A Massachusetts-based processor is unable to fulfill major US Department of Agriculture (USDA) requests for Alaska pollock to be used in federal school lunch and other assistance programs due to an ongoing Customs and Border Protection (CBP) dispute with supplier American Seafoods, the top executive told IntraFish.
"The biggest contract we have is with the USDA emergency relief food program," Channel Fish President Thomas Zaffiro said.
"That's the biggest impacted contract right now. We’ve informed the USDA we can’t ship any more. We can’t produce any more product than we've already produced."
Since the beginning of this year, the USDA has awarded the company nearly $6.4 million (€5.4 million) to distribute around 2.6 million pounds of product to federal assistance programs throughout the United States, according to the agency's public records of the bids.
Zaffiro said the agency needs the pollock by the end of this year, which makes the stakes all the more high as a lawsuit that could potentially free up more of it remains in limbo in a US district court in Alaska.
The CBP claims American Seafoods, through its use of the so-called Bayside Program gave its frozen fish a short pro-forma ride on a Canadian rail track to nowhere, then trucked it over the US border to take advantage of an exemption in the US Jones Act.
The action has brought the US pollock trade to a standstill during a high season with cold-chain warehouses brimming with fish that owners are afraid to move.
Lawyers for the American Seafoods subsidiaries involved has since asked the judge for a preliminary injunction to prevent the company from incurring more fines. Arguments in the case were made on Sept. 17, but the outcome has yet to be decided.
Zaffiro testified to the court earlier this month that his company only had 30 day of pollock blocks on hand, and will be forced to shutter its factory if it does not receive additional supply after that. He told IntraFish Wednesday the circumstances remain the largely the same.
"We’re looking for other production right now to fill in while there’s a gap," he said. "We've taken on more fresh salmon business. We're doing whatever we can to use other species than Alaska pollock."
Zaffiro added finding a new Alaska pollock fillet supplier has been challenging.
"In normal years, other than when there is coronavirus, it would be possible, but the market was tight going into this," he said. "No one has additional inventories to ship."
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Already a challenging year
A spate of coronavirus outbreaks during pollock's A season started off a difficult year for US processors.
Another major issue the industry is struggling with as it navigates the Alaska pollock "B" season is not having the right size fish to produce fillets for the highest-value customers.
Pinbone-out (PBO) fillet production was around 26 percent lower through Sept. 11 than in the 2020 B season through the same period. Deep-skinned fillet output, while ahead of last year in early July, is now 12 percent behind last year's levels.
He added another challenge is that the product must be domestically produced for the USDA, meaning it can't come from other major global suppliers such as Russia and China.
"Until American Seafoods is able to figure out how to ship the product down, we’re kind of in waiting mode. We're sitting, waiting hoping the ruling goes in favor of American," he said.
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