Why “Fake Tuna” Is Becoming A Big Profitable Business

Once a major exporter of catering sized canned skipjack tuna to US food service buyers, canners in Thailand have been complaining of a severe lack of business. Rocketing American imports of tuna-like species, which some have branded as “fake tuna” continue to have a disastrous impact on the market, being retailed as “Chunk Light”, and making more traditional skipjack products far less competitive. Soon, you might be finding a sort of mackerel fish in your tuna sub.

At the same time, a more indirect impact that has a slice of the industry concerned is the environmental effect that this growing trend is potentially having on stocks of tuna-like species. With belief that the majority of this catch is netted by IUU vessels, there is no idea of knowing the full extent of the landings.

The Growing Trend

As a trend that was revealed by Atuna over a year ago, there is a rapidly growing emergence of chunk light canned tuna imports into the US marketplace, which are not packed with skipjack tuna meat, but with tuna-like species such as Euthynnus Affinis and Auxis Thazard, more commonly known as frigate and bonito, and stem from the mackerel family.

The latest stats show that a recent extraordinary surge in volumes heading to the US has continued so far in 2016. During January and February, NOAA data already displays that over 1,650 tons of this product was imported by US buyers. Two years ago, during the same months, just 20 tons reached the US market.

According to one US tuna importer in the food service segment, in 2015 alone, there were over 500 containers of this product imported; however he told Atuna that this is expected to grow much greater within 2016.

Shipment documents made available to Atuna show that today already 30 US importers are actively involved in distributing this product in the US market place, with most located in the New York, New Jersey, Washington and California areas. These often smaller import companies appear to be doing very well and rapidly growing their businesses, to the detriment of those importers continuing to traditionally source solely skipjack for their foodservice size “Chunk Light”.

The Incentive?

Not only are these tuna-like fish generally regarded as a different and lower quality, and therefore cheaper in price, but the import tariff levied on this canned product is substantially lower than for skipjack tuna. Under the product code “Bonito, yellowtail, Pollock ATC in Brine” canned tuna-like species are entering the US at just four percent duty, when more traditional chunk light tuna species (skipjack, yellowfin and tongol) in brine are levied with a much higher 12.5 percent tariff for the majority of the year.

This very high cost difference is an obvious attraction for some US importers, while the practice is also completely legal under American law, with no requirement to name the species on the label. However as our source stresses: “US consumers are totally unaware of what they are actually getting.”

According to the current code of federal regulations, and as indicated to Atuna, the US authorities have a rather inconsequent approach to the issue. When it comes to how to label and retail these tuna-like species, the US FDA considers it being tuna “sub-species”, but still tuna. Contrastingly, in the import stage, the US Customs service do not classify them equally as skipjack, yellowfin and tongol, but see them as separate species with distinct tariff codes, allowing them to be imported under a much lower duty rate.

The result of US government agencies not being consistent with their regulations is “a disconnect and oversight/loophole that needs to be urgently corrected,” our source stresses. The relaxed state of the US import procedures at present are offering a convenient channel for those firms wishing to capitalize on this emerging business.

The Impact?

This new emerging trend is undermining the traditional chunk light tuna market in the US, several sources have outlined. One stated that “by giving inferior grade fish protein to the consumer, those US importers that bring this product in are able to undercut skipjack prices by several dollars per carton, due to both a lower duty as well as cheaper raw material cost.”

As a consequence, he says that larger, reputable US food service distributors have definitely lost business. Around 95 percent of this activity has been related to the food service market so far, he estimates, however he believes that various packers have now started producing retail can sizes as well.

The majority is being imported from China, but shipments of this tuna-like canned product are also arriving in the United States from the Philippines and Vietnam, and in much more limited volumes from Thailand, according to import documentation.

Thai canners that have been packing traditional tuna species, like skipjack into 66.5oz cans for the US Chunk Light market, at the same time, have been losing out significantly on business. Bangkok-based sources state that exports of catering pack tuna to the US have likely reduced by 800 containers per year, or maybe more, with very few orders coming in.

This skipjack “Chunk Light” business now only remains with the major customers, like Subway and Sysco, as well as other seriously established firms that cannot risk being involved in such activity. The situation has left the US’ top 5 tuna importers feeling under threat.

On the flipside, while tuna-like species are being imported under this far lower tariff, with no requirement to mention the type of fish on the product, there has also been a distinct prevalence of more traditional canned skipjack tuna being brought in under this lower duty code. With a lack of any DNA testing taking place on imports, and without skipjack being mentioned on the label, this is just another loophole recognized as a way for some buyers to offer imported “Chunk Light” skipjack at significantly reduced prices.

Not only the market impact, but the environmental impact is also a major concern, several industry representatives have stressed. Another US importer noted “I continue to be asked if we would want to purchase these species, however have refused as a high percentage is caught by potential IUU vessels, high seas drift nets, gill nets, etc. There is no traceability at all required at present.” Most of these products carry dolphin safe logos, and the importing firms can be found on lists of “dolphin safe” approved companies.

He describes these types of nets as “indiscriminant killers of our oceans,” and added that there are no stock assessments available for these species to his knowledge. Also “dolphin safe” standards specifically forbid the use of such methods.

The Solution?

The US importers that are directly affected by the competition of this growing import trend, and struggle to compete on price with firms involved, all believe that the US government needs to take urgent action to resolve what they see as a “current destruction to the industry” that is only likely to increase.

One American buyer said that “it needs to be addressed on multiple fronts, first and foremost from the environmental standpoint. The US government needs to apply full traceability to the harvest of these species, which are no different than for all other tunas.”

He also states that Vessel Registration should also be undertaken against the same criteria that all fishing boats are now forced to, as well as having to take NOAA’s online fishing course. Also dolphin safe regulations should be applied by government and environmentalists in the same way.

Additionally, he hopes that “the US national brands would step up and put pressure on the FDA/NOAA/US Customs, as they have the strength to be able to lobby for changes.” NGOs should also jump all over this issue, one source states, due to the potential for IUU fishing and no traceability.

One particular organization, first set up by industry and NGOs to drive increased sustainable management, appears to be missing from this discussion. The International Seafood Sustainability Foundation (ISSF) has kept very quiet in the midst of this growing trend being raised, another source stressed to Atuna.

Despite the group being a go-to source for information on the health of tuna stocks, and having raised the alarm on several populations in the past, these tuna-like species are completely missing from its analysis. Focus instead is solely on the main commercial tuna species.

Ultimately, the industry, the US government, and the consumer have no idea if these species are already severely overfished, but nonetheless they continue to catch them, can them, import them, even certify them, and (unsuspectedly) eat them.

It’s generally believed that with the current set up of US import regulations, there is little focus on getting information to consumers, and that without a total review of the entire import policy, this business will continue to grow.

What About In Other Markets?

US and EU authorities have very distinct differences in their views of what’s tuna and what’s not, and any product packed with Euthynnus Affinis, Auxis Thazard, or any other tuna-like species in Europe, is required to clearly state so.

In the EU market, the product name “Chunk Light” does not exist, and on shelves instead, products are commonly labelled as tuna chunks or solid tuna. Often the species and their Latin names are mentioned on the ingredients panel of the label, but this tends to differ per each product and market.

EU importers have previously told Atuna that there is little stimulus to import these species, as the tariff rate for canned bonito is higher (25%) than the rate for tuna (24%). Therefore, they see no threat in this trend that has hit the US market, also infiltrating EU nations.

What’s Next?

If this trend persists, one particular US importer believes that fleet owners, who are struggling to make decent profit selling their catch of skipjack, will face continued and growing pressures in the US market due to the differentials in finished goods’ costs.

“Packers of finished product will also face competitive issues against those producers that are packing and shipping these “tuna-like” species, and the importers and distributors that refuse to sell these inferior quality species will all face competitive issues; a vicious circle.”

He stresses that “fraud is an extreme possibility on many different levels.”

The accuracy of the expected year on year substantial rise of these canned tuna-like shipments will only become clear as NOAA continues to update its imports stats. However, without serious changes in the way US government agencies approach these issues, a turnaround isn’t predicted anytime soon.