BENEDICT C. POSADAS. FOOD DISTRIBUTION RESEARCH SOCIETY 2010 ANNUAL CONFERENCE October 16-21, 2010 Sandestin, Florida
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1 ECONOMIC ALTERNATIVES FOR GULF OF MEXICO OYSTER PROCESSING SECTOR BENEDICT C. POSADAS Associate E/R Professor of Economics Mississippi State University Coastal Research and Extension Center Mississippi Sea Grant Extension Program FOOD DISTRIBUTION RESEARCH SOCIETY 2010 ANNUAL CONFERENCE October 16-21, 2010 Sandestin, Florida February 19,
2 U.S. Per Capita Oyster Supply * Pounds of meat per person February 19, PC landings PC net imports
3 GOM Raw Oyster Products* February 19,
4 Shellfish-related Vibrio vulnificus cases and deaths* Number of cases Number of deaths February 19,
5 Regulatory and Market Constraints* Since 2003, California required that all GOM oyster products harvested from April 1 to October 1 must be subjected to approved PHP before they can be sold for raw consumption In Oct 2009, FDA proposed new regulations that would require GOM oysters to undergo PHP from April 1 to October 1 February 19,
6 2001 Oyster PHP Program* MSU-Coastal Research and Extension Center initiated an oyster PHP research and extension program in collaboration with the Mississippi Department of Marine Resources to evaluate consumer acceptance of PHP oyster products and economic viability of oyster PHP systems February 19,
7 2010 Gulf-wide Oyster Initiative* Economists from the five Gulf states Sea Grant programs met with oyster processors on March 19, 2010 to assess the economic implications of the proposed new FDA regulations that would require GOM oysters to undergo PHP from April 1 to October 1 February 19,
8 FDA-Approved Approved Commercial PHP Systems for Raw Oysters* Heat-Cool Pasteurization (HCP) High-Hydrostatic Hydrostatic Pressure (HHP) Individually Quick Freezing (IQF) Low Dose Irradiation (LDI) February 19,
9 NPV Approximations for HCP** Heat-cool pasteurization (HCP) is a process where live oysters are placed in warm water for a period of time and then dipped in cold water to stop the cooking process. February 19,
10 NPV Approximations for HHP** High hydrostatic pressure (HHP) subjects oysters to very high pressures for 3 to 5 minutes to kill bacteria and reduce microorganisms like Vibrio to non- detectable levels. February 19,
11 NPV Approximations for IQF** Individual quick freezing (IQF) involves rapid freezing of half shell oysters on trays, then adding a thin glaze of ice to seal in the natural juices before storing them frozen. February 19,
12 Low Dose Irradiation* Cobalt-60 irradiation (C-60) is the traditional means used to irradiate foods. The gamma ray from the cobalt isotope is very penetrating through food packages and product. There is no residual radioactivity. February 19,
13 February 19,
14 Annual GOM Oyster Landings* 100,000,000 90,000,000 80,000,000 70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000, Pounds Value1 February 19,
15 Damages of Deepwater Horizon Oil Spill* April 20, 2010 ~~ 100 days 4.9 million barrels 1.8 million gallons of dispersants Fishing closures in federal and state waters Damages to oyster resources Market perceptions of safety of GOM seafood Market prices of Gulf seafood Market shares of Gulf seafood February 19,
16 GOM Monthly Oyster Landings** 2,500,000 2,000,000 Pounds of meat 1,500,000 1,000, ,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Mean Deviation February 19,
17 Stochastic Individual Plant Monthly PHP Capacity** PLANT = [POUNDS x HOURS x SHIFTS x DAYS] where PLANT = individual plant PHP capacity per month, POUNDS = equivalent pounds of shellstock processed per hour, HOURS = number of hours operating per shift, SHIFTS = number of shifts operating per day, DAYS = number of days operating per month. February 19,
18 70% 60% 50% 40% 30% 20% 10% Percent of GOM PHP Capacity to Landings With One Shift** 0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec % to Harvest February 19,
19 Summary and Capacity Modeling Implications* Meat yield differences between summer and winter harvests Type of PHP system: year-round round or 6-month operation Processing mix: half shell, whole shell, shucked Processing days per week and per month Length and number of shifts per day February 19,
20 Summary and Compliance Implications* Current PHP equipment Planned purchases of PHP equipment Testing and validation of PHP process New location New owner New equipment New workers February 19,
21 Summary and Transportation Implications* From docks to PHP plants From docks to processing plants to PHP plants From PHP plants to storage facilities From PHP plants or storage facilities to market destinations February 19,
22 Summary and Financial Implications* Short-term term capital for operations Oyster shell stock Labor Long-term capital for capacity expansion Equipment Space February 19,
23 Summary and Sustainability Implications* Recovery of GOM oyster harvesting sector from DHOS damages Graded oyster shellstock Recovery of lost market shares of GOM oyster products Traditional oysters PHP oysters Prices of major PHP inputs Shellstock Energy February 19,
24 Percent of GOM PHP Capacity to Landings With Two Shifts** February 19,
25 Summary and Marketing Implications* Market perceptions Overall safety of Gulf seafood Safety of eating raw oyster products Consumer acceptance of PHP oysters Willingness to pay for PHP oysters Promotion of PHP oyster products February 19,
26 Willingness to Buy PHP Oyster Products** Percent of respondents willing to buy PHP raw oysters, 2007 Percent of respondents interested in buying PHP raw oysters, IQF IQF HCP HCP HHP HHP February 19,
27 Willingness to Buy PHP Products* It seems that respondents with higher education are more willing to buy PHP products as are those who are in the upper income brackets. There is slight evidence that male respondents are more willing to buy PHP products. Seafood markets seem to be the preferred source of product with oyster bars and grocery stores being preferred in some instances. While race did not seem to affect willingness to buy, age did seem to play a role with older individuals less willing to purchase PHP products. Respondents in Pascagoula, Mississippi were less willing to buy PHP products. February 19,
28 Willingness to Buy PHP Products* Respondents who considered the appearance, smell and taste of oysters to be important were less willing to buy PHP products. Respondents who had health and safety concerns about raw oysters were also less likely to buy PHP oysters. Respondents who perceived raw oysters to taste good and were fun to eat, their willingness to buy was positively enhanced. Respondents who were aware of the health risks and methods to reduce risks seem to be positively influenced in their willingness to buy PHP products. February 19,
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