Wholesaling Your Product to Fish Brokers

Bob Rubin
Director of Research and Development
Chicago Fish House
compiled by
Robin Goettel

Communications Coordinator,
Illinois-Indiana Sea Grant Program

Introduction

There are many important factors that an aquaculturist must consider when it comes time to develop marketing Strategies for selling his product. Species type, seasonality, and marketing costs are all elements that should be carefully thought out when deciding which species to culture and what marketing strategy to employ.

Procedure For Selling Fish Products to the Seafood Industry or Chicago Fish House

When an aquaculturist is ready to sell his product, he simply needs to call the fish buyer with information on the species and its size, and then offer his product for sale at a certain price. If this meets with the buyer's specifications (what its customers are requesting), then the buyer will conduct the whole transaction over the phone.

The producer will be asked to box and pack his commodity in fresh or chemical ice and make arrangements for shipment by truck or airplane. Delivery is preferred no more than one day from the harvest date for maximum freshness.

The Chicago Fish House and most seafood buyers use no contracts and makes no long-term commitments on 99% of what they buy in fresh fish. Its buyers operate on a day-to-day and week-to-week basis through phone transactions.

Once the product arrives at the dock, the receiver examines it for freshness. Among the qualities looked for are firm flesh, bright and colorful skin, bulging clear eyes, and clean red gills. If there is a problem, the fish is sent to the Government Inspector for further examination. If there is a concern, a certificate of inspection will be issued and is available to the seller.

If the delivered product is not acceptable, it will be returned to the seller. However, this change in timing can certainly affect the selling price. For instance, if a product delivered to the Chicago Fish House on Thursday did not meet required standards, then the buyer would not have time to find a replacement to sell to its customers for the weekend, therefore losing money.

What Species are Hot; What are Not

Game fish seem to be in great demand these days by retail and institutional customers because they are not easily obtainable as some other species, and are a favorite food of many fish eaters. Game fish are those fish not allowed for commercial harvest, but for capture by sport fishermen. They include walleye, pike, lake perch, crappie, sunfish, striped bass, largemouth and smallmouth bass, and bluegill.

I recommend that fish farmers in the Midwest not get involved in the production of catfish and salmon. There are already large quantities available from people throughout the U.S. A midwestern farmer could possible find a small niche in a local market, but there would probably be little potential to expand.

Factors Affecting Price Paid to Producer

The Chicago Fish House and other fish buyers will only pay what the market will bear, so that they can make a profit. The idea is to buy for less than they will sell it for.

Seasonality comes into play in determining price. In the winter, the market for fresh fish is often higher because there is less available. People can't go out and catch their own, and the commercial fisheries don't harvest as much as in other seasons. Production of fish is highest in the spring and the fall so prices paid to producers are generally lower. The summer market is unstable because people go on vacation and eat out more. Price determination all boils down to supply and demand.

Transportation Considerations

The seller must make transportation arrangements and pay the freight when dealing with any seafood buyer. There is an occasional exception that a fish broker will pay some of the shipping costs if there is great demand and little supply.

A seafood buyer will accept any quantity of fish if there is enough customer demand. They buyer takes as little as 50 lbs. of fish or as much as 4,000-5,000 lbs. of fish.

The aquaculturist must be aware that freight charges are assessed per pound or per hundred weight of the product. I recommend that if, for instance, the freight charge is $100 for 1,000 lbs. or less, then the producer should try and get the buyer to take 1,000 lbs. if he has that much stock on hand. If the buyer will not take the minimum shipment, then the seller must pay the increased freight charge or increase the price of the fish to cover shipping costs.

Other Marketing Considerations

A bill on seafood inspection is still pending in Congress. If it passes, the aquaculturist will have to understand what the criteria will be required for his product to pass inspect on.

Many institutional and retail customers are touchy about receiving a product that has received chemical additives by the producer or through the environment. Aquaculturists should carefully consider what they use. Artificial chemicals such as antibiotics used in feeds during fish production can create problems. Even though these chemicals serve to control disease or improve fish size, they will adversely affect the product's marketing potential. This applies even if the volume of chemicals is low.

In addition to chemical additives, the fish producer should also take care to avoid any pollution hazards such as industrial, agricultural, and other outside chemical pollutants that may harm the crop.

The Future Role of Farm-Raised Species in The Operation of The Chicago Fish House

I have seen farm-raised species play a greater role in my operation every year. In the last ten years, farm-raised fish went from 10% to 25% of the species we stock in our fish cooler and distribute. In the next 10 years, it could jump to 50-60% of our business.

The benefits of buying farm-raised fish are a raw material supply I can count on and it provides more stability in pricing. Aquaculturists who have a desirable product and a good marketing plan can expect to reap the benefits of this industry now and in the future.