Mussel woes aired

There is discontent within New Zealand's multimillion-dollar mussel industry, with claims companies are undercutting one another.

A "significant number" of people within the industry had expressed "extreme disquiet" about the pricing of mussels on the international market, said David Hogg, managing director of Richmond-based Sea Health Foods, which last week announced it was closing.

"Until there's a much greater effort to move the product we have in New Zealand to higher-value markets, and stop the commoditisation and price-taking in offshore markets, this industry will remain in a poor state," he said.

The closure of Sea Health Foods, a mussel-processing business, will see up to 75 staff lose their jobs, with some finishing today.

The rising New Zealand dollar and the falling market for greenshell mussels had forced the closure, Mr Hogg said. The market price for the mussels, which were mainly exported to North America and Australia, had fallen from $2 to $1.40 per 453g.

Mr Hogg said there were few offshore buyers for mussels, and they were driving down prices dramatically by forcing New Zealand companies to compete against each other.

It was "completely and utterly wrong" if people thought the mussel industry was in a healthy state, he said.

"The aquaculture industry has lofty targets. If they are going to rely on greenshell mussels, those targets are not reachable," Mr Hogg said.

Aotearoa Seafoods sales and marketing manager John Grant said the industry was facing "unnecessarily tough" times because members had become a "soft touch" for importers pursuing low prices.

"They are leaving tens of millions of dollars on the table that could come back into New Zealand."

Mr Grant said there was no "magic [price] threshold", that dictated demand, but "the current market prices are not sustainable for anybody over a long period".

"It's certainly not $1.40 ... At about $2 a pound [453g] it would be profitable. There's enough demand out there for everyone to be happy at a good price."

Mr Grant said there would be no staff laid off at Aotearoa Seafoods in the near future, but some smaller companies would be under pressure.

Aotearoa Seafoods is owned by Wakatu Incorporation, whose chief executive Keith Palmer said a sharp eye would be kept on its mussel operations.

But Nelson-based Aquaculture NZ chief executive Mike Burrell said the closure of Sea Health Foods was not a reflection of the market.

"In economic downturns there will be companies that unfortunately fail, but as a sector, we have been really reassured and pleased with how robust our companies have been [during the recession]," he said.

Mr Burrell said the "economic fundamentals" for the industry were strong, particularly in the areas of research, investment and the production of mussels. After an increase, the price of the shellfish had fallen back to a level "slightly ahead" of the same time last year, he said.

Sanford managing director Eric Barratt said the company, which has a mussel processing plant in Havelock, had been affected by the high exchange rate, but there were no plans to "reduce activity".

"We believe in the long-term future of the industry."

In July, Sanford bought $23.5 million worth of marine farms in the Marlborough Sounds from Sealord.

Marine Farming Association chief executive Graeme Coates said independent growers were disappointed by market returns in the United States created by the competitive behaviour of companies.

But it was not the "death of the industry". Mr Coates said new markets were being explored and new mussel farms emerging.

- © Fairfax NZ News