Institutional Investor

Consider the menhaden.

The menhaden, for the uninformed, is a fish — one that swims at the base of the enormous, yet fragile, pyramid of sea life. At the top of that pyramid exist whales, which, after disappearing decades earlier from New York City environs, were spotted again in 2010, just a few miles from Manhattan’s famous skyline.

Which is how, on a sunny July weekday, I find myself approaching the American Princess, a whale-watching boat docked at Riis Landing on the bay side of Rockaway. The boat is here to look for whales — and so am I.

Tom Paladino, white-haired and tan, sits on the bumper of his truck in the gravel parking lot abutting the dock. He fits the image of a man who has been in the fishing business 45 years. Paladino started running whale-watching excursions on the American Princess with his partner, Frank De Santis, in 2010.

For decades it had been rare to see a whale or its primary Atlantic meal, the silvery, oily fish called menhaden. Before menhaden took over from whales as humans’ choice source of sea oil, the big marine mammals had been hunted almost to extinction. And when humans switched to menhaden and from harpoons to spotter planes and industrial fishing nets, many of the remaining whales starved. Whales eat menhaden by the thousands. If their population was rebounding, then whales, dolphins, bluefish, striped bass, and other marine life couldn’t be far behind.

“Ten years ago, heart to mouth, there were more and more reports of whales,” says Captain Paladino in a New York accent that is slowly disappearing from the city. Paladino and De Santis were cautiously optimistic and started bringing people out, one day a week at first. More than half the time, the passengers saw whales. By 2014 — two years after catch limits on menhaden cut commercial hauls by about 20 percent — Paladino says he “saw bunkers, 40 feet thick, tens of thousands.” Bunkers are one of many local names for the slimy and stinky menhaden. Now, 90 percent of the time that De Santis takes the boat out, he sees whales, sturgeon, seals, and even dolphins.

Paladino — who grew up in south Brooklyn — remembers when in the 1960s, 100-foot-plus gray ships arrived from Reedville, Virginia, with smaller aluminum boats perched on their decks. They had been sent to capture menhaden by a company now called Omega Protein. Men in the smaller aluminum boats would position massive nets — purse seines — over pods of fish located by spotter planes and zip them up. The fish would then be loaded onto the factory ships.

Omega Protein was one of many so-called menhaden reduction companies operating at the time. These companies captured menhaden in great volumes and processed them into fish meal, oil, and other commodities. It took just three days to make the fish vanish for the rest of the year, says Paladino. Until there was legislation to block foreign vessels from fishing within a certain distance of the U.S. coast, he would also see Russian trawlers enter the bay in 30-boat fleets.

Paladino’s memories of bunker decimation and depleted populations in the ’60s fits with the view of Hall Watters, the first spotter pilot in the menhaden industry. According to Bruce Franklin’s book The Most Important Fish in the Sea, Watters saw 1960 as the turning point.

That year technology — from better netting to fish pumps — enabled boats to surround and capture massive schools and suck them from the sea. Watters, who died in 2004, recounted the destruction of a school he estimated to be about five city blocks in diameter and 125 feet tall. After that the fish pods started shrinking and the population began plummeting, writes Franklin. By 1967 fisheries were catching nothing significant in the North Atlantic, according to the book.

In the late 1990s and early 2000s, Maine, New Jersey, New York, and other Atlantic coast states began curtailing what remained of the menhaden industry. (Omega Protein and others can still catch Gulf menhaden — smaller and less desirable than their Atlantic brethren.) The prohibitions came as sports fishermen and environmentalists called attention to the declining populations of species like bluefish, which were reliant on the shrinking menhaden populations.

But the state restrictions required little sacrifice. Most of the reduction industry, which dates back to the 1860s, overfished menhaden and put themselves out of business.

Omega Protein, a precursor of which owned the boats Paladino vividly remembers, now runs the last reduction factory on the East Coast. It’s based in Reedville, Virginia, in the only Atlantic state that still allows the industry to operate. Omega takes 80 percent of the menhaden catch on the East Coast (about 130,000 metric tons a year, down from 160,000 the year before the 2012 limits were put in place), and the bait industry takes the rest.

“A 45-foot tractor trailer holds 20 tons. That’s a lot of tractor trailers,” says Jim Rogers, a former Chesapeake Bay Foundation board member.

For decades Omega has been at the center of controversy over its role in depleting menhaden populations on the East Coast and in the Chesapeake Bay; the size of a healthy population of menhaden; and even the role the fish plays in the ecosystem.

Bob Vanasse — head of commercial fisheries advocacy group Saving Seafood — disputes the notion that menhaden are even threatened. He points to their robust fertility, and notes that the debate goes back more than a century. According to Vanasse, the new head of the National Marine Fisheries looked at official data as recently as November and said the current quota could be doubled without hurting the menhaden population.

Vanasse acknowledges that recreational fishermen are irritated when they see boats use purse seines and spotter planes to pull menhaden schools from the water. Hobbyists also seek out the oily schools, which attract what they are after: striped bass and other sporting species. “The purse seine goes out there and takes the whole school,” Vanasse says. But, he argues, “it’s efficient, and there’s no by-catch” — collateral damage to other marine life.

Paul Eidman, a fourth-generation fisherman aboard the American Princess, is not convinced. “The reality is that Omega Protein makes nothing that can’t be replaced,” says Eidman, who represents the mid-Atlantic for a group called Menhaden Defenders. Some of Omega Protein’s products, such as an ingredient for dog food, could be easily replaced by other commodities. Technology companies are researching the development of substitutes for fish meal, another Omega Protein product, used as a feed for aquaculture. With the state’s protection, capitalism isn’t working the way it should. “There are much more attractive industries that can replace all of this,” he says.

Full Article found here.