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J’can company B&D gains from US-China trade war - Grows lobster sales as conch ban bites into income

Published:Friday | October 18, 2019 | 12:00 AMHuntley Medley - Senior Business Writer
CEO of B&D Trawling Roderick Francis (left) and Director of Operations Sean Francis display one of the company's lobster posters on October 11, 2019
CEO of B&D Trawling Roderick Francis.

One Jamaican exporter is reaping dividends from the ongoing trade war involving the United States and economic arch rival China.

With US$185 billion worth of duties being slapped on American exports to China in retaliation for US imposition of US$550 billion in tariffs on Chinese goods, leading seafood exporter, Kingston-based B&D Trawling Limited is ramping up volumes of live and frozen lobster sales into that Asian market at a significantly lower tariff than its US competitors.

“The trade war is affecting us in a good way,” says B&D Trawling CEO Roderick Francis.

While US lobster exports to China face a 35 per cent tariff, the product from Jamaica enters at five per cent, Francis said. The US is the second--largest exporter of lobster after Canada, according to statistics from the Food and Agriculture Organization of the United Nations.

The Jamaican company broke into the mainland China market for the first time when certification for the export of live lobsters was granted to Jamaica two years ago. Before then, B&D’s exposure to the Chinese market was limited to selling to Hong Kong for the past 20 years. Access to mainland China, and at a lower cost than US competitors, has provided a windfall and financial lifeline for B&D Trawling, which has experienced a massive falloff in revenues from a one-year Jamaican Government-imposed ban, at least to January 2020, on the harvesting, sale and export of conch, one of the company’s main exports.

The coming on stream of the Chinese market with its big potential for the more lucrative, value-added, live lobster sales has resulted in a change in the profile of B&D Trawling’s export business, away from the previous reliance on the European market with greater diversification and a concerted push into China.

Having exported some 100 tonnes of live lobsters last year, the company is set to double that figure this year, Francis says. The business produces and sells about 400 tonnes of frozen lobsters, but is cutting back on this volume as it sells more live lobsters to China at a higher price and bigger margin.

Possibly the sole Jamaican exporter of live lobsters, the Port Royal Street-based fishing company is also tapping into the recently opened market for the export of frozen lobsters into China.

“That’s very exciting for us as well,’’ Francis said in an interview with the Financial Gleaner. B&D Trawling is expected to send its first shipment of frozen lobsters to China over the next two weeks. B&D Trawling sells to distributors in China.

Export growth

Francis notes that the export market continues to show signs of growth. Sales are continuing to Europe and the US, while the company recently opened a new market with its first shipment to Dubai in the United Arab Emirates. The seafood businessman, whose company is estimated to control about 80 per cent of all Jamaican seafood exports, has his eyes set on other foreign markets as well.

With the fillip from the growing Chinese export business, the company’s revenues of approximately $1 billion a year would have been more significant, Francis says, but for the total erosion of conch sales for the past year. He placed the estimate of industry losses from the extended closure of the conch season at about US$10 million, or more than $1.3 billion, with the bulk of that reflecting lost revenues to B&D Trawling.

“It has been a very challenging year. The industry is in turmoil,” Francis notes. “We are the largest exporters of conch and our business would have been affected by that closure, and continues to be. But we are pushing through. We are starting to recover, expanding our live lobster business. We hope to make full recovery by next year in terms of diversifying, pushing more of our products live and into China and getting a greater margin there. The future is bright.”

Francis’ optimism is helped by what he says is currently a good seafood export market in terms of relatively high prices. B&D Trawling’s business model has for most of its near-40 years in operation, been focused on exports. Some 99 per cent of its lobsters, conchs, fish and sea cucumbers are sold overseas. Sea cucumbers are worm-like marine animals found on the sea floor. Soft-bodied and shaped like cucumbers, they can grow beyond six feet in length and are in high demand in Asia, especially China, as a delicacy regarded as having numerous medicinal benefits.

Highest standards

Francis makes the point that the very high standards accompanying certification for exports mean his company’s operations adhere to the highest standards of quality during harvesting, transport, processing, packaging and storage. Fishing activities at B&D Trawling are anchored by operations director Sean Francis.

While it operates its own fleet of five commercial fishing vessels and two commercial boats for the transport of live lobsters, B&D Trawling buys seafood from thousands of Jamaican fishermen, with those catches going to its small domestic market sales, a relatively new facet of the business that started in 2013.

Francis says B&D is now working with the Ministry of Commerce, Industry Agriculture & Fisheries to bring the operating standards of fishers to levels where they can receive export certification.

The company has had a 35-year partnership with Beaver Street Fisheries in the US, which supplies it with some seafood, including scallops and mussels.

B&D-produced seafood is sold in Jamaica under the Sea Best brand. Local sales are in the region of $136 million per year with a lot of room for growth, Francis said.

The company has retreated from a foray it made two years ago into supermarkets and wholesale stores across the country, he adds, because some retail outlets are not equipped to deliver the high-quality storage standards on which the seafood company insists.

All local selling is now done via the company’s website or directly from the company’s Kingston waterfront facility. Online sales are said to be bringing in more money than the previous supermarkets channels. B&D’s seafood is also distributed to restaurants and the company is looking to penetrate the hotel market.

The business operates from leased property at 3B Port Royal Street, which includes corporate offices, a processing plant, and the popular Bunny’s Seaside Kitchen.

Bunny’s is a seafood restaurant established about a year ago with an investment of about $40 million and named for the business’ founder, Roderick ‘Bunny’ Francis, who was murdered in 2011. Francis Jr, who became general manager of B&D Trawling in 2005, was named CEO after his father’s death.

The company employs 200 workers, most of whom are women from communities in downtown Kingston as well as several hearing-impaired persons, who are said to have a long association with the business. The majority of the staff work in the processing plant.