Net Losses: Declaring War on the Menhaden
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Omega now owns 61 ships and 32 spotter planes. Only 10 of the ships and seven of the planes—all based at the company’s factory complex in Reedville, Virginia—still operate on the Atlantic coast. And there Omega has big problems.
As Atlantic menhaden have declined, their range has contracted. The biggest, most oil-rich fish used to concentrate off New England in the summer. But from 1993 until 2004, no significant schools of adult menhaden were observed north of Cape Cod. As awareness grew of menhaden’s importance to the dwindling stocks of Atlantic food and game fish, state after state banned the fishery from its waters. Today the only Atlantic states that still allow it are North Carolina and Virginia. Unable to fish in the waters of any other states and no longer able to find large oceanic schools in federal waters, which begin three miles out from the states’ coasts, Omega Protein now gets close to 70 percent of its Atlantic catch from the Virginia waters of the Chesapeake Bay. The industry has been forced “into a box,” Omega spokesman Toby Gascon told the Atlantic States Marine Fisheries Commission (ASMFC) last July. “We have nowhere else to go.”
But the Chesapeake, the tremendous tidal estuary that once produced more seafood per acre than any body of water on earth, is an ecological disaster. Historically, it was once the world’s greatest source of oysters, menhaden’s partners in filtration. But by the 1990s, overfishing and pollution had reduced the bay’s oyster population to less than 1 percent of what it had been at the turn of the 20th century. An alarming study by environmental scientist James Hagy and others in the scientific journal Estuaries in 2004 demonstrated that from 1950 to 2001 nitrogen overloads from human activities were stimulating rampant overgrowths of phytoplankton, literally choking the bay, creating ever-expanding dead zones. Benjamin Cuker, professor of marine and environmental science at Virginia’s Hampton University, has discovered that these dead zones have continued to enlarge every year since 2001: “All the way from south of the Potomac to the Bay Bridge the water below eight meters is now severely hypoxic, uninhabitable by any organism that demands any significant amount of oxygen.”
All of which makes the conservation of menhaden even more urgent. “With the oyster population gone and little hope of its return, menhaden are absolutely critical to restoring the health of the bay,” says Bill Matuszeski, former executive director of the National Marine Fisheries Service and former director of the EPA’s Chesapeake Bay Program. Bill Goldsborough, senior scientist of the Chesapeake Bay Foundation, is alarmed by the huge catch of menhaden, “the main filter feeders that keep the bay’s food web in balance,” and sees these guardians of the bay becoming victims of a deadly “perfect circle”: “Menhaden are big targets of Pfiesteria, the toxic algae known as ‘the cell from hell.’ The menhaden are ground up and fed to the big chicken farms on Maryland’s Eastern Shore. Chicken manure from these chicken farms is the dominant source of the nitrogen entering the Chesapeake from the Eastern Shore. The nitrogen triggers the Pfiesteria, which then infects the menhaden.”
Thanks to Omega’s slaughter of approximately 233 million pounds of Chesapeake menhaden each year, the fish can no longer perform their other great ecological mission: being eaten by animals higher up the food chain. The most dramatic effect is on striped bass, the bay’s signature fish.
The Chesapeake is the world’s principal spawning region for striped bass, but half the stripers in the bay are now diseased with mycobacterial infections. Some scientists now think that the stripers are sick because they are malnourished, and malnourished because they are not getting enough menhaden to eat.
Thanks to the slaughter of 233 million pounds of Chesapeake menhaden each year, the fish can no longer perform their great ecological mission.
Image: Courtesy NOAA National Marine Fisheries Service
omega is seen as an agro-play at the stock market. Their stock was highlighted a few times by analysts/commentaries.
My final conclusion is not to buy their shares. Even with rising prices and profits near term.