Harvesting shrimp a jumbo headache

Tampa's Sahlman Seafoods is convinced that aquaculture is its future. But if you want to farm shrimp in Central America, you've got to be ready for trouble.

[Times photos: Stefanie Boyar] Joel Rios, left, Elvin Flores, center, and Renaldo Palma collect shrimp in a net as one of the farm's ponds is harvested.

By KRIS HUNDLEY

© St. Petersburg Times, published October 22, 2000

CHINANDEGA, Nicaragua -- The Sandinistas have taken over two banks in town. At the processing plant, there's too much shrimp, too few bins and a busted gear on the sizing machine. And a virus is killing off the crop in Pond 15.

Luisa Ocon, a part-time biologist for Sahlman Seafoods, inspects a shrimp from antennae to tail for signs of the deadly white-spot virus.

At least the volcano is quiet.

If you want to raise and process shrimp in Central America, you've got to be ready for headaches. And just when Gary Cummings, who runs operations here for Sahlman Seafoods, thinks he has things under control, a tornado slices through the shrimp farm in the middle of the night, ripping the roof off the kitchen.

Nobody was killed. Cummings went back to bed.

The joke is that to make a small fortune in shrimp farming, you start with a large fortune. It's a reality for Sahlman, the largest U.S. shrimp farmer and processor in Nicaragua.

A family-owned business now in its third-generation, Tampa-based Sahlman has been pulling shrimp out of the ocean since 1936. It still has the largest privately owned shrimping fleet in the Western Hemisphere, operating for the past 42 years out of Guyana on South America's Atlantic coast.

Sahlman is vertically integrated, processing and marketing its catch under the Bee Gee label to distributors worldwide. Until 18 months ago, the company even owned the refrigerated ship that carts its frozen product to Tampa's port once a month from Guyana.

Jack Sahlman, the 73-year-old son of the founder and company president, said his boats hauled 2.3-million pounds of shrimp out of the ocean last year. At an average wholesale price of $7.50 per pound, that tallies up to more than $17-million in revenues from fishing.

The company has been profitable every year but one, said Sahlman, who remembers the date without missing a beat: 1974, when high oil prices sent the cost of diesel skyrocketing and forced consumers to forgo expensive shrimp dinners.

But the ocean harvest has been steadily declining, while shrimp farming -- growing shrimp from larvae in saltwater ponds -- has become increasingly popular. So four years ago, Sahlman turned to aquaculture, sinking $8-million into a processing plant and massive shrimp ponds in rural northwestern Nicaragua.

The operations stumbled from early mismanagement. Two years ago, just as the plant and ponds were poised for profit, Hurricane Mitch swept through, marooning the farm and wiping out roads. Then a virus that had never been seen in this part of the world decimated shrimp farms throughout Central America.

Marty Williams, who oversees the Nicaraguan operation from Sahlman's Tampa headquarters, said the company had hoped to harvest 675,000 pounds of shrimp from its 28 ponds last year. Instead, the total harvest was 163,000 pounds, less than one-quarter of projections.

"It's been very discouraging," said Williams, Jack Sahlman's son-in-law who travels to Nicaragua about once a month to check on operations. "But there's no question shrimp farming is the future. We just happened to go down there at a bad time."

Global business, global concerns

Shrimp farming, a $5-billion global business, is as much an art as a science. For well more than 20 years, farmers and multinational conglomerates have grown shrimp on everything from tiny family plots to 100-acre ponds from Thailand to Texas.

Traditionally these farms have been built in low-lying areas or swampy wetlands to allow for tidal water exchange. Bulldozers excavate an area up to 10 feet deep, pushing up earthen dikes to form a perimeter. The bottoms are sloped, so water can enter at the shallow end and flush out with the tides at the deeper end.

The word on shrimp farming was that you could simply flow water through a pond and take money out.

Harvests usually take place at night, when the heat is less intense and the shrimp are more active. Under the diesel-powered spotlight that provides the only illumination for the night-long harvest, a farm worker lights a cigarette and waits for the tide to fall.

But as the popularity of shrimp farming grew, so did environmental problems. Developers ripped out mangroves and displaced local people to build farms. The constant effluent from ponds polluted the estuaries. And when the shrimp farms failed, companies simply abandoned the property, leaving depleted resources behind.

Cummings, the 44-year-old expatriate who runs Sahlman's Nicaraguan business, said he has seen damage done by shrimp farmers in the past. But he said Sahlman -- and the Nicaraguan government -- learned from those mistakes.

Nicaragua came late to shrimp farming, long after multinational conglomerates had parceled off the tidal flats in Honduras and Ecuador. While its neighbors were trading shrimp for international currency during the 1980s, Nicaragua was being ruled by the Sandinistas and punished by a U.S. embargo. After the Sandinistas were forced out of office in 1990, foreign investment came slowly.

In 1995, when a team of scientists visited Nicaragua under the auspices of the U.S. Department of Agriculture's Emerging Democracy Program, fewer than 5,000 acres had been developed into shrimp farms. Honduras, meanwhile, had 27,000 acres in production.

By 1999, Nicaragua was exporting 6.6-million pounds of shrimp, valued at $21-million, from 94 farms. Only two farms, both Nicaraguan-owned, are larger than Sahlman's operations.

David Hughes, a professor of aquaculture at Ave Maria College of the Americas in Managua, watched the development of shrimp farming in Nicaragua through the 1990s and surveyed much of the land that has been approved for government concessions.

"The government and producers have taken the stand that they only want to develop half of the potential areas," Hughes said, "and do it so the developed farms are buffered from each other."

The work is hard and dirty

Sahlman's parcel, which it leases from the government under a 10-year agreement, consists of 2,500 acres on Mangles Altos, an uninhabited island in the Estero Real, an estuary that leads into the Gulf of Fonseca. So far, the company has developed only about one-fifth of its concession; the rest remains a barren salt flat flecked with scrub.

It took Cummings and about 120 Nicaraguan workers 15 months to carve the tract of mud-caked earth into 20-acre rectangular ponds. Mangroves around the perimeter of the property were largely untouched.

To improve water filtration, 18,000 mangrove seedlings were planted in tidal areas abutting the ponds. From the air, the tidy rows of mangrove seedlings look like a bad hair-weave.

Everything on Mangles Altos had to be brought from the mainland down a winding river and across the mouth of the Gulf of Fonseca on an hourlong barge ride. Among the imports: rock used to reinforce the ponds' earthen banks and connecting roads; fresh water, cement and sand to build the giant pumping station; and the five green industrial-sized pumps, which pull water in from the estuary at high tide to fill the canals that snake through Sahlman's farm.

Today, 52 men live on the isolated property. They sleep in hammocks under a thatched roof, listening to a staticky transistor radio that blasts Backstreet Boys in a language they don't understand. They eat tortillas, beans and plantains at picnic tables in front of a color TV blaring Spanish-speaking soap operas.

Shrimp farming is hard and dirty work. First, the workers have to stock the ponds with millions of larvae, which look like miniature shrimp. They are purchased from hatcheries in Panama or Mexico or Colombia for about $5 per thousand, then released into the farm's acclimation tanks and finally the ponds. Throughout the growing cycle, which can last up to four months, the fast-growing larvae must be fed twice daily.

Though the food, a commercially milled pellet made of protein and molasses, has traditionally been sprinkled by hand from boats, Cummings recently started using feed trays in all but a few of his ponds. These round, mesh nets are attached to stakes throughout the pond and settle on the bottom when in use. By retrieving the trays, workers can look for dead shrimp and tell how much food is being eaten, avoiding waste.

The workers spend 11 days on the farm, three days off. Pay is 30 cordobas, or $2.30 per day, plus free meals and medical insurance. Men who work a harvest, which can last from 7 at night until 4 in the morning, get an $8 bonus.

Cummings is unapologetic about the pay scale. He figures more than 500 people have been on Sahlman's payroll since the company came into Nicaragua. "That's 500 families affected by us," Cummings said. "I have no tolerance for anyone in the U.S. whining about what we pay, especially when you consider that this part of the country has over 80 percent unemployment."

Some of the men have worked at other shrimp farms in the area -- there are several just down the river and dozens across the border in Honduras. Some have cut sugar cane in the fields that stretch for miles along the base of the coastal mountain range.

But in this part of the country, which is poor even by Nicaraguan standards, opportunities are few. Many families scrape a living from the land -- using dugout canoes to pull fish from the river, growing bananas and beans, raising pigs and chickens. Homes are thatched huts hunched low to the ground, nearly hidden in the palms. A sign of wealth is a battered bicycle, which can carry whole families along the rutted roads.

Problems: production, poachers

One day in late August, Sahlman's workers pile into the back of the farm's pock-marked, mud-caked Toyota pickup to head out to the ponds. They are dressed in ragged shorts and T-shirts. Most are barefoot; a few wear cheap rubber flip-flops.

Nelson Penalda, 27, is at the wheel. Penalda, who wears a tan Jansport ball cap, neat polo shirt and long pants, has been farm manager for the past year.

The farm cut back to a skeleton crew in late 1999 after the virus swept through and Sahlman decided to let the ponds dry out for the first four months of this year. Penalda was one of only seven people who survived the layoffs. He is tired, but grateful for the chance.

Penalda's mother, brother and girlfriend live in Chinandega, 20 minutes by boat, then an hour by car. Penalda comes to the farm on Mondays and returns to town on Fridays. On Sunday morning, he attends English class.

"If there is good production, all is well," said Penalda, who earns about $800 per month plus bonuses. The night before, he had harvested a paltry 3,000 pounds of shrimp from a virus-infected pond.

Production is not Penalda's only problem. In Nicaragua, the second-poorest country in the Western Hemisphere, shrimp that wholesale for hard dollars are worth gold. About a year ago, thieves slipped onto the farm in mid-day, sliced a mesh drainage screen and made off with about 1,500 pounds of shrimp before being noticed.

Cummings grabbed an AK-47, Penalda his Glock handgun, and the two men took off through the mangroves chasing the intruders. All they found were footprints in the muck as the sound of an outboard motor, speeding towards Honduras, faded into the distance.

Today men dressed in dark blue uniforms and armed with rifles patrol the property. That hasn't stopped the poaching. In September, four men with cast nets had 400 pounds of shrimp hauled out of a pond before security chased them away.

Nicaragua's uneasy progress

As Nicaragua lurches toward the future, it retains vestiges of the past. Though the Sandinistas have been out of power for a decade, the party known as FSLN still holds more than a third of the legislative seats.

In Chinandega, Sandinistas briefly occupied two banks on payday in late August before being run out by local police.

At a busy intersection in Managua, a tall bronze statue of a worker raising a gun stands as a monument to the revolution with a message from its donor: "Iran Till the End."

And deep in the countryside, where the roads are occupied by more pigs and horses than cars, a message from the FSLN is emblazoned on the only brick building within miles. Todo sera mejor -- "All will be better."

The current administration of Arnoldo Aleman is fighting back with propaganda of its own. Billboards along main roads boast Obras, no palabras -- actions, not words -- as they tout the government's aggressive program of building roads, extending power lines and providing clean water. Much of the work is being financed by U.S. and other international help after Hurricane Mitch.

People are still divided about the meaning of the 10-year Sandinista rule. Jaime Montealegre, 65, manages Sahlman's landing site, a 220-acre parcel on the muddy-colored tributary that leads to the farm. For 34 years, he ran an Esso station in Chinandega -- through Somoza, the Sandinistas, and finally, the election of Violeta Chamorro.

Montealegre recited the indignities he endured under the Sandinista regime: Gas supplies were rationed, the government set prices and operating hours. Worse yet were the Cuban cigarettes.

"They were ugly and had no filters," said Montealegre, who drives a a stripped-out Russian van around the landing site's washboard roads.

Asked if he ever considered leaving during the Sandinista years, Montealegre, who lived in New Jersey in the late 1950s, scoffs. "Hell, I figured they should leave first. And they did."

About an hour down the road, in the little town of El Viejo, the FSLN is memorialized in the plaza, where there's a granite monument to one of the party's founders. Around the corner, in a store the size of a walk-in closet, sits Ignacio Bustos, a 46-year-old former Sandinista functionary.

Bustos sells ice cream and Pepsi whenever someone wanders into his shop, just a few steps from the main market. But business is slow, with too many underfunded shop owners in town competing for too few cordobas. Bustos said his life has not improved under the Aleman administration. People are consuming too many imports, he said, and no one can save money or own a home.

"We've lost the beautiful things of the revolution," said Bustos, as his 6-year-old daughter climbed on his lap. "I think Aleman is corrupt, worse than Somoza ever was."

Bustos complained that Sahlman's processing plant, a few miles from his store, sometimes smells and should have been put farther out in the country. Then he conceded that he hasn't heard anything bad about the plant, which employs about 250 people, many from his town.

"When Mitch came through two years ago, the factory helped us out," Bustos said, almost grudgingly. "I had 3,000 cordobas worth of ice cream here that would have melted. The plant gave me ice for free."

'There's no other work here'

Workers, mostly women, start arriving at Sahlman's plant before dawn, settling like birds on the low concrete curb outside the gates, waiting to find out if there's work for the day.

One morning in late August, five women have arrived by 5:30 a.m. They've walked an hour to get there. Three fume-spewing trucks have already rumbled through the gates, bearing bins full of shrimp. There will be plenty of work today.

But the pay pales by U.S. standards. The fastest shrimp deheaders, the best paying job on the floor, earn about $35 to $48 per week. Francesca Martinez, 49, has worked at the plant for three years and said deheaders haven't had a raise since she started.

"There's no other work here, other than to be a domestic," she complained during a lull. "But food, water and electricity are so expensive."

Jaime Garcia, a 20-year-old who is in quality control, sees opportunity to advance with Sahlman. Garcia, a native of El Viejo, returned in June after two years at Santa Fe Community College in Gainesville, studying aquaculture and seafood processing.

"I got that scholarship hoping I'd be able to come to work here," Garcia said. "It's a good salary and a nice working environment."

Dr. Steve Otwell, a food scientist at the University of Florida, has visited more than 100 shrimp processing plants around the world. He characterizes Sahlman's plant in Chinandega as one of the best.

"It's well above average in their commitment to the handling of the product," he said. "They haven't cut corners, they pay attention to sanitation in everything from the hand-washing to clothing to personal hygiene. And they pay attention to training their employees, who understand what they're doing."

The shrimp plant is his life

Tommy Guerrero runs Sahlman's plant in the shadow of San Cristobal, a volcano that occasionally carpets the countryside with ash. Guerrero is a U.S. citizen who was born in Puerto Rico and has a wife in Lakeland. He has managed shrimp plants all over Latin America, from Colombia to Honduras to Ecuador. He also once managed a Sahlman processing plant in Lakeland, which the company sold in 1997.

Two years ago, just days before Mitch hit, Guerrero moved to a comfortable ranch home right behind Sahlman's plant outside Chinandega. Now the plant is his life.

Dressed in a white lab coat and white rubber boots, a cell phone constantly to his ear, Guerrero seems to be everywhere. At the plant's reception area, where a fork-lift operator wheels blue bins holding 900 pounds of shrimp from trucks into the plant. On the factory floor, where workers in blue aprons line the grading machine and those in green aprons snap off shrimp heads faster than the eye can follow. On the loading dock where Nicaraguans in snowsuits and gloves are rolling 44,000 pounds of frozen shrimp, bound for Vigo, Spain, into a refrigerated truck.

On the last day of August, Guerrero, 56 years old and ramrod straight, moved nearly 100,000 pounds of shrimp through his plant, working two shifts. The job was complicated by the fact that the shrimp came from 10 different farms.

Each farm's harvest has to be handled separately, carefully marked and tracked from the minute the bin comes in the door to when the shrimp are packed in 5-pound boxes, bound for the freezer. Guerrero charges a processing fee based on packed weight -- about 41 cents a pound for deheaded shrimp, shell on. He also buys about one-third of the product that comes through the plant. In late August he was paying $5.90 per pound for shrimp sizes averaging 36 to 40 per pound, a size that is considerably smaller than Sahlman's ocean catch.

Guerrero guarantees his price for a week. Though shrimp prices are up over the long run, they fluctuate in the short term due to supply and demand. In late August, prices were on a downswing due to big harvest by Mexican fleets.

Since weight is all-important -- to both the shrimp processor and the producers -- Guerrero insists that at least one representative from a farm must be on the factory floor while its harvest is being handled.

"I don't want them to come back to me later and tell me something is wrong," he said.

Maintaining good relations with other producers is critical as the plant strives to run at full capacity. Sahlman has developed a program to help support the local shrimp cooperatives, small family-run farms that have trouble buying feed in bulk and a hard time making it through lean years.

The company loans the farmers money to buy feed at the beginning of a growing cycle; in return, the farm commits to process its harvest at Sahlman's plant and give Sahlman first option to buy the product. About $100,000 was loaned out in the first growing cycle this year, with individual loans averaging $2,000.

"If we help raise production levels, everybody benefits," Cummings said, dismissing the suggestion that his company would be better off to let the coops fail, then buy up their concessions. "One outside investor did that and there was plenty of bad blood as a result. We have enough attention already as the Big Gringos. And we have plenty of work to do with the concessions we've got."

The challenge to turn a profit

Four years into Sahlman's money-draining Nicaraguan endeavor, Cummings is under pressure to produce. And he isn't used to losing.

For 18 years, the 6-foot-4, solidly built Cummings, was in charge of logistics for high-performance auto teams on international circuits such as the Paris-to-Dakar race. His team won two world championships. Being defeated by a shrimp -- or a deadly virus or a hurricane -- isn't an option.

So far this year, Sahlman's plant is well on its way to a positive cash flow, as long as trucks keep pouring through the gate with shrimp and distributors keep buying the frozen product.

Though one section of the farm has been scattershot with white-spot virus, which is harmless to humans, the other two parcels look promising. Cummings has been experimenting with smaller ponds, new larval strains and different feeding techniques. Early results from four test ponds have been encouraging.

But things change quickly with Mother Nature.

In late August, Cummings was disgusted to see birds plucking dead shrimp out of a pond that had looked healthy just days before. Though the shrimp were only halfway through their growing cycle, they had to be harvested immediately or lost.

At dusk the next night, Cummings and a crew of 15 were under a big spotlight, pulling shrimp out of the pond on the falling tide. Two men, waist-deep in the tidal stream, hold a 15-foot-long net while the harvest washes through a concrete tube draining from the pond. As the net fills, they open one end and empty it into a crate, which another worker races to an ice-filled container on the muddy bank.

Dead from the icy shock, the harvest was then sorted: blue crabs into a bucket for the workers; slippery yellow pico de oro fish flung into the mud; shrimp into a basket, then to a crudely hung scale. Next stop, a 5-foot-tall bin full of ice on the back of a truck.

The men work quickly, whistling and yelling over the roar of the water, harvesting 100 pounds of shrimp in the first hour. By midnight, Cummings has seen enough to tell him the crop is healthy and surprisingly large.

A buyer had offered to buy the harvest for about $10,000 for sale to a French distributor. The pond would still be a loss, but not as big as Cummings had feared.

Leaving the farm, Cummings rousts the launch driver, shoves the boat down the rough rock bank into the fast-falling current, then hoists himself over the prow. On the shadowy dock, a security guard raises his Winchester in a half-hearted salute.

The night is overcast, the sky an inky black, the mangroves along the river bank slightly darker, jagged against the sky. The driver guns his Mercury engine, slips effortlessly around the river's bends and into the wide opening that flows into the Gulf of Fonseca and the Pacific beyond.

Cummings stands in the bow and looks back at the farm. In the distance, the lights of the harvest glow like a beacon in the night. With luck, the farm will make money this year.

"I've learned to do what I need to do to get the job done," said Cummings, who was hospitalized with high blood pressure two years ago. "It's not as perfect as in the States, but I'd be dead if I expected perfection."

Postscript

By mid-October, all but about four of Sahlman's shrimp ponds had been harvested and the healthy ponds outnumbered those hit by virus. Total harvest for the four-month cycle will be about 250,000 pounds, well above last year's total from two cycles.

Meanwhile, the plant has been handling record volume, packing 696,000 pounds of shrimp in September.

Experimenting on the farm with aeration pumps, new feeding techniques and a different larval strain have paid off, said Marty Williams, Sahlman's vice president in Tampa.

"We got our direct costs back, plus some, and we learned a lot," he said. "We're committed to restocking the whole farm, plus an additional 50 or 75 acres, in January."

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