Sustainability | March 2010 | By Blair Chancey

His Personal Crusade

Steve Phillips, president and CEO of Phillips Seafood Restaurants, lived through the destruction of the Chesapeake Bay, and he’s vowed not to sit by idling while the same thing happens in Asia.

This month will mark the 20th anniversary of a local East Coast publication called the Bay Journal. When it published its first issue, the main headline proudly read "Taking a new look at an old goal," referring to the 1987 Chesapeake Bay Agreement to reduce nutrient pollution in the Chesapeake by 40 percent by the year 2000.

The publication, like many in the news industry, has since changed. But much about the publication’s coverage, according to its editor Karl Blankenship, has not changed over the last two decades. After all, the conservation of the Chesapeake Bay is still a priority among environmentalists in the area, and there continue to be public and private efforts to save the bay.

While QSR has no ties to the Bay Journal (at its creation, QSR did not even exist, and its publishing company was creating medical journals and the KFC franchisee quarterly), the bay has ties to many QSR readers. One specifically is Steve Phillips, president and CEO of Phillips Seafood Restaurants, a chain of six quick-service and 11 full-service locations.

Just one year after the “old goal” referenced in the Bay Journal was established, Phillips embarked on a trip that would change his then-75-year-old seafood company and eventually the entire seafood industry forever.

Phillips, a fourth-generation bay resident, left his familiar waters and went to Asia, where he set into motion an international economy that still booms more than 20 years later. That was 1988—three years before the Bay Journal was first published, 34 years after Phillips’ family opened its first restaurant in Hoopers Island, Maryland, and the year he first realized his beloved bay was in trouble and that he had to look elsewhere to source the crab for his restaurants.

“There used to be 450 oyster shucking houses along the Chesapeake Bay, and now there’s one left.”

“My grandfather on my mother’s side was a Chesapeake Bay waterman, so he was a crabber in the summer and a fisherman in the winter,” Phillips says. “As a young kid, I used to go out with him to catch oysters. The Chesapeake Bay was a tremendous bounty of seafood with the oysters, fish, and crab. As a young boy, I never thought that would run out. I said, ‘This will be here forever.’”

Unfortunately, as most know, Phillips’ childhood prediction did not come true. A combination of overfishing, lack of governmental protection of the area, and overdevelopment along its coasts nearly destroyed the fragile body of water and the ecosystems it housed.

“Within my lifetime, I’ve seen a total erosion of our resources,” Phillips says. “There used to be 450 oyster shucking houses along the Chesapeake Bay, and now there’s one left. The oysters have disappeared, the fish have disappeared, and the crabs have diminished and struggle to hang on every year.”

That total erosion of resources led Phillips to look elsewhere for his crab. “Twenty-two years ago, when the prawn industry was in its infancy in Asia,” Phillips says, “I was reading an article about it, and there was a photograph attached to it with a little basket of crab in the corner of the photo. So I said, ‘My gosh, they have crab in Asia!’”

The rest isn’t exactly history; instead, it’s more of a repeat of history. After Phillips flew to Southeast Asia, saw the crabs for himself, taught the local fisherman and their wives how to crab, and established crabbing standards (like not buying female buried crabs or any crabs smaller than five inches), the competition came and changed the game and the local ecosystems.

“The competition didn’t abide by the rules and would buy any size crab and would buy the female buried crab,” Phillips says.

The repeat of history soon followed as Phillips began witnessing major reductions in Asian seafood resources, like a 24 percent decrease in exports in Indonesia in 2008. “We have to do something about it before it’s too late, because on the Chesapeake Bay I’ve seen it happen in my lifetime, and in Asia I’m seeing it happening now,” he says.

But for Phillips Seafood Restaurants, a sustainable fishing industry isn’t just one where there’s an endless and self-sustaining wealth of resources. It also factors in socio-economic elements.

“A sustainable fishery should be one with stable stocks, and there are community pieces as well,” says Ed Rhodes, the U.S. director of aquaculture and sustainability at Phillips. The company has another director on site in Asia. “The fishermen themselves need to be treated fairly. There’s the whole economics; the whole chain needs to be sustainable.”

While that sounds easy enough—simply price crab products served to U.S. customers at a premium if they are labeled “sustainable”—Phillips is finding it’s anything but. Some seafood companies are vowing only to purchase Marine Stewardship Council–certified products, in which there are only 20 fisheries in the world participating. Phillips, whose company is the U.S. “pioneer” in the region, believes his company has obligations to the fisheries it’s been working with for the last two decades.

“In a fishery where we are an active player and where we can make a difference, we really want to stay with that fishery rather than abandon it,” Phillips says. “If we were only dealing with certified material at this point, and that crab fishery isn’t certified, our corporate decision might be to walk away from it, but our responsible decision is to stay engaged and invest in the fishery.”

“A sustainable fishery should be one with stable stocks, and there are community pieces as well.”

Rhodes explains that many local fishermen find various sustainable certifications too expensive, and they are unable to afford large-scale sweeping improvements all at once.

“Until we have some numbers we could probably say, ‘Well, we don’t know if the fishery is being overfished,’” Phillips says of potentially turning a blind eye to the problem. “The bottom line is that we’ve seen a reduction in crab resources in Indonesia, and those are signs of overfishing.”

Armed with the company’s experience with the dwindling resources in the Chesapeake a quarter century before, Phillips and Rhodes went to work organizing the disjointed economy of seafood producers in Asia. “We have a lot of competition these days who produce crab in Indonesia and the Philippines, and we realized that Phillips couldn’t make this effort alone,” Phillips says.

As a result, Phillips formed the APRI—the Blue Swimming Crab Producers Association in Indonesia—and the Philippine Association of Crab Processors (PACPI). Both were formed with the main purpose of creating and enforcing sustainability measures in an industry that before had none—not even from the government.

“What I’m trying to convince these associations to understand is that we have to get the governments to realize that we have some very serious resource issues with the crab,” Phillips says, “and that they need to pass national rules and regulations to manage the industry.”

Among those rules and regulations are the protection of female buried crabs, which can have 2–3 million eggs in their egg clusters, (Phillips says fishing them is like “destroying the future of our industry”) and crabs that are smaller than 5 inches, a measure meant to ensure the crabs have passed their breeding potential.

“We need to stay aggressive,” Rhodes says, “but not aggressive-ugly-American. We put pressures on them to move forward. Certainly these are expensive programs, and there is push back because of that and because it requires effort. But we’re putting resources together with that pressure to make some things happen.”

But Phillips is not content with organizing associations that merely make recommendations. There’s also money involved—to be precise, a tax.

“We want the association to support a resource-management tax,” Phillips says. “Each of the crab processors would have to go to the association if they wanted to export a container, and they’d need an export certificate. They’d have to pay a half of 1 percent to the association to get the certificate.”

The revenue from the tax would be used to pay full-time positions within the associations and would fund grants for university research in the region. “We need to know, in order to have the appropriate rules and regulations, exactly how the crab population works and acts,” Rhodes says, explaining that the 5-inch regulation is more or less a guess in terms of a breeding guideline for the species.

“Until we know better what size crabs breed at, how many times they breed before getting to that 5-inch size, we really can’t say what kind of regulations to put in place,” Rhodes says. “All of the biology and ecology research needs to get done.”

And even that step in the process presents its own unusual challenges. While millions of research dollars have been pumped into the universities surrounding the Chesapeake Bay for its exploration, very few resources have been dedicated to the same type of studies in Asia. “In Asia it’s not like the universities have marine programs and boats and are ready to go out,” Rhodes says. “There’s a lot of infrastructure that’s not there and we would need to provide to get the program going.”

In addition to partnering with universities for research opportunities, the organizations are also hoping to begin a college internship program in the near future that would engage the next generation in the issues of sustainability. Beyond that, they’re even developing Good Fishermen and Bad Fishermen coloring books in hopes of reaching children even younger.

“We think the youth and the young people in the schools is an important way to go,” Rhodes says. “So we target the fisherman, but we think we’re going to get more traction with the children’s programs.”

The company’s efforts abroad have also, in part, been applied stateside. In 2009, at the Boston Seafood Show, Rhodes and Phillips gathered about 20 U.S. seafood companies and explained the need for increased research, regulation, and respect for sustainability in Asia. “Virtually everyone in the room signed the pledge that fateful day in Boston a year ago,” Rhodes says, “and that was the beginning of the crab council, now formerly part of the National Fisheries Institute.”

Despite all of their efforts, Rhodes and Phillips say the process to save an entire economy and ecosystem simultaneously is slow-moving at best.

“I had written a nasty-gram to someone in Asia, putting a lot of pressure on them to move forward, and my council members said, ‘Ed you need a tranquilizer. Take a deep breath and rewrite your letter,’” Rhodes says of trying to develop a realistic timeline for the company’s goals. “I was asking, ‘OK, where are we? A three-year timeline? A five-year timeline?’”

While the schedule for the potential regulations and the rejuvenation of the local species is still unknown, both men remain hopeful. “If we can take our experience from the Chesapeake and use that as the canary in the mine shaft, then we can pull this off,” Rhodes says. “The crab is resilient if the habitat is there. We’ll get there.”