Odd Lots - The True Story Of America's Catfish Gold Rush

Episode Date: June 9, 2017

America has had many well-known booms and busts in its history: Real estate, internet stocks, Beanie Babies... too many to list. But did you know there was once a catfish gold rush? Yep, starting in the 1970s, farmers in the south, in states like Mississippi, Alabama, Louisiana, and Arkansas started devoting thousands of acres to catfish farming in the hopes that catfish would become America's next great white meat. Joining us on this week's Odd Lots is Mike McCall, the editor of the Catfish Journal, and the author of "Catfish Days: From Belzoni To The Big Apple," to talk about how the boom happened and why it eventually collapsed.See omnystudio.com/listener for privacy information.

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That's vanguard.com slash audio. All investing is subject to risk vanguard marketing corporation distributor. Put knowledge to work and grow your business. with CIT. From transportation to health care to manufacturing, CIT offers commercial lending, leasing, and treasury management services for small and middle market businesses. Learn more at cIT.com. Put knowledge to work. Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wisenthal. And I'm Tracy Allaway. Hey Tracy, you know what I was thinking about recently? No, what? Remember that time, remember that time you came over and had to be. dinner at my house? Yes. Yes. You promised that you would make me dinner and the dinner you made was

raw fish. So really, you didn't make much. I said, I said, uh, I said, is there any kind of food that you don't like? And you're like, well, I'm not really into fish. Yeah, yeah, and you made me raw fish. Thanks, Joe. But I made fish anyway. I, I apologize about that. So after all this time, like a year and a half later, whatever, a year later, it sort of dawned on me that that was kind of rude. It was pretty good, though. It was okay. Okay. Okay, it was. Yeah, I was. Yeah. Thank you. I'm glad you liked it. Okay, good. Well, that's the perfect seg, because today on our podcast, we are going to talk about fish. So this is the podcast equivalent of you serving me fish for dinner.

Well, it seems like we have a lot of episodes where I come up with something and then you're like, this isn't really my thing. But they usually turn out kind of well like that dinner did. So it is kind of like, that equivalent, except this time we're not talking about raw fish. What kind of fish are we talking about? Well, let's back up real quickly because obviously in markets, we talk about commodities all the time, and we talk about, you know, we talk about cattle, and we talk about wheat, and we talk about corn and other things. Pork bellies. Yeah, exactly right.

We don't really talk about seafood all that much. No, is there a thriving seafood commodity market that I should be aware of? Well, not really, but did you know that there was once sort of a bubble in or a gold rush in U.S. seafood? In U.S. seafood? I'm really, like, I'm trying to scratch my head and think about which particular seafood it could possibly be. Well, let's just cut right to the chase. We are going to be talking about the delicious, one of my favorite fishes, the catfish. and it turns out that there was once a sort of catfish bubble in America. I know. Hard to believe, right?

Well, we've seen, I mean, we've seen bubbles in lots of things. The Beanie Babies episode we did was one of my favorite bubbles of all time. So I can believe it. Who exactly is going to be discussing this with us? Well, we have the perfect guest today. his name is Mike McCall and he is the editor of the Catfish Journal a publication on the Catfish Industry

and he is the author of the book Catfish Days from Belzona to the Big Apple which is all about America's the time we had a catfish gold rush in America so let's bring in Mike. Mike McCall thank you very much for joining us. Thanks for having me. So did I introduce this right?

Is it fair to say that there was one a time in America when we once had a catfish bubble, so to speak? I think that's correct. The way the business came on in the 1960s and started voting in the 70s, and really the 1980s and 90s, there was just a big heyday in the business. Everybody had to get into it, and of course the business is mainly in the south, but people are coming from all over the country. And if you look at the statistics, up and until around, and then started going down.

So you mentioned that it mostly boomed in the South. I was recently in Mississippi where I had some delicious fried catfish at the Taylor grocery outside of Oxford, Mississippi. So tell us the story. Why did people get so excited that they felt that they had to get into the catfish business back in the six. 60s and 70s. Well, it's DC. Joe, your choice of topic is going to backfire on you because I want you to know I was born in Arkansas. My grandmother lived there pretty much most of her life. And I remember as a young kid going to some catfish farms and looking at the catfish. We also went to chicken

farms, but maybe that's a topic for another episode. So, Mike, in terms of the catfish farms, What was the sales pitch? And was it was the sales pitch aimed at, you know, small operators, like small farmers to get them into the industry? To get into catfish farming. They just gravitated to it. They were looking for something different. Your row crop, you know, if you had land and little money, it's an expensive thing to get into. But people just started gravitating to it.

Like Reader's Digest has a story on catfish farming, and I think about 73, and millions of people read that. The members of America, they got thousands of letters. Everybody wants to get into it. So really, people just wanted to get into it. Now, every great boom or bubble has a story, a dream attached to it. And in the case of catfish, people really thought it was going to become potentially as big as chicken, right? it was going to be the next great American white meat. People all around the country would just make it a staple of their diets.

Right. That's true. Contract with land to have their own feed meal. So it's more of a market driven. It's just stock and a processing plant. Just kept. So, Mike, before we get to that point, if I was someone in Arkansas and, say, the late 1980s and I was interested in getting into the catfish industry, what would I actually have to

do in order to participate and like what kind of investment would I have to make how would I actually begin farming catfish great question well you'd have to have a pile of money for one thing and and some land Arkansas are you talking about like the southeastern part of the state uh well I was born in Blythville but my grandmother was in Hope Arkansas for a long time I'm glad we're getting into specifics I wouldn't want to have a discussion about the economics of catfish farming in Arkansas without pinpointing the region. Well, back in those days, you would talk to people's service about the land you own, would it be good for growing catfish, a plenty of water, funding to build ponds. In some cases, you might have had to buy stock in a processing plant,

which gave you, that's kind of something that a lot of people did not think about. Pretty don't happen anymore. Let's get even more specific, because our audience is pretty nerd. here, and I think they'll enjoy it. So let's talk about how many acres of land you could get, how much, how big of a pond you would need, and the unit economics in terms of the cost of feed for X amount of catfish protein relative to say how much that same energy or feed costs would get you with, say, chickens. In the early days, some of these catfish ponds are to manage. When I say smaller pines today, they're 10 to 15 pounds. The old number that's always been banded about, it's going to cost you about $3,000 per acre to get into the business.

Now, that includes your levies. You're going to need tractors and trucks. You're going to need aereration equipment to produce oxygen in the ponds. you're going to have to, of course, stock your pines with small finglings that you're going to buy most likely from somebody else. So let's say you stock your fingelings, then, of course, you have to grow them. And in the case of catfish, it's going to take you roughly a year and a half to grow that fish to maturity. You're going to pour in the feed in there, which that's dependent on your grain costs, which go up and down. It's been very high, and lately it's moderated.

So you're going to be spending all that money, and, of course, on people, too. You've got to have people to. And then, you know, in a year and a half or so, the world can change. Prices might be down. It might be up a little bit. Grain prices will be up and down. There are a lot of variables. And, of course, at the end of the cycle, you need to sell your fish to a processing plant.

And the processing plant owner and you might not be on the same page. Of course, you want to move the fish in an ordinary way, but depending on the market, depending on how much fish are out there, it can be a really different production ever. And yet, the fish prices for the farmer was the lowest in 25 years. So things happen. today inventories are managed better you don't really have that oversupply of course we've lost so much of the acreage it's a it's a more manageable situation now Mike before we get to the overproduction and

the bursting of the bubble I just want to press you on this point because the description you just gave of how to get into catfish farming it's not a cheap investment and it's not an easy investment, it sounds like you have to be pretty serious about it. So could you just dive in a bit more into the psychology of the people who got into this industry and whether or not, you know, were there companies or like sales reps that were trying to push them into catfish farming? I don't believe there were actually sales reps. Well, there were people during the early growth years, I guess the processing plants were trying to get people involved in catfish farming because they needed fish. And that was the dynamic at the time.

When things started going better, the bankers started pushing people to get into catfish because in the south your row crop prices were really low. And there were people with land, and they wanted to get something better. And catfish farming, your yield per acre, back in those days, a guy could raise catfish. I don't know. But for a year, he could sell that. To a cotton field or soybean field or something, the return was much higher. So that was a real financial incentive to get into it.

So I don't know of that. That answers your question. It's just a simple matter of people wanting to get more out of their farm. And a lot of them were diversified. They continue to do crops. But here are some catfish that they could grow and could really churn some money at the time. It was just another market to get into for a farmer. I feel like the detail about the bankers encouraging farmers to get into catfish is a sort of crucial, classic stop on any bubble.

I want to take a quick break for a word from our sponsor. Put knowledge to work and grow your business. with CIT. From transportation to health care to manufacturing, CIT offers commercial lending, leasing, and treasury management services for small and middle market businesses. Learn more at cIT.com. Put knowledge to work. And we are back with Mike McCall. He's the editor of the Catfish Journal, and he is the author of the book Catfish Days from Belzona to the Big Apple. We are talking about the time, the true story of when America actually had a catfish bubble, mostly in the south. I want to get very soon to the sort of bursting of the bubble.

But before we do that, I want to ask you, you know, in any great boom or bubble or gold rush or whatever it is, you're always going to find some colorful, larger-than-life characters who really defined the moment. From your view, who are some of the most interesting people, the prime movers of the catfish boom? Well, in the Mississippi Delta, which is a major agricultural area, there were some interesting folks who got into that business. But there are also a lot of people who came from outside of the business and thought they could make big money. If you recall how I started off the book, Joe, with the group up in New York, that decided they could see the growth of the industry. They could see the slick advertising. This is late 80s.

They jumped into it, raised $20 million or so, came down to South Texas, built a farm, built the process, down the tubes. So that was that dynamic going on. Insofar as individuals, I have to be careful about mentioning names. Sure. So I'll try to walk around that. Money was flowing everywhere back in the heyday, and I say that 1980s were pretty much of the end of the, probably the heyday, up until around 1990. People were spending money in any way they can that the profits were so big.

There were lots of parties. There were lots of traveling. I'll explain it. It was just money was going everywhere. And it appeared to be no end to it, too. And when they looked around one day and realized they didn't have money to buy feed because they weren't selling any fish. And then boom, I guess that's when.

things down the hill. So, Mike, what was the exact tipping point for things to go downhill? Was it just over production, or was there something else? It was basically two things. Production was overshot the market. And then you had cheap fish from Asia and started coming in, mainly from Vietnam, some from China. And they took over the markets when the industry would,

overproduce. Eventually, things would tighten up, supply would tighten up, and they'd just keep on going. But this time, they lost their food, service, and it just worked out those inventories in the pond. And people drain their ponds. They couldn't do it anymore. Feed prices got very high. And they just couldn't hold on. That's why we've lost over half. In this point, you know, your banker's going to shut you down if you don't shut it down yourself. Do you have any stats in terms of how big the, either overall or specifically in a state like Mississippi, how much acreage was devoted to catfish farming at the peak and how much it's come down to now? In Mississippi, they had about 110,000 acres.

And today they're down. So they went from 100,000,000 acres to 35,000 acres in 2016. Arkansas, Tracy, went from 38,000 acres down to less than 5,000 acres. So people would just, you know, they just couldn't hang on. They had to do something. So what exactly happened to the farmers? And I'm assuming, you know, you were talking about the bubble at its heyday. You were talking about parties and lots of money flowing.

So I'm assuming there were some people who made, you know, a great fortune from catfish farming what happened to them when the bubble burst? The agents had to get out, and some of them had other means of income. They were growing the row crops. You know, the grain prices got very high. They could still make money off of that. The processing plants probably fared a little better than the farmers did. And they made in the worst year for the farmer in 25 years, he made $6 million that year.

and actually turned and made a bunch of more money. So there was still some money to be made, but for the rancen file farmer, they just had to get out. Some of them lost homes, you know. And the banks took over, some of them. Some of the farms were converted to the Wetland Reserve programs where they can make a little money off of that to try to go with return the, but yet some of them are just sitting there. Nothing. They're grown up. It weeds.

That is a depressing image. It kind of reminds me of some of the crazy boom time housing developments right before the housing crash in Florida and California and then revisited in 2009, 2010 in a state of disarray with weeds and decay and everything. We got to, you know, wrap it up here. But finally, so what's the state of the industry right now? Is it growing? Is it stable? I mean, you're still chronicling catfish at the Catfish Journal. So what is the equilibrium that had settled in that? It took roughly, I'd say about 2012 things began to stabilize. At its peak, the industry process, 660 million pounds, and around 2012 sort of gyrated between 300 million pounds and maybe 330 million pounds. So with a tight supply, prices have come up for the farmer.

and the process. Much growth. You might see a little bit. I'm hoping that you won't see it go down any further. I operate the bus in the family business. If there's nobody to come along behind you to take it over, basically shut it down. And there's a little bit of that that's going on too.

Mike, I have one more quick question. I don't like fish, but I know Joe does, and I'm sure some of our listeners do. Where's the best place in the South to eat catfish? jump into that. Too controversial. Taylor Grocer is a great spot. There are places all over.

And I leave in the Middorf story in the book, which probably has introduced catfish from the world because it's the gateway New Orleans. So there's some of the great places. And some from the... What's the name of the place in New Orleans again?

Well, Middendorf. You know, I talked about them in the book. And you might not have got to that point. But it's north of New Orleans on Interstate 55, and Manchak, Louisiana, a very famous place that opened in 1934. Ah, yeah. And they have special thin fried catfish that's wonderful. But twice a minute, mention something about my liking fish. Oh, no.

Americans are not fish eaters. Unfortunately, that's part of the problem, compared to. The most every country in the world, Americans are at a low end of a scale on eating fish. For example, we eat roughly 15 pounds per capita. That's everything. That's shrimp, tuna, caters, everything. Just for example, some of the years more than twice that amount, probably about 35 pounds per capita annually. And then he did into other countries.

They're much higher in Asia. Japan was about 120. You know, if people ate one more pound in the U.S., that'd be a game changer. Well, hopefully today's episode does a little bit in furthering America's increased consumption of fish. Mike McCall, the editor of the Catfish Journal and the author of Catfish Days from Belzona to the Big Apple. Thank you so much for joining us on the Odd Lots podcast. Fascinating story. Really interesting book.

I appreciate you coming out. Thank you so much. So, Tracy, I think we really have to do an Oddlotz road trip to Bindorf's in Manchak, Louisiana. Oh, I am so there. I will even eat fried catfish in order to do that. You know, have you had fried catfish? Because a lot of, like, I have family members who don't like fish, but they totally make an exception for fried catfish. Because it's not fishy when you eat it.

You know, it's like, it's just good fried food. I think, like, for me, the thing about fish, it's more the idea. It's more the like scaly, slimy, slimy fishies that you are eating. Catfish isn't like that, so. Well, anyway, I'm trying to get over it. I did go to your house, so you'll have to invite me over for more fish at your place. Sounds good. But also, I do really like that story because it makes me think that there's probably numerous sort of booms and bubbles and gold rushes

and whatever you want to characterize it as sort of that we never hear about. We know about the big ones, whether it's stocks or the internet bubble or even Beanie Babies. But I suspect there's just numerous more out there for the finding. Yeah, you know what I was thinking about while he was talking about catfish? Do you remember a couple years back there was a lot of talk about buying alpacas and farming alpacas? That was the only sort of agricultural equivalent that I could think about. But the thing I love about all these bubbles is the psychology is, you know, it varies a little bit, but it's almost always the same. It's, you know, people get kind of lured in by the promise of higher returns.

And eventually there's so much money pouring in that you reach some sort of tipping point. Right. I guess when you get to the tipping point, that's the most interesting thing, right? And if you get the timing right, then you can become a millionaire. And if you get the timing wrong, then you lose everything. Also, how awesome do you think like a catfish party was in the 80s? Like, don't you think I just want to be at one of those parties so bad right now. So you've read the book, right? Are there photos in the book?

I want to see photos of a catfish party. There are more forms, photos of farms, not so much photos of the parties themselves. But in my mind, they're the most fun parties in the world. Yeah, I'd love to see that. All right. Well, on that note, so Tracy, you have a standing. offer to come eat catfish anytime. I'll make some. But until then, this has been another episode of the Odd Lots podcast. I'm Joe Wisenthal. You can follow me on Twitter at The Stalwart. And I'm Tracy Alloway. I'm on Twitter at Tracy Allaway.

And you can follow our fabulous producer, Sarah Patterson, on Twitter at Sarah Pat with two teas. Thanks for listening. Put knowledge to work and grow your business with CIT. From transportation to health care to manufacturing. CIT offers commercial lending, leasing, and treasury management services for small and middle market businesses. Learn more at CIT.com. Put knowledge to work. The news doesn't stop on the weekends. Context changes constantly. And now Bloomberg is the place to stay on top of it all. Hi, I'm David Gura. Join us every Saturday and Sunday for the new Bloomberg this weekend. I'm Christina Ruffini. We'll bring you the latest headlines, in-depth analysis, and big interviews, all the stories that hit home on your days off.

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