If all goes as planned,Del Monte will soon be selling its StarKist subsidiary to the Korean food conglomerate Dongwon, a "leading player" in the Asia-Pacific canned foods market.
So far, no one in the U.S. appears to be complaining about the loss of another great American icon, Charlie the Tuna -- a hipster pelagian so deranged and suicidal that he plunged into deep depression every time StarKist refused to haul him out of the sea and chop him into tiny bits. Sorry, Charlie.
The explanation for Del Monte's decision to unload struggling StarKist? Sharply rising prices for skipjack tuna. But unlike its better-known and higher-quality relatives, yellowfin and bluefin, skipjack isn't getting pricier because stocks are collapsing. The real problem appears to be the cost of oil. Fuel is now so expensive that many tuna fleets can't afford to do anything besides stay in port. Some 60 percent of the cost of canned tuna is related to catching it, so rising fuel prices trickle up the production chain with celerity. StarKist has raised prices, but consumers seem unwilling to pay a premium for canned tuna.
The impact of changing energy prices on global production chains is of endless interest to How the World Works, but there's more to the StarKist saga than just oil. StarKist is actually the last -- and largest -- American titan of canned tuna to abandon the United States and emigrate to the Far East. Chicken of the Sea went to Indonesia in 1988. A Thai conglomerate snapped up Bumblebee in 1989. The story of canned tuna is yet another parable of globalization, one in which changing energy costs, environmental regulation, trade liberalization and global labor arbitrage all play a role.
Martin Bogdanovich, a Croatian fisherman who emigrated to California in the early 1900s, founded StarKist. He bought a fishing boat in 1910, and parlayed it into a seafood empire, making a fortune selling canned tuna to the U.S. Army and in the process transforming Los Angeles Harbor's man-made Terminal Island into the largest tuna cannery in the world. His son sold out to Heinz in 1963, and Heinz, in turn, sold the subsidiary to Del Monte in 2002.
But California's reign over a global empire of canned tuna was not to last. A constellation of factors -- the endless search for lower labor costs, the biological oddity of life in the Eastern Tropical Pacific, where schools of tuna are usually accompanied by schools of dolphins (leading to mass dolphin murder as the tuna fleet industrialized its operations), and the availability of tax breaks in territories such as Puerto Rico and American Samoa all contributed to the decline of Terminal Island.
Although environmentalists hail the decision by the three big canneries not to accept tuna from the Eastern Tropical Pacific in the mid-'80s as one of the great victories of the environmental movement, one analyst, Achim Korber, writing in the European Journal of Political Economy in 1998, says the truth is not so simple. Korber argues in "Why Everybody Loves Flipper: The Political-Economy of the U.S. Dolphin-Safe Laws" that the real reason for the canneries' change of heart had to do with their changing modes of production. In American Samoa, for example, the minimum wage is only $3.30, the tuna fleets can scour the Western Tropical Pacific, where tuna and dolphins do not congregate together, and a production tax credit essentially abolishes any corporate income tax for cannery operations located there. Between 1979 and 1985, every major U.S. cannery on the mainland but one was shut down. Anti-environmentalists are quick to blame dolphin protection laws, but the real reason was that it was cheaper to abandon the U.S., with or without the dolphins.
But live by cheap labor and tax incentives, die by cheap labor and trade liberalization. California appears to have survived the decline of the canned tuna industry. American Samoa, however, has a lot less to fall back on. Business leaders are now terrified by the dual threat that American tariffs on imported canned tuna from South America will soon be lifted, and the production tax credit might be removed, thus annihilating its economic advantage. In Ecuador, for example, tuna cannery workers are paid 89 cents an hour. Sorry, Pago Pago.