China’s Pearl Trade

Shell Shock: China’s Pearl Trade Faces Crisis

NEWS BULLETIN: September 25, 2007 from www.coloredstone.com

By David Federman, Colored Stone Editor-in-Chief

Forget lead paint on toys. Forget poisons in pet food. China has got water problems so severe the government is pondering wide bans on its major aquaculture industries, including fish and pearl farming. “Thirst comes first,” says a West Coast pearl dealer returning from a recent buying trip to Hong Kong.

Two tropical storms and four days of steady rain between August 9th and 12th dropped salinity levels so low in Chinese bays that fish—as well as pearl oysters—died by the millions.

Last May, the algae that is a byproduct of widespread use of pesticides and fungicides to protect oysters, formed a carpet of green so thick in Taihu Lake pearl country on China’s east coast that officials had to turn off the water supply to 2 million residents. Only after two weeks of purification treatment was the lake’s water judged safe enough to drink. In the mean time, the price of bottled water had quintupled and many locals still complained about stench.
Algae blooms, as they are called, are and have long been a common occurrence in China where fast-track, often anarchistic entrepreneurs ignore pollution laws.
Consequently, water emergencies are a fact of life. One of the provinces hardest hit by water woes is Hubei in central China, an up-and-coming production center for freshwater pearls. Since 1949, overuse of the region’s once-pristine lakes has reduced their number from 1,000 to 300. Fearing central government intervention, the province took state law into their own hands on August 11th, and ordered a halt to all new pearl-farming leases and a clean-up by existing farms.

After two tropical storms killed off tens of millions of nucleated oysters in southeastern China between August 9th and 12th, farmers prematurely harvested the dead mollusks and tried, unsuccessfully, to find useable pearls.

Perhaps because Hubei accounts for only 15% to 20% of Chinese freshwater pearl crops, the ban is largely being ignored by farmers elsewhere as a local matter. “Warnings have been made,” one farmer in another province acknowledges in an email to a New York dealer, but then he denies their importance by saying, “Maybe in 10 to 15 years, we have to worry.” Another far-away but less short-sighted Chinese farmer writes to a West Coast dealer that the time to worry is near if not now. “I am afraid other provinces will follow or the central EPA will give an order to ban pearl farming,” he continues. “Some strict rules are coming. So I am already trying to collect pearls now, although there are little high-quality goods to be found.”
Most likely, it will take strongly enforced regulation to make China’s pearl farmers mend their ways. First, the industry is populous and decentralized. Second, it is spread out over many provinces. Pearl industry insiders say that Chinese farmers will simply move to pristine water areas in undeveloped states where they can pollute with impunity rather than comply with new rules in their home states.
That is why dealers like Betty Sue King of King’s Ransom, Sausalito, California, believe, “This would be a good time for China and pearl dealers in America to get on the Fair Trade bandwagon and encourage Chinese pearl farmers to adopt environmentally friendly codes of conduct.”
Other dealers think external pressure is bound to fail. “Cash not conscience is king in China,” says one. “What Americans think matters little to China’s pearl farmers. Regulation not education is what will change things.”

The Great Akoya Oyster Die-off

While a freshwater pearl crisis is still in the portent stage, sending strong signals of its immanence, a full-blown saltwater pearl crisis has arrived—and dealt a profound blow to future supplies of Chinese-grown akoya pearls. No, make that Japanese akoya pearls, since the Japanese buy the lion’s share of China’s akoya production, and mark it “Product of Japan” after processing.
But no matter from where they’re shipped, the akoya pearl market is facing perilous times.

When the tropical storms hit, they tore boats used by pearl farmers from their moorings and left shorelines littered with them.

Between August 9th and 12th, two tropical storms that hit China’s Leizhou (pronounced lay-zho) peninsula, which produces 65% of the country’s Akoya pearls, and completely destroyed all pearl crops there. “Freshwater runoff dropped salinity levels in the bays so low that the oysters couldn’t survive,” says Jeremy Shepherd of PearlParadise.com, based in Los Angeles. “I’m afraid there was a complete die-off of every nucleated oyster in the region.”
Since there are at least 500 farms in the area—many with, on average 500,000 to 750,000 seeded oysters—we are talking mollusk mortality numbers of at least 30 million. This die-off, say both Shepherd and Peter Bazar of Deltah-Imperial, East Providence, Rhode Island, will translate into acute shortages by spring and possible price increases of between 25% and 40%, depending on size and quality.
Will higher prices be permanent? Both dealers say they will last until supply once again matches demand. How long is that? Two years, they answer.
But that’s a worst-case scenario. “The Chinese are resilient,” says Shepherd. “Most farms are already reseeding and putting newly nucleated oysters back in the water. If China is spared any more disasters, we’ll see a swift return to normal.”
Shepherd is also encouraged by the central Chinese government’s pledge of substantial money to subsidize farmers’ purchase of replacement oysters and bead-nuclei materials. “This should speed recovery dramatically,” he says.