The Juneau-based Sealaska Corporation looks to be expanding its move back into the Alaska fishing business in a big way via Seattle and China.
Seafood Source.com on Friday was reporting the regional Native corporation for Southeast Alaska was acquiring the majority interest in Odyssey Enterprise, Inc.
Odyssey specializes in frozen seafood products. The company’s retail brand is “Treasures from the Sea,” which features “wild caught” breaded pollock and wild, boneless, Alaska salmon filets.
The company’s website describes the latter as a “Product of USA & China/Value Added in Seattle, WA.”
China has become the go-to place for processing of Alaska salmon filets in recent years.
“A certain amount of Alaska salmon gets caught by Americans in Alaska, sent to China, defrosted, filleted, boned, refrozen and sent back to us. How’s that for food miles? We don’t want to pay the labor involved in boning fish and more and more of that fish that used to go make that round trip is actually staying in China because the Chinese are realizing how good it is, much to our detriment,” author Paul Greenberg told National Public Radio in 2014.
“The labor is so much cheaper that it makes the shipping cost-effective. When you ship things via freighter, frozen, the cost per mile is relatively low compared to, say, air freighting or train travel or truck freighting.”
Greenberg is the author of “American Catch: The Fight for Our Local Seafood. ”
Trying to pin down exactly how much Alaska seafood is going to China for processing is not easy. Now retired University of Alaska Anchorage economist Gunnar Knapp in 2013 pegged exports to China at about 60,000 metric tons of frozen pink salmon and 20,000 tons of frozen chum salmon.
In a Powerpoint presentation prepared for a fisheries conference in the Bristol Bay community of Dillingham in 2013, Knapp reported smaller exports of sockeye and coho salmon, and noted that much of the salmon shipped to China comes back to U.S. after processing.
“Especially during the past decade, almost all frozen pink salmon production has been exported, mostly to China. There has been a very dramatic increase in frozen pink salmon exports to China. Note that most of this frozen pink salmon is not being consumed by Chinese people!” he wrote. “Most of it is reprocessed in China into value-added products which are re-exported to the US, EU (European Union) and other markets. (This is also what is happening to US frozen sockeye and frozen chum exports to China.)”
The Seattle Times newspaper first reported the shift to Chinese processing more than a decade ago, but the move has been little covered in the mainstream media and ignored by Alaska media.
Sealaska’s investment in a company doing business in China is only more interesting in that it comes at a time when newly elected President Donald Trump is lobbying businesses to bring manufacturing jobs back to the U.S. But cheap Chinese labor has been the talk of the Alaska commercial fishing business for years now.
The new model
Sitka-based Silver Bay Seafoods, a company owned by commercial fishermen holding limited entry permits to work in Alaska’s state-organized salmon cartel, has been a leader in the shift to Chinese processing.
In 2007, with help from a $1.2 million loan from the Alaska Industrial Development and Export Authority plus another $900,000 from the City and Borough of Sitka, it opened a highly efficient plant where the heads are cut off salmon, their innards removed, and the carcasses frozen for later processing on the other side of the Pacific Ocean.
“The plant, specializing in high volume processing and freezing, focuses primarily on pink as well as chum salmon; they also process sockeye and coho,” the Juneau-based Capital City Weekly reported that fall. “Sold to domestic, European and Asian markets, employees will head, gut and freeze salmon. Concerning other types of seafood processing in the future, it will be a business decision, he said. The salmon is sold in numerous product forms such as salmon in a pouch and boneless and skinless fillets.”
Since 2007, Silver Bay has made enough profit to fuel rapid expansion. It now has plants in the Southeast communities of Metlakatla and Craig, in Valdez on Prince William Sound, in Naknek on Bristol Bay, and work is underway on a Ventura, Calif. plant that would freeze squid.
A major player in the Alaska seafood business in the 1980s, Sealaska sold its fish-processing, Ocean Beauty subsidiary to Indonesia based Ika Muda International in 1990. The Alaska company realized a nearly $15 million profit on the deal, according to the website ReferenceforBusiness.com.
The sale marked the successful end to what had been a near disaster. Only two years after Sealaska bought Ocean Beauty in 1979, the Alaska canned salmon industry was rocked by the death of a Belgian man who ate botulism-contaminated salmon.
“The Food and Drug Administration recalled all canned salmon packed in 1980 and 1981 from eight Ocean Beauty processing plants in Alaska,” Business Reference says in recording the history. “The parent company also had to endure a stumbling timber industry and extremely high interest rates in the early 1980s. The situation became so dire that Sealaska was on the verge of declaring bankruptcy by the end of 1982. The company managed to recover, due in large part to the performance of Ocean Beauty, which in addition to the botulism scare was able to overcome a collapse in crab stock and low salmon returns.”
This history overlooks the efforts of the late Sen. Ted Stevens, R-Alaska, to allow Sealaska and other Alaska Native corporations to sell their financial losses in the 1980s. The companies buying those “net operating losses,” or NOLS as they were commonly called, could then use the losses to write down their taxes.
“Within a few year of the tax break, many of the Native corporations had generated more than $1 billion in new capital, in essence refinancing ANCSA (the Alaska Native Claims Settle Act),” wrote Alaska historian Claus Naske in “Alaska: A History.”
For more than 25 years after the Ocean Beauty sale, Southeast-based Sealaska avoided an unpredictable Alaska fish processing business originally built on canned salmon but forced to change as consumer demands shifted to fresh or “fresh-frozen fish” and prepared meals.
But in May of last year, Sealaska bought an interest in “Independent Packers Corporation,” a small Seattle company specializing in prepared fish meals that consumers can pop in the oven or microwave.
“The reason we like the business is because it’s in the middle of the supply chain,” (Sealaska chief operations officer Terry) Downes told Alaska Public Media in May 2016. “They touch a lot of different seafood companies. They never actually own the resource itself, so they’re not exposed to commodity price fluctuations. So the earnings are more stable.”
Seattle-based Odyssey is a big step beyond Independent Packers. Odyssey supplies a multitude of seafood products to supermarkets under its “Treasure from the Sea” brand.
“Sold throughout North America, Treasures from the Sea is our retail seafood brand. While some of our most popular products include Parmesan Encrusted Tilapia and Breaded Flounder, we’re always developing and introducing new recipes to cater to changing consumer tastes,” the company’s website says.
The company offers a broad selection of salmon, halibut, pollock and flounder products.
Sealaska said in a public statement that it had agreed to terms with Odyssey and expects to close the deal in a few weeks.
Seafood Source reported “Odyssey’s Sockeye Spinach Feta Salmon Burger competed in this year’s Alaska Symphony of Seafood competition in the retail category, while its Seafood Cakes with Dungeness competed in the food-service category.”
The crab cake won a silver medal. There was no report on how the burger did.
Salmon burgers are thought to be one of the best growth markets for the fish processing business going forward. Both Trident Seafoods, a $2.6 billion business based in Washington state and a huge player in Alaska, and the now-Thailand based Chicken of the Sea, known to many American by its canned tuna of the same name, have been heavily promoting salmon burger consumption in recent years.
Chicken of the Sea in February suggested to retailers that its “Grilled Alaska Salmon Burgers” is a good way to drive sales during Lent, “the Christian tradition that spans the six weeks leading up to Easter,” the company noted on its blog.
“During this observance, many choose to abstain from eating meat, with the exception of fish. In most U.S. markets, this is your biggest opportunity of the year to drive sales of seafood items.”
Update: This story was updated on April 1, 2017 to include some further information on global salmon markets.
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