After three years of work, a University of Alaska Fairbanks study of the state’s commercial fishing industry has reached one conclusion nobody in the 49th state wants to talk about and another that not even the authors of the report seem willing to confront.
The first conclusion is barely disguised in the report:
“Since limited entry programs were implemented in state commercial fisheries, permit holdings by rural residents local to their fisheries have declined by 30 percent. Some
regions like Bristol Bay have lost over 50 percent of their local rural permits.”
In simple English, a system that has proven a bonanza for some individual fishermen has proven a bust for communities in rural Alaska.
Limited entry was established by Alaska voters who in 1972 approved an amendment to the state Constitution to save the state’s over-crowded fishing industry. The amendment allowed the state to establish a fixed number of permits for the various salmon fisheries. It then handed permits out to individual fishermen to do with as they wished.
Permits have been freely sold and bought ever since, and the free market has ruled for better or worse.
“In some regions like Bristol Bay, permit transfer has resulted in a large loss of local
access. Of the 692 local rural salmon drift and setnet permits lost to the Bristol Bay region between 1975 and 2016, over 60 percent (439 permits) have been transferred or sold out of the region,” the report says. “Similar trends are evident in the smaller Southeast salmon seine fishery where permit transfers account for more than 60 percent (30 of 49 permits) of the loss of rural local permits.”
But the problem with limited entry isn’t just the sale of permits to non-residents. It’s also the decisions made by some resident permit holders.
“While a quarter of all state permits are (now) held by non-residents of the state, the increase in permits among this group is not due to sale as is commonly assumed, but rather to the migration of permit holders out of the state,” the report says.
Why would people do this?
Because they can. Because limited entry in some areas of the state did exactly what it was intended to do.
In places like Bristol Bay, it made commercial fishing into a viable business in which one could produce a year’s income in a couple of months. And for some number of people, that sort of economic reality led to a simple, lifestyle question:
Where do I want to spend the fall, winter and spring if I don’t have to work?
For most salmon high-liners, the answer to the question wasn’t Dillingham, Naknek, King Salmon or any other community around the Bay, or for that matter Anchorage, the largest community in Alaska. For most of the top-earning permit holders, home became an Outside city in a warmer and brighter place.
They took their money and ran.
Of the $72.7 million (after expenses) earned by limited entry permit holders in Bristol Bay in 2010, only 31 percent stayed in Alaska, according to a report prepared for the Bristol Bay Regional Seafood Development Association by the University of Alaska’s Institute of Social and Economic Research (ISER). Almost as much, 26 percent, went south with Washington state fishermen. Residents of Oregon and California near equally split another 8 percent. And 8 percent was spread among residents of other Lower 48 states.
All told, about $50.3 million of the $72.7 million went south. Earnings for fishing crews were similarly apportioned, and those of processing workers were even more weighted toward the Lower 48 because only about an eighth of processing employees working the Bay were Alaskans.
“Even though fewer Washington (state) residents worked in Bristol Bay, Washington residents earned almost as much income working in Bristol Bay—almost $50 million—as Alaska residents,” the reported concluded. “This is because Washington residents earned much more on average from fishing than Alaska residents.”
After the direct output value of the combined fishing and processing was calculated, the report concluded, the split was $263 million for Outside business interests to $126.7 million for those in Alaska.
Gunnar Knapp, the dean of economic fishery research in Alaska and the now retired director of ISER, once suggested there is a profitability sweet-spot in salmon fisheries that tends to keep permits in Alaska. It could be seen, he said, in the prices at which permits were being traded. Those prices tend to pretty directly reflect the value of various fisheries.
High-priced permits, he said – permits which define big-money fisheries – tend to end up with professional fishermen from the lower 48, and low-priced permits – which indicate low-profit fisheries – start moving to hobbyists from the Lower 48 or Alaska’s major cities who find commercial fishing a fun way to spend the summer in the north.
Bristol Bay drift gillnet permits and Southeast Alaska seine permits are among the high-priced permits. After this year’s record sockeye season in the Bay, drift permits there are going for about $150,000. Southeast seine permits are worth even more.
A 2015 report to the Alaska Legislature put the average price at $307,500 at that time, and said 53 percent of the permits were already owned by non-residents. The report from the state’s Commercial Fisheries Entry Commission (CFEC) also warned that the calculation of Outside ownership was likely low.
“It’s worth noting these are probably conservative representations of the true number of
out of-state-residents,” the report said. “CFEC residency is self-reported, and there’s a significant financial incentive to declare Alaska residency, with few checks or audits.”
Former Alaska Board of Fisheries member Roland Maw, once the executive director of the United Cook Inlet Drifters Association – the most powerful commercial fishery lobby in Cook Inlet – for years made off-and-on claims to Alaska residency while teaching full-time at Lethbridge Community College in Alberta, Canada.
After retiring as a college prof, he split his time between homes and Dillon, Mont., and Kasilof, and claimed to be a resident of both states. Some serious problems arose after Alaska State Troopers were informed of this dual citizenship. It is illegal to claim residency in two states at the same time.
Maw became the poster boy for bad behavior.
He was found guilty of seven times illegally claiming to be a Montana resident to obtain state hunting and fishing licenses and was fined $7,245 in 2015. The state of Alaska subsequently charged him with 12 felonies for illegally claiming Permanent Fund Dividends, a resident-only benefit in Alaska.
His oft-delayed trial is now tentatively set for early next month in Juneau, but looks as if it could be delayed yet again. Having managed to quash Maw’s first indictment, his attorney is now trying to sink the second.
Maw was never charged in connection with his claims of Alaska residency for commercial fishing purposes. The requirements for a resident commercial fishing license are significantly more liberal than those required to obtain a PFD, and once a resident fishing license is obtained, there are no stipulated standards that must be met to maintain residency.
Being an Alaska resident now saves a Cook Inlet commercial fisherman $215, the non-resident surcharge attached to a 2018 fishing permit. The base fee for the gillnet permit itself is $150. The fee for setnetters is $75.
Cook Inlet is one of the places in the state where the UAF report says the number of permits owned by residents has actually been increasing even though CFEC reports that the earnings per permit have been falling since the start of the decade.
According to CFEC records, Dan Anderson, the second vice-president of UCIDA, has been an Alaska resident since 2004, although the Milwaukee Journal in 2011 reported “Dan is planning to move his wife and three kids – the oldest will be a freshman in high school this fall – to Alaska in the coming months.
“He’s got a boat in Alaska, and after years of jetting up there for several weeks each summer, he is ready to make the place home. He says this is the only choice he has because he can catch more fish in one day in Alaska than he can catch all winter off Milwaukee.”
Anderson used to fish Lake Michigan. The Journal could be wrong about when he took up residence in Alaska.
And those most familiar with the Inlet fishery say the biggest change in modern times hasn’t been an influx of professional fishermen from elsewhere – whether new residents or visiting non-residents – but with a shift from professional fishermen to hobbyists.
On one level, the Inlet fishery is reflective of the graying of the fishing business. There are a lot of old-time Alaskans in the fishery who’ve spent their lives fishing.
But on another level, the fishery is a reflection of the new Alaska order.
UCIDA secretary/treasure Dino Sutherland is the general manager at The Alaska Dome in Anchorage, and one of the stars of the former National Geo reality TV show “Alaska Fish Wars.” Before the Dome, Sutherland was the community relations coordinator for the Matanuska Electric Association.
Sutherland has held a series of management jobs over the years. He moonlights as a commercial fishermen because in many, if not most, of the Alaska’s fisheries of today, no one can actually make a living.
The seine fisheries, the Bristol Bay gillnet fisheries, and a handful of others are the exceptions, not the rule.
A whole lot of commercial fishermen in Alaska fish for the same reason sport fishermen do; they think it’s fun, and if they can make a little money on the side all the better.
This is the business into which the state is studying ways to entice young fishermen.
“The geographic and demographic shifts in access to Alaska fisheries are the result of several factors,” says the report on Alaska’s Next Generation of Fishermen. “In our study of fishing communities in Bristol Bay and the Kodiak Archipelago, we found that privatizing fisheries access has created large financial and other barriers to entry into commercial fisheries for the next generation of fishermen and has especially
impacted small rural fishing communities.”
That’s clearly part of what is preventing young people from owning more fishing permits.
But the problem is bigger than that, and it isn’t just because of the declining value of many fisheries. Cook Inlet fisheries values have decreased steadily from a worth of about $55 million in 2011 to $25 million in 2016.
There are now too many permits and too few fish in the Inlet for anyone to make much money in a market that is overwhelmingly dominated by farmed fish that produce a constant downward pressure on price.
Salmon prices dictated by farmed salmon are the sad new reality for Alaska fishermen, but even this might not be the biggest problem facing the state’s remote communities.
There is that issue no one in Alaska really wants to confront.
The world today is evolving at a digital speed, and everywhere people are abandoning rural areas for urban areas because that is where the opportunities of tomorrow are going to be found.
From Europe, Tobias Buck of The Financial Times writes of a “Spanish exodus to the cities (that) leaves a desert in its wake.
“All around Motos, in Spanish inland provinces such as Teruel, Guadalajara and Soria, villages are gradually being abandoned. A process of depopulation and rural flight that has lasted more than five decades is drawing to its seemingly inevitable conclusion.
“What is left behind is a region twice the size of Belgium but so devoid of people that it rivals the Arctic provinces of Lapland as the least populated zone in Europe. For every square kilometre, there are fewer than eight inhabitants.”
Type the words “rural flight” into Google and headlines pop up from around the world.
The stories go on and on. Google counts 6.7 million hits for the term “rural flight.” There are good reasons to believe the economic problems of rural Alaska fisheries are bigger and more fundamental than limited entry simply pricing young people out of the fishing business.
There are reasons to believe that some number, possibly a significant number of people, would move to larger urban areas anytime they could afford to move. Paula Cullenberg, the lead author on the Next Generation report, counters that “the villages are still growing.”
Some are; some aren’t. Dillingham’s population is down about 3 percent since 2000; Nanek’s population is down 20 percent.The two communities are focal points for the Bristol Bay fishery.
To the north on the Yukon-Kuskokwim River delta, Hooper Bay has grown steadily since 2000. It is now significantly bigger than Naknek. But most of the growth has come from a high birth rate in recent years. The average age in the community is 19.
The village doesn’t have any Bristol Bay-size resources nearby to support it, either. Fishing opportunities are limited. Almost 30 percent of the population is living below the poverty line.
A systemic fail?
The problems in rural Alaska are not simple and have no simple solutions. Tweaking the existing system to provide access to some commercial fishing might help a few people in a few places, but it’s legitimate to ask whether it’s worth the cost.
“Is the system we have the best way to keep these communities?” Cullenberg asks.
The evidence would appear to say no, but there are other questions to be asked:
“Would any other system be all that much better? Is any other system feasible?”
Especially to a lot of people in rural Alaska, limited entry might look like a failed experiment, but “I think the people who created that system wouldn’t agree,” Cullenberg admitted. Some of those people are still deeply imbedded in Alaska politics.
Some of them will only reluctantly concede that maybe, maybe, limited entry suffered somewhat from what Cullenberg termed “unintended consequences.” There does seem to be agreement that the commercial fishing business is in need of new blood. The average Alaska commercial fisherman is now in his or her 50s.
The problem is that there aren’t many in the AARP who want to give away their permits. Resident or non-resident, they are holding a valuable commodity. They understandably want money for it. And it is doubtful there are many among them who would want the state do anything that diminishes the value of their permit or decreases their fishing opportunities.
There are legitimate reasons to wonder if any the reforms suggested to date would do anything but take Alaska on a long journey back to where it is now. The Cullenberg-led study suggests creating “limited community quota freely accessible for fishing community residents and quota-free fisheries restricted by landings and seasons.”
But if those fisheries are “limited,” how would they produce enough revenue to support anyone? And if they are simply “quota-free and restricted by landings and seasons,” the state is back to where it was before limited entry only with limited entry, too.
Certainly, there are a lot more fish to go around these days then back in the pre-entry days. Limited entry arose in the midst of a salmon fishery collapse. The 1972 harvest was only 30 million fish. The harvest this year was 225 million.
The state has now gone 30 years with harvests above 100 million salmon per year, and the decadal average appears to be somewhere in the range of 150- to 160-million. But most of these fish are already fully allocated between commercial, sport and subsistence fishermen.
It’s hard to imagine the Alaska Board of Fisheries agreeing to create new fisheries in places where fishermen are already fighting with each other over every fish. It’s even harder to imagine the limited-entry permit holders in the United Fishermen of Alaska, who have a history of going to court, welcoming the creation of new commercial fisheries.
There is no doubt the Alaska fishing business needs radical reform. It is a 21st Century business using 19th Century tools and harvest techniques. The very top of spawning goals were exceeded by more than 5 million salmon in the Bay this year because the system for catching and processing salmon couldn’t handle the return.
At the average weight of 5.5 pounds, the rivers of the bay were “over-ecaped” to the tune of 27.5 million pounds of salmon. At $1 per pound, that’s $27.5 million gone for no reason other than that the technology couldn’t handle the return.
That would seem to offer a big incentive to do things differently, but change is hard. Very, very hard.