More bad news for Alaska’s third-largest industry is coming out of Europe.
Dutch-based banking and financial powerhouse Rabobank, a global leader in food and agriculture financing, says the aquaculture business has grown by $100 billion in the past six years and is expected to increase by another $100 billion in the next decade, Aquaculture North America reported this week.
“…In the last six years, aquaculture increased its value by another $93 billion (US),” the bank said. “As a comparison, before 2010, it took 15 years to grow by $84 billion (US).”
Aquaculture is largely banned in Alaska, though the state has been heavily involved in ocean ranching salmon which are then sold as “wild caught.” Increasing questions about that practice are being raised, however, with wild runs appearing to suffer at the expense of hatchery fish.
Meanwhile, the state that banned salmon farming decades ago hoping to control the market for salmon increasingly finds itself a bit player in that segment of the seafood business. It has tried to fight back with a campaign to market “wild” and “wild-caught salmon,” but seafood industry analysts note that as aquaculture continues to grow, farmed fish become ever more the norm.
As farmed salmon have increasingly defined the mass market, they have pushed Alaska salmon into niche markets where prices are still constrained by farmed fish although Alaska fishermen have long counted on earning a premium in those markets as their salvation.
How big a premium “Alaska wild” is now worth and how long any premium will last is unclear. University of Copenhagen PhD candidate Isaac Ankamah-Yeboah this year calculated an “organic price premium of approximately 20 percent,” but whether Alaska can capitalize on wild as organic is also unclear.
As salmon aquaculture begins a move to land-based farms using filtered and recirculated water, a pushback against “dirty” wild fish has already begun.
Land-based, farmed fish “are grown without any antibiotics or pesticides ever. No contaminants or pollutants like you’ll find in the ocean,” a writer for Festival Foods, a supermarket chain in Wisconsin, wrote this year in a pitch for the locally farmed Superior Fresh salmon being sold by that grocery.
The U.S. Department of Agriculture (USDA) does not at this time certify any salmon as “organic,” and organic certification has run into difficulty because both commercial fishermen and fish farmers want the label.
“Our brand sells the most sustainably farmed seafood in the world, which embodies the values and standards of organic and yet gets none of the benefit of an organic label,” Jacqueline Claudia, co-founder and CEO of LoveTheWild, told the Supermarket News in February.
Farmed salmon lacking that label is available for $8.49 per pound. Alaska wild sockeye retails at $16.99 pound, but that price could be on the rise soon. A 10 percent tariff on seafood imported from China kicked in on Monday, and a significant volume of Alaska sockeye is now shipped to China for processing and then imported back into the U.S.
The high cost of processing Alaska wild salmon, linked in part to the seasonal nature of the fishery, is one of the many problems facing 49th state salmon producers. Farmers can build their operations around a steady, year-round supply of fish very similar in size that can then be run through automated processing plants that produce boneless, skinless filets in a matter of minutes.
Technology weighs heavily on the side of the farmers, which has led Gunnar Knapp, a fisheries expert and the former director for the state’s Institute of Social and Economic Research (ISER), to call for innovation the Alaska fishing business. But the industry faces significant constraints.
It is, for instance, saddled with government-mandated regulations designed to share the wealth among a maxiumum number of fishermen. Gillnetters in Bristol Bay, the state’s richest sockeye fishery, are limited to boats of no longer than 32-feet in length to limit harvest capability. The lengths of gillnets in all fisheries are limited for the same reason.
“Will policies of regulated inefficiency eventually price Alaskan seafood out of global markets?” Knapp and former Alaska Lt. Gov. Fran Ulmer asked in a 2004 analysis of the Alaska fishing industry. “As noted above, the Alaska Legislature has the constitutional authority and responsibility to manage Alaska’s salmon fisheries for the ‘maximum benefit’ of Alaskans. But the legislature has neither assumed nor delegated clear responsibility, authority, and ability to restructure Alaska salmon management for the purpose of strengthening the economic viability of the industry.”
More than a decade on, the Legislature still hasn’t done anything to restructure the industry. Commercial fisheries in some areas – Cook Inlet among them – continue to be home to more commercial fishermen than the salmon runs can support given today’s salmon prices.
Drift gillnet fishermen in the upper Inlet averaged an income of but $28,192 last year, according to the state’s Commercial Fishery Entry Commission, and they will average far less this year after a disastrous sockeye season.
For most Cook Inlet commercial fishermen, the fishery has become a seasonal, part-time job, but they still lobby vocally and heavily to keep any salmon catch from shifting toward what has become a highly valuable Kenai Peninsula tourism industry.
Market adaptation is difficult in Alaska fisheries. It is much easier in the salmon farming business where capital is free to gravitate to new financial opportunities.
“On a projection screen in front of a packed room in a coastal Maine town, computer-animated salmon swim energetically through a massive oval tank,” Laura Poppick wrote for Scientific American in a Sept. 17 story forecasting a sea change in salmon aquaculture. “A narrator’s voice soothingly points out water currents that promote fish exercise and ideal meat texture, along with vertical mesh screens that ‘optimize fish densities and tank volume.’ The screens also make dead fish easy to remove, the narrator cheerily adds.
“The video is part of a pitch made earlier this year for an ambitious $500-million salmon farm that Norway-based firm, Nordic Aquafarms, plans to build in Belfast, Maine, complete with what Nordic says will be among the world’s largest aquaculture tanks. It is one of a handful of projects in the works by companies hoping these highly mechanized systems will change the face fish of farming—by moving it indoors.”
The businesses making these moves do face hurdles, RaboResarch noted.
“Improved genetics, new husbandry technologies, and innovations in aquafeed will be the three key factors determining aquaculture’s future,” its report says. “Further long-term growth in the sector can only be achieved through modernisation and professionalisation, while maintaining a strong respect for the environment and local communities.”
But changes are coming fast. Some farmed salmon could soon be moving to a trout diet – flies.
“We take waste and convert it into our three products — one of which is protein,” Jason Drew, the company’s CEO, told CNN earlier this months. CNN reported the company has raised $105 million in capital this year and is now valued at $200 million.
Ankamah-Yeboah has already examined a key market issue surrounding the new feed source.
“Consumer preferences for fish products produced from insect-based protein sources does not significantly affect majority of the consumers choices,” he reported, “which may allow the scarce standard feed substitution and lessen pressure on fishery resources.”
One of the biggest complaints against salmon farms has been that they increase the harvest of forage fish in order to produce salmon-farm feed. The shift to alternative food sources counters that complaint just as the move to land-based facilities undermines accusations salmon farms can pollute local waters.
Technological advances have powered the industry, and Alaska commercial fishing businesses have found themselves on the wrong side of the technological curve.
The response of one Alaska commercial fishermen looking at the direction in which the salmon business is moving was simple: “Close to time for me to retire.”
On an individual level, that might be a good out. On a state economy level in a state where commercial fishing remains an important industry and vital in rural, isolated, already struggling communities, this is all nothing but bad news.