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Future years

 

Norwegian salmon is flooding into China and the first, farmed Chinese salmon are due to hit the market to help grace the traditional Yee Sang prosperity salad as the lunisolar calendar officially welcomes the new year to much of Asia this month.

 

Welcome to the future in this the year of the pig.

If it wasn’t obvious before, it should be obvious now: salmon have gone domestic, and they go a little more domestic every year.

The implications for one of Alaska’s largest industries – commercial fishing – are profound. The full impacts are still out there a ways, but on a horizon creeping closer and closer year by year.

“Fish farming has come a long way from its humble origins 4,000 years ago in China, when cages were used to raise carp,” Lee Bruno wrote at All Turtle in October.  “Two years ago, fish farming surpassed a major hurdle in human history when the amount of consumed farmed fish globally exceeded that of wild-caught fish. That threshold speaks to the important role of aquaculture in feeding people. Fish farming is now the fastest-growing animal-food production sector in the world.”

All Turtles is a San Fransisco based artificial intelligence (AI) start-up with offices in Tokyo and Paris. It is looking at aquaculture for the obvious reason: the ability to produce high volumes of protein in limited amounts of space at relatively low cost.

“In Norway, Cermaq’s salmon farming technology designed for use in open water cages uses a combination of sensors and computer vision to help operators monitor health conditions, and identify parasites like sea lice as well as other signs of disease,” Bruno wrote. “After capturing visual data on individual fish, the company’s automated IFarm system sorts diseased fish and steers them into separate cages where they can be rehabilitated through targeted treatment….”

The Norwegians have harnessed technology to become the world’s number one salmon producer. Norway produced 1.2 million metric tons of salmon in 2017, the last year for which complete number are available.

Alaska production in the same year was 487,000 tonnes. The state made up more than 50 percent of an entire Pacific Ocean catch that didn’t quit reach 1 million tonnes, according to the North Pacific Anadromous Fish Commission. 

The 2017 Alaska catch was the third highest in a recorded history dating back to the 1800s. The largest catch in Alaska history – nearly 510,000 metric tons – came in 2013, more than a third of them were hatchery raised fish, according to the 2013 Fisheries Enhancement Report by the Alaska Department of Fish and Game.

Norway leads

The catch was still less than half that of Norway’s production. Norway is a Scandinavian country about a fifth the size of Alaska.

Both Norwegian and Alaska salmon production has been growing in the 2010s. Alaska’s five-year average harvest now comes close to a mind-boggling 205 million salmon per year. Historically, an annual harvest over 100 million was considered good.

Some ocean ecologists have suggested the Pacific has reached carrying capacity and the only direction for harvests to go is down.

“So we have to ask ourselves: Is it possible that there are too many salmon in the Pacific Ocean? Since the late 1970s, salmon in the North Pacific have been more abundant than any time since comprehensive statistics began to be collected in 1925,” Canadian scientist Jim Irvine told the American Fisheries Society last year.

“Chum salmon and pink salmon, which tend to be most common in northern regions, dominate. Although each salmon species has somewhat unique feeding and habitat preferences, they co-exist in the same ecosystem. If the North Pacific Ocean is at its carrying capacity with respect to Pacific salmon, the large numbers of pink salmon and chum salmon may be having detrimental effects on growth and survivals of other species.”

Irvine is one of the leading authorities on Pacific salmon populations. He and colleague Greg Ruggerone from Seattle co-authored the definitive study on Pacific salmon abundance. It concluded there are now more salmon in the Pacific than at any time in history.

Suffice to say, there is little reason to doubt that from a salmon standpoint, Alaskans are now living in a period destined to become the good old days. Alaska salmon production is almost certainly going to go down in future years.fish production

Market realities

Farmed fish – like farmed chickens, turkeys, pigs and cattle – will only increase. Domestic production is not constrained by natural forces or subject to the whims of the same.

Domestication to create farm animals succeeded because early humans discovered it was more efficient and more productive to raise animals for food than to hunt them.

The domestication of salmon is a relatively new phenomenon, but it has been steadily growing and shows every sign of continuous growth, especially with the Chinese jumping heavily into the game.

China might be the last, great Communist nation on the globe, but in world markets it functions as a ruthless capitalist. There is a lot of debate among economists about whether the Chinese model of state capitalism can sustain itself over the long-term, but some are starting to warn of it winning in the short-term.

China’s latest plan to become a world technology leader has rattled its old German business partners to the core.

“Until three years ago, we thought these were complementary economies,” Thorsten Benner of the Global Public Policy Institute think-tank in Berlin told Financial Times in January. “This has totally changed. With Made in China 2025 we could see that state capitalism was out to eat our lunch.”

Americans are conditioned to think of government industry as inherently bloated and inefficient. Historically the record is less clear. Wars, in particular, have shown the ability of governments to build very efficient and deadly industries.

But there have been significant peace time successes as well. The National Aeronautics and Space Administration (NASA) – basically a U.S. government business – pioneered space and put the first man on the moon.

Aquaculture is one of the businesses to which China is now turning its attention. The country is already the biggest player, according to the Food and Agriculture Organization of the United Nations (FAO), and is expected to play a major role in a projected 34 percent increase in aquaculture production by 2026.

The good news for Alaska is that only a tiny portion of that increase is expected to come in the form of salmon. The bad news for Alaska, which has already lost most of the market to farmed fish, is that there is no reason to foresee anything but steady increases in farmed salmon production year by year.

Moving offshore

“China’s first, deep-sea fish farming facility, Shenlan 1, will be put into use later this month for salmon cultivation in the Yellow Sea, which will enable the country to achieve large-scale breeding,” China’s official news agency announced in May. 

Shortly thereafter, Shenlan 1 was towed 130 miles offshore and lowered beneath the waves. The farm takes advantage of a deep pool of cold water there.

“The huge (area of) water, with good quality, is suitable for the cultivation of cold-water fish, especially salmon. But it’s far from the coast and deep, so exploitation has remained a dream for fish farmers,” Shenlan 1 designer Wang Yu told China Daily. 

Remotely monitored, the 300,000-salmon cage can dive to a depth of 150 feet or rise to within about 10 feet of the ocean’s surface to stay within waters providing optimum temperatures for young, growing salmon.

The project is being run by the Wanzefeng Fishery Co. in the Shandong province. Shandong has been a focal point for Chinese aquaculture activities.

The Chinese government announced a plan to launch a “Shandong Province Modern Ocean Farming Comprehensive Pilot Scheme Construction Project,” Seafood Source reported last month. As part of the project, 83 massive “ocean pastures”  are to be constructed in which to raise fish and shellfish.

The Chinese, like the Norwegians before them, are moving rapidly to modernize and domesticate their fisheries to make them more efficient and increase their production.

Alaska, meanwhile, continues to forge ahead with fishing controlled by government-mandated inefficiencies in the hopes that by promoting catches as “wild” a premium can be extracted to maintain industry profitability.

It isn’t exactly working well in the emerging markets of Asia.

“A Chinese New Year is not complete without a good Yee Sang to be tossed around during the Great Dinner,” the Malaysian news wire Kr8tif Express was reporting in the lead up to the holiday. “It symbolizes prosperity, good fortune and abundance. With that, yue or fish will always be the centerpiece of the Yee Sang and the Norwegian salmon and Fjord trout have gained a foothold becoming the main fish option to accompany the Yee Sang. This is mainly due to their versatility (and) ability to be safely served raw….”

The farmed fish are parasite free. Wild salmon carry parasites that must be killed by cooking or solidly freezing the fish before eating. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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28 replies »

  1. The salmon are coming! The salmon are coming! Hide your children! Jeez, another FEAR FACTOR Medred essay about the doom of wild salmon. Medred, how many permutations of this same. exact. story. do you have prewritten?

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    • I should have a bunch Monk, but I don’t. It’s not about fear. It’s about adaptation. Alaska needs to figure out how to respond to a changing market to maximize the value of its resource.

      We might have shot ourselves in the foot in banning aquaculture. Nothing much we can do about that now though but limp toward the future with a view toward making better decisions.

      We should be looking at the situation and trying to figure out how to maximize fisheries value.

      Instead of complaining how about producing a good idea. The Chinese appear to have figured out how to raise salmon in the Yellow Sea, which is no easy task.What you got?

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      • Craig you said it…
        Alaska has “shot ourselves in the foot”.
        Not only will Alaskans lose out in the Global markets of farmed fish, we also are way behind the curve on Renewable Energy, mass transportation, LNG shipping and all the other great “derailments” of past administrations of Democrats, Independents and Republicans a like…all who yield to corporate lobbyists sponsored by the 1 percent of Americans…
        Old money is dying in America and the millennials are getting older every day.
        Lack of PF investment in the state is obvious to anyone with half a brain.

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      • For Pete’s sake, Steve. If instate investment had been allowed by PF money it would have been zeroed out years ago.

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      • Well bill,
        It is a complicated situation, but there are many variables in this equation.
        Timing of investment, value of the dollar and stock market value all play into our PF earnings.
        I would argue that not investing in production in Alaska has further hurt our society than a smaller dividend might have.
        Crime, Mental Illness, Violence, Alcohol Addiction…these are all linked closely to poverty and a feeling of helplessness many Alaskans feel in the current economy.
        Why are countries like Saudi and China good investments when they treat their people like “animals” and the end result is that AK has one of the worst GDP’s in the nation?
        I personally would take a smaller PFD if I knew the low earnings were do to the news jobs created in our local communities.
        As it stands now, the current system just further extracts our wealth to the 1 percent who own all the shares and we are left with a “War on Crime” in our backyard.
        Not very lucrative or safe if you ask me.

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      • Steve, as said by a pretty great orator: “May you have a strong foundation, when the winds of changes shift.” Bob Dylan

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  2. The real underlying problem is the exploding global population. The advent of modern medicine and
    technology is facilitating the unsustainable number of mouths to be fed , thus encouraging more and more land and and sea development for food production.

    Soylent green or fake fish ? Too many people and not enough food is a challenge indeed. Just ask any of the Donner party.

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    • Seems Democrats are trying to tackle that “problem” by allowing one to kill their babies outside the womb. Seems NY, CA, and VA are doing their “overpopulation” part.

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    • There’s no argument that human population growth is a continuing problem, Andy. We defused the population bomb with the green revolution, but we didn’t make the problem go away.

      No population can go on expanding infinitely because the planet’s resources are finite. We’re either going to need to figure out how to stabilize the planet’s population (which is really not that easy because it’s largely out of sync with how human economies work), or we’re going to have to get off this rock and find new habitats to colonize.

      The alternative, of course, is nature’s solution: War, famine, pestilence or some combination of the three.

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      • Craig, where do you think AI/robotic partners plays a role in population control? Studies/polls show a large number of younger people willing to take on one of these “gadgets” as a partner. The younger gen are also forgoing marriage and the complexities of it.

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      • We know how to stabilize and shrink the population – make it rich. Population growth rates in western democracies is trending below replacement rate.

        If you are a Julian Simon fan, there is an Ultimate Resource, one that does not run out. That is human ingenuity. Most recent example is the fracking boom. I suppose fish farming is another, though he wrote about neither. He wrote a couple books about it. Worth your time to read. And he did not even consider space resources. Cheers –

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  3. There is no doubt about roe. I would expect Alaska increasingly becomes a roe market – since farms can’t produce that – with the fish priced accordingly. It will make pinks and chums valuable even if the flesh is simply ground into fish meal to sell the Chinese for food for aquaculture.

    This makes a strong economic argument for further increasing the Alaska hatchery production of pinks and chums.

    I would only note that the 1988 dollar is today work 47 cents. Value wise, we’re not close to getting back to where we were on salmon in the round. But, given that roe is a limited commodity supply and that we are among the biggest producers, there is room for upward movement in price for roe.

    “The vast majority of Alaska fish meal/oil production utilizes pollock (81% of meal and 95% of oil by volume in 2015). (But) salmon is the next largest raw material species, and production is generally growing – particularly for salmon meal,” the Alaska Seafood Marketing Institute says.

    I’d expect the latter trend to continue as roes prices climbs and flesh prices continue to slide. I don’t care what you do with a pink salmon filet, it’s not going to match the quality of a sockeye or, for that matter, a farmed Atlantic.

    Yes, I’ve sampled the latter, and – sad to say – it was damned good.

    Pink salmon will continue to go into cans and increasingly into pouches as the market shifts away from cans. Even sales of canned tuna – which a lot of Americans were conditioned to buy – are falling. https://www.cnbc.com/2018/12/03/millennials-are-killing-canned-tuna-but-the-industry-is-fighting-back.html

    And while pouch sales are doing much better, there appears to be a pretty solid shift to fresh (we’re screwed there) or frozen products underway in the Western world. No one can predict the future. Maybe the Preppers will become a force, and there will be a shift back to products that can be kept in a bunker for years.

    But the biggest problem for Alaska is unlikely to change no matter what happens. Farm production will steadily increase. Farms will become increasingly efficient. Farm prices will define market prices. Alaska will never again see those ’88 prices in real dollars. And inefficient Alaska fisheries will increasingly become difficult fisheries in which to make a living.

    It’s hard to imagine any scenario other than one that takes the state pretty much back to where it was before it approved limited entry.

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    • Actually, increasing amounts of fresh frozen pink fillets, processed by Trident, Ocean Beauty, Peter Pan Seafoods, Seward Fisheries (Icicle Seafoods), Copper River Seafoods & Silver Bay Seafoods, who all process PWS pink salmon commercial harvest, during last five years, mean less goes in the can.
      With the two cold pressed oil plants in Cordova, 97% recovery is now possible, compared to the historical 72-73% recovery rate. After the oil is extracted, all is left is a little bit of skin and bones. This oil is made into fish oil capsules, which are consumed by the 70 million US baby boomers, who are now reaching age 65 at a rate of 10K per day. Guess what? They all want fish oil to help with the onset of arthritis, inflammation & poor brain memory.
      The future looks great for pink salmon harvested by Ak fishers and processed by AK processors. A pink salmon fillet thrown on the Barbie, beats GMO raised beef, chicken & pork, anyday of the week.
      Concerning the price paid exvessel value, not to worry, it will not ever reach the ‘88 level again, though it is still a decent way to make a living. Hard working fishers in Alaska deserve credit, not attacks from the likes of KRSA and the wannabe fish pundits, who believe they have all the answers.

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    • Bill, I read and re-read your article. No mention of the “last half decade” (as they love to say) of warming temps brought on soley by el Nino. Imagine that? As they say “at what point in history did the climate not change”?

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      • Bryan, just chalk it up to your not being used to reading scientific articles. And that was not my article, either-just my link to it.

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      • Bill: Well, that story does reflect the thinking last year. The thinking is changing a bit. Judah Cohen is really worth following if you’re interested in Arctic and near-Arctic climates: https://www.aer.com/science-research/climate-weather/arctic-oscillation/

        His honesty as regards the complexity of the situation is refreshing, ie:

        “As I discussed in last week’s blog, I find the relatively cold Arctic humbling, and I cannot explain it other than to attribute it to natural variability or forcing from outside the Arctic including possibly the tropics.”

        Personally, I find this year baffling. My thinking generally paralleled that of the KTOO story, which – by the way – would create a better scenario for Alaska than the present situation. We make a hell of a lot more money in this state on salmon than pollock, and a regime change in the Bering to give salmon an edge over pollock could be a boon for us.

        Think of the opportunities if we could just give up on worrying about Yukon Chinook and open a string of pink and chum salmon hatcheries along the coast.

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  4. James,
    Great news about vessel gross stock reaching new highs.To bad the dollar has lost well over 50% of its purchasing power with regards to 1988 prices.
    On another topic,I was down in Whidbey Island a few months ago, looked up a former shipmate who is more in touch than I with the Seattle schooner fleet.
    He said an average halibut trip these days is about 20,000lb’s.
    Normally that would have been 40-60000 for a 3-4 day trip(not counting Area 4).
    But still @ say $5/lb dock price thats $100k gross stock.Assuming the contract is still average 7% of the gross to each crew member,thats $7k for a weeks work.
    Not bad if you can get it–

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  5. I was a bit surprised to see Costco selling Norwegian salmon as well. That is a HUGE consumer base. They laid to rest all consumer concerns that arise from farm raised salmon.

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  6. Can Alaska recoup its costs fairly for management of commercial fisheries?

    Some folks seem to be saying that Alaska salmon can be sold on the global markets at a price point that is independent of supply. If that’s the case, then there should be agreement that a modest increase in fish taxes to adequately pay state government the true cost of administration of a commercial business operations will not kill the industry.

    With black Wednesday on the horizon this week, maybe the subsidies for commercial fishing and hatcheries will be finally on the chopping block.

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  7. Guess what? The price for all species, of “in the round” salmon delivered to Alaskan processors, by AK commercial fishers, in 2019, will be the highest since 1988.
    Why? The global demand for all seafood is currently outstripping the supply.
    Main reason why China is going “all in” on aquaculture.
    The “live” shipments of WA geoducks, West Coast Dungeness crab, Sea Urchins & Sea Cucumbers from both WA & AK to China, has cost hundreds of millions over the last ten years. China wants to change that. Why buy when you can produce. Salmon are relatively simple to produce. Other seafood not so easy.
    Anyway you look at it, China is a gigantic economic engine, that is 100%, supported and enmeshed with the Chinese government.
    Same with Samsung, the electronic firm and the S Korean government are also completely meshed together.
    The US cannot compete on the global market, except we have seafood, that they cannot easily produce. At least for now.
    Moral of story: salmon are easy, the rest not so much.
    AK salmon is now in more demand, in the lower 48, than ever before.
    No issue selling the entire AK commercial salmon catch, to American consumers, the hitch is, the Chinese need the raw product to produce the value added product, which is sold back to US consumers, and China is making money at it.
    We cannot compete with their $1 a day wage to N Korean workers, reprocessing AK salmon.
    So, a good % of AK commercially harvested salmon, will be shipped to China, in the near forseable future.
    China actually needs AK seafood, more than we need them.
    Also, remember the most important aspect of farmed salmon, “they are sterile, do not produce roe”. Guess what, the demand for salmon ikura or simply salted roe, also far out strips the supply.
    The value of salmon roe of pink salmon is higher than the flesh. Farmed salmon do not have that. The world seafood consumers want and will always buy salmon roe. Like a grocery store (milk, eggs & bread). Gotta have it. The Russians, Japanese & now China love AK salmon roe.
    I actually enjoy eating it myself. Crackers & cheese, salad garnish etc.
    Pure protein and omega 3s, cannot get any better.
    End of story: AK may lose market space, though we will always be able to sell all of the seafood we harvest.

    Like

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