Inefficiency is the bane of business and the boom of local economies.
Alaskans in territorial days understood. As Bob Bartlett, the Territory of Alaska’s delegate to the U.S. Senate, observed in the 1940s with Alaskans wanting to restrict fish traps, businesses are “regulated and governed sometimes out of existence because they do away with employment.”
The failure to recognize the link between efficiencies and jobs could today be costing the state tens of millions of dollars in lost tourism revenue in Cook Inlet in order to put tens of thousands of dollars worth of salmon in the holds of commercial fishing boats, if Matanuska-Susitna Borough tourism businesses and a new Borough economic study are to be believed.
Sport-fishing interests contend their businesses are dying or already dead because poorly regulated and highly efficient commercial harvests in the Inlet have choked off returns to Matansuka-Susitna streams. The study conducted by Southwick Associates concluded almost 1,800, sport-fish related jobs have been lost Inlet-wide since 2007.
No fish means no fishermen, and those fishermen are valuable. The Borough-commissioned study determined non-resident anglers spent $358 million to fish 393,000 days in and around the Inlet in 2017.
That works out to an average expenditure of $911 per day, a number almost too big to believe. It is clearly inflated by real estate expenditures on fishing retreats. If the $132 million in real estate is removed from the calculation, non-resident angler spending drops to $226 million, or an average of $575 per fishing day.
Salmon fishing limits in most of the region range from one to three fish per day. An angler who spent $575 and caught a limit of three would be spending an average of almost $192 per fish.
Alaska Department of Fish and Game records indicate the average sockeye salmon, a high-value species, caught commercially in the Inlet last year was worth $8.50 to a commercial fisherman. If that salmon’s value doubled when it was processed – as some studies have indicated – before being shipped out of state, the fish would be worth $17.
The difference between the numbers here is large. Even if the non-resident costs of Alaska travel are also removed from the equation, and tourist angler expenses are limited to in-state gear expenditures and direct fishing costs, the non-resident fisherman spends an average of $232 per day or more than $77 per fish on a limit of three, according to the study.
The state’s unwillingness to take into consideration these sorts of economic values when allocating salmon between no-growth commercial fisheries and tourism-driven sport fisheries with the potential for significant growth marks a radical and to this point largely unnoticed departure from the territorial history of salmon management for maximum value.
But the latest system appears to have strong political support.
Former state Board of Fisheries chairman Karl Johnstone, who in his years on the Board tried to steer more salmon toward sport fisheries, was last month attacked by state Rep. Louise Stutes, R-Kodiak, as “extremely biased against commercial fisheries” for those efforts to shift catch into more valuable Inlet sport fisheries.
Stutes was enraged that Johnstone wanted to pursue an economic philosophy predating the Statehood movement, a philosophy that held that the best way to build a robust Alaska economy is to maximize the in-state value of resource production.
That idea appears to have gone out of favor from the time when territorial residents believed Alaska benefited significantly from many people harvesting many salmon rather than a select few harvesting nearly all of the salmon.
The Bay was and is the state’s most valuable fishery. Of the approximately 114.5 million salmon with an estimated value of $595.2 million harvested in Alaska last year, according to the Alaska Department of Fish and Game, the harvest of 41.3 million sockeye – 36 percent of the catch – was worth $281 million – 47 percent of the value.
Bay fishermen are no longer restricted to sailboats, but when powered gillnetters were finally permitted in 1951, they were limited to 32-feet in length and remain so limited today. The intent then as now was to restrict efficiency.
Eight years after the territory imposed the 32-foot limit on Bay gillnetters, the new state of Alaska took an even stronger stand against efficiency when it voted to ban fish traps – the most efficient, most selective and environmentally cleanest form of salmon harvest.
Years earlier when the U.S. Senate was considering legislation to lease trap sites in the Territory of Alaska, fisherman R.R. Warren journeyed to Washington, D.C. to tell Congress of fears the traps would “jeopardize the livelihood of the many resident workers, of the many small businesses; in whole, the entire economic structure of Alaska. For what? The continued exploitation of Alaskan resources by an absentee monopoly that must have a profit far in excess of that of any other business.”
At a 1948 hearing, a befuddled Sen. Edward Moore, R-Okla., wanted to know why Alaska would want to get rid of the most efficient means of harvesting salmon invented by man.
It was then wrote Steve Colt from the University of Alaska Institute of Social and Economic Research (ISER) that Bartlett offered his explanation that Alaskans wanted the trap gone for “the simple reason that they feel that the trap is too efficient. It is like other things in this world that are regulated and governed sometimes out of existence because they do away with employment.”
Colt is an economist and in 2000 went back decades to examine the history of the traps. He wanted to find out whether the end of traps and the evolution toward the less-efficient net fisheries that followed had in fact created jobs.
“Because the ban actually occurred, I can evaluate this argument. Trap opponents were correct about the volume of employment,” he wrote in a study that concluded that more than 6,000 commercial fishermen joined the workforce in Alaska between the time the traps were banned and the state passed the Limited Entry Act to cap the number of commercial fishermen in 1973.
That was then
Colt’s study also ended with an ominous warning:
The long-term data show that Alaska commercial salmon fishermen have since the 1970s been “consistently rescued from their own declining physical productivity by rising real prices,” he wrote. “The periodic need to exit the industry has been minimized, but only by luck. Recent price pressure from ever-increasing supplies of farmed salmon has changed this picture. The ex-vessel value of salmon declined from a 1988 peak of $781 million to $362 million in 1996 despite a 50 percent increase in harvest volume. Starting from a zero-profit equilibrium, these downward price shocks have induced full-blown ‘natural disasters’ in coastal Alaska, complete with federal aid.
“It may be time for Alaskans to reconsider the fish trap.”
Bringing back traps would lower the cost of commercial production and in that way make Alaska salmon more profitable in a world dominated by farmed fish. Johnstone, in arguing for shifting more salmon into the sport fishery, once made a similar argument as to markets in an op-ed for the Anchorage Daily News.
Stutes didn’t like that either and accused the retired Superior Court judge of being a secret supporter of farmed fish because he recognized that pen-raised salmon from Norway, Chile and elsewhere now account for 75 percent of global salmon consumption.
That was never supposed to happen. When Alaska lawmakers voted to ban salmon farming in Alaska in 1990, they believed the move would preserve Alaska wild salmon dominance and economically benefit the state. At the time, Alaska accounted for more than 75 percent of global production.
The results of the ban, unfortunately, turned out to be the opposite of what the Legislature wanted. The production of farmed fish skyrocketed, and Alaska salmon are now bit players in the global market even though Alaska has seen record average, commercial harvests this decade.
Those harvests far exceed the expectations of fishery biologists of the 1990s, and yet the state accounts for only 12 or 13 percent of wild salmon production with Russia supplying most of the rest.
Economists expect the loss of market share to only continue. Alaska’s percentage will keep getting smaller and smaller and smaller as farmed salmon production continues to increase, they say.
The Chinese are pioneering deepwater pens for raising salmon in cold water in the Yellow Sea. And land-based salmon farms using so-called recirculating aquaculture systems (RAS) technology are popping up in the U.S., Canada, Japan and elsewhere. The RAS operations not only resolve issues of escaping salmon, antibiotics and net-pen waste – the big complaints against farming – they also allow farmers to claim an “organic” product.
SalMar, a major Norwegian fish farming company, is already selling Europen Union certified organic salmon while the U.S. wrestles with the question of what qualifies as an organic salmon. The U.S. Department of Agriculture has been unable to decide what standards to set on the feed for farmed salmon that would qualify them as “organic,” but has ruled out an organic classification for any wild fish because there is no way of telling what they are eating or to what chemicals they might have been exposed.
Issues, issues, issues
All those farmed fish now dictate the market price for salmon.
Shifting market conditions and changing consumer attitudes make it impossible to accurately predict future prices for Alaska’s commercially caught salmon. But prices are generally expected to rise slowly with the exception of fish that have found niches in cult markets that boost their value as has been the case for early season Copper River kings and sockeyes.
With the Copper season set to open in six days, the Alaskan Salmon Company is now offering pre-order filets at $69.99 per pound, while FishEx offers them on “sale” at $78.25 per pound with delivery by May 21.
At those prices, the salmon are even more valuable than a Cook Inlet fishing opportunity.
Copper River kings, however, are a fish in very short supply. The Alaska Department of Fish and Game is forecasting a harvest of only 31,000 or approximately 620,000 pounds of whole fish. Such a catch would be expected to yield somewhere around 450,000 pounds of filets.
How long prices stay high will depend on the size of the catch, too. Prices generally go up if catches are low and down if catches are high. And as the market fills with Alaska salmon as the season progresses, prices just keep going down.
The state harvest and value figures for last year show an average price of $5.20 per salmon caught in Alaska. The Alaska salmon catch usually averages out to a weight of about 5 pounds per fish, according to Fish and Game data, making the average dockside value of an Alaska salmon last year about $1.05 per pound.
It’s hard to calculate exactly how much more valuable any given sport-caught salmon, but it would appear to be orders of magnitude greater, according to the study from Southwick Associates, a respected consulting firm based in Florida.
Even if salmon bag limits for anglers are boosted to six fish per day as they sometimes are in years with particularly large runs of sockeyes hit the Kenai River, non-resident anglers would end up spending at least $38 per fish, or more than twice as much as the same salmon caught and processed in the commercial fishery.
Around the Inlet, peak salmon value for the Alaska economy would appear to be found in maximizing the number of people coming to Alaska to catch their own salmon rather than maximizing the number of salmon to be caught by a limited number of commercial fishermen for shipment to markets in the U.S., Europe or Asia.
Anglers and Alaska-only dipnetters do sometimes harvest up to almost a quarter of the Inlet salmon, but statewide angler harvests are tiny. Fish and Game data indicate that all sport-fishing by Alaska residents and all “sport fishing and hunting” by non-residents accounts for only 0.4 percent of all wild resource harvest in the state on an annual basis.
Commercial harvest vital
Overall, the agency says, commercial fisheries harvest 98.5 percent of all fish and wildlife resources. By and large, this has little to do with regulations set by the state and everything to do with the practical reality that in most of Alaska commercial fishermen are the only ones with the resources and equipment capable of harvesting salmon returning to the state by the hundreds of millions.
Most of the reason the sport harvest is so low is that the sport fishery is so inefficient its harvest capacity is low.
Even in the Inlet at the doorstep of the state’s largest city, where anglers and commercial fishermen constantly war over salmon harvests, commercial fisheries remain vital – and are likely to remain vital for a long, long time – to harvest returns in excess of spawning needs.
There is no science to support the claims of the Inlet’s commercial fishermen that “over-escapement” of salmon into Inlet streams will cause runs to collapse, but there is also no doubt that without commercial harvests over-escapement would cause declines in overall productivity and waste millions of pounds of valuable salmon.
Thus the issue the BOF faces in the Inlet is as simple as it is complicated: How to get enough salmon into Inlet streams to maximize the attraction for valuable, non-resident anglers while minimizing the impact on commercial fisheries and ensuring the commercial fisheries can harvest enough salmon to hold escapements within a reasonable range.
The Southwick study would indicate the Board has been failing at that task. Southwick’s one year snapshot for 2017 showed the value of the fishery slipping slightly from when a similar state study was conducted in 2007 with the number of sport-fishing jobs dropping significantly from 8,056 to 6,300.
Where and how the fisheries changed over the decade was not tracked. So it is not clear whether sport fisheries have been declining for a decade or took a dive in 2017. Most think there might have been a little of both in play.
Before the start of the 2017 season, the BOF changed Inlet regulations to favor commercial fishermen. Then-Gov. Bill Walker had just won election with strong backing from the Inlet’s commercial fishermen, and payback came quickly.
Among Walker’s first appointments to the BOF was Roland Maw, newly retired as executive director of the United Cook Inlet Drift Association (UCIDA), the region’s most powerful commercial fish lobby. Maw didn’t last long. When it was discovered he was claiming to be a resident of both Montana and Alaska, he quit. But Walker appointed another commercial-fish advocate in Maw’s place.
Dunleavy’s appointments appear geared toward shifting the Board back to a more economics-driven look at salmon allocation, but the Alaska Legislature, which must confirm the governor’s appointments to the Board, hasn’t looked all that receptive to the idea.
Johnstone came under fire not only from Stutes, who represents a fishing port, but from Anchorage lawmakers whose constituents include large numbers of anglers and personal-use dipnetters.
And Rep. Ivy Sponholz, D-Anchorage, was concerned the Joint Boards of Fish and Game didn’t consider Maw for the job of Commissioner of Fish and Game while Johnstone was chair of the BOF. Sponhloz eventually accused Johnstone of sexually harassing unnamed employees of the Boards Section after which a joint session of the Legislature voted down his reappointment.
The unsubstantiated #metoo accusations are thought to have shifted just enough votes to block Johnstone. But due to Johnstone’s previous actions while on the Board, the vote was close before Spohnholz fired off her accusations.
Tarr summed the public perception of Johnstone pretty close to accurately during a meeting of the House Fisheries Committee.
“It’s starting to sound like that you do in fact sort of support this evolutionary idea going forward that we will have to move toward the user group that has increased, the personal-use group, and away from commercial,” she said.
To that, Johnstone admitted, he viewed salmon as a “common property” resource as stipulated by the state Constitution and personally believed the BOF should adhere to the Constitutional directive to manage common property resources in “the best interests of all Alaskans.”
“My intentions have always been to maximize the economic benefit of all of our fisheries,” Johnstone said, adding his own definition of that term to include the value of fish in the freezers of Alaskans as well as fish in the coolers of tourist fishermen.
Tarr appeared unaware of the value of the sport fishing business in Alaska, but she did recognize that the shifting demographics of the state warranted some reconsideration of salmon allocation. The Anchorage metro area is now home to half the state’s population.
“In my mind,” she said, “a lot of these challenges are much more environmental.” She argued that BOF should “look at things that are influencing like the changing climate, warming temperatures, ocean acidification, illegal harvest from foreign vessels.”
“All of those things also have an influence on what’s going on in the commercial industry and what’s happening with prices, and I guess I’m just concerned that this piece, you know, sort of pushes it because I’ve heard one line of thinking that seems consistent with what’s suggested here that the commercial industry is going to go away and the future is just going to be more personal use and subsistence…and (that) in my mind misses a lot of the potential reasons for stress on commercial and other fisheries.”
Unfortunately, there is no evidence Alaska salmon harvests have been reduced by illegal catches by foreign vessels. And though there are future concerns about climate, warming and ocean acidification, there are no signs those issues are having any effect in the here and now.
North Pacific salmon populations are at the highest in level in recorded history, according to the American Fisheries Society. The salmon allocation problem Alaska faces today isn’t a new one fueled by environmental change; it’s an old one fueled by shifting economics.
The problem isn’t with a shortage of fish. As in the days of traps, the problem is with who catches the fish and how. The vast majority of the salmon are now being harvested in a way that minimizes instead of maximizes their value in-state.
The good part is that no segment of the commercial fishing industry need be put wholly out of business to fix the problem this time, but fishing businesses would need to change, and change is hard.
It is especially hard when powerful, monied interests line up to block change. The United Fishermen of Alaska, the modern version of the fish-trap barons of old, vowed to stop Johnstone’s reappointment because of his stated view of maximizing “the economic benefit of all of our fisheries,” and the group succeeded.