Nothing but bad news for Alaska commercial fisheries and one of Alaska’s historically largest employers is contained in a new report from Rabobank – the huge, Dutch financial company the specializes in global food and agriculture financing.
“Rabobank sees the tide turning for recirculating aquaculture systems (RAS) and sees potential for this emerging technology to change the aquaculture game over the next decade, according to the latest RaboResearch report ‘Aquaculture 2.0: RAS Is Driving Change – Land-Based Farming Is Set to Disrupt Salmon.'”
The report is focused on salmon farming, which now produces more than 70 percent of the salmon consumed around the globe. Farms are the businesses in which Rabobank, like the Alaska Permanent Fund, actively invests.
The bankers envision RAS operations becoming a significant competitor to net-pen salmon from Norway, Chile, New Zealand, the Faroe Islands and elsewhere. This is the banks forecast for the most likely RAS salmon production come 2030:
- A 250,000 metric ton catch – more than twice the annual harvest of Alaska’s Bristol Bay – with a cost to raise of “€3.5 per kilo.”
At today’s exchange rate, 3.5 euros per kilogram translates to $1.78 pound, which can be expected to cap wild salmon prices if – and this is a significant if – if the wild fish can even compete with the RAS fish.
Alaska salmon processors for years put their marketing efforts into promoting wild-caught (though not necessary wild) as “better” than farmed because of anti-biotics used at some salmon farms, fish escapes at others, and questions about the fecal contamination of bays and estuaries from pens containing huge numbers of salmon.
“Many salmon farms impact the environment in numerous ways – pollution, chemicals, parasites and non-native farmed fish that escape from salmon farms all affect the natural habitat and the native salmon in the surrounding areas,” Target, the country’s eighth-largest retailer, reported in 2010 when it banned farmed salmon from its 1,740 stores.
“Wild-caught salmon from Alaska is considered a “Best Choice” by the Monterey Bay Aquarium and is certified as sustainable to the standard of the Marine Stewardship Council.”
A changing world
A lot has changed since then. Fish farms began to reduce their use of chemicals and clean-up their operations, and the Monterey Bay Aquarium changed its mind on farmed fish. The aquarium manages the popular “Seafood Watch” program that advises consumers on what kind of seafood is best to eat from a health and environmental standpoint.
Alaska wild salmon headed the Watch’s list of “Best Choice” salmon in 2005 with only two sources of farmed salmon at that time ranked “acceptable.” By 2012 Seafood Watch was labeling “acceptable” all farmed salmon certified by the Aquaculture Stewardship Council, an independent monitoring group set up by the WWF and the Sustainable Trade Initiative.
Today all Alaska salmon are gone from the Watch’s list. There’s not even one that ranks “Good Alternative” status although some wild salmon caught in selective fisheries in the Pacific Northwest are classed that way.
All of the fish on the “Best Choice” list today come from a variety of net-pen farms in Norway and New Zealand, lift-net fisheries in Washington state, or any “indoor recirculating tank.”
The latter are the RAS farms in the Rabobank report, and some of them have already launched a direct assault on Alaska wild fish as health crapshoot from a polluted ocean.
When Amy Bailey, a food writer for the Festival Foods supermarket chain in Wisconsin, was tasked with promoting the locally grown RAS salmon from Superior Fresh, second on her list of reasons to buy was this:
Fourth on her list was “fed an organic diet.” Some salmon farmers are now pushing for an official “organic” designation and the U.S. Department of Agriculture (USADA) reports it “is in the process of developing organic practice standards for aquaculture. Specific labeling guidance will be detailed after these standards are implemented. Certification of aquatic animals will not be available until new standards are complete.”
“Organic” has become a major selling point in retail groceries. Seattle-based Coherent Marketing Insights is projecting an 8.4 percent growth in the sale of organic products through 2026.
The U.S. National Organic Standards Board almost two decades ago vetoed the idea of labeling wild salmon “organic.” The board said it was impossible to do so because the designation depends on a guarantee the food eaten by the fish is organically produced, and there is no way of knowing what wild fish are eating.
At the time, the decision was met by howls of protest from Alaska, and then Lt. Gov. Fran Ulmer observed in an oped for the Alaska Journal of Commerce that “under those restrictive and ‘landlocked’ definitions, it’s obvious that virtually no fish likely will qualify for the organic label. That will put an indisputably healthy and natural product (Alaska salmon) at a distinct disadvantage in the marketplace where the term ‘organic’ is increasingly appealing to consumers.”
U.S. RAS operations raising fish in tightly controlled environments with clean, filtered water and fed largely vegetable-based or insect-based feeds diets, the latter like young salmon eat in the wild, could possibly meet organic standards.
Technology Networks earlier this year forecast a big boom in the sale of insect-based fish meal.
“The advantage of insect meal compared to fresh or unprocessed dried insects is that it can easily be mixed with other feed components, such as ground grains and soy, to form a mixture of a desired composition that is then pressed into pellets for better and more convenient feeding to animals,” the website reported.
“Overall, insects as a feed component for animals in aquaculture have great potential due to their high energy and protein content. This potential has been recognized by EU legislation and several insect species have been permitted for the production of animal feed in aquaculture. It will be exciting to follow the development of how and to what degree these insects will be used over the next few years.
Bad to worse
All of this comes as the breaking wave atop a giant swell of farmed fish.
Pen-raised salmon farming – unlike the free-range farming in which Alaska fishermen are now heavily engaged through a variety of state-backed private, non-profit hatcheries – is limited by the carrying capacity of ocean waters.
Hatcheries, aided by warm waters in the North Pacific Ocean, have helped boost Alaska salmon annual salmon harvests to over 200 million fish four times this decade, and seven times in state history.
“To put the magnitude of…production in historical perspective,” the Alaska Salmon Fisheries Enhancement Annual Report 2017 notes, “the hatchery harvests alone in both 2013 and 2015 were greater than the entire statewide commercial salmon harvests in every year prior to statehood except for 7 years (1918, 1926, 1934, 1936, 1937, 1938 and 1941).
The state’s problem is that most of the hatchery fish are high-volume, low-value pink salmon that sell for 30 to 60 cents per pound. The 23 million hatchery pink salmon caught last year were worth about $43 million or $1.87 per fish, according to the state enhancement report.
U.S.-bound, farmed Atlantic salmon was at the same time selling for more than twice as much per pound at $4.97 per although these prices are not directly comparable to the Alaska price paid fishermen. The Chilean value would be closer to the after-processing value or what is called the “first wholesale value” in Alaska.
The Alaska Department of Fish and Game reported a 2018 value of about $1.35 per pound for headed and gutted pinks being shipped out of the state that year. That’s less than a third of the value of farmed fish, but species of wild salmon other than pinks do better.
Headed and gutted Bristol Bay sockeye were worth $4.13 per pound last year – almost as much as farmed fish, according to Fish and Game. High prices for farmed salmon are now seen as a good thing by those assessing Alaska market conditions; they’ve come to see farmed fish prices as setting the standard by which everything else is measured and thus propping up prices that can be obtained for the higher-grade species of Alaska salmon.
That is how much the market has changed from the 1980s when Alaska fish set the bar for value.
The price paid fishermen for Bristol Bay sockeye peaked in 1988 at over $2.00 per pound – about $4.35 in 2019 dollars when inflation is taken into account. Fishermen were earning $1.35 this year though that could grow to as much as $1.50 per pound with after-season bonuses.
With farmed salmon now selling at $4.97 per pound wholesale and production costs forecast at $1.78 pound, the Rabobank warning of RAS disruptions in the market would appear more than justified.
“So far, we (Rabobank) have identified more than 50 RAS proposed projects (and counting) to farm salmon on land,” according to Beyhan de Jong, a company analyst for “animal protein.” “The total estimated production of these announced projects up to 2030 is equal to 25 percent of total current salmon production.
“Although the RAS concept is still under development and the future holds uncertainties, in our view the future of RAS operations is positive. If the risks within RAS operations are managed effectively, in our view, RAS will disrupt aquaculture trade flows, supply chains, and the marketing of salmon within the next decade.”
The Rabobank analysis does concede RAS could fail. The technology, at least at the large-scale production level, remains even though Atlantic Sapphire, a Norwegian company, has invested a reported $350 million in a massive Florida RAS facility.
A RAS failure is arguably the best Alaska hope, but technology failures in the short term seldom extend into the long term.
“And yet in Silicon Valley ‘failing fast’ is heralded as a virtue and, sometimes, even failing slowly can have unforeseeable benefits. Cutting-edge products may die an embarrassing death, but they often also lay the groundwork for better, more well-timed ideas that flourish later on.”
The Times story cites a long list of tech that died only to come back stronger. The Blackberry, the first handheld device able to connect to the internet, had a short life but “paved the way for the super-powered smartphones we carry around today.”
GM’s EV-1 – the first mass-produced electric car of modern times – lasted from 1996 to 1999 before it died as “too niche.” Today the Tesla is a rage with all auto manufacturers scrambling to get into the game.
MySpace faded away only for Facebook to take over the world. An all-but-forgotten Pebble pioneered the smartwatch only to buried by the Apple Watch, Samsung’s Galaxy Watch, and the FitBit. MapQuest provided the first mobile phone GPS and mapping only to be rendered extinct by more efficient Google Maps and Apple Maps.
These were all ideas destined to appeal to a broad market, and RAS ticks those boxes in these days of increasing worries about the environment and “climate change.”
Ocean warming appears to be playing a role in declines of West Coast salmon in British Columbia, Canada, and the Pacific Northwest, and the New York Times, among other publications, has pushed the idea that warming now threatens Alaska salmon.
There is no truth to the idea although warming might someday lead to a decrease in Alaska salmon. To date, however, it has been the opposite. Alaska wide, salmon have been returning in numbers never seen before, and harvests have increased accordingly.
On a sustainable-harvest basis, Alaska commercial salmon catches are near twice what the state once produced. But perceptions are sometimes far more important than reality.
Against this backdrop, consumers could hardly be blamed for choosing RAS salmon raised in clean, filtered water and fed organic food over wild, Alaska salmon portrayed as struggling to avoid extinction in an ocean threatened with climate change.
So here’s the consumer choice:
You can buy wild-caught salmon that might be consuming microplastics or worse in an ocean full of pollution before being caught in Alaska, a state that could care less about climate change although the Times says its salmon are threatened by the same, or you can help save wild salmon by buying environmentally friendly, farmed salmon from a RAS operation where they are raised in clean, filtered water, fed organic food and never come anywhere close to an estuary, bay or ocean they could pollute.
Which would you pick if this was all you new? And how about if someone sweetens the deal by tossing in the victory of farmed salmon in blind taste tests?