In debt to the state of Alaska to the tune of about $90 million, beholden to the state to collect and turnover hatchery taxes on commercial fishermen to keep hatcheries running, and under fire as a threat to wild salmon, Alaska’s private, nonprofit (PNP) hatcheries have decided they need a better lobby.
“In working together with the other PNP operators, the following are lobbying goals and
objectives we are discussing for 2020,” Dean Day, executive director of the Cook Inlet Aquaculture Association said in Jan. 23 memo to his board.
Day went on to outline plans to:
- “Inform Alaska Legislators of the salmon hatchery associations…including fishery enhancement programs and economic and social benefits.
- “Build strong positive relationships with fishery advisors within the Governor Dunleavy administration.
- “Enhance working relationships within the Alaska Department of Fish & Game….
- And “affect Alaska Board of Fisheries confirmations to positively shape policy on hatchery production and regulation.”
A copy of his memo was obtained by craigmedred.news.
The Kenai River Sportfishing Association, the Fairbanks Advisory Committee to the state Board of Fisheries, Homer-area hatchery critic Nancy Hillstrand and others have complained the hatchery operators already hold too much sway with state fishery managers.
For the defense
Bill Templin, the chief scientist for the Fish and Game’s Division of Commercial Fisheries, has been an outspoken defender of the hatchery production of 16 million to almost 100 million pink and chum salmon per year this decade, arguing fellow scientists who have hypothesized an ocean-wide decline in returns of Chinook and localized declines in sockeye salmon and coho (silver) salmon due to at-sea competition with the hatchery fish don’t know what they are talking about.
“Correlation is not causation,” Templin in October 2018 reminded the state Board of Fisheries as it contemplated reductions in the approximately 1.5 billion young salmon the 25, commercial-fishermen-run PNP hatcheries now dump in the ocean every year.
Those questioning the hatchery program have produced no evidence hatchery stocking programs cause any threat to wild salmon, he said, ignoring a peer-reviewed study from scientists from the National Oceanic and Atmospheric and Administration (NOAA), the University of Alaska, the National Center for Ecological Analysis and Synthesis, the Farallon Institute for Advanced Ecosystem Research, the University of Washington and his very own agency which concluded that the high-volume hatchery operations in Prince William Sound were depressing sockeye returns to the nearby Copper River.
The scientists were looking for lingering damage to the Sound from the Exxon Valdez oil spill when they stumbled on the conflict between the hatcheries and wild Copper River sockeye.
“All sockeye salmon stocks examined exhibited a downward trend in productivity with increasing PWS hatchery pink salmon returns. While there was considerable variation in sockeye salmon productivity across the low- and mid-range of hatchery returns (0–30 million), productivity was particularly impacted at higher levels of hatchery returns.”
Given that the researchers could not identify the specific interaction between pinks and sockeyes that would spark such declines, Templin chose to overlook the study.
For the prosecution
Hatchery critics have charged the state is taking an ass-backward approach to hatchery reviews.
Hatchery operators and the state, hatchery critic Nancy Hillstrand of Kachemak Bay has observed, should be required to show the hatchery releases of massive numbers of young fish aren’t harming wild stocks instead of supporters of wild fish being required to prove the opposite.
Wiggling hatchery fry and smolt are among the very few forms of organic matter the government allows to be dumped in the ocean in large quantities without an environmental impact statement (EIS).
The dispute over hatcheries in Alaska comes at a time when the utility of salmon hatcheries, in general, is undergoing a global rethink and the farming of salmon has shifted massively from ranching – the preferred method in Alaska, Japan and Korea – to net-pen farming – the preferred method in Norway, Chile and Scotland – to increasingly on-land farming in recirculating aquaculture systems (RAS) in the U.S. and elsewhere
Scientists in the Pacific Northwest are questioning the interactions between hatchery and wild fish while scientists in Japan, where the business of ranching salmon got its start in a big way, are pondering whether the economic benefits touted by hatchery boosters actually exist.
One-time world leader
Japan offers the perfect test case for an examination of the long-term economics of hatcheries given that it has “released the largest number of marine and salmonid species, often on a large scale,” according to Kitada.
Japan began industrial-scale ranching programs in 1963 and Kitada reports there are now 242 private hatcheries run mainly by fishermen or cooperatives. The Japanese focus has been primarily on chum salmon, fish larger and tastier than the pinks that predominate in Alaska.
Japanese chum stocking reached a peak of 2.1 billion young fish in 1991, but has since scaled back to 1.5 billion or so per year. Once the world leader in salmon ranching, Japan is now second to the U.S. where hatchery releases are primarily driven by Alaska’s massive ranching effort.
Japanese salmon return rates for chum today range from 3.6 percent plus or minus 1.1 percent on the island of Hokkaido to 1.6 percent plus or minus 0.6 percent on Honshu. Paying to breed and raise 100 fish to dump them in the ocean and get only about one and a half back is not good business, according to Kitada.
But Japan remains deep into ranching many species of fish – salmon, bream, flounder and mackerel – plus crustaceans and molluscs – scallops, abalone, crabs, and prawns.
When Kitada looked at the aquaculture efforts from a purely economic standpoint, he reached the same conclusion the Weyerhaeuser Corporation, British Petroleum and Union Carbide reached after a dozen years of ranching salmon in Oregon.
“But the pampered, pond-reared salmon couldn’t make in the real world. They either starved to death in the ocean, became easy prey for predators or simply never returned — at least not in sufficient numbers to make aquaculture a money-making proposition.
“Now, after 12 years and investments of millions of dollars, none of Oregon’s 11 private salmon-breeding farms have made a profit. Fishermen bad mouth the quality of the fish and the state legislature, which once welcomed the huge corporate investments, has turned lukewarm on the idea.”
Unlike in Alaska, the big players in Oregon gambled on salmon that needed to be raised for a year in freshwater before being released into the ocean, a requirement that significantly increases hatchery costs. They also lacked for government assistance.
But even in Japan where the salmon are chums that require no freshwater rearing and with a supportive government, Kitada concluded that “all cases of Japanese hatchery releases, except Japanese scallop, are probably economically unprofitable if the costs of personnel expenses, facility construction, monitoring, and negative impacts on wild populations are taken into account. Stocking effects are generally small while the population dynamics are unaffected by releases but instead essentially depend on the carrying capacity of the nursery habitat. Hatchery rearing can reduce the fitness of hatchery fish in the wild, and long-term hatchery stocking can replace wild genes and cause fitness decline in the recipient population when the proportion of hatchery fish is very high.”
Despite this, hatcheries remain popular with many because they bring the fish to the fishermen rather than the fishermen being forced to go to the fish. A state-run hatchery supports one of Alaska’s most popular sport fisheries on Ship Creek in downtown Anchorage, and hatchery supported sport-salmon fisheries are popular in Michigan, Wisconsin, Minnesota, Washington state, Oregon and California.
Saving the fish?
Scientists with NOAA’s Northwest Fishery Science Center and the Washington Department of Wildlife in November reported they might have found one way in which hatchery releases of salmon can harm wild fish.
They suggested hatcheries could be setting the table for predators.
“…Releasing large numbers of young salmon within a short time frame could make them vulnerable to opportunistic predators,” they reported in a peer-revied study published in the journal Ecosphere.
Both mergansers and spiny dogfish have concentrated “in the Salish Sea in response to high densities of hatchery salmonids,” they wrote. “Furthermore, these predators are capable of learned behavior; as hatchery releases become more predictable in time and space, we hypothesize that predators may increasingly congregate to opportunistically feed on pulsed hatchery releases and co‐mingled naturally produced salmon.”
They noted, however, that mass releases of hatchery fishery are a two-way street. On the one hand, a huge school of young hatchery fish could attract predators and increase predation. On the other hand, it could overwhelm those same predators.
“Alternatively, high densities of migrating juvenile salmonids have been shown to produce predator swamping effects, which result in lower mortality rates,” they wrote. “It is likely that such dynamics are unique locally and vary over space and time. Thus, it would be difficult to generalize these interactions to an ecosystem level without large, replicated experiments involving multiple hatcheries. While it is unclear from our results whether earlier or later releases would increase survival of hatchery Chinook, we found that variability in release date has generally decreased and that release dates among sub‐basins in both the Puget Sound and Georgia Strait have become less diverse for Chinook.”
The main point of their paper was that well-meaning humans have been dumping a lot of salmon in the ocean without knowing much about what they are doing, a problem that seems to be universal on the West Coast.
“For over a century, hatchery programs have been used to subsidize natural salmon populations in order to increase fisheries opportunities and, more recently, to conserve declining natural populations,” they observed. “While an extensive literature has described the impacts of large‐scale hatchery operations on freshwater ecosystems, less attention has been given to ecosystem interactions within the marine environment.”
In Alaska, almost nothing is known about these interactions, and the state Department of Fish and Game – once a leader in global salmon management – has said the issue is too complicated for it to study.
Alaska’s bounty
The state is lucky in that a warm North Pacific Ocean has generally favored both natural and wild salmon. As a result, Alaska salmon harvests have reached numbers unimaginable in the first decades after Statehood.
The state has seen fluctuations in some species – primarily sockeye, coho (silver) and Chinook salmon – at some times in some areas – notably Cook Inlet and the Copper River. But it is not facing the problem of “marine survival rates at chronically low levels,” as the Pacific Northwest scientists observed of that region.
Whether Alaska’s record abundance of salmon, boosted far beyond all historic precedents by the nation’s largest hatchery program, is having an effect on those PNW fish with which they share the Gulf of Alaska pasture is unknown.
But some Outside scientists have suggested possible connections, hypothesizing that a coastwide decline in Chinook is as simple as the biggest of the salmon proving unable to compete with the mobs of smaller sockeye, chum and especially pink salmon.
“Pink salmon have never been more abundant than now,” they and six other scientists argued in a presentation to the 19th Salmon Ocean Ecology Meeting in Newport, Ore. in 2018. “During 2005-2015, pink salmon abundance averaged nearly 500 million fish with peak abundances of approximately 650 million fish in 2009 and 2011.
“Pink salmon are especially abundant in odd-numbered years, reaching 76 percent of all
Pacific salmon in peak years.”
All those hungry mouths reduce “the abundance of zooplankton, which in turn leads to a greater abundance of phytoplankton, zooplankton prey,” they argued, and the consequences of that change ripple through the entire ecosystem of the North Pacific with consequences for other salmon, seabirds, and marine mammals.
Correction: This story was altered from the original to include molluscs.
Categories: News
Late breaking news for Craig: scallops and abalone are molluscs, not crustaceans. Never have been. I hope the rest of your reporting is more factual.
Of course, they are. It’s the difference between segmented and unsegmented bodies.
It would have been nice if you’d also flagged me to the hodgepodge of plural and singular references used after the word crustaceans. But in the process of correcting the story, I noticed and corrected that as well.
But thanks for the catch. Cloud copy-editing is always appreciated at an operation that can’t afford a copy editor.
Leo- A big part of the problem is that the State is subsidizing these “careers”. And a career that is not economically viable without that subsidy in many(most?) cases. So far as the residency requirement is concerned I can tell you there are a pretty good number of “mail forwarding” accounts set up in communities like Cordova. What do you think an accounting of phone records for these loan recipients would reveal?
Bob,
CFAB & AK State are the only two entities, who can use a limited permit as collateral on a loan. Reason why the Division of Investments, is very strict in their guidelines in applying for a loan, ie:
number of years, where applicant, has to show minimum 30% of total income derived from comm fish. Mail forwarding is not a qualification or even having an AK P.O. Box. A actual AK residence address is required and adhered to, even in Cordova.
They also do not loan total amount for permit only a %. If fisher defaults on loan, the State takes back permit, and resells it.
The State also makes money on interest earned by permit payments.
In addition all comm fishers have to renew their permits each year, annual fee is based on income generated by each fishery.
Your comment “career that is not economically viable, without a subsidy”, shows you do not have clue, about the state loan program. It was primarily set up to help resident fishers get a start in a fishery, after limited entry was established in the early 70’s.
Out of state fishers have no such program, so are at a disadvantage to engage in this business. The state loan program, is one way for the permits to stay in the hands of state residents. If this state loan program was to be discontinued, then more permits would transfer to hands of non-residents.
Is this the result you are hoping for?
Ya know, loans are not ‘free’ as interest is paid on them. Tell us about defaults then tell us about interest income.
The loan issue is the wrong tree to bark up. While I don’t like it as I don’t think the state should be involved in such matters just like I don’t think the feds should be when it comes to student loans or home mortgage loans, they do it as a lower cost service and compete with private industry…the reason I don’t think our government should be involved in such matters. All the state is doing is offering the same loans at a lower cost and to the residents of this state, as Leo noted this program isn’t available to nonresidents. The bigger, and actual, issue is the number of hatchery salmon in our waters and their effect on said waters.
It only makes sense that the hatchery folks would hire a lobbyist, I don’t know why they didn’t do it already it’s not like they are paying for it! Seriously if these hatcheries want more money they just print it. Of course when they print money they just dump more fish in the water and wait a couple years then catch it when it comes back. If you could spend a day making paper airplanes and then a day throwing them into the wind, knowing that when/if they came back to you there would be less of them and they would be bigger and they would be legal currency, wouldn’t you do that…A LOT??? Especially knowing that if your paper airplanes don’t come back the government will probably declare a state of emergency and pay you anyways.
lobbyists and riders should be outlawed. Every Bill should pass or fail on it’s own merits……
$90 million is just the state debt from Hatchery Operations…this is just the tip of the iceberg.
What is the total commercial lending debt (to the state of Alaska) from ALL combined “comm fish” loans?
I believe it is closer to $400 million when you add up all the loans to commercial fishing operators (many of whom are not AK residents).
This is becoming a “state owned” industry when we are supposed to be a capitalistic free market economy?
Residents who care about preserving the natural salmon runs in Alaska need to get out their bullhorns and tell the Dunleavy administration that we should not be in the business of lending money to prop up a “non solvent” industry.
Ask yourself why aren’t the bankers taking on the debt to supply fisherman and hatcheries with loans?
Because bankers know the operation costs exceed revenues in most of the industry.
It’s two things here Steve. Budgets & Loans.
Mismanagement of budgets (Inlet Keepers?) is one thing. The use of lending & borrowing is another.
Student loans? Farm loans? Small business loans (80% first year failure rate)?
I’m not a cheerleader for some of these fiscal methods myself. I like being debt-free, and am … at the cost of things that are nice to have (with a loan-payment), and that most of my friends do have … and generally consider to be worth the challenge of meeting payments.
Governments make bajillions in loans for lots of different things & purposes. Alaska is hardly the Loan Ranger here!
Again, this debt-economy choice is not my personal preference either … but that doesn’t Alaska’s use of it abnormal or unprofessional. It’s Modern Society, for better & for worse.
Ted,
I would have to do more research to know how much other states lend out to industry in their state.
The difference that I see right off the bat is why is AK floating loans for more permits when we both know many areas are overfished?
I think if the commercial lending program was ended there would be balance returned to the whole system.
Guys and gals who are not in debt over their eyeballs could then get a loan from a banker if they met the requirements.
I would suspect that some states floated subsidized loans for farmers and are in a position of holding bunk notes as mom and pop farms fail across the country.
Better to have state Government out of the loan business as we see how the feds are stuck holding the bag of student loan debt as well as had to bail out Freddie and Fannie Mac…all of which added to our National Deficit.
Steve i am curious where you get your facts and figures. CFAB requires borrower to be an Alaska resident. I do not know of a state fishing loan program that does not. Why do you think the industry is non solvent? The industry has existed for well over 100 years in this state.
No one is floating loans for more permits. The amount of permits is fixed. If anything there has been a decline due to buybacks.
Leo,
There has been much questioning surrounding folks who may use an AK address but live outside the state for the majority of the year.
There is no monthly residency required for these loans like say on the PFD application.
I understand that the amount of permits may be fixed, but the state still lends money to buy a permit and we both know many of these people who buy up these permits with state money would not qualify for traditional bank loans.
When does it stop being a lending program and start being more of a state owned industry?
It seems to me like the current lending situation is blurring the lines.
Farming versus Hunting & Gathering is no-contest. Managing the landscape, farming for plant & animal harvests, increases natural productivity a hundred fold. No reason the seas can’t be farmed to similar & greater effect.
There is opposition to farming or ranching the seas, of course. There’s opposition to farming & ranching the land. There’s opposition to pumping oil & gas … yeah-huh, there’s opposition to Humans in general and anything that supports them.
The big thing to know, is that the open oceans are nutrient & biological Sahara deserts … but would be easily & efficiently fertilized to expand productivity, even greater than farming does on land. You don’t hear about this very much, ‘because opposition’.
Hatchery operations, assorted coastal & continental shelf species-ranching, is barely dipping a toe.
Steve you need to read a loan application. Both state of Alaska fishing loan programs have length of residency spelled out. Minimum of one year for CFAB 2 years for the other. I really do not know why you would object to a program that helps young people in rural communities have a livelihood and enables them to live in the community they grew up in. You are probably the same person who would make the argument that too many non residents participate in our fisheries.
Yes, Leo, and it’s a little like being sent to prison for a year. You serve your time, and you’re done with it.
The Commercial Fisheries Entry Commission has the laxest standard for “residency” of any Alaska government entity. To wit:
“20 AAC 05.290. Residency Definition, for the purpose of assessing fees for the application for, annual issuance of, or renewal of entry and interim-use permits, an individual is a resident of this state if, on the date of permit application, issuance, or renewal, and throughout the
12-month period before that date, that individual maintained their domicile in this state and neither claimed residency in another state, territory, or country nor obtained benefits under a claim of residency in another state, territory, or country.”
This is the legal definition of domicile: “the place where a person has his/her permanent principal home to which he/she returns or intends to return.”
So you can buy a shack somewhere in Alaska and declare it your domicile while living most of the year somewhere else and be a happy Alaska “resident.” I’d guess it’s a really good deal if you’re living in Washington state where you can get a sales tax rebate if you’re an Alaska “resident.”
Who knows, depending on your annual spending, the rebate might well be as big as a PFD.
This administration had no problem gutting the Marine Ferry system as it was disproportionately serving a small group of users/taxpayers. How about the same consideration for the PNP and their $90,000,000.00 debt? Time to insist on an independent, forensic accounting of all things related to PNP. Included in this accounting should be an overveiw of the debt repayment plan.
Can’t argue with facts. Nice reporting.
I’m guessing the $90 mil figure here is hatchery borrowing, from the revolving loan fund. The hatcheries is general have been very good about paying down their debt, there have been only a few non-performers. If you will ask Dept. of Commerce, I suspect they may tell you that all the large hatchery associations are current with their loans. Some off the largest have paid all loans. This has been a very successful program for th state and for the industry.
The hatcheries have been very good at staying current on payments. They have not been that good at paying off the loans. And, of course, the state is now subsidizing them with “cost recovery” fish which was not part of the deal when the PNP program began.
The fish produced by the PNP’s were supposed to be a “common property resource,” and the funding for the hatcheries was supposed to come from the assessment (ie. tax) on commercial fishermen.
The cost-recovery program basically has given the hatcheries ownership of a chunk of a pubic resource.
And then there are some other little state kickbacks I don’t have the time to get into now.
Typical Medred propaganda, I guess I should expect as much. To the accusation of subsidies, the state does not subsidize hatcheries or fisheries through the loan program. The state seeded a loan program from the general fund through a few different deposits for a total of $25 million. The last time general fund money went to the loan program was over 25-30 years ago. That $25 million investment in fisheries and hatcheries has returned around $600 million to the state. Much of which has gone back into the general fund. The Fisheries revolving loan fund is completely solvent. All money currently outstanding has all come from profits on performing loans, and the pools of money, one for hatcheries and one for commercial fisheries that is available for lending are also from profits. So if CIAA, PWSAC or SSERA goes to get a loan from the state for whatever reason none of that money comes from general state funds, only from existing profits from performing loans. In fact the loan fund program has been so successful it is constantly being targeted by politicians to pull money from it to fund other things, so a more accurate characterization would be to say the Fisheries loan fund is subsidizing other state items. Where do I get my info? Andy Macaulay Sate of Alaska division of economic development the loan fund manager.
Huh. Propaganda? No subsidies?
Reminds me of a story a commercial fishing friend just told me after hiring an accountant from Outside to do his books. Guy got all done and then asked, “OK, where’s the cost of the fish?”
The fisherman’s answer was the obvious one, of course, “what cost for the fish?”
The accountant, being from Outside, still didn’t get it.
“What do you pay the state for the fish?” he asked.
The commercial fisherman could only answer “We don’t pay the state anything, but we do have to catch the damn fish.”
No other industry is subsidized by being given the resource free.
The mining industry pays lease fees for taking minerals from state lands and on top of that there are taxes bigger than the fish taxes. And the oil industry, oh lordy the oil industry.
First the oilies pay a shitload of money just for the chance to look for oil on state land. Then, if they find oil and decide to produce, they pay the state a royalty of around 12.5 percent per barrel and a production tax of 35 percent.
Yes, commercial fishermen will tell you that they pay a 3 percent tax on the fish they land in Alaska, but that tax doesn’t cover the cost of managing and policing the fishery. And it’s a pittance anyway.
A non-resident angler pays $25 for a one-day fishing license. The average non-resident leaves the state with something like 1.5 fish; so ignoring all the economic studies of the money non-resident anglers leave here and just looking at this one number, that non-resident pays the state an effective tax of $16.66 per fish.
But, for the sake of argument, let’s assume she catches her limit of three Kenai sockeye. The effective tax then falls to $8.33 per fish. But let’s further assume that some people buy three-day ($45), seven-day ($70), 14-day ($105) or season ($145) licenses and catch more fish, and thus drive down the cost of what they’re paying for each fish.
We can’t drive the figure down too far, however, because we’re still up against that bar of a 1.5 fish average for the non-resident angler. So let’s just say the average, overall effective tax for a non-resident angler is $5 per fish.
And the per-fish tax on a commercial fisherman?
Well, it varies depending on the weight and species of the fish. But let’s put an average size on a sockeye at 7 pounds and a price at $1.50 per pound (both of which are probably a little high), but will work for the top end of the scale. That sockeye is then worth $11.25.
A 3 percent tax on $11.25 is about 34 cents. That’s basically what a non-resident commercial fisherman pays the state for an Alaska sockeye, and when we get into big production sockeye fisheries (most notably Bristol Bay), a lot of the fishermen are non-residents.
Let’s forget the hatcheries the state built and gave to the PNPs and the subsidized loan programs, which is what they are. When the state sets up a system to run a bank that makes no money in competition with real banks, it’s a subsidy.
But, as I said, let’s ignore that and look at the reality of this manufacturing process.
Basically, the state is giving non-resident (and resident) commercial fishermen one of the state’s more valuable resources for 3 percent of what it’s worth. And the price paid the state for the fish just goes down from the sockeye level. You could probably figure the state’s seiners, a high percentage of whom are also non-residents, are paying the state 3 or 4 cents per fish.
If this isn’t the state subsidizing a resource extraction industry, what is it? And commercial fishing is a resource extraction industry. Commercial fishermen, or at least the good ones, run high-volume operations that basically mine the sea for fish.
And if they fail, the government props them up with even more money. Not that this is unique. American agricultural production is otherwise subsidized in all sorts of ways. But don’t kid yourself that commercial fishing in Alaska is much different.
I’d even wager those farmers would love it if the state gave them they land they farm for free and all they had to pay was a 3 percent tax on the wheat, corn or soybeans they sell.