Fishery chaos

peter pan

The Valdez processing plant of Peter Pan Seafoods, one of several Alaska processors now reported up for sale/Peter Pan photo

As the Alaska Board of Fisheries meets in Anchorage to discuss the fate of Cook Inlet salmon fisheries, the potentional bombshell that has been but a rumor since fall has finally slid into the light.

“The shakeout has begun: Alaska salmon processors struggle to survive,” the website Intrafish is now reporting. The story below the headline is about the financial troubles of Alaska’s major fish processors and the consolidation that has been the subject of much behind the scenes rumbling for months.

The problem for processors, according to a variety of sources, is that a lot of them paid too much for sockeye and then bought too much with quality suffering during a Bristol Bay heatwave that coincided with a monster catch.

Processors are now reported to be sitting on expensive to operate freezers full of fish while fish buyers are looking to Russian sockeye, which also came back in significant numbers this year but was better handled and is reported to be of higher quality.

Lurking in the background of all of this is the long problematic issue of farmed salmon which now dominate the market and can be handled with kid gloves from pen to table given the ability of farmers to tightly control how many fish are delivered to a processor on any given day and how.

Intrafish’s John Fiorillo writes of the “weakening, frail condition of Alaska’s salmon processing industry” as it tries to deal with this change. But the top “trending story” linked at the bottom of Fiorillo’s Alaska report might say more about the situation than anything.

Prize salmon

“Top Kontali executive leaves to join luxury farmed salmon supplier,” the headline on that story says.

The top executive in question is Anders Marthinussen, a veteran of the Norwegian fish farming business, who is reported to be joining Pure Norwegian Seafood which “supplies raw material to Balik, a company based in Switzerland, that offers its finished product for NOK 6,000 (/$650) per kilo.”

That translates to about $295 per pound. So much for “wild” Alaska salmon being the market’s premium product. Even the much-hyped, first-of-the-year, Copper River king salmon – the small number of which come and go quickly in late May and early June of every year – have only been attracting prices in the $60 range.

Copper River salmon prices do, however, remain in generally in good shape compared to those of the salmon caught commercially in the Inlet where prices have been doing nothing but going down for years now.

And Inlet fisheries – commercial, sport and personal use – are at the moment the topic before a Board trying to determine allocations between these competing interests. All have stressed their importance to the local, regional and statewide economies.

But given the lack of independent analysis, the economics are the hardest part of the equation for Board members to get their hands around. Still, the future for the Inlet’s commercial fishery does not look bright.

Fishermen speak

“The absence of the (Inlet) sockeye salmon over 6 pounds has taken Cook Inlet out of the premium market,” the United Cook Inlet Drifters Association complains in a September reported titled “Issues Concerning Salmon Yields in Upper Cook Inlet, Alaska.”

Sockeye have been generally shrinking in size for a decade. Scientists Greg Ruggerone and Jennifer Nielsen have theorized the fish can’t compete well with an explosion of fast-growing pink salmon in the North Pacific Ocean.

Sockeyes spend years at sea maturing before returning lake-based drainages to spawn. Pinks, on the other hand, spend only a year at sea and are genetically programmed to eat like little pigs in order to grow to spawning size in that time.

UCIDA says the average sockeye size is now down by a pound, and “UCI sockeye are competing with the marketplace where 3 to 5 pound and 4 to 6 pound sockeye are plentiful. Cook Inlet has lost the premium market position.”

Were this not enough of a problem, the paper goes on to warn that the large volumes of sockeyes caught in commercial nets in recent Augusts aren’t worth much.

“The August component of the sockeye harvest no longer are graded #1,” the report says; “now it’s mostly #2 and dog-food grades. Annually, the August sockeye component costs the industry in excess of $2 million” in lost revenue.

UCIDA’s answer to these problems of smaller fish worth less money and lower-grade August fish is to fish more earlier, lower the spawning escapement goal for the Kenai River to enlarge the commercial catch, and expand August fisheries for those “dog-food grade” sockeye.

Sport fishing groups at war with commercial fishermen contend the August sockeye fisheries are really nothing but an excuse for gillnetters to go to sea to catch coho (silver) salmon, a highly prized sport fish that returns in much smaller numbers than the sockeyes.

When the Alaska Department of Fish and Game turned drift netters loose in the Inlet on the last day of July 2017, they caught more coho than sockeye and then claimed it was an accident.

Andy Couch, a fishing guide on the then coho-starved Little Susitna River, said at the time that he felt like he’d been kicked in the teeth by state fisheries managers. Couch had sent a letter to then Commissioner of Fish and Game Sam Cotten, a long time commercial fishermen, begging him not to open the north end of the Inlet to protect the coho.

Cotten never responded to the letter and the state followed up with another commercial opening in the area at the start of August when more “dog-food grade” sockeye were available. Cotten is now gone as commissioner, but the Kenai commercial fishermen who swayed him remain an active and powerful group fighting any changes in Inlet salmon management.

The present management scheme, which gives a priority to commercial harvests in July, has already cost the state hundreds of millions of dollars in lost tourism business according to a respected economics firm that studied the issue for the Matanuska-Susitna Borough north of Anchorage.

The Mat-Su has watched sportfish tourism businesses wither and die because of the inability of salmon to dodge the gillnets in the Inlet while trying to reach Susitna River drainage.

Mat-Su interests want to shift management more toward sportfishing, but they are up against powerful interests even as a fishing industry built around chasing wild fish struggles to compete with modern agriculture in the form of salmon farms.

“The magnitude of this change, in addition to the variability of Alaska’s wild salmon runs and the overcapacity of the state’s aging processing infrastructure, has long-time processors such as Peter Pan Seafoods, which recently went up for sale, struggling to stay afloat,” Fiorillo wrote.

“There is no doubt that times are tough for many Alaska salmon processors. Some executives say the past season was one of the worst in decades (despite a banner year for the fishermen in Bristol Bay, Alaska’s largest sockeye producing region) and has brought many processors to their knees. Critics blame the current state of affairs on the companies themselves, arguing that they neglected to invest in their plants for decades and now are suffering for it.”

Along with Peter Pan, Ocean Beauty and North Pacific Seafoods are struggling. Cooke Seafoods, which already owns Icicle, is reported to be in negotiations with Ocean Beauty.

A Canadian company that got its start as a salmon farming operation, Cooke bought Petersburg-based Icicle in 2016 hoping to capitalize on the large volumes of relatively cheap wild salmon available in Alaska.

It is now reported to be in discussions to buy Ocean Beauty, apparently believing in part that the managers there are better equipped to manage the shifting Alaska market.

“Most who participate in the sector will tell you a major rationalization and restructuring of the Alaska salmon processing industry is in motion,” Fiorillo reported. “But what is the value of some of the traditional salmon processors such as Ocean Beauty or Peter Pan? Most of them have old plants that lack automation. And it is hard to see where the money will come from to upgrade these plants, given the slim margins and less than stellar profits in recent years.

“One thing most agree on is there is just too much salmon processing capacity in the state.”

Fiorillo’s report could be read to argue it’s time for Alaska to start adapting to a changing world, but change is seldom something that comes easily.

25 replies »

  1. Nancy Hillstrand

    5:55 PM (2 minutes ago)

    There is alot going on…
    Interesting Valdez selling…. Valdez Peter Pan built in the hay day of hatcheries is owned by the largest seafood company in the world merger of two huge Japanese corporations that processes their neighbours hatchery fish, the 270,000,000 pink salmon release Solomon Gulch Hatchery where more than half are stripped for eggs (caviar) for a market in Europe…

    Here is the history of Peter Pan an American Company bought by Japan in 1979 so they have a means of bypassing the 1976 Magnuson/ Stevens Act moving the territorial limit out to 200 miles to rid our waters of foreign (Japanese) fleets. Pretty savvy move to intercept our fisheries using hatcheries. Valdez SGH is the largest hatchery in Alaska with the largest seafood processor in the world next door…smart!
    That’s fishing

    1898 Alaska Portland Packers stakes claim at junction of Wood and Nushagak River (future site of Dillingham, AK) for salmon cannery.

    1911 Pacific American Fisheries Co. (PAF) builds cannery at King Cove, Alaska.

    1914 P. E. Harris changes name of Hawk Fish Company to P. E. Harris. At that time the sales price of 1# can of salmon was $0.09 (“Double Q” label). This stands for Quality and Quantity.

    1917 PAF Claims land at Port Moller, Alaska site of current Port Moller operations. PAF builds cannery at Port Moller. Trap sites are developed at Port Moller and the Port Moller Spit.

    1933 PAF and Deming & Gould register “Deming’s” label and brand for canned salmon in the U.S.A.

    1954 Deming’s label and brand introduced into United Kingdom for canned salmon.

    1962 P. E. Harris Company, Inc. changes its name to Peter Pan Seafoods, Inc. (PPSF).

    1979 Peter Pan Seafoods, Inc. sold to Nichiro Gyogyo Kaisha, Ltd.

    1985 Peter Pan Seafoods, Inc. purchases 50% of Astoria Warehousing, Inc. in Astoria, OR.

    1988 The Valdez facility is completed and begins operation.

    1989 Seattle warehouse is completed and opened to support Alaska operations.

    1994 Golden Alaska Seafoods Company is merged into Peter Pan Seafoods, Inc. as subsidiary Golden Alaska Seafoods, Inc. (GASI).

    2007 Nichiro Corporation merges with Maruha Corporation in Japan creating the largest seafood company in the world.

    2018 Peter Pan Seafoods, Inc. continues to produce the top selling brands of canned salmon in the United States.

  2. I have said it before. The whole “wild” luster is wearing off.
    Farmed salmon reminds me of OPEC. Alaska, you better jump on the “OPEC” train and the sooner the better. Sad to say really.
    Steve S, um, the Democrat Party has been instrumental in pushing the Globalism you speak of.

    • Bryan,
      This Globalism thing is so beyond Democrats and Republicans at this point.
      It has been building for years, one brick at a time.
      “The Bilderberg meeting is an annual conference established in 1954 to foster dialogue between Europe and North America.
      The group’s agenda, originally to prevent another world war, is now defined as bolstering a consensus around free market Western capitalism and its interests around the globe…
      “To say we were striving for a one-world government is exaggerated, but not wholly unfair. Those of us in Bilderberg felt we couldn’t go on forever fighting one another for nothing and killing people and rendering millions homeless.
      So we felt that a single community throughout the world would be a good thing.”

      • Steve S, socialism/communism come to mind? Amazing a failed socialist, who never held a job until his 40’s (Bernie), owns 3 homes, and is worth millions is doing well by Democrat standards in the Presidential race.

    • Norwegian farmed salmon? Fed concentrated pellets with harmful chemicals. Look up the ways in which they fight parasites and disease? Toxins build up in the fish that are consumed by the public. The little Susitna had a great return of Silvers last fall,Board of Fish has been negatively impacting the Inlet fishery’s because of years of over escapement they pushed for. They have had their chance to make a difference,now they need to move aside and let science and those who know how to manage the fishery take over. The fish in the Inlet are small from over escapement,pinks have nothing to do with it in the ocean but, since the Board has been calling the shots commercials have not been able to harvest surplus supplies of pinks so, the pinks do affect habitat and thus reducing the size of sockeye in the Inlet. Politics in fisheries hardly ever works.

  3. Thanks for your articles on fishery issues. You’re the only guy offering analysis on such important issues.

  4. Russian Sockeye is not the only seafood destroying the U.S. market today.
    “…75 percent of the king crab sold in the U.S. is imported from Russia, where the crabs are caught using unsustainable fishing practices, and much of the meat is mislabeled and brought into the U.S. illegally, according to a recent study by the World Wildlife Fund.”
    Alaska made the mistake years ago of selling out our fisheries to the Norwegians who seem to own half of the fishing fleet coming out of Washington.
    This is all the end result of the globalists dream on squeezing the profits out of American Capitalism.
    Everything from shirts on the rack at Walmart to king crab at Costco seem to be made in Communist countries like China and Russia.
    How can the American economy survive when the only thing we seem to still make in this country is soliders and bombs?

    • Ten years ago, I traveled to South Dakota with a friend for a hunt. The driver was a Cabelas Nut and stopped at every Cabelas store on the route. I looked, but didn’t buy anything. As a veteran ’66 – ’68, it really torqued me that all of the camo clothing was made in ‘Nam………

    • Steve, Shame on you for disparaging the hard working Norwegian/American blue collar fishers in Alaska.
      My grandfather immigrated from Norway in 1913, met my Norwegian grandma and birthed my 1st generation Norwegian/American father. I worked and fished in Bristol Bay and PWS/CR for over 37 years. I take umbrage of your racist and egocentric views of my ancestors.
      All of us in the US are born from immigrants, who have risked everything to get to America. The indigenous Native Americans are the only ones who can claim this country as theirs.
      Pre statehood, San Francisco fish processors sent Italian & Norwegian immigrants to AK to fish and get paid for doing it. Chinese railroad workers were brought along to process the fish.
      Alaska did not sell out to anyone. Alaskan fisheries were wide open in the ‘60s-‘70s before limited entry. Any US citizen could partake. The hardest working ones survived, the others did not. Get a life!

      • James,

        There is no such thing as indigenous Native Americans. The peoples we call indigenous in North America migrated from Asia, many of them replaced other first peoples meaning they weren’t first peoples and definitely not indigenous.

      • James, Steve -O is correct. Excellent response by the way. I just take exception to the whole “Native American” thing. The Europeans were here before the “Native Americans”. So, basically, Europeans are the real “Native Americans”.

      • James,
        If Norwegians want to immigrate to the U.S. and pay taxes, buy land and contribute to our country then great.
        As it stands a handful of Norwegian Oligarchs are in control of over half the permits in some of Alaska’s fisheries.
        This is nothing against the hard working deckhands on board their boats.
        If you do not think Norway has a history of over harvesting marine resources, then you should examine what their whaling fleet did to whale populations in the 20th century and look at their continued harvest quotas in the face of large scale opposition.
        “Norway boosts whaling quota despite international opposition…
        Norway has announced a 28% increase of its annual whaling quota to 1,278 whales in a bid to revive the declining hunt amid international controversy.
        Norway and Iceland are the only countries in the world to authorise whaling.
        Japan also hunts whales, but officially does so for scientific research purposes, even though a large share of the whale meat ends up on dinner plates.”

      • Steve,

        Do you honestly think that what happens to political opposition is what makes a country communist or not?

      • Steve, which AK fishing permits are you addressing here? Which fishery?
        To my knowledge only US citizens or US entities are allowed to have ALASKAN IFQs, Limited Entry, CDQ and Crab shares, etc. issued by CFEC. What have you been smoking?

      • James,
        Ever hear of the Norwegian Oligarch named Kjell Rokke and the company he started called “American seafood company”…last time I checked they alone controlled over $500 million in fish revenue.
        These rich Oligarchs base their businesses out of Seattle so they are technically American Companies.
        The Scandies Rose that just sunk in the gulf of Alaska had a Norwegian flag painted on its bow?
        These Oligarchs are laughing all the way to the bank and have been for a long time in AK.
        “Federal authorities are seeking fines of more than $2.7 million against Seattle-based American Seafoods, saying the company underreported its catch by doctoring the scales on its vessels…
        The National Oceanic and Atmospheric Administration says the practice dated as far back as 2007 on three American Seafoods’ factory trawlers, which catch and process pollock off Alaska, The Seattle Times reported. The company operates six such trawlers in all, reports revenue of more than $500 million and is one of the major players in the North American seafood industry.”
        (Seattle times)
        I guess the feds made Rokke sell off American seafood but he went on to start Aker Biomarine and is now focused on Qrill in Antarctica.
        He just essentially bought the rights to promote the Iditarod race on his new channel “Qrill Paws”.
        “Kjell Inge Rokke, the Norwegian billionaire, confirmed he invested in American Seafoods Group, the company he started his business career with in the US.”

  5. Any snagged Red Salmon should be kept as part of that fisherman’s limit. After fishing the Kenai for almost 50 years, I’ve seen too many salmon realeased only to float down the river shortly afterwards. Studies have shown that salmon fought to exhaustion never make it to the spawning areas. Snagged fish, in addition to their wounds, usually fight longer and become worn out.

    An additional plus: the rivers won’t be crowded for lengthy periods of time as space becomes available when people limit out quickly.

    • Want to know how you can reduce if not eliminate foul hooked red salmon? Fish with a circle hook. I’ve done it for five years and always get my fish (and it’s in the mouth). Google “circle hooks for sockeyes” and you’ll become a convert.

    • We should be able to snag our limit and carry on with our day, there is historical precedent for it the out of state processors didn’t like it an put an end to it. When harvesting fish for food doing so in the most efficient way possible with the least amount of impact should be used…since we aren’t allowed to string a net from bank to bank snagging is that way. At the very least there should be a snagging only section set up on the river so as not to exclude my and many others ancestral right to snag fish.

      • I wouldn’t be adverse to snagging as long as every snagged fish had to be retained. No throwing back small salmon in order to snag a larger one.

    • Steve, that is Pollock harvest you are talking about. The AK Native CDQs are heavily invested and involved in this fishery. Not Norwegian oligarchs.
      The majority of halibut, black cod, Pacific cod, salmon and crab permits are in the hands of over 10K plus fishers from AK, WA, OR & CA. All US citizens, that a hard working blue collar workers.
      Your conspiracy theories does not play out!

  6. Funny how many times one can hear Alaskan elites claim that the answer to all our troubles is that we have to do things more sustainably like Norway…

    Except for salmon. Because who would ever want to control the luxury top shelf niche salmon markets, when the luxury dog food market is easily within our grasp.

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