Commentary

Pain of change

ufa

The United Fishermen of Alaska – one of the 49th state’s most powerful political entities – is mad that commercial salmon fishermen might be losing some fishing opportunities in Cook Inlet, but the world doesn’t seem to care.

Global salmon markets are rapidly moving on from wild-caught salmon, and the sooner Alaska wakes up to this reality the better.

AquaBounty – the company that raises the genetically modified (GMO), fast-growing salmon that Sen. Lisa Murkowski, R-Alaska, likes to call “Frankenfish” – just made a public stock offering hoping to raise $10 million and took in $15.5 million.

Along with farming salmon in Canada, the company operates a recirculating aquaculture system (RAS) in Indiana.

Its Chinook salmon modified with a growth gene from a fast-growing ocean pout “is expected to make the salmon reach a harvestable size in 16 to 18 months, not the usual 28 to 36 months taken by the non-GMO Atlantic salmon,” Undercurrent News reported. 

“The company received its first 120,000 genetically engineered salmon eggs at its Indiana facility in May 2019 and has projected its first commercial harvest to take place in the fourth quarter of 2020.”

RAS rage

Land-based RAS operations using filtered water in closed systems that isolate salmon from wild pathogens and solve the problem of concentrations of fish potentially polluting estuaries are becoming all the rage among fish farmers.

“Finger Lakes Fish: New Auburn salmon farm first of many across country,” the online version of “The Citizen” newspaper in Auburn. N.Y, reported Monday.

“Soon, the salmon you eat could be from Auburn,” business writer David Wilcox wrote. “Finger Lakes Fish, a new aquaculture business, is getting off the ground inside a 43,000-square-foot facility on Technology Park Boulevard. Founded by CEO Ed Heslop, of Aurora, the business raises coho salmon and sells them to high-end restaurants and grocers under the LocalCoho brand name. The Auburn facility is the first of a dozen Finger Lakes Fish plans to open across the country.”

Superior Fresh went operational with this sort of community-size RAS farm in Wisconsin three years ago. The company has already announced expansion plans and other RAS operations are popping all over the place.

Pure Salmon – note the catchy name meant to denote the controlled conditions in which these fish are raised rather than swimming around in an ocean of who knows what –   “wants to be the local seafood option, worldwide,” Seafood News headlined earlier this month.

A four-year-old company owned by a Singapore-based private equity firm, “Pure Salmon has invested in a huge expansion of land-based salmon farming around the world, and has plans to launch operations across the globe with projects planned in Japan, France, North America, China, Southeast Asia, and Africa,” Seafood’s Sam Hill reported.

“The increased viability of land-based fish farming has allowed aquaculture operations to set up shop in areas that cannot support sea-based farms. This gives Pure Salmon the opportunity to build facilities within a relatively short trucking distance of major markets and giving consumers a more local option for salmon, instead of buying imports from faraway locations such as Norway or Chile.”

Bit player

Noticeably absent from that list of “faraway locations” was Alaska, which has become a minor player in the global salmon market. More than 70 percent of salmon are now produced on farms, not caught at sea, and the less than 30 percent harvested in the ocean – many of those hatchery-spawned fish – are split between Russia and Alaska.

The Alaska wild salmon harvest is at a historic peak and seems poised to inevitably decline with or without climate change. Meanwhile, the production of farmed salmon continues to increase.

“Pure Salmon has set the goal of producing a combined 260,000 tons of salmon per year globally once all of its planned RAS facilities are operational. In February 2019, Pure Salmon revealed Tazewell County, Virginia, will be the location of its farm in North America,” Hill reported.

Upper Cook Inlet, the fishery about which the UFA is making such a fuss and which was a battleground before the state Board of Fisheries earlier this year, produced a commercial harvest of 1.7 million sockeye salmon last summer, or less than 5,000 tons, according to Alaska Department of Fish and Game data.

According to the UFA’s Facebook post chastising the Fish Board and the Dunleavy administration, “in 2019 Cook Inlet commercial fishermen and three local processors provided over 2.6 million pounds (approximately 1,300 tons) of seafood to markets and restaurants on the Kenai Peninsula, Anchorage and communities in the (Matanuska-Susitna) Valley for Alaskan’s consumption….With only 160,000 resident sport fishing licenses sold across the state each year, Alaskans best access to seafood resources is through the commercial fishing industry.”

Follow the money

Those locally marketed fish – about 25 to 30 percent of the Upper Inlet harvest – provide the biggest economic bang in Alaska with money flowing to the fishermen who catch them, the processors who butcher them, the middlemen who deliver them to markets and restaurants, the markets and restaurants themselves, and the people who work in all of these places.

The other 70 to 75 percent of these fish are minimally handled and shipped out of state with little return to the Alaska economy. Cook Inlet commercial fishermen pocket some cash. Many of them are now hobbyists who one member of their group described to the Fish Board as “doctors, lawyers and nurses.”

The state collects a three percent tax on their raw fish, the least valuable form of a dead salmon. The tax revenues are split with local governments in communities with fish processing plants. The state gets barely enough out of the deal to pay for the cost of managing and policing the commercial fishery.

Seasonal employees of processing facilities make some money. Seventy-two percent of them are non-residents, according to the Alaska Department of Labor, and spend little money in the state.

Alaska fish processors annually fret about finding enough people to work what are called “slime line” jobs in their Alaska plants and depend to a significant extent on foreign workers on visas.

In 2017, “immigration policies, difficult labor conditions, and the unpredictability of wild salmon combined into a perfect storm. Experts estimate that the labor shortage cost Bristol Bay’s fishery tens of millions of dollars in lost profits,” reported The Counter, a nonprofit publication focused on what Americans eat.

A job recruiter was quoted saying “I don’t know where you find people. I’ve recruited in Guam, Samoa, the Virgin Islands, and 40 states in the lower 48, [but] soon it’s going to be just us recruiters in a room talking to no one about how great work in Alaska is.”

He blamed increased government labor restrictions and reduced appetite for manual labor among young people for the lack of workers.

Economic decisions

Against this backdrop and lobbied heavily by people in tourism businesses in the Matanuska-Susitna Valley and on the Kenai Peninsula, the Board adopted some regulations intended to put more fish in state rivers to increase sport fishing opportunities – which help drive tourism businesses – and feed Alaskans who participate in what are called “personal use” dipnet fisheries for salmon.

The UFA blasted Commissioner of Fish and Game Doug Vincent-Lang for describing the outcome as “‘a win for recreational fishermen and personal fishermen in the state – and a win for conservation – because we ended up not only providing some additional harvest opportunities, but we took some real solid steps in conserving these fish stocks for future generations.’

“UFA is disappointed the Commissioner chose to celebrate through a state-sponsored communication platform the positive outcomes for recreational and personal-use fishermen, without even acknowledging the associated cost to other user groups. The remarks communicate a blatant disregard for the losers in this scenario, namely Alaskan residents who depend on commercial fisheries in the Cook Inlet region, and the individual Alaskans who access the resource by purchasing commercially harvested fish.”

The latter statement, however, was directly contradicted by UFA’s earlier claim of that in-state demand for only 2.6 million pounds of Inlet seafood. Even with the new regulations in place, the commercial fishery is expected to harvest three to four more times as many Upper Cook Inlet salmon.

Despite forecasting a very weak sockeye salmon return next year, the state expects a commercial harvest of about 1.7 million of those fish, a catch in the range of 8.5 million to 10 million pounds. That far exceeds the UFA’s claim of a 2.6-million-pound demand from seafood restaurants that “depend on commercial fisheries in the Cook Inlet region, and the individual Alaskans who access the resource by purchasing commercially harvested fish.”

Given evolving global markets, a slow but steady transition to an emphasis on sport fisheries in the few areas in Alaska where the demand exits to support such a change makes economic sense. Alaska stands to get a much bigger economic bang out of many people flying north to try to catch a few fish to take home in a cooler than it does out of a few people netting tens of thousands of fish each to be shipped south in a freezer van.

And the value of the former fish are likely to increase in real dollar terms going forward while the real-dollar value of the latter fish decrease. Competition and the ever-increasing efficiency in fish farming are expected to hold down salmon prices as has been the case with most U.S. agriculture.

Food and agriculture economist Jayson Lusk has calculated that when adjusted for inflation corn, wheat and cotton prices “were routinely three to six times higher” in the 1950s than 2016. The same trend has applied to most agriculture commodities over the past 70 years.

“The beneficiaries of falling agricultural prices have been food and fiber consumers,” Lusk wrote. Salmon consumers look to become the beneficiaries of the newest agricultural breakthrough going forward.

Alaska commercial fishermen will sadly be the loser. Whether the Alaska economy takes a big hit as well will depend on how the state manages the change.

 

 

 

 

 

 

 

 

 

9 replies »

  1. It may be true that markets will shrink for Alaska salmon but niche markets for high quality wild Alaska sockeye will continue. There are some of us who do not want to eat fish fed who knows what to survive in crowded space and to get flavor. So writing off UCI is pure speculation based on little analysts, except your generalized assumptions.

    Also the idea more fish means more fishing opportunities and tourists is flawed. On the Kenai I would agree the first million sockeye is critical to sport fishing. However add another million and effort and harvest drop off significantly. So the idea more is better is flawed. More importantly on the Kenai is how fish enter and the speed they move through the fishery. In the Susitna exploitation rates are low not due to a lack of fish but a lack of accessibility. The Susitna is a boat based fishery. So adding more fish is not going to do much for tourists. The Kasilof River is another system where access is the issue not number of fish. If one looks at the percentages of the runs entering streams it exceeds 80 % for everything but sockeye.

    So the Commissioner misinformed the public but more serious he became an advocate for a user group. He just compromised the integrity of all managers making in season calls

    • Ken,
      You said:
      “The Susitna is a boat based fishery”.
      Most people do not fish for salmon in the Susitna River, but fish at the mouths of the clear water tributaries that feeds this great drainage.
      Rivers like the Little Susitna, Willow Creek, Little Willow, Caswell Creek and Montana Creek all provide Park’s Highway access to fisheries for tourists and locals a like.
      The dip net fishery on the Susitna is new and will help free up congestion at places like the mouth of the Deshka River (where participants already needed a boat).
      My point is you are wrong that more fish will not help the Susitna drainage as this area has seen closures for the last 5 years up and down the Park’s Highway with a negative impact to the guiding community, property values and morale of those of us who chose to call this area home.

    • Seafood is best eaten immediately after harvest.

      It is the most unstable of any mass market protein sold on the global market place, most prone to spoilage.

      USDA data shows that 50 percent of all seafood spoils and is thrown away prior to consumer sale.

      Seafood is the only global mass market protein that does not have mandatory inspection and standards from point of harvest to consumer purchase.

      The importance of bleeding live animals at point of harvest to prevent spoilage (and disease, food poisoning) is one of the oldest stories in human oral histories – one of the primary stories passed down from generation to generation, around the world.

      The importance of maintaining temperature control to prevent the onset of food spoilage is known throughout the world. It is not a recent ah ha moment on global food knowledge.

      There are no mandatory food handling laws for seafood harvest on this country from the point of harvest to the first point of processing / manufacturing.

      None.

      The only major source of global protein production in the United States and elsewhere in the world.

      Switching gears to Upper Cook Inlet commercial salmon harvests, is there an seafood industry standard to monitor and enforce either time of first bleeding after harvest of salmon or maintaining thermal integrity from point of harvest to delivery to the processor?

      No.

      Of the 400+ UCI drift boats, how many are retrofitted with vessel refrigeration systems that maintain thermal quality to prevent spoilage? How many bleed their harvest before delivery to processors? Very few, probably less than 5 percent, which means there is effectively no guarantee of product quality.

      Why did the effort of VOLUNTARY certification for quality standards of icing and bleeding salmon by harvesters through the Kenai Wild brand program fail spectacularly more than a decade ago?

      Lack of interest of UCI commercial fishermen to guarantee a quality product to fellow Alaskans and the global marketplace. .

      The dirty little not so secret problem with UCI fisheries is that the market place best equipped with inexpensive and reliable energy sources and closest air transport hub to global markets has one of the lowest quality salmon products produced in Alaska’s salmon fisheries.

      That epic failure rests solely on UCI fishermen, processors and apologists who should know better.

      In the last decade while UCIDA has focused a large amount of its attention and money to its Done Quixote attempt to mandate federal management in the UCI fisheries, Bristol Bay drift fishermen and processors have focused on retrofitting boats with refrigeration systems to ensure product quality from the point of harvest.

      A majority of BB drift boats now have invested in product development and quality- UCI has chosen not to.

      Simply mandating temperature and bleeding quality controls for commercially harvested salmon from UCI would probably go further in reducing the number of commercial drift and set netters fishing, more so than any buy back attempts. Why, because this cohort of commercial fishermen and processors has shown no interest in being the cutting edge of innovation or having a commitment to grade a product quality, and would rather give up, quit or die rather than innovate and survive and maybe thrive.

      Sure, there have been and are pockets of innovation and caring of the quality of the end product by commercial fishermen in Cook Inlet – but those attempts have been met with more hostility than Karl Johnstone trying to get back on the Alaska board of fisheries, more knives on the back than Julius Caesar at the forum, and more lead released downfield than between the Hatfields and McCoys.

      So Bravo to Commissioner Vincent-Lang.

      The rest of us have been waiting for a commissioner to finally stand up and say the emperor has no clothes.

      And that doesn’t mean commercial fishing is over or has no meaningful place in Cook Inlet salmon management – but it should be a wake up call to the realities that everyone else seems to be able to see clearly.

      And that awareness and disgust includes the majority of commercial fishermen and processors elsewhere in the state who are extremely frustrated with the intransigence of the old guard in Cook Inlet, and the collateral damage it causes to all.

      Fish On.

    • KT – Writing off UCI salmon as a niche market because it is wild and high quality? You’ve not been paying attention, as your UCIDA peeps sold UCI salmon last year as type / quality 2, suitable for dogs rather than people. In short, you guys are getting your backsides handed to you quality-wise by the fish farmers, regardless of what you personally choose to eat or not.

      In the Brave New World of a tourista dominated Kenai River salmon, my guess is that they end up with about 2 million sockeye up river, after the dippers remove half a million, which will decrease the commfish catch by at least a 1 – 1.5 million fish.

      Perhaps it is time for you guys to embrace the RAS world. If Dunleavy is successful turning AK into the Monaco of the North, combining a day of gambling with a day of salmon fishing (guaranteeing fish on the hook) will be a killer vacation. And the offseason fishermen can chase either rainbows in stocked lakes or actual salmon in RAS vats.

      Keep doing what you guys have been doing and you end up like the buggy whip guys did a century ago. Embrace the new world and you can do quite well. The choice as always, is up to you. Personally, I predict you will hardball the transition, and get your businesses ground into dust by the global salmon marketplace. Cheers –

      • you obviously have no clue about me. I have never commercial fish but I know a lot about it. The truth of this debate is in the figures. For Susitna east side streams cannot produce enough fish for existing users let alone more people. As I pointed out more than 80% of coho enter the Susitna and most of those are not road accessible

  2. Then there is the wagyu/high-end part of the market, which is still Oncorhynchus tshawytscha (chinook salmon) – but it comes from New Zealand. Chinook salmon isn’t indigenous to NZ. A couple of decades ago some NZ entrepreneurs calculated that they had ideal growing condition for a premium salmon so they gave it a go with eggs sourced from here. https://orakingsalmon.co.nz/our-story/

  3. Pretty convenient that UFA mentions the 160k resident sport fish licenses but completely ignores the 288k licenses sold to out of state fishermen in 2018. Those out of state fishermen support businesses here in Alaska, mostly in southcentral (Kenai and MatSu). It is only a matter of time before the massive economic opportunity of supporting out of state visitors chasing salmon will put our ‘friends’ in the commfish community another few notches back in the pecking order for Cook Inlet salmon. Those visitors are going to demand fish in the streams and offshore. And local vendors who cater to those visitors are going to start electing legislators and governors that will make that happen.

    Solution? UFA needs to get into the RAS business. Sooner will be better than later, though I expect they will drag their feet until the rest of the world grinds their businesses into dust. Cheers –

  4. For longer than I care to remember the State of Alaska through the Alaska Board of Fisheries has not been fulfilling its Constitutional obligation to maximize the benefit of the fisheries resource to the people of the State by continuing to restrict personal use, sport, and guided sport salmon fisheries in Upper Cook Inlet in favor of the commercial salmon fisheries. In my opinion the Board needed to adopt constructive change in five areas of the regulations during the recent meeting mentioned in Craig’s piece above. Managers needed instruction to allow incrementally more late-run sockeye salmon into the Kenai River. Additional restrictions needed to be placed on the drift gill net fishery in an effort to pass more salmon to the rivers and streams of the northern inlet. The Board needed to designate a predictable trigger for managers to back off commercially harvesting every last sockeye and transition to passing coho into freshwaters to provide for successful sport fisheries. Folks in the Mat Su, asked for and got a very limited personal use fishery in the Susitna River that will target mostly chum and pink salmon. And, nearly all king salmon management plans needed to be tuned up to operate more efficiently during the times of low king salmon abundance that we find ourselves living through now and probably for some time to come. All user groups took an opportunity hit to conserve kings. None of the actions taken by the Board should come as a huge surprise and none will put the commercial fishery in Upper Cook Inlet out of business. The dirty little secret about the commercial fishery in the Inlet is that there are too many participants for the fishery to be economically sustainable.

Leave a Reply to agimarc Cancel reply