The Bristol Bay Borough is now gone from the list of the richest communities in the U.S. even if the Sunday news roll on the United Kingdom version of Yahoo Finance was continuing to tease the headline “Town In Alaska May Be The Wealthiest In The US.”

Granted, the story was one of those adverts or “paid content” promotions that linked to a website called Unpuzzle Finance selling who knows what. Unpuzzle listed the 40 richest towns in the country. 

Neither the tiny Borough, population 869, that surrounds and encompasses the community of Naknek, population 544, nor any of the communities in the Bay made the list although how that could be after the federal government ranked the borough the nation’s fourth-richest county in 2018 is unclear.

If the Bay was rich in 2018, it could only have been richer in 2019 after a big run of sockeye salmon and the high prices paid for them set a state record.

‘Bristol Bay breaks records again in 2019!” raved the Alaska Department of Fish and Game. 

• Highest ex-vessel value of all time: $306.5 million (all salmon).
• Second highest harvest of all time: 44.5 million (all salmon).
• Fourth largest inshore run in the last 20 years: 56.5 million sockeye salmon.
• Fifth consecutive year with inshore sockeye salmon runs exceeding 50 million fish.

The fishery value was up about 9 percent despite a catch of about a million less salmon than in 2018. Sockeye salmon, as usual, produced most of the revenue, and things only got better in 2019 than in 2018 when the average price for sockeye climbed to $1.35 per pound, according to state reports. 

It was great then. It is not so good now.

Half-price sale

Some processors ended the 2019 season worried they’d over-paid and overbought on a return that came back bigger than expected. Then came the global pandemic, which led to the closures of restaurants around the world as country after country tried to slow the spread of the contagious SARS-CoV-2 virus.

More people eating at home – not to mention food hoarding early in the health crisis – helped processors move a lot of frozen sockeye they’d been sitting on in warehouse freezers, but then salmon farmers – who normally sell most of their fish fresh and who already owned most of the restaurant business – started freezing fish and sending them to supermarkets.

Almost overnight, markets changed, new competition appeared, and costs of doing business went up as processors were forced to spend on pandemic protection measures for the 2020 season.

The largely Seattle-based companies which run the salmon business in Alaska got nervous, and the result was a big price rollback this year.

After the record year of 2019, the base prices for sockeye fell to 70 cents per pound. One unidentified fisherman reportedly from the Susitna Valley community of Wasilla told public radio station KDLG in Dillingham that he couldn’t afford to fish at that price.

“….It’s ridiculous because it’s not worth it at all,” he said. “I’m putting all this money in.

“I’m leasing a permit — just for $20,000. And that’s another ten grand for the boat, and then the stuff that I pay for renting the storage, and then taxes for gear and all this other stuff. And then what happens is we get 70 cents. So I go home. I can make more money on unemployment.”

Some processors are paying bonuses for chilled and bled fish, which could bring prices up to 90 cents per pound for some fishermen. But even at that price, the 2020 harvest of almost 38 million sockeye is expected to have an ex-vessel value under $175 million.

The prices are about what fishermen were getting paid in 2016, according to The McDowell Group, a consultancy. Fishermen who’ve been the business for a while have, however, seen this sort of volatility before.

Prices of 55 to 70 cents per pound in the 2000s climbed to $1.50 per pound in 2013 only to come crashing down. They bottomed out at 50 cents per pound in 2015 only to start climbing again.

No Silicon Valley

Salmon fishing in Alaska is a tough, highly seasonal business that has only become more so as farmed salmon have taken over the market place. About 75 percent of the salmon eaten around the world these days are farmed fish.

“Although Alaska supplied over 80 percent of salmon produced or caught in the United States in 2014, it only contributed around 10 percent of the world’s total salmon,” the Alaska Department of Labor reported. “Norway, the world’s largest salmon producer, exported almost three times the total U.S. catch.”

The numbers have only shifted more in Norway’s favor in the years since.

Farmed fish cost more to raise than wild fish, but benefit from efficiency in processing. Because they are produced on a regular basis, there is no need for large numbers of seasonal employees and the infrastructure to feed and house them.

Because the fish are of uniform size, they can be more easily run through fully automated processing plants. Because fish or filets are being shipped to market on a regular basis, there is no need for large, energy-consuming freezer plants in which to store stockpiles of frozen filets.

Alaska processors for their part have only found the Alaska market tougher over the years as rural Alaskans have moved to the state’s urban areas or found ways to garner year-round incomes, and college students have discovered there are better summer jobs.

Processors now bring in a lot of foreign laborers who save their earnings to send home.

Given the economic realities of the salmon fishery in the Bay, how the Borough in the remote southwest corner of the 49th state made it onto the richest places list was never clear to begin with as economist Gunnar Knapp observed. Knapp thought it possible the U.S. Bureau of Economic Analysis simply failed to calculate how much of the salmon money flows out of the Bay.

When silvery sockeye salmon return in large numbers, there is a lot of money made by commercial fishermen, processors and processing workings. But not all that much of the money stays in the Bay.

When the Bristol Bay Regional Seafood Development Association a decade ago commissioned the University of Alaska’s Institute of Social and Economic Research (ISER) to follow the money, it discovered that of the $72.7 million in earnings was netted by limited entry permit holders who fished the Bay in 2010, but only 31 percent stayed in Alaska and a lot of that flowed into communities outside of the Bay.

About 26 percent of the earnings went south with Washington state fishermen. Oregon and California fishermen split another 8 percent. And another 8 percent was spread among fishermen from all over the U.S.

Overall, the study estimated about 70 percent of the fishermen’s earnings –  $50.3 million of the $72.7 million in net earnings of Bay fishermen – left the Bay that year. Earnings for fishing crews were similarly apportioned, and those of processing workers were heavily weighted toward the Lower 48 and other countries because only about an eighth of processing employees working the Bay were Alaskans.

Anchorage and Fairbanks actually boast better claims to Alaska’s wealthiest town than any Bay community. The Unpuzzle list ranked them numbers 33 and 35 among the top-40:

#35 Fairbanks, AK

“Median household income: $76,747

“Alaska is known for its fantastic nature, clean air, and an excellent quality fo life. Yes, Alaska is partly supported by the government’s permanent fund, which pays each resident a share of the state’s oil revenue each year.

“The government service sector, including the military, employs more than one-third of the area’s workers. Also, significant industries are mining and tourism.”

#33 Anchorage, AK

“Median household income: $76,871

“Although the income is this area is significant, the area still has a higher rate of unemployment, around 5.2 percent. The city’s top industries are defense, tourism, and oil production.

“There are even three military bases located in the city’s area. The majority of the population are military and personnel family members.”

The last line does make one wonder Unpuzzle got its information.