New world order

As commercial fishermen in Alaska’s Cook Inlet continue to beat the dead horse of “maximum sustained yield (MSY),” the world of seafood is evolving at the speed of the SARS-CoV-2 virus.

China’s Haisheng Group, the Asian country’s largest vendor of fruits and vegetables, this week revealed it is looking to invest $800 million to $1.6 billion in 15 to 20 land-based salmon and shrimp farms by 2030.

All of the farms are to rely on recirculating aquaculture systems (RAS), Seafood Source reported. RAS allows seafood to be raised in clean, filtered water, eliminating the potential for the fish to ingest pollutants. The filtering systems can remove fish waste for use as fertilizer.

In Singapore, the Appollo Aquaculture Group is in the midst of construction of an eight-story RAS farm to raise grouper, trout and shrimp.

“The high-tech facility will produce up to 3,000 tonnes of hybridized grouper, coral trout, and shrimp each year with an efficiency, measured in fish per ton of water that is six times higher than established aquaculture operations in the Southeast Asian city-state,” Smithsonian Magazine reported today. 

Atlantic Sapphire, a Norwegian company that started construction on a massive RAS facility in Florida in 2017, now has the first phase of its operation up and running, and is supplying fresh salmon to markets in that state.

“Publix (supermarket) shoppers in Florida may have spotted a new product among the store’s seafood offerings this month: Bluehouse Salmon, grown and prepared in an indoor Homestead facility poised to possibly be the biggest of its type in the world,” according to the latest issue of Miami Today.  

“The product is sold fresh, not frozen, across the U.S. at more than 1,000 locations with retailers including Sprouts, Wegmans, New Seasons, HEB, Giant Eagle and Chef’s Warehouse. Other outlets like Winn Dixie, Whole Foods and Milam’s Market will have to wait.”

Phase one of the farm is set to produce 10,000 metric tons (22 million pounds) of salmon per year in its “Bluehouses.” When fully built out in 2031, the farm is planned to produce 220,000 metric tons (485 million pounds).

Cook Inlet last summer produced 15 million pounds of salmon, according to the Alaska Department of Fish and Game, but only about 4 million pounds of that was high-value sockeye that competes with farmed salmon in the market.

The bulk of the Inlet catch – 9 million pounds – was low-value pink salmon. That catch was reported to be worth $3.2 million to Inlet fishermen. The catch of less than half as many sockeye was worth $6 million.

Since 1985, sockeyes have provided more than 82 percent of the annual value of the catch in the upper Inlet, according to the state’s Commercial Fisheries Entry Commission (CFEC). That money gets spread among about 400 to 500 drift gillnet and 500 to 650 setnet gillnet fishermen.

All told the state has issued 1,305 limited entry permits (570 drift/735 setnet) for the fishery, but given the fishery’s low profitability some permit holders simply don’t fish.

Everyone seems in agreement there are too many fishermen and not enough fish, though this is a problem that was supposed to have been solved in the 1970s when Alaska voters agreed to amend the state Constitution to allow for limited entry in the state’s salmon fisheries.

The Limited Entry Act that followed the constitutional amendment specifically stipulated that the permits constituted “a use privilege that may be modified or revoked by the legislature without compensation,” but commercial fishermen took the act as a de facto grant of ownership to the salmon.

Fish wars between commercial and non-commercial interests have raged in the Inlet almost ever since, growing only more intense as both the state’s tourism industry and the Cook Inlet regional population has boomed.

About four out of every seven Alaskans now live along the Inlet or in the Anchorage metropolitan area at the head of the Inlet. Among them are tens of thousands of personal-use dipnetters who consider Inlet sockeye vital to their food security, and a legion of both resident and non-resident anglers who live to fish.

For many of the latter, there isn’t anything much better than a hard-fighting and tasty sockeye at the end of their line. All of them want more salmon to get past the nets of commercial fishermen to enter the region’s rivers and as a result, commercial fishermen see them as the enemy when the real enemy is the market.

Market realities

The first market reality is that limited entry long ago failed in the Inlet. The intent of the Limited Entry Act was to ensure the ” economic health and stability of commercial fishing.” 

The Act worked in the last late 1970s and 1980s when Inlet sockeye runs were at their peak and sockeye prices were sky-high. Annual average earnings for drift gillnetters hit almost $103,000 per year ( about $180,000 when adjusted for inflation to 2021) in the 10-year period from 1977 to 1988, according to CFEC figures. 

They are now netting but a fraction of that income. The $6 million of 2020 split between 800 to 1,000 active fishermen would work out to an average of $6,000 to $7,500 per permit. Fishermen like to blame this financial loss on catch lost to non-commercial interests, but the catch lost to environmental changes has been significantly bigger.

An analysis prepared for the National Marine Fisheries Service (NMFS) found no significant increase in the noncommercial harvest of sockeye over the past decade although the noncommercial catch has increased as a percentage of sockeye harvest as the catch by all fishermen has fallen from a peak of more than 6 million in 2011 to just over 1 million in 2018.

 

The 2018 fishery was split near equally between commercial drifters, commercial setters and noncommercial fishermen with about a third of the catch going to each.

The NMFS report also found that although the United Cook Inlet Drifters Association (UCIDA), the region’s most powerful commercial fishing lobby, has complained long and loudly about how it has lost harvest to noncommercial fishermen in the Inlet, the harvest trend line since 1990 held almost rock steady at 40 percent of all sockeye.

The real problem the fishery faces is not with harvest but with value. Inlet sockeye that peaked at an inflation-corrected price of $5.56 per pound in 1988 were trading at $1.95 per pound last year, according to Alaska Department of Fish and Game data. 

Prices did creep upward in the last decade from a low of $1.67 in 2000 to the $1.95 in 2019, but the $1.67 of 2000 equals $1.98 when adjusted for inflation.

The big problem Inlet fishermen now face is the one most Alaska salmon fishermen face. When it comes to high-value salmon, the farmers dictate price, and the competition between them serves to push prices down.

With the help of Prince William Sound hatcheries, Alaska has cornered the market on pink salmon – the jug wine of the salmon world – but it faces ever more competition in the sale of other species, and the explosion of RAS operations is only destined to make things worse.

The state was only a couple of years ago eyeing the potential for market expansion in China, but a trade war with China complicated expansion there, and now it looks like China – along with the rest of the world – might be more interested in growing its own salmon than buying fish from Alaska.

“Locally grown” has gone from a trend to a boom, according to the U.S. Department of Agriculture (USDA), which reported the labeling has become a major influence “on
grocery shopping decisions.  Eighty-seven-point-two percent say it is ‘very or somewhat important’ to their choice of a primary food store (in 2018), up slightly from the 2013
level of 85.0 percent.”

The USDA report put “locally sourced meats and seafood” at the very top of its list of top-10 menu trends.

The state of Alaska thought it had this all figured out when it banned Alaska salmon farming in 1990. The ban was supposed to lock up the market for Alaska wild-caught fish. The late Sen. Dick Eliason from the Southeast fishing community of Sitka took great pride in this achievement.

“We had opposition from a senator from Fairbanks. She had a constituent up there who was raising salmon in his garage, and she wanted to make an exemption for him,” he told Sitka radio station KCAW in 2011. “I said, ‘Wait a minute. We can’t do that because we’ll have nothing but exemptions throughout the state. It destroys the total concept of this idea.

“So we hassled back and forth, and she had the bill in her committee, and she wasn’t about to let it go. So I introduced a $40-million bill to fund a coal plant up in her area, and got it to my committee. And I said, ‘Look, you’re not going to get the $40-million if you don’t let that bill go. And she hemmed and hawed, and her representatives from that district came down and beat on her desk every day: ‘We’ve got to do something. We’ve got to do something because he’s not going to let it go!’

“So one morning she said, ‘Well, it’s a lot easier to eat crow if you eat it in small pieces.’ So she turned the bill loose, and of course, we had pretty clear sailing from then on.”

How different that all looks now. Alaska had a pioneering RAS salmon farmer at work in the Interior in 1990, and the state outlawed his entrepreneurship with the idea that by doing so it could control the global market for salmon.

As Eliason put it at the time, “I fished all my life. We didn’t want to see it go down the tube. We were very close to losing it a couple of times.”

It hasn’t gone down the tubes yet, but in the global salmon market, its market share keeps shrinking with low-quality pinks now the bulk of the harvest. Pinks last year accounted for more than 50 percent of the state harvest, but less than a quarter of value, according to the Alaska Department of Fish and Game.

And there are scientists who today believe the explosion of pinks in the North Pacific – pinks are today more plentiful than at any time in history – are suppressing the production of sockeye, coho and Chinook salmon.

There is no way the state is going to MSY the Inlet’s commercial fishermen out of this mess because no matter what fishery managers do, the Inlet can’t produce enough high-value salmon to change the picture.

Even if fishery managers could magically get the total return of sockeye back above the average 6 million per year rather than the less than the 4.5 million of recent years, the market would lower the value compared to those now seemingly long-ago times when Alaska salmon production controlled the global price.

One can only wonder what would have happened if someone in Fairbanks had been allowed to take the lead in developing RAS technology Alaska could sell to the world instead of forcing the world to develop that technology elsewhere.