The Kenai Peninsula ranch house for the Cook Inlet Aquaculture Association’s free-range salmon farming business/Wikimedia Commons

AK salmon ranch business failing

The Cook Inlet Aquaculture Association (CIAA) – the Weyerhaeuser of the Alaska salmon ranching scene – is poised to post huge financial losses again this year.

A weak return of pink salmon to Cook Inlet meant the association harvested only about 3 percent of the more than 804,000 pinks it planned on catching to help pay the cost of hatchery operations. And though CIAA did better on sockeye, with the Alaska Department of Fish and Game reporting a hatchery harvest of more than 84,000 of those fish, this was still less than half of the 204,000 expected and needed by a business that has now spent years underlining the “non” in non-profit.

The aquaculture association has yet t reveal how much money it made off the sale of its fish, but sources knowledgeable with Cook Inlet commercial fisheries say CIAA likely took in somewhere between $800,000 and $900,000 on the sale of its cost-recovery salmon.

This is not the commercial-fishermen-run organization’s only source of revenue. It also benefits from a 2 percent enhancement fee, a form of state tax, that Alaska levies on all of the salmon caught and sold by commercial fishermen in the Inlet, and it collects funds from the state and local governments to pay for the costs of raising some salmon for sport fishermen, suppressing salmon-eating populations of northern pike and monitoring some salmon returns.

HigherGov – a website that tracks local, state and federal contracts – calculates that CIAA was paid just over $336,000 by government entities this year. The best estimate on the enhancement tax revenue puts that at about $800,000.

Using these figures to total up CIAA’s 2025 revenue indicates an income of a little over $2 million. That’s less than half of what it costs the organization to run the hatcheries under its control.

What all of this means is that CIAA, already deep in the red, is facing another annual operating loss of about $2 million.

Way underwater

This loss follows on more than $18 million in losses since 2014. It also marks the sixth year in a row that CIAA has failed to come anywhere near to generating its projected cost-recovery revenue, and the ninth time in the last 10 years that it has ended up short of the expected payout for cost-recovery salmon.

The last time CIAA met its cost-recovery goal was in 2018 when revenues topped the goal by $91,415. Since then, CIAA has come up short of the goal to the tune of an average $2.7 million per year.

Anyone at all familiar with finances is now forced to ask the obvious question:

How can a business run like this survive?

And the answer is simple. CIAA keeps asking the state of Alaska for loans, and the state keeps doling out those loans. Oregon was faced with similarly failing hatcheries in the 1980s and decided to let them fail.

Open-ocean salmon farming was at that time expected to be a big, profitable business in Oregon as it was later destined to become in parts of Alaska. Cook Inlet fishermen got into the business expecting to follow on the success of the Prince William Aquaculture Corporation working in a massive, 3,900 square-mile estuary only 100 miles south of the Inlet. 

But things have not worked out that way, and the state has been forced to prop CIAA up with annual loans. When the Oregon salmon farming effort failed, that state took a different view.

“If a well-capitalized company like Weyerhaeuser can’t make it, I don’t know who will step in and take over,” state Sen. Bill Bradbury to the UPI wire service at the time.

The year was 1985, and UPI reporter Tom Towslee started his story off this way:

“Private commercial salmon ranching is an idea that looked great on paper, but its promise of big profits and a revitalized commercial fishing industry has been stranded by economics, biology and plain bad luck.”

If Towslee were in Alaska today, he could arguably start a story about CIAA the same way, though the private, non-profit hatchery associations’ problems appear a lot more about economics and biology than bad luck.

The association’s problems go way back.  Jenny Neyman, a reporter at the long-defunct “Redoubt Reporter,” observed that “the organization has found itself on the brink of a financial crisis, with a $900,000 deficit, increasing loan payments looming on the horizon, cost-recovery fisheries that have not produced revenue as expected and a lack of capital to start up new projects that might be successful.

“The very nature of how the association functions involves a mixture of factors outside its control that create a recipe for financial instability, at best, and, at worst, a level of surprise that the whole thing hasn’t already gone belly up.”

There is little doubt that CIAA would by now be “belly up,” as Neyman put it, were it not running a state-owned hatchery and operating in the strange world of Alaska state-capitalism with a government-run “Fisheries Enhancement Loan” program helping to subsidize CIAA operations. 

CIAA’s “central hub,” as the organization terms it, is the state-owned Trail Lakes Hatchery in the middle of the Kenai Peninsula. The state built the hatchery in 1982; six years later recognized that it was too costly for the state to operate; and subsequently turned the facility over to CIAA.

Pretty much from its beginning, the hatchery has struggled with outbreaks of the infectious hematopoietic necrosis (IHN) virus. The virus is naturally associated with a number of wild sockeye populations, but when it breaks out in hatcheries with dense concentrations of fry and smolt, it can kill a lot of them.

Things at the hatchery didn’t sound good in 2010 when then CIAA President Brent Johnson told Neyman that “lots of times we’re cutting corners with costs so much that we don’t have enough personnel, we’ve got old equipment. There’s these various homestead fishermen kind of bale-wire-the-program-together-and-make-it-work approaches. And we’re trying to get past that to put together real good programs that are actually going to work.”

Not much seems to have changed in the years that followed.

Commercial fisherman Tom Buchanan in Seward now calls the hatchery “a disaster, destroying more fry than it supplies.” But the hatchery’s systemic problems are arguably bigger than sometimes being forced to cull infected smolt and fry.

As state biologist Mark Stopha noted in a 2012 review of the Trail Lakes facility, it “is limited by freshwater capacity and freshwater rearing space. Soon after emergence, all pink and chum salmon fry can be transferred from freshwater to saltwater. Most Chinook, sockeye, and coho salmon, on the other hand, must spend a year or more in fresh water before fry develop to smolt and can tolerate salt water. These species require a higher volume of fresh water, a holding area for freshwater rearing, and daily feeding.”

Holding and feeding fish for a year drives up costs and increases the risks of disease outbreaks and associated mortality. The state’s most successful ocean-farming operations are built around the production of chum and pink salmon, which are, as Stopha observed, “more economical to rear in the hatchery setting and generally provide a higher economic return.”

The state reports the 30.3 million hatchery salmon harvested last year were worth $76.6 million with pinks and chums comprising 62 percent of the value, despite 2024 being a very bad year for pinks as is often the case in even-numbered years when pink returns are a fraction the size of those in odd-numbered years.

In 2023, according to the state report, hatcheries produced 80.4 million salmon worth $131 million, with pinks and chums accounting for $112.8 million or 86 percent of that value. CIAA has tried to transition its operations into great pink production, but has had little success.

It might be doing better if it got out of the free-range farming of fish and into the net-pen farming of fish, but as Stopha observed, that sort of “farming of salmon is not currently legal in Alaska; it is prohibited under Alaska Statute 16.40.210.”

This leaves Alaska dependent on the harvest of only two kinds of salmon, he wrote, “wild fish…that are the progeny of parents that naturally spawned in watersheds and intertidal areas. Hatchery fish are fish reared in a hatchery to a juvenile stage and released.”

When the latter fish return to Alaska and are caught, they are not, however, marketed as Alaska hatchery salmon. They are sold as “wild-caught Alaska” salmon to disguise their origins for sale in a marketplace where there is believed to be some cachet attached to salmon that have not been tampered with by humans.