And Permanent Fund misdemeanors
Alaska Democrats are upset that Sen. Dan Sullivan, R-Alaska, followed the lead of the Alaska Permanent Fund and invested in a highly successful salmon farming business.
They should be happy at least one Alaska politician has recognized that the world has moved into the 21st Century. The Permanent Fund board of directors recognized that years ago and invested in not one but seven salmon farming businesses.
One of them, Marine Harvest, netted the Fund a $657,000 return on investment back in 2018. Who knows what the returns might be by now. They could be up over $1 million.
And Democrats are outraged that Sullivan made “up to $50,000” by trading in Mowi stock, and that this was somehow “killing” the state’s salmon economy?
If Democrats want to get upset about something, they should get upset with Sullivan and fellow Republicans Sen. Lisa Murkowski and Gov. Mike Dunleavy for propping up Alaska’s failing commercial salmon business.
Why?
Because propping up failing businesses just serves to keep them failing until they finally, catastrophically collapse. See the demise of the Union of Soviet Socialist Republics (USSR).
Hate the salmon farming business or love it, the reality is that this is the future. The Norwegians, who started it all, did to fishing what the animal herders did to hunting long, long ago.
They replaced wild protein production with domestic protein production because domestic production is far more efficient.
Alaska could have jumped on the fish farming bandwagon at the end of the 20th Century and joined the economies getting rich off salmon today. Instead, the state’s political leaders decided to bow to the wishes of the state’s fishing industry and farm the sea in another way, thinking it would be more efficient to let the ocean feed their stock than to pay for fish food.
This works well for sheep and cattle ranchers in many places to this day. Unfortunately, Alaskans overlooked the big difference between ranching on land and ranching at sea.
Terrestrial ranchers can see how well their pastures are doing and adjust their production accordingly. Ocean ranchers can only guess at what their pasture is doing because it is all hidden beneath the waves.
The crash of 2026
The Valdez Fisheries Development Association (VDFA), one of Alaska’s biggest ocean farming operations, is this year demonstrating what happens when you can’t tell what the pasture looks like.
On May 14, 2024, VDFA optimistically reported the release of the first 167 million of what was to eventually total almost 255 million, pen-fattened pink salmon into Port Valdez.
This “target release size” – reached by feeding the salmon in pens just like Norwegian, Chilean and other fish farmers feed salmon in pens – is intended to make the hatchery fry bigger and stronger and thus better able to compete with their wild brethren in the fight for survival at sea.
The likelihood that fattening up pink hatchery fry might also make them able to outcompete other, more valuable Alaska salmon – like sockeyes, cohoes and Chinook – is the subject of considerable debate, which you can read about here if you’re interested: Pink problems.
This story is focused on the risk for ranchers knowing little about their pasture, and all the money VFDA wasted, as it turns out, to fatten up those little fish in 2024.
VFDA didn’t hit the 15.3 million jackpot. Nor did it get the expected 10.2 million. It didn’t even get the worst-case 5.1 million.
With the cost recovery goal unmet, it is unclear where VFDA will get the money to fund hatchery operations next year. Its hatchery has seen some big returns in recent years, and one would hope it put away money for a rainy day like this.
The report did not specifically advise VFDA to set up a rainy-day fund, but it did say that “harvesters need to be diligent in saving during large years to offset weak years.”
How many have done that is not clear. In Alaska in general, there has historically been a lot more searching for “disaster relief” after bad years than saving money in good years to cover losses in those bad years.
And this is a particularly bad year. At this point, the statewide pink salmon harvest is at 15 percent of the five-year average, and pinks – the smallest and least valuable of the salmon species – have for decades made up the bulk of the Alaska salmon harvest.
Pinks have boomed in part because, scientists believe, they are better adapted to warmer North Pacific waters than other salmon, and in part, without a doubt, because of hatchery production.
“The importance of VFDA salmon to the overall seine harvest increased during the study period due to small wild runs and small runs returning to Prince William Sound Aquaculture Corporation (PWSAC) hatcheries. In 2025, the portion of the seine fleet, ex-vessel value attributable to VFDA salmon rose to an estimated 70 percent.”
Ninety-eight percent of this value came from pink salmon harvests. This year, the approximately 200 seiners active in the Sound have gotten nothing out of VFDA salmon returns and little, to date, out of PWSAC pink returns.
By this point, the pink salmon harvest in the Sound should be into the multiple millions if not 10 million or more. As of today, the catch stood at less than 600,000 because seiners have been allowed so little fishing time.
The Alaska Department of Fish and Game today did, finally, report that returns of wild fish to their streams of origin had reached the point that some seine fisheries could be opened for 12 hours, and it added that the PWSAC had met cost-recovery goals at two of its hatcheries and suggested fishing could be opened there.
But even if there was a late-season miracle and the harvest from here on out matched the five-year average, something that is unlikely given that even-year returns of pinks are usually a half to a third the size of odd-year returns, the Sound harvest would fall 5 million pinks or more short of the forecast harvest of 18.6 million.
The odds are the shortfall will be much bigger than that. The parent-year harvest of pinks came in at under 10 million. The non-hatchery harvest of 5.1 million pinks that year comprised “an estimated 3.55 million VFDA fish, 1.42 million wild fish, and 121,800 PWSAC fish,” according to Fish and Game.
The hatcheries took almost half the harvest – 4.88 million pinks – for hatchery cost recovery and broodstock. Forecast to produce 15.53 million salmon that year, VFDA produced only 5.59 million. PSWAC did even worse. Fish and Game reported that its “pink salmon run of 3.08 million fish was 70 percent below the forecast of 10.20 million.
The 2026 season is now looking like an unwelcome replay of 2024 with the Sound well short of the 14.7 million ocean-farmed, hatchery pinks that are forecast to come back to be caught and sold as Alaska “wild-caught salmon.”
“Wild-caught” now also has its own problem. The term is tangled up in a class-action lawsuit accusing Amazon of “greenwashing” seafood.
There is considerable debate among scientists about how much harm to the oceans and environments is being done by Alaska, Russia, Japan and Korea flooding the North Pacific with pink and chum salmon to be “wild caught” or trapped at hatcheries because farming the sea is cheaper than raising salmon in net pens in the ocean or recirculating aquaculture systems (RAS) on land.
There is strong evidence linking the increase in the number of hatchery pinks to a shrinkage in the size of sockeye salmon, and indications of a link to the shrinkage in size of coho and Chinook (king) salmon. There is a strong correlation tying large production of pink salmon in the Sound to declines in sockeye salmon returns to the Copper River, and a sizeable debate over whether that ‘proves’ pink-salmon farming of the sea is responsible for shrinking Copper River returns.
Overlooked economics
From a purely economic standpoint, a Copper River sockeye is 10 times or more greater in value than any Alaska pink salmon, but the Alaska Board of Fisheries pays little attention to economics when setting regulations governing commercial fishing in the state.
This is part of the reason the pound-for-pound value of the Alaska salmon harvest has gone down in the 21st Century even as the volume of fish caught has exploded, and helps explain why salmon-farming businesses in Norway, Chile and elsewhere have flourished despite the significant costs of feeding salmon kept in pens.
What the net-pen and RAS farmers have going for them is that they produce the product most consumers want, a fat filet of Atlantic and coho salmon, while Alaska’s ranchers are mainly producing chums and pinks.
The latter traditionally went into cans. Processors have for years been trying to find ways to move the fish into higher value markets for fast food, fresh salmon, or so-called “fresh frozen” salmon, but many of the fish are too small to make decent filets and putting the fish in modern-day pouches instead of cans really hasn’t done much to raise consumer demand in the Western world.
As a result, a lot of the value of pinks now comes from the sale of their eggs for so-called “red caviar.”
Along those lines, there is just more bad news for Sound fishermen, hatcheries and processors. PSWAC was reporting that only about 25 percent of the pinks returning to its hatcheries were egg-carrying females.
PSWAC – unlike VFDA – did appear likely to harvest enough fish to meet its cost-recovery goals, but hatcheries meeting cost recovery goals was not the objective when then-tax-paying Alaska voters started voting to fund hatcheries to move the state into the ocean-farming business in 1968.
“In the late 1960s, public concern over depressed fisheries was high because, prior to North
Slope oil, the salmon industry was the engine that drove a significant portion of the
state’s economy,” a state Fish and Game history records.
A year after the first bonds were approved, the state pocketed $900 million from the sale of oil and gas leases on the North Slope, and the decision was made to ‘invest’ in more hatcheries. Five years later, the United Fishermen’s Association (UFA), a commercial fishermen’s collective, was formed to push for even more hatcheries.
“Although the UFA and other fishermen’s organizations such as the Alaska Trollers Association (ATA) and Southeast Alaska Seiners (SEAS) became influential supporters of state hatcheries, they lobbied heavily for a private nonprofit hatchery (PNP) program,” that history adds.
“…In 1976 the legislature estimated it would take $400 million to build up the entire fishery resource to a healthy level. Half of that amount would be for state hatcheries and would be provided by state funding. The other $200 million would be designated for development of PNP hatcheries, and the legislature anticipated that funding would come from fisheries groups, private foundations, or federal grants. In 1976, 1978, and 1980 publicly approved bond issues provided $29.2, $27.0, and $7.7 million, respectively, for capital improvements to state hatchery facilities.”
It wouldn’t be long, however, before the state decided the hatcheries were too expensive to operate and turned them all over to fishing organizations controlled by commercial fishermen, and as a result, the hatcheries would never deliver the salmon promised voters: 25 million chum, 8 million sockeye, 1.5 million coho, and 300,000 Chinook salmon” and roughly 16 million pinks.
Since the hatcheries began operating, the coho goal has been met once. The chum, sockeye and Chinook goals have never been met. And the production of cheap-to-raise pink salmon has set records.
At the peak of hatchery success in 2015, the state reported that the Sound hatcheries alone accounted for the harvest of 74 million pinks – 23 million more than the 53 million salmon of all species the hatcheries were promised to produce.
The hatcheries were that year credited with producing Chinook (113,000) and sockeyes (3 million) – two of the most popular fish for average Alaskans who fish with rod and reel – at well less than half of promised levels. The hatcheries came close for coho at 1.2 million, but chum production at 12.5 million was just half of what was promised.
The system worked the way voters intended for it to work only so long as the state ran the hatcheries. Once commercial fishermen took over operations, it didn’t take them long to figure out that the way to make the hatcheries pay was to produce only the cheapest to raise salmon – pinks and chums.
The funding the legislature anticipated coming from “fisheries groups, private foundations or federal grants” never came, largely because the support from those fisheries groups was supposed to be generated by a tax on commercial harvests that never produced anywhere near the revenue to run the hatcheries.
Thus the hatcheries became new, self-sustaining businesses supported by cost-recovery fisheries. Statewide, that model has generally worked well up to now to benefit both commercial fishermen and hatcheries in the Sound and in the state’s Panhandle.
It has not worked so well in Cook Inlet, where the Cook Inlet Aquaculture Association is about $20 million in debt to the state, taking for itself almost all the salmon it raises, and still charging the Upper Cook Inlet drift gillnet fleet a smallish tax to help provide it revenue even though the gillnetters get no hatchery fish.
Sound fishermen are finding themselves in much the same situation this year, but the hatcheries are now so deeply embedded in the Alaska fishing business that it would almost impossible, politically at least, to scale any of them back, let alone shut them down and return Alaska to its one-time status as the wild fish capital of the North Pacific even if the state might make more money off selling comparatively rare “wild” salmon instead of the fish-farmed “wild-caught salmon.”
But there is an old Alaska saying that goes like this: “We don’t care how they do it Outside.”
It helps explain why Alaskans want to continue to live in the 20th Century – the century of steel, hydrocarbons and the beginning of computers – as the world moves rapidly into the 21st Century- the century of carbon-fiber, electric power and artificial intelligence.
Thanks Craig. I’ve been trying to figure out where Peltola’s “Protecting Foreign Trawlers” ad was coming from.