Bailouts – Craig Medred

All that’s left of the once thriving Dundas Bay salmon cannery/NPS

The Alaska Congressional delegation is singing praises for a new $100 million bailout of the state’s floundering commercial salmon processing business.

In a joint statement from the office of Sen. Lisa Murkowski, the trio applauded the U.S. Department of Agriculture (USDA) move with the state’s senior Republican lawmaker tried to spin it as a new poverty program to provide “almost $100 million of Alaskan seafood for people experiencing food insecurity.

“This purchase won’t just bolster Alaska’s seafood industry and support our coastal communities,” Murkowski was quoted as saying, “but will help bring the highest-quality and healthiest seafood products in the world to families in need. I am grateful for the USDA’s investment in our fishermen and the health of Americans.”

There has been no actual “investment in our fishermen,” presuming she is talking about Alaska fishermen. But they may benefit from a deal that helps processors clean out some of their inventory before the upcoming fishing season.

What Murkowski and her colleagues convinced the USDA to do is purchase about $70 million worth of canned pink salmon and another $30 million worth of canned sockeye salmon to try to draw down backlogs of slow-selling products that have left most processors struggling to cover storage costs after several years of huge returns of both pinks and sockeye,

The purchase could have some trickle-down to fishermen. Historically low prices paid this year were largely blamed on the inability of processors to move both canned and frozen salmon left in storage from 2021 and 2022.

These are the unintended consequences of a warmer North Pacific Ocean. For 60 years from 1920 to 1960, a cooler Pacific limited Alaska harvests to an average of about 65 million salmon per year, according to the official Alaska Department of Fish and Game history, but now regularly produce harvests of 200 million or more of the fish per year.

Decadal harvests averaged 122.4 million in the 1980s, 157.5 million in the ’90s, 167.4 million in the 2000s, and 180 million in the 2010s, but harvests have oscillated widely from year to largely due to the differences in the abundance of even-year pink salmon and odd-year pink salmon.

The smallest of the five Alaska species of salmon and the least desired by 49th-state residents, pinks have come to dominate Alaska salmon harvests while the production of bigger, higher-valued species has trended downward except in Bristol Bay where sockeye salmon are arguably the state’s biggest climate warming’s biggest winner.

Pinks and undersize sockeye were the salmon filling the cans overflowing storage shelves. The USDA announced a buy of $37.5 million worth of canned salmon in a can in May along with the purchase of another $30 million worth of more valuable frozen sockeye filets in an effort to help out processors.

The $67.5 million purchase, however, proved too low to prevent prices paid fishermen for Bay sockeye from falling to record lows. The Bay is the world’s larget producer of sockeye, and Bay fishermen are still angry about the summer’s low prices.

And the latest bailout doesn’t look to do much for them. The biggest beneficiaries of any trickle-down from it are most likely to be the fewer than 1,400 fishermen, about a third of them non-residents, who hold permits to seine salmon. Purse seiners harvest most of the pinks, both wild and hatchery-farmed, that return to the state every summer.

Pinks, the fish most Alaskans call “humpies,” have exploded in number in a warmer Pacific that now supports more salmon than at any time in recorded human history.

Of the 230.2 million salmon the Alaska Department of Fish and Game reported harvested last summer, approximately 152.4 million – or near 66 percent of the catch – were humpies.

This big catch of pinks was valued at $113.7 million or about 75 cents per fish. Most humpies are too small in size to provide the product the market now prefers, a two- to four-pound filet.

As a result, a lot of these fish are still canned, as they were 100 years ago; pouched, a modern version of the can; or increasingly used for pet food. All of those are comparatively low-value products, but seiners can still earn profits thanks to high-volume harvests, although this was not a good year for them despite the big catch.

A $113.7 million harvest works out to only about $81,000 per permit. Since a fair number of the permits go unfished each year, the seiners who fished last season surely earned more than an average of $90,000 per boat last summer, but that isn’t much considering that seiners are, in general, the biggest and costliest fishing boats in Alaska and require a crew of four to six, who must be paid.

The real profit in Alaska is in the bigger salmon – Chinook (king), coho (silver) and sockeye (red) salmon – today’s consumers want, but even there market problems exist because of now heavy competition from farmed Atlantic, Chinook and coho salmon.

Farmed salmon today provide for about 80 percent of global salmon eaten consumption with Alaska and Russia in competition to provide the 20 percent share of wild fish, most of which are pinks and chum salmon. These are the two lowest-value species in the salmon market.

While seiners were hauling in boatloads of pinks this year, gillnetters were – despite those record low prices – hauling in the most money. The statewide catch of 51.8 million sockeye was only about a third the size of the pink harvest, but it was 60 percent more valuable.

Still, low prices resulted in the 2023 sockeye catch being worth about half as much as a 2021 catch that was only slightly larger. The catch of just under 57 million sockeye in 2021 was, according to Fish and Game figures, only 10 percent bigger than last season, but it was valued at $361.4 million versus the value of $181.1 million put on the 2023 catch.

How grim things were in 2023 might best be underlined by how close the $361.4 million value of 2021 sockeye came to the $398.6 million value of the all-species catch of salmon in 2023. Fish and Game was also forced to note the “significant decrease from 2022’s value of $720.4 million despite a 2022 harvest that was less than 70 percent the size of that in 2023.”

The harvest was down in 2022 because it was an even-numbered year. Even-year pinks historically return at about half the strength of odd-year pinks. But humpies made up 43 percent of the 2022 catch even while Bristol Bay that year produced an unprecedented, record harvest of 60.1 million sockeye -more than double the 20-year average harvest of 29.4 million, according to Fish and Game.

The 60.1 million catch simply buried the old record 44.3 million.

It also left processors swamped with frozen sockeyes, the most valuable part of the Bay catch, and contributed to an unusually large volume of canned sockeye given the return contained a lot of smallish sockeye.

All of this left them holding large inventories of canned sockeye and canned pinks while sitting on cold storages full of frozen sockeye, the fish that compete most directly with market-dominating farmed salmon.

Enter Alaska’s national lawmakers.

“I’m grateful to my colleagues in the Alaska delegation for continuing to highlight this issue with me, supporting our fisheries, and feeding those in need,” Rep. Mary Peltola, D-Alaska, was quoted saying in the Murkowski-provided statement. “I’m excited to see USDA make this step and will keep working to get more Alaskan seafood in federal programs and supermarkets across the country.”

Unfortunately in these times, the problem isn’t in getting Alaska seafood into supermarkets; the problem is in getting Americans to buy Alaska seafood.

To start with, the seafood Americans most desire is shrimp which Alaska produces in only tiny quantities. Salmon is the nation’s second most consumed seafood with Americans eating a reported 3.38 pounds per year compared to 5.9 pounds of shrimp.

But most of the salmon Americans now eat is net-pen-farmed Atlantic or coho salmon, and Alaska doesn’t farm those fish. It primarily farms free-range pink and chum salmon.

The state banned net-pen salmon farming in 1989 in the hopes that preventing production along the salmon-farm friendliest coastline in the nation would slow the industry’s growth. It didn’t and Alaska wild salmon were soon overrun by competition from farmed salmon produced in the fiords and bays of Norway, Chile, Scotland, the Faroe Islands and elsewhere.

One of the Norwegian companies – Mowi – recently announced that it expects to reach an annual production of 500,000 metric tonnes of farmed salmon this year. That would put it on track to annually produce more salmon than the record, all-species Alaska harvest of 497,000 tonnes of salmon in 2013.

The state has not come close to a harvest of that weight in recent years in part because of the shrinking size of Alaska salmon. The catch this year ranked fourth in the number of fish but only seventh in poundage.

State records reflect that Alaska salmon have gone from an all-species, average weight of 4.7-pound size in 1980 to just under 4 pounds this year. Scientists studying Pacific salmon in general have reported a “10 percent decline in mean body mass since the early 1960s, though much of this decline occurred since the early 2000s.”

The marketing problem for Alaska is that consumers desire filets from larger fish.

The state’s highest-value salmon are big salmon produced in low volumes such as troll-caught kings and cohos from Southeast Alaska and early-season kings and sockeye from the Copper River.

Even though this was a dismal year for salmon prices, those Southeast kings averaging 10.9 pounds brought fishermen $6.31 per pound at the dock with 5.5-pound average weight coho (silvers) worth $1.40 per pound. Copper River fishermen did even better with their 14.8-pound average weight kings at $11.07 per pound and their 5.3-pound sockeye at $1.82 per pound, according to Fish and Game data.

Bay fishermen, on the other hand, ended up getting paid an average of 52 cents per pound for their 5.5-pound sockeye, according to the state. The greater than three-time difference in price for sockeye Copper River and Bay sockeye reflects a culinary cachet attached to salmon marketed as Copper River kings and sockeyes even though some of the latter come from elsewhere in nearby Prince William Sound.

None of these are canned salmon. They are so-called, “first-of-the-season” Alaska salmon flown fresh to white tablecloth restaurants in May and June. The promotion of those sockeye and king filets in May and early June has helped boost the value of Copper River-area salmon throughout the season.

“Copper River salmon must store up more energy in the form of healthy Omega-3 oils than any other wild salmon to fuel their journey up the 300-mile river. This characteristic difference, possessed only by salmon of true Copper River origin, sets this fish apart in flavor and color and results in an eating experience that is unmatched by any other salmon – farmed or wild – available on the market today,” gushes the website of the Chef’s Roll, “a global culinary community.”

Much of that isn’t true. As researchers who’ve investigated Omega-3 levels in salmon have reported, the fish “vary in total fat and EPA + DHA (the key Omega-3s) content depending on location, season, water temperature, age, sex, and diet. The environment of farmed salmon is controlled, but the EPA + DHA content of the feed varies.”

The Alaska Seafood Marketing Institute credits coho salmon, many of which spawn in small coastal streams only miles in length, with significantly more Omega-3s than sockeyes, and claims Alaska pink salmon canned without salt or liquids almost matches Chinook (king) salmon in Omega-3 values.

But marketing isn’t necessarily about the science even when it claims the science as a marketing tool. And more important than where the Copper salmon are born (some actually start their lives in a fish farm) or how much Omega-3 they contain is how they are handled.

The Copper River fishery is a small, day fishery. Openings are usually only 12 hours long. The fishermen catch a few hundred fish and rapidly return to Cordova where the fish are promptly processed. The local climate is generally cool and wet.

All of these things combine to help ensure salmon quality in a business where quality is hard to maintain given that seafood is one of the world’s most perishable sources of protein.

“Fresh fish is a highly perishable food characterized by a short shelf-life, and for this reason, it must be properly handled and stored to slow down its deterioration and to ensure microbial safety and marketable shelf-life,” noted a 2021 study in the journal Foods.

How salmon are handled in the first hours after they are killed is significantly more important to how they will taste than where the fish were born, whether they were farmed or grew wild, and even what the species.

Alaska’s commercial fishermen have in the past two decades made great strides in improving quality by chilling fish before delivery to processors, but the Alaska fishing business remains at a disadvantage compared to farmers who can literally pump salmon from their pens into a processing plant and do so on a steady basis rather than forcing processors to battle with an overwhelming gush of fish in a matter of weeks as happens in Bristol Bay.

The undeniable reality here is that in these days of “supply chain” economics, the Alaska model of production is badly outdated and because of that flawed.

“Our great fishing industry is a pillar of Alaska’s economy and culture, and a vital part of America’s food supply chain,” Alaska junior Sen. Dan Sullivan, said in the Murkowski missive. “It’s welcome news for our fishermen that the USDA is purchasing $100 million dollars’ worth of Alaska salmon. We will continue to work on many fronts to advance policies and legislation that provide greater stability and more opportunities for the thousands of Alaskans who make up our world-class, sustainable seafood industry.”

These are nice words, but commercial fishing ceased to be a pillar of Alaska’s economy years ago. Commercial fishing remains vitally important to some of the state’s smaller, coastal communities, but what Alaska economic Scott Goldsmith long ago described as the three-legged-stool of the Alaska economy now stands primarily on the oil industry, government and tourism.

The $398.6 million paid Alaska fishermen for the entire catch of Alaska salmon last summer equaled less than 10 days worth of oil from the declining reserves on Alaska’s North Slope, which the state reported to be pumping at an average rate of 479,400 barrels per day in fiscal year 2023, according to the Alaska Department of Revenue.

The commercial fishing business as it now exists in Alaska is old and worn and outdated. It doesn’t need welfare for processors. It needs a remodel, a serious remodel.

Laine Welch, an industry propagandist who once wrote a regular column for the Anchorage Daily News, in 2016 chortled that a “single king salmon (is) worth far more than a barrel of oil these days” while intentionally failing to note how few of them are caught in the state.

An even year, 2016 was a really off year in the Alaska salmon fishery with a statewide, all-species harvest of only slightly more than 111.2 million. It was by far the smallest harvest in the 2010s. The king catch was 417,004 fish or, in one word, tiny. Or, statistically about 0.37 percent of the harvest.

When comparing fish to oil, pink salmon ought to be the measure. Last year, with the state Revenue Department reporting oil trading at an average price of $86.63 for the year, it took about 115 of a commercial fishermen’s humpies to equal the value of a barrel of oil.

Or put another way, that big, 2023 humpy harvest was worth about 1.3 million barrels of North Slope crude to Alaska commercial fishermen, which sounds like a lot until you realize it is only about two and three-quarters days of output from Prudhoe Bay.

What the Alaska commercial fishing industry is today is a fading and outdated business. What it needs isn’t another bailout. What it needs is a major remodel aimed at maximizing the production of the fish the market wants and squeezing the maximum value out of every one of those fish.

Categories: News, Outdoors, Uncategorized

Tagged as: alaska, Atlantic, Chinook, farmed fish, Fish and Game, government bailouts, hatchery, humpies, Mowi, oil prize, pink salmon, Prudhoe Bay, salmon, USDA