Alaska Sockeye Catch Bounces Back, But Exports to Japan Still Sluggish.

Farmed coho from Chile now said to be preferred by Japanese consumers. Southern Europe increasingly targeted by Alaska Seafood Marketing Institute; processors also pursue domestic value-added segment. Norway still dominates European market.

Salmon were practically leaping into the nets this summer in Alaska. Sockeye catch at Bristol Bay reached 25.6 million fish by the close of the season July 31, and statewide harvest of the red salmon exceeded 40.8 million.

After a disastrous 1998 season, which yielded only 9.9 million sockeye at Bristol Bay, the 1999 harvest was welcome news to Alaska fishermen and processors. But doubt remains whether Alaska can ever recover the dominance of the Japanese market it once enjoyed.

Before a series of poor catches, Alaska sockeye accounted for 40-50% of Japanese salmon imports. Last year, that declined to 20%. Farmed salmon from Chile and Norway have taken up the slack, and Japanese consumers are getting used to them. Moreover, Japan has its own resources.

Farmed coho harvest this summer reached 12,000 tons, well ahead of the 10,500 forecast -- thanks to a low mortality rate among smolts and small salmon. Prices averaged [yen] 500-510/kg. The fall chum fishery, which opened in Hokkaido Aug. 27, was expected to yield up to 16,900 tons.

Before this year's Bristol Bay harvest came in, frozen 1998 sockeye were selling for [yen] 1,100-1,250/kg. But prices fell as the new harvest mounted; by July 21, a 500-ton sale by Marubeni yielded [yen] 820/kg for 4-6 pound headed and gutted sockeye, and the average price had sunk to [yen] 700 by Aug. 28. Norwegian farmed Atlantics, meanwhile, were available for just [yen] 520-530 in the same size, and Chilean farmed coho for [yen] 670-690.

Few if any Japanese supermarkets were featuring new production sockeye during sales tied to Obon (the Japanese festival of the dead) Aug. 15. Instead, they were pushing kirimi -- sliced Chilean silver (coho) salmon. Supermarket buyers say consumers now favor farmed coho over wild sockeye because they find it more consistent in both quality and price, and easier to handle -- sockeye's red color just isn't a strong selling point any more.

Norwegian Production Gains

Farmed salmon production in Norway reached 343,000 tons last year, up 8.8% from 1998, and was expected to increase only 4.9% this year to 360,000 -- thanks in part to feed quotas. But now there's talk of lifting those restrictions, which could bring problems for farmers and the industry as a whole.

Feed quotas were introduced in 1997 as part of agreement with the European Union (EU) to rein in runaway growth in salmon production that had overwhelmed the market and put farmers in the red. Since 1997, however, the restrictions have not only raised prices but raised the value of salmon farms two-fold or even four-fold. Farmers who have borrowed against those higher values could be in big trouble if restrictions are lifted in 2002.

Norwegian salmon exports had reached NOK 6.2 billion by the end of July, with the European Union accounting for 67% of the market -- off from 77% a year earlier. Both the European Union and the United States have imposed anti-dumping duties on some salmon exporters for allegedly selling their product below cost.

The US has long maintained a maximum tariff of 23.8% on Norwegian fresh whole salmon, but hardly any whole salmon has actually been shipped to the US in the last five years. Nearly all the trade has been in fillets, which aren't covered by punitive tariffs. As a matter of fact, fillet exports for the first six months of 1999 increased from NOK 132 million to NOK 153 million.

But the EU has increasingly been imposing selective anti-dumping duties of 14% on Norwegian companies. Most recently affected were Arne Mathisen A/S and Brodrene Eilertsen A/S, which were accused in May of selling salmon at prices below the minimum set in 1997 (NOK 24.20kg). Some Norwegian companies aren't even trying to export to the EU any more; of 191 on the original approved list, only 110 now remain.

Meanwhile, five container loads of Norwegian salmon were rejected by Japan last spring due to a peculiar taste believed to have been caused by vegetable oil used in feed by Grieg Seafood. Ingvald Loring, managing director of T. Skretting A/S, which supplies the feed, said his company's own tests failed to detect any change in taste from increased use of vegetable oil.

Another issue more explosive than taste arose in July, with a proposal by the EU to put a limit on the amount of dioxin in fish oil, which is also used in salmon feed. The proposed limit is five to ten times lower than that naturally occurring in herring and mackerel used to produce fish oil, and removing dioxin would make it considerably more expensive and thus raise the cost of raising farmed salmon.

Chile Has Ups and Downs 

Farmed salmon production in Chile was 130,600 tons last year and is expected to reach 134,500 this year. Japan is Chile's primary export market, accounting for 67% of sales, with the USA second at 19%. During the first half of 1999, however, salmon exports actually fell 37.4% from 133,400 to 83,500 tons, with 53,000 going to Japan and 21,000 to the USA.

Those January through June figures are evidently for all forms of salmon, since total exports of whole eviscerated salmon were only 65,300 tons for all of 1998. As of 1997, when total salmon production was 124,472 tons, frozen accounted for 74,877 (coho/silver 55,086, Atlantic 19,295, king 497) versus 48,443 for fresh and chilled (nearly all of it Atlantic).

Some 98% of Chilean salmon production is exported. Again as of 1997, exports were valued at $313.7 million, including $94.8 million for frozen fillets and $142.6 million for fresh fillets. Besides the United States, Chilean exporters -- reportedly with minimal support from the government -- have been pursuing markets in Brazil and Europe. But higher prices this year have reduced tonnage shipments.

An attempt to impose heavy punitive tariffs on Chilean salmon this year failed in light of evidence that Chile was not subsidizing its salmon industry. The US Department of Commerce set 5.19% duties on three exporters, but that was a far cry from the 42% sought by Atlantic salmon farmers in Maine who have been having other troubles lately: local residents are objecting to expansion of cage farms.

Wild Atlantic salmon used to be a mainstay of the Maine economy, but the number of wild salmon returning to their home rivers has declined by 80% in the last decade, according to a suit against the federal government by two conservation groups, the Atlantic Salmon Federation and Trout Unlimited. The suit blames too many dams, industrial pollution and overfishing for decimation of wild stocks.

More Canadian Restrictions

Canada's sockeye fishery was closed in early August, after the Pacific Salmon Commission revised its projection of the Fraser River run from 8.2 million to only 3.1 million. Lingering effects of El Nino from two years ago were blamed. It was a devastating and unexpected blow to fishermen, processors and exporters.

The Canadian government had already banned coho fishing in northern British Columbia, and refused to lift the ban this summer despite near-record catches by US fishermen -- 800,000 fish, including 200,000 in Canadian waters. On June 4, the Canadian government approved a salmon treaty update which British Columbian officials protested favors US interests and was negotiated without their input.

With Canada also promoting reduction of the Pacific salmon fleet, only farmed salmon may have a commercial future in British Columbia. Production totaled 39,000 tons last year, up from 32,500 in 1997, and contributed $CA 613 million to the provincial economy.

A survey by the British Columbia Salmon Farmers Association (BCSFA) this year showed that 69% favor growth of the industry as long as environmental safeguards are in place. But there has been a freeze on new farm permits since 1995, in part because of fears that Atlantic salmon might get loose and spread disease or breed with Pacific salmon.

This actually happened in June, but in US waters: 100,000 farmed Atlantics were reported to have escaped from Northwest Seafarms off Bainbridge Island, Washington. Like their US counterparts, British Columbian farms use open net cages that could let salmon escape if they are damaged, and which allow wastes and excess food to contaminate the water.

But the BCSFA argues that escaped Atlantic salmon aren't any threat to Pacific salmon. Despite hundreds of deliberate attempts to introduce wild Atlantics to Pacific waters, let alone 25 years of farming, "only a handful of second generation [Atlantics] have ever been found," said Anne McMullin, executive director of the group. Atlantic salmon just can't compete with their Pacific cousins, she noted -- in fact, Pacifics have driven Atlantics out of other habitats, such as the Great Lakes.

Meanwhile, Canada has been in an ongoing salmon war with Australia, which has banned imports -- allegedly on health grounds, but actually (the Canadians believe) to protect its own farmed salmon industry.

On July 19, the Australian Quarantine Inspection Service (AQIS), in response to a ruling by the World Trade Organization (WTO) that its treatment of salmon violated WTO rules and was inconsistent with standards applied to other finfish, agreed to allow uncooked Canadian salmon imports -- but still under strict conditions.

The AQIS decision was immediately denounced by the Tasmanian Salmonid Growers Association, which demanded compensation for any disease damage to the AU$100 million a year fanned salmon industry. But Canada in turn said it would pursue a claim before the WTO for US$ 30.29 million in damages for lost exports, and the right to impose punitive tariffs on Australian exports.

Canadian processors are beginning to tap the domestic market with value-added products. Even private label is getting into the act, with marinated Atlantic salmon fillets under the President's Choice label from Loblaw Companies, Toronto, Ontario. Thanks to franchises of President's Choice south of the border, the items are being introduced to US consumers as well. Lemon & dill salmon fillets in 20-ounce packages, for example, were retailing for $9.99 recently at Acme Markets outlets in New Jersey and Pennsylvania.

Alaskan Industry Fights Back

The Alaska Seafood Marketing Institute (ASMI) is concentrating on Southern Europe as an export market. Overall exports of Alaska seafood reached 3,864 tons in Portugal and 2,312 tons in Spain, but most of those were groundfish. Italian imports of 312 tons and Greek imports of 136 tons were mostly salmon.

In mid-July, ASMI took foreign buyers on a tour of seafood plants in Alaska and in Seattle. "The companies are major seafood importers, and have conducted promotions of Alaska seafood," said ASMI spokesman Laura Fleming. David McClellan, ASMI trade liaison for Southern Europe, accompanied the mission, along with Lisa Twedt of the US Foreign Agricultural Service.

Abordo, a retail frozen food chain in Spain, was represented; so was Frieremar, Spain's largest fish importer. Other companies taking part included Spanish importer Pescados, Italian smoker COAM, Panatrade of Spain, Scagel of Portugal, Kontoveras of Greece and Mercadona of Spain.

Value-added products account for most of the growth in the domestic frozen food market, but that message was lost on the salmon industry for decades. A few years ago, you could have counted value-added frozen salmon products on the fingers of one hand, but now there are dozens and they are gaining greater exposure in retail cabinets. A few of these include:

* Icicle Seafoods, Inc., Seattle, Washington (Fax: [phone]), Salmon Chef line: salmon tenderloins in chili cilantro, salmon petite fillets in sun-dried tomato basil, salmon short loins in sweet red pepper sage, salmon strips in ginger cilantro, salmon medallions in dill sorrel, salmon burgers, salmon shooters.

* Aquacuisine, Inc., Campbell, California (Fax: [phone]): salmon franks, salmon sausages (hot Italian; garlic, basil & sun-dried tomato), Mediterranean salmon; Salmon Santa Fe.

* Ocean Beauty Seafoods, Seattle (Phone: [phone]): chum fillet moist cuts, coho mesquite boneless skinless fillets, salmon fillet burgers (honey garlic, lemon dill), salmon fajitas.

* Trident Seafoods Corp., Seattle (Fax: [phone]): seafood croquettes (blend of salmon, potato cubes, herbs and spices), salmon nuggets, salmon croquettes, mesquite glazed salmon portions, marinated salmon sides (teriyaki, garlic-lemon-dill, mesquite, blackened cajun), Maritime Medley (salmon, surimi, shrimp).

Icicle Seafoods is pursuing the commercial foodservice market with with institutional packs of its Salmon Chef value-added products -- short loins, tenderloins, kabobs, diamond cuts and burgers. Foodservice operators are being offered a choice of three-pound aluminum steam trays and 32-pouch vacuum packs in tenderloins, short loins and diamond cuts; two-pound trays in kabobs -- which are garnished with Japanese yakiniku sauce. The items are promoted at Icicle's web site.

Fisher Unloads Seafood Units To Avoid Drowning in Debt

Burdened by debt and by pressure on prices from retailers, the Albert Fisher Group has unloaded its three fish and seafood units and is also getting out of chilled food distribution.

Rahbekfisk of Denmark, a value-added processor and largest of the three fish and seafood units, was sold to the Dutch Gilde BuyOut Fund, which is consolidating it with the German Pickenpack Tiefkuhlgesellschaft GmbH (see story, p. 84).

Gilde and Heiploef Beheer, a Dutch food group, jointly picked up two Belgian seafood units, Morubel (scallops, prawns and clams) and La Couronne (salmon and halibut). At the same time, Fisher sold British chilled food distributor A. Wood & Sons to its management, and it is seeking buyers for its chilled food business in the UK and its frozen food operation in Europe.

Fisher got 15.5 [pounds sterling] million from Gilde for the three fish and seafood operations, and assumed 5.4 [pounds sterling] million of their debts. It was able to realize 1.25 [pounds sterling] million from the Wood buyout. Altogether, the three sales reduced its debt from 165 [pounds sterling] million to 99 [pounds sterling] million. Just before the sales, Fisher had reorganized into frozen produce, seafood and chilled produce divisions, but the second and third seems to be on the way out already.

Spanish Seafood Processor Targets Market in Benelux

Congelados Marimar Espana (CME), Madrid, Spain, has just opened an office in Belgium to develop the entire Benelux market.

"As our planned growth in the southern market is becoming more stable, we decided to open an new office with three representatives in Belgium," said Yves Verhamme, chairman of CME. "This way, we can attack the Benelux market with our products such as peeled shrimp, fresh water black tigers and langoustines, all either raw or cooked and IQF."

In addition to its own products, Verhamme added, CME will try to introduce other typical Spanish seafood items into Northern Europe according to the same strategy it has used in Spain, Portugal and Italy. Sales were up eight percent during the first half of 1999, he said, and projections are for 12% growth over the rest of the year.

Two Organizers Join forces For Fisch International 2000

Two trade fair organizers in Bremen, Germany, have combined forces to sponsor the next Fisch International & Seafood Europe show in Bremen in March 2000.

Messe Bremen GmbH has joined the original organizer, Messe-und Austellungsgesellschaft Hansa (MGH) GmbH. "With Messe Bremen, we have acquired a strong new partner, and together we are well prepared for the challenge tasks ahead of us," commented MGH General Manager Peter Koch Bodes.

Alaska Catch, 1999(*)

Sockeye                40,821.0
Pink                   45,448.0
Churn                  12,364.5
Coho                    1,499.9
Chinook                   341.1
Total                 100,474.5

(*) millions of fish as of Aug. 153