Salmon industry's changing currents.
For Alaska's salmon fishermen, processors and hatchery hatchery
a commercial establishment dedicated to the hatching of bird eggs to provide day old chicks and poults to the poultry industry.
the contents of unfertilized eggs. Used in petfood manufacture. operators, 1991 was plagued by low prices, late returns and intra-industry quarreling. Here's a look at what the future holds.
In 1991 many Alaskan salmon fishermen tasted the death of their way of life. They weren't alone. Out-of-body experiences Noun 1. out-of-body experience - the dissociative experience of observing yourself from an external perspective as though your mind or soul had left and was observing your body were reported by salmon producers and processors around the world. What they saw was a frightening spectacle of chaotic markets, strikes, plunging prices, a mountain of unsold product, bankruptcies, foreclosures, even burials at sea for truckloads of pink salmon pink salmon
Food fish (Oncorhynchus gorbuscha, family Salmonidae) of the North Pacific that constitutes half of the commercial fishery of Pacific salmon. It weighs about 4.5 lbs (2 kg) and is marked with large, irregular spots. Pink salmon often spawn on tidal flats. .
Some fisheries fisheries. From earliest times and in practically all countries, fisheries have been of industrial and commercial importance. In the large N Atlantic fishing grounds off Newfoundland and Labrador, for example, European and North American fishing fleets have long analysts say dire straits Noun 1. dire straits - a state of extreme distress
straits, strait, pass - a bad or difficult situation or state of affairs should give way this year to slightly smoother sailing. Although predicting salmon prices makes tea-leaf reading seem like an exact science, fairly reliable signs indicate that prices may float upward. But the business of catching and selling salmon has probably changed for good.
Fishermen received 70 cents a pound for Bristol Bay Bristol Bay
An arm of the Bering Sea in southwest Alaska between the mainland and the Alaska Peninsula. It is a rich salmon-fishing area. sockeye (red) salmon in 1991, down from $2.25 a pound in the dreamy dream·y
adj. dream·i·er, dream·i·est
1. Resembling a dream; ethereal or vague.
2. Given to daydreams or reverie.
3. Soothing and serene.
4. days of 1988, when a couple of reds were worth more than a barrel of North Slope North Slope, Alaska: see Alaska North Slope. crude. Alaska sockeye salmon sockeye salmon
or red salmon
Food fish (Oncorhynchus nerka) of the North Pacific that constitutes almost 20% of the commercial fishery of Pacific salmon. It weighs about 6 lbs (3 kg) and lacks distinct spots on the body. had been the state's money fish, accounting in 1991 for 65 percent of the value of the entire salmon harvest and 36 percent of the weight.
World production of salmon in 1991 was 2.3 billion pounds, almost double the production of 10 years ago. Farmed salmon's market share has grown from 1 percent in 1980 to 30 percent. There's a tidal wave tidal wave, term properly applied to the crest of a tide as it moves around the earth. The wavelike upstream rush of water caused by the incoming tide in some locations is known as a tidal bore. of fish out there.
Cheap, abundant salmon has created something of a paradox: Although low prices are causing suffering in the short-term, new consumer interest sparked by the bargains may bring stability to the Alaska salmon industry. Consumption is increasing, but not fast enough to use all the available salmon at anywhere near the prices sellers used to get. Japan, the world's largest salmon consumer, last year couldn't absorb the increased production at lofty 1988 prices.
Many Japanese importers lost lots of money as they slashed prices in early 1991 to sell expensive fish that they'd bought the year before. Burned by the expensive fish, and with cold storages still brimming brim
1. The rim or uppermost edge of a hollow container or natural basin.
2. A projecting rim or edge: the brim of a hat.
3. A border or an edge. See Synonyms at border. with farmed coho salmon Coho salmon
oncorhynchuskisutch. from Chile purchased during the winter, Japanese buyers last summer were looking for Looking for
In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. cheap sockeyes from North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. .
Pink salmon fishermen fared worse. Although the fish returned in record numbers, fishermen received between 12 and 15 cents a pound, and many processors stopped buying as their canning lines clogged with late-arriving fish. Many fishermen claimed they were losing money. Some quit, tied up their boats, and sat out the rest of the dreary season. The value of limited entry permits in Prince William Sound Prince William Sound, large, irregular, islanded inlet of the Gulf of Alaska, S Alaska, E of the Kenai peninsula. It has many bays and good harbors; the large Columbia Glacier flows into Columbia Bay, in the N central portion. plummeted.
Finger-pointing ensued. The Japanese were blamed for fixing prices, though credible evidence of illegal activity has not yet surfaced. Processors in Prince William Sound accused the aquaculture aquaculture, the raising and harvesting of fresh- and saltwater plants and animals. The most economically important form of aquaculture is fish farming, an industry that accounts for an ever increasing share of world fisheries production. association of producing too many pink salmon, and the aquaculture managers and fishermen blamed the processors for not buying all their fish.
Fishermen and processors blamed the state for not allowing floating processors into the sound to take up the slack. The Alaska Department of Fish and Game was blamed for not opening the season earlier and farther out farther out
Of or relating to an option contract with a later expiration date than a contract that is currently owned or being considered. For example, a contract with a May expiration date is farther out than a contract with a February expiration date of in the sound, which might have improved the quality of the pinks.
Much smaller in number, the wild pinks usually enter Prince William Sound first. But the runs were late, and wild pinks mingled with enormous numbers of returning hatchery fish, so Fish and Game delayed openings Delayed opening
Postponement of the start of trading in a stock until correction of a gross imbalance in buy and sell orders. Such an imbalance is likely to follow on the heels of a significant event such as a takeover offer. See: Suspended trading. until escapement goals were reached for the wild pinks.
Nature was blamed for the late returns. Because the fish were more mature, deterioration was hastened, making them unsalable Un`sal´a`ble
a. 1. Not salable; unmerchantable.
Adj. 1. unsalable - impossible to sell
salable, saleable - capable of being sold; fit for sale; "saleable at a low price" at any price. Nature also had something to do with the small size of the fish. Because processing lines are made for larger fish, that operation was more difficult. Also small fish don't sell as readily as larger ones.
The manager at one Prince William Sound hatchery describes the season as his worst nightmare come true. When the wreckage cleared, there were fewer solvent fishermen and processors in the state's traditionally richest fisheries.
And despite a record harvest of 711 million pounds of commercial salmon, the value of the catch had tumbled from a peak of $745 million in 1988 to $310 million in 1991. Pay for the resource was sliced by more than 50 percent.
Sockeye Prospects. Fishermen met in the off-season to discuss how the pieces of the fish business in Alaska might be restructured. Because Japan consumes approximately 40 percent of all the salmon produced in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , most of which is harvested in Alaska, all eyes are on Japan. Also, because farmed salmon is influencing salmon prices, the salmon farming industries, particularly those in Canada and Chile, are attracting attention.
Market analysts on both sides of the Pacific agree that one of the most important barometers is Japanese cold-storage salmon inventory. These holdings reflect supply and demand patterns, cluing buyers about how much Alaska salmon to buy and at what price.
Inventories of all species of salmon in Japan are down by about 7,000 tons, or about 6 percent from last year due to lower imports and brisk demand. Of special importance is the salmon in storage that's not under contract and which any processor or retailer can buy. The amount of salmon in this category -- a lot of it sockeye -- is believed to be less than 10,000 tons, fewer than last year, and may move fast during the winter months.
Following are several other positive indicators:
* In November 1991, a key month for spotting trends, sockeye salmon was selling in Japan wholesale markets for a price higher than last year's.
* Japan's autumn harvest of chum salmon chum salmon
or dog salmon
Lightly speckled North Pacific fish (Oncorhynchus keta) of the salmon family. The chum salmon ranges from the Mackenzie and Lena rivers in the southern Arctic southward to Japan and the Rogue River. , which sometimes are substituted for sockeye, dropped 15 percent.
* Japan isn't expected to buy any more Chilean coho salmon -- also a substitute for Alaska sockeye -- this winter than was purchased last year. The Chileans announced that they would maintain production levels at about 12,000 tons, most believed to be destined des·tine
tr.v. des·tined, des·tin·ing, des·tines
1. To determine beforehand; preordain: a foolish scheme destined to fail; a film destined to become a classic.
2. for Japan. By contrast, Japan buys more than 50,000 tons of salmon from Alaska.
In future years, Chile is expected to increase production and exports. Japanese ownership of Chilean salmon farms will motivate future interest in production from the South American nation.
* Japanese buyers are paying about 20 percent more than last year for Chilean cohos, or silver salmon. Part of the increase is due to the lower inventory situation.
* Norway is cutting farmed salmon production by 15 percent in 1992. A further cut may follow in 1993 if prices don't firm. Imports of fresh Norwegian salmon by Japan are still relatively small, but growing.
* A poor return of sockeyes is predicted for the Fraser River Fraser River
River, south-central British Columbia, Can. Rising in the Rocky Mountains near Yellowhead Pass, it flows northwest and south nearly to the U.S. border. It then turns west through the Coast Mountains in a spectacular canyon to empty into the Strait of Georgia in British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography
. Japanese buyers in 1991 didn't aggressively start purchasing Alaska sockeyes until later in the season when it was clear that sockeyes from the Fraser would be down 15 percent over 1990.
* Dollar/yen exchange rate fluctuations will probably not put less money in the pockets of Alaska fishermen. Currency fluctuations lowered prices paid to fishermen in 1989, but raised them in 1990. The dollar is likely to remain steady against the yen through the 1992 salmon season.
On the negative side, even though inventories are down, an uncomfortably large supply of North American North American
named after North America.
North American blastomycosis
see North American blastomycosis.
North American cattle tick
see boophilusannulatus. cohos remains in cold storage. If the price of Alaska sockeye were to jump during the next couple of months, consumers might substitute the cheaper cohos, thus driving down demand for the remaining sockeyes.
Also, if considerable stocks of sockeye remain in cold storage at the end of March -- the close of Japan's fiscal year -- wholesalers may unload the remaining sockeyes at bargain prices, lowering wholesale, and perhaps retail, prices just in time for the summer rush of Alaska reds. Lower prices in Japan may mean lower grounds prices -- those paid to fishermen -- even though the cold storages are bare.
The fate of up to 50,000 tons of Norwegian farmed salmon that were frozen when world markets couldn't absorb the glut glut pronounced as rut, slut Vox populi An excess of a service or skilled labor in a particular area. See Physician glut. of fresh product that Norway produced could hurt markets also. Japan is being courted as a possible buyer.
In 1991 Japan imported 9,000 tons of sockeye from Russia, up from a mere 200 tons in 1990. Although the Russians pose no major threat to prices for Alaska sockeye this year, the iron curtain Iron Curtain
Political, military, and ideological barrier erected by the Soviet Union after World War II to seal off itself and its dependent eastern European allies from open contact with the West and other noncommunist areas. has gone up on a salmon resource that in size eventually could rival Alaska's.
Another problem may be slack demand for salmon in the U.S. market, which still absorbs about 40 percent of the Alaska catch. A February article in Consumer Reports magazine warned the public not to eat salmon more than once a week. Later in the month, federal investigations of fish processing In fishing industry, fish processing or fish products industry refers to processing fish delivered by fisheries, which are the supplier of the fish products industry. plants highlighted sloppy industry practices.
Pink Prospects. The outlook for pinks isn't very rosy, particularly in light of the inventory of canned salmon -- the way most pinks end up. U.S. and other consumers would have to eat canned pink salmon like peanut butter for those inventories to be drawn down. George Berkompas of the Seattle-based National Food Processors Association says the current canned salmon inventory amounts to a supply adequate for somewhere between three and four years.
The stability of processors in Prince William Sound also is bad news for that commercial fishing area. After two canneries went bust last season, the other canneries couldn't handle the last-minute influx of pinks and stopped buying, leaving fishermen with fish but no markets.
Heather McCarty, spokeswoman for the Prince William Sound Aquaculture Corp. (PWSAC), fears another glut of pinks, unless the state allows factory trawlers to participate in the fishery.
The trawler companies are knocking on the door. In addition to looking for an invitation from the state, they're asking the North Pacific Fisheries Management Fisheries management is today often referred to as a governmental system of management rules based on defined objectives and a mix of management means to implement the rules, which is put in place by a system of monitoring control and surveillance (MCS). Council to switch the groundfish season from a June to a September start. This would allow the floating processors to steam into Prince William Sound, churning out pink salmon fillets, surimi su·ri·mi
Minced, processed fish used in the preparation of imitation seafood, especially imitation shellfish.
[Japanese : suru, to process, mash + mi, meat.] and a variety of other value-added products that could increase the price paid to fishermen, according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. McCarty and Stuart Looney, chief executive of Seattle-based Royal Seafoods. The proposal to change the season was voted down at a council meeting in November, but trawler companies are expected to ask again.
Shore-based processors in the sound are opposed to the entry of the trawlers. They argue that the trawlers will hurt or kill what's left of their business. The shore-based companies propose instead that fishermen be allowed to catch fish earlier to avoid overwhelming processing facilities with short intense harvests.
The problem, says McCarty, is that the market won't absorb all the canned salmon. New markets have to be developed for pink salmon products. Until that happens, PWSAC is maintaining production levels of pinks at its hatcheries, while attempting to increase efforts to ranch higher-value sockeyes and cohos.
JAPAN'S JANUARY THROUGH OCTOBER SALMON IMPORTS Metric tons, 000 Country 1990 1991 United States 109,865 82,209 Canada 17,348 15,888 Chile 9,388 12,905 Soviet Union 1,494 7,120 China 1,029 1,047 Norway 495 564 Source: Japan Fisheries Association
Producing fish for markets that don't exist is a problem that perhaps reflects Alaska's upside down view of the world. But cutting production in Alaska may play into the hands of other fish ranchers and farmers around the world, which see cuts by competitors as opportunities to increase their market share at Alaska's expense. Clearly, problems in Prince William Sound will not be fixed by quick or easy solutions.
Changing Course. The explosion in worldwide salmon has put fresh farmed fish in the fast lane when it comes to setting prices and reeling in new customers. The shakeouts of the last year will, to an even greater extent than before, pit more cost-efficient farmers against Alaska's romantic -- but perhaps less efficient -- ways of fishing and doing business.
University of Alaska economists agree that the Alaska salmon industry is undergoing a period of change that probably will leave it more competitive and innovative. Other predictions suggest the sun is setting on the Alaska commercial salmon fishery and that within five years it may nose-dive from its present position as one of the state's largest renewable resource Noun 1. renewable resource - any natural resource (as wood or solar energy) that can be replenished naturally with the passage of time
natural resource, natural resources - resources (actual and potential) supplied by nature industries.
Sandy Tavanis, a fish processor and member of the governor's Alaska Salmon Strategy Task Force, thinks both scenarios are equally plausible. That the industry is at a turning point is beyond question. The question for Tavanis is whether Alaska will swim against or with the rising tide Noun 1. rising tide - the occurrence of incoming water (between a low tide and the following high tide); "a tide in the affairs of men which, taken at the flood, leads on to fortune" -Shakespeare
flood tide, flood .
She thinks that Alaskans must first develop a kind of emotional and attitudinal integration somewhat akin to the way the Japanese, and increasingly the Europeans, are vertically integrating their seafood industries. She acknowledges that this won't be easy given such factors as the mythology of the "Last Frontier," the fisherman as lonely hunter, the psychic distance The term ‘Psychic Distance’ is a composite of the Greek word ‘Psychikos’ referring to an individual’s mind and soul (Simpson & Weiner 1989) and ‘Distance’ which is based on perceived cultural differences between a ‘home’ country and a between producers and their markets, and the adversarial ad·ver·sar·i·al
Relating to or characteristic of an adversary; involving antagonistic elements: "the chasm between management and labor in this country, an often needlessly adversarial . . . posture of fishermen, processors and other components of the system.
Says Tavanis, "We all have to bury the hatchets to lay aside the instruments of war, and make peace; - a phrase used in allusion to the custom observed by the North American Indians, of burying a tomahawk when they conclude a peace.
to make peace or become reconciled.
See also: Bury Hatchet , bury the old skeletons in the closet, heal the old wounds. It won't happen this year, but it's got to happen soon if we're to remain a credible player in the global market."
Some processors, fishermen and hatchery managers have started to talk guardedly about different ways to share the risks and rewards of the fishery. One scheme would provide fishermen with a percentage of the grounds price, then later a percentage of the wholesale price. If prices rise as the season progresses, fishermen can claim a piece of the expanded pie.
Another suggested approach would resolve the problem that occurred when buyers last year were reluctant to make early-season offers. It would enable fishermen to sell fish on an "open ticket," with the price left blank until the market creates more information and prices start to move. Some fishermen complain, however, that those among them who are the higher cost operators -- those with huge loans for fish permits and boats -- can't roll with the uncertainties, and that in any case, the very existence of cheap fish may quickly drive them out of business.
Tavanis and other processors point to another problem involved with squeezing more money from the resource. They insist that profit margins are so low that there's little left over to invest in new product forms and more marketing. While acknowledging that some small Alaska processors have developed niche markets for products such as fillets, steaks and microwaveable single-serving entrees, Tavanis says the industry in general needs to develop and launch innovative products.
Fishermen -- who are being asked to accept lower initial prices and reap rewards later in the form of profit sharing profit sharing, arrangement by which employees receive, in addition to their wages, a share of the net profits of a business. The purpose is to give them an incentive to increase their output through enhanced morale, less wasteful use of materials, better care of -- say that processors earned big incomes at their expense in the 1970s and will do it again if given the chance. Tavanis responds that while there was once some justification for mistrust, many problems have been solved during the past 20 years. What's needed now, she says, is complete openness and trust.
The problem in Prince William Sound may require extensive conflict resolution. The state is charged with managing the resource for "maximum economic benefit." But this concept is fuzzy, and critics claim that the whole management scheme, including the means for setting hatchery production goals, is seriously out of sync Out of Sync: A Memoir is the upcoming autobiography of American pop singer Lance Bass, set to be published on October 23, 2007. It features an introduction by Marc Eliot, a New York Times with the realities of the marketplace. Critics also blame smaller fish, poor-quality fish, and shrinking seasons on divergent management goals.
In January, the Salmon Strategy Task Force released its findings. Among recommendations was a quick survey to assess the capacity of processors in the sound to handle another huge return of pink salmon. More coordination among agencies involved in managing the fishery and a greater emphasis on markets and marketing also were advised.
Fishermen were counseled to start talking prices with processors earlier in the season. The task force also recommended that a mediator be stationed in Bristol Bay in an effort to avoid another possible strike. One problem with these steps, though, is that last year little information was available on which to base pricing decisions until well after the fishing had begun.
With powerful market forces challenging the underlying assumptions of an entire industry, profound changes appear inevitable.
Fisheries banker Ed Crane is a member of the Salmon Strategy Task Force. He points out that Alaska has managed the salmon fishery to achieve many goals, not the least of which is the social goal: to allow as many people as possible to make a living catching salmon. That goal, along with other aspects of the salmon business in Alaska, may now be incompatible with borderless market forces.
Will Alaska wind up in the backwash of a farmed seafood machine now building up a head of steam around the world?
That's possible, say industry analysts. But another plausible alternative is a leaner, more united, more competitive Alaska.
Doug Barry is deputy director of the Alaska Center for International Business, University of Alaska Anchorage UAA comprises eight colleges and schools: The College of Education, College of Health and Social Welfare, College of Arts and Sciences, College of Business and Public Policy, the Community and Technical College, School of Engineering, School of Nursing and School of Social Work. . ACIB's Glen Fowler and Eric Downey assisted in preparing this article.