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Salmon industry, troubled with glut, seeks new products and new markets.

Salmon Industry, Troubled with Glut, Seeks New Products and New Markets

For most industries, being "in the pink" is great. For the Pacific salmon industry, it's a migraine headache. But the prospects look a bit brighter - in the long run, at least - for the frozen salmon segment.

With this year's catch of pink salmon so abundant that Alaska Governor Walter Hickel gave away five to ten million pounds of them to the Soviets in the wake of the failed hard-line coup (they would have just been dumped in Prince William Sound otherwise), attention is turning to other species.

Frozen salmon exports to Japan and Europe still figure as the longterm hope of the industry, although for the short term the prices have been low and the shipments have been slow. Prices paid by Japan dropped from 1,200 yen a kilogram last year to 700 yen earlier this year, according to Michael D. Bristow, president of Ocean Premium Marketing, Inc., Seattle, Washington; but at press time, there were signs of an upturn.

Some "aggressive" Japanese buyers were paying $2.75 at Puget Sound in August for four to six-pound sockeye, Bristow told Quick Frozen Foods International. At Bristol Bay, prices had been only $1.80 to $2; and at Cook Inlet, $2 to $2.20." Prices for Canadian salmon have been a bit higher than Puget Sound prices," Bristow added. Mike Epstein, president of J.S. McMillan Fisheries in Vancouver, British Columbia, cited US dollar prices of $2.80 a pound for what he called "standard grade" Canadian sockeye.

Epstein startled Bristow by reporting to QFFI that one salmon concern in British Columbia had even sold a lot of 700,000 pounds of sockeye to Japan at $3.70 for the four-to-sixes, $3.90 for the six-to-nines, and even $3.30 for thw two-to-fours - which had previously been going for $2.10. "Some people must be speculating due to the shortage of high-quality fish," he theorized. "That $3.30 price is totally out of whack." The Japanese are bound to take a loss on the two-to-fours, he added, but must hope to make it up on the rest.

Almost halfway across the world, meanwhile, the Norwegians came to market with 150,000 tons of farmed Atlantic salmon. The government had to bail out the farmers in return for a promise to freeze 44,000 tons, and kill enough smolt to cut next year's production to 120,000 tons. Pacific salmon and farmed Atlantic salmon, meanwhile, are competing for the hearts, minds and pocketbooks of European buyers. At the same time, the Alaska Seafood Marketing Institute (ASMI) is trying to increase the retail market in Japan.

Peggy Parker, ASMI export marketing director, told QFFI about a new TV commercial for Japan, where Ted Motoyoshi is the agency's liaison. Running only 10 seconds, due to budget limitations, it features a Japanese voice chanting "Wild Alaska Salmon" to scenes of salmon leaping and being caught, a glacier and a salmon steak on a plate. It is being broadcast in the Osaka market, which hasn't been reached before, and the ASMI has high hopes for it: in a small-city test market, it boosted retail salmon sales 90%.

It would be a shot-in-the-arm to the industry, after this past summer's gloomy headlines in the Anchorage Daily News about the collapse of the salmon market in Japan and the bankruptcy of Marutsubo Otsubo Suisan Co. Ltd., a major processor of Alaskan red salmon. Rick Lauber, vice president of the Pacific Seafood Processors Association, told the Daily News around July 20 that not a single pound of Bristol Bay sockeye had been sold since Marutsubo and one of its suppliers, Shin Nisshoku Co. Ltd., had gone out of business. "Purchases have come to an exact halt," he said. "Frightening."

But the industry has some worries besides immediate sales, or lack of same. For some reason, Pacific salmon of all species have been smaller this year, according to Herman Savikko, director of the Alaska Department of Fish and Game in Juneau. The difference is slight for sockeyes, but significant for both pinks and chums. Common wisdom has it that large runs produce small fish, but the chum run has been short, so that theory won't hold. Is this just a temporary glitch, or the sign of some unexpected environmental problem that could continue to impact the industry? Nobody knows yet.

As of mid-August, with data from some runs incomplete even to then, Savikko reported catches of about 42.8 million sockeye (weighing in at about 251.2 million pounds), 99.1 million pinks (274.7 million pounds), 7.6 million chum (68.3 million pounds), 2.4 million cohoes (14.9 million pounds), and 539,000 chinook (nine million pounds). Meanwhile, at the British Columbia Fisheries Council, Mike Hunter reported an apparent catch of 5.5 million for sockeye, and up to 34 million for pinks. Canadian salmon, too, were smaller this year - "Our scientists are taking a look at that," Hunder said. "There are theories about the carrying capacity of the Pacific."

Pink salmon, of course, are mostly canned. This year, there was such a glut of them that when Alaska fishermen went on strike to protest prices of only 12 cents a pound, the processors just laughed at them. Fishermen had to go back, take 12 cents, and like it. By contrast, fishermen who struck at Cook Inlet forced processors to up the ante to $1 a pound for sockeye, and those who went out at Bristol Bay got the price raised from 45 cents to 65-70 cents. "It really shocked me that the Bristol Bay fishermen got as much as they did," Savikko said. Of course, while they were out on strike, an estimated five million sockeye got away up the river. That was expected to keep the final poundage for Bristol Bay below the 1990 record of 155 million pounds (as of Aug. 11, it was 153 million). Cook inlet had produced 12.1 million pounds by Aug. 3, only about two thirds of what was expected.

The success of the strikes may have been a sign that, even though the Japanese weren't buying at the time, they were expected to. And that was just what happened, according to Mark Sandvik, vice president of sales of Icicle Seafoods, Seattle. "The Japanese were sitting on a substantial inventory," Sandvik told QFFI. "When they pull out of a market, it becomes no market." But as of late August, he said, "The Japanese have been buying aggressively for three or four weeks. They'll buy everything." Anyway, he added, the salmon industry has had troubles before and always bounced back. The people who were complaining about low prices this year "have a selective memory," and the scare headlines in the press were just "newspaper stuff - the papers don't do their homework."

Of course, Japan isn't the only customer. "The European market is actively buying salmon at substantial prices," Sandvik said, including some pink salmon frozen to reduce the canned surplus. ASMI has a full-time liaison, Nelly Messon, working in France, and a part-time (like Motoyoshi in Japan) liaison, Ian Walker, in the UK. Messon is working with French smokers and further processors, who are in turn working with retailers, small chains and home delivery services. Funding has been short - Messon had only three months last year to carry out a program that should have had 12 months, and wasn't able to get started this year until June because of budget delays. Still, she is making progress, in spite of the Norwegians.

Parker cites the case of one French company which had been buying only Norwegian salmon, but was convinced to go American because Pacific salmon offers more variety - one of the company's pet projects was a salmon steak with a salmon filler of another variety in the center, and that wouldn't work with the single strain of farmed Atlantic salmon available from Norway. In Britain, meanwhile, Walker is working to increase Alaska's share of canned salmon from 44% to 49%, Parker said - but there's a definite limit to the canned market, and ASMI has therefore begun to work on selling fresh and frozen salmon to British importers for smoking and further processing.

Frozen Tops |Fresh'

Of course, two can play at the same game - and for the Norwegians trying to counterattack in the US market, the game is also frozen salmon. Chef Paul Mattison of Pinon's, a top restaurant in the ski resort of Aspen, Colorado, switched from fresh Canadian to frozen Norwegian salmon recently, on the basis of a blind taste test that showed the restaurant staff preferred the frozen salmon almost unanimously. The test took place during the American Express Aspen /Snowmass Food and Wine Classic in June.

Although he didn't know about the competition plans at the time he supplied the frozen salmon to the restaurant, the results didn't surprise Kellus Sewell of Sekkingstad USA, Tahoe City, California, the import company which distributes frozen Norwegian salmon in the United States. "The salmon are frozen very quickly after harvest - within an hour of being live, compared with |fresh' salmon taking days to reach the market," Sewell commented. "Frozen Norwegian salmon has the advantage of quality, taste and safety."

The Canadian salmon used in the test were also farmed Atlantics, according to a release by Sekkingstad's agency, so the only issue in the competition was fresh vs. frozen. Salmon farming is a growing industry in Canada, although not yet on the scale of Norway's. Production this year was about 20,000 tons, 16,000 of that in British Columbia. East Coast output of about 4,000 tons was all Atlantics. On the West Coast, production included about 12,000 tons of chinooks, 3,000 tons of Atlantics and 500 tons of cohoes. There is also a fledgling rainbow trout farming industry in British Columbia, which produced an estimated 300-500 tons this year.

While Alaska promotes its salmon as being wild, and thus less fatty than farmed salmon, it has a hatchery operation for pinks in Prince William Sound. That creates a problem for wild salmon fishermen during the run, however: they have to wait for the fish to swim in far enough to separate into wild and hatchery stocks. "By that time, they begin to lose quality," explains Savikko. "Their flesh becomes darker, and they're harder to market." The hatchery-born pinks have to be caught separately under a cost recovery program for the hatcheries.

World salmon output, according to ASMI, was 2.056 billion pounds last year, with Alaska salmon accounting for 31% of that, or 639 million pounds. Other wild salmon sources totaled 30%, or 796 million. But farmed salmon accounted for 30%, or 621 million pounds. Back in 1980, farmed salmon accounted for only one percent of the production, at 15 million pounds. Alaska then produced 41%, or 511 million; and other countries 58%, or 716 million. The total world harvest that year was only 1.242 billion pounds.

|McSalmon' Not Likely

With this year's low prices, there is talk again of a shift in the whole direction of the market, with salmon as a commodity item. Will there be Salmon McNuggests at McDonald's, as predicted by Paul Fuhs, director of economic development for Alaska? Baloney, says Icicle Seafoods' Sandvik: "People talk about McDonald's every time there's a situation like this." And he disagrees with Ed Crane, president of the Alaska Commercial Fishing and Marketing Board, that canned salmon is old-fashioned and inconvenient because it contains skin and bones. "Frozen salmon has them too," he insists.

Still, the trend of the world market seems to favor not only fresh and frozen salmon over canned, but the same kind of value-added products - both Alaska and Norway are pushing something called "salmon medallions" in Europe, for example. Norway still faces stiff European Economic Community (EEC) tariffs on value-added products, but they'll gone as of Jan. 1, 1993 - and to try to convince European buyers what they may have been missing, it gave a prominent place to new salmon products at the AquaNor trade show in Trondheim in August. Items on display included smoked and marinated salmon, salmon chops, salmon steaks, salmon pates, salmon fillets, salmon soups, and more. There were even international chefs on hand to prepare their own specialties as well as those of exhibitors.

Norway expoerted about 90,000 tons of fresh and frozen salmon to the EEC in 1990, and about half of that was later processed into value-added products by the importers. The Norwegians want to increase both export value and employment by bringing the further processing home. Meanwhile, however, they have to worry about competition from closer to home as well as the United States.

Scots, Too, Add Value

Farmed salmon output in Scotland was expected to reach 37,000 tons this year, according to the Scottish Salmon Growers Association. That would be up from 32,350 tons last year and 18,000 in 1988. And there is a growing value-added market being served by companies like The Salmon Poachers of Hartley Witney, Hampshire, which bones and dresses salmon, decorates them with mayonnaise, cucumbers and prawns, and sells them to delicatessens and caterers. Perhaps other countries will do likewise.

Ireland has also gotten into salmon farming, although the volume of production is uncertain. Fish International ran a piece recently on Burren Fishproducts, a salmon smoking operation that produces up to 600 kilograms a week from raw material supplied by the Irish Salmon Producers Group. The Irish Sea Fisheries Board has an office in Paris, where it is trying to market smoked salmon in competition with that from French concerns like Saumon P.C. of Brittany. Saumon P.C. produces about 8,000 tons of smoked salmon a year - with about 4,800 tons of the raw material coming from Norway, 1,900 tons from the Pacific and 1,400 tons from Scotland and Ireland.

Quality Problems

Concern was expressed earlier this year at a forum on salmon in Berlin about the quality as well as the quantity of farmed salmon in Europe. Salmon of "production" quality, the lowest grade, which shouldn't be exported at all, have been showing up on the German market, according to Egon Ellinghausen of Deutsche See, a major importer. Stefan Stippl, manager of the Norwegian Salmon Center in Frankfurt, attributed this to desperation on the part of a few salmon farmers facing poor sales and huge debts.

Most salmon is graded "superior" or "ordinario," with the former being marked with an ear clip. Sometimes the clip is missing, and Ellinghausen said that in cases like that, his company will pay only the ordinario price. But there's some confusion about what the actual difference is, Stippl said - ordinario salmon as presently defined might just be missing a scale here or there. Norwegian farmers are now working on new criteria, he added. But the quality of the raw material may be moot; a taste test at the fair pronounced most of the smoked salmon produced in Germany and neighboring Denmark to be of poor quality - some so bad it should have been reported to the authorities.

China Wants In

On the other side of the world, China is getting into the salmon farming business, apparently inspired by exaggerated fears (as reported in the People's Daily) that salmon are becoming "rare" all over the world due to overfishing. With an investment of 610,000 yuan, some of it in US-made incubation equipment, the Dongning County Salmon Research Center in China's northeastern Heilongjiang Province seeded the Suifen River with 1.22 million fry in 1988. More than 1,000 adult salmon returned in 1989 and 1990.

But if the rarity of salmon as seen by China was an exaggeration, it isn't entirely a fantasy. The US National Marine Fisheries Service recently declared the chinook salmon of California's Sacramento River a threatened species under the Endangered Species Act, thus forbidding sport and commercial fishermen alike from taking them. The winter run of Sacramento River chinooks has fallen to less than 500, from 84,000 in the late 1960's.

Salmon runs have also fallen in the Northwest, where the Shoshone Indians are alarmed about the disappearance of sockeye that used to swarm up the Columbia, Snake and Salmon rivers to Redfish Lake in their reservation. And even in Alaska, the US Forest Service is putting logs in streams to create pools that increase the survival rate of coho fry on their way to the Pacific.

Perhaps the most unexpected threat to Pacific salmon comes from the double-crested cormorant, a bird that was threatened with extinction back in the 1970's, but has since made a comeback. It is now suspected of preying on young salmon in the Columbia River on their way to the ocean - having previously been accused of raiding catfish farms in the South.

A smaller pest has been causing problems for European salmon farmers: the sea louse. But Norwegian and Faroese farmers have dicovered a simple remedy: chopped onions. Now a three-year trial of the same idea is being carried out in the Shetlands at a cost of 35,000 [pounds].

PHOTO : While the fish are beauties, too much salmon is not always a good thing, as fishermen know all too well.

PHOTO : Factory workers in Alaska prepare salmon for quick freezing.
COPYRIGHT 1991 E.W. Williams Publications, Inc.
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Title Annotation:includes related article
Author:Pierce, J.J.
Publication:Quick Frozen Foods International
Date:Oct 1, 1991
Previous Article:Foreign investment sought to boost Eastern Germany.
Next Article:China's Yantai to speed up production plans.

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