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Bristol Bay drift gillnet boats in storage awaiting a new season that could be as bad as the old season/Wikimedia Commons
After years of choking on record runs of Bristol Bay sockeye salmon and near-record runs of heavily farmed, low-value pink salmon, the Alaska fishing industry is in chaos with processors now pleading for more government subsidies and coddled commercial fishermen demanding yet more disaster aid.
One could blame global warming, which has led to historically unprecedented harvests of Alaska salmon despite whatever nonsense to the contrary the mainstream media might have reported, but the industry’s problems are far more complex than just trying to sell high-priced seafood in Western markets where the sales of animal protein are dominated by chicken, beef and pork.
Allen Kimball, a one-time fishery scientist who long ago recognized where the big salaries are paid and went to work for Trident Seafoods in 1994, and Mark Palmer, president and CEO of OBI Seafoods and Ocean Beauty Seafoods, well laid out the problems of the moment in an Oct. 26 webinar with the United Fishermen of Alaska:
Market problems brought the opening price paid fishermen for Bristol Bay salmon to a record low this summer, and things don’t look much better for next year given market conditions.
As Palmer observed, Alaska has long been “very reliant on export markets” that bought large volumes of fish and paid for them on the spot, but many of those markets are now gone or radically altered.
Once, he said, “a lot of what you did (as a processor) was deciding what percentage of your commodity product you wanted to presell,” he said, and deciding how much you wanted to hold for the future when you might be able to sell it for even more.
But, he added, “there was always a piece, a good piece, that you needed to be able to sell just for cash flow…(and) as we’ve watched China just all but disappear compared to what it was just four years ago, China was a great home for low-grade reprocessing of fish. They can take a number two; they can turn it into portions. They can take a number three; they can make a block out of it.
“They could turn (a low-value fish) into a very sellable, value-added prodcut, and that’s had a real big hit on the chum business. It’s had a big hit on the frozen pink business.”
Were this the only major change in the business, processors would be struggling, but there have been so many other ground shifts in global markets.
Japan, which historically bought a lot of high-quality Alaska salmon and salmon roe, “has lost 45 percent of its buying power” due to shifts in currency exchange rates, Palmer said. “Asian markets, for the most part, didn’t put up a lot of tariffs against Russia,” so those markets are now basically closed to American sellers “until they work through the Russian sockeye or whatever.”
The loss of Russia, another purchaser of lower-grade salmon, is a big problem. 
“Russia used to be a great market for pink (salmon) green roe,” he said. “They would take pink green roe and immature roe, and they’d produce it into a product that is, you know, a huge, huge seller in their market. We sold a lot. We sold a lot of pink green roe….there was a lot of business done with Russia.”
Pink salmon roe has sometimes been worth as much or near as much as the pink salmon themselves, and Russia was one of the few markets taking green – rather than ripe – roe.
While the Alaska processors are now locked out of Russia, European reprocessors that traditionally stocked up on Alaska sockeye for their salmon smoking operations aren’t buying fish like they once did because they “feel no need to position on inventory,” Palmer said. Businessmen there recognize Alaska processors are sitting on and stuck with inventory they can’t move at prices anywhere near what they had been hoping to get.
Better to let the processors pay the cost of storing the fish than pay to store it in freezers in Europe.
“They don’t feel the need to step up,” Palmer said, and as a result, most of the world’s inventory of frozen Alaska is being carried at the processor level.
“We’re now carrying way more frozen inventory than we would have expected to and (our) borrowing costs are a little over double,” he said. “In real dollars, we’re going to spend four times as much in financing inventory as we did last year.”
Few, if any, businesses can survive these sorts of market shifts for long, but the conditions of the moment might be the least of the problems facing the Alaska fishing business.
Palmer only hinted at these other issues, perhaps because the real, long-term problems are about the last thing his audience of commercial fishermen, many of the most successful of them now living Outside the 49th state, want to hear.
Still, the message was there for those who could read between the lines when he pointed a finger at Russians now efficiently harvesting big numbers of better-managed wild salmon plus hatchery salmon, both which are enjoying an additional boost in numbers thanks to a warming Bering Sea.
“They’re harvested in fish traps,” Palmer said. “They’re processed in factories that are set up to process them. There’s no fishermen. There’s no tenders. They just swim, you know, into a fish trap, and (the Russians) pump them into a factory.”
On top of this inherent efficiency in harvest, he said, Russian processors don’t face the regulatory oversight imposed in the U.S., aren’t saddled with the labeling requirements of the U.S., and have easy access to cheap labor that U.S. processors have to import from abroad and still end up paying higher than minimum wages.
“There’s got to be a fairness issue,” Palmer complained, conveniently overlooking the big hand the U.S. and especially the Alaska governments have had in creating the current situation as they have tried to manipulate the marketplace.
One could almost argue the Alaska fishing business is today on the verge of collapse for the same reason the old Union of Soviet Socialist Republics, the USSR, collapsed: Governmental manipulation of business stifled innovation, locked in inefficiencies, and eliminated market incentives to produce high-quality goods and services.
About all that needs to be said about the Alaska salmon fishing business today is this:
Processors are bribing fishermen to deliver higher-quality fish to processing plants by paying premiums for bled and chilled salmon. The net-pen salmon farmers of Norway, Chile, Scotland and elsewhere, who now produce more than three out of every four salmon consumed around the globe, don’t have to resort to such tactics to ensure quality because of the influence of markets.
Farmers pay to buy the little fish they grow into big fish, and thus every one of those little fish that doesn’t survive, or is blemished or mishandled and thus cannot be sold for a top price, is a loss for their businesses.
Yes, there are sometimes poorly run salmon farms that allow fish to escape or fail to control for sea lice that can injure and even kill immature salmon, but the farmers face a big, economic incentive to avoid such problems.
In Alaska’s salmon capture fisheries, on the other hand, net fishermen are incentivized only to catch as many fish as fast as possible with quality a secondary concern, if that. The hook-and-line troll fisheries of the Panhandle, which harvest comparatively low volumes of salmon long destined for sale in premium markets, are one of the few exceptions. 
These troll-caught salmon are generally bled, gilled, gutted and put on ice immediately after they are caught to provide the highest quality fish to so-called “white tablecloth restaurants.” 
Palmer referenced this in response to a UFA webinar question suggesting Alaska processors abandon those fancy eating establishments in favor of fast-food businesses to increase sales of salmon.
“Fine dining is important,” he said, “There is a halo effect to those products.”
They fuel the image of Alaska salmon as a high-quality product, he argued, and that has a trickle-down value for Alaska salmon filets sold in a variety of markets. Someone buying a once-frozen sockeye salmon filet from a retail discounter with a good reputation for quality, such as Costco, is led to believe they are getting a raw product of restaurant or near-restaurant quality.
Or at least this has long been the thinking of Alaska salmon marketers pushing “wild-caught” Alaska salmon as a premium product. How much that image has been tarnished by the entry into the market by lower-quality, frozen pink salmon caught in Alaska, processed in China and sold by Walmart, Safeway, Albertsons and other major grocery chains at comparatively low prices is hard to say.
The pink filets tend to get very mixed reviews. Mashed – a self-proclaimed website for those “who find the joy in eating” with a claimed reach of ” 25 million monthly readers worldwide” – has advised specifically against buying Walmart’s wild-caught pink salmon, asking “who wants subpar salmon?”
Other species of Alaska salmon, however, have held on to a solid reputation, but face difficulty in competing against farmed salmon because of their price point.
Some of the Alaska industry’s issues here are rooted in its long history. For most of the years after commercial fishing began the north in the late 1800s, the business dealt almost wholly in canned salmon.
The quality of the fish delivered to processors wasn’t a big issue then. Unless the carcasses of harvested salmon were allowed to rot in the sun before being cooked and canned complete with skin and bones, the condition of the fish didn’t much matter.
A canned salmon was a canned salmon, although processors did eventually start removing the skin and bones from their canned or now “pouched” salmon in order to compete with tuna, the other big canned fish product.
And the nature of the salmon fisheries changed through the 20th Century as trollers in Southeast Alaska first began delivering salmon kept on ice to fresh seafood markets in the Pacific Northwest and the U.S. created an Exclusive Economic Zone (EEZ) from the coast for 200 miles out to sea in 1983. 
The latter move led to a radical shift in the Alaska salmon business. The EEZ put an end to Japanese harvests of salmon off the Alaska coast.
As a result, long-time Alaska fishery economist Gunnar Knapp observed in a 1993 paper, “Japanese fishing companies invested in processing plants in Alaska” to help guarantee a supply of fish for the island nation.
Japan eventually became the destination for “about four-fifths of U.S. exports of fresh and frozen salmon,” he wrote. “During the period 1987-1991, Japan accounted for 78 percent of U.S. exports of fresh and frozen salmon by volume, and 82 percent of U.S. exports by value. Japan accounts for almost all fresh and frozen sockeye salmon exports, and well over half of exports of other species….But this growth began to level off around 1990.”
Exports to Japan continued to slow as the new millennium approached and the Japanese found better deals with coho salmon farmers in Chile and safe-to-eat-raw, fresh Atlantic salmon farmed in Norway entered the Japanese market to make salmon sushi, once a rarity in Japan, a sushi mainstay.
Fresh wild salmon can contain troublesome parasites, and for that reason, the Japanese had long avoided salmon sushi.
Over time, they also came to avoid Alaska. The Japanese processors who once dominated the state’s processing operations are now gone.
The legacy of the market transformation away from canned salmon to frozen salmon, however, remains.
“Most seafood (now) leaves Alaska in frozen form after heading and gutting by a vessel or shore-based processor,” according to an Alaska Seafood Overview of the Global Supply Chain written, apparently in part, to placate Alaska commercial fishermen who have long been of the view that the state’s salmon processors are taking advantage of Alaska fishermen.
“Alaska Seafood Marketing Institute (ASMI) contracted with McKinley Research Group to research Alaska’s seafood supply chain and produce a report that increases understanding of this complex topic,” says the first line of the report published in March by the processor-funded lobby for Alaska seafood.
“The global supply chain for seafood is among the most complicated of any commodity,” says the 80-page report, which expands at length on the points made by Palmer and Kimball during the webinar.
“Most products are partially processed in Alaska (e.g., headed, gutted and frozen) before being transported out of state for additional manufacturing, known as secondary processing,” reprocessing or value-added processing, the report says.
“Reprocessing locations typically have an inexpensive, abundant, and skilled processing labor force and facilities that handle large volumes of fish year-round….Most of the filleting happening in these countries is done by hand and is not economical to do by machine with current technology.
“A major reason behind the lack of value-added processing in Alaska is the short timeframe in which many summer fisheries occur. For example, the 50 million or so sockeye harvested in Bristol Bay each summer must be processed within a six-week window in June and July.
“It is difficult to mobilize sufficient resources for such a brief, high-volume manufacturing pulse in a remote location. Processing capacity is limited by factors such as labor, housing, processing equipment, storage space, and outbound shipping capacity. The infrastructure, human capacity, and time required for additional value-added processing is therefore limited.”
According to the report, about 60 percent of this head and gutted (H&G) frozen Alaska seafood is now shipped to Asia where it is reprocessed with much then shipped back to the U.S. Nearly 20 percent is shipped to Europe, a lot to Poland, where it is reprocessed and enters European domestic markets. And about 20 percent is sent to the Lower 48.
China remains a big player in the reprocessing business but is facing competition from Vietnam, Thailand and Korea. Even a lot of Alaska canned salmon, which still comprises about a quarter of the harvest, is being put into cans and pouches after being shipped overseas as frozen H&G, then thawed and reprocessed.
All of this global movement of fish is focused on one goal: lowering production costs.
“Alaska seafood products enter a massive global seafood marketplace from an isolated corner of the world,” the report says, and that remoteness creates manufacturing problems, starting with the lack of a resident workforce willing to work for relatively low pay.
What the report fails to add is that seafood, as a commodity, is also the most fragile source of animal protein, and thus requires extremely careful handling to avoid waste. A peer-reviewed study published in Global Environmental Change in 2015 estimated “nearly half of the edible U.S. seafood supply was lost annually from 2009 to 2013.”
“Fish spoil quickly due to digestive enzymes, microbial spoilage, and oxidation, which change the odor, flavor and texture,” the study noted. Fish processors, have done a good job of reducing losses due to waste, and those now account for only 13 to 16 percent of the problem, according to the report, but consumers “in and out of home” waste 51 to 63 percent of what they buy.
Simply put, unfrozen seafood does not keep well, which is why Alaska processors try to get it headed, gutted and into a freezer as fast as possible during the short and busy salmon season that now witnesses catches nearly 50 percent greater in volume than was the average in the 1980s.
Unlike the Russians, who once free of Soviet socialism instituted efficiencies at every level possible in their Far East salmon fisheries, Alaska has since before territorial days followed the almost exactly opposite path.
The first big government intervention came in 1949 when drift gillnet boats in Bristol Bay were limited in length to 32 feet. The intent of the regulation was to restrict the efficiency of the fleet and prevent highly successful fishermen who could afford to finance larger boats from taking over the majority of the harvest. That view has persisted to this day.
When the Alaska Board of Fisheries considered repealing the 32-foot limit in 1983, Alaska Department of Fish and Game staff warned the Board that “local resident fishermen are convinced that bigger boats would lead to a few rich operators profiting to the detriment of the majority of fishermen.”
The opposition from local fishermen killed the proposed change in a state where commercial fishermen – the last ocean cowboys – have long been iconic figures. In 1960, those fishermen convinced their fellow Alaskans to ban fish traps which supposedly gave too much control of the fishing industry to Seattle-based cannery interests.
“The years of discrimination and political frustration led Alaskans to articulate the question of control of the fisheries on a straight ‘we-they’ basis that left little room for rational discussion of the biological and economic complexities of the resource and the industry,” economist James Crutchfield concluded a decade later. 
The ban on the traps produced the inevitable unintended consequences.
With the traps gone, the number of fishermen increased by 55 percent, according to an analysis conducted by University of Alaska economist Steve Colt.
For a short time, this was all good.
“In the minds of Alaskans, the additional employment of 6,000 fishermen was a clear benefit,” Colt wrote, especially given that the average earnings of fishermen at the time also rose by 20 percent.
The good times didn’t last long. With the number of fishermen on the increase at a time when cooling waters in the North Pacific were sparking a decline in the ocean’s salmon carrying capacity, the inevitable happened.
Salmon were over-fished. The size of returns started creeping downward. And by 1972, they had hit rock bottom, which led to the next big government intervention.
Alaska commercial fishermen then convinced Alaska voters to amend the state Constitution to allow “limited entry” into the fisheries.
A permit system limiting the number of fishermen followed. Fishermen who could prove the longest history in the Alaska salmon fisheries were given permits that then became their property. And the idea that commercial fishing, a seasonal business by nature, was to be protected by the government to provide year-round income for Alaska commercial fishermen was established.
Limited entry created a sense of entitlement that would shape how the fisheries were managed in a variety of ways for decades to come. Harvests were organized in such a way as to try to produce the biggests catches within the shortest times to the benefit of fishermen even if this approach sometimes clogged processing operations and hurt salmon quality.
Again, as with the ban on traps, government intervention worked for a time. Limited entry helped push the price paid Bristol Bay fishermen for sockeye to an average near $2 per pound, the equivalent of about $5.20 per pound in current dollars, in the late 1980s. The starting price this season was 50 cents a pound.
Unfortunately, there were again unintended consequences to government intervention. The boom in the value of salmon came at a time when the Norwegians were just starting to experiment with the widescale farming of salmon.
High salmon prices helped to keep those experiments going until the farmers could figure out how to maximize the efficiency of their business.
The state of Alaska thought it could head off this growing competition with a 1990 ban on fish farming in the waters of the 49th state. But the ban was a colossal market failure. At the time it passed, the farmers were producing 271,000 tonnes of salmon per year. 
The production of farmed salmon, which spread from Norway to most of the cold-water regions of the globe, reached near 2.9 million tonnes last year – a more than tenfold increase, according to the Food and Agriculture Organization of the United Nations.
Over the years, the farmers also managed to increase the efficiency of their farms along with the volume of their production.
“In real terms, the production cost in 2016 was about a third of what it was in 1985, as was the price,” according to researchers who studied the issue and reported their results in the journal Aquaculture in 2020. “This is the relationship one would expect in a growing, competitive industry.”
Costs were by 2020 starting to creep upward, however, and the researchers from Norway and the University of Florida, Gainesville observed that this might make it difficult for some countries, such as Chile where costs were rising fastest, to remain competitive.
“It is well known that there is a global market for salmon where most consumers do not care where the salmon originates from and movements in prices are closely aligned over time,” they wrote. “Hence, the production cost is a key measure of each salmon producing country’s competitiveness, although access to suitable production sites is vital for an industry’s ability to respond to a good competitive position.”
Unfortunately, those observations as to origin and price apply to Alaska’s wild-caught salmon just as much as they apply to the countries – Norway, Sweden, Chile, Canada, the United Kingdom, Denmark, the Faroe Islands, Australia, Iceland, Finland, Switzerland, the Netherlands, the U.S., France and Germany – now producing 99.4 percent of the globe’s net-pen or land-based, farmed salmon, and those countries just joining or about to join the list of farmers – ChinaSingaporeJapanRussiathe United Arab Emirates, Saudi ArabiaSpainPoland, and who knows what country next.
Not to mention that Alaska, Japan and Russia are all engaged in intensive open-ocean farming – ranching as they prefer to call it – of salmon. 
With all of this going on, there are no indications the salmon business is going to get any less competitive in the years to come, and in such a situation, the business world comes to mimic the natural world.
You either compete or you die.
Someone, Palmer said, recently sent him a photo of a can of pink-salmon-based dog food along with a note informing him it was selling for 50 cents more per can than the canned pink salmon Walmart was selling for human consumption.
“We’ve got to recognize these emerging markets, and we have to look at sales, and we have to be able to adapt product forms to do that, and some of them don’t take much adaptation,” he said. “It might take a food additive here or there to meet nutritional requirements for pet food.”
And in this case, going to the dogs (or cats) could be good for the Alaska salmon business. ASMI has even recognized this and allowed the use of the ASMI label on pet food. Some people didn’t like that idea, Palmer admitted, fearing it was “bastardizing” the brand.
But, “we disagree,” he added. “People want to do their best for their pets.”
Hopefully, they won’t discover that pet food is made from those #2 and #3 grade salmon that used to go Russia or China and not #1s.
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craigmedred.news is committed to Alaska-related news, commentary and entertainment. it is dedicated to the idea that if everyone is thinking alike, someone is not thinking. you can contact the editor directly at craigmedred@gmail.com.
Hi Craig,
“Heavily farmed low value pink salmon” in your opening paragraph is not factual. Pink salmon are not farmed in Alaska or anywhere else. You are probably not educated in the difference between hatchery reared wild pink salmon, natural spawning wild pink salmon, and non-existent farm raised pink salmon.
Other than that it’s a very informative article. It’s just a shame that you had to start out that way.
I am very interested in wild sockeye salmon marketing. I’ve been in the business since 1965. I think this is the best article I’ve read on this issue/ subject. Very good. Congratulations!
Charles G Nash
360 622 6455
Thanks, Charles. But I’m not into word games. Farming is farming whether or not anyone wants to play cute and try to disguise it as ranching.
Ranch: “A large farm, esp. in the W U.S., with its buildings, lands, etc., for the raising of cattle, horses, or sheep in great numbers.
Webster’s New World
“Similar definitions
“Any large farm devoted to the raising of a particular crop or livestock.
“A fruit ranch.”
We’ve long dumped hundreds of millions of hatchery salmon in the ocean each year – having never once completed a single EIS to explore how this might affect the ecosystem – and we now also fatten them in net pens, just like those the farmers in Norway and Chile use, before their release.
Why? So they can “better compete” in the ocean. And who are they competing with? Other salmon, of course, including a whole lot of our wild fish.
It’s farming.
Enter the corporate owned hatcheries as they’re about to get all of the resource.
I’ve been pushing fish traps as a way for Kenai peninsula set netters to fish for Sockeye, while being able to release Kings unharmed. Latest Washington F&G studies showed 100% survival rate on the Columbia River fish traps of release Chinook Salmon.
Good luck. That’s a hard, hard sell. A majorty of east-side setnetters still won’t even accept the idea that Chinook bycatch is a problem. Their view is that is all just part of a ADF&G-angler conspiracy to put them out of business. It’s the Alaska fisheries version of QAnon.
Me too, Frank
I believe that fish traps of the kind you are suggesting were declared illegal by Ordinance 3 of the Alaska Constitution in the mid 50s.
Amending the constitution by 2/3 vote by both houses in our legislature and a majority vote by Alaskan residents could change that. As could an amendment proposed in a constitutional convention and adopted by the voters. That opportunity is provided every ten years and was recently rejected by Alaska voters.
Given that antipathy for fish traps was the prime motivation for Statehood and Ordinance 3 carried 10 to 1, it is highly unlikely that legalizing fish traps will ever occur.
OTOH, things have changed a bit in the last 70 years. Antipathy for fish traps 3-4 generations ago is long forgotten, replaced today by crashing king runs.
State constitution can be changed by ballot initiative.
Do think that commfish and the processors will fight any proposed change with everything they’ve got, which would be yet another mistake. As CM pointed out in the piece above, economically, they are dead men walking. Their way of life is over. Their only choice today is how completely they want to destroy wild runs of salmon on their way into economic oblivion. The harder they fight, the more destructive of wild runs they will be (see crashing king returns statewide as an example, or crashing chum, silver and red returns in PWS for another).
Somewhere along the line, those of us who drop the occasional hook and line in water will blame commfish for the lack of fish and treat them with the same loving care they have treated our opportunity to catch salmon, some version of sucks to be you.
There is a way out of this. Fish traps and fish farming are two solutions. I’d like to help with the transition from what you guys are doing to what you should be doing. The longer commfish fights this, the harder that transition will be for them and the less helpful the rest of us will be in the transition as we watch commfish’s destruction of wild salmon runs statewide.
Your choice on how you guys want to do this. One way or another, its gonna happen. Sooner would be a lot easier than later. Cheers –
There are many similarities between the USSA economy right now and the USSR in the late 80’s/ early 1990’s.
First and foremost is nearly 30 years of funding war in the middle east has bankrupted our economy.
Next, the Dems sanctions & isolation towards Russia (who is a growing superpower) has destroyed all trade alliances we have had with them in the past.
Secondly, the decision to allow sport & personal use fisheries to collapse around the state has pushed many folks to leave the state.
Now, we have a fish board that is deaf to the people’s concern over the monoculture of pink salmon destroying OUR natural stocks.
Instead of holding down production or decreasing amount of hatchery salmon in ocean, they are voting to allow 2 Billion new salmon EVERY year to enter habitat.
There are NO plans to restore historic Chinook runs in SC Alaska & most guides have either left the state or try and compete for freight hauling up Yentna basin.
For me personally, the old “fish ranching” paradigm can’t collapse fast enough…
Unfortunately, its’ not about profit to fisherman…it’s about the amount of Diesel they burn each summer, so the government will continue to subsidize BIG OIL as they do in so many other ways.
Huh, guides leaving the state, huh? Most guides leave the state every year when the fishing is done.
Huh, the state keeps commercial fisherman fishing to burn diesel to subsidize big oil, huh? Big oil, and little oil for that matter, subsidize the state…where have you been that you don’t know that?