Federal government solicitations for canned salmon bids are boosting spirits a bit in Alaska’s commercial fisheries industry, but, overall, gloom prevails due to the selloff of some processing facilities and announced cutbacks on 2024 fishing season processing.
Last year, the U.S. Department of Agriculture purchased over $200 million in Alaska seafood and the current solicitation for canned pink and sockeye salmon is expected to help clean up inventory of the sockeyes, Bruce Schactler, food aid program and development director for the Alaska Seafood Marketing Institute, said.
“It will pretty much put a big dent in inventory,” he remarked.
Meanwhile, three major processors—Trident Seafoods, OBI Seafoods and Peter Pan Seafoods—have announced plans for selling off some facilities, along with cutbacks on processing for upcoming 2024 fisheries, but were tight-lipped on their overall processing and reorganization plans.
“We are seeing a perfect storm … with the squeeze coming from several different directions,” said veteran seafood economist Gunnar Knapp, a professor emeritus of economics with the Institute of Social and Economic Research at the University of Alaska Anchorage. “Consumer demand is down and companies across the world are in troubled times.”
Current exchange rates make Alaska product more expensive, and there are a variety of cost increases from interest rates to labor, plus labor shortages and an oversupply of seafood in world markets, he said.
The industry in Alaska has no shock absorbers in one fishery that are able to make up for losses in other fisheries. Everybody is having difficulty and some processors are reacting by not operating a facility at a loss, Knapp said. “Selling options for fishermen get reduced and some fishermen lose markets totally.”
“It’s just a big squeeze,” he continued. “The industry shrinks until the industry regains profitability. It hurts employees of plants that close, shareholders of plants, fishermen who lost markets, and it hurts all the industries that support fisheries and the tax base of these communities, and the ports that rely on boats using the port. There is a whole multiplier effect.”
Another longtime industry insider, speaking on condition of anonymity, contends that none of the current market conditions should have come as a surprise to observers of the seafood processing industry.
Trident Seafoods, for example, is selling stock it should have already sold, and its decision to do so now is a good move on the company’s part, he said. Decisions to shutter facilities at Ketchikan during an even year for pink salmon also makes sense, because there won’t be enough humpies harvested there to justify opening that plant in 2024.
The current dismal economic condition of the seafood economy in Alaska is just part of the overall traditional boom-and-bust economy, the Alaska seafood industry veteran said. During the height of the COVID-19 pandemic, harvests and retail sales in Alaska seafood kept rising, and Bristol Bay harvests hit a high as retail demand for sockeye salmon heightened.
Then the pandemic impact on seafood sales dropped and inventory that just wasn’t commanding as high a price. Processors had sold their product at a high price and retailers who bought it had to sell at that price or lose money. Some retailers still have a lot of that frozen product in inventory.
In Alaska’s seafood economy, every time there is a boom, people don’t think there will be a bust, so when the boom lasted for several years and then collapsed, many did not expect it, but that’s just how the market operates, the observer said.
There’s still a lot of inventory out there that has to work its way through the market, with processors producing value-added retail products just now getting into 2023 fish, which is much cheaper than what they paid for fish in 2022, he said.