A global pandemic raising havoc in health care and the nation’s economy, prompting cost-of-living increases and supply-chain disruptions, has cost the seafood industry in Alaska and Western states millions of dollars since the spring of 2020.
If there’s a silver lining in those challenges, along with climate-change issues facing fisheries, it is that consumer demand for seafood is up, and so is the market price.
When the novel coronavirus, aka COVID-19, began spreading rapidly two years ago, thousands of restaurants shut down, and customers of the food-service industry, ranging from universities to the tourism industry, also substantially decreased or halted their orders.
With millions of people sick and many dying of COVID-19, seafood processors operating in Alaska and the U.S. West Coast scrambled to make their workplaces safer as they dealt with the ongoing challenges facing most sectors, including hiring enough staff who were virus free.
With no vaccines against the dangerous virus available at first, everyone connected with the seafood industry raced to find enough hand sanitizer, disinfectants, masks, COVID testing kits and other high-in-demand items, ranging from toilet tissue to rice, before their suppliers ran out.
Once vaccines and booster shots became available, they became mandatory in some sectors of the seafood industry. Still even some vaccinated individuals continue to catch COVID-19 variants, and a significant portion of the U.S. population remains unvaccinated, posing more risk.
Costs rose rapidly for processors, who hired more medical staff, while pre-testing and/or quarantining employees in hotels before sending them to processing facilities. They also planned for medical evacuation of those who tested positive on shoreside and at-sea processing facilities.
If processor workers tested positive, the facility they worked in shut down temporarily for deep cleaning and testing of everyone working there. Those shutdowns proved costly.
“Obviously our industry is investing very carefully in testing, providing protective equipment and medical care,” said Craig Morris, chief executive officer of Genuine Alaska Pollock Producers. The cost of evacuating people from places like Dutch Harbor and the Aleutians to Anchorage for medical care is high, he said.
In the Alaska Pollock industry, for example, suspension of operations in the Bering Sea and Aleutian Islands during the A season of 2021, when they receive the maximum value in Asian markets for roe, meant some processors were not able to get their roe. The groundfish B season in the BSAI also proved challenging, with global transport shipping largely unavailable and expensive, Morris said. Most of their product is exported.
Domestic shippers serving Alaska announced rate increase of between 5% and 8% in 2021, citing their own increased costs of labor and equipment, said Dan Lesh, an economist with McKinley Research who prepared an updated COVID-19 briefing paper in November 2021 on behalf of the Alaska Seafood Marketing Institute. Those rate increases are in addition to fuel surcharges, which also rose.
Another cost to the industry is the rise in hourly wages to H2B visa guest workers, an important part of Alaska’s seafood processing workforce. The hourly pay for Alaska seafood processors in 2013 was $9.75. By 2021, it was $12.36, and in 2022, it will be $15.85, a 28% increase from the previous year.
Harvesters had similar challenges. Some of them opted to keep workers onboard for the length of their fishery even if everyone on their fishing vessel had tested negative. They also had to find enough sanitizers, disinfectants and other health supplies for their crews.
Drop in Revenue
A NOAA Fisheries study of the impact of COVID-19 in the seafood industries in 2020 found that in Alaska, despite its position as a national leader in quality and value of seafood, saw landings revenue drop 26%, or $511 million, relative to the baseline.
Month to month, Alaska 2020 landings revenue declined 13% in March, 21% in April, 26% in May, 48% in June and 41% in August, then 15% from August through October, and 35% and 57% respectively in November and December.
Species incurring the largest revenue losses, relative to the baseline, were herring, down 79%, Bering Sea-Aleutian Islands Pacific cod shoreside and at-sea sectors, down 42% and 47% respectively, halibut, down 41%, and salmon, down 41%.
On West Coast landings, revenue fell 24%, or $227 million relative to average annual landings revenue from 2015 to 2019, the report said. Tracked monthly, revenue declined between 19% and 29% from March through October, while landings revenues for November and December were down 58% and 57% respectively.
In California, fisheries that contributed most significantly to ex-vessel revenue included crab, market squid and selected other fisheries. Total ex-vessel revenue in 2020 was 29% lower than the baseline median and 31% lower for March through December.
In Oregon, the fisheries most significant to harvester revenue were crab, shrimp and shoreside Pacific whiting. Their ex-vessel revenue in 2020 was 6% lower to the baseline median for the first two months, and 21% lower from March through December.
In Washington, the fisheries contributing the most to harvester revenue were crab, tuna and Puget Sound fisheries. Total ex-vessel revenue in Washington in 2020 was 26% lower than the baseline median for January and February and 29% lower for March through December.
Non-whiting groundfish species were among those showing the highest revenue losses relative to the baseline in West Coast states. The non-whiting individual fishing quota bottom-trawl fishery saw a 52% decrease in revenue and the fixed-gear sablefish fishery had a 44% decrease, the NOAA report said.
Other West Coast species that had sizable revenue losses were shrimp, down 18%, market squid, down 20%, Dungeness crab, down 15% and tuna, down 15%.
Non-Profits Take a Hit
Humanitarian non-profits like SeaShare in Seattle, which provides millions of dollars’ worth of seafood portions to food banks nationwide, also were hard hit by the pandemic. SeaShare receives donations of seafood from processors and harvesters alike, along with much of the related services needed to get those seafood portions to food banks all over the country. Many entities, from the Alaska Air National Guard to major trucking firms, for example, donate or provide transportation at reduced costs.
SeaShare will pay residual costs to make product available, said Jim Harmon, the organization’s executive director. Such costs might include repackaging or cold storage. But the biggest impact of the pandemic has been on transportation, he noted.
During the first half of 2020, SeaShare was able to get access to a lot of seafood because it wasn’t going to food-service firms, but then that source dried up, he said. Large grants of money have helped, but in 2022 everything will be more expensive. “All my normal sources are having a tough time meeting customer demand, let alone finding stuff to donate,” he said.
Market demand indeed has so far kept prices high for halibut, salmon and other wild seafood.
“In 2021, demand for seafood product was strong, as retail consumers continued to buy seafood at higher-than-usual rates and the food-service sector reopened, wrote Lesh, in his November briefing paper.
Farmed salmon prices hit a six-year low in 2020 as restaurants and cafeterias closed and surplus supply flooded grocery store shelves, Lesh said. That pattern reversed itself in 2021, with food-service firms reopening, while retail sales remained strong.
On the supply side, farmed salmon prices got a boost in 2021 from a decrease in farmed salmon production in Chile, the largest producer of salmon for U.S. markets. Early in 2020, Chilean producers decided to reduce smolt stocking because of pandemic uncertainties, which reduced the 2021 harvest, but Chilean salmon production is now forecast to increase again in the second quarter of 2022, which may put downward price pressure on wild Alaska salmon.
Lesh noted, however, that the value of Alaska’s seafood harvest, both the ex-vessel and first wholesale level, is expected to return to the normal range after the 20%-30% drop seen from 2019 to 2020. Key factors behind the increased values expected in 2021 included the natural two-year pink salmon run-volume fluctuations, amplified by the contrast between above average 2021 runs and particularly poor 2020 runs. Higher market prices for key Alaska species, including salmon and Alaska Pollock also are contributing, he said.
Price increases were also especially dramatic in 2021 for Alaska crab species, although low-harvest quotas for king and snow crab in Alaska for 2021-2022 will limit the industry’s ability to take advantage of these high prices, he said.