Laine Welch: Report shows nice gains throughout salmon value chain

FisheriesMay 25, 2013 

It takes quite a crew to get an Alaska salmon from "boat to throat," and everyone along the line gets a cut of the catch. How that "value chain" has paid out in the past few years shows nice gains for Alaska fishermen and processors.

"We often get asked what share the fisherman retains, and how much each segment of the supply chain gets for salmon. The answer depends on the species, and the product you are talking about, and what gear type," said Andy Wink, a fisheries economist with the McDowell Group in Juneau who compiled the report for the Alaska Seafood Marketing Institute.

Wink's report tracks and compares from 2008 to 2011 salmon ex-vessel (dock price) payouts for fishermen and first wholesale value for processors, which typically is defined as the value of the product as it leaves Alaska.

The chain illustrates three examples, showing values from high to low returns for fishermen. Troll-caught kings top the list.

"In this case, the harvester bleeds and dresses the fish and adds most of the value before delivery," Wink explained. "The processor basically just holds and ships out the fish, and acts as more of a distributor."

For that reason, the chinook fisherman gets a higher return: 40 percent of the final retail value in that four-year period.

The value chain for sockeye fillets follows a different pattern.

"The processors are taking on fish in the round, filleting them, packaging and freezing; they've got a lot more labor and capital expended," he explained. "It's the processors who are adding more value, and for that reason they get a larger share."

Canned salmon follows a similar pattern, he said.

Comparisons from 2008 show nice gains throughout the salmon value chain, and the trend is likely to continue.

"The share of the first wholesale value paid to fishermen has increased, and we attribute that to higher prices for salmon in general," Wink said. "If salmon prices are higher at the wholesale level, processors are going to have more funds to compete for fish. And that's what we see going on here."

Forecasts call for fewer sockeye harvested, meaning "there might not be enough to go around," which could boost prices. And despite a big rebound by farmed fish from Chile, Wink said, Alaska wild salmon prices are holding strong.

"There has been some weakness in the frozen pink and chum market recently, but besides that, it's been pretty good going. All the work Alaska has done since the start of new millennium is starting to pay off to keep our market share," he said.

In another sign of how times have changed, Alaska sockeye exports to Japan were down 72 percent last year. Not long ago, nearly all of Alaska's red salmon went to that one country. Chile has taken a lot of market share within Japan, but there doesn't seem to be any shortage of demand for sockeye in U.S. and European markets, Wink said.

New rules for hired skippers

The practice of hiring skippers to fish for other people's quota shares is set to undergo some big changes.

Last April, the North Pacific Fishery Management Council approved a plan to limit the use of hired skippers who fish quota shares allocated to others when the IFQ program began in 1995.

When the halibut and sablefish quota share program hit the water, federal managers envisioned a primarily owner-operated fleet that would reduce pressure on the resource and provide entry-level opportunities for coastal Alaskans. But over 20 years, the number of hired skippers has surged from 8 percent to 50 percent. Many of the absentee quota owners have been charging them high "rents" for their fish, which has cut into crew wages and inflated the cost of quota shares.

A proposed rule has been published in the Federal Register that would bar an initial quota share recipient from using a hired skipper to harvest any halibut or sablefish shares acquired after Feb. 12, 2010.


Laine Welch is a Kodiak-based fisheries journalist. Her Fish Radio programs can be heard on stations around the state or found at alaskafishradio.com. Contact her at msfish@alaska.com.

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