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Salmon's Two-Way Street: Cheap Protein and Expensive Icon by Bill Rudolph NW Fishletter, February 27, 2002

Over the past five years, a not-so-funny thing happened on the road to West Coast salmon recovery and the goal of sustainable fisheries. The bottom dropped out of the salmon market. Just ask any Alaska fishermen where exclusive Bristol Bay fishing permits were selling for more than $200,000 in 1995; today those licenses are on the market at prices below $20,000.

The market value of wild salmon's high-class protein sunk to levels not seen since the 1950s when last year's 173-million-fish harvest was worth only $216 million at Alaska docks--less than half the amount federal agencies are committed to spending next year on the recovery of weak West Coast stocks.

With salmon and steelhead stocks listed under the ESA up and down the coast, federal agencies and BPA ratepayers are committed to spending over $500 million dollars this coming fiscal year on recovering weak runs in three states where commercial salmon landings (chinook and coho troll) totaled around $10 million last year.

On the Columbia River, where most of the recovery money is being spent, commercial catches were hard to value since much of the activity involved "over-the-bank" sales by tribal fishers. Total catch of spring and fall chinook was more than 200,000 fish, with a value of about $2.2 million, according to estimates by the Pacific Fishery Management Council, ranging from several dollars a pound for spring chinook to about ten cents a pound for fall run tules. Late summer prices were so low that some gillnetters stayed tied to the docks rather than accept thirty cents a pound for bright chinook headed for the Hanford Reach.

The fish had finally come back in droves, due principally to cyclic improvements in ocean conditions. Unfortunately for commercial fishermen, both non-tribal and Indian, there won't be much in the way of cyclic improvements for salmon prices, either in the near term or farther into the future.

In fact, last week, fishermen from six Northwest tribes met in Bellingham to discuss how to cope with the future. Job retraining for fishermen who could find other ways to make a living was high on the discussion list, in the hope that by reducing the number of harvesters, those still fishing could continue to make a living at it.

It's a situation that's been in the cards since the early 1980s when British Columbia embraced the salmon farming industry, following the models of Norway and Scotland and Nova Scotia. Then ten years ago, Chile got into the act with financial backing from Japanese interests.

The price decline has gathered more momentum in the past few years as farmed salmon has flooded the world. With declining markets in Japan and exchange rates compounding the problem, the salmon industry has been in a tailspin for the past few years. In some parts of Alaska, fishermen are banding together to cut expenses by fishing cooperatively, or they're talking about setting fishing seasons that maximize market opportunities by increasing the quality of the millions of wild salmon that will be frozen or canned this coming year. Some processors have already reduced their capacity, resigned to shrinking markets for wild fish.

The farmed product now provides 60 percent of the world's supply of salmon, according to Terry Gardiner, president of Norquest Seafoods. In remarks he penned last fall and shared with the public at last November's Fish Expo in Seattle, Gardiner painted a gloomy picture of the near-term future.

"An oversupply of farmed salmon has collapsed salmon prices globally," Gardiner said, "Some believe that once this glut has worked its way through the marketing python, salmon prices will recover." But he said a recent study of prices, farmed salmon costs and future growth, shows that "any price recovery will only be slight and belated. Five years from now the current salmon prices will return, and salmon farmers will be profitable again."

Gardiner pointed out how the Chilean farmed salmon business began with fresh and frozen whole fish, then moved to both fresh and frozen fillets and now produces canned salmon sashimi loins, smoked salmon and grill-marked portions shipping direct from that South American country--all in the last 10 years.

"Technology moved to the location that could produce the product the market demanded at the lowest cost. Chilean labor costs are ten percent of US costs," he said.

Gardiner said other basic industries are facing the same global realities. "Orchards in eastern Washington are being plowed under because of foreign fruit in China and Chile. Potato farmers in Idaho are selling significantly below cost due to imported potato products. The US government is paying millions per month in storage for surplus sugar that exceeds market demand."

Gardiner's recipe for fixing the Alaska fishing industry calls for more level production of low cost species like pink salmon, buying out both fishermen and processors, co-op'ing and consolidating efforts, all ways to reduce costs to make the product sell better when facing adverse currency exchanges. He even raised the question of getting on the "federal agricultural bandwagon" to survive. He said federal subsidies have supplied fifty percent of the annual profits for US farmers.

So where do the Columbia River fisheries fit into the big picture? It's all a matter of availability, said one long-time market watcher, who declined to be named. He said there used to be a lot of interest in Columbia River fish. He cited New York restaurant and wine promotions that featured the Columbia River springers in the early 1990s. Then along came the ESA and changed all that. With the Snake River springers listed and runs down, fishing all but ceased until last year's monster run. "The spectre of an endangered species is difficult to overcome in the market," he added.

Though the salmon sold in the early spring commercial fishery on the Columbia are all hatchery fish, politically correct market watchers like the folks at the Monterey Bay Aquarium in California don't finesse the idea. Their list of OK fish to eat includes California wild salmon, but they have put Washington and Oregon stocks on a cautionary category and suggest that one check with the fish buyer to find out if the stock in question is "overfished," a designation that NMFS has given to some species. It's doubtful that most fishmongers would have a clue. The situation gets even more confusing since NMFS has cited the Sustainable Fisheries Act as a federal mandate to restore ESA stocks to "fishable levels."

In April when the tribal fishery begins above Bonneville Dam, fishermen will be allowed to catch up to 12 percent of the Snake River spring chinook run, which is listed under the ESA. However, their fishing techniques do not allow them to release unmarked (wild) fish alive like the experimental tangle net fishery now under way in the lower river, so a certain amount of legally caught ESA-listed fish will reach the market.

Even if the stigma of the ESA can be reduced, the prognosis for higher prices is not good. Consultant Howard M. Johnson, interviewed in the December 2001 Alaska Fisherman's Journal was blunt. "Like it or not, the market wants fresh fish 365 days of the year. The market is unwilling to drop farmed for wild for a few months." Johnson said Alaska could fix its salmon industry by reducing the number of fishermen, using bigger boats in places like Bristol Bay and producing fewer hatchery fish (Alaska releases 1.5 billion hatchery fish annually). "With fewer fishermen and fewer fish, maybe the remaining fishermen can make money," he said.

As for niche markets like the Copper River fishery that would compete head to head with a potential spring Columbia River harvest, Johnson said the Copper River marketing program worked because its success had as much to do with timing and public relations as quality. If more Alaska fisheries tried to model themselves on the Copper River example, Johnson said there would be too much volume to market the product fresh "and the market isn't there for frozen."

So it seems that the future may be limited for marketing Columbia river spring salmon, beyond a tiny niche of availability for a few weeks. In fact, they are already showing in Seattle fish markets, crowding out the Alaska winter troll fish for the number one spot and commanding nearly $16 a pound. As for the Copper River kings, they won't be showing until some time in May.

Columbia springer numbers are likely to drop after this year due to smaller brood years, but fall chinook are expected to be pouring into the river this August in huge schools, especially the Spring Creek hatchery bred tules from Bonneville Pool. Last year, both tribal and non-tribal members faced prices of 10 to 15 cents a pound for the ripe ready-to-spawn fish when twice as many (125,000) came back as forecast by fish managers. Sports fishermen spurn the poor quality fish, which are usually sold for pet food or to fish smokers by commercial fishermen. This year even more tules are expected, nearly 145,000 of them, the largest run since 1976 when 182,000 fish returned to the pool above the river's first dam. Maybe Alaska's not the only place where fish agencies should be raising less hatchery fish.