The Kodiak Regional Aquaculture Association has decided to forgo cost recovery, its primary method of generating income, due to the potential for low fish prices resulting from the coronavirus pandemic and low salmon run forecasts.
“With the uncertainties for the season for Kodiak fishermen, the board felt it would be better to put fish in fishermen’s nets than cost recovery,” said KRAA Executive Director Tina Fairbanks.
Cost recovery allows the association — whose hatchery fish make up a percentage of local fishermen’s catches — to harvest fish in special harvest areas and sell them to recover the costs of operating the hatchery.
The association’s $3.3 million in cost recovery revenue from last year, about 72% of its total income in 2019, has allowed it to halt cost recovery operations this year.
Other sources of income for the association include a 2% salmon enhancement tax paid by Kodiak salmon fishery permit holders, grants and other sources.
The successful cost recovery from last year allows the board “to do that with some level of comfort,” Fairbanks said.
“The board wanted to put the fishermen of Kodiak first out of concern that with everything that’s going on with COVID-19, with the markets, with the forecast and a lot of other factors.”
The 14-member KRAA board that voted to forgo cost recovery this year is composed of Kodiak salmon permit holders representing each gear group as well as processing, marketing, sport fishing and other interests.
Fairbanks also noted that fishermen are still recovering from difficult fishing years with low harvests, including the 2016 pink salmon disaster.
That year, coastal Alaska communities saw the worst pink salmon run in almost 40 years, with total catch in Kodiak amounting to 5 million fish compared to 10 million to 34 million fish in each of the previous nine years.
While this year’s salmon forecast is exponentially lower than last year, when a record-breaking 32 million pinks were harvested, it is more or less in line with previous even years.
The 2020 forecast for KRAA pink salmon is 2.8 million fish out of the 12.2 million pink salmon predicted for the season.
“With a fair but not large pink salmon forecast for wild stocks, the board factored that in,” Fairbanks said of the decision to forgo cost recovery.
This is not the first year the association has decided to suspend cost recovery operations.
In anticipation of a poor pink salmon return in 2018, the association decided to harvest fewer fish in their Kitoi Bay egg-take, where they harvest the salmon eggs for incubation, to make more fish available for fishermen.
That year, the association also suspended their cost recovery efforts at Kitoi Bay hatchery, so more salmon would be available for fishermen.
By the end of the 2018 salmon season, 3.2 million fish — half of the season’s harvest — were attributed to the Kitoi Bay hatchery, compared to 10% to 20% in a typical year, Fairbanks said.
“In the tough years we can take pressure off natural runs to give fishermen a place to go and spread out the fleet,” she said.
Garrett Everidge works as a fisheries economist with the McDowell Group and presented at a recent meeting with the Alaska Seafood Marketing Institute.
He said that this year, the future of the seafood market is uncertain, but noted the existence of pandemic-related challenges with the market and supply chain of seafood, as well as unexpected winners.
Everidge said that although the fresh salmon market is down with restaurants and other food establishments closed or slowly reopening, there has been a reported increase in sales of canned and frozen salmon, depending on the product.
“In addition to toilet paper, people were also buying canned and frozen salmon,” Everidge said.
According to Everidge, the most valuable product produced by the salmon industry is headed and gutted pink or sockeye fish, followed by canned pink salmon, with sockeye fillet coming in third.
Other key products include frozen and headed and gutted chum salmon and coho, as well as salmon roe.
But with the uncertainty about how the market will fare, accurate predictions are difficult to make.
Some market scenarios highlight a healthy retail market in which people rediscover the joy of cooking at home. Other scenarios remain bleak as the nation exits the immediate crisis into a recession.
And the high national unemployment rate of 14.7% could impact consumers’ ability and desire to buy premium protein like Alaska salmon, which is more expensive than other protein sources.
However, because meat plants have been closing due to COVID-19 outbreaks, salmon could fill the void, he said.
“We have seen disruptions in beef, pork, chicken, farmed salmon both on the market side and in the supply chains … We’ve seen headlines of meat shortages due to plant closures,” Everidge said.
“There could be an opportunity for Alaska seafood to help fill that gap.”
He also noted unlikely heroes in the salmon market could be people who panic-bought canned salmon at the beginning of the pandemic.
“Even if only 5% of those sales went to the nontraditional food buyer, that does represent an opportunity that can be retained,” he said.