Bristol Bay fish prices shaping up as hot topic
Turmoil is roiling the Bristol Bay salmon fishery long before boats start ramming each other and running over nets.
One major issue is price, which last year averaged 50 cents per pound before refrigeration and production bonuses.
Last fall, fisherman Erick Sabo started a petition to compel the Alaska Department of Labor and Workforce Development to get involved by supplying a mediator to intervene between fishermen and processors. That petition failed to get the roughly 1,000 signatures, or one-third, needed to mandate state intervention according to statute.
The petition was still forwarded to Commercial Fisheries Division Operations Manager Forrest Bowers, who determined that it fell short.
“Currently there are about 2,800 permit holders in Bristol Bay, and he provided about 426 permit holders on the petition,” Bowers said, “so it didn’t meet the criteria for us to forward it on to the Department of Labor.”
Even if it had succeeded, the whole thing put processors in a Catch-22 position: They could not meet together with a mediator preseason to discuss prices without running afoul of federal anti-trust laws, and they could not get involved in the process without discussing prices.
Sabo had a conversation with University of Alaska economist Gunnar Knapp, wanting to find out how to measure what was a fair and reasonable price.
Knapp said looking at percentage of wholesale value for historical prices was not the right approach; instead look at processor profit margins.
Sabo ran those numbers, limited because the Alaska Department of Revenue’s price/production report is redacted.
He separated out Bristol Bay salmon products including sockeye head and gut, frozen fillet and fresh, then multiplied production numbers by the average ADR prices, and went with the sales season which runs from May until April the following year, for five years.
In general, for the past five years, not including 2015, the processor margins averaged around 50 percent, he said.
“What that means is that if fishermen got paid $100 million, the pack value was $200 million,” Sabo said.
Bristol Bay fishermen got paid $1.20 per pound for sockeye in 2014, a big year, and the pack value was around $391 million, which Sabo’s numbers found was their lowest margins for the last five years, around 44 percent.
He said if average prices hold true for 2015, a good production year, the overall pack value will be among one of the highest in the last 10 years at $360 million, but at 50 cents per pound, one of the lowest ex-vessel values, at $92 million.
“That equates to a 74 percent processor margin, over $260 million — far exceeding any of the last five years,” he said.
For example, he added, the highest margin for processors before 2015 was $207 million in 2010 and in 2011 it was $186 million.
While the unknown in the equation is processors’ fixed costs that affect their profit margins, Sabo did not see a reason for those to vary greatly, and with volume production those costs are more easily absorbed.
Sabo pointed out that it is not just the fishermen losing money, the state and local communities are losing tax dollars.
Another issue getting attention is cost recovery fishing to make up for shortfalls in the Alaska Department of Fish & Game budget to operate counting towers and other management tools.
Last season ADF&G contracted with processors to provide cost recovery fish at 15 cents per pound, around 30 cents on the dollar at 50 cents per pound ex-vessel price.
This year ADF&G is not doing cost recovery, but the Bristol Bay Regional Seafood Development Association, or BBRSDA, and processors are providing the funds.
Tim Sands, ADF&G area management biologist for the Nushagak/Togiak area in Dillingham, said it is a very inefficient method of providing funds.
He said the bids were made preseason, so processors were unsure of the price. It was a huge run forecast, so that added to processor risk, since processors have to write a check to the state first and then pay the fishermen.
Add to that word that after bonuses, prices for some fishermen were closer to 60 cents per pound post-season.
“My point to people is that it’s like a quarter or a fifth of what the fish are worth, so you have to catch four or five times as much fish to make the same amount of money,” Sands said.
“Cost recovery works best on higher value species that you can catch quickly,” he said. “As the price drops, the cost recovery becomes less efficient.”
Another problem is that BBRSDA is funded by a tax on drift fishermen, but not setnetters, who voted against the 1 percent tax, meaning they are not paying for the management costs that they benefit from.
Sands said there are better ways to get the funds, such as a direct state tax on fishermen.
“Doing cost recovery is just as much of a tax as an actual tax, but an actual tax is much more efficient, much more equitable, you can write it off on your other taxes, you get credit for it,” he said.
He added that the BBRSDA/processor funds are certainly appreciated, but it does not seem like a long-term solution.
“Clearly there are options out there that would be more efficient than cost recovery fishing,” he said.
Bowers and Sands both said that they do not expect much change in the management of the Bristol Bay salmon fishery this year, but Bowers said that could change in years with lower returns.
The biggest change is the loss of the Igushik counting tower, which has been operating since 1958. The cost recovery funds will keep the Togiak tower in operation.
Another change to the fishery is the loss of so-called “free week,” where fishermen were able to fish the Eastside districts prior to June 25 without registering and having a 48-hour waiting period to move to another district.
Sands said that the decision was made by the Alaska Board of Fisheries, probably from proposals by dedicated fishermen in Igigik, an area that generally sees earlier fish arrivals. It gets inundated with people from other areas who are able to switch back with no notice when they see how things are shaping up in other districts. The change will probably result in less effort early on when people are not willing to take the gamble.
Cristy Fry can be reached at email@example.com.
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