Huge Inlet, Bay sockeye forecasts in face of price slump

Next year promises to be a big year for sockeye harvests. Both Bristol Bay and Upper Cook Inlet are forecast to have sizable sockeye returns in the midst of global and domestic market hostile to U.S. higher sockeye prices detailed in a new economic report.

 In Cook Inlet, the second-largest sockeye producing region in the United States’

largest seafood producing state, the Alaska Department of Fish and Game forecasts a run to the major rivers of 7.1 million salmon, with 4.1 million available for commercial harvest.

This exceeds the most recent 20-year average by 1.1 million fish.

The biggest gain for the area is on the Kenai River. ADFG forecasts a Kenai River run of 4.7 million fish, exactly 1 million more than the 20-year average. The Kasilof and Susitna rivers both have run forecasts 13 and 12 percent lower than the 20-year average, respectively, at 861,000 and 372,000.

Fish Creek, the fourth major Upper Cook Inlet spawning river, is forecast to see 31 percent more sockeye than the 20-year average at 110,000.

Sockeye escapement on the Kenai and Kasilof rivers has exceeded the maximum escapement goal several years running. Between 2011 and 2015, the Kenai River sonar counted an average 285,000 sockeye beyond the maximum goal. For the Kasilof River, the 2012-15 average sonar count was 104,000 over the maximum goal.

Commercial fishermen in the region argue the management framework has needlessly slashed their fishing opportunities for the sake of sportfishing opportunities. Taking the average pounds per fish, along with the average annual ex-vessel price per pound of sockeye, United Cook Inlet Drift Association calculated $30.5 million dollars of ex-vessel value foregone, or approximately $60 million in first wholesale value.

Bristol Bay, Alaska’s most valuable fishery and the world’s largest wild sockeye salmon run, is forecast for its third straight massive run and commercial harvest.

ADFG biologists are forecasting 46.5 million sockeye in the 2016 Bristol Bay run, with an escapement of 15.3 million and commercial harvest of 31.2 million.

The run size and the harvest prediction surpass both recent and long term averages. The run forecast is 15 percent greater than the previous 10-year average, and 41 percent greater than the long-term average of 32.9 million.

The projected harvest is broken down between 29.52 million fish in Bristol Bay and 1.72 million fish in the South Peninsula fisheries. A Bristol Bay harvest of 29.52 million would be 8 percent greater than the previous 10-year average of 27.3 million, and 46 percent greater than the long-term average of 20.2 million.

This would make 2016 the third-biggest sockeye crop in as many years. In 2015, the total Bristol Bay harvest was 36.7 million, which is second only to 2014 in the last 20 years. This year, ADFG had predicted a run of 48 million and a harvest of 37.6 million.

Bristol Bay’s fishermen in particular had a difficult 2015 season, with a massive but oddly timed run preceding a 50-cent per pound ex-vessel price, half the average for the region.

To examine the marketplace factors affecting this price, the Bristol Bay Regional Seafood Development Association contracted McDowell Group, a Juneau economics firm, to produce a research paper.

The paper’s author Andy Wink said 2014 harvest particulars blended with 2015 market conditions and geopolitics to create an the exceptionally low ex-vessel price. Fishermen got paid less in 2015, the report claims, partly to correct an overpayment in 2014.

Ex-vessel prices usually correspond to first wholesale prices; between 2006-2015, fishermen received an average 25 percent of the first wholesale price as their base ex-vessel pay. In 2014, the ex-vessel percentage of first wholesale was 30 percent. In 2015, it was 17 percent.

“Bristol Bay processors paid significantly higher ex-vessel prices in 2014, relative to average first wholesale value per pound of product sold, due to lower than expected wholesale prices and sales volumes,” according to the report.

“Overall gross processing margin declined 44 percent during the 2014 sales cycle and inventories increased. This resulted in a very weak ex-vessel price for 2015 sockeye, as processors acted conservatively to protect capital and minimize risk from declining wholesale prices.”

Other sockeye producing areas did not suffer the same drop in fishermen’s pay. Bristol Bay’s ex-vessel price was not only low in comparison to its own historical average, but also low in comparison to other areas. Wink wrote that Bristol Bay’s uniquely rising volume output for 2014 and 2015 accounts for the locality of the price drop.

“Bristol Bay sockeye harvests increased 75 percent in 2014 and another 16 percent in 2015, compared to a decline of 1 percent and an increase of 13 percent, respectively, for all other Alaska sockeye fisheries combined,” according to the report. “Given the difference in regional harvest volume, market destination, and product forms, a larger difference in ex-vessel price compared to other regions is understandable, though still unfortunate.”

Sockeye, despite a large U.S. consumer base, is primarily an export product. The U.S. dollar’s strength relative to key foreign markets and exports is cited as yet another reason for the overall decline in sockeye value, with the value of relevant currencies declining between 18 and 49 percent in the last two years.

Despite the loss of export value, however, exports for 2015 sockeye rose instead of dropping.

“U.S. sockeye exports following the Bristol Bay season (July-September) are up 51 percent in 2015 over the same period last year,” according to the report. “Exports of frozen (head and gutted) sockeye increased 81 percent, while year-to-date export volumes of canned sockeye increased 16 percent.”

DJ Summers can be reached at daniel.summers@alaskajournal.com.

Updated: 
11/18/2015 - 3:20pm

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