Price of salmon at the dock is just the beginning of what fish will eventually cost

Salmon fishermen often wonder why there is such a large difference between the prices they get and the prices they see quoted in markets, both at home and abroad. The Salmon Market Information Service offers this generalized background: A sale price has three major elements. These are the cost of fish, cost of manufacture and cost of shipping. The starting point for cost of fish is the ex-vessel price, the amount paid to fishermen at the dock. This price is not adjusted for taxes paid by fishermen. Cost of fish is the processor’s cost of raw material, adjusted for recovery rate. The raw fish tax of 3.3 percent is factored in, but no other expenses involved in making a finished product are included.

To calculate the cost of fish, the amount paid is divided by pounds of finished product. If a processor bought 100 pounds of sockeye to make fillets, he would get 53 pounds of finished product. If he paid $1 per pound ex-vessel plus 3.3 percent tax, his cost is $103.30. Divide that by 53 pounds to calculate cost of fish: $1.95 per pound in this case.

Cost of manufacture is the total of cost of fish, plus all other expenses involved in turning raw fish into finished product, packaged for shipment. Cost of manufacture is normally just called cost and is expressed in cents per pound of finished product.

Information on processors’ cost of manufacture is not available to the public. Some processors are willing to share this information with fishermen and others, but most consider it confidential.

Once fish has been purchased, processed and packaged, it is ready to be shipped. Shipping is the final element of what makes up a sale price, and is one of the most important items in a sales contract.

When a seller and buyer agree on a price, that price includes the cost of getting it to a specific location. In some cases, price is "FOB plant" meaning there is no shipping cost included. In other cases the sale price includes shipping the product several thousand miles.

There are 13 standard shipping terms that define exactly how far product will be shipped and exactly what expenses will be paid by the seller in the process of getting it there. Some of the most common are: FOB, meaning freight on board. The seller pays for the cost to deliver the goods to a named port of destination. If it’s FOB Seattle, for example, it means the shipper pays the cost of freight to that port.

CFR means cost and freight, in which the seller pays cost of goods and freight to the named port of destination. The more common term used is C and F. CIF means cost, insurance and freight. The seller pays cost of goods, freight and insurance to bring the goods to the named port of destination, such as CIF Japan.

FAS means free alongside ship, and the seller pays cost of goods, insurance, inland freight and all other expenses to deliver the goods alongside the vessel at the named destination.

U.S. government data define value of seafood exports as FAS port of export, meaning the value is affected by point of departure from the country. A case of salmon exported via Boston, for example, will have higher value than if it left the country from Seattle. Value of the Boston-departure fish includes the cost of shipping it 2,500 miles from Seattle to Boston.

More eco-label fish

The Marine Stewardship Council has announced that the New Zealand hoki fishery has met its standards for a sustainable and well-managed fishery. The certification allows products from the fishery to bear the MSC sustainability eco-label. The hoki fishery is the fourth fishery certified so far by the MSC.

More than two dozen fisheries are undergoing the certification process, including Alaska’s pollock fishery, which is the largest fishery in the United States. Other fisheries include South Georgia Patagonian Toothfish and the Burry Inlet Cockle Fishery in Southwest Wales. Last year, Alaska salmon was the second fishery to receive MSC certification.

Hawaiian fleet idled

A court order shutting down the Hawaiian longline fleet of 115 vessels went into effect on March 14. The fleet will remain inactive until May 31, in accordance with an Aug. 4 ruling by U.S. District Judge David Ezra.

WorldCatch reports that the judge could lift the closure following the completion of an updated environmental impact statement for the fishery by the National Marine Fisheries Service, which is expected to be completed by April 1.

Resolutions have been drafted in both houses of the Hawaiian Legislature to urge Ezra to delay the closure. Western Pacific Fishery Management Council spokesperson Sylvia Spaulding said because the Hawaiian fleet operates on just a 7 percent profit, yielding a $50 million fishery in landed value, the closure would have a severe economic impact on the industry.

"Right now, each day the fleet lands $180,000 worth of fish," she said. The closure is expected to cause severe repercussions in seafood markets, not only in Hawaii, but also on the U.S. mainland. Hawaiian markets are likely to be empty of fish for at least three weeks.

Affected species include yellowfin, albacore and bigeye tuna, swordfish, Opah, Ono and other South Pacific species. Prices for tuna and other species could shoot up by more than 30 percent to 40 percent in the coming weeks, according to Roger Tasaka of Hilo Fish in Honolulu.

 

Updated: 
11/12/2016 - 3:58pm

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