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Web posted
An analysis of the impacts published recently by the Alaska Department of Labor and Workforce Development shows just how hard the industry and Alaska's struggling economy have been hit.
The article, written by state labor economist Neal Gilbertsen and appearing in the October issue of Alaska Economic Trends, predicts the farmed salmon industry is likely to continue its worldwide influence.
Gilbertsen noted that while the economic crisis facing the industry was probably unavoidable, it also was predictable under the laws of supply and demand.
Here's what economists know has happened based on the effects of measurable quantities, such as the numbers of fishers, boats, permits, fish, and, most importantly, prices.
The number of fishers plying Alaska's waters for salmon plummeted 37 percent between 1990 and 2002, according to Gilbertsen. In actual numbers, that's a fall from 10,487 salmon fishers to 6,567.
During the same period, the metric ton yield of wild salmon and its value to fishers also declined dramatically. In 1990, according to Gilbertsen, the harvest hit 302,600 metric tons worth $559 million. That had fallen to 238,000 metric tons in 2002, a catch worth just $130 million.
An important aspect of the overall decline was that prices were falling faster than harvest numbers. Gilbertsen noted that prices went from record highs in 1988 to record lows in 2002.
"Processors, in an attempt to remain competitive with farmed fish on world markets, lowered wholesale prices, which translated into lower prices for fishermen," he said.
That had a cascade effect on important peripheral elements of the fishing industry. As fish prices dropped, so did the value of fishers' investments in boats, gear and permits, Gilbertsen said.
According to statistics from the Commer-cial Fisheries Entry Commission noted in the Trends article, the estimated market value of valid limited entry permits in 1990 was almost $1.25 billion.
"By 2002, estimates placed the value of the remaining 11,421 permits at $204 million," Gilbertsen said.
In other words, the value of all valid salmon permits had crashed by 84 percent, a statistic probably matched by the fall in the value of vessels, he said. Another way of looking at it is to say the value of a generic salmon permit fell by $91,347.
"This loss of equity, which for self-employed fishermen is equivalent to retirement accounts, will continue to reverberate throughout the Alaska economy in coming years,"Gilbertsen said.
Coastal communities have felt the impact. The reduction in the number of actively fishing permit-holders resulted in a decline in crew jobs and shore-based employment. Monthly employment in the state's seafood processing industry fell from 11,200 in 1992 to 7,400 in 2002, according to Gilbertsen.
The impact of farmed salmon on world markets is largely to blame, he said. Farmed salmon has several key advantages. Pen-reared fish are available to the market year round, quality control is better, the supply is predictable and production can be planned to meet anticipated levels of demand, he said.
Chile and Canada are the two major suppliers of the U.S. domestic market.
Canada is close to American markets and is a partner in the North American Free Trade Agreement, which removed certain trade barriers, Gilbertsen said.
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