Lower salmon prices may mean more markets
Too much red and pink salmon could be a blessing in an ugly disguise for 2015.
Industry has a pessimistic outlook for the price of Alaska salmon in 2015, due in large part to one of the largest pink and sockeye salmon run forecasts in 50 years. A healthy U.S. economy is driving a strong dollar, which can harm exports, and key markets have vanished.
Like sinking oil prices, however, the value squeeze could open new domestic market positions as more consumers get a taste of wild-caught Alaska salmon in a market flooded with foreign farmed fish.
The Alaska Department of Fish and Game projects a commercial salmon harvest of 221 million fish for the 2015 season, following a 2014 season that exceeded expectations and left storehouses stocked with canned and frozen 2014 salmon that has yet to move off shelves.
Prices in 2014 dipped slightly in response to healthy salmon runs. The ex-vessel prices decreased from $4.27 per pound in 2013 to $3.95 per pound in 2014 for chinook; from $1.29 per pound to 96 cents per pound for coho; from $1.78 per pound to $1.59 per pound for sockeye; and from 42 cents per pound to 27 cents per pound for pink. Only chum salmon increased value, from 54 cents to 55 cents per pound.
The 2015 total commercial salmon catch (all species) projection of 220.9 million is expected to include 54,000 chinook salmon in areas outside Southeast Alaska and Bristol Bay, 58.8 million sockeye salmon, 4.6 million coho salmon, 140.3 million pink salmon, and 17.2 million chum salmon.
The projected pink salmon harvest is about 46 percent higher than the 2014 harvest of 95.8 million. The projected sockeye salmon harvest is about 14 percent higher than the harvest in 2013, and 33 percent higher than the harvest in 2014; the projected chum salmon harvest is expected to be about 52 percent higher than the harvest in 2014.
The Alaska all-species salmon harvest for 2014 totaled 157.9 million, which was about 25.3 million more than the pre-season forecast of 132.6 million. This combined harvest was composed of 487,302 chinook salmon, 44.1 million sockeye salmon, 6.3 million coho salmon, 95.8 million pink salmon, and 11.3 million chum salmon.
Price predictions can be as ephemeral as run forecasts, and many Alaska seafood marketers hesitate to guess, but Northrim Bank CEO Joe Beedle said it’s simple enough.
“Fishermen will get 25 percent less this year because of the strength of the dollar and the high supply,” said Beedle at an editorial board meeting on April 2.
Farmed fish and export troubles
Increased competition from foreign farmed salmon, which is also projected to rise this year, will cut into the Alaska wild salmon market.
Fishing industry publication Undercurrent News reported that Norwegian salmon farmers are harvesting salmon an average of 5 percent greater in weight than the 2014 average, and 4 percent above the average norm. The weight will correspond to higher volume. In response to Russian seafood export bans, Norway authorized salmon farmers to keep greater biomass levels for the first quarter of 2015.
In August 2014, Russia enacted a ban on seafood imports from the U.S., European Union, Canada, Australia, and Norway in retaliation for U.S. sanctions against the Russian Federation. Ukraine, in the midst of the conflict that caused the sanctions, also has less to spend on imports.
Russia and Ukraine, at the height of consumption in 2013, purchased nearly 10 percent of the total $1.1 billion of Alaska salmon exports. Russia imported $46.6 million worth of Alaska roe. Ukraine imported $31 million of roe and $15 million of fresh and frozen pink salmon.
The strong U.S. dollar will also weaken the remaining markets for salmon. Japan, Alaska’s second-largest single seafood market behind China, imported $132 million worth of Alaska salmon in 2014. As of March 2015, the Japanese yen’s value has fallen 18 percent against the U.S. dollar since March 2014.
Chile, which produces roughly one third of the U.S. farmed salmon imports, has also seen the value of its currency, the Chilean peso, drop 13 percent against the U.S. dollar from March 2014 to March 2015, giving the U.S. greater purchase power. In Norway, which produced another third of U.S. farmed salmon, the Norwegian kroner dropped 33 percent against the U.S. dollar.
More fish, more food, more business
Downward price pressure could affect salmon fleet bottom lines, but marketers believe the year’s revenue loss will be an investment, not a curse.
“The challenges are creating opportunities, because we’re putting more Alaskan salmon in consumers’ mouths,” said Cassandra Squibb.
Squibb is chief business development office of Copper River Seafoods, a marketing cooperative focused on wild-caught Alaska salmon, particularly from Prince William Sound.
Like falling oil prices, lower salmon prices means less capital return for the producers but more availability for the consumers. The market for relatively pricier wild-caught Alaska salmon, according to Squibb and other Alaska seafood marketers, is largely confined to coastal, upscale consumers from retail outlets like Whole Foods.
The McDowell Group, an Alaska market and economic research firm, works with the Alaska Seafood Marketing Institute, or ASMI, on fisheries analysis. Seafood market analysis project manager Andy Wink said that lower 2015 salmon prices could be an entry point for lower-expense markets.
If wild-caught Alaska salmon is truly superior to farmed salmon, as ASMI consumer research suggests, then courting consumers with lower prices hook them on Alaska salmon and, hopefully, keep them buying when prices go back up.
“Prices may be lower, but the volume of pink and sockeye will likely increase,” wrote Wink in an email. “Even if fishermen do not make much, if any, lower prices driven by supply benefits the industry in the long run because it increases consumption. Generally that demand carries over for some time.”
DJ Summers can be reached at [email protected].