Prospects for Diversification in Alaska

By Brad Pierce 11

quaculture is a general term wh ich can b e defined as t he cult iva­ tion of finfish, and aquatic plants in fresh o r saltwater. is a more specific term w hich refers to the cultivation A of plants and animals in saltwater. Aquaculture in Alaska is presently centered around a highly successful hatchery prog ram where j uveniles are reared in a protected freshwater environment and released to m ig rate to sea and return as adults. During the past few years, attention has turned to the possibilities offered by adapting techniq ues used in other parts of the world to utilize Alaska's clean, nutrient-rich marine waters and vast areas o f suitable habitat for mariculture development. Two species-Pacific oysters and blue mussels-are currently being farmed in commercial quant ity and salmon, gi· ant kelp and are being studied for their fe asibility in Alaska.

The Big Picture

Annual world per capita con­ World commercial landings of fish and shellfish have rem ained rather static at 70-75 million metric tons (mt) during the past 15 years. T his suggests that sumption of fish and shell­ naturally occurring stocks are being harvested at or near their upper level of fish is presently 28.6 Ibs. capacity. An annual average increase in commercial landings of j ust 0.3 per­ cent is forecast by the National Marine Service (NMFS) t hrough 2010. World commercial fisheries landings accounted for about 88 percent of total world production of fish and shellfish, while aquaculture production accounted for the remaining 12 percent by 1983. As portrayed in F igure 1, the NMFS expects the commercial fisheries component to slip to 76 percent of current levels and aquaculture production to increase at a 5.5 percent annual rate by 2010.

Annual world per capita consumption of fish and shellfish is presently 28.6 Ibs., which is expected to increase to 34 Ibs. by the turn of the century. Over the same period, population is forecast to increase from 5.0 billion to 6.1 bil­ lion. These global factors combine to portend a 15 m illio n mt annual market for aquaculture products by the turn of the century. Many experts argue that we are in the beginning stages of a worldwide " blue revolution" in aquacul­ ture development similar to the "green revolution" in agriculture of the 1960s, which had profound social and economic consequences wor ldwide and trans­ formed many food-importing countries of the t h ird world into net food ex­ porters. T he United States as a major m arket Figure 1 for fish and shellfish and Alaska as a World Production of Fish and Shellfish major producer of ca n be ex­ pected to experience substant ial eco­ nomic impacts as the wo rldwide ,..-­ protein production potential of aqua· ,..­ ,..­ culture is realized. D omestic seafood ,..­ markets are among the fastest grow­ ~ ing in the world and have been dra · 200 ,..-"'­ ,..­ matically affected by aquaculture 1a.. production. United States per capita ....- ___ 6 Aquaculture and Commercial Tota l consumption of fish and shellfish has ~------!! 17~ increased 13 percent since 1980, while total domestic annual con­ sumption of seafood increased by 19 1~0 Commercial Landings percent. This trend is expected to con­ tinue as American consumers be­

12~L------~------~------~------~~------4 1&83 19&0 2000 2010 Yecr.o 1/ Brad Pierce is a Legislative Analyst with the Alaska House of Represen­ Source: "Future of Aquaculture: Profile of a Growth Industry." International Aqua· tatives Research Agency in Juneau, culture Foundation, February 1985, P9. 8. Alaska. 4 come mo re knowledgeable about the ther aquacul ture development Sever­ are rapidly developing their own hea lth benefi ts of eating seafood and al significa nt issues need to be salmon farm ing indus ries. increasingly sophi sticated abo ut resolved including potential user con­ different species and methods of fl icts over ma riculture sites; the In 1986 approximately 59,200 metric preparation. Most of the increase in dangers of disease transm ission or tons (mt) of farmed salmon were domestic demand for seafood is be· genetic degradation of wild stocks; p roduced worl dwide, compared to a ing met by im ports. Fresh salmon im· environmental hazards of fish waste 657,000 mt wil d harvest. By 1990, ports increased from 1.1 million accumulation or effects of antibiotics production of fa rm ed salmon is fore­ pounds in 1982 to 13.8 million in feed being diluted into the water; cast to increase to 107,000 mt while pounds in 1984. In fact, im ports of and impacts to the existing fishing in­ the wild harvest is expected to sta bi­ fo reign fish and shellfish grew by 14 dustry, especially on fish prices and li ze at about 677,000 m t. By compar­ percent in 1985 alone and the U.S. access to State loan programs. ison, the 1986 Alaska salmon harvest fisheries trade deficit amounted to was 268,000 mt. The proportion of $5.6 billion that year. While salmon farming is the most fa rmed to wild salm on in world mar­ controversial form of development, kets is expected to increase from 8.3 Alaska's Place in the Blue Revolution other aquaculture activities such as pe rcent (1986) to 13.7 perce nt by the rearing of mussels, oysters, scal­ 1990. Fig ure 2 gives a historical per­ Alaska's competitive position as a lops and sea vegetables are not per­ spective on Alaska's wild salmon producer of aquaculture products will ceived as a direct threat to the production and Figure 3 provides a depend on the economics of produc· traditional . All of the graphic representation of proportion­ tion and distribution as well as world­ other aquaculture products men­ ate world salmon production (farmed wide conditions of supply and tioned above which could be deve­ and wild) by m a jor p roduc ing demand for seafood. The state's phys­ loped in the near term (next five countries. ical potential for aquaculture develop­ years) are likely to be of minor eco­ ment is quite large. Major physical nomic importance, however, when Since about 43 percent of world advantages include enormous natur­ compared to the potential of salmon salmon production a nd 90 percent of al salmon runs (which are being sup· farming. U.S. sal mon come fro m the commer­ plemented by public and private cial harvest in Alaska, the enormous hatchery production), clean nutrient­ Salmon Farming influx of fa rmed salmon into worl d rich waters and many undeveloped markets (pa rticularly dom estic ma r­ areas that are suitable for mariculture The new form of aquaculture develop­ kets fo r premium species) expected in sites. For species other than salmon, ment with the most economic poten­ the early 1990s will have major impli­ however, cold water temperatures tial is salmon farming. The pen cations for the va lue of Alaska's ma r­ limit the number of varieties that can rearing (farming) of salmon, where ket share. Farmed salmon com pete be cultivated economically. smolts are held captive in pens and most directly with premiu m wild fed until they reach harvester size is species-chi nook, cohos and sock­ Aquaculture development in Alaska a relatively new industry that has eye. The combined 1986 Alaska har­ has the economic advantages of a largely developed since 1970. Norway vest of chino ok (5,070 mt) and co hos well developed fisheries infrastructure is the leading producer of farmed (18,771 mt) was about half the 48,600 and barrier-free access at reasonable salmon, but twelve other countries mt Atlanti c fa rmed salmon produc- cost to rapidly growing domestic seafood markets. The classic eco­ nomic development triad of cooper­ ation between government, the Figure 2 university system and private indus­ Alaska Commercial Salmon Catch 1904-1985 try already exists in Alaska and has 1~0 been proven in the salmon hatchery 140 systems. The major disadvantage of 130 further aquaculture diversification in Alaska is generally high operating 120 costs. Since the State and federal 110 government own most of the coastal 100 ii 110 lands in Alaska and the State has t.:: jurisdiction over waters to three miles 'Ci eo offshore, government policies (partic­ -c 70 ularly as they affect operating costs) ~ eo will playa substantial role in future ~o development. 40 30 Major obstacles to diversification of 20 the aquaculture industry are legal 10 and political. Aquatic farming legis­ lation (HB -108, SB 106) would have established an administrative and Source: Alaska Commercial Salmon Catches 1878-1984, Alaska Department of Fish regulatory framework allowing fur­ and Game, Division of Commercial Fisheries, February 1985_ 5 tion. The 1986 Alaska sockeye har­ maintaining a frozen inventory of wild pete d irectly with wild fish from vest was 88,575 mt. Sockeye are fish in t he o ff season. Alaska. p rimarily sold on t he J apanese m ar­ ket and thus are not expected to be The n ex t major challenge to N ew entrants to the salmon farming a major factor in the fierce dom estic p roducers o f farmed sal mon is to industry are likely to face stiff price market com petition of the 1990s. m ove into the mass retail market (i.e., com p etit ion f rom established supermarkets) and win acceptance producers within t he next five years. Recently Brit ish Columbia has be­ with the great bulk of domestic con­ T hose with unamortized develop­ come the focal point for farmed Pa­ sum ers. This market segm ent is m ent costs or improperly scaled oper­ cific salm on development, with where wild fish from Alaska will Iike­ ations could be very vulnerable to Chilean, Japanese and New Zealand Iy face their greatest competition in price undercutting by producers such production also expanding rapidly. the near future. Farmed p roduction as Chile, which has very low labor and feed costs, and new A laska fi sh farm­ ers may have difficulty surviving the Figure 3 anticipated industry shakeout. in­ World SaJrnon Production, 1984 terestingly, sa lm on farming opera ­ tions do not appear to benefit from 800~------~------~ significant economies of scale. In Norway, the m ost profitable opera­ tions appear to be medium-sized (1 40 !l00 mt) farms which have average annu­ al costs of about $400,000 and revenues of approximately $640,000. Larger and sm aller scaled operations tend to have lower rates of return.

According to the British Colum bia '0 Salmon Fa rmers Association, a g 200 properly scaled operation requires a ~ capital outlay of about $1 million in the first two years of operation before 100 any fish are ready for harvest. A bout 40 percent of the ca pital investment (estimated at slightly over $7 5 mil· .Japan USSR Canada Norway Oth.,. lion) for the 75 salmon fa rms current· Source: Seafood Business Report, Volume 4, Number 2, March/April 1985. Iy operating in British Columbia came from foreign investo rs, m ainly Norwegian ban ks. It is likely t hat an British Columbia is likely to be Alas­ fits in with the ability of these stores influx of foreign capital would occur ka's major competitor in premium to plan, schedule and market large if Alaska were to allow salmon farm ­ domestic markets as further pen rear­ fresh product volumes of consistent ing, since domestic banks have no ex· ing development in Puget Sound and quality and price over long periods perience with aquaculture and State Maine has been slowed by opposition each year. Farmed salmon of specif­ loan program s are generally being (primarily on aesthetic grounds) from ic quality and size can be purchased reduced. waterfront homeowners and real es­ via long-term fixed price contracts. tate interests. The key to mass markets will be low­ Salmon farming is a ca pital intensive er prices for farmed products. business. Labor costs am ount to Fresh Atlantic farmed salmon have about 15 % of total annual operating been targeted at the top of the Ninety-seven percent of Alaska's costs. The average 108 m t farm in domestic market and have enjoyed production of premium salmon spe­ British Columbia employs 5.5 per­ their greatest acceptance with fine cies is sold in frozen form. Salmon sons and has a payroll of $98,920. restaurants and specialty fish shops, farmers only marginally compete Salm on farm employees are not high­ where quality and continuity of sup­ with fisherman in Alaska in today's ly paid-the average salary in British ply are prime considerations. Farmed markets but this situation is begin­ Columb ia is about $18,000 per year. Atlantics have also captured a large ning to change. As can be seen in In this respect, salmon farming em ­ portion of the European smoker mar­ Figure 4, the year-round volume of p loyment is similar to the fish ket, once dominated by wild fish from imports of farmed salmon is increas­ processing industry, however, unlike Alaska. Even though the characteris­ ing rapidly as producers begin to the seafood processing industry tics of wild Pacific species are superi­ compete more directly with domesti­ which relies heavily on nonresident or (flesh color, oil content), many cally produced fish. By the early and seasonal employees- fish farm­ smokers have switched to farmed At­ 1990s, large volumes of farmed fish ing provides year·round jobs to resi­ lantics because they can order them are likely to saturate the fresh salmon dents and could beco m e an fresh as needed and do not have to market and begin to spillover to important source of incom e to coastal bear the energy and interest costs of frozen markets where they will com­ communities.

6 It is estimated t hat a fu lly developed ted oyster fa rms in Alaska, with seven cally adapted to Alaska. Therefore 20,000 mt salm o n farming industry actually growing oysters and two growth rates are fa irly uneven among in A laska would directly employ in fa rms with commercial sales. Half· juveniles. A selective breeding pro· excess of 1,000 persons and have shell oysters take two growing sea· gram could develop an Alaska strain gross sales on the o rder of $130 mil­ sons to produce and sell for about 50 within a few generations that would lion. A 20,000 m t salmon farming in­ cents each or $3 /Ib. The Department grow uniformly well. dustry in Alaska is m any years in the of Fish and Game does not compile future, although a 4,000 m t industry statistics on oyster production, but A major priority for oyster farm ers is may be possible four to five years af· from conversations with producers it to establish a hatchery in the state. At ter enabling legislation is adopted. appears that 1986 sales amounted to their pre sent scale of production, it 30,000·32,000 oysters. would not be feasible to generate The market im pacts of a 20,000 mt enough from an assessment tax on Alaska salmon farming industry are small compared to the impact of the expected increase in the supply of Figure 4 farmed salmon worldwide. Prelimi· nary estimates indicate that increased (J.S. Imports of Norwegian Salmon 1982-1985 supplies of non-Alaska farmed "00 salmon will cause a $5 m illion to $36 million loss in revenue to the Alaska 700 1 II,,!! • / /' \ / ~ . fishing industry by 1990. A fully de· .____./ .R." / \ /. veloped Alaska salmon farming in· "00 • / .'.0: \ / dustry could result in an additional \:~/ \. \ ! ,i \. \ / 10·15 percent ($500,000 to $4 mil· !!OO 1 l.. / .\ / ...... / .. lion) revenue loss. In relative terms, E -400 \'\,, "' ,./ \ .I ! / D prices for Alaska salmon are expect· 19"-4;.' \ / . ~/ / ed to fall by about nine percent as a , 300 /--- i.. / result of world farmed salmon Iii! / '\ production and an additional one per· /,; \~ ...... G...... J 200 19"/ ___ ...... • •• .,-. / cent if Alaska were to develop a 20,000 mt industry. 100 ~ '-- --_--.I 19"2, The domestic seafood market is very oL2~~~==~~~~ .Jan Feb Mar ~r May oJun .Jul Au~ S.p Oct Nov Dea dynamic; there appears to be con· siderable room for expansion of fresh Source: Ronald V. Rogness and Dr. Biing·Hwan Lin, " The Marketing Relationship salmon sales. Significant substitution Between Pacific and Pen ·Raised Salmon: A Survey of U.S. Seafood Wholesalers . effects between wild and farmed University of Alaska. Fairbanks. salmon have not shown up in domes· tic sales data which su ggests that the fresh market is not close to the satu­ Oysters only rarely in Alaska gross sales to pay for a hatchery. Thus ration level. There is a window of op· because they require a sustained a State· funded facility appears to be portunity for Alaska to enter the water temperature of 68 to 72 the most realistic option at present. salmon farming business that will degrees for approximately one close as existing producers establish month. This biological fact has both Each shipm ent of oysters (or other their share of the domestic market for good and bad implications for oyster farmed shellfish) that is so ld, must be premium salmon products. At this farmers in Alaska. On the positive tested for paralytic shellfish poison· point, we can only guess that real side, because oysters do not spawn, ing (PSP) by the Departm ent of En· price competition between wild and they remain fat and succulent during viro n m ental Conservation as a farmed salmon in frozen markets will the summer when Puget Sound oys­ condition of their shuckerlshipper occur sometime in the early to ters get mushy and bitter. This gives permit. The DEC testing lab is locat· mid·1990s. Alaska producers a foothold in fresh ed in Palmer. O yster farmers, most of half·shell markets during the summer whom are located in Southeast, must Oysters months. Actually oyster farmers in remove their oysters from the water Alaska have little trouble selling all and send off a sample to be tested be· Oysters are the only mariculture they can produce. Demand for oysters fore they can ship their product. It product in Alaska that are specifical· is high and domestic production is often takes three days to receive Iy addressed in State law and regulat· declining because of water q uality results back from the lab by phone. ed by the Board of Fisheries. Oysters problems in Puget Sound and New Even though the oysters can easily were farmed for a brief period in England. survive the interval out of the water, Southeast Alaska prior to statehood they lose some of their shelf life be· using beach culture methods. Ex­ On the negative side, juveniles (spat) ca use of the delay. Oyster and other perimental production using raft cui· must be imported from outside the shellfish farmers are selling a gour· ture techniques began in 1978, with state. Nonindigenous spat is very m et product and freshness is of para· the first commercial sales occurring hearty and has a high (90 percent mount importance, so the testing in 1983. Today there are 20 permit· plus) survival rate but is not geneti· delay is bothersome. Thus shellfish 7 farmers of all types in Alaska are lob­ Chil e, New Zealand and Asian coun­ practiced in many suitable coastal byin g the legislature for regional PSP t ries account for m ost of the rest. regions of the state. Combined with testi ng faci Iities. the cultivation of other species, it can Because of wa ter quality problems, a llow a sma ll operator to make a It takes two years for an oyster farm no new mussel fa rm s are likely to be comfo rtable living and enjoy a re­ to p roduce a harvest. During the permitted in Puget Sound in the near mote life-style. In some other areas of winter, the oyster rafts only require future. Another problem faced by the wo rld, m ussel rafts have been custodial care, but duri ng the intense shellfish growers in Puget Sound is placed around sa lm on pe ns to feed April to October growing season, oys­ p lankton blooms (red tide) in late off the fi nes from salmon food sus­ ter farming is a fairly labor intensive summer which nearly shut down pended in the wate r. opera ti on. The screens in the rafts sales fo r about two months each year. must be cleaned and the oysters must In many areas of New England, har· Scallops be turned and sorted regularly to as­ vested mussels must go through a sure maximum growth. It is estimat­ depuration process, where they are The stable price of scallops ove r the ed to take a capital investment of fl ushed with clean saltwater for a cer­ years (about $4/Ib.) and a growi ng about $110,000 during the first two tai n ti me period before they can be domestic shellfish market m akes it a years of operation to raise enough sold. European mussel farmers are very attractive species for maricul­ oysters to have an economically via· also faCing severe water quality ture. There are several larvae ble business and earn a living wage. problems. These factors add up to a co llection efforts underway in the Oyster fa rms are generally sited in re­ very promising domestic and export waters around Kod iak Island and mote locations. Because the farmer market situation for mussel farmers other areas of Prince William Sound must remain on site for most of the in Alaska. Freight rates from Alaska and Southeast. The Kod iak efforts are year, it is difficult to hold down to both the U.S. and Europe are being coord inated under a joint another job. cheaper than they are for several of Alaska·Japan development project to the exporting countries cited above. adapt techniques used to grow the All shellfish farmers in Alaska oper· Japanese scallop, which has been un­ ate under a complicated site permit­ There are currently five permitted de r c ultivation fo r over twenty years ting situation. The Department of mussel farms in Alaska-three in in that country. Japan has a very large Natural Resources (DNR) administers Kachemak Bay and one each in scallop culture industry, located the leasing of sites for shellfish farms. Prince William Sound and Kodia k_ ma inly o n Hokkaido, that produces The terms of shellfish site leases were Mussel fa rmers benefit from the same a bout 200,000 mt of scallops annu­ originally drafted for log transfer sites market situation as oyster farmers. a lly. Kodiak has some of the richest and do not give an operator enough Thus far, only one farm is producing sca llop-g rowi ng conditions in the security to obtain long-term financ­ mussels in commercial quantities world and the species that is being ing. T he DNR is in the process of (10,000 Ibs. in 1986). targeted is the weathervane scallop, drafting new site regulations, specifi­ which is the largest of ten sepa rate cally designed for mariculture oper· Mussel farming is a moderately labor species fo und in the a rea. ations. The idea is to have a screening intensive business. The larvae can be procedure for new applicants that collected at the free floating stage on Weathe rvane larvae drift in the water does not allow for site speculation lines suspended in the water or and seek a place to attach them­ and a prove out period to keep sites juveniles can be scraped off rocks or selves. Spat are collected by suspend­ from being tied up and not de­ cliff faces and contained in sock nets ing onion bags full of mo nofila ment veloped. Operators who establish a around a hanging line. When the line fro m anchored a nd buoyed lines viable business would be allowed mussels become attached to the line, near known scallop beds. T he larvae long-term leases. the containment sock is removed. attach themselves to the m onofila· The hanging lines are then suspend­ ment in the bags until they become Mussels ed from rafts. Periodically the lines m ature enough to d rop off and con­ must be inverted and sediment and tinue their life cycl e on the bottom. Blue mussels are the only indigenous debris scraped off. Mussels take from By this time they are too big to fit shellfish species that is currently be· 12-18 months to mature and can be through the onion bag m esh and are ing farmed in commercial quantities harvested at any time of the year. captured. To date, many other kinds in Alaska. Mussels are a rich food of shellfish have been collected but source and can produce more protein Mussels are sold live, in the shell for weathervane have p roven e lusive. A per acre than any other farm crop. about $1.45/lb. wholesale and large-scale effort is planned for this Although considered to be a gourmet $2.99/1b. retail. Based on the econom­ summer. item in North America, mussels are ics of present operations, six rafts a primary fo od source in many parts yielding an average of 5,000 Ibs. each In the initial grow-out phase, small of the world. The domestic market for would generate sufficient returns for scallops are placed in pearl nets to mussels is quite large and growing a fam il y livi ng at the farm site, once filter feed fro m the wate r as it is rapidly. Some of the U.S. market for initial investment costs have been m oved by ti des and currents through mussels is supplied by farms in Puget recovered. We do not have an ade­ the mesh of the net. Scallop culture Sound, the Santa Barbara Channel quate information base to discuss in­ is fairly labor intensive. Periodically (mussels grown on oil rigs) and New vestment costs in detail but it appears the scallops must be removed to be England, while imports from Europe, that mussel farming could be an ideal cleaned, checked and sorted. After family-type operation that can be approximately one year, the scallops 8 are moved to final grow-out nets o f tive to the traditional sac fis he ri es. The Department of Fish a nd Game is larger mesh o r alternatively strung on in t he process of surveying widely lines through holes drilled in their A major concern in the management scattered he rring stocks to see if shell s. Withi n two to three years the of the existing roe-on· kelp is there are any which are currently un­ sca ll ops reach harvester size of about the potential for overharvesting t he exploited by existing sac roe fisher­ five inches in diamete r. Ma ricultured wild gia nt kelp reso urce. One way to ies that could support fu rther pound scallops are generally sold on the avoid this would be to artificially cul­ fi she ries. Thus it a ppea rs that while gourmet half-shell marke t. tivate kelp on farms to enhance exist­ kel p farme rs could have a good roe­ ing beds. Sheldon Jackson College in on-kelp fishery market, the ulti mate If current larvae collection efforts are S itka is conducting an experimental feasibility of giant kel p mariculture successful and a reliable source of project to test the feasibility of kelp wi ll p robably depend on locating a n spat is developed either through wild mariculture in Southeast under the adequate roe resource. capture or hatchery techniques, scal­ same Alaska-Japan cooperation lop mariculture could become a via­ agreement as the scallop project in ble industry, suitable to many of the Kodiak. A smaller kelp project will Conclusion coastal areas of Alaska. Based on the also be conducted in Kodiak over the experience of the Japanese industry, next year. Aquaculture di versification is there could be potential for cultivat­ p roceeding along several paths in ing scallops in Alaska. Giant kelp is cultivated by collecting Alaska and holds g reat promise for sporofites from wild plants. At the ap­ the economies of coasta l com muni­ Giant Kelp propriate stage of development, ties. Two recent developm ents have juvenile plants are started on strings, conspired to make the articulation of Herring roe-on-kelp is the highest which are then threaded through a a State policy fo r mariculture de­ priced fisheries product harvested in velopment take on a sense of urgen­ Alaska. Roe-on-kelp is known as cy. First the Attorney Genera l's Office kazunoko kombu in Japan where it is has issued a n opinion that says that a traditional delicacy. The Japanese salmon far m ing is legal under exist­ market is expected to provide the ing statutes_ Second, a lawsuit has impetus for development of a sea been filed against the State by vegetable industry involving the cul­ Wilderness Acquisitions, Inc. for de ni ­ tivation of giant kelp in Alaska. The al of the perm its necessary to sta rt a roe-on-kelp pound fishery, which hatchery and salm on farm at Warm would serve as the basis for giant kelp Spri ngs Bay on Baranof Island. If the mariculture, occurs in Prince William Herring roe-on-kelp is the State loses this case in court, it could Sound for a few days each spring. In highest priced fisheries open the way fo r further litigation and 1987, herring roe-on-kelp sold for $10 product harvested in Alaska. potentially allow salmon fa rm ing un­ - $14/Ib. (depending on the grade of der very loose regulatory guideli nes. product) and the pound fishery grossed approximately $1.2 million In response to these develop ments, on a harvest of 60.26 tons. the legislature has passed a bill (Chapter 70, SLA 1987) that places a In the pound fishery, giant kelp is har­ one-year mo ratorium on the issuance vested in Southeast (where it grows of licenses, perm its, leases or authori­ wild) and is transported to Prince Wil­ zations for comme rcial fi nfish farm­ liam Sound (where it is not native). ing but allows the experimenta l The kelp is suspended in net­ scallop a nd giant kelp projects to pro­ enclosed rafts or pounds. Ripe ceed. Oyster and m ussel fa rmers will schools of herring are caught by fish­ groundline that is suspended just off continue to operate under the curre nt ing vessels in seine nets and trans­ the seabed_ When the plants reach permit situation until an agreeable ferred to the pound, where they are maturity, the groundline is retrieved regulatory st ructure can be wo rked held until spawning occurs on the en­ and the kelp fronds are harvested. out. This legislation is designed to al­ closed kelp. The roe-laden kelp is Iowan in terim committee o f then harvested at the optimum time In recent years the pound fishery has representatives of the various regula­ for the highest quality roe and the become so popular that the Board of tory agencies and inte rest groups to herring are released to return and Fisheries limited entry to the pound design a comprehensive policy for spawn again in future years. fishery at 125 permits in February of furthe r mariculture development. this year. The 1987 fishery quota was In the traditional sac roe fisheries, the set at 85 tons. The Board of Fisher­ A ll parties concerned feel that aqua­ spawning herring are caught in nets, ies has been petitioned by many culture diversificati on is too im por­ frozen in blocks and generally groups wishing to start pounding tant to proceed ha phazardly and shipped to Japan to be stripped of operations in other areas of the state, should be undertaken within a poli­ their roe. Because the adult herring but has turned them down because cy framework that is clearly laid out are not killed and a much higher available roe herring stocks are being in State law. valued product is produced, the fully exploited by traditional net fish­ pound fishery is an attractive alterna­ eries_ 9 Employment in Alaska's Seafood Industry

By Neal Fried and John Boucher

he seafood industry has been a majo r contributor to Alaska's overall economy since the late 1800s. Comme rcial fish canning bega n in 1878 in Southeast Alaska a nd the number of canne ries in T Alaska increased steadily for the next fifty years. The numbe r of can· neries reached their peak in 1929 at 160. Al though the n umber of canneries has declined since, the seafood industry remains an important econo mic ac­ tivity in Alaska. Canneries and fishing fl eets provide economic activity around which coastal co m munities from Ketchika n to Kotze bue sprang up and prospered.

In recent years oil has been such a Figure 1 dominant force in Alaska's economy Seafood Industry Employm ent 1977-1986 that strong growth in Alaska's seafood industry has gone unnoticed. Now, with lower oil prices and reduced state government spending, 20000 Alas ka's seafood industry is reemerg­ 18000 ~ __ Pn>cee.lng El'npl..",..._ ing as a leader in employment and in­ 16000 dustry growth. Today, employme nt is more than double the levels of the 1400 0 - 1960s and early 1970s. The develop· 12000 ment of new seafo od products, the recovery in the salmon fi shery, and 10000 1"ZL expanding shellfish a nd bottomfish oS 8000 harvests have made this growt h 6000 possible. 4000 This articl e examines employm ent 2000 and trends in the seafood industry. Seafoo d industry em ployment is 0 77 711 71t eo II' 112 8 3 e4 as ae broken into two com pone nts; seafood Ye ar harvesters (fis he rmen) and seafood ~ ...,.. ~~,... .,...... ­ processors (ma nufacturing). This method is used for several reasons.

First seafood processing and harvesting employment estimates are o btained by separate methodologies. Seafood processing employ ment is covered by un­ employment insurance and therefore included in the nonagricultural wage and salary employment figures published monthly. Seafood harvesting employ­ ment is not covered by unemployment insurance, unless the number of the crew is ten or more and they receive a wage o r salary.

Since most crew members work for a share of the catch they are considered self-employed and not included in the nonagricul tural em ployme nt numbers. Data from the Commercial Fisheries Entry Commission and c rew factors for various types of fisheries are used to estimate seafo od harvesting em ployment. (For an explanation of methodology see Alaska Seafood Industry Employment, Alaska Department of Labor, June 1987)

In addition to methodological considerations, seafood processing and ha rvest· ing are different occupations. Seafood harvesting attracts independent individu­ als who are willing to take high risks for potential big gains. Processing wo rk on the other hand is manufacturing factory work at relatively low pay. The levels of employment are related, however, and estimates of seafood processing em­ ployment give an indication of the level and trend of seafood ha rvesting e m­ ployment (Figure 1 and Table 1).

10 Seafood Harvesting Employment Table 1 Since seafood harvesting em ploy­ Seafood Industry Employment by Major Category ment is classified as se lf-employed 1977·1984 Annual Averages and not collected by an ongoing su r­ Total vey such as that used to collect Seafood Seafood Seafood nonagricultural wage and sa lary em· Year Processing Harvesting Industry ploym ent an alternative method to estimate seafood harvesting em ploy­ 1977 5,122 6,164 11,286 1978 6,274 7,278 13,352 m ent was developed. This data was 1979 6,657 7,919 14,576 first estimated for 1977 through 1981 1980 7,510 7,590 15,100 and was recently . updated through 1981 7,884 7,821 15,705 1984. (See Alaska Seafood Industry 1982 6,730 8,194 14,924 1983 6,132 8,029 14,161 Employment, Alaska Department of 198:4 5,52 1 8,202 13,723 Labor, J une, 1987.) 1985 6,149 * 1986 6,366 From 1977 to 1984 the number of seafood harvesters in Alaska in· * Estimate not available creased by one·third, with most of the increase occurring prior to 1980. In 1977, annual average employment in the low point is in January. (Figure 2) is the most important species fo r all fisheries was 6,164. By 1979, Alaska seafood harve sters (Figure 3). seafood harvesting employment was Trends in the Seafood Industry In 1984 the salmo n fishery provided 7,919 and it has remained around 65% of all seafood harvesting em­ 8,000 since. In 1984, seafood harvest­ Through 1984, three fisheries were ploy ment. After salmon, t he nearest ing employment recorded its highest responsible for most of the growth in fishery wa s shellfish which acco unt· level of employment since 1977 with seafood employment; the salmon ed fo r 14 % of the total employm ent. an annual average employment of fishery, the hal ibut fishery and the Halibut was third at 11%. 8,202. herring fishery. O f t he 2,000 seafood harvesters added from 1977 to 1984, Since 1977, the m ix of employment Seafood Processing Employment over half were in the salmon fishery, by species has changed because of 400 in the halibut fishery, and 300 in the collapse in the shellfish fishery. In The seafood processing component is the herring fishery. The bottomfish 1977, the shellfish fishery accounted the other major employment gener· and sablefish fisheries account for for 18% of all seafood harvesting em­ ator in Alaska's seafood industry and most of the balance of seafood har· ployment and it maintained that level is A laska's leading manufacturer. vesting employment growth since through 1983. By 1984, harvesting Over the past decade annual average 1977. em ployment in t he shellfish fishery seafood processing employment has dropped off dramat ically because of b een relatively stable. T he low point Seafood harvesting employment and disapp ea ring shellfish stocks. Fro m was 5,463 annual average employ· other available data show that salmon 1977·1980 the annual shellfish ca tch ment in 1977. At that time salmon harvests were just beginning to recover after a number of lean years. Figure 2 Employment in the industry peaked Seasonality of Fishing Industry Employment 1984 in 1981 when a very healthy salmon season pushed annual average em­ ployment in seafood processing to 40000~------. 7,957, a record. Ironically, this was also the year the collapse of the king :55000 fishery began. :50000 No other industry in the state is as seasonal as the seafood industry. In 25000 1986 seafood processing employ· m ent peaked at 15,007 in July; with 120000 an annual average 6,813 jobs. This 1" represents 41-45% of the jobs in the 1.5000 seafood industry and 3% of the states total wage and salary employment. 10000 During the past three years the peak m onth's employment in seafood :5000 processing is seven times the low month's employment. The peak month traditionally occurs during the salmon harvest in July or August and 11 Figure 3 of salmon processed increased, and 4) certain fishing seasons, such as Seafood Harvesting Employment by Species halibut and herring were shortened so 1984 Annual Average that an increasingly concentrated ef­ fort during a shorter period of time now takes place, causing more dra· m atic swings in employment.

Salmon 5331 (65%) In the future there could be some smooth ing out in the seasonality if the bottom fish fishery continues to grow. Fishing activity in botto rn fish­ ing is not limited to th ree or fo ur Other 10 (.1 %) months out of the year, but instead is a year-round activity. This year a Herring 423 (5.2%) number of processors in Kodiak plan Sa blefish 155 (1.9%) on operating both bottomfish and salmon lines simultaneo usly for the Ha libut 930 (1 1 .3%) Bottomfish 176 (2. 1% ) first tim e. A return to a healthy shell­ Shellfish 1177 (14.4%) fish fishery could also temper the fluctuations in em ployment. The less seasonal the industry becomes, the more Alaskan residents could depend on it as source of t heir l ive lihood.

Geographic Distribution Figure 4 Fishing Employment by Region 1982-1984 Not surprisi ngly, seafood industry employment is concen trated in A laska's coastal communities and is 7000 r------, an im portant contrib utor to employ­ ~ _ood p_'"V Ernploym..,t m ent in all the coastal regions of 11000 _ _004 H"rveetlnv Employment Alaska (Figure 4). In rural areas seafood harvesting's stature as a ~ooo source of employm ent is greater than urban areas where local econom ies } 4000 are not as dependent upon this sin­ gle resource. In 1985, 9 5% of the "is. .!i ;'000 seafood processing employment was conce ntrated in t hree regions-the 2000 Gulf Coast (including Anchorage/ MatSu) (48%), Southwest (32%) and 1000 in Southeast (1 6 %). Interior Alaska is the only region where t here is no sig­ O~~~ __~~~JL nificant seafood em ploymenU/ 5E CC SW N SE QC SW N :!IE QC SW H 19112 1IUI3 19114 SE-South_.t; QC-Oulf eo".t; SW-Southw• .t; H-North.rn Southwest Alaska has the largest amount of seafood harvesters and its economy re lies more heavily on har­ was over 300 million pounds, but by Unlike Alaska's economy as a whole, vesting employment than any other 1984 the shellfish catch wa s down to seasonality has increased in the region in A laska. O n an annual aver­ 9 1 million pounds, little more than seafood processing ind ustry over the age basis, seafood harvesting employ· one-quarter of the total harvested in past decade. During the late 1970s ment in t he Southwest region was the late 1970s. and ea rly 1980s the difference be­ tween high and low months was In contrast to the decline in employ­ three-fold unlike the seven-fold it has 11 Because of the way harvesting data ment in the shellfish fishery, the been during the past three years. is aggregated, A nchorage/MatSu is halibut fishery has seen its share of Seasonality of the industry has in­ included with the Gulf Coast Region's total harvesting employment steadi­ creased because: 1) t he collapse of data. Seafood harvesting employ­ ly increase since 1977. In 1978 the the king crab fishery which provided ment is not ava ilable separately for halibut fishery accounted for 7% of significant employment during the the Anchorage/MatSu Region. In ad­ total seafood harvesting employment. non-salmon season, 2) other shellfish dition the processing data for the By 1984 it had climbed to 11% of the harvests such as and tanner Southwest Region falls in areas that total seafood harvesting employment. crab suffered declines, 3) the volume are included in the Northern Region for fish harvesting. 12 nearly 2,800 in 1984. If seafood har­ landed and second only to New Bed­ been Kodiak and Dutch Harbor. Dur­ vesting employment were compared ford, Maine nationwide. Kodiak ing the past year, processors in Ko­ to nonagricultural wage and salary presently has 13 active fish proces­ diak and in Dutch Harbor have employment, seafood harvesting sors, the largest number in anyone processed bottomfish for filets, suri­ would be the largest employer except community in the state. The South­ mi, and blocks. local government. If seafood harvest­ west region is dominated by Dutch ing and seafood processing employ­ Harbor and Bristol Bay processors_ Some Cook Inlet processors and ment are added together they surpass others in the state also began to local government's total annual em­ The Northern region's seafood har­ process bottomfish during the past ployment. In J une, J uly, and August, vesting employment is rather small two years, and others are considering seafood harvesting and seafood when compared to the other regions_ expanding to process bottomfish. The processing employment combine to T he fishing industry's impo rta nce is potential is great, and if Alaskan create over 10,000 jobs in the region. minimal when compared to the oil in­ based processors succeed in captur­ A recent report by the University of dustry, but it does provide employ­ ing a large portion of the harvest, it Alaska's Institute of Social and Eco­ ment and -income primarily to the could provide t he biggest boost to the nomic Research (ISER) on the com­ northwest coastal communities of the seafood industry since the growth in mercial seafood industry in Alaska state_ the King Crab harvests of the late estimated that the fisheries industry 1970s and early 1980s_ A n addition­ generated 47% of all income earned Floating Processors Increase in al benefit to a growing bottom fishery in the Southwest region_If just private Num ber is the smoothing of the sea sonality of sector basic industry income is con­ this industry. sidered, fishing generated 98% of all One change occuring in the process­ private sector basic industry income ing arena is an increase in t he num­ An increasing amount of salmon are in Southwest Alaska_ b er of floating fish processors. being processed for the fresh/frozen F loating processors provide flexibili­ m arket as opposed to canning. In The Gulf Coast and Southeast ty by moving with ease from one fish­ 1977 3 2% of the salm on processed reg ions of Alaska are not as depen­ ery to the next. According to the were fresh or frozen while 64% were dent upon seafood harvesting em­ Alaska Department of Environmental canned. By 1985 the proportions had ployment as Southwest A laska, but Conservation's records there are ap­ reversed t hemselves; 66 % were sea food harvesters do playa signifi ­ p roximately 3 -t imes as many float ing processed for the fresh/frozen market cant role in their economies. Proces­ p rocessors permitted in 1987 than and 32% were canned. These propor­ sors in the Gulf Coast and Southeast there were in 1980. tions fl uctuate each year but with a often benefit from fi sh harvested in t re nd towards a greater percentage of other region's waters. T he Southwest There is some concern regard ing this fresh and frozen salmon. For example reg ion produced the largest trend because m any fl oating proces­ in 1982, the year after the bot ulism harvests-almost twice as large as the sors are based out-of-state, and there­ scare, 70 % of the salmon were Gulf Coast's but its processing em­ fore may more readily buy their fresh/frozen. T he effects a shift to a ployment is sign ificantly smaller. It is supplies and bring in their crews from fresh/frozen p roduct has had on not unusual for a share of the large elsewhere. This would mean little eco­ processing employment is not clear. Bristol Bay salmon catch to be nomic activity generated in Alaska's Some claim it utilizes more labor and processed in the Gulf Coast. economy, and would make the goal other say less. to improve resident hire much more In 1984, seafood harvesting employ­ difficult. The growth in the number of In addition to a growing fresh/fro zen ment in t he Gulf Coast and Southeast flo ating processors does not neces­ product, Horm el, Bumble Bee and Alaska was comparable, slightly u n­ sarily mean Alaska will accrue less others are introducing a new method der 2,400 in both regions. Although economic b enefit from fl oating to can skinless and boneless pink Southeast Alaska had sl ightly m ore processors than shore based opera­ salmon. T he project is an attempt to harvesting employment in 1984 than tions. It will depend on whether t hese b roaden the appeal of canned pink the Gulf Coast, historically the Gulf floating processors doc k in A laska's sa lmon. If it proves to be successful Coast has had m ore seafood harvest­ port s for repa irs, supp lies and it could help insu re a permanent mar­ ing employment. T he flip-flop is due wo rkers. ket for A laska's largest salmon to the co llapse in the Gulf Coast's fishery. crab fishery. The Gulf Coast region Product Changes has historically relied on the shellfish Employment of Residents fishery for about 25% of its total har­ The biggest chang e occurring vesting employment. On the other presently is the growing bottomfish­ Few residents wo rk in Alaska's hand, Southeast Alaska's shellfish ery in Alaska. Though we are unable seafood processing plants. As a low fisheries share of total, employment to accurately break down seafood paying and uncertain source of em­ only recently topped 10% of total har­ processing employment by species ployment it is difficult to sustain a vesting employment. we know this fishery has made mea­ person in areas with a high cost of surable inroads into Alaska's proces­ living. Gulf Coast seafood processing is sing industry. The bottomfish harvest dominated by Kodiak and Cook Inlet has increased dramatically for In 1985, 69% of all seafood proces­ processors. Kodiak is Alaska's num­ domestic fisherman. The areas most sing workers were nonresidents. The ber one fish port for value of fish active in bottomfish processing have migration of thousands of college 13 students and others from the lower 48 Resource Management and Seafood fish harvesting employment has is an annual ritual. They are Alaska's Harvesting Employment grown 450% from 1977 to 1984. 'm igrant' wo rkers. A majority com e for three to fo ur m o nths during the Any d iscussion of seafood harvesting Projections of the American take of summer season and then leave. Som e employment m ust acknowledge the bottomfish for 1987 indicate that begin with t he herring fishery in en ormou s effec t t hat resou rce vo lum e p rocessed will be double the Togiak in April and work t heir way m anagers have on seafood harvest ing volum e processed in 1984. In Japan, down the coast to Ketchikan in Sep­ employm ent. Since so few variables retraining p rograms are being in­ tember to p rocess salm on. T he affecting the availability of t he fisher­ st it uted for Japanese bottom fisher­ seasonality of the fishery partially ex­ ies resource can be con trolled, m en who have been laid off d ue to plains why so few residents choose to resource managers control the num ­ America nization of the industr y_ All work in this industry. ber of fishermen, the type of gear of these point to increasing bottom ­ used, and the time that fishing can fish harvesting em ployment fo r the Wages paid in this industry make take place. In short, resource immediate future. work less attractive to residents. The managers can be one of the most im­ average entry hourly wage is $5.66 portant variables in the amount of A nother way resource managers af­ per hour and the average hourly wage seafood harvesting employment. fect seafood harvestin g employment for a person with a two years of ex­ is by increasing the available supply perience is $6.67. Long working Alaska's salmon fishery is an exam­ of fish through hatchery programs_ hours can boost earnings, but in spite ple of how resource managers have By enhancing the supply of salmon of this, the average monthly wage in affected salmon harvesting employ­ through state owned and private non­ this industry remains low. In 1985 the ment. Since 1975, Alaska's salmon profit hatcheries, t he sal m o n fishery average monthly earnings was $1,443 fishery has been managed through has increase from 304 m illion pounds in seafood processing, only 61% of limited entry. Permits are issued that harvested in 1977 to 650 m illion the monthly average of $2,369 for all lim it the number of seafood har­ pounds in 1984. industries. The highest wages are vesters that have access to the fishery. paid during the salmon season be­ The result has been that except for a Conclusion cause of longer hours wo rked. The j ump in salmon harvesting employ­ average m onthly earnings cl imb to m ent that occurred from 1977 to The seafood industry provides many $1 ,600 during the third quarter of the 1978, sal mon harvesting employ­ benefits to A laska's economy includ­ year. m ent has remained stable at around ing direct jobs. In 1985 the value of 5,000 harvesters. Alaska's fish harvest was $565 m illion Over time, seafood processing earn­ but the wholesale va lue to the proces­ ings have increased little, and if they Limited entry is not the only way that sors wa s $ 1.1 billion. T he processing are adj usted for inflation they have ac­ resource managers can affect harvest­ of the fish p rovides an "added value" tually lost purchasing power. The ing employment in a fishery. Halibut to the fish product. In other wo rds t he average m onthly earnings would have harvesting employment has been fi sh becomes a m o re va l ua ble fallen further if salmon's relative im­ made more seasonal since 1977 be­ product after it is processed and some portance hadn't increased over the cause the halibut fishery is not limit­ of the " added value" accrues to the past six years because of the poor ed. Since fishermen are allowed free state's economy in the form of direct shellfish fishery. The combination of access to the fishing grounds, the jobs, taxes, and indirect j obs in the low wages, seasonality, a long trad i­ length of halibut openings have been transpo rtat ion and services ind us­ tion for many fish p rocessors to hire dramatically shortened. In 1977 the tries. In 1986 $115 million was paid thei r c rews outside of Alaska, and halibut season lasted five months and out in wages_ Processors purchase possibly working conditions have all monthly employment never exceed­ su ppl ies and other serv ices and pay tended to make the percentage of ed 1,800. By 1984 halibut was a one taxes in the com m unities they are lo­ nonresidents high in this industry. month fishery with employment dur­ ca ted. And last b ut not least they pro­ ing that month of over 9,000. vide the necessary infrastructure to In the future the number of residents o perate one of Alaska's largest represented in the processing indus­ Resource m anagers do not always act indust ries-fishing. try cou ld grow for two reasons. as a limiting factor to seafood harvest­ Presently there are far fewer employ­ in g em ployment. In the case of the ment o pportunities in the state than l:> otto mfish industry, Congress man­ in past years and therefore m ore state dated with the Magnuson Act of 1980 residents m ay' choose to work in this that resOurce managers act to expand indust ry. A lso, the Department of seafood harvesting employment by Labo r and a g roup of fish processors "Americanizing" the bottom fish in­ are mak ing greater efforts to facilitate dustry. -:he growth of bottomfish har­ and encourage state residents to work vesting employment, at least through in this industry. 1984, has been slow but it has been accelerating. From 1983 to 1984, the total number of employees involved in bottomfish grew 47% compared to the usual 20 to 25% growth_ Bottom­

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