Though the salmon sector in the U.S. state of Alaska is facing unsettling times, OBI Seafoods CEO John Hanrahan, Silver Bay Seafoods CEO Cora Campbell, and Trident Seafoods CEO Joe Bundrant are hopeful 2024 will bring more stability and profits.
In 2023, Alaska’s total salmon harvest exceeded 200 million fish for just the 10th time ever, but low prices and an early halt to fish purchases frustrated many fishermen, resulting in the Alaska Legislature declaring the state’s seafood industry to be in an “economic crisis.”
Following that, several companies announced plant closures and sales, with Peter Pan Seafoods entering receivership and Trident Seafoods in the midst of offloading several processing facilities.
Amid this uncertainty, Alaska’s 2024 salmon season kicked off 16 May with the opening of the Copper River sockeye season. U.S. restaurants have already started to offer salmon from this year's season in promotional deals.
As of 21 May, the Alaska Department of Fish and Game’s Cordova office reported overall catch at 93,851 sockeye, 2,392 Chinook, 2,433 chum, and 64 coho salmon.
The larger Bristol Bay season is set to begin mid-June, and several of Alaska’s biggest salmon processors have already announced conservative pre-season pricing levels, including Silver Bay Seafoods – a mostly fishermen-owned company founded in 2007 with a single salmon plant in Sitka. It has grown significantly since then and recently acquired Trident’s Ketchikan plant, as well as Peter Pan’s Valdez cannery and its Deming’s, Double “Q”, and Humpty Dumpty canned salmon brands. It also plans to operate Peter Pan facilities in Dillingham and Port Moller for the 2024 season, “while work on a larger deal continues,” according to the company.
“These discussions will continue through the summer, and we expect to have more information about long-term plans for all facilities, including King Cove, after the salmon season,” Campbell told National Fisherman. “Silver Bay views the current challenges as an opportunity to strengthen our position through thoughtful planning and strategic investment that will bring additional value to our fishermen partners, our workforce, and communities. Our expanded operations provide fishermen with critical market opportunities, capacity, and services and support product form diversity, increased throughput, and operational efficiencies that target economic benefits for our fishermen owners.”
Campbell said the major issues facing the salmon industry this season continue to be increased costs – particularly for labor, shipping, and fuel – as well as changes in consumer demand and behavior and excess inventories.
“Some of these issues are outside of the control of the seafood sector or the U.S., but the seafood industry has made progress in areas where we can have an impact,” Campbell said. “For instance, Alaska’s congressional delegation worked hard to secure a ban on importing Russian seafood products. The results of this may take some time to be fully realized, but we are seeing some positive activity in domestic markets.”
High inflation and interest rates are also a problem, Campbell said.
“Just like for every other business, the cost of borrowing remains high for the seafood sector,” she said. “Managing these additional costs carefully is critical for fishermen and processors. The entire supply chain, right down to the consumer, has higher costs of borrowing, meaning less money is available for purchasing and holding seafood inventories.”
In May, Alaska lawmakers voted to establish a seafood industry task force, an eight-member group that will recommend policy changes to the legislature that aim to aid the state’s commercial fishing industry. Previously the commissioner of the Alaska Department of Fish and Game, Campbell said she supported the creation of the task force.
“I remember attending meetings of the prior Joint Legislative Salmon Industry Task Force in 2002. In that case, there were good policy initiatives by the task force along with the benefit of raising awareness among the public and decision-makers about the importance of the industry to Alaska’s communities and economic health,” she said. “I have high hopes that this task force will do the same and will extend the conversations happening with the legislature during the current session about prioritizing funding for sound management and enhanced marketing and modifying state programs, such as the commercial fishing revolving loan fund and the seafood product development tax credit program, to support a strong future.”
Despite Silver Bay’s decision not to process salmon at Peter Pan’s King Cove facility this summer, Campbell said her company remains bullish on Alaska’s seafood industry in the long term.
“We are clearly optimistic about the Alaska salmon industry; Silver Bay has expanded our programs statewide,” Campbell said. “The seafood industry has faced challenges before, and as an industry, we have proven ourselves to be resilient and innovative. At the end of the day, our industry is about harvesting and processing a natural, wild, healthy protein that feeds the world. Looking forward, we believe that core-value proposition will overcome any short-term economic or market conditions.”
Both Campbell and Hanrahan, who has been an Ocean Beauty employee since 1987 and who took over as CEO from Mark Palmer in November 2023, praised recent U.S. Department of Agriculture purchases of Alaska seafood for helping to stabilize the sector and clear out excess inventory.
Seattle, Washington, U.S.A.-based OBI Seafoods, formed in 2020 through a merger of legacy Alaska processors Ocean Beauty Seafoods and Icicle Seafoods, has 10 processing plants around the state. The company’s current ownership includes Blacks Harbour, New Brunswick, Canada-based Cooke and the Bristol Bay Economic Development Corp.
Despite winning a huge USDA contract on 6 March that includes the purchase of USD 53.9 million (USD 49 million) in canned pink salmon and USD 14.3 million (EUR 13 million) in canned red salmon from the company, OBI has also had to pull back on its Alaska salmon operations, shuttering its Larsen Bay plant for the season and eliminating its tendering service to setnetters at Alitak on the remote south end of Kodiak Island.
“Due to the low pink forecast, we will not process at Larsen Bay this year. It will operate in 2025. Our Kodiak city plant will process fish from the island this year,” Hanrahan told National Fisherman. “Our plant in Seward will be available to support volumes if needed. All other OBI plants are operating in 2024. We have reviewed all areas of the business and have aggressive cost-saving and efficiency initiatives in place to increase value.”
Hanrahan said inventory levels – a major problem in 2023 – have subsided.
“Inventory levels for salmon will be low coming into the season, [but] we have seen significant improvement over the last four months,” Hanrahan said. “Inventories from 2023 are mostly sold, and we feel that will strengthen the market and increase the velocity of sales in 2024 compared to 2023 and 2022.”
The biggest issue facing Alaska’s salmon sector are high interest rates and a strong U.S. dollar, according to Hanrahan.
“Interest rates, which are up 5 percent over March 2022 levels, continue to be a great concern. The Alaska salmon industry purchases most of its product from June through August. High interest rates increase the incentive for our customers to delay purchases, and increased holding costs reduce the value returned to processors and harvesters,” Hanrahan said. “Second, the dollar continues to be strong compared to the yen and euro, reducing our customers’ purchasing power in those markets. The Japanese yen has lost 30 percent of its value compared to the dollar in the last three years.”
That opinion is shared by Bundrant, who took over as Trident CEO in 2013 from his father, Chuck Bundrant, a legendary figure in the North Pacific fishing industry who died in 2021.
“High interest rates are challenging for everyone right now. The seafood sector is no different, and that holds true for everyone throughout the seafood supply chain,” Bundrant told National Fisherman.
Bundrant said the company’s restructuring of its Alaska operations “is to ensure we can continue to invest and make the improvements we think are critical for the coming years.”
“Trident remains deeply committed to Alaska,” he said. “The sale of the Petersburg and Ketchikan plants marks a positive step in our modernization journey, allowing Trident to focus investments in our other Alaska-based operations. We’ve had fleet meetings for each region outlining our strategy and commitment to each community.”
Bundrant firmly denied rumors Trident is executing an exit from Alaska’s salmon sector.
“Nothing could be further from the truth. Salmon is part of Trident’s core, and we are being very deliberate about how we reshape the business to focus our efforts and build markets that will serve fishermen, communities, and processors alike,” he said.
Bundrant said the major issues facing Alaska’s processing sector include “restoring lost value to fishermen and processors, absorbing the inflation of the last five years into a profitable model and continuing to invest in the future.”
“We hope that the current challenges have shaken off the rust and gotten the whole industry thinking more strategically about the future,” he said. “We have got to evolve quickly to ensure that Alaska seafood remains an important economic contributor for Alaska – today and in future generations.”
Following a 23 May meeting of Alaska industry and municipal leaders with U.S. Commerce Secretary Gina Riamondo and U.S. Senator Dan Sullivan (R-Alaska), Bundrant said the U.S. ban on Russian seafood will further help Alaska's salmon sector, but only after a glut of imports that came in before the ban went into effect on 22 May is cleared out.
"We don't have the import numbers yet to verify, but I would say there was a flood of Russian fish that came to the United States between 22 December and 22 May," he told the Kodiak Daily Mirror.
Still, Bundrant said he's hopeful the ban will push more consumers to buy Alaska salmon.
"At least we have a market [in] the United States of America [of] 330 million people, and we have a chance to tell the story of Alaska seafood, and not be undercut by people who don't have the same restrictions and costs that we do," Bundrant said. "Now with the order in place, we can take the time we need to rebuild our markets in America. It's going to take time, but we're starting out."
Reporting by Wesley Loy
