A tasty tax benefit for processors

The Alaska legislative session has concluded, and among the bills that passed is a measure to revive and expand a lucrative tax credit for seafood processors.

The state previously had a tax credit for investments in equipment used to produce value-added salmon and herring products, but that credit expired after 2020.

Senate Bill 33, which now awaits the governor's signature, would revive the tax credit and expand it to additional species including pollock, Pacific cod and sablefish.

A fiscal note estimated processors could benefit by up to $3.6 million annually.

The seafood industry broadly supported SB 33, which was sponsored by Sen. Gary Stevens, R-Kodiak. Industry players said the legislation could spur innovation, increase the value and utilization of each fish, and support jobs.

Millions for processors

The U.S. Department of Agriculture this week announced $50 million in COVID-related grants to seafood processors.

Of this sum, nearly $30.7 million has been allocated to Alaska. Here's the rundown by state.

The Alaska congressional delegation is really happy about the funding.

Help urged for seafood processors

"Federal support to help seafood processors weather the pandemic is urgently needed — without it, our nation's entire seafood industry may falter," says this congressional letter to the Biden administration.

Processors and COVID-19

Noting coronavirus outbreaks at Lower 48 food-processing plants, Alaska officials have issued Enhanced Protective Measures for Seafood Processing Workers.

Heading to court?

Here's what the major processors are telling Bristol Bay communities and tribal councils regarding coronavirus safety precautions they intend to take during this year's salmon season.

This letter is interesting in two respects. First, it seems to confirm the processors are gearing up for the fishery — a major financial gamble on their part.

Second, these processor safety commitments seem unlikely to satisfy community members who fear the fishery could usher in the pandemic to Bristol Bay.

As we reported earlier, the state appears disinclined to cancel Alaska's most valuable salmon fishery.

Deckboss is sure all parties will keep talking. But don't be surprised if the matter winds up in court.

Plenty of capacity, processors say

A new survey indicates Bristol Bay processors will have more than enough capacity to handle this year's projected sockeye harvest.

Ecopeace

Rival processor groups have reached a deal to end their conflict over Marine Stewardship Council certification of Alaska salmon.

MSC urges arbitration in salmon dispute

As we observed last month, Alaska's major salmon processors are having trouble rejoining the Marine Stewardship Council certification program.

That's because a group of generally smaller processors, led by Silver Bay Seafoods, holds the MSC certificate for Alaska salmon and appears unwilling to share it.

A recent attempt to settle the matter through mediation has failed.

Now the MSC is urging binding arbitration. And the organization is asking Alaska's governor to help bring the two sides to an arbitration proceeding.

Here's an exchange of correspondence laying out the situation:

Gov. Bill Walker letter to the MSC
MSC Chief Executive Rupert Howes reply

Make of it what you will

A mysterious person, presumably a public relations man, just sent the following press release to Deckboss.

FOR IMMEDIATE RELEASE

Alaska Salmon Producers Decide to Rejoin MSC

10 April 2015 (Seattle, WA) — Several Alaska salmon producers announced today that they have decided to rejoin Marine Stewardship Council (MSC) through the client group that holds the MSC certificate for wild Alaska salmon, Alaska Salmon Processors Association, Inc. This is in addition to their ongoing commitment to, and participation in, the United Nations Food and Agriculture Organization (FAO)-based Alaska Responsible Fisheries Management (RFM) certification program.

This expansion would provide multiple certification choices in the global marketplace for virtually 100% of the gold-standard of sustainable seafood: wild Alaska salmon.

"This decision is based on the recognition that both the salmon market and sustainability landscape have changed in recent years," said Stefanie Moreland, Director of Government Relations and Seafood Sustainability at Trident Seafoods. "Today, there is growing market acceptance for multiple sustainability certifications, underscored by the significant progress made in establishing a common global benchmarking tool for those certification programs."

Moreland added, "The successful launch of Alaska's RFM program in 2010 and its ongoing refinement was undoubtedly a major factor in this market shift, and we continue to pledge our full support for the RFM program and the Alaska brand."

Adopting both RFM and MSC certifications would eliminate arbitrary sustainability product differentiation in the market place for Alaska salmon and ensure that even more consumers around the world will be able to enjoy the world's most sustainable and high-quality seafood.

"We project historic runs of wild Alaska salmon this year, and it is important that as many global retailers as possible have access to our abundant supply," said Barry Collier, President and CEO of Peter Pan Seafoods. "We recognize different markets have different preferences for certification, which is why we look forward to offering choice."

As a testament to the long-standing sustainability success of Alaska's seafood industry, the 2015 run of Bristol Bay sockeye salmon is forecasted to be approximately 50% larger than the long-term mean, according to the Alaska Department of Fish and Game.

"In Alaska, we work hard to ensure that we maintain the most advanced and rigorous science-based approach to ensuring the sustainable management of our fisheries," said Jeff Regnart, State of Alaska Department of Fish and Game Director of Commercial Fisheries. "The decision of the Alaska salmon producers to expand their certification options reaffirms Alaska's commitment to keeping responsible fisheries management at its core, and to promoting choice and competition in the marketplace."

The group of Alaska salmon producers entering into the discussions includes Alaska General Seafoods, Icicle Seafoods, Kwikpak Fisheries, Leader Creek Fisheries, North Pacific Seafoods, Ocean Beauty, Peter Pan Seafoods, Triad Fisheries, Trident Seafoods, and Yukon Gold. The group has also requested that any other interested Alaska salmon producer also be given the opportunity to join under the same cost-sharing agreement as the new members.

###

For more information, please contact Stefanie Moreland, Director of Government Relations and Seafood Sustainability at Trident Seafoods, at 206-297-4627.

Higher risk than usual for Bristol Bay processors?

The Bristol Bay Regional Seafood Development Association has posted a new sockeye market analysis.

"This will be the riskiest year in recent memory for Bristol Bay processors," the report says. "Wholesale prices for sockeye are at peak levels and price resistance from buyers is increasing."

The MSC merry-go-round

Back in November, the London-based Marine Stewardship Council said Alaska salmon had earned recertification as a sustainable and well-managed fishery (except for Prince William Sound).

The MSC "client" securing the recertification was the Purse Seine Vessel Owners' Association, a Seattle-based fishing group.

PSVOA, you'll recall, stepped in after most of Alaska's major salmon processors in 2012 decided to pull out of the MSC program.

Well, now the matter has taken yet another twist.

A notice posted May 6 on the MSC website said PSVOA "has withdrawn as the MSC client for this fishery."

The new client, the notice said, is the Alaska Salmon Processors Association.

Never heard of it, you say?

That's because it's very new. State records show the Alaska Salmon Processors Association is a nonprofit corporation formed on April 10.

Four persons are listed as officers in the association. All are connected with processors who apparently see some market value in continuing with the MSC ecolabel.

Here's a rundown of the four officers:

Robert Zuanich, Sitka, president
Affiliated with Silver Bay Seafoods LLC

Cassandra Squibb, Anchorage, vice president
Affiliated with Copper River Seafoods Inc.

Joe Kelso, Seattle, secretary
Affiliated with Ekuk Fisheries LLC

Norman Kilborn, Kodiak, treasurer
Affiliated with International Seafoods of Alaska Inc.

$10 an hour

The morning crew at the Goodnews Bay plant. CVRF photo
 

Now here's something Deckboss has never seen before — a processor bragging about what it pays workers on the slime line.

Coastal Villages Region Fund says it's bumping up beginner pay to $10 an hour, "believed to be the highest starting wage for processors in the history of the Alaska seafood industry."

The company's flagship plant is the Goodnews Bay regional facility near the village of Platinum.

Processing hands are an essential, but often overlooked, component of Alaska's commercial fishing industry.

Many come from out of state, and ethnic minorities are predominant.

The work is monotonous and messy. Workers stand for hours in wet, noisy conditions heading, gutting, cleaning and packing fish.

Coastal's starting pay rate does appear favorable compared to other processors in the state.

Icicle Seafoods, one of the state's biggest seafood processors, pays $7.75 an hour to start, which is the minimum wage in Alaska.

Because seafood processing is so labor intensive, companies have a strong incentive to control payroll costs.

In 2009, they lobbied against a state minimum wage hike.

Coastal Villages suggests it is different from other processors. And it is.

It's a nonprofit company operating under the federal Community Development Quota program. The goal of the program is to improve economic conditions in Western Alaska villages.

Coastal says better than 80 percent of its processing hands are Alaskans, including village residents.

The company acknowledges it actually loses money on its salmon, halibut and herring operations in Western Alaska.

Coastal subsidizes those operations with the lucrative income stream from its Bering Sea pollock, cod and crab harvests.

We're dumping the MSC — really!

Deckboss just received this open letter from Alaska salmon processors "reaffirming" their intent to withdraw from the Marine Stewardship Council certification program.

The 27 processors signing onto the statement say they represent 80 percent of the salmon caught in Alaska.

Full Alaska delegation jumps into J-1 visa issue

Here's an update on our recent report that the State Department might stop granting foreign students J-1 visas to work in U.S. seafood processing plants.

As you'll recall, U.S. Sen. Mark Begich, D-Alaska, was telling Secretary of State Hillary Clinton this would be a bad move, that Alaska's seafood industry heavily depends on these student workers.

Now, Sen. Lisa Murkowski and Rep. Don Young, both Republicans, have joined Begich on an objection to the Obama administration.

Looking back a few months, Deckboss wonders about the role this Begich letter might have played in precipitating this looming labor crisis for the 2012 salmon season.

Begich suggested the J-1 program might need "modification," noting foreign students had come to work in Kodiak, Kenai and elsewhere without appropriate housing or transportation, and that their employment had cost local resident workers overtime pay.

Some locals even had to resort to a food bank due to the loss of income, Begich wrote.

"Especially when it comes to placing students in smaller communities, we need to assure there is accountability and we are not over-burdening the local area with additional workers competing for jobs," the letter said.

Labor crisis looms for Alaska processors

U.S. Sen. Mark Begich, D-Alaska, recently sent two letters to the Obama administration objecting to possible changes that could shut off a major source of workers for the state's seafood processing industry.

At issue is the Summer Work Travel Program, which allows foreign college students to come to the United States on a J-1 visa to work and travel during their summer vacation. The U.S. Department of State oversees the program.

Begich worries the State Department, now considering possible reforms to address worker exploitation complaints and other issues, is about to exclude manufacturing and packing facilities from the program, including fish processors.

That would deny Alaska processors thousands of workers, right on the brink of the summer salmon season, Begich says.

One of his letters is to Secretary of State Hillary Clinton, who might have a sympathetic ear on this issue. After graduating from college, she worked the slime line in a Valdez cannery.

Processors sue over new rockfish program

Five major processors with plants at Kodiak are suing the federal government over the new Central Gulf of Alaska rockfish catch shares program.

The plaintiffs are Trident, Westward, North Pacific, Ocean Beauty and International.

The 21-page lawsuit accuses federal regulators of failing to do proper environmental studies before adopting the program.

The real issue, however, is who controls the fish.

Because the program establishes catch shares, but not processor shares, all the profit in rockfish harvest will go to vessel owners, the companies argue.

Well, Deckboss is sure he's greatly oversimplifying this. So he strongly recommends you read the lawsuit for yourself.

In particular, check out page 15, paragraph 39 of the complaint.

For background on the rockfish program, click here.

Alaska salmon industry bails on MSC

Here's statement just in from the Marine Stewardship Council:

Jan. 17, 2012

MSC statement regarding Alaska salmon

The Marine Stewardship Council has been informed by the Alaska Fisheries Development Foundation, the organization that serves as the client for the Alaska salmon fishery, that it is withdrawing the fishery from assessment toward a possible third five-year certification.

The existing MSC certification runs until Oct. 29, and any Alaska salmon caught prior to that date may be sold as MSC-certified.

Kerry Coughlin, MSC Americas regional director, said: "We regret that the Alaska salmon fishery is being withdrawn from the assessment under way for a potential third certification period. While there are other sources of MSC-certified salmon, Alaska was an early and important leader in the MSC program. We hope that this fishery will re-enter assessment, maintain the market advantage of MSC certification, and continue to showcase their sustainability.

"The number of fisheries and supply chain companies using the MSC program continues to expand worldwide, and consumer appreciation for the MSC ecolabel on products is increasing. MSC remains the recognized global standard by which fisheries confirm they are meeting or improving to global best practice in sustainable fishing as established by a wide consensus of scientists, industry experts and conservation organizations. By demanding a scientifically rigorous, transparent certification process using truly independent, third-party assessments, seafood markets around the world are helping to protect our ocean resources as well as seafood-related jobs and livelihoods now and for the future."

The third assessment was announced by the Alaska salmon fishery on Nov. 18. A certifier had been engaged by AFDF, the first site visit in the assessment process had been scheduled for later this month in Alaska and a number of conservation organizations had registered as stakeholders. The fishery, first certified in 2000 and recertified in 2007, includes Chinook, chum, coho, pink and sockeye salmon throughout Alaska waters. It does not include the tribally managed Annette Islands Reserve salmon fishery in southeast Alaska, which continues in the program and holds its own separate MSC certification.

Certificates for all other MSC-certified species in Alaska are also unaffected by the change in status for the state-managed Alaska salmon assessment.

Bristol Bay processors: We can handle 'em

Salmon processors say they can handle the 28.5 million sockeye gillnetters are expected to catch this summer at Bristol Bay.

And more.

That's the upshot of the Department of Fish and Game's annual processing capacity survey.

Near as Deckboss can remember, the processors always say they have enough capacity to deal with Bristol Bay's sockeye hordes.

But much depends on how evenly the salmon enter the fishing grounds.

The survey indicates the processors collectively can handle a little over 2 million fish per day.

If the run is heavy and catches exceed that level, especially on consecutive days, processors often must limit their purchases until they can work the excess fish through their plants.

This, in turn, can set off howls of protest from fishermen asked to sit idle just when the fish are running thickest. To them, it's money swimming up the river.

Anyway, for more details, read the survey. It's a quick eight pages.

Economist: Crab revolution favored fishermen

Here's a new academic paper that's sure to stir some crabby conversation.

Scott Matulich, a Washington State University economics professor, wrote the paper for the journal Marine Resource Economics.

It argues that crab rationalization, the 2005 management overhaul that divided the Bering Sea crab fisheries into individual catch shares as well as unprecedented processor shares, upset the balance between crabbers and processors.

The bottom line, according to Matulich: The processors got screwed.

Looking at just the important Bristol Bay red king crab fishery, he calculates the "gross value" of the individual fishing quota (IFQ) is $436 million, while the individual processing quota (IPQ) gross value is under $24 million.

Matulich argues the crab rationalization program's arbitration feature, designed to settle price and other disputes, has disadvantaged the processors.

"Seven price arbitrations have occurred since policy implementation," Matulich writes. "All were won by harvesters."

I'm not an economist, so I'll leave the peer review of this paper to others more qualified.

I will say this: My understanding was that the price arbitrations were confidential. I've never been able to get my hands on the outcome of one. So if Professor Matulich has seen enough to conclude the crabbers always win, Deckboss would sure like to see it, too.

Bristol Bay update: Sockeye run really surging now

Bristol Bay fishermen caught 1.83 million sockeye on Sunday.

That's slightly above the 1.8 million fish per day processors told the state they could handle this year at maximum capacity.

Sunday's catch was also the third consecutive day we've seen catches in excess of 1 million fish.

Obviously, the salmon run is really surging now so I'm not surprised to see processors impose buying limits, as we reported earlier today.

The total catch through Sunday is 8.2 million sockeye.