In the shifting tides of the commercial fishing industry, it's not only fishers who face an uncertain future.
As fishers ready their crews and gear for today's driftnet opening, processors, too, are preparing for the season, and both large and small operations have different challenges to confront.
Kenai's Inlet Salmon is one of the largest processors in Alaska. With annual revenues exceeding $30 million in all but one year since 1994, it also is one of the state's top businesses. But the nature of the industry is changing, according to president and owner Vincent Goddard, who founded Inlet Salmon in 1987.
"(When we first opened), we were considering expansion and how we could continue growing in an international market in which Alaska salmon was preeminent," said Goddard, whose company exports 85 percent of its processed fish, mostly to Japan.
"Our primary orientation now is figuring out how to survive in an international market where Alaska salmon is in danger of becoming obsolete."
The ever-increasing grip that farmed fish have on the market is the biggest threat to the state's commercial fishing industry, Goddard said. Japan, for example, which is one of the world's leading seafood importers, counted on farmed salmon to fill 70 percent of its demand last year.
"Farmed fish reign supreme in marketing and pricing. We have to price compete and quality compete," he said. "The situation is only going to get worse. It wouldn't surprise me to see the production of farmed salmon double in the next seven years."
Fueled by continuous scientific advances, such as fish genetically engineered to grow faster, farmed salmon, which come primarily from Norway and Chile, are becoming easier and more economical to produce. That, said Goddard, has forced the commercial fishing industry to rethink its approach to marketing its own product.
"I think the industry as a whole is gearing much more toward the final product form," he said. "In general, the industry is having to become more sophisticated in marketing and production."
He noted the increased emphasis on processing fish into a consumer-ready form -- something virtually unheard of in the '80s -- as evidence of the new trend in domestic fish processing. While the bulk of Inlet Salmon's final product still goes out headed, gutted and frozen, the company also now ships salmon in fillets and portion-controlled form.
Alaska Seafood Marketing Institute officials confirm that the trend in the industry is away from raw product and toward value-added work.
"In the seafood industry, it's very difficult to rely on one product or one product form," said Barbara Belknap, ASMI's executive director. "If you don't have one product to make up for the loss of another, it's very difficult."
Belknap, who has been with ASMI for nearly 12 years, said despite the processors who have shut their doors and the commercial fishers who have left the business bemoaning a lack of resources in recent years, Alaska's seafood industry remains on firm footing.
"Everybody is sure (the Alaska seafood market is) declining, but we're the envy of the world," she said. "We can get so caught up in our allocation battles that we forget our place in the world."
That place, according to ASMI statistics, is huge. If Alaska were a country, it would be the fourth-leading seafood producer in the world. Domestically, the state's harvest comprises 60 percent of the United States' annual catch.
But Belknap conceded that all is not rosy for the industry. Logistical concerns and lack of support industries have increased competitive pressure from outside Alaska, especially in the canning industry, which is dominated by large-scale operations in western Canada.
"It's a competitive market out there," she said. "And it's a very complicated industry.'"
Still, despite the fact that close to 70 percent of the Alaska salmon catch ends up in cans (See related story, this page), ASMI officials say the trend in the industry is toward smaller-scale, specialty processing shops that offer more than just traditional canned salmon.
"There's advantages and disadvantages to size," Belknap said. "A disadvantage (of a smaller operation) is a lack of resources to back them up. But the smaller (processors) are fleeter of foot. They can make a change faster."
Manny Soares, seafood section chief with the state Department of Environmental Conservation, said the ability to change has helped keep the small processors in business.
"I think the reason we've had smaller canners show a slight increase is the fact that they're specializing. Everybody's going to specialty items," he said. "The small guys have to be diversified because they're not doing the volume."
Deep Creek Custom Packing, in its 40th year of serving the Kenai Peninsula's commercial and sport fishing industry, is one of those smaller operations. The Ninilchik processor has found that by diversifying its operation, it has managed to survive the changes that have shut the doors of other peninsula processors in recent years.
But the "small guys" face challenges of their own.
While farmed fish takes its toll on the demand side of the equation, the influx of deep-pocketed Outside processors has put a dent in the supply of fish available to processors, according to Mike Sutton, sales manager at Deep Creek Custom Processing.
"As the guys in Seattle get hungrier and hungrier, the price goes up. They can squeeze the price up and the margin down with higher-volume buying," he said. "They're able to control the market because they have money to pay on the spot. A lot of Alaska operations aren't in the same position."
But Sutton fingered lack of adaptability rather than aggressive competition as the main reason contributing to the recent demise of local competitors like Wards Cove Packing Company, which shut its doors in 1999.
"Do companies get squeezed out of the market, or do they just not change with the market?" he asked. "Some aren't willing to do the secondary processing and 'do the work,' so to speak. There's more call for quality now, especially from the Japanese. They just didn't follow the market trend."
Efficiently produced farmed fish and Outside competition may have the commercial fishing industry tossing on the waves of an economic storm, but Inlet Salmon's Goddard said it is by no means dead in the water.
"It's a difficult problem. Producing a quality product costs more in the short run, but in the long run it's mandatory," he said. "We're not going to conquer (the farmed fish industry). But we have to learn how to make Alaska salmon successful in an international market dominated by farmed fish, because there's no turning back the clock now."
Goddard added he believes it is the appeal of wild salmon that, ultimately, will be the industry's saving grace.
"We think that there's always going to be a very significant part of all our markets that will appreciate the quality and intrinsic purity of wild products," he said. "We feel that in a lot of ways, the wild product is superior and also healthier (than farmed fish). What we have to concentrate on is protecting that quality."
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