The Bristol Bay commercial harvest forecast, processing, market supply, competition and retailer prices, as well as consumer demand, all contribute to how much money people make in the fishery.
Andy Wink is director of the Bristol Bay Regional Seafood Development Association, a drift-fleet funded marketing organization focused on improving the value of the Bristol Bay fishery, through marketing, quality research and sustainability projects.
Wink calls this season a “hangover year,” the result of a major surplus from last year’s record breaking harvest of 60 million fish. Bristol Bay’s prices aren’t out yet, but low prices from other fisheries around the state indicate fishermen could see dramatically lower prices this year.
Only Trident Seafoods has released a base price of 60 cents per pound for False Pass sockeye and Area M fishermen in the Aleutian Islands - an indication Bristol Bay prices could be dramatically lower this year.
Wink says there are a few reasons why prices would be lower. One is the price for headed and gutted sockeye, or “H and G,” which are frozen and exported to other processors or retailers. He says that the margin for wholesalers has dropped, decreasing the price for fishermen.
“Coming into last year, the frozen H&G price for Bristol Bay sockeye was in the $4.50 to $5 per pound range. But now that's in the $3 to $3.25 range,” Wink said. “Over the past couple of years, we've generally seen a gap of about $2.50 to $2.75, between final ex-vessel price and the frozen H&G price. So if prices don't get better, it doesn't leave much room, if that's how much processors need to cover their costs. Of course, however, fishermen don't really know what that margin has to be. But, if things are in that $3.25 range, it just doesn't leave as much of a gap there.”
Wink says another factor is the surplus of sockeye products from last year’s massive harvest, which processors and retailers say they’re still selling off.
“Looking further ahead, I think it's pretty likely that processors still have some 2022 fish that needs to be converted into dollars, he said. “It's probably sold as uncommitted to various programs. Until they realize cash flow from it, their financial position will probably remain tight. And we've seen that in the news, and we've heard that through the rumor mill for some various companies.”
That supply could help drive down prices. But Wink says prices could bounce back this season.
“I think there's a possibility that fishermen could see adjustment, or some other form of price competition,” he said. “And the reason I say that, because if you estimate the wholesale value of last year's pack, and contract payments to fishermen, it looks pretty good in terms of gross margin. But as I said, that probably hasn't been completely realized yet. So once that money comes in, maybe processors will be in a better position to pay retro.”
Retro pay or bonuses are based on processors gains in the market, usually paid out long after the season wraps in July.
“Basically, we need wholesale prices for frozen H&G sockeye to be probably $3.75 or better, in order to generate a decent price for fishermen. And I do think we'll get back up there and higher, perhaps even pretty quickly, as buyers do the math on making sure they secure enough 2023 fish. But it's kind of impossible for us to say how long it will take sitting here right now.”
Another factor is potentially lower consumer demand, as Americans are facing a year of inflation and soaring grocery bills.
“Bristol Bay sockeye is far from the only protein hitting a rough patch lately,” Wink said. “Lots of species, seafood species, as well as the beef, pork and chicken guys are struggling too. And that's because consumers are pulling back. Interest rates are way up. And all of that drives wholesale prices down. It makes costs hurt and matter a lot more. And it also leaves a lot less cold storage space out there too.”
Wink says his organization BBRSDA has boosted marketing efforts over the last year in the retail, restaurant and social media spaces.
When it comes to the potential price drop, Wink says there needs to be more transparency between fishermen and processors.
“Yeah, it is a really dramatic drop. And hopefully none of us have to experience a hangover that deep at any point,” he said. “I think it really just underscores the need to have strong partnership and transparency between fishermen and processors. You know, my market summary that I kind of walked through (recently) had more maybes and probably than I think fishermen would like, and that's all because there's very little transparency. Fishermen don't know what they're going to get paid. Until at best, they've already committed to fishing for the season. Or prior to the past couple of years, after they've delivered the bulk of their catch. So like many fishermen, we also believe that it's imperative that processors and fishermen forge a more robust business partnership and have agreements that guarantee both sides get a share of this fisheries value. Things like that long term would be in the best interest of both sides going forward.”
KDLG reached out to the large seafood processing companies - Peter Pan Seafoods, OBI Seafoods, Silver Bay Seafoods, and Trident Seafoods - to comment on the base price concerns, but did not hear back before publication.
Disclaimer: BBRSDA is an underwriter of KDLG and funds the Bristol Bay Fisheries Report but has no involvement in editorial coverage or newsroom operations.
Get in touch with the author at corinne@kdlg.org.
