Heading into the 2020 fishing season, many people were concerned that seafood workers from out of state would bring COVID-19 to rural communities. Processing companies managed to keep the disease under control — but at a big cost. Now, economists are looking at that financial toll.
Seafood processors had a lot to deal with this season.
“Our biggest challenge in 2020 was safely staffing our plants,” said Julianne Curry, the public affairs manager for OBI Seafoods.
“It was a huge lift to get all employees tested, transported, quarantined, and fully integrated into each of our plants all while observing a closed campus and all COVID-related protocols and doing it all with very little time to plan and prepare for the summer salmon season,” she said.
To keep track of how the pandemic is shaping the seafood industry, economists at the McDowell Group have started to publish monthly briefs for the Alaska Seafood Marketing Institute.
“It’s interesting to describe a crisis when you’re in the crisis, right? And that’s our situation," said Garrett Everidge, an economist at the McDowell Group. “The goal is to try to keep up to speed on how the pandemic is impacting the seafood industry and really impacting all stakeholders, from local governments, supply chains, retailers, harvesters, processors.”
Data collection for this information can take years, so to get a real-time picture of what’s going on, the authors conducted interviews with those stakeholders and compiled data that’s already available.
The financial costs of the pandemic hit the industry hard this summer. Everidge said processors have spent $50 million dollars on mitigation plans — so far.
“So $50 million is kind of a start and it’s just expected to increase," he said.
Nicole Kimball, the vice president of the Pacific Seafood Processors Association in Anchorage, which represents several processors that operate in Bristol Bay — Trident, Peter Pan, and Alaska General Seafoods.
“The initial quarantines for thousands of workers. So that can include hotel and food and daily medical screening," she explained. “It’s the testing that came online, often multiple times for each worker. It’s hiring medical companies to provide daily screening and be on site for each plant. It’s PPE and sanitation supplies. All of those things. Security, which in Bristol Bay people were really adamant about needing to ensure if you were going to have a closed campus it really was a closed campus.”
Kimball said all those things were expensive — over and above the normal cost of operating. And the $50 million price tag for 2020 is in line with what she’s heard from companies around the state.
“I think some companies, individual companies, spent more than $10 million alone,” she said.
Another factor is that the scientific understanding of the virus and how it is transmitted has been constantly evolving, and that’s posed a big challenge for processors as well.
“As we learned new information about the virus, we had to change protocols — so constantly evolving situation, protocols, information — in order to stay most up-to-date on how it’s likely transmitted, the scale of asymptomatic cases, how long someone will test positive even after they’re no longer contagious. All those things were constantly kind of in flux.”
Those precautions paid off. The outbreaks among processors were confined to the workforce, and didn’t spread to communities in the region.
Companies also saw a big drop in the size of the workforce — they had 13% fewer people processing fish this summer. For OBI Seafoods, that was one of the biggest sources of lost revenue.
The McDowell Group’s report says that meant more low-value products, like head and gutted fish and less high-value products, like fillets.
Kimball wouldn’t speak to any specific company or to the products that came out of Bristol Bay this season. Still, she said that processing is wholly dependent on how many people are working.
“The more labor you have, the more higher-value products you could probably do. It also depends on lots of other factors, like the volume of fish coming in at a short period of time and things like that. But generally I think the report was right on in just identifying when you, in any year when you don’t have a sufficient workforce you’re often forced to do lower-value products.”
Less workers didn’t mean a lower harvest in Bristol Bay, however. That fleet hauled in almost 40 million fish — the fifth largest harvest on record. Sockeye harvests in other fisheries around the state were relatively weak, however. According to the Alaska Seafood Marketing Institute, if Bristol Bay were excluded from the statewide total, this would have been the smallest harvest year since 1976.
Those costs had to be felt somewhere, and the price per pound for Bristol Bay sockeye dropped steeply; fishermen were paid about half of what they got in 2019. This year’s base price was $0.70.
Looking ahead, Kimball said that tariffs on American seafood means the costs of the pandemic are more acute for everyone. Tariffs for sockeye entering China’s domestic market are at 37%. For other Pacific salmon that number is 40%.
“We’re in a challenging tariff environment for our seafood -- not just Alaska seafood but U.S. seafood. So these challenges, these costs, are just on top. They’re exacerbating an already challenging global market situation.”
As the 2020 summer season winds down, Julianne Curry. with OBI Seafoods, said they are already bracing for more costs and more restrictions from the state in 2021. To put that in context, she said, the current mandate for the seafood industry is 10 pages long, but the draft of a new mandate for processors is around 29 pages, and the company is already making plans to exceed those requirements.
“It’s safe to say that the processing sector will be seeing an increase in protocols in 2021 and that COVID is far from over for our industry. We anticipate that our COVID-related costs will be just as high, if not higher than last year,” she said.
Still, she said, they’ll have more time to prepare. They are hopeful that testing will become easier and more affordable, and they want to continue working with local leadership to apply what they learned in 2020.
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