Seafood industry execs optimistic for 2021 after troubled pandemic year

A lack of fish in the freezers is an encouraging sign for Alaska salmon as we head into the new year, driven by increasing customer demand. But headwinds from trade disputes and the COVID pandemic also loom large on the 2021 horizon.

Those are some prime takeaways shared by Mark Palmer, president and CEO of OBI Seafoods, and Allen Kimball, vice president of global operations and sales for Trident Seafoods.

“We don’t see entering the 2021 season with any real big carryovers. And that’s always one of the downsides as we head into a new season, if there’s an abundance of two to four (pound) sockeyes or something. We’ve gone into seasons like that and it influences the new season pricing. But as we go into 2021, we should have a pretty clean slate and be ready to buy and ideally put it up in a better product form than we did this last year,” said Palmer, speaking at a webinar hosted by United Fishermen of Alaska.

The COVID pandemic this year forced a shift from workers producing fresh salmon fillets to lower value canned and frozen fish when the labor force was reduced and costly restrictions were imposed on processing lines.

Kimball added that while he was “a little more conservative,” his outlook was fairly optimistic.

“We don’t have inventories around and we have good demand,” he said. “I think we’re going to see a lot of adjustments and positive things in terms of the demand at retail and it’s going to continue. And if we get this food service piece back to full giddy up, I think it’s going to be quite good.”

[Fisheries council shuts down commercial salmon fishing in Cook Inlet federal waters]

Nationally, people are buying more seafood at grocery stores than ever before, added Palmer. And while lower in value, all that pack put up by Alaska processors fits the bill.

“The type of seafood they’re buying is more canned and frozen products and that’s where we’ve really seen some great market share gains,” he explained. “It’s probably one of the best times to be a frozen seller and to get new value added products in the market.”

With COVID crippling the food service sector, Palmer said farmed fish has flooded into retail outlets and forced a downward press on salmon prices.

“These aquaculture produced salmon had a huge piece of the food service market and as that evaporated, they’re still pulling fish out of the water. We’ve watched that industry go after the retail market more aggressively than they ever have. They’ve got the fish and they’re going to find someplace to move it. We’ve watched prices go down, so we’re slugging it out every day to keep our products on the shelf,” he said.

Roughly 75% of the world’s salmon is now farmed, added Kimball. But both men emphasized Alaska’s biggest market competition comes from Russia.

“When we’re negotiating with some of our bigger export markets, whether it’s salmon or whitefish, all of these global markets influence that,” Palmer said. “For the last four years, Russia has had these huge production years on pink salmon and solid sockeye and chum production. That’s what’s really driven the market. Trying to put up product forms where we don’t have to directly compete against Russia has been important.”

Both also bemoaned the trade imbalance that allows Russian-caught fish into U.S. markets while that country has not purchase a U.S. pound since 2014.

“Russia has open access to our markets with no restrictions. I just don’t understand the fairness of this,” Palmer said. “We would rather just see open markets. We will compete against anyone, but if they’re not going to give us access to their market, they shouldn’t have unfettered access to ours.”

“If we can’t sell our fish in Russia, they shouldn’t be able to sell their fish in the United States,” echoed Kimball. “I think that’s going to continue to be a battle. We’ll have to see with the next administration how that’s going to materialize. But I anticipate that we’re going to have to be at the table really early and carefully to make sure that we get our voices heard in this particular issue.”

Both men said that dealing with trade wars and currency fluctuations over the past several years “has been a big nightmare.”

Tariff activity since 2018 on various fish ranges between 35% and 45% going into China,

Kimball said, and a new 35% tariff has been imposed on Alaska salmon going to Europe stemming from a government dispute over airplane subsidies.

“It is going to have an effect on our ability to get wild salmon into the European Union. With that kind of tariff, it’s going to make it pretty darn tough,” said Kimball. “But I would say that with many of these tariff challenges, what we’ve seen in China and other countries, the dynamics of this could change. So we’re heavily working on this from a political position standpoint. But if this remains, there is no question it’s going to have a big influence on fish next year.”

The ongoing influence of the COVID pandemic also remains a question. Most seafood companies picked up the tab this year to charter planes to transport tens of thousands of processing workers, rent hotel rooms for 14-day quarantines, purchase testing and prevention equipment – costs not reimbursed by federal relief funds. More strict state requirements for preventive protocols are already extended into 2021.

“In fact, they’ve been expanded,” said Kimball. “We are all working with the state on surveying our community work forces and factories at places that operate year round, and we have to go to continuous monitoring of our employees there, including testing. So the handling of the workforce is getting more expensive, not less, as we head into 2021. It’s just a big unknown at this point.”

Share the Sea - Two million pounds of seafood turns into 8 million meals at Feeding America food bank networks across the nation. That’s how much the Seattle-based nonprofit SeaShare has donated to Lower 48 states so far this year. Alaskans in dozens of remote communities also share in the seafood bounty.

“I think we’re at 180,000 pounds which is over 720,000 servings this year, which is more than we normally do,” said Jim Harmon, SeaShare executive director.

SeaShare has positioned freezers full of fish in regional hubs at Juneau, Kodiak, Anchorage. Mat-Su, Kenai, Dillingham and Kotzebue that allows distribution to remote communities.

The program began in 1994 with bycatch donations from boats fishing the Bering Sea and has since expanded in the Gulf of Alaska to include 136 vessels, 12 shoreside processors, 34 catcher processors and three motherships.

To date, it has delivered more than 220 million seafood servings of fish to U.S. food bank networks.

SeaShare is the only group authorized to receive bycatch donations which today make up about 20 percent of the fish; the rest includes a wide array of smelt, halibut steaks, salmon burgers, breaded pollock portions and more, all processed and donated by seafood companies.

“The nice thing is that the donations that the fishermen and processors make, it enables us to bring in other donations of freight, cold storage, packaging, and those things they wouldn’t be able to donate if we didn’t have the fish,” Harmon said.

Good protein is the hardest item to source and the demand on food banks has soared due to the COVID pandemic.

“The clients that go to food banks have doubled this year. I believe 22% of Americans are accessing food banks and that’s unprecedented. That’s an incredible need,” Harmon said.

With many federal and state relief programs set to expire at the end of December, pressure will grow as food banks struggle to keep up with.

There are all kinds of restrictions in place and volunteers have really dropped off, which most food banks rely on to distribute the hand outs and segregate all the different donations that come in,” Harmon said. “It’s scary to think about. It’s going to come right after the holidays when those extra services run out.”

Donations are more important than ever to fill the seafood pipeline. Harmon said every one dollar donated to SeaShare equals eight seafood servings to hungry Americans.

Fish skins cure - Fish skins that help regenerate human tissue have garnered a $600,000 grant from the U.S. Defense Department to make them available to wounded soldiers.

It’s the third grant the Icelandic company Kerecis has received from the Defense Department’s Combat Casualty Care Research Program (JPC-6).

Kerecis has pioneered and patented the omega 3 fish skins that need minimal processing and provide an infection barrier while enabling the body to regrow its own tissues. The skins already are used around the world in hospitals and by health care workers and consumers. Now, Kerecis will create field kits for use by the U.S. military.

The company says it “harnesses nature’s own remedies,” in this case the omega-3 fatty acids and collagen found in cod fish skins. And because no disease-transfer risk exists between cold-water fish and humans, the skins are ideal for treating soldiers in the field.

Collagen is the most abundant protein in the human body and supports everything from our skin and bones to our toenails, and marine collagen is the same kind.

While the marine collagen market is pegged to reach nearly $1 billion by 2023, Alaska’s skins are still dumped as wastes.

For Alaska pollock, with catch volumes averaging over 3 billion pounds a year, that adds up to over 1.4 million pounds of skins, assuming a 5 percent yield, according to economist Dan Lesh of McKinley Research Group (formerly McDowell Group).

Pacific cod could produce nearly 1.4 million pounds of skins. The skin yield is in the 8 to 10 percent range for Alaska salmon.

And they are loaded with healing goods: Studies show cod skins produce about 11 percent collagen and nearly 20 percent has been extracted from salmon skins.