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ALASKA SEAFOOD INDUSTRY.
Term Paper ID:29083
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Essay Subject:
Economic problems of the salmon industry.... More...
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5 Pages / 1125 Words
4 sources, 13 Citations,
MLA Format
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Paper Abstract:
Economic problems of the salmon industry. Global economic impact, including free trade as disastrous for Alaska. Contributing factors to decline of salmon fishery. Expansion of aquaculture and farmed salmon. Effect on prices of economic recession. New global competition. Impact of Chile and Russia as market competitors.
Paper Introduction:
The Alaska Seafood Industry, the economic backbone of the state of Alaska, is today in dire straits. In particular, the salmon market is on the brink of collapse, having sustained many consecutive years of plunging prices and waning product demand. Scores of salmon fishermen have already given up on the trade; when the 2001 coho fishery opened in Cordova last September, only around 100 boats in a fleet of 520 put out to sea to cast their nets (World Environment News (WEN) 2). The salmon fishery is facing severe economic challenges today that may prove to be too global and manifold to be effectively countered by local measures. Governor Tony Knowles has already deemed the U.S. expansion of free trade with Chile “disastrous” for the state, and the statistics seem to support his contention (Alaska Seafood 1). It is clear that the Alaska Salmon Industry is at a criti
Text of the Paper:
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May 8, 2 2. AsGovernor Tom Knowles commented in a May 8 press release, Alaskans "havegreat difficulty competing economically with foreign fish farms thatoperate with cheap labor and inadequate business and environmentalregulation" (Alaska in the News 2). Retreived from the World Wide Web July 9, 2 2."Fish Farms Ruining Alaska's Salmon Industry". Prices once in the dollar-per-pound range for cohosalmon have fallen to .3 cents per-pound, a price some fisherman deem tobe prohibitively low. Works Cited"Alaska Governor's Report...". Or Slow Death?" 2 2: NorQuest Seafoods. This fact is duenot only to the relative ease of manufacture and low production costsassociated with farmed fish; also a factor is the year-round productioncapabilities of farmed salmon plants, which essentially compete only withthemselves during the many months of the year in which wild salmon are notfished and brought to market (WEN 1). www.gov.state.ak.us/PRESS/ 2 93.html. Retreived from the World Wide Web July 9, 2 2.Gardiner, Terry. Essentially, globalizationallows manufacturers in the lowest cost producing areas of the world toimport to the highest value markets. Retreived from the World Wide Web July 9, 2 2. Third, twelve years of economic recession in Japan has served todepress demand- and subsequently prices- in Alaska's largest seafoodmarket. Other species of salmon have suffered a similar fate(WEN 1). Alaska Seafood. And, though Alaska continues to provide roughly 9 % ofthe wild salmon in the United States, the output of farmed Atlantic salmonis increasing at an alarming rate; in the past 1 years, the annual outputof farmed salmon has increased by more than 5 % (WEN 2). Chilean farmed salmon currently comprises 7 % of Japan's salmonimport market (the economic enablers for this transition will be examinedbelow); Alaskan salmon suppliers have been nearly entirely supplanted bytheir competition it the Southern Hemisphere (Alaska Seafood 2). Scores of salmon fishermen have alreadygiven up on the trade; when the 2 1 coho fishery opened in Cordova lastSeptember, only around 1 boats in a fleet of 52 put out to sea to casttheir nets (World Environment News (WEN) 2). Those fishermen who took bank loans out to buy licenses when theirprice was at its peak are today scrambling to make their payments (WEN 1).Many declare bankruptcy, or cash out by selling off their permits at rock-bottom prices while covering their remaining debt by selling fishing boatsand gear. www.gov.state.ak.us/fishsummit/gardiner_seafood.pdf. Fishing permits, costing as much as $18 , at the peakof the salmon boom in the late 8 s, have fallen in value by as much as3 %. www.alaskaseafood.org/aboutus/ 917 1.htm. Office of the Governor: Press Releases. Retreived from the World Wide Web July 16, 2 2."State Rejects Russian Fish Processors Request". In particular, the salmon market is onthe brink of collapse, having sustained many consecutive years of plungingprices and waning product demand. Fifth, the emergence of Russia as a market competitor has been afactor. Specifically withrespect to Chile (the salmon market experiencing the most rapid 1 -yeargrowth), labor costs are currently about 1 % of those in the United States(Gardiner 3). It is clear that the Alaska Salmon Industryis at a critical juncture. World Environment News. Smoked salmon and salmon sujiko roe, which are considered to beamong the higher-end fish products that are brought to Japan, have beenparticularly hard hit by the Japanese recession (Gardiner 3). September 26, 2 1. The five most fundamental waves ofeconomic change to hit the industry are as follows: First, the strong US dollar has allowed other, more cheaply pricedseafood to enter the US market. "Alaska Seafood Industry: Radical Surgery? And, the costs of harvesting farmed Atlantic salmon grown inChile are minuscule when compared with those costs incurred by Alaskanfishermen harvesting wild salmon; environmental restrictions are not asstringent in Chile, nor are labor restrictions (Alaska Seafood 2). Those "lucky" enough to buy licenses at a low rate are continuing tofish, although many of these do not find the advantages of an uncrowdedocean all that palpable. Russian fishprocessors have even been so bold as to request permission from the stateof Alaska to allow them to use foreign flag vessels to process Alaskansalmon in state waters; so far, Governor Knowles has refused this request,citing his responsibility to protect the state economy (Alaska in the News1). The meteoric rise of aquaculture hascreated an oversupply of farmed salmon that has- for many years insuccession- driven the price of wild salmon spiraling downward all over theworld (Gardiner 3). www.planetark.org/advantgo/dailynewsstory.cfm?newsid=12539. It is prudent to examine each of these factorsindependently in order to best assess how they have together impacted thewhole of the state economy of Alaska. Governor TonyKnowles has already deemed the U.S. The Alaska Seafood Industry, the economic backbone of the state ofAlaska, is today in dire straits. Today, Japan hasturned to other, cheaper producers to cover the devaluation of theircurrency. Fourth, the massive globalization trend that is currently affectingmarket economies the world over has presented Alaskan salmon fishermen witha host of new, international competitors. Farmed salmon, once an economic anomaly, today commands more than6 % of the world's market share. Conversely, the strong dollaralso causes overseas customers such as Japan, Europe, and Canada (Alaska'slargest export markets) to lose buying power for US products, which hasdriven export salmon prices down (Gardiner 1). The salmon fishery is facingsevere economic challenges today that may prove to be too global andmanifold to be effectively countered by local measures. Many cannotconceive of another way of life that would be as gratifying as the one thatthey have inherited: preparing for another dangerous season in the mostbeautiful place on earth, captaining a fishing vessel in the Bering Straitor up the Inside Passage, experiencing the rapture of a good harvest. Prices for salmon have fallen so dramaticallythat in spite of the diminished competition, turning a profit can still bevery difficult to do. Second and third generation fisherman are not uncommon inAlaska, and these sea dogs are committed to their craft. Forthis, there is no substitute, and for this the Alaska Fishing Industry willpersevere. Ultimately, many fishermen continue to fish for wild Alaskan salmon.Governor Knowles has made the protection of the Alaskan economy hisparamount concern, and all recognize the very prominent position the salmonfishery plays in this platform. And, many fisherman have grown up in thefishing culture. As a result of the five economic forces examined above, many AlaskanSalmon fishermen have found themselves unable to make a trip out to seacost-efficient. A multiplicity of factors have contributed to the decline of thesalmon fishery in Alaska. Since the Soviet collapse in 1989, the Russian fishing industryhas grown considerably; the decline of the Russian ruble has allowedRussian fishermen to produce exactly the same products as their Alaskancounterparts at a fraction of the cost (Gardiner 4). September 17, 2 1. Second, the dramatic expansion of aquaculture has literallyredesigned the very marketplace in which salmon is harvested, bought andsold. Directlyaffected are the Alaskan salmon fisherman that have traditionally suppliedthe Japanese market with 9 % of the salmon it consumes. expansion of free trade with Chile"disastrous" for the state, and the statistics seem to support hiscontention (Alaska Seafood 1). Fish markets in nations such as Chile andCanada have experienced erosions in currency value against the US dollarwhich allows them to import at lower prices. This trend can be threatening to high-cost, high-value countries such as the United States.
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