Alaska, B.C. regulators discuss concerns over transboundary mining
KCAW by Jacob Resneck - May 21, 2021
Alaska’s top environmental regulators held a cross-border Zoom session May 19 with British Columbia officials in charge of permitting mines in the shared transboundary watershed that flows into Southeast Alaska.
Community Steps Up to Continue Yukon River Salmon Research During Pandemic
Local fishermen team up with scientists to find out why Chinook salmon returns to the Yukon River are declining.
NOAA Fisheries - May 19, 2021
On the Yukon River, Chinook salmon are woven into the fabric of life and culture. They are a resource that indigenous people have harvested for more than 1,000 years. But over the last 20 years or more, the Chinook populations have declined dramatically. Fewer Chinook are returning to the river each year, and those that do are smaller and younger than they have been in the past. This has created hardship for the people who rely on this resource. It is nurturing a strong desire to understand and contribute to solutions to address the dwindling returns.
The Winding Glass: The Seafood Industry and the Bullwhip Effect
SeafoodNews by John Sackton, Founder - May 25, 2021
[The Winding Glass is the commentary and opinion column by John Sackton, Founder of SeafoodNews]
Seafood trading is hard when a couple of bad decisions on pricing or timing can wreck a business. As a result, we are trained to focus on short term problems.
Most of our time is spent managing supply, shipping, and customer needs within a 6-to-12-week time frame. This can obscure long term issues that will transform our business.
The last year is a great illustration of this, and we are not out of the woods yet.
When the pandemic first hit the U.S. in March of 2021, seafood prices not on contract dropped immediately, with widespread fear that markets would just disappear. Even if harvesters could keep supply fresh markets, their customers would not be there.
As a result, those items with seasonal openings in the spring all saw coordinated price collapses. This was true for crab, Alaska salmon, and lobster, but also for less seasonal items like crabmeat and Atlantic salmon fillets. The only exception among major items was the whitefish sector. The whitefish sector escaped due to longer term contracts and the fact that the period after Lent is the low point in seasonal global landings.
A year later this May all the items that saw a collapse in prices are now at record or near record levels.
No one has a problem selling seafood at high price levels so long as customers accept them. But we can’t let our short-term focus lull us into thinking the market today is just going to continue as it is.
In the seafood industry, and in the broader economy as a whole, we are experiencing something economists call the bullwhip effect. The basic idea is that a relatively small change in customer behavior amplifies back through the supply chain to huge changes at the manufacturer/distributor level.
This happens because there is no reliable real-time exchange of information up and down the supply chain.
At each point in the distribution chain suppliers try to balance out of stock situations and long inventory situations. Historically they rely on previous experience to do so. When end customer behavior changes even in a small way, it can lead to huge changes at the manufacturer/producer end of the supply chain. Instead of having a manageable inventory to meet customer needs, the supplier suddenly has too little or too much product, causing big swings in pricing as they try and rebalance. This effort is replicated at each level of the supply chain, so the signal becomes increasingly stronger.
The story of the pandemic is that the change in customer behavior proved far different than expected, and as a result inventories that had been adequate were suddenly too low, and prices surged. This has been the experience in seafood over the past year.
First, the potential lack of markets and production issues caused packers to drop their prices. They thought that with the closure of foodservice, a lot of demand would just evaporate.
Second, consumers shifted into retail food purchasing, and the money they saved from not travelling or eating out allowed them to purchase more expensive foods, including seafood. No one anticipated that the shutdowns (and government support) would lead consumers to have more money, not less.
The frozen seafood sector boomed, outperforming most other retail categories.
Packers and importers were caught flat-footed by this shift in demand. Suddenly their products were in short supply, and prices shot up.
Why didn’t things normalize more this spring? Afterall retailers are not going to buy as much $13 crab or $6 salmon as they would when these products were $8 and $4 respectively.
I think things have not normalized because we are in a global reset that is still very much going on. New patterns of consumer behavior, where people live, business travel, office work, education, and wage expectations are all going to be different than they were before the pandemic.
As a result there are multiple pressures from many different directions, all obscuring the extent and duration of our product shortages and price increases.
One factor is that restaurant and foodservice demand bounced back faster than expected. Suddenly foodservice need for seafood was additive to retail needs. So the pressure of shortages and higher prices continued, as once again demand was stronger than expected.
Seafood is unique in that there are certain commodities where the supply simply can’t be increased, and as US and Chinse consumers have more money to spend, prices on these items will rise over the long term to reflect the higher value. This is currently the case with crab and lobster.
But other seafood commodities do respond to increased demand with increased production. Salmon and shrimp are examples.
We can expect an increase in salmon production overall as the land-based facilities come online, despite the fact that some have had biological problems and setbacks. The overall trend is that there is a big advantage to producing closer to the market, and once these facilities have proved operational, there will be significant competitive price pressure on salmon.
Shrimp is another commodity where superior genetics and improved broodstock have led to huge production increases. These may be tempered for a year or two due to the continued severity of the pandemic in India and parts of Southeast Asia, but overall, the trend shown by Ecuador will prevail: it is possible to massively continue to increase shrimp farm output.
But it may not be possible to transport all this product.
Our ability to forecast our future has been hampered by the larger production and shipping problems across all commodities caused by the pandemic. Freight rates from Asia have gone from $3,000 to $4,000 per container to $8,000 to $12,000. In some cases, shippers are saying they will switch to FOB only. This has happened with H&G whitefish sold into China. Producers frustrated by unpredictable shipping and customs delays have given up on logistics, saying to their Chinese customer your haddock is in Amsterdam if you want it. The transport is on you. Could China do the same to their export customers, shifting to FOB sales?
It was not just seafood that experienced a stop and start. So did electronics, computer chips, cars, rental cars, airlines, furniture and global shipping and freight forwarding. Each of these sectors cut back rapidly due to fear of loss and found they could not catch up when consumers changed their behavior.
In terms of inflation and price increases, we need to know what will stick and what will change, so we don’t end up making one of the wrong purchase calls that can be catastrophic.
In one example of the bullwhip effect, producers in Canada are still trying to raise crab prices weekly, but at the market end more and more customers are already backing away. So LTL loads that would have sold in 2 days three weeks ago now are taking 14 days or more to sell.
Trucking costs, lack of containers, more LTL shipments and other freight disruptions are likely to continue for the rest of this year, and probably into 2022.
An example of the complexity is the lack of containers has led to a surge in LTL freight and cross dock shipping, where containers need to be stripped and repacked. Yet the companies that specialize in moving containers from rail or port terminals to local warehouses can’t get drivers. The congestion means these drivers, paid by the round trip, are doing 1 to 3 less trips per day. Trucking industry estimates are that up to 1/3 of these drivers have quit, as the congestion cuts their income and they can easily get longer haul driving jobs. The cost per mile for container freight is now up over $3.00, a record according to trucking sources. Lots of logistics workarounds to overcome shortages are simply not possible these days.
This problem won’t resolve until there is a new pay scale for drivers or robotic trucks, which means that higher freight costs are probably here to stay.
There is already evidence of consumers reacting to retail price increases by changing their behavior.
Supermarket News reports that consumers have begun to shift shopping patterns in response to high grocery prices.
Inmar, a North Carolina based retailer intelligence company, reports that in their May survey, 2/3 of respondents have shopped at a different store in response to price hikes.
In asking where people primarily shop before the pandemic and today, Kroger has lost 11.7% in survey market share, Whole Foods has lost 19%, Publix has lost 23%, and H.E.B. has lost 23%.
Meanwhile, Albertsons has raised its survey market share 6%, Target is up 12.7%, and Aldi is up 58%. Retail analysts say there is a shift to lower price club stores and value chains. This is bound to influence buyers for the chains losing customers to make them more resistant to price increases. A retailer seeing customer outflow is going to think twice about replenishing a crab stock that cost him $7.00 with one costing $13.00. For a Casino operator in Las Vegas, a whole cooked lobster is now half the price of a large snow crab section. Undoubtedly market changes are afoot.
Outside the US, food prices have begun coming down. Financial analysts who bet on commodities say that food inflation is now declining in “virtually all countries”. The reason is that the macro factors that pushed up food inflation, especially the culling Chinse pig farms and the spread of the swine disease to other parts of Asia, have now reversed. Long term commodity contracts (such as corn) are 20% lower one year out than are the short-term delivery contracts.
It is reasonable to think we will see a retreat in pricing on those seafood commodities than can respond to changes in demand with increased output.
The key takeaway is that the current experience of rising prices across the board will come to an end, and we should not get lulled into thinking this is the new permanent state of affairs. Instead we are seeing prices rise due to the fact we are in the middle of a huge shift in behaviors, and we don’t yet know the end point.
Seeing a short-term price increase that then settles down to a new stability is not a long-term inflationary threat. And that is why I don’t think we should be adjusting our expectations to a multi-year period of rapidly rising prices.
131-year-old fish plant, other Alaska sites to be considered for national historical places registry
KNBA by Tripp J Crouse - May 24, 2021
On Tuesday, a state commission that oversees historical place names and registries will consider nominations for the National Register for Historic Places.
Grundens Debuts Clothing Made From Recycled Fishing Gear From Cordova
SeafoodNews by Laine Welch - May 25, 2021
Grundens, the go-to brand for outer wear and foul-weather gear for mariners around the world, is using recycled plastics from old fishing gear for a new line of rugged casual wear, and the first batch contains nets from Cordova.
“Cordova is moving full steam ahead. The gill net fleet is pretty dialed in and seines are made out of the same type of plastic, so those two gear types can be recycled together.”
Nicole Baker is founder of Net Your Problem which has helped jumpstart fishing gear recycling programs in Alaska since 2017.
Baker connected Grundens with the Copper River Watershed Project which collects the nets and prepares them for shipping to Europe, where they are recycled into a trademarked yarn called ECONYL made from fishing nets.
The first items in Grundens NetSource Collection are men’s shorts and women’s capri leggings, but more are in the works. Corey Lowe is a Grundens’ spokesman,.
“Right now, it's just a small part of our overall collection but we're definitely thinking about how to put it into foul weather gear. We also have some footwear coming that's made out of recycled nylon. So while it's just a small part of our overall collection, it's definitely growing. And we seek to continue to expand it, because we believe in it.”
Lowe says Grundens encourages others to join the movement.
“We want more and more products to be made with recycled fibers, and we want more and more plastic to come out of the ocean. So whether we're doing it or our competitors, what we want is for more plastics to end up in the recycling supply chain. So we see it as a rising tide lifts all boats kind of thing.”
Grundens hopes more fishermen will opt for recycling.
“We're aware that sometimes it's easier to dispose of a net in other ways and we want to encourage them to dispose of it correctly. And then hopefully wear a product from us later on that has some amount of their net in it. It’s kind of a cool thing to think ‘hey, my net is now hanging off my shoulders as a jacket’ or something along those lines.”
Grundéns also is now using 100% biodegradable packaging whose raw material is glucose from corn starch. By June 2021 all products will be shipped in compostable Eco-packaging. “Grundéns encourages other brands to follow suit and increase the rate at which plastic poly bags are eliminated from the apparel supply chain,” a press report said.
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