Wednesday, December 30, 2020

Alaska Year in Review 2020: Fishing It was another huge year for Bristol Bay's fishery, and KDLG covered everything from how the pandemic affected the season to fishermen's reactions to prices, and the lowest run on record in the Chignik River. KDLG by Brian Venua - December 28, 2020 Even before the COVID-19 pandemic took hold in Alaska, the year was off to an eventful start for the largest wild salmon fishery in the world. https://www.kdlg.org/post/year-review-2020-fishing#stream/0 Alaska’s commercial fishery managers appear to be spared big budget cuts next year Anchorage Daily News by Laine Welch - December 29, 2020 As Alaska faces its toughest budget squeeze ever, the state’s commercial fisheries are set to get a bit of a breather. But it is due more to fund swapping than lawmakers’ largess. https://www.adn.com/business-economy/2020/12/29/alaskas-commercial-fishery-managers-appear-to-be-spared-big-budget-cuts-next-year/ Hatchery board votes to end summer coho program on eastern Prince of Wales KFSK by Joe Viechnicki - December 29, 2020 The board of a regional hatchery non-profit voted this month to end a program for summer coho salmon in Neck Lake on northeastern Prince of Wales Island in Southeast Alaska. Those early season silver salmon have seen poor returns in recent years. https://www.kfsk.org/2020/12/29/hatchery-board-votes-to-end-summer-coho-program-on-eastern-prince-of-wales/ Environment/Science Sen. Dan Sullivan highlights final passage of second ocean cleanup bill KFSK by Joe Viechnicki - December 28, 2020 Alaska Republican Sen. Dan Sullivan is highlighting the passage of his bipartisan legislation aimed at cleaning up plastic in the ocean and reducing sources of plastic pollution. https://www.ktoo.org/2020/12/28/sen-dan-sullivan-highlights-final-passage-of-second-ocean-cleanup-bill/ FYI's New Dietary Guidelines Recommends Moms & Kids Eat More Seafood for Brain Health Seafood Nutrition Partnership - December 29, 2020 Seafood is an important source of iron, zinc, protein, choline, and long chain polyunsaturated fatty acids needed for the rapid brain development that occurs through the infant’s first 2 years of life, according to new DGA 2020-2025 advice https://www.seafoodnutrition.org/press-releases/new-dietary-guidelines-for-seafood/ Opinion The Winding Glass: 2020 Part 1: The End of a Year of Turmoil, Loss, and Resilience SeafoodNews.com by John Sackton - December 28, 2020 [The Winding Glass is the commentary and opinion column by John Sackton, Founder of SeafoodNews.com] Most will welcome the end of 2020 as next year promises improvements in all respects. For the seafood industry looking back on this past year it feels like a bomb went off. Now we are picking up the pieces, seeing who survived and who didn’t, and checking on each other to see what shape we’re in. The most salient aspect of the pandemic is that although its a universal event affecting behavior in every country in the world, the impacts have been very uneven. Some sectors of our industry have thrived. Others are on life support. At the same time, some of the larger trends in our industry continued this year unabated, almost impervious to the chaos happening in real time. My philosophy is that you develop a general picture by building up from specific details. Our year end roundup is in two parts. First we are looking at some of the ways we coped with the emergency of the pandemic, and the trends that helped us survive. Part 2 will focus on resilience, and what changes in 2020 may carry forward into the future. To capture the year we will review some of the elements that go into making up a total picture not unlike an impressionist canvas. Where possible, we have linked back to relevant stories we published at the time. China At the start of the pandemic in January and February, all eyes were focused on China. With a dramatic shutdown of travel just at the start of the Chinese New Year, seafood sales into China were suddenly in question. Fortunately, most lobsters and high value products had been shipped in for the new year prior to the shutdown. But their value in China immediately crashed, hurting importers and distributors. Then with workers prevented from getting back to their factories, some disruption occurred in supplies of materials like blocks processed in China, and shipping was disrupted as well. However, this all proved temporary, and by late spring many supply chains had returned to more normal business, and Chinese purchasing of lobsters brought prices back up to their normal levels. Current disruptions in China are limited to particular ports and areas. The fact that the Chinese have found traces of COVID-19 on imported frozen food has led to higher expense and more caution from importers. It is also turning Chinese against imported food, which may have a long-term consequence in seafood. But economically China is out of the woods, and new year’s consumption should be strong. Shutdown When both Canada and the U.S. largely shut down in March, it was unclear how or whether fisheries would open. Travel restrictions prevented plant workers coming into Canada. In fact, travel between provinces was shut down. Also companies were racing to see how they could reconfigure production lines to be safer, with protective equipment and spacing. Their efforts were largely successful. Unlike the meat industry, in the first months of the pandemic seafood production was maintained without large outbreaks. However, that record became harder to sustain as West Coast and Alaska fisheries opened up. Here the issue was less with plant outbreaks, but with the trouble and expense of quarantines and new procedures. Even with precautions, there were significant outbreaks on an American Seafoods Trawler and in some Pacific Seafoods plants. But overall, the industry across the U.S. and Canada maintained production. Crab The snow crab industry had a historic year, despite the pandemic. With the season opening at the height of economic uncertainty, producers priced crab below $7.00. Buyers bought the first loads with trepidation. There was a lot of fear that crab might not move. However, within days this sentiment reversed itself, as it became clear that crab was going to be one of the hottest commodities at retail. That momentum was propelled by a number of favorable factors including demand for frozen seafood, the wide appeal of cooked ready to eat snow crab, and the fact that pandemic checks gave people money to spend. It meant quickly upped retail orders. The result has been an historic year for snow crab. The U.S. supply is the highest in at least 10 years. Prices are at historic levels. And Barents Sea snow crab from Norway and Russia now accounts for around 30% of US supply. The snow crab industry has weathered the pandemic, and will likely be stronger for years to come based on the big expansion of demand. Lobster Frozen lobster has followed the same path as snow crab, but at a less intense level. For frozen lobster, the first issue was production, with many plants operating at only 50% capacity. But this was balanced by a fear that demand would be down equally, so pricing came down but never collapsed to levels seen three years ago. Once again, retail demand proved to be the wildcard. Along with crab, frozen lobster was among the top five commodities seeing sales increases at retail. Lobster also benefited from the consumer spending available due to government stimulus. The upshot was that by July, when labor issues had been resolved, Canadian producers bought high volumes from Maine, stabilizing the live market. Also the market stabilized due to lower overall volumes being landed in Maine. Frozen lobster prices are now high again, as demand is more than what is available, and live lobster prices are reacting to normal seasonal pressures: weather and lack of fishing days has pushed up prices, and Chinese demand, while not overwhelming, is strong and consistent. Cruise ships Cruise ships represent a narrow but high volume channel for seafood sales. Some of the contracts out for bid routinely exceed millions of dollars. This market came to an abrupt halt when cruise travel was shut down as being incompatible with pandemic safety. Horror stories of passengers trapped on infected ships have probably permanently tainted the industry. Any revival, even with a vaccine, will be slow and cautious. The impact of the loss of sales to cruise ship lines was felt mostly in frozen salmon, where millions of pounds of inventory suddenly did not have a home. Because fresh salmon is such a retail staple, there was little ability to repurpose these frozen products for retail, and so they will have to work through a reduced foodservice channel. The good news is that very few companies in the seafood industry relied on cruise lines for most of their sales. Instead these were add on sales for existing producers and distributors. Restaurants Foodservice is where the pandemic has hit the hardest, and where the seafood industry has suffered the most losses. These are not just numbers or a decline in sales. Restaurant culture, which is vital to our industry, has taken a severe hit. During the pandemic, it is not possible to eat indoors in safety. Despite the patchwork of state regulations, a large number of diners have just stopped eating out. This is having an impact on restaurant culture. For example, Portland, Maine, which had become known throughout the country as a dining destination, may lose between 25% and 33% of its restaurants permanently. The struggling operations remaining have laid off 50% to 80% of their staff, are closed for some days, and are either just breaking even or losing money. All the owners and chefs report they are just trying to hang on, despite community support, takeout service, and donations. These restaurants, mostly independents and small chains, make up the backbone of seafood street business. It is these chefs that popularized diver scallops, oysters, and monkfish. Because consumers consistently report fears about cooking seafood and lack of knowledge, the path from restaurant to familiarity to buying and cooking at home has been critical to the expansion of quality and specialized seafood in the US. Now this pathway is endangered at its source. For seafood producers, this has meant a drastic cutback in sales of things like oysters, which can’t easily make a switch to home consumption. It has also narrowed the market for specialty seafood items, whether a frozen sockeye or fresh halibut. Many restaurants, including large national chains, have begun simplifying their menus to cut out all but the most popular items, and to focus on items that can be prepared as take out entrees also. Where restaurants used to be the place to start with a specialty seafood item, this pathway is now closed. Variety, not commodification, is the sales mantra of seafood, even If much of the total volume comes from standard species like shrimp, salmon, tilapia etc. Loss of our independent restaurant partners represents more than a loss of business. It is a loss of vitality, of experimentation, of enthusiasm for seafood. This in my opinion is one of the greatest losses of the pandemic, and it will be hard to replace. After the pandemic, restaurants will grow back. But they will be digging out of a hole. They owe money to landlords. Their staff is scattered. And it is unclear whether certain dining practices like lunch and business travel will ever rebound to their former importance. How foodservice can recover after the pandemic to provide a unique and vital seafood experience is one of the things we just don't know. These wounds affect us, not just the restaurateurs themselves. Boston has seen the sale of Legal Sea Foods; the New York Times is listing popular landmarks that have permanently closed. Younger chefs are wondering how and where they will cook. Colleges are serving far fewer meals. It is appropriate to take in the full scale of what has happened to the foodservice industry. How it rebuilds will help shape our industry as well. Pandemic relief In March, both the U.S. and Canadian governments instituted pandemic relief that provided some forms of income support and rental protection to people who lost income due to the pandemic. There also were business support programs. These programs were successful at mitigating the economic damage, and for the first few months provided a platform from which economic activity could rebound. While almost every other industrial democracy continued their programs unabated, the US allowed its program to lapse, and only this week replaced it with a smaller and less effective stimulus. When you are staring at economic disaster (as some are in our bi-furcated economy) even a three-month reprieve is better than nothing, and there is no time to focus on the failure to provide for the long term. There is remarkable consensus among economists on the importance of government pandemic relief. When it is possible to borrow money at virtually zero interest, the government can create a trajectory of higher economic growth in the future by investing in infrastructure, payment support and other goods like health care that ultimately promote more economic activity. In simple terms, these investments are the difference between a slow and painful recovery like after the 2008 financial collapse, or a snap back to a higher level with more employment, more income, and a bigger economy. Like many democrats, I have argued for the larger 1930’s style economic relief. How much of that we get with the new administration is still very much up in the air. But the scale of relief is another wildcard that will influence the business climate and value of seafood. With a larger relief program, we could see a decade of higher values for our products, and the successful investments that would entail. Frozen food and grocery The most significant factor in the survival of most of our producers and distributors has been the surge in demand for frozen seafood, and the expansion of seafood sales at retail. This came about due to the intrinsic value of seafood to American consumers. Surveys found that seafood was one of the most missed items when Americans stopped eating out, and they found ways to replace some of that restaurant consumption at home. In the process, they disproved the myth that Americans won’t cook seafood at home, and they also supported purchasing ready to eat items like frozen crab and shrimp. It is too soon to know if this adjustment in retail seafood demand is permanent but there are several reasons to be optimistic it will persist. The first is that consumers have learned new behaviors that they are comfortable with. These include eating healthy meals and more seafood at home. Many consumers have developed alternative ways of getting seafood, whether through home delivery or co-op buying, or online purchases. More and more companies are being forced to adopt Amazon’s model of including the shipping costs in the item price. When there are no obvious added delivery costs, consumers quickly adjust to home deliveries. So it is likely that even as restaurant demand slowly recovers, Americans will continue to order seafood and buy at retail at elevated levels. This means that the investments our companies have made to support these changes will pay off, and not be something just relegated to an emergency need. Food as a key commodity Overall, we have found out this year how critical seafood remains as a key food commodity. Despite all the disruption demand for seafood has remained strong and growing. Our biggest takeaway from the past year has been that we have survived because our customers need our products. Our adaptations to the pandemic, which included higher costs, huge business risks, and commitments up and down the supply chain, have paid off. We begin 2021 with most of our companies intact, and ready to take advantage of better opportunities next year In part 2 of this review, we will focus more on this resilience, and what we may have learned from the pandemic that will carry forward. https://www.seafoodnews.com/Story/1188361/The-Winding-Glass-2020-Part-1-The-End-of-a-Year-of-Turmoil-Loss-and-Resilience

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