Monday, March 21, 2011

Knapp: Alaska losses likely after Japan disaster

Deckboss asked Gunnar Knapp, a University of Alaska Anchorage economics professor and an authority on world seafood markets, to talk about potential implications of the Japan disaster for Alaska's fishing industry. Here's what he had to say:

Like everyone else, I'm shocked by the videos and photos and stories of the effects of the earthquake and tsunami.

I'm particularly shocked because in 2004 I spent several days touring several fishing ports near Sendai with a group of fisheries economists prior to an international meeting in Tokyo. According to an e-mail from the director of our fisheries economics association, the International Institute of Fisheries Economics and Trade, "most of the coastal and fishing areas in the region around Sendai were completely destroyed and thousands are dead — the death toll will probably rise. Matsushima and Kamaishi, where we enjoyed such friendly hospitality and had fun visiting the market, wandering the docks and chatting with fishermen and coop managers, were largely destroyed."

It's very sobering and very sad.

Here are a few general thoughts — I doubt that any of them are original:

Most of the effects upon the Alaska seafood industry probably would derive from Japan's very important role as a market for Alaska seafood. The importance of Japan as a market varies widely depending on species and products. I haven't reviewed the data for the past couple of years, but here's my general sense of the relative importance of Japan for different species and products.

Japan is by far the most important market for:

• Sablefish
• Pollock surimi
• Pollock roe
• Salmon roe
• Herring roe

Japan is an important market but not necessarily the most important market for:

• Frozen salmon
• King crab and opilio crab

Japan is not a particularly important market for:

• Canned salmon
• Halibut

So different parts of the Alaska industry are likely to be affected to differing extents. My general instinct is that the events in Japan will be a significant disruption and will cause significant losses for some parts of the Alaska seafood industry, but that it will not be an economic catastrophe for the industry as a whole.

Alaska's seafood industry is diversified across many species and products and geographic markets. It does not depend entirely on Japan. Japan is a big country. There are large parts of the country that are not directly affected by the earthquake or tsunami or radiation concerns. And many of the effects will be fairly short-term.

For those species and products for which Japan is an important market, it may be useful to think about three potential kinds of effects:

Effects on Japanese companies that buy Alaska fish — Any Japanese companies that buy Alaska fish, or that are actively involved in Alaska, are likely to be, to put it mildly, distracted. They have a lot going on that will distract them from and interfere with normal import business. They may have employees and their family members who died or were injured; they may have facilities which were destroyed or damaged, and even companies a long way from the center of things are facing disruptions because people can't get to work. So hardly anyone is likely to be in a "business as usual" mode.

Effects on Japanese facilities and infrastructure — The press has a lot of reports about damage to processing facilities in the Sendai area; damage to transportation (railroads, roads, ports, airports); damage to cold storage facilities; loss of power (which is hugely damaging to cold storage), etc. This is going to cause a lot of disruption for quite a while, the extent of which will vary for different companies and species and products.

Effects on Japanese consumer demand for Alaska fish — Everything that's happening is going to affect consumers across Japan to varying degrees. It's going to be harder to get fish and they aren't going to have as much money to buy fish. The general rule of thumb is that the higher-priced products are likely to be the most affected.

A nuclear catastrophe could have many additional effects. If a catastrophic meltdown and widespread radiation contamination happened, there could be all kinds of additional impacts on the Japanese economy and society which would be more bad news for anyone trying to sell fish to Japan. However, if the Japanese felt that their own products were unsafe, that might work in favor of imported fish. As far as effects of radiation reaching Alaska, my instinct is to be skeptical that that's a major concern. But all of this is just speculation at this point.

Events in Japan could work against the Pebble mine. My sense is that when there's a big natural disaster (like the earthquake and tsunami) or a technological disaster (like the Exxon Valdez oil spill or now the problems at these Japanese reactors) it has a psychological and political effect: people become more aware of and scared of the potential for future natural or technological disasters, even though the actual risks haven't changed. Part of the psychology and politics of the Pebble mine issue is "how big a risk is it?" Regardless of the objective merits of the arguments, people are more likely to distrust industry assurances that the Pebble mine can be developed safely.


Anonymous said...

Epicenter Unakwik, Good Friday 1964and the Joe Clark report, on the Quest going to Miners Lake?

Perceptions, and reality are two different things, just go ask that drunken sailor on the Exxon Valdez, Good Friday 1989.

No yen report Gunnar?

After those Texans got togather with Icicle and their Seattle Seven friends?

Perception's or Facts, with no National Academy of Sciences required.

Anonymous said...

Why is it that most of the posters on this blog speak Ferengi, a language I don't understand?

Jay said...

Sitka Sound Sac Roe Herring fishermen are probably on pins and needles... with PWS and Bristol Bay following suit....

Have you heard anything about price or harvest limits from the processors?

Anonymous said...

It looks like our favorite poster (#1 here) has been hitting the bottle a little early today.

Anonymous said...

Thank you for the thoughtful commentary Gunnar.

Anonymous said...

Doom and Gloom Gunner pulls his head out and just can't see the bright side. Big difference between paid mouthpieces and Comfishermen...Optimism ...Maybe the Japanese will need more Alaskan seafood to fill the gap lost by their own fisheries.

Anonymous said...

And the G-7 and S-7 and who's hitting the bottle of Saki?

Key word, Yen?
After you flunked your math class at the University of Alaska, and missed that first flood, by the Jap's Central Bank.

Fishin for Tuition?

And did the Japenese Housewife's Salmon buyer's report, also get missed in the great Seattle Seven Seafood Processors report?

And those illuminated signs...

Anonymous said...

Does anybody really care what Gunnar Knappp thinks? I haven't seen anything that he has written that is anything but doom and gloom for the industry. If we had been paying attention to him 20 years ago, we would have all sold out and gone to college, so we could be brilliant.

Anonymous said...

Anonymous 5:45 a.m.

Actually a stint in college would have been a good choice for you.

Anonymous said...

I like Gunnar, but aside from a rare moment, he's only putting out such vague generalities that it has no value. C'mon, dude...give us something we can use.

Here's soemthing to look at: did the quake/tsunami do much damage to Japan's mega-hatcheries? If much of their chum production is taken offline in the future, they're going to be looking for fish from somewhere else. An upside, possibly?

Anonymous said...

Indecipherable Ferengi at 5:24 may have a point about the yen. If demand doesn't fall, a strong yen means more money for Alaska fish sold into Japanese markets. Why Mr. Ferengi doesn't just say that is beyond me.

Anonymous said...

as negative as Mr. Knapp is I can't remember many times when my wishing he was wrong came true. If I'm wrong someone please give me an example, seriously I want ti be wrong. Mr. are a moron sir. Only time will tell about the effect this has on our price and after all its only $ ,we could be dealing with trying to find a lost child and then not have a home to go to. Our financial fears seem a bit trivial compared to what's going on over there

Anonymous said...

And the pre-64 earthquake, Silver Dollar value?

The lowest prices paid since 1888, according to Gunnar Knapp?

To many morons watching fiction and that fiat currency, need more college too!

Anonymous said...

Anyone know about the tsunami effects on FCA? I think their sister company (Anyo Fisheries)is/was based in one of the hardest hit cities in Miyagi.

Anonymous said...

they have halted fishing

Anonymous said...

any new news about the herring quota this we might not be harvesting much because the japan market isnot buying??