Gunnar Knapp: Trump's Greenland talk isn't serious

Here's his letter posted on the Anchorage Daily News website.

The salmon situation

University of Alaska Anchorage fisheries economist Gunnar Knapp last week gave legislators in Juneau an overview of world salmon trends.

You can view the entire presentation here. It's well worth your time.

"In general, as of February the market outlook for 2013 looks relatively favorable," says Knapp, sizing up the short-term salmon situation for Alaska. He cites three key factors:

• Sockeye harvest volumes probably will be lower
• Canned salmon markets are strong and inventories are low
• Farmed salmon prices appear to be strengthening

Lower harvests, Knapp explains, can push up prices, and Alaska's wild salmon value generally rises or falls with prices for farmed salmon, which now dominates world supply.

Here are a few more interesting Knapp notes:

Alaska wild salmon accounts for less than a third of U.S. fresh and frozen salmon consumption.

About two-thirds of Alaska pink salmon production was frozen in 2011, compared to less than 20 percent in the late 1990s.

The first wholesale value of Alaska salmon production has increased dramatically, from $466 million in 2002 to $1.5 billion in 2011. Total processor margin and total ex-vessel value have risen by similar amounts.

The salmon situation

At last week's ComFish trade show in Kodiak, fisheries economist Gunnar Knapp delivered this important presentation, Trends in Alaska Salmon Markets.

It's a concise overview of the salmon industry's remarkable resurgence in recent years, and some potential trouble on the horizon.

Anyone seriously interested in this business should review the entire report — it's a fast-moving 101 pages.

Here are three key points Deckboss took away from it:

• Strong harvests and surging prices have nearly quadrupled the dockside value of Alaska salmon since the terrible 2002 season. But when adjusting for inflation, the value remains well below levels seen in the late 1980s and early 1990s (see the graphs on pages 47-48).

• Japan once was practically the only destination for frozen sockeye, the state's most valuable salmon species. Now the market is diverse, with a great deal of sockeye going to the Lower 48, the European Union and China (see graph on page 17).

• While long-term prospects for wild Alaska salmon are good, some recent developments don't bode well for prices this year. These include rapidly growing world farmed salmon supply, sharply lower farmed prices the past six months, and recent declines in foreign purchasing power.

"Both economic theory and past experience suggest that if farmed salmon prices fall and the value of the Japanese yen and the Euro fall, it will be difficult for wild salmon sellers to continue to sell wild salmon for the prices they could get in 2011," Knapp says.

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.

Notes from Boston

Is Alaska lost in an ocean of seafood? Gunnar Knapp photo

Deckboss invited Gunnar Knapp, a fisheries economist at the University of Alaska Anchorage, to send along some observations from the International Boston Seafood Show. He provided the following, and even threw in some nice photos!

Attending a show like this is an extremely valuable reminder of some of the realities of the seafood industry that our Alaska industry is part of. It gives you a very different perspective than that which you can get in Alaska. For that reason, I would highly recommend attending this show (or others like it, such as the Brussels Seafood Show) to anyone involved in the Alaska seafood industry. You can learn a lot that you just can't learn at home.

• Alaska is an important player, but it's only one of many many important players. There are some big and impressive booths here of important Alaska players, such as Trident Seafoods, Ocean Beauty Seafoods and ASMI (the Alaska Seafood Marketing Institute). But there are equally big and impressive booths from many other producing companies, regions and marketing councils. Examples (among many many others I could name) include large companies from Norway, Iceland, Scotland, Chile, Atlantic Canada, Vietnam, China, Korea; marketing organizations such as the Norwegian Seafood Exporting Council; regional booths from producing regions such as Quebec, etc. All of these regions are competing, to varying extents, with Alaska.

• Alaska products are important but there are many many other products that are important: tilapia, anchovies, tuna, shrimp, catfish, squid, sturgeon caviar — the list goes on and on and on. All of these products are competing, to varying extents, with Alaska products.

• Value-added products are growing in importance. Much of what is on display here is the value-added products that companies are making from fish caught in Alaska as well as elsewhere. I suspect that more and more the success of various kinds of fish will depend on the success of the value-added products made from them. A particularly tasty item that I enjoyed was the Trident Seafoods "beer-batter cod" (the beer is Alaskan Amber).

• Aquaculture is hugely important. The impression that you get here is the same as the impression that you get from looking at international fish production data — aquaculture is now equally important to wild fisheries as a source of fish supply. I would say that about half the fish on display here from around the world are farmed products — from Norwegian farmed salmon to Chinese sturgeon caviar to Vietnamese shrimp to Thailand tilapia. Clearly wild fisheries are facing huge competition from farmed fish and will continue to do so.

• A hot topic these days is "sustainability" and "certification." What sustainability means, and who should be certifying it and who should be paying for the certification, was a big topic of discussion in several seminars. The ASMI booth has a lot of information about why ALL Alaska fisheries are sustainable — not just those certified by MSC (the Marine Stewardship Council).

Those are a few starter thoughts. More to follow tomorrow if I can find a few free seconds.

— Gunnar