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Thread: Allocation, allocation, allocation

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    Member willphish4food's Avatar
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    Default Allocation, allocation, allocation

    This seems to be the crux of the issue. All that we talk about boils down to allocation. So what would happen if there were no sport or PU fishing on the Kenai, and 100% of the reds were allocated to commercial?

    A couple figures... In 1994 Cook Inlet sockeye was $1.45 lb. 2007- $1.00. Today- Cook Inlet sockeye is at $1.40 a pound.


    In 1994 a gallon of diesel was $1.10. Today it is $3.50. Inflation overall has been at roughly 2.5% over that period of time. Other than fuel, the price of other goods has gone up about 45% due to inflation- yet sockeye prices are nearly identical; actually a nickel less. 2 years ago it was $1 per pound. Had it just kept pace with inflation, it should be $2.10 per pound. Instead, by staying the same price as 15 years ago, it has lost nearly half its value.

    In other words, to realize the same gains on fish that a fisherman did in '94, he has to hope that prices stay level or grow each year, and catch 50% more fish than he did then. (I say 50%, but that's probably low as the price of fuel has more than tripled.) The other alternative is to somehow trim half his operating costs, without cutting crew. (to cut crew would not be making the same gains)

    There's not many ways for the commercial fleet to accomplish this. They can a) have more fish made available to them as a whole, or b) reduce the size of the fleet, so fewer boats share the fish available. c) find a more economic way to harvest the fish that are currently allocated. d) develop niche markets that bring their fish a higher value than the processors are paying.

    What we hear most from all user groups is "give us more fish." At 80% allocation (for Kenai reds), there's only 20% left. Yet 50% is needed to break even. So even with 100% allocation, commercial guys will still be going broke.

    What is the solution?

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    Default Huh?

    First, you could use any number of different date/price scenarios and come to completely different conclusions. The dates/prices you picked fit your scenario.

    Second, the commercial sockeye fishery never used to have an allocation to sportfishing or personal use....those fisheries were practically non-existent.

    Third, I don't hear the commercial fishermen saying, "give us more fish". They know the importance of obtaining in-river goals, as that ensures the future of their livlihood. They are also used to dealing with price fluxuations and different levels of run abundence.

    What I hear the commercial guys saying is that they've lost allocation they used to have, and they are fighting to keep what they have left. I also hear them saying that when counts are low that all user groups should share the burden of concern and stop fishing rather than just them. I also hear them saying they are frustrated when there is lost yeild and goals are not met (exceeded top end). All legitimate, reasonable concerns.

    I have no idea where you're getting the notion that 50% is needed to break even, and even with 100% allocation, commercial guys will still be going broke. For the most part their fishery has always been viable, and they are working to keep it that way.

    Not sure what the point of starting this thread is?

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    Default lets clear this up some

    I agree, I am not sure why this is here? It is an incomplete picture of the situation in UCI. Effort is down in both the set and drift gill net fleet. That makes more fish available to those who are fishing.

    Second, a number of fisherman have their own markets. During the period referenced the processors in Kenai went from 6 to 9 - smaller focused markets bring higher prices.

    Third the posted price is not the true price. Fisherman get delivery add ons, if they ice they get more money, if they bleed the fish they get more money. The percent of fish handled this way has increased significantly. So Willphish4food, you just cannot make the leap you made as you do not understand the fishery or the markets.

    Also, UCI fisherman fish a variety of species including halibut and that price has increased. So the total business model is what is important here not some simplistic math calculation.

    I think we can move on - however, I will agree with Will it is tougher for this component of the business model but the direction for the industry could be based on the following:

    1. a stable regulatory environment - an industry that goes every three years into a meeting where major changes can take place is not very condusive to investment which is needed for some of the following.

    2. High sustained yields helps everyone

    3. Increasing market quality - fish early in the season get over 3 dollars a pound. Ice and bleeding fish makes for higher prices throught out the season.

    4. Developing new markets - this is taking place already but needs to expand.

    5. Making plants more cost effective. The present model is not working with labor and other factors. New machines that bone fish, make fillets, and process cheaper are needed. Again this is being done but some plants cannot afford to do it right now.

    6. Brand names - this is being done by some processors with a good rate of return. It needs to continue.

    7. Consolidation for the larger plants. Some of the older plants may need to shut down and allow for consolidation to be cost effective. This is also happening but should be examined for the long term.

    There are more things that can be done but these are in my opinion what the industry is doing for the most part. They need help in the regulatory framework and that means less meetings and a more stable regulatory environ.



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    Default

    Willfish,what are you trying to accomplish w/this thread?

    Instead of the question you asked........how bout this............what if there were no commercial fishery for salmon in UCI (not talking about commercial sport fishery). That seems to be your and others goal. Would this get the valley more fish? Less fish? More silver/kings but less reds?
    What would be your goal? What DO you want?

    Nerka can answer this much better than I , and I'm sure so can others. I'm not a salmon expert, but only a guy who fishes that likes to learn about management.
    Here is my take on what would happen. We'd go to a boom or bust cycle. Sometimes 200,000 reds sometimes 4 million. While no fishing would allow more silvers in the river, and some more kings..wich isn't a given as commercial effort is enforced in ways to decrease catching those species to my knowledge......what would be the cost? Wouldn't spawning beds for all species be destroyed in big years? Would we see any increase in silver or King numbers? (I doubt much of an increase over time actually).

    This is w/out talking habitat issues wich increased sportfish effort would have. OR would sportfish effort even actuall increase? It depends on if you think fishing would be better or worse. I think worse. At the moment thanks to great management.......you can predict fish to a point. Makes deciding about fishing easier. What if there were a five year down cylce? Would people still continue to fish? I know I don't bother fishing reds in the lower Kenai until it's 25,000 per day, or it's not worth flossing water. I fish for the heck of it sometimes too (when I doubt I will catch anything I just like fishing). Would tourists do that? Or stay home?

    This all is just speculation as the use of the resource is clearly spelled out in our state constitution.

    Nerka or others......if a hypothetical commercial closure happened.....how would this affect the overall stocks of all three salmon plus other species of resident fish.

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    Member willphish4food's Avatar
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    Default thanks

    The numbers I pulled were straight off the state's commercial fisheries report page. Nerka- "posted price is not true price." So now you're even saying the state is posting false or misleading data for the public. All because you disagree with me. Whatever.

    Thank you, though, Nerka, for listing steps other than allocation that the commercial industry can do and is doing to make itself more profitable. AkBrown and Grampy, thats the discussion I'm looking for in starting this thread.

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    Member garnede's Avatar
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    Default

    willphish4food, it seems based on your origional post rhat the solution is simple. Supply is out striping demand. Cut the supply and keep the demand the same and you get higher prices. Of course that would never sell, but that is what you were looking for right?
    It ain't about the # of pounds of meat we bring back, nor about how much we spent to go do it. Its about seeing what no one else sees.

    http://wouldieatitagainfoodblog.blogspot.com/

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    Willphish4food is trying to associate the allocation of Kenai sockeye with the economic value of the fish. Same old argument, different twist.

    This time Willphish4food has developed a short-sighted scenario of his own making and using it to show how managers are allocating large numbers of Kenai sockeye to a commercial fishery where he claims the fish have little value - such little value that no matter how many we allocate to them or no matter what they do, they will still "go broke".

    Willphish4food's scenario is deceiving. The fact is Cook Inlet sockeye prices are higher now than they have been in the last 15 years! They are 150% higher than they were just 7 years ago. Willphish4food simply picked the highest price year. Go figure.

    Regardless of the fluxuating value of the commercial fishery (sometimes increasing or sometimes decreasing), as long as the commercial fishery exists, remains viable and sustainable, and sport and personal use have reasonable opportunity to harvest fish, managers will continue to allocate Kenai sockeye primarily for commercial harvest. And that makes sense. Otherwise we are left with unharvested surpluses and lost yields that have no economic value to any user group - direct violations of our own proven and established sustained yields principles.


    Quote Originally Posted by willphish4food
    The numbers I pulled were straight off the state's commercial fisheries report page. Nerka- "posted price is not true price." So now you're even saying the state is posting false or misleading data for the public. All because you disagree with me. Whatever.
    The data you pulled off the State's commercial fisheries report page were average exvessel prices, taken from a commercial operator's annual report, which excludes confidential pricing, and includes pricing from the entire Cook Inlet catch, not just the Kenai that you specifically mentioned. Nerka did not say the State is posting false or misleading data, and it is very unfair and wrong for you to say that he did. I would have to agree with him that you do not understand how to use the data...at least honestly.


    Some food for Will to phish4....

    For decades, the Kenai commercial sockeye fishery has remained viable, regardless of price and abundence fluxuations. It has played the major role in making the fishery healthy and sustainable, for all user groups. Over the last 30 years the sport and personal use fishermen have had surpluses to harvest, with more than half of those years exceeding the top end of the goals (lost yield). Furthermore, according to ADF&G sport fishing over that time accounts for only 9% of the Kenai harvest and 5% of the personal use harvest. So there is no reason not to allocate the rest of the harvestable fish to commercial fishermen, regardless of their value. Sport and PU fishermen simply can't and aren't harvesting it.

    Knowing willphish4food's prior postings, he is simply looking for yet another avenue to justify more allocation of fish to the personal use and sportfishery, based on the assumption they have more value in those fisheries than the commercial fishery. I fail to see any other reason he started this thread.

    Willphish4food, you started a thread about allocation, then used a lame example trying to show how commercial caught sockeye have little value. You make a statement that even with 100% allocation commercial fishermen would "still be going broke", and then criticize others for not discussing how to make them more profitable. Spill the beans...what is it you want? Quit beating around the bush.

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    Forum Admin Brian M's Avatar
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    Quote Originally Posted by willphish4food View Post
    So now you're even saying the state is posting false or misleading data for the public. All because you disagree with me. Whatever.
    Quote Originally Posted by Grampyfishes View Post
    Knowing willphish4food's prior postings, he is simply looking for yet another avenue to justify more allocation of fish to the personal use and sportfishery, based on the assumption they have more value in those fisheries than the commercial fishery. I fail to see any other reason he started this thread.
    I have made this request previously, but apparently I need to repeat myself. Please stop posting about others' perceived motivations. This goes for all members here. Thank you.

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    Member willphish4food's Avatar
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    Default

    Anyone else, please chime in. For the record, I took the first date available on the state's comfish annual report, which is '94, and compared it to this year's price quoted by an active fisherman. I then asked a simple question. Apparently not simple enough. Let me reword, and expand- Allocation aside, how does the commercial industry make the guys in the boats more profitable? Why has the ex-vessel price of salmon never risen above the price it garnered 15 years ago? Why can't it keep up with inflation?

    Grampy, are the commercial guys happy that the price of salmon today is about equal to what it was 15 years ago? Even though fuel is 3 times as high, and operating costs across the board have risen through inflation? Is that a satisfactory price?

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    Sorry about that Brian.

    Every respondent in this thread asked willphish4food what the point of starting this thread was. I stated why I thought he started it, based on his allocation-value scenario, and his prior themes. I wasn't posting willphish4food's motivations, I was posting my own opinion for the reason he started this thread.

    It seems odd that a thread is started without knowing what the point is, or the reason it's being discussed. That in itself leads to speculation.

    I mean Willphish4food titles this thread "Allocation", and even says it's the "crux of the issue", and asks "what is the solution".

    Then he talks about the value of commercial-caught sockeye, pulling one data point and using it to make up his own scenario trying to show how the commercial guys are broke no matter how much fish they get.

    Now he claims this thread is about how to make commercial fisherman more profitable. ??

    Brian, without Willphish4food tying all that together, all we can do is speculate why he is posting about it. And please don't forget that many of us here are seasoned members familiar with the themes posted by Willphish4food. So the writing is on the wall. I am having a real hard time believing he started this thread to find ways to make commercial fishing more profitable. He could've just said that.

    Again, sorry.

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    Willphish4food, even using data to 1994 one can easily see that CI sockeye prices are the highest they've been in 15 years, and 150% higher than they were just 7 years ago.

    1993....$1.05
    1994....$1.45
    1995....$1.18
    1996....$1.19
    1997....$1.16
    1998....$1.08
    1999....$1.33
    2000....$0.88
    2001....$0.65
    2002....$0.56
    2003....$0.65
    2004....$0.71
    2005....$0.94
    2006....$1.07
    2007....$1.00
    2008....$1.26
    2009....$1.40

    And again, these are just average prices taken from annual reports which include entire Cook Inlet sockeye, not just Kenai sockeye, and they exclude all confidential pricing and other add-ons.

    Your comparison was deceiving, if for any other reason than because you picked a high point in an industry where prices, markets, abundence, and many other factors fluxuate and cycle widely. You could've just as well picked another data point and created an entirely different scenario.


    Quote Originally Posted by willphish4food
    Allocation aside
    Allocation is the title of your thread. The "crux of the issue" as you say.

    Quote Originally Posted by willphish4food
    how does the commercial industry make the guys in the boats more profitable?
    As any farmer could tell you, efficiencies only go so far, and expenses are reasonably predictable. A commercial fishermen's profits are always at the mercy of his own abilities, markets, mother nature, and Murphy.


    Quote Originally Posted by willphish4food
    Why has the ex-vessel price of salmon never risen above the price it garnered 15 years ago? Why can't it keep up with inflation?
    On the contrary, why has it risen to the highest price in 15 years, risen above the price garnered 25 years ago, or risen 150% above the price garnered just 7 years ago?

    Markets. They fluxuate and cycle. Like a farmer, it's all part of a commercial fishermen's livlihood.


    Quote Originally Posted by willphish4food
    Grampy, are the commercial guys happy that the price of salmon today is about equal to what it was 15 years ago? Even though fuel is 3 times as high, and operating costs across the board have risen through inflation? Is that a satisfactory price?
    I'm not a commercial fishermen, so I can't speak for them. I would imagine they are happy that they have the highest price for sockeye that they've had in 15 years. As for the effects of operating costs and inflation, that is unclear and probably on an individual basis. It is an old fleet. Inflation may not be much of a factor for those who have their boats, gear, and permits paid off, or who's crew consists of family members. On the other hand a newcomer with big payments and a hired crew may find costs and inflation eating him up. So each individual permit holder probably has his own threshold of what a viable fishery is, both in terms of price and quantity. Participation in the fishery has declined somewhat, which means other commercial fishermen may be able to compensate for rising costs by harvesting more fish.

    Willphish4food, why are you concerned with making the commercial fishery more profitable?

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    Quote Originally Posted by Grampyfishes View Post
    So each individual permit holder probably has his own threshold of what a viable fishery is, both in terms of price and quantity.
    That's a really good point. My parents have fished halibut commercially for 30-some years. The prices have been great over the past 4 years, but this year they took a pretty serious dive. For them, it's still a very viable fishery, as they don't owe anything on their permits or their boat. Bait, ice, crew, fuel, and moorage cost something, but it's still profitable, particularly since it is a mostly family operation. For those that bought IFQs in the last few years, though, it has got to be extremely painful. What is viable for one is not for another. Such is life in darn near every industry, though, as it is in the residential housing market. Those that have owned their homes for a long time and aren't planning to move are still sitting fine today, while those upside down in their mortgages and planning to move are hurting.

    As for making the guys in the boats more profitable, willphish, a lot has been done over the past decade to lay the groundwork for this. Nerka mentioned previously the branding efforts. We now have names like "Copper River Wild", "Southeast Rainforest", and "Yukon Gold" that conjure up an image and notions of quality in the minds of consumers. This has already led to greater demand and higher prices and will only continue to do so. There has also been a much greater emphasis on improved care leading to better quality, hence higher prices. As Nerka mentioned, icing fish leads to a 10 cent higher price/lb, as does bleeding fish. Twenty cents per pound is a pretty significant difference when spread over a large volume of fish.

    Do you have some other ideas? Seriously, increasing the profitability of our commercial industry is beneficial to all Alaskans, so such ideas are always welcome.

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    Default cannot make comparsion

    Quote Originally Posted by willphish4food View Post
    Grampy, are the commercial guys happy that the price of salmon today is about equal to what it was 15 years ago? Even though fuel is 3 times as high, and operating costs across the board have risen through inflation? Is that a satisfactory price?
    Willphis4food, 15 years ago less than 10 percent of the fleet iced thier fish. Today over 50% does. That incentive bonus to ice is not in the posted price. That is just one reason you cannot make the statement above. The state posted price is on the ground if you did not participate in any incentive programs. That price also does not include post season adjustments. A number of processors now have like a profit sharing plan (not exactly but it is the closest I can make here) which allows post season bonus to be paid based on the market selling price - which is confidential. So lets just stop using these figures they have little meaning.

  14. #14

    Default How about fish traps

    With all the new equipment, why don't we go back to fish trps. Coops have worked in the past and they can be made to work smarter. Take fish to the processor when they need them, let the non-targeted species go.


    Big Fisherman

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    Default I ask the same question?

    Are the powers that be, afraid if new and improved fish traps? I have asked before. Form new co-ops/ buy out sit-outs for more than two years( even if the state's limited entry commercial board is soppose to do that) and then split the profits up by share equity. I'm not versed in fishing economics but the model can't be that bad or hard to put together. Comfishers need a channel to help them, new and old fishers, so that they can all be commercially viable. The traps were banned in the early 50 and 60's because they were too efficient. What is so wrong with that? With oversight, it is a win-win. Am I too ignorant to believe this can work? I don't know. It might be worth a shot, at least with Sockeye. What say you?

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    Default not correct

    Quote Originally Posted by thewhop2000 View Post
    Are the powers that be, afraid if new and improved fish traps? I have asked before. Form new co-ops/ buy out sit-outs for more than two years( even if the state's limited entry commercial board is soppose to do that) and then split the profits up by share equity. I'm not versed in fishing economics but the model can't be that bad or hard to put together. Comfishers need a channel to help them, new and old fishers, so that they can all be commercially viable. The traps were banned in the early 50 and 60's because they were too efficient. What is so wrong with that? With oversight, it is a win-win. Am I too ignorant to believe this can work? I don't know. It might be worth a shot, at least with Sockeye. What say you?
    Actually Willphish4food if your read some history on traps they were mostly banned to keep Seattle and San Francisco companies from controlling the fisheries. Prior to statehood everything was controlled by these outside forces including the amount of local hire. Workers from China were brought to Alaska to can fish as opposed to using Alaskans. So with statehood the way to break this hold on the fisheries was to ban traps.

    There are some good papers on this if you are interested.

  17. #17

    Default

    Great Idea- Fish Traps! Why didn't somone think of this before?. Now we can eliminate all the problems we have with dipnetters- just have every interested household in Alaska come to the fishtrap to collect their fish!
    Think of the money we'll save on enforcement! Just imagine how much cleaner the beaches will be!----- In all honesty if a fishtrap could be put in that would eliminate all of the problems that the personal use fishery has created I would be in favor of it- Won't work for the commercial aspect however, you must understand that the premium product that we provide could never be obtained in a terminal harvest area.

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    Default what traps really do

    All this talk of traps is from people who did not fish them or talk to anyone who fished them. Below is a picture of a fish trap unloading - it could only take place at slack water and the trap had to be unloaded quickly - no quality product - fishforks used to pitch the fish into the boat. Also, the chinook were killed with the crush of fish. I have talked to some people who actually fished these traps and the picture is from a UCI trap on the lower eastside beaches.

    Attached Thumbnails Attached Thumbnails fish trap 1.jpg   fish trap 2.jpg  

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    Default

    Great pictures, Nerka. Thanks. Also, thanks for your explanation of fish pricing. I disagree with you that the data I used is invalid: it is a constant data point, that the state posts each year. It is good to see that the value added methods are actually working to add value- that is certainly needed in today's economy.

    There's no nefarious purpose to this discussion. I really do want to step aside from allocation debate in this thread and find out how to be more profitable with the fish available. I pulled out the highest value of sockeye in the last 15 years to compare with today's price- thats' just because it was the earliest number I could find quickly. I got critters to hunt for and fish to put in the freezer yet- research time is limited. I do want to find out, as well, if there is still concern that Japanese buyers/processors are colluding to keep prices artificially low. (don't know if that actually occurred, but do know it was bandied about quite a bit in the 90's)

    Grampy, I'm just gonna have to quit responding to you. Keeping it civil here

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    Default OK, at least it was worth a shot?

    I'm certainly not versed in traps. It was at least a shot, thinking outside of the box. I just believe that more people need to think outside of the box, more often. Enough said.... Next!

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