Alaska salmon permit trade sluggish amid high prices, uncertainties

Trade on permits in Alaska’s salmon fisheries has been generally sluggish, as high prices in booming fisheries, warming waters, and market uncertainties are giving fishermen pause.

Fishermen are still looking to get into Bristol Bay after consecutive seasons of robust runs have coincided with strong prices, culminating in a 2019 season that was the most lucrative in history. Last year’s record-breaking preliminary ex-vessel value of USD 306.5 million (EUR 275.7 million) in Bristol Bay was nearly 250 percent of the 20-year average, and permits prices reflect the recent boom.

Last year at this time, Bristol Bay driftnet permits were selling for around USD 163,000 (EUR 146,669). Now, Dock Street Brokers in Seattle, Washington, said the same permits are selling in the neighborhood of USD 190,000 to 195,000 (EUR 170,966 to 175,465). And while the Bay permits are desirable, the high price tags mean they are not flying out the door. 

“Guys get cautious when things get expensive,” Dock Street’s Aaron Overland told SeafoodSource.

The other most-coveted salmon permits in Alaska right now are in Area M – False Pass, on the Alaska Peninsula – where seine permits have shot up to over USD 175,000 (EUR 157,464), an increase of nearly three times from 2017, when they barely scraped above USD 60,000 (EUR 53,987).

Doug Bowen of Alaska Boats and Permits in Homer told the Anchorage Daily News that he recently sold an Area M driftnet permit for USD 235,000 (EUR 211,431), and the most recent records from the state had setnet permits nearing USD 60,000 (EUR 53,987).

This is in stark contrast to places like Cook Inlet, where a steady five-year decline has driven seine permits down to below USD 50,000 (EUR 44,958) after a peak at the end of 2014 at USD 86,000 (EUR 77,329). Drift and set permits are being offloaded in Cook Inlet for a paltry USD 31,000 (EUR 27,874) and USD 20,000 (EUR 17,983), respectively.

“We’re seeing drift guys trying to get out of Cook Inlet and into both Area M and Bristol Bay. There are not a lot of drift permits in Area M, so it’s been easier for them to go to Bristol Bay,” Overland said.

Dock Street showed no Area M gillnet permits listed, with one wanted listing offering USD 200,000 (EUR 179,200) to get into Area M. 

Jamie O’Neill, another broker at Dock Street, said seiners in Southeast Alaska were looking to diversify or move out after recent pink salmon runs have come in below forecast, including a 2018 season that was the district’s lowest run in four decades. 

“Southeast has definitely seen some people migrating to Area M, as well as Prince William Sound and Kodiak,” O’Neill said.

After a relatively strong season, state figures have Kodiak experiencing a year-on-year bump from USD 26,000 (EUR 23,375) to USD 34,000 (EUR 30,556) for seine permits, and Southeast fishermen are hedging with second permits in Kodiak.

Despite some lateral movement, Overland and O’Neill said general trading in permits has been sluggish.  

Even in booming Bristol Bay, there were concerns over hot weather that cranked up water temperatures and caused die-offs in several river systems, along with rumblings of lower prices after a steady after a robust USD 1.35 (EUR 1.21) ex-vessel price offered last season.

“I don’t think there’s outright worry, but I think the markets are tamping down expectations in terms of what they’re going to be paying ex-vessel for sockeye,” Overland said.

O’Neill added that there is a complex interplay among fisheries across Alaska, and said “soft” markets on halibut, crab, and black cod are contributing to overall caution, noting that the impact of the recent closure of the Gulf of Alaska cod fishery for 2020 will likely ripple out through the salmon market.

These factors all add to an especially hostile environment for newcomers. Expensive permits in places like Bristol Bay and Area M are restricting entry into the fisheries, in particular for non-Alaska residents who are unable to access permit loan programs.

“It’s expensive. You have to go into debt, and the risk is through the roof,” O’Neill said.

While O’Neill called buying permits low a “dangerous game… with far too many variables,” Overland argued that Cook Inlet could see a resurgence.

“They think their fish are getting intercepted in Area M and Kodiak, and theoretically, if they can get the right political pressure, you could see that fishery coming back. But it’s all competing interests, and it would be at the cost of someone else,” Overland said.

Overland added that some salmon fishermen were having luck diversifying with crab permits, and Dock Street had listings for several Southeast Red/Blue/Brown/Tanner crab permits, as well as three Southeast Dungeness permits. West Coast crab permits in Washington, Oregon, and California were all plentiful on Dock Street with a wide range of price tags, and there were three Puget Sound crab permits listed from USD 167,000 to USD 170,000 (EUR 150,000 to EUR 152,400).  

Photo courtesy of dani shlom/Shutterstock