Bristol Bay and World Salmon Markets in 2016

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1 Bristol Bay and World Salmon Markets in 2016 Gunnar Knapp Professor Emeritus of Economics Institute of Social and Economic Research University of Alaska Anchorage January 24,

2 This year s Bristol Bay harvest volume was the fourth highest on record. 2

3 As of October 2016 the Alaska Department of Fish and Game s preliminary estimate of the average ex-vessel price for Bristol Bay sockeye salmon was $0.76/lb. Historically the final price has been $.10-$.20/lb higher. 3

4 Although significantly higher than last year, adjusted for inflation the price remains lower than most of the past three decades. 4

5 The combined effect of higher catches and higher prices was an increase in the ex-vessel value of sockeye catches from $118 million in 2015 to $153 million in 2016 similar to 2009 and

6 Adjusted for inflation, the value of the catch is much higher than the early 2000s but well below the 1980s and early 1990s. 6

7 Why did Bristol Bay sockeye prices rise in 2016? 7

8 The most important Bristol Bay sockeye salmon product forms are frozen H&G, frozen fillets and canned halves. 8

9 Average monthly wholesale prices for Bristol Bay frozen H&G and frozen fillets have increased since last year, while prices of canned halves have stayed flat. 9

10 2011-II 2011-III 2012-I 2012-II 2012-III 2013-I 2013-II 2013-III 2014-I 2014-II 2014-III 2015-I 2015-II 2015-III 2016-I 2016-II $/lb Alaska frozen and fresh sockeye wholesale prices recovered significantly in 2016, but remain well below levels. Average First Wholesale Prices Received by Alaska Salmon Processors for Fresh and Frozen Sockeye Products $10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 Fresh Fillet Frozen Fillet Fresh H&G Frozen H&G I = Jan-Apr; II = May-Aug; III = Sep-Dec; Source: Alaska Department of Revenue, Alaska Salmon Price Report 10

11 Trends in the Bristol Bay ex-vessel price closely reflect the combined trends in wholesale prices of the major Bristol Bay product forms. 11

12 2016 sockeye harvests were up slightly in both Alaska and Russia. Sources: : FAO FishstatJ; ; ADFG and industry sources; does not include estimates for Canada or Japan. 12

13 Non-exported frozen and fresh production account for increasing shares of the Alaska sockeye harvest. Sources: ADFG harvest and COAR production data, NMFS Foreign Trade in Fisheries Products data. 13

14 Non-exported Alaska frozen & fresh sockeye volume has been growing. Sources: COAR production data, NMFS Foreign Trade in Fisheries Products data. 14

15 Alaska frozen & fresh sockeye is about 10% of the US market. Sources: ADFG harvest and COAR production data, NMFS Foreign Trade in Fisheries Products data. 15

16 World salmon markets are dominated by farmed Atlantic salmon 16

17 As farmed salmon production has grown, Bristol Bay sockeye salmon has become an ever-smaller share of world salmon supply. 17

18 Norway is the world s largest Atlantic salmon producer. Chile and Canada are the largest suppliers to the US market. Source: Estimated based on harvests and exports reported by Kontali 18

19 World farmed Atlantic salmon supply fell by 7% in World total -7% Norway -4% Chile -19% Source: Kontali Analyse 19

20 Total Chilean Atlantic salmon exports fell slightly in 2016 but exports to the USA, Far East and EU increased. 40% of Chilean exports are to the USA Source: Kontali Analyse 20

21 Monthly U.S. Atlantic salmon imports fell during 2016 and by May were below 2015 levels. Source: NOAA Foreign Trade in Fisheries Products data 21

22 Year-over-year % change in price Historically, prices have risen when world supply growth has been < 6-8%. Prices have fallen when world supply growth has been > 6-8%. Year-over-year % change in supply Source: Dag Sletmo (DNB), The new normal in salmon farming, (Nov 2016); based on DNB, Kontali 22

23 US prices have generally fallen when import growth > 10% US prices have generally risen when import growth < 6% Source: NMFS Foreign Trade in fisheries products data 23

24 Historically, year-over-year changes in US monthly imports have been inversely correlated with year-over-year changes in prices. Source: NMFS Foreign Trade in Fisheries Products data 24

25 U.S. wholesale prices rose sharply in the winter and spring and leveled out in the summer... Source: Urner-Barry 25

26 Wild sockeye wholesale prices are correlated with farmed Atlantic wholesale prices. Sources: NMFS Foreign Trade in Fisheries Products data; Alaska Department of Revenue salmon wholesale price data. 26

27 World farmed Atlantic salmon supply is projected to grow by 3% in % in % in % in % in % in 2017 Source: Kontali Analyse, November