Wednesday, August 31, 2005

Exporting, "revitalization" and flooding.

"The United Nations Conference on Trade and Development reflects the complexities involved, estimating that an average international transaction involves 27 to 30 different parties, 40 documents, and 200 data elements." This gives an idea of how complicated it is to export seafood products.It is only the largest seafood processors and brokers that can accomplish this feat.

It also is a risky proposition in terms of relying on a foreign market for a significant portion of sales. When I was banking, we had one processor that had to sell to Great Britain because they were a new kid on the block and couldn't get U.S. markets. In the time period between pack financing and paying fishermen, to the middle of the winter, the exchange rate fluxuated just enough to warn off the bank. The upshot was that the bank lost their confidence in their marketing strategy, which was the only one they could develop, and declined to offer pack financing for the coming year.

That was the end of that cannery. A lot of the problem is that canned salmon is a commodity, not a value added product like consumers demand these days. This has to change for any degree of security to return to the Alaska seafood industry, which includes the banks, suppliers, shops, repair facilities, etc. The whole infrastructure of the industry. This infrastructure should be quantified soon, to determine the potential benefits of revitalization, and the possible damage to the Alaska economy from failure.

I think that the State government in Alaska would be more determined to see their efforts at revitalization succeed if they knew what was at stake. Up to now, fleets like the hand trollers have gone quietly into the night, without any spotlight being shed on the phenomenon. There is a phenomenon going on right now under the noses of those that could do something about it. I just hope "Revitalization" doesn't stall out.

And finally, pray that all those people in the deep south that have been displaced will be safe.

Monday, August 29, 2005

Flavors, Commissioners and Buy Backs

"People are always looking for a new flavor, a new texture, a new mouth sensation." This from researchers from MIT who have discovered a new way to make ice cream - with fizz. But the point is that people aren't satisfied to eat the same old thing decade in and decade out. Or in the case of the one pound can of salmon, century in and century out.

The term is "day in and day out." How has seafood missed the product development train so badly? Now the salmon seiners in Southeast Alaska are talking about buying out hundreds of fishermen, with government money, and their own. What is innovative and problem solving about this? It is for the 180 seiners who have been able to upgrade their boats, but not innovative at all for the rest of the total 435 permit holders.

The organizers of the buy-back idea are getting impatient waiting for anything good to happen. Remember, it doesn't make any difference to the big regional processing companies whether all these boats disappear. In fact it is easier to control fewer fishermen.

The 3% they are talking about as a fisherman tax to buy out the rest is three times what the Regional Seafood Development Associations are going to use to try jumpstart the industry. This seems like another brainstorm in the piecemeal approach to seafood development. And this one will hurt the communities badly, unless all the surplus seiners are turned into charter vessels for the tourist trade.

Will the new products be minimally processed and go to Asia, or majorly value-added in Alaska and boost local economies? Remember, most all of the processes can be automated and would make for good local jobs. The new Commissioner of Community and Economic Development in Alaska may or may not be the guy to help the Regional Seafood Development Associations. The Department oversees $50 million to revitalize the seafood industry in Alaska. The question is, will he be sympathetic with the big processors and help support minimally processed fish exports to Asia?

If Commissioner Noll thinks that exporting fish like exporting coal to Asia is the way to go, that New Yorker is not doing Alaska any favors. Maybe the Seattle based processors, but not Alaskans. NAFTA and CAFTA were designed to force our industries to be more competitive, which will benefit all of us in the long run, over doing nothing.

Shipping mass quantities of frozen salmon to Asia for processing is the anti-thesis of free trade. It is an extension of oligopolistic practices by a few big processors. The Asians can't start with a competing natural resource, so there is no "free trade mechanism" at work here. It's just taking jobs overseas.

This may be a short term solution, but buying salmon cheap from fishermen and sending them out of state like round logs, only benefits Asia and Seattle. Remember when Alaska shipped round logs? No loggers in Alaska put millions in cash in their personal bank accounts. There were quite a number of Japanese who did, and even two or three who became billionaires.

I guess we'll see his stripes soon enough in his day to day managing of the Department. What does this have to do with product development? Remember that government employees just have to show a good faith effort, like when Mr. Noll mentions some pin-bone removal, etc.

The small processors have been screaming for years for help to make and promote their value-added products. Decades of being ignored isn't going to be forgotten by a few gestures. And then to say the "jury is out" on their efforts? Is this being a leader in economic development? If I was a small processor, a vertically integrated minded fisherman, or an organizer of an RSDA I might be inclined to cry.

Is what seafood industry revitalization needs is some positive words, not mealy mouthed words. Come on, Bill, be the super cheerleader you are, finish what your department started, and it will happen the way you want. If things need to be tuned up, then do it. New products will be developed, new markets created and new life pumped into the communities. Maybe there will even be a few seiners left in the villages in Southeast to continue their millenium old tradition of seafaring.

Friday, August 26, 2005

New Business/Product Development Manager

Product development work was a subject I knew I had to get to sooner or later. This article from an employment agency calling for a Business Development Co-ordinator in England seems fitting to kick off a series on this. This is the work that the Regional Seafood Development Associations will be doing in spades.

This picture shows the innovation of a fish processing plant in Fairbanks: salmon peperoni sticks.

Here's a job description of the kind of person that will be needed. 25,000 Pounds Sterling isn't much for that kind of work in the U.S. I don't think. But these Associations will have to work hard and Just Over Broke for a little while to get going.

They won't have to worry about making expensive mistakes like I've seen in the past, because they won't have much to make mistakes with. I remember the product development and business development people at Whitney-Fidalgo putting a $25,000 ad in Time magazine for salmon caviar. Nobody had ever heard of salmon caviar back then. That was a one time ad too.

You have to be as conservative and smart as parents saving to put junior through college. No guessing allowed. Or let me put it another way. When that brown bear you're after is moving fast, like markets do, you have to hit a vital spot with one shot. No peppering it with rounds, no matter how big the round. This takes focus, by someone who can focus, and a track record of determination and innovation.

The Business Development Manager is a "make it or break it" position that makes the whole undertaking worth while. A lot of the skills needed can be learned on the job. There won't be much time to spare, so he or she will have to be a quick study. The first positions will have to call for a jack-of-all-trades; interfacing with the markets with research and intuition, then developing the criteria for the products to match.

This picture is of salmon chunks being brined in prepatation for smoking.

So buckle your seat belts, dive right in and all that, and above all have fun. Norquest put the having fun part right in their By-laws and look how successful they have been.

Bonus Material:

"Guarding the flavour potential of baked goods is a challenge for food makers preparing frozen –to-microwave and oven foods." This is a rubber-meets-the-road kind of article in product development.

Southeast Alaska gillnetters are taking vacations and halibut fishing this month instead of the salmon fishing that they have done for the past 100 years in August

I wrote a post a little while back that mentioned making condos out of the last seafood processing plant in Astoria, OR. I don't know how I missed the work to turn the big old Columbia Wards plant in Kenai into a hotel, restraunt, custom processor, and everything-else-they-can-think-of facility.

There is big bucks behind this effort, that's how they can afford to throw some money at an outside quality control party, (AQS). As a new processor, they need to buy their credibility in the market. And even at that, you couldn't prove by me how important that is. Whether anybody south of Dixon Entrance really gives a hoot about the glamor of the quality control program or just about the quality of the fish.

Thursday, August 25, 2005

Small tourist friendly fish processing plants

"More than a fish plant, Kenai Landing incorporates a number of other activities at its facility, including a restaurant and bar, lodging, RV park, theatre, and launch ramp. Tours of the processing plant are given to visitors during the season and incorporate all aspects of salmon processing, including information on the AQS program."

Another of my favorite little plants is Tonka Seafoods in Petersburg. They are located on the historic board bridge over Hammer's Slough near the Middle Harbor. They just need a pike pole to pull in tourists walking up town from jumping off the small tour ships that can land in Petersburg. They major in smoked salmon but have a nice gift shop.

The architecture of the building fits and enhances the downtown waterfront area like I've never seen before. It was built in the tradition of the "Old Country." Fishermen pulled right up to little processing plants that their family owned, and they lived upstairs from the processing rooms as well. Very efficient.

Harold Kalve's little plant in Anchorage is strictly a one man show. But he makes out real well with his own catch, which he plate freezes and flys all over the world using the Fed Ex hub there. At one point he spent $30,000 on blueprints for a new facility with his apartments on the top floor. He was even thinking about putting in a small swimming pool upstairs. Outside the processing room windows he was going to plant a garden and other landscaping so he would have a perfect pastoral view while filleting cod and halibut.

I guess these examples point to the old axiom of working smarter and not harder. Harold is also the classic example of just keeping the nose to the grindstone and not seeking pulicity to make him feel good about his success. These guys have a wide range of skills and this is something the average fisherman would be hard pressed to duplicate, but not impossible. You can do about anything if it fits your temperment.

The fishermen that aren't in the mood to get 18 permits like Harold had to and hassle with government folks will probably want to join one of the new Regional Seafood Development Associations. Maybe Columbia Wards saw the handwriting on the wall when they sold all their big salmon canneries in Alaska a few years ago. Their old plant in Kenai is being turned into a fancy hotel.

Surprise red run on the Kenai River

"An unexpected, mid-August flood of sockeye salmon into the Kenai River has state fisheries biologists scratching their heads and extending the sockeye season on the watershed's most popular tributary." This from an article in the Anchorage Daily News.

The extra 250,000 sockeye that showed up unexpectedly isn't causing any complaining, but it has biologists scratching their heads, supposedly. Well, like I said in a past post, the sockeye runs north of Southeast Alaska seem to be in good shape. Of course the runs that disappeared in Southeast, Canada and Washington didn't go off course and end up in the wrong river.

But this bears watching in the next few years for evidence of a pattern. Global warming phenomenon? Maybe someone should develop sensors that could be deployed from a long range airplane to sample the plankton all over the North Pacific. Then when the smolts go out to sea the food values could be correlated eventually to predict runs a little better.

Right now, the best the biologists can say is, "we don't know where they go." That seems a little lame to me considering all the hundreds of millions of dollars that have been thrown at these guys in Alaska and the West Coast.

There may not be anything a farmer do or say about future weather, but the ocean conditions when smolt go to sea is a different matter. It is measurable. Just like when someone measured the lack of phytoplankton in the Bering sea and noticed that it was replaced by large quantities of diatoms. Diatoms are the critters that sockeye smolt feed on in the ocean when they come out of the streams and have glass-like shells. Not the juicy morsels they are used to.

I guess it's all in how bad the industry wants this knowledge. I think when fishermen start leveraging their production more, to finance vertical integration, they will want to keep their bankers happy with predictions of consistent production. Maybe only the sockeye fishermen north of Icy Straits will be able to do that.

Bonus Material:

Quote of the day: "The good thing about Little League Baseball is that it keeps the parents off the streets." Yogi Berra.

Is there a surprise run of pinks showing up in Southeast Alaska?

I looked up my rental house in Oregon on Google Earth, zoomed in, and could see the swing in the back yard. I figure the picture was taken last summer, because I didn't put up the swing with the awning this year. The satellite photo of the Wrangell, Alaska area had fog in the channels. Maybe the Google people who selected the picture thought it was glacier. But it's hard to get a satellite photo of southern Southeast Alaska without some clouds or fog.

Tuesday, August 23, 2005

Microsoft and Radio Frequency Identification

The latest round in the RFID wars has Microsoft weighing in with plans to develop software to manage all the information. RFID has taken center stage since Walmart announced that U.S. suppliers have to include RFID tags on merchandise. And that Chinese made goods sold at Walmart are in their sights too.

I talked about RFID at the bottom of a previous post. It may be premature to jump into this technological tide pool at this point. The tide may go out on you leaving you stranded and then bring in a new variation on the next tide. The software to manage all the data and link it to others down the supply chain will be the biggie.

Microsoft has the resources to develop a comprehensive system and big business feels comfortable going with a large well known company for such things. In like fashion, many students of the industry might feel more comfortable getting seafood industry training from the University of Alaska's new on-line program in seafood salesmanship.

What is U of A going to say about RFID though. It's not an exact science yet. They'll have to say something though. They can't just say, like I am, wait a little for things to settle down. I would hope they don't get people jumping on the wrong band-wagon just to say something about it. The same with Microsoft. A lot of the new breakthroughs are coming from smaller companies like Google and Mozilla.

Some seafood shippers have already misspent their money in these regards. How long do you wait? I don't know. The small seafood shipper won't be the one to get the whole supply chain on-board RFID I'm pretty sure. But when they do, you can just get the software they use, buy the RFID tags and away you go. Things are developing fast though and Alaska Report and myself are reporting on the latest as they happen. So, is all I can say is stay tuned.

Waterfront property for fisheries use

"Question 7 will ask the voters to amend the Maine Constitution to provide a different tax assessment level for waterfront land used for commercial fishing purposes. The waterfront property would be taxed much like farmland and forestland currently are." This is the kind of thing I was talking about in my previous post. That it's not only the fish farmers giving the fishermen a hard time, it's also everyone that has just got to build a condo on the waterfront, or put in a pizza parlor where there used to be an outboard repair shop.

It used to be in Petersburg that if you were a fisherman, you built a warehouse on piling along the beach somewhere. It made their life infinitely easier, to just pull up to the warehouse at high tide and throw things back in or take new gear on, etc. I have fond memories of playing in these old musty warehouses when growing up. They acted as the unofficial museums. Sometimes a new generation of fisherman in the family would get tired of the old stuff and bring in a dump truck to haul everything away.

I got in before the truck arrived at my grandfather's old warehouse and picked up a few things, like his log books dating to the 1920's. At least one trip to Astoria was in there. It must have been pretty rough going over the Columbia River Bar, because one of the crew got washed overboard and they never did get him. My grandfather pulled into Astoria and notified the Marshal and that was the extent of the notations about that. If I remember right, that was in 1927.

His brother was lost at sea at Point Gardner, Alaska in about 1908 while fishing a dory for halibut. He was by himself, while the gas boat was anchored at Tyee. The old boy who had the big boat probably just figured it was his job to get back in a blow. Things were certainly different back then. My grandfather and his brother had come from Norway together to join their father in Petersburg just a couple of years before that.

Well, you can't afford to build a warehouse on the waterfront anymore. The zoning regulations won't allow it in a lot of cases, or the land is just too expensive. The model of the successful fishing port is being chipped away at, and the new model, with limited fisherman impact in the waterfront area, is not guaranteed to yield a viable industrial base.

But certainly warehouses and such fisheries infrastructure should be taxed at a lower rate to support industrial activity. Sometimes these old warehouses are the incubator for good local businesses like an aluminum repair and fabrication shop, or machine shop. Coastal communities need to factor in such things to strengthen their business model. But I don't know if these communities have even developed or adopted a fisheries industrial model as a blueprint to strengthen the industrial base that is their bread and butter.

Saturday, August 20, 2005

Looking 100 years ahead

This article about Seattle looking 100 years ahead is thought provoking in itself, but I especially wanted to include a link to this web site. There was an article that led me to the site about nanotubes. They are being made into sheets of fabric that is stronger than steel, holds a charge, is transparent, can be welded in a microwave oven and even has the science fiction buffs drooling over the possibility of a space elevator. This looks like the technological breakthrough of the decade.

But it got me thinking about an article that Lainie Welch wrote about the University of Alaska offering on-line courses in Seafood Marketing, etc. These courses are all well and good, except for the fact that there hasn't been the discussion about what our seafood industry should look like down the road.

And I'm not faulting Steve Grabaki as this has the makings of a cushy job for a lot of years. But who is he going to point to as the source of fish products. The fishermen who are forming ranks to be the suppliers, under the Regional Seafood Development Associations banner, or the traditional suppliers, the shore plants who have never worked at new product development with any enthusiasm.

Of course, these courses will come with a lot of video and glitz, content that folks that have been in the industy have seen a million times. These are the students that have the background to take marketing to the next level in my opinion. They have attended Fisheries 101 on the deck of a halibut or crab boat or piled seine web day after day on a salmon seiner, or worked in a processing plant. I'm not saying that others can't break into the industry from scratch via the internet. I still feel bad for discouraging a car salesman in Anchorage that was from a northern village and wanted to market fish for the Tannana Chiefs Conference.

But to teach the basics of harvesting and processing to students that have never "been there - done that" is a tough job, and might yield negligible results. But who's to say. From an instructors point of view, with limited hands-on industry experience, it makes sense.

These courses are a step in the right direction, but remember, colleges are businesses that are looking to increase enrollment first. But the good thing about this is that course outlines can be changed quickly. I hope some fisher-folks with good ideas will contact Mr. Grabacki with suggestions for curriculum to represent their interests.

Should fishermen's groups have management contracts with other groups?

This article concerning farmers in the Mid-West may or may not give folks in Alaska some ideas. It has to do with efficiency in marketing and product development, two things the new Alaska Regional Seafood Development Associations will be looking to accomplish.

The other aspect of this movement is the ownership of the plants.
"Now that the farmer-owned plants are running, Minnesota will become the top U.S. producer of biodiesel, the alternative fuel that already is sold at more than 200 service stations in the state." I'll repeat, "now that the farmer-owned plants are running."

The Farmers Union Marketing & Processing Association annually is making 3 million gallons of biodiesel from soybeans but also plans to make the fuel from rendered animal fats supplied by a sister company, said Chuck Neece, new business development director for the association.

Some of the products of the RSDAs are unique to their area, like Copper River sockeye. There's no other sockeye like them. And troll king salmon from Southeast Alaska. But a lot of the products will be the same across the board such as pink salmon.

There wasn't a provision made for joint marketing at the outset of this program. Just the theory that the fish from different regions are varied like the varietal wines from France. The question will become whether the pink salmon producers in Kodiak want to go head to head with the pink salmon producers in Prince William Sound or Southeast. Or should they work together to form a Pink Salmon Board for example and just pay for one management team like the corn and soybean farmers are doing.

Some of these ideas may make the difference whether fishermen vote this year to judge the RSDAs as a waste of time or the savior of the industry.

Nevertheless, some fishermen are getting together now to do processing and marketing and not waiting for someone else . The floater concept continues to flourish. If the shore plants don't cooperate with the fishermen's groups now, it may be too late later, when the bulk of the good fishermen are processing their own fish.

I didn't mean to get into the whole thing about floaters, but community leaders wouldn't want these floating factories to float south with all the processing wages and tax revenue either. This is the kind of stuff local economic development people should be thinking about, not individual projects that they are not qualified in.

Friday, August 19, 2005

Red flag for reds again

The poor showing of sockeyes in Canadian rivers has the Canadians scratching their heads. They are blaming the huge losses on ocean warming as I wrote about in an early July post. It looks like the phenomenon might have affected the king salmon on the Columbia River in Oregon to the red run on the Stikine river in Southeast Alaska, and everything in between. That's a lot of rivers.

The Lake Washington sockeye run, was a disaster, the Stikine River sockeye run was real poor, maybe a disaster, I haven't heard anything from the Alaska Department of Fish and Game. I suppose my brother knows. My son was gillnetting for those fish with Arnold and he came back early when Arnold went halibut fishing. At one point 150 gillnetters opted not to go out.

The Canadians have noticed major losses in ocean survival to the runs on the Frazer, the Nass and the Skeena. These are big rivers. The Frazer might have had runs of up to one hundred million sockeye before they started hammering them and before they blew part of the sidehill into the river making a railroad. They are expecting a run of only a couple of million this year. They had forcast a run of 11 million.

The folks with the last functioning plant in Astoria at the mouth of the Columbia aren't waiting around for any good news. It looks like the same old lip service on restoring the runs up the Columbia, and now the closure of all sport and commercial fishing for chinook this summer. They are turning the plant into condos and cutsy shops.

Why sweat it anyway, people are all a little overweight anyway, or, there are just too many other needs for the water and surrounding stream ecosystems. The runs are too far gone anyway and any number of other reasons fisheries managers and politicians might have for not being too concerned about this situation. But, these are the species that brought fishermen from all over the world to the West Coast to settle down and build the cities we have here now.

There should be a lot more jumping up and down because the word might get out that wild fish is the only safe protien source left for human consumption. What other North Pacific species might be affected next? So far, the humpies and the sockeye north of Icy Straits in Alaska don't seem to be affected. That's a generalization for bankers and politicians. There may be some other isolated problem areas.

I'm sure that when the Canadians say it's the ocean environment, they have looked at all the other variables such as winter stream conditions, river water temperature and flow rates, etc. They usually tell it like it is. Not that there is anything they are going to be able to do about this one. But watch what measures they take: they are usually a bunch of years ahead of the Americans in fisheries research. Not that it helps them much, they have some fisheries that are just shadows of their former glory just because of overfishing.

Thursday, August 18, 2005

Record Dungeness harvest in Oregon

The numbers are in, it's an all-time record. Over 33 million pounds of dungies were landed in Oregon this season that just ended. The season runs from Dec. 1 to August 14. They had 20 million pounds by February, and it could have tapered off and been a great year, but the fishing help up ok all the way to the end.

So what's up with that? Well, it just looks like a great year. Next year looks like it will be a good year. There were a lot of just undersized crabs last year that became legal this year. They don't expect that to happen next year. So with a good 3 year old cohort and a good number of 4 year olds it added up to a record.

S.E. Alaska, by comparison, only gets a couple of million pounds of dungeness a year. So Oregon results drive the price. Lots of crabs also expands the market. So next year with a smaller harvest, there should be decent prices.

It isn't so much of a problem in Alaska where there is usually only one boat's pots in a bay, but in Oregon and Washington there is a lot of pot raiding going on. This is the antithesis of cooperative marketing among fishermen. It's sad to see from that perspective too.

Not that many non-fishermen in Alaska haven't pulled a fisherman's pot or two through the years. It's just that it was customary to but in a couple bottles of beer to pay for the crab on the way to the beach for a crab boil. Now that crab is worth more, you'd have to put in at least a six-pack for a couple of crabs. The tendency is to think that the crabs are not "caught" when they are still on the botton, whether in a pot or not. This has been an on-going problem in Puget Sound for many years. With the higher prices for dungies, it's becoming more of a problem in Oregon too.

There isn't a lot of margin in processing dungeness in Alaska. The mainstay buyer in Petersburg quit buying, just like they did shrimp. I'll tell you what, fishermen sure get jerked around by not having their own secondary processing capacity.

In the face of all these odds, I was made the Economic Development Director for a small Alaska Penninsula village who wanted to break into the dungeness game. They needed pots, a dock, a plant, shipping infrastructure, plant personnel, a rapid decrease in the sea otter population and a marketing campaign that would beat all others. Is what they and other small communities needed was a seafood industry primer, like this blog.

The Internet has opened up many ways for residents of these small remote communities to make money, that would beat old style fish processing. But if you have a stake in the seafood industry already, keep read'n.

Wednesday, August 17, 2005

Community quotas

It looks like Alaska isn't the only place interested in keeping a piece of the pie close to home. Fishermen on Cape Cod are spearheading an effort to buy permits that would be kept in the community. The goal is to keep fishing rights close to home. That has the effect of retaining or even increasing the industrial base of coastal communities. Probably the smartest thing a city council could do.

Of course, in Alaska, it took an act of the Legislature to do it. Nobody but an individual could own permits or quota shares before that. And in Alaska it only extends to those fisheries like black cod and halibut that is based on an individual quota system. Not like salmon fishing that is based on a permit system. The Legislature sure as heck didn't want the big companies buying up the permits and then leasing them to fishermen. That smacked too much of the old cannery fish traps.

I wish the Cape Codders, Cape Codites?, luck with their endeavour. To my way of thinking it's logical and they have found one Foundation at least that thinks so too. Maybe these fishermen can teach the Alaskan communities a little in the way of creative financing to secure the fishing rights.

The multiplier effect of bringing the fish back to the community is awesome. There could be a caveat built in to these programs that encourages this. It would be hard to tell a fisherman that he had to bring all his fish back, because he might be fishing way out in left field and too far to deliver back to town. But with a handful of delivery receipts from the local processing plant, he might ought to get a break on his local taxes or utilities. This could be the ultimate win-win situation.

Just the sense of community that is fostered is well worth it. Fishermen tend to get real focused on making dead fish out of live fish to the exclusion of civic pride. This really has the potential to catch on all over the place. Just think of how much easier it would be to finance a shore plant with dedicated production as collateral. Fishermen would really have to break from the hunter-gatherer mode to go for that though. Among indigenous peoples this mind-set is more common though. Money also does some pretty strange things to people when they get their hands on it.

Many parts of the world are still in the industrial fishery/colonial power phase of the evolution of their fisheries. Such as West Africa and the Western Pacific. A lot of the tuna we eat doesn't come from anywhere near the North American continent, even though the owners of a lot of the biggest tuna clippers have been from San Pedro, California.

Fisheries Business Management

  • Integrate various internal and partner systems for increased efficiency
  • Better manage relationships and speed communications with materials vendors through online supply chain management systems
  • Reduce material delays through enhanced supplier communications
  • Analyze vendor reliability in real time to improve outsourcing decisions and product quality
  • Optimize process execution by integrating online applications with key ERP modules
  • Monitor process execution to identify additional areas for process improvement
Does all this sound like what you see in the Alaska seafood industry? If not, maybe that's why ex-vessel prices are so low. I'll use just one company as an example of what kind of Business Management services are available for free.

They offer free downloadable training materials with White Papers and Prochures, Data Sheets, Case Studies, Solution Briefs, and Webinars. This kind of information cuts to the chase, no Business 101 stuff. This kind of information can be used by fishermen and fishermen groups to write business plans that will have substance. And that is necessary if other fishermen, government officials or banks are needed to help make the proposed venture a success.

You just can't do things by the seat of your pants in this day and age. The competition out in the marketplace is just too keen. East Coast and Global seafood operations are using business models and strategies that are 21st century.

Sure, there are a lot of people in the Alaska seafood business that have survived to create good businesses, but there are ten times as many that have failed. The survivors were unique individuals, the circumstances and assets that they leveraged were unique, and they most likely had good help. We've all heard of guys like the S.E. Regional Vice President, of the company I worked for once, who told me he didn't think the President knew he had a college degree. It just hasn't been historically important. But that company went from canning 25% of the Alaskan canned pack to zero within a decade.

There are some really sharp fishermen. One study showed they have a high percentage of degrees and other higher education experience. But there is particular knowledge of business systems that is needed. They will either have to train themselves with resources such as the above or hire help that has this knowledge.

Some of the great operators that have made it look easy, like that "Floater King," Ivar Reiten, worked up the ranks running progressively larger boats. He had a lot of experience working in a company with deep pockets too, and with people who were innovative. That allows you to surviving bad decisions or short packs.

Many fishermen's groups may decide that it's just not tenable to be business partners with a traditional shore plant and want to get floaters. Equipment is a lot more compact and efficient these days, and coming technology has the potential to run high volumes through these floating factories. Large hold capacities aren't necessary with good lightering. A lot of things make these kinds of operations feasible. But experienced management is still necessary.

I told my brother, who got involved in a floater once, that managemet was a key factor. He thought about that, and maybe it raised a red flag for him. Later that summer his floater rolled over and sank in the channel in front of Ketchikan while processing full bore. The operator was a flamboyant accountant who knew a lot, but not enough as it turned out. The point is that you can't cut corners on bringing experience to bear. As the old saying goes, "in a multitude of counselors, there is wisdom and safety."

Fishermen who see that it is necessary to vertically integrate, and others that want to position themselves in the supply chain somewhere, can educate themselves and save consulting fees at the start. "Knowledge onboard" gains them essential credibility with third parties to get started. And it will be easier to do business with everyone down the supply chain. Not to mention "sinking to the bottom" somewhere down the line.

This Blog is a resource for these people. that merges experience with information. Maybe this should be called Fisheries Business 101.

Monday, August 15, 2005

Prince Rupert port expansion

It was an 80 degree day in Ketchikan Thrusday when a delegation from Prince Rupert was in town to pitch their new port project. It included the Mayor of Prince Rupert and the executive director of the Prince Rupert-based Northwest Corridor Development Corp. As reported in the Ketchikan Daily News, "We're here to share with you an opportunity........." they said.

The KDN reported, "A new container shipment facility opening in early 2007 will provide the fastest shipping times between Asia and Chicago of any West Coast port. As planned, the next phase of the $175 million (Canadian) project will boost the port's container capacity above that of Vancouver, British Columbia."

I guess that there is massive congestion in the other West Coast ports because of all the products coming from Asia. (Our trade deficit shot up 30% last year.) Of course they would like Alaskans to ship their fish to Asia. (Read that, a couple of big processing company owners should ship the fish they bought from fishermen to Asia to be reprocessed and then shipped back for sale in the U.S.) We're talking rail cars and containers here, not something logs fit on very well. Although I suppose you could ship some wood.

30 hours closer to Chinese ports than Vancouver is a statistic all right. It doesn't matter with a container of frozen fish though. And I don't know if that's the direction we want to go in overall anyway. Even though nobody in the seafood industry in Alaska has put forth a strategic plan, a choreography you might say, of how this industry should look. I guess if the big processors won't do it, the ball is in the court of the Regional Seafood Development Associations. But I'm quite sure fishermen don't need another tail wagging the dog that is them.

The investment doesn't stop here though. Canadian National is planning to put $30 million (Canadian) into rail line, yard and tunnel improvements. Then about $125 million in locomotives and rail cars. Then a New Jersey company is putting in $60 million in cranes and other equipment.

Apparently the Canadians are working toward building a road from Rupert to Port Simpson too. Unless this is just politics. They want the Alaska Marine Highway to use Port Simpson instead of Rupert. 90 minutes closer. Another statistic. Is there a gas station in Port Simpson?

These guys think it would be neat for tourists to make a loop around S.E. Alaska, the Bradfield Canal road, even though Canadian people think of the Bradfield road as having "nebulous" benefits, then down to Prince Rupert and Port Simpson. As if a few tourists are going to pay for all that. Maybe they want the AMH out of the way for their port project.

Seafood sanitation: Ozone

When you talk about cleaning a fish plant and rinsing the fish, you may want to talk about the advantages of ozone.

I had a little experience with an ozone generator once, so this article struck a chord. I was trying to dry up my parents basement in Petersburg, Alaska at the time. Many of you know that if you have a basement there it's like having a boat. The concrete walls of the basement are "underwater" in that rainforest. So the walls leak and mold grows and odors emanate to give you a "sick" house.

So I borrowed an ozone generator and turned it on for a day down there. The result was dead looking mold all over and a nice new smell. I'm sure that what the makers of this equipment are saying is correct, that if you use the air to distrubute your cleaning agent, you get into every crack imaginable.

Now this process won't clean a process room, you need to blast the dirty surfaces with something else. There used to be what was called Good Manufacturing Practices that the Federal Government put out that seafood processors followed. Now States have their own rules, and generally prescribe chlorine in the washdown water.

I don't know if the DEC in Alaska, for example, would go for cleaning entirely with ozone impregnated water and air, but it sure would be less toxic to the food going through the plant.

Colloidal silver is another one of these natural pathogen killing problem solvers that is overlooked in favor of distributing a chemical industry product. Remember that silver was used by the royalty in Europe to keep them from getting the black plague. The just didn't have the ability to make a silver product in a form that would keep you from getting a bluish tinge to your skin, hence "Blue bloods."

I used colloidal silver for awhile, and one effect, besides knocking out the symptoms of a flu, was the disappearance of my tennis elbow problems. At the time antibiotics were invented, there were about 35 different silver based products in the pharmacies. And remember that the pioneers on the Oregon trail hung silver coins in their water casks to prevent germs from growing.

Silver is great as a tooth filling material, the only problem with amalgam is that they mix the silver with about half mercury. And mercury is one of the most toxic substances to the human body. Why else did they warn us when we were kids to not roll mercury drops around in our palms?

Saturday, August 13, 2005

"A Partnership between Farmers and Consumers"

Now that's what I'm talk'n about. That's how you get high quality products and product forms that sell for decent money. They figured it out a long time ago in the contiguous states. Only a portion of the fishermen think of any possibilities beyond unloading their catch and washing down the boat, though. When fishermen voted to be partners with consumers in the Cordova, Alaska area, it turned out to be a landslide, in Presidential election terms. And it passed in Bristol Bay.

The title of this post came from the banner of the Ohio Farm Bureau. But it struck me as to how poingant that slogan is and the ramifications for fishermen everywhere. Remember the old Granges? They have old Grange Halls all over Oregon where I'm at right now. They evolved a long time ago to represent farmers' interests. During most of my career in Alaska I never saw an organization of fishermen anywhere close to the likes of the above refenenced web site. And I didn't know what farmers were doing, because living in Alaska makes it impossible to make the connection.

I did work on the connection between fishermen and farmers while working in Fisheries Infrastructure Development for the state of Alaska. I was introduced to the concept by the President of the Alaska Commercial Fishing and Agriculture Bank while I worked there, though. I do a lot of research on bottlenecks like this because that's what I like to do . But where does that leave fishermen who need to make the connection?

That's the 64 dollar question. Under Alaska law now, only 30% of the fishermen in a region are needed to organize a production association and tax themselves. A 1% tax isn't much to start up something like this. Maybe someone set this limit because it wasn't known if fishermen would ever have the business savvy to pull this off. And this small amount wouldn't hurt anyone if they went out and blew the money.

Notice it's not just the mega-processors I needle. No, it's just that fishermen are so darned busy already. 1% might be just enough to hire professional help, but they might not see that that's what they need. They eventually will though. But while they are organizing and learning, they might get boxed into a corner by processor quotas, new products made out of farmed salmon, and any number of land mines laid down by folks that would just as soon "keep them down on the farm."

Friday, August 12, 2005

Processor quota shares

Here we go again. Oregon's Senator Gordon Smith is forwarding a Bill that the whiting processors wrote to give them a secure share of the fish resource. I hate it when a special interest group can do that. I thought our representatives in government were supposed to think for themselves, and on a more altruistic plane than the rest of us scrambling to put food on the table.

And there's a bunch of draggers in Oregon that supposedly like the idea. Although I suspect that they might be like the guy in the Bible who sold his birthright for a bowl of soup. Short term gain, long term pain. If the draggers in Oregon were all in an association like the "growers association" model, it would be fitting for them to decide how to get the most for their "crop." And if that's giving "crop land" to the processing plant, then so be it. It's their kids that will have to live with their decision, not anybody else's.

Personally, I think the Justice Department got it right. Giving processors a chunk of the resource stymies competition and innovation. There's enough of that kind of thing going on already. It just isn't free enterprise. Besides going straight to Mommy goes over the heads of the folks that are charged with forwarding this kind of legislation if needed, the regional management councils. Not that they are so altruistic either, ie. crab plant owner shares in Alaska.

So where does giving out shares of the resource stop. To be fair you would need to give some shares to not only the couple of owners of a big processing plant, but to the owners of the trucking companies that haul the products away from the plant and everyone else down the supply chain. What makes the secondary processor so special? Nobody twisted their arms to make their investments in their plants.

The most important person in the whole supply chain, besides the fishermen,is probably the sales people in the fish section of the grocery store, or the chef in the restaurant, or next level processing plant that develops consumer friendly products for mass consumption, the second tier processors sure aren't doing much in those regards. The same one pound can of salmon since 1868? The same whole frozen fish?

The owners of fish processing plants have traditionally coasted at the expense of their business partners, the fishermen, who mostly get maneuvered into a corner so they can't do anything about anything. In practical terms, it looks like they keep the ex-vessel prices down with outmoded products so fishermen can't afford to organize. You ever see fishermen get together and mount an ad campaign?

The owners of the big processing plants really aren't so bad though. They make sure fishermen have jobs: Just Over Broke. I just think an organization like Tree Top, a production association of 1700 growers, could do a better job of eking the most value out of the fish and choosing business partners, not the government.

Seafood as collateral

Individual fishermen and groups of fishermen are breaking into shipping their own fish more and more. And the chances are still good that there are unscrupulous folks just waiting for an unwary fisherman to send his fish his way without proper tracking, whether by paper or electronically.

When I was buying fish in Juneau, it seemed like most fishermen had lost a load and then given up. There was a period there between when the Juneau Cold Storage closed and Taku Smokeries opened, that buyers were scarce around there. A lot of these deals were over the phone with little to no paperwork to tie down the handler on the other end. Many times the fisherman would hear, "I don't know what happened, I never saw the fish."

The best thing a fishermen or group can do is send the product to a bonded warehouse/cold storage. SeaFreeze is a good big public cold storage in Seattle. Although for small lots, a smaller facility might be better. In any event you'll have the Bill of Lading saying where it's going, then get a Warehouse Receipt when it gets there.

When the fish comes out of the warehouse they will issue a Delivery Order to the owner, and his bank if the fish is being used as collateral. The D.O. spells out who is receiving the fish or where it is being shipped to next. All movements are directed by the owner of the fish and documentation issued by the movers when it moves.

Banks don't like this system, because it is too laborious to monitor all the small reductions in inventory themselves. Alaska banks just don't do it because all the pack is in Seattle and they can't watch their collateral very well. Seattle banks just take a jaunt over to the sales office of the fish once a month to look at their books. If they trust the bookkeeper that is.

Alaska banks could feel comfortable about collateralizing fish if it is kept locally for reprocessing in the winter like Norquest does. Fish gets frozen, goes into a really cold van, goes back to the plant for smoking and whatever else they do to it, then back into another van. The loan officer could just go take a look-see as often as he liked.

Good collateral control also includes going to all the public cold storages and getting to know the staff. Because of my doing that I got a call from one of them alerting me that a processor didn't want them to issue Warehouse Receipts to match some vans. We had already advanced on Bill of Lading. We needed the W.R.s to secure our collateral.

It's cases like that, and worse, that has fouled the pack financing air for the new kids on the block in Alaska. But fishermen hold all the cards. They might not know it yet. When their fish is shelf stable and put in a container or warehoused by a third party, they can get a bank advance on future sales. They could swap fish for processing costs on the rest of their fish to do the initial processing.

An electronic tracking system fits the fisherman's livestyle a whole lot better. A GPS based system like the ones from Globalstar would be the cat's pajamas. For a fish shipper, this is great, because if he sees the fish stop for longer than a coffee break he can call whoever is doing the hauling and ask them what's going on.

Some smart people are trying to sort out all the technology now. That might ease the jitters for some folks. A lot of what fishermen are trying to do these days is going to take a lot of cooperation and just plain talking things out.

Wednesday, August 10, 2005

Chain's reaction

Change at Rhee Bros. is a constant, be it new products, new promotions, new marketing strategies aimed at luring new customers. As the consumer becomes "smarter and smarter," the food business has to keep up, Ahn says. If not, "they [food businesses] don't know how to survive."

We forget that the United States is still a melting pot of nationalities. I'm not a demographer, but I think I heard that folks with a Latin heritage will outnumber those with a European heritage before long. And our neighbors of Asian extraction now number over 11 million strong. Enough to have Asian sections in the grocery stores too.

This guy that started Rhee Bros. was positioned to take advantage of a demographic shift mostly by accident. Is the seafood industry in Alaska looking ahead at these shifts with products ready and waiting? I never thought I'd get excited about the prospects for the Alaska seafood industry, but I'm getting there fast. Part of the reason is the way we can gather information about conditions in the market-place now.

So the question is: Why target rich white folks, who are dying off fast? The Asians in this country have money, being as they are so upwardly mobile. They will pool their money to send one to law school or medical school, where a lot of other minorities will pool their money to buy a motel, mom and pop grocery, or a restaurant. Now that's not a good analysis, buy you gotta think about these things to sell seafood in the future.

You gotta give 'em what they already want, not try to educate them to want what you got.

4 Generations of Enges: Two War Horses, the author and a newcomer

Recovery rates and waste utilization

In an article I saw recently, a reporter wrote that the recovery rate on salmon is only 50%. This is hard to say in the overall scheme of things. It might be close if you only recover the meat, but different situation are pushing and pulling the figure up and down all the time. Keeping the roe in a normal fish freezing operation pushes up the recovery rate to maybe 62%. Saving the roe and discarding the fish pushes the recovery rate down to 12%. These are approximate figures only. Recovery rates vary by specie of fish, time of year, type of processing, etc.

If you figured in the salmon that are discarded because of lack of processing capacity and markets, in those areas where there are hatcheries, you would get the true recovery rate for the industry in the area. And that might bring the figure down, that adding roe recovery made go up. So in effect, you might be getting 50% recovery in some areas. Who knows.

Taku Smokeries, of Juneau, put a waste processing barge north of Sitka where a lot of chum salmon have been stripped for roe in the past. (I put the hyper-link in a recent post.) I suppose Sandro Lane is getting the fish mongers to pay him to get rid of the carcasses once the roe is out. The liquified fish is a developing market and why should Sandro go it alone. And maybe the whole thing is designed to do SOMETHING with the carcasses. The state has some obligation to allow roe stripping. They were the ones who built the hatcheries. Then when they discovered there were too many salmon for the market, like my dad and others warned, they dumped the hatcheries on the private sector for a song.

It would be great if Taku Smokeries could make some money with the liquified waste. Traditionally, that's not how by-products have been utilized though. The Alaska seafood industry is probably the last outpost of cutting the tongues out of the buffalo and leaving the carcass to rot. (Not to mention the by-catch issue in the Alaska trawl fishery.)

There's enough protein being destroyed in Alaska that the U.N. could run around in a processing ship getting it all and make football players out of all the men in Nigeria. Well, maybe not quite. But it's all quite a nasty little secret of Alaska's and it might come around to bite the industry one day. You know how word gets around, especially now with so many search engines on the Internet and the like.

But hope may be on the way in the person of one Peter Bechtel at the University of Alaska Fairbanks. He's the Waste Research man for the State of Alaska. He's working on utilizing the bones of fish right now. I'm sure he's got other irons in the fire as well though. But calcium is a real important nutrient for us. One in four men over 50 is going to have a calcium deficiency fracture sometime.

This is the kind of stuff you put in your business plan when you look for financing for a meat separator and bone processing equipment for your plant. This research needs to go from 0 to 60 in a hurry. One person isn't much to work on such a big issue. And he probably is just researching on the Internet. About this time I'd like to import that product research lab at Technical University of Nova Scotia I toured and give him an early Christmas present.

Product development work, whether for the fish or the waste, will go a long ways in getting those 150 Southeast Alaska gillnetters out fishing who just didn't bother one week in July. Or getting those Ocean Beauty seiners back out that are going to have to quit fishing this week. The story I heard was that O.B. was running out of tin to put salmon in, which can't be fixed quickly, unless another packer is willing to give some up.

Maybe they don't want any more canned salmon sitting around past spring though. Or have to dump it into lousy markets like the 99 Cent Stores, or another chain, the Dollar Stores. Maybe that's why the canned pack disappeared this spring. Selling to the Dollar Stores sure doesn't equate to making Marine Mortgage payments on fishing boats and sending kids to college.

Tuesday, August 09, 2005

Cold storage engineering, RFID tags

Providing specialized location optimization analysis, logistics, material handling and automation consultations to our distribution and manufacturing clients, Food Tech delivers a circle of services that is unmatched by any other company. Our engineers stay ahead of the curve on innovation, trends, and technological advancements, keeping you one step ahead of the competition.

I was going to go straight into talking about a great cold storage engineer we had at Whitney-Fidalgo in Petersburg once, but the subject gets real deep when remodeling or building from scratch. A cold storage is basically just one component of the supply chain that stretches from producer to consumer. Planning for components has to take into account everything along the way, even to consumer's taste buds.

Before a community and their fishermen can pull together to make a successful secondary production facility, there has to be consensus on how it is going to happen. The planning phase is no place to skimp. A look at the above web site will show all that is involved and a possible solution. I know folks in Petersburg were concerned that there wasn't anyone on the horizon to do this kind of planning, and they should be.

Actually the old "cold storage" is rapidly getting to be a thing of the past. They were designed to do the very minimum amount of processing and then ship the frozen carcasses out for someone else to worry about. The norm has been that the Seattle sales people didn't have a good "connect" with the production people or the consumer, so the frozen fish carcasses were sold off "as is." The traditional "connect" has been to join a traditional cold storage with a cannery.

I'm speaking of salmon mostly here, of course, and high volumes at that. There have been small plants that could service specialized fishermen, like longliners and trollers, or a small local fleet of seiners or gillnetters. The industry has been steadily consolidating into central processing by very large companies with tender fleets and boats with RSW systems. Fishermen just can't afford to specialize much anymore, to support a small plant that does just a couple of things.

The "cold storage" of the future will look more like a Hormel plant, with different things going in all different directions and the squeal going up the stack. Why not put in a waste liquifier right outside while you're at it.

You gotta research what all products you can get out of the fish before putting pen to paper, much less pouring concrete. Provide for future possibilities too. The competition is. Otherwise the fish might as well go to a company that is already at your level of imagination.

Getting back to the engineering of the plant facility, I'd sure like to know who decided to put quick-disconnect ammonia couplings on the plate freezers in Yakutat back when. So, you can't get too fancy either. Sometimes when I would put in a line I'd make to-scale paper cut-outs of the machinery and move them around on the floor plan to see how they would look. Lots of materials handling fundamentals, time and motion things, egronomics things, dimensions of everything thought of and unthought of.

But I wanted to tell the story of Byron Pollak, no relation to the fish, although we often wondered. Byron grew up in Hyder, a town in Alaska with a population of maybe a couple dozen people. He had a third grade education, but was a mechanical genius. It was a gift. He was a machinery maestro, social skills notwithstanding. He always did things by himself using that inate craftiness, and some schooling in heavy equipment.

One time he single-handedly pulled a piling back under the end of the cannery that was full of canned salmon. We had loaded some of the canned pack into a barge and when the tugboat operator pulled the barge away with one line still fast, we almost lost the whole back of the cannerey in the bay. The piling was hanging on the beam by a hair, but Byron pulled it back with a complex assortment of pulleys and levers.

You could get him to do the work of ten men if you bet him a fifth of scotch he couldn't finish a project in a ridiculously short amount of time. He threaded a 20 ton North Star ice machine into the top of the cold storage under such an arrangement one time. Got it up and in place and all plumbed in in ten days. It reminds me of a TV show I watched last night on how Henry Kaiser got building Liberty Ships down to ten days.

The key in these situations is proper incentive. Sometimes it's just showing off, other times it's reputation, (Keiser pitted one of his shipyards against the other.) but most of the time it is just the exact right incentive or combination of incentives for that particular person. It's going to be hard finding the right help, but I remember how well Rick Carr worked for me as an engineer and he had no formal training in refrigeration. Just lots of experience, starting by welding up aluminum herring skiffs early in his teen years. He was good with people, and liked sales too.

And to top it all off, a cold storage engineer will have to be really computer literate. If you can't think why, just read some of my previous posts, ie, one mentioning RFID tags. These may be a ways off, but inventory control is crucial since there are so many codes to put on boxes and bills of lading as it is. You're never going to get him to cut fish, he'll be doing enough already. These guys have always made about as much as the general manager.

The whole subject of engineering, from before the blueprints are made to getting good pressures in the refrigeration system, is heady stuff. It's not in a book and hopefully proponents of freezing operations (and that includes other processes as well) will do due dilligence, and I repeat, DUE DILLIGENCE, at the start rather than at the tail end.


OK, here's the scoop on Radio Frequency Identification as per a conversation with my tech support. PASSIVE RFID is often said to only work from six feet away, when in fact more numerous, and reliable, sources say it works at a distance of 30 feet. Of course you can get real expensive RFID tags that are ACTIVE and work from 100 miles away. (That might be a good thing to use on a whole Igloo. They have a habit of growing legs and not being where they are supposed to be.) (I still want to look into whether you can track it via satellite, which I suspect you can.)

The RFID discussion about China and Walmart involves using this technology on every cheap thing that comes from there to here. A frozen, headed and gutted, fifty pound troll caught king salmon is not in this category. However, "reading" that fish is hard to impossible when it's covered in frost and in with more frozen kings in a unit. Or even reading a taged wet-loc on a pallet load. But you could certainly tag the pallet if it's going to stay intact for any length of time.

John Borseth would say amen to that, if he is still around. I ran the warehouse at the cannery on Ship Creek in Anchorage for him when we put up 68,000 cases of reds. I was just a kid, still in college, I really miscounted the pack. Fortunately they tallyed it again in Anacortes, WA. Maybe RFID would have helped, but not when they opened one rail car in Anacortes and they had a flood of loose cans come out the door.

Monday, August 08, 2005

Mercury, smoked salmon, & self marketing

This is something I just gotta get off my chest. We get a lot of "scares" from a lot of sources that I don't think warrant a second of thought. I remember walking an FDA officer around a cold storage in Petersburg and he asked me where all the big halibut were going to. There was a mercury "scare" going on at the time regarding whale halibut. I just told him, Seattle. Like he didn't already know.

That scare went away and now we have the tuna scare. I've never been involved with the tuna industry, but don't believe they deserve what they are getting from "government warnings." The problem is, where is the fickle hand of the FDA going to land next? Is what industry needs is it's own testing equipment to put things in perspective.

I read an article once about just that kind of reality check and it had to do with mercury in fillings, which are about half mercury. The tests showed that the "atmosphere" in the average person's mouth with amalgam fillings was "off the charts" compared to the maximum allowable atmospheric mercury allowed in a factory building by the EPA. Of course nobody wants to tackle that one.

The point is, private industry has to be pro-active: debunking myths about it's products, making fair comparisons with competing products. Maybe Consumer Reports can have a hand in this. And that goes for the flavor comparison of wild caught seafood to farm raised seafood. Maybe they have already. If someone says something negative about your kids you want to get to the bottom of it. In general you go around bragging about your kids, right? We should be the same way with wild caught seafood.

Any Alaskan who has tried farm raised shrimp or farm raised salmon will tell you that they might as well be eating beans for all the flavor the farm "caught" variety has. Beans were never meant to be eaten in a pile on the corner of the plate with the potatos and steamed vegies on the other side. No, you put a ton of sauce on them, some hot sauce, melted cheese, and a thousand other things to make them a meal. Same with farmed raised seafood. They might have a place, but not center stage in my opinion.

In a fish quality workshop at the Marine Advisory program for us instructors, we got a nice little feast on smoked kings from around the state. Those Yukon kings were fine, even though the smoking techniques varied widely. We didn't have a smoked king from Southeast Alaska though. I grew up eating cold smoked troll or ocean seine caught kings. That's not something you see nowadays. Anyway, these smoked kings should be reserved for the $10,000 business lunches.

And don't kid yourself, these guys can afford it and they would appreciate it. They spend a lot more than their share of that lunch just flying in on their Gulfstream.

The point of all this is that fishermen shouldn't let anyone handle their fish to just "get rid of it." There are too many opportunities out there, and it's a lot of fun getting involved in the marketing. You just might get a ride on one of those Gulfstreams, sans the oilskins, of course.

Bonus Material:

Here's an article that looks to me like some folks are having fun marketing their own sockeyes. Of course you can see someone else is making a bunch of money adding value to it before marketing it to the customer. And to Scottish customers! I thought a lot of farmed raised salmon were coming from Scotland. My comment would be, sell 'em smoked salmon like we sell surimi to the Japanese. Just find out how they like it.

Here's an idea, drop the frozen fish off in the Midwest at a continuous smoking process plant and have it all smoked up in a couple of days. Well, the Scots probably like it cold smoked. Well, build a smoker in the winter with fisherman labor and a lien on future production like the big processors do. The cold storages still make money freezing the fish during the season, and the fishermen will get several times the price for their fish.

"The sale to the Scottish firm was sealed after representatives of the company attended a barbecue with fishermen and CISB board members earlier this summer at the mouth of the Kasilof River, Beaudoin said. The firm, whose named was not disclosed, plans to market the reds as a smoked product in retail markets in England, she said."

And here's something that strikes me as right on, considering that juniper berries are great in a smoked salmon brine. Pine nuts and salmon.

Saturday, August 06, 2005

"Rationalization" or "Company Store Policy"

This week marked a milestone in readership of this seafood industry news blog by Alaskans. They finally outnumbered the Washington sector of the Alaska seafood industry. Remember that knowledge is power and maybe now we're starting to see a real desire by Alaskans to do their homework. Remember in school, if you didn't do your homework, you just plain failed and had to take the course over in order to move forward.

Fisheries business folks can't do any less. I've been a fisherman and small processor so I know it's hard to keep up with the latest and run these kinds of businesses. I also know that there is some slack time, maybe not a regular lunch or coffee break like Seattle folks get, but here and there. Kind of like trying to remember to take your pills. Alaskans could spread the word about sources of good news, like this blog, so conversation within the industry isn't limited by lack of knowledge on the part of fishermen, the backbone of the industry and a huge reservoir of innovation.

An example of how backwards not having information and conversation is, can be seen in the Groundfish Rationalization debate they had in Kodiak. There was a panel at a big meeting to answer questions. I think the panelists were probably the folks who have an interest in the processing plants, or politicians who back the owners of the plants, to lock in the deliveries of fish to certain towns. Anyway the meeting was total chaos. Obviously there had not been any ongoing discussion from top to bottom. And I really smell a rat when hordes of plant employees write in to parrot management's views.

A handful of people want to chisel the decision in stone as to what distribution channel to run fish through. Then the fisherman/businessman has no chance to run his operation as a business. Individual initiative and the acquisition of business acumen to vertically integrate his operation, seek a more efficient distribution channel, or otherwise excell at catching and marketing his fish, is snuffed out and rendered moot.

Do fishermen end up like"collective" workers? I worked on a collective in Israel once, and it's strictly a survival thing. You don't hear of the equivalent of the "American Dream" in the Kibbutz system in Israel. So when you don't have a chance at the brass ring then you have a collective. Call it what it is. It's not "rationalization." That's a word that was conjured up by the shore plants to just slowly get everyone used to the idea so they can cook the fishermen before they know it. (I'm using the frog in the slowly warming up pot of water analogy again.)

Did the owners of the shore plants have this handicap when they stepped off their boats and started processing? No, of course not. You can see their "rationalle" though. It's called greed, fear of the unknown, laziness, and just plain bad business for a healthy industry. If they can pull this off, they don't have to be innovative in product development and marketing. Just like in the old USSR.

This will really back-fire on those communities and plant owners if this "company store policy" is allowed to spread. Stagnation will set in through lack of modernization, fishermen might just give up by having their heart for the business ripped out, profits will decline for everyone, and wages in the glorious shore plants will be so low nobody will be able to afford to work there.

These folks want to force the other fishermen/businessmen to have to do business with them through force of law, a major departure from the free enterprise system. It probably wouldn't hold up in the Supreme Court. It's a wild card with the local courts though, if politics is hitting on all cylinders.

Look for other different scams to crop up too, that the folks that support the status quo think up, to lock out fishermen getting together. Keeping fishermen apart keeps them from having an incentive to educate themselves and have a conversation. It doesn't take a rocket scientist to figure out that the way the industry has been run hasn't been taking care of things.

The "Company Store Policy" just "rationalizes" away an individuals right to better himself. If Alaska is going in a different direction, then a lot of business folks that might be thinking of locating in Alaska might want to know about it.

I'm glad that Rep. Ben Stevens took a recording of the meeting in Kodiak back with him. And I hope he sees it with his heart and not his head. Right now the forces "for" have all the arguments laid out, and have blind-sided the fishermen who are caught without many prepared arguments. So a meeting like the one in Kodiak will not be representative of the fishermen's position. If this panel was a court, a good judge would allow more time for preparation by the audience.

Many fishermen haven't thought about where they are going with their businesses, but that's what the Regional Seafood Development Associations are for. To help restructure the industry like the Murkowski administration and Legislators intended. These arguements should be shelved until the Regional Associations of fishermen have a chance to get together. It's like having the trial at four in the morning while the defendant is heading in for the eight o'clock scheduled court date.

Bonus material:

This is new to me and it looks like it might be new to the Alaska seafood industry. (This article) in Forbes bears passing on I think. Of course, if you put raw seafood in a paper based container that is to be cooked by the consumer, then you have to freeze it in a cold storage, which lowers your through-put. I don't know what the optimal freezing process for this kind of product would be. You'd have to ask the manufacturer of the packaging.

And here's one on the benefits of eating fish, written by the Mayo Clinic. Take note of the magazine and the web site mentioned, they are important for future reference.

In fact, I'll start putting various useful links at the bottom of my blogs from now on. Then there will be a permanent record of them in the Blog Archives that is easy for all of you to access.

Friday, August 05, 2005

Economic Development Projects in Alaska

This article about Economic Development Administration projects keeps getting threaded around. It just points out the need, in the seafood industry, for analysis of industry news by an industry insider. The projects listed in the article; Metlakatla cold storage revamping, St. George processing plant, Kodiak travel-lift, are great additions to Alaska's fisheries infrastructure.

But they didn't magically appear on the radar after the Secretary of Commerce showed up in Alaska as the article implies. I'm sure he paid a visit to Bernie Richert, the EDA Representative in Alaska, in Anchorage. And a year before that the proponents of these projects were getting their ducks in a row to apply to Bernie last fall.

Then Bernie works with these and a dozen other proponents to winnow the list down to the ones that are solid. I've been looking at the unwinnowed lists for years. And Bernie has been at it a lot longer there and knows how to develop a criteria list that fits the Alaska scene. Not that it's easy for him, it's not. You can never forsee all that can go wrong with a project either. 100% of the time, the proponents have not had such a project before either. There is a learning curve to make them successful, once built.

So, I guarantee it's pure coincidence that the EDA announced these awards "as soon as the Secretary got back from Alaska." I appreciate all different kinds of seafood industry news stories and we need them. We just need them tweaked for industry consumption, as opposed to general consumption. Industry might get the idea from the above referenced article that these EDA projects are spit out at the push of a political button.

You have to be a municipality to get an EDA grant. There has to be a good chunk of matching money, usually from the state on projects like these and plenty of sweat and tears on the part of the proponents, in addition to anything esle they can afford to throw in the mix.

The harbor project that was recently announced in False Pass started at least 14 years ago. False Pass had hired a ED director within a year of me meeting up with her at the State Office Building in 1990. Petersburg was looking at ways to get more water about that time and it took until 1998 or 1999 to get a dam and waterline built with EDA help.

As you see, even a years lag time would be a miracle of greased skids.

But keep in mind that municipalities aren't necessarily the most up to date on the needs of the industries in their boundaries. Often it is a knee jerk reaction, like in Petersburg, when they had two dry summers in a row.

And St. George has been wanting a processing plant since 1990 too. They had just finished their breakwater and harbor when I went out to the Pribilofs to look things over. You could write a book on the development of those two islands development efforts. And here's some final bonus material.

In the last hurricane to hit the Gulf of Mexico, they detected a 91 foot wave, as measured by pressure sensors on the sea floor. The article said what we know about Alaska storms. That the next biggest waves recorded happen on a regular basis in winter storms in the North Pacific. That they are truely hurricane force storms. Hence the saying, that in Cold Bay, if the wind ever stops blowing, everyone would fall down. And of course, the biggest wave recorded was a 1740 footer, as recorded by the trees being sheared off up to that height in Lituya Bay. Another story.

Thursday, August 04, 2005

Fishing Industry Resturcturing

This working group of the Alaska State Board of Fisheries has a tough row to hoe, let me tell you. They are trying to figure out how to even take proposals. Some restructuring may not go down too well with some, and I can see that they'll have to read the fine print in the Alaska State Constitution already.

I'm not going to make any proposals here by any means, and won't even comment on ones I've seen. I just want to help spread the word that they are fishing for ideas. Here's one link to information on the process.

Fishermen will have a lot of homework when they get back from fishing this season. The Regional Associations will be organizing, the Restructuring Panel will go back to work, some brick and mortar infrastructure projects will want to start fast tracking.

I'm reminded of days gone by when I'd hear about the planets about to line up. What that meant I never could figure out, but maybe there was some significance. I can more easily imagine that if all these goings on in the seafood industry lined up there might be some good things come of it. It's going to take a lot of participation to accomplish that though. I read a quote today that went something like this, "Either get in front and pull, get behind and push, or stand to the side."

I know one thing though, that if projects don't line up with the others, they won't be lined up. Simple enough. I think the thing to remember is that by lining up, a synergy develops that is greater than the sum. With the right teamwork in the industry, it should be able to shoot fish to consumers like out of a particle accelerator.

Here's another link to the Restructuring Panel that might be helpful too. (Click here) And one I found on the continuing, on-going, ever-present resturcturing by the North Pacific Fisheries Management Council resides here.

In Alaska it's common in "discovery" groups to collate all the information and just leave it as such. What's not common is for someone, who may be the Chairman of the discovery group or a Legislator, to actually run with the ball. It seems to take a disaster, like the ex-vessel value of the salmon fisheries to drop to one fourth of a decent value for anyone to take action. There are risks in taking action as I found out working at the State.

When I wrote my Small Processors Association white paper, and even demonstrated how it could work, I was ejected like a spent cartridge from a semi-automatic. Taking a stand is no way to get you kids through college. Not taking a stand is no way to run a railroad either.

On matters of science, I'm heartened that the NPFMC is elevating the status of the scientists. One report the State of Alaska put together in the 80s was called the Delphi Project. It was a compendium survey sheets that industry and government collaborated on. Some of the questions had to do with such things as the carrying capacity of the North Pacific. Most of us didn't have a clue on these questions. I was at CFAB at the time and the President of the bank got Bob Waldrop, representing the Board, and me, representing the staff, to fill out the report. I feigned vision problems, which in my first job looking at printed matter all day wasn't a stretch. But Bob, mostly, whipped throught that and as a later President of the bank said, it was just a compendium of guesses.

Man, I don't like to be guessing, and I don't think guess work has any place in developing programs and controls. And I don't think minor interests, whether from an industry sector, or government sector, has the depth to design something for the industry as a whole. By numbers, which in a Democratic system is the supreme commandment, fishermen and the small processors that they evolve into, need to be the ones that pull the strings.

I'm not talking about any particular project, such as the Board of Fisheries Restructuring Panel, at this point, but in general. I do think that when the Regional Seafood Development Associations get on their feet, and with professional managers, these folks will be where the rubber meets the road. They will be able to make the connection between resource management and the market-place. They will have their feet in both ponds. And of necessity, because keeping an Association alive is a 12 month a year job, the managers will have to be trained and experienced managers first, know processing and marketing second, and the fisheries third.

These managers will easily be able to make decisions because they will be the focal points of information from the public sector, the private sector, and academia. They will represent the interests of 99 % of the number of business people in the primary and secondary processing sectors. (Remember that crew members are independent contractors.) The plant workers are in a category by themselves, and the way things are going now, will all be working with green cards.

Wednesday, August 03, 2005

It's about control

Let's get down to the brass tacks today. I don't ever know what I'm going to write about until I stand out in the driveway in the morning looking out over our field on the edge of Dallas. It's quiet here, with no neighbors within ear shot. So today is what bubbled to the surface in a flood was what drives the distribution of production and marketing. And that's control of the product for marketing purposes.

I'll repeat what I've written before, information that's down in the Archives. I know there are only a couple of people reading the archives, because my traffic report gives me how long a particular viewer is on line. I can see too, that there are four of you reading my blog at the moment. Word of mouth, which is how you are finding out about my blog in Alaska, says that a real buzz is starting up. Besides I get e-mails from appreciative viewers and they are from some real movers and shakers.

Except for the loyal viewers in Sweden, Australia, the East Coast, and now out to Westward who are probably searching Blogger for blogs with key words they are interested in, which are in my Profile. I'm just sorry I don't have time right now to make blogs on some of the other things that beg attention like restructuring in the seafood industry does, because a lot of viewers just go on their way without reading.

Back to the point, "taking back control" was the thesis of the talk by John St. John who spoke on restructuring in the Florida citrus industry. They had the same problem, a lot of product, and wasn't getting to the consumer in a form they wanted it in. The canned orange juice was retorted and had a burnt taste. It was the same as up in Alaska, and probably all over the world where the secondary production and marketing is decided by people other than the primary producers.

These decisions are crucial to the financial health of the primary producers, but there is no working relationship, and there can't be by the nature of the arrangement. In the case of Florida Citrus Mutual, they got a state grant to start an Association (which was in the millions of dollars) and it was the Association that invented the product forms (frozen concentrate), processing techniques (shippingwhole oranges in ethelyle gas), and marketing strategies that we all experience today. It wasn't the processors who had the incentive to do this, and they weren't going to do it FOR the growers.

Another good example of successful restructuring is the formation of the Blue Diamond brand growers Association. Ray Wadsworth was the one who told me about them to start with. These nut tree growers were getting just a couple cents a pound for their almonds until they got together and formed an Association. They then had the resources to come up with a better extraction process and ended up getting 35 cents a pound. Again their business partners, the processing plants, didn't have the incentive to make any breakthroughs.

If you are serious about restructuring, sending kids to college, upgrading your equipment, getting out of debt or any other goal that requires a decent return on investment, go to this Blue Diamond site and poke around. There are lots of services for the producers, payment arrangements, ways to communicate with the Association management, etc. You'll be tremendously encouraged about the potential of the Regional Seafood Development Associations that are now in the works in Alaska.

The risk now, is that the Regionals in Alaska won't develop professional business plans that reflect the best of the Lower 48 models, and the fishermen will think they are hokey and not going anywhere. The great Alaskans who wrote the Alaska state Constitution had many models to look at and they did, adopting the best of them all. Alaskans won the fight for independence from the big canning companies in Washington D.C. in 1959, but they never won the battle in Juneau.

I don't want to kick into high gear yet on this, because the fishermen are still out fishing. But look at one more example, Tree Top brand apples. They are an Association of 1700 apple growers. They must have had excess production too, because they were able to fill an order for 57 million dollars worth of apples a year, for McDonalds. We've been told by ASMI that we couldn't sell to McDonalds or any fast food chain because such a market would suck up more fish than we could produce.

Well, a $57 million order is something the seafood industry could easily fill. Salmon or any other species isn't going to replace hamburgers any time soon. Salmon patty sales was the comparison that was used to shoot down work in that direction. It would probably be something like smoked salmon flakes in a green salad or something. Who wants to eat a salmon patty anyway? I never do. Salmon patties is the only thing that will utilize Alaska's predominant secondary product form in any quantity. There are even fewer people that want to eat salmon patties than the canned salmon they are made from.

But if the Seattle canning companies can get Juneau to buy into just promoting traditional product forms by default, by advertising "wild," then nobody can break into processing, because retorts and canning equipment are too expensive, and yields a low margin. Even though the margins are low, the Seattle packing companies do manage to keep control so they keep their jobs. And what jobs they are. They are well into the six figures, everything taken into account.

The point is, with the absence of any other large-scale marketing organizations for seafood in Alaska, this is the sorry state of affairs you end up with. More fishermen will have a chance to vote on what state of affairs they would choose, low fish prices and no say in marketing, or all the say in the world in marketing and good prices.