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VIEWS FROM ALASKA The covid trail

By Dan Lesh

he nation’s largest seafood producing state kept workT ing through the pandemic, but under di cult and constantly changing conditions. For at least nine months, retail seafood sales were up 20-30 percent above pre-pandemic levels. Those increases tell the story of high demand, but also of the hard work and sacri ce that kept boats shing, processing lines operating, and shippers keeping products moving.

To better understand how covid-19 is a ecting the industry, the Alaska Seafood Marketing Institute commissioned McKinley Research Group (formerly known as McDowell Group) to produce a series of surveys and brie ng papers.

Alaska’s winter/spring Bering Sea and Aleutian Islands sheries were already underway when covid hit in early 2020, limiting initial impacts in those massive sheries. Heading into the peak summer salmon season, processors and harvesters scrambled to set up new protocols and spent heavily to protect workers and communities. Sporadic outbreaks occurred, but sheries that were once in question were widely heralded as successful.

Our research indicates that Alaska seafood processors spent roughly $70 million in 2020 to mitigate the spread of the virus through quarantines, chartered travel and other measures. Seafood harvesters who responded to a separate ASMI survey reported spending an average of $9,350 per vessel on covid mitigation in 2020, while 82 percent said they expect covid-19 costs to be the same or higher in 2021. Uncertainty also resulted in fewer shermen on the water. Crew license sales data from the Alaska Department of Fish and Game show a 31 percent drop in commercial crew license sales from 2019.

Unfortunately, covid-19 cases exploded across the country at the end of 2020, just before the start of the 2021 winter/ spring sheries. Despite extensive precautions, including prework quarantines, chartered travel and regular testing, several of Alaska’s largest seafood processors experienced outbreaks. Rapid responses and expanded vaccine distribution contained and mitigated the spread of the outbreaks. However, because of the high costs of bringing thousands of workers for these winter sheries, as well as the response costs associated with outbreaks and mitigation measures that will continue throughout the year, the mitigation price tag for processors in 2021 is expected to exceed $100 million.

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The worst impacts of the pandemic were softened by government relief payments to businesses and individuals, but a patchwork of programs and inconsistency in access left many processors, harvesters, and coastal communities struggling.

Roughly a quarter of harvesters that responded to our survey reported receiving relief payments (excluding the Paycheck Protection Program) that covered their pandemic-related losses, with another quarter receiving relief payments not meeting that threshold. Two-thirds of seafood processors reported receiving some covid relief (excluding PPP), but those payments only covered an average of 24 percent of pandemic impacts. And none of the processors reported it covered more than 35 percent.

Added costs extended beyond shing vessels and processing plants. Expenses and logistical challenges piled up around the world for the seafood industry as the pandemic shifted consumer buying patterns and caused global cargo congestion. A particular challenge for the Alaska industry has been the covid-19 inspection protocols in the northern Chinese ports that are hubs for seafood reprocessing.

The abrupt foodservice closures in March 2020 created an unprecedented shock, with many seafood sales channels disappearing overnight. Species that could transition to the grocery store, online, and drive-through restaurants did well. Other products more dependent on full-service restaurants and cafeterias suffered, including sable sh, halibut, Paci c cod, and at sh, like ounder and sole.

Despite some species seeing strong prices in end markets, ex-vessel prices to shermen were a ected by higher costs, market uncertainty, and other factors. Preliminary data suggests Alaska’s catch was worth 20-25 percent less in 2020 compared to 2019. About half of that decrease was related to lower harvests (Alaska saw one of the lowest salmon runs since the 1970s) but lower prices also hit shermen hard, with more than 90 percent of those surveyed reporting covid-19 a ected ex-vessel prices negatively.

Operational challenges persist, and associated costs are stacking up to be worse in 2021. On the positive side, there is a stronger salmon forecast and increases in some ground sh catch limits. Booming retail demand did not make up for foodservice losses, but the pandemic helped introduce more people to preparing seafood at home.

Dan Lesh is a research consultant for McKinley Research Group. He lives in Juneau, Alaska.