Commercial Fishing Business

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Commercial Fishing Business

• 1. Product to Sell, Buyers to Purchase
• 2. Supply Demand Controls Price
• 3. Costs Control Over Price
• a. Capital Expenditures
• b. Labor Costs
• c. Other Operational Costs
• d. Raw Material Costs

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Buyer Perspective

• 1. Excess Supply Forces Competition, Lower Prices
• 2. Relationship Between Price Quality
• 3. If Not Retail, Business Costs Dictate Price
• 4. Reseller Costs
• a. Capital Expenditures
• b. Labor Costs
• c. Other Operational Costs
• d. Raw Material Costs

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Retail

• 1. Supermarkets High Volume - Low Margin
• 2. Markets Low Volume - Need Higher Margin
• 3. Consumer Psychology
• a. unfounded beliefs bones, cant cook fish
• b. manufactured scares toxins in fish
• c. health concerns Omega 3 Fatty Acids
• d. coolness factor pristine Alaskan waters
• f. effect of news stories

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Alaska Fish Business

• 1. Capital Expenditures
• a. Physical Plant - In Remote Sites
• b. Processing Equipment
• c. Costs of Financing
• 2. Labor Costs
• a. Imported Labor - Transportation Costs
• b. Unanticipated Excesses or Stoppages

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Remote Siting Hunter Bay Cannery
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Remote Siting Port Bailey Cannery
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Remote Siting Port Roberts Cannery
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Remote Siting - Southeast Alaska
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Capital Equipment - Canning Retorts
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Capital Equipment - Fish Traps
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Capital Expenses - Beach Seine
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Capital Expenses - Deck Gear
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Labor Costs - Sanitation Inspections
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Labor Costs - Gear Maintenance
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Labor Costs - Primitive Conditions
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Labor Costs - Hard Work, Long Hours
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Labor Costs - Rugged Living Conditions
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Labor Costs - Overtime for Sundays
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Unanticipated Events - Disasters
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1964 Tsunami Kodiak
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Unanticipated Fishing Closure
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Unanticipated Volcanic Eruption
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Unanticipated Weather
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Total Loss
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Production Costs

• 1. Raw Material Costs as - low in Alaska
• 2. Labor Costs Very High in Alaska
• 3. Operational Costs -
• a. Problem - Fish Spoils Quickly
• b. Must Stabilize to Retain Value
• c. Jones Act - Transportation Costs
• d. Packaging Must be Imported

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Global Markets

• 1. Farmed Salmon vs Wild Salmon
• a. More Farmed Fish Available
• b. Farmed Fish Available Year Round
• c. Farmed Quality Flavor Predictable
• 2. Farmed Salmon Commands Higher Price
• a. King Silvers Valued in Niche Markets
• 3. 120 Million Pinks, Market for 60 M in Cans
• a. Need New Product Forms

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Global Industry 2005

• 1. Good Bering Pollock Season
• 2. Most Headed Gutted (HG) Frozen
• 3. Frozen HG Sold to China
• a. Secondary Processing in China
• b. Much Lower Labor Costs
• c. Quality Lower (2x Frozen)
• d. Sold in Europe, China US

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Global Seafood Industry

• 1. Wild Harvest from Ocean Will Not Increase
• 2. Increased Demand Satisfied by Aquaculture
• 3. More China Tilapia than Alaskan Pollock
• a. Frozen Tilapia in Bethel AK
• 4. Must Extract Greater Value from Same Fish
• a. Diversify Product Line -
• b. Handle Fish Flesh as Meats
• c. Extract Profit from Waste

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Next Week

• 1. Monday - Harvesting Regulations
• 2. Wednesday Friday -Groundfish
• a. Wednesday Pollock Cod
• b. Friday Flats, Halibut, Arrowtooth
• Blackcod (Sablefish)

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