More than 6 million cases of canned Alaska pink salmon are in processors' warehouses around the state. Some will be sold on the market, and others will remain in the warehouses, gathering dust. The governor has asked the U.S. Department of Agriculture to buy $30 million worth of the fish, but whether the deal will go through remains to be seen.
"The Alaska salmon industry has been brought to its knees by the large quantities of foreign farmed salmon that are glutting the U.S. markets as well as the downturn in the Japanese economy," Gov. Frank Murkowski wrote last week in a letter to the federal agency.
The state has not heard back from the agency yet, Murkowski spokesman John Manly said.
The Department of Agriculture has made surplus-reduction purchases of Alaska salmon almost every year since 1996, said Glenn Haight, a fisheries development specialist with the state Department of Community and Economic Development.
"What they've done with it in the past is put it in the school lunch program and the WIC (Women, Infants and Children) program, and I believe food banks," Haight said.
Last year the agency bought $15 million worth of fish, at a rate of $17 to $19 per case, which is lower than the $22 or so it costs to produce a case, he said. One case is 24 14.5-ounce cans.
Haight said when the state began selling canned salmon to USDA, processors made a profit, but that in recent years they have taken a loss to get rid of their surplus.
"There's problems with this program," he said. "USDA will say, 'We're going to purchase 1,000 cans in two weeks,' " and anyone who has cans of fish can put in a bid. If a company is in need of some short-term working cash, they'll dump the product at a loss."
In addition, because the USDA buys are public, sometimes buyers wait to see what the agency is paying and then uses those prices in negotiations for their own purchases, Haight said.
Even with those problems, many processors support the buy.
"We're losing money anyway. We need some help," said Stephanie Madsen, vice president of the Pacific Seafood Processors Association. "We don't have a problem selling fish, but we can't sell it for a reasonable price."
As of Jan. 1, 6.4 million cases were in the warehouses, according to seafood industry analyst Chris McDowell. Processors had sold about 2 million cases between September 2002 and January 2003, representing strong sales of canned salmon, he said.
But prices are still low, due in part to a strong salmon harvest and low prices in the canned-tuna market, he said.
"A record harvest is by definition rare, and that's what we've had the last several years," McDowell said. "At this point with a cumulative surplus situation we've been over a million cases in carryover inventory the last three years. The end result to fishermen and to the industry has been pretty detrimental."
It could just get worse. The USDA could make a smaller purchase this year, or not make a purchase at all, Haight said.
"Unfortunately, what we're hearing back from USDA is that the schools do not want this canned product," he said.
It's also possible the agency won't have as much money for the surplus reduction program as it has in the past. Kathryn Mattingly, a USDA spokeswoman, said some of the money is being diverted to other programs.
Masha Herbst can be reached at firstname.lastname@example.org.