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Finfish Focus: Alaska pollock

Global whitefish shortfalls drive prices higher

Lisa Duchene
November 01, 2005

Buyers can expect continued tight supplies and high prices as global shortages of other wild-harvest whitefish intensify pressure on a finite Alaska pollock fishery.

Demand for Alaska pollock is “high, high,” while supply is “short, short,” says Charlie Gibbons, president of Multi-Fish Seafoods in Mill Creek, Wash.

“Very short,” is how Joe Bundrant, VP of marketing and sales for Trident Seafoods in Seattle, describes the market. “I’ve been in business 20 years and I’ve never seen it like this.”

In late September, pollock prices were about 15 percent higher than last year and holding. European and U.S. buyers paid $1.25 per pound for delivered pinbone-out frozen blocks.

Deep-skinned fillets were priced at around $1.60 per pound. Prices of once-frozen fillet blocks were $1.20 to $1.25 per pound, and 2- to 4-ounce pollock fillets sold for $1.20 to $1.40 per pound.

In late September, Urner Barry listed prices of skinless, boneless, frozen-at-sea Alaska shatterpack fillets at $1.70 to $1.75 per pound for 2- to 4-ounce, $1.80 to $1.85 for 4-6s and $1.95 to $2 for 6-8s.

“Mama only has so much to spend, and because [pollock] is a belly-filler item, it’s a product she can afford to spend money on,” says Gibbons.

Since pollock is a price-sensitive product purchased primarily by a budget-conscious consumer, some grocery chains have reacted to higher prices by switching from once-frozen fillets to twice-frozen fillets for their 1- to 2-pound, private-label bags of pollock to keep the price down, says Gibbons.

Sobey’s, which operates 1,600 grocery stores out of Toronto, Canada, uses pollock as a price leader.

It has not had to raise prices of the frozen private-label pollock fillets and fish sticks it sells.

Pricing has been stable, says Mikael Schaltz, director of business development for consumer brands, and pollock continues to work well as an affordable, lower-priced item.

Sobey’s sells a retail grab bag of just under a pound of frozen, poly-bagged, vac-packed fillets for $1.99 Canadian. The chain will use about 320,000 pounds of frozen pollock fillets over the course of
the year just for its private-label business.

Growth in demand for pollock has come mainly from the stores in expanding ethnic markets, says Schaltz.

A stable supply
The Alaska pollock resource is in good shape, with a healthy, stable quota this year and forecast for 2006.

But demand is high and rising as the pollock and the surimi markets grow.

“We’re seeing more demand for H&G, tail-on or tail-off in Eastern Bloc countries and Russia,” says Merle Knapp, VP of sales and marketing for Glacier Fish Co. in Seattle. The growing middle class in China and Eastern Europe is driving demand for a moderately priced protein.

“[Pollock] is a fish that is consumed by the everyday person,” says Gibbons.

The Marine Stewardship Council this year certified both the Bering Sea/Aleutian Islands and Gulf of Alaska pollock fisheries as well-managed, and suppliers say that also may be spurring some of the demand, especially in Europe.

Certification adds value in the eyes of European wholesale buyers like Unilever — the world’s largest whitefish buyer and a co-founder of the Marine Stewardship Council — and, to a lesser degree, for wholesale buyers in the U.S. market, says Knapp. Some buyers simply like the ability to trace the fish back to the boat and harvest area, he says.

“As an industry, we’re prepared to sell to the segment of the market that requires or is requesting MSC certification, and it’s highly likely that soon we’ll have the MSC logo on our packaging,” says Knapp.

“I think the MSC [certification] is beginning to have an impact on demand. I think it has a long way to go before MSC reaches its goals with regards to consumer awareness.”

Trident is seeing good success with its first retail product carrying the MSC eco-label, says Bundrant, who would not say which product the company chose for the logo.

The Alaska Seafood Marketing Institute has produced a new set of pollock promotional materials for retailers, chefs and food writers highlighting pollock’s sustainability profile and its attributes as a versatile whitefish with a mild, sweet flavor.

The global shortfall
The U.S., Chinese and European markets are looking to pollock to help overcome several whitefish shortfalls around the world. North Atlantic cod production, Argentine whiting, Russian pollock and New Zealand hoki are all off.

Harvests of New Zealand hoki, which is also certified as well-managed by the Marine Stewardship Council, are restricted; stock assessments last year showed a decline in hoki, particularly in New Zealand’s western fish stock.

In October 2004, New Zealand cut the hoki quota by 44 percent, to 100,000 metric tons from 180,000 metric tons for its 2004-05 fishing year. Its 2005-06 quota was kept at 100,000 metric tons.

There is also less Russian pollock on the market, reportedly due to greater controls on the stocks, says Bundrant.

The annual catch of Russian pollock has dropped from 4 million tons to less than 2 million tons, according to Pacific Seafood Group, a West Coast seafood supplier and distributor in Clackamas, Ore.

Dynamics in the surimi market are also placing pressure on the Alaska pollock harvest in a couple of ways. Some producers of surimi blocks made from Alaska pollock are diverting more of their production into fillets due to higher prices, says Michael Faris, president of Shining Ocean in Sumner, Wash.

Another factor is a drop in the supply of a tropical bream harvested primarily by Thai fishing fleets and used to make surimi, says Faris.

Japanese buyers, who purchase 65 percent of global surimi production, call the bream itoyori and call the surimi made from it itoyori surimi. With an unstable supply of itoyori, Japanese buyers have turned again to Alaska pollock, says Faris.

Dr. Jae Park, director of the Oregon State University Surimi School, says tropical surimi production was increasing until 2004, when it plateaued at 140,000 metric tons.

It is expected to be the same this year. More than 70 percent of tropical surimi is made from threadfin bream.

Other species used are lizardfish and bigeye snapper.

Reasons for the declining harvests of alternative species include overfishing and rising fuel costs that have been it too expensive for a small-boat fleet to fish, says Park.

“The shortfall of tropical surimi [species] may bring Japanese buyers’ attention to Alaska pollock surimi,” he says.

The recent Hurricane Katrina disaster will also lead to more demand for analog seafood as a replacement seafood product, and that will continue to put pressure on the Alaska pollock market, says Knapp.

“That slack has to be picked up somewhere,” he notes. “Any type of an increase at all is going to have an impact, because we’re already fully utilizing the resource. If the plant needs more surimi, that raw material has to come from somewhere.”

Energy costs are also taking a toll in the pollock market, as on many markets. Harvesters and processors face fuel costs that could be as high as double from two years ago. Following Hurricane Katrina, shippers raised freight surcharges to 30 to 35 percent.

Higher fuel costs have raised costs at every step in the supply chain, says Bundrant.

“When fuel costs double in a year and a half and you use 25 million gallons, it’s painful,” he says.

Through Sept. 17, the U.S. pollock fleet had harvested 1.4 million metric tons in 2005 from the fishery. Pollock landings (through Sept. 17) totaled 57,735 metric tons from the Gulf of Alaska against a 2005 total allowable catch of 91,710 metric tons.

The Bering Sea/Aleutian Islands catch (through Sept. 17) totaled 1.34 million metric tons against a 2005 total allowable catch of 1.5 million metric tons.

Managers have set the 2006 quota right around 2005 levels but will likely tweak it when scientists deliver the latest stock reports. Quotas are tentatively set at 1.5 million metric tons for the Bering Sea/Aleutian Islands and 91,910 metric tons for the Gulf of Alaska. Those numbers do not yet reflect the National Marine Fisheries Service’s summer trawl survey.

Early reports on the NMFS sampling indicate an increase of 20 percent for the Bering Sea pollock fishery and a decrease of 10 percent in the Gulf of Alaska fishery, says Jane DiCofimo, senior plan coordinator for the North Pacific Fishery Management Council. Biologists will analyze the data and plug it into models to project the fishery’s population.

The council will likely tweak the 2006 quotas in November. No changes would take effect in the fishery until the end of February, so the Jan. 20 trawl “A” season will most likely open under the current projected 2006 quota.

The A season winds down at the end of March, and the B season runs June through the first week of October.

Any increase could be a glimmer of good news for pollock buyers but is unlikely to significantly ease demand.

“Prices are definitely not going to go down,” says Gibbons, “so if [buyers] know they’re going to need something for Lent, they should buy now, because [pollock] is not going to get any cheaper.”
 

November 2005 - SeaFood Business 

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