Strong dollar and oversupply meant slow herring season in Sitka

Most years, the sac roe herring fishery in Sitka means boats filling the harbor, crewmembers filling the bars, seiners jostling for position within sight of town, and spotter planes in close formation overhead.

But this year fishermen voted to abandon the competitive fishery in favor of a co-op. That meant a much smaller footprint, with fewer boats, crewmen, tenders, and spotter pilots.

The reason? Low prices for roe, for starters. And a strong US dollar that makes all American exports more expensive.

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Jamie Ross has been coming to Sitka from Homer every March for more than twenty years. But this year, for the first time, he didn’t make the trip.

“I’m just really kind of devastated personally,” Ross says. “And my whole family. We just love coming to Sitka every year.”

Ross’s boat is the Shadowfax. (And yes, for you Lord of the Rings fans, it’s named after Gandalf’s horse.) He fishes for herring all over the state — in Kodiak and Togiak — but Sitka is his favorite.

“For me, fishing’s a way of life. It’s not just a paycheck and it’s not just a job,” Ross says. “I usually bring my family with me every year. My wife and kids have come with me since they were little babes in arms, literally.”

So how come this year, the Shadowfax stayed home? In a word, cost.

Herring prices are famously volatile. In the late ’80s and ’90s, Sitka’s sac roe herring fleet saw prices that regularly topped $1,000 per ton, according to numbers kept by the Alaska Department of Fish & Game. The price peaked in 1990, at more than $2000 per ton. (That’s about $3800 in today’s dollars.) Over the past 35 years, the price has averaged about $660 per ton.

But last year, the price was down to about $180 per ton. And Ross says the rumor was that this year, it could go even lower.

“For us to come from Homer, it’s typically almost $15,000 just in fuel, to get from Sitka to Homer and back,” Ross says. “And then figure insurance [is] maybe another $10,000, and groceries for a month and moorage, etc, etc…”

Ross did the math, assuming, say, $100 per ton.

“I’d lose like ten grand just to even go, let alone the permit payment on top of that,” he says.

So this year, the 48 permit-holders in the sac roe fishery agreed to work together — the first time the fleet has gone co-op because of the price. Each permit-holder was allotted an equal share, about 180 tons. But only about two dozen permit-holders actually made the trip to Sitka. Ross was one of those who stayed home — he’d get a percentage of the proceeds, but someone else would catch his share.

Someone like Joe Lindholm, the captain of the Star Shadow. Lindholm fished for himself and two other permit-holders.

“This is uncharted waters,” he said, speaking on the second day of the fishery.  “We’re trying something because the economics of the fishery has fallen so far down, and if we all came up here competitively and did what we’ve always done — and love to do, incidentally — it didn’t hardly make sense.”

“I mean, yes, there might be somebody that got a home run,” he said. “But there would be a lot of people that didn’t do anything.”

To understand the trends affecting Sitka herring prices this year, I called Gunnar Knapp, a professor of economics at the University of Alaska, Anchorage.  He heads up the school’s Institute of Social and Economic Research.

Knapp: Heckuva business, eh? I mean, you work just as hard, you have the same expenses…

Knapp says the key point is that there’s pretty much just one market for Sitka’s herring roe, or eggs: Japan. Almost all of Sitka’s roe goes to make kazunoko, a traditional New Year’s treat. In fact, the Sitka fishery was created essentially to fill that market, after Japan’s herring stocks collapsed in the 1960s.

That means the price in Sitka depends in large part on what’s happening across the Pacific. And right now, one of the things that’s happening is the rise of the dollar.

Knapp: So I’m just making a note… wow, huh, 121…17…

Knapp is looking at how the exchange rate has changed in the past year.

Knapp: My God. Ok…

And it’s changed a lot. Right now the dollar is up against most other currencies, including the Japanese yen and the euro, largely because the U.S. economy is doing better than most other economies worldwide.

Knapp says that last year at this time, one dollar was worth about 100 yen. Now, one dollar is worth about 120 yen. And that means that buyers have less, well, buying power.

“Those yen don’t go as far in dollars,” Knapp said. “If I am the buyer, and I’m sent by my company, ‘Buy a thousand tons of this,’ and I say, ‘Well, what am I authorized to pay?’ and they say ‘Well you’re authorized to pay x yen per kilo.’ [Laughs] If those yen are a smaller number of dollars, then, whoah! Less dollars.”

Then, there’s also a lot of roe on the market. Big quotas in Sitka and Togiak in recent years meant fishermen caught a lot of herring. Sandy Souter, of Alaska General Seafoods, says there’s about a year’s worth of roe already sitting in buyers’ freezers.

The two fisheries produce slightly different kinds of roe, but Souter says that at a certain point, it doesn’t matter.

“It’s a different product, but when you get into an oversupply situation, it’s just roe on the market,” Souter says. “It’s just eggs available for sale in Japan. So when there’s a lot of it, it just pushes everything down.”

And then there are the longterm trends.

According to anthropologist Shingo Hamada, who gave a presentation recently in Sitka, imports to Japan peaked in the late ’80s and ’90s, when the Japanese economy was booming. Businesses would buy kazunoko gift boxes in bulk to give to partners – and public officials – during New Year’s celebrations.

That buying declined with the slowdown in the Japanese economy and a crackdown on corporate gift-giving, Hamada says. Plus, kazunoko is a traditional food, and younger consumers eat less of it.

All this adds up to a weak market — and a more mellow experience on the fishing grounds. Joe Lindholm said it was actually kind of nice to take a break from “combat fishing.”

“By golly, I don’t think anybody got a ticket,” he said. “And nobody’s getting sued. And nets aren’t being run over, and skiffs aren’t being turned over, and dents aren’t happening in boats. I’d say that there’s a lot of good things happening right now.”

Or, depending on your livelihood, some not-so-good things. A less competitive fishery means less risk for fishermen. But fewer boats means fewer crew members; it means fewer tenders, because the boats are carrying their own fish to the dock; it means fewer spotter planes, because boats that aren’t competing for fish don’t need pilots overhead giving them an edge.

Jamie Ross says that’s one reason he resisted going co-op in the past.

“You’re talking a lot of people’s livelihoods here,” Ross says.  “There’s pilots, tendermen, crewmembers. People in the town. Just the impact that 50 permitholders and dozens of tenders and all the crewmembers and everybody coming into Sitka…that’s a big economic impact for Sitka as a town.”

The final price for 2015 herring isn’t yet set. Often, processors and buyers will negotiate until they see the results from all of Alaska’s fisheries – or longer.

And by the time Sitka’s fishery ended in late March, the fleet had some good news. Canadian fishermen in British Columbia only caught about half of their quota this year. That means less herring on the market, and, maybe, a slightly higher price than expected just a few weeks ago.

Meanwhile, Souter, of Alaska General Seafoods, says that consumption in Japan has held steady for the past three years. And Hamada says he’s seeing herring roe start to pop up in unconventional places – as an ingredient in ordinary sushi restaurants, for instance.

Ross is hoping that this year turns out to be an anomaly.

“Like anybody that has a connection with the land and ocean and a traditional way of life, I hate change,” he says. “It just doesn’t feel like spring, without going to Sitka.”