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PUBLISHED: 4:57 PM on Wednesday, April 23, 2008
Fuel prices put squeeze on seafood industry
High fuel prices have idled 20 percent of Kodiak's trawl fleet - and hundreds of local seafood workers.

Seven of the 35 trawlers home ported at Kodiak are tied up at the peak of the flatfish season. At $4.65 a gallon for diesel, they simply can't afford to go fishing.

"The cost of fuel comes off the top of the trip. Then we have observer fees, gear and maintenance costs, insurances... It's just reached the breaking point. And the price of fuel keeps going up," said Jeff Scott, skipper of the 86-foot fishing vessel Dusk.

"For our last delivery we grossed $12, 546. The fuel cost was $7,000. Over 60 percent for fuel," lamented Al Burch, Dusk owner and director of the Alaska Draggers Association.

The months of April through June are the prime fishing months for arrowtooth flounder, rock sole and other flatfish in the Gulf of Alaska. Normally, the fisheries provide between 35-45 percent of the Dusk's annual income, Scott said. But fish prices have remained constant for two years, while diesel costs have increased by more than 40%.

So far the tie up means a loss of 10 million pounds of flatfish to Kodiak, Burch said, as well as down time for the resident seafood processing workforce.

"Every three days that the Dusk doesn't make a trip puts 160-170 processing workers out of work. That's just one boat - multiply that by six boats," he said.

Jeff Scott said fishermen aren't blaming the local buyers for not upping flatfish prices.

"In most cases they have already pre-sold the fish as frozen blocks. Their overhead is going up too and they're stuck," he said.

We're scratching our heads over what to do," added Al Burch. "Boy, it sure is discouraging."

That was echoed in Cordova where the cost of diesel fuel by the town's single supplier was $4.38/gallon, said fisherman Brent Davis.

Last month he began jigging for cod with his salmon boat, but had to give up after two trips.

"Since no one else is doing it here, I had to do some prospecting. But the fuel costs exceed what I am willing to spend," Davis said.

"I know that jigging for cod could be a viable fishery in Prince William Sound," he added. 'As a small time salmon fisherman who wants to expand into other fishing opportunities, I feel pinched by petroleum and will leave the cod to swim."

Fuel costs are "the biggest concern" for Cordovan Rick Ballas who fishes for salmon and halibut.

"If fish prices stay the same it's easy to calculate the additional impact rising fuel costs will have. It will come directly from my pocket, which is not very deep or big, for that matter," Ballas said.

By last week the average price of diesel had topped $4 per gallon, according to a AAA nationwide survey of 80,000 fuel providers, and prices are expected to increase.

Ballas said fishermen should receive "fuel breaks" from the federal government, similar to other food producers.

"If nothing is done to reduce fuel costs for commercial operators in general, it will be the American people who will feel the impacts the most in the end," he added.

"I seem to recall that farmers and fishermen receive a special federal tax break on fuel. Does the State have a similar rate deduction for those who need fuel for their commercial enterprises? If not, the issue might be worth bringing up to the next Legislature," suggested Phil Smith, a former state and federal fishery management pioneer.

Now retired, Smith offered this reflection: "I think it is absurd that Alaskans individually are suffering from the effects of extraordinarily high fuel prices, while we are collectively enriched beyond any rational expectation by the world price of crude - same phenomenon, same population, but hugely different effects."

Seafood perceptions

The collapse of the West Coast salmon stocks has made headlines in the Pacific Northwest, but it's not news worthy in the Mid-West.

"We hear very little, both in the popular and the trade press, about that issue. It just doesn't seem to be hitting the radar screen here," said Bob Goldin at Technomic, a Chicago-based consulting firm for U.S. restaurants and food suppliers for over 40 years.

Consumers don't regard salmon as "at risk" Goldin said, because "fresh, farmed salmon is all over the place."

"There is the perception that there is tremendous supply available due to advances in aquaculture," he said.

While it is often preferred, Goldin said the high prices for wild salmon limit its market appeal, especially in today's economy.

"You can buy fresh salmon at CostCo for $3-$4 bucks a pound," he said.

Overall, Goldin said the "seafood category" is showing good growth in the food trade, especially salmon. He credits the perceived health benefits, and said users are more comfortable cooking seafood and are menuing it in more ways.

Alaska seafood gets high marks for food safety and has a lot of appeal, but "price and stability of supply and availability are always questions and challenges in the seafood business," Goldin said.

Goldin agreed that all segments of the food and transportation chain face huge challenges from rising fuel costs.

"I hadn't really thought of it in terms of commercial fishing," Goldin said from his Chicago office. "Especially for the small fishermen, the costs for them are prohibitive. It doesn't even pay for them to go out."

Fuel fact

The diesel fueled internal combustion engine was invented by Rudolf Diesel of France in 1898. Diesel originally conceived the diesel engine to enable independent craftsmen and artisans to compete with large industry, according to historical sources. Diesel's first engines were built to run on peanut oil for the developing world, which had no petrochemical industry.


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