The merger of the Alaska salmon and groundfish operations of Canada-based Cooke Inc.'s Icicle Seafoods and Seattle-based Ocean Beauty Seafoods means fishermen in the state are selling to an increasingly smaller set of buyers, and further complicating things, one of the companies is among the world's largest salmon farmers.
Alaska's fishing industry was not surprised about the merger itself, David Harsila, president of the Bristol Bay Fishermen's Association (BBFA), told IntraFish, citing Cooke's substantial presence in Alaska already with its ownership of Icicle Seafoods.
"The main point we would have is too much consolidation is always troubling," he said.
"The problem is you are putting too much power into too few hands, and that will affect the price of salmon in a fairly dramatic way at some point in the future."
Under the terms of the agreement between Cooke and Ocean Beauty, Cooke's Icicle Seafoods' and Ocean Beauty's wild salmon businesses will be brought together under a new company, OBI Seafoods Inc. The two groups' Gulf of Alaska groundfish operations will also be merged and operated by OBI, in which the two companies share equal ownership.
Ocean Beauty Seafoods' smoked salmon and distribution operations, meanwhile, will remain under its current ownership under the name OBS Smoked & Distribution.
A consortium of private businessmen -- Howard Klein, Mike Selby and Ronald Shaw -- will continue to hold its 50 percent stake in Ocean Beauty Seafoods alongside Dillingham, Alaska-based community development quota (CDQ) group Bristol Bay Economic Development Corporation (BBEDC).
Harsila said the fact that more hands-on executives are moving into the group is a positive.
"I don’t think our members are thinking this is a bad deal, now it's being run by a fish company, instead of by a coalition of investors," he said of Ocean Beauty changing its business structure.
Frances Bursch, a Bristol Bay fisherman who sells to Canfisco-owned Leader Creek Fisheries, told IntraFish the companies often base their price per pound for ex-vessel fish off of a price set by major companies, so consolidation can limit competition.
"What you’re being paid per pound can vary a lot," she said. "We never know even while fishing what the price is going to be. The more competition between companies that we have, the more options we have. Competition benefits the fishermen, even if it only increases the price by a few cents per pound."
Overcapacity in salmon processing, inefficient plants and erratic returns for some species have been major factors driving consolidation.
There are some positives about the deal, according to BBFA's Harsila, even if Cooke's overall success in salmon farming is well-known among Bristol Bay fishermen.
"Cooke is a relatively new company in the Alaska business of salmon, but I hear they are well-financed, well-funded and they have salmon markets, albeit farmed salmon," Harsila said. "Cooke wants to expand in Alaska, and they have the money to do it."
As a high-volume fishery, Bristol Bay fishermen also look to the major processors to ensure they have somewhere to sell all of their fish.
"Big companies have better financial backing, and they usually can process more fish and handle more fish," he said.
Harsila noted Silver Bay Seafoods, a fishermen-owned company, has maintained competitive prices as the industry consolidates, and has advocated on behalf of fishermen in the region for a number of years.
"They have been very aggressive and competitive in terms of acquiring the fish, the product, and paying their fishermen because fishermen are privy to the numbers there," he said.
Michael Jackson, who has fished in Bristol Bay for over 41 and serves on the Bristol Bay Regional Seafood Development Association's (BBRSDA) board of directors, told IntraFish the deal, while upsetting to some because it could impact prices, also "brings more certainty" to the fishery's future.
"The times are tough, there’s just not a lot of extra monies around," he said. "If you’re strained and put in the situation where one catastrophe can take you out of competition, you can reduce risk by broadening your base."
Jackson could not speak specifically to working for either of the companies involved in the merger. He sells both to Trident and directly through his own local company Fall Line Fisheries.
In a comment that highlights the importance fishermen put on the behavior of the seafood companies they choose to sell to, Jackson pointed out Trident has shown a strong commitment to the Bristol Bay region this year in particular, praising CEO Joe Bundrant's efforts in keeping the fishery safe.
"He has set the bar for safety standards for COVID-19 in Bristol Bay," Jackson said of Bundrant's planning during the pandemic.
A marriage of necessity?
Trident and Silver Bay loom over the Ocean Beauty-Icicle deal, and several industry members see the pressure from those two groups as a major driver for the merger.
Bothell, Washington-based Triad Fisheries President Mark Tupper told IntraFish the agreement was crucial for Ocean Beauty and Icicle to stay competitive.
"They’re all producing the same product," he said, noting the move will mean lower overhead for Ocean Beauty and Cooke and allow the companies to move a high volume of product more efficiently.
But apart from the major producers -- many of whom are facing the same challenging economics of the Alaska salmon sector -- smaller producers and direct-to-market fishermen have largely shrugged off the deal.
Tupper, whose company sells hook-and-line caught wild salmon from southeast Alaska, noted his premium salmon does not generally compete with the larger groups, and instead is targeted at relationships with low-volume, higher-end buyers.
Taran White, a fisherman on F/V Thunder and co-owner of Thunder's Catch Seafood, which in addition to direct-to-consumer sales also supplies some fish to Leader Creek, told IntraFish he doesn't believe his company will be impacted by the merger specifically.
"It doesn’t matter to us at all," he said, noting Leader Creek sells to the European market and to Japan, and has a different strategy than other companies.
Wild vs. farmed is still a thing
Alaska fishermen, however, have historically had a negative view of farmed salmon, and many still cling to outdated notions of how the fish is produced, and the impact it has on their work. In general, the two species don't compete for market share. Farmed salmon is available fresh year-round, while fresh wild salmon supply is overwhelmingly limited to a few months a year, and instead is primarily sold frozen or in cans.
Bristol Bay fisherman Leroy Straley is concerned about Ocean Beauty and Icicle conducting business-as-usual with rising coronavirus cases in the state and threatening the salmon fishery this year.
The companies should have waited on completing the merger until the COVID-19 pandemic is over, he argued.
"I don't like that there is a possibility that BBEDC has pushed the community to 'safely' have a 2020 Bristol Bay salmon season, so that they can sell their stock in Ocean Beauty seafood to a fish farmer," he said, referring to Cooke. "The sellouts are worse than scabs. It's always been wild versus farmed."
Cooke referred questions on the deal to OBI Seafoods CEO Mark Palmer, who declined to comment to IntraFish for this story.