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Not convinced that quality pays? Consider a cost-benefit analysis

August 26th 4:48 pm | Izetta Chambers Print this article   Email this article   Create a Shortlink for this article

I often have discussions with fishermen about the issue of salmon quality. When questioned about whether a fisherman has chilling capacity, such as RSW or insulated holds or slush bags for holding slush ice, the results are mixed. Those fishermen who are not yet on the quality bandwagon seem to have a host of excuses, some of them legitimate, and others that are more for the sake of argument.

Here are some of the most common excuses:

(1) I don't have a refrigerated seawater system (RSW);

(2) I don't have the money for installation of an RSW system;

(3) my boat is too small to put an RSW system onboard;

(4) there is no ice where I fish;

(5) ice is too expensive; it's not worth it;

(6) who cares if I ice and bleed my fish - they are only going to be mixed up with other poor quality, warm fish at the tender or plant.

Because most of these excuses seem to center around the issue of the cost of chilling your catch, here is a simple analysis a fisherman can run if they are considering quality improvements. I suggest that all fishermen who are currently operating dry boats go through this exercise. It's simple. First, add up all of the costs of a new RSW system - this includes the installation, equipment, and any kind of vessel modifications needed. Next make another column where you add up all of the costs of vessel upgrades if you are using ice.

This may be as simple as the purchase of inexpensive slush ice bags. (By the way, my colleague out of Bethel, Terry Reeve, knows where to purchase slush bags for around $200 apiece.) Next, figure out what your boat typically catches in a normal season by averaging your catches over the past ten years, so as not to overinflate what you can reasonably expect to catch on an average year. Because RSW and ice will reduce your vessel capacity somewhat, you might want to multiply the average catch number by 90 percent to account for the reduction in vessel capacity, just to be on the safe side.

Next, you might need to do a little digging, but find out what types of bonuses, if any, your processor pays for iced and bled fish. If your processor doesn't pay for quality, you might want to consider fishing for a processor that offers quality incentives.

I know that there are a number of processors that pay such bonuses, including Ocean Beauty, Leader Creek Fisheries, Peter Pan, and SnoPac. So, if your icing and bleeding bonus is between $0.10 and $0.20 per pound, depending on the cost of the system you chose, you can calculate the payback on a system by dividing the adjusted average catch by the quality incentive.

For example, a drifter who catches 100,000 pounds in a typical season, but with the addition of a chilling system may reduce their capacity to 90,000 pounds, will earn an additional $9,000 to $18,000 in a season just through chilling efforts.

Although there could potentially be a $9,000 opportunity cost associated with icing the catch, (through a 10 percent reduction in capacity) anything over 100,000 pounds would push you beyond the point where the capacity reduction is offset by the quality incentives. If a fisherman purchased a $20,000 RSW system, they could potentially pay it off in only a few seasons. If a fisherman purchased slush bags and insulated their fish holds, those improvement costs could be recaptured the first season they are implemented. Many river systems now have ice available either their ice barges or through ice on the tenders. Although each fisherman's situation is going to be slightly different, based on catch history, boat configuration, overhead costs, etc., both RSW and ice are viable options for adding value to your catch at the point of harvest.

An analysis conducted by BBRSDA board member Barney Johnson suggests that for average producers, using ice is more cost effective, therefore more profitable, than installing, operating and maintaining a mechanical RSW system. However, there are certain advantages of RSW over ice - namely, the freedom that an RSW system affords a fisherman, in that the boat does not have to fish where there is an ice barge or ice available for use on the boat.

The overall impact of individual boats chilling their catch has, and will continue to have a positive effect on the ex-vessel price of salmon. Let's all work together to improve the market outlook for Alaska's wild salmon resources.

Izetta Chambers is a Marine Advisory Program Agent with the Alaska Sea Grant Marine Advisory Program. She works at the University of Alaska Fairbanks, Bristol Bay Campus in Dillingham. You can reach Izetta at izetta.chambers@alaska.edu or (907) 842-8323.

 

Izetta Chambers can be reached at bristolbaytimes@alaskanewspapers.com, or by phone at 907-348-2449

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