US consumption, revenues skyrocket
August 15, 2022
Alaska pollock on a wild ride
While many facets of Alaska’s seafood industry struggle to recover from the throes of trade tariffs, the pandemic, and more recently the war in Ukraine, Bering Sea pollock products are on a roll like they’ve never known.
Skyrocketing demand for fillets and surimi consumed domestically was borne of the pandemic while the war in Ukraine has done its share to bolster demand for U.S. product in the world market.
“Nobody’s ever seen anything like this,” says Craig Morris, CEO of Genuine Alaska Pollock Producers, in Seattle. “It’s not always going to be this way,” he adds. “But it’s an amazing period right now.”
To many in the industry, the nexus of positive market conditions domestically and abroad has been a long time coming for a product that has received short shrift against other species through the years. When the pandemic hit, it blocked the flow of product in and out of the world’s top trading ports. Alaska pollock was no exception to transportation boondoggles that beset just about every industry.
“For the last three years we’ve had some real challenges to the industry on the production side,” says Morris.
As an offset, Alaska pollock fish sticks found their way into the ovens and the air fryers of work-at-home, school-at-home families during quarantine and established a following that continues to increase domestic consumption through 2022.
According to a January 2022 report prepared for the Alaska Seafood Marketing Institute by McKinley Research Group, the pandemic impacted the markets for all food on a global scale in 2020 when restaurants closed.
While fresh and frozen seafood that had been distributed through foodservice businesses took a huge hit in 2020, grocery stores saw record sales, which continued above pre-pandemic levels as the restaurants re-opened last year.
A byproduct of the pandemic has been consumers’ preferences to source their food in terms of resource sustainability, and Alaska pollock’s eco-label blessings have spurred sales in the United States and in Europe.
Specific to fish sticks, the USDA purchased 2-pound packages of frozen fish sticks for the shelves of food banks and other outlets to ensure that youth had access to one protein-rich meal per day during the pandemic. Since then, the reconvening of schools and other institutions created even more demand.
USDA purchases of 17.6 million pounds of fish sticks hit the second highest on record at $57.46 million this year, up significantly from the $35 million purchase in 2021 and off the charts from the average purchases of around $3 million per year from 2011 to 2016.
For more than a decade, U.S. caught and processed single-frozen fillets faced stiff competition from fish that had been exported from Alaska to China in frozen blocks, thawed, reprocessed into fillets, frozen again, then shipped back to U.S. markets at a cheaper price. Besides that, large volumes of Russian pollock were shipped to China, where they underwent the same process. Some of it was sent back to Russia, and surplus volumes were distributed into the world market.
Recent progress in modernizing the Russian pollock fleet, however, has shifted the regime. Instead of sending Russian-caught head and gut product to China for reprocessing, the fleet now processes its own single-frozen fillets at sea, which means that increased volumes have been delivered to Russian ports and consumed domestically.
“Their plans to modernize their fleet actually predated covid,” says Morris. “They had been on a campaign to build factory trawlers like we have so that they could freeze product onboard.”
Though the original plan had been to crank out single-frozen fillets for distribution into the world market, including the United States, sanctions against Russia over the war in Ukraine has all but stopped its seafood trade in many countries.
“I think a lot of that once-frozen pollock that they were looking to put on the world market they’re now keeping and putting into the Russian Market,” says Morris. The absence of competing Russian product has given Alaska pollock “some breathing room,” he adds.
If that development isn’t favorable enough for the fillet market, Morris reports that this year’s fish have been running larger than in years previous, which helps the deep-skinned fillets and pin-bone-out (PBO) fillets fetch a higher price in premium markets.
No doubt, the rage over pollock fillets has contributed to a spike in demand for surimi. While part of the equation is that increased production of fillets has created a shortfall in supplies of surimi, other dynamics come into play. For years, surimi in the form of imitation crab has had a tough go in the domestic market against real crab, especially in times when crab was abundant.
With the recent closure of the red king crab season and the crash of opilio stocks in the Bering Sea, imitation crab has moved up in ranking – and price – against imported Russian king crab, which was selling for more than $300 per 10-pound box last winter.
“When you’ve got an imitation crab product sitting next to $50 a pound crab, there’s a lot of headroom for pricing.”
That headroom for more lucrative pricing provides revenue for further promotion of surimi and its versatility as a food product.
“It just becomes a perfect storm when you get that revenue to help people understand how versatile some of these products are, that have been there for so long,” says Morris.
Meanwhile, surimi in the world market seems to be enjoying equally strong demand. Exports to Japan added up to around 49,000 metric tons in 2020, at a value of $122 million, and jumped to 55,500 metric tons at $144 million in 2021, according to foreign trade data from the National Marine Fisheries Service. Early data for 2022 show 21,500 metric tons valued at $58 million.
Alaska pollock surimi shipped to South Korea in 2020 came in at around 59,000 metric tons for $157 million, and 73,000 metric tons for $185 million in 2021. So far, this year stood at around 25,000 metric tons for a value of $80 million.
Crunching out the numbers for Japan and South Korea, prices have hovered in the neighborhood of $2,500 per metric ton, but hungry markets could drive those values substantially higher by the end of the year.