SEAFOODNEWS.COM by John Sackton — May 15, 2014 — As we had predicted last year, Silver Bay has created an organization to take over the MSC client relationship for Alaska Salmon for the coming season from the Purse Seine Vessel Owners Association.
The group is called the Alaska Salmon Processors Association, and it is a non-profit registered with the state of Alaska.
The non-profits agent is Robert Zuanich, the Seattle lawyer who is also the managing partner of Silver Bay. Zuanich was also instrumental in getting the PSVOA to take on the client role, which was supported by Silver Bay at the time. Because of his involvement, it is reasonable to infer that Silver Bay's interest is the main force behind the new client association.
The Purse Seine Vessel Owners Association, which took on the clientship for last years season, was dealt a huge blow when the MSC certifier failed to include Prince William Sound salmon in its certification last year, saying instead they needed further time to study the fishery.
PWS salmon is one of the biggest fisheries for the PSVOA, and their board was clearly embarassed by what happened. In leaving the MSC process, the PSVOA reiterated their support for the RFM certification program put forward by ASMI.
Bristol Bay is shaping up as a wild-west shoot out this year, as Silver Bay is aggessively hiring away people from other companies, especially Trident. Dave Hambleton, former manager of Trident's salmon operations, joined Silver Bay several months ago as chief operating officer.
At the Brussels Seafood Show, several people reported that Paul Padgett, a veteran fisheries executive who has been with Trident for 29 years and recently retired, will also consult for Silver Bay.
The word on the street is that Silver Bay is paying astronomical amounts of money to get people who know something about salmon, and to try and jump start their Bristol Bay operation in its first year.
Silver Bay is a fishermen-owned salmon processor that started in Sitka in 2007. They have now expanded to four plants, in Southeast, PWS, and their newest, in Naknek in Bristol Bay.
Silver Bay mostly produces frozen, headed and gutted salmon for domestic and export markets, although they may be trying to produce more value added products in Naknek. Silver Bay says they are now one of the largest seafoods companies in Alaska, operating five domestic processing facilities throughout Alaska and the West Coast.
"Silver Bay's primary strength is in its combination of having a state of the art processing plant and favorable logistics to support its operations; competent management and key personnel; an established fish buying system; and ownership by fishermen who represent over 80% of committed effort," says the company's promotional material.
As Silver Bay ramps up their Naknek plant, there is also a widespread feeling that there may be a bidding war as Silver Bay tries to win the allegiance of harvesters who have never sold to them in the past.
Also in Brussels, it was reported that Silver Bay's financing model – like that of another upstart salmon supplier, Yehe Corp., is based on buyers advancing funds to Silver Bay in return for guaranteed fish. This model is risky, as the bankruptcy filing of Yehe attests, because if there is a change in the market buyers tend to renegotiate their contracts and leave their supplier high and dry. The other problem with this model is that it forces sales for cash or to customers with no long term committment, leading to downward pressure on the sockeye market greater than what might otherwise exist. The buyers using this model see it as a way to get the cheapest price salmon; not to participate in a long-term healthy fishery.
The fishermen who support this model see it as a short term way to get a higher dollar. In the middle, are processing margins which can dwindle to nothing or a loss in this environment.
In recent years sockeye has been an excellent performer for Bristol Bay fishermen and processors, but the key to making profits from salmon is not simply adaquate supply, it is also investment in sales channels, in product quality, and in the experience that allows for consistency year after year.
With an aggressive new entrant this year in Bristol Bay, many of these attributes are going to be tested.
This story originally appeared on Seafood.com, a subscription site. It is reprinted with permission.