Arctic Storm has beaten out American Seafoods for a lucrative piece of the Bering Sea pollock fishery. This is Arctic's flagship, the factory trawler Arctic Storm, at the pier in Seattle last month. Wesley Loy photo

Part of the growth strategy for American Seafoods, owner of the largest fleet of Bering Sea pollock factory fishing ships, has been to lease rights to catch Community Development Quota.

The quota belongs to six Alaska companies that hold a 10 percent share of available Bering Sea pollock, as well as other kinds of fish and crab, for the benefit of Western Alaska villages.

For years, the biggest of these CDQ companies, Anchorage-based Coastal Villages Region Fund, contracted with Seattle-based American Seafoods to catch and market its pollock in exchange for royalty payments. In 2007, Coastal collected $13.6 million in royalties, mostly from pollock catches.

Next year, however, American won’t have Coastal’s pollock business. That’s because Coastal has decided to lease its pollock – around 20,000 metric tons or about 2.5 percent of the entire allowable catch proposed for the Bering Sea next year – to a fierce American competitor, Seattle-based Arctic Storm.

Arctic Storm operates two factory trawlers that net and process pollock at sea, compared to American’s seven ships.

Now here’s the really interesting part: Coastal itself is the largest owner in American Seafoods, holding a 46 percent share.

The Highliner, naturally, asked Coastal’s executive director, Morgen Crow, what prompted his company’s jump to Arctic Storm.

“Just because we supply fish doesn’t mean we have to supply at below market,” he told me.

Crow also gave me this brief written statement:

“The lease for CVRF pollock expired at the end of 2008. In the judgment of the CVRF Board of Directors, the best offer we received for 2009 was from Arctic Storm, Inc. We look forward to working with Arctic in 2009 on behalf of our 20 member villages and 9,000 residents.”

OK.

So what does this mean for American Seafoods?

Loss of the Coastal pollock is sure to sting, especially as federal regulators prepare to cut next year’s overall Bering Sea pollock catch limit by 18.5 percent to 815,000 metric tons.

That cut, if approved, would mean the catch limit will have declined by nearly half since the peak of nearly 1.5 million tons in 2004.

American does catch other kinds of fish such as Pacific cod. But pollock, used to make products such as fish sticks and a protein paste called surimi, is the company’s bread and butter.

Until last year, American made financial disclosures with the U.S. Securities and Exchange Commission. These disclosures have stopped, but last we heard, the company had at least $181 million in high-interest junk bonds on the street.

Loss of the Coastal pollock might not be all the bad news for American. The Highliner understands another CDQ company also has decided to abandon American and lease its pollock to Arctic Storm.