Fishing loans prove tough to land.

• Author: Ripley, Kate
• Position: Commercial Fishing Focus - Industry Overview

Feeling the bite of lower salmon prices in 1991, Alaska's fishing loan programs have been forced to renegotiate with more borrowers than usual.

The state's $68.8 million commercial fishing loan program received more than five times the usual amount of extension requests last winter, following a salmon season plagued by a glutted market and low prices. Meanwhile, the other agency lending money to fishermen and seafood processors -- the Alaska Commercial Fishing and Agriculture Bank -- is feeling the effects of the poor commercial salmon season as well.

An oversupply of pink canned salmon still sitting on warehouse shelves from 1990 pushed down prices by 30 percent in 1991 compared with the previous year, although some salmon species fetched better prices.

The state's loan program received nearly 600 requests for relief in making annual payments for commercial fishing boat and permit loans, says Martin Richard, director of the Division of Investments in Juneau, which handles the loan program. Usually, the division annually receives between 100 and 125 such requests.

Richard calls the 300 extensions for commercial fishing loans approved by the agency "a high amount." He notes, "What most of them are asking for is deferring their payments this year and re-amortizing their loan over the remaining year."

Most of the state's loan payments are due annually between August and December. Each loan extension request is reviewed on an individual basis, Richard says. The state looks at other sources of income the borrower may have, assesses collateral value and determines the likelihood for future payments.

Because the agency deferred $3.2 million in boat and permit payments that were due late last year, it has $3.2 million less available to loan out this year, Richard adds. "We anticipate that the loan demand in the upcoming year is going to be reduced also, and hopefully, those two things will balance out." According to Richard, the loan fund has close to 1,500 loans out worth almost $70 million.

In 1990, the commercial salmon harvest was valued at $550 million, but this past year dropped to $310 million, according to state statistics. Many of Alaska's commercial fishermen faced pink salmon prices of 12 cents a pound last summer, down from 1990's 30 cents a pound.

Most state loans carry a 5-percent late-payment penalty, so if other arrangements are not made and a payment is missed, it hurts, Richard says. "When you're talking an annual payment of...