Dick Grachek, A Report for AAFC , March 2010:
Proponents claim Catch Shares will stop overfishing, restore the stocks, create high paying quality jobs, and make the fishermen profitable and safe. A closer look at Catch Share programs in place for decades shows no data to support these claims.
Further consolidation or reduction of the commercial fishing fleet, a known consequence of Catch Shares and stated by NOAA during their push for implementation, will take the independently owned at sea fishing vessel operations and the dockside support businesses beyond their financial “tipping point”. This will cause the small, family owned, independent fishing businesses and their communities to collapse.
CATCH SHARES
WHAT IS A CATCH SHARE?
The New England Fishery Management Council is in the process of installing the Amendment 16 management scheme of Catch Shares or Individual Fishing Quotas (IFQ’s), or Individual Transferrable Quotas (ITQ’s). The various terms and acronyms for the program can all be defined by the concept of owned percentages of the Total Allowable Catch (TAC) by individuals, or groups, or corporations, or organizations, or cooperatives. A “Sector” is a cooperative of Catch Share holders.
This Catch Share management approach is actually an idea of economics, claiming production efficiency, and not one of fishery conservation. It is the private ownership of the shares of a natural resource. Catch shares are an extension of the faulty deregulated free market theories of economists such as Milton Friedman, which in this case have evolved into the concept of Free Market Environmentalism which is the approach of …ownership equals responsibility; or render a commodity profitable enough and somehow the owners and the mechanism of market capitalization will automatically stabilize and sustain that resource or industry. For a natural resource such as a fishery this thinking is based on the following principles:
- Private property rights encourage stewardship of resources
- Market incentives spur individuals to improve environmental quality
- Government controls and subsidies often degrade the environment
- Polluters should be liable for the harm they cause to others
This information can be found at www.perc.org , Property and Environment Research Center, a “think tank” located in Bozeman, Montana, which proclaims itself as having …“championed the successful approach [ITQ’s] to eliminating overfishing (see www.ifqsforfisheries.org).”
The Claim: Fish populations worldwide are imperiled from overfishing. The Remedy: Individual Transferrable Fishing Quotas will stop overfishing by making fishing operations more “efficient”, therefore making fishermen more profitable, and therefore they will become more “responsible stewards”, and therefore sustain the health of the resource.
A BRIEF HISTORY
Individual Fishing Quotas have been in existence since 1976 in Iceland, since 1986 in New Zealand, and more recently in the US, Pacific Whiting and North Pacific Pollack since the late nineties, and Bering Sea Crab in 2005. New Zealand and Iceland are most often cited as being in the forefront of developing catch shares or ITQ’s for their fishery; they’ve certainly been at it the longest and their programs will be looked at more extensively in the next section.
The New England Groundfishery had a brush with catch shares in 1995. The Staff of the New England Fisheries Management Council (NEFMC) concluded at that time that although these ITQ programs did improve the economic efficiency of some fisheries, there was little evidence that they improved the biological condition of the stocks. They specified that the Catch Share or ITQ scheme is not practical for the diverse multi-species nature of the New England Groundfishery. They also noted that groundfish stocks at that time were in trouble world wide, including those managed with ITQ’s and fishing mortality targets. Also they found that the management costs for this type of program were enough to drive certain governments (e.g., The Netherlands) to move away from Catch Shares or ITQ’s.
In New Zealand fisheries failures occurred in three species under this scheme, and Canadian east coast Cod and their other groundfish populations collapsed after ten years of IFQ management.
This information was enough so that in 1995 the National Marine Fisheries Service dropped promoting Catch Shares; but then resumed the push for them in 2005 which culminates today with the impending implementation of Amendment 16 Catch Shares/Sectors program. The question is: Why? Can any evidence for this renewed commitment by NOAA to Catch Shares be found in the stock assessments and TAC’s of fisheries that have operated for decades under this type of regime?
A CLOSER LOOK
Do Catch Shares Rebuild the Stocks?
A Review of Stock Assessments: The fisheries of Iceland, New Zealand, and U.S., which have operated in a Catch Share or ITQ program for at least 5 years.
Fisheries often cited as a successful examples of the ITQ management scheme are Iceland, New Zealand, and in the US, Northwest Pacific Whiting, Alaskan Pollock, Alaskan Crab fishery, Alaskan halibut and groundfish.
Certainty of successful stock rebuilding is professed when proponents are advocating Catch Shares and citing existing ITQ programs as examples; this paper will concern itself with a closer review of the TAC’s of those countries’ stocks to illustrate the effect (or lack of) that the ITQ’s actually have on the fish stocks. It will also look at the effects of ITQ’s on coastal fishing ports and communities.
This is not to claim that ITQ’s are necessarily a detriment to the stocks, although they could be; it is to claim that Catch Shares as a panacea for the fish and the fishermen is a marketing slogan more than a statement that is based on fact. It is therefore stated that ITQ’s in themselves are not the answer to the problems experienced by the fisheries and to claim so is misleading.
Iceland
(I am enclosing these Stats for Iceland because some are quite extreme and I didn’t want the impact to be lost in consolidation.)
Timeline of ITQ Development:
Introduced Individual Vessel Quotas for Herring in 1976; they were made transferrable in 1979.
Introduced Individual Vessel Quotas for Capelin in 1980; they were made transferrable in 1986.
Introduced Individual Transferrable Quotas for larger vessels for Demersal (Groundfish) 1984.
ITQ system for all fisheries, (small vessels exempt) 1991.
ITQ for small vessels as well 2004.
Landings of Icelandic Stocks for 2008/2009 and potential TAC’s for 2009/2010 for 31 species:
This information can be found at The Icelandic Ministry of Fisheries website:
www.fisheries.is/ Go to “Status of Marine Stocks” from left side menu.
Species 2008/2009Landings 2009/2010 Recommended TAC & % of + or –
Atlantic Cod 147,000t 160,000t + 9%
Haddock 103,000t 57,000t - 44%
Saithe (Pollock) 70,000t 35,000t - 50%
Golden Redfish 45,000t 30,000t - 33%
Icelandic Slope Redfish 25,000t 10,000t - 60%
Shallow Pelagic Redfish 2,000t closed fishery
Deep Pelagic Redfish 7,000t landings down no limit set until future survey
Greenland Halibut 23,000t 5,000t -78%
Halibut 564t no targeted fishery only by-catch
Plaice 6,700t 5,000t -25%
Dab 800t 500t -37%
Long Rough Dab 280t 250t by-catch only -10%
Witch (Gray Sole) 1,400t 1,600t but declining recruitment +14%
Lemon Sole 2,630t 1,800t precautionary TAC -32%
Megrim 197t closed fishery
Wolffish 14,700t 10,000t -31% and closed spawning area
Blue Ling 3,800t closure and closed spawning areas
Ling 9,300t 6,000t -35%
Tusk 8,200t 5,000t -39%
Anglerfish 3,000t 2,500t -16%
Lumpfish 5,700t Limited Data no TAC
Summer Herring 152,000t Stock infection no TAC
Herring 217,000t 238,000t +10%
Capelin no TAC Low level last 4 seasons no TAC
Blue Whiting 159,000t -53%-- int’l spawn stock down since 2003
Mackerel 112,000t +59% for international stock no TAC agreement
Smelt 8,900 8,000t -10%
Nephrops (Prawn) 2,070t 2,200t +6%
Northern Shrimp Inshore Closed in recent years Remain closed
N. Shrimp Offshore 1,450t down from 65,000t in 1995-1997 for 2010 7,000t
Iceland Scallop closed remain closed due to natural mortality, protozoan infestation
In Iceland and in some other areas as well, Cod are holding their own; the exploitation rate of 40% in 2000 is now at 22%. Fishing mortality has declined by 40% yet productivity is considered impaired because the seven most recent year classes have been below average with poor recruitment and low weight at age, most likely due to lower capelin abundance.
Most all other species for the 2009/10 fishing year have had the TAC significantly reduced, some drastically.
An interesting side note illustrating a perspective on the fishing industry which is not hostile but supportive is a press release from Einar K. Guofinnsson, Icelandic Minister of Fisheries and Agriculture, on January 19, 2009, announcing an increase of 30,000 tons in the cod TAC, and by way of qualifying the increase wrote:
“This decision has been taken not least in view of the economic difficulties facing the Icelandic nation, but also in consideration of positive indications as to cod stock size resulting from trawl service [surveys] of demersal species this past autumn. Those assessments indicated that the overall cod index was considerably higher than in preceding years.
The cod TAC for the next fishing year is also expected to be at least 160,000 tonnes.
Although rebuilding the cod reference and spawning stock biomass will be slower than planned, this decision is in line with declared objectives for sustainable fishing of cod and other commercial stocks in Icelandic waters.” (Underline emphasis is mine)
So the stock assessments look pretty good, and factoring in economic realities, they’re going to slow down the rebuilding process, confident that the stocks are in the process of achieving sustainability. That is common sense governance that U.S. fisheries have been deprived of for decades. Also worthy of note: it is Fisheries and Agriculture; not Fisheries and International Commerce and Big Business, which is what the placement of the U.S. fisheries amounts to in the Department of Commerce.
Cod seem to be on the rebound in all the fisheries reviewed; but they are alone; almost all TAC’s for the Icelandic fisheries reviewed have been cut. It would seem that there are other factors governing the health of the stocks besides the allotment of Individual fishing quotas. If the ITQ’s were solely responsible for any successes, than what about the rest of the fish under ITQ’s, why haven’t they rebounded? What is abundantly clear is that ITQ’s promoted as a panacea for all that ails the fisheries is either a grossly ignorant oversimplification of a very complex set of circumstances which effect the health of the fish; or such statements have a predisposition because of some external agenda that has little or nothing to do with the actual health of the fish or the fishery.
This is not to make the argument that ITQ’s are causing the decline in the fish population, but simply put ITQ’s are certainly not necessarily helping the stocks as they are purported to do.
New Zealand
Fisheries statistical information was found at The New Zealand Ministry of Fisheries website: www.fish.govt.nz “New Update for Status of Stocks”, September 2009
The New Zealand fisheries have been under ITQ’s or QMS’s (Quota Management Systems as they are known in New Zealand), since 1986. The results are mixed concerning the sustainability and health of the fish. According to the Ministry of Fisheries’ statistics out of the 117 major commercially harvested stocks evaluated that are in the QMS, 79 are near or above target levels while 38 are not. The report goes on to disclose that of the 117 the number of stocks depleted or overfished is 18, not depleted, 77; while 8 stocks are collapsed and closed to fishing, orange roughy and scallops among them, and 19 stocks are overfished.
The Orange Roughy Fisheries of New Zealand and Australia (a story by themselves) were on ITQ’s since 1986 and 1989 respectively. By some accounts the stock is now at 10% of what it was estimated to be before a market developed for the fish, whether or not that figure is accurate is another question; but it’s safe to say that the ITQ scheme did little to sustain the fishery. The brilliant ITQ strategists failed to take into account the fact that the fish for which they were advocating ITQ’s have a lifespan of 120-150yrs and spawn at 30 years of age. As a species, they’re just a bit sluggish on the rebound. Clearly there’s more to management than marketing shares of the TAC; it also helps if something about the characteristics of the fish is known. Each fishery is unique, and some are more complex than others, such as the New England Multispecies Fishery where many regulated species inhabit the same area.
They don’t seem to greatly emphasize the ITQ system part of their management program; although it has been used for almost all their fisheries for the last 26 years. The New Zealand system is seen as much as an “input controls” system (i.e., restricting how, where, and when fishing is carried out, days at sea, and closed areas, etc) as it is an “output system” (or limiting the amount of fish taken, TACs and ITQs). They use both; and do not make any claims of either being a panacea. In a comprehensive study titled, “The historical development of fisheries in New Zealand with respect to sustainable development principles”, http://www.ejsd.org/ Archives, volume 1,issue 2, Sustaining the Seas, Dr. Mark T. Gibbs, the Stream Leader of Aquatic Resources Monitoring and Modeling at the Commonwealth Scientific and Industrial Research Organization, concludes that although he thinks that they are probably a good idea, after 26 years of ITQs in New Zealand he writes with a sense of honesty and reality in the conclusion ,in fact, the very last paragraph of the paper on p31:
“It therefore appears that ITQ regimes as presently practiced are neither a necessary nor a sufficient condition to ensure sustainable development. However, at least in the case of New Zealand, they have been a major milestone on the pathway that ultimately hopes to achieve sustainable fisheries.”
This, after 26years of ITQ’s, an honest appraisal can only offer the ITQ pathway as an ultimate “hope” to achieve sustainability.
U.S. Fisheries: Pacific Whiting, Alaskan Pollack, Crab, and Halibut
The Pacific Whiting Fishery, in ITQ’s since 1997, is owned by four companies running ten vessels; their TAC for 2009 has been cut by 50% by the Pacific Fishery Management Council, alleging declining stocks.
The North Pacific Pollack Fishery has been in ITQ’s since 1999. A huge fishery in terms of landings, it accounts for 35% of all US landings and is worth billions. The bottom line is that the fishery is in the hands of a powerful few and the TAC was reduced by 29% for 2009 for alleged stock decline.
Since 2005 the Bering Sea King and Opilio crab fishery has been in ITQ’s, or “Crab Ratz” as the rationalization of the fishery is affectionately known to the fishermen involved. The TAC’s for these fisheries have not increased in recent years.
In Southeast Alaska the Red and Blue King Crab fishery did not open and the biomass is at its lowest level in sixteen years. Halibut fishermen in this area have seen their TAC decline by more than half in the last five years.
It is not argued that ITQ’s or catch shares are causing the decline in TAC for these species; or that a declining TAC is necessarily an accurate indication of declining fish populations. It is argued, however that there is no evidence in these assessments to indicate that Catch shares or ITQ’s have any demonstrable beneficial effect on the fish stocks. The Catch Shares or ITQ scheme is just that, an economic scheme to produce a new tradable commodity and a new path for economic expansion, --- wealth for a few investors with good timing (or connections).
Any management program that uses Catch Shares or ITQ’s still needs to use a Total Allowable Catch or TAC in order to manage the stock populations. The TAC’s were cited above only to illustrate that the claim for ITQ’s or Catch Shares as having a profound beneficial effect on the health of fish populations and therefore a benefit to the fishing community cannot be statistically supported; and the opposite seems true, most TAC’s show a decline over the years. Fish populations have increased and declined over the years with apparent disregard for the management regime in place. What effects fishing mortality is TAC and trip and daily catch limits not who owns what percentage of the TAC.
The report, “Updated Status of New Zealand’s fish stocks”, September 2009, begins with the statement:
“In New Zealand, setting and adjusting Total Allowable Catches (TACs) and/or Total Allowable Commercial Catch (TACCs) to limit annual catches is the primary mechanism for managing our fisheries. This is generally thought to be the most effective management method worldwide.”
Do Catch Shares rebuild the stocks? NO. Additionally it is only common sense to understand that if the resource is owned by absentee investors (“sealords”) there will be far less good stewardship involved than with a publically owned resource, procured by local fishermen who are accountable to the local consuming community.
Catch Shares are nothing but more faulty Milton Friedman free market economics. Consider what's already been privatized and corporatized and market capitalized: Schools, Prisons, Energy, War, farm food; and look at the corporate track record in those areas: Enron, Exxon Valdez, Halliburton, Blackwater, the US has the largest prisoner population on the planet, Judges taking kick backs for populating juvenile prisons, e-coli and poison peanut butter, etc. After fish become tradable commodities, why would we think the fisheries resource would be handled with any more integrity and enlightenment by the corporate "Funds" investors, that are licking their chops as we speak? (See Festa courts Milken, Gloucester Daily Times, June 30 '09)
What will be the effect of being privatized, corporatized, commoditized, and derivitized on the ocean and its inhabitants (both finny and human)? Has free market, profit oriented, corporate stewardship improved the health of anything it has touched? Consider the current state of the world economy after the deregulated free market “profit is all that matters, it will float all boats” economic policies of the last decade were so vigorously and consistently applied to our financial institutions.
CONSOLIDATION
WHAT IS CONSOLIDATION?
Does Consolidation through Catch Shares Increase Profitability and Safety for the Fishermen?
Consolidation is fleet reduction; and is a known consequence of Catch Shares. In fact fleet reduction is a stated goal for the fisheries of the ENGO’s and NOAA. Consolidation is their answer to their own sound bite, “…too many boats, chasing too few fish”.
Consolidation results from commoditizing a resource into individual quotas or Catch Shares because the allocation process is so flawed it can for instance, cut out single license holders from receiving a viable allocation. In addition the mechanics of the allocation such as the “qualification period” on which the percentage of the overall catch is based, might entail a period when the catch history of a license was in the hands of a previous owner who could have had a fleet of boats and fished each one at various times, but might not have accumulated a decent total catch history for any one of them. Accurate government agency record keeping in this process is crucial; NOAA/NMFS has admitted its allocation data is flawed.
Of course if the overall TAC allotted by NOAA is not reasonable, then all but the largest allocation holders will go down the drain.
WHY CONSOLIDATION? WHAT IS THE RATIONALE?
The claim: Fish populations worldwide are imperiled from overfishing. The remedy: Individual Transferrable Fishing Quotas or Catch Shares will stop overfishing by making the fisheries more efficient.
Efficiency is a mainstay in the argument for consolidation through Catch Shares. Economists and the free market environmentalists talk about more efficient fisheries. What exactly do they mean by this? They mean cheaper production costs and more profit i.e., less people, less jobs, fewer boats, and more production, ---usually fewer but larger factory vessels. In the case of aquaculture it entails the centralized raising and feeding or industrialized mass production of fish on fish farms.
The World Bank’s Global Program for Fisheries (PROFISH) has an ongoing study of the efficiency of the world’s fisheries. It is called “The Rent Drain Project”. “Rent” is a term in economics which essentially means the profit or net economic benefit from a property or resource with the connotation of not being involved in the actual “hands on” production process.
The study also has the title of “The Sunken Billions. The Economic Justification for Fisheries Reform” in which the specific countries’ fisheries are studied and advised as to their “inefficiency”, usually citing excess fleet capacity as the culprit and recommending reductions of from 40% to 80% in the number of fishing vessels. This would increase consolidation, therefore efficiency, to the level where governments would not see their “rent” or profits from the resource being drained by small privately owned, community based “inefficient” fishing boats.
In other words, by extracting rent from our local fisheries through consolidation, the allocations would pay dividends to individuals or funds that own, but don’t enter into the hands on production.
This is Wall Street investor mentality: exacting profit through buying and selling shares of production or catch without doing the work involved; without touching a fish. Catch Shares and this entire system have nothing to do with the health of the fish or the fishery. Wall Street is hungry for a new investment tool, a new derivative package.
This system leads to overcapitalization in the fishery, not as money flows to the vessels and fishermen, but as it rattles around among the investors, and constantly increases the price of buying the right to catch a pound of fish, until eventually the undercapitalized fisherman is priced out of his own business.
Catch Shares essentially render a fishing license worthless. They ultimately will allow outside or non-license holders to own and collect “rent” from the fish poundage landed; and the license then becomes nothing more than the opportunity to do the back breaking work while someone else collects the rent or the profit.
In the days-at-sea effort control system, fishermen can buy and sell each other’s right to fish for groundfish species, but it all stays with the license holders. Catch Shares will open up the actual ownership of the pounds of fish to outside investors i.e., “outside” of the licensed fishermen.
These Catch Share or ITQ concepts are based on academic theories of economics and business, written by the professors at universities such as University of Rhode Island, University of British Columbia, and University of Iceland. Many of these university departments are supported by grants from environmental organizations which are hostile to fishing, and doing the bidding of the funding parent corporations, which have various agendas all aimed at increasing their profit margins. Many of these economic theorists know little or nothing about sustaining the resource or the welfare of the fishing communities dependent on that resource.
Some of these academics have the title of bio-economist, or resource economist, but it’s clear from the sometimes devastating effects of these theories out in the world, that the theoreticians don’t know much about the fish and even less about the fishing industry.
In British Columbia fisheries leasing fees or the “rent” for catch shares (the privilege to catch the fish) can take up to 70 to 80 percent of the value of the fish that come out of the fish hold.
For a cogent statement of an Icelandic economist’s “interest” in the fisheries, see Ragnar Arnason, Prof. Dept of Economics at the University of Iceland, “Iceland’s ITQ system creates new wealth” http://www.ejsd.org/public/journal_article/9 .,
SOME EXAMPLES OF CONSOLIDATION
In New Zealand today Eight (8) Fishing companies own 80% of production and the value of the full fishery quota is $3.5bn. There are 2200 individuals and companies that own quota, so if eight companies own 80% and even if each company holds several licenses, then at least 2000 individuals and companies own the remaining 20%. That’s some distribution of fish; and also makes one wonder about who will have the political clout and the price setting ability.
In the North Pacific Pollack Fishery cooperatives were formed by large catcher processor vessels. They were exempted from the antitrust laws through the American Fisheries Act of 1998 (AFA). The offshore fish are caught by a handful of catcher-processor vessels (factory ships) and 3 motherships that handle product from 20 additional catcher vessels. The inshore fishery consists of 5 processing plants and 80 catcher vessels delivering to the plants. It is not important to go into great detail regarding the many and complicated administrative difficulties and controversies of this type of arrangement, but just to name a few: the anti trust or monopolistic, and hence price setting nature of the factory ship cooperatives create inequalities between them and the independently owned inshore fishing vessels and processing plants; then comes government micro (mis)management, as usual, through regulations in the AFA, with inequities and market destroying consequences. The common pool fishermen’s livelihoods are controlled through price manipulation by the large factory ship cooperatives and the relatively few processing plants. The bottom line is that the fishery is in the hands of a powerful few, with market destroying price setting powers.
The Pacific Whiting Fishery, in ITQ’s since 1997, is essentially run by four companies fishing ten vessels.
The Bering Sea King and Opilio Crab fishery rationalization has shut down the fishing operations of 200 boats (there are 68 remaining) and has cost an estimated 1200 fishing jobs. Kodiak is said by the locals to be “dying”.
In Canada’s halibut fishery it is estimated that since the installment of ITQ’s, for every dollar that the boat earns 70 cents goes to the cost of leasing the quota for those fish caught. Essentially this triples the overhead cost to the vessel owner, the captain, and crew. Where is the increase in job quality, and profitably, and safety in that? The fleet was reduced by 50%.
ITQ’s do however have a profound effect on the fishing communities that have operated under such a regime. Vessel, captain and crew shares have decreased on average by 50%. When profit margins are decreased by that much, there is less incentive and funding for upkeep and maintaining vessel safety equipment.
Our fishing regulation approach seems dominated by science, mostly economists and biologists; but there are people living amongst all these theories. Catch Shares or ITQ’s do have an effect on the fishing community, on people, and the effect is negative. Catch Shares have nothing to do with the common good, or public purpose, security of the food supply, safety of those at sea, or the health of the resource.
Do Catch Shares increase profitability and safety for the fishermen? NO.
COUNTERPOINT: THREE STUDIES
Although there is a paucity of attention paid to the socio-impact of the Catch Share scheme, below are a few studies that provide some balance to the largely unsupported talking points of the proponents. The entire issue of Catch Shares or ITQ’s should still be in the debate phase.
Eco trust Canada outlines eight potential trouble spots in a paper aimed at helping Obama’s US Task Force on Catch Shares avoid difficulties they’ve already experienced in their ITQ experiment. They don’t seem to be listening.
The British Columbia Fishery ITQ management regimen has been held up as a model of success by Catch Share proponents and has been in effect since the early 1990’s. Here is a report by a Canadian Environmental NGO, Ecotrust Canada; they apparently have not been adulterated by corporate grants. They seem not to have lost their integrity and they report here on the realities that BC fishermen have faced over the years. Realities which run counter to the marketing pitch of Catch Share proponents’ media campaigns. In the words of the report, “A cautionary tale about ITQ fisheries”, http://www.ecotrust.ca/fisheries/cautionarytale front page, 2nd paragraph:
"Debate about ITQ's is often polarized and fuelled more by ideology than by reality. Proponents hail ITQ's as a solution for both conservation and the financial ills plaguing the fishing industry. However, too many people-- including some environmentalists--accept exaggerated claims about ITQ's without clearly knowing the facts. Downplayed is the critical role that sound science and good governance- that is, inclusive, transparent, co-management between government, and industry and stakeholders- plays in ensuring the sustainability of fisheries."
The report discloses 8 lessons "... learned from the practical experiences of designing, implementing and managing ITQ's in BC."
It is worth listing the 8 lessons here since they are in direct contrast to the latest talking points blog released by a principal proponent of the catch share scheme, the Environmental Defense Fund, www.edf.org titled “NOAA’s New National Catch Share Program: An investment that makes (dollars and) cents” which contains the statement, “Fishermen are increasingly embracing catch shares because they boost profitability, wages, and safety.”
This shorter version of the 8 lessons can be found under “BACKROUNDER” in the Ecotrust paper http://www.ecotrust.ca/fisheries/study-cautions they are as follows:
With refreshing facts and sobering analysis, Ecotrust Canada’s Cautionary Tale describes eight lessons to be learned from BC’s experience with ITQ fisheries since the 1990s.
· Lesson 1: ITQs promote quota leasing, not ownership. In 1993, only 19 percent of the halibut quota was leased compared to 100 percent in 2008. Lucrative leasing has caused quota purchase prices to soar, making ownership prohibitively expensive.
· Lesson 2: ITQs give fishermen a false sense of security. By allocating individual fishermen a defined share of the catch, ITQs can reduce a bit of uncertainty, but they by no means eliminate it and, in some cases, can exacerbate it. For example, quota lease fees negotiated pre-season can expose fishermen to increased financial risk if fish prices drop, fuel prices rise or foreign currency exchange rates change.
· Lesson 3: ITQs facilitate resource privatization. Fishing licenses and quotas are not property de jure, that is “in law.” Rather they are property de facto, that is “in practice.” ITQs create new forms of de facto property that can be divided, capitalized and transferred with even greater ease.
· Lesson 4: ITQs increase capitalization in fisheries. While ITQ systems can rationalize fleets, reducing capitalization in vessels and equipment, they can also lead to speculative buying and leasing which increases the capitalization in quotas themselves. Today, fishing quotas and licenses, or intangible assets, are worth $1.8 billion or five times the value of all the vessels and equipment in BC’s commercial fisheries. That means total capitalization in tangible and intangible assets has actually increased.
· Lesson 5: Quota leasing hurts the financial performance of working fishermen. Quota lease fees are as high as 75 percent of catch landed value in many BC fisheries, draining revenues from working fishermen. In BC’s trawl fishery, as the amount of quota leased rises to 100 percent on a vessel crew shares decline by about 50 percent.
· Lesson 6: ITQs don’t enhance science and monitoring. While ITQs fisheries usually require stricter monitoring because of high-grading problems, there is nothing about the nature of ITQ fisheries that inherently improves monitoring or scientific data collection.
· Lesson 7: ITQs have safety problems of their own. The high cost of buying and leasing ITQs bleeds income away from working fishermen, causing boats to go out with inexperienced or insufficient crewmen, which can lead to accidents. Anecdotal reports and safety statistics suggest that the groundfish trawl fishery has become less safe since ITQs were introduced in 1997.
· Lesson 8: Sound science and co-management underpin fisheries sustainability. ITQs don’t guarantee sound science and good governance. They represent only one alternative, among many input and output controls, to responsibly manage fisheries
The question is: have these eight points been adequately considered and addressed for the impending Catch Share system here in New England; no less, allotted the time and energy required in order to create their preventative remedies for our fishery, —and will they ever be seriously dealt with?
Dr. Julia Olson (July 1, 2009), “Social Impact Assessment Literature Review: Leasing and Permit Stacking”, New England Fisheries Science Center, Woods Hole, MA writes,
“the primary social impacts that have been documented in empirical cases involving consolidation (explained in greater detail below) range from employment loss, decreased income, decreased quality of life, changing relations of production, structural disadvantages to smaller vessels and firms, dependency and debt patronage, concentration of capital and market power, inequitable gains, regulatory stickiness reduced stewardship, decreased community stability, loss of cultural values, and so on.” (Underlines and parentheses are Olson’s)
Dr. Olson concludes that same introductory paragraph with,
“Thus the question of capacity reduction is ultimately not simply an issue of economic efficiency, but a question of what values to promote and what the future of the fishery and its fishing communities should look like.”
This broader perspective from Julia Olson’s paper, (i.e., what about the people?) is found again in a paper that contains a great deal of common sense and knowledge of fishing communities by Seth Macinko and William Whitmore, Dept of Marine Affairs, Uni. of Rhode Island, Revised June 2009, A New England Dilemma: Thnking Sectors Through, Final Report to Massachusetts Divison of Marine Fisheries.
Sectors are the cooperatives that fishermen are required to join thus pooling their individual Catch Shares. Sectors are supposed to be self-governing and self-policing. This is an aspect that many feel to be so administratively costly and unwieldy, that it’s a setup for failure.
Macinko and Whitmore’s relevant bullet points in the “Executive Summary” are as follows:
“The current push for sectors obscures the fundamental policy decision at stake: whether to pursue catch shares via a model that emphasizes ‘privatization’ of public resources or a model consistent with public ownership of fishery resources. The privatization model carries with it known inequities while the public ownership model could offer equity for all interests involved. Sectors can occur via either route but there has been no public recognition or discussion of this choice.”
“The current approach to sectors appears to be driven by an extreme faith in privatization, deregulation, and devolution of authority. Mere faith that private ownership promotes stewardship will not contribute towards solving the monitoring and enforcement challenges on which conservation truly depends, and could spell disaster for sectors.”
“While arguments can be made either way, on balance the available evidence suggests that sectors are likely to accelerate the consolidation that is already happening in the groundfish fleet. In addition to affecting sheer vessel numbers, consolidation will likely have a geographic component, shrinking the number of ports actively involved in the fishery.”
“In view of the Council’s [New England Fisheries Management Council] expressed concern for adverse impacts on communities, as well as the statutory mandate to reduce such impacts (National Standard 8) [of the Magnuson Stevens Act], the relationship between sectors and community benefits warrants closer attention. Community benefits cannot be just assumed to happen via a trickle-down process.”
It is clear from these three studies alone that the headlong rush into Catch Shares, ITQ’s, IFQ’s or whatever they are called is a disastrous vector for the fishing industry, the fishing communities, and the fish. They need to be in a moratorium until these issues are addressed at length.
TIPPING POINT
Even during the best of times because of unpredictable market forces, the illusive prey, and extremely high operating costs, fishing businesses do not have a very fat reserve account backing them up. They don’t have a great margin of cash flow error. Their financial “burn time” is not impressive. Any irritant to these shallow financial margins, if sustained for any length of time, can be disabling and before too long will cause the business to shut down. This is true not only for the vessels that go to sea; but just as importantly, it is also true for the many shore side support businesses that make a fishing operation possible. These dockside businesses have a point of “no returns”. These days the majority of the boats and shoreside businesses financially are on the edge of going under due to the “Perfect Storm” of the slow choking of landings revenues through overzealous regulation, and the even higher than normal overhead costs due to escalation in fuel price and insurance premiums, and low fish prices because of the poor economy and cheap imports.
Fishing vessel operations have a mutually dependent relationship with their dockside support business counterparts; they need each other in order to exist. Vessels depend on ice suppliers; look to wholesalers to pack and sell their catch; and call on net makers, electricians, welders, and mechanics for immediate repairs which will enable them to return to sea without too much costly down time. Without these support services, the thin financial margins of vessel operations threaten the continued solvency of even the best boats. Similarly the support businesses are not publically owned corporations with unlimited resources. If the boats are not frequent enough or don’t pay their bills, these shore side businesses, the foundation of the system, will be jeopardized and if they fold, the entire local fishing industry will collapse.
There is a solvency tipping point where the number of vessels coming in for repairs, ice, fuel, groceries, net refurbishing, or with fish to pack out, i.e., the overall volume of transactions, is simply not yielding enough cash flow for these businesses to keep the doors open. It is the point where overhead overwhelms income and the business operates in the red, and will soon close.
It is one thing for academic economists to theorize about the economic “efficiency” resulting from fleet consolidation; but the reality off-campus is that the 50% percent reduction of an already reduced and starved fleet will not be enough to keep the support businesses open; they will disappear. Then without the necessary dockside support, the fishing vessels will soon follow and easily slip down the same sinkhole as the dockside facilities. We will then see a complete 100% consolidation of the small boat fleet. In its place will be vertically integrated companies of self sufficient factory trawler-processors, contracted directly to Wal-Mart and McDonald’s, providing a cheap, uniform, and low quality product. See the Northwest Pacific Whiting Fishery for an example of the effects of ITQ consolidation.
Consolidation or fleet reduction is a known consequence of the Catch Share management scheme. But when business “tipping points” are factored in, a “domino effect” comes into play. Further fleet reduction becomes a very real and immediate threat to the continued existence of the major fishing ports in New England, and throughout the entire industry, jeopardizing entire communities and thousands of livelihoods.
Unrealistic fishing regulations and vessel consolidation have brought this industry, both at sea and at dockside, right up to the “tipping point”. Any further loss in the volume of working vessels due to consolidation from a Catch Share management regime will render the majority of the support businesses and consequently the entire fleet no longer viable. It will be the end of the independent family owned small fishing operation and the end of a dependable and safe national food supply.
JOBS:
Do Catch Shares Create High Paying Quality Jobs?
In Alaska fishing provides more direct jobs than the oil, gas, mining, agriculture, forestry, and tourism, industries combined. Some 54,000 at its height
If Alaska employs 54,000 people in its fisheries, add in fishermen from the Southeastern States, the Gulf of Mexico, the Mid Atlantic States, and the New England Fisheries, plus the commercial aspect of the recreational fisheries then multiply that by 6.6 which is the University of Maine’s multiplier for dependent land jobs for each fisherman at sea, and the number of fishing jobs is huge. There is a great deal at stake here for the economy in general and job loss is a direct result of Catch Shares and consolidation.
According to a paper by Dr. Julia Olson (July 1, 2009), “Social Impact Assessment Literature Review: Leasing and Permit Stacking”, New England Fisheries Science Center, Woods Hole, MA
“Employment in the Mid- Atlantic surf clam fishery dropped by nearly 80% between 1990 and 1999 (from 155 to 34 employed crew members) as the industry consolidated in the wake of ITQ’s …”
It is estimated that approximately 1200 jobs have been lost in the Bering Sea Crab fishery.
Crew quality decreases with decreased crew pay and safety is compromised in extremely dangerous fisheries.
Fishermen often turn to underpaid assembly line work on factory processor trawlers, or turn into sharecroppers even if they are able to hold on to their own boats, paying out up to 70% of their landings proceeds to the holder of the fish allocation. Crew shares decline because of leasing overhead expense; and many fishermen are forced to leave their native coastal communities because of lack of employment opportunity.
Catch Shares kill jobs.
CONCLUSION
CATCH SHARES: NOT A GOOD IDEA!
Catch Shares do not help the fish.
Catch Shares do not help the fishermen and the fishing communities.
Catch shares were not put to the referendum vote as statutorily mandated by the MSA.
Catch Share Sectors were not “voluntarily” joined by the majority of the fishermen. The common pool was not a viable option.
The NOAA/NMFS allocation data is admittedly flawed and inaccurate.
Catch Shares have been “ramrodded” without due deliberation or adequate planning.
Finally catch Shares or ITQ’s are just a tool like any of the others that have been tried; only if this one goes wrong, the fishery is gone forever. Fleet consolidation through ITQ’s and the consequent collapse of shore side support facilities, possible factory ship cartels, (legal under the American Fisheries Act 1998), and the transfer of “fishing rights” into the wrong hands, are most likely irreversible consequences of this plan, and may be the end of the independent fisherman and their communities.
“Fisheries that begin with limitations on transferability can quickly lobby to remove them given market pressures as in Canada, Iceland, and Tasmania” (Olson)
Catch Shares don’t boost small fishing business profitability, increase safety, help the fish stocks, or the communities. They destroy the independent small boat fishing operation in several ways, but essentially by putting the price of shares of a public resource beyond the financial reach of the small boat fisherman. Due to extracting “rent” and open market trading, the costs associated with leasing or buying quota become prohibitive, especially for a financially strapped industry. The small independent fisherman is left out.
European Union Fisheries Commissioner Joe Borg suggested scrapping their Catch Share Quota system for effort controls (Days-at-sea, etc.) after 25 years of experimenting with them.
A BETTER IDEA:
“…the critical role that sound science and good governance ---that is, inclusive, transparent co-management between government, and industry and stakeholders --- plays in ensuring the sustainability of fisheries.” Ecotrust Canada (intro. to “A Cautionary Tale”)
The fisheries can be successfully managed. With integrity, common sense, and clarity of purpose it can be done. Everyone involved knows that successful effective management is absolutely necessary for survival. The problems managing the complicated North East Multi-Species Fishery have more to do with the huge and detached autonomous bureaucracy we’ve built and its unwieldiness, confusion, and ineptitude, than with uncooperative fish or rogue fishermen.
Fishing cannot be managed from sound-bites or marketing slogans created by environmental organizations with a prejudice and an agenda. Good scientific observation, stock assessments and governance does not result if there is a predisposition or a given blind allegiance to the postulate that ‘the fish are endangered due to illegal and immoral overfishing”.
Fishing can also not be managed from an academic economist’s or biologist’s point of view only. Fishing is a multi-faceted issue and requires a multi-discipline approach, including sociologists, social-psychologists, social-anthropologists, and social-historians, and especially must include the fishermen whose lives will be directly and sometimes drastically affected by the outcome of the regulation decisions. The words men and women, the humans, have to be put back and coupled with the term “fishers” (so favored by the detached anti-fishing theorists).
These issues and problems are not insurmountable; but there needs to be honest communication about the purpose and long term goals for the fisheries. There can’t be hidden corporate agendas or personal ambition driven politics if the management endeavor is going to succeed at preserving the resource and the fishing dependent communities.
WHAT CAN BE DONE RIGHT NOW?
Stay for now with the present system of effort controls. The days-at-sea, governed by cooperative research, is actually working and the infrastructure is already established. THE FISH ARE BACK!
Return to Framework 42 days-at-sea and review immediately. Devote funding to cooperative transparent research and analysis in order to revise the assessments and current TAC’s and closures of Winter Flounder, Yellowtail Flounder, Pollack and Fluke allocations, Sea Bass, Red Snapper, dogfish, etc.
Employ scientists and analysts who know fish and who know the fishing industry and pair them with accomplished fishermen and their vessels. Employ accomplished fishermen who know how to set a net and to know whether it’s tending bottom or not. For a start hire people like, Dr. Brian Rothschild, Kevin Stokesbury, Ph.D., Nils Stolpe, Ph.D., and Capt. Jim Rhule on the F/V Darana R., for an intelligent and accurate appraisal of the health of the stocks.
Devote some funding to developing a management model based on a hierarchical concept of ecosystems, using a point system to direct catch effort away from vulnerable stocks as outlined in Apollonio and Dykstra, “An Enormous, Immensely Complicated Intervention”: Groundfish, The New England fishery Management Council, And The World Fisheries Crisis.
Allocate funding to develop even more selective gear innovations as a way to deal with the problems associated with the complex New England multi-species ground fishery (i.e., regulating to the weakest species etc.). Include fishermen and professional net designers in every phase of the process. Phil Rhule and Jon Knight accomplished building such gear which won awards, the”Rhule Trawl” has been sanctioned by NMFS. Jon Knight can be commissioned to continue with more such research and development.
A fleet of many privately owned small boats have conservation systems and limits built in. They are restricted by weather and funding, market prices, fuel and mechanical repair costs; so they naturally spend down (non-fishing) time. Due to narrow financial margins and weather safety issues, they can only fish for the stocks that are plentiful and within reach of their ports. It is not financially viable for them to fish on depleted stocks. This coupled with intelligent management will secure the health of the resource and the fishery.
A Fleet of many small “inefficient” boats will sustain the fish, preserve jobs, provide a vital healthy source of fresh food daily, and keep the traditional coastal fishing communities thriving.
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