the following editorial appeared in our paid news service today, and we are posting it on the blog to make it more widely available. Please feel free to comment
NEWS [Editorial opinion] by John Sackton - Nov. 13, 2009 - This week,
we sponsored two public meetings in New Bedford and Gloucester to
discuss the issue of catch shares with Steve Minor, exec director of
the N. Pacific Crab Assoc., and Joe Childers, President of United
Fishermen of Alaska.
Having worked in Alaska for many years on fisheries issues, including the crab rationalization program, it seemed appropriate to me to provide a forum for some discussion and comparison of the Alaska and New England experiences when the opportunity arose.
Despite calls from some of the more wild-eyed reader comments in the Gloucester newspapers to run us out of town, the Gloucester meeting attracted over fifty people, and for two hours, there were civil back and forth questions and a very informative discussion.
Several key issues came out.
First, no Alaskan catch share program has been put in place without a lot of attention to the issue of ownership caps and eligibility for transferring quota shares. In halibut, very specific rules were put in place to protect the character of the fleet, which is dominated by small boats.
In crab, although differing by species, there were vessel caps and use caps that were designed to address issues of concentration.
The Alaskans were shocked to discover that nothing in the current Amendment 16 addresses these issues directly.
Secondly, the flexibility and control that shares give to fishermen is unparalleled, and in both halibut, pollock and crab, was an under appreciated benefit of the program. Banding together in co-ops to manage fishing effort and by-catch issues gives harvesters a lot of control over decisions that formerly were dictated by NMFS. Such flexibility, in every case, has led to better timing of harvests, better control of bycatch and prohibited species, and a more profitable and efficient fishery.
However, there was a ten year moratorium in place on catch share programs after the halibut program was implemented. As a result, both the pollock program and the crab program were done through congressional legislation and refined through council action.
One of the key requirements for legislation is that the various parties have to agree among themselves first, before going to Congress, or else their fight just continues in Congress and nothing gets done.
In New England, the current amendment 16 was originally begun during the moratorium, and some of its design elements were put in place because no IFQ systems could be legally adopted. The moratorium was lifted with the reauthorization of Magnuson in 2006 and 2007.
The upshot is that radical re-thinking is going to be necessary in order for the New England program to achieve its goals. This does not mean the program should necessarily be delayed - I think the jury is still out on that one. But it does mean that all participants, including NMFS, should recognize this is a work in progress, and try and avoid actions that will irrevocably kill off parts of the New England fishing industry, whether on the water, or on shore.
The key promise of catch shares is to use market forces to align the interests of fishermen with stock sustainability. Under an open system, every fish left in the water is a fish a competitor can catch. Therefore, the race is to get the most fish possible before the fishery is shut down. Under catch shares, every fish in the water represents a potential value that can be higher or lower, depending on the actions of the harvester who has rights to that fish. The result, in almost all cases, has been that harvesters start taking actions that increase the value of the fish - through better timing, more careful handling, and more targeted fishing. At the same time, catch limits are recognized as investments, because the shares will increase in value as the stock size increases as well.
New England in many ways has been a garbage fishery. Of roughly 2.5 or 2.6 million pounds of yellowtail brought over the side this year, roughly half of that has been dumped back overboard as garbage. This is what happens when trip limits are imposed on an open fishery. Fishermen are acting rationally by making a last tow, lets say if they are 200 pounds under their limit. If they catch 700 lbs, they then throw 500 lbs. overboard, and keep the 200 they are entitled to. Repeat this across a range of species with trip limits, and you can see how destructive this is. Catch shares will end trip limits, which is one of their best features.
The problem in New England is that the groundfish fishery encompasses more than a dozen species, and each vessel will get allocations based on its history across all the different species.
But during the ten years that are the qualifying years, there were closed areas, there was the impact of global warming, stocks were migrating to new areas - so that there is a terrific mis-match, potentially, between the history as allocated, and the actual fishing opportunities for the current fleet in the different regions.
This will be resolved by market trading within sectors or co-ops, and among different co-ops.
Without understanding of the market forces, a disaster is likely to occur.
Here is the problem. We all believe in free markets, but we don't allow auctions of organ donations. That is because we have other values as well, and we recognize that an auction for organs would mean the richest would buy life, and the poor would die. That is not acceptable in a society based on all men being created equal.
So, we all accept that even though we like market efficiencies, there are circumstances where we prohibit or regulate market forces.
Such regulation is desperately needed in New England, and very little attention has been paid to it.
Because some of the stocks in the groundfish complex are weak, they will become limiting factors in allowing fishing to take place. A good example is yellowtail - which NMFS is concerned about, and there will be extremely low allocations. Cod will also likely be a severely limiting factor.
Already many in New England complain how much haddock is left in the water due to the limits on cod bycatch.
In a pure market system, the holders of yellowtail or cod would be able to increase the price of their quota to the point where they would be getting the majority of the value of all the other dependent fisheries.
This is what happens to a scarce resource that is necessary for the use of other stocks.
Those who have foreseen this system have been buying up the scarce quotas whenever they could. During our trip this week, we learned of people who had rarely fished redfish before running up to Maine and buying quota, so that they could use it as bycatch.
We also heard about boats up in Gloucester scouring Rhode Island for any quotas for sale. All of this consolidation and jockeying is taking place even before Amendment 16 with catch shares is implemented.
Under the market system that exists in the crab fishery in Alaska, red king crab quota shares can be leased for 78% of the value of the catch. We wrote about this yesterday. If the red king crab is worth $4.50 at the dock, the leaseholder gets $3.51, and the harvester who caught that crab gets $0.99 cents.
But red king crab is a single species fishery. Leases are attractive because boats are more efficient if they are able to catch higher volumes, and have fewer boats actually fishing. So some quota holders lease 100% of their quota and have no fixed expenses, while some boat owners (usually with their own quota) lease additional quota to make their operation more efficient, ie. a lower cost per lb. for harvesting crab.
In a multi-species catch share fishery, the value is not set by the fish that is landed, but by its worth compared to the most valuable fisheries.
So for example, if an extra hundred pounds of cod would allow someone to catch another 300 pounds of haddock, the value of that cod quota would be a certain percentage of 300 lbs. of haddock - not just the 100 lbs. of cod.
Alternatively, if the value of yellowtail was that for an extra 100 lbs of yellowtail, you could land 500 more lbs of scallops, the value of the yellowtail, as a lease, would be based on the value of 500 lbs. of scallops.
The problem is that not all ports and fishing practices are equal. Redfish fishermen need pollock - and there may not be any. Scallopers need yellowtail - and there is not enough to give them. Haddock fishermen need cod, etc. etc. But if haddock fishermen also need some yellowtail, they will not be able to compete against higher value fisheries, like scallops, buying up the quotas.
Now, this is an extreme example - because New England is not migrating directly to an open IFQ system and there are a lot of fisheries that are not under the catch share system, such as scallops.
But fishermen are smart, and they will quickly figure out how to use the market forces - far more quickly than NMFS or the regulators will even be able to determine what is going on.
The solution is to be prepared to amend the program, even if it means reversing or canceling sales of history, because they have been found to violate some cap.
This will add to the market uncertainty - and create winners and losers, just as the switch in currency from days at sea to history made worthless some purchases of days at sea.
But if the goal is to preserve fishing in at least some of the places where it still exists along the coast, some types of protective actions will be necessary to curb the unbridled market forces.
Everyone here is working towards the day when there will be rebuilt stocks. But without addressing the market issues, that day will come as a payday not to the fishermen who have sacrificed and hung on in difficult times, but to the investors who took advantage of their distress.
This means issues like eligibility, regional distribution requirements, ownership caps, and trading restrictions all need to be in place to protect the New England industry, just as hard quotas are put in place to protect the stocks.