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Has the financial viability of the fishery changed?

Indicators: Landings | Revenues

Key Findings

  • The almost steady decrease in groundfish landings since the early 1980s has been accompanied by a decline in groundfish revenue in real dollars.
  • Average annual groundfish revenue in the first five years of the Northeast Multispecies Sector Program were approximately 42 percent lower than the previous nine-year average annual due largely to a decrease in landings.

Interactive Chart Story

Metrics

This indicator shows changes in groundfish revenue, which affect the financial viability of fishing operations participating in the catch share fishery.

Analysis

Baseline: Before Catch Share Program

The charts provided show the project baseline (first tab) along with an extended baseline (second tab) that spans three decades and provides additional context. All revenue values have been adjusted for inflation.

The decline in commercial landings of groundfish since the early 1980s ( Financial Viability of the Fishery: Landings) was accompanied by a decline in groundfish revenue. Total groundfish revenue during the 2005 through 2009 period was 24 percent of that from 1980 through 1984. Between the same time periods, the total value of landings of Atlantic cod, a species of historical importance in the groundfish fishery (History of Fishery), fell by about 72 percent.

From 2007 through 2009, the distribution of revenue across the groundfish fleet was fairly constant, with about 68 percent of revenue from groundfish sales concentrated in the top 20 percent of active vessels. The distribution of groundfish revenue is also shown by the Gini coefficient, where a value of zero indicates that revenue is evenly distributed across vessels in a given year, while a value of one indicates a single vessel accounted for 100 percent of the revenue. The Gini coefficient for affiliated vessel level groundfish revenue increased from 0.715 in 2007 to 0.765 in 2008 but did not change appreciably in 2009.

During Catch Share Program

Average annual groundfish revenue in the first six years of the Northeast Multispecies Sector Program were approximately 43 percent lower than the previous nine-year average annual due largely to a decrease in landings (Financial Viability of the Fishery: Landings).

During the first years of the catch share program, there was an increasing concentration of groundfish revenue among the top-earning vessel affiliations. In 2010, the highest-earning 10 percent of vessel affiliations accounted for about 58 percent of the total revenue from groundfish sales, an increase of approximately 11 percentage points compared to the average percentage during the 2007-2009 period. The distribution of groundfish revenue among vessels in 2011 and 2012 was similar to 2010, but the proportion of total groundfish revenue earned by the top 20 percent of vessel affiliations grew by some 4 percentage points in 2013 (Revenue Distribution ). The increasing concentration of groundfish revenue is also shown by the Gini coefficient for vessel affiliation-level groundfish revenue. The coefficient jumped by nearly nine percent from 2009 to 2010 and showed an increasing trend through 2013.  Under the catch share program, the transferability of quota, together with the suspension of trip limits, made it possible for companies with sufficient capital to increase their groundfish catch.

The variable cost net revenue is an indicator of annual operating profits. The average vessel owner share of variable cost net revenue per day on groundfish trips increased in 2010 from 2007-2009 levels in all categories except for vessels less than 30 ft. These gains were likely due to an increase in the average price per pound for groundfish from 2009 through 2012. The strong prices may have reflected the lower local supply of commercially important species such as cod, since fewer fish were being caught (Financial Viability of the Fishery: Landings). In 2013, however, average owner share of net revenue per day on groundfish trips was the lowest in the available time series for all size categories (Average Owner Share of Net Revenue ). The largest percentage declines were for vessels less than 30 ft. and for vessels 50-75 ft. The decline in economic performance was caused by unprecedented cuts in the harvest limits of key stocks in the groundfish fishery (Financial Viability of the Fishery: Landings), together with a substantial average price per pound decrease. The price decline likely resulted from a combinations of factors, including increased imports of foreign groundfish and by a change in the composition of local groundfish landings, with an increasing share generated by lower-value species.  Increased operating costs, including costs associated with higher fuel amounts as boats fish further offshore to avoid constraining species, also reduced profits.

The majority of fresh, local groundfish moves through the commodity channel where it competes with low-cost, high-quality foreign imports. Pricing is based on the global market, with little to no premium recognized for fresh fish sourced locally. However, certain segments of the New England groundfish industry are beginning to capitalize on growing demand for differentiated products and move toward end markets that value fresh, local, storied, and/or traceable fish. These market channels tend to involve shorter value chains and higher, more stable pricing. In particular, some small groundfish vessels sell to community-supported fisheries (CSFs), specialty distributors, or directly to consumers. Within the past few years, at least eight CSFs have formed throughout the Northeast by fishermen and their communities. Some CSFs have built regional franchises to expand their reach. For example, Cape Ann Fresh Catch, which began operating in 2009 and is now the largest CSF in the country, serves around  6,500 members in eight locations. Some sectors have also become involved in local branding or marketing. In 2012, for example, Northeast Fishery Sector 11 organized New Hampshire Community Seafood, a CSF based in Portsmouth that sells underutilized pollock, redfish, and haddock as well as other seafood. However, most sectors have limited time, capacity, and capital to undertake such initiatives. Moreover, many sector members have no interest in cooperative marketing of catch because they want to maintain their individual long-established relationships with buyers.

With the assistance of federal and state grants, some coastal communities have also become involved in promoting sales of local groundfish. For instance, Gloucester began its “Gloucester Fresh” seafood product branding campaign in 2016. One of the first major successes of the initiative was to facilitate the supply of local haddock to Ninety-Nine Restaurant & Pub franchises. More recently, the initiative launched “Gloucester Fresh Restaurant Membership Program,” which is designed to connect Gloucester fishing companies with additional restaurants in the region.

Information Sources

Kitts, A. et al. 2011. 2010 Final Report on the Performance of the Northeast Multispecies (Groundfish) Fishery, (May 2010-April 2011). National Marine Fisheries Service, Northeast Fisheries Science Center Reference Document 11-19. Woods Hole, MA.

Future of Fish and N. Inamdar. 2014. Building a Sustainable Value Chain for New England Groundfish. Prepared for the New Venture Fund’s New England Finfish Finance Needs Assessment Project. Washington, D.C.

Murphy, T. et al. 2012. 2011 Final Report on the Performance of the Northeast Multispecies (Groundfish) Fishery, (May 2011-April 2012). National Marine Fisheries Service, Northeast Fisheries Science Center Reference Document 12-30. Woods Hole, MA.

Murphy, T. et al. 2014. 2012 Final Report on the Performance of the Northeast Multispecies (Groundfish) Fishery, (May 2012-April 2013). National Marine Fisheries Service, Northeast Fisheries Science Center Reference Document 14-01. Woods Hole, MA.

Murphy, T. et al. 2015. 2013 Final Report on the Performance of the Northeast Multispecies (Groundfish) Fishery, (May 2013-April 2014). National Marine Fisheries Service, Northeast Fisheries Science Center Reference Document 15-02. Woods Hole, MA.

National Marine Fisheries Service. 2013. Annual Commercial Landing Statistics. Available online: http://www.st.nmfs.noaa.gov/st1/commercial/

New England Fishery Management Council. 2009. Final Amendment 16 to the Northeast Multispecies Fishery Management Plan Including a Final Supplemental Environmental Impact Statement and an Initial Regulatory Flexibility Analysis. Newburyport, MA.

Scheld, A. and C. Anderson. 2014. Market  Effects of Catch Share Management: The Case of New England Multispecies Groundfish. ICES Journal of Marine Science 71(7):1835-1845.

Updated: April 2018

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