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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.

In Their Own Words

Although some of the quantitative data analyzed for this indicator exhibited clear trends, it was challenging to discuss the relationships between observed data trends and implementation of the respective catch share programs, especially in the Northeast. The Measuring the Effects of Catch Shares project team believed that those stakeholders most involved in the fishery, either as active participants or as representatives of an involved coalition of participants (e.g., sector managers in the Northeast), would be able to provide insight and help to explain trends seen in the existing quantitative data. The following quotes were selected to illustrate some of those perspectives and highlight trends such as effects on small vessels, the effect of avoiding “choke stocks,” fleet diversification, and product quality. The individual quotes do not represent findings or conclusions for this indicator, nor do they represent a consensus across any category of participants.

“I have a black bottom on the boat and I went and got some white boot tar paint and I put on it about half way down from the water line, “No codfish allowed.” This one guy came down and he is standing there cocking his head. He says to me, “How are you going to read that if its underwater?” I said, “You don’t understand. That is for the codfish to read.””
~ Fishermen

“Yeah, catch shares when they first came into play they worked because the allocation that NMFS gave us was so much higher than it is today.”
~ Fishermen

“Well, I mean they haven’t been able to use haddock as a direct fishery. When they go target haddock they catch choke species like codfish and stuff like that. The choke species suffocate them from totally capitalizing on the haddock.”
~ Fishermen

“There are fishermen that are really hurting. When catch shares came in some of the bigger boats came in and scooped up whatever quota there was, right out in front of them. If stocks had been healthy, it wouldn’t have happened.”
~ Government

“Well, I’m of the opinion that the new management system has been an equal opportunity constrainer. I mean I know that information shows that the impacts seem to be more on the smaller boat fleet than on the bigger boat fleet but when we started there was a lot more small boats than there were big boats. I know from experience a lot of people that were under 50 feet that were fishing under days at sea are no longer fishing today. If they were cut down to 25 days at sea and a 200 pound trip limit with a two for one counting in the Gulf of Maine, probably those same boats would not be fishing. I don’t think it’s because of the design of the system. If the stocks are going down, the regs are going to get tighter, whether it’s days at sea or quotas.”
~ NGO

“Well, the big boats can take advantage of the healthy stocks, which is haddock, haddock and reds right now. The inshore small boats, the little 38 to 40 footers, last year they got hammered hard. I mean Gloucester, I mean they had a huge day boat fishery down there for codfish. Guys go out and get their codfish and come back in. Gone because of the Gulf of Maine cod restrictions. The same thing happened to our boats here this summer. They couldn’t fish inshore because of the codfish. There is a crap load of cod out there. So these guys couldn’t fish because they didn’t have the quota for it. So if you’re out there and you have an observer on board, you catch codfish and you’re screwed. You shut down your sector for the year.”
~ Processor

“We also closed some areas that we thought were high potential catch areas. We subsequently reopened those this year because we found that we still had enough cod quota and it wouldn’t be a problem. So we self-imposed restrictions on our members to avoid cod. They also have to report their Gulf of Maine cod catch daily. If you find this hot spot of cod you report that [to the sector manager] and then he broadcasts it to everybody through email to try to stay away from this area, unless you happen to have some cod allocation.”
~ Industry Representative

“With, what are there, 19 different species or something like that? And they all fluctuate relative to one another. So in one year you have one or two choke species, and then two years later it’s a completely new set of choke species that you hadn’t planned for.”
~ Fishermen

“I think there has been a more willingness to adopt certain types of ideas, at least try it out, because they realize they do need to become somewhat more selective. How do you target pollock without catching cod? Or how do you target haddock without catching cod? Everything is about not catching cod. Yeah, I think there has been advancements that guys are more willing to at least try out.”
~ Industry Representative

“Well, I’m of the opinion that the new management system has been an equal opportunity constrainer. I mean I know that information shows that the impacts seem to be more on the smaller boat fleet than on the bigger boat fleet but when we started there was a lot more small boats than there were big boats. I know from experience a lot of people that were under 50 feet that were fishing under days at sea are no longer fishing today. If they were cut down to 25 days at sea and a 200 pound trip limit with a two for one counting in the Gulf of Maine, probably those same boats would not be fishing. I don’t think it’s because of the design of the system. If the stocks are going down, the regs are going to get tighter, whether it’s days at sea or quotas.”
~ NGO

“Well, the big boats can take advantage of the healthy stocks, which is haddock, haddock and reds right now. The inshore small boats, the little 38 to 40 footers, last year they got hammered hard. I mean Gloucester, I mean they had a huge day boat fishery down there for codfish. Guys go out and get their codfish and come back in. Gone because of the Gulf of Maine cod restrictions. The same thing happened to our boats here this summer. They couldn’t fish inshore because of the codfish. There is a crap load of cod out there. So these guys couldn’t fish because they didn’t have the quota for it. So if you’re out there and you have an observer on board, you catch codfish and you’re screwed. You shut down your sector for the year.”
~ Processor

“We also closed some areas that we thought were high potential catch areas. We subsequently reopened those this year because we found that we still had enough cod quota and it wouldn’t be a problem. So we self-imposed restrictions on our members to avoid cod. They also have to report their Gulf of Maine cod catch daily. If you find this hot spot of cod you report that [to the sector manager] and then he broadcasts it to everybody through email to try to stay away from this area, unless you happen to have some cod allocation.”
~ Industry Representative

“With, what are there, 19 different species or something like that? And they all fluctuate relative to one another. So in one year you have one or two choke species, and then two years later it’s a completely new set of choke species that you hadn’t planned for.”
~ Fishermen

“I’ve talked to a few guys that are also dealers. They need steady product coming in, and they didn’t see a steady product coming from the groundfish fishery anymore. They’ve outsourced. I go to my supermarket. I see the cod. I know where it’s coming from. It’s coming from Norway, Iceland. I mean it’s a beautiful product too.”
~ Industry Representative

“There are major issues around small boats, big boats. I try not to focus too much on those because they always have been big issues, whether it’s under days at sea or other types of management. I don’t think sectors are making it that much different. The larger boats have been able to work within the sector system more effectively than the small boats, but the small boat communities have stepped up to try to combat that by building quota lease funds like what we have on Cape Cod.”
~ Industry Representative

“The bigger guys, I mean they can go out. They have enough fuel capacity to be able to get off the fish that they shouldn’t be catching and move somewhere else. And if they’re fishing on some of the George’s stocks that are in far better shape. They go fill their boat full of haddock.”
~ Government

“The bigger guys, I mean they can go out. They have enough fuel capacity to be able to get off the fish that they shouldn’t be catching and move somewhere else. And if they’re fishing on some of the George’s stocks that are in far better shape. They go fill their boat full of haddock.”
~ Government

“The problem was these small boats were small, private companies. They had spent their entire life competing against the very people that they had to form a sector with. It went against all business practice. On top of that, we found out that you were liable for everybody else in your sector. That’s mind boggling. The expectation of the federal government was that these guys would pool all of their allocation and divvy it up evenly, which is totally an economic nightmare and something that goes against the fabric of New England fishing.”
~ Fishermen

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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