Did opportunities or barriers to entering the fishery change?

Indicators: Access and Exclusion Effects

Key Findings

  • Prior to implementation of the Shorebased IFQ Program, access to the groundfish fishery had tightened due to implementation of the limited entry program and subsequent vessel and permit buybacks. When the catch share program was established additional potential participants were excluded because they had too little history to make fishing economical.
  • At the inception of the catch share program, a majority of quota shares (QS) for several IFQ species was concentrated among the top 25 quota holders.
  • Transfers of quota pounds (QP) between vessels are permissible as a means to address short-term mismatches between catches and allocated shares. However, greater communication and transparency in the quota market are required for an efficient distribution of QP.
  • Lifting the restriction on QS transfers in 2014 created opportunities for fishermen who were not allocated QS to participate in the Shorebased IFQ Program, although these fishermen may face a barrier to entry from the cost of purchasing shares.
  • A number of coastal communities have established community fishing associations and community quota funds in order to create a pathway for new entrants into the groundfish fishery and to maintain access to the fishery by local fishermen.

Interactive Chart Story

Metrics

This indicator measures access to and exclusion from catch shares and fishing opportunities and how evenly catch shares are distributed among the fleet).

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.

“Last year I caught a yellow-eye in 240 fathoms, and they don’t live out there. They just don’t live there, but we caught one. And I only had 3 lbs. of yellow-eye quota. Well, this fish weighed 4 lbs. Boom, I was over.”
~ Fishermen

“Well it’s changed to where the boats will call and want to trade. Like they’ll call and say hey, you got any black cod, we want to trade for petrale or whatever it is. So that part’s changed. We’ve always had a pretty good relationship with our boats. The IFQ thing, it’s changed the dynamics of the fishery because you can move fish from here to there, and you can keep that guy fishing. Weird deal, but we’ve helped out a few of the boats.”
~ Processor

“The previous system, we just went fishing. We didn’t worry about anything. Now we talk to everybody. We know everybody. We trade fish with everybody. And you work with them. I just had a call last night from a guy that’s out here fishing petrale, and he looks like he’s going to need some black cod, and he wants to make a trade, and it’s not a problem. I’m sitting at home at dinner, and he’s texting me.”
~ Fishermen

“I would say 90% of its trading. I do a little bit of leasing, like right now at the end of the year when I have something left and somebody wants it and there’s nothing for me to do, so then I’ll lease it, but most of its traded.”
~ Fishermen

“There’s three things that are worth [leasing], the petrale, the black cod, and the whiting. So, there’s supply and demand. A lot of the other species, the quota doesn’t get caught, so you might have to pay something, but it’s relatively cheap. There’s a couple of different auctions or brokerages, so you can kind see what other people pay.”
~ Fishermen

“If you hit the vessel limit, that’s it.  And  the limits themselves were based on a projection of what the fleet had been doing at the time, so it was back in 2010, I guess.  And I remember the head of a fishermen’s association assuring everybody that oh no, everybody is going to be within  the limit, this takes into account what everybody’s fishing pattern has been.  That was fine, except fishing  patterns have changed.  And we’re stuck  with limits, and anytime you try to suggest changing the limits, you’re seen  as the evil empire trying to come in and eat up all the poor small fisherman.”
~ Fishermen

“We used to call, and we still do, groundfish the bread and butter fishery. Now, the IFQ program has changed that to where you might run out of fish, and you’ve got to lease and borrow and trade to continue fishing.  But if you’ve got a groundfish permit and a boat that’s of any size and you want to work, you can make a living in groundfish.”
~ Fishermen

“You could make a mistake before, and you’d have to throw over the fish. But at least you could keep fishing. Now if you make a mistake you’re shut down. So it’s actually taken some flexibility away.”
~ Fishermen

“And the way those overfished species were allocated was different than the way the other species were allocated. The other species were allocated on past history. The overfished species were allocated on recent history. So you have somebody with a permit which over the years has fished a lot of Dover sole, whatever. And in recent years, because of the avoidance of overfished species, he only has a tiny little bit of petrale sole. So now he’s got this huge quota of Dover sole, but no petrale sole to go with it. So the guy literally can’t fish.”
~ Fishermen

“Whatever you have the least amount of in your IFQ account is your restrictive fish. And it could be halibut. That’s what most people think. They’re usually not. In my case it’s yellow-eye. In somebody else’s case it’s black cod. Or somebody else’s case it’s other types of rockfish. It depends what species you have the least amount of, that becomes your most restrictive thing.”
~ Fishermen

“In my opinion, one of the worst things that we ever did was allow gear switching. It sounded great, but sablefish fetches a higher price pot-caught. So we allowed our sablefish to exit the trawl fishery—well, it’s technically still in the trawl fishery, but a guy can go fish pots and catch trawl sablefish. It created an inequality. They can get paid more for it, therefore they can bid more for it.”
~ Fishermen

“Gear switching really hasn’t worked the way they thought. What it’s done is let the fixed gear people come and buy trawl quota and put it into the fixed gear side. And that is hamstringing the Dover you’re going to get out of the water. Where you had 100% of the amount of black cod to prosecute your old fisheries, now you don’t have that, and it’s going to leave Dover, it’s going to leave other fisheries in the water. So I don’t think that that was right. I don’t think that they foresaw that.”
~ Fishermen

“When this fishery evolved into an IFQ program, before it actually took effect in 2011, guys that had money purchased latent permits that hadn’t fished in quite some time but they had quota attached to the permit. So they bought the paperwork and the boat came with it. A lot of the boats are just junker boats. They scrapped them or sold them for something else other than fishing. My partners have multiple permits. We’ve actually got a big pile of fish to catch. We don’t catch all of our fish, so we’ve become kind of a marketplace for quota when guys need quota so they can continue fishing. We’ve leased out quite a bit of fish. It’s an advantage for us and an advantage for them too.”
~ Fishermen

“Lingcod has been declared rebuilt, but you can’t really target ling cod because ling cod and yellow-eye like the same kind of grounds. Canary rockfish is another very constraining species, extremely so. If a boat has 2,000 or 3,000 pounds of canaries in his quota, that’s a pretty decent quota, and he’s got to leave fish in the ocean because he can’t target them for fear of going over. Canary has become a very big bargaining chip late in the season. We’ve got increased numbers on our rockfish and ling cod, but you’ve got to be very, very careful. You can put yourself out of business from one day to the next if you’re not careful.”
~ Fishermen

“The way I look at it, we’ve had great shrimp years. Environmentally, we’ve had just terrific conditions for the last four or five years. And that’s not going to stay. It never does. And when it goes downturn now, it used to be you can go out there and work harder and do whatever, and you can’t do that now. You have so many constraints, and you got the costs so high. The fixed costs are so high that you can’t go out there and scrape anymore. And you can’t afford to catch too many canaries, yellow eye, halibut, all that stuff. Plus you’re paying a $500 day. Plus you’re paying the lease rates. And that’s why I think it’s more volatile. Pretty soon you’re going to have a crappy shrimp year, whether it’s next year or year after. And there’s going to be a bunch of guys, oh well, I better try to go dragging, you know, or spend more time dragging. So then everybody is going to be competing for leasing fish, which is great for the guys leasing it, ’cause their lease price will go up. But for those of us fishing, it just chips away at the profit.”
~ Fishermen

Analysis

Baseline: Before Catch Share Program

Implementation of the 1994 federal license limitation program constrained access to the groundfish fishery by restricting vessel participation in the directed commercial groundfish fisheries off the coasts of California, Oregon, and Washington. The federal license limitation program was the primary means of limiting access during the baseline period (20022010), and many of the elements of the program continue to be required in the Shorebased IFQ Program.

Pacific Coast groundfish limited entry permits not only restricted the number of vessels that could participate in the groundfish fishery, they also carried maximum vessel length limits and were gear specific. For instance, a trawl endorsement was required to participate in the non-whiting and Pacific whiting trawl fisheries. Limited entry permits had to be renewed annually and were transferable for use on any vessel within the length restriction. During the baseline period, access to the trawl fishery was further tightened via the limited entry permit and vessel buyback program in 2003 (Management Framework).

Access to groundfish during the baseline period was also limited by bimonthly cumulative trip limits, which allowed a permitted vessel to land no more than a pre-determined amount of fish in each two- month period (Management Framework).

During Catch Share Program

The Shorebased IFQ Program limits participation in the shorebased groundfish trawl fishery to vessels registered to a limited entry permit with a trawl endorsement. QS were initially allocated to 166 limited entry trawl permits. These initial allocations were consolidated into 138 QS permits/accounts because many of these permits were owned by the same entity.

A permit owner’s initial allocation of QS was based on his/her permit’s catch history (Shorebased IFQ Program). The majority of groundfish trawl fishermen have family-run fishing businesses and hold only a single permit, meaning that each boat represents one or more fishing families. However, permit consolidation occurred during the baseline period as corporate ownership of vessels and permits has been increasing in recent decades. In particular, vertically integrated seafood companies have purchased several limited entry trawl permits over the past several years. As a result of this permit consolidation, a small number of entities acquired significant amounts of QS for target and overfished species. In addition, prior to the implementation of the Shorebased IFQ Program, The Nature Conservancy purchased permits and vessels in an effort to promote more sustainable fishing.

At the inception of the catch share program, the majority of QS for several IFQ species were concentrated among the top 25 quota holders. Furthermore, the top three quota holders for select species owned more than 50 percent of the available shares. The most concentrated species was cowcod south of 40°10′ N lat., which is an overfished rockfish undergoing a rebuilding process. Three quota holders controlled 57 percent of the total QS for this species. The second-most concentrated species was shortspine thornyhead south of 36° N. lat., followed by sablefish south of 36° N. lat., and bocaccio south of 40° N. lat. QS for yelloweye rockfish, another overfished species, was concentrated with 60 percent of the total shares allocated to the top 25 quota holders. It is estimated that the remaining three-quarters of quota holders received an average of five pounds of yelloweye rockfish allocation, which is equivalent to about one fish. The least concentrated QS was for sablefish north of 36° N. lat., with the top 25 quota holders controlling only about 36 percent of the QS and the top three quota holders controlling just 10 percent. In 2014, the moratorium on QS ownership transfers was lifted, and by the end of 2016, there were 172 QS permits/accounts. November 30, 2016 was the deadline for the divestiture of QS in excess of accumulation limits, with the exception of widow rockfish (Shorebased IFQ Program).

Under the catch share program, transfers of QP between vessels are permissible as a means to address short-term mismatches between catches and allocated shares (Shorebased IFQ Program). By 2012, a number of brokers offered online auctions for trading of QP, and NMFS began listing the specific QS and QP holdings of each quota holder online, enabling interested parties to search for potential buyers and sellers and allowing trading to occur in near real-time conditions (Shorebased IFQ Program). More recently, NMFS has further facilitated QP transactions by releasing a public QP price data tool that provides insight into market prices for QP trades based on data reported by quota holders. However, greater communication and transparency in the quota market are required for an efficient distribution of QP, whereby fishermen can readily rebalance their portfolio of quota holdings throughout the year to match catch levels. This improved alignment of QP supply and demand would result in less quota being left unfished at the end of the season (Financial Viability of the Fishery: Landings).

From 2011 to 2016, 19 percent of transfers involved cash compensation only, 13 percent were reported as barter, in which swaps of QP of different IFQ species occurred, or as a combination of cash and barter, 36 percent were “self-trades” in which individual QS holders transferred their annual allocations into vessel accounts or within a company, and 33 percent were other transfer types, including transfers made to and from risk pools, contractual arrangements where payment is a share of revenue when fish is landed, and gifts. The number of cash sale transfers increased each year during the first five years of the catch share program, from 377 in 2011 to 560 in 2015, and dropped to 517 in 2016 (See Chart: Number of Transfers by Type) . From 2011 to 2016, the most traded target species in terms of number of transfers not designated as self-trades were sablefish north of 36° N. Lat., petrale sole, and Pacific whiting (see chart: Number of QP Transfers by Species). Pacific halibut IBQ and canary rockfish were the most traded constraining species.

At the end of each year there is often substantial unused QP available for constraining species. QP prices of some of these species (e.g., canary and yelloweye rockfish) are high and a significant fraction of ex-vessel price (QP Prices by Species ). Fishermen are likely holding their constraining species QP in case they need it themselves. While catches of these species are rare, they tend to be highly uncertain, and can be concentrated when they occur. Moreover, QS owners who opt each year to sell their entire annual allocations to other fishermen may hold quota until the end of the season, when QP prices may be higher.

Lifting the restriction on QS transfers in 2014 created opportunities for fishermen who were not allocated QS to participate in the Shorebased IFQ Program, although these fishermen may face a barrier to entry from the cost of purchasing shares. To date, QS transactions usually involve large increments of quota and multiple species as an individual sells an entire portfolio, with most transactions involving amounts equivalent to more than 10,000 QP according to the NMFS Five-year Review of the catch share program. Small fishing operations may be particularly disadvantaged to the degree that they may find it more difficult to finance such purchases.

A number of coastal communities have established community fishing associations and community quota funds in order to create a pathway for new entrants into the groundfish fishery and to maintain access to the fishery by local fishermen. In 2014, for example, Morro Bay created the Morro Bay Community Quota Fund (MBCQF) The MBCQF functions by acquiring QS and groundfish limited entry permits and leasing them to eligible fishermen at prices lower than market value. With a loan from the California Fisheries Fund the MBCQF was able to purchase QS from The Nature Conservancy worth about $2 million. The advisory committee that oversees decision making by the MBCQF is led by local fishermen and representatives from the City of Morro Bay, academic community, and The Nature Conservancy. The MBCQF manages its overfished species through the risk pool operating in California (Financial Viability of the Fishery: Landings).

Among the goals of the catch share program was the use of reserved non-whiting QS to facilitate new entry into the groundfish trawl fishery (Shorebased IFQ Program). To date, however, the 10 percent of non-whiting QS that could potentially be set aside for this purpose has been issued to current QS holders in proportion to their non-whiting QS.

As part of the catch share program, 20 percent of the shorebased Pacific whiting quota allocation was given to eligible shorebased Pacific whiting processors (Shorebased IFQ Program). By 2015, these processors increased their holdings of shorebased Pacific whiting QS to 25 percent by purchasing additional QS from non-processors after the moratorium on QS trading ended. In addition, some shorebased Pacific whiting processors have purchased non-whiting groundfish QS. Processors use their Pacific whiting and non-whiting groundfish quota to support bargaining relationships with vessels that help secure deliveries.

Information Sources

Holland, D. 2016. Development of the Pacific groundfish trawl IFQ market. Marine Resource Economics 31(4):453- 464.

Morro Bay Community Quota Fund. 2017. Available online: http://www.morrobaycommunityquotafund.org/

National Marine Fisheries Service. 2017a. Pacific Coast Groundfish Individual Fishing Quota. Available online: https://www.webapps.nwfsc.noaa.gov/ifq/

National Marine Fisheries Service. 2017b. West Coast Groundfish Trawl Catch Share Program Five-year Review – Draft. Pacific Fishery Management Council. Portland, OR.

Pacific Fishery Management Council and National Marine Fisheries Service. 2010. Rationalization of the Pacific Coast Groundfish Limited Entry Trawl Fishery; Final Environmental Impact Statement Including Regulatory Impact Review and Initial Regulatory Flexibility Analysis. Portland, OR.

Thompson, J. 2012. Emerging Impacts Resulting from the Implementation of the United States Pacific Coast Groundfish Trawl Rationalization Program. MS thesis, Oregon State University. Corvallis, OR.

Updated: May 2018

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