Has the financial viability of the fishery changed?

Indicators: Landings | Revenue

Key Findings

  • Revenue from landings of non-whiting groundfish by the trawl fleet showed a declining trend well before the project baseline period, as seen in fleetwide revenue data analyzed for 1981–2015.
  • Since the beginning of the project baseline period in 2002, there has been more stability, albeit with reduced revenues compared to the levels seen in the 1980s to mid-1990s. During the first five years of the Shorebased IFQ Program, the average annual ex-vessel revenue in the non-whiting portion of the Shorebased IFQ fishery was about $32 million (whiting landings were valued at over $22 million), which is comparable to the average during the baseline (2002-2010).
  • High revenues in the shorebased Pacific whiting fishery during the first years of the catch share program reflect increases in the ACL and high ex-vessel prices.

Interactive Chart Story

Metrics

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

Analysis

Baseline: Before Catch Share Program

Total revenue of trawl vessels from non-whiting groundfish landings declined substantially through the 1980s. But the trend during the baseline period (2002-2010), while fluctuating on an annual basis, did not show strong upward or downward movement. As expected, this trend tracked with landings of non-whiting groundfish species (Financial Viability of the Fishery: Landings). Total revenue in the non-whiting groundfish trawl fishery during the 2002-2010 period were about 30 percent of those from 1981 through 1989.

After declining dramatically from highs in the 1980s, revenue from flatfish, rockfish, thornyheads, lingcod, and Pacific cod leveled off during the baseline period. In contrast, revenue from sablefish trended upward over the baseline years, even though landings of that species remained relatively stable.

The ex-vessel price of sablefish showed an increasing trend during the project baseline years due to strong markets in Asia, where most of the sablefish are shipped. The prices of most other non-whiting groundfish, however, were generally flat or declining (Ex-Vessel Price of IFQ Species ). The majority of trawl-landed groundfish entered a lower margin, commodity value chain where it competed with large volumes of low-cost imported products.

With the rapid expansion of the domestic shorebased Pacific whiting fishery after the mid-1980s, revenue in the fishery increased substantially. From 2002 through 2010, the average annual value of the shorebased Pacific whiting fishery was around $13 million. The average ex-vessel price for Pacific whiting generally trended upward during the project baseline years due to strong export demand for headed-and-gutted product (Ex-Vessel Price of IFQ Species ).

During Catch Share Program

During the first five years of the Shorebased IFQ Program, the average annual ex-vessel revenue in the non-whiting portion of the Shorebased IFQ fishery was about $32 million, which is comparable to the average during the baseline (2002-2010). In 2011, revenue temporarily spiked due to the high market demand for sablefish and resulting increase in sablefish price. evenues from sablefish were also enhanced by the flexibility under the Shorebased IFQ Program for fishermen to use any legal groundfish gear (Shorebased IFQ Program). Some trawl fishermen switched to fixed gear (especially pots) to harvest sablefish because of the higher market price for sablefish caught with fixed gear, compared to trawl-caught sablefish (Ex-Vessel Sablefish Price by Gear Type ). In addition, some participants in the limited entry fixed gear sablefish fishery leased limited entry trawl permits after the catch share program began in order to acquire quota for IFQ sablefish (Northern Sablefish Revenue by Vessel Type ). In 2011, sablefish accounted for about 52 percent of the total revenue of the non-whiting groundfish vessels, compared to an average of around 30 percent in 2002-2010. Sablefish revenue declined after 2012 as sablefish prices dropped due to the weakening of the yen and persistently high hold-over inventories of sablefish. However, an increase in flatfish revenue partially offset the drop in sablefish revenue.

Fleetwide average annual non-whiting groundfish revenue did not change appreciably after implementation of the Shorebased IFQ Program, but because of the decrease in the number of vessels (Number of Active Vessels), average annual vessel revenue was $100,000 higher in the five years after the implementation of the catch share program than for the five years prior. According to the NMFS Five-year Review of the Shorebased IFQ Program, the variable cost net revenue, which is an indicator of annual operating profits, for the average non-whiting groundfish vessel was $150,007 during the first years of the Shorebased IFQ Program, as compared to $107,538 during the pre-catch share program period. While the average variable cost net revenue of non-whiting groundfish vessels increased substantially, the median variable cost net revenue increased only slightly. This difference indicates that a few vessels have substantially higher variable cost net revenue, but most have not experienced dramatic changes. The percentage of non-whiting vessels with negative variable cost net revenue has increased from an average of 7 percent to 11 percent for non-whiting vessels since the catch share program began (National Marine Fisheries Service 2017).

An increasingly uneven distribution in income across active non-whiting groundfish vessels is shown by a rising 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 average annual Gini coefficient increased from 0.36 during 2009-2010 to 0.45 in 2011-2015 (Non-whiting Groundfish Revenue Distribution ).

In 2014, the Marine Stewardship Council certified the West Coast groundfish trawl fishery as a sustainable fishery (the Pacific whiting fishery was certified in 2010), and the Monterey Bay Aquarium Seafood Watch promoted several West Coast groundfish from “avoid” to either “best choices” or “good alternatives.” Both designating entities indicated that their findings had been based on management changes in the groundfish fishery, including the catch share program and its stringent monitoring requirements.

However, there has been no early indication that non-whiting groundfish vessels have been able to reap economic benefits in the form of price premiums and a secure position in the expanding market for “eco-labeled” seafood products. Most trawler-landed groundfish continued to enter a commodity market where its “sustainable” differentiation is lost. Buyers and processors have a difficult time securing premium retail markets for non-whiting groundfish because they perceive the supply to be inconsistent and unreliable (Financial Viability of the Fishery: Landings).

However, certain segments of the groundfish market are beginning to capitalize on growing demand for differentiated products and shift away from commodity fish toward end markets that value local, storied, and/or traceable fish. These channels tend to involve shorter value chains and higher ex-vessel prices. In addition, a Groundfish Markets Development Initiative was recently organized by Bornstein Seafood, Pacific Seafood, Environmental Defense Fund, Oregon Department of Agriculture, Oregon Trawl Commission, and the Marine Stewardship Council, with the goal of harmonizing supply and demand through business planning and coordination, securing buyers serving various sizes and locations of fishing operations, and overseeing groundfish marketing and promotional campaigns in all three West Coast states.

Shorebased Pacific Whiting Fishery

High revenues in the shorebased Pacific whiting fishery during the first years of the catch share program reflect increases in landings concurrent with the increase in the annual catch limit (ACL) (Annual Catch Limits), together with high ex-vessel prices. A price spike in 2012 may have been due in part to the increased flexibility in fishing operations provided by the Shorebased IFQ Program, which allows fishermen the opportunity to delay the start of their whiting season to target larger, higher-priced fish (Financial Viability of the Fishery: Landings). However, the price for headed-and-gutted Pacific whiting has decreased since 2013. The market softened in part because Russia, one of the world’s largest markets for headed-and-gutted product, imposed a ban on the import of most seafood products from the United States beginning in 2014. Nevertheless, shorebased Pacific whiting revenue was at or near record levels in 2013 and 2014, as historic highs in landings more than offset falling ex-vessel prices (Financial Viability of the Fishery: Landings). In 2015, however, revenue dropped sharply due to a combination of continuing weak markets and low catch rates that may have been caused by anomalous oceanographic conditions (Financial Viability of the Fishery: Landings).

Average variable cost net revenue for shorebased Pacific whiting operations increased substantially between the pre-catch share program period and first years of the program due to the increases in landings. In 2015, however, it fell to near pre-catch share levels because of the lower landings and decreasing ex-vessel price.

Information Sources

Matson, S. 2013.  Annual Catch Report for the Pacific Coast Groundfish, Shorebased IFQ Program in 2012. National Marine Fisheries Service, Northwest Regional Office. Seattle, WA.

National Marine Fisheries Service. 2017. 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. 2012. Proposed Harvest Specifications and Management Measures for the 2013-2014 Pacific Coast Groundfish Fishery and Amendment 21-2 to the Pacific Coast Fishery Management Plan, Final Environmental Impact Statement. Pacific Fishery Management Council, Portland, OR.

Wilderness Markets. 2015. West Coast Groundfish in California Value Chain Assessment. Washington, D.C.

Updated: May 2018

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