Did the financial viability of the fishery change?

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.

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.

“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

“Well, we had visions of starting markets for Dover on the East Coast using fresh trucks. Get a team driver, and get it there in two to three days. We talked to groups back there that were willing to take a look at it.  We talked to a couple fishermen, and when it came time, they didn’t go fishing for Dover.”
~ Processor

“Black cod prices have gone up and down, but they’re [generally] higher. Petrale’s stable or higher. Our rockfish that we’re delivering has gone up higher. So all of it has definitely increased. And most of that is becasue there’s a lot of markets shoreside. I can go from port to port. I can go from fish plant to fish plant any time in the season I want. I can deliver to who I want. There’s competition, and as long as there’s competition, you’re going to get the price available for the fish.”
~ Fishermen

“I get up, catch the fish in the morning, and have it in in four hours, five hours.  [A small outlet] cuts it, holds it, freezes it in the cooler for a day, and serves it out to people. And there’s a line all summer long trying to get to the door. It’s not just my fish. They buy fish off other boats.  But I have basically an unlimited market for rock cod and lingcod. And I don’t get rich at it, but the limits are very small. “
~ Fishermen

“The larger processors see where under the right conditions, people can benefit from the ITQ program. They may not like the ITQ program, but they see under the right conditions where people can benefit from it. But it will require some changes in the program itself, which the council has been reluctant to make. On the accumulation limits, for example. There’s got to be some switching around, some loosening up of the limits, if for no other reason than to make boats more efficient so that they would be willing to provide fresh groundfish during the course of the year. There needs to be some willingness on the part of the boats to enter into cooperative agreements with processors. Under antitrust law, there is a limit to what the processors can do under a cooperative. But if the fishermen agree among themselves that they will all sell to X plant or X company, whatever, and the company agrees separately that yes, we will pay premium price during this time of year for this groundfish as long as it’s delivered in this fashion and so forth, yeah, there’s opportunities out there. So you sort of achieve the benefits of vertical integration without having vertical integration. But it requires true cooperation on the part of both the fisherman and the processor. And that is one of the downsides of having an independent fleet, is that everybody’s independent.”
~ Processor

“And so gradually it’s less and less and less money for the smaller boats. And so what’s happening is they’re retiring. They’re selling their quotas.  It’s just basically put the small dragger out of business.”
~ Fishermen

“When you talk about big companies that use quota as a line on their ledger, whether it’s accessing more money from the bank or making the company worth more, you get a little bit different tune. It’s all about setting the quotas as high as you can set them and getting the most out of the resource, which is different than the Ma and Pop operations. And it’s part of the struggles I have been butting my head against.”
~ Fishermen

“I would say the biggest challenges for both whiting and non-whiting are all the archaic regulations that are still in place that should have gone away when we moved to an ITQ system. And so we were promised by the National Marine Fisheries Service that under an ITQ system you can fish where you want, when you want. You would have 100% observer coverage, but you would still have more flexibility and freedom. And while we do have some of that, we don’t have all the benefit of being fully rationalized. We still can’t fish in some areas because the rockfish conservation zones that were supposed to go away have not gone away. These were put in place to protect over-fished species, several of which have been rebuilt.”
~ Fishermen

“This whole thing was supposed to have 100% observer coverage on board, 100% accountability for the catch, a pound of quota for everything counted. Okay, fine. Let me go catch what I can catch. But they won’t do that. You still got all these closed areas. You still got all these gear restrictions that are ridiculous now. And why?”
~ Fishermen

“There are some people that absolutely hate this program, despise it, hate the observers. I’m on the other extreme. I think it’s a good program. We just need to fine-tune it, get rid of the old rules, bring the rules up to speed where we’re at now. I think the whole program is still very capable of being a very good program. It’s good for the ocean; there’s no doubt. And it’s for us too if we just get rid of the old frigging rules.”
~ Fishermen

“There have probably been some geographic shifts, like folks will say, “Well, there’s no whiting landed in California anymore,” and there used to be big production in Eureka. But that’s not a function of the ITQ program. That’s a function of where the fish are.”
~ Fishermen

“It’s not all bad. The good part is we can beach fish longer now. We can stay in shallower and fish the stuff that I’d rather fish longer, whereas under the old system we’d move out to the deep earlier. So that’s good. If you get nice weather for two months straight, you can fish every week for two months and bring in whatever the cannery wants of petrale, So that makes it more efficient.”
~ Fishermen

“Right now two months is all I groundfish. I’ll go get my petrale, my black cod, and what little Dover I get with those two species. And when I catch the petrale and black cod, I’m done. I’ve got 1.2 million lbs. of Dover sole, but I can’t catch that Dover because I’ve caught all my black cod.”
~ Fishermen

“We’ve seen quite a few changes. The one that comes to mind first off is vessel behavior. We were told that the IFQ fishery would lead to more opportunity for vessels to develop landing patterns to support the market, and in fact, it’s turned out 180 degrees opposite of that. Since they control the quota over the whole year and can fish at any time they want, they tend to pick the best opportunity in front of them at the time. Now we go through these intense periods of gluts and starvation. In a market that has a lot of substitute competition, notably from imports, it is very difficult to maintain your market base. And that has been a major factor in what I feel is a deterioration in our ability to market this fish.”
~ Processor

“Whiting being rationalized has been really beneficial to this fleet. As you probably see from the data, the whiting fishery, especially the shoreside fishery but I guess the same for the mothership sector, was a very short, derby, dangerous fishery that only lasted a couple of weeks. Now it starts May 15th and lasts through December 31st, so that gives folks the time to plan their activities around their other fisheries, whether it be bottom trawl or something up in Alaska and do it in a safe way at a time when it makes the most financial sense to do so.”
~ Fishermen

“I can go from port to port. I can go from fish plant to fish plant any time in the season I want. I can deliver to who I want. There’s competition, and as long as there’s competition, you’re going to get the price available for the fish.”
~ Fishermen

“If the abundance of a species isn’t recognized by the stock assessment, and you start running into a lot of it, then you got a problem.”
~ Fishermen

“This thing, it just inhibits and inhibits and inhibits. There’s no new opportunity developing here at all. They’ve taken black cod and allowed to be caught by pot boats. Sounds real good on the surface until you figure that black cod’s your biggest choke species for Dover. And then you double the Dover ACL. I mean honestly…”
~ Processor

“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 problem is the initial investment in resources from private foundations as well as from agencies is to get [catch share programs] in, and then a lot of that support goes away, and the fleet is left struggling with a lot of things that the support could actual be helpful in. For instance, now that we’re in an ITQ program, you can catch species with different kinds of gear on your trawl quota. So if you have trawl quota, you can start working on alternative gear types and that can lead to higher value in those products. Yeah, but here’s the catch; there’s really no easy identified funding source to help the fleet to do that. And I see that as a huge problem because it’s like, oh, this is great, you can get more value. There’s no mechanism for them to actually do that.”
~ Government

“Those who were smart enough to acquire permits and acquire black cod to go with their fixed gear permits are making good money on it. Black cod tends to be a higher value species, and pot and longline-caught black cod tends to be higher in value than trawl black cod. There’s a bunch of fisherman up in Ilwaco that were smart enough to recognize what was coming, and they went and they acquired trawl permits and were able to buy the black cod and do the gear-switching or trade it around amongst other fisherman and so forth.”
~ Fishermen

“So I don’t know about excessive consolidation. I don’t think that that’s been borne out. Like the problems with getting fish out of the water, some might say, “Well, because there are less boats” or whatever, and that’s not the case. There are enough boats to catch the fish. It’s just all these other regulations keeping people from getting the fish in my opinion.”
~ Fishermen

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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