Community-based Sectors for the New England Groundfish Fishery

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nonexistent since 1997, and the Midcoast Maine and Portland fleets have been shrinking over the last five years. The Portland Fish Exchange is now operating with unsustainable losses. Its potential closure threatens to further undermine the viability of the Maine groundfish fleet. Sector management creates opportunities for groups of fishermen to develop operating plans that allow them to fish more efficiently, increase access to stocks for which catches are currently well below TACs, land and sell fish they are currently forced to discard because of trip limits, and potentially reduce costs by consolidating operations on fewer and the most efficient vessels. The potential benefits of sectors go beyond allowing more effective and efficient use of catch allocations. They empower sector members to develop innovative ways to better manage the resources they have access to, and they can create strong incentives to conserve fishery resources since their catch allocations in future years are directly related to the size and productivity of the fish stocks. Sectors may also provide a means for communities to retain or regain their access to the groundfish fishery. The industry has been slow to take up sectors and has yet to take advantage of the full regulatory relief they offer. Fishermen have lacked a clear understanding of the potential benefits of sector management and whether those benefits outweigh the considerable effort and costs required for sector formation and operation. However, the additional restrictions on effort included in Framework 42 and the looming prospect of hard TACs following reauthorization of the Magnuson-Stevens Act appears to have tipped the balance. Technical assistance provided by the Gulf of Maine Research Institute also facilitated development of proposals by two sectors which may have spurred development of others. There are now up to 19 new sector proposals that could be authorized by the Council under Amendment 16 to the Multispecies FMP. It is possible that sectors could account for the majority of groundfish activity if these new sectors begin operating 2009, but it is too early to know either the number or size of the sectors that will ultimately be approved. The economic evaluation of prospective sectors in Portland and Port Clyde suggest that sectors can realize substantial increases in profits relative to status quo management. The gains estimated in the foregoing analysis are more than sufficient to offset the costs of establishing and operating a sector, even for the comparatively small Port Clyde sector. The gains in revenues and profitability projected in the analysis are due solely to higher rates of utilization of the sectors’ shares of TACs for species for which landings have been well below target TACs and optimal yield. The projections assume the sectors will be able to catch 85% of their species allocations on average. These higher utilization rates should be possible as result of relaxation of effort constraints including limited DAS and trip limits that currently force vessels to turn some marketable fish into discards. However, the ability to fully utilize allocations will depend on the sectors’ ability to find fish for which they have allocations in the specific areas where they fish, and localized depletion of some species in the area fished by a particular sector could prevent this. If sectors are able to trade ACE, as is currently being considered, sectors may be able to adjust ACE portfolios to more closely match the relative availability of species and thereby achieve a higher level of utilization of their ACE allocations. Additional gains not included in the analysis could be realized by concentrating through consolidation of fishing onto fewer an the most efficient platforms and by increasing the prices of catch through improved quality and forward contracting. This move toward sector management presents both risks and opportunities for fishing communities that have been struggling under current management. Overall, sectors have the potential to improve profitability of participating fishermen. However, sectors also create 50
opportunities for consolidation of the industry that could reinforce the trend of consolidating landings in larger ports at the expense of smaller fishing communities. Additionally sectors make it possible to move fishing privileges from smaller boats to larger boats which was not possible with DAS leasing. On the other hand, sectors may also mitigate some of the disadvantages faced by smaller, less mobile boats and even create some potential advantages (e.g. development of high value markets for dayboat fish). Sectors offer an opportunity for communities that value their access to the groundfish fishery to actively maintain it through a partnership with community fishermen. Fishermen will require organizational and technical assistance to set up and operate a sector. Community assistance may be critical to sector development and also the key to retaining an active groundfish fleet in the face of incentives and opportunities to move fishing operations or ACE allocations to larger ports. Sectors also offer the possibly of establishing some community ownership of fishing rights and potentially ongoing access to future entrants through creation of a permit bank partially or fully owned by a community entity. By purchasing permits and associated catch history, a community entity could own a share of a sector’s catch allocation and make it available to sector members as an incentive to retain vessels in the community. Such a permit bank might also provide a means for communities to provide ongoing access to new fishery entrants, perhaps through an apprenticeship program. The economic feasibility analysis of permit banks presented in this report suggests that a permit bank could be a profitable enough investment to finance permit acquisition with a commercial loan and still provide substantial surplus benefits. However, uncertainty about the security of the fishery access right associated with the permit and the ability of the permit bank to utilize that right may make it difficult for communities or groups of fishermen to find funding to acquire permits due to the risk. Establishment of a fixed baseline for sector allocations will increase the level of security for such an investment, but the possible transition of the fishery to sector or other forms of management still creates considerable risk and uncertainty. A loan guarantee program might be needed to help lenders manage the risk associated with loans for permit banks. Alternatively, a mechanism for direct government loans to community permit banks could be created. Direct involvement by communities in sectors requires a more active role in the fishery than most communities have taken to date. While many communities have created or administered programs to assist fishermen, the concept of direct involvement in marine fisheries management and particularly of ownership of fishing rights is likely to meet resistance from community leaders as well as fishermen. Some fishermen express philosophical objections to community entities owning fishing rights, and communities generally do not have the experience or the mandate from tax payers to take an active role, never mind equity position, in marine fisheries. However, community involvement in management of shellfish fisheries in tidal areas is not uncommon in New England states and does provide some precedent. Notwithstanding the lack of active participation of communities in establishing groundfish sectors, several groundfish sectors are likely to be de-facto community-based. The two Cape Cod sectors, which may be reformed as new sectors with new allocations, have been communitybased from the start and have been exploring the development of a permit bank. The Port Clyde sector is community-based, and some of the sectors proposed by the Northeast Seafood Coalition may also be geographically defined community-based sectors. A non-profit entity in Gloucester has been created to administer several million dollars from a settlement process for establishment of an offshore LNG terminal. This money was set aside to provide additional access to Gloucester fishermen in the form of leased DAS, but could also fund the establishment of a permit bank to be 51
Page 1 and 2: Community-based Sectors for the New
Page 3 and 4: Table of Contents Executive Summary
Page 5 and 6: Community leaders in Portland and P
Page 7 and 8: of community-based permit banks. Th
Page 9 and 10: 1.0 Introduction The groundfish fis
Page 11 and 12: Although Amendment 13 effectively e
Page 13 and 14: somewhat vague on how the allocatio
Page 15 and 16: 2.2 Experience with Existing Sector
Page 17 and 18: me to explore the idea further and
Page 19 and 20: period is that which was used to de
Page 21 and 22: shown above in Table 2. Revenue pro
Page 23 and 24: Table 3a: Port Clyde Sector Revenue
Page 25 and 26: ecruitment and could be either high
Page 27 and 28: increased. They also have caught a
Page 29 and 30: 3.2.1 Strawman Sector Structure and
Page 31 and 32: Table 8: Portland Sectors A and B V
Page 33 and 34: discussed earlier these price proje
Page 35 and 36: Table 9b: Portland Sector A Revenue
Page 37 and 38: Table 9d: Portland Sector B Revenue
Page 39 and 40: Table 10b: Portland Sector A Revenu
Page 41 and 42: Table 11b: Portland Sector B Specie
Page 43 and 44: vessels would be leased to sector v
Page 45 and 46: is ostensibly to reduce excess capa
Page 47 and 48: Table 15: Projected Total Revenue,
Page 49 and 50: later. However, rolling baselines c
Page 51: 4.4 Communities without Catch Histo
Page 55 and 56: References Alexander, Yvette 2006.M
Page 57 and 58: Appendix A: Landings and revenue pr
Page 59 and 60: Appendix B: Groundfish Price Model
Page 61 and 62: Appendix C: Sector Proposals Submit
Page 63 and 64: Port Clyde Community Sector Glen Li
Page 65 and 66: Full Retention All fish caught 1. e
Page 67 and 68: Reasons for Existence: 1. end overf
Page 69 and 70: Gloucester Fixed Gear Sector Peter
Page 71 and 72: New Bedford Channel Trawl Sector Ri
Page 73 and 74: Point Judith / Southern New England
Page 75: Pier 6 Initiative Michael Walsh Req

Community-based Sectors for the New England Groundfish Fishery

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