the achievements of the pacific “whiting conservation cooperative” rational collaboration in a...
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The Achievements of the Pacific “Whiting Conservation Cooperative”
Rational Collaboration in a Sea of Irrational Competition
Gil Sylvia
Marine Resource Economist
Oregon State University
Heather Munro
Munroe Consulting
Pacific Whiting Management in 1996
• Allocation to three sectors• Olympic style fishing • Overcapitalization • Significant loss in regional and national fishery
benefits • Significant failure in meeting the objectives of the
PFMC’s Groundfish Management Plan
Pacific Whiting Management in 2003
• Allocation to (Four) Fleet Sectors• Olympic Style Fisheries in only two sectors• Overcapitalization in only two sectors• Significant loss in regional and national fishery
benefits to only two sectors• One sector is achieving (most) of the PFMC’s
Groundfish Management Objectives
The Story of the Pacific “Whiting Conservation Cooperative”
• What happened before, during and after 1997?
• What led to the transformation of one sector while other sectors engaged in “irrational” competition?
• Can we apply principles to other fishery management challenges?
• Cooperation versus “Cooperatives”: Are Coops a substitute for ITQ’s?
Biology and Natural HistoryMerluccius Productus
• A true “hake” (1 major and 2 minor stocks)• Largest stock of fish south of Alaska• Ecologically important • “Average” stock size 1-4 MMT• “Average” harvest 250 TM• Range of potential harvest 100-500 TMT
Biology and Natural HistoryMerluccius Productus
• Average fish size: two pounds• Moderately productive/long lived (15-20 yrs) • Variable recruitment (.1-8 billion annually)• Myxosporidean parasites-protease enzymes • Mid water-long annual migrations
Pacific whiting landings (1966-2002)
0
50,000
100,000
150,000
200,000
250,000
300,00019
66
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
tribal
shoreside
mothership
catcher/processor
JV
foreign
History of the FisheryForeign Domination 1880-1980
• Sporadic small harvests back to 1880• Considered nuisance/trash fish• 1950’s small domestic harvest animal food• 1966 Soviet Union/Japan (H&G and fillet blocks,
meal)• 1970’s and 1980’s additional European and Asian
vessels
History of the Fishery Domestication 1980-1989
• 1976 MFCMA—allocative preference for US fishermen
• 1978—first foreign/domestic joint venture – Soviet Union paid $.05/lb
• 1980’s Japanese begin producing surimi using protease inhibitors
History of the Fishery Regulatory Development
• Open Access (until 1994)• Total Allowable Catch (TAC) • Season opening—transitioning later
– (April 15, May 15, June 15) • Minimum mesh size • Bycatch management/monitoring/quotas
– Area closure S of 42 N for at-sea sector• Sector allocation (1990’s)
History of the FisheryAllocation Wars 1990-1996
• 1990—first factory trawler harvests by Alaskan pollock fleet– overcapitalization of factory trawler fleet – testing ability to make surimi from whiting
• 1991– fishery totally domesticated– at sea component harvests 91% of TAC– factory trawlers harvest 60% TAC
History of the FisheryAllocation Wars 1990-1996 (continued)
• Olympic race for the resource among all sectors• Seasons begin to decrease
– maximize harvest and throughput per vessel– bycatch problems– 10% reduction in potential TAC– decrease in product quality– decrease in product recovery
History of the FisheryAllocation Wars 1990-1996 (continued)
• PFMC “shocked” at rapid capitalization– 1991 Council tries to force vessels to either harvest or
process – Commerce Disapproves plan
– 1992 Council allocates 98,000 mt to at sea processors and 80,000 shore based with reserve
– 1993 Council proposes 74% quota in favor of “shore-based priority”
• Commerce disapproves one day before season opening
• Approves 70% to at sea sector
History of the FisheryAllocation Wars 1990-1996 (continued)
• Fall 1993 -- Industry Committee develops allocation plan– Three years– 60% allocated open competition– 40% onshore
• 1994 Groundfish Limited Entry– Factory trawlers are “shocked” -- don’t qualify
• Ten factory trawlers buy their way back in• 10 –11 permits per factory trawler• Buy out 109 groundfish permits @ $15 M total • Four companies: Glacier Fish Company(1), Tyson Seafood Group (3), American Seafoods (5), Alaskan Ocean
(1)
Formation of the Pacific Whiting Conservation Cooperative
• 1994-1996: “Irrational” competition continues• Whiting season continues to shorten • 1996 New approved five year allocation scheme
– 42% on-shore, – 24% motherships, – 34% factory trawlers, – tribal allocation off the top
Formation of the Pacific Whiting Conservation Cooperative (continued)
• Factory Trawlers develop common understanding of problems and opportunities
• Recognize advantages for cooperating and voluntarily allocating quota within their sector– Lengthening season
– Reducing bycatch
– Improving product recovery, quality, and “full utilization”
– Meeting individual company needs• Problem is Antitrust Laws
Formation of the Pacific Whiting Conservation Cooperative (continued)
• Investigated the formation of legal cooperative behavior– initial investigation for Alaskan pollock
• The Fisherman’s Cooperative Marketing Act– provides antitrust exemptions for the fishing industry
– intended for “small” producers insufficiently integrated
Formation of the Pacific Whiting Conservation Cooperative (continued)
• 1996: Discussions with Anti-Trust Division -Justice Dept– potentially could allow limited harvesting
arrangements if demonstrated “competitive” • increased efficiency (lower production costs)
• increased production (higher product recoveries)
• potential price decrease
Formation of the Pacific Whiting Conservation Cooperative (continued)
• Based on preliminary discussions with Antitrust:– the four companies allocated shares in “one
afternoon”
• “Membership Agreement” of WCC– transfer shares without constraint– full time observer coverage – report catches to private centralized reporting service– penalty agreements for exceeding shares– other private rights of action for violating the
Agreement
Evaluating Success of the Whiting Conservation Cooperative
• May 27, 1997 Anti Trust Division issues favorable decision
• Season performance before and after May 27 decision: – multi-vessel companies immediately transferred excess capacity
out of the fishery
– “efficient” operators leased shares from “inefficient” operators
– product recovery rates increased from 17.2% to 20.6%• increased revenues of $5.1 Million (Profits $1-2 million)
– reduced yellowtail bycatch from 2.47kg/mt to .99 kg/mt
– total utilization of allocated strict total catch limit
Evaluating Longer Term Success of the Whiting Conservation Cooperative
• Longer seasons
• Reduced bycatch
• Higher product recoveries– 24% recovery??
• $10 M annual additional revenue ($2-4 M profits)
• Cooperative research (landings levy)
Pacific Whiting Fishery Season Length
Season Length (days)
0
50
100
150
200
2501
99
2
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
Year
Nu
mb
er
of
Da
ys
Shoreside
Mothership
Catcher / processor
Salmon bycatch in Whiting Fishery (all sectors)
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
1996 1997 1998 1999 2000 2001 2002
Year
by
ca
tch
ra
te p
er
me
tric
to
n o
f w
hit
ing
catcher/processor
mothership
shoreside
tribal
widow bycatch in the pacific whiting fishery (all sectors)
050
100150200
250300
350400
1997 1998 1999 2000 2001 2002
Year
Me
tric
to
ns catcher/processor
mothership
shoreside
tribal
Cooperative Management and Research Activities of the WCC
• Pre-recruit surveys• Hydro-acoustic stock research• Bycatch reduction management and research• Future research and management projects
– optimal timing of harvest?• higher product recoveries• higher surimi quality and prices• higher TAC/OY • balanced against opportunity costs of harvesting pollock
Risks to Whiting Conservation Cooperative
• Potential victim of own success?– more profit, and/or – increased quota, and/or– available cheap permits, then– profitable for new entrants into fishery without compensating
existing members • Growing bycatch constraints
– Ex: widow rockfish may be only 1/3 amount available in 2004 (200 mt) compared to 2003
Why Are Other Pacific Whiting Sectors Still Engaging in “Irrational” Competition?
• Problem of “large numbers” and transaction costs• Integrated versus non-integrated seafood sectors
– shorebased processors cannot secure rights to the fish
• Antitrust impediments • Overcapacity problem • Ineffective institutions
– limited entry not very limiting
• Ban on ITQ’s
Conclusion• WCC succeeded due to:
– small numbers/well known players
– relatively secure allocation
– defined rights (license holders)
– integrated industry
– mutual understanding of costs/benefits
– similarity in operations (and harvest histories)
– win-win for all players
– and smart managers and lawyers
Conclusion• “Cooperative behavior” in managing a club good is a
feature of fishery systems that allocate relatively secure rights
• IFQ’s, Cooperatives, and other institutional structures, are not mutually exclusive—they are complementary or mutually reinforcing given common needs and interests of the rights holders
• Whether Coops are a better approach than e.g., ITQ’s etc. depends on fishery management objectives, legal constraints, other factors –need empirical research
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