North Pacific Council Threatens New England Style Fisheries Management Collapse in Gulf of Alaska
SEAFOODNEWS.COM [News Analysis and Opinion] by John Sackton – December 27, 2016
Before the holidays we missed a major story about a North Pacific Council Action that threatens the economic health of the Gulf of Alaska.
As practically the last agenda item on a day when many people had left town, the council tabled without further action all options for the Gulf of Alaska groundfish rationalization at their December meeting.
In doing so, they violated a promise made to the Gulf of Alaska Trawl Fleet, and in my view, have emulated one of the fateful decisions that doomed fisheries management in New England.
Throughout my entire career I have been involved with fisheries and market practices in both Alaska and New England which are the two principal groundfish producing regions of the U.S.
New England has lurched from one fisheries crisis to another and has gone from having a thriving and economically vibrant groundfish sector to one that has collapsed. No processing plant in New England can exist on local landings anymore. Those who continue, use imported fish, including a lot of H&G cod from Alaska.
The wealth of the fishery today exists in lobsters and scallops, and only New Bedford has a significant groundfish processing industry, subsidized by money made in scallops.
The key mistake in New England came in 1982, just after Magnuson was passed, when the New England council, overwhelmed by pressure from fishermen angry about catch limits, voted in a weak management regime that set no hard caps on total landings. They wanted to protect the right of fishermen to fish.
The fishery boomed. Cheating was rampant. Boats were built like crazy. The good times lasted for about 8 years. By the early 1990’s the groundfish fisheries had by and large collapsed. Gone were significant stocks of cod, haddock, redfish, flounder.
Gloucester vessels began sinking mysteriously in droves to collect insurance money.
In 1994, in settlement of a lawsuit by the conservation law foundation, NMFS agreed to put in hard caps on stock removals and a new management system. But the damage had been done.
The groundfish industry was a fraction of its former self. There were far too many fishing licenses for the volume of fish, and over several years the council struggled to put in a catch share scheme, again over considerable opposition from those who claimed they had a natural right to fish.
The current plan, based on catch shares and hard quotas, has stabilized the fishery at a low level where only 25% to 30% of the total TACs for major groundfish species (cod, haddock, pollock, redfish) are caught each year.
The volumes are too small to support a shoreside industry, and the lifeblood of ports up and down the coast, that were thriving 30 years ago, has now slipped away. In the smaller ports, fishermen either have lobster licenses or work part time at other jobs.
The number of people in the industry, both fishing and processing, has declined dramatically.
Much of this was done in the name of protecting the rights of smaller, independent fishermen. But today quotas for some of the species are owned by a few major entities, and most fishermen never have enough to support what they could catch. That is why only 25 to 30% of the TAC is caught each year.
Now lets look at Alaska.
The first thing to notice is Alaska catches fish. In the Bering Sea for decades groundfish catches have been at 2 million tons, mostly of pollock, cod and flatfish, and no fishery has ever collapsed. In fact the Bering Sea has the most successful and productive fishery management in the world.
The Gulf of Alaska is not far behind. Although a much more mixed fishery, on average Gulf groundfish harvesters catch about 85 to 93% of the allowable TAC each year.
There is also a thriving processing industry centered in Kodiak, but with groundfish plants up and down the coast. These plants also do salmon, halibut, some crab, herring and other species.
The key driver of Alaska’s success, in my opinion, has been the early decision to enforce groundfish catch limits as soon as Magnuson was passed. Initially these limits were popular as they were enforced on the Japanese and Russian foreign fleets in the early 1980’s.
But the Alaska also had a long history of supporting limits to preserve fisheries. The International Pacific Halibut Commission was established in 1923. In 1959, achieving state control over salmon, and the power to limit access, were key drivers of statehood. After limited access was put in place in the 1970’s, Alaska’s salmon catches are now as high as they have been in one hundred years.
There was also a boat building boom in Alaska in the 1980’s with a rush to bring vessels into the fleet, and this led to significant overcapacity.
But with limits in place, the expanding number of vessels hit a wall: seasons were reduced to days. Halibut and crab seasons that used to last for months now could be over in as little as a week.
The competition between the offshore and inshore pollock fishery threatened the economic viability of both sectors, as too little opportunity to fish will not support either large shoreside plants or multi-million dollar factory vessels.
So Alaska adopted rationalization programs. The common element in each case was the assignment of fishing rights, often with a market determined value. This allowed for the stabilization of the pollock fleets under the American Fisheries Act. It allowed for stabilization of halibut, with the value of halibut immediately rising 25 to 30% because suddenly the fish could be timed for the fresh market. The Halibut season went from one week to seven months. It allowed for the reduction of the crab fleet from around 280 vessels down to 80 or so.
Not all these rationalization programs were done well, and some of them did result in large transfers of wealth to out of state absentee owners.
An unrestricted market can have negative social impacts on ports and remaining fishermen. One of the wealthiest crab fishermen from Kodiak left town right after the rationalization to spend his millions, leaving the fishery far behind, and leaving those in the fishery still to make his lease payments year after year after year.
So what happened with the Gulf of Alaska?
The trawl fleet was not yet severely over capitalized, but the structure of the fishery was under threat. Rationalization in some form seemed necessary. But there were a number of problems, all highlighted by previously rationalized fisheries.
When halibut was rationalized, the shift to the fresh market caught the shoreside industry by surprise. Much of what they had invested to process and pack frozen halibut suddenly was obsolete. While harvesters received ample payment for their historic investments in the fishery, shoreside processors and communities received nothing.
Furthermore the location of landings shifted. Instead of being landed in Kodiak for processing, a lot of halibut went to Homer where it could go right into the fresh market via Anchorage.
So when the crab fleet wanted to rationalize, processors insisted that their investments be protected or recognized in some fashion. The result was a complex system where harvesters had to match their quota shares with processors, who had processing quota shares. The idea was that processing quota shares would have some value, and could be used by processors seeking to compensate for investments they made in shoreside processing. Although slow to take off, eventually the processor shares had some value.
But the idea of determining who you can sell fish to in advance was difficult for harvesters to accept.
The Gulf of Alaska fishery faced three problems:
First, some fisheries like black cod and rockfish were high value and if harvesters could sell them in an unrestricted manner and only leave the lower value fish for local processors, most local processors couldn’t survive. The halibut situation would repeat itself.
The second problem was that many in Alaska were fed up with high lease payments as a price of rationalization, arguing that it placed an unfair burden on those who remained in the fishery. Some wanted rules requiring owners to actively participate in the fishery or sell. Others wanted better protection for crews, who ended up working for less money in some rationalized fisheries since lease payments were taken off the top of the trip, leaving less money for crew shares.
Finally, bycatch issues had become very important, especially for halibut and salmon, and the Gulf groundfish fleet was expected to greatly improve its bycatch performance, and curtail fishing if strict bycatch limits were approached.
In every fishery where spectacular bycatch reductions have been achieved, it has been done by cooperation among the fleet. If bycatch is shared in a coop or fleet wide, first real time monitoring can be achieved, and second, accountability can be enforced by the coop, forcing individuals to stop fishing if they violate their bycatch limits. This prevents an entire fishery being shut down due to a small group of irresponsible fishermen on bycatch.
When the council imposed stricter bycatch limits in the Gulf for salmon and halibut, they promised the groundfish fleet that they would give them tools to make it work.
Between 2013 and 2016 a rationalization program based on fishery coops in the Gulf was developed. The coops were to be based on fishing history, protecting processors and harvesters. The coops would have flexibility to address bycatch and effort, to end the derby style fishery. The catch shares in the co-ops would be allocated based on history.
The council approved a pilot rockfish program which required vessels and processors to be in a coop together in order to fish. The program allowed for controls on rockfish and protected the historic position of communities and processors.
The fleet also set up a voluntary system for groundfish bycatch. This had the potential to assign bycatch of a group of vessels, and force them to stop fishing if the bycatch limit was reached. But because they operated as a coop, they could allocate and share among themselves, giving the flexibility needed to overcome unusual bycatch problems.
Finally the fleet also wanted the market flexibility that comes with catch shares, but in return was willing to accept a lot of limitations to prevent the less desirable outcomes.
A rationalization plan that embodied a lot of these ideas worked through the council process for several years, until a change of administration in Alaska.
In February of this year, the new six-member Alaska majority on the council indicated it would add a new approach focused only on bycatch to the program under consideration.
In June, at a contentious council meeting, the council added language prohibiting the creation of an economic asset through shares, and prohibiting plans that would create significant economic barriers to entry for new fishermen.
There was a lot of concern that these options would not work, but staff was directed to conduct an analysis for final action at the December meeting.
The analysis came back to much of the original program called Alternative 2 with modifications. The AP passed a motion supporting Alternative 2 with some changes, and also another motion rejecting the by-catch only alternative 3 that had been introduced in February.
After a full day of testimony on the final day of the council meeting, the council voted to take no action, and tabled all further discussion of Gulf Rationalization.
The decision left the trawl fleet with no protection from a derby fishery, and with no legal mechanisms to control bycatch.
It incentivized fishermen to get their fishing in early before bycatch cap limits are reached, and it provided no mechanism for controlling rogue players who have high bycatch.
In short, it sets the Gulf groundfish fishery up for failure.
Already one poor council decision prematurely closed a portion of the Gulf for 120 days, due to poor bycatch allocation.
This decision keeps the race for fish intact, refuses to allow harvesters to cooperatively work on bycatch reductions, and is supposedly made in support of open entry and the preservation of the right to fish. This was the same argument used in New England.
Unless the council reverses course or there is a change of administration in Alaska the Gulf is on a path to fisheries losses.
A death spiral is possible. Lack of bycatch tools will lead a race for fish, and to fisheries shutdowns, reducing the volume of fish landed for processing.
Many marginal processors in Kodiak will find it financially impossible to keep operating as their throughput falls.
Trident, which recently invested millions of dollars in its Kodiak plant to produce state of the art high-quality H&G pollock, is now facing uncertainty as the fishery could prematurely close in any given year. Council members and even Kodiak residents who do not want to see their town home to only one major processor have actually hastened that result. Consolidation is the only way for processors to survive the coming catch reductions.
A falling away of processing infrastructure will hurt groundfish harvesters, who will have fewer buyers and less opportunity to get high prices for their catch.
The fishery will turn to the high-value species to survive, such as sablefish and rockfish, halibut and salmon.
If this decision is not reversed, the days of large-scale processing in the Gulf are numbered, and that type of production will be confined to the Bering Sea.
Instead the Gulf will come to look more like New England, based on a few high value species, and leaving much of its groundfish unharvested and unusable.
The tragedy is that unlike New England, Gulf communities are remote and far from major markets, and do not have good economic futures outside of renewable resources like fishing.
This action is a terrible legacy for any Alaskan administration to leave in its wake.
The Alaskan members of the council have a responsibility to tackle the problems, not throw up their hands and say we give up. All the concern in the world about future fishermen and entry opportunities mean nothing if the structure and productivity of the industry erode. This was truly a cowardly and perplexing decision.