Overfishing and Overcapitalization in Large Scale Fisheries: The Bering Sea Pollock Fishery 19642006

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Overfishing and Overcapitalization in Large
Scale Fisheries The Bering Sea Pollock Fishery
1964-2006, A Case Study
Presented to Pacific Rim Fisheries
Conference Hanoi, Viet Nam March 2006 Paul
MacGregor Mundt MacGregor Law Firm General
Counsel At-sea Processors Association, Seattle
Washington
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Article 63 FAO Code of Conduct for Responsible
Fisheries

• States should prevent overfishing and excess
  fishing capacity and should implement management
  measures to ensure that fishing effort is
  commensurate with the productive capacity of the
  fishing resources and their sustainable
  utilization.

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Definitions

• For purposes of this discussion, I will use the
  following definitions
• Overfishing means a rate or level of fishing
  mortality that jeopardizes the capacity of a
  fishery to produce the maximum sustainable yield
  (MSY) on a continuing basis. Section 3(29)
  Magnuson-Stevens Act
• Overcapitalization represents the degree to
  which a sustainably managed fishery is incapable
  of generating a reasonable return on invested
  capital over time.

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The Eastern Bering Sea
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Alaska Pollock

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Bering Sea Pollock Fishery

• Largest Commercial Fishery in the U.S.
• 2006 TAC 1.5 million tons
• First Wholesale Value 750 Million
• Three Sectors/Allocations
• Catcher/Processors 40
• Shore Side Processors 50
• Motherships 10
• Products Produced
• Surimi
• Fillets
• Block
• Roe
• Meal

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Pollock Catcher/Processor (C/P)(LOA 80-120 m
crew 100 )
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Pollock Catcher Vessel (C/V) (LOA 30-60 m
crew 4-6)
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Evolution of Modern Day Bering Sea Pollock
Fishery

• Phase I 1964-1976 - The Foreign Fishery
• Phase II 1977-1989 - The Americanization
  of the Fishery
• Phase III 19901998 The Race for Fish
• Phase IV 19992006 The Rationalized
  Fishery

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Phase IThe Foreign Fishery1964-1976

• Fishery pioneered by distant water fishing fleets
  from Japan, Russia, Poland, China and Korea
• Fishery began in early 1960s and peaked in
  early 1970s
• Characteristics of Fishery
• No centralized management
• No reliable biomass estimate
• No formal exploitation formula or strategies

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Phase I ContinuedThe Foreign Fishery1964-1976

• Characteristics of Fishery
• Minimal Observer coverage
• Fishery controls or limits imposed through a
  series of bilateral agreements between U.S. and
  flag states
• No viable way to verify catch estimates
• No viable way to effectively monitor catches or
  enforce harvest limits
• Was the fishery
• Overfished? Probably
• Overcapitalized? Dont know/Cant tell

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Eastern Bering Sea-Aleutians Total Pollock
Catch(1964-2004, Catch in MMT)
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Phase IIThe Americanized Fishery1977-1989

• Fishery Conservation and Management Act of 1976
• (Now known as the Magnuson-Stevens Act)
• Extended U.S. fishery management and conservation
  jurisdiction out to 200 miles
• Established series of 8 regional fishery
  management councils to manage fisheries in their
  respective regions, with the North Pacific
  Fishery Management Council (NPFMC) responsible
  for Alaska
• Established priority access for U.S.
  fishermen/processors
• Required management actions to prevent
  overfishing while achieving optimum yield from
  the fishery

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Development of the Fishery Management Plan (FMP)
for Bering Sea Groundfish

• Following passage of the FCMA, the responsible
• agencies (NPFMC/NMFS) took the following actions
• Conducted a comprehensive baseline survey of
  groundfish stocks
• Lowered harvest levels on key species such as
  pollock to prevent overfishing
• Created a Scientific and Statistical Committee
  (SSC) to advise the Council on biological and
  socio-economic issues
• Set hard cap TAC levels for each target species
• Imposed comprehensive observer and catch
  reporting requirements
• Set a series of research priorities including
  biomass estimates for all species under
  management
• Imposed a 2.0 million ton cap on all species
  harvested in the BSAI
• Set prohibited species caps (PSC) limits on
  salmon, crab, halibut

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1977 1989
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Phase II Continued The Americanized
Fishery1977-1989

• Although harvest controls remained firmly in
  place during phase II, there were no limits on
  expansion of domestic harvesting or processing
  capacity.
• The unanticipated influx of such new capacity in
  the late 1980s caught the NPFMC and virtually
  everyone else by surprise. This set the stage
  for the race for fish that was to characterize
  the next decade of management for the BSAI
  pollock fishery.
• Was the fishery
• Overfished? No
• Overcapitalized? Not yet, but vessels/plants in
  the pipeline would result in an overcapitalized
  fishery in the 1990s

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Eastern Bering Sea Pollock Catch(1964-2004,
Catch in MMT)
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Phase III Overcapitalization and the Race for
Fish1990-1999

• As more and more harvesting and processing
  capacity came on line in the late 1980s and
  early 1990s, the harvest caps the Council had
  placed on pollock and other groundfish species
  suddenly became a constraint and US fishermen
  and processors found themselves having to race
  against each other to catch their share of a
  suddenly limited amount of fish. As the decade
  progressed, the race intensified, fishing seasons
  got shorter and shorter and the emphasis shifted
  to catching/processing as much fish as possible
  in the shortest period of time this led to
  further increases in capacity so as to increase
  the fish a vessel could catch or a plant could
  process in a day.

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Phase III Continued Overcapitalization and the
Race for Fish1990-1999

• Unfortunately, it was not until 1995 that the
  Council was able to implement a moratorium on
  further entry into the fishery and 1999 before a
  license limitation program was implemented. The
  door was closed on the barn long after the horse
  had escaped. Throughout this period, and despite
  the hardships that the race for fish was creating
  for the fleets, the council maintained a
  conservative, science-based, exploitation
  strategy for pollockeven reducing the quota in
  those years when stock conditions dictated. Thus,
  while the fishery became severely overcapitalized
  during this period, overfishing was not a
  problem.

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Phase III Continued Overcapitalization and the
Race for Fish1990-1999

• Consequences
• A series of acrimonious and divisive allocation
  battles between the inshore and offshore
  components of the BSAI pollock fishery disputes
  that demanded large amounts of Council staff and
  other resources as the Council struggled to
  fashion sectoral allocations between the inshore
  and offshore components of the fishery.
• The unintended consequence of such sectoral
  allocations, however, was the creation of two
  parallel intra-sectoral races for fish
• Shorter and shorter seasons a fishery that took
  the pollock C/P sector 365 days to prosecute in
  1989 had shrunk to 55 days in 1997.

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C/P Fishing Days1990-1997
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Phase III Continued Overcapitalization and the
Race for Fish1990-1999

• Consequences
• Economic instability and numerous bankruptcies
  that only tended to undermine the viability of
  the remaining fleet as capital assets were
  recycled back into the fishery at a discounted
  value
• Wasteful fishing practices that led to high
  bycatch and discard rates and low utilization
  rates
• To its credit, however, the Council held firm on
  harvest caps and maintained a conservative
  approach to its exploitation strategy for the
  BSAI pollock fishery.
• Was the fishery
• Overfished? No
• Overcapitalized? Yes, definitely

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Phase IV The Rationalized Fishery1999-2006

• In 1998, the U.S. Congress intervened in an
  effort to
• End the pollock allocation battles
• Stabilize the fisheries
• Reduce the size of the fleets
• Rationalize the fishery
• The vehicle was the American Fisheries Act (AFA)
  of 1998.

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Phase IV Continued The Rationalized
Fishery1999-2006

• The AFA did a number of things
• Provided a loan of nearly 100 million to buy out
  nine pollock catcher/processors (representing
  about 10 of the annual pollock harvest)the
  bought out vessels were scrapped
• Reapportioned pollock between the various sectors
• (40 to catcher processors, 50 to shoreside,
  10 to motherships)fixing those allocations in
  the law and the number of vessels/sector
• Most significantly, the AFA facilitated the
  creation of pollock harvesting cooperatives
  whereby the vessels in any given sector could
  rationalize their fishery by entering into
  private ordering arrangements under which the
  participants in a sector divided the sectors
  annual allocation among themselves

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Phase IV Continued The Rationalized
Fishery1999-2006

• As a result of the co-operatives that were formed
  in each of the sectors, the member companies have
  been able to
• Slow down their harvesting/processing activities
• Reduce bycatch of undesirable fish
• Reduce discards
• Increase utilization
• Further reduce fleet size by tying up surplus
  vessels
• Was the fishery
• Overfished? No
• Overcapitalized? No

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Pre and Post-AFA Fishing Patterns
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C/P Fishing Days1990-2005
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Pre and Post-AFA Recovery Rates
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Conclusion

• Based on the experience with the Bering Sea
  pollock fishery, it is clear that a large,
  industrial scale fishery can be managed in a
  sustainable way a way that prevents overfishing
  on the one hand while avoiding overcapitalization
  on the other. The essential ingredients are
• Science-based management
• Conservative quotas based on ecosystem
  considerations
• Reliable monitoring/catch accounting
• Strict enforcement of quota caps
• Closure of fishing when TACs are reached
• Avoiding the race for fish that inevitably
  flows from open access, Olympic style
  fisheries and
• A rationalization system that creates the right
  incentives for responsible behavior

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Certificate of Sustainablity
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