The Future of New England Seafood

Fishing Banks: Fleet diversity and an intro to permit banks

“Fishing Banks” is an exclusive Talking Fish series that will look at the use of permit banks to support a diverse groundfish fleet while encouraging sustainable fishing and the continued rebuilding of fish stocks. This post, the first in the series, explains the inequities that resulted from the methods used to allocate fishing quota upon the implementation of Amendment 16 (sector management), and how permit banks have the potential to help even the playing field.

Let’s talk about fishing banks. No, not the Grand Banks or Georges Bank, the legendary biological hotspots for cod, haddock and halibut. We’re talking today about permit banks, a new strategy in the effort to produce sustainable fisheries in New England to benefit a diversity of fishermen and fishing ports. Are permit banks our friends or foes?

The banks most fishermen know are the ones with tellers and vaults. Many New England fishing families, like other small business owners, have had to take out sizable loans to support their fishing operations over the past twenty years, particularly when catch levels were cut back to rebuild exhausted fish populations. Because the management system used at that time was based on how many “days-at-sea” a fishermen could fish, not how many pounds of fish he was entitled to, bankers either couldn’t figure out or didn’t care what a “day-at-sea” was worth as collateral for a mortgage. Fishermen usually had to pledge hard assets like the family home to get a loan. When those fishermen had a bad year and couldn’t make the monthly payment, they not only lost their fishing businesses, they also lost their homes.

That has changed since Amendment 16 went into effect last year and implemented a major overhaul of the management of the New England groundfish fishery by introducing sectors. For the first time in decades, the region’s fishermen were given a set amount of fish that they could bring to port each year based on their history of landings during a specified qualifying time period. A fisherman could take this allocation to the bank for security on a loan. He could also bring this allocation into his sector, a fishermen-run, community-based cooperative that uses the collective quota of all its members to increase the efficiency, safety and profitability of the members’ businesses.

The shift from days-at-sea to sectors was important, but it was a double-edged sword. By allocating fish to fishermen (rather than days-at-sea), the fishery managers essentially monetized a permit’s value: each permit took on the value of the pounds of fish it allowed the holder to catch each year. The rub was that the managers had to use a qualifying fishing period as the basis for this initial allocation. The more fishing an individual had done during the qualifying period, the more pounds of fish, and thus the bigger the economic windfall, he received.

This initial allocation was inevitably torqued toward particular fishermen — those who concentrated and did well on landing groundfish during the qualifying period.  At the same time, it hurt fishermen who didn’t catch groundfish during that period even though they might have caught a lot of groundfish before or after the qualifying period. Some of these fishermen had done this for conservation reasons — they didn’t want to continue overfishing on depleted stocks. With others, it was circumstantial — they couldn’t get to the fish because there were none left in their area, there were regulatory closures on fishing that prevented them from having access, or they needed back surgery that knocked them out of the fishery for a couple of years.

Because of these factors, the allocation formula and qualifying period tended to favor the larger, better-capitalized boat operations which had big boats powerful and mobile enough to catch the fish wherever they congregated each year. It disadvantaged some smaller and older boat owners who were often trapped fishing in close proximity to their ports and couldn’t chase the fish as easily.

That’s where these new permit banks come in. Permit banks allow entities such as groups of fishermen, states, and even nonprofit organizations to purchase fishing permits, creating “banks” of available permits, and then lease the associated quota back to fishermen, often at below-market prices. They can attach certain conditions to the leases to best serve their communities— for example, quota leasing may be restricted to fishermen who use only certain types of fishing gear, which may be less efficient but better achieve conservation goals while allowing fishing businesses to continue operating. Or quotas can be leased only to owner-operators or to people fishing out of a specific port. This process can help get quota from those who did well in the qualifying period to those who, for various reasons, did not – thus preserving a more diverse fishing fleet

In my next post, I’ll discuss the ways permit banks are currently being used in New England, as well as different goals they can be used to support.


8 Responses to Fishing Banks: Fleet diversity and an intro to permit banks

  • Doug Maxfield says:

    Once again CLf has made projections based on assumptions from shore. Permit banks, with the help of NOAA have given small, day boat fishermen who were making a good living with days at sea no choice but to sell out. The resulting quota will not be returned from whence it came. Sectors have made it possible for the big boats that caused all of the problems in the 70’s & 80’s to move back inshore. In three years there will be no fish left, despite all of our sacrifices over the last fifteen years to bring them back, and NOAA and CLF will blame the fishermen. Blame aside, NOAA and the non-profits that control the agency are in the process of making an epic mistake.

    • Peter Shelley says:

      Mr. Maxfield certainly captures the fears of a number of fishermen in New England about the dramatic management shifts that are happening in the fishery, particularly the sector management program and the quota permit banks. No one I know or work with in the conservation field has an agenda to drive small day boat fishermen out of the fishery.

      Be that as it may, fisheries management is notorious for producing unintended consequences, so it is critical that we pay attention to the real world that fishermen operate in. The hard data this past year to date has not indicated that permit banks or sectors are forcing small-scale fishermen as a group to sell their permits. In fact, there are not many permits for sale on the market at all. If that data changes, we should be quick to react.

      The “big boats” have been operating inshore for all the decades I have been watching this fishery, which was well before the inception of permit banks. We and many conservation groups would support a system that created an inshore fishery for the day boats to pursue their livelihoods free of competition and interference from the large boats that can safely operate offshore. We would welcome an opportunity to work with Mr. Maxfield and others to that end.

      • Doug Maxfield says:

        Under days at sea and the daily weight limit system, boats were not only charged 2:1 for their time at sea but limited to only a small set amount of fish. Larger “trip” boats did not find it worth their while to stay inshore for small amounts of fish at a higher cost to their available fishing time. So Peter, I’m not sure where you were watching from, but you are wrong. However, you are very well spoken.
        Think of it this way: more fishing power + no daily limits + no rolling closures (to protect spawning fish) = whole year classes of fish wiped out in days. Under the old system their may have been forty boats in an area chipping away at 800lbs a day of cod. Now two offshore boats could handle that amount of fish in a day.
        This will be year two where I have to listen to folks from NOAA and the NGO’s that run the agency talk about what the ‘hard’ data says. Apparently, ‘hard’ data hasn’t taken a look around the harbor at all the small boats tied up; or taken a ride around some of the most traditionally productive waters on the east coast; or realized that the cost of quota has become so high that there is no longer such a thing as a ‘start-up’ in the industry.

        • Peter Shelley says:

          I don’t want to push back too hard on you, Doug, because keeping the inshore, day boat fishery healthy is clearly a high priority for you and for many conservation groups, including specifically CLF. When we looked at the fishing history over the past several decades a while ago, we were expecting to see a major consolidation under the old program from the smaller boats to the larger trip boats as you indicate. It wasn’t really there, however, based on the 1994 to 2001 data: 30-50’ groundfish boats declined in numbers in about the same proportion as the biggest boats (+75’)–about 9%. Groundfish landings from 2001 to 2007 showed the 30-50’ boats increased landings by 1% while the largest (+75′) trip boats’ landings declined 31%. Moreover, if you are right that the larger trip boats never fished inshore under the old system, then they shouldn’t have gotten any ACE for those inshore stocks in the initial quota allocation and wouldn’t be able to fish those stocks in the sector program. True, they can trade or lease quota now and get access that way to fish stocks that they didn’t have history for but we haven’t seen any information yet on the degree to which that is happening. The equation you lay out for sector groundfish boats under the new system is not accurate in another sense. There are still rolling closures related to spawning fish that apply to sector boats and even a new closure in Ipswich Bay designed to protect spawning cod aggregations from all fishing. Although theoretically, a sector could ask to be excused from these closures, I am not aware that many have or that they would be authorized. Finally, on using data rather than direct observations, CLF and fishermen have to use the data that’s available. Anecdotal information is important but notoriously unreliable and subjective as far as fishing effort is concerned.

          • Doug Maxfield says:

            Thanks for going easy on me…Looking at these numbers it easy to see How NOAA, CLF and organizations of the like have traditionally been so successful in straightening out our fisheries. I apologize if I have disrespected you in any way. I have just recently learned of what a storied career you have had generating lawsuits to hinder any motions that CLF didn’t agree with; all the while providing no useful thought generation of your own.
            Alas, I am but a lowly fisherman. I catch fish and get paid for those fish. It is much easier for me to keep track of my successes. I sometimes forget that it is much more difficult for the regulators to fabricate evidence to justify their existence. I only wish that there were numbers on paper to help out. That would help keep the anecdotal information at bay.

  • bill skrobacz says:

    does any body got a clue of what it costs to own&operate a boat?

  • Brett Tolley says:

    Just want to add to the conversation on Fleet Diversity. Here’s a link that details the public comments that New England fishermen, fishing families, and folks who care about Fleet Diversity have written to the New England Fisheries Council.

    In particular, fisherman Brian Pearce’s latest comments (scroll half way down the linked page) to the New England Council highlights some of the hard numbers that are out in terms of the disproportionate impacts small-scale fishermen are facing after the first year of New England’s new sector management system.

    Please have a look but in a nutshell the numbers say that landings and revenues are up for larger-scale boats and down for smaller-scale.

    • Peter Shelley says:

      The truth of the matter is that existing data on relative impacts on New England fleet diversity and health, while generally positive, can be twisted to serve anyone’s purposes. The small boat, small coastal community fisheries are both very important and always at the greatest risk in any fishery. NMFS has promised to have better social and economic data by the fall of 2011 to bring this issue into focus. Everyone needs to hold them to that promise.

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