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.


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