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Exploring the Business of Groundfish Sectors

May 28, 2014
Spring 2014

As part of GMRI's ongoing technical assistance to groundfish sectors, Fisheries Technical Assistance Program and Research staff are collaborating on a multi-year project evaluating the viability of sectors as businesses. The project will also explore how sectors can leverage market pricing and leasing data to improve the effectiveness of their organizations. Providing these data streams could help inform their members how to manage their allocations and landings schedule collectively as a business entity. The project has been a joint effort led by our Marine Resource Economist, Jenny Sun, the Fisheries Technical Assistance Program, and with Andrew Kitts at the Social Sciences Branch of NOAA Fisheries Northeast Fisheries Science Center. The impetus for this work started in 2010 during the first year that groundfish sectors were implemented and when the future of federal financial assistance to sectors was uncertain. This project is one of several initiatives GMRI has undertaken to help strengthen both the institution of sectors as 501(c)5 nonprofit corporations, and the individual fishing businesses that provide the majority of the revenue for sector operational expenses.

Each year of this project builds on analysis from the previous year, with the first year focusing on development of business profiles for sectors. Each business profile included a compilation of landings and revenue for groundfish and non-groundfish species, quota leasing and utilization rates, and a predictive model for budget planning in fishing year 2012 that integrated changes in the sectors annual catch entitlement (ACE), or quota. During this phase, the project team worked directly with sector managers and the board of directors of seven groundfish sectors. This analysis revealed that groundfish fishermen are increasingly reliant on non-groundfish species such as scallops, whiting, and lobster to support their businesses. For sectors, this growing reliance away from groundfish species presents new challenges.

Building off of the business profiles from the first year, the projects second year delved into the seasonality of landings and market prices in an effort to better understand how a sector member could change their fishing behavior to increase the value of their landings. One potential strategy for dealing with volatile prices in the groundfish market is to collaborate across sectors to maintain a steady supply of fresh catch to develop innovative marketing channels for the high quality niche market. In order for this to happen, each sector would need their members to consider arranging their fishing activity to avoid glutting the market during certain seasons and to smooth out their combined landings in order to secure a higher price.

The projects third year, which is ongoing, is building on the market information and analyzing the relationship between fishing operations, utilization of ACE, and leasing efficiency. Following completion of the third year analyses, the project team plans on disseminating the results to sector fishermen through various outlets.

The executive summary of the first two years of the project is available online and a full report will be available later this year.