The WCPFC plenary starts today in Suva, and I’m only attending online… since there is little that I can contribute to my role in MIMRA that I have not already done in TCC and SC.
Last week, I caught up with some of my regional friends in Suva as I ended my work with the World Maritime University CAPFISH Summer Academy.
One of the participants asked me about my views on the Purse Seine and Longline fleets' future and logistics after I had been a frontline witness to the fishery in the region for over thirty years. This question made me think…, and I like thinking.
I’m sure others may not share my limited and generally unreferenced view. So, for whatever it's worth, here it is.
Purse Seiners
The number of vessels has decreased as older ones retire and larger, more efficient ones join the fleet. Better technologies and eFADs are making it easier to catch fish, so fewer vessels are needed to find the same amount of fish.
The number will go down slowly for the foreseeable future due to the fishing effort caps among the DWFN and PNA's availability of fishing days. Based on my perception, we will keep going down and stabilise between 220 and 240.
The graph below, taken from the document just published by SPC and FFA I bloges last, shows the trend in the number of vessels.
I think the value of each day under the VDS has reached the top edge of what is possible and is being paid mainly through heavily subsidising DWFN. Everyone else is out. The way around this is flagging to PICs. While great for catch histories, this comes with potential liabilities as many small administrations can’t act as fully compliant flag states.
If I had the magic wand, I would move toward a short-term and a longer-term goal.
Short term: the value of the vessel day should be tied up to a performance indicator, and the easiest for me is the FFA Compliance Index. Ergo, the value of the VDS should be linked to it… if your vessel is at the worst performing end (-4, -5), you pay 40% (just as an example). If you are -3, then 10% more, if at -2, the base fee, at -1 (10% discount) and at 0 (15% discount). In the case of bilateral fleetwide negotiations, a similar principle applies as an average for the fleet.
Long-term: This is a bit more ambitious and undoubtedly not original… I grew up on a cattle and ship farm. We all knew that if you sold the animals to the truck driver at the farm gate, you made a bit of money. But you would have made more money if you had contracted the transport to take them to the abattoir and sell them to them. And even better, if you subcontract the transport and the abattoir to process your animals and sell them directly to the distributors… then there is big money.
In fisheries, we sell the tuna to the transport truck drivers… the Purse Seiners pays for the right to catch… and that is it. It has the advantage of being easy and practical. Yet, it gives you a limited margin of negotiation and rent maximisation. Is there a model where we subcontract the vessel to catch the fish in our waters, and they take a %, and then get on carriers (that also take %) to the canneries where they process on our behalf (take a %) and we sell to the distributors? Of course, it requires excellent catch monitoring and financial rusting along the value chain… and here, you subcontract one of the big auditing firms and negotiate a % for them of any money they bring to you… They’ll be your bulldogs, and I’m sure the benefit for the region will be more significant than it is now.
I know it sounds utopian, yet in the last thirty years, I’ve seen the power in tuna fisheries shift from the boat owners to those who possess the fish. Of course, the PICs rely on the billions of dollars generated from fishing each year. However, the tuna industry as a whole is built on what it lacks: the PICs’ Tuna. What alternative options do they have? Other oceans stocks are not as healthy, and their volumes are minimal compared to the WCPO.
Longline
The fleet has been losing money for years in the region and has been going down for a while… Past and more recent studies have strongly suggested that longline fleets presently fishing in the Pacific EEZs and in the WCPO are highly subsidised by their flag states. This is one of the only ways longline fleets have continued operating. I think 1/3 to 1/2 of the fleet only exists because of subsidies (but are maintained under the 1st principle of tuna geopolitics: "If you have a presence, you have rights”). See graph below
When they lose money, the first two things they cut are crew costs (by contracting people from more desperate poor countries) and cutting down maintenance and safety equipment, making the gear even less attractive.
The fleet is now half the size when I left the fishery in 1995. My gut feeling is that it will keep going down until 1500-1600.
The fluctuations in catch from year to year have been on an overall decline over the past 20 years. This coincides with the expansion of the subsidised fleets from DWFNs. The decreasing economic conditions coupled with increasing costs add a further challenge to profitability since
Fuel, being a major component, has steadily increased with only short periods of respite from time to time.
Prices for premium-grade tuna in Japan have been decreasing, and most exporters have had to redirect it to the U.S. market.
USA market returns have increased for premium grade as they recognise the rise in premium grade volume traditionally allocated to the Japanese market. However, this increase is not sufficient to offset the losses from the typically good returns of the Japanese market, which has been struggling since the 1990s and has become uneconomical in the past 5 to 8 years.
Compliance costs have significantly increased over the last 20 years
Capacity enhancing SUBSIDIES granted to DWFN fleets have competed in the same markets of Domestic fleets, which has also added to a downturn in prices and, in some years, seen gluts in the cannery market price, which has seen returns fall by 35 – 40%.
MSC certification has trapped some fleets, with buyers not offering better prices yet demanding certification. At the same time, the costs associated with maintaining it are significantly increasing.
During my fishing days, it was always said that when costs increased, you had to catch more fish by increasing effort, adding more hours to the day, and working harder for longer. Those who succeed will benefit when those who do not fall away.
However, the data and science show that more is needed, as the number of hooks per set has reached a maximum (see below: we are at double the # of soaking hooks than 20 years ago with the same deck technology). Adding more hooks than you can haul within 24 hours reduces catch quality for fish that remain in the water for too long and reduces rest time for crews that must set the line just before sunrise.
The only option for those in the fishery is to reduce costs, leading to the question: What else can be done? It is worth noting that older vessels are significantly more costly to maintain and experience more downtime than newer vessels. So, breakdowns are a triple whammy: no income due to no fishing, while expenditures continue, and then further expenditure (usually significantly) on the repair.
However, buying a new vessel to improve efficiency does not make economic sense in the current economic climate. Additionally, it is impossible to find a financial institution that will lend money to a money-losing sector in a catch-22 situation.
Investment in new vessels at minimal interest rates to reduce downtime is impossible when no lenders will take the risk. This will only exasperate the effort on the resource, and sooner or later, the subsidies will prevail again.