Crab rationalization a decade in

The North Pacific Fishery Management Council is set to meet next week in Kodiak.

One of the items on the agenda is this 10-year review of the Bering Sea and Aleutian Islands crab rationalization program.

You remember crab ratz, right?

It was a revolution in crab fishery management, implemented in the fall of 2005. It involved assigning individual fishing quotas to what was a dangerously competitive crab fleet. The program also established processing shares for the companies that pack the lucrative catches of king and Tanner crab.

So, how has this program worked out?

That's what the 10-year review tries to tell us.

Deckboss imagines very few will care to read the full 244-page report. So you might want to skip straight to Page 226 of the document (Page 235 of the PDF) for the summary and conclusion.

One of the most interesting points in the conclusion is that "incremental consolidation continues in both the harvest and processing sectors."

This builds, of course, on the radical fleet consolidation we saw right after rationalization was implemented.

A deeper discussion of fleet capacity and participation begins on Page 69 of the PDF. Some really interesting details there.

And be sure to check out the section on crew employment and earnings beginning on Page 106 of the PDF. My impression from the discussion and tables in this section is that captains and crewmen — those fortunate enough to still have jobs in the reduced fleet — are making considerably more money than they did pre-rationalization. But perhaps you will read the data differently.

The council isn't expected to make any changes to the crab rationalization program at this meeting.

The season for lucrative council business

The North Pacific Fishery Management Council begins a seven-day meeting tomorrow at the Hilton hotel in downtown Anchorage.

The Christmas meeting is always a big one for the council, the time when catch limits are set for the coming year.

Looking over the packed agenda, three items stand out:

Halibut — The council will receive a report from the National Marine Fisheries Service that explains how the embattled halibut catch sharing plan might be saved — or simply killed.

Crab — The council has blocked out a full day to talk about lingering issues with "crab rationalization," including the theory — will Deckboss get in trouble for using that word? — that crewmen have taken a pay cut under the new management regime.

Groundfish — As already mentioned, the council will set the "total allowable catch" for important species in the Bering Sea and Gulf of Alaska. I'd be surprised to see much excitement here. Government scientists seem to have blessed a Bering Sea pollock TAC well in excess of 1 million metric tons, similar to what the industry enjoyed this past season. Another important Bering Sea target, cod, could see a decent increase.

Council actions are subject to U.S. commerce secretary approval.

Steller rules, Gulf bycatch, harvest limits and more

We've got the North Pacific Fishery Management Council meeting all week here in Anchorage, and the agenda is packed.

Here's a rundown of the major items:

• The council likely will learn the federal government's final stance on fishery restrictions in the western Aleutians to conserve prey for endangered Steller sea lions.

• The council will hear a report on crab rationalization, five years after implementation.

• The council will discuss the recent high Chinook salmon bycatch in the Gulf of Alaska groundfish harvest. Halibut bycatch is on the agenda, too.

• Finally, the council will take care of one of its main yearly chores: setting catch limits for pollock, cod and other groundfish in the Bering Sea and the Gulf.

Crab rationalization, five years in

The staff of the North Pacific Fishery Management Council has released a new report titled "Five-Year Review of the Crab Rationalization Management Program for Bering Sea and Aleutian Islands Crab Fisheries."

Find the document plus a couple of important appendices on the council's website.

One appendix is a "social impact assessment" of crab rationalization, while the other analyzes the "safety performance" of the program.

Altogether, we have nearly 600 pages of reading here. The perfect pastime for a long Thanksgiving weekend!

Crab bits

The lucrative Bristol Bay red king crab and Bering Sea snow crab fisheries opened at noon Friday. Get your drawn butter ready.

Here are a few notes to mark the season start:

• It's been five years since the crab fisheries were "rationalized." That is, since the quotas were sliced into individual shares for fishermen and processors. That took a lot of the fight out of the fisheries. Another effect was the drastic consolidation of the fleet; once the race for crab ended, the need for so many boats evaporated overnight. Here's the trend: 101 vessels fished in the first year of rationalization, 91 in the second year, 87 in the third, 88 in the fourth and 78 in the fifth. For this season, 63 crab boats had registered to fish as of opening day. That's a far cry from the 250-plus boats that used to go after the top prize, Bristol Bay red king crab, prior to rationalization.

• The Alaska Department of Fish and Game is losing its longtime crab fishery manager at Dutch Harbor. Forrest Bowers is leaving at the end of the year to take a new position with the National Marine Fisheries Service in Juneau. Thanks, Forrest, for all your help over the years.

• Finally, although the crab fisheries are tamer than they used to be and nowhere near as deadly, what would a new crab season be without a TV film crew to stir things up? From the Unalaska police blotter:

Disorderly conduct, Oct. 14 — Drunken crew members of two vessels from the quasi-reality show "Deadliest Catch" squared off against each other in the lobby of the Grand Aleutian hotel. Those interviewed claimed "bad blood" between the two vessels had instigated the altercation.

Crabber: Let's cure 'indefensible' lease rates

Deckboss asked crab boat owner Ian Pitzman for permission to post the following letter calling attention to what he believes is a serious problem with crab rationalization, the reform that converted Alaska's major king and Tanner crab fisheries to catch and processing shares beginning in 2005.

The letter is addressed to the board of ICEPAC, the Inter-Cooperative Exchange Policy Advocacy Committee. ICEPAC is an umbrella group for many Bering Sea and Aleutian Islands crab harvesters.

I'd sure like to elaborate on this important letter, but lacking sleep I'll just post it for now and maybe circle back later.

May 10, 2010

ICEPAC Board of Directors

Mr. Chairman:

As a concerned member of your organization, I would like to address the sensitive subject of lease rates, a.k.a. "royalties," in the Bering Sea crab fisheries. I believe that the current environment, with lease rates at seventy to eighty percent, is unsustainable. In its short tenure, ICEPAC has proven very effective in addressing problems that confront our changing industry. With regard to the Bering Sea crab fisheries, lease rates are, by far, the biggest issue to everyone actually working on the water. Responsible vessel maintenance comes at no small price. Unsustainably high lease rates, paid out before vessel and crew costs, create a very real safety issue. Furthermore, these high rates are stifling to new entrants in this fishery. I am certain that these are unintended consequences of crab rationalization.

To be true stewards of a fishery, sometimes tough choices must be made. This is a tremendously valuable natural resource and we must make sure an equitable share remains on the water for the benefit of the vessels and their crew. I suggest to you that it is in our best interest as an industry to address this issue cooperatively. If the will does not exist for a voluntary agreement amongst harvesters, I feel it is our responsibility, as a group, to ask the NPFMC for lease rate regulation.

I have been a Bering Sea crabber all of my adult life. I live in Homer, Alaska, and I own two crab vessels, one of which is currently fishing. I have a modest amount of quota, and I lease from four other quota holders to maintain my fishing enterprise. Because I bought my first boat in 2006, just after crab rationalization, quota leasing is absolutely critical to my survival in this fishery. As I see it, businesses like mine are the model for future access to the industry. Short of inheritance, for an Alaskan to progress from the deck to wheelhouse to vessel owner, they must tread my path. This is a path of opportunity that must remain accessible.

Some may say that I can just opt out. If I can't afford the lease rates, just don't participate. But all that accomplishes is another boat tied up, more jobs lost, and one more voice silenced. I feel that this is an industry-wide problem and it must be addressed broadly. I can't ask my leaseholders to take less than the market rate for their quota, just as they wouldn't ask me to catch it for more. What is needed is an industry-wide lease rate that has variable potential, taking into account quota value, vessel operating costs, fair crew wages, etc. Perhaps an annually arbitrated cap verified by EDR would be prudent.

My intent in writing to the board today is twofold. First, I would like to see this subject "out of the closet," so to speak, and roundly discussed in public prior to the Council addressing it later this fall. Secondly, I would like to see our group take up this issue at the Kodiak ICEPAC meeting on May 27th. Let us be proactive rather than reactive. Everyone is well aware that seventy to eighty percent lease rates are indefensible.

Thank you for your attention to this matter.

Sincerely,

Ian Pitzman

Fortune Sea LLC
Homer, AK
F/V Cape Caution & F/V Kona Kai

Managers move to save snow crab fishery

The Alaska Department of Fish and Game wants to get rid of a regulation that could shut down the upcoming Bering Sea snow crab fishery.

The underlying problem is that the catch limit could be drastically lower this season because the depressed snow crab stock hasn't made enough progress under a 10-year rebuilding plan.

Under existing state regulations, the stock must be capable of safely supporting a commercial catch of at least 15 million pounds (not including community development quota). Otherwise, the fishery can't open.

But the rule is archaic, the department argues, imposed to control a fleet that once was much larger with each boat racing to catch as much crab as possible. The worry then was that a big and powerful fleet could overshoot the quota before managers could whistle the harvest to a halt.

Beginning in 2005, the universe changed and each boat received its own quota. The racing stopped and the fleet consolidated. So the need for a sizeable catch limit no longer is necessary, as boats can rationally fish a quota of less than 15 million pounds without worry of overharvest.

The department is asking the state Board of Fisheries for expedited consideration of a proposal to drop the rule.

We'll know soon how big, or small, the snow crab total allowable catch (TAC) will be for this season.

Fishery scientists on what's known as the Crab Plan Team are meeting in Seattle this week to go over the latest stock assessment.

The National Marine Fisheries Service has indicated it'll announce a maximum harvest rate by Sept. 21, keeping both the stock assessment and rebuilding plan requirements in mind.

Last year's TAC was 52.7 million pounds of snow crab (plus CDQ of 5.9 million pounds).

Crabbers are unlikely to enjoy a limit that large when the new season opens Oct. 15.

Economist: Crab revolution favored fishermen

Here's a new academic paper that's sure to stir some crabby conversation.

Scott Matulich, a Washington State University economics professor, wrote the paper for the journal Marine Resource Economics.

It argues that crab rationalization, the 2005 management overhaul that divided the Bering Sea crab fisheries into individual catch shares as well as unprecedented processor shares, upset the balance between crabbers and processors.

The bottom line, according to Matulich: The processors got screwed.

Looking at just the important Bristol Bay red king crab fishery, he calculates the "gross value" of the individual fishing quota (IFQ) is $436 million, while the individual processing quota (IPQ) gross value is under $24 million.

Matulich argues the crab rationalization program's arbitration feature, designed to settle price and other disputes, has disadvantaged the processors.

"Seven price arbitrations have occurred since policy implementation," Matulich writes. "All were won by harvesters."

I'm not an economist, so I'll leave the peer review of this paper to others more qualified.

I will say this: My understanding was that the price arbitrations were confidential. I've never been able to get my hands on the outcome of one. So if Professor Matulich has seen enough to conclude the crabbers always win, Deckboss would sure like to see it, too.

Guest analysis: Crab processor quota goes Alaskan

A big item on the agenda for the June 1-9 meeting of the North Pacific Fishery Management Council in Anchorage is management of the Bering Sea and Aleutian Islands crab fisheries.

One proposal the council is mulling is elimination of processor quota shares (Deckboss, May 18).

Steve Minor, executive director of an association of crab processing companies, is among those arguing to keep processor shares.

He's written this brief analysis of one reason why processor shares are working, and concludes: "Alaska should be extraordinarily happy."

Deckboss disclaimer: I post Steve's analysis not because I agree or disagree with it. Rather, I just find it informative and admire its brevity for such a complicated subject.

Crab rationalization on the radio

I talk processor shares this week with news director Jay Barrett of Kodiak radio station KMXT. Click here to listen to the "Alaska Fisheries Report."

'Extinguishing processor shares'

The staff of the North Pacific Fishery Management Council has written an interesting discussion paper on the idea of dropping processor shares from the crab rationalization program.

Already lost? Let's review some history.

In August of 2005, the competition for Bering Sea and Aleutian Islands king and Tanner crab ended and we moved to a "rationalized" fishery. That is, fishermen received individual quotas to catch crab, and landings were apportioned by region.

The fisheries also were divided another way: among processors. Essentially, the established processors received buying rights, just as the existing fishermen received fishing rights.

While processors believe it's vital for their plant investments to have a guaranteed stream of crab deliveries, some fishermen and other critics hate processor shares as restraint of trade.

Anyway, there's my quick and no doubt inadequate overview of crab rationalization.

Now let's get back now to that discussion paper, titled "Extinguishing processor shares."

The paper was written at the request of the council, which is looking at the idea of dropping processor shares.

My aim today isn't to summarize the entire 16-page paper for you, but to spotlight one intriguing part: The idea that getting rid of processor shares might be a very involved and difficult thing to do.

Why?

Because crab rationalization without processor shares could be such a fundamental change that it "effectively creates a new limited access privilege program" as defined under the recently reauthorized Magnuson-Stevens Fishery Conservation and Management Act.

The act requires the council to consider a host of issues before adopting a new LAPP.

"This includes respecification of the goals of the program, reconsideration of allocations (including allocations to small owner-operated vessels, fishing communities, and set asides for entry, captains, and crew), and the consideration of the auction of shares and the collection of royalties in the fisheries," the paper says.

Wow, can you imagine a whole new slugfest over who gets how much?

And auctions and royalties?

Anyway, Deckboss recommends you add this paper to your reading list.