gulf trollers association
QUOTA DISCUSSION PAPER

CRITICAL ISSUES EFFECTING VIABILITY,

- NATIVE TREATY SETTLEMENTS

- S.A.R.A. (SPECIES AT RISK ACT)

- PRICE and QUALITY

- COST RECOVERY

How we deal with these issues will determine the survival of the commercial salmon industry. DFO’s priority is not our survival, in fact the commercial fleet is at the bottom of the priority list, with conservation, treaty settlements, section 35 fish, and sports priority to springs and coho before us. Our local officials are trying but they have constitutional requirements that must be met. Very soon a law will be enacted that compels DFO to adhere to their mandate of conservation. This law once enacted will require increasingly strict risk averse measures. This paper attempts to bring forth some solutions to the above concerns and asks is there another way and if so what is it?

Prior to the development of any organizational concept it is necessary to have a clear idea of the aims and goals to be achieved. This discussion paper will begin with an outline of some desired results and make proposals designed to achieve these results. It should be reviewed in that context, are the desired results correctly stated and complete and if so will the suggested mechanisms achieve these results.

The introduction of ITQ’s has different meanings for fishery managers and for fishers. This discussion will consider but not analyze the value to managers, but will focus on the impact to fishers.

During the past few years there has been extensive debate over the value of ITQ’s to the salmon fleet. The essence of this debate has been the conflict between two fundamentally opposed views. Historically, fishing has been an activity in which skill, hard work, guts and efficient equipment has allowed some fishers to catch more fish and earn greater incomes than others. Each year and each trip was a gamble with the potential for a wide range of financial rewards.

An ITQ system of management alters the traditional fishery fundamentally. Under this system the fisher knows how many fish he may catch before fishing begins. The gamble, which is a significant factor in the appeal of the life style, is to a large extent removed.

The fact remains however, that even if the stocks returned to traditional levels, outside forces (SARA, Treaty settlements, Sports allocation) will have a dramatic impact on the commercial sectors ability to pursue their allocation. While quotas may not be a panacea, they can offer greater flexibility in harvesting and marketing, coupled with reduced risk in the area of over harvesting, quotas may provide a better management tool.

There needs to be financial compensation for the inevitable reallocation that will follow treaty settlements and growth of the sports sector. Based on a fixed percentage share of the annual catch, there needs to be an accountable mechanism to transfer allocation from one sector to another. Quotas offer a good mechanism of exchange when allocation is transferred from one sector to another.

This paper proposes an Individual Transferable Quota (ITQ) system for the troll fleet. Some desirable results of the system are;
- Creates an accountable means of moving allocation.
- Improved stable business environment.
- Accountable access to harvestable surpluses.
- Co-management with DFO.
- Increased stability of markets and prices.
- Flexibility in harvesting times, areas and methods.
- Encourages innovative marketing.
- Improved quality control.

It is evident that some important issues which impact the fishery and must be negotiated between fishery managers and fishermen are independent of ITQ considerations and should be ignored when considering the ITQ system. These issues are:
- Total Allowable Catch (TAC)
- Environmental Issues
- Treaty commitments
- Observer coverage

Issues which must be discussed and resolved are:
- Setting of each individual’s quota.
- Management
- Costs
- Transferability
- Accountability

It is proposed that quota can be allocated as pounds and/or pieces depending on species and ease of management. Quota transferability is seen as critical to the success of an ITQ program. It is proposed that quota be transferable in units of pounds or numbers of fish between licensed vessels of that gear type. Transferability between gear types should not be allowed, but special circumstances may arise where your allocation may be caught by an alternate means. Special circumstances will be decided at the CSAB Troll caucus level.

ADDRESSING THE AIMS AND GOALS


Creating an Accountable Means of Moving Allocation


Only when all available catch is accounted for, (commercial, sports, native) with each sector having their own known and enforceable portion of the overall TAC, is it possible to protect the stocks and effect transfers between sectors in a fair and equitable manner. As the fishery is fully subscribed the only place the native and sports fishermen can obtain allocation is from the commercial sector. It is essential that each commercial vessel have a known percentage of the commercial TAC thus when a commercial vessel license is retired the proper allocation is also retired. The past practices of reallocation have been neither fair nor equitable and if they continue in the present manner over 100% of the commercial TAC will be reallocated long before 100% of the commercial licenses are bought out. In this case all parties will be disenfranchised, native, sports, those remaining in the commercial industry and the people who chose to sell out. An IQ establishes quantifiable percentages of the TAC, and this will ensure fair transfer of allocation and protection of the stocks.

Stable business environment


The quota system reduces the number of variables within the fishing business. Weather and breakdowns are less of an influence as is competitive fishing pressure. Having a known preseason allocation will help in the planning of an individuals fishing season: i.e. crew size, opening times, pre-selling.

Accountable access to fish

The quota system will force accountability into the system. When individual fishers are allocated a percentage of the TAC, these same individuals have a means not only to track their allocation but a means to track others as well. Management also, will have an effective accounting tool to track the TAC. A properly set up quota system allows each sector the ability to maximize their allocation, it also ensures that each sector stays within their allocation. Slower paced fisheries are no longer in jeopardy of losing their TAC to the higher volume fisheries. This has been shown to be true in all other ITQ fisheries as there have been no significant overages in the last 12 years.

Co-management with DFO


Quota systems in other fisheries have lead to more responsibilities for the fisher but also more input into the planning of the fishery. ITQ in the salmon fishery will strengthen the current co-management structure between fishers and DFO, in turn this will strengthen security of access to salmon. A good example of this is the 88% commercial 12% sports allocation split recently negotiated in the halibut fishery.

Stability of markets and prices


The advent of a quota fishery allows flexibility in the development of fishing patterns, this will allow supply to more nearly meet the needs of the market, consequently enhancing the value of the fish.

Quality

Without the pressures we have to maximize daily catches before the quota is caught, fishers will have the luxury of improved quality control. The fear that others will catch ones share of the allocation is removed.


ISSUES THAT DO NOT AFFECT IMPLEMENTING AN IQ PROGRAM



Treaty commitments


Canada is committed to certain catch levels as a result of International and Native treaties and these levels must be maintained. These commitments will impact the TAC and may impact timing of allowable fisheries, but they are not related to implementing an ITQ program.

Environmental issues


Canada is committed to SARA legislation and as in treaties these concerns must be addressed but are not related to implementing an ITQ program.

Total allowable catch

The TAC for each species and stock will be established by managers using processes that are not related to the ITQ program although they will be achieved with input from fishermen.

Fleet Observer Coverage

DFO is committed to observer coverage in salmon fisheries now. This is not specific to either IQ or derby fisheries, but to the fleet as a whole regardless of whether the fishery is an ITQ or derby.


ISSUES WHICH MUST BE DISCUSSED AND RESOLVED.


Setting the ITQ percentage.


There are a number of possible formulas that could be used to determine the individual share of the TAC. Its attributes must include transparency, fairness and workability. Experience in other IQ fisheries indicate that some combination of equal shares per license plus an allowance for either past performance or investment in the industry is considered fair by a majority of fishers in these fisheries. An equal share to each license holder has a significant degree of support in the salmon fleet.
The problems that skew setting of an ITQ in the salmon industry are many. For example history is nearly impossible to define, with, fleet reduction, stacking, dockside sales, and area switching having taken place over the last few years. Investment in the industry is also hard to quantify, the size of a vessel may not be a factor of salmon income alone and in the Gulf size is certainly no indication of catching ability.
Regardless of the method chosen, a referendum of license holders is the best possible way of deciding this issue.

Management


Historically all citizens had a right to participate in the fishery. As populations grew and technology advanced this right was restricted to those who had invested time and money into the industry. Government assumed the responsibility of controlling the licensing process and developed and enforced regulations designed to restrict over harvesting of stocks. The introduction of ITQ’s effectively provides more certainty and fishing opportunity rights for fishers and the responsibility for protecting that certainty shifts from a solely government role to a joint fisherman/government responsibility. Consequently, co-management between fishermen and managers becomes essential with both groups working towards maximising opportunity.

The introduction of an ITQ fishery represents a fundamental shift in the underlying philosophy of fishery management. As it stands now managers only open fisheries if they feel there is enough room and abundance for the whole fleet. The accountability of an IQ fishery allows managers the ability to open fisheries on small surpluses.

Unfortunately government is not able to relinquish its management responsibilities when it passes the cost of this management to fishers. It is imperative that fishers establish an organization to control and administer the funds provided by the fleet and DFO to co-manage the fishery.
Activities that will be managed and overseen under the new system include: administration of a validation program, quota transfer tracking, enforcement, monitoring, research and data gathering activities. If quota fisheries were to become a reality across the troll sector, budgets will be measured in the hundreds of thousands of dollars and cannot be done in an ad- hoc basis. There are two possible ways to approach this problem. Industry could create a new organization, or could contract this service to an established firm. Once fishing organizations acquire the expertise to manage these activities it is recommended they assume co-management responsibilities.


Cost Recovery

DFO has stated there will be increased cost recovery in the salmon fishery. The GTA has done some cost analysis of the validation, management and reporting required over the past two years of the pilot program. There are a number of avenues to be explored in the collection of fees.
- Flat rate.
- Percentage of poundage (species specific rates)
- Percentage of total dollar value.
- Small upfront license fee and pay remainder at time of delivery.
- Small upfront license fee with a fixed dollar value per lb and/or piece paid at time of license pick up.

The individual IQ holders would cover validation cost. With an average shore based offload time of 821 pieces per hour and confining the offload sites to those covered by the halibut fleet, costs could be kept to a minimum. Validation at sea is slightly more expensive with an average 641 piece per hour offload time.


Transferability.

Transferability or the possibility of sale or lease of quota has been the subject of extensive debate. Much has been made of “armchair fishermen” and instant millionaires. The assumed risks and/or fears with transferability are two-fold: first, “armchair fishermen” leasing quota and it’s associated high lease price and secondly, concentration of ownership into a few hands. These risks are overstated in the troll fishery as there is an upper limit to the amount of fish that one vessel can catch. However real or perceived these concerns are, there are a number of ways to deal with them. It depends on the initial set up of the IQ system. For example, the first concern of armchair fishermen can be addressed by setting the quota, (as is being proposed by the GTA) in-season on the actual number of boats that are on the water participating in the fishery; or you could institute a owner-operator clause. The fear of corporate concentration can also be addressed by limiting the total allowable allocation allowed on any one license to 1% or lower of any areas TAC.

It is proposed in this discussion paper that permanent allocation transfers between gear types not be allowed, but if special circumstances arise where it is impossible to catch your allocation (thereby leaving large parts of your area allocation uncaught) by traditional means alternate solutions could be explored. An example of this would be short windows of opportunities because of SARA or other management constraints. Regardless of the outcome of the debate on transferability, methods must be developed which allow individual fishermen maximum flexibility to design their own operations.

Accountability.

For its success, an ITQ program depends on the fact that it ensures catches can be controlled. Individuals have an agreed amount of fish that they may harvest, with a combination of hail-ins, at sea monitoring and 100% validation confidence amongst managers, conservationists, natives, sports and other fishers that the TAC will not be exceeded will be considerable. This has lead to increased fishing time and flexibility in management in other ITQ fisheries herring, halibut, and geoduck to name a few. It is envisioned that an ITQ fishery in the troll industry will provide the same flexibility and opportunities.

Catch Monitoring


In a quota fishery it is necessary to have some form of process in place to record all landings and relate them to the available areas quota.
Elements for a monitoring system would be:
- Hail out to start fishing. (to management entity)
- Daily catch reporting from sea. (to management and DFO)
- Daily tracking of available TAC. (through management with DFO involvement)
- Hail in prior to landing. (to management entity)
- 100% dockside or at sea validation. (report to DFO/ management)
- Landing reports submitted to DFO.

High grading

An area of concern centers around the perception of highgrading; the releasing of one fish for the retention of another due to size and/or condition of the fish. Although it is much touted as a deterrent for the implementation of a quota system there are ways to address these concerns. In sockeye for example, (although for the last two years of the quota project and with extensive coverage no evidence of highgrading has occurred) it would be possible to assess possible high grading by comparing the rates of #2 sockeye delivered. You would achieve this by using DFO sales slip data to calculate the amount of #2’s delivered over the last few years and comparing to the landings by quota vessels.
In the case of spring salmon you could use an entirely different approach. DFO has the data that is used for the allocation process. This breaks down the number of fish and the poundage caught in each area by each gear type. It would be a matter of compiling the number and poundage of each grade (small, medium, large) resulting in a quota of each grade.
It may require that different species require different means to set the individual quotas. Sockeye may be set on pieces; spring salmon may be set on poundage. Whichever is used, pieces/poundage, or a combination of the two, ease of management and accountability would be main factors to take into account.

STEPS IN THE STRUCTURE OF AN IVQ PROGRAM

In conclusion, these are the challenges that would need to be overcome if the fleet were forced, or decided on its own to embrace an IQ system.

- Establish quota shares (equal or combination)
- Establish transferability mechanism.
- Establish communication protocol
- Establish method of payment of program costs.
- Establish management organization.
- Establish enforcement and penalty guidelines.
- Establish level of observer coverage

Although it sounds complicated one just needs to look at the Trawl quota fishery with its multitudes of species and areas to know it can be accomplished.

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