Council takes aim at absentee ownership in crab fishery

Buying into the Bering Sea crab fishery will take boots on deck or a stake in some steel under requirements now being contemplated by the North Pacific Fishery Management Council.

The thorny issue of crew compensation in the Bering Sea crab fishery put a divide between Alaska and Pacific Northwest members on full display Dec. 10 at the Anchorage Hilton as a 6-5 vote advanced potential rules for active participation to buy harvest shares. 

The Alaska majority controlled the outcome of the vote, which advances a range of requirements for active participation by anyone who wishes to buy quota shares in the rationalized Bering Sea crab fisheries.

The motion introduced by Alaska Department of Fish and Game Commissioner Cora Campbell has a range of options for purchasers of quota shares to either have an ownership stake in an active crab vessel or to have participated as a captain or crewman in previous seasons.

The measures to be considered get at the issue of crew compensation indirectly by addressing the issue of absentee quota shareholders who no longer participate in the crab fishery while receiving the benefits of initial allocations of quota in king and snow crab through leasing their shares to active vessels.

Lease rates to fish Bristol Bay red king crab are typically 70 percent or higher, with opilio, or snow crab, shares between 50 percent and 55 percent. Lease rates paid to quota shareholders have eroded the crew share as a percentage since the fishery was rationalized in 2005.

In October, the council voted to consider collecting unique crew contracts and settlement sheets to verify crew pay data as part of its economic data reporting program. Final action on that measure is scheduled for February.

Crew share as a percentage of the vessel harvest has declined from between 35 percent and 40 percent before 2005 to between 15 percent and 20 percent in 2009.

During the five-year review of the program at the December 2010 council meeting, compensation data revealed that crew who harvested the most Bristol Bay red king crab in 2008 and 2009 were paid less than fellow crew who harvested far less crab.

Key quartile

John Henderschedt of Seattle, the most vocal critic of the motion during deliberations, noted the fourth quartile on Bristol Bay king crab was “the part of the five-year review that has gotten us to this discussion.”

In 2008, the highest quartile of crabbers harvested about 437,000 pounds and were paid an average of $39,414. The third quartile of crew harvested about 281,000 pounds in 2008 and were paid an average of $45,426.

That trend in the fourth quartile continued in 2009, with crew who harvested 358,000 pounds of red king crab paid about $2,400 less than those who harvested 249,000 pounds.

In 2004, the final king crab season before rationalization, crew in the highest quartile harvested an average of about 110,000 pounds and were paid an average of $22,220.

In 2009, despite a similar ex-vessel price, the average pay for the top crewmen was $29,137 — less than $7,000 more than 2004 while harvesting 248,000 more pounds on average.

The problem statement by Campbell notes that the conservation, efficiency and safety goals of the program have largely been achieved — there has been only one death in the rationalized crab fisheries since 2005 — but identifies absentee ownership as a barrier for entry to active participants that must be addressed.

Campbell’s motion also requests a discussion paper that will examine what, if any, tools the council has to set thresholds on lease rates, crew compensation, the amount of lease fees that could be charged against crew shares and other methods for encouraging entry to the fishery.

Members of crab industry groups put on a full court press at the council meeting in support of the program and its workgroup proposals developed over the last year as an alternative to any regulatory action.

The industry workgroup headed by Ed Poulsen of Alaska Bering Sea Crabbers advanced a right of first offer, or ROFO, program that would have made 10 percent of every share sale within the ICE co-op available for purchase by crew first, and the remaining 90 percent only available to active participants.

ICE is the Inter-Cooperative Exchange, the largest such group of Bering Sea shareholders which represent about 70 percent of the quota.

A number of crewmen testified they are making more than $100,000 per year crabbing under the rationalized program, a large chart highlighting daily rates of pay showing crab fishermen tops in Alaska stood outside the meeting room and supporters punctuated public comment with several rounds of applause — an unusual amount of pep for the normally staid council meetings.

Other members of the public took issue with the industry focus on daily rate of pay.

“I think that’s a little bit disingenuous,” said Tom Suryan of Skippers for Equitable Access. 

Suryan said that prices and fish stocks move up and down over time affecting pay, but that percentage is a relative constant for comparison and is also the traditional way fishermen have been paid based on “a century or more of history.”

That the average pay has increased under rationalization is not unusual given that a crew labor pool one-third its previous size will harvest nearly 100 million pounds of king and snow crab this season.

With king crab prices at $10 per pound and an opilio quota of almost 89 million pounds, about 450 crewmen will generate an ex-vessel value of more than $250 million during the 2011-12 season.

“It is such as ephemeral number,” Suryan said of daily rate. “Right now it’s a really good number. In a year it could be an awful number. You can’t lose sight of that fourth quartile.”

Suryan said that if daily rate of crew pay is to be a measure considered by the council, it should also look at the daily rate of compensation for leaseholders collecting 50 percent to 70 percent of the vessel harvest.

That sentiment was echoed by Rhonda Hubbard of J&R Fisheries in Seward, who is a halibut and sablefish shareholder and direct marketer without ties to the crab fishery other than her two brothers’ experiences as before and after rationalization.

She said her affinity for the Alaska Young Fishermen’s Association and the next generation compelled her to comment.

“(Rationalization) plans and consolidation of fisheries that don’t require owner on board become executive fisheries operated by armchair managers and royalty collectors,” said Hubbard. “I find it peculiar we’re now looking at crew compensation in days versus a percentage of catch amount. These are deckhands.

“These aren’t tendermen. They’re not factory workers. They’ve historically been paid on a percentage basis.”

Duncan Fields of Kodiak successfully amended Campbell’s motion — also by a 6-5 vote — to change the requirements to encompass the retention of shares purchased as an active participant in the fishery.

The motion approved by the council makes the requirement that to “permanently transfer and retain” shares, the ownership stake must be maintained or active fishing must continue.

That language inserted by Fields became the big sticking point during deliberations, which featured a number of verbal jabs among members.

Apologies abound

Henderschedt said he wanted to apologize to the crab industry vessel owners and quota shareholders who worked over the last year to draft a proposal.

That apology to industry, echoed soon after by Roy Hyder of Oregon, drew a pointed response from Fields, who said he felt he should apologize to the 1,000 crewmen who lost their jobs in the first year of crab rationalization in 2005 when the fleet shrunk from 260 boats to 80 in the first season of Bristol Bay red king crab.

Fields went on to ask why the program has an arbitration process to ensure historical split of revenue between harvesters and processors, but no such consideration for the historical crew split of revenues.

“There’s a lot of apologies to go around,” Fields said.

Henderschedt also called the council decision to advance new management measures a “vote of no confidence” in the industry workgroup effort.

Campbell said she was troubled by Henderschedt’s description, and pointed out the roadblocks industry encountered with the limits of their management to influence lease rates and crew compensation on anything more than a voluntary basis. About 70 percent of ICE members voluntarily capped their lease rates this year.

 “I don’t see this as a vote of no confidence in the work that they’ve done or a waste of their time,” Campbell said. “I do think it’s a waste of their time to play a game with them where we continue to tell them we have concerns but don’t give them enough definition about what those concerns are.

“I believe that it’s time to lay our cards on the table about what we mean when we say we have a concern about active participation.”

Another issue with ROFO the council keyed on was the lack of available crab quota on the market for crew to purchase. Shareholders said many transfers happen in the private market, and that co-op membership in ICE would require crew to be notified about all sales for the first chance to buy.

Others made the rather morbid observation that quota shares may become available as initial recipients pass away, prompting Hubbard to tell the council that, “we shouldn’t have to wait until the quota shareowner dies for quota shares to become available.”

Fields also introduced an amendment to Campbell’s motion, that failed 2-9, which would have required active participant eligibility rules to apply all quota shareholders during a range of 5 years to 15 years after implementation. Cotten was the only only other vote in favor of Fields’ amendment.

Hyder of Oregon said Fields’ amendment showed “what the camel will look like once it’s in the tent,” in regards to the direction the council is moving with active participation in the crab fishery.

12/15/2011 - 1:20pm