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Web posted Friday, June 5, 2009

Crab rationalization: How the program has affected crews

By Margaret Bauman
Alaska Journal of Commerce

Leasing fees allowed under the federal crab rationalization program have severely affect crew compensation, economist Mark Fina said in a discussion paper for the North Pacific Fishery Management Council.

The program, in effect since 2005, allows vessel owners who lease quota shares to deduct the cost of lease fees before determining crew pay, even though harvesting leased quota requires the same amount of effort as that initially allocated to the vessel.


     

Fina, a senior economist on the council staff, prepared the report for the council's June meeting to address concerns that have surfaced since program was implemented.

Among alternatives to amend the program are options to increase the portion of the harvest share that must be held by persons active on vessels in the fisheries. Many of the leased quota shares are held by people no longer active in the fishery, but were acquired due to a harvest history during the qualifying period.

In other cases, owners of more than one crab boat have opted to lease some of their quota shares on one vessel and lease the rest, at rates of up to 75 percent of the value of the quota shares, thereby deriving income while saving the considerable expenses of operating additional vessels.

Fina notes in the discussion paper that, before the rationalization program began, all license holders needed to have a vessel in the fishery to realize a return, and so were compelled to participate in the fisheries, regardless of whether returns were expected to be substantial or even cover the full cost of participation, he wrote.

With relatively high participation rates, crew positions were readily available, particularly for those with experience. Most crew were paid on a share system, where payment was a percentage of the vessel's revenues, after deducting specified costs, generally food, fuel and bait.

With the first season of rationalization, former license holders used their new ability as quota share holders to consolidate fishing on fewer vessels, Fina noted. Prior to rationalization, between 167 and 251 vessels participated annually in each of the two largest crab fisheries, the Bristol Bay red king crab and Bering Sea snow crab fisheries.

In the Bristol Bay red king crab fishery, the fleet shrunk to about one-third of its pre-rationalization size, he said. Other vessels sat idle and owners collected lease royalties.

Assuming approximately six crew members per vessel, an average of 975 fewer crew, including captains, were employed in the bay's red king crab fishery in the first three years of the program when compared to the 2000 to 2004 season average, Fina said.

In the opilio fishery, the number of crew jobs dropped an average of 675, compared to the 2001 to 2005 season average, he said.

While crewmembers have expressed concern over the financial fall-out of leasing costs on their paychecks, many also feel they should have been issued quota shares initially along with vessel owners, captains and processors.

They point to national standards for fisheries contained in the 1996 Sustainable Fisheries Act. Those national standards state, in part, that "if it becomes necessary to allocate or assign fishing privileges among various United States fishermen, such allocation shall be fair and equitable to all such fishermen."

"In the old days, I made about $1 a red king crab, average weight 6.5 pounds," said Steve Branson, a veteran commercial fisherman. "The last time, it was about 20 cents a crab."

The program isn't working, he said.

"I would rather crab ratz was thrown out and we went back to an open access fishery," he said. "Why don't we have new catch limits, load limits? There are more tools than privatization."

Others in the fishery, including Keith Colburn, one of the crab captains featured in "The Deadliest Catch" series, feel it is important that crew have an opportunity to buy into the fishery, but opposes giving them shares outright.

Colburn, who was allocated 3 percent quota share as a captain after 20 years in the fishery, said he felt direct allocation to crew sends the wrong message.

"I was a crewman for years and I had no intention of buying into the fishery," said Colburn, now the owner of the Wizard. "Most of them want to buy in so they can have ownership in the smaller fisheries. If you had a direct allocation to crew right now, I would guarantee 80 percent of it would be for sale immediately so they can buy into the smaller boat fishery."

Edward Poulsen, who manages a crab cooperative, argues that crew on his boats are interested in leasing additional quota.

"If they are already up there, they would much rather lease more quota and get a few more days fishing," he said.

"Every boat owner I know started out as a crew member," said Linda Kozak, of Kodiak, who works as a consultant to a crab group of independent harvesters. "A lot of folks came up to Kodiak, began walking the docks, got a job as crew, started buying into the boat. Crew is labor. They don't take any of the financial or legal risk. There is physical risk and they are paid for that. I don't believe the labor force in any industry deserves to own part of the store. They have been compensated."

Kodiak fisherman Stosh Anderson, who as a council member who voted for crab rationalization in 2002, said he tried unsuccessfully to get council support for crew to participate in an equitable fashion.

"Crew had a minor capital investment, but they worked on shares just like everyone else," Anderson said. "They certainly had a sweat equity investment in the fishery."

Other veteran fishermen like Shawn Dochtermann, also of Kodiak, argue that the council has continued to turn a deaf ear to crew.

"The problem is that the council is not willing to go back and fix the problem," he said. "There are $140 million to $180 million in crew shares missing that should have gone into the economics of the coastal communities of Alaska or wherever the crews are from. It's gone."

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