c
Fishery Cooperatives

William R. Garland and Phillip F. Brown

Agricultural Marketing Specialist and

Agricultural Economist, respectively

Cooperative Development Division

Agricultural Cooperative Service

U.S. Department of Agriculture

This study describes the organizational and financial structure, and

operational activities of U.S. fishery cooperatives in 1980. Major aspects treated

include observance of cooperative principles, eligibility and size of the

membership and the board, types of fishery cooperatives-marketing, supply,

and service.activities performed, balance sheet and operating statement data,

and equity composition and redemption. Selected data are reported for all

responding cooperatives, and reported in detail for finfish, lobster, and shrimp

cooperatives as groups.

Key words: Fishery cooperatives, finfish, shellfish, marketing, supply, finance.

ACS Research Report Number 44

Issued May 1985

Reprinted January 1988
Preface

Some fishers have used cooperatives for many years, but little is known

about the extent of cooperative involvement in the U.S. fishing industry. This

reflects the isolation many cooperative managers and boards feel about their

organizations. They usually have little contact with other cooperatives. Nor do

they have a forum to discuss concerns of cooperative structure, organization,

operating issues, or their role in the industry. No private or Government

respository of experience and technical assistance has focused on the needs of

fishery cooperatives.

The purpose of this study was to provide a profile of U.S. fishery

cooperatives as an aid in making them aware of themselves and of some of th,eir

key characteristics as a sector of the fishing industry. Information on structure

and financial performance will help fishers plan new cooperatives and be useful

to managers and boards in planning change for their own cooperatives. The

same basic information is useful to private management firms, lending

institutions, universities, and Government agencies in their work with fishers and

fishery cooperatives.

The National Marine Fishery Service (NMFS), List of Fishery Cooperatives in

the UnitedStates: 7978-79, provided the basis for this survey. The list of fishery

cooperatives (excluding those of Hawaii, the Virgin Islands, and Puerto Rico)

plus any other cooperatives found to be in operation during the survey period

comprised the respondent universe. NMFS or contract personnel interviewed the

cooperatives’ general manager or other appropriate officers. Alaskan

cooperatives were contacted by phone and mail.

Information was received and developed through telephone followup of 23

fully completed questionnaires from 70 returned questionnaires. Business

volume and financial information about the 23 cooperatives make up most of this

report.

The authors wish to thank the staff of the National Marine Fishery Service

who participated in planning this study and obtained data from cooperatives.

Thanks also go to Mary Anne Lambert, who helped complete this report by

consolidating tables and rewriting portions of the text.

. . .

III
A fishery cooperative’s dock and facility along the New England seacoast.

iv
Contents

HIGHLIGHTS ...............................................................

OVERVIEW OF U.S. FISHERIES ...........................................

FISHERY COOPERATIVES, 1980 ..........................................

Location, Business Activity, and Membership .........................

Organizational Characteristics .........................................

Fishery Marketing Cooperatives .......................................

Fishery Supply and Service Cooperatives .............................

OPERATIONAL ACTIVITIES OF 23 MARKETING-HANDLING

COOPERATIVES ..........................................................

Marketing Activities ....................................................

Supply and Service Activities .........................................

FINANCIAL STRUCTURE OF 23 FISHERY COOPERATIVES ..............

Net Margin Distribution ................................................

Payments to Fishers ...................................................

Equity Capital Composition ............................................

Equity Redemption .....................................................

Borrowed Capital .......................................................

FINFISH AND SHELLFISH COOPERATIVES ...............................

Finfish Cooperatives ...................................................

Lobster and Shrimp Cooperatives .....................................

APPENDIX ..................................................................

Legal Authority .........................................................

Fishery Cooperative Marketing Act ....................................

vi

1

8

8

8

10

10

10

14

14

15

V
Highlights

There were 102 fishery cooperatives in 1980; about 70 are operating

actively. Their age varied from less than 5 years to 67 years. The cooperative

population changes continually with new associations being formed and others

ceasing operations.

Only 5 percent of U.S. fishers use a cooperative to market their fish. Use of

cooperatives is greatest in the Pacific region and least in the Atlantic and Gulf

regions.

Organizational structure and operations generally follow cooperative

principles. Membership is almost exclusively restricted to fishers. All directors

are member-fishers. All cooperatives practice a one-member-one-vote policy.

While only a third of the cooperatives specifically limit dividends on capital, most

in practice pay no return on membership capital. Bylaws of 74 percent of the

cooperatives require the board to allocate annual net margins to patrons.

Most cooperatives market fishers’ products and provide supplies or services

to fishers. Few cooperatives specialize in only one of these functions. Several

associations represent fishers in establishing fishing rights.

Cooperatives marketed 8.6 percent of the 1980 U.S. fish landings. Also,

some bargaining cooperatives negotiate price and other factors for an additional,

but unknown, portion of the U.S. landings.

Most fish are marketed in fresh form, primarily to wholesale distributors and

processors. Marketing generated 80 percent of cooperative revenue and was the

dominant business activity for 23 fishery cooperatives examined in this report.

Cooperatives handling fish returned 82 percent of fish sales revenue to fishers.

Most of the volume handled by these reporting cooperatives was in New England.

Sale of fuel, ice, fishing gear, insurance, and other services generated 21

percent of the revenue of the 23 cooperatives.

Cooperatives returned 53 percent of net margins as cash patronage refunds

and nearly 4 percent as dividends on equity capital. Most of the remaining net

margins were retained and allocated to fishers. Lobster cooperatives generally

are not yet allocating retained margins to members, but should allocate. This

action would properly credit members with the capital they have provided and

enable the cooperatives to carry out operations at cost.

Current assets for the 23 associations providing data are roughly 1.3 times

current liabilities. Sixty-five percent of these cooperatives borrowed funds, with

more than half of total borrowings coming from the Bank for Cooperatives. Equity

in these cooperatives is 29 percent of total assets. Responsibility for financing

most cooperatives could be improved by members and directors.

Eighty-three percent of the associations have special equity redemption

programs. Most cooperatives need a systematic equity redemption program to

return allocations to fishers who have not patronized the cooperative in recent

years.

Funds to increase equity and to redeem it are difficultto secure. Most

cooperatives depend on retained net earnings for new capital. A more reliable,

but seldom applied technique is a per unit capital retain. This is an assessment

generally in cents or fraction of a cent, on each pound or number of fish marketed

by the cooperative that is credited to eacfi members’ capital account.

The marketing-handling cooperatives should better maintain membership
among current patrons by purging their roles of inactive members.

Most finfish and all shellfish marketing cooperatives averaged less than $1

million in total assets, with good but improvable equity positions. They also had

fewer than 100 members and 11 or fewer employees. As a group, the few large

finfish cooperatives averaged $4.9 million in assets, averaged 268 members and

sales three or more times greater than the smaller finfish and shellfish groups,

but had weak equity positions. These large finfish marketing cooperatives

should increase their equity position compared with total assets by 2 to 3 times

the 20 percent level of 1980.

This profile of cooperatives in the U.S. fishing industry provides a unique

description that can assist the cooperatives, lenders, universities, and

Government to better understand how fishers are cooperating to meet their

needs. The information should help cooperatives plan for change and growth in

the seafood industry.

Information about cooperative principles, organizing and operating

cooperatives, and technical assistance for cooperatives is available on request

from Agricultural Cooperative Service.

vii
Fishing boats at anchor in a sheltered harbor along the New England coast.
Fishery Cooperatives

William Ft. Garland and Phillip F. Brown*

OVERVIEW of U.S. FISHERIES

The world’s oceans and inland waterways are a major source of human protein needs. About one quarter of the

world’s total animal protein supply

comes from the sea.* In 1980, the world

fishery catch was nearly 80 million tons,

60 percent being food fish, 12 percent

shellfish, and the remainder for feed and

industrial use.’ While the demand for

fish by the year 2000 is expected to be

more than 132 million tons, it has been

estimated that the oceans could sustain a

level of 330 million tons annually of

organisms useful for human food.3 4

The United States, often called the

world’s breadbasket, also ranks high in

world fishery catch. As a net importer,

this Nation will continue to depend on its

fishing industry for decades to come.

The U.S. fishery catch ranked fourth

worldwide in 1980, behind Japan,

U.S.S.R., and China. U.S. landings

*William R. Garland is an agricultural

marketing specialist and Phillip F. Brown is

Program Leader, Field Operations and

Training, with the Cooperative Development

Division of the Agricultural Cooperative

Service, USDA.

‘Lucas, Kenneth C., “World Fisheries

Development,” Vital Speeches of the Day, Vol.

XLVII, No. 7, p. 212.

*Fisheries of the United States, 1981. National

Marine Fisheries Service, U.S. Department of

Commerce, Washington, D.C., April 1982.

‘Lucas, op. cit.

4Hunter, W.D.R., Aquatic Productivity McMilIan, New York, 1970.

totaled 6.4 billion pounds (table 11, or

roughly 4 percent of the world catch.5

About 62 percent of the U.S. total was

caught within a distance of 3 miles or less

of U.S. shores and 92 percent within 200

miles. The five States (Louisiana, Alaska, California, Virginia, and Massachusetts) with the most landings

accounted for 67 percent of the U.S. total

in 1980.5 The U.S. catch is 82 percent

linlish and 18 percent shellfish.

Domestic demand for fish has increased

over the past 20 years. In 1960, per capita consumption of fit-dish and shellfish

entering commercial channels was 10.3

pounds; in 1980, it was 12.8 pounds.

This consumption was partially supported in 1980 by imports, which were

almost 1.6 billion pounds.

Substantial U.S. resources are employed

harvesting the sea’s production. In 1980,

-_______-

‘Fisheries of the United States, 1981.

193,000 fishers and 113,200 hulls were

utilized. The latest information on their

home ports is for 1976, and a listing of

fishers and fishing craft by region is

found in table 2.

Table 1 -U.S. commercial fish

landings by region, 1980

Region Commercial landings

1.000 pounds

New England . . . . . . . . . . . . . . . . . . . . . . . . . . 788,089

Middle Atlantic . . . . . . . . . . . . . . . . . . . . . . . 981,120

South Atlantic and Gulf 2,452,572

Great Lakes

and Inland Areas . . . . . . . . . . . . . . 44,032

Pacific Coast . . . . . . . . . . . . . . . . . . . . . . . . . . 2,151,713

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,828

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,482,354

Source: National Marine Fisheries Service,

National Oceanic and Atmospheric

Administration, US. Department of Commerce.

Fisheries of the United States, 1981.

Washington, D.C., April 1982.

Table 2-U.S. fishers and fishing craft, by reglon, 1978

Region Fishers

New England . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Middle Atlantic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

South Atlantic and Gulf . . . . . . . . . .

Great Lakes and Inland Areas

Pacific Coast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fishing craft

Number

31,048 18,595

42,884 30,459

48,075 27,808

9,847 8.721

54,385 22,598

’ 173,810 ’ 102,821

‘Exclusive of duplication

Source: National Marine Fisheries Service, National Oceanic and Atmospheric Administration, U.S.

Department of Commerce. Fishery Statistics of the United States 1976. Washington, D.C., October

1980.

1
FISHERY COOPERATIVES, 1980

A total of 102 cooperatives were active in

some manner in 1980. Some cooperatives on the NMFS list were found inactive or closed, others were added, and

some did not provide data.

Location, Business Activity

and Membership

The 102 active fishery cooperatives are

primarily along the continental seaboard.

Cooperatives are clustered in Maine,

California, Washington, and Alaska (fig. 1)

Several descriptive characteristics of the

70 fishery cooperative respondents are

found in table 3. The two major business

activities are (1) marketing, and (2) providing supplies and services. Marketing

cooperatives receive and market the

catch, or perform some other functions

such as locating buyers and negotiating

terms of trade. Supply and service

cooperatives may provide ice, fuel, fishing gear, or offer services such as boat

repair, insurance, and representational

functions. The supply and service

cooperatives do not perform a marketing

function. Marketing cooperatives outnumber supply and service cooperatives.

The 70 cooperative respondents are in

15 States. Half are in the Pacific coast

region and a third are in New England.

Maine has the largest number of

cooperatives.

The Pacific coast and New England

regions have nearly the same number of

marketing cooperatives. The Pacific

coast region has the most supply

cooperatives. Four Pacific coast cooperatives provide public relations or lobbying

services as their primary function.

The 10,425 members comprise 5.4 percent of all U.S. fishers. More than 70

percent are in the Pacific coast region

with most of the remainder in New England. Eighty percent belong to marketing

cooperatives.

The fishing craft operated by members

comprised 7.3 percent of the U.S. fishing

fleet in 1980. Nearly 80 percent of these

boats are in the Pacific coast region.

;$gg 3--Membership and fishing craft of 70 fishery cooperatives by major business activity, State and region,

State and region

Marketing Supply and service Total

H.Q. in Meybers Fishin

B

H.Q. in Mem,bers Fishin

State craft State craftB

H.Q. in

State

fvteybers Fishinjf

craft

Number

Connecticut ..,.,.................................

Maine ,,,_.,.....,,...................................

Massschusetts . . .

Rhode Island

0 0 0 1 125 4 0 1 125 4 0

1 4 842 428 1 100 200 1 5 942 628

5 1,074 423 0 0 0 5 1,074 423

2 221 138 0 0 0 2 221 136

Total New England ................... 21 2,137 989 2 225 240 2 3 2,362 1,229

New Jersey ...................................... 3 7 0 51 0 0 0 3 7 0 51

Total Middle Atlantic

Florida ,...,.......,..................................

Georgia

South Carolina

Texas

3 7 0 51 0 0 0 3 7 0 51

1 2 4 2 8 0 0 0 1 2 4 2 8

1 2 2 3 3 0 ’ 0 0 1 2 2 3 3

2 41 2 3 0 0 0 2 41 2 3

2 57 144 0 0 0 2 8 7 144

Total SAtlantic & Gulf

Michigan ...........................................

Minnesota .........................................

Great. Lakes 8

Inland Areas ............................

Alaska ...............................................

California ..........................................

Oregon ..............................................

Washington ......................................

Pacific Coast .............................

Total ..................................................

6 174 228 0 0 0 6 174 228

0 0 0 1 125 9 0 1 125 9 0

1 200 100 0 0 0 1 200 100

1 200 100 1 125 9 0 2 325 190

5 1,158 31,125 3 205 185 a 1,363 1,310

9 2,363 31,744 4 231 206 1 3 2,594 1,950

4 1,215 1,026 0 0 0 4 1.215 1,026

5 622 811 6 1,500 1,480 11 2,322 2,291

2 3 5,558 4,706 13 1,936 1,671 3 6 7,494 6,577

5 4 8,139 6,074 16 2,286 2,201 7 0 10,425 8,275

‘Total membership not reported by all cooperatives.

‘Craft operated by members not reported by all cooperatives.

?wo cooperatives are public relations or lobbying oriented

2
Figure 1 -Fishery cooperative locations, 1980

3
Cooperatives reported handling or bargaining for the marketing of 555.8 million pounds of fish for human food and

industrial use in 1980. This was 8.6 percent of U.S. commercial landings. An

additional but unreported amount was

bargained for by cooperatives.

Organizational Characteristics

Several characteristics distinguish

fishery cooperatives from other

businesses. Some of these features are

composition of ownership and boards of

directors, voting provisions, dividend

payment limitations, and disbursement

of net margins.

The oldest cooperative surveyed was

organized in 19 14 and the newest in

1980. Almost half were organized in the

1970’s (table 4). Twenty-one percent, 15

cooperatives, fall into the youngest age

group and 4 cooperatives are more than

30 years old. There is no relationship

between formation date and regional

location or type of operation.

Unlike most investment oriented corporations, the cooperative owners are

patrons of the business. In the case of

marketing cooperatives, the members

must also be fishers for the cooperatives

to be protected by the limited antitrust

exemption of the Fishery Cooperative

Marketing Act. Among survey respondents, all but six associations limited full

membership status to fishers. Bylaws of

two cooperatives limit members who are

nonfishers to 5 percent of their total

membership. Other respondents who

provided a copy of their bylaws did have

Table 4-Age distribution of 70

fishery cooperatives, 1980

Age range

Years

5 and under . . . . . . . .

6 - 10 . . . . . . . . . . . . . . . . . . .

1 1 - 20 . . . . . . . . . . . . . . . . . . .

21 - 30 . . . . . . . . . . . . . . . . . . .

31 and over . . . . . . . . . .

Total . . . . . . . . . . . . . . . .

Cooperatives

Number Percent

15 21

19 27

13 19

19 27

4 6

70 100

4

Table 5-Capital stock flsher cooperatives’ bylaw requirements on

dividends and patronage dlstr rbutions, by State and region, 1980

State and region

Limited Allocation of

dividends net margins

on capital required

Yes No Yes No

Connecticut .................................................

Maine ...........................................................

Massachusetts ...........................................

Rhode Island ...............................................

New England ........................................

New Jersey (Middle Atlantic) ...................

Georgia ........................................................

Flordia ..........................................................

South Carolina ............................................

Texas ...........................................................

Number

0 1 t 0 1

2 13 12 3

4 1 5 0

2 0 2 0

8 15 19 4

2 1 3 0

1 0 1 0

0 1 0 1

2 0 2 0

2 0 2 0

South Atlantic and Gulf ..................... 5 1 5 1

Michigan ...................................................... 0 1 1 0

Minnesota .................................................... 0 1 1 0

Great Lakes and Inland Areas ......... 0 2 2 0

Alaska .......................................................... 0 2 1 1

California ..................................................... 1 5 2 4

Oregon ......................................................... 0 1 0 1

Washington ................................................. 1 2 2 1

Pacific Coast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2 10 5 7

17 29 34 12

a separate membership status, for example, associate member, for nonfishers

wanting to support the cooperatives’

efforts. Associate members were not

granted voting privileges.

All cooperatives follow the onemember, one-vote principle.

The size of boards varies from 2 to 38

directors. On average, there are 10 directors to a board, but 7 is the most common number. All board members are

active fishers.

Carrying out board policy in daily operations is delegated to a cooperative’s

management. Fifty-five of the fishery

cooperatives (78 percent) have a hired

manager. The remaining 15 rely primarily on the associations’ officers to manage

the business affairs, contracting with

individuals to handle specific tasks such

as legal, accounting, warehousing, or

fish handling.

A basic distinguishing characteristic of

cooperatives is their owner capitalization

and limited dividend payments on

member capital. Of the 70 respondents,

24 are nonstock cooperatives. These 24

cooperatives are all in the Pacific coast

region and do not operate facilities. The

remaining 46 fishery associations are

stock cooperatives. Only 17 of these

organizations have a dividend rate limit

specified in their bylaws (table 5). The

lowest rate is 5 percent by a Washington

cooperative and the highest is 20 percent

by a Texas cooperative. The average rate

is 7.4 percent. Seventy-five percent of

these associations require payment or

allocation of net earnings as patronage

refunds. There is no relationship

between these bylaw requirements and

geographical location.
Fishery Marketing Cooperatives

,

Fishery marketing cooperatives are

divided into two groups; marketingbargaining cooperatives, and

marketing-handling cooperatives.

Marketing-bargaining cooperatives function as an agent or bargaining intermediary to negotiate the terms of trade for

members’ catch, but do not usually handle fish or supply items. The oldest

marketing-bargaining organization in

our survey is a California cooperative

formed in 1927. All 2 1 bargaining associations are in the Pacific coast region.6

California has nine of the bargaining cooperatives and the most members

and craft of the four States (table 6).

Marketing-bargaining cooperatives

make up a major portion of the cooperative membership, with 48 percent of all

cooperative members and 62 percent of

the marketing cooperative membership.

The number of fishing craft operated by

the bargaining cooperative members is

68 percent of the craft operated by marketing cooperative members.

The business operations of the 21

cooperatives concentrate on the terms of

trade for its members. Only nine have

nonbargaining activities, two sell supplies, four sell insurance, and all provide

other services including representation

and liaison work with State and Federal

officials. Most respondents did not know

or were unwilling to provide the volume

or value of fish marketed under bargained contracts.

The marketing-handling cooperatives

are the largest group of fishery cooperatives surveyed. They are in all four

regions. Most of these cooperatives, 91

percent, provide fishing supplies or services in addition to marketing the fish.

New England has the largest number

and the most members (table 7).

Overall, 70 percent of their members are

60ne Washington cooperative assists its

members by operating an auction board to

price their catch. Since fish are not handled by

the cooperative, it was grouped with the

bargaining associations.

active. The New England fleet comprises

3 1 percent of the marketing and 29 percent of all responding associations’ craft.

The earliest marketing cooperative was

organized in 1929 and the latest in 1975.

Fishery Supply

and Service Cooperatives

Eight cooperatives offer only fishing supplies or services. Five supply either ice,

fuel, or fishing gear to members. The

other three provide only insurance. The

earliest of this group was formed in 1933

and the latest began operations in 1977.

The supply cooperatives are prominent

on the Pacific coast. These cooperatives

have a high percent of active members.

They represent 10 percent of the

members and more than 12 percent of

the fishing craft of all cooperatives surveyed.

Another Pacific coast grouping of eight

fishery associations represent fisher’s

interests at the State and national level

and perform public relations activities.

While most have articles and bylaws that

would enable them to operate as marketers and suppliers, their current function is closer to that of a trade association. The earliest cooperative was

formed in 1962, and the latest in 1978.

This relatively young group comprises

about 12 percent of the cooperative

members in the survey and 18 percent of

the fishing craft.

Table GMembershi characteristics of fishery marketing-bargaining

cooperatives by StaPe, 1980

Members

Fishing

State Cooperatives Active’ Total craft

Number

Alaska . . . . . . . . . . . . . . 4 1,101 1,126 1,100

California . . . . . . . . . 9 2,363 2,363 1,744

Oregon . . . . . . . . . . . . . 4 1,215 1,215 1,026

Washington 4 273 310 299

Total 21 4,952 5,014 4,169

‘Reported number of members patronizing cooperative within the past 3 years. SIX cooperatives,

two each in California, Oregon, and Washington, did not report the number of active members. All

members were assumed active.

Table 7-Membershl

cooperatives, by

characteristics of fishery marketing-handllng

reg on, 1980 P

Members

Region Cooperatives Active’

Number

Total

Fishing

craft

New England . . . . . . . . . . . . . . . . . . . 21 1,396 2,137

Middle Atlantic,

Great Lakes and

Inland Areas . . . . . . . . . . . . . . . . . . 4 266 270

South Atlantic

and Gulf . . . . . . . . . . . . . . . . . . . . . . . . . 6 156 174

Pacific Coast . . . . . . . . . . . . . . . . . . . 2 365 544

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 2,207 3,125

‘Reported number of members patronizing their cooperative within the past 3 years.

969

151

226

537

1,905

5
OPERATIONAL ACTIVITIES

OF 23 MARKETING-HANDLING COOPERATIVES

The fully completed questionnaires

received from 23 marketing-handling

cooperatives contain specific information on their operational activities. All

handle fish and provide fishery supplies

and services. Their combined revenues

were nearly $102 million (table 8), 78.6

percent from marketing revenue, 21.0

percent from supply sales and 0.4 percent from services and other income.

Marketing Activities

These cooperatives marketed $80 million in fishery products in 1980. Eightyfive percent of the sales ($52 million)

and seventy percent of the cooperatives

were in New England. New England

handled 85 percent of the poundage sold

by the 23 cooperatives. Pacific coast

cooperatives averaged $6 million in

sales, largest of any region.

The 138 million pounds marketed by

these cooperatives was 2 percent of 1980

U.S. landings (table 9). New England

cooperatives marketed 15 percent of the

region’s total landings. While not a large

proportion, it is substantially more than

in other coastal regions. The poundage

Table 8-Sales of 23 marketlnghandling cooperatives, 1980

Function Cooperatives Volume

Number Dollars

Marketing 23 80,195,625

Supplies 19 21,348,967

Service 17 417,469

Total sales ‘23 101,962,261

‘All perform 2 or 3 functions.

Table 9-Volume of fishery products

marketed by 23 cooperatives and

share of U.S. fishery landings, 1980

Type of Fish Proportion

Fish marketed of US. landings

Pounds Percent

Finfish 125846,227 2.4

Shellfish 12,442,589 1 .l

Total 138,288,816 2.1

6

represented by the Pacific coast bargaining cooperatives is not included in this

tabulation nor is it available, but the

amount is probably large.

Seventy-eight percent of these cooperatives’ fish is marketed as edible products, and the remainder goes for industrial use. The 95.4 million pounds of tinfish make up 88 percent of the edible fish,

with ground fish predominating (table

10). The major shellfish marketed by

these cooperatives are shrimp, lobster,

and scallops.

Cooperatives marketed 72 percent of

their products in fresh form (table I 1).

The highest proportion of processing

occurred in the Pacific coast region. Most

fishery cooperatives have not integrated

into the processed fish market. Of the

seven cooperatives that process, five

freeze and four package fresh fish. Four

cooperatives use their brand on more

than 90 percent of their processed products. Brand recognition and consumer

loyalty are important for boosting sales.

These cooperatives sold 59 percent of

their fishery products to wholesalers

(table 11). However this pattern did not

apply in all regions. The Pacific coast

cooperatives utilized export markets

while cooperatives in other regions sold

primarily to processors. Neither retail

sales nor sales to retail chain stores were

important to most cooperatives.

Supply and Service Activities

The oldest supply cooperative surveyed

was organized in 1929 in Minnesota.

Fishery cooperatives provide several

kinds of supplies and services. Supplies

include ice, fuel, nets, lines, and other

fishing gear. Services include insurance,

representation, moorage, and dock facilities. More organizations sell fuel than

any other product (table 12). Of the 17

cooperatives selling fuel, 13 are in the

New England region. This region has

more than 50 percent of all the cooperatives which provide each supply item.

Insurance is the primary function performed by the service cooperatives. All

are in the New England region.

Table 1 O-Volume of fishery

products marketed by 23 fishery

cooperatives by species, 1980

Use and

specie co-ops Volume

Human Food:

Ground fish

Halibut

Herring

Mackerel

Tuna

Salmon

Other finfish

10 71,548,063

3 516,550

2 13,175,230

3 1,240,595

3 308,819

2 4,935,ooo

3 3.709,270

Subtotal’ 12 95,433,527

Shrimp 5 3,273,652

Crabs 1 880

Clams 1 1,380,OOO

Lobster 14 3,764,857

Mussels 1 27,870

Scallops 7 3,035,330

Other Shellfish 1 960,000

Subtotal’

Industrial Use:

Finfish

Total’

19 12,442,589

3 30,412,700

23 138,288,816

Number Pounds

‘Total number of cooperatives adjusted for

duplication arising from multiple products of

many cooperatives.
Table 11 -Product forms and market outlets used by 23 marketing-handling

cooperatives, by region, 1980

Item New England Pacific Coast Other regions All regions

Fresh live lobsters being

unloaded in Maine. These

lobsters were sold directly

to a consumer group.

Product form:

Fresh

Processed

All forms

81 .O

19.0

100.0

Percent

8.2 91.5 72.1

91.8 8.5 27.9

100.0 100.0 100.0

Type of outlet:

Local dealer

Processor

Wholesaler

Chain store

Retail

Export

All outlets

3.0 0.0 3.9 2.7

17.2 7.2 60.4 24.1

73.4 32.5 32.6 59.3

3.3 0.0 0.0 2.2

1.5 0.0 3.1 1.6

1.6 60.3 0.0 10.1

100.0 100.0 100.0 100.0

Opposite pageAn employee of the Stonington,

Maine, Lobster Cooperative,

prepares to haul up lobsters

to the cooperative’s dock.

Table 1 P-Supplies and services provided by 23 marketing-handling

cooperatives, by region, 1980

Supplies Services

Region

Ice Fuel

Net, lines

8 other supplies Boat repair Insurance

Number

New England 7 13 11 1 6

Middle Atlantic 1 1 1 0 0,

South Atlantic and Gulf 3 3 1 0 ‘0

Great Lakes and Inland Areas 1 0 1 0 0

Pacific Coast 1 0 0 0 0

Total 13 17 14 1 6
FINANCIAL STRUCTURE OF 23 FISHERY COOPERATIVES

The cooperatives’ combined assets in

1980 were $18.8 million and average

$817,384 (table 13). Current assets, 62

percent of total assets, were 1.3 times

current liabilities. Total liabilities were

$13.4 million. Equity invested was $5.4

million, or $234,521 per cooperative,

and was 29 percent of total assets. While

not shown, Pacific region cooperatives

had the largest assets as well as the

lowest equity-to-asset ratio. The South

Atlantic and Gulf coast cooperatives had

the highest proportion of equity.

Net Margin Distribution

These cooperatives distributed most of

their net margins, 90.6 percent, in a

combination of cash patronage refunds,

53 percent, and as retained allocations,

38 percent (table 14). Dividends or

interest paid on equity capital and unallocated retains utilized most of the

remaining net margins.

This distribution was far more generous

with cash to patrons than were agriculTable 13-Financial structure of 23 fishery cooperatives, 1980

Item Total Average

Proportion

of total

Assets:

Current

Fixed

Other

-___ _-___ _Do,,a,s_ - _ _ - - - _ - - Percent

11,593,997 504,087 61.7

69937,667 301,638 36.9

268,157 11,659 1.4

Total

Liabilities

and member

equity:

Current

Long-term

Equity

18,799,821 al 7,384 100.0

6724,033 379,306 46.4

4,681,805 203,557 24.9

5,393,983 234,521 28.7

Total 18,799,821 817,384 100.0

tural cooperatives. In 1976, farmer

marketing and supply cooperatives distributed 39.3 percent as cash patronage

refunds, 44.5 percent as allocated

retains, 8.4 percent as unallocated

retained equity, 2.1 percent as dividends

and interest on equity capital, and 5.7

percent for Federal and State income

taxes.’

Payments to Fishers

Primary benefits to fishers are payments

for their catch marketed through

cooperatives, dividends or interest paid

on equity capital, and patronage refunds

in both cash and noncash form. In 1980,

the 23 cooperatives paid fishermen more

than $66 million, which was 83 percent

of fish sales value. This ratio ranged

from 79 percent in the Pacific coast

region to 98 percent in the South Atlantic and Gulf coast regions.

Equity Capital Composition

The equity section in the balance sheet

indicates how much money members

have invested in a cooperative and how

this investment is evidenced. We established six equity account categories:

preferred stock, common stock,

membership fees, qualified certificates of

allocation, nonqualified allocations, and

unallocated equity.8

Table 14-Methods of distributing net margins used by 23 fishery

cooperatives, 1980

Method of

distribution Cooperatives

Proportion of

net margins

Dividends or interest on equity capital

Patronage refund:

Number

4

Percent

3.8

Cash refund . . ..__......._................................ 13 52.7

Retained allocated equity . . 9 37.9

Total refund’ .......................................... 15 90.6

Unallocated equity ..................................... 15 4.0

Income taxes .............................................. 11 1.6

Total net margins ................................... 23 100.0

‘Retained allocations were not issued by some cooperatives, and others issued retained

allocations while not paying a cash patronage refund.

‘Griffin, et al., The Changing Financial Srrucwe of Farmer Cooperatives, U.S. Department

of Agriculture, Agricultural Cooperative Service, FCRR 17, March 1980.

*A qualified allocation is a patronage refund

or per-unit capital retain allocation that the

cooperative can exclude from its taxable

income and that the patron agrees to include

in his income. At least 20 percent of a qualified patronage refund allocation must be paid

in cash. A nonqualified allocation is a noncash

patronage refund or per-unit capital retain

allocation that is not deducted from the taxable income of the cooperative. When a nonqualified allocation is later redeemed in cash,

the cooperative deducts the allocation from its

taxable income, and the patron recognizes the

amount, with minor exceptions, as ordinary

income. From Equity Redemption, D.W. Cobia

and J.S. Royer, et al, p. 184-185.

8
Table 15-T pes of equity capital

yggegdgby 23 rlshery cooperatwes,

Percent

Preferred stock 6.3

Common stock 7.1

Membership certificates 5.3

Qualified allocations 59.8

Non-qualified allocations 11.6

Unallocated equity 9.9

Total equity 100.0

For the 23 fishery cooperatives, 90 percent of equity capital is in the form of

capital stock, membership certificates,

and allocations to member fishers (table

15). A majority of these funds are certificates of allocation and are in a qualified

form. There are regional differences in

the form of equity used by fishery

cooperatives. Stock and membership

certificates are seldom found outside of

New England. Cooperatives in the South

Atlantic, Gulf coast, and Pacific regions

primarily used qualified allocations. In

the Middle Atlantic and New England

regions, nonqualified allocations were

important. Significant amou’nts of unallocated equity appear only for the Great

Lakes and Inland Area cooperatives and

for two of the New England cooperatives.

Compared with agricultural cooperatives, fishery cooperatives utilized qualitied and nonqualified allocations more,

and common and preferred stock less. In

1976, the equity in agricultural cooperatives was represented by preferred stock,

18.1 percent; common stock, 15.3 percent; membership certificates (nonstock), 0.4 percent; qualified allocations,

49 percent; nonqualified credits, 1.1 percent; and unallocated reserves, 15.1 percent9

9Griftin, et al., The Changing Financial Structure of Farmer Cooperatives, U.S. Department

of Agriculture, Agricultural Cooperative Service, FCRR 17, March 1980, p. 38.

A commercial boat is tied at dock after unloading its cargo.

Equity Redemption

Current patron-members are responsible

for financing the cooperative. As

cooperative membership grows or as

member use changes, so should each

member’s equity share change. Redemption or revolving of equity is designed to

maintain equitable member financing as

changes occur.

Special redemption programs were carried out by 19 of the 23 fishery cooperatives (83 percent) in 198O.‘O Only 5 (22

percent) carried out a systematic program.” The 19 cooperatives redeemed

nearly 18 percent of their allocated equities in 1980, and used half their net margins and current per unit retains to make

those redemptions. One cooperative

lacked allocated equity and therefore

would not have a redemption program.

Borrowed Capital

Loans are another source of funds to

support fishery operations. Fifteen associations (65 percent) had loans of $7.9

“Special equity redemption programs are

those without predictable regularity, such as

redemption of equities held by estates, persons no longer fishing, hardship situations,

those persons of a certain age, or persons simply requesting redemption of their equities.

“A systematic program is a definite plan carried out with a fair degree of regularity, with

fairly predictable financial requirements that

can be taken into account in a cooperative’s

financial budgeting process.

million in 1980. Half of those funds

came in one loan from the Bank for

Cooperatives in the Pacific coast region.

Commercial banks were second in terms

of funds loaned, but provided the largest

number of loans. These cooperatives

rarely borrow from Government agencies. Thirty-five percent reported no borrowing. Those in the Middle Atlantic,

the Great Lakes, and Inland Areas had

no loans outstanding.

The 1976 data on farmer cooperatives

indicated that 79 percent did borrow

funds, with 62.2 percent of loan funds

coming from Banks for Cooperatives,

9.5 percent from commercial banks, 18.9

percent from debt securities, and 9.4

percent from other sources.‘*

Eighty-seven percent of the fishery

cooperatives that borrowed funds provided the lender with personal guarantees of their board members. These

loans were only 10.5 percent of the funds

borrowed by the 15 cooperatives. A primary incentive for any group to incorporate is the benefit of limited liability.

This reduces risk to an individual by limiting any potential loss to the amount

invested in the business. Personal security for cooperative loans negates limited

liability but is often required by lenders

when the cooperative has insufftcient

equity.

‘*Grifftn, et al., The Changing Financial Structure ofFarmer Cooperatives, U.S. Department

of Agriculture, Agricultural Cooperative Service, FCRR 17, March 1980.

9
The 23 cooperatives have a major portion of their marketing business in either

lintish, lobster, or shrimp. Among the

fmfish cooperatives, natural-size groupings occur over and under $1 million in

total assets.

The smaller finfish cooperatives and the

lobster and shrimp cooperatives average

fewer than 100 members, 7 or fewer

full-time employees, and 3 or 4 part-time

employees (table 16). While their sales

are quite different, none was more than

$4.2 million in sales. All have total assets

well below $1 million.

By contrast, the larger tinfish cooperatives average many more members and

employees, handle much more product

in pounds and dollars, and have much

larger total assets.

Each group displays particular strengths

or weaknesses. The larger tinfish

cooperatives have a relatively weak equity level of 20 percent of assets while the

other groups show a stronger equity

position, particularly the shrimp

cooperatives. The shrimp cooperatives

have much higher sales and equity levels

per member than do the other groups.

While the smaller finfish cooperatives

show the smallest equity investment per

member, the modest nature of their

operations allows them to achieve the

highest sales per dollar of equity and of

assets.

Finfish Cooperatives

These 10 finfish cooperatives are in four

regions. The three largest cooperatives

have a majority of the members, poundage, and sales handled (tables 17 and

18). The smaller cooperatives- those

with less than $1 million in assetsmarket nearly all their fish in fresh form.

The large cooperatives sell equal

amounts in fresh and processed form.

Wholesalers are the primary outlets for

both large and small cooperatives. However, any one cooperative may have a

specific outlet and therefore not tit the

pattern for the group.

Sales for the smaller cooperatives are

almost entirely sales of food fish. The

large cooperatives also conducted a supply business that provided 27 percent of

their 1980 sales.

Net margins for both groups were lowless than 3 percent of sales for the large

group and less than 1 percent for the

small cooperatives. The portion of earnings retained in the business was much

higher for the larger cooperatives,

reflecting their larger proportion of

long-term liabilities compared with the

smaller cooperatives.

Total assets for three large tinfish

cooperatives were 12 times greater than

assets for the 7 smaller cooperatives. The

proportion of member financing (20 percent) in the large cooperatives was less

than half the level (45 percent) among

the smaller cooperatives (table 19). A

majority of the equity capital of both

groups was retained allocated net margins. Most of these allocations were nonqualified for the small cooperatives, and

qualified among the large cooperatives.

The small cooperatives reported 22 percent of their equity as unallocated to

members.

The financial performance and relationships discussed previously are presented

as ratios in table 20. These ratios apply

only to 1980. Experience shows that a

cooperative’s ratios can change substantially from one year to another. While

judgment is not offered regarding the

adequacy of these ratios, managers and

directors will find them helpful in

absence of other industry data.

Lobster and Shrimp Cooperatives

Ten lobster cooperatives in Maine and 3

shrimp cooperatives in the South Atlantic and Gulf coast region provided

operating and financial data. These

groups averaged about 40 members for

the lobster and 34 for the shrimp

cooperatives (table 21). The shrimp

cooperatives essentially handled only

shrimp for human food, while some lobster cooperatives also handled other

shellfish and ground fish. Most of the

product was sold fresh.

The shrimp cooperatives marketed more

poundage per cooperative than did the

lobster cooperatives. Together with a

higher priced product and supply sales, a

shrimp cooperative’s total sales averaged

6 times higher than a lobster

cooperative’s Lobster moved primarily

to wholesalers while most shrimp moved

to processors.

The lobster cooperatives marketed a

$7.4 million catch and paid members 85

percent of that amount (table 22).

Members later received an additional 4.7

percent as a patronage refund. The

shrimp cooperatives marketed a $12.6

million catch and returned 94 percent of

this to members. An additional 1.75 percent patronage refund was paid later in

cash and 2.4 percent was retained in the

cooperative for capital needs. While both

groups retained earnings for capital

needs, only the shrimp cooperatives allocated most of the retained amounts to

member-patrons.

Lobster and shrimp cooperatives both

showed a healthy financial condition in

1980. Current assets substantially

exceeded current liabilities, and fixed

assets exceeded long-term liabilities for

the shrimp cooperatives (table 23). The

shrimp cooperatives had a strong equity

position and more truly operated on a

cooperative basis by retaining earnings

in an allocated status rather than unallocated.

Their financial performance is summarized as ratios in table 24. These ratios

apply only to 1980 and only to the

cooperatives reported in this study. The

current performance or performance of

individual cooperatives within the industry may be substantially different.

10
Table 16-Average characteristics of finfish, lobster, and Table 17-Selected characteristics of finfish

shrimp cooperatives, 1980 cooperatives, by asset size, 1980

Characteristic

Finfish cooperatives

$I- Over

%1,000,000 $1 ,ooo,ooo Lobster Shrimp

assets assets cooperatives cooperatives

Characteristic

Sl-

$1 ,ooo.ooo

of assets

Over

$1 ,ooo,ooo

of assets

Number

Number

Members (total)

Employees:

Full-time

Part-time . . . . . ..__.___

88 266 40 34

3 72

4 10 3 4

1,000 Pounds

Products marketed:

Human foodFinfish 4,572 21,083 18 0

Shellfish 420 1,000 327 1,077

Industrial 286 9,471 0 0

Cooperatives

Members (total)

Fishing craft

Employees:

Full-time

Part-time

Products marketed:

7

614

396

23

27

3

805

722

217

30

Pounds

Human foodFinfishGroundfish

Halibut

Herring

Mackerel

Tuna

Salmon

Other finfish

25,841,507 45,726.950 71,368,457

109,550 407.000 516,550

100,000 13,075,230 13,175,230

1 ,135,085 105.510 1.240,595

308,819 0 308,819

1 ,ooo,ooo 3,935.ooo 4,935.ooo

3,709,270 0 3,709,270

Total ..____ 5,278

Fish sales 2,590,OOO

Supply sales .._________.. 92,735

Net margins 23,008

Total assets . . . . . . . . 172,536

Equity . . . . . . . . . . . . . . . . . . . . . . . 77,686

Fish sales per

member . . . . . . . . . . . 29,432

Sales/dollar

of assets 16

Sales/dollar

of equity 34

Equity per member 883

Net margins to

total sales

Equity to total

assets

1

45

31,554 345

Dollars

14,044,067 736,348

5,101,667 137,742

540,442 45,846

4,867,685 118,295

987,370 49,634

52,403 18,409 123,236

4 7

19 18

3,684 1,240

Percent

3 5

20 42 81

1,077

4,190,030

1,339,133

173,889

602,021

487,602

9

11

14,341

3

Total

Subtotal

finfish

ShellfishClams

Lobster

Scallops

Other

shellfish

32,004,231 63,249,690 95,253,921

1,380,OOO 0 1,380,OOO

402,000 250,000 652,000

202,192 2,750,OOO 2952,192

Subtotal

shellfish

Industrial UseFinfish

2,944,192

2,000,000

Total fishery

products 36,948.423

Market orientation:

Fresh sales

Processed sales

Total sales

Meat outlets:

Dealer

Wholesaler

Chainstore

Processor

Retail

Export

10

1,419

l*,l 18

240

57

960,000 0 960,000

3,000,000

28,411,700

5,944,192

30,411,700

95.5

4.5

100.0

11.6

64.2

0.0

15.6

4.2

4.4

94,661,390

Percen f

50.7

49.3

100.0

0.0 3.5

61.8 62.4

4.2 2.9

16.7 16.5

0.0 1.3

17.3 13.4

131,609,813

64.3

35.7

100.0

All outlets 100.0 100.0 100.0

11
Table 18-Combined operating statements for 10 finfish cooperatives, by

asset size, 1980

Operating statement item

$1 -$l ,ooo,ooo

assets

Over $1 ,OOO,OOO

assets

Dollars

Total

Sale of fishery products . . . . . . . . . . . . . . 18,101,340 42,132,220 60,233,560

Commission or auction income . . . . 28,700 0 28,700

Total marketing receipts . . . . . . . . . . . 18,130,040 42,132,220 60,262,260

Fisher payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,219,765 34,515,100 45734,865

Gross marketing margin .........

Supply sales ....................................

Cost of supplies ..............................

6,910,275 7,617,120 14,527,395

649,144 15,305,000 15,954,144

648,843 13,628,399 14,277,242

Gross supply margin . . . . . . . . . . . . . .

Service and other operating

income . . . . . . . . . .

301 1,676,601 1,676,902

18,167 170,300 188,467

Gross margin . . . . . . . . . . . . . . . . . . .

Total expenses . . . . . . . . . . . . . . . . . . . . . . . . .

Net margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Distribution of net margin:

Dividends or interest paid on

equity capital . . . . . . . . . . . . . . . . . . . .

Patronage refundCash portion . . . . . . . . . . . . . . . . . . . . . . . . . . .

Retained allocated equity . . . .

Unallocated equity . . . . . . . . . . . . . . . .

State or Federal income taxes

69928,743 9,464,021 16,392.764

68767,888 7,842,694 14,610,382

161,055 1,621,327 1,782,382

10,301 97,070 107,371

134,016 770,400 904,416

41,463 831,700 873,163

(26,498) (67,943) (94,439)

1,771 (9,900) (8,129)

Table 1 g-Financial structure of 10 finfish cooperatives, by asset size, 1980

Balance sheet item

$1 -$l ,ooo,ooo

assets

Over $1 ,OOO,OOO

assets

Total

Assets:

Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fixed . . . . . . . . . . . . .

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dollars Percent Dollars Percent Dollars Percent

719,350 59.5 9,087,986 62.2 9,807,336 62.0

370,371 30.7 5,407,683 37.0 5,778,054 36.6

118,033 9.8 107,385 0.8 225,418 1.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Liabilities and member equity:

Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,207,754 100.0 14,603,054 100.0 15,810,808 100.0

539,251 44.7 7,506,509 51.4 8,045.760 50.9

124,703 10.3 4,134,435 28.3 4,259,138 26.9

543,800 45.0 2,962,llO 20.3 3,505,910 22.2

Total ....................................................

Equity capital composition:

Allocated equityCommon stock .....................................

Preferred stock ....................................

Membership certificates ....................

Qualified allocations ...........................

Non-qualified allocations ...................

Unallocated equity ...................................

1,207,754 100.0 14,603,054 100.0 15,810,808 100.0

85,678 15.8 246,920 8.3 332,598 9.5

11,400 2.1 311,685 10.5 323,085 9.2

0 0.0 290,975 9.8 290,975 8.3

90,808 16.7 1,712,530 57.9 1,803,338 51.4

233,956 43.0 400,000 13.5 633,956 18.1

121,958 22.4 0 0.0 121,958 3.5

Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 543,800 100.0 2.962,llO 100.0 3.505,910 100.0

12
Table PO-Selected financial ratios of 10 finfish Table 21 -Selected characteristics of lobster

cooperatives, by asset size, 1980 and shrimp cooperatives, 1980

Ratio

$I- Over

$1 ,ooo,ooo $1 ,ooo.ooo

assets assets

Characteristic Lobster Shrimp

Times

Liquidity:

Current assets to

current liabilities . . . . . . . . . . . . . . . . . . . . 1.3 1.2

Asset management:

Sales to fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.7 10.6

Sales to total assets . . . . . . . . . . . . . . . . . . 15.6 3.9

Percent

Debt management:

Equity to term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436 72

Fixed assets to term debt . . . . . .._._............... 297 131

Operating:

Net margin before taxes to sales ._...._....,,,, 0.8 2.8

Net margin before taxes to total assets 13.3 11.1

Net margin before taxes to equity . . . . . . . . . . . . 29.6 54.7

Total expenses to total sales . . . . .._._............. 36.0 13.7

Fishers’ payments to fishery product sales 62.0 81.9

Cooperatives

Members (total)

Fishing craft

Employees:

Full-time

Part-time

Number

10 3

398 102

319 154

26 21

31 11

Pounds

Product marketed:

Human foodGround fish

ShellfishShrimp

Crabs

Lobster

Scallops

Mussels

179.606 0

43,000 3,230,652

880 0

3,l 12,857 0

83,138 0

27,870 0

Table PP-Combined operating statements for lobster

and shrimp cooperatives, 1980

Subtotal

shellfish

Industrial useFinfish

3,267,745 38230,652

Operating statement item Lobster Shrimp

Dollars

Total fishery

products

Sale of fishery products . . . . . . . . . . . . . . .

Commission or auction income . . . . .

Total marketing receipts

Fishers payments . . . . . . . . . . . . . . . . . .

Gross marketing margin . . . . . . . . . . .

Supply sales . . . . . . . . . . . . . . . . .

Cost of supply products . . . . . . . . .

Gross supply margin . . .._._..

Service and other

operating income . . . . . . . . . . . . . . . . . . . .

Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total expenses ._...........,,.,.,,................

Net margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,359,775 12,570,090

3,700 0

7,363,475 12,570,090

69259,375 11,762,367

1,104,100 807,723

19377,424 4,017,399

1,352,489 3,626,095

24,935 391,304

3,000 226,002

1 ,132,035 1,425,029

673,571 903,362

458,464 521,667

0 1,000

______ ~~

3,447,351 3,231,652

Percent

Market orientation:

Fresh sales

Processed sales

Total

Market outlets:

Dealer

Wholesaler

Processor

Retail

100.0 93.5

0 6.5

100.0 100.0

Total

1 .o 0.0

92.6 24.7

0.0 75.0

6.4 0.3

100.0 100.0

Distribution of net marginPatronage refund

Cash portion . . . . . . . . . . . . . . . . . . .

Retained allocated equity . . . . . . . . .

Unallocated equity . . . . . . . . . . . . . . . . . . . . . . . . . . .

State or federal income tax . . . . . . .

346,435 220,358

0 296,835

104,969 2,492

7,060 1,982

13
Appendix

Table 23-Financial structure of lobster and shrimp cooperatives, 1980

Balance sheet item Lobster Shrimp

Dollars Percent Dollars Percent

Assets:

Current . . . .

Fixed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Liabilities and

member equity:

Current liabilities

Long-term liabilities . . . . . . . .

Equity

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Equity capital

composition:

Allocated equityCommon stock . . . . . . . . . . . . . .

Preferred stock

Qualified allocations......

Unallocated equity

Total equity . . . . . . . . . . . . . . . . . . . .

573,927 48.5 1,212,734 67.2

591,736 50.0 567,677 31.4

17,287 1.5 25,452 1.4

1 ,182,950 100.0 1,806,063 100.0

393,852 33.2 284,421 15.8

292,762 24.8 129,905 7.2

496,336 42.0 1,391,737 77.0

1,182,950 100.0 1,806,063 100.0

53,520 10.8 128 (‘1

19,965 4.0 0 0.0

43,289 8.7 1,420,830 97.1

379,562 76.5 (29,221) 2.9

496,336 100.0 1,391,737 100.0

‘Less than .Ol percent.

T$#$ 24-Selected financial ratios of lobster and shrimp cooperatives,

Ratio Lobster Shrimp

Liquidity:

Current assets to current liabilities . . . . . . . . . . . . . . . . . . . . . .

Asset management:

Sales to fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sales to total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Debt management

Equity to term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fixed assets to term debt . . . . . . . . . . . . . . . . . . . . . . . . . .

Profitability:

Net margin before taxes to sales

Net margin before taxes to assets . . . . . . . . . . . . . . . . . . .

Net margin before taxes to equity

Total expenses to total sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fishers’ payments to fishery product sales . . . .

1.5 times

14.8 times 29.2 times

7.4 times 9.2 times

170 percent

202 percent

5.3 percent 3.1 percent

38.8 percent 28.9 percent

92.4 percent 37.5 percent

7.7 percent 5.5 percent

85.1 percent 93.6 percent

4.3 times

1071 percent

437 percent

Legal Authority

Since the late 19th century this Nation

has been very cautious regarding collusion between separate business entities.

The Sherman Antitrust Act of 1890,

sponsored primarily by farmers, was

designed to prevent collusion and the ill

effects of monopoly power. Unfortunately, the prohibition against large companies also applied to small businesses

including individual fishers.

In 1934, Congress passed the Fishery

Cooperative Marketing Act to give tishers and their cooperatives some exemption from antitrust legislation.t6 This

legislation extended the right “that persons engaged in the fishery industry, as

fishermen, catching, collecting, or cultivating aquatic products on public or

private beds, may act together in associations, corporate or otherwise, with or

without capital stock in collectively

catching, producing, preparing for market, processing, handling, and marketing

in interstate and foreign commerce, such

products of said persons so engaged.”

The Fishery Cooperative Marketing Act

did not give license to fishers to monopolize or restrain trade to the extent that

prices would unduly be enhanced. The

Act vested in the Secretary of Commerce

the authority to determine if a fishery

cooperative was engaged in activities

that unduly enhanced fish product

prices. If the Secretary did find that such

activity was taking place, he would then

be required to direct the cooperative to

cease and desist from monopolization

and restraint of trade. In 1939, these

functions of the Secretary of Commerce

were transferred to the Secretary of the

Interior.

The Fishery Cooperative Marketing Act

does not provide for Federal charters for

fishers forming cooperatives. This function is left to the States. Several States

have laws specifically written for the

incorporation of fishery cooperatives. In

Alabama, Georgia, and New Jersey, the

t6The Act is printed at the end of this section.

14
agricultural cooperative statutes also in the products of non-members to an

permit associations to form for handling amount greater in value than such as are

marine or aquatic products. handled by it for members.

Fishery Cooperative Marketing Act’ 7

Section 522. Monopolies or restraints of

trade; service of complaint by Secretary

Section 521. Fishing industry; associa- of Commerce; hearing; order to cease

tions authorized; aquatic products and desist; jurisdiction of district court.

defined; marketing agencies; requirements. If the Secretary of Commerce shall have

Persons engaged in the fishery industry,

as fishermen, catching, collecting, or

cultivating aquatic products or as

planters of aquatic products on public or

private beds, may act together in associations, corporate or otherwise, with or

without capital stock, in collectively

catching, producing, preparing for market, processing, handling, and marketing

in interstate and foreign commerce, such

products of said persons so engaged.

reason to believe that any such association monopolizes or restrains trade in

interstate or foreign commerce to such

an extent that the price of any aquatic

product is unduly enhanced by reason

thereof, he shall serve upon such association a complaint stating his charge in

that respect, to which complaint shall be

attached, or contained therein, a notice

of hearing, specifying a day and place not

less than thirty days after the service

thereof, requiring the association to

The term “aquatic products” included show cause why an order should not be

all commercial products of aquatic life in made directing it to cease and desist

both fresh and salt water, as carried on in from monopolization or restraints of

the several States, the District of Colum- trade. An association so complained of

bia, the several Territories of the United may at the time and place so fixed show

States, the insular prossessions, or other cause why such order should not be

places under the jurisdiction of the Unit- entered. The evidence given on such a

ed States. hearing shall be taken under such rules

and regulations as the Secretary of ComSuch associations may have marketing

agencies in common, and such associations and their members may make the

necessary contracts and agreements to

effect such purposes: Provided, however, that such associations are operated

for the mutual benefit of the members

thereof, and conform to one or both of

the following requirements:

merce may prescribe, reduced to writing,

and made a part of the record therein. If

upon such hearing the Secretary of Commerce shall be of the opinion that such

association monopolizes or restrains

trade in interstate or foreign commerce

to such an extent that the price of any

aquatic product is unduly enhanced

thereby, he shall issue and cause to be

served upon the association an order

First. That no member of the association reciting the facts found by him, directing

is allowed more than one vote because of such association to cease and desist from

the amount of stock or membership capmonopolization or restraint of trade. On

ital he may own therein; or the request of such association or if such

association fails or neglects for thirty

days to obey such order, the Secretary of

Commerce shall file in the district court

in the judicial district in which such association has its principal place of business

a certified copy of the order and of all the

Second. That the association does not

pay dividends on stock or membership

capital in excess of 8 per centum per

annum, and in any case to the following:

of such tiling. Such district court shall

thereupon have jurisdiction to enter a

decree affirming, modifying, or setting

aside said order, or enter such other

decree as the court may deem equitable,

and may make rules as to pleadings and

proceedings to be had in considering

such order. The place of trial may, for

cause or by consent of parties, be

changed as in other causes.

The facts found by the Secretary of Commerce and recited or set forth in said

order shall be prima facie evidence of

such facts, but either party may adduce

additional evidence. The Department of

Justice shall have charge of the enforcement of such order. After the order is so

tiled in such district court and while

pending for review therein, the court

may issue a temporary writ of injunction

forbidding such association from violating such order or any part thereof. The

court shall, upon conclusion of its hearing, enforce its decree by a permanent

injunction or other apppropriate remedy.

Service of such complaint and of all

notices may be made upon such association by service upon any officer, or agent

thereof, engaged in carrying on its business, or on any attorney authorized to

appear in such proceeding for such association and such service shall be binding

upon such association, the officers and

members thereof.

Third. That the association shall not deal

records in the proceedings together with

a petition asking that the order be

“U.S.C.A Sections 521 and 522.

enforced and shall give notice to the

Attorney General and to said association

15