2. In several fisheries all or part of the fuel costs
are deducted from the crew share. The rapidly increasing
fuel costs since 1973 have probably diminished net crew
share.

These negative effects on fishermen earnings have in some cases been
partially offset by decreases in number of crewmen per vessel. However,
in the opinion of the authors, fishermen net earnings have not increased
as rapidly as manufacturing wages since 1965. Because of the authors'
judgment that the change in manufacturing wages would overestimate
fishermen earnings, the Index of Producer Prices for Industrial
Commodities (which increased at a slightly slower rate than the Index of
Hourly Manufacturing Wages) was selected to represent the rate of
increase in fishermen earnings.

Thus, the separate cost components and the index selected to
represent the change in price of that component over the period 1965-1982
are:

Fuel - Index of Producers Prices for Processed Petroleum Products;

Interest - Index of Prime Rate Charged for Short Term
Business Loans; and

Repairs, wages, capital and other costs - Index of Producers
Prices for Industrial Commodities.

In order to calculate an appropriate aggregated input cost index, it
was necessary to determine the proportion of total costs represented by
each of the above cost components for each fishery. Information from
cost and earnings studies made during the late 1960's and early 1970's
formed the basis for this cost allocation. It was determined that during
the base year for the surf clam, groundfish, scallop, lobster and king
and tanner crab fisheries the breakdown would be: fuel, 10 percent;
interest, 10 percent; and other costs, 80 percent.

For the shrimp fishery for 1965 the allocation was: fuel, 15
percent; interest, 10 percent; and other costs, 75 percent.

The breakdown for the tuna fleet in 1965 was: fuel, 12 percent;
interest, 10 percent; and other costs, 78 percent.

For menhaden the cost allocation among the three categories was:
fuel, 7 percent; interest, 10 percent; and other costs, 83 percent.

Although the above allocations were specified for 1965, the
different rate of change in the three cost categories resulted, by 1982,
in a significantly different allocation of costs. For example, in the
groundfish fleet fuel made up 10 percent of the 1965 cost but 19.0
percent of the 1982 costs. The change in allocation was even more
striking for the shrimp fleet where in 1965, 15 percent of the costs were
for fuel while in 1982 this had increased to 27.1 percent. The pattern
of this change was similar for all fisheries considered in this paper.

-14-



TABLE 17 KING § TANNER CRAG: VESSELS, EFFORT, LANDINGS AND VALUE OF LANDINGS 1965-1982

1) VSL_AC NUMBER OF VESSELS, KING AND TANNER CRAB (UNDUPLICATED)

2) EFRT_AC VESSEL TON-TRIPS, KING AND TANNER CRAB (THOUSANDS)

3) LAN_KC LANDINGS OF KING CRAB (THOUS. METRIC TONS)

4) LAN TC LANDINGS OF TANNER CRAB (THOUS. METRIC TONS)

5) LAN_AC LANDINGS, KING & TANNER CRAB, (THOUS. METRIC TONS,LIVE WT.)

6) VAL_KG VALUE OF LANDINGS ,KING CRAB(SMILLION)

7) VAL_TC VALUE OF LANDINGS ,TANNER CRAB (SMILLION)

8) VAL_AC VALUE OF LANDINGS ,KING & TANNER CRAB, (SMILLION)

9) VALD_AC  DEFLATED VALUE OF LANDINGS , KING & TANNER CRAB(MILLION 1965 DOLLARS)

0

t

4

VSLLAC EFRT_AC LANKC  =LANTC = LAN_AC = VAL_KC)=-VAL_TC ~=—VAL_AC-—-VALD_AC

Date a=
1965 342.00 307.80 59.76 0.00 59.74 12.70 0.00 12.70 12.64
1966 424.00 387.96 72.21 0.00 72.21 15.70 0.00 15.70 15414
1967 501.00 473.44 57.92 0.05 57.97 15.00 0.00 15.00 14,06
1968 462.00 450.45 37410 1.45 38.60 21.80 0.30 22.10 19-81
1969 405.00 436,30 26.44 5.13 31.57 15.60 1.20 16.80 14.29
1970 345.00 365.15 23.63 6.58 30.16 13.20 1.40 14.60 u.aL
1971 314.00 400.40 32.07 5.85 37.92 19.10 1.40 20.50 15.80
1972 368.00 563.16 33.66 13.65 47.31 20.50 3.70 24.20
1973 470.00 690.31 34.84 27.99 62.87 44.70 10.80 55.50
1974 528.00 698.06 43.82 29.03 72.85 39.30 13.10 52.30
1975 447.00 545.20 44.27 21.27 65.54 38.40 7,00 45.50
1976 492.00 637.76 48.08 36.65 84.78 67.90 16.00 83.90
1977 $42.00 723.09 45.18 44.68 89.86 99.60 37.50 137.10
1978 679.00 960.13 55.61 58.88 = 114.62 155.90 50.90 206.80

1979 848.00 © 936.03 67.90 59.19 127.09 149.00 72.30 221.30
1980 834.00 923.64 84.23 55.38 139-61 191.70 60-10 © 251,80
1981 830.00 915.95 40.29 48.81 89.10 158.20 47.40 205.60
1982 830.00 935,86 17.46 30.62 48.08 114.80 71,40 186-20

TABLE 1g KING § TANNER CRAB: INDEXES OF EFFORT, PRODUCTIVITY, PRICES, COSTS, AND HARVESTING SECTOR

HEAGTH, 1965-1982

3) LAN_AC_X LANDINGS INDEX KING & TANNER CRAB 1965100
2) VALTAG_X VALUE OF LANDINGS INDEX., KING & TANNER CRAB, 1965=100

3) VALD_AG_X DEFLATED VALUE OF LANDINGS INDEX, KING & TANNER CRAB, 1965=100

4) BERT_AC_X VESSEL TON-IRIPS INDEX, KING & TANNER CRAB, 1965=100

5) CPUE_AC_K LANDINGS PER TON TRIP INDEX,KING & TANNER CRAB, 1965=100

6) ICST_AC_X INPUT PRICES INDEX, KING & TANNER CRAB, 1965=!00

OUTPUT COST INDEX (COST/UNIT OF LNDGS.), KING 5 TANNER CRAB, 1965=100

_AC_X AVERAGE EXVESSEL PRICE INDEX, KING & TANNER CRAB, 1965=100

9) HLTX_AC KING & TANNER CRAB HARVESTING SECTOR HEALTH INDEX (PRICE/COST RATIO)BASE 1965¢1.0

LAN_AC_X VAL_AC_X VALD_AC_X EFRT_AC_X CPUE_AC_X ICST_AC_X OCST_AC_X PRI_AC_X HLTX_AC

Date -—- =
1965 100.00 100,00 100,00 100.00» -100.00 100.00 100.00 100.00 1.00
1966 120.88 = 123.62 119.74 126.04 95-91 104.20 108.65 102.27 0.94
1967 97.04 118.11 111.08 = 153.82 63.09 105.90 167-86 121,72 0.73
1968 64.62 174-02 156.75 146.35 44.15 109.50 247.99 269.31 1.09
1969 52.85 132.28 113.09 141.75 37,28 © 115.60 310.06 += 250.32 0.81
1970 50.49 114,96 93.47 118.63 42.56 119.40 280-52 227.68 0.81
1971 63.48 161.42 125.00 130.08 48.80 118.80 243.45 254.29 1.04
1972 79-19 190.55 141.68 = 182.96 42.29 121-40 280.46 240,61 0.86
1973 105-26 437.01 307425 224.27 46.93 162.26 © 345.74 415.26 1.20
1974 121-94 441,81 266.06 226479 53.77 199.92 3971-80337. 71 Q.91
1975 109.71 358-27 211.676 177413 61.96 212.64 = 343-30 326.56 0.95,
1976 141.91 660.63 «371.16 207-20 68-49 221476 323.77 465.52 1.44
1977 150.41 1079.53 -573.1L 234.92 64.03 274,40 © 428.55 717.70 1.67
(978 191.87 1628.35 804.88 = 311.93 61.51 299.60 487.06 648.66. 1.74
1979 212.74 1742.52 792.79 304.10 69.96 393.76 = 562.85 819.08 1.46
1980 233.70 1982.68 825.20 300.08 17.88 460.16 $90.85 848.39 ferry
1941 149.15 1618.90 615.66 297.58 50.12 $15.06 1027-58 1085.43 1.06
1982 80-48 1466.14 526.62 304.05 26.47 511-68 1932.93 1821.63 0.96

-35-



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-31-


APPENDIX

TABLE A- LEDIBLE VS. INDUSTRIAL: LANDINGS AND VALUE

1) LAN_ED LANDINGS, EDIBLE FISH & SUFLLFISH (THOUS. METRIC TONS LIVE WT.)

2) LAN_IN LANDINGS, INDUSTRIAL FISH (THOUS. METRIC TONS LIVE WT.)

3) LAN_TO LANDINGS, TOTAL COMMERCIAL FISH & SHELLFISH (THOUS. METRIC TONS LIVE WT.)
4) LAN_ED_PC EDIBLE LANDINGS AS A PERCENT OF TOTAL LANDINGS

5) VALED VALUE OF EDIBLE FISH & SHELLFISH LANDINGS (SMILLION)

6) VAL_IN VALUE OF INDUSTRIAL FISH LANDINGS (SMILLION)

7) VAL_TO VALUE OF U.S. LANDINGS COMMERCIAL FISH & SHELLFISH, ALL SPECIES (S$MILLION)
8) VAL_ED_PC VALUE OF EDIBLE LANDINGS AS A PERCENT OF TOTAL LANDINGS VALUE

9) VALD_TO DEFLATED VALUE ALL U.S. COMM. LANDINGS FISH & SHELLFISH (MILLION $1972)

1

i

LAN_ED = LANLIN, —LAN.TO LANED_PC © -VAL_ED-=-VAL_LIN. © VAL_TO. VAL_ED_PC
Date
1965 1173.46 993.38 2166.83 54.16 409.00 37.00 446.00
1966 1167-11 813.30 1980.40 58.93 437.00 35.00 472.00
1967 1074.12 765.22 1839.34 58.40 414,00 26.00 440,00
1968 1064.59 822.37 1886.96 56.42 468.00 29.00 497.00
1969 1052.80 914.45 1967.25 53.52 492.00 35.00 $27.00.
1970 1150.78 1079.56 2230.34 51.60 565.00 48.00 613.00
1971 1107.23 1165.29 2272.52 48.72 595,00 48.00 643-00
1972 1104.51 1075.48 2179.99 50.67 702.00 46.09 748,00
1973 1087.73 1115.85 2203.57 49.36 836.00 101.00 937.00
1976 1132.18 1120.84 2253.02 50-25 844.00 8R.00 © 932.00
1975 1118.12 1094.08 2212.19 50.54 904,00 73,00 977.00
1976 1258.73 1185.25 2443.98 51.50 1257.00 92.00 1349.00
1977 1315.43 1042.37 2357.80 55.79 1404.00 111.00 1515.00
1978 1441.08 1293.21 2734.28 52.70 1733.00 121-00 1854.00
1979 1805.03 1337.66 2842.69 52.94 © 2093.00 141.00 2234.00
1980 1657.44 1282.77 2940.22 56.37 2092.00 145.00 2237.00
1981 1608.91 1102.24 = 2711615 59.34 2277.00 111.00 2388.00

VALD_To

599.78

1982 1490.07 1397.99 2888.05- 51.59 2247.00 143.00 2390.00 1154.59

-_ —

—_ -

TABLE ,-2 EDIBLE VS. INDUSTRIAL: LANDINGS AND VALUE OF LANDINGS INDEXES

1) LAN_ED_X LANDINGS INDEX, EDIBLE FISH & SHFI-LFISH, 1965=L00

2) LAN_LIN_X LANDINGS INDEX, INDUSTRIAL FISH, 1965=(00

3) LAN_TO_X LANDINGS INDEX, ALL FISH & SHELLFISH, 1965-100

4%) VALLED_X VALUE OF LANDINGS INDFX, EDIBLE FISH & SIIELLFISH, 1965100

5) VAL_IN-X VALUE OF LANDINGS INDEX, INDUSTRIAL FISH, 1965=100

6) VAL_TO_X VALUE OF LANDINGS INDEX, ALL FISH & SHELLFISH, 1965=100

7) VALD_TO_X DEFLATED VALUE OF LANDINGS INDEX, ALL FISH & SHELLFISH, 1965=100

LAN_ED_X LAN_IN_X LAN_TO_X VAL_ED_X VAL_IN_X VAL_TO_X VALD_TO_x

Date =. —
1965 100.00 100.00 100.00 100.00 100.00 100.00 100.00
1966 «99.46 81687 «91640-10685 94.59 105.83 102.52
1967 91.53. 77.03 «= 84.89 10L.22 70.27 98.65 92.79
1968 90.72 82.79 87.08 116.43 78.38 11.43 100.39
1969 89.72, «492.05 90.79 120.29 94.59 118.16 101.03
1970 98.07 108.68 102.93 138.14 129.73 137.44 ALL. 76
1971 117.31 106.88 145.48 129473144617 11166
1972 108.26 100.61 172.64 124.32 LG7e7L L2G TL
1973 112.33 101.70 204.40 272.97 210.09 147.73
1974 112.83 103.98 206.36 237.84 208.97 135.03
1975 110.16 102.09 221.03 197.30 219.06 129.50
1976 LL9.3L 112.79 307.33 248.65 302.47 169.95
1977 104.93 108.81 343,28 300.00 339.69 180.36
1978 130.18 126.19 423.72, 327-03 415.70 205.50
1979 134.66 131.19 SLL. 74 381.08 500.90 227.92
1980 129.13 135.69 Sil. 49 391.89 501.57 208.78
198L 110.96 125.12 556.72 300.00 535.43 203.64
1982 126.98 «140.73 133.28 © 549.39 386.49 595.87 192.50
I — — —_ _ _



Here, C., and C, are respectively the prices paid
per unit of inpd? in year t and year o, the base year.

Thus, I
Sea

Where,

= F Kj, (C,,/05.) = C.4/c,, 3
Cc i and Cy, are the aggregated cost per unit
of effort for species i in year t and the base year.

Productivity Index

The Productivity Index is designed to reflect the relative
changes in output per unit of input over the time period considered.
In words, the Productivity Index is qn index of catch per unit of effort
in the fishery and is calculated as:

Ty Me Ee Ei /E oy) 5 )
ti
Where,
Tp is the Productivity Index for species
ti iin year t,

Leg and Loy are landing in year t and
year o of
species i, and
Ea and Eat are the amount of effort on
species i in year t and year o.

Unit Output Cost Index
For an individual vessel, the change in cost per unit landed

(Unit Output Cost) of a particular species i over the time period from
the base year o, to the year t is represented as:

I = I, /L 3 (4)
CU, Seg Peg
Where,
I is the Per Unit Cost Index of a species
cu .
ti iin year t, and I, and Ib are
as defined above. “ti ti

The logic of the index Toy can be seen through the derivation of this
index. That is, ti

3. The authors recognize the difficulty in measuring fishing effort and
therefore catch per unit of effort. Measures used for this study were
selected from available data and involve the assumption that changes in
effort will be accompanied by changes in costs. It should be noted that
the effort measures used herein are not necessarily those measures
preferred by fishery biologists for modeling and analyzing fisheries
population dynamics and stock assessments.

-8-


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-36-



PREFACE

A version of this paper was presented originally at the Eighth
Annual Seminar of The Center for Oceans Law and Policy, University of
Virginia, held at Cancun, Mexico in January 1984, The dual purpose of the
paper was to develop a simplified but credible means to gauge the
economic health of the U.S. commercial fish harvesting industry and to
apply the methodology to a cross section of major U.S. fisheries. With
regard to methodology, the authors recognize limitations imposed by
availability of data and various technical assumptions that underlie
indexing procedures used in the analysis. Nonetheless, they wish to
emphasize the critical need for analyses of this sort to guide fisheries
policy and fisheries investment decisions and they encourage further
attempts to refine both the data and methodology presented in this
paper.

Virgil Norton is Professor, Department of Agricultural and Resource
Economics, University of Maryland, College Park, MD; Morton Miller and
Elizabeth Kenney are Economists, National Marine Fisheries Service,
respectively, Washington, DC and Woods Hole, MA.

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-29-



Productivity Index

The measure of fishing effort used in this study differs by
fishery. Data availability constraints and variations in fishing
operations across fisheries make it impossible and in some cases
undesirable to construct a uniform effort measure. The aim in this
analysis was to use measures that are reasonably associated with parallel
changes in the use of inputs.

Given below is the measure of fishing effort used to calculate catch
per unit of effort or productivity for each fishery. The productivity
was calculated for each fishery for each year during the period
1965-1982. The result for 1965 was then divided into the result for each
other year and multiplied by 100. Thus, the index for each year for each
fishery is expressed as a percent of the 1965 catch per unit of effort in
that fishery.

The effort measures used and sources of information are:

Scallops Scallop dredge vessel days at sea (NMFS);
Groundfish Otter trawl vessel days at sea (NMFS);
Lobster Number of trap hauls (Maine Dept.

of Marine Resources);

Menhaden Vessel ton weeks (The sum, over all
weeks, of registered net tonnage of vessels
that landed menhaden at least once
during the week.) (NMFS);

Surf clams Weighted effort index of three size classes
of vessels. (Class I, less than 50 GRT;
Class II, 51 to 100 GRT; Class III, greater
than 100 GRT.) (The weights are: Class I,
1; Class II, 1.47; Class III, 4.71.) —
(Mid-Atlantic Regional Fisheries
Management Council);

King crab Ton trips (Average GRT times number of trips)
(NMFS);

Shrimp Ton trips (Average GRT times number of trips)
(NMFS); and

Tuna Total carrying capacity of vessels

(IATTC Annual Reports).

-15-


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-21-


TABLE 3 NEN ENGLAND SCALLOP DREDGE: VESSELS, EFFORT, LANDINGS, AND VALUE QF LANDINGS

1965-1982

1) VSL_SD NUMBER OF VESSELS, NEW ENG. SCALLOP DREDGE
2) EFRT_SD VESSEL DAYS ABSENT, NEW ENG. SCALLOP DREDGE

3) LAN_SD LANDINGS, NEW ENG, SCALLOP DREDGE (THOUS, METRIC TONS LIVE WT.)

4) VAL_SD VALUE OF LANDINGS, NEW ENG. SCALLOP OREDGE (SMELLION)

5) VALD_SD DEFLATED VALUE OF NEW ENG. SCALLOP DREDGE LANDINGS (MILLION 1965 DOLLARS)
6) LAN_SD_X LANDINGS INDEX, NEW ENG. SCALLOP DREDGE, 1965=100

7) VALSD_X VALUE OF LANDINGS INDEX, NEW ENG. SCALLOP DREDGE, [965=100

8) VALD_SD_X DEFLATED VALUE UF LANDINGS INDEX, NEW ENG. SCALLOP DREDGE, 1965=100

VSL_SD EFRT_SD LAN_SD -VAL_SD_--VALD_SD__LAN_SD_X VAL_SD_X VALD_SD_X

Date - — — — =
1965 60.00 8200.00 45.90 8.23 8.19 100.00 100.00» 100.00
1966 7100.00 41.40 5.40 5.20 90.20 65.61 63.56
1967 25.90 5.30 4.96 56.43 64.39 60.57
1968 29.20 8.64 7.75 63.62 105.06 94.65
1969 18.60 5444 4.63 40.52 66.08 56.50
1970 16,00 5476 4.66 34.86 69.99 56.91
1971 14,80 5.79 4.46 32.24 70.36 54.50
1972 12.90 6.86 5.07 28-10 83.36 61.98
1973 11.80 5.55 3.88 25.71 67.46 47663
1974 15.60 6.42 4.13 33.99 78.08 50.45
1975 20.20 10.14 5.95 440l 122.95 72.68
1976 38.90 19.21 10.76 86.75 233.52 131.21
1977 58.90 25.78 13.62 128.32 313.41 166.41
1978 60.10 40.59 19.97 130.94 493.40 243.91
1979 199.00 13000.00 $7.10 51.51 23.33 124.40 626.22 284.95

1980 266.00 8200.00 58.20 59.04 24.46 126.80 717,68 = 298.74
1981 258.00 19700.00 67.20 71402 26.88 146.41 863.41 328.39
1982 175.00 17800,00 50.80 35.61 19.88 = 110.68 += 676.00 242.84

TABLE 4 NEW ENGLAND SCALLOP DREDGE: INDEXES OF EFFORT, PRODUCTIVITY, PRICES, COSTS, AND IARVESTING
SCTOR HEALTH, 1965-1982

1) BERT_SD_X VESSEL DAYS ABSENT INDEX, NEW ENG. SCALLOP DREDGE, 19652100

2) CPUE_SD_X LANDINGS PER DAY ABSENT INDEX, NEW ENG. SCALLOP DREDGE, 19652100

3) ICST_SD_X INPUT PRICES INDEX, NEW ENG. SCALLOP DREDGE, 1965=100

4) OCST_SD_X OUTPUT COST INDEX(COST/UNIT OF LNDGS.),NEW ENG. SCALLOP DREDGE, 1965=100

5) @RI_SO_X FXVASSEL PRICE INDEX, NEW ENG. SCALLOP DREDGE, 1965=100

6) HLTX_SD N.E. SCALLOP DREDGE HARVESTING SECTOR HEALTH INDEX (PRICE/COST RATIO), BASE 1965=1.0

EFRT_SD_X CPUE_SD_X ICST_SD_X OCST_SD_X PRI_SD_X HLTX_SD

Date — -
1965 100-00 100.00 100-00» 100.00 10000 1.00
1966 86.59 104.16 = 104.20 100.03 72.78 0.73
1967 Th 9S, 78.43 105.90 135.03 114.12 0.85
1968 91.46 69.56 109.50 157-41 165.14 1.05
1959 76.83 52.76 115-60 219.10 163.07 0.74
1970 60.98 57.18 119.40 208.80 200.77 0,96
1971 56.10 57.49 118.80 © 206.63 218-21 1.06
1972 57.32 49.05 121.40 247.49 296.59 1,20
1973 46.34 55.49 135.20 243,64 262.39 1.08
1974 42,68 79.63 166460 209.21 229.73 1.10
1975, 50.00 @8.02 177.20 201.32 279.37 1.39
1976 78.05 108.58 = 184.80 170.20 275.53 1.62
1977 LN3,4L 113614 196.60 173626 264.23 Lead
1978 120.73 108.45 214,30 «197-61 376.81 AOL
1979 158.54 78.47 246.10 313.61 503.38 1.61
1980 221.95 57-16 287,60 503.29 565.99 Ll
1981 240.24 60.95 321,90 528-11 589-72 Led
1982 217.07 34-04 319.80 626.57 611.24 0.98
a —

-17-



TABLE 13 SURF CLAM: EFFORT, LANDINGS, AND VALUE OF LANDINGS 1965-1982

1) EFRT_SC WEIGHTED EFFORT INDEX, SURF CLAM MIDDLE ATLANTIC
2) LAN_SC LANDINGS, SURF CLAM (THOUS. METRIC TONS MEAT WT.)

3) VAL_SC VALUE OF LANDINGS, SURF CLAM (SHILLION)

4) VALD_SC DEFLATED VALUE OF LANDINGS, SURF CLAM (MILLION 1965 DOLLARS)
5) LAN_SC_X LANDINGS INDEX, SURF CLAM, 1965=100

6) VAL_SC_X VALUE OF LANDINGS INDEX, SURF CLAM, 1965*100

7) VALD_SC_X DEFLATED VALUE OF LANDINGS INDEX, 1965=100

EFRT_SC LAN_SC -VAL_SC_-VALD_SC_ LAN_SC_X VAL_SC_X VALD_SC_X

Date —— =
1965 91,00 20.00 3.20 3.18 100.02 100,00 100.00

1966 112.00 20.46 3.90 3.76 = 102.29 121-88 118.23

1967 151.00 20.46 4.40 4.12 102.29 137.50 129.51

1968 128.00 18.10 4410 3.68 90-49 128.13 115.59

1969 133.00 21.55 5.70 4.85 107-73 178.13 152.51

1970 176.00 30.53 7.70 6.23 152.64 240.63 195.93

1971 180.00 23.86 6.90 5.32 119.30 215.63 167.26

1972 174.00 28.76 7.90 5.85 143.79 246.88 183.84

1973 177.00 37.38 9.90 6.93 186-88 = 309.38 217.85

1974 183.00 43.59 12.20 7.84 217-95 381,25 246.70

1975 187.00 39.42 12.60 7.41 197-09 393.75 233.09

1976 274,00 22.27 23.30 13,03 111-36 728.13 409.70

1977 467.00 23.13 26.40 13,95 115.67 825.00 438.66

1978 474,00 17.78 20.90 10.28 88.91 653.13 323.33

1979 492.00 15.83 19.30 8.74 79-15 603.13 274.83

1980 399.00 17.10 19.10 7691 85.50 596.88 248.81

1981 387.00 20.91 23.50 8.89 104.55 734.38 279.71

1982 403.00 22.54 26.00 9.29 112.72 812.50 292.29

— SS a
—- —

TARLE 14 SURF CALM: INDEXES OF EFFORT, PRODUCTIVITY, PRICES, COSTS, AND HARVESTING SECTOR
“HEALTH 1965-1982

1) EFRT_SC_X INDEX OF SURF CLAM WEIGHTED EFFORT, 1965100
2) CPUE_SC_X INDEX OF CATCH PER UNIT OF EFFORT, SURF CLAM, 1965=100
3) UCST_SC_X INPUT PRICES INDEX, SURF CLAM, 1965=100
4) OCST_SC_X OUTPUT PRICE INDEX, SURF CLAM, 1965=100
5) PRI_SC_X EXVESSEL PRICE INDEX, SURF CLAM, 1965=100

6) HUTX_SC SURF CLAM HARVESTING SECTOR HEALTH INDEX (PRICE/COST RATIO) BASE 1965=1.0

EFRT_SC_X CPUE_SC_X LCST_SC_X OCST_SC_X PRI_SC_X HLTX_SC

Date --~ a

1965 100.00 100.00 100.00 100.00 100.00 1.00
1966 123.08 = 83.00 104.20 125.54 119.16 0.95
1967 165.93 62.00 105.90 170.81 134.43 0.79
1968 140,66 65.00 109.50 168-46 141.59 0,84
1969 146,15 77.00 115460150413 165.34 1.10
1970 193,41 79.00 119,40 151.14 157.64 1.06
197t 197,80, 60.00 118.80 198.00 180.74 O.9L
1972 191,21 75.00 121.40 161.87 «171.68 1.06
1973 194.51 96.00 135.20 140.83 165.54 1.18
1974 201.10 108.00 166-60 154.26 174,91 13
1975 205.49 97.00 177.20 182-68 = 199.77 1.09
1976 301-10 37.00 184.80 499.46 653.69 1.31
1977 513.19 23,00 196.00 852617 713,06 0.84
1978 520.88 = 17.00 186.40 1096.47 734.43, 0.67
1979 540.66 15.00 192.00 1280.00 761.77 0.60
1980 438.46 = 20.00 247.30 1236.50 697.89 9.56
1981 425.27 24.00 206.00 858.33 702.20 0.82
1982 442.86 = 26.00 227-10 873.46 720,63 0.83

— —— _

~30-


TABLE 1 POSSIBLE FINANCIAL SITUATIONS IN YEAR t UNDER ALTERNATIVE

ASSUMED BASE YEAR FINANCIAL STANDINGS AND HEALTH INDEX VALUES

Financial Standing
in Base Year

Health Index
in Year t

Is it Possible for the Firms
in the Industry in Year t To
Be Operating at:

Profit Breakeven Loss
Profit Less than 1.0 yes yes yes
Break even no no yes
Loss no no yes
Profit Equal to 1.0 yes no no
Break even no yes no
Loss no no yes
Profit Greater than 1.0 yes no no
Break even yes no no
Loss yes yes yes

TABLE 2 COMPARATIVE LANDINGS VALUE OF FISHERIES ANALYZED IN

HARVESTING SECTOR HEALTH STUDY

Value of Landings

Percent of Total

1981 1982 1981 1982

Fishery Million Dollars Percent
New England otter trawl 129.0 151.2 5.4 6.3
New England scallop dredge 71.0 55.6 3.0 2.3
Maine lobster 44.4 47.3 1.9 2.0
Gulf shrimp 401.4 425.7 16.8 17.8
Gulf menhaden 47.7 72.7 2.0 3.0
Tuna (excl. albacore) 179.4 135.2 7.5 5.7
King & tanner crab 205.6 186.2 8.6 7.8
Surf clam 23.5 26.0 1.0 1.1
Sub-total 1102.0 1099.9 46.2 46.0
All Species 2387.7 2390.0 100.0 100.0

-12-


1965 and 1982. During the same period beef and veal prices increased by
almost 200 percent, and poultry prices advanced by less than 100 percent
(Figure 9). Considering these relative price changes, it is not
surprising that the per capita consumption of fish has increased only
slightly while the growth in poultry consumption has been considerable.

The relatively small increase in per capita consumption of fish,
however, when combined with the population growth that has taken place in
the U.S. during the past two decades, has resulted in a significant
increase in total consumption. Because domestic landings have not kept
pace with consumption, the U.S. is a leading importer of fish products,
outranked in this respect only by Japan. U.S. landings of edible species,
for example, accounted for only 41 percent of total edible supplies in
1982 (Figure 10 and Appendix Table A-3). This is below the domestic
industry's share of the market in 1965. U.S. producers of industrial
species fare somewhat better with 76 percent of the market, or about
double their 1965 share (Figure 11). The rise in the domestic industrial
fish share occurred as a result of the sharp drop in U.S. imports of fish
meal following the failure of the Peruvian anchovy fishery in the early
1970's. Overall, 53 percent of U.S. fishery product supplies by volume
are from domestic landings, and 47 percent are from imports (Appendix
Table A-4).

The U.S. exports a portion of its fishery production, but the volume
of exports remains well below imports. There has been a growing deficit
in the U.S. balance of trade in fishery products. In 1982, imports of
fishery products were valued at $4.5 billion and exports at $1.1 billion,
for a trade deficit of about $3.4 billion. The deficit in 1965 was
approximately $0.5 billion (Figure 12 and Appendix Table A-5). It should
be noted that a portion of the imports is made up of jewelry. This
contributes to the trade deficit.

THE CONCEPTUAL FRAMEWORK

Changes in landings, value, prices and consumption as discussed
above are useful indicators of the general status of the commercial
fishing industry in terms of overall relative growth. However, these
changes do not necessarily give insight into the economic health of the
industry which is determined by both costs and revenue. If appropriate
data were available industry health could be expressed as net profit or
through other measures such as rate of return on investment. Cost
information is essential because it is possible to have a declining net
profit even if total revenue and landings increase over a period. This
could occur if costs increase at a faster rate than revenue. Similarly,
if revenue and landings in a fishery were declining, net profit could be
increasing if costs were declining faster than revenue.

For this reason, it is useful to have indicators that reflect the
changes in revenue over time relative to changes in cost. Conclusions
regarding trends in industry health can be drawn from detailed profit and
loss statements for firms in a fishery. There are, however, certain
problems associated with accounting profit and loss statements (P-LS). A
major consideration is that such statements are generally not available

-4-


Peruvian Anchovy fishery and an increase in soybean prices -- both of
which represent close competitors to menhaden fish meal. Prices were off
slightly in 1981 and 1982 because of problems with marketing menhaden
oil. The strong U.S. dollar also put downward pressure on exports and
prices.

Table 12 and Figure 30 indicate that while catch rates were
generally off from the 1965 level during the period, they increased
substantially in 1987 and 1979, then dropped off, but in 1982 nearly
reached the 1965 level.

The increased catch rate and level of landings in 1982 helped the
industry partially recover from the 1980-81 situation. However, the
Health Index for 1982 was still below the levels for 1965 and most of the
1970's (Table 12 and Figure 32). It is interesting to note the impact of
the Peruvian anchovy fishery on the U.S. Gulf menhaden Industry Health
Index. The Peruvian industry was fully developed and placing large
quantities of fish meal in international markets especially in 1967, 1968
and 1969. This is reflected in a drop in menhaden price and a depressed
Health Index for those years. The impact of the price drop was
exacerbated by a simultaneous drop in catch rate in the Gulf fleet during
these years. However, by 1973, U.S. prices were up and the catch rate
had also partially recovered from the low level in the late 1960's. As a
result, the Health Index in 1973 and 1974 and again in 1978 and 1979 was
substantially above the 1965 level.

Surf Clams

Surf clam landings in 1982 were at approximately the same level as
in 1965 but were only about one half of the amount that occurred in the
mid 1970's (Table 14 and Figure 34). The value of surf clam landings was
eight times higher in 1982 than in 1965 and deflated value increased by
300 percent (Table 13 and Figure 33). The increase in value is largely a
result of substantially higher prices which in 1982 were seven times
higher than the 1965 level (Table 14).

During the period, there were large fluctuations in catch rates,
declining from the base of 100 in 1965 to 60 in 1971, then increasing to
108 in 1974 only to fall substantially by 1976. Catch rates since 1976
have remained at about one-fourth of the 1965 level (Table 14 and Figur
34). This drop in catch rate combined with increased input costs
resulted in cost per unit of output increases of up to 1200 percent in
the late 1970's (Table 14 and Figure 35).

Therefore, although prices did move up rapidly during the period,

they did not offset cost increases. The Health Index indicates that
since 1977 the industry cost-revenue situation has deteriorated relative

5. The cost index was adjusted to reflect the fact that vessels were
operating fewer days each week after 1978. This reduced variable costs
and the index was adjusted accordingly.

-27-


landings and catch per unit of effort between 1976 and 1978 (Figure 22).
The partial recovery in catch rates along with relatively large price
increases helped to move the Industry Health Index above 1.0 in 1976,
1977 and 1978 (Table 8 and Figure 24). However, in the following years a
number of vessels were added to this fleet (Table 7). This contributed to
a significant increase in total days at sea by the fleet, and catch per
unit of effort diminished with a sizeable drop taking place in 1982
(Table 8). The decline in catch rate along with the effects of increased
fuel and other costs caused a reversal of the Health Index which dropped
to below 1.0 in 1980 but gradually climbed back to 1.0 by 1982 (Figure
24). Sharp price increases in 1981 and 1982 and relatively stable input
costs in 1982 helped to restore the Health Index to the 1965 level
(Figure 23).

Gulf Shrimp

The economic health of the Gulf shrimp fleet is particularly
sensitive to the price of vessel engine fuel and the conditions in the
national economy. Fuel costs make up a larger percent of total cost for
this fleet than for most other fleets, and this is reflected in the Index
of Input Prices. This Index moved up rapidly between 1972 and 1974 and
between 1978 and 1980 when large increases in the price of petroleum
products took place (Table 10 and Figure 27). Also, prices received by
shrimp fishermen have been suppressed by declines in demand as a result
of the economic recessions (1974-75 and 1980-81) and a steady flow of
imports from numerous countries throughout the world. In spite of these
events, total ton-trips by this fleet continued to increase and in 1982
were 65 percent greater than in 1965 (Table 9). The expanded fishing
effort did not result in significantly increased landings (Figure 26 and
Table 9), and catch per ton-trip in 1982 was only about two thirds of the
1965 level (Table 10).

During the period the Output Price Index increased at such a rapid
rate that the Industry Health Index generally remained above 1.0 (Table
10, Figures 27 and 28). The Health Index may underestimate the industry
financial situation in some years because certain U.S. shrimp vessels
fished out of Trinidad, French Guiana and other Caribbean ports. Shrimp
caught by these vessels were offloaded in these foreign ports and not
reported as U.S. catch.

Menhaden

Gulf menhaden account for more than one third of the weight of
finfish landed by U.S. fishermen. The value of this catch represents six
percent of the value of all finfish. Menhaden landings in 1982 were at
an all time high and were 55 percent above the 1981 level and 184 percent
above the 1965 catch (Table 11 and Figure 30).

The demand for U.S. menhaden increased sharply in 1973. This is
reflected in a rapid rise in price that year to a new level that was
approximately maintained in subsequent years (Table 12 and Figure 31).
Among the causes of the rapid price increase were the collapse of the

-24-


NATIONAL TRENDS IN FISHERIES

~ The United States traditionally has been among the world leaders in
commercial fishing and currently ranks fourth in volume produced behind
Japan, the USSR and China. In terms of contribution to the world catch,
the U.S. accounts for approximately five percent of the world total,
about the same as in 1965,(Figure 1). During the late 1960's and early
1970's the U.S. share dropped below four percent. This was a period when
traditional domestic fishing grounds were being exploited by foreign
distant water fleets. Since the late 1970's, however, the U.S. share of
the total has been increasing (Figure 2).

the fisheries for edible species as well as those used for
industrial purposes have shared in the recent growth in the U.S. catch,
(Figure 3). In 1982 landings totaled 2.9 million metric tons divided
approximately equally between edible and industrial species (Appendix
Tables A-1 and A-2), The dockside value of landings was $2.4 billion, of
which edible species accounted for over 90 percent (Figures 4 and 5).

There has been more than a five fold increase in the value of the
U.S. catch since 1965,(Figure 6).°,Some of this increased value is due to
inflation in the national economy and the general rise in all prices.
However, the rate of growth in prices received by fishermen has outpaced
the increase in the general price level, (Figure* ,This growth in the
"real" value of fish and shellfish landings reflects a strong U.S.
consumer demand for fish products and, in some cases, a decrease in the
market quantities available. :

eo

Per capita consumption of commercially marketed fish products in the
U.S. has remained between 5.5 and 6.0 kilograms during the past decade,
up slightly over the 1965 level of 4.9 kilograms (Figure 8). This
reflects an increase in per capita consumption of fresh and frozen
products such as fillets, steaks, sticks and portions and certain
shellfish such as shrimp. These product forms are popular in the
institutional (restaurants, etc.) markets where high prices are less of
an inhibiting influence on consumption. Currently, over half of U.S.
fish consumption takes place away from home.

Periodic declines in the market availability of certain species such
as king crab, scallops and surf clams have resulted in rapidly escalating
prices for products from these species. This, along with the strong
consumer demand for fresh and frozen fish products is reflected in a rate
of increase in the price of fish well above that for meat and poultry.
The average price of fish and shellfish was up about 300 percent between

1. Demand for raw fish at the dock is derived from consumer demand, and
the relative strength of demand for fresh and frozen products is
reflected in exvessel price differentials. Tuna, for example, is
processed almost exclusively as a canned product, and exvessel tuna
prices show a 332% increase between 1965 and 1982. During the same period
the average dockside price of shrimp, which is distributed mostly in the
fresh and frozen form, increased 458%.

-1-




considering these limitations, the authors selected for analysis the
period 1965 through 1982.

Output Price Index

The calculation of the Output Price Index for each species was
relatively straight forward. Total dollar value of landings for each
fishery for each year was divided by total landings (metric tons) for
that year. This gave a weighted average annual price per metric ton for
each fishery. The 1965 price was then divided into the price for each of
the years in the period of analysis and the result multiplied by 100.
Thus, the Output Price Index for each species was established with a base
year (1965) value of 100 and each other year's price was calculated as a
percent of the base year price.

Input Cost Index

The components of cost for any firm can be classified as either
variable or fixed. Variable costs are those that change with output. In
fishing, these are likely to be costs associated with fishing time such
as days at sea. These would include expenditures for labor, food, fuel,
engine repairs, etc. Fixed costs are those that do not change with
output and include items such as hull insurance, interest on loans,
rental on dock space, interest on investment and depreciation.

In examining the change in costs during the period of analysis the
authors determined that the rate of increase for all costs except fuel,
labor and interest rates could be represented by the Bureau of Labor
Statistics' Index of Producers Prices for Industrial Commodities. The
change in interest rate paid by fishermen was considered to be best
represented by the Index of the Prime Rate for Short Term Business Loans.
(Although short term rates are higher than long term rates, they both
increased at approximately the same rate during the period of analysis.)
Fuel price changes were represented by the Index of Producers Prices for
Petroleum Products.

The wage rate for fishermen was somewhat more complicated. Over the
long run, it would be expected that crewmen be paid their opportunity
cost (what they could earn in their best employment alternative) as
represented, for example, by the wage rate in manufacturing. However, in
fisheries since 1965, two factors may have prevented wages from
increasing as fast as the manufacturing wage rate. These factors are:

1. Fishermen in most fisheries are paid on a "lay" or
share system. In many fisheries the catch rate has declined
over time and this could represent downward pressure on
fishermen wages earned per unit of time; and

-13-


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—s

~3-


Maine Lobsters

Landings of Maine lobsters, which account for over half of the total
catch of northern lobsters, were about 20 percent higher in 1982 than in
1965. The value of landings was up by more than 300 percent during the
period. The deflated value of landings increased at about the same rate
as landings, indicating that the deflated price per pound in 1982 was
almost the same as in 1965 (Table 5 and Figure 17).

The number of trap hauls expanded slightly during the period but
because landings also increased, the catch per haul showed no clear trend
(Figure 18). For most of the years during the period of analysis the
catch per haul was within 10 percent of the 1965 rate (Table 6).

The Health Index indicates that for a majority of years between 1965
and 1982 the Maine lobster harvesting industry was not doing as well as
it did in 1965 (Figure 20). This is in large part because of the slow
rate of change in price due to consumer resistance to what was already in
1965 a relatively high priced item. It is also related to the flow of
imports from Canada which tend to have a price depressing effect on U.S.
caught lobsters.

As can be seen from Figure 19, most of the cost increase for
lobsters occurred because of inflationary pressures on input prices
rather than a decline in productivity. The Health Index may
underestimate the actual industry health because some vessels have, in
recent years, carried more traps, which would tend to reduce cost per
trap haul.

New England Otter Trawl

The New England otter trawl fleet lands a mix of species, most of
which are groundfish. The fleet during the 1960's and early 1970's
labored under the dual pressures of heavy foreign fishing on George's
Bank and a steady stream of imported competitive products from Canada.
There were serious declines in the abundance and availability of haddock,
cod and ocean perch and by the time the U.S. Congress enacted the
Magnuson Fishery Conservation and Management Act, the otter trawl catch
had diminished to less than half of the 1965 level. In 1967 the haddock
fishery was dependent almost entirely on the 1963 year class and even
with the quotas set by agreement within the International Commission for
Northwest Atlantic Fisheries (ICNAF), the fishery was unable to recover.
By 1970 the catch and value of otter trawl landings were well below 1965
levels (Table 7). Although landings continued to decline, value did rise
in the early 1970's. However, deflated value did not reach the 1965 level
again until 1976 (Figure 21).

From 1965 through 1975 there was a continuous decline in landings
per day at sea and it was not until 1976 that productivity increased. At
least some of the improvement likely came about because of less foreign
fishing effort and a recovery of certain stocks due to natural conditions
or perhaps, actions taken under ICNAF. There were moderate increases in

-19-


prose, :
sy , NOAA Technical Memorandum NMFS-F/NEC- 40
4

$ e,
|
3 Is This TM series is used for documentation and timely communication of
p preliminary results, interim reports, or special purpose information, and
aN a has not received complete formal review, editorial control, or detailed
MENTOR e editing.

Indexing the Economic Health
of the
U.S. Fishing Industry's Harvesting Sector

Virgil J. Norton’, Morton M. Miller?,
and Elizabeth Kenney?

‘Dept. of Agricultural and Resource Economics, Univ. of Maryland, College Park, MD 20742
2Woods Hole Lab., National Marine Fisheries Serv., Woods Hole, MA 02543

U.S. DEPARTMENT OF COMMERCE
Malcolm Baldridge, Secretary

National Oceanic and Atmospheric Administration
Anthony J. Calio, Acting Administrator

National Marine Fisheries Service
William G. Gordon, Assistant Administrator for Fisheries

Northeast Fisheries Center
Woods Hole, Massachusetts

May 1985



TABLE A-S U.S. IMPORTS VS. EXPORTS: VALUES, BALANCES, INDEXES, AND RATIOS

tL) LMP_VAL U.S. IMPORTS OF FISHERY PRODUCTS IN MILLIONS OF DOLLARS

2) EXP_VAL U.S. EXPORTS OF FISHERY PRODUCTS IN MILLIONS OF DOLLARS

3) BAL_FISH U.S, BALANCE OF TRADE IN FISHERY PRODUCTS (SMILLION)

4) IMP_VAL_X INDEX OF U.S, IMPORTS OF FISHERY PRODUCTS, 1965=100

5) EXP_VAL_X INDEX OF U.S. EXPORTS OF FISHERY PRODUCTS, 1965=100

6) IM_EX_RAT RATIO OF U.S. IMPORTS FISH, PROD. TO U.S. EXPORTS FISH. PROD.

IMP_VAL EXP_VAL BAL_FISH IMP_VAL_X EXP_VAL_X IM_EX_RAT
Date ---—=. = =
1965 600.90 69.50 -531.40 100.00 69.50
1966 719.70 84,80 ~634.90 119.77 84.80
1967 707.90 82.20 -625.70 117.81 82.20
1968 822.70 67.80 ~754.90 136.91. 67.80
1969 844.30 104.50 -=739.80 = 140.51 104.50
1970 1037.40 117.50 -919.90 172.64 117.50
1971 1074.20 139.20 -935.00 178.77 139.20
1972 1494.40 157.90 =1336-50 248.69 157.90
1973 1583.10 299.20 -1283.90 263.45 299.20
1974 1710.90 262-10 -1448.80 284.72 262,10
1975 1637.10 304.70 -1332.40 272.44 = 304.70
1976 2328.20 384.70 -1943.50 387.45 384.70
1977 2633.60 520.50 -2113-10 438.28 520.50
1978 3086.00 905.50 -2180.50 513.56 905.50
1979 3808.80 1084.50 -2724.30 633.85 1084.50
1980 3648.50 1006.20 -2642.30 607.17 1006.20
198L 4206.00 1157.00 -3049.00 699.95 1157.00
1982 4523.60 1058.90 =3464.70 752.80 1058.90

TABLE A-OWORLD CATCH: LANDINGS, INDEXES AND PERCENTAGES

1) LAN_WO WORLD CATCH OF FISH & SHELLFISH IN MILLION METRIC TONS LIVE WEIGHT

2) LAN_WXP WORLD CATCH EXGLUDING PERUVIAN ANCHOVY IN MILLION METRIC TONS LIVE WEIGUT
3) LAN_WO_X INDEX OF WORLD CATCH FISH & SHFLLFISH, 1965100

4) LANWXP X INDEX OF WORLD CATCH EXCLUDING PERUVIAN ANCHOVY, 1965=100

5) PCT_US U.S. CATCH FISH & SHELLFISH AS A PERCENT OF WORLD CATCH

LANHO  LAN_WXP LAN WO_X LAN WXP_X —PCT_US

Date

1965 53.20 45.50 100.00 100.00 5.08
1966 57.30 47.70 07-71 104.84 4.36
1967 60.40 49.90 113.53 109,67 3.97
1968 63.90 52.60 120-11 115.60 3.91

1969 62.70 53.00 117-86 116.48
1970 65.60 52.50 123.31 115.38
1971 66-10 54.90 124.25 120.66
1972 62.00 57.20 116-54 125,71
1973 62-70 61.00 117.86 = 134.07
1974 66.50 62.50 125.00 137.36
1975 66.40 63.10 126.81 138.68
1976 69.80 65-50 131.20 143.96

1977 68.10 129.51 149.67

1978 69,00 132.33 151.65

1979 69.90 134.02 153.63

1980 71.40 135.71 156,92

1981 73.30 140.60 161.10

(982 - - - -- -
— — _

-42-


for most fisheries. During the period 1964-1972 a number of cost and
earnings analyses were conducted by economists with the Bureau of
Commercial Fisheries and NMFS. This work was not continued and efforts
since then have been of an ad-hoc nature and not appropriate for
examining changes over time.

Even if P-LS were available, care is required in interpreting the
results. For example, "lay" systems (arrangements for dividing costs and
revenues among vessel owners and crews) in some fisheries have been
altered during the past decade due to the changing nature of the fishery
or in response to input price changes. Under these circumstances,
returns to owners may not reflect the actual conditions in the fishery.
That is, a crew could be absorbing more of the costs with a resultant
decrease in net crew share while the returns to the owner remain
constant. Thus, the P-LS of the owner would not reflect the overall
health of the industry. Also, P-LS may be misleading when comparing
across firms or over time because of different accounting procedures.
For firms that are vertically integrated, it is difficult to allocate
costs to particular levels of their operations, and firms may allocate
these costs differently.

Therefore, while P-LS are helpful in evaluating the effects of
certain management or regulatory actions, they may not always give a
complete picture of what is occurring relative to the long term economic
health of the industry. For this reason, the authors developed a set of
indexes for examining relative changes in industry costs and revenues
over time. These indexes can be used to supplement information from P-LS
if they are available and, in the absence of P-LS, can provide an
indication of industry economic health relative to a given base period.

The indexes developed for this paper are based on the principal that
the profit or loss situation of a firm or set of firms is dependent on
three components of the business operation. These components are:

1. Price of the output (ex-vessel price);

2, Price of inputs (cost of fuel, repairs, etc.); and

3. Productivity of inputs (catch per day at sea,
catch per trap lift, etc.).

Changes in any or all of these components will be reflected by a shift in
net profit or loss of the firms involved in a fishery. For example, if
in a particular fishery over a period of years input prices and catch per
day at sea remained constant but ex-vessel price (output price)
increased, the firms' financial situation at the end of the time period
would be improved relative to that at the beginning of the time period.

2. If, for example, one would examine the owner's P-LS for certain
airlines or automobile manufacturers, the "bottom line" of these
statements would not directly reflect the fact that workers in these
firms have given up benefits or even taken wage cuts. Thus, a P-LS for
such firms would underestimate the actual decline in overall industry
health.

-6-


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fisheries -- especially Gulf menhaden and tuna -- the 1982 cost-revenue
conditions were less favorable than in 1965.

The authors believe the method outlined in this paper is a useful
approach for tracking the economic health of the various fisheries in the
U.S. and suggest that NMFS establish a regular procedure for calculating
and publishing such indicators.’

It is recognized by the authors that the indexes calculated for this
paper have the limitations inherent in the landings and effort data for
each fishery. Attempts should be made to improve and refine the data and
the indexes. This will require interdisciplinary work, particularly
relative to the Productivity Index. Also important is an expansion of
on-going cost and earnings studies. The product of this work would be
the establishment of a set of industry economic health indicators useful
to policy makers, potential investors in the harvesting sector, financial
institutions and others interested in the U.S. commercial fishing
industry.

TABLE 19 INDUSTRY HEALTH INDEX/VALUES FOR 1982, BY FISHERY

Fishery : Index Value
New England sea scallops 0.98
Maine lobsters 0.90
New England otter trawl 1.00
Gulf of Mexico shrimp 1.09
Gulf of Mexico menhaden 0.72
Surf clams 0.83
West Coast tuna 0.60
King and tanner crab 0.94

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-26-


TABLE 9 GULF SIIRINP:EFFORT, LANDINGS, AND VALUE OF LANDINGS 1965-1982

1) EFRT_GS VESSEL TON TRIPS GULF SHRIMP
LANDINGS, GULF SHRIMP, (THOUS, METRIC TONS, LIVE WT.)

x VALUE OF LANDINGS, GULF SHRIMP, (SMILLION)

VALD_GS DEFLATED VALUE OF LANDINGS, GULF SHRIMP (MILLION 1965 DOLLARS)
5) LAN_GS_X LANDINGS INDEX GULF SHRIMP, 1965=100

6) VAL_GS_X VALUE OF LANDINGS INDEX, GULF SHRIMP, 1965=100

7) VALD_GS_X DEFLATED VALUE OF LANDINGS INDEX, GULF SHRIMP, 1965*100

EFRT_GS LAN_GS -VAL_GS_- VALD_GS LAN GS_X VAL_GS_X VALD_¢S_Xx

Date oe -~
1965 252.00 88.54 70.90 70.56 100-00 100.00 100.00
1966 288.00 61.28 82.90 79.92 91.81 116.93 113.26

1967 309.00 102.38 90.60 84.80 115.63 127.79 120.18
1968 340.00 92.53 95.80 @5.89 = 104.52 135.12 121.72
1969 337.00 90.90 101.10 86.02 102.67 142.60 121.91
1970 317.00 104.55 108.20 87.55 118.09 152,61 124.08
1971 309.00 103-15. 136,30 105.05 116-50 192.24 148.89
1972 384.00 103.83 164.10 121-43) 17-27 231-45 172.10.
1973 405.00 €2.65 171.80 120.22 93.34 262.31 170.38
1974 373.00 84.46 138.00 88.74 95.39 194.64 125.76
1975 333.00 77416 178.30 104.89 87.16 251.48 148.65
1976 376.00 95.35 275.20 «153.88 ~=—:107.69 388.15 218.09
1977 347.00 120.61 296.80 156.82 136.22 418.62 222.26
1978 = 373.00 112.63 319460 157.23 127.21 = 450.78 222.83
1979 393.00 93.71 377.60 105.84 532.58 242.33
1980 366.00 94.48 302.10 106.71 426.09 177.36
1981 412.00 121.65 401-40 137.40 $66.15 215.32
1982 415.00 95.21 425.70 107.53 600.42 215.68

TABLE 10 GULF SHRIMP: INDEXES OF EFFORT, PRODUCTIVITY, PRICES, COSTS, AND HARVESTING SECTOR MEALTH

1) EFRT_GS_X VESSEL TON TRIPS INDEX. GULF SHRIMP. 1965=100

2) CPUE_GS_X LANDINGS PER TON TRIP INDEX, GULF SHRIMP, 1965=100

3) ICST_GS_X INPUT PRICES INDEX, GULF SHRIMP, 1965=100

4) OCST_GS_X OUTPUT COST INDEX (COST/UNIT LNDGS.) GULF SHRIMP,1965=100

5) PRI_GS_X AVERAGE EXVESSEL PRICE INDEX, GULF SHRIMP, 1965"100

6) HLTX_GS GULF SHRIMP HARVESTING SECTOR HEALTH INDEX (PRICE/COST RATIO) BASE 1965"1.0

EFRT_GS_X CPUE_GS_X LCST_GS_X OCST_GS_X PRI_GS_X HLTX_GS

Date - - =.
1965 100.00 100.00 100.00 100.00 100.00 1.00
1966 114.29 80.33 106.20 129.72 127.36 0,98
1967 122.62 94.30 105.85 112.25 110.52 0.98
1968 134.92 77246 109.15 140,91 129.29 0.92
1969 133.73 76.77 115.15 150-00 138.89 0.93
1970 125.79 93.87 119,10 126.88 = 129.24 1.02
1971 122.62 95.01 118,80 125.05 165.02 1.32
1972 152.38 76.95 121,40 157.76 197.38 1625
1973 160.71 58.08 = 135.45 233.22 259.60 LIL
1974 148.02 64.46 169.15 262-47 204.05 0.78
1975 132.14 65.96 180.65 273.94 288.59. 1.05
1976 149.21 72.17 188.65 261.39 360,45 1.38
1977 137.70 98.93 201.00 203-18 = 307.31 1.51
1978 148.02 85.94 219.20 255.07 354.37 1,39
1979 155.95, 67.87 253.50 373.53 503-19 1.35
1980 145.24 73.47 300.75 409.34 399.30 0.98
1981 163.49 84.04 338-75 403-09 412.05 1.02
1982 164.68 65.30 336.00 $14.58 558.37 1.09

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RESULTS OF EMPIRICAL ANALYSIS
Scallops

There has been a significant change in landings by the scallop
dredge fleet in New England since 1965. Landings in 1982, at 51,000
metric tons (MT) were slightly higher than in 1965 but four times higher
than in the early 1970's (Table 3). The value of landings in 1982 was
nearly 600 percent above the 1965 level. Even deflated value more than
doubled (Figure 13). Since the mid 1970's there has been an expansion in
number of scallop vessels and days at sea for the fleet. Vessel numbers
have almost tripled while days at sea have slightly more than doubled
(Table 3). This means fhat the average days at sea per vessel has
declined in recent years. Although days at sea more than doubled during
the period, landings in 1982 were only 10 percent higher than in 1965.

The result of the changes in landings and in vessel days at sea is
that landings per unit of effort have diminished especially since 1978
(Figure 14). This recent decline in landings per day absent appears to be
following a pattern similar to what occurred in the late 1960's. The drop
in that period was attributed to a decline in abundance of sea scallops
on George's Bank and the Middle Atlantic grounds. The recovery of the
catch rate in the mid 1970's was due to increased fishing activity in the
Middle Atlantic grounds off New Jersey where the fishing season was
extended from six to ten months.

Ex-vessel prices for scallops were up substantially during the
1965-82 period, despite downward pressures on prices from an active
Canadian fishery and relatively large quantities of scallops imported
from Canada.

The Health Index given in Table 4 and Figure 15 indicates that
cost-price relationships in the scallop fleet have been relatively
favorable as compared to the 1965 situation. In 11 of the 18 years
during the 1965-82 period, the Health Index was greater than 1.0. The
fleet did especially well during the years 1976-1978. A primary reason
for the improvement was a substantial increase in catch per day at sea.
This increase in catch per unit of effort helped to offset the rapid rise
in input costs. This can be seen more clearly in Figure 16 where the
Unit Output Cost Index is shown to be below the Input Cost Index for
those three years. It was only in recent years (since 1979) when the
catch rate again began to decline that the Unit Output Cost Index
increased substantially. The combination of a rapid increase in input
costs and the declining catch rate moved the Unit Output Cost Index near,
and in 1982 above the Output Price Index, indicating that for the first
time since 1971 the industry was not doing as well as it did in 1965.

4. Many of the vessels are capable of facilitating other gear. Some
vessel owners may have exercized this option to a greater extent in
recent years. This could result in a decrease of days at sea for
scallops but not necessarily in total days at sea.

-16-



TABLE 15 TUNA: VESSELS, LANDINGS, AND VALUE OF LANDINGS 1965-1982

1) VSL_TU NUMBER OF U.S. FLAG TUNA PURSE SEINE VESSELS

2) LAN_TU LANDINGS OF TUNA,U,S. MAINLAND AND PUERTO RICO,EXCL. ALBACORE (THOUS. MT. TONS,LIVE WT.)
3) VAL_TU VALUE OF TUNA LANDINGS, U.S. MAINLAND AND EST. PUERTO RICO ($MILLION)

4) VALD_TU  DEFLATED VALUE OF TUNA LANDINGS (U.S. MAINILAND AND EST. PUERTO RICO - $MILLION)

5) LAN_TU_X LANDINGS INDEX, TUNA 1965100

6) VAL_TULX VALUE OF TUNA LANDINGS INDEX, 1965=100 (INCLUDES U.S. MAINLAND AND EST. P. RICO)

7) VALD_TU_X —DEFLATED VALUE OF TUNA LANDINGS INDEX, 1965=100

VSL_TU © LAN_TU = VAL_TU-VALD_TU LAN TUX VAL_TU_X VALD_TUX
Date a
1965 111.00 152.54 42-74 = 42453-10000 100.00 100.00
1966 102.00 134.67 48.59 46.84 «88,29 113,68
1967 101.00 171.41 46.83 43.84 112.37 109,58
1968 104.00 156.76 $2.44 47,02 :102.77 12270
1969 120.00 169.42 59.96 51,02 111.06 140.29
1970 121-00 191.51 74,95 60.65 125455 175,37
1971 124.00 195.05 86.80 66.90 127.87 203.09
1972 127.00 216.14 105.50 78.07 141.69 246.85
1973 133.00 217.55 117.28 82.07 142.62 276.41
1974 135-00 227.80 145.95 93.85 149.34 341.49
1975 142.00 234.83 «135.73 79.85 153.94 317.58
1976 155.00 282.59 182.72 10217 185.26 427,52
1977 142.00 198.31 163.44 86.36 130.01 2
1978 140.00 239.68 219.41 107.94 157.13 513.36
1979 138,00 223.53 209.49 94.86 146.54 490,14
1980 126.00 219.59 278.22 115.25 143.95 650.95
1981 128.00 208.88 ~=— 264.96 100.29 136.94 619.93
1982 123.00 192.42 232.95 83.28 126.14 545.04 195,81

TABLE 16 TUNA: INDEXES OF PRODUCTIVITY, PRICES, COSTS, AND HARVESTING SECTOR HEALTIL
1965-1982

1) CPUE_TU_X CATCH PER TON CARRYING CAPACITY INDEX, TUNA, 1965=100
2) ICST_TULX INPUT PRICES INDEX, TUNA 1965=100

3) OCST_TU_X OUTPUT COST INDEX (COST/UNIT OF LNDGS.), TUNA, 1965=100

4) PRL_TULX —EXVESSEL PRICE INDEX, TUNA, EXCLUDING ALBACORE, 1965=100

5) HLTX_TU TUNA HARVESTING SECTOR HEALTH INDEX(PRLCE-COST RATIO) BASE 1965=1.0

CPUE_TU_X ICST_TU_X OCST_TUX PRI_TULX HLTX_IU

Date
1965 100.00 100.00 100.00 1.00
1966 104.20 100.19 128.77 1.29
1967 105.88 72.52 97.52 1.34
1968 109.36 = 103.17 119.40 1.16
1969 115.42 109.92 126.32 115
1970 119.28 114.69 139.70 1.22
1971 118.80 123.75 158.84 1.28
1972 161.87 174.22 1.08
1973 196.09 192.43 0.98
1974 250.18 228.69 0.91
1975, 262.62 206.31 0.79
1976 270.06 230.79 0.85
1977 366.67 294.17 0.80
1978 337.91 326.74 0.97
1979 452.86 334.50 0.74
1980 574.24 © 452.22 0.79
1981 586.86 = 452.75 0.77
1982 326.28 725.07 = 432.11 0.60
LT EE EnEEEn a a eS —

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-34-



TABLE 7 NEW ENGLAND OTTER TRAWL: VESSELS, EFFORT, LANDINGS, AND VALUE OF LANDINGS 1965-1982

1) VSL_OT NUMBER OF VESSELS, NEW ENG. OTTER TRAWL
2) EFRT_OT VESSEL DAYS ABSENT, NEW ENG. OTTER TRAWI.

3) LAN_OT LANDINGS, NEW ENG. OTTER TRAWL, (THOUS.METRIC TONS, LIVE WT.)

4) VAL_OT VALUE OF LANDINGS, NEW ENG. OTTER TRAWL, (SHILLION)

5) VALD_OT DEFLATED VALUE OF NEW ENG. OTTER TRAWL LANDINGS (MILLION 1965 DOLLARS)
6) LAN_OT_X LANDINGS INDEX, NEW ENG. OTTER TRAWL, 1965=100

7) VAL_OT_X VALUE OF LANDINGS INDEX, NEW ENG. OTTER TRAWL, 1965*100

8) VALD_OT_X DEFLATED VALUE OF LANDINGS INDEX, NEW ENG. OTTER TRAWL, 1965=100

VSL_OT EFRTOT LANOT -VAL_OT VALD_OT LAN _OT_X VAL_OT_X VALD_OT_X
Date — —

1965 512.00 63878.00 243.00 36.38 100-00» 100-00 100.00

1966 $45.00 62101.00 231.00 37.13 105.34 102.05
1967 $59.00 62219.00 209.00 31653
1968 © 538.00 5757-00 203.00 30.23
1969 550,00 $6732.00 186.00 31.98
1970 562.00 60253.00 172.00 33.54
1971 $66.00 $7299.00 155.00 29.61
1972 565.00 57506.00 135.00 31.16
1973 553.00 $4814.00 134.00 32.27
1974 575.00 56568.00 123.00 31.06
1975 587.00 60727.00 115.00 33.69
1976 $90.00 58363.00 118.00 36.17
1977 594.00 56782.00 135.00 39.59
1978 643.00 61497.00 145.00 45.55
1979 768.00 69508.00 153.00 48.42
1980 896.00 75923.00 166.00 48.02

1981 914-00 72519.00 161.00 128.96 48.81
1982 975.00 82887.00 169.00 151.24 34.07

TABLE 8 NEW ENGLAND OTTER TRAWL: INDEXES OF EFFORT, PRODUCTIVITY. PRICES, COSTS
AND HARVESTING SECTOR HEALTH, 1965-1982

1) EFRT_OT_X VESSEL DAYS ABSENT INDEX, NEW ENG. OTTER TRAWL, 1965=100
2) CPUE_OT_X LANDINGS PER DAY ABSENT INDEX, NEW ENG. OTTER TRAWL, 1965=100

3) [CST_OT_X INPUT PRICES INDEX, NEW ENG. OTTER TRAWL, 1965=100

4) OCST_OT_X OUTPUT COST INDEX (COST/UNIT OF LNDGS.), NEW ENG. OTTER TRAWL, 1965=100

5) PRI_OT_X AVER. EXVESSEL PRICE INDEX, NEW ENG. OTTER TRAWL, 1965-100
6) HLTX_OT N.E. OTTER TRAWL HARVESTING SECTOR HEALTH INDEX (PRICE/COST RATIO), BASE 1965=1.0

EFRT_OT_K CPUF_OT_X ICST_OT_X OCST_OT_X PRI_OT_X HLTX_OT

Date
1965 100.00» 100-00 :100.00 100.00 100.00 1.00
1966 97.22 97.78 104.20 106.56 110.82 1.04
1967 97.40 88.30 © 105-90 119.93 107.13 0.89
1968 90.42 92.39 109.50 118.52 110,42 0.93
1969 88.81 86.18 115.60 134413 134.33 1.00
1970 94.33 75.04 119,40 159.11 160.17 1.01
1971 89.70 TLeLL 118-80 167.07 164.74 0.99
1972 90.02 6.71 121.40 196.72 207.34 1.05
1973 85.81 64.26 = 135-20 210.39 228.75 1.09
1974 88.56 57.16 166.60 291.47 261.05 0.90
1975 95.07 49.78 177.20 355.96 331.04 0,93
1976 91.37 53.15 184-80 347.71 364.41 1.05
1977 88.89 62.50 196.00 313.61 368.92 11a
1978 96.27 61.98 214,30 345-75 424.40 1.23
1979 108.81 57.86 246-10 425.31 464.53 1.09
1980 118,86 57.48 287-60 500.39 464,20 0.93
1981 113.53 58436 © 321.90 551.57 532.38 0.97
1982 129.76 53.60 319-80 596.67 594.81 1.00
ae — - — -

~22-




TABLE A-3 U.S. EDIBLE AND INDUSTRIAL SUPPLIES: QUANTITIES AND PERCENTAGES.

1) SUP_ED U.S. SUPPLIES OF EDIBLE FISHERY PRODUCTS (LANDINGS & IMPORTS, MIL. LBS. LIVE WT.)

2) SUPLIN U.S, SUPPLIES OF INDUSTRIAL FISHERY PRODUCTS (LANDINGS & IMPORTS, MIL. LBS. LIVE WT.)
3) SUP_TO U.S, SUPPLIES OF ALL COMM. FISHERY PRODUCTS (LANDINGS & IMPORTS, MIL. LBS. LLVE WT.)
4) PCT_EDLAN DOMESTIC LANDINGS EDIBLE SPECIES AS A PERCENT OF TOTAL EDIBLE SUPPLIES

5) PCT_INLAN DOMESTIC LANDINGS INDUSTRIAL SPECIES AS A PERCENT OF TOTAL IND. SUPPLIES

6) PCAPCON U.S. ANNUAL PER CAPLTA CONSUMPTION OF COMMERCIAL FISH & SHELLFISH (KGS. EDIBLE MEAT)

SUP_ED SUP_IN  SUP_TO PCT_EDLAN PCT_INLAN PCAPCON

Date =.
1965 5163.00 5372.00 1053.00 50.11 40.77 4.90
1966 5432.00 7037.00 12469.00 47,37 25.48 4.94
1967 4849.00 9142.00 13991.00 48.83 18.45 4.81
1968 5579.00 11802.00 17381.00 42,07 15.36 4.99
1969 5674.00 6173.00 11847.00 40.91 32.66 5.08
1970 6213.00 5261.00 11474.00 40.83 45.26 5.35
1971 6023.00 $773.00 1796.00 40.53 44.50 3422
1972 6889.00 6960.00 13849.00 35.35 34,07 5.67
1973 7107.00 3271.00 10378.00 33.74 75.21 5.8L
1974 6638.00 3237.00 9875.00 37.60 76.34 5.49
1975 6394.00 3770.00 10164.00 38.55 63.98 5453
1976 7404.00 4189.00 11593.00 37.48 62.38 5.85
1977 7414.00 3165.00 10579.00 39.12 72.61 5.76
| 1978 8135.00 3374.00 11509.00 39.05 84.50 6.08
1979 8251.00 3580.00 11831.00 40.21 82.37 5.90
1980 8006.00 3351.00 11357.00 45,68 86.39 5.81
1981 8267.00 3086.00 11353.00 42.91 78.74 5.85
1982 7968-00 4043.00 12011.00 41.23 76.23 5.58
bee — — — ol
—— — _ —

TABLE. j-4UsS. EDIBLE AND INDUSTRIAL SUPPLIES: QUANTITIES AND CONSUMER PRICE INDEXES.

1) SUP_ED_X INDEX OF U.S. SUPPLIES OF EDIBLE FISHERY PRODUCTS, 1965=100

2) SUPLINX INDEX OF U.S. SUPPLIES OF INDUSTRIAL FISHERY PRODUCTS, 1965=100

3) SUPLTO_K INDEX U.S. SUPPLIES OF ALL COMMERCIAL FISHERY PRODUCTS, 1965=100

4) PCAPCON_X INDEX U.S. PER CAPITA CONSUMPTION OF COMM. FISHERY PRODUCTS, 1965=100
5) CPI_FISH CONSUMER PRICE INDEX - FISH & SHELLFISH, 1965=100

6) CPILBFVL CONSUMER PRICE INDEX - BEEF & VEAL, 1965-100

7) CPEPOUL CONSUMER PRICE INDEX - POULTRY, 1965100

SUP_ED_X SUP_IN_X SUP_TO_X PCAPCON_X CPI_FISH CPI_BFVL CPI_POUL

Date on
1965 100.00 100.00 100.00 100-00 100.00 100.00
1966 105.21 118.36 100.93 106.56 105.27 105.38
1967 93.92 132.80 98.15 110.18 105.89 98.70
1968 108.06 164.98 101.85 111.99 110.18 101.80
1969 109.90 112.45 103.70 11B+1L- 121425 107.56
197012034 108.91 109.26 129.97 126-61 107.03
197L 116.66 L1L.97 106.48 143.45 132-26 107.65
1972 133.43 131.46 115.74 156432144270 109.00
1973 137.65 98.51 118.52 179.38 173644 «152.88
1974 128.57 93.76 112.04 206.75 178-41 145.01
1975 123.84 96.48 112-96 223.92 180.04 160.32
1976 143.40 110.04 119.44 250.37 17441915377
1977 143.60 100.42 117659277416 173.26 154474
1978 157.56 109.25 124.07 303-34 212.92 170.71
1979 159.81 112.30 120.37 333-04 270.89 179.22
1980 155.06 107.80 118.52 363.77 286.22 (188-36
1 1981 160.12 107.76 119.44 394.03 288.70 196-08
1982 154.33 114-01 113.89 408.26 292.79 192-63

a |

WV



ACKNOWLEDGEMENTS

The authors are grateful for the assistance of many individuals who
contributed data and other information for this study. We wish to
especially thank the following persons:

Richard Marasco and Joseph Terry, NMFS Northwest
Fisheries Center, Seattle, WA; Ray Baglin, NMFS, Kodiak, AK;
Barry Collier, North Pacific Vessel Owners Association,
Seattle, WA; John Poffenberger, NMFS Southeast Fisheries
Center, Miami, FL; Richard Raulerson, NMFS Regional Office,
St. Petersburg, FL; Wade Griffin, Texas A & M University,
College Station, TX; James Waters, NMFS, Beaufort, NC;
Stephen Freese, Mid-Atlantic Fishery Management Council,
Dover, DE; Samuel Herrick, NMFS Southwest Fisheries Center,
La Jolla, CA; Craig Orange, IATTC, La Jolla, CA; James
Thomas, State of Maine Department of Marine Resources, West
Boothbay Harbor, ME; James Wilson, University of Maine,
Orono, ME; Ed Bowman and James Kirkley, NMFS Northeast
Fisheries Center, Woods Hole, MA; and Pat Kurkle, NMFS
Regional Office, Gloucester, MA.

Also, the support in preparing the paper provided by the staffs of
the NMFS Northeast Fisheries Center and the University of Maryland Sea
Grant Program and Department of Agricultural and Resource Economics is
very much appreciated. In particular, we thank Diane Walbesser and David
Swartz.

-39-


Lous * Ce, 5/05, / UCL, /B, )/ 9 /E GI (4a)
This can be rewritten as

Tou, = CC, (C/U, /L9 Ch, /E, I (4b)
or Tou. = CC, 5/65 TE) EL /EGy) (4c)

Equation (4c) shows that for species i:

1. If effort and landings remain the same in year t as
in the base year but input costs in year t are higher that in
year o (the base year), cost per unit of output will be
higher in year t than in the base year.

2. If input cost andlandings remain the same in year t
as in the base year but effort in year t increases relative
to that in year o, the cost per unit of output in year t will
increase relative to cost per unit of output in the base
year.

3. If input cost and effort in year t are the same as in
the base year but landings in year t are higher than in year
o, the cost per unit of fish landed will decrease.

An alternative way of examining the Unit Output Cost Index is by
rewriting equation (4a) as:

Tou. Cee Eee be MCE s/Lgy) - (44)

Since C_. is cost per goat of effort on species i and E_. is the total
effort on species i, (C = total cost of harvesting species i in
year t. Dividing (c, Et) * v where L is, for example, pounds of
species i landed in Shar’ ft evel! the cost th pound landed of species i
in year t. The right hand side of equation (4d) then, is simply the
ratio of cost per pound landed in year t to cost per pound landed in the
base year.

Industry Health Index

The Industry Health Index is designed to identify for a given year
the ratio of per unit output prices and costs as compared to the ratio of
these measures in the base year. It is calculated as:

I = I/1 (5)

,
Hea Reg Ung

where the right hand terms are those defined in equation (1) and equation
(4).

Examination of the various components of equations (1), (2), (3) and
(4) shows that equation (5) can be rewritten as:

th = (COP, JOP (Co /C, E/E. g/L Gy) (5a)


Likewise, if Tat < 1.0, it does not necessarily follow that the firms are
operating at a toss, merely that they are not doing as well as in the
base year. If they were making a profit in the base year, a Health Index
value of less than one in year t could mean they are making less profit
in year t -- or they are breaking even, or -- they have moved into a loss
situation. The possible situations in year t given alternative financial
standings in the base year and alternative values for the Health Index
are summarized in Table 1.

The second point relative to interpretation of the Health Index is
that the absolute value of the index in any year t will be affected by
the choice of the base year. This is a common problem of any index
designed for comparisons over time. For that reason, the primary use of
the Health Index over the period of time under consideration should be to
evaluate tendencies or general trends. For example, if Tie > 1 ttl?
the choice of any other base year will result in the relatidthip etween
the Health Indices for years t and t+l continuing to be I > 1 ae
The difference between I, and I. will vary as altetdacidt babe

Het] ,i
years are selected. However, the Etlebeion of alternative base years
will not change the direction of the inequality. This point also means
that absolute values of the Health Index should not be used to directly
compare across fisheries for a given year.

EMPIRICAL DATA

In the time available for the preparation of this paper, it was not
possible to assemble the data required to analyze the economic health of
all U.S. fisheries. The authors therefore attempted to obtain the
necessary information for evaluating a cross section of some of the major
fisheries. The analyses contained in this paper cover the following
species or categories of species: sea scallops landed in New England by
the scallop dredge fleet; New England groundfish (cod, haddock, red and
white hake, whiting, redfish, and flounders caught by otter trawl on
vessels over five gross registered tons; Northern lobster landed in
Maine; West Coast tuna (excluding albacore); Gulf of Mexico shrimp; Gulf
of Mexico menhaden; surf clams, and Alaskan king and tanner crab. These
eight fisheries account for almost one half of the value of U.S. landings
(Table 2). The most important species in terms of value excluded from the
analysis is salmon which makes up about one fifth of the total U.S.
landings value. Salmon is excluded because the authors were unable, in
the time available, to obtain appropriate data on this fishery.

The Base Year

The selection of the period of time covered in the analysis was, as
is the case with most indexing analyses, somewhat arbitrary. The primary
criterion was to select a period of time for analysis covering as many
years as possible while at the same time having available data for all
fisheries to be covered. This required data on quantity and value of
landings and fishing effort. It is, of course, the latter factor that is
most limiting and the authors recognize the complex and difficult
considerations involved in developing a measure of fishing effort. In

-11-


PREFACE .

TABLE OF CONTENTS

NATIONAL TRENDS IN FISHERIES .

THE CONCEPTUAL FRAMEWORK — .

Output Price Index . .
Input Cost Index ...
Productivity Index

Unit Output Cost Index
Industry Health Index .

EMPIRICAL DATA -...-..-.
The Base Year... ..
Output Price Index ..
Input Cost Index ...
Productivity Index . .
RESULTS OF EMPIRICAL ANALYSIS .

SUMMARY

Scallops .......
Maine Lobsters . . .
New England Otter Trawl

Gulf Shrimp ......
Menhaden .......
Surf Clams ......
Tuna .'. hoe ee ee

King and Tanner Crab

ACKNOWLEDGEMENTS ..... .-

APPENDIX --- +--+ +e eee

——————

' |
| Preceding Page Blank |

i J

-iii-


to the 1965 situation (Table 14 and Figure 31). The conditions in the
late 1970's and 1980's were brought about in part by the relatively high
Health Index that existed from 1969 to 1975 (Figure 36). By 1974 and
1975, considerable expansion plans had been made and when the additional
effort was added to the fishery, it likely contributed to the decline in
catch rates. The fishery is now heavily regulated and earnings are
depressed as a result of excess capacity -- conditions that will continue
unless stocks increase substantially. Unfortunately, there are few
alternative fishing activities for these vessels.

Tuna

U.S. tuna landings (excluding albacore) were down in 1982 slightly
below the 1965 level and about half of the 1976 landings. However, this
decline in U.S. landings was partially offset by increased landings by
the fleet in Puerto Rico. As a result, combined U.S. and Puerto Rico
landings were almost one third higher than the 1965 level (Tables 15 and
16). During this period, there was a substantial expansion in effort and
catch per unit of effort has dec}ined to approximately one half the 1965
level (Table 16 and Figure 38)... The data represent the operations of
vessels from a number of countries which report their results to the
Commission which maintains records of gear, flag, and tuna carrying
capacity for most of the vessels that catch yellowfin, skipjack, or blue
fin in the eastern tropical Pacific Ocean. U.S. vessels account for over
half the number of vessels and carrying capacity. According to
Commission records, carrying capacity increased substantially between
1965 and 1975 and has been relatively stable since.

The decline in productivity combined with increasing input costs
resulted in unit output costs that moved up faster than the relatively
moderate gains in price (Table 16 and Figure 39). As a consequence, there
has been an almost steady decline in the tuna Industry Health Index. It
should be noted, however, that this does not take into account revenues
earned by this fleet from landings in ports other than the U.S. and
Puerto Rico.

King and Tanner Crab

This fishery started in the early 1960's as the king crab fishery.
It was late in the 1960's that exploitation of the tanner crab resource
was initiated (Table 17). The combined catch of king and tanner crab per
unit of effort (ton-trips) declined rapidly during the period 1966, 1967
and 1968 (Table 18 and Figure 41).

The decline was reversed as the tanner crab catch increased.
However, in 1981 and especially in 1982 the combined catch rate fell

6. Effort and catch-effort data used in this analysis is derived from
information published by the Inter-American Tropical Tuna Commission
(1aTTC

-32-



TABLE 5 MAINE LOBSTER: EFFORT, LANDINGS, AND VALUE OF LANDINGS 1965-1982,

L) EFRT_ML NUMBER OF TRAP HAULS (IN THOUSANDS), MAINE LOBSTER FISHERY

2) LAN_ML LANDINGS OF MAINE LOBSTER (THOUS. METRIC TONS, LIVE WT.)

3) VAL_ML © VALUE OF MAINE LOBSTER LANDINGS (SHILLION)

4) VALD_ML DEFLATED VALUE OF MAINE LOBSTER LANDINGS (MILLION 1965 DOLLARS)
5) LAN_ML_X LANDINGS INDEX, MAINE LOBSTER, 1965*100

6) VAL_ML_X VALUE OF LANDINGS INDEX, MAINE LOBSTER, 1965=100

7) VALD_ML_X DEFLATED VALUE OF LANDINGS INDEX, MAINE LOBSTER, 1965= 100

EERTML «= LAN.ML = VAL_ ML VALD_MLLAN_ML_X VAL _ML_X VALD_ML_X

Date == aon aos: -
1965 29245.00 8.56 14.18 14.11 100.00 100,00 100.00
1966 29524.00 9.03 14.90 14.37 105.59 195.13 101.84
1967 27031.00 7.48 13.36 12.50 87.42 94.21 88.61
1968 34170.00 9.30 14.76 13.23 108.70 104.12 93.80
1969 32516.00 9.00 16.07 13.67 105.16 113.32 96.89
1970 30800.00 8.26 16.90 13.68 96.35 119.21 96.93
1971 32515.00 7.96 13.26 93.09 121.37 94.00
1972 26220.00 7.37 16.76 12.39 86.19 LB. L 87.82
1973 31647.00 7.75 21.87 15.31 90.60 154.29 108.49
1974 26980.00 TAT 22.71 14.60 87.26 160.20 103.52
1975 34035.00 7672 27.45 16.15 90-22 193-60 114.45
1976 30647,00 8.62 27.9% 15,62 100.74 -197-LU 110.75.
1977 34881.00 8.39 98-02 203.75 108.18
1978 32984.00 8.68 33.56 101-43 236-74 117.03
1979 35699.00 10.04 40.99 117.35 289.12 131.55
1980 33816.00 9.97 37.90 116.54 267.32: UL.27

119.99 313.01 119.05
119.29 339-64 «119.85

198L 32331.00 10.27 46.38
1982 43979.00 10.21 0

TABLE ¢ MAINE LOBSTER: INDEXES OF EFFORT, PRODUCTIVITY, PRICES, COSTS, AND HARVESTING

SECTOR HEALTH, 1865-196:

1) EFRT_ML_X LANDINGS PER TRAP HAUL INDEX, MAINE LOBSTER, 1965100

2) CPUE_ML_X LANDINGS PER TRAP HAUL INDEX, MAINE LOBSTER, 1965=100

3) LCST_ML_X INPUT PRICES INDEX, MAINE LOESTER, 1965=100

4) OCST_ML_X OUTPUT COST INDEX (COST/UNIT OF LNOGS.), MAINE LOBSTER, 1965=100
5) PRI_ML_X EXVESSEL. PRICE INDEX, MAINE LOBSTER, 1965=100

6) HLTKML MAINE LOBSTER HARVESTING SECTOR HEALTH INDEX (PRICE/COST RATIO), BASE 1965=1.0

EFRT_UL_X CPUE_ML_X ICST_ML_X OCST_ML_X PRILML_X  HLTX_ML

Date
1965 100.00 100,00 100.00» 100.00 100.90 1.00
1966 100.95 104.59 104.20 99-63 99.56 1.00
1967 92.43 94.58 105.90 111.96 = 107.76 0.96
1968 116.84 93-03 109.50 L727 95.79 0.81
1969) LLL 18 94.59 115.60 122.22 107.76 0.88
1970 105,32 91-48 = 119.40 130.52 123.73 0.95
1971 LLL 18 83.73 118-80 141-89 130.38 0.92
1972 89.66 96.13 121.40 126-28 137.03 1.09
1973 108.21 83.73 135.20 161-47 170.29 1.05
1974 92.26 94.59 166.60 176.14 183.59 1.08
1975 116.38 77653177420 228.57 214.58 0.94
1976 104.79 96-13 184.80 192.23 195.65 1.02
1977 119.27 82-18 196.00 238.50 207.87 0.87
1978 112.79 89.93 214.30 238.30 233.41 0.98
1979 122.07 96-13 246410 256.00 246.37 0.96
1980 115.63 100.79 287.60 285.35 229.38 0.80
1981 110.55 108.54 321.90 296.57 260.85 0.88
1982 116.19 102.67 319.80 311.47 279.68 0.90
be — ——

-20-




TABLE 11 GULF MENHADEN: LANDINGS AND VALUE OF LANDINGS, 1965-1982

1) LANGM LANDINGS, GULF MENHADEN, (THOUS, HETRIC TONS, LIVE WT.)
2) VAL_GM VALUE OF LANDINGS GULF MENHADEN (SMILLION)

3) VALD_GM DEFLATED VALUE OF LANDINGS, GULF MENHADEN (MILLION 1965 DOLLARS)
4) LAN_GH_X LANDINGS INDEX, GULF MENHADEN, 1965=100

5) VAL_GH_) VALUE OF LANDINGS INDEX, GULF MENHADEN ,1965<100

6) VALD_GM_X  DEFLATED VALUE OF LANDINGS INDEX, GULF MENHADEN, 1965=1!00

LAN_GH = -VAL_GM = VALD_GH LAN GM_X VAL_GM_X VALD_GM_X

Date —
1965 463.58 16.90 16.82 100.00 100.00 100.00
1966 359.70 13.90 13.40 77.59 82.25 79.67
1967 317.52 8.50 7.96 68.49 50.30 47.30
1968 = 375.12 10.70 9.59 80.92 63.31 57.03
1969 523.90 17.20 14.63 113.01 101.78 87.01
1970 548.40 23.70 19,18 118.30 140.24 114.02
1971 728.93 26.20 20.19 157.24 155.03 120.06
1972 $02.13 18.10 13.39 108.32 107.10 79.63
1973 487.16 46.00 32.19 105.09 272.19 191.37
1974 587.86 48.30 31.06 126.81 285.80 184.65
1975 542.96 35.50 20.88 = -117-12 210.06 124.16
1976 561.55 24.60 121-13 260.36 = 146.27
1977 447,25 20.71 96.48 231-95 123.14
1978 820.56 38.37 177.00 461.54 228,14
1979 779.28 33.24 168.10 434.32 197.60
1980 702.17 28.62 151.47 408.88 = 170.18
1981 552.48 18.05 119.18 = 282.25 107.34
1982 854.12 25.99 184.25 430.18 154.51

TABLE 12° GULF _MENHADEN: INDEXES OF PRODUCTIVITY, PRICES, COSTS, AND HARVESTING SECTOR HEALTH
1965-1582

1) CPUE_GM_X LANDINGS PER TUN WEEK INDEX, GULF MENHADEN, 1965=100

2) 1CST_GH_X INPUT PRICES INDEX, GULF MENHADEN, 1965*100

3) OCST_GM_X OUTPUT COST INDEX (COST/UNIT OF LANDINGS) GULF MENHADEN,1965=100

4) PRI_GM_X AVERAGE EXVESSEL PRICE INDEX, GULF MENHADEN, 1965=100

5) HLTX.GM GULF HENHADEN HARVESTING SECTOR HEALTH INDEX (PRICE/COST RATIO) BASE 1965=1.0

CPUE_GM_X ICST_GM_X OCST_GM_X PRI_GMX HLTX_GH

Date
1965 100.00 100-00 100-00 100.00 1-00
1966 69.00 104,20 151.01 106.01 0.70
1967 57.00 105.93 185.84 73.37 0.39
1968 71.00 109.71 154,52 78.19 0.51
1969 93.00 115.87 124.59 90.03 0.72
1970 99.00 119.58 120.79 118.59 0.98
1971 112.00 118.80 106.07 98.59 0.93
1972 82.00 121,40 148.05 98.87 0.67
1973 83.00 135.05 162.71 259.36 1.59
1974 87.00 165,07 189.74 225.65 1.19
1975 74.00 175.13 236.66 = 179.52 0.76
1976 71.00 182-49 257.03 215.18 0.88
1977 61.00 193.00 316.39 240.73 0.76
1978 104.00 211.36 = 203-23 261.10 1.28
1979 107.00 241.66 = 225.85 258.71 1s
1980 82.00 279.71 © 341-11 270,31 0.79
1981 65.00 311.79 479.68 23713 0.49
1982 96-00 310.08 = 323.00 233.77 0.72

~28-



dramatically (Table 18 and Figure 41). This occurred after a period of
rapid build up in the number and size of crab vessels and an expansion in
the number of trips by these vessels. The build up in effort was
partially a result of an unprecedented increase in value of landings
which reflected increased landings and a rapidly increasing price from
about 1970 to 1978 (Tables 17 and 18 and Figures 40, 41, and 42).

The unusual factor in this fishery is the price increase that took
place in recent years. This price increase tended to offset increasing
costs and declining catch rates. The strong price in this fishery is a
result of the well established export market and the domestic market
orientation toward restaurant sales. The final result, however, was that
by 1982 even a price of 20 times higher than the 1965 level could not
offset the catch rate drop of 1982. Thus, the economic health of the
industry as measured by the Health Index no longer compared favorably
with even that of the beginning stages of the fishery in 1965.

SUMMARY

The purpose of this paper was two-fold: to develop a simplified but
meaningful method of evaluating the economic health of the U.S. fish
harvesting industry; and to utilize that method to depict the economic
health of certain major fisheries. The measure of economic health is an
Industry Health Index which includes three components.

1. Industry output price (ex-vessel price);

2. Industry input costs (cost of fuel, labor, repairs,
etc.); and

3. Industry productivity (catch per unit of fishing
effort).

Industry productivity is the quotient of landings and total fishing
effort. Therefore, the Health Index for each fishery is an aggregation
of ratios of outut price, input costs, landings, and fishing effort in
the year of interest (1982 for example) to that in the base year (1965
for this study). Using this approach, when the Industry Health Index for
a fishery in a particular year is greater than 1.0, the industry
cost-revenue situation (taking into account all of the components listed
above) is relatively better than it was in 1965, the base year.
Similarly, when the Index value is less that 1.0, the industry
cost-revenue situation is less favorable than it was in the base year.

An important aspect of the proposed approach is that the cause of
changes in output costs can be quantitatively partitioned between input
price fluctuations and variations in productivity. This is especially
useful in evaluating fishery management policy decisions.

The method was applied to eight major fisheries. Table 19 gives the
fisheries included and the calculated 1982 Industry Health Index for
these fisheries. Relative to 1965, the cost-revenue situation in the
Gulf shrimp fishery was improved in 1982, while that for the New England
scallop and otter trawl fisheries was about the same. For the other

-37-


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-23-


However, if ex-vessel price and catch per day at sea remained the same
but fuel and repair costs (input prices) increased, the firms' economic
health would deteriorate during the period. Similarly, if input and
output prices remained constant but productivity (catch per day at sea)
diminished, the financial status of the firm would decline.

In preparing this paper, five basic indexes were established. These
are designed to reflect the following:

1. Changes in per unit output price;

2. Changes in input prices;

3. Changes in productivity;

4. How (2) and (3) combine to determine changes in cost
per unit of output; and

5. How (1)and (4) combine to determine the change in the

economic health of the firms in the industry.
Output Price Index

The Output Price Index is given by:

TR = oP, ,/OP,, 3 qd)
Where,
IR is the output price or per
ti unit revenue index for species
iin year t,
OP ey is output price for species
i in year t, and
OP a: is output price for species i in

the base year.
Input Cost Index

The aggregated Input Cost Index is calculated by appropriately
weighting the cost indexes of the factors of production. That is:

I = 3 x,t 3 (2)
Se OF RS
Where,
I, is the aggregated cost index in year
ti t for firms harvesting species i,
Ri is the proportion of total costs of

harvesting species i contributed by
input j, and

I, is the index of input costs for input
jet j in year t and is calculated as
I =C. /C,
Cie jt’ jo


The logic of the Industry Health Index as an expression of how the
profit or loss situation for firms in that industry may have changed in
year t relative to the situation in the base year can be seen by
examining equation (5a). Insight is provided by observing which right
hand elements are in the numerator and which are in the denominator. If
output price, input cost, effort and landings in year t are each the same
as in year o, the fractions on the right hand side equal one and the
value of I,, is 1.0. This would indicate that the industry is in the
same profit or loss situation in year t as it was in year o.

Other interpretations are:

1. If input cost, effort and landings in year t are the
same as in the base year and output price in year t is
greater than in the base year, equation (5a) indicates that
(because OP_, is in the numerator) the Health Index would be
greater than 1.0. That is, the industry profit or loss
situation is improved in year t relative to that in the base
year;

2. If output price, effort and landings in year t are
the same as in the base year but input costs are greater in
year t than in the base year, the Health Index will be less
than 1.0 (because C is in the denominator). This would
indicate that the industry profit or loss condition is less
favorable than in the base year;

3. If output price, input cost and landings in year t
are the same as in year o, and effort in year t is greater
than in the base year, the Health Index will be less than 1.0
and the profit or loss situation will be less favorable than
in the base year; and

4. If output price, input price and effort in year t are
the same as in the base year and landings in year t are
larger than in the base year, the Health Index will be
greater than 1.0 and the industry profit or loss picture will
be improved over the base year situation.

There are two key points that must be kept in mind in using this
Health Index. The first is that the value of the Health Index in any
given year t does not directly show whether or not the firms in the
industry are making a profit in year t. For example, assume that the
Health Index is 1.2. This implies only that the industry is doing better
than it did in the base year. Thus, if the firms in the industry were
just breaking even in year o, a Health Index of 1.2 for year t would mean
the industry has moved to a profit making situation. However, if the
firms in the industry were generally operating at a loss in the base
year, a Health Index of 1.2 could indicate:

a. the firms are earning a profit in year t;

b. the firms are just breaking even in year t; or

c. the firms are continuing to operate at a loss
in year t -- albeit not as great as the loss
in the base year.

-10-