The Achievements of the Pacific
“Whiting Conservation Cooperative”
Rational Collaboration in a Sea of Irrational Competition
Gil Sylvia
Marine Resource Economist
Oregon State University
Heather Munro
Munroe Consulting
Pacific Whiting Management in 1996
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Allocation to three sectors
Olympic style fishing
Overcapitalization
Significant loss in regional and national fishery
benefits
• Significant failure in meeting the objectives of the
PFMC’s Groundfish Management Plan
Pacific Whiting Management in 2003
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Allocation to (Four) Fleet Sectors
Olympic Style Fisheries in only two sectors
Overcapitalization in only two sectors
Significant loss in regional and national fishery
benefits to only two sectors
• One sector is achieving (most) of the PFMC’s
Groundfish Management Objectives
The Story of the Pacific
“Whiting Conservation Cooperative”
• What happened before, during and after 1997?
• What led to the transformation of one sector while other
sectors engaged in “irrational” competition?
• Can we apply principles to other fishery management
challenges?
• Cooperation versus “Cooperatives”: Are Coops a substitute
for ITQ’s?
Biology and Natural History
Merluccius Productus
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A true “hake” (1 major and 2 minor stocks)
Largest stock of fish south of Alaska
Ecologically important
“Average” stock size 1-4 MMT
“Average” harvest 250 TM
Range of potential harvest 100-500 TMT
Biology and Natural History
Merluccius Productus
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Average fish size: two pounds
Moderately productive/long lived (15-20 yrs)
Variable recruitment (.1-8 billion annually)
Myxosporidean parasites-protease enzymes
Mid water-long annual migrations
Pacific whiting landings (1966-2002)
300,000
250,000
tribal
shoreside
200,000
mothership
catcher/processor
JV
150,000
100,000
foreign
50,000
2002
1999
1996
1993
1990
1987
1984
1981
1978
1975
1972
1969
1966
0
History of the Fishery
Foreign Domination 1880-1980
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Sporadic small harvests back to 1880
Considered nuisance/trash fish
1950’s small domestic harvest animal food
1966 Soviet Union/Japan (H&G and fillet blocks,
meal)
• 1970’s and 1980’s additional European and Asian
vessels
History of the Fishery
Domestication 1980-1989
• 1976 MFCMA—allocative preference for US
fishermen
• 1978—first foreign/domestic joint venture
– Soviet Union paid $.05/lb
• 1980’s Japanese begin producing surimi using
protease inhibitors
History of the Fishery
Regulatory Development
• Open Access (until 1994)
• Total Allowable Catch (TAC)
• Season opening—transitioning later
– (April 15, May 15, June 15)
• Minimum mesh size
• Bycatch management/monitoring/quotas
– Area closure S of 42 N for at-sea sector
• Sector allocation (1990’s)
History of the Fishery
Allocation Wars 1990-1996
• 1990—first factory trawler harvests by Alaskan
pollock fleet
– overcapitalization of factory trawler fleet
– testing ability to make surimi from whiting
• 1991– fishery totally domesticated
– at sea component harvests 91% of TAC
– factory trawlers harvest 60% TAC
History of the Fishery
Allocation Wars 1990-1996 (continued)
• Olympic race for the resource among all sectors
• Seasons begin to decrease
– maximize harvest and throughput per vessel
– bycatch problems
– 10% reduction in potential TAC
– decrease in product quality
– decrease in product recovery
History of the Fishery
Allocation Wars 1990-1996 (continued)
• PFMC “shocked” at rapid capitalization
– 1991 Council tries to force vessels to either harvest or
process – Commerce Disapproves plan
– 1992 Council allocates 98,000 mt to at sea processors
and 80,000 shore based with reserve
– 1993 Council proposes 74% quota in favor of “shorebased priority”
• Commerce disapproves one day before season opening
• Approves 70% to at sea sector
History of the Fishery
Allocation Wars 1990-1996 (continued)
• Fall 1993 -- Industry Committee develops allocation plan
– Three years
– 60% allocated open competition
– 40% onshore
• 1994 Groundfish Limited Entry
– Factory trawlers are “shocked” -- don’t qualify
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Ten factory trawlers buy their way back in
10 –11 permits per factory trawler
Buy out 109 groundfish permits @ $15 M total
Four companies: Glacier Fish Company(1), Tyson Seafood Group
(3), American Seafoods (5), Alaskan Ocean (1)
Formation of the Pacific
Whiting Conservation Cooperative
• 1994-1996: “Irrational” competition continues
• Whiting season continues to shorten
• 1996 New approved five year allocation scheme
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42% on-shore,
24% motherships,
34% factory trawlers,
tribal allocation off the top
Formation of the Pacific
Whiting Conservation Cooperative (continued)
• Factory Trawlers develop common understanding of
problems and opportunities
• Recognize advantages for cooperating and voluntarily
allocating quota within their sector
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Lengthening season
Reducing bycatch
Improving product recovery, quality, and “full utilization”
Meeting individual company needs
• Problem is Antitrust Laws
Formation of the Pacific
Whiting Conservation Cooperative (continued)
• Investigated the formation of legal cooperative
behavior
– initial investigation for Alaskan pollock
• The Fisherman’s Cooperative Marketing Act
– provides antitrust exemptions for the fishing industry
– intended for “small” producers insufficiently integrated
Formation of the Pacific
Whiting Conservation Cooperative (continued)
• 1996: Discussions with Anti-Trust Division Justice Dept
– potentially could allow limited harvesting
arrangements if demonstrated “competitive”
• increased efficiency (lower production costs)
• increased production (higher product recoveries)
• potential price decrease
Formation of the Pacific
Whiting Conservation Cooperative (continued)
• Based on preliminary discussions with Antitrust:
– the four companies allocated shares in “one
afternoon”
• “Membership Agreement” of WCC
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transfer shares without constraint
full time observer coverage
report catches to private centralized reporting service
penalty agreements for exceeding shares
other private rights of action for violating the
Agreement
Evaluating Success of the Whiting
Conservation Cooperative
• May 27, 1997 Anti Trust Division issues favorable
decision
• Season performance before and after May 27 decision:
– multi-vessel companies immediately transferred excess capacity
out of the fishery
– “efficient” operators leased shares from “inefficient” operators
– product recovery rates increased from 17.2% to 20.6%
• increased revenues of $5.1 Million (Profits $1-2 million)
– reduced yellowtail bycatch from 2.47kg/mt to .99 kg/mt
– total utilization of allocated strict total catch limit
Evaluating Longer Term Success of the
Whiting Conservation Cooperative
• Longer seasons
• Reduced bycatch
• Higher product recoveries
– 24% recovery??
• $10 M annual additional revenue ($2-4 M profits)
• Cooperative research (landings levy)
Pacific Whiting Fishery Season Length
Season Length (days)
200
150
Shoreside
Mothership
100
Catcher / processor
50
Year
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
0
1992
Number of Days
250
bycatch rate per metric ton of
whiting
Salmon bycatch in Whiting Fishery (all sectors)
0.35
0.3
0.25
catcher/processor
mothership
0.2
shoreside
tribal
0.15
0.1
0.05
0
1996 1997 1998 1999 2000 2001 2002
Year
Metric tons
widow bycatch in the pacific whiting fishery (all
sectors)
400
350
300
250
200
150
100
50
0
catcher/processor
mothership
shoreside
tribal
1997
1998
1999
2000
Year
2001
2002
Cooperative Management and Research
Activities of the WCC
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Pre-recruit surveys
Hydro-acoustic stock research
Bycatch reduction management and research
Future research and management projects
– optimal timing of harvest?
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higher product recoveries
higher surimi quality and prices
higher TAC/OY
balanced against opportunity costs of harvesting pollock
Risks to
Whiting Conservation Cooperative
• Potential victim of own success?
– more profit, and/or
– increased quota, and/or
– available cheap permits, then
– profitable for new entrants into fishery without
compensating existing members
• Growing bycatch constraints
– Ex: widow rockfish may be only 1/3 amount available
in 2004 (200 mt) compared to 2003
Why Are Other Pacific Whiting Sectors Still
Engaging in “Irrational” Competition?
• Problem of “large numbers” and transaction costs
• Integrated versus non-integrated seafood sectors
– shorebased processors cannot secure rights to the fish
• Antitrust impediments
• Overcapacity problem
• Ineffective institutions
– limited entry not very limiting
• Ban on ITQ’s
Conclusion
• WCC succeeded due to:
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small numbers/well known players
relatively secure allocation
defined rights (license holders)
integrated industry
mutual understanding of costs/benefits
similarity in operations (and harvest histories)
win-win for all players
and smart managers and lawyers
Conclusion
• “Cooperative behavior” in managing a club good is a
feature of fishery systems that allocate relatively secure
rights
• IFQ’s, Cooperatives, and other institutional structures, are
not mutually exclusive—they are complementary or
mutually reinforcing given common needs and interests of
the rights holders
• Whether Coops are a better approach than e.g., ITQ’s etc.
depends on fishery management objectives, legal
constraints, other factors –need empirical research