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90 cents Makes Fisheries Sense

Tom HiltonTom Hilton Posts: 1,595 Captain
Howdy,
I don't know if you had time to attend or listen to the RS-IFQ AP the last couple of days, which was of course stacked with pro-IFQ enviro-funded advocates.

The subject or resource rent came up earlier this week by Troy Williamson and the **** hit the fan.

Resource Rent, or Royalties are authorized in the Magnuson, and it needs to be addressed as to why the American Taxpayer and American Citizens are getting ripped off here. Making the program pay for itself and pay the nation for the privilege of harvesting our Public Trust Resources is the right thing to do, and of course the LAST thing these greedy bastards want to do. Looks like the Gulf Council doesn't want to go there either, even though the Magnuson mandates that they consider it.

Let's put it into perspective; based on $4.50/pound dockside price for red snapper, the 3% Cost Recovery Fee equates to less than 14 cents per pound. If the Gulf Council implemented a resource rent of an additional 31 cents/pound (total 45 cents/pound) this program could at least pay for itself.

Increase the resource rent to 76 cents/pound (total 90 cents/pound), and not only does the program pay for itself, the nation actually gets a couple of million dollars/year return on its investment, or provide monies that could be used to improve data, improve habitat, etc. for the Gulf fisheries.

90 cents make fisheries sense.

90 cents/pound is certainly not a deal breaker, especially when noting that 1/3 of the IFQ owners don't even own a commercial fishing permit, and the price of 100% of the fish in their quota is increased by their $3 to $4/pound lease rate. This goes for the leased fish "owned" by the commercial fishermen who DO own permits as well. 90 cents is a drop in the bucket in comparison to their exorbitant lease rates, and solves the problems of the program being subsidized and the lack of return on investment to the nation.

The RS-IFQ fat cats scoffed at the idea of resource rent - the terms punitive, malicious intent, etc. were used in addition to claims it would make the price of fish go up - they want that $3 million+/year (and increasing) to go into THEIR bank accounts - NOT to the actual owners of the fish - The American People. Of course, the issue of what effect their $3.50/pound lease rates has on the price of red snapper never was raised.

Nobody seems to have a problem with them charging lease fees of $3.50/POUND between each other while the nation gets ZERO return on its investment?

90 cents/pound is certainly not too much to ask to allow them to harvest our Public Trust Resource, is it? Remember, it is NOT their fish - these fish belong to EVERY American.

The American People and the Gulf of Mexico Fisheries and recreational fishermen are getting royally screwed with this fisheries welfare system called IFQs. I say their program contains malicious intent to the American People, the Gulf fishermen, and the Gulf coastal communities.

There are people who believe that commercial captains and CFH captains are equal when it comes to harvesting our Public Trust Resources, and should all be gifted exclusive access to our fish. They are wrong.

The commercial red snapper fishermen catch and harvest our Public Trust Resource, through exclusive access, for their personal profit. CFH captains provide a service to the open access American Public - it is NOT the CFH captains who are harvesting this Public Trust Resource - it is the RECREATIONAL FISHERMEN who are catching those fish.

Sector Separation (Amendment 40) is designed to give the same exclusive access to our Public Trust Resource to the CFH captains, who can trade, lease, sell that access for their personal profit, and of course opens up the door for inter-sector trading.

This would allow not only the commercial fat cats to lease their allocation to the recreational sector, making hundreds of thousands of dollars each annually without even having to go fish, but also give the same exclusive ownership "rights" to individuals/corporations just because they own a federal reef fish permit. What's next? Are we going to gift all of the federally permitted duck hunting guides exclusive rights to our ducks?

It's time for the Gulf Council to address the issue of Resource Rent for those engaged in the commercial harvest of our Public Trust Resources, just as every other industry that harvests our Pubic Trust Resources is required to pay.

There is no need for Sector Separation, as it does not matter WHAT PLATFORM a recreational fisherman fishes upon, whether it be a charter boat, a private boat, or a headboat - the fish are all being caught by RECREATIONAL FISHERMEN. Giving exclusive fishing rights to recreational anglers that fish aboard charter boats while prohibiting other recreational fishermen from enjoying those same rights is NOT the answer.

That's my 90 cents for today.

Capt. Thomas J. Hilton

Replies

  • surfmansurfman WC FLPosts: 6,017 Admiral
    Taxpayer subsidies seems to be the wave of the future, why should the commercial fishermen have to pay for it when the taxpayer is so willing to reach into his pocket and shell out the necessary funds, or at least is seems to be that way anyway, based on the voting that they do.
    Tight Lines, Steve
    My posts are my opinion only.

    Be thankful we're not getting all the government we're paying for.  Will Rogers
  • Chester BrewerChester Brewer Posts: 171 Officer
    Tom, I agree with you except 90 cents is too cheap. The market price for resource rental has already been set. That rental rate is over $3.00 a pound. This fact was made know to Monica Medina went the catch shares policy manual was being formulated. Of course the facts were ignored because EDF needed the support of the bottom long liners. Chester Brewer
  • Oh just wait until we see the rental rate of Individual Bluefin Tuna Bycatch shares in the PLL fishery!
  • Steve WSteve W Posts: 613 Officer
    It's sad to see Americans gladly ask the govt to impose MORE taxes on other people.

    If you want to pay the tax out of your profit, then go ahead, but don't presume to speak for all end users of fish to pay for it for you.
  • Jack HexterJack Hexter New Port RicheyPosts: 5,552 Moderator
    The fishermen of Florida asked for and received a tax on their fishing a long time ago. That's why we have a saltwater fishing license. I was for that tax then and am still in favor of it, even though it is not being used as originally projected,that being all funds would go back into the resource, either Law Enforcement, Habitat Enhancement, or research.

    The law currently states that the catch share program, enjoyed by the commercial fishermen should pay for itself. It does not and is subsidized by the taxpayer. What Tom is proposing is merely a program to enforce the existing law
  • Tom HiltonTom Hilton Posts: 1,595 Captain
    That's EXACTLY the point Chester - 90 cents is a drop in the bucket and certainly NOT too much to ask for this program to pay for itself AND pay the nation for the privilege of harvesting our Public Trust Resource. This fact is amplified when you consider that they have been charging $3.50/pound lease rates for many years now.

    Resource Rent has been collected on our Red Snapper since the inception of the RS-IFQ program...the $3.50/pound lease rates are in effect Resource Rent being levied by IFQ quota "owners" on commercial fishermen who have to lease their quota in order to go fishing. I view this as a LARGE problem when the system has been rigged so that private individuals/corporations are able to profit from the levying of Resource Rent of our Public Trust Resource while the nation does not receive one red dime. Al Capone would be proud.

    Not only is the nation not receiving any compensation from these individuals/corporations profiting from the harvest of our Public Trust Resources, the system has been rigged to saddle the American Taxpayer with the costs of managing/enforcing the RS-IFQ program - to the tune of millions of dollars/year. This is a double slap in the face to each and every American.

    Here is an unbiased analysis presented to the Gulf Council by Dr. Larry Abele last year. Of interest is that he pointed out the "mystery" as to why the ex-vessel price has not increased, pointing to possible collusion between the fishermen and dealers, and recommended that the NMFS investigate this matter. I highly doubt there was any investigation done. This issue becomes even more interesting when you figure in this $3.50/pound lease rates and their subsequent effect on ex-vessel prices, as leasing has become, and will continue to become more and more prevalent. Leasing between fishermen needs to be halted NOW - if there is any leasing, it needs to be done directly between the fishermen ACTUALLY DOING THE FISHING and the government. Other government welfare program recipients such as food stamps are not able to trade, sell, or lease their welfare checks between each other - why should these jokers?

    THE RED SNAPPER IFQ
    A SUMMARY OF ISSUES THAT THE COUNCIL MIGHT CONSIDER
    Some Success, Serious Problems
    By: Dr. Larry Abele

    BASIC PROGRAM INFORMATION
    • Established in 2007.
    • Began with 1,000,000 shares.
    • Shares were distributed based on historical catches of fishers.
    • In order to allocate quota based on weight, the shares were converted to percentages.
    • A minimum of 0.0001% and a maximum of 6.0203 % per shareholder was established.
    • Shares (allocations based on weight) could be sold or leased. Share value: $78.90. Lease value: $3.00- 3.50.

    CURRENT STATUS OF THE RS-IFQ (2011)
    • 418 Shareholders.
    • Share value of $78.90.
    • Quota of 3,300,901 pounds.
    • Ex-vessel value of $11,562,478 ($3.50 per pound).
    • 362 vessels (up from 289 in 2009 perhaps as a result of leasing of allocation by Grouper-Tilefish shareholders).

    GOALS OF THE RED SNAPPER IFQ
    •Mitigate Derby Fishing.
    •Improve Safety at Sea.
    •Reduce Overcapitalization.
    •Eliminate market guts lowering ex-vessel prices.
    •Reduce bycatch and discard mortality.

    POSITIVES OF THE RS- IFQ
    • No longer a derby fishery.
    • Almost certainly greater safety at sea.
    • Availability of fresh product all year.
    • Good Accountability.

    MAJOR PROBLEMS:
    1. Pricing and market gluts.
    2. Overcapitalization.
    3. Bycatch and Discard mortality.

    1. PRICING AND ELIMINATING MARKET GLUTS
    • It is a mystery why there is no evidence of a significant increase in ex-vessel prices as the increase since the start of the IFQ program is about 1%.
    • Part of the mystery may be that actual ex-vessel prices are not being reported as a result of arrangements between fishers and dealers.
    This topic requires investigation by the NMFS.

    2. WHAT ABOUT OVERCAPITALIZATION?
    • “harvesting capacity in excess of the minimum amount required to harvest the desired quantity of fish at the least cost.” (OECD, 1996)
    • At first glance this goal would appear to have been met as there were 440 pre-IFQ vessels harvesting red snapper and by 2009 there were only 289. However, there were 384 in 2010 and 362 in 2011.

    3. BYCATCH AND DISCARD MORTALITY
    • As red snapper spread into new areas, local fishers without allocation encounter them and often discard fish rather than pay the leasing fee (when it is possible to lease).
    • Dead discard percentages have not significantly decreased since the IFQ pre-IFQ: 11.6% (2006) post- IFQ: 7.3% 10.3%, 11.1% and 9.9%

    ECONOMIC PROBLEMS
    • Economic concentration has occurred with 7% of shareholders owning more than 60% of the shares. This is expected given that the referendum gave more weight to the votes of large harvesters.
    • High share cost limits new entrants as shares are $78.90.
    • More than 1/3 of shares owned by firms or (individuals) without reef fish permits.
    • These groups lease allocation to others creating investment instruments out of our fish.
    • Extensive leasing removes the owner from the fishery reducing incentives for conservation.


    ECONOMIC VALUE OF RS-IFQ (2011)
    • $345 million- almost $12 million per account is the capitalized (present) value of the 2011 Red Snapper fishery.
    • $78.9 million is current value of gifted shares.
    • $10.73 million is the lease value of gifted shares (rather than fishing for an ex-verssel value of $11,562,478)
    • $4.8 million is the amount gifted to the largest shareholder(s).

    (b) NO CREATION OF RIGHT, TITLE, OR INTEREST.—Limited access privilege, quota share, or other limited access system authorization established, implemented, or managed under this Act— (1) shall be considered a permit for the purposes of sections 307, 308, and 309; (2) may be revoked, limited, or modified at any time in accordance with this Act, including revocation if the system is found to have jeopardized the sustainability of the stock or the safety of fishermen; (3) shall not confer any right of compensation to the holder of such limited access privilege, quota share, or other such limited access system authorization if it is revoked, limited, or modified; (4) shall not create, or be construed to create, any right, title, or interest in or to any fish before the fish is harvested by the holder; and (5) shall be considered a grant of permission to the holder of the limited access privilege or quota share to engage in activities permitted by such limited access privilege or quota Share.

    Virtually every other public resource is auctioned off, from logging rights to electromagnetic spectra. The Magnuson Act permits auctions.

    (303 A) (d) AUCTION AND OTHER PROGRAMS.—In establishing a limited access privilege program, a Council shall consider, and may provide, if appropriate, an auction system or other program to collect royalties for the initial, or any subsequent, distribution of allocations in a limited access privilege program if— (1) the system or program is administered in such a way that the resulting distribution of limited access privilege shares meets the program requirements of this section; and (2) revenues generated through such a royalty program are deposited in the Limited Access System Administration Fund established by section 305(h)(5)(B) and available subject to annual appropriations.

    Why Should the American People Gift this Valuable Resource to the Private Sector and allow THEM to collect Resource Rent, when the nation gets virtually nothing in return?

    A SUPERIOR MANAGEMENT TOOL: THE TAC-SHARE MODEL
    • Basics of the model (Bromley 2005; Bromley and Macinko 2007; Bromley 2009).
    • The TAC is put up for auction and sealed bids are accepted for shares of the TAC.
    • The bids commit a fisher to pay a royalty as a percentage of ex-vessel proceeds.
    • Bids are opened and ranked from
    highest to lowest.
    SOLD!
    • Assume 1,000,000 pounds are available for the commercial sector (this is the TAC).
    • Assume 200 fishers bid for these pounds with an upper limit of 5% and a lower limit of 0.001%.
    • The sealed bids are opened and ranked from high to low with the amount of poundage sought with each bid.
    • Assume that the top 80 bids account for the full 1,000,000 pounds.
    • Then the 81st bid is the highest losing bid.
    • The 80 winning bidders are each issued a permit to harvest the amount they bid for.
    • The highest losing bid would be the royalty rate paid by all winning bidders.
    • This is called a “Second-price Auction.”

    EXAMPLE ADVANTAGES
    • Requires no up-front financing to acquire quota shares.
    • Fees are paid only when the fish are caught.
    • The American public would receive the “resource rent.”
    • These funds may be used to support research on the fishery, and for state-level programs to restore ports and fishing communities to promote tourism.

    ADOPTION
    • The new stock assessment will almost certainly raise the TAC providing new fish to auction.
    • A phase in over 10 years would not disrupt the current IFQ as 10% of the current TAC could be auctioned each year.
    • Auctioned leases could for a 5 year period to avoid disrupting businesses.
    • Current holders would have right of retention at new royalty rate.
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