Thursday, March 13, 2014

A CFA or an RSDA for Community Benefit from the Fisheries

In the Magnuson - Stevens Act that was enacted to provide a framework to manage the fisheries in the 200 miles of fish rich waters around U.S. shores, there is an intent to protect the fishing communities themselves. Not just the fishermen, but the downtown businesses, the tax coffers that fund roads, schools, etc, and the airlines and everything else that makes a community viable. Later, 'community fishing entities' wording was inserted as an idea to help in this process. This is a look at a current proposal for a 'community fishing entity' which is untried and untested and then a look at an existing State of Alaska program that would do the same thing.

Community leaders throughout the coastal communities in Alaska, from Nome to Ketchikan, have bemoaned the fact that fishing doesn't contribute nearly what it once did to the vitality of their communities. The old saying comes to mind, "The curse causeless does not come." There has been a death to the communities by a thousand cuts, and it's not the fault of school teachers or hardware store cherks I can guarantee. Most malaise has come at the hands of the politics of the Federal fisheries management system.

Flying in the face of the commonly hyped sound bite, "the fisheries of the North Pacific are the best managed in the world," many high valued stocks are at record low abundances. Some are entirely gone, or at non-fishable levels, and large swaths of the ecosystem, small feed fish and bottom ecology, are being clear-cut. In short, the jury is still out on North Pacific fisheries management. 'The Management Act' is undergoing review as we speak and some folks are lining up to effect changes. But are these changes for the better? We don't think that the fish processors' attempt to get Congress to give them 'rights' to the swimming fish will help. Maybe it will help employ more low wage third-world fishermen on company boats, but that doesn't help Alaska communities.

There is also an attempt to form a community fishing association in Kodiak now, with the stated goal of getting more fish to family fishermen to get more dollars circulating in the community. One North Pacific Council member has been employed (no conflict here, move along) to steer benefit toward the little villages around Kodiak Island. (Not a bad idea, since they were there first) So, for Kodiak folks to want to do the same is logical. But are these efforts steeped in sound business management principles or just knee-jerk reactions to the big Seattle trawl fleet and Seattle processors freezing them out?

More particularly, a couple of folks in Kodiak want to form a thing they call a Community Fishing Association to receive quota shares of fish stocks, before they are all given away to someone else, to distribute to local family fishermen. To give younger fishermen a better chance of working into their own operations. That's about the end of the feel-goodness of it. Like coveting a honey-comb made by wild African honey bees, it could get painful before any rewards are realized, if any.

I was going to revamp my prior post on this subject, but I think I should just take a fresh approach, for another coffee break. And I don't like to re-read my stuff either. Being that the devil is in the details, most people don't like to delve into the details at all. It's flat uncomfortable. But lots of folks are paid good tax dollars to do just that, so here goes.

First of all, there are no Community Fishing Associations in the United States to copy the business plan from. This partly explains why the Alaska Marine Conservation Council, who has come up with this name, and a direction to send maybe millions of dollars worth of quota shares, has no business plan. They do, however, mention that they would need a 5% to 10% commission on the value of the landings to 'manage' the program. And that would be a program that they would make up as they go along and fumble to decide who gets what quota afterward, except their commission, of course. Sounds more like a dictatorship to me. And believe me, you're not talking about rocket scientists that are proposing this. I won't go into the gory details on that. But let me try to shorten the pain of reading all this by using a bullet format on a CSA and then on a Regional Seafood Development Association, a program that is already in law and ready for any area of Alaska to adopt to do the same thing.

  • 'Community' is not a valid term for this, as the proponents have been secretive about it. They didn't get the advice of the community or even experts on the subject. Reminds me of the 'Good Neighbors Farmers' group here in Southern Oregon who represents a Swiss bio-chemical and seed company that want to grow GMO crops. They could then sue the organic farmers whose crops get cross-pollinated, for patent infringement. Over 150 farmers have been sued already and the farmers never win. 
  • AMCC doesn't represent any fishermen, much less 'the community.' Would 'community' in their eyes be the few boats that they give quota to and delivered to a floater so they could stay out longer? Would it be the waterfront of Kodiak, or all the communities on Kodiak Island? Or would it mean the communities around their region of the Gulf of Alaska, or wherever it is that the guy lives that offers the highest lease fees for the quota they get who fished in Kodiak area waters?.
  • AMCC does not fish, so the term 'Fisheries' does not apply either. They would sit in an office and just reap an inordinately large cut of other people's earnings for doing no further work.
  • The term 'Association' has no real meaning at this point because there is no organization filed with the State, with it's Articles of Incorporation and By-laws, whether for-profit or non-profit, with this name. There isn't any transparency. This could be one of the biggest scams you ever heard of.
  • The proponents at AMCC recieved a grant to do this. ENGOs have been supporting consolidation of fishing privileges and hence poorer communities. The communities were built from not having a few at the top.
  • AMCC does not have a track record of helping the family fishermen as they imply with this program. To be plain, it seems like a program to get them good salaries. Kodiak would probably be better served if they pushed for historic and equitable crew shares. How is a young fisherman going to come up with maybe three million dollars for a boat and gear to go get a little piece of trawl quota? Seems like just joining the club. What about more eco-friendly gear types that would let a young fisherman get out fishing affordably; there are a number of them.
  • AMCC has not compared their proposal to other things that have been done to improve community fisheries development, such as RSDAs, or how Iceland put hundreds(?) of small fishermen back to work after the World Health Organization said catch shares violates human rights. Nor have they weighed in on the shore-based processors' attempt to gain fishing privileges. Seems like a free-for-all of grabbing for quota going on and real short on cooperation. Come to think of it, I haven't heard a peep out of any actual fishermen or 'potential family fishermen.' Well, maybe I'm speaking for my three boys at-arms who have fished commercially in Alaska and might want to do it again, continuing the hundreds of years of family tradition.
  • 'Fishermen' is a broad term; like fish, there are all kinds. We are reminded that the Federal fisheries 'Council System' was supposed to be 'members of the industry' for their expertise. Now it's over-dominated by folks who never go out on boats: Federal agency folk, reps from Washington and Oregon, and folks representing not themselves, but special interest groups. The AMCC folks may be former fisherfolk, but they are strictly a Kodiak organization because the folks who run it live there and don't weigh in on state-wide issues. They also live on grant funds. Kodiak politicians and the State Legislature should be concerned that AMCC is representing an ENGO and not the community of Kodiak.
  • AMCC says they have Federal attorneys advising them. Where are these opinions in writing, since we taxpayers paid for them? If this was legit, these opinions would be included in the package with the business plan and risk analysis, which of course don't exist either.
  • This organization would not have any sort of critical mass of political power, to be honest. The fishermen and the program would have a tenuous existence at best. Sure, they could get some quota later even, like the CDQ groups did in the Bering Sea, but they aren't likely to get such a percentage of the overall quota. AMCC is asking for crumbs basically. They could all possibly get together and deliver their catches to their own plant, but these are small family fishermen, remember, and not ones to be able to finance a processing operation, aka, market power.
  • This plan might not pass IRS muster as it would probably be a non-profit corporation in ownership of a public marine resource. This is not allowed, nor has it ever been approved by fishermen.
I won't beat a dead horse to death here, so let me address the question that has been posed, "Well, what else can we do?" That's the same question that was posed to me by the Mayor of Cordova after the Exxon Valdez oil spill. I was working in the State Dept. of Commerce... at the time and had just finished a draft of a Small Processors Association white paper to help fishermen vertically integrate. I got the idea from a former Executive Director of Florida Citrus Mutual who had come to Alaska on our bank's behest to introduce their business model. It took fifteen years, but it is in State law now, there are liaison people in Juneau that can tell you all about it, and several regions of Alaska have already formed one for their area. Their communities are thriving and the fleets are robust. One new venture is projected to spend around $25 million dollars in the next year or two in one of the communities (Naknek). So, let me do a bullet for RSDAs too so I don't ramble on.
  • A Regional Seafood Development Association can bring stability to a region's communities, attracting investment, as stated above.
  • There is a critical mass of fishermen in the association to give a single voice for the impact that has to the benefit to the communities in which the fishermen live in the region. Communities in a region have existing good working relationships through Borough governments and other State and regional economic development organizations.
  • The proponents of the RSDA can include whatever gear groups in the region they want to include. Keeping in mind the critical mass concept; the more the better. I just don't know about inviting the lions to sit with the lambs to start with. In Kodiak's case, that would be the trawlers. AMCC has proposed there be one trawler on their Board.
  • The State requires a business proposal, not your Harvard Business school type, but some write-up on what this is all about and how it's going to be run. They want to see a fishermen-led organization; we still are a democracy after all.
  • A small percentage of the settlement checks are sent to the State by the buyers and then the State sends these back to the Region in a lump sum. Financing of the organization is secure this way. The State has given out hefty grants to get these started.
  • The State knows it's as hard to organize fishermen as it is to herd chickens, so they only require 30% of the permit holders to vote and then a 51% majority of these will kick things off. And if it flops for lack of interest, then it just flops. But big money interests have and will try to short-circuit such an effort. In Florida there was a fight in the legislature over the retraction of the start-up money for the orange growers association. It was the orange growers who, after they got organized, invented ways to market fresh oranges and fresh orange juice all over the world and not just in Florida, or put in a can and retorted. Let me put that a different way, the processors did none of the marketing breakthroughs the primary producers needed. Same thing happened with the almond growers, they got together and formed the very successful Blue Diamond brand, spurred by processing breakthroughs they made themselves.
  • An RSDA takes in fishermen who are trying to get their feet under them and also the ones who are successful and want to vertically integrate their businesses. They all end up helping each other. We've all heard the reports on how stress is tearing apart the communities along the coast of Alaska due to privatization, well this is one way to reduce that stress of uncertainty and stagnation..
  • Unlike the mythical CSAs, which currently and proposed, are single gear type and very limited in scope, RSDAs can be all-encompassing of fishermen in a region. The State of Alaska has set up the regions, check it out. The promise is that fishermen in a region have a forum to work out their differences, fisherman to fisherman, and not lobbyist to lobbyist, moderated by Washington D.C. or Juneau. A unified voice in these other forums from a region packs a lot of punch. That is missing now. In Bristol Bay, the RSDA finally came out against the Pebble Mine and now the EPA is on-board with the region in it's efforts to save the fishery.
  • With a larger membership base, the RSDA model is known for innovation in all aspects of the industry. Alaska processors have been in charge of product development and marketing for the whole history of the fishing industry in Alaska for the most part, but fishermen have more incentive to improve on this for their sake and that of their communities. Processors make the same profit margin, low, so as to limit competing processors, hence there is no incentive to re-tool the product or the marketing.
  • RSDAs are a logical entity to accept community quota shares of fisheries, whether allocated by the NPFMC or financed by someone like the Alaska Industrial Development and Export Authority, the Commercial Fishing and Agriculture Bank or the Division of Investments. RSDAs are guaranteed to always have democratically appointed someone capable of keeping the lights on, and writing business plans that ensure success. (Processors' whole thing is about getting their hands on as much product as possible.)
  • There is no narrow focus on what an RSDA can do for a Region. They can do whatever they can think of to do to help themselves: the existing ones started out by increasing ice capacity with floating ice barges to increase the quality of the fish and hence the price. In Bristol Bay, they estimate the extra ice added $3 million to the back pockets of fishermen in one year. With a wide membership base of all the fishermen in multiple gear groups, they could effectively lead the charge on pioneering new fisheries, protecting and enhancing old ones, making breakthroughs in gear research, interfacing with scientists better, and the list goes on and on. These things only increase employment opportunities and only step in when nobody else is doing it. With the failure of the MSA to protect communities, there is a real buzz to get fishing permits and quota into the hands of a true community entity. This is a big and highly visible issue in Alaska now after decades of privatization of the fish resources, consolidating rights into fewer and fewer hands; mostly out-of-state hands. If the processors are successful in their bid for fishing 'rights' after years of trying, the problem is compounded for communities.
  • With a good Board of Directors of boots-on-deck boat owners in an area, they can select someone to be the day-to-day point man. He doesn't do anything the fishermen don't want done. It's fairly straightforward though as fishermen are looking to enhance their returns on investment and maybe accident insurance. Some vessel insurance pools have come out of things like this.
  • Decisions on what to do to improve things are made in due process, not up front without transparency and collaboration. 
The RSDA model goes back to the 1930s in the U.S. The 'non-CFA' concept hasn't ever been tried and there are no particulars on it. Cape Cod and Morro Bay are places that are used as examples of a CFA, but they are totally different than the Kodiak proposal and very different from each other. And they are supported like charities by Environmental Non-Governmental Organizations for very narrow purposes.

I brook no ill will towards the folks at AMCC; ill will is like expecting poison you take to affect the other person. While I'm doing analogies, another quota program seems like a repeat of the 'big privatization mistake.' And everyone knows the definition of insanity, about repeating the same thing over and over and expecting different results. The difference between an RSDA and a 'CFA' is the difference between a having a tank and hand-to-hand combat.

Thursday, March 06, 2014

Council Business or Monkey Business

Two things are on the North Pacific Fisheries Management Council's mind these days, splitting up the loot in the Gulf of Alaska and the dumping of multitudes of species that the trawlers and longliners catch secondary to their target species. I first have to scratch my head at the underlying disconnect between reality and the original intent of the Magnuson-Stevens Marine Fisheries Management and Conservation Act of 1976 of using professional fishermen to man the management council for their expertise.

Full-time, boots-on-deck fishermen just don't have the time for the homework and travel. Fishermen's organizations get their lobbyists to represent them on the Council if they are a big enough organization. The little fishermen's organizations rarely are represented. And lots of the business of the council is geared to tell which fishermen can go fishing and which can't. That's part of the current Council agenda, and always will be.

The Gulf of Alaska is a massive area and some fish stocks, like the Pacific ocean perch, is still up for grabs. Now that's a real simplistic way of explaining a massively complicated situation that few people understand. And those Councilors are being paid by someone, of course. But in the current give-away, there seems to be some room to give a few crumbs to the little guys in that iconic fishing port, Kodiak. Maybe it could be part of the grand bargain. And the Alaska Marine Conservation Council is lining up the steer things Kodiak's way. Or maybe partly their way, if they get to manage the program.

The thing that worries me about AMCC is that they have stood by all these years while the family fishermen were getting shut out. They sure haven't been getting their funding from family fishermen. I was just watching a Matt Damon movie about fracking and how the gas company used both a front man and a fake environmental organization to influence a town. Got me a little worried about AMCC. After all, when a friend penned the Pacific cod regulations for State waters in the Gulf and they were mostly adopted, the AMCC took credit for it.

Drop back in time to 1991 when I penned the outline for the current Regional Seafood Development Association program while in the employ of the then State Department of Commerce. and Economic Development. I watched it get strong-armed, co-opted, stalled, and others taking credit for it. Governor Murkowski made it a state program when it looked like pink salmon fishermen were only going to get a little more than a thank-you for their fish. The model is well represented in the U.S. and across the globe. Several regions of Alaska have organized RSDAs. No need to reinvent the wheel.

But now AMCC is seemingly reinventing the wheel with their proposed Community Fishing Association idea. The specifics are fuzzy, well, because it's not a well tested model and one hasn't been done in Alaska. There is one in Cape Cod, but that is being supported by the heirs of Shell Oil and they don't have a multitude of gear groups. The Council has held workshops on it now. Giving a CFA to Kodiak, maybe run by AMCC, would give quota shares of some select fish stocks, the ones that aren't already spoken for that is, to a group of fishermen with recent history of fishing. Maybe not any pioneers of the fisheries like the other IFQ programs went. But that's another thing altogether. The big companies would get everything they wanted except for this little slice of the pie. And don't forget, a RSDA could be a CFA as a sideline.

Maybe a CFA would help, but I'm reminded of the old saw about the Dems and the Repubs. The Rebublicans propose a crappy program out of the blue where no fix is needed and the Dems counter-propose something less crappy to derail it and to maybe get some brownie points now that it's all the squawk. And that makes a tolerable situation worse. What if a CFA in Kodiak was just to quiet the dissent over a massive give-away and the little that Kodiak got wasn't enough. Unlike an RSDA, a CSA of limited scope would not be democratic, not be able to raise funds from it's membership automatically, or have much political clout. But then political clout isn't something anyone with it willingly hands over. You'd really see true colors come out if you proposed giving half the POP quota to longline and pot fishermen and let the trawlers have everything else. Not to mention dingtle-bar fishermen, which is probably the best way to catch them in terms of by-catch and efficiency.

You might be wondering why I mention Pacific ocean perch so much, a little known species, that's sent almost strictly to Japan. The Japanese know good fish, I guarantee. But the value of it all might be easily as much as the Bristol Bay salmon harvest and that's the thing to keep in mind. Think 'under the radar.' The foreign fleets, prior to the 200 mile limit law, took up to 700,000 metric tons a year. The stocks crashed and are now coming back strong.

That brings us back to how to ensure the community of Kodiak reaps some of this largess of nature they were founded on. God knows they need it: downtown Kodiak has gotten as bad off as all the other little coastal towns under the storm clouds of privatization, but nobody wants to address that. What is the right way forward? Although that statement probably gets lots of the same reaction as when I mentioned doing the right thing while working in State government: guffaws.

The real hot topic at the NPFM Council these days is by-catch, and that's because trawlers catch lots of the high value fish that are earmarked for other fishermen and the public, and those stocks are crashing. Sometimes the trawl industry will throw out a red herring, pardon the pun, and blame the stock crashes on the lack of an obscure herring-like fish that nobody could find much of anyway, going back many decades. The pot really shouldn't call the kettle black. The trawlers caught and dumped over 17 million pounds of squid one year, which are certainly king salmon food. Most of what the king salmon trollers use for an artificial bait looks just like a squid, down to the phosphorescent eyes.

And sometimes a trawler will catch a hundred tons of herring by accident and have to throw them back. They joke about the squid as being the bane of 'The Calamari Triangle.' The rest of the by-catch just gets a ho-hum. Even when they have caught up to around 400,000 salmon in a year. That was a bad year of course and isn't talked about. Maybe the reason the by-catch of king salmon has dropped is because they thinned them out so bad. I do have sources for these numbers and wish I could get officials to talk more. Or get more observer coverage on the decks of the trawlers. Very low coverage has been the norm, even though the public has been calling for full coverage for years.

I've covered much of this in my blog over a period of years. Nothing changes. An old running partner of mine just contacted me after decades of not much word with the announcement that he had to bail out of halibut fishing. There have been and are still lots of these little halibut fishing operations. With the current stock crash in halibut those quotas will all go real fast now to the big boats that grandfathered in and don't have Q payments. And you can project what will ultimately happen. Think Omega, that does all the menhaden fishing and processing on the East coast.

For a real eye-opener on halibut by-catch, go to the Tholepin blog. He has lots of pictures of what snow crab and halibut by-catch looks like. Maybe before the Council starts using bandaids like they are doing, they should do the economic impact analysis of it all that they promised many, many years ago. They would be bringing out the tourniquets instead. But of course anything useful they do now will highlight the political control the trawlers have over the Council. But don't feel bad, nobody has been able to get the big banks under control either.

The only hopeful note I can leave is that one key person in a big fish company I know told me "I don't agree with those guys." Meaning the upper management. So, go into the fish business if you got that burning desire, but have your eyes wide open. After all Sergeant York at first refused service in the U.S. Army during WWI, but then when he did feel the call to go in he became our most memorable hero of that war.