by Donald Sutherland
The US fish-harvesting industry is facing bankruptcy and the government agencies charged with overseeing the fisheries admit that they cannot prove the industry isn't already insolvent.
Commercial fish harvesting is the country's last "wild animal industry." The US is the world's fifth-largest fishing nation, harvesting 10 billion pounds annually. As the world's third-largest seafood exporter (with more than $2.3 billion worth of seafood shipped overseas in 1998), the industry represents a $25 billion wholesale business that employs 300,000 people and claimed more than $3 billion in landing revenues for 1998. Despite these figures, the US Commerce Department is unable to say if the harvesting industry is broke.
"Most of the US fisheries stocks are facing a disaster due to over-capitalization of the fishing industry and the mismanagement practices of Commerce Department's National Marine Fisheries Service (NMFS)," says Zeke Grader Jr., executive director of the Pacific Coast Federation of Fishermen's Association. "We are very close to total closure," says Grader. "The fish harvesting industry in the US isn't run like a business, and you can't prove the US fish harvesting industry is financially solvent."
Congress currently is reviewing the reauthorization of the 1996 Magnuson-Stevens Conservation and Management Act, the law that governs management of the US fish industry. But not even Congress has the financial data to assess the solvency of the industry. "Nobody does financial solvency reporting for the US fisheries harvesting industries," says Richard E. Gutting Jr., president of the nonprofit National Fisheries Institute.
In April, the US Government Accounting Office (GAO) released its latest review of the industry and the economic impact of the Magnuson-Stevens Act. The report failed to investigate the solvency issue.
"Congress hasn't asked us to look at the financial aspects of the fishing agency," explains Jill Berman, senior evaluator at GAO's Energy, Resources, and Science Issues. "We can't get financial records, because disclosure of financial profit and loss information is considered proprietary."
Lost at Sea, a report by the Marine Fish Conservation Network (a coalition of 90 environmental groups, fishing associations, and marine scientists) charges the NMFS with approving fishery management plans that failed to abide by conservation measures mandated by the 1996 Sustainable Fisheries Act. The report claims that since 1994, taxpayers have spent more than $160 million to mitigate economic and ecological impacts of fishery management failures in New England, Alaska, and along the West Coast.
Congress now is considering another $421 million in federal disaster relief for anglers affected by crab, salmon, and groundfish collapses in these regions.
There's a very good reason why the industry doesn't open its books to the public, says Mark Powell, Pacific fisheries manager for the Center for Marine Conservation, a Washington-based nonprofit. "The industry is suffering from serial depletion, with harvesters going from species to species in each fishery without concern for renewable stocks. The businesses harvesting fish are the same groups regulating the industry. They don't want the public to know they are operating without a viable business plan."
The industry is hard to review says John Pappalardo, director of the Cape Cod Commercial Hook Fishermen's Association, because "it is made up of thousands of little businesses instead of major publicly traded companies. The businesses often use a lot of smoke-and-mirrors tactics when it comes to financial reporting."
In response to declining fish stocks, the NMFS and its eight regional councils (New England, Mid Atlantic, South Atlantic, Caribbean, Gulf, Pacific, North Pacific, and Western Pacific) have initiated fishery-management plan, vessel buyouts, limited-fishing seasons, closed-fishing grounds, and imposed catch quotas on stressed species.
Despite these measures, too many boats are still chasing too few fish. Meanwhile, the use of seabed trawling gear continues to destroy essential fish habitat, resulting in sharp reductions in groundfish landings and revenues.
"We are just moving into a crisis phase in our region, with landings declining five years in a row," says Steve Freese, regional economist for the northwest office of NMFS. "Right now we are only operating on theory."
Chris Kellogg, chief technical officer for the New England Fishery Management Council believes the New England fisheries are "basically covering costs and just on the boarder of solvency and insolvency."
The financial data that is available to the public shows an industry in distress and near collapse.
New England fisheries, which have received more than $23 million in federal aid, are under strict quota restrictions for groundfishing and scallop fisheries. Large portions of the Gulf of Maine and the Georges Bank fisheries have been closed.
In January, the Commerce Secretary declared the West Coast groundfishing industry a disaster, with loses of $11 million in revenues. Curiously, the only cause cited for the reduced stocks was "climate change."
Following the imposition of an 80 percent catch reduction, the North Pacific crab industry collapsed and now is looking for $100 million in federal assistance.
A Texas Parks and Wildlife Department study has revealed that Gulf of Mexico shrimp stocks have dwindled to 30 percent of their historic levels. Soon natural reproduction will no longer be sufficient to replenish stocks.
NMFS officials say there aren't any US fish stocks (with the possible exception of sardines) now operating at maximum sustainable yields -- the category the Magnuson-Stevens Act used to establish long-term potential yields and catch quotas. "Each time fish stocks decrease and the number of vessels remain the same the harvesting industry becomes less solvent," says Mike L. Grable, chief of the Financial Services Division at NMFS.
An October 1999 NMFS report to Congress on the "Status of Fisheries of the United States" listed 127 species as "not overfished," 98 species as "overfished," and five species as "approaching an overfished condition." For 674 species (75 percent of the stocks), the status was "unknown."
The NMFS's survey concluded that the vast majority of groundfish in the Pacific council's jurisdiction was "not overfished", "not approaching an overfished condition," or "unknown." A year latter, the Pacific groundfish industry was declared a disaster.
"Since the seventies all [the NMFS has] set out to do is build up the US fishing fleet -- only to buy it back because of over-capitalization without any idea of how much fish is out there," says Grader. "Congress is just listening to the large trawler organizations, seafood processors, and National Fishing Institute."
Alan Snimada, a spokesperson for the NMFS Science and Technology Division, believes financial solvency reporting in the US fish-harvesting industry is critical. As Snimada observes, "If the fish-harvesting industry is shown to be financially insolvent, then the US government is carrying an industry that has gone down the tubes."
©2000 Donald Sutherland. Donald Sutherland is a freelance writer based in Hopkinton, Massachusetts. His articles have appeared in Environment News Service, Environment, Health, and Safety Management, and Vertical Net.
Fishy Accounting: Are US Fisheries Insolvent?