Dear Chairman McIlwain,

The Fishermen’s Advocacy Organization (FAO) strongly supports IFQ management for the commercial grouper and tilefish fisheries.  Scrolling through our website will reveal the roots of our organization. FAO began as a small group of commercial grouper fishermen united in opposition to an industry sponsored buyout plan aimed at reducing overcapacity in the commercial grouper fishery. One of our primary objections with that plan was its initial “limited entry” phase, or “grouper endorsement”, that required a minimum catch history to stay in the fishery. This buyout plan would have squeezed out the small scale fisherman, in hopes that the mid size and large operations might fish the full year. FAO strongly opposed this tactic.

However, FAO recognized that the objective of reducing capacity in the commercial fleet has merit. The question for us became ‘how can the managers reduce overcapacity without evicting the existing small-scale producers?’

On October 15, 2004 the Council initiated a control date regarding the eligibility of catch histories in the commercial grouper fishery to protect the historical fishermen by discouraging new entry into the fishery. In Amendment 29 the Gulf Council is considering two effort management approaches to rationalize effort and reduce overcapacity, i.e.; limited entry endorsements, and IFQs. The IFQ option is the Councils preferred alternative.

FAO recognizes that IFQs are the most effective means to manage effort, and protect fishermen who meet the control date eligibility. The IFQ option is FAO’s preferred alternative, for the reasons just stated.

Confusion abounds over the 8,000 lb. annual average catch definition for “substantially fished”. The Magnuson-Stevens Act requires that Gulf multi-species IFQs be decided by a majority of those who have “substantially fished” for the species for which the IFQ is being considered. A good yardstick for defining this is a level of harvest that will, on its own, sustain a business in this fishery. An annual harvest of 8000 lb. equates to 670 lb. a month. It would be nearly impossible to sustain an offshore fishing business on this level of catch. That is why we recommend that those who are considered “substantially fished” land at least 8,000 lb. /year. Thresholds lower than 8,000 lb. would require weighted voting to attain the intent of the Magnuson Act.

According to the Council, the permits with catch histories that satisfy the 8,000 pound threshold account for 89% of the commercial harvest. The permits below this threshold account for only 11% of the catch.

FAO wants to clarify that the 8,000 pound criteria only determines who can vote in the IFQ referendum and has no relationship to those who will receive quota share. IFQs will be allocated to all the permits that have catch histories during the qualifying period, including those who landed less than an annual average of 8,000 pounds. Unlike the other alternative to reduce overcapacity, limited entry endorsements, the IFQ will not kick out the small operators. Hence, FAO prefers the IFQ alternative.

The IFQ system has similarities with the stone crab and spiny lobster trap tag program. The trap tag program limits individuals’ traps, and allows for voluntary consolidation. Those who now wish to enter and fish in these fisheries must purchase the trap tags from an existing fisherman. Effort remains stable.

The grouper IFQ will limit an individuals’ catch, and allow for consolidation that is voluntary. It will allow newcomers to enter the fishery by purchasing an existing fisherman’s’ catch share, without adding capacity to the fleet. With IFQs, the management problems associated with latent effort will vanish.

IFQs will provide an exit strategy for some, and a quantifiable entry point for others who wish to enter the fishery and develop their business plan. IFQs will allocate increases and decreases in annual catch limits equitably and proportionately among permit-holders. IFQs will allow stone crabbers, charter operators, mackerel fishermen, and others to continue to fish for groupers in their slow seasons, based on their grouper catch histories.

IFQs will not allow effort to grow unchecked, which is good for our fishery.

Most fishermen recognize that consolidation is inevitable and want to maintain their access. However, most amendments to fishery management plans include options intended to re-allocate resources away from those who have traditionally held commercial harvest privileges.  The Council should be commended for recognizing the deficiencies of the other alternatives, and for supporting IFQs based on its superior ability to achieve the amendment 29 objectives of reducing overcapacity and rationalizing effort in the grouper fishery. 

FAO asks that the Council;

1-    Stand firm on the existing October 15, 2004 control date.

2-    Support the 8,000 lb. definition of ‘substantially fished’.

3-    Send the Grouper IFQ to referendum promptly. 

Thank you,

Bill Tucker, President, Fishermen’s Advocacy Organization

www.Fishermensadvocacy.org

P.O.Box 222

Dunedin, Fl. 34697     

Because the purpose of Fishermen's Advocacy Organization to ‘advocate for the interests of commercial fishermen’, we have closely examined the alternatives proposed in the recently released Amendment 29.  FAO has taken a position to support the IFQ alternative and believe that IFQ is the only alternative that will accomplish the effort management goal of ‘rationalizing effort and reducing overcapacity’ on a voluntary basis.

 The point of this letter is to explain why we support IFQ. The directors of FAO are very protective of the fishing rights of all fishermen and are wary of alternatives that that discriminate against small-scale operations, and that encourage derby fishing or allow for redistribution of historical market share. Furthermore, IFQ makes sense from an accountability standpoint, conservation standpoint, and the unique ability of IFQ to achieve the objectives of management. IFQ will allow the multi-species and small-scale producers to remain in the fishing business, under the same rules as those fishermen who target groupers exclusively.

Reading and understanding Amendment 29 is crucial for making an informed decision and we are encouraging all participants to become educated in the alternatives.  Smaller scale fishermen need to realize that a properly developed and administered IFQ plan is the option that will allow their future participation in the fishery.  The other alternatives either evict them outright, or set the stage to evict them eventually. Fishermen's Advocacy Organization strongly believes that IFQ is in the best interests of fishermen, both large-scale and small-scale.

Members of our organization should accept that quota cuts are on the horizon and that unless we take steps to equitably bear the weight of the cuts and increase the profit margins on the fish we are allowed to catch we can be assured of tough times indeed. We firmly believe that fishermen who have an annual quota and 12 months to catch that quota can maximize their profits and can make informed, long range financial decisions

 Latent effort is the potential effort associated with a permit that is not yet realized. Latent effort exists in every permit. Latent effort is feared because unrestrained additional effort is what causes closed seasons. The argument goes that if we revoke the permits with lower catch histories, we will remove the possibility for those folks to catch more fish in the future. The unspoken part of that argument is that “the remaining fishermen will be able to catch the fish that would have been caught by the fishermen who are evicted”, and therefore the problem is never fixed. It is simply perpetrated by fewer people. History proves that this method doesn’t work, yet those evicted are never reimbursed. A better plan (IFQ) manages the effort of every permit.

Latent permits are often removed by a process called “limited entry”.

Buyouts have a history of squandering money, and not working. Buyouts are like limited entry. Where limited entry evicts fishermen involuntarily, buyouts pay fishermen to leave. The fishermen who remain have to pay back the loan. The big question is ‘what are you buying’? The answer is nebulous- “you are paying for people to leave, then the more effort you add, the more you benefit”. This is called a derby incentive. These buyouts generally promote derby behavior, and add incentives to exploit the latent effort that exists in every permit. The “Industry Buyout” was extremely unpopular for several reasons-

1) it was devised outside the council process, and as unpopular as the Council process may seem, it is designed to elicit the input of fishermen in a public forum. Because the buyout bypasses the council and instead goes directly through congress, the process of stakeholder input is more likely to be corrupted by insiders and individuals who are politically connected.

2) The Buyout plan was designed with limited entry as a crucial element. The first action of the buyout attempted to evict the small producers for the benefit of the larger producers.

3) The buyout used a weighted voting scheme to enact limited entry, essentially a bullying tactic to push out small producers.

4) The buyout never linked the landing history of a permit with the vessels that actually caught the history. Consequently, many permits were transferred prior to the referendum, in anticipation of some “free money”. The buyout included this huge loophole, allowing top producing boats to continue to fish as hard as ever (with different permits), while at the same time allowing clever owners to sell the landing history from the old permits(now transferred), pocketing hundreds of thousands of dollars.

Traditional buyouts will not rationalize effort, and will promote derby incentives in the grouper fishery. We would like to see the “Buyout” alternative in Amendment 29 classified as “considered, but rejected” in future drafts.

An accountable buyout plan could be developed, if it were conducted within the framework of IFQ management.  But because IFQ lends itself to voluntary consolidation, buyouts become unnecessary, and excessively costly. The time to debate the merits of a buyback is after an effective IFQ system is established, not before.  

Permit endorsements are basically a form of limited entry. Endorsements would not revoke a reef fish permit, but add an endorsement to an existing permit as a condition to land grouper. Like limited entry, fishermen will need to have a landing history in excess of some threshold in order to qualify. Be aware that this threshold will have to be set high enough, and eliminate enough competition, to be able to ensure that the larger producers will be able to fish year round. This will remove small-scale operators.

Gear endorsements are another type of permit endorsement. For example, a longline gear endorsement would allow only certain boats to use that gear. Bandit endorsements would restrict the use of bandit gear. Same applies with rod and reel. Gear endorsements would make some fishermen more equal than others, by enacting differing standards for different fishermen. Some fishermen will have privileges that others do not.

Longline endorsements, if allowed to happen, would command big dollars on the open market. Anyone paying these big bucks to buy an endorsement would have a huge incentive to add effort in order to pay for this large investment. These incentives are not rational. Since endorsements do not manage effort, they do not address the objectives of Amendment 29. This is reason enough to reject endorsements. 

Speaking of waste, IFQs will be the best means of allocating the under 20” red groupers should the size limit eventually be reduced. In the absence of IFQs, a reduction of the red grouper size limit would result in a derby of epic proportions, one that would rival the red snapper derby, (the derby IFQs recently solved). And we don’t want that kind of derby in the grouper fishery.  

Bill Tucker                       Steve Maisel