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On high seas? Australia's fishing industry

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RESEARCH NOTE Number 55, 25 June 1996 ISSN 1323-5664 On High Seas?—Australia's Fishing Industry Size of Industry

Fishing is a major primary industry, with a gross value of production (GVP) in 1994-95 of $1744 mil-lion, mostly comprising high-value species such as rock lobster,

prawns, abalone and scallops. Pro-duction volume is relatively small by world standards: Australia was ranked fifty-fourth in 1992-3 with 218339 tonnes.1 About 70 percent of the industry revenue is derived from exports ($1367 million in 1994-95). Our major markets are Japan (41% by value), Hong Kong (20%) and Taiwan (15%).2

Figure 1. Source: ABARE statistics

Strong growth in the value of sea-food exports over recent years has been due to two major factors: ex-change rates and growth in the value of live and other high quality fresh seafood.3 The value of live, fresh or chilled rock lobster grew from $159 million in 1992-93 to $246 million by 1994-95, despite a decline in total production from 13600 to 12389 tonnes.4 Similarly, the value of whole fresh or chilled tuna nearly doubled, from $4 mil-lion (for 613t) in 1992-93 to $19.6 million (1599t) in 1994-95. Ac-cording to one view, potential for further growth in the 'live, fresh' trade exists, but is dependent on Australia maintaining and develop-ing its reputation as a 'clean' pro-ducer.5 The Australian dollar has been weak relative to the Japanese yen, making our exports more at-tractive in that market. However, it

is expected that strengthening of the Australian dollar in the short term, in addition to relatively weak de-mand and high availability on the Japanese market, will reduce re-turns for producers in 1995-96.6

Australia also imports a significant volume of fish products, mainly in the form of canned fish, frozen fil-lets and prawns (either fresh, chilled or frozen). The value of imports in 1994-95 was almost $666 million.7 The value of imports has risen by 25 percent since 1992-93 ($529 million).

Future directions While the value of catch has in-creased, production tonnage has been declining over the last few years (see Figure 2, below. See also Research Note No. 57, How Many Fish in the Sea?).8 How much of the reduced production is due to decline in fish stocks or other fac-tors is unknown. Part of the decline is due to quotas introduced in some of the Commonwealth fisheries to reduce fishing to sustainable levels: twenty-two of the around one hun-dred commercially fished species (in all fisheries) are considered to be in the category 'heavily to fully exploited' and nine are 'overex-ploited'.9 Although some fisheries have been identified as 'underex-ploited' there is little expectation that there will be much increase in the total landed catch.10 This means that the industry must continue to

focus on improving the marketing, handling, processing and packaging of products for higher returns.

Key issues At the present time the fishing in-dustry is facing the major challenge of maintaining or increasing profit-ability when there is little likelihood of increase in production tonnage and possibly a decline. Restructur-ing to reduce excess capacity and overcapitalisation is one option. Overcapitalisation and the concomi-tant overcapacity is a feature of the fishing industry generally. Global attention is currently being focussed on the question of how to restruc-ture.

Australian Fisheries Exports 1994-95

Fish 10%

Rock Lobster 36%

Prawns 17%

Abalone 12%

Pearls 15%

Other 10%

Initially a result of open access (un-restricted entry) and then of fisher-ies management measures aimed solely at conservation of fish stocks, fleet overcapacity has forced fisher-ies managers to consider tools aimed at the twin objectives of stock conservation and maximising economic efficiency.11

Conservation measures in isolation, such as limited entry to a fishery and restricted seasons, can encour-age economic inefficiency by pro-viding an incentive for investment in boats and equipment for competi-tive advantage, which then lay idle for long periods after season closure or which have capacity in excess of

Figure 2. Source: ABARE statistics

A u s t r a l i a n F i s h e r i e s P r o d u c t i o n a n d V a l u e , 1 9 8 9 - 1 9 9 5

1 5 0 0 0 0

1 7 5 0 0 0

2 0 0 0 0 0

2 2 5 0 0 0

2 5 0 0 0 0

1 9 8 9 - 9 0 1 9 9 0 - 9 1 1 9 9 1 - 9 2 1 9 9 2 - 9 3 1 9 9 3 - 9 4 1 9 9 4 - 9 5

t o n n e s

1 0 0 0 0 0 0

1 2 0 0 0 0 0

1 4 0 0 0 0 0

1 6 0 0 0 0 0

1 8 0 0 0 0 0

$ d o l l a r s

P r o d u c t i o n

V a l u e

that required for sustainable fishing.

One tool which has been increas-ingly used in fisheries management to conserve stocks and encourage economic efficiency is the 'individ-ual transferable quota', or ITQ.

Individual transferable

quotas The ITQ is allocated to a licensee as either a portion of the total allow-able catch (TAC) or as a set number of tonnes. Rational capital expendi-ture on boats and equipment in ac-cordance with income expectations is encouraged in this way. Neces-sary to effective quota management, however, is the determination of the correct quota limit, which requires considerable knowledge.

Limitations of ITQs Smooth adjustment of fleet capacity is dependent on efficient, unre-stricted markets. Since overcapacity is a feature of nearly all fisheries

there is hardly a market for under-utilised equipment. In addition, the small number of quota-managed fisheries implies a fledgling or non-existent market for quotas, so that even if they are transferable they are not necessarily able to be sold by the 'less efficient' fishermen. Limited alternative employment

opportunities for those wishing to leave the industry compounds the problem.

Unresolved issues concerned with the ITQ remain—such as its appli-cability in a multi-species fishery, i.e., what should be done about 'by-catches' (species caught other than the targeted species); 'highgrading' (throwing back lower value species, often dead); and the high costs of monitoring, surveillance and re-search (vital for effective TACs). Enforcement is also an issue, when species with quota restrictions in a Commonwealth fishery can be caught in State waters where no quota restriction applies.

Fisheries management The Commonwealth and the States have shared responsibility for man-agement of our fisheries resources since federation. The cumbersome effect of multiple licences and laws

in a fishery has led to the introduc-tion of Offshore Constitutional Set-tlement arrangements (OCS) be-tween the States and the Common-wealth, where a single jurisdiction, either State or Commonwealth, ap-plies to a fishery. OCS arrange-ments for some fisheries have cur-rently been negotiated between the Commonwealth and Western Aus-

tralia, the Northern Territory and Queensland; have not yet been finalised with South Australia, Vic-toria and Tasmania; and have been delayed with New South Wales.

Foreign fishing vessels Australia has an international obli-gation under the United Nations Convention on the Law of the Sea (UNCLOS), which was ratified in 1982, to allow foreign vessels to harvest resources not taken by do-mestic fishermen. The fishing ca-pacity of domestic fleets and the possible impacts of foreign fishing on local industries are considered before any foreign access agree-ments are approved. Management and access fees for the right to fish in Australian waters are charged.

Australian Fisheries Value in 1994-95


100,000 200,000

300,000 400,000

500,000 600,000


$ '000

Georgina McGill Science, Technology, Environ-ment and Resources Group Parliamentary Research Service

Phone: 06 2772424 Fax: 06 2772407

Views expressed in this Research Note are those of the author and do not necessarily reflect those of the Parliamentary Research Service and are not to be attributed to the Department of the Parliamentary Library. Research Notes provide concise analytical briefings on is-sues of interest to Senators and Members. As such they may not canvass all of the key issues.

© Commonwealth of Australia

Figure 3. Source: ABARE statistics.

1 FAO, The State of World Fisheries and Aquaculture, Rome 1995, p.52. 2 ABARE, Australian Fisheries Statistics 1995, p.31, derived from Table 22, in 1994-95. Not including live exports. 3 Battaglene, T., Standen, R. and Smith, P., "Fisheries Outlook" in Outlook '96, Canberra 1996, p.208 4 ABARE, op.cit., Table 18, p.25. 5 Battaglene, T., et. al., ibid. p.208. 6 Battaglene, T., et al., ibid, p.209. 7 ABARE, ibid. p.37. 8 ABARE, ibid. pp.8-10. In 1992-93 production was 245,777 tonnes; in 1994-95 production was 218,273 tonnes. 9 Kailola, P., et al., Australian Fisheries Resources, Canberra 1993, pp 404-7. 10 Kailola, P., et al., ibid, p.2. 11 For fuller explanation see DPIE, New Directions for Commonwealth Fisheries Management in the 1990s A Government Policy Statement December 1989, AGPS Canberra 1989 pp.16-26