Appropriation of economic values in a rights-based fishery

This study integrates resource-based and stakeholder theories to explore how values are generated and appropriated in a rights-based fishery. We argue that in the fish harvesting industry, a firm’s ability to create values is critically dependent on stakeholders outside the firm’s boundaries, such as society in general (the principal owner of the natural resource) and the fisheries management of the government. The latter protects the resource from being overfished, and it decides who will get the rights to fish. The empirical context is the seagoing Norwegian purse seine fleet, which has gradually created significant values relative to revenues through the 32- year study period (1985–2016). Specifically, the value appropriation between key stakeholders under a stepwise, more liberalized individual transferable quota system is described and analyzed. The findings show that the vessel owners’ share of added values increased gradually from approximately 7% in 1985 to 45% in 2016. Conversely, the labor share dropped from 75% to 42% during the study period. The society’s share of the values added (corporate taxes) increased from − 5% (net subsidies) to +9% (net tax income). The present study concludes by discussing the findings and their policy implications

Sources of superprofit in a well-regulated fishery

Source at https://doi.org/10.1016/j.marpol.2019.103551. This study is motivated by the ongoing debate on resource rent taxation in Norwegian fisheries. Drawing on strategy literature, this paper argues that resource rent is just one of several conceivable sources of above-normal profit (superprofit) for a firm in a natural resource-based industry. The financial statements of almost the whole population of the Norwegian purse seine fleet were analyzed (61 firms owning 65 vessels) for a 5-year period and the level of superprofit for each company was calculated. The findings show that the average firm made modest superprofit in 4 out of 5 years. One reason is that the firms have received a large portion of their quota portfolios gratis. Another reason is that the competition arena is favorably protected through institutionalized barriers to entry. Moreover, the study reveals large profitability variations among seemingly similar firms. Different sources of superprofit were therefore investigated. It was found that the most profitable firms were the most risk adverse. They invested in neither large quota shares nor large catch capacities; as a result, their balance sheets were not debt loaded. The paper concludes by discussing policy implications and limitations of the findings

Price Links between Auction and Direct Sales of Fresh and Frozen Fish in North Norway (1997–2003)

In North Norway the dominant method of exchange for fresh and frozen fish at the ex-vessel level is by direct (contract) sale, whereby price is negotiated between fish processors and the fishermen. More recently, an auction for frozen fish has been introduced. In this paper we investigate the relationship of prices between these methods of exchange and, in particular, whether the prices develop in a stable pattern between auction and direct sale by means of a cointegration analysis. Monthly prices of size-graded cod and haddock landed in the period 1997–2003 are analysed. For most months, frozen fish sold through auctions realised the highest price, followed by direct sales of fresh and frozen, respectively. Fish sold by auction exhibits a larger monthly variation in price than fish sold directly. Prices for cod were cointegrated to a larger degree than for haddock, and the cointegration was strongest for frozen cod. The analysis also demonstrates that the auction prices for frozen cod and haddock drive the direct sale prices of similar fish, both frozen and fresh, even though the quantity sold via direct sales is greater than that of auctions. Law of one price (LOP) and weak exogeneity were present for cod and haddock.Market linkages, cointegration, auction sale, direct sale, fresh fish, frozen fish, cod, haddock, North Norway, Resource /Energy Economics and Policy, Q22, C32, D44,

Value added in Norwegian Fisheries; The Creation, the distribution, and value added strategies

Maximizing profit and value added are central objectives when fishing rights are distributed. Financial profitability on a company level traditionally measures the return on total assets. Value added on the national level is the net (or gross) national product, and is the total profit of investments and wages and salaries to employees. In the fishing sector live fish is a restricted though renewable resource. Fish is a common resource, and is part of the capital stock of the nation. Unlike financial capital and most other assets, no one pay the rest of society for access to the common fish stock. In this paper the issue to be investigated is which structure of the fishing fleet that may maximize value added per unit of fish caught, and thereby maximizing the fishing sector’s contribution to the net national product. Our analysis is based on annual accounts for Norwegian vessels collected annually by “Budsjettnemda for fiskerinæringen”. Our data covers the period 1999-2004. The data is reflecting the actual situation for the fishing fleet with regards to restrictions to access, quota distributions and other regulations on the free operation of the fleet. There is no reason, per se, to expect the regulations to be optimal in an economic sense. Our conclusion is that the national value added per sales NOK (NNP) for fish will improve if a bigger share of the national TAC is transferred from deep-sea fishing vessels to coastal vessels. Value added per man-year, would, however, be maximized by fishing more of TAC with larger vessels. The distribution of the present value added show that smaller vessels have value added in percent of gross sale value of about 57 – 58%. Same figures for large purse seiners/blue whiting trawlers are 51-54%, for mechanized line fishing 44%, for cod trawlers 40%, and for trawlers with processing facilities on board 36%. Value added relative to total revenue has had a negative trend for the total fleet for the period 1999 – 2004, from about 51% to about 44%. For the total period the coastal fleet with length less that 28 m has had largest value added as percent of total revenues, and pelagic highs sea fishing is number two. Value added as percent of total revenues has declined for the open sea fleet fishing for cod from about 47% in 1999 to 35% in 2004. We conclude that the explanation for the relative large value added for the smallest vessels can be found both in the income part and the cost part of the calculation. First, smaller vessels experience a better price per kilo as quality is presumed to be better, and also by-products and bycatch are better utilized. The smallest vessels (in Norwegian called “sjark”) have less cost per unit catch as this group is less capital and energy intensive that the largest fishing vessels. Value added per man-year is highest for the largest vessels. This is explained by large fish quotas per fisherman and highly intensive use of capital as input. The current allocation of TAC have compensated for the rather dismal value added per kg in the group of large vessels by unduly distributing large quotas to the large vessels. To maximize value added (NNP) of the limited TAC, we conclude by recommending that a bigger share of the national TAC should be redistributed from the large deep-sea vessels to smaller coastal vessels. As the fishing technology is different for the different groups, this recommendation implies that employment and landing of fresh fish will increase, while landings of frozen will decrease

Price links between auction and direct sales of fresh and frozen fish in North Norway (1997-2003)

In North Norway the dominant method of exchange for fresh and frozen fish at the ex-vessel level is by direct (contract) sale, whereby price is negotiated between fish processors and the fishermen. More recently, an auction for frozen fish has been introduced. In this paper we investigate the relationship of prices between these methods of exchange and, in particular, whether the prices develop in a stable pattern between auction and direct sale by means of a cointegration analysis. Monthly prices of size-graded cod and haddock landed in the period 1997- 2003 are analysed. For most months, frozen fish sold through auctions realised the highest price, followed by direct sales of fresh and frozen, respectively. Fish sold by auction exhibits a larger monthly variation in price than fish sold directly. Prices for cod were cointegrated to a larger degree than for haddock, and the cointegration was strongest for frozen cod. The analysis also demonstrates that the auction prices for frozen cod and haddock drive the direct sale prices of similar fish, both frozen and fresh, even though the quantity sold via direct sales is greater than that of auctions. Law of one price (LOP) and weak exogeneity were present for cod and haddock

Structural Breaks in the European and US Market for Salmon

This study investigates a possible structural break in the relationship between the price of Norwegian salmon exported to the EU and prices of Chilean salmon exported to the US. A structural break is expected in the spring/summer 1997 because restrictions on price and quantum on Norwegian salmon was introduced at this time. A test for cointegration suggests that there is a long term relationship between prices of salmon in the EU and US before and after the break. A Chow test reveals that that there is a distinct structural break in May 1997. The study can and will be improved in subsequent studies by using better tests for cointegration

Price links between auction and direct sales of fresh and frozen fish in North Norway (1997-2003)

In North Norway the dominant method of exchange for fresh and frozen fish at the ex-vessel level is by direct (contract) sale, whereby price is negotiated between fish processors and the fishermen. More recently, an auction for frozen fish has been introduced. In this paper we investigate the relationship of prices between these methods of exchange and, in particular, whether the prices develop in a stable pattern between auction and direct sale by means of a cointegration analysis. Monthly prices of size-graded cod and haddock landed in the period 1997- 2003 are analysed. For most months, frozen fish sold through auctions realised the highest price, followed by direct sales of fresh and frozen, respectively. Fish sold by auction exhibits a larger monthly variation in price than fish sold directly. Prices for cod were cointegrated to a larger degree than for haddock, and the cointegration was strongest for frozen cod. The analysis also demonstrates that the auction prices for frozen cod and haddock drive the direct sale prices of similar fish, both frozen and fresh, even though the quantity sold via direct sales is greater than that of auctions. Law of one price (LOP) and weak exogeneity were present for cod and haddock

Methodological issues in estimating the profit of the core catch business unit of a fishing vessel firm

In fisheries, only the strategic business unit (SBU) of a firm that exploits a common-property natural resource can yield a resource rent. Hence, we discuss issues in isolating the economic return of the catch business unit (CBU) of a fishing vessel firm based on public accounting data. Furthermore, if detailed data on the CBU are available, some of its profit may stem from financing activities. Accordingly, we discuss issues in separating the economic return of the financing and operative activities of the CBU. Frequently, the industry is the unit of analysis in profitability surveys of fisheries. The data applied do not always clearly separate the profit of the CBU from other strategic downstream business activities in the value chain such as processing, sales, and non-fishery activities. Further, the economic return is always corrected for financial items. In addition, profitability may not properly reflect the return from the operational activities of the CBU. In the method described in this paper, the unit of analysis is the individual CBU and not the industry. Moreover, the accounting figures from the firm level have been corrected to disclose only the economic return of the operational part (core) of the CBU. </ul