Saturday, February 11, 2012

SEAS February Newsletter Article- Fleet Consolidation- Take #2

Fleet Consolidation Take #2- March 22nd Referendum 

 NMFS will conduct the referendum by mailing a ballot to all permit holders on March 22nd. This round of bidding produced 64 permits at an average price of $205,000. The high permit in the reverse auction was $240,000 and the low was $175,000. After looking at the list of permit holders and the prices they're selling for at, it is apparent that there is less a proportion of SRA, SEAS and PSVOA board members or past board members than the rest of the fleet. Certainly this fleet consolidation program was vetted well enough and for long enough- over a decade now- so that it would make some sense that we'd need to buy permits from everyone, board members and non-board members.

 Indeed if one were to spend a few hours on you'd find each and every newsletter on the subject since 2004. Since 2004 there have been around two dozen articles on the fleet consolidation program. And while it has changed a bit those changes have been reflected and updated as soon as possible. Particularly telling is the date-certain articles on the buyback process in the spring. We were trying to get the up to the moment information to the fleet with the first round. The ED was hunting and vacationing most of the fall so neither our website, nor nor the newsletters (except for the October newsletter) were up to date until fairly recently

. If you did not have an opportunity to sell your permit in this round or if you know of someone who either forgot or didn't feel they had adequate notification, please let them know that we have around $10 million left for purchasing future permits. This, of course, would depend upon the will of the remaining permit holders to take on more debt for the program. Our note is for $23 million and over the first few yearss we'll pay 3% whether we borrow one dollar or the whole enchilada so the CW is that we would use the additional $10 million to get down to the SRA's goal of 260 permits left in the fishery.  Of course, if we don't borrow more we will be paying less than 3% after the NMFS review that we would undoubtedly request.  And with 260, we believe that'll be the new 225, as there are constantly more double skippers on boats (relief situations) as well as False Pass, Cali, and PWS boats that are more and more cycling through. This will mean that a couple dozen, or possibly up to 3 dozen, permits will always be sidelined. Now, granted, we'd have to get the next 45 permits for less than we got the last ones, but at these prices, if we could pick up 35-37, that'd put us at 268-270 total permits, which after doubles and outside fishing, should provide for around 230-235 permits operating. This would be 12% less permits less than we had in 2011. Worth paying 3% for? You decide.

 Certainly there are those of you who have differences with the program and we're sorry but, like the 58 foot limit and other split issues, we have to go with the supermajority. Issues like whether we belong in Chatham Strait, whether Hidden Falls should remain seine only, whether we deserve more time at Neets Bay as well as first start in all fishing seasons there......these are questions that unite us nearly 100%-- …. Without reiterating the reasoning behind the buyback, let's just say that each season we've failed in successfully implementing the program, there's been another great reason to keep working on it. 2006 showed us what a flop would look like, even though there were 30-some boats less than last year. The 42 million harvest in 2007 was the first seriously major decline in the awesome 99-05 odd cycle that had averaged 63 million pinks per odd year. (03 and 05 were not relative total harvest numbers as our trip limits kept us from harvesting at least 10 million pinks each year). 2008 was another slow burner. 2009 was worse than the 2007 season. Then some rebounds in both 2010 and 2011, with 2011 being the most exciting perhaps of the turnarounds, producing 56 million pinks, 20 plus million more than the parent year of 2009.

 But the recent years only add to the long term logic of having the fleet consolidation program. While we won't belabor the long track record of reasoning behind this and the long list of legislation and roadblocks cleared in order to proceed, there are a few points that we want to leave you with as we all await the NMFS conducted vote.

 1. 3%. The 3% is taken off of your fish ticket just like the 3% aquaculture assessment. It's an assessment that will take more money from those who catch the most fish. So it's really a fair assessment...... it's not like the IRS code.....there's no writeoffs for the top 1% here. They pay way more than the average. And the entire operation pays, not just a skipper or boat owner. Anyone who gets paid by percentage pays the 3%.

2. The fleet was supposed to be set at around 270 back in 1974. But the Boldt decision caused a major increase in the fleet from disenfranchised Puget Sound boats. So we ended up with 419 permits. After the first round we ended up at 379 permits. And what a deal that looks like now. We bought 39 permits ( the last one got lost or something) at $2.88 million with grant funds at an average of $82,000-- the highest permit was $97,500.

 3. With the average permit price on this round of $205,000 that's the equivalent of around 6000 lbs of SE 2-C Halibut Quota. What could you gross with that quota? $40,000-45,000.

 4. SEAS wants a vibrant fleet. We're not out to put the next guy out of business. It's a total voluntary program from the permit selling side and the guys who are getting out would have a hard time complaining that we're not treating them well enough for getting their permit out of the fishery. A young guy who wants into the fishery can get a loan through Division of Investments. Sure, ten years ago permits were cheap but you couldn't get a job with one. We won't go through the list of names here and now but let's just say many fishermen who are much more capable than this writer were let go in the big crisis of 2001-2003.

5. Unanimous. The SEAS board rarely is unanimous on anything. 4 guys from Ketchikan, 1 from Sitka, 3 from Petersburg, and 5 from the Puget Sound basin are currently on the SEAS board and are all 100% in favor of this fleet consolidation program.

 6. The state of Alaska has expectations on this as they are our partner. They would not have given us the $2.88 million, of which Cora Crome (at the time) was in charge of had they thought we'd not follow through on the fleet consolidation effort on our part. If you are against this program at this time, where were you when your fleet accepted the near- $3 million to fund the first round?


  1. Anonymous11:52 PM

    It's about time

    Let's get Er done

  2. Anonymous6:37 PM


    only 1 of the 13 seas board members sold a permit?


    and what happened to the thorstenson permits. only peder sold his, that he had owned since 1999- 2 years before the first buyback meeting.

    1. BTW... Mike Sturtevant did say in the recent NMFS buyback meetings that the 3% would drop significantly. It is likely that, without a further round of permit purchases, the rate will drop to as low as 1%.

      The newsletter article was really incorrect in it's insistence that 3% would be the same forever.