asg-blue-600w

FishBiz Project

Financial and business tools for Alaska commercial seafood harvesters brought to you by the Alaska Sea Grant Marine Advisory Program

Step 1: Determine Your Fishery's Value

Hauling in Alaska king crab pots. Photo credit Alaska Sea Grant.

As you think about buying a boat or permit, it is wise to get a good understanding of the current and historical value of the fishery you are about to enter. The price of the permit is only one indicator of the value of the fishery - many factors influence the cyclical rise or fall in permit values. 

For state-managed fisheries, the Commercial Fisheries Entry Commission tracks permit prices over time with their Permit Value Reports. The values listed here are average permit sale prices reported to the CFEC during the three-month time frame indicated. Scroll through the tables to get a feel for what permit values have been in the past, relative value of similiar fisheries elsewhere in the state, and what trends appear to be happening now. Within your fishery of interest, does it look like there was a peak price in the recent past? Are permit values dropping or increasing?

Remember, though, these permit values are just one indicator of the value a fishery. How can you get a realistic estimate of the value that permit will bring to your specific operation? You might look at the most financially successful members of your fleet, and be tempted to assume you can do the same.  Remember, highliners likely have many years of experience catching fish, operating vessels and managing the business side of their operation.  Although you can and should learn as much as possible by talking to more experienced fishermen, remember that nothing substitutes for those years on the fishing grounds, and everyone had to start with debt, learning curves and grit. 

To estimate potential earnings in Alaska state-managed fisheries, an important information source for lenders and others in the fishing industry are the "quartile tables" found on the Commercial Fisheries Entry Commission website.  Here's a quick tutorial on navigating these tables.

To begin, at the bottom of the CFEC page, notice the "quartile tables" are broken into categories of salmon, herring, other finfish, crab, and other species.  Choose your species of interest, and then click on the gear code for that fishery (example: a Southeast purse seine permit is S01A).  Here you will see a table of earnings for each year for that gear type that looks like this: 

S01A - Salmon, Purse Seine, Southeast - Year: 2013
  Permits Estimated Gross Earnings  
Quartile Number Percent Total Percent Average  
1 43 15.58 $38,621,388 25.07 $898,172 actual
(high) 43 15.58 $38,621,388 25.07 $898,172 cumulative
2 56 20.29 $38,530,909 25.01 $688,052 actual
  99 35.87 $77,152,297 50.08 $779,316 cumulative
3 67 24.28 $38,149,999 24.76 $569,403 actual
  166 60.14 $115,302,296 74.84 $694,592 cumulative
4 110 39.86 $38,761,699 25.16 $352,379 actual
(low) 276 100.00 $154,063,995 100.00 $558,203 cumulative
Total pounds represented in this table: 334,435,054

These tables contain a wealth of information.  First, let's look at the very bottom box, highlighted in yellow, which shows "total pounds represented in this table."  Look back through the years at this number to get a general sense of annual total harvests for the fishery.  Are they going up or down?  Are they highly cyclical, as in this Southeast purse seine example?

Next, look at the row above, highlighted in orange. This tells us 276 permits earned a total of $154,063,995.  A person might be tempted to just divide the total pounds and dollars by the number of permit holders in a fishery, and assume that he or she could expect to catch 1,211,721 pounds and earn $558,203 in their first year. Look further. In these tables, CFEC divides the total gross earnings in each fishery into four tiers, or quartiles of top, second, third and bottom tier.

  Permits Estimated Gross Earnings  
Quartile Number Percent Total Percent Average  
1 43 15.58 $38,621,388 25.07 $898,172 actual
(high) 43 15.58 $38,621,388 25.07 $898,172 cumulative
2 56 20.29 $38,530,909 25.01 $688,052 actual
  99 35.87 $77,152,297 50.08 $779,316 cumulative
3 67 24.28 $38,149,999 24.76 $569,403 actual
  166 60.14 $115,302,296 74.84 $694,592 cumulative
4 110 39.86 $38,761,699 25.16 $352,379 actual
(low) 276 100.00 $154,063,995 100.00 $558,203 cumulative
Total pounds represented in this table: 334,435,054

Here's where this data becomes very useful. In the top row of the quartile table, you can see in 2013, 43 seine permit holders (15.58% of the total) were the top producers and made up the top tier or quartile. This group grossed an average of $898,172 each that year. Next, go to the lowest quartile row labeled "actual" (highlighted in red above)and notice that 110 permit holders (39.86% of the total) were in the fourth, or lowest quartile and grossed an average of $352,203 each that year. A first-year fisherman is more likely to be in the bottom group than the top quartile, so it is prudent to put yourself in the bottom half of gross earnings in your first few years, and plan how to manage your expenses and debts accordingly. Remember these figures are gross earnings before taxes, permit or vessel loan payments, crew share, moorage, fuel, etc.

Everyone has access to this information. You will be much better prepared (and will look much better informed to prospective lenders) if you do fishery value research BEFORE approaching a lender. Now, go to the next section "Will It Pencil Out" to analyze projected expenses.

Federally managed fisheries, particularly halibut and sablefish IFQ systems, present a different scenario.  Quota share holders are allocated a certain poundage of each year's quota based on the number of quota share units they own.  Average price per landed pound of halibut and sable fish since 1992 are shown on the NOAA website under IFQ Cost Recovery Reports and Ex-vessel Prices.