abare.gov.au - research report 08.10

4	Large fisheries

Eastern tuna and billfish fishery

At a glance

PRIMARY EFFORT CONTROL	Input controls including limited entry and gear restrictions. Swordfish and albacore catches are controlled by TACs. The introduction of transferable effort units or catch quotas for the fishery are currently under review by AFMA.

ECONOMIC PERFORMANCE	Net economic returns are usually negative, and latency is high. Management for most species relies on input controls so is prone to effort creep

BIOLOGICAL STATUS
Albacore tuna	Not overfished or subject to overfishing
Bigeye tuna	Not overfished but subject to overfishing
Striped marlin	Stock status uncertain
Swordfish	Stock status uncertain
Yellowfin tuna	Not overfished but subject to overfishing

MAJOR LANDING PORTS	Mooloolaba, Sydney, Ulladulla, Cairns, Southport and Coffs Harbour

VESSELS OPERATING IN 2006-07	73

2006-07 GROSS VALUE OF PRODUCTION ($2007-08)	$33.7 million

2006-07 ALLOCATED MANAGEMENT COSTS	$2.95 million

Overview

The eastern tuna and billfish fishery extends from the tip of Cape York to the border of South Australia and Victoria, and includes waters around Lord Howe Island and some waters on the high seas (map 2). Offshore constitutional settlements have been made with adjacent states (except New South Wales) so major tuna species are managed by the Commonwealth even inside the usual three nautical mile boundary.

Most fishing effort occurs within a few hundred kilometres of ports along the coast of New South Wales and southern Queensland. AFMA’s management of high seas fishing in the western Pacific Ocean is influenced by Australia’s commitments to regional fishery management organisations (RFMOs). The fishery was classified as a ‘target fishery’ for the purposes of the Securing our fishing future business exit assistance package (see chapter 1). A brief history of the fishery is given in timeline 1.

Timeline 1

Eastern tuna and billfish fishery

Year

Event

1950s

Japanese and domestic tuna fishing begins in waters that are now part of the Australian Fishing Zone (AFZ)

Late 1970s

United Nations Convention on the law of the sea establishes the AFZ. Bilateral negotiations allow Japanese longliners to continue fishing in Australian waters

Mid-1980s

Markets in Japan for fresh tuna become available to Australian fishers as air freight costs fall. Domestic fishing increases as a result

1985

Granting of new Commonwealth licences suspended

1986

First meeting of the fishery’s Management Advisory Committee (MAC)

1990s

Significant expansion of effort directed at yellowfin and bigeye, particularly off northern Queensland

Early 1990s

Fisheries Management Act 1991 comes into force. Permits giving access to specific areas are issued

Mid-1990s

Revised Offshore Constitutional Settlements (OCS) with states (except New South Wales) mean responsibility for tuna management now resides with Commonwealth

1997

Bilateral agreement lapses. Japanese longliners no longer permitted to fish in AFZ

Late 1990s

Expansion of the swordfish fishery off southern Queensland

2002

Draft Management Plan released for first round of public comment

2003

Draft Management Plan released for second round of public comment

2004

Draft Management Plan released for third round of public comment

Oct-05

Eastern tuna and billfish management plan 2005 (the management plan) comes into force.

2006

A competitive TAC of 1,400 tonnes is introduced to address concerns over broadbill swordfish

2006

99 longline and 30 minor line permits removed in the Australian Government’s Structural Adjustment Package fishing concession buyout

May-06

Amended management plan determined

Nov-07

Provisional grant of Statutory Fishing Rights under the management plan

Source: (AFMA 2004a) (Eastern Tuna MAC 2007).

Catch composition

Several tuna and billfish species are caught in the fishery, almost entirely by longline. In 2006-07, approximately 2800 tonnes of albacore, 1800 tonnes of yellowfin tuna and 1200 tonnes of broadbill swordfish were caught, valued (in 2007-08 dollars) at $6 million, $11.7 million and $7 million, respectively (figures 13 and 14). Bigeye tuna and striped marlin are also important species. Note that catches of southern bluefin tuna, wherever they are made, relate to the southern bluefin tuna fishery.

Trade

The value and volume of the fishery’s exports are difficult to determine because tuna products come from a variety of Australian fisheries, and trade data do not distinguish according to fishery. However, estimates can be drawn from tuna export data after southern bluefin tuna exports have been removed. Exports from the much smaller western tuna and billfish fishery are also included in these estimates. Japan is the principal destination for Australian tuna, taking almost 60 per cent of tuna exports (excluding southern bluefin tuna) by value in 2006-07, at around $12.7 million. The United States, American Samoa and Thailand are also important markets, taking 13 per cent, 8 per cent and 7 per cent, respectively. Yellowfin tuna is the fishery’s principal catch in terms of value, and also the fishery’s most important tuna export at around $8.5 million in 2006-07.

Broadbill swordfish is also a major product of the eastern tuna and billfish fishery. In 2006-07, almost 18 tonnes and 79 tonnes of broadbill swordfish was exported to Japan and the United States respectively.

Management arrangements

Current management arrangements

The eastern tuna and billfish fishery (ETBF) continues to be managed with annual fishing permits under transitional arrangements set out in the Eastern tuna and billfish fishery management plan 2005. Under these arrangments , the fishery continues to be managed with annual fishing permits which limit the number of boats able to operate in the fishery. Each permit authorises an operator to employ either pelagic longline or minor line (poling, trolling, rod and reel and hand line) fishing methods to target tuna and tuna-like species in the ETBF. Operators using an ETBF permit are required to meet certain obligations related to gear specifications, bycatch mitigation, reporting requirements and spatial restrictions.

Concerns regarding the status of broadbill swordfish in 2006 led to a competitive total allowable catch (TAC) of 1400 tonnes being introduced in that year. This TAC continues to apply in 2008-09. The TAC applies for the period from July to June each year and is divided into a series of triggers which, if breached, results in a 10 fish per trip bycatch limit per operator. This bycatch limit is only removed once the total catch of swordfish falls below the next relevant trigger.

Management arrangements specifically for albacore were recently introduced by AFMA in response to increased albacore catches. In 2008, a formal mid-year catch review process was implemented. Under this arrangement, the total catch of albacore was assessed at the Eastern Tuna Resource Assessment Group (ETRAG) meeting in August 2008. It was noted that no immediate management action would be required to address albacore catches given reduced targeting of the species. It was subsequently recommended that albacore be managed under the ETBF harvest strategy.

Southern bluefin tuna is also subject to special controls as this species is managed in the Commonwealth southern bluefin tuna fishery. Between May and October each year AFMA institutes a system of restricted access areas in the ETBF, to ensure any catch of southern bluefin tuna (SBT) is covered by quota. In order to access these areas, operators are subject to minimum quota holding requirements and increased levels of observer coverage.

The Eastern tuna and billfish fishery management plan 2005 highlights the importance of attaining economic efficiency (table 6).

5	Competitive trigger TACs for broadbill swordfish, 1 July 2007 to 30 June 2008 eastern tuna and billfish fishery

period

cumulative competitive trigger TAC

tonnes

July 2007 to September 2007

500

October 2007

600

November 2007 to December 2007

700

January 2008

1 100

February 2008 to April 2008

1 200

May 2008

1 300

June 2008

1 400

6	Eastern Tuna and Billfish Fishery Management Plan 2005 - excerpts relating to economic efficiency

objectives of the management plan are:

measures by which the objectives are to be obtained are:

performance criteria against which measures taken will be assessed are:

To maximise economic efficiency in the exploitation of the resources of the fishery

Gathering information about the economic efficiency of the fishery and implementing long-term management arrangements that pursue economic efficiency for the fishery

Data about the economic efficiency of the fishery has been collected and analysed to enable a periodic assessment of whether the data is consistent with improvements in the economic efficiency of the fishery has occurred. Any changes to the management of the fishery are assessed in relation to their likely effect on the economic efficiency of the fishery

Future management arrangements

The ETBF will continue to be managed through the transitional arrangements of the Management Plan until the final grant of Statutory Fishing Rights (SFRs) has been undertaken. SFRs were provisionally granted in November 2007 however the final grant has been delayed because of appeals against the management plan. It is expected that the final grant of SFRs will be made in late 2008 following the conclusion of the appeals process.

It was proposed under the Management Plan that once SFRs were allocated, the fishing could be managed under a total allowable effort (TAE). Each season’s TAE (as determined under the ETBF harvest strategy) would be divided up amongst the total number of SFRs in the fishery. The TAE would therefore determine the effort value of each SFR and operators would be allowed to expend a level of effort in the fishery equivalent to their SFR holding. Each time fishing activity is undertaken by an operator their effort entitlement would be reduced for that season.

The 2006 Ministerial Direction requires that AFMA implement output controls in the form of individual transferable quotas (ITQs) in all Commonwealth fisheries by 2010 unless there are significant impediments to their introduction in specific fisheries. AFMA subsequently commissioned a consultants report to examine the feasibility of ITQs in the ETBF. According to this report, there is no reason why an ITQ based management system could not be implemented in the fishery (AFMA 2008f). Discussions are currently underway on the possible implementation of a quota system in the ETBF. The outcomes of these discussions will dictate the management system under which the fishery will operate in the future.

Biological Status Eastern Tuna and Billfish Fishery

species	status	stock status indicator	notes

Albacore tuna	Not overfished or subject to overfishing	Biomass	South Pacific assessment indicates biomass is well above biomass required for MSY. Fishery targets a narrow band of very old age classes

Bigeye tuna	Not overfished but subject to overfishing	Biomass	Current levels of fishing and historical average recruitment will move stock to an overfished state; lightly exploited in ETBF but heavily affected by equatorial fishing.

Striped marlin	Stock status is uncertain	Biomass	Preliminary assessment; range of plausible conclusions on stock status

Swordfish	Stock status is uncertain	Biomass	Plausible conclusions on stock status, with most indicating not overfished or no overfishing, but some indicating overfishing and overfished. Consistent trend in declining abundance in recent years in ETBF

Yellowfin tuna	Not overfished but subject to overfishing	Biomass	Overfishing in western Pacific. Current levels of fishing and historical average level of recruitment may move stock to an overfished state; lightly exploited in ETBF, but heavily affected by equatorial fishing

Source: Larcombe and Begg. (2008).

Financial performance

ABARE regularly surveys operators in the eastern tuna and billfish fishery, and reports the results in the Australian fisheries surveys report (see Vieira (2008) for most recent survey results). Financial performance results are reported for the entire fishery and two subgroups in the fishery — broadbill boats (boats which caught greater than 10 tonnes of broadbill swordfish) and non-broadbill boats (boats which caught less than 10 tonnes of broadbill swordfish). These financial performance estimates reflect an average fisher’s accounting statements and do not take into account other economic costs, such as the opportunity cost of capital. The most recent estimates available are for the 2005-06 and 2006-07 financial years.

Average per boat total cash receipts for the entire fishery increased by 14 per cent, from approximately $501 000 in 2005-06 to almost $571 000 in 2006-07 (table 7). Total cash costs per boat increased by a similar amount in percentage terms from $519 000 in 2005-06 to $590 000 in 2006-07. As a result, boat cash income remained relatively constant at around -$18 000 per boat in 2005-06 and -$19 000 per boat in 2006-07. Despite boat cash income being constant between survey years, profit at full equity decreased from a loss of -$33 000 in 2005-06 to a loss of -$47 000 in 2006-07.

For the two subgroups in the fishery, average total cash receipts per boat in 2006-07 were estimated at $828 000 for broadbill boats and $411 000 for non-broadbill boats. Boat cash income and profit at full equity were negative in both sectors in 2006-07 — profit at full equity was estimated to be -$32 000 in the broadbill sector and -$57 000 in the non-broadbill sector.

Economic performance

ABARE has been conducting economic surveys of the eastern tuna and billfish fishery since the mid-1990s. This allows for the calculation of net returns and studies currently underway at ABARE to calculate productivity indices and profit decompositions for the fishery. Estimates of the level of latency in permits are also available for the fishery.

Latency

Many vessels have more than one permit attached to them. This means that while information about the number of active vessels is obtainable, it is hard to determine how many permits are fished against. Table 8 shows that as recently as 2002-03, 12.7 million hooks were set under the 220 issued permits. By 2004-05, only 9.4 million hooks were set under the same number of licences.

Following the Australian Governments concession buyout in 2006, both the total number of permits and the total number of active vessels were reduced substantially in 2006-07. At the same time, the number of hooks used in the fishery remained relatively similar to levels in 2004-05 and 2005-06. This demonstrates how much latent effort previously existed in the fishery and suggests that this latent effort has been significantly reduced through the buyout.

The introduction of ITE units may allow managers to more easily address latent effort in the fishery. However, it is likely fishers will find ways of increasing the productivity of each hook over time so AFMA will have to revise the target number of hooks regularly.

Net economic returns

A fall in the number of active vessels since 1999 coincides with a period of generally low or negative net economic returns (figure 15). Of the past 13 surveyed years, a positive net economic return was estimated on only three occasions. The increase in revenue throughout the 1990s was almost always accompanied by proportional increases in costs, leaving the net return of the fishery largely unchanged. Fishers targeting swordfish off Mooloolaba (Queensland) in the late 1990s led to modest net returns being generated, but these had been dissipated by 2001-02 as interest in this species increased. Since then, substantial net economic losses have been made in the fishery.

Implications of new management arrangements

The proposed management system of ITE units has the potential to constrain fishing effort to a greater degree than the current management arrangements of limited entry and zone restrictions. However, a major concern with input controls (such as ITE units) is that the fishery manager does not have direct control over the total catch in the fishery or the species composition of that catch. Effectively, the manager has to determine an implicit total catch and then determine the number of hooks required in the fishery to achieve that level of catch.

Input control regimes provide fishers with an incentive to find new ways to fish within the rules. Fishers use unrestricted inputs in place of restricted inputs to increase their fishing power in a process known as effort creep. While operators gain experience with new fishing gear and techniques and can improve catching capacity, they have the incentive to use a combination of inputs that do not minimise costs for the levels of catch they are landing. In this case, vessel level efficiency is not being achieved.

Where effort creep occurs, it is likely that input controls will need to be tightened frequently to ensure that fishing mortality coincides with management targets. As Rose (2002) explained, changes to rules can be expensive as they generally make some gear worthless. Also, the process of researching, designing and negotiating changes in management regimes can be costly for both fishers and managers. In estimating the long run net economic returns to the fishery, both sets of periodic costs — those of research and negotiation and those of reinvestment — should be set against any apparent net economic returns in the years between changes in management regime.

Another potential problem associated with ITE units is that, without additional controls, they provide little management control of effort directed at any particular target species. In a multispecies fishery where a degree of targeting of fishing effort is possible, such as the eastern tuna and billfish fishery, fishers will direct their effort at the species and locations that maximise profits. A number of factors may lead to changes in targeting behaviour. For example, changes in the relative prices of target species, changes in relative abundance (perhaps as a result of environmental factors) and changes in catchability (perhaps as a result of a change in fishing technology) can be expected to affect the proportion of effort directed at each of the major species.

A major challenge in implementing an ITE unit based management regime that is efficient and sustainable in the eastern tuna and billfish fishery will be to provide an adequate degree of control over catches of target species. The use of subarea factors that give different weightings to hooks set in different areas of the fishery gives managers better control over how effort is distributed spatially. However, setting subarea factors appropriately may be problematic.

A system of individual transferable quotas (ITQs) and a total allowable catch would be likely to avoid the problems associated with effort creep and changes in targeting practices. The incentives that ITQs might create to discard fish and difficulties in setting an optimal total allowable catch in a fishery targeting migratory stocks with unpredictable abundance have been recognised (Rose 2002). Localised depletions are also common in the fishery’s history and some form of area based ITQ system would likely be required.

Overall economic performance

One of the key prerequisites for achieving economic efficiency in a fishery is the existence of a control on effort or catch that restricts fishers from exploiting the resource beyond catch levels that sustains the maximum economic yield (MEY). Controls prevent effort from expanding to the open access point where no profits are made. There is substantial evidence that the eastern tuna and billfish fishery has some of the economic characteristics of an unmanaged, open access fishery despite it being a controlled fishery. ABARE’s estimates of net economic returns suggest that for many years the fishery has earned only very small or negative net economic returns. Increases in revenue in the late 1990s coincided with similar increases in costs leaving profits mostly unchanged. Low profits lead to a large proportion of the fishery’s permits not being fished against.

Under the new management plan, individual transferable effort units may be introduced that allow AFMA to place an upper limit on the total number of hooks set. The system would give AFMA control over how effort is applied spatially by the use of subarea factors. However, it would not allow AFMA to control the catch composition in the same way that a TAC system does. This is especially important in a fishery with overfished stocks or for which overfishing is occurring.

ITE units promote effort creep in the same way as any other input control. Innovative fishers will always look for new ways to circumvent restrictions on the number of hooks they can set by substituting inputs to increase the effectiveness of each hook. Innovation is welcomed in an ITQ managed fishery because the total harvest can then be made at a lower cost. However, in an ITE units managed fishery innovation means that fishers are probably able to take more fish than management initially intended.