abare.gov.au – Australian Fisheries Surveys Report 2008

2	Eastern tuna and billfish fishery – longline and minor line

The fishery

The eastern tuna and billfish fishery (ETBF) is a multispecies fishery extending from the tip of Cape York to the South Australian-Victorian border, encompassing the waters around Lord Howe and Norfolk Islands (map 1). The fishery supports both commercial and recreational fishing activities. Commercial fishing occurs in a longline sector which uses longline fishing methods and a minor line sector in which rod-and-reel, handline and trolling methods are used (Larcombe and McLoughlin 2007). The longline sector accounts for the majority of the fishery’s catch.

Key tuna species targeted in the fishery include yellowfin tuna, bigeye tuna and albacore tuna while the key billfish species targeted is broadbill swordfish. Historically, the combined catch of yellowfin tuna and billfish has comprised more than half of the fishery’s catch (figure a). Since 2004-05, however, the catch composition of the ETBF has altered as operators have shifted effort toward targeting albacore tuna. The production volume of albacore rose from 630 tonnes in 2004-05 to 2800 tonnes in 2006-07. Of the 7700 tonnes of fish landed in 2006-07, albacore accounted for the largest share by volume (37 per cent), followed by yellowfin tuna (23 per cent) and billfish (21 per cent).

As a comparatively low-value species, the contribution of albacore to the fishery’s gross value of production (GVP) is much lower (figure b). In 2006-07, GVP rose by 10 per cent to $33.7 million (in real terms). Yellowfin tuna, valued at $11.7 million, accounted for the largest share of production by value (35 per cent), followed by billfish ($9.3 million, 28 per cent) and albacore ($6.1 million, 18 per cent). Despite the rise in production value in 2006-07, GVP was approximately $60 million lower than the fishery’s maximum recorded value of $93.7 million in 2001-02, a year when both catches and prices were strong for yellowfin tuna, bigeye tuna and billfish.

Biological status of major species in the fishery

The Bureau of Rural Sciences (BRS) publishes stock assessment results for the main target species of all Commonwealth fisheries in its annual Fisheries Status Report (Larcombe and Begg 2008). Because of the large number of species targeted in the ETBF, brief descriptions of the biological status of only the key species targeted in the fishery are listed in table 1 as outlined by Larcombe and Begg (2008).

1	Biological status of key species

Species

Status

Yellowfin tuna

Not overfished but subject to overfishing.

Bigeye tuna

Not overfished but subject to overfishing.

Broadbill swordfish

Stock status uncertain.

Albacore tuna

Not overfished and not subject to overfishing.

Striped marlins

Stock status uncertain.

Source: Larcombe and Begg 2008.

Management of the fishery

Commercial fishing of major tuna and billfish species in the ETBF is regulated by the Commonwealth government through the Eastern Tuna and Billfish Fishery Management Plan 2005, which was adopted in October 2005. Under the plan, annual fishing permits will be replaced by statutory fishing rights (SFRs) (AFMA 2005a). When SFRs are granted, longline SFRs will restrict the number of branchline clips (hooks) available to operators using longline methods on a yearly basis and minor line SFRs will define the maximum number of lines to be used at any one time by minor line operators. Operators in both sectors will also need an additional permit to operate in the Coral Sea Zone, formerly referred to as Zone E. All other management zones in the fishery have been removed under the new management plan.
Until SFRs are granted, the fishery will continue to be managed by annual fishing permits (through transitional arrangements under the Management Plan). Species-specific arrangements are also in place for southern bluefin tuna, broadbill swordfish and albacore (box 1).

The fishery has recently undergone significant change following the Australian Government’s Securing Our Fishing Future structural adjustment package implemented in 2006. The package aimed to address overfishing and rebuild overfished stocks. It included a $149 million fishing concession buyback and involved a voluntary tender process to allow individual fishing businesses to leave the industry. The ETBF was one of the fisheries targeted in the buyback. The buyback concluded in December 2006 and resulted in 99 longline permits and 112 minor line permits being surrendered from the ETBF (Abetz 2006).

Following the buyback, a harvest strategy framework (HSF) was developed in response to the Minister’s Direction aimed at addressing and eliminating overfishing in Commonwealth fisheries. The framework includes a decision tree that defines rules and subsequent catch adjustments for each target species. The decision tree will guide decisions under the HSF using information regarding catch rates of target species across different size classes in combination with predefined reference levels and target points. The HSF is scheduled to be implemented in 2008 (Larcombe and McLoughlin 2007).

Another aspect of the Minister’s Direction relating to the ETBF was the implementation of output controls in the form of individual transferable quotas (ITQs) by 2010 unless a strong case can be made that this would not be cost-effective. The adoption of ITQs in the ETBF is currently being considered under this direction.

box 1

Species-specific management arrangements in the eastern tuna and billfish fishery

Southern bluefin tuna
ETBF permits do not allow fishing for southern bluefin tuna (SBT). Therefore, every year, a SBT core and buffer zone is set by AFMA in southern waters of the fishery. The boundaries of the zone are set and altered by AFMA (usually fortnightly), primarily using CSIRO modelling results and observer data (AFMA 2007a). Vessels operating in these zones must hold minimum amounts of SBT quota at relevant times of the year (normally June to November). In 2008, a minimum of 500 kilograms of SBT quota must be held by operators fishing in the zone.

Broadbill swordfish
Broadbill swordfish are currently managed using a competitive TAC. In 2007-08, the TAC was set at 1400 tonnes. To ensure the TAC is not exceeded, cumulative catch trigger limits are applied on a monthly basis. If a monthly cumulative catch trigger is exceeded, all permits are subjected to a ten swordfish bycatch limit per trip until catches are reduced to an acceptable level. These interim measures apply until the cessation of the transitional management arrangements under the new ETBF Management Plan (Rundle 2005).

Albacore tuna
Increased targeting of albacore in 2006 led to the development of interim management arrangements for this species in 2007. A competitive TAC of 3,200 tonnes was introduced for an area of water where the majority of albacore had been caught. Operators were required to register for access to this albacore area or be subject to an albacore limit of 200 fish per trip when operating in the area (Norris 2007). Given lower than expected albacore catches in 2007, the Eastern Tuna Management Advisory Committee (ETMAC) recommended that the 2007 albacore management arrangements were no longer required in 2008. Instead, a review of the albacore sector would be conducted if the total catch of albacore in the ETBF reached 2000 tonnes; or at the mid-year meeting of the Eastern Tuna Resource Assessment Group (ETRAG) (whichever came first). The review was undertaken by ETRAG at its mid-year meeting in July 2008. A number of catch based performance indicators had been breached but this was due to reduced targeting of albacore rather than overfishing. It was subsequently decided that the species would be managed under the ETBF Harvest Strategy (as is the case for other key species in the fishery) (AFMA 2008).

Boats surveyed

Nearly all of the landed catch in the fishery is caught by longliners. Consequently, only the longline fleet was surveyed. For the purpose of the survey, the target population was defined as longline endorsed ETBF boats which recorded a catch in the fishery of greater than 1 tonne in the survey years. In 2005-06 the population was 91 vessels, of which 34 were sampled. In 2006-07 the population was 73 vessels, of which 33 were sampled.

The population was further divided into two sub-groups – ‘broadbill boats’ and ‘non-broadbill boats’. Broadbill boats were defined as boats which caught more than 10 tonnes of broadbill swordfish while non-broadbill boats were defined as those which caught less than 10 tonnes. In 2005-06 the total population comprised 37 broadbill boats, of which 22 were sampled, and 54 non-broadbill boats, of which 12 were sampled. In 2006-07 the total population comprised 28 broadbill boats, of which 14 were sampled, and 45 non-broadbill boats, of which 19 were sampled.

Financial performance of the fishery

Key measures of the financial performance of the entire longline fishing fleet plus the financial performance of broadbill and non-broadbill boats are contained in table 2. Definitions of items contained in table 2 are included in appendix A at the end of this report.

Many boats which operate in the eastern tuna and billfish fishery also operate in other fisheries, such as the southern bluefin tuna fishery. Any receipts earned and costs incurred by these boats while operating in these other fisheries are included in the financial performance results in table 2.

Receipts

Average per boat total cash receipts for the entire fishery increased from approximately $501 000 in 2005-06 to almost $571 000 in 2006-07. This increase occurred due to a catch of relatively higher value being taken by fewer boats in 2006-07.

In 2006-07, average total cash receipts per boat were estimated to be approximately $828 000 for broadbill boats and $411 000 for non-broadbill boats.

Costs

For the fishery as a whole, average per boat total cash costs rose from $519 000 in 2005-06 to $590 000 in 2006-07. For broadbill boats, average total cash costs per boat rose to $838 000 in 2006-07, while for non-broadbill boats average total cash costs increased to $436 000. The increase in cash costs for the non-broadbill sector is largely because a number of broadbill boats with high costs in 2005-06 were reclassified as non-broadbill boats in 2006-07 as a result of lower broadbill catches. Many of these vessels caught higher amounts of albacore in 2006-07.

Labour costs were the highest single expense for the average boat in the fishery in 2005-06 and 2006-07. Crews are generally paid a percentage share of revenue in the fishery. As a result, average per boat labour costs increased in line with total cash receipts to $137 000 per boat in 2006-07, accounting for 23 per cent of total cash costs in that year. Labour costs include payments to skipper and crew, as well as shore based labour and the opportunity cost of owner and family labour (see appendix A for more detail).

Fuel was the second highest cost item on average in the fishery, estimated at $104 000 per boat in 2006-07 and making up 18 per cent of total cash costs. Fuel expense per boat was much higher in the broadbill fleet at $142 000 per boat in 2006-07 compared with $80 000 in the non-broadbill fleet in the same year.

Freight and marketing expenses were the third highest cost item for the average vessel in the fishery, estimated at approximately $96 000 per boat in 2006-07. Together, labour, fuel and freight and marketing expenditure accounted for 57 per cent of total cash costs for all boats in 2006-07.

Boat cash income and profit

The proportional increase in average total cash receipts between survey years was similar to the proportional increase in total cash costs per boat. As a result, boat cash income remained relatively constant at -$18 000 per boat in 2005-06 and -$19 000 per boat in 2006-07.

Average boat business profit, which is boat cash income less an allowance for depreciation, was estimated to be -$62 000 per boat in 2005-06 and -$71 000 per boat in 2006-07.

Similarly, profit at full equity (boat business profit plus interest, leasing and rent) is estimated to have declined from an average of -$33 000 per boat in 2005-06 to -$47 000 per boat in 2006-07. Profit at full equity represents the average return that would have been earned by the business unit had the boat and capital (including quota and licences) been fully owned by the operators. While interest, leasing and rent costs affect the financial position of the operator, they represent some profits that have been redistributed to other investors in the fishery.

Rates of return

The rate of return to boat capital is based on the value of boat capital (excluding the value of quota and licences) as if the operators wholly owned all assets so that the financial performance of all boats can be compared regardless of the operators’ equity in the business. The estimated average rate of return to boat capital (excluding the value of quota and licences) for the average vessel was negative in both years and decreased from -4.7 per cent in 2005-06 to -7.4 per cent in 2006-07.

For vessels in the broadbill fleet, the average rate of return to boat capital per boat was above that of the entire fleet but was still negative in both survey years at -3 per cent per boat in 2005-06 and -3.7 per cent per boat in 2006-07. For non-broadbill boats, the rate of return to boat capital was relatively more negative and deteriorated from -7 per cent per boat in 2005-06 to -11.6 per cent per boat in 2006-07.

The rate of return to full equity includes the value of quota and licences in addition to boat capital, and therefore provides an indication of the return to total capital invested in the business unit. It reflects changes in the value of quota and licences as well as changes in the profitability of the fishing operation — that is, the profit from fishing that accrues to the owners of capital.

The estimated value of capital including the value of quota and licences attached to each boat remained relatively constant between years and was $1.12 million in 2006-07. This value includes the estimated market value of quota and licences used by the average boat, including the value of non-ETBF endorsements, for example, state licences. The rate of return to full equity which shows the return to both capital and endorsement values declined from -2.9 per cent in 2005-06 to -4.3 per cent in 2006-07.

For boats in the broadbill fleet, the average rate of return to full equity was closer to zero relative to the average for the entire fleet, and remained relatively constant, declining from -2 per cent in 2005-06 to -2.4 per cent in 2006-07. For vessels in the non-broadbill fleet however, the average rate of return to full equity declined from -3.7 per cent in 2005-06 to -5.9 per cent in 2006-07.

2	Financial performance of boats in the eastern tuna and billfish fishery average per boat

broadbill

non-broadbill

all boats

2005-06

2006-07

2005-06

2006-07

2005-06

2006-07

Seafood receipts

737 302

(7)

791 073

(10)

301 703

(20)

394 267

(18)

478 815

(9)

546 466

(10)

Non-fishing receipts

35 365

(18)

36 679

(15)

13 838

(23)

16 286

(29)

22 591

(14)

24 108

(15)

Total cash receipts

772 667

(7)

827 751

(10)

315 541

(19)

410 552

(18)

501 405

(8)

570 574

(10)

Administration

10 136

(14)

10 027

(14)

11 565

(20)

14 775

(20)

10 984

(14)

12 954

(14)

Bait

59 288

(6)

47 243

(9)

20 294

(25)

18 231

(20)

36 148

(9)

29 359

(9)

Crew costs

163 937

(6)

185 947

(8)

86 217

(19)

106 683

(17)

117 817

(9)

137 086

(9)

Freight and marketing expenses

132 670

(7)

131 068

(12)

50 365

(27)

74 790

(20)

83 830

(10)

96 376

(12)

Fuel

150 474

(6)

142 465

(9)

60 017

(16)

80 338

(17)

96 796

(7)

104 168

(9)

Insurance

25 135

(7)

35 292

(8)

18 553

(10)

20 221

(12)

21 229

(6)

26 002

(7)

Interest paid

22 909

(20)

21 742

(27)

8 203

(33)

6 351

(42)

14 182

(17)

12 254

(23)

Licence fees and levies

12 747

(8)

10 625

(17)

16 143

(14)

9 303

(14)

14 762

(10)

9 810

(11)

Packaging

56 164

(18)

86 439

(20)

2 939

(46)

10 890

(42)

24 580

(17)

39 868

(18)

Repairs and maintenance

101 542

(7)

120 102

(11)

32 964

(17)

59 141

(15)

60 847

(7)

82 523

(9)

Other costs

44 619

(12)

46 637

(11)

33 124

(26)

35 062

(14)

37 798

(15)

39 502

(9)

Total cash costs

779 621

(5)

837 587

(8)

340 383

(16)

435 785

(15)

518 974

(7)

589 901

(8)

Boat cash income

–6 953

(239)

–9 836

(225)

–24 842

(74)

–25 233

(81)

–17 569

(73)

–19 327

(78)

less depreciation a

59 935

(9)

58 419

(11)

34 540

(20)

47 009

(14)

44 865

(10)

51 385

(9)

Boat business profit

–66 889

(25)

–68 255

(32)

–59 382

(35)

–72 241

(28)

–62 434

(23)

–70 712

(21)

plus interest leasing and rent

38 713

(15)

36 231

(23)

23 392

(32)

15 126

(26)

29 621

(17)

23 221

(17)

Profit at full equity

–28 176

(50)

–32 024

(60)

–35 990

(54)

–57 115

(39)

–32 813

(39)

–47 491

(33)

Capital

– excluding quota and licences

953 823

(7)

877 335

(6)

516 380

(21)

492 870

(18)

694 241

(10)

640 336

(9)

– including quota and licences

1 394 416

(5)

1 345 285

(4)

960 166

(11)

973 807

(15)

1 136 729

(6)

1 116 292

(8)

Rate of return

– to boat capital b

–3.0

(53)

–3.7

(61)

–7.0

(51)

–11.6

(39)

–4.7

(38)

–7.4

(32)

– to full equity c

–2.0

(53)

–2.4

(60)

–3.7

(51)

–5.9

(40)

–2.9

(38)

–4.3

(33)

a Depreciation adjusted for profit or loss on capital items sold. b Excluding value of quota and licences. c Including value of quota and licences.
Note: Figures in parentheses are relative standard errors. A guide to interpreting these is included in appendix A.

3	Net returns in the eastern tuna and billfish fishery, total for fishery, $2007-08

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

1999-00

Fishing receipts

19.6

(29)

21.7

(14)

25.9

(14)

46.3

(14)

74.6

(15)

87.7

(9)

81.4

(12)

Cash costs

18.1

(31)

20.8

(14)

24.1

(14)

39.4

(15)

61.9

(11)

70.4

(10)

65.4

(12)

Boat cash profit

1.5

(53)

0.9

(76)

1.8

(38)

6.9

(19)

12.7

(42)

17.3

(33)

15.9

(21)

less owner and family labour

(30)

1.9

(13)

3.2

(20)

5.5

(14)

10.6

(12)

10.3

(13)

9.8

(19)

less opportunity cost

of capital

1.1

(34)

1.4

(16)

1.8

(22)

2.2

(20)

4.3

(22)

4.6

(20)

4.4

(23)

less depreciation

1.8

(32)

2.4

(16)

2.7

(21)

3.7

(20)

6.7

(21)

7.9

(19)

6.7

(23)

plus interest leasing and

management fees

2.3

(32)

2.6

(16)

2.7

(16)

3.6

(14)

8.1

(9)

13.1

(20)

(18)

Net return — excluding

management costs

–1.0

(110)

–2.2

(35)

–3.3

(36)

–0.8

(134)

–0.8

(745)

7.6

(76)

(94)

Management costs

1.2

1.1

0.9

1.3

1.4

Net return —including

management costs

–3.4

–4.3

–1.7

–1.8

6.3

1.6

Number of active boats

no.

118

143

146

143

Net return (excl.

management costs) per boat

–11 191

(110)

–26 709

(35)

–34 892

(36)

–6 995

(134)

–5 350

(745)

52 008

(76)

21 007

(94)

Management costs per boat

13 862

11 265

7 724

6 908

8 744

9 965

Net return (incl.

management costs) per boat

–40 571

–46 156

–14 718

–12 258

43 264

11 042

2000–01

2001–02

2002–03

2003–04

2004–05

2005–06

2006–07

Fishing receipts

94.4

(9)

102.4

(8)

82.4

(5)

68.9

(11)

62.1

(14)

45.8

(12)

41.2

(12)

Cash costs

77.5

(8)

91.6

(9)

87.3

(5)

73.5

(11)

62.2

(15)

(11)

43.1

(10)

Boat cash profit

16.9

(22)

10.8

(25)

–4.9

(50)

–4.6

(72)

–0.2

(1292)

–2.2

(62)

–1.9

(67)

less owner and family labour

11.5

(12)

6.7

(20)

4.6

(15)

(25)

2.6

(19)

1.6

(26)

1.4

(29)

less opportunity cost

of capital

4.4

(12)

4.9

(15)

5.5

(8)

5.1

(15)

3.4

(15)

(12)

2.5

(9)

less depreciation

7.5

(13)

7.1

(15)

8.8

(9)

7.4

(16)

5.3

(15)

4.3

(12)

3.9

(9)

plus interest leasing and

management fees

10.9

(13)

6.3

(11)

6.9

(7)

8.1

(20)

5.4

(18)

4.1

(14)

2.5

(16)

Net return — excluding

management costs

4.5

(86)

–1.6

(215)

–17.0

(14)

–13.0

(19)

–6.1

(28)

–7.0

(21)

–7.1

(17)

Management costs

1.5

2.4

2.9

3.1

2.7

2.9

3.1

Net return — including

management costs

–4.0

–19.9

–16.1

–8.8

–9.9

–10.2

Number of active boats

no.

132

141

138

132

112

Net return (excl. management

costs) per boat

33 771

(86)

–11 092

(215)

–122 885

(14)

–98 381

(19)

–54 403

(28)

–76 391

(21)

–97 718

(17)

Management costs per boat

11 194

17 340

21 113

23 615

24 197

32 306

41 811

Net return (incl. management

costs) per boat

22 576

–28 432

–143 998

–121 997

–78 599

–108 697

–139 530

na Not applicable.
Note: figures in parentheses are relative standard errors. A guide to interpreting these is included in appendix A. Net returns including management costs not available for 1993-94.

Economic performance of the fishery

The results presented in table 2 show changes in the average receipts and costs of boats which operated in the eastern tuna and billfish fishery in 2005-06 and 2006-07. However, they shed little light on the economic performance of the fishery because they include receipts and costs earned and incurred from operations in other fisheries and because no allowance is made for the opportunity costs of capital employed in the fishery. Table 3 shows boat cash profit and net economic returns generated from the eastern tuna and billfish fishery for the period 1993-94 to 2006-07. Only receipts and costs estimated to have been earned and incurred in the eastern tuna and billfish fishery are included.

Total fishing receipts in the fishery gradually increased from the early 1990s with the expansion of the fishery and reached a peak in 2001-02. However, receipts have since steadily fallen, declining to $41.2 million in 2006-07. Boat cash profit, which is fishing income less cash costs, also steadily increased for a period in the 1990s, reaching a peak of $17.3 million in 1998-99. Since 2000-01, however, boat cash profit has fallen significantly. In 2002-03 it became negative for the first time and has remained negative since. In 2006-07 boat cash profit in the fishery was estimated at -$1.9 million.

Net economic return is a measure of economic performance which incorporates depreciation expenses, the opportunity costs of owner and family labour and the opportunity cost of capital — costs that are not accounted for in boat cash profit. Net economic returns also include a deduction of fishery management costs. These management costs include both management levies paid for by fishery operators (accounted for under ‘licence fees and levies’ in table 2) as well as non-recovered management costs paid for by government (not accounted for in table 2). An explanation of the calculation of net economic returns is included in appendix B.

Net economic returns (including management costs) in the ETBF ranged between -$4.3 and $6.3 million in real terms during the period between 1994-95 and 2001-02 (figure c). The peak of $6.3 million in 1998-99 coincided with the development of the swordfish component of the fishery. Following this period, net economic returns fell dramatically, becoming negative in 2001-02 and have remained negative since then. The recent decline in boat numbers since 2002-03 (when net economic returns were at a record low) has coincided with some improvement in total net economic returns to the fishery. However, the average net economic return per boat in 2006-07 remains low at -$139 530.

It is important to note that factors outside the control of fishery management influence both net economic returns and other measures of financial return in the fishery. For example, movements of the Australian dollar affect the prices received by fishers. Also, the prices of inputs, such as fuel and gear, are not controlled by fishery managers. However, the fishery manager can attempt to ensure profits are maximised given prevailing input and output prices. This may require periodic review of the optimal level of catch and effort.