That’s why the industry is losing

Jan Fredrik Frantzen

6. June 2006



The last 11 years have given a profit over 5 billion NOK in the fisheries for pelagic species such as herring and mackerel. But the profit ends up with the fishermen. The industry is left with the "Old Maid".

A new report from Fiskeriforskning shows that the fishermen are left with the majority of the added value while the consumption industry, which produces finished products, winds up with none of this profit.

Scientists Audun Iversen and Bjørn Inge Bendiksen believe several factors can help explain this.

Closed, one-time auctions give higher prices

The consumption industry’s dilemma is that it falls between two stools – or between the fishermen and the consumers, if you will. The system with closed, one-time auctions for pelagic fish is helping push up the prices for fish.

"This auction system allows the industry to make only one bid on the fish that’s put out for sale, and they don’t get to know what the other buyers are bidding", says Iversen.

Consequently, people quickly end up bidding above their means because they want to guarantee themselves the catch and thus their own production. Scientists call this "the winner’s curse", and it favours the fishermen, who get a good price for the catch.

Overcapacity and short season

The scientists have also studied the catch patterns for these types of fish. Herring and mackerel are available and maintain good quality in the autumn and early in the winter. This makes for a short season and large catch volume as long as the fishery is operating.

The fishing boats have also gotten bigger and can take upwards to two thousand tonnes of fish at a time. In recent years, the industry has therefore increased its capacity in order to receive larger loads, and these investments cost money. A lot of money.

"This large production capacity stands still the rest of the year, and then the industry doesn’t make money", says Iversen.

"On the other hand, there’s also an overcapacity in the fishing fleet, but they still make money even though they operate only three to four months of the year", he says in closing.

The report on added value in the pelagic fishing industry will be complete in the summer of 2006 and is being prepared on assignment from the Pelagic Forum and the Aquaculture Industry Research Fund (FHL).

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