An Analysis of the Relationship between Fish Harvesting and Processing Sectors

July 1, 2004 through June 30, 2005

Dr. Di Jin
Marine Policy Center, MS 41
Woods Hole Oceanographic Institution
Woods Hole, MA 02543

PROJECT SUMMARY
This is a collaborative research between the WHOI Marine Policy Center and the NMFS Northeast Fisheries Science Center. The study is related to the CICOR theme area Coastal Ocean and Near-Shore Processes (CICOR Task II). We understand that research in this theme area is extremely broad, including issues related to fisheries management. In this project, we examine the effects of changing marine resource conditions on the coastal economy.

The commercial fisheries of the Gulf of Maine and Georges Bank are among the most important in the Nation. New Bedford, Portland, Point Judith, and Gloucester rank among the top-grossing fishing ports in the United States, and more than $692 million worth of fresh and partially processed fish was landed in New England in 2002. However, commercial landings of finfish and shellfish in New England have declined over the last fifty years from over one billion pounds in 1950 to 575 million pounds in 2002. Commercial landings of the traditional mainstay species of Atlantic cod, haddock, and yellowtail flounder have declined much more substantially as these stocks have been overfished for much of the time.

The fish-harvesting sector is linked tightly to an intricate network of onshore wholesaling, processing, and retail trade businesses. Together, the commercial fish harvesting and processing sectors in New England employ more than 16,000 people, and the annual total output value from these sectors exceeds $1.5 billion. An economic input-output analysis indicates that every $1 million increase in the sales of fish harvests leads to $1.4 million in economic impacts capturing direct, indirect and induced effects in economic sectors that both supply the fishing industry and purchase its products.

An analysis of all of the potential economic gains that could result from rebuilt fish stocks is critical. Clearly, the revenue from commercial fishing could be much higher if all of the groundfish resources were rebuilt. The economic gains might not be limited to only the harvesting sector. For example, the downstream processing sector might also grow as a consequence of rebuilt groundfish stocks. To date, however, the relationship between the harvesting and processing sectors has not been examined through a carefully designed empirical analysis.

The objective of this study was to develop a characterization of the relationship between fish harvesting and processing in New England. The characterization should enable improved assessment of the economic growth in the processing sector due to rebuilding of groundfish stocks. The hypothesis that economic output from the New England processing sector is not related to changes in the supply of fish from local harvests is the focus of the study. If this hypothesis is rejected, then the economic ramifications of low resource levels may have been and continue to be deeper and more widespread than is currently appreciated. Further, the relationship between the output from the fish processing sector and fish imports is examined. The study results suggest that output from the fish processing sector is jointly determined by local fish landings and fish imports. The level of imports is an important factor in the management of fish processors. Local landings were found to Granger-cause processing in several cases, implying that past resource conditions indeed affected present processing output. In
contrast, no significant causality was found between processing and landings. Given the low abundance stock condition during the study period, one would not expect processing to drive harvest.

A unidirectional causality was also found from processing to imports: processors import more fish when local landings decline. All identified Granger causalities in the study existed only at aggregate (all species) level, suggesting that the cause and effect relationship is weak at the individual species level. This is due to inter-species substitution as well as substitution among different raw fish suppliers (e.g., local landings versus imports).

The study findings indicate that firms in the fish processing sector optimize their business operations over multiple species and multiple supply sources. Although an increase in local fish landings generally leads to an expanded seafood processing sector, the interaction may be complex, due to various substitution effects. A clearer understanding of these substitution effects will improve assessment of the economic gains accruing from rebuilding fisheries in New England.

PUBLICATION
Jin, D., P. Hoagland and E. Thunberg. 2004. An analysis of the relationship between fish harvesting and processing sectors in New England. Marine Resource Economics, Submitted.

INTERACTION WITH NOAA
This is a collaborative research between the WHOI Marine Policy Center (MPC) and the NMFS Northeast Fisheries Science Center. Di Jin and Porter Hoagland of MPC worked closely with Dr. Eric Thunberg of the Social Sciences Branch at the Northeast Fisheries Science Center (Woods Hole) throughout the project.

Last updated: August 19, 2008