Australian Fisheries Surveys Report 2008

Simon Vieira, Roslyn Wood and Tara Causer

October 2008

Australian Fisheries Surveys Report 2008

Results for selected fisheries 2005-06 and 2006-07

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© Commonwealth of Australia 2008

This work is copyright. The Copyright Act 1968 permits fair dealing for study, research, news repor ting, criticism or review. Selected passages, tables or diagrams may be reproduced for such purposes provided acknowledgment of the source is included. Major extracts or the entire document may not be reproduced by any process without the written permission of the Executive Director, ABARE.

ISSN 1325-8893

Vieira, S, Wood, R and Causer, T 2008, Australian Fisheries Surveys Report 2008, Results for selected fisheries 2005-06 and 2006-07, ABARE Report prepared for the Fisheries Resources Research Research Fund, Canberra, October.

Australian Bureau of Agricultural and Resource Economics

Postal address GPO Box 1563 Canberra ACT 2601 Australia

Location 7B London Circuit Canberra ACT 2601

Switchboard +61 2 6272 2000

Facsimile +61 2 6272 2001

ABARE is a professionally independent government economic research agency.

ABARE project 3280

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Foreword

This repor t is another edition in a series of regular fisheries sur vey repor ts, which have been under taken ever y year since the early 1990s. In 2008, ABARE completed sur veys of the eastern tuna and billfish fisher y and the southern and eastern scalefish and shark fisher y. This repor t contains estimates of the financial and economic per formance of each fisher y based on the data collected in these sur veys.

ABARE sur vey information is used by fisheries policy makers, managers, researchers and the fishing industr y. The Australian Government Depar tment of Agriculture, Fisheries and Forestr y and the Australian Fisheries Management Authority use the information to monitor the per formance of Commonwealth fisheries, and the impact of their management policies. As sur vey findings are made publicly available, the fishing industr y can also independently assess their per formance and the impact of management policies.

Funding for ABARE’s fisheries sur veys repor ts is provided by the Fisheries Resources Research Fund.

Phillip GlydeExecutive DirectorOctober 2008

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Acknowledgments

ABARE’s fisheries sur veys program involves a cooperative effor t among industr y, fisheries management, research agencies and ABARE staff.

IndustryABARE sur veys are voluntar y. The cooperation of fishing operators and their accountants in providing data is essential for the success of the fisheries sur veys. Without this assistance the sur veys would not be possible. The advice and comments on a draft of the repor t provided by industr y representatives and representatives of relevant Management Advisor y Committees (MACs) are also greatly appreciated.

Management and research agenciesThe Australian Fisheries Management Authority (AFMA) provided the logbook information necessar y to select a sample as well as information on fisher y management costs. In par ticular, Thim Skousen and David Galeano provided valuable assistance.

Funding for the project was provided by the Fisheries Resources Research Fund which is administered by the Australian Government Depar tment of Agriculture, Fisheries and Forestr y.

ABARE staffSimon Vieira carried out the sample design and data analysis. Laura Hohnen, John Kemp and Graham McInnes assisted with data collection. Programming and computer systems suppor t was provided by Ken Colber t and Mark Neilsen. Rober t Cur totti and Peter Gooday provided comments on the repor t.

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Contents1 Introduction and summary 1

Key results from the sur veys 1

2 Eastern tuna and billfish fishery – longline and minor line 3

The fisher y 3

Biological status of major species in the fisher y 3

Management of the fisher y 5

Boats sur veyed 7

Financial per formance of the fisher y 7

Economic per formance of the fisher y 10

3 Southern and eastern scalefish and shark fishery 13

The fisher y 13

Biological status of major species in the fisher y 15

Management of the fisher y 15

Results for the Commonwealth trawl sector 20

Results for the gillnet, hook and trap sector 24

Appendix

A Survey methods and definitions 29

Collecting economic sur vey data 29

The 2008 sur veys 30

Sample weighting 30

Reliability of estimates 30

Use of relative standard errors 32

Comparing estimates 32

Non-sampling errors 33

B Estimating the economic performance of Commonwealth managed fisheries 34

Net economic returns 34

References 36

Eastern tuna and billfish fisher y — longline and minor line 36

Southern and eastern scalefish and shark fisher y 36

Previous fishery survey reports 38

Australian fi sheries survey 2008 abare.gov.au

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Maps1 Location of the eastern tuna and billfish fisher y 4

2 Location of the Commonwealth trawl sector 14

3 Location of the gillnet, hook and trap sector 17

FiguresA Landed catch eastern tuna and billfish fisher y — longline

and minorline 3

B Real gross value of production eastern tuna and billfish fisher y — longline and minorline $2007-08 3

C Boat cash profit and net economic returns total for eastern tuna and billfish fisher y, $2007-08 12

D Landed catch Commonwealth trawl sector 14

E Real gross value of production Commonwealth trawl sector, $2007-08 15

F Landed catch gillnet, hook and trap sector 15

G Real gross value of production gillnet hook and trap sector, $2007-08 16

H Boat cash profit and net economic returns total for the Commonwealth trawl sector, $2007-08 24

I Boat cash profit and net economic returns total for the gillnet hook and trap sector, $2007-08 28

Tables1 Biological status of key species 5

2 Financial per formance of boats in the eastern tuna and billfish fisher y average per boat 8

3 Boat cash profit and net economic returns in the eastern tuna and billfish fisher y total for fisher y, $2007-08 11

4 Biological status of key species southern and eastern scalefish and shark fisher y 16

5 Total allowable catches – southern and eastern scalefish and shark fisher y 19

6 Financial per formance of boats operating in the Commonwealth trawl sector average per boat 21

7 Boat cash profit and net economic returns in the Commonwealth trawl sector total for sector, $2007-08 23

8 Financial per formance of boats operating in the gillnet, hook and trap sector average per boat 25

9 Boat cash profit and net economic returns in the gillnet, hook and trap sector total for sector, $2007-08 27

Boxes1 Species-specific management arrangements in the eastern

tuna and billfish fisher y 6

2 Definitions of key variables 31

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Estimates of the financial and economic per formance of two key Common-wealth fisheries are presented in this repor t. Estimates are produced using data collected from fisher y operators sur veyed by ABARE during 2008. ABARE has been under taking sur veys of selected Commonwealth fisheries since the early 1980s. The current fisheries sur veys program has been running since 1992 and only focuses on major Commonwealth fisheries. A list of earlier fisheries sur veys repor ts is presented at the end of this repor t.

Among other things, the sur vey data are used to estimate net economic returns which is the key economic per formance indicator referred to in the Fisheries Management Act 1991. As specified in that act, the Australian Fish-eries Management Authority (AFMA) is obliged to pursue the maximisation of net economic returns to the Australian community from the management of fisheries. Estimates of net economic returns can be used to assess AFMA’s per formance against this objective and can also be used to identif y what factors other than management have led to changes in a fisher y ’s economic per formance.

In 2008, ABARE sur veyed two fisheries — the eastern tuna and billfish fisher y and the southern and eastern scalefish and shark fisher y. For the latter fisher y, the focus was on two sectors — the Commonwealth trawl sector and the gillnet, hook and trap sector. Information was collected from fisher y opera-tors for the 2005-06 and 2006-07 financial years. Estimates of the financial and economic per formance of these fisheries generated from the sur vey data collected are presented here.

Key results from the surveys

Eastern tuna and billfish fishery

Financial performance – per boat• Average per boat total cash receipts for the entire fisher y increased from

approximately $501 000 in 2005-06 to almost $571 000 in 2006-07 while average per boat total cash costs rose from $519 000 in 2005-06 to $590 000 in 2006-07. Labour, fuel and freight and marketing expenditure accounted for 57 per cent of total cash costs for all boats in 2006-07.

• The propor tional increase in average total cash receipts between sur vey years was similar to the propor tional 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.

• The average rate of return to full equity (including the value of quota and licences) declined from -2.9 per cent in 2005-06 to -4.3 per cent in 2006-07.

Introduction and summary1


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Economic performance – fishery as a whole• Since 2001-02, receipts have fallen steadily at a faster rate than costs.

As a result, net economic returns (including management costs) have been negative since 2001-02. In 2006-07, net economic returns were -$10.2 million.

Southern and eastern scalefish and shark fishery

Commonwealth trawl sector

Financial performance – per boat• Average total cash receipts per boat rose from $673 000 in 2005-06 to

$765 000 in 2006-07. Average total cash costs per boat also increased from $596 000 in 2005-06 to $634 000 in 2006-07. Crew costs, fuel costs, freight and marketing expenses and repair and maintenance costs accounted for 79 per cent of total cash costs in both years.

• Average boat cash income increased from $77 000 per boat in 2005-06 to $130 000 per boat in 2006-07.

• The average rate of return to full equity (including the value of quota and licences) increased from 6.2 per cent in 2005-06 to 9.5 per cent in 2006-07.

Economic performance – sector as a whole• Fishing receipts in the sector have continued to decline since 2000-01, falling

from $83 million in 2000-01 to $49.2 million in 2006-07. However, after several years of negative returns between 2002-03 and 2004-05, the sector’s economic performance improved in 2005-06 and 2006-07 with net economic returns (including management costs) rising to $1.5 million and $3.5 million respectively.

Gillnet, hook and trap sector

Financial performance – per boat• Average total cash receipts increased from $325 000 per boat in 2005-06

to $398 000 in 2006-07. Average total cash costs per boat also increased between these two years from $300 000 to $353 000 per boat in 2006-07 — an increase of approximately 18 per cent.

• As a result, average boat cash income increased from $25 000 per boat in 2005-06 to $46 000 per boat in 2006-07.

• The average rate of return to full equity (including the value of quota and licences) rose from 4.8 per cent in 2005-06 to 6. 4 per cent in 2006-07.

Economic performance – sector as a whole• Net economic returns (including management costs) in real terms showed

an increasing trend over the period from 1998-99 to 2003-04 and peaked in 2003-04 at $4 million. Net economic returns were lower in 2005-06 and 2006-07 at $1 million and $1.5 million respectively.

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The fisheryThe eastern tuna and billfish fisher y (ETBF) is a multispecies fisher y extending from the tip of Cape York to the South Australian-Victorian border, encompassing the waters around Lord Howe and Nor folk Islands (map 1). The fisher y suppor ts 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 fisher y ’s catch.

Key tuna species targeted in the fisher y 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 fisher y ’s catch (figure a). Since 2004-05 , however, the catch composition of the ETBF has altered as operators have shifted effor t 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 fisher y ’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 fisher y ’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 fisheryThe Bureau of Rural Sciences (BRS) publishes stock assessment results for the main target species of all Commonwealth fisheries in its annual Fisheries Status Repor t (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 fisher y are listed in table 1 as outlined by Larcombe and Begg (2008).

Eastern tuna and billfish fishery – longline and minor line2


4

Papua New Guinea


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Management of the fisheryCommercial fishing of major tuna and billfish species in the ETBF is regulated by the Commonwealth government through the Eastern Tuna and Billfish Fisher y Management Plan 2005 , which was adopted in October 2005 . Under the plan, annual fishing permits will be replaced by statutor y 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 fisher y have been removed under the new management plan.

Until SFRs are granted, the fisher y 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 fisher y 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 over fishing and rebuild over fished stocks. It included a $149 million fishing concession buyback and involved a voluntar y tender process to allow individual fishing businesses to leave the industr y. 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 har vest strateg y framework (HSF) was developed in response to the Minister ’s Direction aimed at addressing and eliminating over fishing 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

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 Beg g 2008.


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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).

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, ever y year, a SBT core and buffer zone is set by AFMA in southern waters of the fisher y. The boundaries of the zone are set and altered by AFMA (usually for tnightly), primarily using CSIRO modelling results and obser ver 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 kilo-grams 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 trig ger limits are applied on a monthly basis. If a monthly cumulative catch trig ger 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 competi-tive 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 Advisor y 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) (which-ever came first). The review was under taken by ETRAG at its mid-year meeting in July 2008. A number of catch based per formance indicators had been breached but this was due to reduced targeting of albacore rather than over fishing. It was subsequently decided that the species would be managed under the ETBF Har vest Strateg y (as is the case for other key species in the fisher y) (AFMA 2008).


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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.

Boats surveyedNearly all of the landed catch in the fisher y is caught by longliners. Consequently, only the longline fleet was sur veyed. For the purpose of the sur vey, the target population was defined as longline endorsed ETBF boats which recorded a catch in the fisher y of greater than 1 tonne in the sur vey 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 fisheryKey measures of the financial per formance of the entire longline fishing fleet plus the financial per formance 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 repor t.

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

ReceiptsAverage per boat total cash receipts for the entire fisher y 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.


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

aver age 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 .


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CostsFor the fisher y 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 fisher y in 2005-06 and 2006-07. Crews are generally paid a percentage share of revenue in the fisher y. 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 oppor tunity cost of owner and family labour (see appendix A for more detail).

Fuel was the second highest cost item on average in the fisher y, 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 fisher y, 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 profitThe propor tional increase in average total cash receipts between sur vey years was similar to the propor tional 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


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position of the operator, they represent some profits that have been redistributed to other investors in the fisher y.

Rates of returnThe 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 per formance 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 sur vey 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.

Economic performance of the fisheryThe results presented in table 2 show changes in the average receipts and costs of boats which operated in the eastern tuna and billfish fisher y in 2005-06 and 2006-07. However, they shed little light on the economic


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2000–01 2001–02 2002–03 2003–04 2004–05 2005–06 2006–07

Fishing receipts $m 94.4 (9) 102.4 (8) 82.4 (5) 68.9 (11) 62.1 (14) 45.8 (12) 41.2 (12)

Cash costs $m 77.5 (8) 91.6 (9) 87.3 (5) 73.5 (11) 62.2 (15) 48.0 (11) 43.1 (10)

Boat cash profit $m 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 $m 11.5 (12) 6.7 (20) 4.6 (15) 4.0 (25) 2.6 (19) 1.6 (26) 1.4 (29)

less opportunity cost

of capital $m 4.4 (12) 4.9 (15) 5.5 (8) 5.1 (15) 3.4 (15) 3.0 (12) 2.5 (9)

less depreciation $m 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 $m 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 $m 4.5 (86) –1.6 (215) –17.0 (14) –13.0 (19) –6.1 (28) –7.0 (21) –7.1 (17)

Management costs $m 1.5 na 2.4 na 2.9 na 3.1 na 2.7 na 2.9 na 3.1 na

Net return — including

management costs $m 3.0 na –4.0 na –19.9 na –16.1 na –8.8 na –9.9 na –10.2 na

Number of active boats no. 132 141 138 132 112 91 73

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 na 17 340 na 21 113 na 23 615 na 24 197 na 32 306 na 41 811 na

Net return (incl. management

costs) per boat $ 22 576 na –28 432 na –143 998 na –121 997 na –78 599 na –108 697 na –139 530 na

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 .

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 $m 19.6 (29) 21.7 (14) 25 .9 (14) 46.3 (14) 74 .6 (15) 87.7 (9) 81. 4 (12) Cash costs $m 18.1 (31) 20.8 (14) 2 4 .1 (14) 39. 4 (15) 61.9 (11) 70. 4 (10) 65 . 4 (12) Boat cash profit $m 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 $m 2.0 (30) 1.9 (13) 3 .2 (20) 5 .5 (14) 10.6 (12) 10.3 (13) 9.8 (19)less oppor tunity cost of capital $m 1.1 (34) 1. 4 (16) 1.8 (22) 2.2 (20) 4 .3 (22) 4 .6 (20) 4 . 4 (23)less depreciation $m 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 $m 2.3 (32) 2.6 (16) 2.7 (16) 3 .6 (14) 8.1 (9) 13 .1 (20) 8.0 (18)Net return — excluding management costs $m –1.0 (110) –2.2 (35) –3 .3 (36) –0.8 (134) –0.8 (745) 7.6 (76) 3 .0 (94)Management costs $m na na 1.2 na 1.1 na 0.9 na 1.0 na 1.3 na 1. 4 na

Net return —including management costs $m na na –3 . 4 na –4 .3 na –1.7 na –1.8 na 6.3 na 1.6 na Number of active boats no. 85 84 94 118 143 146 143 Net return (excl. management costs) per boat $ –11 191 (110) –26 709 (35) –3 4 892 (36) –6 995 (134) –5 350 (745) 52 008 (76) 21 007 (94)Management costs per boat $ na na 13 862 na 11 265 na 7 72 4 na 6 908 na 8 74 4 na 9 965 naNet return (incl. management costs) per boat $ na na –40 571 na –46 156 na –14 718 na –12 258 na 43 264 na 11 042 na


12

per formance of the fisher y because they include receipts and costs earned and incurred from operations in other fisheries and because no allowance is made for the oppor tunity costs of capital employed in the fisher y. Table 3 shows boat cash profit and net economic returns generated from the eastern tuna and billfish fisher y 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 fisher y are included.

Total fi shing receipts in the fi shery gradually increased from the early 1990s with the expansion of the fi shery and reached a peak in 2001-02. However, receipts have since steadily fallen, declining to $41.2 million in 2006-07. Boat cash profi t, which is fi shing 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 profi t has fallen signifi cantly. In 2002-03 it became negative for the fi rst time and has remained negative since. In 2006-07 boat cash profi t in the fi shery was estimated at -$1.9 million.

Net economic return is a measure of economic per formance which incorporates depreciation expenses, the oppor tunity costs of owner and family labour and the oppor tunity cost of capital — costs that are not accounted for in boat cash profit. Net economic returns also include a deduction of fisher y management costs. These management costs include both management levies paid for by fisher y 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 fisher y. 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 fisher y. However, the average net economic return per boat in 2006-07 remains low at -$139 530.

It is impor tant to note that factors outside the control of fisher y management influence both net economic returns and other measures of financial return in the fisher y. 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 fisher y managers. However, the fisher y 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 effor t.

13

The fisheryThe southern and eastern scalefish and shark fisher y (SESSF) is a complex, multi-sector, multi-gear and multi-species fisher y. It covers an area from southern Queensland, around Tasmania and west to Cape Leeuwin in Western Australia. The fisher y operates under complex jurisdictional arrangements which exist between the Australian Government and the various state governments. Major por ts used by the fleet include Ulladulla, Eden, Lakes Entrance, Hobar t and Por tland.

The SESSF was established in 2003 following AFMA’s implementation of the Southern and Eastern Scalefish and Shark Fisher y Management Plan 2003 . The management plan provided for the merger of three previously separate Commonwealth fisheries in order to create the SESSF (Smith and Wayte 2004). The SESSF is now divided into four separate sectors managed under a common set of management objectives. The sectors include:

• the Commonwealth trawl sector;• the gillnet, hook and trap sector; • the Great Australian Bight trawl sector; and• the east coast deepwater trawl sector.

ABARE’s economic sur vey this year was limited to the Commonwealth trawl sector and the gillnet hook and trap sector.

Commonwealth trawl sectorPreviously managed as the south east trawl fisher y, the Commonwealth trawl sector (CTS) is one of Australia’s oldest commercial fishing sectors, commencing operation off Sydney in the early 1900s (DEH 2003). The sector is the largest in the SESSF, extending south from Barranjoey Point (nor th of Sydney) around the New South Wales, Victorian and Tasmanian coastlines to Cape Jer vis in South Australia (map 2).

The primar y har vesting method used in the sector is otter trawling, although a number of Danish seine vessels operate out of Lakes Entrance in Victoria (Smith and Wayte 2004). The total number of active trawlers in the CTS declined from 1992 to 2006, although total fleet capacity and

Southern and eastern scalefish and shark fishery3


14

horsepower in fact increased over this period (Larcombe and McLoughlin 2007). The recent Commonwealth funded structural adjustment buyout fur ther reduced the number of statutor y fishing rights (SFRs) and active vessels in the fisher y.

More than 100 species are routinely caught in the CTS, however, five key species constitute more than 60 per cent of the landed trawl tonnage. In 2006-07, total landings in the sector were approximately 16 300 tonnes, 47 per cent less than the peak catch of 30 600 tonnes in 2002-03 (figure d). The total 2006-07 catch included 3800 tonnes of blue grenadier, 2600 tonnes of tiger flathead, 910 tonnes of orange roughy, 2400 tonnes of silver warehou and 650 tonnes of ling.

After peaking at $98.2 million in 1997-98, the sector ’s gross value of production (GVP) steadily declined, falling to $46. 4 million in 2005-06 (figure e). Driving this decline were reductions in the total allowable catch of orange roughy, which resulted in the real production value of this species decreasing by $30. 4 million (83 per cent). In 2006-07, the real gross value of production increased by 21 per cent to $56. 4 million. This increase was primarily the result of higher prices for key quota species, particularly blue grenadier and tiger flathead. These two species combined accounted for 48 per cent of the sector ’s gross production value in 2006-07.


15

Gillnet, hook and trap sectorThe gillnet, hook and trap sector (GHTS) consists of what were previously the south east non-trawl fisher y and the southern shark fisher y. Both fisheries had been in operation for long periods of time prior to being merged into the GHTS; the south-east non-trawl fisher y has operated since the early 1900s and the southern shark fisher y since 1927 (AFMA 2004).

The sector extends south from southern Queensland to the South Australian - West Australian border and includes waters to the south of Tasmania (map 3). Gear types used in the sector include demersal gillnets, droplines, demersal longlines and traps. However, operators are only permitted to use gear types specified on their boat SFR or fishing permit (AFMA 2004).

The total landed catch for the GHTS declined from a peak of 5040 tonnes (whole weight equivalent) in 2004-05 to 4250 tonnes in 2006-07 — a drop of 16 per cent in two years (figure f ). Contributing to this decline was a 57 per cent decrease in landings of ling, from 890 tonnes in 2004-05 to 380 tonnes in 2006-07, as well as an 11 per cent drop in gummy shark landings, from 2450 tonnes (whole weight equivalent) in 2004-05 to 2190 tonnes in 2006-07. Gummy shark accounted for 52 per cent of total landings in 2006-07.

Compared with other sectors in the SESSF, the production value of the GHTS has remained relatively stable in recent years, averaging $25.2 million (in real terms) over the fi ve years to 2006-07. More recently, the real GVP for the sector increased slightly from $22.9 million in 2005-06 to $24.6 million in 2006-07 (fi gure g). This increase was largely the result of an increase in both landings and prices for blue eye trevalla and, to a lesser extent, gummy shark.

Biological status of major species in the fisheryThe Bureau of Rural Sciences (BRS) publishes stock assessment results for the main target species of all Commonwealth fisheries in its annual Fisheries Status Repor t (Larcombe and Begg 2008). A brief description of the most recent stock status of each of the quota species in the fisher y is presented in table 4.

Management of the fisheryManagement of the fisher y is predominantly based on output controls in the form of individual transferable quotas (ITQs) and total allowable catches (TACs). These were first introduced in the former south east trawl


16

fisher y for gemfish and orange roughy in 1988 and 1990, respectively. In 1992, AFMA fur ther expanded ITQ management in the south east trawl fisher y to a total of 16 target species, par tly in response to worsening economic conditions across the fisher y (Smith and Wayte 2004). Then in 1998, ITQ management was expanded to the non-trawl sector to cover catches of blue eye trevalla, blue warehou and ling, given increasing catches of these species in that sector. ITQ management of all quota managed species in the south east trawl fisher y was then expanded to

4 Biological status of key species in the southern and

eastern scalefish and shark fishery

Species Status

Blue eye trevalla Not overfished and not subject to overfishing. Blue grenadier Not overfished and not subject to overfishing.Blue warehou Stock status uncertain. Eastern school whiting Not overfished and not subject to overfishing.Flathead Not overfished and not subject to overfishing.Gemfish – eastern stock Overfished but is currently not subject to overfishing. – western stock Stock status uncertain.Jackass morwong Stock status uncertain.John dory Uncertain whether overfished but not subject to overfishing.Mirror dory Uncertain whether overfished but not subject to overfishing.Ocean perch Stock status uncertain.Orange roughy Overfished but not subject to overfishing.Orange roughy - (Cascade plateau) Not overfished and not subject to overfishing.Pink ling Not overfished but subject to overfishing.Redfish (eastern) Stock status uncertain.Royal red prawn Stock status uncertain.School shark Overfished but overfishing status uncertain.Gummy shark Not overfished and not subject to overfishing. Elephant fish Stock status uncertain.Sawshark Stock status uncertain.Deepwater shark (upper slope) Overfished but overfishing status uncertain.

Deepwater shark (mid-slope) Not overfished and not subject to overfishing.Silver trevally Stock status uncertain. Silver warehou Not overfished and not subject to overfishing.Ribaldo Not overfished and not subject to overfishing.Oreo dory: smooth Overfished but not subject to overfishing. Oreo dory: smooth (Cascade Plateau) Uncertain whether overfished but not subject to overfishing. Oreo dory: other Uncertain whether overfished but not subject to overfishing.

Source Larcombe and Beg g 2008.


17

the non-trawl sector with the setting of global TACs across both sectors in 2001. Currently 26 species of scalefish (including deepwater shark) are managed under global TACs that cover all sectors of the fisher y (Larcombe and Begg 2008).

The major shark species (excluding deepwater shark) taken in the SESSF were previously managed in the southern shark fisher y. ITQs were first introduced into this fisher y for school and gummy sharks in 2001 and then saw shark and elephant fish in 2002. The use of quota SFRs to manage these species is expected to take place in the 2009-10 fishing season following the resolution of legal challenges to the quota allocation formula (Larcombe and Begg 2008).

TACs represent the upper limit of catch for a quota species for all concession holders in a given fishing year. Each quota SFR entitles the holder to a specific share of the agreed TAC for the quota species to which the SFR applies. This is adjusted according to overcatch and undercatch allowances from the previous year to arrive at an actual TAC for the fishing year.

In 2005 , a har vest strateg y framework was adopted for the fisher y to provide a more strategic approach for determining TACs. The framework identifies how TACs should be altered when a stock declines or rises above predetermined levels. The rules that guide TAC setting have been designed to incorporate a higher level of precaution when there is an increased level of uncer tainty about stock status. The framework also improves the transparency of the TAC setting process. The SESSF har vest strateg y framework has been continuously revised and


18

altered in response to a number of shor tcomings identified since it was implemented (Larcombe and McLoughlin 2007).

To ensure concession holders comply with their quota entitlements, catches must be reconciled against quota holdings at set inter vals. Prior to 2006, quota reconciliation in the SESSF was required only on 31 December for the entire year. In 2006 however, the fisher y moved to quar terly quota reconciliation in an attempt to reduce the likelihood of concession holders exceeding their quota entitlements in the fishing season (Shoulder 2006). An additional reconciliation period was first added in 2006, and then quar terly reconciliations were implemented in 2007. An extended season was also introduced in 2007 to allow the fisher y to move to a May-April quota season. The 2007 season ran for an additional four months, from Januar y 2007 to April 2008. TACs for individual species were adjusted to account for the extended season. The 2008 quota year commenced on May 1st 2008 and will run until April 30th 2009. The TACs for the recently concluded 2007 season and the current 2008 season are listed in table 5.

In addition to output controls in the form of TACs, input controls are used to manage the fisher y. Input controls used include area and seasonal closures, limited entr y, catch size restrictions and a variety of gear restrictions. At the star t of the extended 2007 fishing season, AFMA introduced a series of new area closures. These closures are primarily designed to protect breeding stock, critical habitat, and vulnerable species.

Automatic longlining is a relatively new method of fishing used in the GHTS. It is a form of demersal longlining in which some of the functions are automated, allowing operators to set and haul more hooks (AFMA 2005b). Operators using this method of fishing are subject to specific rules regulating where and when they may use this method. Fur thermore, all operations using this method are required to comply with additional restrictions including an upper hook limit of 15 000 hooks, mandator y use of bird scaring (tori) lines, obser ver coverage and integrated computer vessel monitoring system (ICVMS) requirements (AFMA 2005b).

Bycatch has historically been an impor tant issue for the SESSF, par ticularly in the CTS where discard rates of 35 per cent prevailed (DEH 2003). The Southern and Eastern Scalefish and Shark Fisher y Bycatch Action Plan 2007-2009, released in March 2007, aims to ensure the impacts of the fisher y ’s bycatch on the ecosystem are sustainable and consistent with legislative requirements. The plan provides guidelines for reducing bycatch in the fisher y, and creates a framework and method to monitor the status of bycatch, and assess annual discard rates and bycatch reduction per formance (AFMA 2007b).


19

In November 2005, the Australian Government announced the $220 million Securing Our Fishing Future Initiative. The initiative aimed to reduce excess eff ort in fi sheries subject to overfi shing or at signifi cant risk of overfi shing. As part of the initiative, $150 million was set aside for a voluntary tender process for fi shing businesses to exit the industry (DAFF 2006). The fi rst round of the tender process was completed in September 2006 and resulted in 142 SESSF boat SFRs being bought out of the fi shery (Abetz 2006). A second

5 Total allowable catches – southern and eastern

scalefish and shark fishery

Species Extended 2007 season* TAC 2008 TAC tonnes tonnes

Alfonsino 576 500Bight redfish 3 338 2 000Blue eye trevalla 785 560Blue grenadier 4 113 4 368Blue warehou 313 365Deepwater flathead 2 109 1 400Flathead 4 020 2 850Gemfish East 121 100Gemfish west 200 167Jackass morwong 1 171 560John dory 237 190Mirror dory 788 634Ocean perch 585 500Orange roughy – Cascade Plateau 483 700– Albany/Esperance 52 25– east 27 25– south 40 25– west 61 50Oreo Basket 190 150Oreo smooth - Cascade 93 80Oreo smooth - other 52 40Pink ling 1 537 1 080Redfish 896 850Ribaldo 257 165Royal red prawn 556 400School whiting 978 750Silver trevally 191 296Spotted (silver) warehou 4 117 3 227Deepwater shark basket - east 21 50Deepwater shark basket - west 10 50Elephant fish 123 94Gummy Shark 2 467 1 800Saw shark 410 312School shark 352 240

* The ex tended 2007 season ran from Januar y 2007 to April 2008.


20

round tender process was run between October and November 2006 and a further 23 SESSF boat permits were bought out. The fi nal result was a 46 per cent reduction in the number of SFRs in the SESSF (Abetz 2006).

Results for the Commonwealth trawl sector

Boats surveyedThe sur vey of the Commonwealth trawl sector covered the two years 2005-06 and 2006-07. For each year, the target population was defined as boats endorsed to fish in the sector which caught in excess of 1000 kilograms, with the exception of factor y trawlers which were excluded from the analysis.

For 2005-06, 23 vessels were sampled from a population of 81 vessels. For 2006-07, 19 vessels were sampled from a population of 73 vessels.

Financial performance of the fisheryKey measures of the financial per formance of all boats in the sector are contained in table 6. Definitions of items contained in this table are outlined in appendix A .

ReceiptsIn line with the sector ’s increased gross value of production and reduced number of vessels, average total cash receipts per boat rose from $673 000 in 2005-06 to $765 000 in 2006-07.

CostsAverage total cash costs per boat increased from $596 000 in 2005-05 to $634 000 in 2006-07. Crew costs, fuel costs, freight and marketing expenses and repair and maintenance costs were the highest cost items in 2005-06 and 2006-07, together accounting for 79 per cent of total cash costs in both years.

As crew are normally paid a percentage share of revenue, the rise in average crew costs to $186 000 per boat in 2006-07 is commensurate with the increase in seafood receipts. Labour costs include payments to skipper and crew, as well as shore-based labour and the oppor tunity costs of owner and family labour. Similarly, average freight and marketing expenses increased to $119 000 per boat in 2006-07, most likely due to the increase in landings over the sur vey period. Repairs and maintenance costs also rose, to an estimated $62 000 per boat in 2006-07. In contrast, average fuel costs fell from $150 000 per boat in 2005-06 to $137 000 per boat in 2006-07.


21

Boat cash income and profitAs total cash receipts rose propor tionally more than cash costs, average boat cash income (the difference between total cash receipts and total cash costs) in the Commonwealth trawl sector rose from $77 000 per boat in 2005-06 to $130 000 per boat in 2006-07.

Boat business profit, which is boat cash income less an allowance for depreciation was positive in both 2005-06 and 2006-07, with average values of $58 000 and $108 000 per boat respectively.

Profit at full equity (boat business profit plus interest, leasing and rent) represents the average return earned by the business unit had the boat and capital (including quota and licences) been fully owned by operators.

6 Financial performance of boats operating in the

Commonwealth trawl sector average per boat

2005-06 2006-07

Seafood receipts $ 621 095 (13) 712 679 (17)

Nonfishing receipts $ 52 400 (17) 51 924 (23)

Total cash receipts $ 673 495 (13) 764 604 (17)

Administration $ 10 270 (15) 14 802 (13)

Crew costs $ 174 503 (14) 185 770 (16)

Freight and marketing expenses $ 97 083 (16) 119 113 (20)

Fuel $ 149 919 (13) 136 552 (16)

Insurance $ 23 571 (12) 22 742 (12)

Interest paid $ 11 609 (24) 11 565 (27)

Licence fees and levies $ 18 048 (12) 12 816 (15)

Repairs and maintenance $ 47 939 (14) 61 621 (16)

Other costs $ 63 347 (19) 69 397 (18)

Total cash costs $ 596 289 (12) 634 378 (15)

Boat cash income $ 77 206 (38) 130 226 (39)

less depreciation a $ 19 598 (11) 22 178 (13)

Boat business profit $ 57 609 (49) 108 048 (47)

plus interest, leasing and rent $ 44 346 (18) 52 855 (21)

Profit at full equity $ 101 955 (29) 160 903 (36)

Capital – excl. quota and licences $ 333 650 (15) 277 979 (15)

– incl. quota and licences $ 1 636 565 (12) 1 686 852 (15)

Rate of return – to boat capital b % 30.6 (30) 57.9 (30)

– to full equity c % 6.2 (25) 9.5 (29)

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 .


22

While interest, leasing and rent costs affect the financial position of the operator, they represent some profits which have been redistributed to other investors in the fisher y. Average boat profit at full equity, which is boat business profit plus interest, leasing and rent, was approximately $102 000 in 2005-06 and $161 000 in 2006-07.

Rates of returnThe 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 per formance 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) in the Commonwealth trawl sector increased from 30.6 per cent in 2005-06 to 57.9 per cent in 2006-07. This rise was the result of a number of factors, including the propor tionally higher increase in receipts relative to costs and lower boat capital values 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 refl ects changes in the value of quota and licences as well as changes in the profi tability of the fi shing operation – that is, the profi t from fi shing that accrues to the owners of capital.

The estimated value of quota and licences attached to each boat rose from $1.3 million in 2005-06 to $1. 4 million in 2006-07. This value includes the estimated market value of quota and licences used by the boat, including the value of endorsements outside the sector, for example, state licences. The rate of return to full equity, which incorporates these endorsement values, rose from 6.2 per cent in 2005-06 to 9.5 per cent in 2006-07.

Economic performance of the fisheryThe results presented in table 6 show changes in the average receipts and costs of boats which operated in the Commonwealth trawl sector in 2005-06 and 2006-07. However, they shed little light on the economic per formance of the sector as they include receipts and costs earned and incurred from operations in other fisheries and because no allowance is made for the oppor tunity cost of capital. Table 7 shows fishing receipts, cash costs, boat cash profit and net economic returns (in real terms) generated from the sector for the period 1997-98 to 2006-07. Only receipts and costs earned and incurred in the Commonwealth trawl sector are included.


23

7 Boat cash profit and net economic returns in the Commonwealth trawl sector, total for

fishery, $2007-08

1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 Receipts Fishing income $m 78.3 (17) 85.4 (16) 69.7 (14) 76.6 (15) 83.0 (12) 80.8 (14)

Cash costs Operating costs $m 70.2 (14) 72.4 (14) 61.7 (14) 68.9 (15) 71.7 (12) 73.7 (15)

Boat cash profit $m 8.2 (46) 13.1 (44) 8.0 (36) 7.7 (55) 11.3 (24) 7.0 (47)

less – owner and family labour $m 7.2 (10) 7.6 (10) 4.8 (13) 5.0 (13) 6.9 (13) 6.3 (17)

– opportunity cost of capital $m 3.1 (11) 2.6 (12) 2.0 (13) 1.9 (15) 1.9 (11) 1.6 (11)

– depreciation $m 4.3 (10) 4.1 (11) 2.8 (11) 2.9 (14) 2.6 (10) 2.4 (10)

plus interest, leasing and management fees $m 12.2 (24) 10.8 (22) 5.2 (14) 5.4 (16) 6.1 (14) 6.5 (18)

Net return (excl. management costs) $m 5.8 (108) 9.6 (63) 3.5 (90) 3.3 (142) 5.9 (56) 3.3 (96)

Management costs $m 2.6 na 3.8 na 3.3 na 3.5 na 3.2 na 2.8 naNet return (incl. management costs) $m 3.1 na 5.8 na 0.2 na -0.2 na 2.7 na 0.5 na

Number of active boats no. 109 109 103 101 106 97

Net return (excl. management costs) per boat $ 52 843 (108) 87 996 (63) 34 424 (90) 32 572 (142) 55 873 (56) 33 895 (96)

Management costs per boat $ 24 195 na 34 537 na 32 386 na 34 586 na 30 143 na 29 122 naNet return (incl. management costs) per boat $ 28 647 na 53 459 na 2 038 na -2 014 na 25 731 na 4 773 na

2002-03 2003-04 2004-05 2005-06 2006-07 Receipts Fishing income $m 62.5 (17) 57.3 (13) 54.0 (20) 49.5 (16) 49.2 (20)

Cash costs Operating costs $m 58.7 (15) 54.6 (12) 53.0 (20) 42.7 (16) 39.0 (19)

Boat cash profit $m 3.8 (69) 2.7 (84) 1.0 (155) 6.8 (36) 10.2 (34)

less – owner and family labour $m 7.5 (14) 6.3 (14) 5.6 (16) 4.7 (24) 4.4 (23)

– opportunity cost of capital $m 1.5 (16) 1.5 (16) 1.3 (16) 1.1 (16) 1.1 (22)

– depreciation $m 2.2 (15) 2.4 (16) 2.0 (15) 1.5 (15) 1.5 (18)

plus interest leasing and management fees $m 5.7 (16) 6.4 (20) 6.9 (37) 4.5 (17) 4.1 (23)

Net return (excl. management costs) $m –1.7 (145) –1.2 (201) –1.0 (270) 4.0 (53) 7.4 (51)

Management costs $m 3.5 na 3.3 na 3.5 na 2.5 na 3.9 naNet return (incl. management costs) $m –5.2 na –4.5 na –4.5 na 1.5 na 3.5 na

Number of active boats no. 100 97 91 81 73

Net return (excl. management costs) per boat $ –17 447 (145) –12 460 (201) –11 443 (270) 49 508 (53) 100 917 (51)

Management costs per boat $ 34 932 na 33 664 na 38 233 na 30 591 na 52 784 naNet return (incl. management costs) per boat $ –52 379 na –46 124 na –49 676 na 18 918 na 48 133 na

na Not applicable. Note : Figures in parentheses are relative standard errors. A guide to interpreting these is included in appendix A .


24

Fishing receipts in the sector have continued to decline since 2000-01, falling from $83 million to $49.2 million in 2006-07. Although receipts have been declining, boat cash profit, which is fishing income less cash costs, increased between 2005-06 and 2006-07 from $6.8 million to $10.2 million, given a relatively greater reduction in cash costs between the two years (figure h).

Net economic return is a measure of economic per formance that incorporates depreciation expenses, the oppor tunity costs of owner and family labour and the oppor tunity cost of capital — costs not accounted for in boat cash profit. Net economic return also includes a deduction of fisher y management costs. These management costs include both management levies paid for by fisher y operators (accounted for under ‘licence fees and levies’ in table 6) and non-recovered management costs paid for by government (not accounted for in table 6). An explanation of the calculation of net economic returns is included in appendix B.

After several years of negative returns (2002-03 to 2004-05), the sector ’s economic per formance improved in 2005-06 and 2006-07, with net returns rising to $1.5 million and $3 .5 million respectively. This improvement can be largely attributed to a decline in operating costs which occured in unison with a sharp fall in the number of active boats operating in the sector in these two years, from 91 boats in 2004-05 to 73 boats in 2006-07. At the same time, fishing income per boat also increased.

It is impor tant to note that factors outside the control of fisher y management influence both the net economic returns and other measures of financial per formance in the fisher y – for example, the movements of the Australian dollar and its impact on the prices received by fishers. Also, the price of inputs such as fuel and gear are not controlled by fisher y managers. These types of external factors are likely to have had a impact on the per formance of the fisher y in recent years. The role of a fisher y manager is to ensure a fisher y is able to maximise profits subject to these external factors.

Results for the gillnet, hook and trap sector

Boats surveyedThe survey of the GHTS covered the 2005-06 and 2006-07 fi nancial years. For each year, the target population was defi ned as boats endorsed to fi sh in the GHTS which had caught more than 1750 kilograms. In 2005-06, 17 vessels were sampled from a population of 80 vessels and in 2006-07, 17 vessels were sampled from a population of 79.


25

Financial performance of the fisheryKey measures of the financial per formance of the sector ’s fishing fleet are contained in table 8. Definitions of items contained in this table are outlined in appendix A.

ReceiptsAverage total cash receipts rose over the sur vey period, from $325 000 per boat in 2005-06 to $398 000 in 2006-07. Receipts here include receipts accrued from landings in other fisheries including, for example, state lobster fisheries.

8 Financial performance of boats operating in the

gillnet, hook and trap sector average per boat

2005-06 2006-07

Seafood receipts $ 315 448 (15) 379 058 (15)

Nonfishing receipts $ 9 187 (15) 19 225 (19)

Total cash receipts $ 324 636 (15) 398 283 (15)

Administration $ 6 065 (16) 6 148 (12)

Bait $ 7 805 (54) 7 843 (40)

Crew costs $ 119 607 (14) 141 503 (14)

Freight and marketing expenses $ 13 542 (36) 15 555 (43)

Fuel $ 31 071 (15) 33 762 (17)

Insurance $ 9 072 (19) 10 317 (17)

Interest paid $ 11 808 (32) 10 803 (34)

Leasing $ 42 234 (21) 54 130 (28)

Licence fees and levies $ 13 631 (21) 9 456 (22)

Repairs and maintenance $ 33 091 (24) 47 745 (22)

Other costs $ 12 019 (21) 15 453 (15)

Total cash costs $ 299 947 (15) 352 714 (14)

Boat cash income $ 24 689 (77) 45 568 (52)

less depreciation a $ 22 883 (24) 19 256 (19)

Boat business profit $ 1 806 (1073) 26 312 (88)

plus interest leasing and rent $ 54 226 (17) 65 187 (25)

Profit at full equity $ 56 032 (36) 91 499 (32)

Capital – excl. quota and licences $ 335 345 (17) 335 684 (17)

– incl. quota and licences $ 1 177 553 (15) 1 424 500 (18)

Rate of return – to boat capital b % 16.7 (40) 27.3 (31)

– to full equity c % 4.8 (35) 6.4 (30)

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 .


26

CostsAverage total cash costs per boat also increased between the two sur vey years, from $300 000 per boat in 2005-06 to $353 000 per boat in 2006-07 — an increase of approximately 18 per cent. Crew costs, followed by leasing, repairs and maintenance and then fuel costs were the highest costs items and together accounted for 79 per cent of total cash costs in 2006-07. Most cost items increased by some degree over the sur vey period – the highest increase in percentage terms was for leasing which rose by approximately one-third in 2006-07 to $54 000 per boat.

Boat cash income and profitAverage boat cash income refers to the difference between total cash receipts and total cash costs. As the rise in total cash receipts was greater than the rise in total cash costs, average boat cash income increased from $25 000 in 2005-06 to $46 000 in 2006-07. Similarly, boat business profit, which is boat cash income less an allowance for depreciation, improved between the two years, from $1800 per boat in 2005-06 to $26 000 per boat in 2006-07.

Profit at full equity (boat business profit plus interest, leasing and rent) also rose significantly over the sur vey period, from $56 000 per boat in 2005-06 to $91 000 per boat in 2006-07. Profit at full equity represents the average return which would have been earned by the business unit had the boat and capital (including quota and licences) been fully owned by the operator. 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 fisher y.

Rates of returnThe rate of return to boat capital is calculated on the value of boat capital (excluding the value of quota and licences) as if the operators wholly owned all assets so the financial per formance 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) rose from 16.7 per cent in 2005-06 to 27.3 per cent in 2006-07. These high rates of return are largely the result of the relatively low value of boat and equipment capital in the sector.

The rate of return to full equity includes the value of quota and licences in addition to other 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 accrued to the owners of capital.


27

The estimated average value of quota and licences attached to each boat was $1.1 million in 2006-07. This includes the estimated market value of quota and licences used by the boat, including the value of non-GHTS endorsements (for example, lobster licences). The rate of return to full equity incorporating these endorsement values increased slightly between sur vey years, from 4 .8 per cent to 6. 4 per cent in 2006-07.

Economic performance of the fisheryThe results presented in table 8 show changes in the average receipts and costs of boats operating in the gillnet hook and trap sector in 2005-06 and 2006-07. However, they shed little light on the economic per formance of the sector because they include receipts and costs earned and incurred from operations in other fisheries and because no allowance is made for the oppor tunity cost of capital employed in the sector. Table 9 shows boat cash profit and net economic returns generated from the gillnet, hook and trap sector for the period 1998-99

9 Boat cash profit and net economic returns in the gillnet, hook and trap sector, total for

fishery, $2007-08

1998 1999 2000 2001 2002 2003 2004 2005 2006 -99 -00 -01 -02 -03 -04 -05 -06 -07 Receipts Fishing income $m 23.1 (13) 25.1 (14) 23.2 (14) 24.3 (17) 24.1 (19) 29.6 (26) 28.2 (21) 21.9 (20) 24.3 (22)

Cash costs Operating costs $m 16.4 (11) 18.3 (16) 16.5 (15) 20.2 (20) 19.1 (21) 21.7 (29) 23.3 (22) 19.0 (21) 21.0 (21)

Boat cash profit $m 6.7 (21) 6.7 (19) 6.7 (19) 4.1 (37) 4.9 (20) 7.9 (24) 4.8 (27) 2.8 (52) 3.3 (51)

less

– owner and family labour $m 6.0 (18) 5.0 (14) 4.8 (14) 3.3 (17) 2.9 (17) 5.0 (26) 4.6 (20) 2.4 (25) 2.3 (21)

– opportunity cost of capital $m 0.7 (15) 0.8 (16) 0.7 (16) 0.7 (19) 0.5 (18) 0.9 (30) 1.0 (31) 1.0 (23) 0.8 (22)

– depreciation $m 1.3 (14) 1.2 (16) 1.2 (16) 1.0 (19) 0.9 (18) 1.2 (33) 1.6 (33) 1.4 (24) 1.3 (23)

plus interest leasing

and management fees $m 2.9 (15) 3.6 (20) 3.3 (18) 4.2 (23) 3.4 (23) 5.7 (31) 6.8 (23) 5.0 (18) 5.1 (24)

Net return (excl.

management costs) $m 1.6 (59) 3.4 (27) 3.2 (34) 3.4 (35) 4.1 (28) 6.5 (29) 4.5 (28) 3.0 (51) 3.9 (52)

Management costs $m 2.5 na 2.4 na 2.6 na 2.6 na 2.6 na 2.6 na 2.1 na 2.0 na 2.5 na

Net return (incl.

management costs) $m –0.9 na 1.0 na 0.7 na 0.8 na 1.4 na 4.0 na 2.4 na 1.0 na 1.5 na

Number of active boats no. 133 126 123 127 131 118 107 80 79

Net return (excl.

management costs) per boat $ 11 983 (59) 27 089 (27) 26 316 (34) 26 923 (35) 31 081 (28) 55 295 (29) 42 171 (28) 37 877 (51) 49 804 (52)

Management costs per boat $ 18 679 na 19 286 na 20 799 na 20 823 na 20 015 na 21 764 na 19 644 na 25 277 na 31 271 na

Net return (incl.

management costs) per boat $ –6 696 na 7 803 na 5 517 na 6 100 na 11 066 na 33 531 na 22 527 na 12 600 na 18 533 na

na Not applicable. Note : Figures in parentheses are relative standard errors. A guide to interpreting these is included in appendix A .


28

to 2006-07. Only receipts and costs estimated to have been earned and incurred in the gillnet, hook and trap sector are included.

Total fishing receipts in the sector were relatively stable between 1998-99 and 2002-03 , averaging $23 .9 million, before rising to $29.6 million in 2003-04 . Receipts remained high in 2004-05 ($28.2 million), declined in 2005-06 ($21.9 million) before rising slightly in 2006-07 ($24 .3 million). Estimates for boat cash profit in the sector (fishing income less cash operating costs) improved over the two most recent sur vey years, from $2.8 million in 2005-06 to $3 .3 million in 2006-07.

Net economic return is a measure of economic per formance that incorporates depreciation expenses, the oppor tunity costs of owner and family labour and the oppor tunity cost of capital — costs not accounted for in boat cash profit. Net economic returns also include a deduction of fisher y management costs. These management costs include both management levies paid for by fisher y operators (accounted for under ‘licence fees and levies’ in table 8) and non-recovered management costs paid for by government (not accounted for in table 8). An explanation of the calculation of net economic returns is included in appendix B.

Net economic returns (including management costs) in real terms show an increasing trend over the period from 1998-99 to 2003-04 (figure i). After reaching a peak of $4 million in 2003-04 , net returns declined over the following two years falling to $1 million in 2005-06. Net economic returns improved slightly in 2006-07, rising to $1.5 million. Although this estimate is lower than the peak reached in 2003-04 , the rapid decline in boat numbers since 2003-04 has meant the decline in average net returns to each boat in the sector has been propor tionally lower, with the average boat achieving a net return of $18 500 in 2006-07 compared with $33 500 in 2003-04 .

It is impor tant to note that factors outside the control of fisher y management influence both net economic returns and other measures of financial per formance in the fisher y. For example, movements of the Australian dollar affect the prices received by fishers. Also, the price of inputs such as fuel and gear are not controlled by fisher y managers. However, the fisher y 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 effor t in the fisher y.

29

Collecting economic survey dataABARE has been under taking economic sur veys of selected Commonwealth fisheries since the early 1980s and on a regular basis for par ticular fisheries since 1992. The current fisheries sur vey program involves sur veying major Commonwealth fisheries ever y second year. The aim is to develop a consistent time series of economic information for each fisher y. Such a database, in conjunction with scientific assessments of each fisher y, is vital for assessing the economic per formance of fisheries.

Aggregated information from the sur veys is made publicly available so the per formance of fisheries and the impact of management policies can be independently assessed.

ABARE sur veys are designed and samples selected on the basis of information supplied by the Australian Fisheries Management Authority (AFMA). This information includes data on the size of the catch and boat characteristics.

Because it is not possible to sur vey all the boats in a fisher y, a sample of boats is selected based on how representative they are. Where possible, boats are classified into subgroups based either on the fishing method used (longline boats, purse seine boats, trawlers) or on the size of operations (typically small, medium and large producers). A number of representative boats from each subgroup are then targeted for the sur vey.

In practice this sample is seldom fully realised. Non-response is relatively high across fisher y sur veys, reflecting the difficulty in contacting some operators and a reluctance of others to par ticipate in the sur vey. Sample design and weighting systems have been developed to reduce the impact of non-response, but care is still required when interpreting the information from the sur veys.

Between Januar y and July, an ABARE officer visits the owner of each boat selected in the sample. The of ficer inter views the boat owner to obtain physical and financial details of the fishing business for the sur vey years. In a number of instances the skipper of the boat is also inter viewed. Fur ther information is subsequently obtained from accountants, selling

Survey methods and definitionsAapp

endi

x

Australian fisheries survey 2008 abare.gov.au

30

agents and marketing organisations on the signed authority of the sur vey respondents.

The information obtained from various sources is reconciled to produce the most accurate description possible of the financial characteristics of each sample boat in the sur vey.

The 2008 surveysABARE sur veyed two fisheries in 2008 – the eastern tuna and billfish fisher y and the southern and eastern scalefish and shark fisher y. Information was collected for the 2005-06 and 2006-07 financial years for both fisheries.

The definitions of key variables used in this analysis are provided in box 2.

Sample weightingAll population estimates presented in this repor t are calculated from the weighted sur vey data of sample boats. A weight is calculated for each boat in the sample, based on how representative that boat is in the population. Sample weights are calculated such that the weights sum to the population of boats that the sample is representing, and the weighted sum of catch repor ted by the sample boats equals the total catch for the fisher y according to AFMA logbook data.

That is,

Swi x

i = X

where wi

is the weight for the ith boat;

xi is the catch for the ith boat; and

X is the total catch for the target population.

Technical details of the method of weighting used are given in Bardsley and Chambers (1984).

Reliability of estimatesA relatively small number of boats out of the total number of boats in a par ticular fisher y are sur veyed. Estimates derived from these boats are likely to be different from those which would have been obtained if


31

box 2 Definitions of key variables

Total cash receipts represent returns from the sale of fish, non-fishing activities including char ter operations, and other income (insurance claims and compensation, quota and or endorsements leased out, government assistance and any other revenue) in the financial year.

For the majority of operators, this information is readily available from their own records. However, different operators record their fishing income in different ways. In some cases, such as where fish are sold through a cooperative, some operators may only record the payments received from the cooperative. These payments may be net of commis-sions and freight as well as net of other purchases made through the cooperative.

In other cases, the crew is paid directly for the catch by the coopera-tive or agency and the owner ’s financial records might include only the amount of revenues they received after the crew ’s share had been deducted.

For these reasons, operators are asked to provide a breakdown of the total catch of their boat and an estimate of the total value of that catch. For consistency, marketing charges may need to be added back into fishing receipts for some boats to give a gross value. Where this is neces-sar y, these selling costs are also added into the cost estimates to offset the new revenue figure. Receipts also include amounts received in the sur vey year for fish sold in previous years.

Total cash costs include the payments made for both permanent and casual hired labour and payments for materials and ser vices (including payments on capital items subject to leasing , rent, interest, licence fees and repairs and maintenance). Capital and household expenditures are excluded.

Labour costs are usually the highest cash cost in the fishing operation. Labour costs include wages and an estimated value for owner/par tner, family and unpaid labour. Labour costs cover the cost of labour involved in boat related aspects of the fishing business, such as crew or onshore administration costs, but do not cover the cost of onshore labour involved in processing the fisheries products.

On many boats, the costs of labour are reflected in the wages paid by boat owners and/or in the share of the catch they earn. In some cases, however, such as where owner skippers are involved, or where family members work in the fishing operation, the payments made can be low or even nil, which will not always reflect the market value of the labour provided. To address this possible underestimation, the value of all owner/par tner and family labour is calculated based on estimates collected at the inter view of the amount it would cost to employ someone else to do the work.

Boat cash income is the difference between total cash receipts and total cash costs.


32

information had been collected from a census of all boats. How closely the sur vey results represent the population is influenced by the number of boats in the sample, the variability of boats in the population and most impor tantly the design of the sur vey and the estimation procedures used.

To give a guide to the reliability of the sur vey estimates, measures of sampling variation have been calculated. These measures, expressed as percentages of the sur vey estimates and termed ‘relative standard errors’, are given next to each estimate in parentheses. In general, the smaller the relative standard error, the more reliable the estimate.

Use of relative standard errorsThese relative standard errors can be used to calculate ‘confidence inter vals’ for the sur vey estimate. First, calculate the standard error by multiplying the relative standard error by the sur vey estimate and dividing by 100. For example, if average total cash receipts are estimated to be $100 000 with a relative standard error of 6 per cent, the standard error for this estimate is $6000.

There is roughly a two in three chance that the ‘census value’ (the value that would have been obtained if all boats in the target population had been sur veyed) is within one standard error of the sur vey estimate. There is roughly a 19 in 20 chance that the census value is within two standard errors of the sur vey estimates. Thus, in this example, there is approximately a two in three chance that the census value is between $94 000 and $106 000, and approximately a 19 in 20 chance that the census value is between $88 000 and $112 000.

Comparing estimatesWhen comparing estimates across groups or years it is impor tant to recognise that the differences are also subject to sampling error. As a rule of thumb, a conser vative estimate of the standard error of the difference can be constructed by adding the squares of the estimated standard errors of the component estimates and then taking the square root of the result.

For example, suppose the estimates of total cash receipts were $100 000 in one year and $125 000 in the previous year – a difference of $25 000 – and the relative standard error is given as 6 per cent for each estimate. The standard error of the difference can be estimated as:

[(0.06 x $100 000)2 + (0.06 x $125 000)2] = $9 605


33

so the relative standard error of the difference is:

($9605/$25 000) x 100 = 38%.

It should be noted that there may be changes in the population of a fisher y from one year to the next. If these population changes are substantial, differences in estimates may be caused more by the changes in population than by changes in the variables themselves.

Non-sampling errorsThe values obtained in a sur vey may be affected by errors other than those directly related to the sampling procedure. For example, it may not be possible to obtain information from cer tain respondents, respondents may provide inaccurate information or respondents may differ from nonrespondents for a par ticular variable being sur veyed.

In conducting sur veys, ABARE draws upon a depth of experience. The sur vey staff are generally ver y experienced and undergo rigorous pre-sur vey training, aimed at minimising nonsampling errors. However, when drawing inferences from estimates derived from sample sur veys, users should bear in mind that both sampling and nonsampling errors occur.

34

Under the Fisheries Management Act 1991, one of the objectives of the Australian Fisheries Management Authority (AFMA) is to maximise the net economic returns to the Australian community from the management of Commonwealth fisheries. Maximising a fisher y ’s net economic returns involves maximising returns from the use of the natural resources (the fish stock). As par t of monitoring per formance of AFMA against this objective, ABARE’s economic sur veys provide some of the necessar y data to calculate per formance indicators such as net returns and productivity indexes. In addition, sur vey data provides some of the necessar y data to construct bioeconomic models. This section outlines how net returns are calculated using ABARE sur vey data.

Net economic returnsNet economic returns are the long-run profits from a fisher y after all costs have been met, including fuel, crew costs, repairs and maintenance, the oppor tunity cost of capital, depreciation and oppor tunity cost of family and owner labour. Although they do not provide an indication of the potential returns available from a fisher y in the long run, a time series of net returns may indicate in which direction net returns in a fisher y are heading. For instance, a fisher y in which estimated net returns are regularly close to zero or negative is probably not being managed effectively. A positive trend may suggest a fisher y is approaching the point of maximum economic yield (MEY) – the level of catch/effor t where the profits of a fisher y are maximised.

The measure of net returns of a fisher y can be calculated by summing the net returns of each boat in a fisher y. The net return of each boat can be defined as:

NR = R – [OC + (d + r)K] - M

NR net returns;

R total cash receipts attributable to the fisher y, excluding any receipts from leasing licences or quota;

OC total operating cash costs less interest paid, less expenditure on leasing licences or quota, less licence fees and levies;

Estimating the economic performance of Commonwealth managed fisheries

Bappen

dix


35

K value of capital associated with vessel (depreciated replacement value);

d depreciation rate for vessel;

r real interest rate; and

M costs of managing the fisher y.

Operating costs include day-to-day expenses such as fuel, crew costs, repairs, administration, gear etc. These cost items are usually easily identified in fishers accounts.

Both receipts and operating costs exclude any income or costs from leasing in or leasing out quota and licences. These are excluded, because the amount fishers pay or accept for leasing quota and licences represents expected future profits which can be generated from the quota or licence. This is precisely what net returns are measuring. If leasing were included as revenues and costs, double counting would occur and estimates of net returns would be incorrect.

Depreciation expense is the cost of capital becoming less valuable over time because of wear and tear and obsolescence. Depreciation expense is not consistently identifiable in fishers accounts, so ABARE calculates the depreciation of boats based on a capital inventor y list collected during the sur veys.

The oppor tunity cost of owner and family labour is estimated at inter view. Often owners and their families are involved in the operation of a boat, either as skippers and crew or onshore as accountants and shore managers. While some will be paid the market value for their labour, some will not be paid at all and others paid large amounts through ‘directors’ fees’ or ‘management fees’. ABARE sur vey officers ask sur vey respondents what market value of any owner and family labour is, and this amount is considered as a cost.

The oppor tunity cost of capital is a return which would have been earned if the capital was invested elsewhere, rather than invested in fishing capital. The standard ABARE rate is 7 per cent a year, and this is used in this analysis. This cost is not identifiable in fishers’ accounts.

The costs of managing a fisher y are comprised of two components. Recovered management costs are those management costs paid for by industr y members in the form of management levies. Non-recovered management costs are those costs of managing a fisher y that are not paid for by industr y but are paid for by government. Both components are included when calculating net economic returns.

36

References

Abetz, E 2006, Commonwealth fisheries set for a more secure and profitable future - Results of Round 2 of the fishing concession buyback announced, Media Release, DAFF06/153A , 22 December 2006.

Australian Fisheries Management Authority (2008). ETBF Resource Assessment Group meeting, 29 & 30 July 2008. Agenda Item 5 .

—— 2007a, Southern Bluefin Tuna Core and Buffer Zones, Commonwealth of Australia, Canberra, (http://www.afma.gov.au/fisheries/tuna /etbf/mg t/zones.htm).

——2007b, Southern and Eastern Scalefish and Shark Fishery Bycatch Action Plan 2007-2009, Commonwealth of Australia, Canberra.

—— 2005a, Eastern Tuna and Billfish Fishery Management Plan 2005 , Commonwealth of Australia, Canberra.

—— 2005b, Southern and Eastern Scalefish and Shark Fishery: A Guide to the 2006 Management Arrangements, Commonwealth of Australia, Canberra.

—— 2004 , Background to Southern and Eastern Scalefish and Shark Fishery, Commonwealth of Australia, Canberra, (http://www.afma.gov.au/fisheries/sess/sess/notices/2004 /n20040910_bgd.pdf ).

Bardsley, P and Chambers, RL1984 , “Multipurpose estimated from unbalanced samples”, Journal of the Royal Statistical Society, Series C (Applied Statistics), vol. 33 , pp. 290–9.

Depar tment of Agriculture, Fisheries and Forestr y (DAFF) 2006 , Securing Our Fishing Future, Commonwealth of Australia, (http://www.daffa.gov.au/fisheries/domestic/fishing future).

Depar tment of the Environment and Heritage (DEH) 2003 , Assessment of the Southern and Eastern Scalefish and Shark Fishery, Commonwealth of Australia, Canberra.

Larcombe, J and Begg, G (eds.) 2008, Fishery Status Reports 2007: Status of Fish stocks Managed by the Australian Government, Bureau of Rural Sciences, Canberra.

Larcombe, J and McLoughlin, K (eds.) 2007, Fishery Status Reports 2006: Status of Fish stocks Managed by the Australian Government, Bureau of Rural Sciences, Canberra.

Norris, W 2007, Revised Interim Arrangements for Longline Albacore Management, letter to all ETBF Longline Permit Holders, 28 March 2007, Reference: F2006/1408, (http://www.afma.gov.au/fisheries/tuna /etbf/notices/2007/n20070328.pdf ).


37

Rundle T 2005 , letter to Bill Nagle, reference F2004 /0343 , 25 November 2005 , (http://www.afma.gov.au/fisheries/tuna /etbf/notices/2005 /n20051123 .pdf ).

Smith, A D M and Wayte, S E (eds.) 2004 , The South East Fishery 2003 , Fisher y Assessment Repor t compiled by the South East Fisher y Assessment Group, Australian Fisheries Management Authority, Canberra.

Shoulder, P 2006, Additional quota reconciliation periods (2006 season), Letter to Concession Holders, 11th May 2006, (http://www.afma.gov.au/fisheries/sess/sess/notices/2006/20050511_letter.pdf ).

38

Previous fishery survey reportsNorthern prawn fishery

1980-81 to 1981-82BAE (Bureau of Agricultural Economics, now ABARE) 1984 , Northern Prawn Fishery Sur vey, 1980-81 and 1981-92, Canberra

1986-87 to 1987-88Collins, D and Kloessing, K 1988, ‘Financial per formance in the nor thern prawn fisher y – latest sur vey by ABARE’, Australian Fisheries, vol. 47, no. 12, pp. 38–4 4 .

1989-90 to 1990-91ABARE 1993 , Fisheries Sur veys Report 1992, Canberra.

1990-91 to 1991-92ABARE 1993 , Fisheries Sur veys Report 1993 , Canberra.

1992-93 to 1993-94ABARE 1996, Australian Fisheries Sur veys Report 1995 , Canberra.

1994-95 to 1995-96Brown, D 1997, Australian Fisheries Sur veys Report 1997, ABARE, Canberra.

1996-97 to 1997-98ABARE 2000, Australian Fisheries Sur veys Report 1999, Canberra.


2000-01 to 2001-02ABARE 2004 , Australian Fisheries Sur veys Report 2003 , Canberra.

2002-03 to 2003-04ABARE 2006, Australian Fisheries Sur veys Report 2005 , Canberra


39

2004-05 to 2005-06ABARE 2007, Australian Fisheries Sur veys Report 2007, Canberra

East coast prawn fishery

1980-81 to 1982-83BAE 1985 , ‘BAE repor t on south-eastern prawn fisher y ’, Australian Fisheries, vol. 4 4 , no. 1, pp. 36–7.

Eastern tuna and billfish fisheryformerly the east coast tuna fishery






1999-2000 to 2000-01ABARE 2003 , Australian Fisheries Sur veys Report 2002, Canberra.




40

Gillnet, hook and trap formerly the south east nontrawl fishery and the southern shark fishery

1988-89Battaglene, T and Campbell, D 1991, ‘Economic sur vey of the southern shark fisher y ’, Australian Fisheries, vol. 50, no. 5 , pp. 12–15 .





1997-98ABARE 2000, Australian Fisheries Sur veys Report 1999, Canberra.


1998-99ABARE 2001, Australian Fisheries Sur veys Report 2000, Canberra.



2001-2002 to 2002-03ABARE 2005 , Australian Fisheries Sur veys Report 2004 , Canberra


41


Southern rock lobster fishery

1981-82 to 1982-83BAE 1985 , Southern Rock Lobster Fishery Sur vey, 1981-82 and 1982-83 , Canberra.

1993-94 to 1994-95BAE 1985 , Southern Rock Lobster Fishery Sur vey, 1981-82 and 1982-83 , Canberra.

Bass Strait scallop fishery



Commonwealth trawlformerly the south east trawl fishery

1978-79 to 1980-81BAE 1984 , Southern Trawl Fishery Sur vey, 1978-79 and 1980-81, Canberra.

1985-86 to 1987-88Geen, G, Brown, D and Pascoe, S 1989, ‘ABARE sur vey of the south east trawl fisher y ’, Australian Fisheries, vol. 48, no. 10, pp. 45–7.





42







Southern bluefin tuna fishery

1980-81 to 1981-82BAE 1986, Southern Bluefin Tuna Sur vey, 1980–82, Canberra.

Southern squid jig fishery



Torres Strait prawn fishery

1989-90Battaglene, T, Reid, C and Collins, P 1992, ‘An economic sur vey of the Torres Strait prawn fisher y ’, Australian Fisheries, vol. 50, no. 7, pp. 28–31.



43






2004-05 to 2005-06ABARE 2007, Australian Fisheries Sur veys Report 2007, Canberra

Western tuna and billfish fisheryformerly the southern and western tuna and billfish fishery

2001-02ABARE 2004 , Australian Fisheries Sur veys Report 2003 , Canberra.

44

Asia Pacifi c Economic Cooperation Secretariat

AusAid

Australian Centre for Excellence in Risk Analysis

Australian Fisheries Management Authority

Australian Government Department of Climate Change

Australian Government Department of the Environ-ment, Water , Heritage and the Arts

Australian Government Department of Resources, Energy and Tourism

CRC Plant Biosecurity

CSIRO (Commonwealth Scientifi c and Industrial Research Organisation)

Dairy Australia

Department of Primary Industries, Victoria

Fisheries Research and Development Corporation

Fisheries Resources Research Fund

Forest and Wood Products Research and Develop-ment Corporation

Grains Research and Development Corporation

Grape and Wine Research and Development Corporation

Horticulture Australia

International Food Policy Research Institute

Land and Water Australia

Meat and Livestock Australia

Murray Darling Basin Commission

National Australia Bank

Rural Industries Research and Development Corporation

10.08

RESEARCH FUNDING ABARE relies on fi nancial support from external organ isations to complete its research program. As at the date of this publication, the following organisations had provided fi nancial support for ABARE’s research program in 2006-07 and 2007-08. We gratefully acknowledge this assistance.

Australian Fisheries Surveys Report 2008

Documents

Transcript of Australian Fisheries Surveys Report 2008