Abstract:
Due to declines in stocks, restrictive management plans, and imports of whole groundfish from Canada, the supply
of whole fresh Atlantic groundfish to New England processing plants (landings plus whole fresh imports) declined by 75%
since its peak in 1983. These reductions in supply of Atlantic groundfish put severe pressure on New England fresh fish
processors. Survival techniques, including scouring local ports, Canada, and the West Coast for whole groundfish, importing
fresh fillets, exploiting niches, substituting for groundfish, focusing more on wholesaling, and closely watching the bottom
line, favored Boston processors, because they have advantages in transport costs, easier access to the regional food
processing market, and share in the cost economies from brokerage, packing, transport, and wholesaling activities that
support processing. As the smaller firms have turned to wholesaling or simply vanished, there are fewer, and typically larger
firms. Large firms are better able to draw on widely scattered geographic sources, and adapt to display auctions, now an
indispensable source of domestic whole fish. The forces that are reshaping the structure of the processing industry are,
therefore, real economies of scale. While the high levels of the concentration might seem to convey substantial market power
to large processors, the pressure on margins that has accompanied the falling supply has effectively prevented concentration
from leading to non-competitive prices and profits. Many of the changes in structure of groundfish processing due to supply
shortages will probably not be affected by increases in landings, when and if stocks recover. Production of frozen fish
products declined more that fresh fish production due to falling demand for frozen products.
