Value added in Norwegian Fisheries; The Creation, the distribution, and value added strategies Public Deposited

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  • Maximizing profit and value added are central objectives when fishing rights are distributed. Financial profitability on a company level traditionally measures the return on total assets. Value added on the national level is the net (or gross) national product, and is the total profit of investments and wages and salaries to employees. In the fishing sector live fish is a restricted though renewable resource. Fish is a common resource, and is part of the capital stock of the nation. Unlike financial capital and most other assets, no one pay the rest of society for access to the common fish stock. In this paper the issue to be investigated is which structure of the fishing fleet that may maximize value added per unit of fish caught, and thereby maximizing the fishing sector’s contribution to the net national product. Our analysis is based on annual accounts for Norwegian vessels collected annually by “Budsjettnemda for fiskerinæringen”. Our data covers the period 1999-2004. The data is reflecting the actual situation for the fishing fleet with regards to restrictions to access, quota distributions and other regulations on the free operation of the fleet. There is no reason, per se, to expect the regulations to be optimal in an economic sense. Our conclusion is that the national value added per sales NOK (NNP) for fish will improve if a bigger share of the national TAC is transferred from deep-sea fishing vessels to coastal vessels. Value added per man-year, would, however, be maximized by fishing more of TAC with larger vessels. The distribution of the present value added show that smaller vessels have value added in percent of gross sale value of about 57 – 58%. Same figures for large purse seiners/blue whiting trawlers are 51-54%, for mechanized line fishing 44%, for cod trawlers 40%, and for trawlers with processing facilities on board 36%. Value added relative to total revenue has had a negative trend for the total fleet for the period 1999 – 2004, from about 51% to about 44%. For the total period the coastal fleet with length less that 28 m has had largest value added as percent of total revenues, and pelagic highs sea fishing is number two. Value added as percent of total revenues has declined for the open sea fleet fishing for cod from about 47% in 1999 to 35% in 2004. We conclude that the explanation for the relative large value added for the smallest vessels can be found both in the income part and the cost part of the calculation. First, smaller vessels experience a better price per kilo as quality is presumed to be better, and also by-products and bycatch are better utilized. The smallest vessels (in Norwegian called “sjark”) have less cost per unit catch as this group is less capital and energy intensive that the largest fishing vessels. Value added per man-year is highest for the largest vessels. This is explained by large fish quotas per fisherman and highly intensive use of capital as input. The current allocation of TAC have compensated for the rather dismal value added per kg in the group of large vessels by unduly distributing large quotas to the large vessels. To maximize value added (NNP) of the limited TAC, we conclude by recommending that a bigger share of the national TAC should be redistributed from the large deep-sea vessels to smaller coastal vessels. As the fishing technology is different for the different groups, this recommendation implies that employment and landing of fresh fish will increase, while landings of frozen will decrease.
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  • Trondsen, Torbjørn and Terje Vassdal. 2006. Value added in Norwegian Fisheries; The Creation, the distribution, and value added strategies. In: Proceedings of the Thirteenth Biennial Conference of the International Institute of Fisheries Economics & Trade, July 11-14, 2006, Portsmouth, UK: Rebuilding Fisheries in an Uncertain Environment. Compiled by Ann L. Shriver. International Institute of Fisheries Economics & Trade, Corvallis, Oregon, USA, 2006. CD ROM. ISBN 0-9763432-3-1
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