Quota Explained

Monopoly Quota: The Wrong Solution: Vessel Owners/Fishermen Win; Consumers and Processors Lose

Monopoly markets rarely work to the advantage of anyone other than the monopoly holder. They drive prices higher for consumers while driving out the smaller players and decimating jobs and communities in their wake.

Approving a quota system that allocates 100 percent of initial quota to vessel owners/fishermen will provide a single group in coastal communities with a virtual monopoly of the ocean.

  • Vessel owners/fishermen have a level of economic security unavailable to other stakeholders in coastal communities
  • Vessel owners/fishermen belong to associations that allow them to collude on prices
  • Vessel owners/fishermen will be able to sell their permit quota to whomever they please, including non-fishing entities. For instance, they could sell to environmental groups who will not fish the quota. A diminished supply of product would reduce coastal employment, as locking up the resource locks out jobs.
  • Some vessel owners/fishermen want to sell their quota to the highest bidder and then retire
  • Forced to pay higher prices for product, processors will have fewer resources to maintain food safety standards
  • Processors will have less incentive to promote optimal utilization of product received
  • A monopoly quota will destroy the prospects of coastal communities.

Shared Market Quota: The Right Solution: A Win for Consumers, Permit Owners and Processors

A shared market quota system will provide economic safeguards for two key coastal entities: vessel owners/fishermen and processors. In a balanced transferrable quota system, the initial quota would be allocated among the two groups.

A transferrable component will enable shore-side processors to share their quota with vessel owners/fishermen. With a shared quota, processors would be guaranteed product and vessel owners/fishermen would be paid for 100 percent of the fish landed, as they are today.

As with any quota system adopted, a shared market quota would result in a managed catch to help conserve natural resources and maintain a consistent supply for processors and distributors. Unlike a monopoly quota, however, a shared quota would:

  • Assure that market forces drive the cost of the fish for the consumer
  • Allow processors to maintain adequate resources for food safety
  • Enable processors to focus on innovation and responsible utilization of the catch
  • Provide greater overall stability for the industry and coastal communities