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Fishing For
Others: New Relations Of Production |
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With some companies holding more than
they are capable or willing to fish and others with less than they
actually need, ITQs would appear to be 'inefficiently' distributed.
A characteristic market solution to such a problem, perhaps, and
one that is increasingly prevalent in the Icelandic ITQ system,
is that of leasing. Boat owners have been permitted to lease their
ITQs from the onset of the system in 1984. ITQ leasing was originally
proposed by administrators as a way for boat owners to fine-tune
their operation to meet short-term needs arising from unexpected
'devaluations' of ITQ shares, fluctuations in local, regional and
national markets, and by-catch problems (for example, by trading
haddock-ITQs for cod-ITQs). |
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At first, ITQ leasing does not seem
to have been a particularly common practice and it was probably
mainly undertaken on a small scale by operators who needed extra
ITQs after a particularly successful fishing season or for the purposes
outlined above. The lessors in most of these cases were operations
actively engaged in using their own ITQs. In time, however, some
ITQ holders came to discern that considerable profits could be made
through leasing ITQs on a larger scale, particularly with many fishing
operations suffering from the 'devaluation' of ITQ-shares resulting
from recurrent reductions to the TAC for cod after 1988. The emergence
of profit-oriented ITQ-leasing is indicative of a shift in the conceptualization
of fishing rights; a shift that coincided with a growing perception
within the industry that ITQs were not just use-rights but, in effect,
property rights that could be leased to others for profit. |
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The original form of leasing, which
we have chosen to call 'direct ITQ-leasing', is still practised
today for the same reasons as before. For example, it is not uncommon
for boats that have finished their cod-ITQs to accidentally catch
a few tons of cod while fishing haddock or another demersal species,
and if they land the cod, they must get hold of an equivalent amount
of cod-ITQs to cover their catch, else they stand to lose their
fishing licenses. The price of ITQs leased in this way tends to
fluctuate considerably in relation to supply and demand. Thus, at
the end of the fishing year when cod-ITQs are scarce, lease prices
have been known to rise to 70-80% of the market value of the catch,
hardly covering the expenses of fishing and thus making such transactions
particularly unattractive. According to many fishermen, this results
in considerable amounts of fish being thrown back dead into the
sea, especially towards the end of the fishing year when ITQs are
scarce and the lease price is inordinately high. |
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In the past few years, however, new
and more formalized modes of ITQ leasing have begun to emerge. These
transactions involve long-term contracts between large ITQ holders
and smaller operators, where the former provide the latter with
ITQs in return for the catch and a proportion of the proceeds. One
such arrangement, habitually referred to as 'fishing for others'
(veiða fyrir aðra), is becoming increasingly widespread
within the industry, according to fishermen and boat owners we interviewed.
Invariably, in such transactions, the supplier of the ITQs is a
large vertically-integrated company that controls two or more trawlers
and a processing plant. Increasingly, such companies have been sending
their trawlers to exploit new opportunities in international waters
-- a manoeuvre that enables them to put their ITQs to other uses.
This is where the smaller operator comes into the picture. A contract
is arranged, whereby the large ITQ holder transfers ITQs to the
smaller operator's boat. The latter then fishes the ITQs and delivers
the catch to the suppliers' processing plant. In return the smaller
operator receives payment, which usually amounts to about 50-60%
of the market value of the catch. |
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Strictly speaking, then, there is
no lease price paid up front for the ITQs. However, the small scale
operator is effectively paying a lease price of up to half of the
value of the catch. Understandably, the lessee boat owners cannot
make the same level of profits when fishing for others in comparison
to fishing their own ITQs. In both cases their outlay is identical,
but when fishing for others their income is cut by 40-50%. As a
result, they try to compensate for their losses by reducing the
shares of fishermen. By law, fishermen receive a fixed share of
the value of the catch. Before the fishermen's shares are calculated,
however, the boat owner is permitted to deduct maintenance costs
from the proceeds of the catch. Increasingly, the lessee boat owners
have resorted to reckoning the fishermen's shares from the amount
left after the lease price has been subtracted from the value of
the catch -- that is from the fixed price that is paid by the supplier
of the ITQs. The result is that fishermen working for lessee companies
may suffer up to 50% wage-cuts, an arrangement that has, not surprisingly,
caused much discontent in their ranks. |
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The typical lessee operator is an
owner of a relatively small vessel that has either finished its
own annual supply of ITQs, or the owner of a boat that has virtually
no ITQs of its own and is solely operated on leased ITQs. Through
ITQ leasing boat owners with small ITQ holdings manage to prolong
their fishing operations throughout the year. Moreover, by lowering
the shares of their crews, they are just about able to make such
practice economically feasible. For the suppliers of ITQs, however,
participation in these new relations of production represents a
rather lucrative business. By leasing its ITQ shares, a company
can free itself from the expenses of actually catching the fish,
while still procuring up to half of the market value of the resulting
catch. Moreover, it keeps the company's processing facilities well
supplied, while allowing its vessels to pursue other assignments
in international waters, bringing even more fish to be processed. |
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According to our calculations, 74
of the 126 'dwarves' that left the system in 1992 were leasing large
proportions of their newly allocated ITQs in 1991. Apparently, these
operators did not feel they could sustain their business on the
quantity of fishing rights allotted to them, and so instead decided
to meet the demand of larger companies for extra ITQs -- first by
leasing and then by selling. In contrast, the larger ITQ holders,
responding to the same devaluations of ITQ shares that caused such
problems for the smaller operators, accumulated ITQ shares, buying
them from the smaller operators who were leaving the system. Moreover,
it appears that these larger operators also temporarily augmented
their ITQ shares by leasing from the 'dwarves' and 'small' ITQ holders
in 1991. Over the next two years, however, this situation appears
to have reversed dramatically, with the 'giants' being almost the
sole suppliers of net leased ITQs while 'dwarves' and 'small' ITQ
holders have now become lessees. Significantly, this shift in the
directional flow of net leased ITQs would seem to reflect, on the
one hand, the distributional changes described earlier and, on the
other, the emergence of the new relations of production associated
with 'fishing for others'. Interestingly, it is the 'small' ITQ
holders that appear to have become the biggest recipients of leased
ITQs. |
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Evidently, then, the Icelandic fishing
industry is undergoing an extensive restructuring process, where
large vertically-integrated companies have strengthened their position
while smaller operators are being marginalized or forced out of
business. It appears that with access to the fishing stocks now
mediated by the possession of ITQs, the size of an operator's ITQ
share has become the single most important measure of success within
the industry. Some of the small operators seem to be persevering,
despite the onerous effects of recurrent ITQ share devaluations.
Although they do not have recourse to the same sort of financial
reserves used by the larger companies to finance their accumulation
of ITQs, many of the small-scale boat owners endure by entering
into contracts fishing for larger ITQ holders. Such contracts, while
quite lucrative for the lessors, result in reduced profits for lessee
boat owners and lower wages for their employees. All told, this
attests to a growing rift between larger and smaller operators --
effectively, between those who own fishing rights and those who
do not. |
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