Vessel Replacement Rules and Procedures on the Atlantic Coast
Discussion Paper
TABLE OF CONTENTS
- Introduction
- Reasons to Regulate
- Changing Fisheries
- The Safety-at-Sea Issue
- Decision-making on Vessel
Replacement
- Principles and
Possible Approaches
- Next Steps
- Questions for Discussion
The current vessel replacement policy for Atlantic fisheries was developed in
the 1970s and 80s. Conditions in the industry have changed significantly since
then, and many industry stakeholders are calling for greater flexibility in the
rules to accommodate new fisheries and new ways of conducting their harvesting
operations.
In response to such concerns, DFO has undertaken a review of the current
policy with the goal of developing a new Atlantic-wide approach on vessel
replacement. The purpose of this paper is to encourage and support discussion on
three questions:
- Is there a need for new rules on vessel replacement within fleets?
- If there is a need for substantial changes in the rules, is there also a
need for new procedures for making the rules on vessel replacement?
- If the rules and the procedures are to change, what policy principles
should DFO establish to guide such changes?
The paper will describe the reasons why the rules were set up the way they
were, and identify changes in the industry that suggest the need for new
approaches. It will then look at key factors to be taken into consideration,
including limits on harvesting capacity, vessel safety concerns, impacts on
conservation issues and international policy commitments.
The paper will then propose principles and provide examples of possible
changes and future processes to consider changes to vessel replacement rules. It
will conclude with discussion questions to assist stakeholders in preparing
their contributions to the consultation process.
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At the outset of this discussion it is important to establish the reasons why
government and industry have generally agreed on the need for effective vessel
replacement rules. Such policies and rules serve three basic purposes:
- Improved conservation through limitation of harvesting capacity;
- More orderly fisheries management through limitations on competition
within and between fleets;
- Meeting national and international obligations for management of fisheries
and oceans.
2.1 Vessel Size and the Conservation Objective
Vessel replacement has important implications for conservation of fish
stocks. Generally speaking, the larger the vessel, the greater its capacity to
catch fish. A larger vessel travels farther and faster, carries and deploys more
gear, and can store more catch in its holds. If the whole fleet up-sizes the
tendency will be for stocks to be harvested at the limits of sustainability with
very little margin for error in the determination of sustainable yields.
This is a complex issue, however, because actual harvesting capacity is not
just a matter of vessel length or even tonnage. The newer vessels carry space
age navigation equipment and deploy more sophisticated fishing gear, they cover
more ground and operate in a wider range of sea and weather conditions. All
these things can result in increased fishing effort. Fish harvesters understand
clearly that vessel size is only one aspect of capacity, and many want more say
in vessel replacement policies so that they can develop realistic and timely
controls on all these factors.
Another issue is latent capacity. Some fleets have access to multiple
licenses but are only active in one or two fisheries for short periods during
the year because of the lack of other fishing opportunities or of quota for
other species. If this fleet was to receive a new allocation in a different
fishery, the actual capacity of the overall fleet could suddenly double or
triple because all that harvesting power would come into use. In planning new
vessel replacement strategies, industry and government participants will need to
take account of the latent capacity in the fleet and consider the most
appropriate ways to manage and control it.
The added factor is that the bigger and more technologically sophisticated
vessels are, the greater the capital, operating and depreciation costs. Owners
of "latent capacity" often lobby hard for expanded allocations to help them pay
for their underutilized investments. For all vessel owners, the higher the
financial risks, the greater the likely temptations to break the rules to
increase earnings. Unreported catches and sales, "high-grading" and dumping
at-sea are illegal practices that may increase if harvesters are under extreme
financial pressure. If there is a stock decline, as happened with groundfish
throughout the Atlantic, the pressure to sacrifice conservation objectives may
be greatest just when the stocks are most vulnerable.
Vessel replacement policies have therefore been used to control capacity for
conservation purposes. In most fleets the rules were intended to define a type
and size of vessel that could support a viable enterprise within sustainable
harvesting levels without undue pressure to over-exploit resources.
An important goal for the regulation of vessel size and replacement is
therefore to help maintain a sustainable balance between the available fish
stocks and the number of viable harvesting enterprises.
Rules that work for one fleet at one time may not work well for another fleet
or for the same fleet when its conditions change. The challenge for licence
holders is to develop a dynamic and flexible approach.
To maintain a sustainable balance between conservation and fleet viability
the policy and regulatory system will have to deal effectively, on an ongoing
basis, with changes in technology, capital and operating costs, market
conditions and the fish stocks themselves. The development of self-adjustment
mechanisms in fleets will help to address these changes in circumstances.
2.2 Orderly Management of Fisheries
Before vessel replacement rules were first brought in the majority of fleets
operated in competitive fisheries where individual enterprises could try to
catch as large a share of the available quota as possible. Having a larger and
faster vessel was an obvious advantage, and so the tendency was for some
harvesters to buy larger boats to try to out-fish their neighbours. Catching
capacity within each fleet would ratchet up, and this in turn created friction
between fleets as groups pushed for larger shares of the global quota.
Fish harvesters and government soon recognized that if vessel size was not
regulated the tendency would be for the largest enterprises to get the lion's
share of the quota while harvesters with smaller vessels would lose their
economic viability. These competitive pressures still operate in some fleets and
between fleets when overall allocations are contested.
Vessel replacement rules can therefore help to stabilize fleets and ensure
that an appropriate number of enterprises have a chance to take a reasonable
share of the available resource. In the process these rules also may limit
competition between fleets.
2.3 Policy on Capacity Management
Since the early 1990s more effective control of fishing effort and vessel
capacity has been a goal of fisheries management policy in Canada and
internationally.
The Food and Agriculture Organization (FAO) of the United Nations has taken
the lead in the development of international policies and guidelines for the
conservation of fish resources. A major focus is capacity reduction in fleets.
The FAO estimates that there is excess fish harvesting capacity of at least 50%
in the world, and is pressing the major fishing nations to support their plan to
solve this problem.
Canada has signed on to the
FAO's International Plan of Action on the Management of Fishing Capacity.
Canada's Auditor General and the Fisheries Resources Conservation Council have
also called for continued capacity reduction measures.
DFO has implemented this policy direction through groundfish adjustment
programs since 1991 and the Core License Policy introduced in 1995. DFO does not
support any increase in overall harvesting capacity when new fisheries are
opened up or established fisheries expand. After conservation concerns and the
rights of Aboriginal peoples, new fishing opportunities in expanding fisheries
or new species will be allocated to enterprises that are designated "core",
i.e., that hold licences for key commercial species and have the ability to
transfer to others such licences based on a history of committed fishing
activity.
The Core
Licensing Policy supports the consolidation of fishing opportunities in the
hands of committed professional harvesters and the development of multi-license
enterprises that are able to maintain economic viability through the ups and
downs in different fisheries. The multi-license approach again suggests the need
for greater flexibility in vessel replacement rules to accommodate more diverse
harvesting activities.
DFO and the Government of Canada have been successful in bringing about
significant rationalization of fleets since the early 1990s. In this current
consideration of vessel replacement rules a major goal is to maintain the gains
that have been made towards "right-sizing" the industry and promoting
sustainable fishing enterprises and operations.
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3.1 Competitive and Quota Managed Fisheries
When the current vessel replacement policy was set up most fleets were
operating in competitive fisheries. This meant that individual harvesting
enterprises had considerable leeway to try to catch as much of the total
allowable catch (TAC) as possible before it was used up.
Vessel replacement rules were developed in consultation with industry groups
as important ways to control such competition for limited resources within
fleets. Other important controls for conservation and orderly harvest included
limited entry licensing and effort controls such as trap limits, seasons and
trip limits.
In some competitive fisheries these management strategies have been
successful in maintaining the balance between overall fleet viability and
sustainable harvesting levels. In other fisheries, however, concerns about short
seasons, gluts in landings, and the costs of enforcing the rules have led to the
adoption of individual quota (IQ) management systems.
In 1999, IQ fisheries accounted for close to 50% of total landed values in
Canadian fisheries. About 21 out of 27 key commercial fisheries in the four
Atlantic DFO regions are managed at least partially under IQ or of individual
transferable quota (ITQ) systems. The important exception is the inshore lobster
fishery.
The shift from competitive to IQ/ITQ management approaches has important
implications for the control of vessel size and replacement.
In competitive fisheries there is a continuing need to regulate vessels,
gear, and day-to-day fishing activities for the fleet as a whole to maintain
fair and appropriate competition within the fleet. Without such controls there
is a danger that the most aggressive enterprises will expand their fishing
effort at direct cost to the viability of other enterprises and perhaps to the
sustainability of the stock.
In IQ fisheries, every enterprise has a well-defined share of the TAC so the
incentives should be different. In theory, these harvesters will be concerned
with earning the most income from a pre-set amount of fish and there will be no
advantage to be gained by building a bigger, faster boat if it increases
operating costs.
Many participants in IQ fisheries will argue that there is less need to
control vessel size and replacement in their fleets because there is no
competitive advantage in up-sizing. Either the fleet or the individual
enterprise should therefore have greater room to make these decisions according
to their business objectives and safety concerns.
3.2 Changes in Fishing Opportunities and Methods
Along with the shift to IQ management, another factor in the concern about
vessel replacement is the ongoing change in fishing activities within fleets.
For example, in the lobster fishery in parts of Maritimes Region harvesters
have taken advantage of strong market conditions, new navigation technologies
and improved traps to fish right through the winter months and to operate in
deeper waters out to 50 miles. Some harvesters want greater flexibility to
modify their vessels for these conditions, while others prefer to maintain the
current controls on vessel size and capacity.
Faced with reduced landings in groundfish fisheries some harvesters are
turning their attention to improvements in fish quality to attract better prices
and maintain their overall revenues. Better on-board facilities for fish
handling and storage may in turn require changes in vessel design and layout.
Since the groundfish crisis of the early 1990s fleets have diversified their
operations to take advantage of the new fishing opportunities in shellfish. In
Newfoundland in particular, harvesters who previously depended on the near-shore
cod fishery are now fishing shrimp and snow crab in more distant waters.
Shellfish landings in the Newfoundland Region grew from 57,000 mt in 1992 to
152,000 mt in 2001, an increase of 167%. For the Atlantic fishery overall
shellfish landings expanded from 239,000 mt to 423,000 mt, an increase of 77%.
A change of this scale in harvesting activities might in itself suggest the
need for changes in the types and sizes of vessels employed in the fishery. In
addition, many enterprises are now less specialized than before, and most have
significant participation in two or more major commercial fisheries, which
provide further support for the need to reconsider vessel size and replacement
policies.
All of these trends again point to the need for new approaches to regulating
vessel size, and for greater flexibility to adjust the rules to changing
conditions and management objectives in the industry.
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Safety at sea is a growing concern throughout the Atlantic fisheries.
Transport Canada and the various provincial agencies responsible for workplace
health and safety have been developing more stringent regulations on safety
including mandatory training.
Because of the many changes in fleet structures and fishing operations
discussed above, industry stakeholders are also paying more attention to safety
at sea issues. Harvesters often refer to safety concerns when they call for
greater flexibility in vessel replacement rules to allow them to use larger
vessels in their more diversified fishing operations.
In Newfoundland and Labrador between 1993 and 1999 there was a dramatic
increase in the number of incidents at sea where Search and Rescue support was
required, and 46 individuals lost their lives in these incidents. A subsequent
DFO review concluded that vessel size was a factor in many incidents, but that
other issues also had to be addressed. Many incidents could have been avoided
with better vessel maintenance and safety equipment.
The majority of harvesters throughout the Atlantic fishery have not yet
completed the mandatory Marine Emergency Duties (MED) course and most have
no-safety at sea training at all. Only a minority of harvesters has formal
qualifications in navigation, vessel handling and rules of the road.
At meetings of Transport Canada's Canadian Marine Advisory Committee (CMAC)
harvester representatives generally support expanded flexibility in vessel size
rules for particular fleets. However most see this as one of a number of
measures to improve safety along with appropriate equipment and training. Recent
CMAC discussions focused on mandatory life rafts with the recognition that many
fishing vessels are currently too small to be able to carry such equipment.
The DFO review concluded that there are many fishing enterprises that do not
generate sufficient revenues to support the necessary investments in safety
equipment and training. More flexible vessel size rules will not have much
impact on the more marginal enterprises.
Based on its review, DFO has recognized that safety at sea is one factor that
should be taken into account in licensing and vessel replacement policies. While
DFO is not directly responsible for regulation of commercial vessel safety at
sea, it will work with industry and with the appropriate federal and provincial
agencies to ensure that departmental policies are consistent with, and
supportive of, efforts to improve health and safety in the fishing industry. The
potential safety impacts of fisheries management measures will also be taken
into consideration in developing fishing plans.
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At the current stage in the development of management systems for Atlantic
fisheries, decisions on vessel replacement rules are made through the
established system of direct, hands-on regulation by DFO Resource Management
staff supported by joint planning and consultation processes with stakeholders.
Over the last decade, however, co-management approaches have been developed
in many fisheries to deal with a variety of decision-making processes. These
approaches effectively transfer various responsibilities for regulating
fisheries to fleets for fixed periods of time under formal co-management
agreements. In future it may be possible to include regulation of vessel size
and replacement within a wider commitment to shared stewardship in Atlantic
fisheries.
5.1 The Current Approach
At present the creation, modification and enforcement of rules on vessel
replacement are the sole responsibility of DFO, and all take place through
established fisheries management procedures dating back to the 1970s. Industry
stakeholders are consulted through advisory committees and the wider integrated
fisheries management planning (IFMP) process, but at the end of the day the
Department decides.
There is growing criticism of this top-down process and of DFO's role in
"micro-managing" many of the practical, day-to-day activities of particular
fleets. Some observers see this as part of a tradition of paternalism whereby
responsibility for decision-making, and accountability for results, are taken
out of the hands of the people who have the most at stake.
According to this view, industry participants who do not feel ownership for
the rules are more likely to try to bend or break them. This in turn results in
higher costs for surveillance and enforcement.
While it has certain strengths, the traditional management model is not
always effective in responding to changing conditions in specific fleets or
fisheries. With particular regard to vessel replacement rules, it has three
distinct drawbacks:
- Slowness and inflexibility in controlling or accommodating changes in
technology and vessel design;
- Slowness and inflexibility in reacting to changing operational conditions
and management objectives within particular fleets;
- Over-dependence on DFO to monitor compliance and enforce the rules.
As stated above, the reason to have rules on vessel size and replacement is
to maintain a sustainable balance between conservation objectives and the size
and harvesting capacity of the fleet. It is possible that better results might
be achieved with less direct involvement by DFO and expanded industry
self-management on the level of fleets or local fisheries.
5.2 Shared Stewardship
The
Discussion Paper for the Atlantic Fisheries Policy Review (AFPR) has
proposed three basic objectives for fisheries management:
- Conservation and sustainable utilization;
- Orderly management; and,
- Shared stewardship.
For the shared stewardship objective the goal is to enable
industry stakeholders to ...
assume greater responsibilities in fisheries management activities and
decision-making in areas related to local allocations and internal fleet shares,
co-ordination of different fleet sectors and fisheries, and the preparation and
implementation of fishing plans on the local, regional and cross-regional
levels.
The AFPR Discussion Paper also provides a definition of
co-management as...
the sharing of authority and responsibility for fisheries management, and of
accountability for results, between DFO and the resource users.
The basic idea is that industry stakeholders take on more significant
responsibilities for managing their own fisheries and along with it some
expanded share of the management costs.
A shared stewardship approach to the regulation of vessel size and
replacement could occur through existing advisory processes, or as a component
of a more formal co-management arrangement. More generally, shared stewardship
over vessel size and replacement might also involve a more global policy
approach for the entire inshore (<65') sector that would be developed through
consultation.
In any case, the implementation of a shared stewardship approach to the
regulation of vessel size and replacement might involve four steps:
- DFO would set the overall policy direction and establish guiding
principles and policy objectives;
- DFO would devolve responsibilities to fleet organizations or other
legitimate industry groups that demonstrated a willingness and capacity to
develop proposals for replacement rules;
- The fleet organization or other type of industry group would proceed with
the development and implementation of new rules, subject to evaluation against
principles and approval;
- Both the proposal and its evaluation will be made public to promote
transparency in decision-making; and
- DFO would oversee monitoring and evaluation of the new rules in full
cooperation with the stakeholder groups involved.
In setting the overall policy direction DFO would be responsible to ensure
that new rules would be consistent with its overall policy goals and
particularly with the objectives of sustainable utilization and orderly
management. DFO would also be responsible to ensure that the decision-making
process under such co-management arrangements was fair and equitable. In
particular it would insist on:
- Transparency in decision-making processes and outcomes;
- Opportunities for all licence holders in the fleet or fishery to
participate in decision-making through appropriate and effective democratic
procedures;
- Meaningful consultations with other fleets or interest groups who might be
impacted by the decisions;
5.3 The Future Outlook
Under the current Fisheries Act DFO is limited in its abilities to formally
delegate fisheries management responsibilities and authority. Co-management
arrangements are currently made on a somewhat ad hoc basis through IFMPs and
joint project agreements (JPAs).
Consistent with the approach spelled out by the AFPR, DFO expects that over
time, as requisite legislative changes are made and resource user groups
demonstrate their capabilities to take on greater responsibilities, aspects of
decision-making on vessel size and replacement may be delegated to resource
users.
Until these larger changes are achieved, there will continue to be
considerable latitude for fleets to make proposals for new rules and procedures,
and to marshal industry support for such changes. However the final authority to
approve such changes will rest with the Department. It will make these decisions
based on larger policy objectives and principles that must be clearly spelled
out and communicated to industry stakeholders.
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This section of the discussion paper suggests three elements of the new
approach: proposed principles to govern changes in vessel replacement rules,
examples of changes to those rules, and new ways of making decisions about
such rules.
6.1 Proposed Principles
In considering changes in vessel replacement rules, DFO will take steps to
ensure that any new approach is consistent with the overall policy goals for
conservation and orderly management. The following set of principles is
proposed:
- New rules for a particular fleet or fishery should not compromise
objectives for conservation and sustainable utilization.
- There should be no increase in overall harvesting capacity in the fleet,
and preferably new vessel replacement rules should contribute to reduced
capacity.
- New vessel replacement rules should encourage self-adjustment mechanisms.
- New vessel replacement rules should enhance safety and be consistent with
the policies and regulations of other agencies responsible for safety at sea.
- New rules should contribute to improved economic viability of fleets and
not generate pressures for expanded allocations.
- New rules should not result in any changes in allocations, fleet shares or
access.
- Only core licence holders with permanent licences will benefit from
changes to rules.
- New rules should be readily enforceable and should not increase
administrative and enforcement workloads for DFO.
- New rules should be consistent with the objectives of current licensing
policy including owner-operator rules and the emphasis on multi-licensed
enterprises.
- New rules should take into account the fact that fishing enterprises may
hold licences for more than one fishery.
6.2 Examples of Possible Rule Changes
If there were greater flexibility in the procedures for making vessel
replacement rules and in the rules themselves, what new approaches might be
developed? Some approaches might be effective in one situation but not another.
Fleets might have scope to move towards greater flexibility or, alternatively,
to impose more restrictive control on the choices of individual harvesters.
The following are examples of the types of changes that fleets might pursue,
which would then be evaluated using the principles outlined above in any
particular situation:
- Flexibility to allow two enterprises to combine/partner by pooling their
quota shares or licences or gear (on a temporary or permanent basis), and
using a larger vessel than formerly.
- A community or group quota approach whereby a number of harvesters
collectively manage a shared quota with the safest and most efficient fleet of
vessels.
- Adoption of quota management programs, such as Individual Transferable
Quotas.
- Flexibility within IQ/ITQ programs to allow individuals to transfer their
quotas to other vessels on a temporary or long-term basis.
- The removal of any restriction on vessel size in a fleet provided that any
new vessel is only used in IQ fisheries.
6.3. Procedural Options
The above section identifies a few possible examples for changes in vessel
replacement rules. It is understood, however, that many more such examples might
be developed to fit the unique circumstances of different fleets and fisheries.
Participants in different fisheries have specific concerns around safety,
accommodation of particular types of gear or fishing methods, and ways to
control rule breaking and inappropriate forms of competition. Industry groups
are often very creative and innovative in coming up with solutions to the
problems that are of greatest concern to them in their local situations.
Perhaps the most important area of change, therefore, would be to invite
legitimate resource user groups to develop proposals through innovations in the
fisheries management planning process and through different types of
co-management arrangements. Proposals will be discussed in existing advisory
processes and then assessed by DFO against the principles.
To address DFO policy objectives for orderly management, procedures for the
development and implementation of any such rule changes should be fully
transparent, and there should be full and appropriate consultation with direct
stakeholders and other groups who might be impacted by the proposed changes.
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DFO's objective is to have a new vessel replacement approach in effect for
the 2003 fishing season.
Groups and individuals who have reviewed this discussion paper and wish to
respond in writing can do so at the following addresses:
- Vessel Replacement Rules Review,
Fisheries and Oceans
P.O. Box 5667,
St. John's, Newfoundland and Labrador
A1C 5X1
(FAX : 709-772-3628)
- Vessel Replacement Rules Review,
Fisheries and Oceans
176 Portland Street, 5th floor
Marine House
P.O. Box 1035.
Dartmouth, Nova Scotia
B2Y 4T3
(FAX : 902-426-9683)
- Vessel Replacement Rules Review
Fisheries and Oceans
P.O. Box 5030
Moncton, New Brunswick
E1C 0E6
(FAX : 506-851-6705)
- Vessel Replacement Rules Review
Fisheries and Oceans
104 Dalhousie
Quebec, QC
G1K 7Y7
(FAX : 418-649-8082)
- Vessel Replacement Rules Review
Fisheries and Oceans
P.O. Box 358
Iqaluit, Nunavut
X0A 0H0
(FAX : 869-979-8029)
- Vessel Replacement Rules Review
Fisheries and Oceans
200 Kent Street, Station 13026
Ottawa, ONT
K1A 0E6
(FAX : 613-990-7051)
- or by e-mail at
Vessel-Bateau@DFO-MPO.GC.CA
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In thinking about new approaches to making vessel replacement rules and about
what the rules might be, stakeholders might consider the following questions:
- Are the principles proposed by DFO clear and appropriate for setting a new
policy direction for vessel replacement
- In what practical ways are current vessel replacement rules a constraint
on vessel and crew safety, or on the viability of fishing
enterprises, and how might they be improved?
- What are the possible benefits of creating greater flexibility for fleets
to develop new vessel replacement rules?
- What are the possible drawbacks if fleets have a greater say in vessel
replacement rules?
- What would be the best ways to balance greater flexibility in vessel
replacement rules with controls on harvesting capacity and fleet viability?
- Do fleets have the organizational capabilities and tools to play a greater
role in managing vessel replacement rules and procedures?
- How should decisions on changes in vessel replacement rules be made within
fleets, and what would be the most effective consultation methods?
- What should be the role of the conservation harvest planning (CHP) and the
integrated fisheries management planning (IFMP) processes in dealing with
possible changes to vessel replacement rules, and is there a need for
additional planning mechanisms to deal with such issues?
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