FISHERY BULLETIN: VOL. 74, NO. 2 



Market expansion and development programs 

 have also been suggested as a means of shifting 

 demand and increasing prices. Market develop- 

 ment is a long term process and the industry 

 should commit itself to such a program. This 

 suggests a greater continuity of programs than 

 the occasional reaction to crisis situations which 

 are evident in the recent history of the industry. 



A much larger question has been introduced in 

 this discussion of economic efficiency. Industry 

 sources have indicated a concern that the indus- 

 try has become overcapitalized in shrimp trawl- 

 ing vessels. One classic solution to this is a total 

 fisheries management scheme which includes a 

 limited entry concept. Other conditions assumed 

 equal, this would increase catch per unit of effort 

 and would result in lower costs per unit of shrimp 

 landed. This is not a short-run solution, however. 

 It is only now being experimented with in U.S. 

 fisheries. A great deal of planning and informa- 

 tion would be needed to design and implement 

 such a program. 



Long-run problems of limited entry include the 

 possibility of creating a stagnant, protected in- 

 dustry which loses touch with both the consumer 

 market and the market for resources. In the long- 

 run this may be more detrimental than going 

 through periodic readjustments such as that 

 which the industry currently faces. 



If it can be assumed that the relative positions 

 of the unit cost and revenue curves remain 

 constant in the future and assume normal pro- 

 duction years, then based on the sample size of 

 each vessel class, the percentage reduction in 

 vessels needed for break even can be calculated. 

 Using class I as an example, in a normal year, the 

 14 vessels in class I would have landed a total of 

 742,000 pounds of shrimp. To experience a break- 

 even rate of return, each vessel would have to 

 land 66,000 pounds of shrimp. Dividing 66,000 

 pounds per vessel into 742,000 pounds implies 

 that class I's total production of 742,000 pounds 

 could only support approximately 11 vessels or 

 79% of the vessels sampled.'^ 



CONCLUSIONS 



The major conclusion from the analysis pre- 



Tt is obvious that if the total Gulf shrimp fleet were reduced 

 to 79% of its current size, total production would also decrease. 

 That is, the estimated reduction in the fleet should be adjusted 

 with respect to the production function. However, calculations 

 using the production function made less than a 1% difference. 



sented here is that investment in a shrimp trawler 

 is unprofitable assuming the environment exist- 

 ing in 1973 when these data were collected and for 

 which the average relationships were estimated. 

 The analysis permits tracing the effects of altered 

 assumptions regarding average prices and vessel 

 landings on profitability. Only class II vessels 

 showed profits under the 1973 conditions. 



The shrimp industry is undergoing consider- 

 able economic stress. The underlying causes 

 relate to factors in the general economy beyond 

 industry control and the rapid expansion in po- 

 tential fishing effort which occurred during the 

 period since the late 1960's. Means of coping with 

 this stress include both improved management to 

 reduce costs and various forms of government 

 programs will be necessary to permit the imple- 

 mentation of some of these ideas. 



Perhaps some would prefer to allow a period of 

 significant readjustment forcing the marginal 

 firms to leave the industry. The costs of this 

 readjustment, both economic and social, must be 

 considered by those who propose this solution. 

 Several things could happen which would pre- 

 vent a significant readjustment: landings could 

 increase dramatically, the economy could recover 

 quickly thus improving demand and prices, or 

 input costs could decline. However, these things 

 may not happen soon enough to avoid the 

 difficult readjustment problems. 



LITERATURE CITED 



BOARD OF Governors of the Federal Reserve System. 



1973. Federal Reserve Bulletin. Div. Admin. Serv., Board 

 Gov. Fed. Res. Syst., Wash., D.C. 59:837-A119. 



1974. Federal Reserve Bulletin. Div. Admin. Serv, Board 

 Gov Fed. Res. Syst, Wash., D.C. 60:683-A88. 



Hayenga, W. A., R. D. Lacewell, and W L. Griffin. 



1974. An economic and financial analysis of Gulf of Mexico 

 shrimp vessels. Tex. Agric. Exp. Stn., Misc. Publ. 1138, 

 14 p. 



Nichols, J. P., and W. L. Griffin. 



1974. Recent trends in catch and fishing effort in the Gulf 

 of Mexico shrimp industry and economic implications. 

 Dep. Agric. Econ. Inf. Rep. 74-5 SP-1. Texas A&M 

 Univ., College Station. 



1975. Trends in catch-effort relationships with economic 

 implications : Gulf of Mexico shrimp fishery. Mar Fish. 

 Rev 37(2): 1-4. 



United States Department of Commerce. 



1974. Fisheries of the United States, 1973. Curr Fish. 



Stat. 6400, 106 p. 

 1974-75. Gulf coast shrimp data. Curr. Fish. Stat. 6442, 



6462, 6503, 6523, 6544, 6564, 6593, 6613, 6633, 6652, 



6671. 



308 



