LYNDE: ECONOMIC •FEASIBILITY OF GROUNDFISH HARVEST 



or variable. Fixed annual costs are invariate with 

 respect to the amount of vessel use per year. Using 

 the subscripts /' and j as before, the fixed annual 

 costs can be prorated over the length of the fishing 

 trip, allowing for yearly down time due to bad 

 weather, maintenance, and vacations, according 

 to the formula: 



Fy = [r,y(365 - Di)]A, 



where Fij = fixed costs per trip, Tij = length of trip 

 in days, D, = total inoperative days per year, and 

 Ai = annual fixed costs. 



Assuming the crew pays a share of certain vari- 

 able costs, the total fishing costs iCij) incurred by 

 the vessel owner per trip can be expressed as: 



c,7 = Fy + Vij + a - Sij)Wij 



where Vij = variable costs incurred only by vessel 

 owner and Wij = variable costs incurred by owner 

 and crew. 



Setting benefits equal to costs and solving for 

 ex-vessel price gives: 



P = 



F.. + V.. 



-^ y- +w.. 



1 



u 



(1) 



This equation defines the ex-vessel price, P, re- 

 quired to break even for a fishing trip with catch 

 rate U. Conversely, Equation (1) can be used to 

 compute the catch rate required to break even for a 

 fishing trip when the ex- vessel price is P. A com- 



puter program (TRAWL)^ was written to calculate 

 solutions for P over a range of catch rates for a 

 given vessel type and mode of operation. 



A tacit assumption has been made that the 

 criterion for economic feasibility of a fishery is met 

 if a fisherman can receive enough revenue to ba- 

 lance the variable and fixed costs of fishing. In fact, 

 if the vessel and gear already exist and no other 

 more profitable fisheries are available, it will be 

 economically advantageous for the fisherman to 

 enter the fishery in question if it provides enough 

 revenue to cover variable costs alone, since the 

 fixed costs will be incurred whether fishing or not. 

 However, the objective of this paper is to examine 

 the conditions under which the fisherman can 

 cover both fixed and variable costs. 



The model relies on a number of assumptions 

 which relate fishing costs to the vessel type and the 

 mode of operation. Table 1 lists these assumptions 

 according to a cost accounting format similar to 

 that suggested by Smith (1975). A description of 

 the cost derivations and the sources of their esti- 

 mates can be found in Appendix I. Note that, un- 

 like Smith's cost accounting procedures, the aver- 

 age annual cost of financing is included here as a 

 fixed cost. Variable costs IIB-D (Table 1), rep- 

 resented in total by symbol W,j in the above 

 development, are commonly deducted from the 

 gross revenue before the crew shares are taken. 

 Fixed costs lA-F and variable costs IIA are in turn 

 represented by symbols Ai and Vtj above. Crew 



^Written in Fortran IV A program listing and user's guide are 

 available from the author on request. 



Table l. — Fixed and variable fishing costs as a function of vessel characteristics and operating conditions. 



Cost category 



Parameter values and variables 



. Fixed annual costs: 



A. Routine boat and engine maintenance 



B. Insurance: 



1. Hull 



2. P&l 



C. Depreciation 



D. Association dues 



E. Contingencies/miscellaneous 



F. Average annual finance cost 

 n = no. of payment periods 



/ = interest rate per period 

 . Variable costs: 



A. Fishing gear repair and replacement 

 (see Appiend. I) 



B. Fuel: 



1 . Cruising 



2. Towing 



3. Stove and auxiliaries 



4. Lube oil 



C. Food 



D. Ice 



$0.07 X vessel's initial value (VIV) 



0.021 X VIV 



2,100.0 X no. in crew 



0.0533 X VIV 



2,500.0 



0.05 X (above total) 



1.0 X VIV refinanced 



[ % financed! ^ p'd +')" _ H 

 yr financedj Ld + /)" . i J 



$1 .0 X gear costs/h x towing h 



0.2105 X horsepower x travel h x fuel price/I 

 0.1579 X horsepower x towing h x fuel price/I 

 30.283 X trip h x fuel price/I 

 0.235 X trip h x price/I 

 13.50 X trip d x no. in crew 



capacity for groundf ish (wt) 

 1 + (fish:ice virt ratio) 



25.00 



305 



