Column IX, the average overhead per 

 vessel is based on data submitted by 

 vessel owners for the years 1953-57. This 

 vas a period vAien effort was 75 percent to 

 100 percent of "normal". It is likely 

 that the $65,000 figure is understated for 

 lower levels of fleet effort and over- 

 stated for higher levels of fleet effort. 

 For instance, the cost of hull and pro- 

 tection and indemnity insurance is likely 

 to be higher per vessel at lower levels 

 and less expensive at higher levels due to 

 the law of large numbers in spreading 

 risk. 86/ 



Column X, per vessel profit or loss 

 at each level of fishing effort, is the 

 result of subtracting overhead expenses 

 from overhead contribution. 



Table III-13 considers liie cost 

 effort relationship in its effect on crew 

 earnings. Column II, the gross crew share 

 was foiind to be 57.8 percent of gross 

 revenues . 



Out of the gross crew share are paid 

 various expenses charged to the fishermen. 

 Food, fuel, and ice (nine months of the 

 year) are the principal items paid for by 

 the crew. On an average basis, it was 

 found that at current 1956-58 prices, the 

 expenses incurred by the crew of a stand- 

 ard otter- trawler would be about $l63 per 

 day out of port, column III. Since these 

 costs are nearly directly variable with 

 fishing time, they are assumed to be pro- 

 portional in totcQ. to the changes in fish- 

 ing effort. The amount then remaining is 

 known as the net crew share, (column IV). 

 (Present fishermen contracts with Boston 

 vessel owners provide for a minimum net 

 crew share per man equivalent to 512 per 

 day out of port, /column "TjJ . Vfhen the 

 net crew share per man is less than this 

 minimum, the owner has to make up the 

 deficiencies.) 



Table III-IO made it clear that in- 

 creases in effort do not provide propor- 

 tional increases in landings. Examination 

 of table III-12 and III-13 reveals the 

 effect of the dindnishing unit returns 

 inherent in this inJustry , 



A word of caution is necessary con- 

 cerning these tables. This analysis is 

 for illustrative purposes only and is 

 based on a situation in which average 

 large otter trawlers fish only on Georges 

 Bank and only for haddock. In reality, 

 they also fish the western Nova Scotian 

 banks in the spring. These travders also 

 catch other species such as cod and pollock 

 when fishing Georges Bank. Revenues per 

 vessel and net crew shares are higher than 

 shown when weight is given to these factors. 



Nevertheless, iiiese figures are valu- 

 able in developing valid conclusions about 

 the relative position of the industry at 

 present. If one were a monopolist and 

 had sole control over all vessels that 

 could possibly fish for Georges Bank 

 haddock, the poi n t of m ax imum profit would 

 be at a level 50 percent or less of the 

 recent average." Not only would per vessel 

 profit be highest at this point, but the 

 combined profit to the owner of all the 

 vessels fishing would be at its height 

 here rather than at a level where more 

 vessels were used, (table UI-lu) . 



If one owner were to gain control 

 over all vessels in the fleet, it would 

 be to his interest to reduce, in due time, 

 the number of vessels operating for haddock. 

 The reason is again basically that over a 

 wide range of effort total landings will 

 not vaiy significantly. Stable landings 

 mean stable prices and, therefore, as 

 effort increases a stable revenue is shared 

 among more vinits. Further, the increase 

 in the number of vessels with their attend- 

 ant overhead (fixed) costs means not only 



86/ All data were submitted by operators of large otter trawlers. The $65,000 

 figure is an average, however, and may run about f75-90,000 for the bigger OTL's 

 and $30-60,000 for the smaller. Another variable is managements' decisions on 

 planned refitting. This figure can vary greatly among similar-sized vessels. 



Ii9 



