APPENDIX III APPENDIX III 
High costs for insurance, fuel and fishing gear, as well 
as reduced catch rates were cited as continuing problems. An 
industry official agreed that while some vessels have been 
able to earn a reasonable profit many vessels have operated 
at a loss or have received very low returns even though gross 
revenues have increased. 
The common property nature of the resource is also a 
problem. While increased resource availability could lead 
to improved returns for groundfish vessels, industry and NMFS 
officials stated that fishing effort will have to be limited. 
Some form of limited entry may be needed to obtain maximum 
benefits from improved resource management. 
Because of low returns, unstable resource conditions and 
high investment risks in the groundfish industry, vessel 
financing has been difficult to obtain. While the Fishery 
Conservation and Management Act of 1976 provides the basis 
for solving many of the economic and institutional problems 
leading to the decline of the groundfish industry, some in- 
dustry officials believe that Federal assistance for vessel 
financing will be needed until the problems are solved. 
Product development and processing 
Beyond the problem of increasing the abundance of popular 
domestic species, other factors affecting the potential for 
product development and processing include technological 
processing problems and the need for large capital investments 
in modern processing and freezing facilities. 
Groundfish meat yields from filleted fish could be in- 
creased from the current levels of about 30 percent to about 
50 percent, according to a study of productivity in the pro- 
cessing industry, by using meat separating machines to remove 
flesh from filleted carcasses. However, while these machines 
are available and are used extensively by foreign processors, 
most Atlantic groundfish processors do not use them. The 
limited use of these machines is related to the low price 
of the product produced, the lack of volume production by 
domestic processors and the strong competition from imports. 
As depleted stocks recover and domestic processors increase 
the volume of production, their competitive position is 
expected to improve in relation to imported products. 
Even with strong foreign competition, NMFS and industry 
officials believe U.S. processors may be able to produce 
minced blocks made from silver hake which is underutilized 
by U.S. fishermen. Processors have produced and sold minced 
silver hake blocks but loss of product quality during frozen 
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