H6 MCINSINC; IHl SMAIIIR (OMMFRCIAI I ISIIIRIIS 



which markets naturally dc|X)sncd r».)c. the Canadian per- 

 mits authori/e tishernicn to iinp<>und spawning herring in 

 ix>nds (.■i>ntainink; Ironds of kelp strung on lines. I his pro- 

 duces a supenor pnxluct. and in the quality-sensitive Jap- 

 anese market, it brings much higher prices. 



Since l**79 spawii-on-kelp ("J") licences have been 

 held by 28 persons, 18 of which are Indians, ["he licence 

 is issued to a person and authorizes the holder to harvest 

 a certain quantity i>f product; in l')82 all licences author- 

 ize pri>duction o\' eight tonnes. It must be harvested in 

 enclosures and the location of these, the place where the 

 kelp may be harvested and other operating requirements 

 are specified in the licence. Licences are renewed annu- 

 ally at no charge, subject only to minimal landings 

 requirements. Licence holders need not operate the 

 catching vessel, but the licences are technically non- 

 transferable. Operations are closely monitored, and the 

 licensee must obtain the approval of the local fishery 

 otticer before beginmng each stage of the production pro- 

 cess. 



While the licensing system has succeeded in preserving 

 the economic viability of this fishery better than most 

 others, it also provides a vivid example of the Depart- 

 ment's attempts to allocate fishing rights to achieve vague 

 social objectives. First, applicants for licences were 

 selected by rating them according to complex point sys- 

 tems that credited, with varying weights, residence in cer- 

 tain coastal regions, participation in other herring fisher- 

 ies and previous expressions of interest. Applications by 

 Indians were given priority. 



Second, the success of this fishery apparently led to 

 concern that some licensees, especially those who also 

 had roe-herring seine licences, would make excessive 

 profits. So they were required to choose between these 

 two fisheries, and spawn-on-kelp licensees (and even their 

 crew members) were prohibited from engaging in the roe- 

 herring fishery. Then, in an apparent attempt to be fair to 

 these fishermen, the spawn-on-kelp quotas were adjusted 

 in size in an eflTort to equate net earnings in the two 

 fisheries. 



These regulations are unnecessary and inefllective. 

 Restricting spawn-on-kelp licensees from engaging in 

 roe-herring fishing is a source of great irritation, particu- 

 larly insofar as the reverse is not prohibited: roe-herring 

 licensees and crew can and do become involved in 

 spawn-on-kelp operations as catchers. In any event, 

 licensees in both fisheries can engage in any of the other 

 limited-entry fisheries if they obtain the necessary 

 licences. 



Fixing the size of quota allocations to licensees in a 

 fishery according to their earnings in another fishery is an 

 inappropriate policy. As prices and costs change from 

 year to year, the relationship of profits between two 



fisheries is bound to change, so any effort to equalize 

 profits over the long run will be futile. Today, for exam- 

 ple, the average net return earned by spawn-on-kcip 

 licensees is at least double that of roe-herring liceasees. 

 Further evidence of the futility of the policy is the 

 observed value of spawn-on-kelp licences, which 

 (although both they and roe-herring licences are techni- 

 cally nontransferable) is much greater than that of rt)e- 

 herring licences. The policy should be, instead, to allo- 

 cate licences of suflRcient size that maximum returns can 

 be generated in all fisheries. And the returns in excess of 

 a reasonable profit to licensees should be captured 

 through charges for the fishing privileges. 



This industry is constrained by the number of licences 

 and. although a huge production is technically possible, 

 the Department has feared that the small Japanese mar- 

 ket could be flooded. However, it is now believed that 

 sales could be expanded somewhat without depressing 

 prices. 



To take advantage of these opportunities and to 

 improve the framework for regulating this fishery I pro- 

 pose the following changes: 



53. Spawn-on-kelp licences should be replaced in 1983 

 with mariculture leases that designate specific areas of 

 operations and have the other characteristics proposed 

 (in Chapters 8 and 11) for this form of fishing privi- 

 lege. The management plan approved under each 

 lease should specify, among other things, the quantity 

 of product to be produced. 



54. Leases for new operations should be allocated through 

 competitive bids, with no special advantage being 

 given to existing licensees or other groups, except 

 where the applicant controls the foreshore or, for other 

 reasons, competition is unfeasible. 



55. The current special restrictioas on transfers of 

 licences and on licensees' participation in other fisher- 

 ies should be abolished. 



The need for the royalty recommended in Chapter 8 is 

 particularly urgent, to recover for the public some of the 

 fishery's substantial value and to moderate escalation in 

 licence values. Licence fees have never been charged, 

 apparently because the Department is reluctant to make 

 additional levies on Indians. But these are exceedingly 

 valuable privileges; they are costly to administer and 

 monitor; and without significant royalties, their holders 

 will realize undue windfall profits. 



AB ALONE 



The abalone fishery is small but lucrative, and it pre- 

 sents promising opportunities for development through 

 enhanced production. Its relatively healthy condition is 



