173 



The information presented in Table 1 is useful for developing long 

 run management and marketing strategies. The information allows 

 processing firms to compare the costs and benefits of providing 

 sets of product attributes. The composition of these attributes 

 however, are also impacted by the regulatory strategies selected by 

 policymakers in at least two ways: 1) fisheries policy can 

 significantly affect the level of investment necessary to control 

 product quality, and; 2) regulatory policy can affect when, where, 

 and under what conditions the fish are harvested. Due to the 

 spatial and temporal characteristics of Pacific whiting these 

 management decisions can have significant long run impacts on a 

 number of characteristics of the stocks and harvests including 

 stock size, harvest levels, and variation in intrinsic product 

 attributes (see Topics 3 and 4 for details) , 



An additional factor related to controlling product characteristics 

 is that improvements in product attributes provide greater absolute 

 and relative value to second receivers — a result consistent with 

 other survey findings which showed that the further downstream the 

 buyer, the more important product quality characteristics become 

 (Sylvia and Peters 1991) . These findings raise important issues 

 related to managing product qualities, developing sales strategies, 

 and increasing industry profits. For example, one of the primary 

 roles of the seafood middleman is to match buyers with suppliers, 

 especially when variability in product supply and product 

 characteristics is significant. Reducing this variability by 

 providing longer and more consistent supplies of quality product 

 can not only generate higher prices but can reduce distribution 

 costs and eliminate middlemen. Survey results showed that second 

 receivers of Pacific whiting are more sensitive to product quality 

 characteristics than first buyers. Therefore, while increasing the 

 supply availability of the product and standardizing product 

 characteristics can increase margins (up to 25%) and reduce market 

 prices by eliminating the "cut" of unnecessary middlemen, it also 

 requires that product quality be improved for the more quality 

 sensitive downstream buyer. 



Issues regarding product quality and fisheries management also 

 affect investment behavior. Prices for seafood products, like many 

 agricultural products, demonstrate significant volatility over 

 time. In order to reduce risks associated with price volatility, 

 producers commonly diversify production strategies and develop a 

 "portfolio" of products. The same is true for the seafood 

 industry. By strategically controlling product quality a 

 "portfolio" of product forms could be processed from Pacific 

 whiting including H&G, fillets, surimi, minced, breaded, and other 

 value-added products (Sylvia and Peters 1991) . Given variations in 

 market conditions and inter- and intra-seasonal variation in 

 intrinsic product characteristics, strategies based on diversified 

 products would be advantageous for sustaining development and 

 reducing overall industry risks. 



