179 



Dr. White. We would not be satisfied with the scientific evidence 

 collected by others than the observers we have trained. 



Mr. McCloskey. Well, let me ask this. Could I ask unanimous con- 

 sent that the record be extended for 10 days for inclusion of this 

 fact? What will be the cost of a can of tuna on today's market if as 

 part of a license application an observer is placed on every domestic 

 fishing boat at the expense of the industry? 



When they apply for a license, they would agree to accept an ob- 

 server and bear the cost. What would be the total cost of an observer 

 program and how would it be reflected in the overhead of the com- 

 pany during business? . 



Dr. White. We would be delighted to supply the information. 



[The following was received:] 



Estimated Effect of a Fleet-funded 100% Observer Program on Retail 



Canned Tuna Prices 



In order to estimate the effect a substantial cost increase on a raw product 

 will have on the finished product, one must make some broad assumptions 

 which can greatly change the effect. Therefore, the following assumptions are 



made in this analysis: «.„«_. 



1 Observer program costs incurred by Certificate Holders would be tians- 

 ferred directly up the chain from the catching vessel to the consumer. 



2. No change in imported /domestic tuna supply usage by processors. 



3! 1977 tuna catch will maintain its present 5 year average level. 



4. U.S. purse seine effort on tuna associated with porpoise will not change 



in 1977. . , . , . .. 



Given these assumptions, we are able to make the following calculations: 



1. The 5 year average tuna landings (1970-74) for light meat tuna species 

 total 460,253 thousand pounds. 1 



2. The present 1977 exvessel price for light meat tuna is approximately ?boU 

 ($655 for YF) per ton or $0.32% per pound. 



3. The total estimated cost for a 100% observer program is $0 million or 

 $0.01 per pound based on the 5 year average landings. ($5 million -f- #1.). 



4. Thus the 1977 estimated exvessel price per pound for raw light meat tuna 

 would be #2 + #3 or $0.33V- 2 per pound. 



5. This represents a percent increase in exvessel price per pound of light 

 meat tuna (#3 -f- #2) of 3.1%. 



6. An unpublished study indicates that a 1% rise in the exvessel price re- 

 sults in a les than 1% increase in the retail price. Given the estimated per- 

 cent increase in raw tuna price, then the responding percent increased in 

 retail price can be estimated by a factor indicated in the study. Thus, a 3.1% 

 increase in exvessel price will cause an estimated 2% increase in retail price. 



7. The 1976 average retail price of chunk light meat tuna was $1.56 per 

 pound.' 



8. This would mean that a $5 million cost increase to the fleet could cause 

 a 2% rise in the retail canned light meat tuna price or $0.03 per pound. (#6 

 x #7). 



Mr. McCloskey. I have read in the papers that some skippers 

 have gone under foreign flags in order to escape United States reg- 

 ulations. 



Even if that occurs, are not the tuna canneries located primarily 

 in the United States ? 



Dr. White. They are here and in other jurisdictions. 



Mr. McCloskey. W^ould it not be simple to amend the Marine 

 Mammal Act so that no cannery accepts any tuna caught by a boat 

 without an observer on board? 



iDOC, Fisheries of the United States, 1975 ; March 1076, p. 12 & 55. 

 a NOAA, Current Economic Analysis F-25, Foodfish Market Revietv and Outlook; 

 December 1976, p. 37. 



