Milkfish spawn offshore and the unmetamorphosed larvae seek out fresh water sources along the coastlines of several Indo-Pacific nations, including the Philippines. These fry are caught using handoperated push and seine nets, then stored temporarily before trans-shipment through a network of dealers to fishpond operators who stock them in brackish-water ponds for rearing to market size (Smith, 1981). In the Philippines, capture of the adult milkfish or “sabalo” is prohibited by law.
Because the fry are caught near the coastline, most often at wading depth, municipalities have authority to regulate the gathering activity. The municipality, as owner of the resource, is empowered through Presidential Decree 704 (The Fisheries Decree of 1975) to “grant to the highest qualified bidder the exclusive privilege of … gathering ‘bangus’ fry, or the fry of other species, in municipal waters for a period not exceeding five (5) years” (Sec. 29, PD 704). Similar municipal powers have existed since at least 1932 when they were promulgated in Fisheries Act No. 4003 (Santos, 1980). The bidding process is usually held via sealed bids on a date each year designated by the municipality (usually January-March). The municipality awards the fry concession to the highest qualified bidder, that is to the highest bidder able to pay immediately the necessary downpayment and who is also thought most likely to pay the balance. Municipalities usually require that the balance of the winning bid be paid within one month of the bidding. Concessionaires thus have to complete payment of their concession fee before the annual peak of the fry-gathering season which usually occurs in April-June each year. In cases when the municipality awards the concession for a period longer than one year, the concessionaire makes annual payments.
The concession fee can represent a significant proportion of annual municipal income, especially in rural coastal areas where licences (e.g., for fishing boats), land taxes and building permits generate only limited income. In 35 fry grounds surveyed in 1977 (Smith, 1981), milkfish concession fees represented on average almost 13 percent of municipal income. In the Province of Antique, Western Visayas, 21 percent of the income of the Province's 15 municipalities was derived from milkfish fry concession fees; several municipalities earned almost one-half of their income from this source. Small coastal municipalities use this income primarily to pay the salaries of municipal officials and allowances for representatives of the ‘Sangguniang Bayan’, or municipal council. The income thus theoretically benefits the community as a whole rather than special sectors. Concession fees can generate significant income for the resource owner (Table 1). The vast majority of fry grounds in the country are now operated under this municipal concession system.
Table 1
| Municipality | Annual Concession Fees (P)1 | Average Concession Fee | Average Annual Municipal Income | Average Concession Fee as % of Municipal Income | |||||
|---|---|---|---|---|---|---|---|---|---|
| 1977 | 1978 | 1979 | 1980 | 1981 | 1982 | 1977–81 2 | 1977–81 2 | ||
| (P) | (P) | ||||||||
| 3 | |||||||||
| San Jose | 100,000 | 100,000 | 100,000 | 210,000 | 200,000 | 200,000 | 142,000 | 1,067,116 | 13.3 |
| Hamtik | 50,356 | 93,645 | 125,336 | 135,587 | 136,993 | not avail. | 108,500 | 464,500 | 23.3 |
| Belison | 60,000 | 53,000 | 53,000 | 85,000 | 90,000 | 95,000 | 68,200 | 201,986 | 33.8 |
| Patnongon | 80,000 | 80,000 | 80,000 | 75,000 | 100,000 | 110,000 | 83,000 | 398,364 | 20.8 |
| Laua-an | 20,000 | 30,000 | 36,000 | 40,000 | 44,000 | 37,000 | 34,000 | 257,182 | 13.2 |
1 In 1976, P 7.30 = US$1.00
In 1982, P 8.50 = US$1.00
2 Averages are calculated for 1977–1981 only becuase data on total municipal income in 1982 are incomplete as the year has not yet ended.
3 From 1977–1979, the San Jose fry concession was operated by the San Jose Fisherman's Cooperative. The cooperative paid a concession fee set by the municipality which was below that which would have prevailed through public bidding. The cooperative collapsed in 1979, however. Public bidding resumed in 1980 and the concession fee increased significantly as a result.
It was the traditional practice that concessionaires would employ the necessary fry gatherers, paying them a daily wage for their efforts. However, over time the system has changed to one in which concessionaires exercise monopsony rights of first purchase of all fry gathered from “their” fry ground. Gatherers are free to use the fry ground as long as they sell their catch to the concessionaire. Concessionaires thus do not directly control the level of gathering effort. In this sense, concessionaires do not exactly fit the concept of the “sole-owners” of Gordon (1954) and Scott (1955) who are assumed to directly limit fishing effort until marginal costs and marginal revenues are equated.
Still, the Philippine milkfish fry concessionaire needs to create sufficient income to be able to recover his concession fee in addition to his other costs. He does this by controlling the price paid to fry gatherers which in turn indirectly influences the level of gathering effort. Fry gatherers, many of whom have options as part-time fishermen, thus reduce their gathering effort as the price they receive for their fry catch is reduced, other things (e.g., catch rates) being equal. Based on data from Librero et al. (1976), the average household engaged in fry gathering earned only 22 percent of its total annual income from this source.
Unfortunately, reliable data on annual fry catch by fry ground are not available in the Philippines. Concessionaires tend to be very secretive about this information because it is to their advantage in subsequent year's bidding to keep this ‘inside’ information to themselves. They also express concerns about this information being used for income tax purposes. The Bureau of Fisheries and Aquatic Resources (BFAR) does make estimates of annual fry catch in Antique (Table 2) based primarily upon records of the auxiliary invoices that are required for shipments out of the Province (Antique has very little brackishwater fishpond area, so most fry are shipped elsewhere). However, it has been our personal observation that shippers generally understate the quantities actually shipped, often by as much as 50 percent (Smith, 1981). At best, therefore, one can make a very crude estimate based on the BFAR records of 90–120 million fry caught annually in Antique Province. This probably represents about 8–10 percent of the annual nation-wide fry catch. Table 2 does, nevertheless, indicate the relative year-to-year stability of fry catch in each fry ground.
The lack of production data is unfortunate because, without them, it becomes difficult to test rigorously various hypotheses regarding the concession system and its implications for efficiency and equity. We will proceed, therefore, from this point at some level of abstraction and subsequently in the last section of this paper introduce supporting evidence in the form of cost and price data.
| 1977 | 1978 | 1979 | 1980 | 1981 | 1982 | |
|---|---|---|---|---|---|---|
| San Jose | 12.7 | 11.6 | 10.6 | 13.8 | 12.1 | 15.7 |
| Hamtic | 10.0 | 7.5 | 7.3 | 8.5 | 10.5 | 12.1 |
| Belison | 6.2 | 5.6 | 3.9 | 6.3 | 5.1 | 7.7 |
| Patnongon | 9.7 | 10.6 | 6.9 | 10.0 | 10.3 | 9.7 |
| Laua-an | 4.7 | 3.6 | 2.6 | 3.2 | 2.5 | 2.4 |
* Estimated by the BFAR District Office, San Jose, Antique
