4. Summary of Findings

4.1 Findings by continent
4.2 Economic performance of selected fishing practices by region

4.1 Findings by continent

The studies, surveys and information presented and discussed in the workshop covered countries in Latin America, Asia, Africa and Europe. The fishing fleets and units covered all major types of medium- and large-scale fishing vessels operating in these countries. Small-scale/artisanal fishing boats were only covered in Ghana, Senegal, France, Indonesia, Malaysia and, in a limited way, in India.

The case studies of fishing units in Latin America, Africa, Europe and Asia suggest that - in most cases and in spite of heavily and sometimes overexploited fisheries resources - marine capture fisheries are still an economically and financially viable undertaking generating sufficient revenue to cover the cost of depreciation as well as the opportunity cost of capital and thus generating sufficient funds for reinvestment as well as employment, income and foreign exchange earnings. A lack of information in Asia and America was noted with regard to the economic performance of artisanal and small-scale inshore capture fisheries.

Even though limited information was collected on financial services available to the fisheries sector including institutional credit programmes and related subsidies, it cannot be concluded to which extend the economic performance of the fishing units studied has been effected by macro-economic financial transfers e.g. indirect subsidies such as exemptions from taxes on production inputs etc. Also external benefits and costs if any such as those resulting from environmental damages etc. have not been taken into consideration.

It was also observed that in many cases, the information available at country level on the level of exploitation of fisheries resources targeted by specific fishing fleets was not very accurate and efforts need to be made to improve the collection and analysis of fisheries statistics at the national level. This issue was also addressed by the working groups convened at the end of the interregional workshop which reviewed the findings of the studies. The recommendations of the working groups are summarised in this report.

As far as the relationship between economic viability and sustainability of marine capture fisheries is concerned, the discussions of the working groups suggest that this is a rather complex relationship as there are many intervening factors. Specific recommendations were made as to how this aspect should be studied more in depth.

Altogether, the studies and their findings presented in this report should be seen as a first step in compiling and presenting much needed information on the economic performance of marine capture fisheries. The recommendations of the working groups presented below include many useful suggestions as to how the information needs to be complemented with regard to the role of macro economic aspects including financial transfers. information on the disposal of catch, processing and marketing etc.

More specifically, the findings suggest the following:

Findings from Ghana/Senegal

Only small-scale encircling gillnetting and deep sea fish/shrimp trawling in Senegal generated a negative net cash flow. All other fishing practices (the operation of small-scale hook and line, driftnetting, bottom set gillnetting, beach seining, purse seining and multi-purpose operations; medium- and large-scale fish and shrimp trawling, pole and line fishing) generated a positive net surplus.

Findings from Peru/Argentina

While large-scale trawling in Peru had a negative net cash flow, purse seiners in both countries and trawlers in Argentina generated a positive net surplus.

Findings from Asia

All fishing fleet units covered in the Republic of Korea, Taiwan Province of China and Malaysia generated a positive net surplus, as did five out of seven typical medium- and large-scale fishing units in China and seven out of eight typical fishing units in Indonesia. The fishing units generating positive net returns included purse seiners, bottom and mid-water trawlers and pair trawlers, jiggers, stow netters, set netters, seiners, tuna handliners, pole and line vessels and longliners. Negative net results were achieved by small-scale gillnetters in Indonesia and smaller bottom pair trawlers and stow netters in China.

While the three types of medium- and large-scale fishing units studied in India - tuna longliners, purse seiners and trawlers - generated a positive net surplus, two out of three small-scale units, i.e. seiners and handliners, scarcely broke even or had negative net cash flows.

Findings from France/Spain

Of the 23 types of small-, medium- and large-scale fishing vessels studied in France and Spain, only two types of deep-sea trawlers operating in France had negative net results while the other 21 types of vessels including handliners, gillnetters, seiners, pole and line vessels, longliners and in-shore and off-shore trawlers all generated a positive net surplus.

In West Africa no significant difference in performance of small-scale fisheries compared with medium- and large-scale fisheries was observed. In Ghana and Senegal, the small-scale sector generally performed well except for encircling gillnetters in Senegal. In Indonesia and India, the economic performance of artisanal and small-scale inshore capture fisheries seemed to be negatively influenced and hampered by medium-scale and large-scale inshore and off-shore purse seining and trawling operations. In France and Germany, the small-scale sector seemed to perform reasonably well. No information was available for Spain.

Pirogue, Senegal

Fishing canoe, Ghana

Fishing boat, Ghana

It was observed that the number of subsidies in developing countries had recently been greatly reduced. At present, subsidies are only available in some cases for offshore fishing, artisanal fisheries and fisheries cooperatives and for fishing operations in remote and underdeveloped areas. These subsidies are mainly available in the form of capital subsidies and reduced duty on fuel and even these are in the process of being further reduced.

It was also noted that, compared with developing countries, more subsidies for the fisheries sector were available in the European Community (EC), e.g. capital subsidies, reduced tax on fuel, compensation for non-fishing days, minimum prices for catch, etc.

4.2 Economic performance of selected fishing practices by region

In the following section, a comparison has been made between the economic and financial performance of selected fishing practices by region. For details, refer to Appendix I The following indicators have been used:

· For assessment of economic performance: net cash flow/total earnings (NCF/TE). This ratio is a general indicator of economic profitability/viability of economic enterprises. A level above 10 percent is generally considered good.

· For assessment of financial performance: net cash flow/investment = Return on investment (ROI). This ratio is the major indicator for financial performance. A level above 10 percent is generally considered good.

In both countries studied, i.e. Ghana and Senegal, the best economic performances are shown by traditional, small-scale marine capture fisheries:

Pelagic fishing (%):
Purse seining canoes :
	Ghana		Senegal
NCF/TE	10.6		17.0
ROI	21.1		44.8
Beach-Seining
	Ghana		Senegal
	Non-motorized canoes	Motorized canoes
NCF/TE	25.2	10.6
ROI	48.0	16.5
Drifting Gill-Netting
NCF/TE	7.9
ROI	19.5
Demersal fishing (%):
Bottom Gill-Netting:
NCF/TE	21.3
ROI	45.5
Multipurpose Canoes:
NCF/TE			16.2
ROI			30.6
Hook and Line:
NCF/TE	11.5		2.0
ROI	51.5		8.6

Semi-industrial fishing boats exploiting inshore areas are economically less efficient or even inefficient such as semi-industrial trawlers and purse-seiners in Ghana, which still have a positive net cash flow and trawlers in Senegal, which show a negative net cash flow.

Industrial fishing vessels fishing offshore in Ghana for tuna and shrimp achieve very favourable financial and economic results as shown below:

	Pole and liners (tuna)
NCF/TE	21
ROI	21.4
%
	Bottom trawlers (shrimps)
NCF/TE	21.7
ROI	22.2
%

Trawler, Argentina

Latin America

Purse seiners in Peru and trawlers fishing for hake in Argentina seem to have a good profitability which increases with the size of the vessels.

Fish prices differ considerably between trawlers fishing for hake in Peru and Argentina. The Argentinian study stated a price for hake (Merluccius hubbsi) of US$310/tonne while information from INFOPESCA indicated price levels for Merluccius gayi caught by the Peruvian vessels of approximately half of the price of Merluccius hubbsi which amounts to US$155/tonne.

Pelagic fishing:	Purse seiners in Peru:
Size of fishhold of vessel (m3)	35	180		270		350
NCF/TE	15.7	19.3		22		37.2
ROI	7.6	11.3		13.6		26
(%)
Demersal fishing:	Trawlers in Argentina:
Length of vessel (m)	25		30		35
NCF/TE	12.4		20.2		24.8
ROI	13.6		17.7		24.1
(%)
	Trawlers in Peru (fish price revalued at US$155/tonne)
Size of fishhold of vessel (m3)	80	140		220
NCF/TE	45.8	40.4		7.7
(%)

East Asia

Pelagic fishing: good economic and financial performances are reported for purse seining in China, tuna purse seining in Taiwan Province of China and mid-water trawling in the Republic of Korea.

Stern trawler, China

Dredgers, China

	Purse seiners:	Tuna purse seiners
	China	Taiwan Province of China
NCF/TE	35.8	15
ROI	14.7	12.3
(%)

	Mid-water trawlers (anchovy)
	Republic of Korea
NCF/TE	10.2
ROI	14.4
(%)

Demersal fishing: good performances are reported for Danish seiners and single trawlers in the Republic of Korea, bottom pair-trawlers in China and the Republic of Korea, set netters in China and medium performances for jiggers. Stow netters did not perform well in either country.

	Danish seiners
	Republic of Korea
	Large	Middle (W-S sea)	Middle (E sea)
NCF/TE	27.2	15	4.2
ROI	81.6	15.5	6.0
(%)

	Bottom pair trawlers
	China	Republic of Korea
NCF/TE	16.3	9.9
ROI	14.9	19.1
(%)

	Bottom single trawlers
	China	Republic of Korea
NCF/TE	2.1	33
ROI	2.7	36.9
(%)

	Set-Netters
	China
NCF/TE	21.5
ROI	93.7
(%)

	Jiggers
	China	Republic of Korea
NCF/TE	18.3	11.6
ROI	6.2	11.1
(%)

South and Southeast Asia

Only semi-industrial and industrial fishing vessels have been surveyed in India and Indonesia. The economic and financial performance of purse-seiners, longliners and pole and line vessels fishing for tuna is compared below.

Pelagic fishing:

	Purse Seiners:
	India	Malaysia	Indonesia
Length/size of vessel	13 m	30/40 GRT	17 m	25.6 m
NCF/TE	21.7	10	25	6.4
ROI	16.2	15.9	19	4.8
(%)

The figures suggest that profitability is much higher for smaller size purse seiners of 13 or 17 m while larger vessels of 25.6 m are more expensive to operate as fuel costs and depreciation allowances are higher. Another reason may be that prices for small pelagic fish are rather low in Southeast Asia and do not allow for sufficient returns for larger types of purse seine boats.

The situation for tuna longliners is quite different since larger longliners are economically and financially more efficient than smaller ones.

	Longliners (tuna):
	India	Indonesia
Length of vessel (m)	36	23.4
NCF/TE	23	6
ROI	20.5	2.3
(%)

Purse seiner, Malaysia

Trawler, Malaysia

Medium-size longliners may be less efficient than larger ones because of lack of range, which is an important factor in tuna longlining.

In Indonesia both vessel sizes surveyed showed good financial and economic performances for tuna pole and line fishing,

	Pole and liners (tuna)
	Indonesia
GRT	10	30
NCF/TE	16.4	20.4
ROI	29.6	23.9
%

Stern trawlers performed well in India but less well in Malaysia, probably because of overexploitation of demersal resources.

Demersal fishing:

	Stern-trawlers
	India	Malaysia
NCF/TE	19.1	7.5
ROI	24	5.7
(%)

Among traditional demersal fishing methods practised in Malaysia, handlining was the economically and financially most beneficial fishing method. Drift gillnetting has only a marginal positive net cash flow and just breaks even, probably because of competition from trawling, purse seining and heavy exploitation of resources.

	Handliners	Portable traps
	Malaysia
NCI/TE	25.2	9.3
ROI	22.3	4.8
(%)

Europe

In general, the marine capture fisheries of France, Germany and Spain are facing a serious situation for two reasons:

· Fishery resources can be considered overexploited in European waters, i.e. the Northeast Atlantic, the North Sea, the English Channel and the Bay of Biscay;

· commercial agreements have abolished custom duties for imported fish and European prices slumped during 1993-1994.

Pelagic fishing:

	Coastal seiners (Atlantic)
Length of vessel (m)	15
NCF/TE	12.4
ROI	29
(%)

Demersal fishing:

	Handliner (Atlantic)
Length of vessel (m)	8-10
NCF/TE	25.2
ROI	29.9
(%)

These good performances depend on low running costs (especially fuel) and depreciation allowances (many artisanal boats are more than 25 years old).

Some other kinds of larger fishing vessels reach less favourable but still positive results:

	Bottom Gillnetters
Length of vessel (m)	12-20
NCF/TE	2.8
ROI	1.3
(%)

	Deep-sea trawlers
Length of vessel (m)	19-20.5
NCF/TE	4.6
ROI	3.1
(%)

Germany The few remaining freezer trawlers operating in northern waters have a low profitability but still achieve positive results.

NCF/TE	1.7
ROI	1.2
(%)

As in France, the small-scale, highly specialized German cutter fleet of shrimp and fresh fish trawlers achieves quite good results based on low running costs and depreciation as shown below:

Cutter fleets:	Shrimp trawlers	Fresh fish trawlers
NCF/TE	26.4	14.2 (NS and Baltic)	23.2 (Sassnitz)
ROI	18.2	10.8	18.4
(%)

Spain Spain has a wider range of fishing vessels and fishing areas, especially if the offshore factory trawlers are included. The economic situation differs completely for inshore and offshore fisheries with the result that inshore fisheries have better results.

Pelagic fishing

	Inshore fishing
	(Atlantic)	(Med.)	(Atlantic)
	Pole and liners	Coastal seiners	Coastal seiners
Length of Vessel (m)	24	24	17
NCF/T	10.6	18.5	6.7
ROI	26.5	31.1	13.1
(%)

Offshore fishing

Purse seiners fishing tropical tuna had rather poor results in 1994, because of the weak US dollar; however, the situation improved in 1996 and the long-term outlook of the fishery is considered quite good.

Demersal fishing

	Inshore fishing
	(Med.)	(Atlantic)
	Coastal trawlers	Coastal trawles
Length of vessel (m)	18	18
NCF/TE	12.2	5.7
ROI	15.5	7.4
(%)

Purse seiner, France

Stern trawler, France

When interpreting the differences between the economic and financial performances of trawlers operating in the Mediterranean and in the Atlantic, it should be remembered that prices for fresh fish in the Mediterranean are much higher than prices obtained by trawlers operating in the Atlantic.

The economic results of selected types of Spanish offshore vessels are shown below.

	Deep sea trawlers
Length of vessel (m)	23
NCF/TE	8.6
ROI	7.3
(%)
	Longliners
Length of vessel (m)	20
NCF/TE	8.3
ROI	16
(%)
	Offshore fishing
	Freezer trawlers (SE Atlantic)
Length of vessel (m)	57
NCF/TE	17.9
ROI	12.1
(%)

The above findings seem to show a slightly different picture from the one projected in the special chapter on "Marine fisheries and the law of the sea: a decade of change" in the FAO publication The State of Food and Agriculture 1992 which, based on data from 1989, suggests that the global marine capture fishery industry is incurring considerable losses, including operational ones.

The differences may probably be attributed to the following factors. First, the earlier global SOFA estimate was arrived at through macro economic analysis and interpretation and extrapolation of secondary data while the more recent findings of the studies presented in this report are based on micro economic analysis and primary data collection. Thus a direct comparison of the findings of the two studies is not appropriate.

Furthermore, the scenario presented in SOFA 1992 was based on calculations which incorporated methodological shortcomings such as the overestimation of the costs of fishing through the assumption of an annual depreciation of 10 percent of the replacement cost of a fishing vessel and related high estimates of the annual cost of maintenance and repairs. Usually, cost and earning studies assume a lifespan of 25 years for medium and large fishing vessels.

When considering the differences between the findings of the studies presented in this report and the estimates of SOFA 1992, it should also be noted that the focus of the studies presented here is on developing countries in Asia and, to a lesser extent, on developing countries in West Africa, Latin America and certain European countries, i.e. Spain, France and Germany. The previous estimate was global, including North America, the former USSR and Oceania.

As the cost of operation of fishing vessels in Asia, Africa and Latin America, covered by the recent study, is considerably lower than for example, in the United States, Japan or Northern Europe, which were included in the SOFA 1992 estimate, and as fishing operations by the state-owned fishing enterprises of the former USSR, also included in the SOFA 1992 estimate may not have been conducted as efficiently as those carried out by private-sector operators, it is not surprising that the more recent study shows a more positive picture in terms of economic efficiency and viability.

Subsidies have little effect on the findings of the study. In most developing countries in Asia, West Africa and Latin America, subsidies are no longer available and have not been entered in the calculation of costs and returns. The granting of subsidies might have had an impact on the economic viability calculations of fishing vessels in the EU countries studies: Spain, France and Germany.

The validity of the findings of the micro-economic study presented in this report may also be confirmed by other recent empirical studies on costs and earnings of marine capture fisheries carried out in some of the countries studied such as France and the West African countries. Results achieved are similar to those found in studies coordinated by FAO and presented in this report. This includes the study by four leading European Fisheries Research Institutes: the Institute Français de Recherche pour l'Exploitation de la Mer (IFREMER), the British Sea Fish Authority (SFIA), the Danish Institute of Fisheries Economics Research (DIFER) and the Dutch Agricultural Economics Research Institute (LEI-DLO) entitled Costs and earnings of fishing fleets in four EC countries and the study on capital needs and availability in artisanal fisheries in West Africa, published as IDAF/FAO Technical Report No. 65, Cotonou, Benin, 1994.