Step 2: Determine Your Fishery's Value
As you think about buying a boat or permit, it is wise to get a good understanding of the current and historical value of the fishery you are about to enter.
The price of the permit is only one indicator of the value of the fishery—many factors influence the cyclical rise or fall in permit values.
For state-managed fisheries, the Commercial Fisheries Entry Commission tracks permit prices over time with their Permit Value Reports. The values listed here are average permit sale prices reported to the CFEC during the three-month time frame indicated.
Scroll through the tables to get a feel for what permit values have been in the past, relative value of similiar fisheries elsewhere in the state, and what trends appear to be happening now. Within your fishery of interest, does it look like there was a peak price in the recent past? Are permit values dropping or increasing?
Remember, though, these permit values are just one indicator of the value a fishery. How can you get a realistic estimate of the value that permit will bring to your specific operation? You might look at the most financially successful members of your fleet, and be tempted to assume you can do the same.
Remember, highliners likely have many years of experience catching fish, operating vessels and managing the business side of their operation.
Although you can and should learn as much as possible by talking to more experienced fishermen, remember that nothing substitutes for those years on the fishing grounds, and everyone had to start with debt, learning curves and grit.
How to navigate quartile tables
To estimate potential earnings in Alaska state-managed fisheries, an important information source for lenders and others in the fishing industry are the "quartile tables" found on the Commercial Fisheries Entry Commission website. Here's a quick tutorial on navigating these tables.
To begin, in the "Quartile Tables" section of the CFEC page, notice the categories of salmon, herring, other finfish, crab, and other species.
Choose your species of interest, and then click on the gear code for that fishery. For example, the code for a Southeast purse seine permit is S01A.
Here you will see a table of earnings for each year for that gear type that looks like this:
S01A - Salmon, Purse Seine, Southeast - Year: 2013
|PERMITS||ESTIMATED GROSS EARNINGS|
|Total pounds represented in this table: 334,435,054|
Look at the bottom row of the table, where bold text shows "total pounds represented in this table." Look back through the years at this number to get a sense of annual total harvests for the fishery. Are they going up or down? Are they highly cyclical, as in this Southeast purse seine example?
Next, look at the row above, highlighted in orange. We see that, in 2013, 276 permits earned $154,063,995. One might be tempted to just divide the total pounds and dollars by the number of permit holders in a fishery, and assume that they could expect to catch 1,211,721 pounds and earn $558,203 in their first year.
But look further. In these tables, CFEC divides the total gross earnings in each fishery into four tiers, or quartiles of top, second, third and bottom tier.
Here's where this data becomes very useful. In the top row of the quartile table, we see that in 2013, 43 seine permit holders (15.58% of the total) were the top producers and made up the top tier or quartile. This group grossed an average of $898,172 each that year.
Now, go to the lowest quartile row labeled "actual," highlighted in blue. Notice that 110 permit holders (39.86% of the total) were in the fourth, or lowest quartile and grossed an average of $352,203 each that year.
A first-year fisherman is more likely to be in the bottom group than the top quartile, so it is prudent to put yourself in the bottom half of gross earnings in your first few years, and plan how to manage your expenses and debts accordingly.
Remember these figures are gross earnings before taxes, permit or vessel loan payments, crew share, moorage, fuel, etc.