Spawn-on-kelp Market Study
Part Two
Potential for, and Impacts of, Expanding
Spawn-on-Kelp Production in British
Columbia
Edwin Blewett & Associates Inc
November 2001
Spawn-on-Kelp Market Study
Part Two
Table of Contents
Table of Contents ........................................................... i
List of Tables.............................................................. iv
List of Figures.............................................................. v
Introduction................................................................. 1
Structure of the Part Two Report........................................ 1
Market/Supply Analysis—Prior Work .................................. 1
Factors Influencing Development of the Fishery................... 2
Production Levels Linked to Marketing Strategy ............... 2
Expansion Considerations .......................................... 3
Market Segmentation ................................................ 3
Spawn-on-Kelp Relates to Roe Herring Fishery ................ 3
Balancing Social and Economic Objectives ...................... 4
Discussion ............................................................... 4
Supply/Price/Value History ........................................ 5
Current Situation ..................................................... 7
Biological and Management Issues...................................... 7
Biological and Physical Constraints to Spawn-on-Kelp Expansion
............................................................................ 8
Available Harvest of Herring ...................................... 8
Distribution of Spawn on Kelp Licences ........................14
Suitable Spawn-on-Kelp Locations ...............................16
Kelp Supply..........................................................18
Summary of Biological/Physical Constraints ...................21
Management Considerations .........................................22
Herring a “Fully Subscribed Resource”.........................22
Gear Conflict ........................................................24
Alleviating Biological and Management Constraints to Spawn-onKelp Expansion ........................................................25
Convert closed ponds to open ponds. ............................26
Increase the spawn-on-kelp quota per J licence. ...............26
Production Plans ..........................................................26
Main Areas of Competition with BC................................28
San Francisco........................................................28
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Alaska ................................................................29
Summary/Outlook .....................................................31
Price Sensitivity ...........................................................32
Seafood Demand in General .........................................33
Seafood Demand In Japan ............................................34
Japanese Demand for Herring Spawn-on-Kelp ....................35
Currency Factors ......................................................37
Summary ................................................................38
Impacts of Spawn-on-Kelp Expansion .................................38
Stratification of Spawn-on-Kelp Operations .......................38
J Licences with Roe Herring Licence Retirement Provision .38
J Licences—No Roe Herring Licence Retirement Provision .39
Commercial Communal Licences ................................40
Financial Analysis—Individual spawn-on-kelp Operations ......40
Base Case Financials ...............................................41
Sensitivity Analysis .................................................42
What is an Acceptable Return? ...................................44
Discussion............................................................45
Financial Analysis—Overall spawn-on-kelp Performance .......46
Scenarios .............................................................46
Discussion ..............................................................48
Social Implications..................................................48
Summary & Conclusions ................................................48
Potential for BC Expansion ..........................................49
Biological Perspective..............................................49
Management Perspective ..........................................49
Non-BC Production Plans/Outlook..................................49
Non-North American Sources of Supply ........................49
Spawn-on-Kelp Production from the USA ......................49
Price Sensitivity of Spawn-on-Kelp .................................50
Impacts of Spawn-on-Kelp Expansion ..............................50
Spawn-on-Kelp Expansion Scenarios ............................51
Spawn-on-Kelp Expansion Outcomes............................51
Documents .................................................................53
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Spawn-on-Kelp Fishery ...............................................53
Market Demand ........................................................53
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List of Tables
Table 1: Derivation of Recommended Yield—2001 (tons) .........13
Table 2: Amount of Herring Available for Catch, By Major Stock
Assessment region (tons) ..........................................13
Table 3: Spawn-on-Kelp Licences......................................15
Table 4: Summary of Biological/Physical Constraints ..............22
Table 5: San Francisco Spawn-on-Kelp Production .................29
Table 6: Hoonah Sound Spawn-on-Kelp Production ................29
Table 7: Craig Spawn-on-Kelp Production ...........................30
Table 8: Norton Sound Spawn-on-Kelp Production .................31
Table 9: Price Sensitivity of Spawn-on-Kelp .........................36
Table 10: Income Statement—Base Case..............................41
Table 11: Operating Income Per Licence—Historical Prices.......42
Table 12: Operating Income Per Licence —Representative Prices 42
Table 13: Operating Income per Licence —Price Reductions......43
Table 14: Operating Income Per Licence —Price/Volume Scenarios
.........................................................................43
Table 15: Operating Income Per Licence —Roe Herring Equivalent
.........................................................................45
Table 16: Summary of Impacts—Base Case ..........................46
Table 17: Summary of Impacts—Historical Prices ..................46
Table 18: Summary of Impacts—Reduced Prices ....................47
Table 19: Summary of Impacts—Increased Production & Lower
Prices .................................................................47
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List of Figures
Figure 1: BC Spawn-on-Kelp Production vs. Price per Pound
(Cdn$) ................................................................. 5
Figure 2: BC Spawn-on-Kelp Production vs Total Value of Spawnon-Kelp (to all Operators in Cdn$ millions) ..................... 6
Figure 3: Spawn-on-Kelp Production from San Francisco and
Hoonah sound .......................................................31
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Introduction
Fisheries and Oceans Canada, seeking objective, factual information on the spawn-on-kelp industry, has commissioned two studies.
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Part One assesses spawn-on-kelp markets, with particular
emphasis on market expansion opportunities.
Part Two provides information contributing to an understanding of the BC spawn-on-kelp industry’s potential for
expansion, and impacts of varying supply scenarios on
markets and on existing spawn-on-kelp participants.
Edwin Blewett & Associates Inc, in association with Nelson Bros
Fisheries Ltd, has been contracted to furnish both reports.
Structure of the Part Two Report
We begin in the next section with a review of prior work examining
the spawn-on-kelp industry. This historical analysis reveals how the
Japanese market for spawn-on-kelp has evolved in the past twenty
years, what issues have remained constant throughout that period,
and what has changed.
We then examine biological, physical and management constraints
to expanding spawn-on-kelp production in BC and consider how
those constraints may be avoided or alleviated.
We have canvassed contacts in other countries and searched the
web for information on production plans in other jurisdictions. Our
findings are presented in the third section of this report.
Next, we investigate the expected sensitivity of spawn-on-kelp
prices to potential increases in production. It proved impossible to
update a recent study on demand for spawn-on-kelp so we have
surveyed the empirical literature on seafood demand and draw conclusions from it on spawn-on-kelp price sensitivity, with reference
to the market research presented in Part One.
We then examine the range of impacts of expanding spawn-on-kelp
production on existing BC producers, both individually and collectively.
Finally, we summarise our work and draw conclusions.
Market/Supply Analysis—Prior Work
Over the past twenty-two years, four economic studies have been
completed that reviewed the emerging spawn-on-kelp fishery, considered the merits of expansion, and sought to find an optimal balance between market demand and BC supply of spawn-on-kelp
product.
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Part Two
A Review of the BC Spawn-on-Kelp Fishery With Some
Proposals for Future Management—P. Leitz, Fisheries and
Oceans Canada, 1979.
BC Spawn-on-Kelp Fishery: Optimal Production Level and
Licence Allocation Policy—P. Leitz and P. Macgillivary,
Fisheries and Oceans Canada, 1983.
Proposal to Expand the British Columbia Spawn-on-Kelp
Fishery—Fisheries and Oceans Canada, 1986.
The 1991 Expansion of the Herring Spawn-on-Kelp Fishery—An Evaluation—ARA, 1993.
Reviewing approaches and findings of past studies is illuminating in
that it serves as a reminder that many of today’s issues are the same
as yesterday’s. Yet, some stark contrasts to the current situation
facing the spawn-on-kelp industry, versus circumstances prevailing
while past studies were conducted, emerge.
Factors Influencing Development of the Fishery
In past studies, certain factors guiding growth and development of
the fishery are cited (some repeatedly). These factors are reviewed
below.
Production Levels Linked to Marketing Strategy
“The marketing strategy applied so far in BC has been to test the
market by pushing the upper limit of production until prices are
affected.” (Leitz, 1979).
“The marketing strategy adopted by the Department since the development of the spawn-on-kelp fishery in British Columbia was
implicitly to ensure that total revenue (the total value of all production) in the fishery would increase as the quantity supplied increased.” (Leitz, Macgillivary, 1983).
“… a more comprehensive marketing strategy must contain the
following three elements:
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A production strategy aimed at maximizing total net revenue to the Canadian spawn-on-kelp industry (optimal production level)…
A promotion strategy… to strengthen the brand image of
Canadian spawn-on-kelp product in Japan and to increase
the awareness of the product…
High quality production…” (Leitz, Macgillivary, 1983)
“In a developed market prices will rise when production falls and
decline as supply increases. Spawn-on-kelp price movements bear
little resemblance to this expected pattern. An almost continuous
upward movement in prices was evident despite significant fluctuations in the quantity supplied. This indicates the market for Cana-
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dian spawn-on-kelp is still growing.” (Fisheries and Oceans Canada, 1986).
Expansion Considerations
“The lack of knowledge about the nature of the demand for spawnon-kelp and the extent to which shifts in demand occur, generated
sufficient support for adopting a conservative production strategy.”
(Leitz, Macgillivary, 1983).
“The study concludes that an increase in spawn-on-kelp production
will increase total net revenue, providing roe prices are rising and
Alaskan production of high quality spawn-on-kelp is not accelerating.” (Leitz, Macgillivary, 1983).
“Expansion of the BC spawn-on-kelp fishery has proceeded cautiously in order to maintain product prices at high levels….” (Fisheries and Oceans Canada, 1986).
“Canada should increase (spawn-on-kelp) production now to limit a
significant market penetration by the Alaskans.” (Fisheries and
Oceans Canada, 1986).
Market Segmentation
“The main market for this product is in Japan where there are two
basic types of consumption. One type is in restaurants and lounges
where it is an expensive luxury product. The other is in the home
where lower quality and lower priced products are consumed. The
restaurant market in Japan has been very small… the home consumption (super market) trade is much larger and is reported to be
growing slowly and absorbing some high grade product.” (Leitz,
1979).
“Due to its high quality, the spawn-on-kelp produced prior to 1969
(in Alaska) was used largely in the restaurant trade, a relatively
small market in which the quantity demanded was insensitive to
price movements. After 1969 Alaskan production was primarily of
lower grade quality… and was used instead by the Japanese housewife….” (Leitz, Macgillivary, 1983).
“Traditionally, the bulk of BC herring spawn-on-kelp was consumed in high class restaurants and sushi bars in Japan. Today
however, the product has much more of a commodity status, and is
being used in home meal preparation. This luxury status has diminished through continually increasing world supply through the
1980s and 1990s.” (ARA, 1993).
Spawn-on-Kelp Relates to Roe Herring Fishery
“one of the roe-on-kelp management objectives is to provide a potentially equal return to spawn-on-kelp licence holders, relative to a
herring seine operation.” (Leitz, 1979).
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“… thus, the potential (and actual) returns for spawn-on-kelp operators are equal to or greater than those offered in the roe herring
seine fishery. This offers some compensation for the additional risk
in this fishery relative to the roe herring seine operation.” (Leitz,
1979).
“the size of individual spawn-on-kelp quotas has been influenced by
average earnings in the roe herring fishery….” (Fisheries and
Oceans Canada, 1986).
Balancing Social and Economic Objectives
“… permits (went) to those 21 individuals who had the most experience in catching, impounding, and live-holding herring, and who
lived in remote coastal communities. Again, special consideration
was given to native Indians who applied for permits.” (Leitz,
1979).
“… evaluate the potential for expanding the BC spawn-on-kelp fishery, considering numerous proposed socially oriented alternatives
as well as the achievement of economic efficiency.” (Leitz, Macgillivary, 1983).
“Band proceeds from the fishery have gone to several uses—support to small business ventures, funding of community projects
such as a community hall, and hiring staff for Band administration
purposes.” (ARA, 1993).
Discussion
From review of past studies and conducting the current study, we
observe that Fisheries and Oceans Canada objectives for development of the BC spawn-on-kelp fishery have always been multifaceted.
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Social—economic development and employment for First
Nations and coastal communities.
Market—assessing the state of spawn-on-kelp markets, predicting supply/price relationships, and tailoring output to
fill high-value markets without saturating them.
Maximizing/optimizing economic returns—increasing total
and net revenues derived from the fishery; ensuring expansion brings incremental returns.
In pursuing these objectives, Fisheries and Oceans Canada has always been mindful of the inextricable link between spawn-on-kelp
and the roe herring fishery.
Many of the insights offered in studies written many years ago remain relevant today—indeed, could have been written today.
•
Lack of knowledge about the nature of the demand for
spawn-on-kelp and the extent to which shifts in demand occur.
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Two market segments for spawn-on-kelp in Japan: expensive luxury product in restaurants and lower priced commodity product for home consumption.
Comprehensive marketing strategy must include promotion
and encourage high quality production.
Inclination to “push the upper limit of production” to assess
the effect on prices.
The first three studies cited (those written in 1979, 1983, and
1986), each included recommendations that BC spawn-on-kelp supply be expanded, while the final study (1993) recommended no
further expansion consideration until roe herring licence retirements
implicit in the 1991 expansion were complete.
Supply/Price/Value History
With the relationship between BC spawn-on-kelp supply, prices
received by spawn-on-kelp operators and gross revenues earned by
the BC spawn-on-kelp fishery of keen interest to observers of the
fishery over the years, it is interesting to view long term trends for
these factors.
Figure 1: BC Spawn-on-Kelp Production vs. Price per Pound
(Cdn$)
1995
1,000,000
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
$45
$40
$35
1988
$30
$25
$20
$15
$10
$5
$0
1975
1980
1985
Production
1990
1995
2000
Price
The above graph tracks BC spawn-on-kelp production in pounds
(left axis) along with the average price per pound received by operators.
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An observer analyzing volume/price trends from 1975 until
1988 would see an almost-uninterrupted escalation in prices
over time, regardless of production volume1.
Prices remained reasonably stable for the 1989-1992 period, even as production increased appreciably, then “exploded”, reaching a peak in 1995.
Since 1995, production levels have risen while price levels
have plummeted. After reaching a bottom in 1998, prices
have firmed somewhat, with the 2000 price similar to that
earned in 1992.
The following graph tracks BC spawn-on-kelp production in pounds
(left axis) along with the total value of production at the spawn-onkelp operator level.
Figure 2: BC Spawn-on-Kelp Production vs Total Value of
Spawn-on-Kelp (to all Operators in Cdn$ millions)
1995
1,000,000
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
$25
$20
1988
$15
$10
$5
$0
1975
1980
1985
Production
1990
1995
2000
Value
The “total value” trend is very similar to the “price per pound”
trend, though in certain years price reductions have been offset by
increases in production, causing overall value to stabilize or rise
(1991, 1996).
A glimpse at supply/price/value relationships shown in Figure 1
and Figure 2 supports the findings of prior studies.
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Until 1988, the “limits” of the market had not been
reached: increasing production was economically prudent.
By 1993, the market/price/value relationship was less clear,
suggesting that caution was in order. Ensuing price escalation (until 1995) offered reason for optimism.
1
A major “correction” in 1980 applied to virtually every seafood product
imported from BC.
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Currently, the market/price/value relationship is decidedly
“murky”, with prices and values markedly down from prior
levels, but appearing to “firm” in recent years .
Current Situation
The preceding analysis identifies changing supply/price/value relationships over time, suggesting that the demand situation now is
quite different than in the past. In fact, the price of BC spawn-onkelp is influenced by factors other than supply of spawn-on-kelp
from BC—and always has been.
A host of variables, including the strength of the Japanese economy, seafood market trends, exchange rates, and supply of spawnon-kelp from other sources, also impact markets and prices.
Certain key variables—other than a higher level of BC supply—
have fundamentally changed since the four studies referred to were
completed.
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The long-mighty Japanese economy has been in a weakened
state since 1997 with the current state of economic malaise
particularly acute.
High-end markets in Japan, particularly for luxury products
and expensive gifts, are apparently shrinking while valueoriented consumption is growing.
The spawn-on-kelp processing and distribution sector in Japan has consolidated dramatically with far fewer active
players currently than historically.
With BC spawn-on-kelp operators now exporting into a soft economy whose consumers are migrating away from luxury consumption towards practical consumption, the demand curve for spawnon-kelp products—a demand curve that has never been well understood—is more difficult than ever to grasp.
This report, drawing upon market information presented in the Part
One market report, provides information and analysis focusing on
the following factors.
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The potential for BC spawn-on-kelp expansion from a biological and management perspective.
Expected output from competing spawn-on-kelp producers.
Predicted demand profile for, and price sensitivity of, BC
spawn-on-kelp given expected supply conditions and the
state of other key variables influencing demand.
The range of impacts on spawn-on-kelp operators in BC of
varying production/price levels.
Biological and Management Issues
In this section, we investigate biological and fishery management
constraints to expanding spawn-on-kelp production in BC and con-
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sider, in the last part of this section, how those constraints might be
alleviated.
Biological and Physical Constraints to Spawn-onKelp Expansion2
Three main biological/physical factors potentially constrain the size
and scope of the spawn-on-kelp fishery.
1. The herring resource biomass, in particular the available
harvest of herring.
2. Number and size of locations suitable for conducting
spawn-on-kelp pond operations.
3. Availability of macrocystis kelp for spawn-on-kelp pond
operations.
We consider each in turn. Management considerations are addressed in the next section.
Available Harvest of Herring
Herring Stock Abundance
The starting point for determining the quantity of herring available
for catch is an assessment of herring stock abundance. Five major
stock assessment regions are recognized for scientific and management purposes.
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Queen Charlotte Islands (Area 2E).
Prince Rupert District (Areas 3, 4, 5).
Central Coast (Area 7 and portions of Areas 6 and 8).
Gulf of Georgia (Areas 14, 17).
West Coast of Vancouver Island (Areas 23,24,25).
2
This section has been prepared with the assistance of W.E. Lorne Clayton of IEC Collaborative Marine Research.
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During the March-April herring spawning season, a variety of information is collected and analyzed in each of the major stock assessment regions, allowing current stocks to be assessed.
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Biological samples for determining the population age composition, and average weight-at-age.
Current and historical catch data.
Assessment of the distribution and intensity of egg deposition (spawn).
Prior to the major roe herring and spawn-on-kelp fisheries, a forecast of pre-fishery biomass is made using recognised stock assessment models. One of these models, the Revised Age Structure
Model, considers estimates of spawning escapement, adjusted for
survival, growth, and expected recruitment, using a 51 year time
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series of catch, spawn, weight-at-age, and age structure information. 3
Sophisticated modeling techniques yield biomass estimates for each
stock assessment area. The following graphs demonstrate the abundance pattern of BC herring stocks, by area, according to one of
the stock assessment models—the Escapement model4. Other models yield varying estimates, but follow a similar pattern.
QCI Abundance Estimate
(Esc. Model)
35,000
30,000
tons
25,000
20,000
15,000
10,000
5,000
0
1980/81
1985/86
1992/91
1995/96
3
The Revised Age Structure Model was used to estimate herring stock
abundance in each area this year.
4
Results from this model are presented because of ready availability of
data.
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tons
Pr Rupert Abundance Estimate
(Esc. Model)
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
1980/81
1985/86
1992/91
1995/96
Central Abundance Estimate
(Esc. Model)
60,000
50,000
tons
40,000
30,000
20,000
10,000
0
1980/81
1985/86
1992/91
1995/96
Gulf Abundance Estimate
(Esc. Model)
120,000
100,000
tons
80,000
60,000
40,000
20,000
0
1980/81
1985/86
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1995/96
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WCVI Abundance Estimate
(Esc. Model)
70,000
60,000
tons
50,000
40,000
30,000
20,000
10,000
0
1980/81
1985/86
1992/91
1995/96
The graphs clearly illustrate the significant annual variability in
herring stock abundance in each major stock assessment area.
The abundance of mature herring populations is heavily influenced
by the survival of young herring from hatching through sexual
maturation. The survival rate during this period appears to be a
function of environmental conditions that are favourable during
some periods and unfavourable during others, resulting in periods
of higher and lower abundance of stocks in each area. As BC herring rarely live to an age greater than eight years, stock abundance
is heavily dependent on the size of the recruiting (ie, first time
spawning) year class. The recruiting year class contributes anywhere from 10 - 80 percent of the entire spawning run in some
years resulting in substantial fluctuations in stock size over time.5
Harvest Yields/Recommended Catch
Once a forecast of herring biomass is determined, the potential
catch can be calculated. The fixed harvest rate approach, currently
in use, is described below.
“The five major British Columbia herring stock assessment regions
are currently managed by a fixed harvest rate strategy in conjunction with fishing thresholds, or “cut-off” levels for each region.
Recommended yields are set at 20 per cent of the forecast biomass
for each of the major assessment regions, provided that the recommended yield does not reduce the biomass below the cut-off. The
20 percent harvest rate is considered to represent a conservative
level of removals given the biological productivity of the major herring stocks (Schweigert and Ware, 1995). Cut-off levels are set at
5
Spawn-on-Kelp IFMP, p 8.
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25 percent of the estimated unfished average biomass, as determined by simulation analyses. As the forecast abundance approaches the cut-off, the recommended yield is the difference between the forecast abundance and the cut-off. When the forecast
falls below the cut-off, a decision may be made to close the region
to commercial fishing.”6
Table 1: Derivation of Recommended Yield—2001 (tons)
RecomCut-Off Forecast
mended
Biomass Biomass
Yield
QCI
11,795
9,590
Prince Rupert
13,338
25,520
5,104
Central Coast
19,401
40,520
8,102
St. Georgia
23,369
91,060 18,210
WCVI
10,723
16,040
Major Stocks
78,626 182,730 31,416
Region
Yield derivation in 2001 is demonstrated in Table 1. In the QCI and
WCVI regions, the forecast biomass is less than the “cut-off” biomass. As a result, the recommended yield or harvest was set at
zero. For the Prince Rupert, Central Coast, and Gulf of Georgia
regions, where forecast stocks are substantially higher than the cutoff, the recommended yield was set at 20 per cent of the forecast
biomass (using the fixed harvest rate approach, describe above).
Table 2 shows, for major stock assessment regions, how the recommended yield has changed over time.
Table 2: Amount of Herring Available for Catch, By Major
Stock Assessment region (tons)
The data presented in Year
Table 2 demonstrate
that, over the past sev- 93/94
94/95
eral years, as estimated 95/96
biomass has fluctuated, 96/97
so too has the harvest 97/98
level supported by each 98/99
stock assessment re- 99/00
00/01
gion.
01/02
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•
QCI
1,157
0
0
342
4,365
6,219
3,329
0
3,086
Prince
Rupert
7,518
4,837
4,652
7,956
7,507
5,384
8,157
5,104
7,529
Central Strait of
Coast Georgia
15,388 21,473
11,982 15,324
5,677 13,966
3,450 17,031
9,821 16,016
9,575 17,394
10,373 18,673
8,102 18,210
5,600 22,707
WCVI
8,003
2,249
2,249
5,313
8,829
8,730
2,976
0
4,012
Total
53,539
34,392
26,544
34,092
46,538
47,302
43,508
31,416
42,934
The Gulf of Georgia (or Gulf) has consistently supported
the largest harvest opportunities for the period shown.7
The Central Coast and Prince Rupert regions have provided
harvest surpluses, with sizeable variation noted.
6
A Review of 2000/2001 British Columbia Herring Fisheries—L. Hamer
and J. Hepples, 2001, p 1-2.
7
However, the Gulf of Georgia was closed to the roe herring fishery in
1986
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QCI and WCVI stocks estimates have not always resulted
in positive harvest recommendations.
Minor Stock Assessment Areas
In addition to the major stock assessment regions, a large number
of coastal areas outside of those cited above support “minor” herring stocks (eg, Areas 2W, 10, 12, 27).
Due to limited data for minor stock areas, no forecasts of biomass
are possible. Given a lack of information, a maximum of 10 per
cent of the previous year’s abundance estimate for a minor stock
may be harvested. In practice, commercial (roe) fisheries are seldom prosecuted in minor areas, while limited spawn-on-kelp operations are supported.
Distribution of Spawn on Kelp Licences
The distribution of spawn-on-kelp licences in the BC coast is relatively “fixed”. Each licence is designated to a particular statistical
area (or areas) within a major or minor stock assessment region.
The commercial spawn-on-kelp fishery occurs in four of five geographic areas that correspond to the major stock assessment regions: QCI, Prince Rupert, Central Coast and WCVI. In addition, a
number of licences operate in locations supporting minor herring
stocks, including Quatsino Sound (Area 27), Johnstone Strait (Area
12), and Smith Inlet (Area 10). The fishery is prosecuted in locations in which there are significant herring spawns and that lend
themselves to herring ponding operations.8
8
Spawn-on-Kelp IFMP—p 4.
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Table 3: Spawn-on-Kelp Licences
The current (2001) distribution of spawn-on-kelp licences is shown in Table 3.
Note that the bulk of spawnon-kelp operations are located
in the north and central
coasts.
Region
QCI
Prince
Rupert
Central
Coast
WCVI
Stat.
Area
2E
3,4
5
6
7
7/8
23,24,2
5
10
12
27
Major
Minor
# Spawn-onKelp
Licences
10
8
3
2
9-159
3
4
Potential Availability of
3
Minor
1
Herring for Spawn-on-Kelp
3
Use
39-45
Total
Biomass estimation, herring
7
yield calculation, and distribution of J licences have direct implications for the potential expansion of the spawn-on-kelp fishery.
When viewed strictly from the perspective of availability of herring
stocks, the following conclusions can be drawn regarding the potential for spawn-on-kelp expansion.
•
•
•
•
Variability in herring yield by region, which is a function
of fluctuating herring stocks, means that the size of harvest
opportunities in a given area will change from year to year.
Queen Charlotte Islands—given that the harvest yield for
QCI stocks has been zero or near-zero three of the last ten
years, the potential to increase spawn-on-kelp harvests in
this region is constrained by availability of herring stocks.
Maintaining the current level of spawn-on-kelp effort (10
licences) is difficult during years of low abundance, necessitating variations from harvest rate policy, adoption of
stringent conservation-oriented operation guidelines10 or
moving operations to a different herring management region.
Prince Rupert District—harvest opportunities have been
substantial in this region in each of the years examined. In
terms of herring abundance, this region has the potential to
support higher spawn-on-kelp production.
Central Coast—harvest opportunities have been substantial
in this region in each of the years examined. In terms of
9
In 2001, three closed ponds were converted to nine open ponds, causing
the number of spawn-on-kelp operations in Area 7 to increase from nine to
fifteen.
10
This occurred in QCI in 2001.
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abundance, this region has the potential to support higher
spawn-on-kelp production.
Gulf of Georgia—this region, over the last several years,
has supported the coast’s largest herring stock thereby providing the largest harvest opportunities. By this criterion,
the Gulf provides large potential spawn-on-kelp expansion
opportunities.11
West Coast Vancouver Island—this stock has seen greater
abundance variation than any other, with recent biomass
estimates at the low-end of historic ranges. Under current
stock conditions, herring abundance appears to be a constraint to expanded spawn-on-kelp output.
Minor Stock Assessment Areas—given that precautionary
harvest guidelines apply to these areas, and seven operations are already operating in minor stock assessment areas,
substantial harvest expansion seems unlikely. For meaningful increases in herring exploitation to be considered, a
greater level of stock assessment work is required.
Stock Outlook
With herring stock abundance subject to rapid change it is difficult
to identify definitive long-term trends. Based on historical performance, it is likely that stocks in each area will continue to fluctuate
significantly. No long term increase or decrease in coastwide abundance is foreseen. This implies that potential spawn-on-kelp expansion should not be premised on rising herring stock abundance.
Suitable Spawn-on-Kelp Locations
A physical, factor influencing potential spawn-on-kelp output levels
is the availability of suitable sites to accommodate spawn-on-kelp
harvest operations. While the BC coastline is vast, and total available herring is substantial in some areas, the number of locations
suitable for siting profitable spawn-on-kelp operations is very limited.
For a potential site to accommodate a spawn-on-kelp operation,
certain basic criteria must be met.
•
•
•
•
11
Proximity to herring stocks, and herring spawning locations.
Accessibility of mature macrocystis kelp.
Weather conditions that allow operations (ie, not too exposed to wind, waves, tidal action).
Physical room to operate.
Other constraints are recognized and will be identified subsequently.
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Any one of a number of elements may impede successful spawn-onkelp operations.
•
•
•
•
•
Sandy/silty bottom—adversely affects product quality.
Presence of marine mammals (eg, sea lions)—may affect
herring stock behaviour, interfere with ponded herring
stocks, and/or damage equipment.
Transient herring populations (ie, may be present one year
but not the next).
Exposure to adverse weather.
Lack of access to spawning grounds.
The following conclusions can be drawn from the preceding analysis.
•
•
•
•
•
•
Macrocystis kelp stocks are most abundant in the north
coast and central coast.
Herring, kelp, weather, and bottom conditions are optimal
in reasonably few sites on the coast. Spawn-on-kelp operations tend to “cluster” in these locations.
The north and central coasts (including QCI) have the
greatest number of suitable locations (39 of 46 operations
are located there).
As the spawn-on-kelp fishery has expanded over the years,
new operations have tended to locate at sites already housing other spawn-on-kelp operations.
There is no known “inventory” of new sites with untapped
potential.
While certain areas provide consistent spawn-on-kelp opportunities, an element of mobility and in-season flexibility
is required, since fish accumulations and spawning locations change from year-to-year.
Following are area-specific observations on the potential for spawnon-kelp expansion based on availability of suitable sites.
•
•
•
QCI—given modest stock levels, and ten spawn-on-kelp
operations in the area, the 2E region appears to have extremely limited to potential to support further operations.
Prince Rupert—though stock assessments show healthy
stocks in the Prince Rupert District, the number of operations in the area (eight in Areas 3 & 4, three in Area 5) is
substantial, with operations already crowded under certain
stock/spawning location conditions. A substantial amount of
spawn-on-kelp production in the District was harvested
within the confines of Prince Rupert harbour in 2001.
Central Coast—spawn-on-kelp sites in the central coast are
more numerous and farther-flung than in other regions.
This area also accommodates more spawn-on-kelp operations than any other (17). The 2001 expanded Heiltsuk open
pond fishery demonstrated that, physically, spawn-on-kelp
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growth, at least in the short term, can be achieved in the
central coast area.12
Gulf of Georgia—despite harbouring the largest herring
biomass, the Gulf possesses few or no suitable spawn-onkelp sites. Sandy conditions, exposure to weather and an
abundance of marine mammals (among other factors) have
caused Gulf-based operations to move to more favourable
sites in other stock assessment regions.
WCVI—with only 4 licenses located in the major stock assessment region, the west coast may at times have the potential to accommodate further spawn-on-kelp operations,
depending on the scope and location of spawns. Current
low stock abundance provides a further constraint, however.
Minor Stock Assessment areas—with three operations in
Smith Inlet (Area 10) and three in Winter Harbour (Area
27), there is little physical ability to accommodate further
operations in these areas. In fact, operations in Area 27
may be relocated elsewhere on the west coast. Area 12
provides a host of seemingly suitable spawn-on-kelp sites
but marginal operating results experienced by current and
past operators make expansion in this area unlikely.
When viewed from a site-suitability perspective, it is evident that
the potential to increase the number of spawn-on-kelp operations on
the BC coast is limited. Some areas present modest potential, while
others are already saturated with pond operations. While abundant
herring stocks may suggest spawn-on-kelp growth opportunities, a
number of other elements, including proximity to spawning
grounds, kelp availability, suitable weather and bottom conditions,
and physical room to work, are key. Optimal conditions for spawnon-kelp operations are found in surprisingly few locations.
The fact that BC’s largest and healthiest herring stock, found in the
Gulf of Georgia, provides little spawn-on-kelp opportunity because
of the lack of site-suitability, limits overall spawn-on-kelp expansion potential.
Kelp Supply
One of the key prerequisites to a successful spawn-on-kelp operation is a supply of high quality “Bull” or “Giant” Kelp (Macrocystis integrifolia), not because it provides a superior herring spawning
habitat but because it is the favoured kelp of Japanese spawn-onkelp consumers.
12
Expanded Heiltsuk participation brings allocation and “area-overlap”
implications, discussed subsequently in the “Management Implications”
section.
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This section provides basic information on macrocystis stocks in
BC.
Kelp Inventory
Starting in the mid-1970s, the provincial government commissioned
a series of studies seeking to create a “kelp inventory” by identifying and quantifying the biomass of kelp stocks in BC. Based on a
kelp inventory method (KIM-1) developed in 1975, these studies
were undertaken to provide inventory data vital to the kelp management program being developed in British Columbia at that time.
Data from these studies continue to form the basis for decisions on
resource allocation through licensing and for establishing areaspecific harvest quotas. Because kelp beds are important to other
marine species, there are a growing number of other users of kelp
inventory data. Inventory charts will be of value to those conducting surveys of herring spawn, abalone and sea urchins.13
The following kelp inventory studies were reviewed.
•
•
•
•
•
•
•
•
•
Nootka Sound—1975.
North Coast Vancouver Island—Hope, Nigei and Balaclava
Islands—1976.
The Estevan Group and Campania Island—1976 (Central
Coast).
The Dundas Group—1976 (Central Coast).
Queen Charlotte Islands—North and West Coasts Graham
Island—1976.
Goschen Island to the Tree Nob Group.
Northwest Coast of Vancouver Island—1978.
Queen Charlotte Strait—1989.
Central Coast—Hakai Pass to the Bardswell Group—1993.
These reports provide a detailed technical summary of mapping and
biomass estimations by species. The conclusions of our review are
listed below.
•
•
•
•
13
Inventory reports covered only a small portion of the BC
coast, though efforts clearly focused on areas known to
possess substantial kelp beds.
Both Macrocystis integrifolia and Nereocystis leutkeana
stocks were inventoried in each area, with Nereocystis
dominating in most areas.
Reports found varying distribution, density, and estimated
biomass of Macrocystis.
The greatest abundance of Macrocystis was found in the
north and central coasts.
Kelp Inventory, 1976. Part 2—Field, Clark
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The reports provide a one-time “snapshot” of kelp stocks,
meaning that trends in abundance and factors influencing
abundance cannot be definitively determined.
In comparing their results to previous inventory work, the
authors of the reports found that the size and location of
kelp beds evolved over time. Kelp beds, it appears, are
ever-changing.
Kelp Harvest Approach
Although a comprehensive kelp inventory of the BC coast has never
been completed, BC’s marine plant biologists14 are comfortable
that, given the general knowledge of stocks of macrocystis kelp
coastwide, harvest of kelp for all uses poses no threat to stock levels. Macrocystis is currently harvested for a variety of purposes.
•
•
•
•
•
The spawn-on-kelp fishery (largest use).
Food.
Feed for abalone/urchins (culture operations).
Fertilizer.
Agar.
Although uses for macrocystis are varied, overall harvest and utilization levels remain low. The BC government’s approach to kelp
harvest is comparable to the “precautionary” harvest approach applied by Fisheries and Oceans Canada to “data-limited” fisheries
(eg, minor stock assessment spawn-on-kelp operations) that permits
only extremely low catches relative to estimated biomasses.
A marked increase in kelp harvests, potentially triggered by development of products and markets for “industrial” products, would
necessitate substantial additional stock assessment and scientific
research. For example, little is now known about factors influencing kelp abundance such as water temperature, salinity, effects of
wave action, and storm influence.
Kelp harvest by spawn-on-kelp operators is licensed and regulated
by the BC government. Harvest of kelp by spawn-on-kelp operators
is subject to a number of restrictions.
•
•
•
Kelp to be harvested in spawn-on-kelp area of operations
(some exceptions allowed).
Hand harvest.
One-in-five fronds per plant may be harvested.
14
We interviewed Scott Pilcher, Shellfish and Marine Plant Biologist, BC
Ministry of Fisheries.
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Kelp Harvest Considerations
Despite the fact that kelp resource managers feel that kelp harvests
are extremely low in relation to the overall macrocystis biomass,
spawn-on-kelp operators periodically report some difficulty in locating and harvesting adequate quantities of kelp of suitable quality
to mount their operations. Possible reasons underlying this seeming
dilemma are threefold.
•
•
•
Timing—spawn-on-kelp operators require kelp from lateMarch through early-May. In that period, the “growing
season” for kelp has just begun. Maximum growth occurs
between April and August. In addition, winter storms may
have depleted kelp beds that will not have re-generated by
the time the spawn-on-kelp harvest takes place. The issue,
then, is not a lack of kelp stocks, but a shortage of kelp
when it is needed by the spawn-on-kelp industry.
Market—as Japanese buyers become more discerning, it is
possible that kelp quality criteria have tightened causing
spawn-on-kelp operators to reject kelp grades that might
previously have been acceptable. This would focus interest
on a smaller portion of kelp stocks.
Growing Kelp Requirements—as the spawn-on-kelp industry has expanded, and as open ponding has grown,
overall kelp requirements have risen. Open ponds typically
require more kelp than closed ponds.
Overall, access to adequate volumes of suitable quality kelp is a
challenge for spawn-on-kelp operators, though one that operators
are generally able to surmount. Operations devoting “serious” resources to kelp harvest—that is, a trained and experienced crew,
willing to explore exposed kelp beds—tend to have few problems
obtaining the kelp they require.
With regard to potential expansion of the spawn-on-kelp fishery,
supply of kelp may be a logistical or operational issue but it does
not appear to be a biological or biomass issue.
Summary of Biological/Physical Constraints
Preceding sections have examined constraints to spawn-on-kelp expansion from a biological perspective. Findings are summarized in
Table 4.
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Table 4: Summary of Biological/Physical Constraints
Constraints
to Expansion
by Area
QCI
Prince Rupert
Central Coast
Gulf of Georgia
WCVI
Minor Regions
Herring
Resources
Available
Limited
Some
Some
Lots
Limited
Limited/None
Suitable
Locations
Available
Few if Any
Few if Any
Few
None
Few
Limited/None
Kelp
Availability
OK
OK
OK
Limited
OK
Varies
Area Potential for Spawnon-Kelp Expansion
Very Limited
Very Limited
Some
Very limited
Limited
Very Limited
Herring abundance is a constraint in areas where the estimated
biomass periodically dips below the “cut-off”. Most notably, in the
last few years, QCI and WCVI stocks have fallen below cut-off
levels.
With 46 spawn-on-kelp operations clustered in the major spawning
areas, virtually all suitable sites are now utilized. Some areas are
“saturated” with spawn-on-kelp operations, meaning that additional
operations would hamper existing operations. In particular, operators in QCI and Prince Rupert felt that crowding may already be an
issue.
The extent to which kelp availability is a constraint to expansion is
difficult to evaluate. For the purposes of this analysis, kelp supply
is not deemed to be a major impediment to expansion of spawn-onkelp output in any of the key areas.
From a biological perspective, therefore, we conclude that there is
some potential to expand the spawn-on-kelp fishery. In the next
section we examine fishery management implications of expansion.
Management Considerations
Before the biological potential to expand the spawn-on-kelp fishery
can be translated into an enhanced fishery, significant management
hurdles must be surmounted.
Herring a “Fully Subscribed Resource”
Once a harvest surplus for herring stocks is identified, requests to
access and utilize the resource generally exceed the harvestable
surplus. Herring in BC are used for a number of purposes.
•
•
•
•
•
•
•
Aboriginal food, social and ceremonial uses.
Spawn on Kelp—both J licence and commercial communal.
Winter food and bait.
Bait impoundment (commercial and sport).
Personal use bait.
Charity.
Zoo and aquarium.
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Allocations for zoo & aquarium, charity, personal use bait, bait
impoundment, and winter food and bait are modest in total (1,847
tons expected in 2001/2002, of a total potential catch of 43,000
tons) with the vast majority of this amount coming from the abundant Gulf stock.
Remaining surpluses not set aside for aboriginal food, social and
ceremonial use, or miscellaneous uses, are divided between the
spawn-on-kelp and roe herring fisheries. A decision to increase the
spawn-on-kelp allocation would reduce the roe herring fishery allocation by a like amount.
Both spawn-on-kelp and roe herring participants guard their interests passionately, and transfers of allocation between or among
sectors are greeted with spirited debate at forums such as the Herring Industry Advisory Board (HIAB).
Allocation of herring surpluses brings many implications for
spawn-on-kelp and roe herring participants, and for the managers
tasked with making allocation decisions.
•
•
•
The roe herring fleet is managed to an allocation formula of
55 per cent for seines and 45 per cent for gillnets. Fisheries
are divided into the five stock assessment regions. Annual
stock variation and “fixed” spawn-on-kelp allocations cause
roe herring quotas by area and by gear-type to fluctuate
significantly.
Roe herring profitability is closely linked to the catch per
licence. Reduced allocations resulting in lower catches are
deemed to negatively impact profitability.
Each sector—spawn-on-kelp and roe herring—attempts to
serve its markets with quality product. Quality varies by
area and according to the nature of the stock in a particular
year (eg, dominant year class).
Fisheries and Oceans Canada has recognised the interrelationship
between the spawn-on-kelp and roe herring fisheries since the inception of the spawn-on-kelp fishery.
“It is evident that the development of the spawn-on-kelp fishery has
been influenced by circumstances prevailing in the roe herring fishery and the overall abundance of herring stocks. For example, the
size of individual spawn-on-kelp quotas has been influenced by average earnings in the roe herring fishery and the need to spread the
burden of conservation when herring stocks are low. In addition,
many individuals were required to relinquish their roe herring licences in order to obtain an spawn-on-kelp licence.”15
15
Proposal to Expand the British Columbia Spawn-on-Kelp Fishery, Fisheries and Oceans Canada, 1986.
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The 1990 expansion of the fishery, when 10 new licences were issued to Native Bands, required the retirement of 60 gillnet licence
equivalents.
Potential expansion of the spawn-on-kelp fishery will have allocation implications for the roe herring fishery.16
Gear Conflict
As indicated in the “Biological Constraints” section (see page 8),
spawn-on-kelp operations are clustered in areas near herring
spawns. The roe herring fishery, particularly the gillnet fishery,
also takes place in the midst of herring spawns. The spawn-on-kelp
and roe herring fisheries share the herring spawning grounds.
When a large number of spawn-on-kelp operations, gillnet punts
and nets, and roe herring support vessels share a (relatively) small
spawning area, working space can be constrained for all. The nature of gear conflict is varied.17
•
•
•
Spawn-on-kelp pond operations (particularly open ponds)
and gillnet punts may directly compete for the same
grounds.
Gillnet harvesting operations near spawn-on-kelp ponds
may have negative impacts on pond operations (eg, roe herring packers transferring product via vacuum pumps may
create blood-water/foam-water that affects spawn-on-kelp
product quality).
Seine harvests reduce the biomass available for spawning
which both spawn-on-kelp and gillnet interests may feel reduces the scope of their opportunities.
The degree of gear conflict varies by area.
•
•
•
QCI—because this area seldom features major gillnet fisheries, conflicts are minimized. The seine fishery rarely interferes with spawn-on-kelp operations. The presence of
spawn-on-kelp operations is a constraint to a larger gillnet
fishery.
Prince Rupert—large gillnet quotas are typically harvested
in this area. The gillnet and spawn-on-kelp fisheries often
utilize identical areas, creating logistical problems and the
need for compromise by both sectors.
Central Coast—gillnet quotas are generally small in this
area, in part because much of the available spawning
16
Management and allocation policies do not necessarily apply to spawnon-kelp expansion under AFS agreements.
17
Use of the word “conflict” does not imply “acrimony” but rather describes the need to use common areas for varying purposes.
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ground is already occupied by spawn-on-kelp operations.
This implies larger seine quotas in this area.
Gulf—wide-spread herring spawns, abundant stocks, and
the area’s unsuitability for spawn-on-kelp operations mean
that the Gulf accommodates large gillnet and seine fisheries. Conflict between spawn-on-kelp and roe herring sectors
is therefore non-existent.
WCVI—gear conflict is minimal, as the gillnet fishery
typically takes place at a location not suited to spawn-onkelp operations.
The area offering conflict-free harvesting for the roe herring sector,
the Gulf, is not necessarily the preferred harvesting area from a
product quality point of view (especially for the seine fleet). Thus,
the roe herring sector is determined to maintain (or expand) its
presence in other areas providing superior quality prospects—such
as the central coast—that are heavily occupied by spawn-on-kelp
operations.
While the spawn-on-kelp and roe herring sectors have demonstrated
an ability to compromise and work together, over-lapping designs
on common areas by the two sectors nevertheless pose a practical
constraint to spawn-on-kelp expansion.
Alleviating Biological and Management
Constraints to Spawn-on-Kelp Expansion
The preceding two sections have identified opportunities for spawnon-kelp expansion from a biological viewpoint, but also noted a
number of factors constraining the scope of such opportunities. The
major impediments to expansion are summarised below.
•
•
•
Herring stocks are at times insufficient to support higher
spawn-on-kelp landings. This applies to the QCI and WCVI
regions in particular.
There is a shortage of suitable sites for additional operations. Spawn-on-kelp utilisation of choice sites has reached
the saturation level in some areas.
Allocation and on-grounds issues between the spawn-onkelp and roe herring sectors create conflict.
There are no readily identifiable and expedient solutions for expanding the spawn-on-kelp sector without violating harvest rate
guidelines, without undue crowding of existing operations, or without negative impact on the roe herring sector.
We have identified two strategies that might be used to expand
spawn-on-kelp production. These are discussed below.
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Convert closed ponds to open ponds.
Because open pond operations are deemed to consume less herring
than closed ponds (a 35 ton “set aside” vs 100 tons for closed pond
operations) the potential exists to produce more finished product
with existing herring allocation by converting some closed pond
operations to open ponding. Per licence quotas could then be expanded, and/or new licences issued.
Since open ponds have a larger “footprint” than closed ponds (ie,
occupy a greater area per operation), the potential for this strategy
is limited where crowding is already a constraint. Open ponds may
also utilize a greater quantity of kelp than closed ponds, potentially
creating kelp-sourcing issues for operators.
The allocation of incremental quota amongst J licences, and potential impacts on markets, are contentious issues for consideration.
Increase the spawn-on-kelp quota per J licence.
Perhaps the simplest means of increasing spawn-on-kelp production
is an “across the board” increase in finished product quota per J
licence. Closed pond operations can produce more product with
few physical changes, so that the effects of crowding are minimized.
In addition to herring and kelp availability issues, this option implies a reallocation of herring resources from the roe herring sector
to spawn-on-kelp. Allocation issues are outside the purview of this
report.
Before examining the impacts of various BC supply scenarios on
spawn-on-kelp operators, we consider spawn-on-kelp production
plans in other jurisdictions.
Production Plans
In this section we briefly review what we have been able to learn
about global spawn-on-kelp production plans.
We contacted Canadian embassies, fishery institutes and organisations, and other contacts in a variety of jurisdictions, and checked
web sites for information. For the most part, only limited information was obtained. Many parties who we attempted to contact did
not respond. We did receive some interesting information on Finland and Norway just prior to finalising this report.
Our findings are summarised below.
•
•
Newfoundland reserved a quota of 200 tonnes for
1999/2000 but reports no landings in recent years.
Finland produced 26 tonnes in 1999, 12 tonnes in 2000 but
none reported to date in 2001.
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Russia produced 42 tonnes in 2000 but none reported to
date in 2001.
Norway. While small quantities of kazunoko kombu have
been produced in Norway in the past, there is no production anticipated in the foreseeable future.
Russia has been encouraged to develop a fishery but has produced
only limited, intermittent quantities in recent years. Poor weather,
ice, and inadequate resources and training have impeded development of a spawn-on-kelp fishery in Russia to date.
In Finland there is one company that produces Baltic herring roeon-kelp, Länsi-Rannikon Kala Oy (LRK Oy, West Coast Fish Ltd).
They have patented the product, so no one else can produce it.
They produce 20-40 tonnes per year, and export everything to Japan. It is not sold in Finland or elsewhere in Europe. According to
LRK Oy, Baltic herring roe-on-kelp is not produced elsewhere in
Scandinavia. Production methods in Finland are apparently different than in Canada. Local constraints preclude conventional ponding methods. Therefore, LRK's Japanese customer sends kelp, usually from China or Norway, to Finland to which the roe is attached
artificially.18
In Norway, the Norwegian Institute of Fisheries and Aquaculture
in Tromso conducted a research project in the mid-1980s to investigate the possibilities for herring roe export for the Japanese market.
While the project was successful regarding export of large herring
and roe herring, it was not successful with the roe products including kazunoko. The maturing stages of the catches were found to
vary too much to get sufficient volumes of high grade product.
Norwegian spring-spawning herring tend not to come into shallow
bays to spawn (as do Pacific herring). Hence it is much more difficult to harvest kelp with sufficient spawn. Earlier this year, the Institute was contacted by a fisherman with a purse seine vessel who
has plans to test this production model. The success of that experiment will not be known until spring 2002.19
There has been no production of spawn-on-kelp in Iceland, Sweden or South Korea in recent years.
The San Francisco spawn-on-kelp fishery relies on a herring stock
with a limited but variable biomass. There is no evidence to indicate that this pattern will change in the future.
18
Saara Lehmuskoski, Project Co-ordinator, Canadian Embassy, Helsinki,
Finland, pers comm.
19
Roger Richardsen, Research Director, Centre of Economics and Marketing, Norwegian Institute of Fisheries and Aquaculture, pers comm.
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The area with the biggest potential to increase production, outside
of BC, is Alaska. Most of the landings in the Alaskan herring roe
fishery are frozen in the round and exported to Japan and China for
processing into brined roe for Japan. The prices received by herring roe harvesters in Alaska are significantly below what could be
obtained if they transferred their quota to spawn-on-kelp. Alaskan
fishery regulators support such a shift but some herring permit
holders have to date been reluctant to support a conversion initiative.
US production out of Alaska and San Francisco are dealt with in
more detail in the next section.
Main Areas of Competition with BC
The major competition for BC spawn-on-kelp product derives from
production from United States fisheries in San Francisco and
Alaska. Other production, as periodically arises in limited quantities from countries including Norway, Finland, Sweden, China, or
South Korea, is not deemed to comprise a substantial or definable
threat to the BC industry.
Spawn-on-kelp production from Russia has penetrated Japanese
markets to a limited extent. Russia’s potential to expand spawn-onkelp production is significant, though impossible to systematically
evaluate. Russian spawn-on-kelp production may be considered a
“wild card” that could affect overall supply in the long term, but is
not foreseen to have a short term impact.
Information in this section therefore focuses on US spawn-on-kelp
fisheries in the key production areas of San Francisco and Southeast
Alaska.
San Francisco
Both roe herring and spawn-on-kelp are harvested in annual herring
fisheries in San Francisco bay. The San Francisco spawn-on-kelp
fishery consists of 11 permit holders (maximum number fixed by
regulation), though fewer may participate in a given year, if expected economics are poor. The number of permit holders is kept
small to prevent undue congestion in San Francisco bay and in recognition of the limited number of suitable sites for securing rafts in
the bay. All licencees utilise open pond operations. Giant kelp
(macrocystis) is not found in San Francisco bay so it is brought in
from other coastal locations. Quotas are based on prior season biomass; stocks are currently at modest, though healthy levels. Spawnon-kelp produced in San Francisco fits into the lower end of the
quality spectrum (ie, lighter density, slight silt content). Variables
affecting production levels include: herring biomass forecast (influences quota); herring abundance; availability of kelp (winter storms
may limit supply); location of spawn (may be other than at sites
where rafts are anchored); and number of permits engaged.
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Table 5: San Francisco Spawn-on-Kelp Production
Historical data on
spawn-on-kelp production out of San Francisco are presented in
Table 5. Currently, a
low biomass level is
leading to reasonably
small quotas. Quotas
will rise if and as biomass improves. Future
landings may be expected to follow a similar, volatile, pattern as
in the past.
Season
1989—90
1990—91
1991—92
1992—93
1993—94
1994—95
1995—96
1996—97
1997—98
Alaska
1998—99
Quo
ta
(ton
s)
Total
Landings
(tons)
Percent
of
Quota
Landed
Number
of
Permits
107.1
97.4
8
47.0
32.6
10
84.2
73.8
10
47.4
35.0
13.1
56.1
99.7
15.4
10
10
10
106.8
100+
10
185.7
64.9
11
36.4
17.4
11
31.7
58.3
11
110.
0
144.
0
114.
0
84.5
35.1
85.0
106.
5
286.
0
209.
0
54.4
Alaskan spawn-on-kelp
1999—
99.2
31
31.3
11
2000
production historically
2000—01 49.3
27.2
55.2
11*
derived from Norton
114.
Sound and Prince WilAverage
62.7
58.5
10
8
liam Sound. The Prince
William Sound fishery has been closed since the Exxon Valdez oil
spill in 1989. Since the closure of Prince William Sound, the
spawn-on-kelp fishery has developed in Southeast Alaska, particularly Hoonah Sound.
Three fisheries currently comprise the Alaskan spawn-on-kelp fishery: Hoonah Sound, and Craig (in SE Alaska) and Norton Sound
(in the Arctic region), with Hoonah Sound being the predominant,
and most consistent, contributor.
Hoonah Sound
Table 6: Hoonah Sound Spawn-on-Kelp Production
Harvest Kelp Blades Ex Vessel
(tons) Per Pond Value ($US)
1990
11.9
240
8.46
Year
Edwin Blewett & Associates Inc
1991
1992
13.25
23.12
280
240
7.31
9.8
1993
1994
14
32.7
160
140
19.36
25.74
1995
1996
27.4
0
100
0
21.45
0
1997
1998
65.2
85.9
430
400
7.05
6.75
1999
2000
71.6
32.7
400
110
7.02
8.23
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2001
65.9
n/a
7.61
The Hoonah Sound spawn-on-kelp fishery started in 1990. It is a
limited entry fishery with a maximum of 107 participants. The bulk
of its production comes from closed ponds. Hoonah Sound operators produce thick density, “jumbo” product, comparable to BC
(though of a marginally lower quality). Fishery production is influenced by the pre-season estimate of herring returns. A kelp allocation per operation (number of fronds per pond) is determined based
on expected herring abundance (ie, larger herring forecasts lead to
more generous kelp allowances). Hoonah Sound herring stocks are
rebounding from low recent levels—the fishery was closed in 1996
due to low biomass forecast. The expectation for 2002 is for moregenerous biomass estimate and kelp allowance. Production could
double in 2002 from 2001 level; if that occurred, it would be the
largest harvest ever in Hoonah Sound.
Craig
Table 7: Craig Spawn-on-Kelp Production
Production
(tons)
1990
0.1
1991
0.05
1992
25.7
Year
1993
1994
5.7
16.5
1995
1996
27.0
37.3
1997
1998
22.8
22.5
1999
36.4
A fishery taking place in Craig, Alaska also contributes limited
spawn-on-kelp production, though on a smaller scale than the
Hoonah Sound fishery.
Production is identified in Table 7.
Sitka
An experimental open pond spawn-on-kelp test fishery was conducted in Sitka for a two year period (1998-1999). The fishery was
exploratory, to examine whether commercially acceptable product
could be produced using open pond techniques, with the potential
objective of converting roe herring seine licences to spawn-on-kelp
permits. The fishery produced 50 tons in two years, with quality
and prices commensurate with a “learning curve” operation. While
the trial was considered successful, the decision was made not to
proceed with a full-blown spawn-on-kelp fishery in Sitka.
Political, not economic or resource, issues scuttled the establishment of a spawn-on-kelp fishery in Sitka. Participants felt that proEdwin Blewett & Associates Inc
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duction could be substantial and that open pond product could be
absorbed by the Japanese market, but that new volumes could
negatively impact prices received by closed pond operations in SE
Alaska.
A re-examination at this herring-use decision could substantially
increase Alaskan spawn-on-kelp production in the future.
Norton Sound
Table 8: Norton Sound Spawn-on-Kelp Production
This sporadic fishery taking place in the Arctic
region near Nome, Alaska contributes minor
spawn-on-kelp production. Production for the
last 4 years is summarised in Table 8. Recent
volumes are small and have been shrinking.
Year
1998
1999
2000
2001
Production
(tons)
9.04
3.74
2.25
2.20
Summary/Outlook
The main fisheries that contribute significant volumes that may
materially impact North American supply of spawn-on-kelp are San
Francisco and Hoonah Sound (SE Alaska).
Spawn-on-kelp production from these two fisheries for the last 10
years is shown in Figure 3.
Figure 3: Spawn-on-Kelp Production from San Francisco and
Hoonah sound
Major US SOK Fisheries - Prod'n
600,000
500,000
lbs
400,000
300,000
200,000
100,000
0
1990
1992
1994
1996
Hoonah Snd
1998
2000
San Fran
The Hoonah Sound fishery is relatively new, and on a growth
trend, with 2002 production likely to increase substantially above
2001 level. As a closed-pond fishery with reasonable proximity to
BC, the Hoonah Sound fishery targets similar market segments as
BC product, though at marginally lower prices.
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San Francisco volume is inherently volatile. The recent downward
trend may hold for a few years, but could very quickly turn around
(see Table 5: 94/95 production = 13.1 tons; 95/96 production =
106.8 tons).
While US spawn-on-kelp production in the last three years has been
quite low, over the long haul, it can be expected to be higher. Periodic spikes in production should be considered likely. Other fisheries (eg, Craig, Norton Sound) may kick-in sporadically.
There is one wildcard. If the Sitka decision not to allow conversion
of seine permits to open-pond spawn-on-kelp is reversed, there
could be a major increase in supply from southeast Alaska.
Price Sensitivity
As part of this assignment, we were asked to update empirical work
undertaken in the mid-1990s on Japanese demand for spawn-onkelp. This proved not to be possible as the author of that study was
unable to assist us. There was then too little time to undertake our
own analysis. In any event, the existing study covers the period to
1995 and there would be too few data points in the remaining period to date to allow useful estimation of demand functions. We
therefore substituted a review of seafood demand literature, including the spawn-on-kelp study, as a basis for understanding the
likely sensitivity of spawn-on-kelp prices to product quantities in
the Japanese market.
In this section, we summarise findings from empirical studies of
seafood markets that bear on the issues to be addressed in this assignment. The best of these for our purposes are studies directed at
herring spawn-on-kelp demand in Japan; the remainder are Japanese studies of interest concerning other species/products, or studies in other jurisdictions with findings of interest to this assignment.
We begin with the general and work towards the specific.
While the following summary is technical, most of the research
summarised focuses on estimating what is known as “price elasticity of demand.” It is well established that in virtually all circumstances, market prices of products tend to fall when market quantities increase, and vice versa. The magnitude of changes in prices
occasioned by increases or decreases in market quantities is known
as the “price elasticity of demand.” For a given increase in market
quantity, say 10 per cent, there are three possibilities: price may
fall by less than 10 per cent; price may fall by exactly 10 per cent;
or price may fall by more than 10 per cent. If the price decline
caused by a 10 per cent increase in market quantity is less than 10
per cent, demand is said to price inelastic; if the price decline is
exactly 10 per cent, demand is unit elastic; if the price declines by
more than 10 per cent, demand is elastic.
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Price sensitivity, as measured by elasticity, is important because an
increase in market quantity will cause price to decline. The ultimate
impact on producer revenues (= price x quantity) depends on the
price elasticity of demand. If demand is price inelastic, then the
decline in price will be proportionately less than the increase in
quantity and producer revenues will increase. If demand is unit
elastic in prices, the increase in market quantity and subsequent
decline in price will offset one another and producer revenues will
remain unchanged despite the increase in market quantities. Finally,
if demand is price elastic, an increase in market quantity will cause
price to decline by a proportionately greater amount and producer
revenues will consequently fall.
In considering the potential for expanding the spawn-on-kelp market, price elasticity is very important. If Japanese demand for
spawn-on-kelp is price elastic, BC producers can expect to see
revenues decline overall if they attempt to increase market quantity.
If spawn-on-kelp in the Japanese market is price inelastic, then
there market expansion should lead to increases in total revenues.
Elasticity also applies to economic variables other than price. You
will read in the following review, for example, about “income
elasticity” and “cross-price” elasticity. One of the key determinants
of demand is income. If a product is income elastic, increases in
income will tend to lead to greater than proportional increases in
quantities demanded. If a product is income inelastic, then demand
increases will be proportionately less than the income increase that
caused them. Cross-price elasticity refers to the relationship between the market quantity of one commodity and the price of another, usually a close substitute. A decline in the price of a substitute product, say roe herring or sea urchin, will affect the quantity
demanded for the product of interest, in this case spawn-on-kelp.
The magnitude of the impact on spawn-on-kelp demand depends on
the cross-price elasticity.
Seafood Demand in General20
An assessment of the impact of advertising on seafood demand in
the USA (Brooks and Anderson, 1991) concluded that retail demand was significantly affected by advertising. In all cases but one,
retail demand was found to be price elastic.
Herrmann and Lin (1988) found that demand for Norwegian Atlantic salmon was price and income elastic in the USA and the EU,
and that demand was highly seasonal.
Wessells and Anderson (1992) point out that, as supply has grown,
demand has expanded from up-market restaurants to other restau20
This section draws heavily upon Wessells and Anderson (1992).
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rants and finally to seafood retailers. Each of these sectors is likely
to have different demand elasticities that are obscured in an aggregate model that does not account for demand shifts and expansion
into new markets.21
The work of Herrmann and Lin (1998) was extended in Herrmann
(1990) who found that demand was price elastic in the short-run
and even more elastic in the long-run, again in both the USA and
the EU.
A study by Squires, Herrick and Hastie (1989) investigated the extent to which US and Japanese sablefish markets are integrated. The
authors examined the degree to which ex-vessel prices in Alaskan
and Pacific coast markets are influenced by prices in the Tokyo
Central Wholesale Market. The majority of Pacific coast production
of sablefish remains in the USA; most Alaskan production, in contrast, is exported to Japan. The authors found that prices in the Pacific coast ex-vessel and Tokyo wholesale markets are segmented
but that the Tokyo wholesale and Alaska ex-vessel markets are well
price-integrated . The authors concluded that changes in Japanese
consumer preferences, exchange rates or trade policies would all
affect prices received by fishermen in Alaska.
Seafood Demand In Japan
Herrmann, Mittelhammer and Lin (1992) studied the seasonality of
Japanese demand for salmon. Monthly demand for fish is likely to
exhibit seasonality implying that elasticities may vary throughout
the year. Seasonally-varying demand elasticities, if they exist, may
be important to fish producers and seafood marketers. Fish farmers
and marketers, for example, might consider increasing production
during periods when demand is price inelastic, thereby increasing
revenues.
The Japanese consume prodigious amounts of seafood. Consumption of fish is the most important source of animal protein in the
Japanese diet. Japanese consumption of fish is the largest in the
world. Japanese consumers are well aware of the quality and species of salmon entering the market and have varying consumption
habits and income patterns throughout the year. Seafood consumption patterns in Japan have been influenced by availability as well
as climatic, physical and cultural factors.
According to Kikuchi (1987), these patterns still exist today, especially in rural areas where traditional lifestyles and dietary habits
remain. Kikuchi found significant regional differences in salmon
consumption. End-of-year salary bonuses and traditional New Year
21
Wessells and Anderson (1992) page 212.
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celebrations can markedly affect consumption levels of fish at year
end, further contributing to seasonality of demand elasticities.
Herrmann, Mittelhammer and Lin found expenditure elasticities
decline from 1.05 in January to 0.79 in May and then rise continually to 2.07 in December. Their model provides statistical evidence
that price elasticities do not vary significantly over the year however. Varying expenditure elasticities imply that opportunities exist
to increase revenues by reallocating salmon supplies throughout the
year. Large cross-price elasticities with pork suggests that pork
prices during the year may have a significant impact on demand for
salmon.
Wessells and Wilen (1993) investigated the extent to which a variety of seafoods (not including herring spawn-on-kelp) substitute for
salmon in Japan and the influence of seasonality and regional location on household consumption of salmon. The inclusion of seasonal and regional variation is important because Japanese consumer preferences for seafood are based on historical patterns that
appear to have held up well over time. Other studies of Japanese
demand for protein pre-suppose Western preferences by assuming
that, for Japanese consumers, beef, pork, poultry and seafoods are
equivalent substitutes. Wessells and Wilen were the first to focus on
substitution among seafood products in the Japanese market. Estimated elasticities indicated that demand for the vast majority of seafood species in Japan tends to be price elastic. Wessells and
Wilen’s analysis identified significant differences in elasticities
among regions of Japan.
Bose and McIlgorm (1996) investigated inter-species price relationships and the degree of substitutability among species in the Japanese tuna market. They note that substitutability between tuna fish
species depends on consumers’ perceptions of the relative importance of attributes such as price, size, colour, appearance, fat and
moisture contents, flesh, texture and species. The sashimi market
demands high quality, large tuna species and thereby commands a
high price. Consumers in the sashimi market are very sensitive to
quality.
Japanese Demand for Herring Spawn-on-Kelp
We reviewed three reports investigating the BC herring spawn-onkelp fishery and world-wide demand for herring spawn-on-kelp.
•
•
•
The 1991 Expansion of the Herring Spawn-on-Kelp Fishery: an Evaluation (August 1993).
Price Analysis: Spawn-on-Kelp (March 1997).
The Import Demand for Spawn-on-Kelp (April 1997).
The April 1997 study of import demand for spawn-on-kelp reached
the following conclusions.
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•
•
•
•
•
•
Part Two
Spawn-on-kelp prices received by BC producers are highly
responsive to Japanese imports, particularly imports from
the USA.
The spawn-on-kelp market has become increasingly competitive as producers outside BC increase the quantity and
quality of their product, making BC prices more vulnerable
to foreign supplies than in the past.
There is some degree of substitutability between spawn-onkelp and herring roe although the statistical evidence is not
strong.
There is a strong positive relationship between expenditures
on dining out and the price of spawn-on-kelp. Dining out
expenditures appear to exert the strongest influence on
price behaviour.
Appreciation of the yen against the Canadian dollar has had
a positive impact on prices paid to Canadian producers in
Canadian dollars, while the yen prices have fallen.
The Exxon Valdez oil spill had a noticeable positive impact
on prices received by BC producers.
The impact of hypothetical increases in Japanese imports on prices
for total imports and on imports from BC were simulated. The
simulation was based on total import prices of $43.76 per kg for
spawn-on-kelp and BC import prices of $61.21 per kg.
A 5 per cent increase in total imports is predicted by the model to
result in a $1.27 per kg decline in total import price of spawn-onkelp and a $0.58 per kg reduction in the price received for BC
spawn-on-kelp imports. According to the model, changes in imports
from the US induce greater changes in the BC price of spawn-onkelp than changes in total imports. A 5 per cent increase in US imports would cause total import prices to fall by $3.00 per kg and
BC prices to decline by $1.04 per kg.
A 20 per cent rise in total imports to the Japanese market would
induce a drop in total import prices of $4.51 per kg and a $2.15 per
kg decline in BC prices.
Table 9: Price Sensitivity of Spawn-on-Kelp
Increase in
Decline in Decline
The price elasticities implied by the
total
imports
total
in BC
simulations reported above are summaof spawn-on- import import
rised in Table 9 which shows the perkelp to Japan
price
price
centage change in total import and BC
5%
2.9% 1.0%
spawn-on-kelp prices if total market
20%
10.3% 3.5%
quantities are increased by 5 per cent
and 20 per cent, respectively. The results in Table 9 indicate that
both prices are inelastic: the percentage decline in price in each
case is less than the percentage increase in quantity. The elasticity
of total import price appears to be in the range of 0.5-0.6 (ie,
2.9/5.0 and 10.3/20.0). The elasticity of BC import prices appears
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to be about 0.2 (ie, 1.0/5.0 and 3.5/20.0). According to this analysis, Japanese demand for spawn-on-kelp is price inelastic.
Our market research, reported in Part One, clearly identifies that
the Japanese spawn-on-kelp market is distinctly segmented. Lack of
data prevented the estimation of elasticities for each segment of the
Japanese market. Other researchers (Wessels and Anderson, quoted
above, see page 34) have pointed out that price elasticities in distinct seafood market segments may well differ, and that empirical
research that fails to distinguish market segments adequately may
obscure the true values of price elasticities.
This result seems to us to be likely in the Japanese market for
spawn-on-kelp. There are clearly at least two distinct markets:
high-end restaurants and fast food/take-out/home consumption. The
former is the virtually exclusive preserve of Japanese businessmen
and is fuelled by corporate dining-out expenditures. Demand in the
restaurant segment of the Japanese market for spawn-on-kelp is
likely to be highly dependent on dining-out expenditures and much
less so on price. The fast food/take-out/home consumption market,
in contrast, would be more likely to exhibit price elastic characteristics, as households experiment with a relatively new product and
substitute as necessary among other products to satisfy domestic
requirements given household income and budget for food consumption. The price elasticities reported above are most likely a
blend of characteristics of these two market segments. Price sensitivity in the fast food/take-out/home consumption segment may be
(much) more elastic.
Currency Factors
BC herring spawn-on-kelp is purchased in Canadian dollars. The
rate of exchange between the Japanese yen and the Canadian dollar
could influence the (Canadian dollar) price paid in BC and the resulting (yen) selling prices in Japan.
We reviewed average import prices of a number of seafood products in yen per kilogram since 1995 and compared them to the yenCanadian dollar exchange rate. There appears to be little, if any,
relationship between the strength or weakness of the yen and the
selling prices of seafood products in the Japanese market (eg, salted
herring roe, ikura, king crab, northern shrimp). The highest (Japanese yen) prices of spawn-on-kelp in Japan was in 1995. In the period we examined, this was the year in which the yen was strongest
against the dollar. In any event, Japanese buyers are known to
hedge against currency fluctuations.
In Japan, factors other than the exchange rate are believed to be of
greater influence in determining the end-user price of spawn-onkelp. These factors include: supply and demand; market share goals
of importers and re-processors; quality of the product annually; and
in-market factors such as inventory levels, disposable income, re-
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duced demand for higher priced food products and reduced expenditures on eating out at high end restaurants.
Summary
On the basis of the research summarised in this section, we may
speculate that the decline in spawn-on-kelp prices in high-end Japanese restaurants is likely driven by the implosion of the Japanese
economy in recent years. The collapse of corporate dining-out expenditures, as reflected in the experiences of visiting business men
who now find themselves “going Dutch” or staying in their hotel
rooms, described in Part One, will have delivered a devastating
blow to demand for spawn-on-kelp, leading to a collapse in the
market price it can support. This segment of the market cannot realistically hope to recover before the fortunes of the Japanese economy as a whole improve significantly.
The fast food/take out/household market, in contrast, is relatively
unexplored. Lower prices allow Japanese households an entry to at
least try spawn-on-kelp in home cooking. While the lofty prices of
the past cannot be supported in the household segment of the market, there may at least be an opportunity to expand quantities as the
household segment is largely untapped.
Impacts of Spawn-on-Kelp Expansion
This section evaluates how varying spawn-on-kelp production levels
may impact existing spawn-on-kelp producers, given assumptions
about the effects of BC production levels on prices received by
spawn-on-kelp operators.
Stratification of Spawn-on-Kelp Operations
For the purposes of impact analysis, spawn-on-kelp operations are
grouped into three “strata”, with each grouping of J licences having
a different cost structure. Each class of licence is deemed to have
identical revenue potential (quota per licence).22
J Licences with Roe Herring Licence Retirement Provision
“In 1991, Fisheries and Oceans Canada issued 10 new J category
spawn-on-kelp licences to Native Bands. The objectives of the expansion were first, to improve the economic base for Native Bands
22
Heiltsuk closed pond licences converted to 3 open pond licences in 2001
being the exception (not evaluated here).
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and second, to increase the economic contribution of the fishery to
the people of Canada.
Each new spawn-on-kelp licence was issued on the condition that
the Band retire either one roe herring seine licence or six roe herring gillnet licences. This retirement provision recognized that a
portion of the herring resource was being reallocated from the roe
herring fishery to the spawn-on-kelp fishery. Licence retirement
allowed this shift to take place without reducing the average catch
per licence in the roe herring fishery, or increasing herring exploitation rates.”23
Currently, these licences (J licences 29 thru 38) require annual retirement of four roe herring gillnet licences (unless licences have
been permanently retired through purchase). Because these licences
bear an annual gillnet licence lease burden, they may be viewed as
having the highest cost structure amongst spawn-on-kelp operations.
J Licences—No Roe Herring Licence Retirement Provision
Licences not having a roe herring licence retirement provision (J
licences 2-28 and 40) afford their owners/holders an equal revenue/cost opportunity. Circumstances of licence holders may vary
significantly.
•
•
•
•
•
•
Some are native individuals, others are non-native individuals, others are native bands.
Some licence holders received their privileges at no cost.
Some licence holders relinquished roe herring opportunities
in exchange for spawn-on-kelp privileges.
Some licence holders paid prohibitive prices for their
spawn-on-kelp privileges24 (prices as high as $1.8 million
have been reported). Licence holders who paid lofty prices
likely have substantial debt service obligations (or at the
very least, heightened return on investment expectations).
Some are roe herring seine vessel owners and operators
who utilize their own expertise and assets in harvesting herring for ponding.
Some must “charter” expertise and/or equipment to conduct
their operations.
23
The 1991 Expansion of the Herring Spawn-on-Kelp Fishery—An
Evaluation—ARA, 1993.
24
Note that J licences are not technically transferable, however various
commercial arrangements are in effect which influence out-of-pocket and
opportunity costs for some operators
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While a single profit/loss format is presented for this strata of licence, it is recognized that out-of-pocket expenses may vary appreciably by operator.
Commercial Communal Licences
Seven spawn-on-kelp privileges are issued under Aboriginal Fisheries Strategy (AFS) agreements. Terms of these agreements may
differ from “standard” J licence conditions of licence. Commercial
communal licences, for example, may not be subject to licence access fees ($11,700 per annum) or validation requirements ($5,000
per year). As such, these licences enjoy a lower operating cost than
J licences.
In 2001, three Heiltsuk commercial communal licences were “split”
into 9 open pond operations, effectively adding six licences (or
96,000 pounds) of production to the regular entitlement. In our
evaluation, this “advantage” is not factored into licence comparison
calculations.
Financial Analysis—Individual spawn-on-kelp
Operations
A sample income statement is presented for each of the three
spawn-on-kelp licence-types. Key assumptions are listed below.
•
•
•
•
Finished product volume is 16,000 pounds—the annual entitlement of a J licence. Product volume may fluctuate according to overage/underage/carry-over provisions, and the
fact that not every operation successfully harvests its entire
quota each year.
“Baseline” selling price (the gross price obtained by the
spawn-on-kelp operator) is the three-year average for the
1998-2000 period ($12.46 per pound, according to Fisheries and Oceans Canada stats). This price is deemed to reflect recent market conditions.
Production costs are estimated based on updates of prior
work25 and interviews with spawn-on-kelp operators.
The profitability measure chosen is “operating income”
which captures results of a spawn-on-kelp operation excluding depreciation, debt service, and taxes. These items
are highly variable among operators, therefore no estimate
is provided. These “below the line” items may be substan-
25
The 1991 Expansion of the Herring Spawn-on-Kelp Fishery—An
Evaluation—ARA, 1993; Inside the Japanese Spawn on Kelp Market—
Michael Uehara & Associates, 2001.
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tial so that operating income is not a “bottom line” measure
of profitability.
Base Case Financials
A “base case” income statement, including key cost assumptions, is
presented in Table 10.
Table 10: Income Statement—Base Case
Revenue/Expense Item
Assumption
Revenue
Finished Product Volume
Selling Price/lb
Gross Sales
Less: Sales Commission
Processing
Storage & Freight
Net Sales
2.5%
$1.40
$0.25
Provision
J Licence J Licence
Commercial
Retirement No RetireCommunal
Provision
ment
lbs
16,000
$12.46
$199,360
16,000
$12.46
$199,360
16,000
$12.46
$199,360
of gross sales value
per finished lb
per finished lb
$4,984
$22,400
$4,000
$167,976
$ 4,984
$ 22,400
$ 4,000
$167,976
$ 4,984
$ 22,400
$4,000
$167,976
Operating Expenses
Crew
Vessel Charter/Share
Fuel
Pond Maintenance/Supplies
Operating Expenses
30%
$30,000
$10,000
$10,000
of net sales value
charter/opportunity cost
for season
for season
$ 50,393
$30,000
$ 10,000
$ 10,000
$100,393
$50,393
$30,000
$10,000
$ 10,000
$100,393
$50,393
$ 30,000
$10,000
$10,000
$100,393
Overhead Expenses
Licence Access Fees
SOKOA (Monitoring) Fees
Gillnet Licence Leases
WCB
Overhead Expenses
$11,700
$5,000
$15,000
5%
annual fee
annual fee
per licencex3 licences26
of wages (crew shares)
$11,700
$ 5,000
$ 45,000
$ 2,520
$ 64,220
$11,700
$ 5,000
$ 2,520
$19,220
$2,520
$ 2,520
Operating Income*
$ 3,364
$48,364
$65,064
*Depreciation, debt service (interest and principal), and taxes are "below this line"
At 1998-2000 pricing, and using assumed costs and production levels, the “retirement” J licence registers a tiny profit, the “ordinary”
J shows a modest profit, and the commercial communal shows an
incrementally larger profit.
Differences among the three strata of licences are the result of gillnet licence lease costs and licence access and monitoring fees.
26
While the retirement provision specifies four licences, we used three
licences in calculations to represent a “typical” case; holders of these licences have varying remaining obligations—the range is from zero licences outstanding, to four.
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Sensitivity Analysis
Historical Prices
Operating income results are shown, by licence strata, under a variety of price scenarios reflecting historical averages.
Table 11: Operating Income Per Licence—Historical Prices
Period
Average Price
per lb
1998-2000
1996-2000
1991-2000
1993-1997
$12.46
$17.15
$20.26
$27.42
J Licence
Retirement
Provision
$3,364
$ 53,481
$ 86,714
$163,226
J Licence
No
Retirement
$ 48,364
$ 98,481
$131,714
$ 208,226
Commercial
Communal
$ 65,064
$115,181
$148,414
$ 224,926
The estimated profitability of spawn-on-kelp operations has dropped
precipitously in recent years as prices received by spawn-on-kelp
operators have declined.
2001 Range of Prices
Table 12: Operating Income Per Licence —Representative
Prices
2001 J Licence J Licence
Prices paid to
Commercial
Operating
Price
Retirement
No
spawn-on-kelp
Communal
Income
per lb Provision Retirement
operators in 2001
Low End
$10.50
($17,581)
$27,419
$44,119
varied over a
Mid Range $12.75
$6,463
$51,463
$68,163
27
wide range from
High End
$15.00
$30,506
$75,506
$92,206
a low of $7.00
(for exceptionally poor quality) to a high of $16.50. Not having
canvassed all licence holders, we will not offer an estimated average price for 2001 but rather demonstrate estimated financial performance of spawn-on-kelp operators under a realistic range of current prices. These are shown in Table 12. Clearly, 2001 performance varied substantially by operation.
Price “Downside”
The prospects of expanded spawn-on-kelp output, coupled with deteriorating Japanese economic conditions, raise the spectre of further declines in prices received by BC spawn-on-kelp producers.
Table 13 shows estimated J licence performance under a range of
lower average finished product prices.
27
According to interviews with operators and processors.
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Table 13: Operating Income per Licence —Price Reductions
Operating Income
Revenue @ 98 - 00 Average
Revenue decline 5%
Revenue decline 10%
Revenue decline 15%
Revenue decline 20%
Revenue decline 25%
J Licence J Licence
Price
Commercial
Retirement
No
per lb
Communal
Provision Retirement
$12.46
$3,364 $ 48,364
$ 65,064
$11.84
($3,294) $ 41,706
$ 58,406
$11.22
($9,951) $ 35,049
$ 51,749
$10.59 ($16,609) $ 28,391
$ 45,091
$9.97 ($23,266) $ 21,734
$ 38,434
$9.35 ($29,923) $ 15,077
$ 31,777
Existing spawn-on-kelp operations will see deteriorating results if
prices fall, all other factors being equal. Note that most production
costs are either fixed (eg, vessel charters, maintenance costs, licence fees) or linked to production levels (processing charges, storage/freight). Only crew shares and commissions decline along with
selling prices, affording a measure of cost relief to offset lower
revenues.
Lower Prices/Higher Quotas
In the event that expanded spawn-on-kelp output translates into
higher per licence quotas, individual operators may benefit, even if
prices fall. Table 14 explores per licence operating income, by licence-type, under varying price/volume scenarios.
Table 14: Operating Income Per Licence —Price/Volume
Scenarios
Operating Income
Base Case
Revenue same/prod'n up 10%
Revenue down 5%/prod'n up 10%
Revenue down 10%/prod'n up 10%
Revenue down 15%/prod'n up 10%
Revenue down 10%/prod'n up 20%
Revenue down 15%/prod'n up 20%
J Licence J Licence
Price Production
Commercial
Retirement
No
per lb
(lbs)
Communal
Provision Retirement
$12.46
16,000
$3,364 $ 48,364
$ 65,064
$12.46
17,600
$14,870 $ 59,870
$ 76,570
$11.84
17,600
$ 7,547 $ 52,547
$ 69,247
$11.22
17,600
$ 224 $ 45,224
$ 61,924
$10.59
17,600
($7,099) $ 37,901
$ 54,601
$11.22
19,200
$10,399 $ 55,399
$ 72,099
$10.59
19,200
$ 2,410 $ 47,410
$ 64,110
The following conclusions can be drawn from the analysis presented in Table 14.
•
•
•
An increase in per-licence quotas will yield improved operating results if prices stay the same.
A percentage increase in per licence quotas that is offset by
an equivalent percentage decrease in price (unit price elasticity) results in deteriorating performance for the individual spawn-on-kelp operator.
Depending on the assumption regarding percentage drop in
price accompanying various percentage increases in perlicence output, individual operator performance may be
marginally improved, or worsened.
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What is an Acceptable Return?
The preceding analysis estimates operating income per licence,
based on a variety of price and volume assumptions. In examining
the range of results, it is reasonable to ask what operating income
level is “acceptable”, given the risks inherent in the fishery, the
annual outlays required to mount the fishery, and the investment in
boats, gear, and licences underlying an spawn-on-kelp operation.
Many spawn-on-kelp operations are not viewed strictly as business
ventures, but rather are vehicles for employment generation, community economic development, and/or promoting the well-being of
individuals and communities. Nevertheless, to sustain generation of
meaningful benefits, an spawn-on-kelp operation must meet basic
financial tests.
Some spawn-on-kelp operations are purely business operations,
with owners having invested heavily in spawn-on-kelp assets, and
foregone other business opportunities, to partake in the spawn-onkelp fishery.
While defining an acceptable return is subjective, the following
considerations are relevant.
•
•
•
For the operation to be sustainable, operating income must
be sufficient to service debt obligations (principal and interest payments) and provide a measure of return on investment.
For employment and community economic development
objectives to be fulfilled, net cash flow must be “healthy”.
If cash flow is repeatedly marginal or negative, then the
operation may be forced to adopt a “cost-cutting” approach
that will reduce the level of benefits generated.28
Given the well-established relationship between the roe herring fishery and the spawn-on-kelp fishery, a spawn-onkelp licence should provide an operating income at least
equivalent to that earned by six roe herring gillnet, or one
roe herring seine, licence (or 50 per cent of this level for
operations with the 3-licence retirement provision).
Using the “roe herring equivalent” guideline, if average roe herring
gillnet lease rates are assumed to be $15,000 and roe herring seine
lease rates to be $75,000, then operating income should be in the
$75,000—$90,000 per year range for spawn-on-kelp operations
($40,000—$45,000 for those licences having to retire 3 gillnet licences). Using these income levels as a benchmark, we investigate
28
Employment levels per operation are currently lower than levels reported in prior reports. Since crew payments are linked to revenue levels,
a measure of cost cutting appears to have already occurred.
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the adequacy of returns to spawn-on-kelp licence holders under a
variety of conditions. Results are shown in Table 15.
Table 15: Operating Income Per Licence —Roe Herring
Equivalent
Price
per lb
Operating Income
Roe Herring Equivalent Scenario
J Licence J Licence
Commercial
Retirement
No
Communal
Provision Retirement
Target Operating Income
$ 40,000
$ 80,000
$ 80,000
Revenue @ 91 - 00 Average
Revenue @ 98 - 00 Average
$20.26
$12.46
$ 86,714
$ 3,364
$131,714
$ 48,364
$148,414
$ 65,064
Revenue decline 15% from 98-00 Average
$10.59
($16,609)
$ 28,391
$ 45,091
The first line in Table 15 provides a “benchmark” target return. As
roe markets fluctuate, the gillnet and seine lease rates will rise and
fall, however a “flat” benchmark is provided.
At an average price level seen over the last 10 years, spawn-onkelp operations are positioned to earn handsome returns. At current
3-year average price levels, spawn-on-kelp operations are earning
returns below the “benchmark” level, with the size of the shortfall
most acute for licences having a retirement provision, and least for
commercial communal licences. At current profitability levels,
many operators feel that financial returns are inadequate, and that
other activities—including roe herring—now provide a better
risk/reward profile.
From current price levels, further price reductions will seriously
impair financial performance.
Discussion
The analytical approach applied to assessing spawn-on-kelp licence
financial performance leads to the following observations:
•
•
Current spawn-on-kelp operations are earning “marginal”
returns, with those licences having a gillnet retirement provision performing poorest, and commercial communal licences having a lower fixed cost structure performing best.
spawn-on-kelp operation performance—whatever the
“class” of licence—is closely linked to price. Increases in
price from current levels allow handsome profitability while
further price reductions will seriously erode results and
threaten the sustainability of many operations.
Many spawn-on-kelp operators are extremely wary of current and
expected market conditions, seeing little hope for substantial price
increases but fearing that further price reductions may be in the
offing.
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Financial Analysis—Overall spawn-on-kelp
Performance
From individual spawn-on-kelp licence performance, inferences can
be drawn regarding the overall financial profitability and economic
benefits derived from BC spawn-on-kelp operations. Measures included are:
•
•
•
•
•
Total gross revenue—the size of the “revenue pie” is the
starting point for the generation of benefits from the fishery.
Total Expenditures—the total cost of operations, including
commissions, processing, wages, and all other items, gives
a sense of the magnitude of funds that may be circulated
through coastal businesses.
Total operating income—this figure sums the profitability of
all operations. High incomes will trigger multiplier benefits
(indirect and induced benefits) while low incomes indicate
diminished, and perhaps un-sustainable, benefits.
Crew shares—the estimated “wages” earned by fishery
participants, given assumed sharing arrangements.
Total crew—the estimated number of spawn-on-kelp harvesting jobs. For the purposes of this analysis, the number
of jobs per operation is fixed. In reality, higher revenue and
profitability levels would support a larger workforce, while
diminished revenue levels would necessitate (further) job
reductions.
Scenarios
Under the “base case” scenario (1998-2000 average price of $12.46
per lb), estimated impacts are summarised in Table 16.
Table 16: Summary of Impacts—Base Case
J Licence
Retirement
Provision
Number of Operations (estimated)
10
Total Gross Revenue
$1,993,600
Total Expenditures (all types)
$ 1,959,964
Total Operating Income
$ 33,636
Crew Shares
$503,928
Total Crew (assume 6.5 crew per licence)
65
Item
J Licence
Commercial
Total
No
Communal Spawn-on-Kelp
Retirement
29
7
46
$5,781,440 $1,395,520
$9,170,560
$ 4,378,897
$ 940,075
$ 7,278,936
$ 1,402,543
$ 455,445
$ 1,891,624
$ 1,461,391
$ 352,750
$ 2,318,069
189
46
299
Impacts assuming the historical ten-year average price ($17.15 per
pound) are shown in Table 17.
Table 17: Summary of Impacts—Historical Prices
J Licence J Licence
Commercial
Total
Retirement
No
Communal Spawn-on-Kelp
Provision Retirement
Item
Number of Operations (estimated)
10
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7
46
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Total Gross Revenue
$2,744,000 $7,957,600
$1,920,800
$12,622,400
Total Expenditures (all types)
Total Operating Income
$ 2,209,191 $ 5,101,654
$ 534,809 $ 2,855,946
$1,114,534
$ 806,266
$ 8,425,379
$ 4,197,021
$ 723,420 $ 2,097,918
65
189
$ 506,394
46
$3,327,732
299
Crew Shares
Total Crew (assume 6.5 crew per licence)
A price increase of 38 per cent from the base case (ie, from $12.46
to $17.15) causes total operating income to rise by 122 per cent
(from $1.9 million to $4.2 million).
Under the scenario in which prices fall 15 per cent from the current
three-year average (from $12.46 to $10.59), results as estimated
are shown in Table 18.
Table 18: Summary of Impacts—Reduced Prices
Item
Number of Operations (estimated)
Total Gross Revenue
Total Expenditures (all types)
Total Operating Income
Crew Shares
Total Crew (assume 6.5 crew per licence)
J Licence
Retirement
Provision
10
$1,694,560
$1,860,646
($166,086)
$ 416,459
65
J Licence
Commercial
Total
No
Communal Spawn-on-Kelp
Retirement
29
7
46
$4,914,224 $1,186,192
$7,794,976
$ 4,090,873 $ 870,552
$ 6,822,070
$ 823,351 $ 315,640
$ 972,906
$1,207,731 $ 291,521
$1,915,710
189
46
299
A 15 per cent drop in price from the base case causes total operating income to fall by 49 per cent. Clearly, the performance of
spawn-on-kelp operations is highly dependent on price levels.
Finally, a case where spawn-on-kelp production per-licence is increased by 20 per cent, accompanied by a 15 per cent decline in
prices, is shown in Table 19.
Table 19: Summary of Impacts—Increased Production & Lower
Prices
Item
Number of Operations (estimated)
Total Gross Revenue
Total Expenditures (all types)
Total Operating Income
Crew Shares
Total Crew (assume 6.5 crew per licence)
J Licence
Retirement
Provision
10
$2,033,472
$2,009,375
$ 24,097
$499,751
65
J Licence
Commercial
Total
No
Communal Spawn-on-Kelp
Retirement
29
7
46
$5,897,069 $1,423,430
$9,353,971
$4,522,187 $ 974,662
$ 7,506,224
$1,374,882
$448,768
$1,847,747
$1,449,277
$349,825
$2,298,853
189
46
299
This scenario yields results that are nearly identical to the base case
scenario. An increase in production, if accompanied by a nearequivalent reduction in price, accomplishes little in the way of improving profitability of spawn-on-kelp operations or increasing the
level of economic activity generated by the BC spawn-on-kelp fishery.
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Discussion
This section provides a means of analyzing the financial performance of individual operators and of the overall BC spawn-on-kelp
sector under a variety of price and volume scenarios.
The analysis provided allows an assessment of how spawn-on-kelp
expansion may affect the performance of existing operators, individually and in total.
The expansion of BC spawn-on-kelp production brings the risk that
markets will respond negatively, causing prices received by spawnon-kelp producers to fall.
We draw the following conclusions.
•
•
•
•
•
The current financial performance of spawn-on-kelp operators is marginal, with prices received by BC producers
having fallen dramatically from long term average levels.
A reduction in market price not offset by an increase in
volume will cause marked deterioration in the financial performance for spawn-on-kelp operators from current marginal levels.
Across the board increases in spawn-on-kelp volume (per
licence quotas) that are not accompanied by a reduction in
price will improve financial performance beyond current
marginal levels.
Across the board increases in spawn-on-kelp volume (per
licence quotas) that are met by price reductions do little to
improve individual or total financial results.
High cost operations are most vulnerable to price reductions while low cost operations are better-buffered from declines in price.
Social Implications
As noted throughout this report, generation of social benefits—in
particular, economic development and employment opportunities
for First Nations and remote coastal communities—is an implicit
objective of the spawn-on-kelp fishery. Sustainable social benefits
are closely linked to economic performance of spawn-on-kelp operations. A further deterioration in results earned by spawn-on-kelp
operations places these benefits at risk.
Summary & Conclusions
In this report we have addressed four topics.
•
•
•
The potential for spawn-on-kelp expansion in BC, from a
biological and management perspective.
An examination of the external (non-BC) supply picture.
Analysis of price sensitivity of spawn-on-kelp in the Japanese market.
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Spawn-on-Kelp Market Study
•
Part Two
Impacts of potential expansion on B.C. spawn-on-kelp operators.
Our findings in each area are summarized below.
Potential for BC Expansion
Biological Perspective
From a biological perspective, we found that there is some potential
for expansion of BC spawn-on-kelp output, though this potential is
constrained by a number of important factors.
•
•
•
Variability of herring stocks, resulting in negligible harvest
surpluses in some areas at some times.
Extremely limited availability of new sites to accommodate
expansion—choice sites are already utilized by spawn-onkelp operations, in some areas to the point of saturation.
Sourcing suitable-quality kelp, where and when it is
needed, is a practical challenge, though not of particular
biological concern.
We found that some of the major stock assessment regions have
virtually no potential for expanded spawn-on-kelp production while
others offer limited to moderate expansion prospects.
Management Perspective
From a management perspective, potential spawn-on-kelp expansion is confounded by the potential for gear conflicts and by
(re)allocation implications. Allocation considerations are outside the
scope of this study.
Non-BC Production Plans/Outlook
Non-North American Sources of Supply
We surveyed nations with intermittent histories of spawn-on-kelp
production to assess future production plans. Information was difficult to come by. We found that past and expected production from
Finland, Norway, Iceland, Sweden, and South Korea is nonexistent or insignificant. Russia appears to have substantial production potential, but development of a spawn-on-kelp fishery has yet
to take place, and is impossible to predict. Russia is not currently a
significant supplier of spawn-on-kelp to the Japanese marketplace.
Spawn-on-Kelp Production from the USA
BC’s primary competition in the spawn-on-kelp industry arises
from spawn-on-kelp fisheries in Alaska and San Francisco.
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Key Alaskan production areas are in Southeast Alaska: Hoonah
Sound and Craig. Although US product quality tends to be somewhat lower than in BC, the price advantage enjoyed by BC producers has diminished over time as high-end markets have softened.
Production volumes from Southeast Alaska and San Francisco fisheries are closely linked to varying herring biomass in these areas.
Low herring abundance in the last three years has curtailed spawnon-kelp output. The San Francisco fishery features an extremely
volatile production pattern, historically, while the Hoonah Sound
fishery (established in 1990) appears to be growing.
Future spawn-on-kelp production from the USA can be expected to
exceed that seen in the last couple of years, on average, with the
likelihood that occasional production “spikes” will place significant
incremental production on the market.
Price Sensitivity of Spawn-on-Kelp
It was not possible to update an empirical study of the price sensitivity of spawn-on-kelp conducted in the mid-1990s. Rather, we
surveyed the empirical literature on seafood demand: (1) in general;
(2) in Japan; and (3) for spawn-on-kelp in Japan. The studies reviewed generally found that seafood products tend to be price elastic. A key finding is that, in segmented markets such as the Japanese spawn-on-kelp market, empirical studies that fail to model
market structure may not provide useful empirical estimates of
price elasticity (ie, empirical estimates may obscure true elasticities
by blending features of distinct market segments in a single estimate). This appears to be a strong possibility for the estimation of
price elasticity in the Japanese spawn-on-kelp market, which found
that demand was price inelastic.
We concluded that the decline in spawn-on-kelp prices in high-end
Japanese restaurants is likely driven by the collapse of the Japanese
economy. Demand for spawn-on-kelp in the high-end market is
likely price inelastic. This segment of the market will not likely be
viable again until the Japanese economy recovers. The low-end
market, in contrast, is relatively unexplored. Demand there is more
likely to be elastic as Japanese households experiment with spawnon-kelp as a new product. While the high prices obtained in the
high-end market will not be supported in the household segment,
there may at least be an opportunity to expand quantities as the
household segment is largely untapped.
Impacts of Spawn-on-Kelp Expansion
Not surprisingly, we found that the financial performance of BC
spawn-on-kelp operators is closely linked to the price per pound
received for finished product. We modeled impacts, mostly financial, for individual operations and for the sector as a whole, under
varying price/volume scenarios.
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Our impact analysis suggests the following observations.
•
•
•
•
Current financial performance (last 3-4 years) of spawn-onkelp operations is marginal—below a “benchmark” earnings level equivalent to that provided through roe herring
fisheries and far below earnings generated historically.
Further declines in price will threaten the sustainability of
all operations particularly those having a high cost structure.
Increased production volume per operation, if not met with
declines in price, will improve financial results.
Increased production volume per operation, if accompanied
by declines in price, will accomplish little in the way of
improving financial performance, or increasing economic
activity.
Spawn-on-Kelp Expansion Scenarios
Two general expansion scenarios are possible.
•
•
New permits are issued, causing overall BC output to increase, but existing operator (per licence) output remains
the same.
An “across-the-board” increase in quotas for J licences is
implemented.
There are three potential price outcomes arising from spawn-onkelp expansion.
•
•
•
Prices rise
Prices remain stable
Prices fall
Our market and price sensitivity work strongly suggests that expansion will bring downward price pressure. There is no basis (other
than optimism) for predicting that prices will rise in the face of increased output29. Stable prices may be considered the “upside”
price outcome.
Spawn-on-Kelp Expansion Outcomes
New Permits Issued—Existing Licence Quotas Remain Same
In this scenario, the profitability of existing operators will be unaffected if prices remain stable. If prices fall, existing operators
will be worse-off because of expansion. Because current financial
results are marginal, the sustainability of social and economic bene-
29
Clearly if prices were to rise, all participants would be better off
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Spawn-on-Kelp Market Study
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fits generation will be threatened, especially for operations with a
high cost base.
Across the Board Quota Increase
In this scenario, existing operators will enjoy improved financial
outcomes if prices remain stable. If price reductions accompany
increased output, then existing operators will either see “indifferent” results (no change in income) if price declines are modest, or
worsened results if price reductions are significant.
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Documents
Spawn-on-Kelp Fishery
1999 spawn-on-kelp fishery: briefing document to the Department of
Fisheries and Oceans. EVS Environment Consultants (July 1998).
2001 Spawn-on-Kelp Monitoring Program Executive Summary. J O
Thomas (2001).
BC Spawn-on-Kelp Fishery: Optimal Production Level and Licence
Allocation Policy. Fisheries and Oceans Canada (1983).
British Columbia Herring Spawn-on-Kelp Fishery. Dickson (1976).
Examination of a Kelp Suspension System for Use in the Spawn-onKelp Fishery. Archipelago Marine Research (1984).
Herring Impoundment and Spawn-on-Kelp Production in British
Columbia. Archipelago Marine Research (1982).
Pacific Region IFMP—Herring Spawn-on-Kelp. Fisheries and
Oceans Canada (2001).
Propagation and Harvesting of Herring Spawn-on-Kelp. Dickson
(Buxton/Allen, 1972).
Proposal to Expand the BC spawn-on-kelp Fishery. Fisheries and
Oceans Canada (1986).
Review of the 1991-1992 BC Herring Fishery and Spawn Abundance. Fisheries and Oceans Canada (1993).
Review of 2000/2001 BC Herring Fisheries. Hamer & Hepples
(2001).
Review of the BC Spawn-on-Kelp Fishery With Some Proposals for
Future Management. Leitz (1979).
The 1991 expansion of the herring spawn-on-kelp fishery: an
evaluation. ARA Consulting Group Inc and Archipelago Marine
Research Ltd (August 1993).
Spawn-on-Kelp Production Using Open Ponds in the Queen Charlotte Islands. Archipelago Marine Research(1983).
Market Demand
Applying Almon-type polynomials in modelling seasonality of Japanese demand for salmon. Mark Herrmann, Ron C. Mittelhammer
and Bing-Wan Lin. Marine Resource Economics, 7 (1992), 3-13.
BC Herring Spawn-on-Kelp Buyers Guide. Fisheries and Oceans
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