TAC AND TACC ADJUSTMENTS FOR LOW KNOWLEDGE STOCKS

Executive Summary

1. This paper reviews the total allowable catch (TACs), total allowable commercial catch (TACCs) and allowances for low knowledge stocks introduced into the quota management system (QMS) in 1998 and 1999. Some of the stocks could have their TACs adjusted while still meeting obligations under s 13.
   
2. Low knowledge stocks are those where there is a paucity of information on the status of the stock relative to B_MSY.Many of the species that entered the QMS in 1998-1999 were given low TACs because limited information was available to set an informed TAC. The TACs were based on unreliable landing information, because fishers frequently underreported the extent of their catch. These fish stocks also had low deemed values set to encourage fishers to land and report all catch so as to improve the available information held on each fish stock. For many of these stocks these TACs, T ACCs and deemed value rates have remained unchanged since 1998.
   
3. The approach taken for the 1998 and 1999 low knowledge stocks was different than that for other QMS introductions. TACs were to be revised following the collection of better landing information. This paper proposes to revise TACs and allowances using seven years of more reliable landing data.
   
4. These stocks are being reviewed because:
   1. In the absence of sustainability concerns, low TACCs may be adversely affecting stakeholder utilisation; and
   2. The integrity of the catch balancing regime is compromised by deemed values that provide no disincentive to constrain catch to the TACC
      
5. MFish reviewed only those stocks that entered the QMS in 1998 and 1999 for which there are no known sustainability concerns, deemed values were set deliberately low to encourage reporting, and there has been chronic overcatch with no recent management intervention.
   
6. MFish does not propose to amend customary and recreational allowances. MFish does not consider there to be significant non-commercial activity in these fisheries.
   
7. Although a range of information sources was analysed, only the 2006-07 port price was used to propose revised deemed values.

Summary of Options

8. Option 1: adjust TACs, TACCs, allowances and deemed values for the relevant stocks
   (MFish’s preliminary recommendation):

Table 1: Current and proposed TACs, TACCs and deemed values

9. Option 2: Leave TAC, TACCs and allowances for all stocks considered in this paper at current levels, but increase the deemed values as listed on Table 1.
   

Rationale for Management Options

10. TACs, TACCs, allowances and deemed values were set for the stocks under review in 1998 and 1999 and have remained unchanged since this time. When these stocks entered the QMS the TACCs were set based on best available information, however this information was incomplete because many fishers had failed to report or had reported incorrectly in the previous years. In addition, the deemed values for these stocks were deliberately set low. The purpose of the low deemed values was to encourage fishers to land and report catch so that information could be collected which could then be used to set more realistic TACs some time in the future.
    
11. MFish is confident that increasing the TACs by the proposed amounts will not undermine the management goal of moving the stock towards BMSY.
    
12. The low deemed value rates have provided an incentive to land and report. Therefore MFish assesses that catch records over the last seven years are reliable and realistic and can be used to set more informed TACCs.
    
13. The current system of low TACCs will undermine the integrity of the catch balancing regime following the implementation of the proposed catch balancing guidelines(which are being consulted on in an accompanying IPP). The revised catch balancing guidelines state that low deemed values will no longer be used to tolerate catch in excess of available annual catch entitlement (ACE). Appendix 1 sets out the principles behind these updated guidelines but the overarching principle is that an incentive is provided to commercial fishers to fish within the constraints of the TACC and to balance catch with ACE. There is no acceptable reason to use low deemed values as a mechanism to ignore the TACC and encourage essentially an open access fishery.
    
14. In addition, the current situation undermines stakeholders’ ability to maximise utilisation in two ways. First, the current system theoretically limits catch rates where there is a low sustainability risk. Secondly, low TACCs also prevent quota owners from achieving best value from their property right since the low deemed value rates associated with these low knowledge stocks force ACE prices down.
    
15. This proposal to amend the TACs, TACCs and deemed values could deliver the following benefits:
    1. Enable quota owners to achieve best value with no increased sustainability risk;
    2. Enable commercial fishers to harvest greater quantities and balance with ACE rather than making more ‘costly’ deemed value payments. An analysis of recent ACE trade prices for these fish stocks shows that deemed values are still above the average ACE price for many of these stocks; and
    3. Increased TACCs could provide opportunities for commercial fishers to explore and develop new markets for these species.

Analytical Process

16. All stocks introduced in 1998 and 1999 were assessed. All the following criteria must have been met before a TAC/TACC change was considered appropriate:
    1. No known sustainability concerns;
    2. Average of at least 20% catch in excess of the TACC during the last three fishing years;
    3. No management intervention in the last three years; and d) Deemed values were set deliberately low to encourage reporting.
       
17. The following fishstocks met these criteria:

18. The proposed TACs and TACCs are based on an analysis of reported landings since the stock entered the QMS in the 1998 and 1999 fishing year. In most instances the TACC was set at or close to the average landing figure for the seven year period.
    
19. Currently, stocks introduced into the QMS that do not have robust assessment information can use current catch as a basis for setting the TAC, subject to consideration of other relevant statutory obligations.This includes known or estimated levels of recreational, Mäori customary, and commercial catch, and all other sources of fishing related mortality. The reliability of any information is to be taken into account. MFish considers that revised TACs should be set for the stocks under review in this paper according to this method, now that reliable information has been collected.
    
20. MFish recommends a minimum TACC of 5 tonnes for these low knowledge stocks. Five tonnes was selected as an arbitrary minimum on the basis that it is difficult to manage a TAC below this level. Therefore no TACC was set below this figure, irrespective of the analysis of previous landings. Appendix 1 details the landings for the seven year period for each stock.
    
21. It is possible that an increased TAC might not provide the maximum utilisation possible for the stock. However, further increases will require, in most cases, additional supporting information on the impacts of fishing on the stock and aquatic environment. This is true for both the low knowledge stocks under review in this paper as well as all other low knowledge stocks subsequently introduced into the QMS.
    
22. Option 2 would increase the deemed values (see below for details), but leave the TAC, TACC and allowances unchanged. In essence, this option deploys the catch balancing regime to defend the existing TACC. In MFish’s view, this constitutes an unwarranted constraint on utilisation with no commensurate sustainability benefit, and levels of dumping, discarding and non-reporting may increase.
    

Allocation of TAC

23. For some of the stocks under review a nominal non-commercial allocation of 1 tonne to recreational fishers and 1 tonne to customary fishers has been allocated. These fish stocks are as follows:
    
    1. FRO2
    2. SPE1
    3. WWA3
    4. WWA4
    5. WWA7
       
24. These nominal allocations were set in 1998 to take account of the small amount of non-commercial activity in the fishery. An assessment of the recreational diary surveys for 1999-2000 and 2000-2001 suggests that recreational take in these fisheries is not significant and MFish assumes that customary take is similarly low. Therefore MFish do not propose to adjust these non-commercial allowances.
    

Adjustment of Deemed Value Rates

25. In addition to reviewing and amending the TACs and TACCs for these stocks the deemed values also require adjusting to ensure they meet the overarching principle of the catch balancing regime: to encourage fishers to fish within the TACC by balancing catch ACE. Low deemed value rates are no longer appropriate once the TACCs have been increased as fishers should harvest, land and report catch within the confines of the TACC.
    
26. Interim and annual deemed values were adjusted using the proposed updated catch balancing guidelines (see Appendix 2). The existing port price, export price of the main exported state and average ACE trading prices were analysed. Appendix 3 details this information for each stock. Interim deemed values have been set at 50% of the annual deemed value rate.
    
27. An analysis of ACE trading prices showed that over the last seven year period ACE prices have been forced down and are well below the current deemed value rates. Therefore, ACE trades were not considered to be a valid information source to set the new deemed value rates. Export price information is only available for some of the species under review and therefore it is not appropriate to use this information to set the new deemed value rates. Instead the annual deemed value rates have been set at a rate of 75% of the port price for the 2006-07 period.
    
28. Differential deemed value rates do not currently apply to low knowledge stocks and MFish do not propose to introduce them at this stage. However, the proposed new catch balancing guidelines require on-going monitoring to assess deemed value rates for each fish stock. As part of this process, an individual commercial fisher’s catches in excess of ACE holdings will be assessed on an annual basis. If, following this analysis, it becomes apparent that some fishers are catching considerably in excess of their ACE holdings and are choosing to pay the deemed value penalty rather than balance with ACE then differential deemed values rates will be considered for these stocks
    

Compliance Implications

29. The current system of low TACCs offset by low deemed value rates provide an incentive for fishers to land and report all catch. Should both TACCs and deemed values increase, commercial fishers who continue to exceed their ACE will be liable for higher deemed value payments. This could provide an incentive for commercial fishers to dump or misreport. The TACC increase, coupled with existing compliance efforts, should mitigate this risk.
    

Statutory Considerations

30. Section 9(a) and (b): These fisheries are predominantly bycatch fisheries and therefore there is no risk to the bycatch of any associated or dependent species. There is no evidence that interactions between species are of significant magnitude to impact on associated and dependent species, or on biological diversity. No other information has been considered about any effects of fishing on any stock or on the aquatic environment.
    
31. Section 9(c): No habitats of particular significance for fisheries management have been identified. It is considered unlikely that the proposed TAC and T ACC increases would have demonstrable adverse effects on such habitats.
    
32. Section 5(a) and (b): There is a wide range of international obligations relating to fishing (including sustainability and utilisation of fishstocks and maintaining biodiversity). MFish considers issues arising under international obligations and the provisions of the Treaty of Waitangi (Fisheries Claims) Settlement Act 1992 are adequately addressed in the management options for the stocks in this paper.
    

Consultation

33. MFish is seeking views from stakeholders on the:
    1. Method and criteria used to amend the TACs and TACCs;
    2. Proposed TACs and TACCs for these stocks; and
    3. Proposed interim and annual deemed values for these stocks.
       
34. Stakeholder submissions will be considered before the final advice paper (FAP) is prepared for the Minister.
    
35. The process and methodology for adjusting deemed values is being consulted on in a separate initial position paper (IPP), due to be released in early July 2006.