Introduction and summary
This report presents estimates of the financial and economic performance of two key Commonwealth fisheries: the Northern Prawn Fishery (NPF) and the Bass Strait Central Zone Scallop Fishery (BSCZSF). For the NPF, survey-based estimates for 2008–09 and 2009–10 and non–survey based estimates for 2010–11 are presented. For the BSCZSF, survey-based estimates for 2009–10 and 2010–11 are presented. A supplementary survey was also undertaken which details operator's perceptions on how key factors affect the economic viability of the BSCZSF. The Torres Strait Prawn Fishery was also scheduled to be surveyed in 2011; however, a reduction in boat numbers combined with low industry participation in the survey meant the survey could not proceed.
A distinction is made throughout the report between financial performance and economic performance. Financial performance estimates are calculated for the average boat in a fishery and include all cash receipts earned and cash costs incurred within the survey period. As such, these estimates reflect the average boat’s profit and loss statement for all business activities. The indicator of economic performance presented in the report is net economic returns (NER) reported at the fishery level. The NER estimates differ from financial performance estimates as they relate only to the surveyed fishery in its entirety and include other economic costs, such as depreciation, the opportunity cost of capital and labour.
Each indicator provides different information. Financial performance information can provide a context for trends in the surveyed fishery; for example, positive financial profits at the boat level may reveal how operators continue to operate in a fishery that has experienced negative economic profits. The financial performance estimates are more relevant to the needs of industry operators, who can compare their performance to that of the average boat within the fishery.
Economic performance is most relevant to the needs of fishery managers and policymakers. This is because NER relates to the specific fishery being managed. Moreover, by taking into account all cash receipts, cash costs and economic costs, NER indicates the economic return to society associated with harvesting the fishery resource. For this reason, NER is the key economic performance indicator referred to in the Fisheries Management Act 1991. According to the Act, the Australian Fisheries Management Authority (AFMA) is required to maximise NER to the Australian community through its management of Australian fisheries. Although estimates of NER do not reveal how a fishery has performed relative to its maximum potential NER (maximum economic yield) in a given period, interpretation of NER trends and drivers can aid assessment of AFMA’s performance against this objective.
Results for the NPF show that favourable stock fluctuations and management settings have turned negative NER into positive returns in recent years. While these recent positive returns are still far lower than the historical peaks in NER, returns at the boat level are more similar. Maintaining a management focus on maximising economic yield will allow the fishery to achieve the highest potential returns possible, on average, for any given operating environment.
For the BSCZSF, results reveal that the low level of profitability that occurred in the fishery in 1997–98 and 1998–99, when the fishery was last surveyed (Galeano et al. 2001), remains in the current survey period. This is despite recent fishery closures. However, a similar NER has been earned with fewer boats (and, therefore, fewer resources) devoted to the fishery. The supplementary survey of operators’ perceptions revealed that operators perceive stock levels in the fishery to be a positive influence on the fishery’s economic viability, while access to overseas markets, current management arrangements and the prices they receive for their product are seen as negative influences.
ABARES has surveyed Commonwealth fisheries since the early 1980s and regularly for key Commonwealth fisheries since 1992. The historical time series data that have been collected through these surveys allows construction of a number of economic tools and indicators that measure AFMA’s performance against its economic objective. These include productivity indexes, profit decompositions, efficiency analyses and bioeconomic models. A list of earlier fisheries surveys reports is presented at the end of this report.
Northern Prawn Fishery
Financial performance—per boat
Average per boat total cash receipts for the entire fishery remained steady at approximately $1.5 million in both 2008–09 and 2009–10, while average total cash costs per boat fell by 5.5 per cent from $1.3 million in 2008–09 to $1.2 million in 2009–10. Labour, fuel, and repairs and maintenance accounted for about three-quarters of total cash costs in both years. Steady cash receipts and lower cash costs resulted in a 41.6 per cent increase in average boat cash income from $206 000 in 2008–09 to $292 000 in 2009–10.
The average rate of return to full equity (including the value of quota and licences) increased from 6 per cent in 2008–09 to 8 per cent in 2009–10.
Economic performance—fishery as a whole
From 2000–01 to 2004–05, receipts fell more rapidly than costs. As a result, net economic returns in real terms (including management costs) decreased each year to a minimum of –$15.3 million in 2004–05 (2010-11 dollars). Since then, economic performance has improved and in 2009–10 the net economic return for the fishery was $11.9 million.
Non–survey based estimates of net economic returns show that returns to the fishery (including management costs) are estimated to have increased by 81.0 per cent to $21.5 million in 2010-11.
These economic performance results relate only to the revenues earned and costs incurred in the Northern Prawn Fishery and exclude receipts earned and costs incurred through operations in other fisheries.
Bass Strait Central Zone Scallop Fishery
Financial performance—per boat
Financial performance estimates for the average boat in the Bass Strait Central Zone Scallop Fishery include a substantial number of receipts and costs from boat operations in other fisheries. For example, many boats operating in the Bass Strait Central Zone Scallop Fishery also catch squid and rock lobster in other Commonwealth and state fisheries. Average total cash receipts per boat rose by 6.5 per cent from $381 000 in 2009–10 to $406 000 in 2010–11; and average total cash costs per boat increased by 8.8 per cent from $372 000 in 2009–10 to $405 000 in 2010–11. Crew costs, fuel costs, freight and marketing expenses, and repairs and maintenance costs accounted for 67.2 per cent of total cash costs in 2010–11. Average boat cash income was positive but close to zero in both years.
The average rate of return to full equity (including the value of quota and licences) was negative in both years at –1 per cent.
Economic performance—fishery as a whole
The fishery was closed from 2006 to 2008 in response to declining catches and no clear signs that the biomass was recovering (Haddon et al. 2006). It reopened for the 2009 season in June 2009. In 2009–10, net economic returns, including management costs, were –$1.1 million. This remained negative in 2010–11 but improved by 4.6 per cent to –$1.0 million. These economic performance results relate only to the revenues earned and costs incurred in the Bass Strait Central Zone Scallop Fishery.