Scott C. Matulich

Efficiencies in Large-Scale Dairying: Incentives for Future Structural Change

The United States dairy industry is undergoing a profound transformation towards intensive largescale production units. During the ten-year period 1964-74, the number of farms with cows declined 71%, while the number of cows declined only 29% (U.S. Department of Commerce, 1964, 1974). According to the U.S. Department of Agriculture, total milk production declined 9%, from 127.0 billion pounds to 115.6 billion pounds. The structural impact of this consolidation into fewer but larger herds is considerable. Both farm and cow numbers

Fishery Cooperatives as an Alternative to ITQs: Implications of the American Fisheries Act

The United States Congress recently passed a law that creates an alternative to individual transferable quota (ITQ) management. The American Fisheries Act promises the ability to rationalize one of the worlds largest fisheries, the North Pacific pollock fishery, without the overt appearance of allocating permanent property rights to a public resource. The Act enabled pollock fishers to form cooperative bargaining units that are guaranteed a fixed share of the total allowable catch (TAC) providing they deliver to historic processors. This paper explores the evolution of that policy change and the innovative use of fishery cooperatives to advance voluntary decapitalization and rationalization that Congress intended to benefit both vessels and processors. Game theory offers insights into the likelihood of achieving congressional intent. It is argued that while the Act is Pareto improving, it may violate the legislative intent of win-win rationalization and may introduce a market failure while attempting to rid the fishery of the open-access externality.

North Pacific Halibut and Sablefish IFQ Policy Design: Quantifying the Impacts on Processors

This study examines how the two largest individual transferable fishing quota (IFQ) policies in the United States impacted halibut and sablefish processors. A survey of processors was conducted to estimate the change in processing sector welfare, measured as the change in quasi rents before and after IFQs. The policy was efficient and harvesters were left much better off. However, most processors did not participate in the rationalization benefits and, on average, were left worse off. Expanding the survey results to the pre-IFQ population, it is estimated that the halibut processing sector lost 56% of its prior quasi rents, while sablefish processors lost 76%. Eighty-two percent of the pre-IFQ halibut processors and 96% of the sablefish processors were estimated to be absolutely worse off.

Did Processing Quota Damage Alaska Red King Crab Harvesters? Empirical Evidence

The Bering Sea and Aleutian Islands (BSAI) red king crab fisheries are managed with a controversial, market-based policy design, in which both individual transferable fishing and processing quotas are used. Despite the fact that the policy design maintains contestable markets, concern remains that the use of individual transferable processing quota (IPQ) damages harvesters who receive individual transferable fishing quota (IFQ). An integer, nonlinear optimization model that incorporates an empirically estimated, non-linear catch per unit effort function is developed to measure imputed IFQ values. The imputed quota values are based solely on harvesting efficiency in the absence of IPQs or potential wealth redistribution between sectors. Results are compared to a prerationalization optimization model and also to empirical quota trading prices in the presence of IPQs. This with and without analysis lends insight into whether and/or the extent to which IPQs damaged BSAI crab harvesters.

The Value of Individual Processing Quota in the Alaska Red King Crab Fishery: A Preliminary Analysis

Abstract Preliminary estimates of the value of individual processing quota in the Bristol Bay red king crab fishery are presented. Implications for processor participation in the benefits of crab rationalization are examined. JEL Classification Codes: Q22, Q28, D61

Stranded Capital in Fisheries: The Pacific Coast Groundfish/Whiting Case

“Stranded Capital in Fisheries: The Pacific Coast Groundfish/Whiting Case” (Wilen 2009) brings attention to an important issue for fisheries policy: avoiding redistributive policy design, though the article is about ex-post mitigation of damages. Unfortunately, the article fails to deliver useful insights into either problem. I begin this comment by anchoring the stranded processing capital issue in the literature Wilen anchors it—in the article by Matulich, Mittelhammer, and Reberte (1996), hereafter MMR. he characterizes that paper with the following assertion: “...the entire MMR conceptual apparatus is a straw man, interesting to speculate about in theory, but without relevance in the real world of fisheries” (p. 5). The next section shows this assertion misrepresents that article. Professor Wilen’s remedy, which is not anchored in economic theory, is discussed in the third section. The fourth section explains why experiences from deregulation lend no insight into fisheries rationalization policy design. Lack of constructive policy guidance is addressed in the fifth section. Two North Pacific contexts were used by Wilen to illustrate why processors should not be included in individual transferable quota (ItQ) policy design. this section corrects factual errors concerning these fishery policies and policy performance. The sixth section addresses the claim that including processors in rationalization policy design undermines the “normal process of competition.” A brief conclusion closes this comment.

Cooperative Bargaining to Internalise Open Access Externalities: Implications of the American Fisheries Act

The United States Congress recently passed a law that creates an alternative to individual transferable quota (ITQ) management. The American Fisheries Act promises the ability to rationalise one of the worlds largest fisheries, the North Pacific pollock fishery, without the overt appearance of allocating permanent property rights to a public resource. The Act enabled pollock fishers to form cooperative bargaining units that are guaranteed a fixed share of the total allowable catch providing they deliver to historic processors. This paper explores the political economy of policy change and the innovative use of fishery cooperatives to advance voluntary decapitilisation and rationalisation that Congress intended to benefit both vessels and processors. Game theory offers insights into the likelihood of achieving congressional intent. It is argued that the Act introduces a new market failure while attempting to rid the fishery of the open access externality. It is further argued that outcomes of voluntary agreements, whether targeting environmental concerns or natural resource management, are sensitive to market structure and institutional contexts.