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Thursday, August 6, 2009

Can Craw-fishermen learn from OPEC?

Agriculture in the Bahamas, as a percentage, is roughly 2% of GDP. Within the agricultural sector, the fisheries sub-sector has been playing a particularly dynamic role, consistently accounting for more than 75% of total agricultural output and with the craw fish industry, yielding anywhere from $60 to $100 million dollars (USD) per year- or on average of about 85% of the value of all fisheries output. For a country with less than 400 thousand people and for a sector that employs less than 10 thousand, country wide, that's a considerable amount of wealth for persons in the fisheries sector.

To show you how important this industry is, the Economic Partnership Agreement (EPA) with the African-Caribbean and Pacific (ACP) countries and the European Union (EU), with regard to the base importance for the Bahamas, was focused on protecting the crawfish industry, among other issues.

Fish-houses and major exporters wanted an EPA for the express purpose of greater market access into the EU. Hence, they lobbied vigorously for the provisions that the EPA provided with regard market access. Pretty academic stuff, when we factor in that if the Bahamas didn't, they would be hit with import tariffs into the EU and our competition, would not. The actual benefit, overall, of the EPA is another discussion that can take up another page and one that will be argued at a later date.

Who generates the most wealth from the fishies sector however, is another story. You can make a pretty fair assumption that the processors and exporters make the most profit, as is the general rule with any agricultural production chain- the producers sell low and the processors and exporters, sell high.

But, regardless, fisher-folk can and should make a healthy, or, perhaps, make a mint, if they choose work together to combat the issues surrounding the current world economy and distortions surrounding their market.

Through speaking with local fisher-folk, they have indicated to me that they were receiving up to $14 per pound in 2006-2007 for crawfish. In 2008, they got, if possible, just about $7 per pound and this year, they started off at just about $6 per pound. That's a huge drop. With considerably high living standards in the Bahamas, fisher-folk have to now adopt and maintain practices they employ in the off season to ease their burden like; construction related work, various service related jobs that have no relation to the fisheries sector; i.e., clerking, transportation and leisure services... etc.

The best and most relative thing that could happen within the fisheries sector, with regard to the individual crawfisher folk, is for them to adopt a policy used by the cartel of oil producing countries, OPEC, and that is cut the supply of crawfish to artificially raise the price.

While this may sound weird to some, if we take into consideration the success of OPEC with controlling output, it may not sound so far fetched.

For one reason to cut prodcution, why would anyone go out to harvest the same amounts, with the same work load, with relatively high fuel prices and last year's equipment, to get less for their share of the work? Also, can you sustain the same harvest levels you had in 2006 today, in any event? So, if they were to harvest less and alternatively spend time perfecting the services they did in the off season, it would have an un-intended consequence of a stronger cross-training of fisher folk.

Secondly, when you cut the supply of any commodity- like oil or crawfish- the price automatically rises, if demand stays constant, because there is less to go around for a larger market. Even at current demand, if we were to cut the supply, for the same amount of people, all tastes considered, you can make a larger profit per catch and manpower. To be fair, crawfish will not go out of style and there will, by all intents and purposes, be a market for food, especially delicacies like lobster/crawfish.

To go even further, if an individual fisherman was harvesting over 150 lbs of craw-fish, at $14 per lb in 2006, and now he is harvesting the same amount for $6 per lb in 2009, then if he was to cut the supply to about $50 per lb, in a successful attempt to raise the price of his catch to $8 per lb, he still wins because the profit margin per lb has increased for less effort. Considering the fact that he uses less fuel and manpower to harvest and considering the effect of less crawfish to go around, he would have made a larger profit rather than going all out on expenses to get less for his effort.

Of course, this depends on crawfisher folk, coming together to agree on a base price. In fact, depends on crawfisher folk coming together, nation wide, all together. This also means that if they were to come together, the likelihood of someone circumventing the effort by going out to sell his catch for less than the agreed upon price, is bound to occur.

For the former, if a meeting of all fisher-folk were to be held to address this, then you have a case and a base to work from on some of the common challenges, like the decrease in value of crawfish per lb.

Also, for the latter, if an individual fisherman, were to go out of his way to circumvent the groups agreed upon price, it is solely up to him to want a lower price for more work. But, yet still, that one individual would not be in a position to affect the overall market price, if all of the other producers are in agreement on a set price and a set harvest and shared storage mechanism.

In addition, the relevant fisheries stake-holders should look into expanding their market base. Take for example the effect China and India has on global demand for energy. Since the emergence, of at least China, oil prices have risen and will stay beyond $40 per barrel just to adjust, permanently, to China's growing energy demand.

Before the emergence of these two emerging economies, oil could have very easily remained at $40 or less per barrel.

If fisher folk were to expand their markets, with perhaps the assistance of the exporters- which may not happen, but it is worth mentioning- they can decrease their supply by adding to the list, two to possibly, three, new customers, aside from the EU and the USA.

There are other issues, not based on reflections on the oil markets, fisher folk in the Bahamas and Caribbean wide can glean examples from. But, coming together to make better this terrible economic situation, is the first step. Meaningful dialogue to induce positive action on the bottom line for their families, is the other.

Who knows, perhaps there can be a Caribbean wide crawfish association, started right out of the Bahamas? One can only imagine!

Now that I’ve done my part, the next fisherman who reads this page, can contact me to pick up my kit of fish for my troubles.
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