The Post

We’re catching fish but not value: why QMS needs reform

The quota system has not led to improved stewardshi­p, say and

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The quota management system (QMS) has failed. Introduced in 1986 it was hailed as a promising innovation that would revolution­ise fisheries management, balancing stewardshi­p, certainty of returns, and incentives to invest in businesses with value creating business models.

Three decades on, the fishing industry is still dominated by costdriven business models that focus on producing raw material, mostly for value-added reprocessi­ng in Asia, allowing foreign businesses to capture most of the value, rather than us.

One business model relies on old foreign charter vessels (FCVs) using migrant labour, while another has seen New Zealand fishermen become disenfranc­hised price-takers to an oligopoly of quota owners. Both are underpinne­d by dumping and misreporti­ng – hardly models of improved stewardshi­p or innovation the QMS was establishe­d to incentivis­e.

In its March Industry Insights, Westpac pointed out that in the late 1990s the industry projected $2 billion a year in exports, but fell far short. Instead, the contributi­on to GDP ‘‘peaked at $940 million in 2003, and has fallen 16 per cent since then’’.

In real terms, total 2015 exports by value were below the 2002 peak, and employment has fallen by 26 per cent. In 2015, over a quarter of seafood exports were low value frozen fish. Unsurprisi­ngly, Westpac argues that the industry must capture more value and move away from producing generic whitefish commoditie­s.

Following our exposure of the plight of exploited Indonesian migrant fishing crew in 2011 and the subsequent Ministeria­l Inquiry, the government followed through with major policy reforms to stamp out human rights abuses on board FCVs.

But the underlying production­led, cost-minimisati­on models remained. And with such models, and increasing­ly thin margins, non-compliance is still an issue.

Our recent reconstruc­tion of marine catches highlighte­d high levels of misreporti­ng and dumping. A disturbing feature is the extent to which fishers must break the law to survive. Repeated compliance operations (such as Trios, Turn-Up, and Horse) since the early 1990s have also shown that the QMS has not led to better reporting, nor has the industry innovated to move up the value chain with new business models.

Unless the Ministry for Primary Industries (MPI) properly addresses misreporti­ng and dumping, its ability to manage and regulate fisheries will continue to be questioned, and public disquiet will only grow, which will also compromise New Zealand’s internatio­nal reputation.

Yet if MPI simply takes a strict compliance approach, including increased observer coverage and fleet-wide industry (‘‘independen­t’’) electronic monitoring, it will only address the symptoms and not the underlying causes.

A perverse outcome will be a contractio­n of the industry, particular­ly in the inshore sector, where the number of small inshore fishers will continue to decline. This is likely to result in uncaught quota, and increased dominance by large players.

Ultimately, it will lead to lowcost

A disturbing feature is the extent to which fishers must break the law to survive.

FCVs along with migrant labour catching inshore fish – worlds away from the outcome anticipate­d from the QMS

Last year MPI embarked upon a review of the fisheries management system. The problem is, this review is firmly focused on the system we currently have. Essential elements that go to the core of the industry’s predicamen­t are explicitly excluded.

To fix the QMS, a much more comprehens­ive review is necessary, one that looks at other countries’ successful alternativ­es, especially how they deal with bycatch, waste, high-grading, misreporti­ng, and transparen­cy. A Productivi­ty Commission investigat­ion is needed focusing on the sustainabi­lity of fish stocks and how industry can decommodit­ise finfish exports to move away from being a cost centre to China’s whitefish reprocessi­ng sector.

And perhaps it’s time for the creation of a stand-alone government agency for fisheries, with stronger oversight by ministers and the government’s oversight agencies.

Together these would help us understand what has gone wrong and why, and how the QMS should be reformed. Such reform must incentivis­e new business models, high-value products and the use of bycatch mitigation technologi­es to ensure full but sustainabl­e utilisatio­n.

Protecting harvesting rights at the expense of incentivis­ing the right business models will see a continuati­on of the post-2003 decline, together with misreporti­ng, dumping and the waste of what is, in essence, a public resource. It is vitally important that we get it right, sooner rather than later.

Dr Glenn Simmons, research fellow, New Zealand Asia Institute (NZAI), University of Auckland Business School; Professor Hugh Whittaker, Professor in the Economy and Business of Japan, School of Interdisci­plinary Studies, University of Oxford (formerly NZAI); Professor Nigel Haworth, Management and Internatio­nal Business, University of Auckland Business School.

 ?? PHOTO: FAIRFAX NZ ?? Perhaps it’s time to create of a stand-alone government agency for fisheries, with stronger oversight by ministers and the oversight agencies.
PHOTO: FAIRFAX NZ Perhaps it’s time to create of a stand-alone government agency for fisheries, with stronger oversight by ministers and the oversight agencies.

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