The Marshall Islands Marine Resources Authority is expecting its revenue from the commercial tuna fishery to decline this year for the first time in eight years of income growth.
The authority currently injects close to $30 million annually into the Marshall Islands' national budget - accounting for between 10 and 15 percent of the government's total annual revenue. But the authority is predicting a $4 million to $6 million decline in revenues for 2020.
This is because it has seen multiple revenue streams decline, according to MIMRA Director Glen Joseph. These include the vessel day scheme (VDS), which is the foundation of the Parties to the Nauru Agreement (PNA) management system for the purse seine fishery in the region. MIMRA revenues have skyrocketed since full implementation of the VDS 10 years ago.
In 2012, the VDS generated close to $2.9 million. The following year, it more than doubled to $7.7 million. Last year, it set a record at $28.1 million - nearly 10 times the 2012 revenue level.
But 2020 will be different, said Joseph. One obvious reason is Covid-19 and the port lockdowns that have seen tuna transshipment in Majuro reduce by 60 percent. In addition to a decline in transshipment revenue, all fisheries observers have been pulled off purse seiners, so no revenue is coming from tuna companies, who in normal times are required to have an observer on all purse seine vessels.
But the bigger revenue hit is coming from a coordinated slowdown in the purchase of fishing days under the VDS. Early this year, "the World Purse Seine Organization agreed to reduce its uptake of VDS days (in the region)," said Joseph, in part because of low world market prices for tuna. As a result, MIMRA ended up having 700 unsold fishing days in July - days that it would normally sell early in most years.
MIMRA has one of the smaller allotments of fishing days under the VDS of the eight participating PNA parties, with about 3,000 days. While the "benchmark" price for a fishing day is US$8,000, MIMRA has averaged a higher rate of return for several years because of the demand for fishing days.
PNA faced pushback on the VDS from some segments of the purse seine industry during the early days of its implementation. But the coordinated slowdown in purchase of fishing days early this year appeared to be a renewed effort to undermine the system during a time when market prices were low. But when market prices picked up in recent months, the World Purse Seine Organization eased its hold on buying fishing days in PNA waters, said Joseph.
Joseph said while MIMRA may net less revenue this year, the fisheries department has sold all of its fishing days for 2020 and is well into sales for 2021. "The beauty of the VDS is that days can be sold through pooling (with other PNA parties) and trading," said Joseph. Because fishing has been heavier in Kiribati, Federated States of Micronesia and Nauru waters, fishing days for those PNA parties are in demand.
Joseph said MIMRA traded its days with these other parties, selling all of the 700 days over the past several months. The sales among PNA parties necessarily will bring a lower rate of return than the close-to $10,000 per fishing day average sale price, he indicated.
Because of the changed fisheries landscape due to Covid, Joseph said MIMRA launched a new approach to selling fishing days for 2021. Instead of waiting for December, as in the past, "we engaged with our bilateral partners earlier," he said. "We've already allocated 70 percent of our fishing days for 2021." Because they are selling their days earlier, "we may get less per day," he added. As of now, MIMRA has only 600 days left to sell for 2021, he said.
He said MIMRA is continuing in 2021 to pool a portion of its fishing days with several other PNA members, which commands the highest prices because those fishing days give vessels that buy these pooled days access to multiple fishing zones.
"We'll suffer a loss for 2020," Joseph said, adding he anticipates it will be a loss of between $4 and $6 million.