Study counts value of deep-sea hake prior to 2020 rights allocation

Project name:
South African Deep-Sea Trawling Industry Association

Service:
Regulatory economics and accounting
Economic impact assessment

Sector:
Forestry and fishing

Area of Expertise:
Socio-economic and regulatory impact assessment
Economic modelling
Sector strategy and regulatory frameworks
Impact of regulatory decisions

Client:
South African Deep-Sea Trawling Industry Association (SADSTIA)

Date:
2018 - 2019

Country:
South Africa


Access to fishing rights in the deep-sea hake fishery, the largest fishery in South Africa, is determined by the Department of Agriculture, Forestry and Fisheries (DAFF) through the fishing rights allocation process (FRAP). The deep-sea hake fishery makes a substantial socio-economic contribution to local fishing communities along the west coast and is responsible for over R4.5 billion in sales annually and 7200 direct jobs.

Deep-sea hake fishing rights were last allocated in 2005 and are due to revert to the state in 2020 when these will be subject to a new allocation process (FRAP 2020), along with a number of other fisheries.

It is within this context that the South African Deep-Sea Trawling Industry Association (SADSTIA) approached Genesis to produce an independent economic report on the deep-sea hake industry. This was to provide a sound basis for meaningful engagement between the industry and DAFF, and ultimately assist informed decision making with respect to FRAP 2020. The Genesis report was based on extensive engagement with large, medium and small rights holders to provide an independent, rounded view of the industry.

The Genesis report presents key analysis relating to the socio-economic contribution of the industry, the history of entry and transformation, the economic characteristics and revealed business models adopted by the industry as well as the challenges experienced by different rights holders.

All these factors have relevance to the policy and regulation of the industry in terms of its ability to optimise the objectives of:

  • Conservation of the fishery resource;
  • Economic development via optimum utilisation of rights, and;
  • Meaningful transformation within the fisheries.

Based on the above analysis the Genesis report identifies critical design considerations for the FRAP 2020. For example, a reallocation of rights must have regard for the scale requirements of the different business models that have emerged in the industry and their relative contribution in terms of value-add, jobs and local economic development.

This is particularly important when considering the impact of a fragmentation of rights. Further, previous experience suggests that small quota allocations to uninvested new entrants in this fishery are unlikely to result in new independent fishing operations. However, this does not mean that smaller transformed fishing industrialists cannot be created, but rather that such industrialists may come from diversified fishing companies that are already invested in fishing assets.

The report has been used by current stakeholders within the industry to not only plan internally for the future of their own businesses but also to provide meaningful engagement with DAFF in the lead up to the 2020 allocation process. The value unlocked by the hake industry has led to further engagement with stakeholders in other fisheries (i.e. the pelagic fishery).

The executive summary of the Genesis report can be found here.

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