A O U


The Anatomy of an Industry Takeover




(Stuff last added or changes made on September 22, 1996)


Ever wonder how a law comes into being? This is my interpretation of how the 1976 Fisheries and Conservation Act came into being.

Back in the late sixties the Eastern Block (collectively referred to as "Russians" here) sent large (one could even say "massive") fishing fleets throughout the world. They would go out in 100 boat fleets with a central "Captain" for each fleet, composed of catchers, hunters, processors, suppliers, whatever it took to keep them at sea for months/years at a time. And these weren't boats either, they were for the most part ships that spent years on the oceans at a time. The smallest of them was larger than our largest (except for deep water tuna seiners).

They chased large volume concentrated protein schools of fish (Mackerel was a particular target in my area - northern New Jersey). They had very sophisticated electronic gear and the Captain would send catchers out in an overlapping pattern one catcher behind the next. Much like the pictures of the huge combines harvesting wheat in Kansas.

There was lots of media coverage whenever they neared a coastline and of course hysterics from the academics and the save-the-worlders. "Ravaging the world's resources" and that type of drivel. "The US industry is old and obsolete and full of 'destructive competition'. What we need is a law to keep these foreigners out and at the same time bring our own industry into the 20th century." The Cold War was pretty hot at the time and there was plenty paranoia about the "Communist Menace spyships" on our front steps.

The First 200 Mile Limit

This was about the same time some South American countries were claiming a 200 mile limit (while the US had a 12 mile limit) "illegally" confiscating American Tuna boats for fishing inside 200 miles. (justifiable... but that's another story) There were other factors as well (undersea mining rights, etc.) contributing to the hue and cry for a 200 mile limit for the United States.

Let's just look at this a little closer. Directed fleet fishing and floating fish factories have never worked in other than very short spurts. And what was caught in those spurts could never begin to compensate for the cost of the fleets the rest of the time. Think of it this way, if a business makes money only one day out of five but has to support the structure (labor, rent, insurance, utilities, maintenance, etc.) for five days, it has to make a hellava lot of money in that one day. And I can tell you, it's been tried many times and has never worked.

Where it does appear to work is in those situations where a company owns the processor and its profit downstream in the wholesale or retail market is so high it can subsidize the losses incurred by the processor.

45 Cents to Catch 25 Cent Protein

In the mid 60's it was actually costing the Russians about $.45 a pound to catch protein that sold on the world market for $.25. Fleet fishing on a large scale is notoriously inefficient. Why would they do that?

(There's a lot more to this ...... but another time.)

As far as our own industry being obsolete, that was absolute poppycock. It's true our inshore fleets looked hard but they were exactly what was needed to profitably harvest what was available for the existing markets. And whenever a new opportunity developed the fleets could adapt in a matter of weeks/months. Contrast that with the auto industry (3-5 years to bring a new model on line) or the steel industry (5-10 years to convert to electric hearths) or almost any other industry in this country. A new plane is an entire career in the Armed Services.

At any rate, a sufficient dynamic was built to demand something be done. Okay, let's look at what happens next.

A Law is Born

Senator Foghorn, after watching the latest hysterics from Dan Blather on TV, says to his Aide(s), "we need a law, get on it. Lotsa votes here. We put it to the commies and protect the little guys at home. Great TV. "

The Aide says "I don't know beans about the ocean, I guess I'll have to find some experts."

The Aide contacts the home offices and tells them to find some fishermen for input. The Home Office finds some guys hanging around the docks (You wonder why they weren't fishing or working on the gear) "Just keep those goddam foreigners outside 200 miles. That's ALL we need and we probably don't need that." And we didn't, they weren't working on anything that had any great value to us.

The Aide calls the National Marine Fisheries Service for some advice on what's needed. "Yeah, we need a law to keep foreigners outside 200 miles. And while we're at it, we oughtta have some authority to do some stock management, make our own five year plans and stuff. The goddam fishermen have had their own way for too long (over 400 years). Now it's our turn." (NMFS types never could stand the independence fishermen had and had been long looking for a way to "makem toe the line like everybody else has to do".)

The Hobbyists

The Aide calls some Universities, who just love contacts from Senate offices (they always offer an opportunity to emphasize the critical need for subsidies and grants). "Certainly Senator's Aide, we have the world's foremost fisheries experts right here on campus who would be more than happy to help you write a law to regulate fisheries." The resident fishery expert (if there really is one) is some old mossback who couldn't make it in the more serious aspects of the biology field, and is there just so the University can say they have a presence. What I used to call "University Hobbyists". They absolutely abhorred the fishermen's independence too.

Happy days are here again

The Aide also calls the BIG GUNS (corporations who have seafood subsidiaries (fish sticks, clam chowder, etc.) and major contributors to Foggy's campaign) for their input. They absolutely hated the fishermen's newfound ability to change markets and/or buyers at will. They had tightly controlled production prices up until 1975 (in the Surf Clam business) when the market finally broke open. Wholesale competition quadrupled boat prices almost overnight (6 months) with no effect at all on finished product retail prices.

"Okay" say the Big Guns, "here's a chance to really put the boots to our smaller competitors and sew up control of the supply like we used to have. We'll get the regulations designed to clearly benefit us and drive the independent producers (the small boats) out of the business. Then we'll regain control of the price and quantity of supply end of the market. He who controls supply controls all. Besides in a regulated marketplace there are increased costs of operation (lawyers, lobbyists, junkets, campaign contributions) we can easily afford if we get back the control of supply. See Surf Clam History. Boy this is gonna be GREAT! Happy days are here again."

The Aide gets these parties together to hammer out the details.

The Fisherman says "All we need is to keep the foreigners out and everything else will take care of itself, just like it always has for the past four or five hundred years."

NMFS (lifelong bureaucrats) and the Hobbyists just know nothing can be that simple and spend hours and days and weeks and months (at the finest hotels the government will pay for) discussing the various "needs" to be addressed.

The Eco-Nazis say to themselves "Man we can get a LOT of publicity out of this. Lotsa tv, newspapers, ... Contributions are gonna roll in. Raises for all our executive staff. Fat City for us."

The Big Guns invite the Aide, NMFS, et al to tour their facilities, maybe play a round of golf at their country club in the Caribbean ("We got a lot of work to do boys, might as well be comfortable"), and only incidentally implicitly make the point that control of supply is absolutely critical to keep this operation going. (One wonders how it survived all those years before)

After a couple days, the Fisherman says, "Fuck this, I got work to do. I told you all that's needed, and we really don't need even that, Those Russkies are gonna go broke fishing that way. The rest is all bullshit. Call me when it's over." And goes back fishing.

The Aide says "Call me when you're ready, I gotta go to work on the Arab oil embargo and meet with some lobbyists from Exxon. Foggy needs some campaign contributions."

And guess whose left to make the rules. The result is a bureaucrat's and university hobbyist's wildest fantasy, the opportunity to "right" their own laws. And boy, did they have some dream. Every authority dreamt of, even down to the right to adjudicate their own cases through their own kangaroo court (pardon my disrespect, "a departmental review") from which there is no practical appeal. 5 and 6 figure fines for violating malevolent regulations clearly designed to be unnecessarily burdensome. "We'll show those arrogant bastards who's boss!"

The Big Guys are there (with their lawyers and open bar hotel rooms) to make sure no regulations are drawn that gives independent owners or small producers a ghost of a chance.

And that's how the fox got to get to make the henhouse rules. And boy did they! Without going into all the details (they're endless and REALLY depressing), when they ended up they had the authority to control (in the words of the NMFS head of enforcement in 1977) "everything that ever walked, crawled, swam in the oceans, and we ain't gonna stop until we got management plans for it all."

The Mid-Atlantic Surf Clam Plan is past its 20th anniversary. Where there were 180+ boats (many/most of which were owner-operated), now there's under 60 (mostly fleet/company owned, all company controlled). That's 300-400 men out of work (plus support services).

Who's happy now?

The BIG GUNS are very happy. The per bushel surf clam price to the man on deck is on average far less than half of what was pre-plan, actual (never mind inflation) prices to the boat have yet to return to what they were in 1977. Consumer prices have doubled and tripled. Production costs down, retail prices up, it just doesn't get much better than this. (see Keiretsu for a more complete picture on how it works.) All together now boys, "Happy Days are here again....."

NMFS have probably at least quadrupled in size plus their individual salaries have probably doubled as well. They were able to get "Off-Budget" (no need to ask Congress for appropriations because of the Saltonstall Kennedy (SK) Act which put a tariff on imported seafood, the proceeds of which are directed to NMFS - something on the order of $250,000,000 a year, plenty grant money for all. Note - the latest estimate (1998) is in excess of $600,000,000. No one really knows as it is a closely guarded secret. )

NMFS fellow travelers (academics, lawyers, Sea Grant, etc.) have all ballooned (even that word doesn't go far enough). NMFS has been more than generous passing along the SK funds in the form of grants as long as the grantees stay within the NMFS Party Line. Universities are happy because the grants are flooding in for all kinds of esoteric projects (well less than 5% are even remotely connected to commercial fishing, despite the clear instruction in the law that all seafood tariffs are to be used to enhance and modernize domestic fisheries). University administrators are happy because they get anywhere from 25% to as much as 90% for "administration expenses" (read higher salaries and perqs).

Who Needs Protection?

We got a 200 Mile Law to protect the fisheries alright, but it turns out the ones initially needing "protection" are the ones who got fucked. And the consuming public has come out so hot either, FAR higher prices at the retail level (somebody has to pay for those tariffs and company controlled production). But it's been Gold Rush Days to be a "marine biologist" or fishery manager.

In the 20+ years of the FMCA, not one ocean fishery has "recovered". Seafood imports have risen from about 25% in 1975 to over 70% and still climbing. Doin' a great job for the country, ain't they?

End of Anatomy of a Law


This document is Copyrighted by G. H. Lovgren. It may not be reproduced in whole or in part without this copyright notice.
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