1. E B DUNNE CONSULTING1 Lost Earnings and Opportunities for Increased Profitability Purpose: To identify and describe causes of lost earnings and quantify opportunities for increased profitability in inshore shrimp sector.

2. E B DUNNE CONSULTING2 Causes of Lost Earnings or Increased Costs Two Categories: Poor Operating Practices Inefficient Regulatory Arrangements

3. E B DUNNE CONSULTING3 Poor Operating Practices Seasonality of Harvesting:

4. E B DUNNE CONSULTING4 Seasonality of Harvesting Causes: Lack of Co-ordination in Industry Crab Must be Harvested First No Pricing Incentives to Fish Other Times “Fine Weather Vessels”

5. E B DUNNE CONSULTING5 Seasonality of Harvesting Results: Concentrated Landings More Costly Vessel Operations Over-supplies of Raw Material Poor Quality Product Lower Market Prices Depressed Port Prices

6. E B DUNNE CONSULTING6 Over-Supplies of Raw Material

7. E B DUNNE CONSULTING7 Over-supplies of Raw material Causes: Fluctuating and Erratic Landings From Uncoordinated Operations “Fine Weather Vessels” Competition for Supply

8. E B DUNNE CONSULTING8 Over-supplies of Raw material Results: Poorer Product Quality Lower Yields Increased Processing Costs Higher Vessel Costs Lower Port Prices

9. E B DUNNE CONSULTING9 Extensive Trucking Causes: Number of Ports Location of Plants Vessel Size Competition for Catches

10. E B DUNNE CONSULTING10 Extensive Trucking Results: Additional/Unnecessary Handling Increased Time to Processing Reduced Yields Downgraded Product Quality Reduced Returns Higher Costs

11. E B DUNNE CONSULTING11 Handling Practices/Capabilities Causes: Vessel Sizes and Designs and Industry Practices

12. E B DUNNE CONSULTING12 Handling Practices/Capabilities At-sea Problems Include: Overly-long Towing Times No Trawl Ramps Emptying Cod-end High Off Deck No Covered Decks Walking on Catch Shovelling Shrimp into Bags Throwing Shrimp into Holds Lack of Refrigerated Holds

13. E B DUNNE CONSULTING13 Handling Practices/Capabilities At-sea Problems Include: (cont’d) Temperatures Allowed to Rise Stacking Heights Often Too High Improper Icing Daily Catches Not Separated Trips Too Long

14. E B DUNNE CONSULTING14 Handling Practices/Capabilities On-shore Problems Include: Improper Loading unto Transports Improper Use of available Reefers Poor Offloading and Holding Practices

15. E B DUNNE CONSULTING15 Handling Practices/Capabilities Results: Inferior Raw Material Lower Quality Product Rejected Landings Reduced Port Prices Lost Earnings

16. E B DUNNE CONSULTING16 Quality Standards and Pricing Problem: “Lowest Common Denominator” Standards Do Not Encourage Good Harvesting Practices Do Not Encourage Investment in More Suitable Vessels and Equipment

17. E B DUNNE CONSULTING17 Quality Standards and Pricing Results: Sector is High-Volume, Low- priced, Low-Returns Higher Average Gross Revenues Difficult to Achieve Discourages Investment in Larger Vessels

18. E B DUNNE CONSULTING18 Un-Harvested Quotas Significant Annual Loss of Gross Revenue Eliminated by Larger Vessels?

19. E B DUNNE CONSULTING19 Inadequate Marketing Result of Structural Problems in Sector Prevents Sector Achieving a Higher Share and Higher Return Contributes to Lost of Gross Revenues

20. E B DUNNE CONSULTING20 Inefficient Regulatory Arrangements Consists of Policy and Administrative Rules: Licensing Provisions Fishing Plan Measures Vessel Replacement Policy

21. E B DUNNE CONSULTING21 Inefficient Regulatory Arrangements Licensing: Currently 386 Licences Issued Average of 347 Vessels Fished 2000-2003 Average Annual Trips (Total)= 3,727 Annual Average/Vessel = 10.7 Average Allocation/Licence (2003) =162.5 mt. Average Allocation/Value/Licence = $179,000 Ranges from Low of $115K in 3L to $303K in 4R 40 Inactive Licences and Only 10.7 trips per Active Vessels

22. E B DUNNE CONSULTING22 Inefficient Regulatory Arrangements Trip Limits: Meant to Spread Available Allocations over Total Fleet and Season Larger Vessels Held Below Capabilities No Real Limitation on Smaller Vessels Larger Vessels Utilise Seasonal Limits for Higher Annual Catches Smaller Vessels Land More Catch in Warm Months More Trips Than Necessary are Required Added Cost Factor Down-grading of Quality of Raw Material

23. E B DUNNE CONSULTING23 Inefficient Regulatory Arrangements Landings Caps: Indirect Way of Allocating Avoid IQ Fees of $3.4 Million “On-again/Off-again” Harvesting Maintain Numbers of Operations Create Inefficient Individual Harvesting Operations

24. E B DUNNE CONSULTING24 Vessel Replacement Policy Maintains Barriers at 45, 55 and 65 ft. Individual Size Limited by Cubic Numbers Fleets Can Propose More Flexible Rules Subject to DFO’s Conditions This Can Either Prevent or Allow Larger Vessels

25. E B DUNNE CONSULTING25 Opportunities for Increased Profitability Reduce Seasonality Reduce Raw Material Gluts Harvest at Optimum Times Improve Raw Material Quality Improve Marketing Efforts Improve Fleet Configuration Reduce Regulatory Hindrances Achieve “Icelandic Level” Market Returns

26. E B DUNNE CONSULTING26 Opportunities for Increased Profitability (cont’d) Reduce Rejected Landings Eliminate Un-caught Quotas Reduce Trucking Increase Average Prices to 2000 Levels

27. E B DUNNE CONSULTING27 Potential Increase in Total Earnings ($’000) Solving Structural Problems and Practices (+10 %) $6,908 Reduce Rejects 2,330 Eliminate Un-caught Quotas 12,100 Reduce Trucking 1,300 Return to 2000 Prices 13,600 Totals 36,238