Study Investigates Cost-Earnings and Profitability of the American Samoa Longline Fishery

The longline fishery based in American Samoa is a key contributor to the local economy. Accordingly, understanding the health of this industry is important for government and private sector officials. Researchers in the PIFSC Economics Program recently completed a cost-earnings study of the American Samoa longline fishery based on data from the 2009 operating year. The study examined the economic health of the longline fleet in 2009 and contrasted the results with those of an earlier study of the fleet conducted in 2001.

Economic scientists from PIFSC and the University of Hawaii Joint Institute for Marine and Atmospheric Research (JIMAR) administered an in-person survey in 2013 to collect cost information from the fleet. Using the survey data along with information from secondary sources to evaluate the economic health of the fleet, researchers found that in 2009 the majority of boats suffered net losses from their longline operations. Rising fuel costs, which accounted for approximately 27% of total expenditures (variable and fixed costs), coupled with relatively low catch revenues (due to lower levels of catch per unit of fishing effort, or CPUE), were the major factors leading to poor economic performance. Because crews on the longline vessels were foreign nationals, as opposed to U.S. nationals, the overall crew compensation was relatively low, accounting for 11% of total expenditures. Compared to unprofitable vessels, profitable vessels were found to generate significantly higher annual revenues while expending less on variable inputs but more on fixed inputs. The current survey indicated the fleet is substantially less profitable than observed during the 2001 cost-earnings study of the same fleet. However, comparison of the results is complicated by the fact that the two surveys involved different sampling methodologies and assumptions.

Isocurves of profit in response to changes in albacore CPUE and price in the American Samoa longline fishery. Color scale indicates 
               profit in $US. Star marks position of the zero-profit curve between profitable and non-profitable conditions.
Isocurves of profit in response to changes in albacore CPUE and price in the American Samoa longline fishery. Color scale indicates profit in $US. Star marks position of the zero-profit curve between profitable and non-profitable conditions.

In addition to the cost-earnings study, PIFSC researchers Minling Pan and Keith Bigelow conducted a sensitivity analysis of the longline fleet's profitability in response to changes in the ex-vessel price and CPUE of the fishery's target species, albacore tuna Using the 2009 cost-earnings data as a baseline, they constructed graphs showing isocurves of profit associated with a range of albacore CPUE values and albacore prices while keeping other economic variables, such as fixed and variable costs, total fishing effort, and non-albacore catches unchanged. The isocurves indicate what combinations of albacore CPUE and price result in the same profit and the conditions leading to profit versus economic loss for the fleet. The analysis indicated that profit is highly sensitive to small changes in albacore CPUE and price, and that a marginal change in CPUE or albacore price can render vessels unprofitable.

In drawing conclusions from the 2009 survey, researchers noted a caveat due to uncertainty in the price levels used. Rough estimates of prices based on annual landings were used in the absence of more fine-scale data. Precise price data are difficult to obtain because, while American Samoa longline fishermen sell most of their catch to the local cannery, prices tied to transactions between fishermen and buyers are confidential. To address the need for more detailed and accurate information, PIFSC economist Minling Pan and JIMAR economist Kolter Kalberg worked with Gataivai Talamoa, the PIFSC liaison in American Samoa, to implement a follow-up study in which data on cannery prices will be collected for species of tuna: albacore, skipjack, yellowfin, and bigeye. This time-series of price data will enable improved future economic research on the American Samoa longline fishery.