Systems modelling of the South African offshore demersal hake trawl fishery : an economic perspective

The offshore demersal hake trawl is the largest sector of the South African hake fishery, which targets shallow-water (Merluccius capensis) and deep-water (M. paradoxus) Cape hakes. Economically, it is the most important fishery in South Africa, generating ZAR ~5 billion in revenue, mainly from exports, and it supports an estimated 30 000 jobs. Whereas there are a number of single-species and ecosystem models that assess hake stock dynamics and examine the food web dynamics of the southern Benguela ecosystem, the human social hake fishery system is less understood. In order to address this need, this study's aims are to i) analyse the structure and dynamics of the economics of the South African offshore demersal hake trawl fishery from empirical data and stakeholder interviews, and ii) produce a prototype economic simulation model of this fishery to better understand the dynamics of the industry and the relative importance of its internal and external drivers, e.g. industrial organization, environmental uncertainty, exchange rate and fuel price. The empirical analyses confirm that the offshore hake trawl fishery is an economically mature and highly vertically integrated industry. That is, most companies control much of the value-chain, catching, processing, marketing and distributing their fish products, with access to economies of scope and scale. Nine company clusters, formed through consolidation of fishing rights and a variety of catch-share agreements, have been identified. Based on their size and operations they have been categorized as small, medium, large and super-cluster types. Fishing vessel numbers have declined since 1978 to streamline operations, with current effort optimising restrictions based on vessel engine power and the ability to catch the full quota. During the observation period (2005-2012), high-value export markets have bought 60-70% of the South African hake total allowable catch (TAC), comprising nine major markets and a number of smaller ones. The lower-value domestic market takes ca. 30% plus imports equivalent to another ca. 15% of TAC. Hake export volumes have shifted from fresh to frozen and increasingly to value-added products, especially after the 2008 banking crisis. This corresponds to an industry-confirmed price-convergence between fresh and frozen hake products. This product displacement trend is largely due to changes in the largest export market, Spain, and is mirrored by an increased reliance on freezer trawling in the industry