This is the twelfth edition of the Commercial Fisheries Entry Commission's publication on the changes in the distribution of Alaska's commercial fisheries entry permits. The report was prepared in response to continued interest by the legislature and general public regarding the long term effects of limited entry and free transferability of Alaska limited entry permits, especially with regard to the number of permits held by Alaska rural residents who live in communities heavily dependent upon local fisheries.
The purpose of the report is to keep interested persons accurately informed about the nature and extent of changes in the number of permits held by various groups of fishermen. This edition covers the time period 1975 through 1994 and includes detailed information on the changes in the number and type of permits held by Alaskans and Nonresidents in the 46 limited fisheries for which permanent permits had been issued by year-end 1994.1
Permit holders have been classified into six resident types to facilitate analysis of permit distribution. These resident types are defined as follows and are referred to in the text by either the underlined words or by their acronym (shown in parentheses):
A. Alaska resident of a Rural community which is Local to the fishery for which the permit applies (ARL);
B. Alaska resident of a Rural community which is Nonlocal to the fishery for which the permit applies (ARN);
C. Alaska resident of an Urban community which is Local to the fishery for which the permit applies (AUL);
D. Alaska resident of an Urban community which is Nonlocal to the fishery for which the permit applies (AUN);
E. Nonresident of Alaska (N);
F. Department of Commerce signifies permits which have been foreclosed upon by the state Department of Commerce (DOC) or of the Commercial Fishing and Agriculture Bank (CFAB) and have yet to be transferred.
Statewide Distribution of Entry Permits
Between 1975 and the end of 1994, 14,064 permanent permits were issued in Alaska's limited fisheries (Table s1). Alaskan residents received the majority of these permits (81.6% or 11,479 permits), and Nonresidents received 18.4% (2,585 permits). Almost half of all permits issued were to Alaska Rural Locals (46.9% or 6,592 permits), and 25.6% were issued to Alaska Urban Locals (3,595 permits). The remaining 9.2% was divided between the Alaska Rural and Urban Nonlocals resident types (2.6% or 363 permits and 6.6% or 929 permits, respectively).
The number of permits held by each resident type can change for three reasons: permits can be revoked, permits can be transferred to other resident types, or permit holders can simply move from one locale to another (migration). By the end of 1994 the total number of permits had decreased to 13,398 due to the revocation of 562 Alaskan permits and 96 Nonresident permits. Revocation normally occurs on nontransferable permits when a permit holder dies or does not renew the permit.2 Both transfer and migration resulted in a decrease of Alaskan permits (and a corresponding increase in Nonresident permits). The number of permits held by Alaskans decreased by 226 through transfer, and by 294 through migration. When the effects of revocation, transfer, and migration were combined, Alaskan residents held 10,397 permits (77.6%) and Nonresidents held 3,001 permits (22.4%) at the end of 1994. Eight permits had been foreclosed upon by the Alaska Department of Commerce (DOC) or the Commercial Fishing and Agriculture Bank (CFAB) and had yet to be transferred.
The largest gains in permits to assigned residency classes have been through transfers to Alaska Urban Non-local permit holders (421 permits, a 45.3% increase) and the migration of Alaskan permit holders out of state (294 permits, a 11.4% increase). The largest decline of permits have been to Alaska Rural Locals through transfers (728 permits, a 11.0% decrease) and migration (243 permits, a 3.7% decrease), and to Alaska Urban Locals through permit revocations (349 permits, 9.7% decrease).
TABLE s1. Initial issuance, overall net and percent change from initial issuance, and year-end 1994 totals of permanent limited entry permits, by residency category. The table shows the totals and total net changes, and in parenthesis, the percent and percent changes.
Permit revocations have resulted in a total net decrease of 658 permits.3 Most of the revoked permits come from the hand troll fishery (579, or 88.0% of the total) (Tables 3 and 4), where a large number of nontransferable entry permits were issued.
As stated earlier, Alaska permit decreases are countered by Nonresident permit increases. Migration, rather than transfer, has had a greater cumulative effect on the Resident/Nonresident balance. By the end of 1994, the number of permits held by Nonresidents increased by 218 as the net result of transfer activity and by 294 as the net result of migratory activity.
The overall decline of 1,134 permits held by Alaska Rural Locals represents 17.2% of all transferable and nontransferable permits originally issued to them. Transfer activities accounted for 64.2% of this decrease (728 permits). The annual Alaska Rural Local net transfer decreases have varied greatly ( Figure 2). The largest net decreases occurred during the 1977 through 1986 time period and have become much smaller since then.
Almost half of the net transfer decrease of permits held by Alaska Rural Locals (48.2% or 351 permits) can be attributed to transfers in the Bristol Bay drift and set gill net fisheries. The net decreases were 199 in the drift gill net fishery and 152 in the set gill net fishery (Tables 7 and 24).
Permit Transfer
Of the 14,064 permanent permits originally issued, 12,399 were designated as transferable and 1,665 were designated as nontransferable ( Table 3). By the end of 1994, 123 permits originally classified as nontransferable had been reclassified as transferable through adjudicatory processes, and 61 transferable permits had been revoked leaving a total of 12,461 transferable permits ( Table 4).
The 20,611 permanent transfers which occurred during the 1975-1994 period included 8,776 transfers from the original permit holder. Thus, 70.4% of the 12,461 transferable permits outstanding at year-end 1994 have been transferred at least once ( Table 1). Most transfers were between people of the same resident type (64.4% or 13,269 transfers) ( Table 5). Annual ratios of transfers to number of permits varied between 0.07 and 0.13, and averaged 0.10 for all years combined. In 1989 the number of permanent transfers decreased and has remained at lower levels since then ( Table 1). The transfer rates in 1993 and 1994 (.07) are the lowest observed over the time period.
Age Distribution of Permit Holders
Figure 1 shows the annual average ages of transferors, transferees, and all permit holders. The statewide average age of transferable permit holders decreased from 43 years in 1975 to 41 years in 1977 and remained at about that level through 1985. The mean age has increased slightly each year since then and by the end of 1994 it had risen to slightly more than 44 years ( Table 11). The increased mean age of transferable permit holders observed in 1994 may be related to reduced transfer activity as well as an increased mean age of transferees.
The statewide average age of transfer recipients ranged from 32 to 34 years from 1975 through 1980, and has increased gradually to 38 years since then. The youngest transferees tend to come from the Alaska Rural Local resident type. Before 1977 and shortly after the first limited entry permits were issued, the average age of persons who transferred their permits was at its highest level. Since 1977 the statewide average age of transferors has been between 41 and 46 years, and appears to be gradually increasing.
Transfer Survey Information
Transfer recipients have been required by CFEC since 1980 to provide certain types of information about the transfer: type of transaction (gift, sale, or trade), relationship of transfer parties, and if applicable, the permit price, transfer conditions, and finance arrangements. The survey has been the sole source of information for CFEC permit price estimates which are used by the Department of Commerce and Economic Development and the Alaska Commercial Fishing and Agriculture Bank (CFAB) as appraisals for fishing loans. The 15,338 survey responses received by CFEC represent 98.2% of the total number of transfers during 1980-1994. Key results from these surveys can be summarized as follows:
A. Relationship of Transfer Parties Of the 15,338 transfer survey responses, 9,187 (60.0%) transfer recipients indicated a prior association or relationship with the transferor. Statewide, 39.1% of the transferors were immediate family members or relatives and 20.8% were friends or business partners. Transfers between persons without a pre-existing relationship accounted for the remaining 40.1% ( Table 16). The relationship between transfer parties varied both by fishery and by the transfer recipient's resident type. For example, 58.0% of Alaska Rural Locals received their permit from a family member or relative, almost double the rate among the other resident types ( Table 17), and in several AYK and Alaska Peninsula salmon fisheries the highest percentage of transfers has been between relatives, whereas transfers in some other fisheries occur primarily between persons with no previous relationship ( Table 16).
B. Methods of Transfer
Statewide, 59.9% of all transfers occurring in 1980-1994 were sales, 34.5% were gifts, 1.8% were trades and 3.8% could not be classified as any of the above. These percentages varied considerably by fishery and resident type. For example, gifts accounted for just over half of the transfers to Alaska Rural Locals (51.7%) but only 27.8% of the transfers to Nonresidents ( Table 19). During the past six years, sale transactions were at the lowest levels observed since 1980. This reduction was observed in many fisheries and resident types, indicating an overall decline in the number of sales transactions and in the total number of transfers ( Table 18).
C. Permit Prices The transfer survey is the source of information used by CFEC to estimate permit values. These estimates are used by the Department of Commerce and CFAB for issuing fishing loans. Over the 1980 to 1994 time period permit prices have fluctuated greatly. Generally, values have tended to increase through 1990, then fall from 1991 to 1994, especially in the salmon and herring sac roe seine fisheries.
D. Sources of Permit Financing The Transfer Survey identified 9,182 permit sales. Over half of these (56.1%) were financed through the buyer's personal resources, 19.4% through the Alaska Department of Commerce's fishing loan program, 12.0% through the seller, 7.9% through private lending institutions, 2.5% through CFAB, 1.3% through seafood processors, and less than 1% through a combination of sources (Table 21A).
Several changes in the patterns of financing have occurred since 1980. The number of sales financed by the seller have declined (27.9% in 1980 to 8.0% in 1994) while the number of sales financed through the personal resources of the buyer increased (40.4% in 1980 to 66.4% in 1994). Also, the number of surveys indicating use of the state loan program dropped considerably over the time period.
When only purchases by Alaskan residents are considered, 31.9% (1,999 out of 6,410) indicated the use of Department of Commerce or CFAB loans. Urban residents have received approximately two-thirds of these transfers (1,310 of 2,008)( Table 22).
Permits Held by Alaska Rural Local Residents
Alaska Rural Locals initially received 60.4% of all transferable permits issued to Alaskans (6,017 out of 9,961) and 37.9% of all nontransferable permits issued to Alaskans (575 out of 1,518) ( Table 3). At the end of 1994, Alaska Rural Locals held 53.5% of all Alaskan transferable permits (5,107 out of 9,553) and 41.6% of all Alaskan nontransferable permits (351 out of 844) ( Table 4).
Alaska Rural Locals transferred 2,254 permits to other resident types and received 1,526 permits through transfer from other resident types ( Table 23). The net result of these cross-cohort transfers (i.e., transfers between persons of different resident types) was a decrease of 728 permits held by Alaska Rural Locals. Statewide, 55.9% of the net decrease went to urban Alaskans: 44.2% to Alaska Urban Nonlocals and 11.7% to Alaskan Urban Locals (322 and 85 permits, respectively). The remaining 44.1% of the net decrease went to Nonresidents (266 permits or 36.5%), Alaskan Rural Nonlocals (35 permits or 4.8%), or loan foreclosures (20 permits or 2.7%)( Table 23). Most of the net loss of permits to Alaska Rural Locals occurred between 1976 and 1986, and the rate of transfers away from Alaska Rural Local permit holders has been much less since then.
Migrations, or permit holders moving their residence from one place to another, have also resulted in a net loss of permits to Alaska Rural Locals, particularly in recent years. Since 1987, the number of permits lost to Alaska Rural Locals due to migration (205) has exceeded the number lost due to transfers (79) ( Table 10). Figure 2 illustrates the annual net changes in the number of permits held by Alaska Rural Locals, and shows the effects of both transfer and migratory activity.
Surveys of the 1,655 transfers from Alaska Rural Locals to other resident types during 1980-1994 indicate that:
1. Only 38.7% (641 surveys) of the transfer parties had a pre-existing relationship ( Table 25).
Permits Held by Alaska Local Residents
Changes in permits held by Alaska Locals can be reviewed by combining the Alaska Urban Local and Rural Local resident types. From initial issuance through 1994, Alaska Local permit holders transferred 2,535 permits to other resident types and received 1,855 permits from other resident types, resulting in a net decrease of 680 Alaska Local permits. The corresponding net increases among the other resident types were as follows: the number of permits held by Alaska Urban Nonlocals increased by 344, Nonresidents permits increased by 278, Alaska Rural Nonlocals permits increased by 32. There was also a net decrease of 26 permits resulting from the foreclosure and subsequent transfer of permits by the Department of Commerce or CFAB ( Table 28).
Annual net decreases in local permits due to transfer activity were highest in the years 1979 through 1986, when the decreases ranged from 47 in 1980 to 97 in 1982 ( Table 28). Since 1987, annual net decreases have been much smaller, ranging from 6 in 1992 to 28 in 1988.
A large portion (51.6%) of the overall net decrease of Alaska Local permits through transfer occurred in the Bristol Bay drift and set gill net fisheries (351 out of 680 permits) ( Table 29). During the years 1978-1984, the annual net decrease in these fisheries averaged 32 permits per year ( Appendix E). The negative shift has diminished considerably since then.
The 1,902 transfers from Alaska Locals to other resident types during 1980-1994 were generally sales (78.6%) between people with no pre-existing relationship (63.7%) (Tables 30 and 31). The buyers were financed mainly by personal resources (66.9%) or state loans (11.8%) ( Table 32). These figures are similar to other cross-cohort transfer statistics reported for Alaska Rural Locals.
Summary
Statewide summary information is presented in this report by fishery, year and resident type. CFEC plans to update this report periodically and hopes that it will serve as a useful reference document for all persons interested in the changes in permit distribution that have occurred since limited entry began in 1975.
