V. TRANSFER SURVEY RESULTS

CFEC has conducted a survey of transfer participants since 1975. The survey collects information on the relationship between transfer parties, whether the transfer was a gift, sale, trade or inheritance, and, for sale transfers, the type of financing used and the sales price. 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 for fishing loan purposes.

During the period 1975-1979 the survey was sent to all transferors and transferees, but its completion was entirely voluntary and anonymous. Because many surveys were not returned and because those that were returned could not be tied in with other CFEC data, their usefulness was somewhat limited. Information from these 1975-1979 transfer surveys is not included in this current report, but may be found in the first edition published in 1983.1

In 1980 the survey was modified, tied in with other CFEC data sources, and made mandatory for the transferee to complete. In late 1983 the survey was expanded to include information from the transferor. Transfer survey results from the 1980-1994 time period are presented in the following tables.

Even though the survey was made mandatory in 1980, strict enforcement of this rule did not occur until 1981. There were 139 transfers in 1980 and 15 transfers in 1981 without completed surveys. Note that in every year some transfers occur and no transfer survey is completed for them, which accounts for the slight differences in the "Totals" columns between Table 1 and the tables in this chapter. The majority of these are transfers that occur on foreclosed permits. Overall, the surveys represent 98.2% of all transfers since 1980 (15,338 of 15,614 transfers).

Of the 15,338 transfer surveys received during 1980-1994, 39.1% (5,997 surveys) indicated a transfer between immediate family members or other relatives, and 20.8% (3,190 surveys) indicated a transfer between friends or business partners. Permit exchanges between people who appeared to have no pre- existing relationship accounted for the remaining 6,150 transfer surveys (40.1%)(Table 16, bottom).2

Many individual fisheries differ from these all years' statewide percentages. For example, in the salmon gillnet fisheries in Norton Sound, Kotzebue and the Kuskokwim and Lower Yukon Rivers, and in the Chignik and Peninsula/ Aleutian salmon seine fisheries, most of the transfers have been between relatives. In the Prince William Sound pound fishery, the Southeast sablefish fisheries, the Kodiak herring seine and gill net fisheries, the Southeast and Cook Inlet herring seine fisheries, the Southeast hand and power troll fisheries and the Norton Sound herring gill net fishery, most transfers have been to persons in the 'Other' category.

With the exception of the 1994 season, the percentage of transfers between friend/partners has been decreasing since the 1983 season. The rewording of the 'Friend' category on the survey form to 'Personal Friend' in October of 1983 may be responsible for part of this decrease and may also account for the relatively sharp increase in the number of transfers between persons in the 'Other' category in 1984.

When transfers are organized by the resident type of the transferee, considerable variation in relationship patterns is evident among resident types (Table 17). Over half of the transfers to Alaska Rural Locals, for all years combined, were from immediate family members and relatives (58.0% or 2,609 transfers), which is almost double that of any other resident type. In the remaining resident types, the 'Other' category predominated.

Under the Limited Entry Act's terms of free transferability, permits may be sold, traded, given away or inherited, thus enabling new participants to enter a fishery. During the 1980-1994 time period transfer survey responses indicated that 59.9% of all transfers were sales (9,182 transfers), 34.5% were gifts (5,295 transfers), and 1.8% were trades (275 transfers). The remaining 584 transfers in the 'Other' category comprised 3.8% of the survey responses (Table 18, bottom).

The incidence of gift transactions has accounted for roughly 30-40% of all transfers since 1980. Because gifts accounted for only 21.5% of all transfer survey responses in the 1975-1979 time period,3 it has been suggested that the 1980-1994 percentage increase may be a result of regulatory attempts to enforce the leasing prohibition. Thus, some of the 'Gift' responses may actually represent lease arrangements or carry reciprocal expectations.

The volume and percentage of sales transfers dropped significantly in 1989 and has remained below the long term average since then.

Individual fisheries often differ considerably from the statewide averages. While sale transactions predominated in most fisheries, gifts represented at least half of the 1980-1994 survey responses in twelve fisheries. These fisheries were the Lower Yukon herring gill net (88.2%), the Kuskokwim gill net (67.4%), the Lower Yukon gill net (63.6%), the Peninsula/Aleutian seine (61.4%), the Kotzebue gill net (61.1%), the Bristol Bay Spawn on Kelp (58.8%), the Chignik seine (54.4%), the Kodiak set net (53.2%), and the Norton Sound gill net (53.1%) fisheries. The Nelson Island herring gill net (90.9%), the Southeast Red/Blue King Crab (100%) and Southeast Tanner crab (50.0%) fisheries also show high evidence of gift transactions, but with a limited number of transfers to date. Fisheries with lower permit values tend to have higher proportions of gift transactions than fisheries with higher permit values. Some notable exceptions are the Peninsula/Aleutian and Chignik salmon seine fisheries (high percentage of gifts and high permit values), and the hand troll fishery (low percentage of gifts and a low permit value) (Tables 18 and 20).

A breakdown of acquisition methods by the resident type of the transferee is presented in Table 19. Since 1980, most of the Alaska Rural Locals who have obtained permits through transfer have received them as gifts (51.7%). Sales have accounted for the majority of the transfers to each of the other resident types over the time period; however, there has been a general decline in the volume and percentage of sales since the 1988, especially for the Alaska resident types.

In Table 20, mean and median permit prices are given by fishery and year for permit sales during the period 1980 through 1994. Surveys that indicated permit prices of less than $500 have been excluded from the computations.4 To preserve confidential data, price statistics are not computed for fishery/years where less than four sales transactions occurred; also, no value will be reported for a permit/year if there were no sales transactions for that permit. All of the prices are in nominal dollars which do not reflect adjustments for general price inflation.

Permit prices for the same gear type used in different areas of the state vary greatly (Table 20). For example, the median price of salmon drift gill net permits varied in 1994 from $61,500 (Southeast) to $324,500 (Peninsula/Aleutian).

Generally, nominal permit prices of individual fisheries over the 1980-1994 time period have tended to increase through 1990, then fall from 1991 to 1994, especially in the salmon fisheries. Some fisheries show permit prices that have been especially variable over the time period; notably, the Prince William Sound salmon seine, the Cook Inlet salmon drift and set net, and the Cook Inlet roe herring seine permits.

In contrast, permit prices for several fisheries have remained fairly stable, especially in the hand troll and AYK fisheries. Other permits tended to rise in value over the time period; for example, the permits for the Peninsula/Aleutians drift gill net and the Kodiak and Peninsula/ Aleutians set gill net fisheries.

Transfer survey information on sources of financing used for 9,182 permit purchases is presented by fishery and year in Table 21a. Beginning with the 1990 edition, additional data has been utilized from surveys in which more than one finance method was indicated. The decision rules used in analyzing these data are listed at the end of this chapter.

Statewide, self-financing of permits has been the predominant method of finance, accounting for 56.1% of all purchases during the 1980-1994 time period (5,148 permits). The next most important source of financing has been the Department of Commerce and Economic Development's loan program with 19.4% (1,781 permits).5 Transferors financed 12.0% (1,102 permits), banks and other private lending institutions financed 7.9% (721 permits), the Commercial Fishing and Agriculture Bank for 2.5% (227 permits), and processors financed 1.3% (121 permits) of the permit purchases.

The remaining 82 (0.9%) survey responses which indicated multiple finance sources were placed in the combination category. Examination of the finance methods by fishery from these 82 permit purchases reveals that most finance sources used were evenly distributed (Table 21b).

Both the percentage and the number of permit sales financed by the transferor have declined significantly since 1980 (Table 21a). In 1980, 143 transfers were financed by the seller (27.9%); in 1994 only 40 transfers were seller-financed (8.0%). The percentage of self-financed purchases has tended to increase over the time period and the percentage of sales financed by the state Dept. of Commerce appears to be decreasing since the high in 1982.

Many individual fisheries deviate from the statewide percentages, as shown in Table 21a. For example, fisheries in which the all years' percentages of self- financed permits are higher than the statewide percentage tend to be those with lower permit values, especially the hand troll fishery (87.6% or 909 purchases) and the six AYK salmon fisheries, which ranged between 71.3% and 86.8%.

State-financed loans were the principal means of financing in several fisheries: the Southeast and Prince William Sound roe herring seine (54.5% and 43.8%, respectively), the Chignik and Cook Inlet salmon seine (43.3% and 47.1%, respectively), and the Prince William Sound herring seine (43.8%) and gill net (35.7%) fisheries. The Southeast King and Tanner crab fisheries also show indications of high use of state financing, but the fisheries have recorded only a limited number of sale transactions to date.

Sources of permit financing by resident type and year derived from the Transfer Survey are provided in Table 22. The most commonly used methods of financing for the 6,410 permits purchased by Alaskan residents were the personal resources (Self/Misc.) of the transferee (51.0% or 3,268 sales) and State of Alaska authorized loans (27.7% or 1,773 sales). Urban Alaska residents have received approximately two-thirds (1,176 of 1,773) of the state loans. Nonresidents have the highest rates of self-financing (67.8%) and of financing through the transferor (17.7%) of the permit.

Finance source data from 1980-1994 have been re-evaluated using this new information in the following manner:

1). Survey respondents may mark 'Other' on the survey form if they feel that their source of financing does not fit into the categories of: personal resources, State DOC loan, CFAB loan, other bank loans, transferor, or processor. A review of the comments associated with the surveys marked 'Other' revealed that a large number of these involved unique methods of self-financing or loans from relatives or friends. Because of the strong association of the 'Other' financing with that of the personal resources financing, those responses were combined and classified under a new Self/Misc. category thus eliminating the non-descriptive 'Other' category for the purposes of this report.

2). For surveys where two finance sources were indicated but one of those sources was Self/Misc., the finance source reported in subsequent tables of this study is that of the alternative finance source (other than the Self/Misc. category). The self-financing associated with permits financed by multiple methods is primarily in the form of a down payment or interim financing. The Self/Misc. category is intended to be representative of permit purchases that are primarily financed by personal resources rather than simply purchases involving a down payment (many financing methods involve a down payment).

3). Surveys involving three finance sources as well as the remainder of the two finance source surveys (i.e. those surveys that did not indicate Self/Misc.) are reported under the category of 'Combination' financing in subsequent tables of this study. The components of these combination- financed permits are reported in Table 21B.

TABLE 16. Relationships of Transferors To Transferees By Fishery and Year (From 1980-1994 Survey Data

TABLE 17. Relationships of Transferors To Transferees By Resident Type of the Transferee (From 1980-1994 Survey Data)*

TABLE 18. Transfer Acquisition Methods, by Fishery and Year (From 1980-1994 Survey Data)*

TABLE 19. Transfer Acquisition Methods, by Resident Type of Transferee (From 1980-1994 Survey Data)*

TABLE 20. Mean and Median Permit Prices from Survey Data, by Fishery and Year, 1980-1994*

TABLE 21A. Sources of Permit Financing by Fishery and Year (From 1980-1994 Survey Data)*

TABLE 21B. Frequency of Finance Methods of Those Permit Purchases Classified Under Combination Financing (From 1980-1994 Survey Data)*

TABLE 22. Sources of Permit Financing By Resident Type of Transfer Recipient (From 1980-1994 Survey Data)*