Fisheries Management Papers

Paper 10 - Undercatch/overcatch of quota principles (May 2003)

Contents

1. Purpose
2. Introduction 
3. Definitions 
4. AFMA's approach
5. Principles

1. Purpose

This Fisheries Management Paper sets out the principles that will be applied by AFMA in managing undercatch of quota (also known as carryover) and overcatch of quota (also known as carryunder).

2. Introduction

The undercatch/overcatch administrative system allows quota holders the option of having unused quota entitlement (undercatch) or above-quota catch (overcatch) in one year taken into account in the following year’s quota entitlement. The effect of this system means that the take of a quota species may vary from the Total Allowable Catch (TAC) set for any fishing year.

The undercatch/overcatch system was first introduced in the South East Trawl Fishery in the early 1990s to help smooth the introduction of Individual Transferable Quotas (ITQs) for orange roughy and royal red prawns. Its application was extended so that by the 1995 fishing year, undercatch/overcatch was available up to a level of 20% for all species except eastern gemfish. Since this time, the mechanism has remained although there have been changes to the limits applying to particular species.

3. Definitions

For the purposes of this Fisheries Management Paper:

4. AFMA's approach

4.1 Background

AFMA’s approach to this issue stems from the Board’s out-of-session decision in November 2001 and subsequent February 2002 meeting, to set the undercatch for the various quota species in the South East Fishery (SEF) in the 2002 fishing year at 10 percent or zero (with only blue eye trevalla remaining at 20 percent). Overcatch remained at 20 percent. Prior to the 2002 fishing year, undercatch and overcatch had been set annually but not altered from year to year.

At the February 2002 Meeting, the Board also considered a paper on undercatch/overcatch arrangements and agreed on a draft set of principles to be applied for their use. That paper was subsequently circulated to all MACs for comment. The Board determined a final set of principles at its 97th meeting in October 2002.

4.2 Discussion

A major challenge in managing undercatch/overcatch is that while such arrangements may create flexibility for concession holders and AFMA, they can also introduce distortions.

In quota managed fisheries, an accurately set and appropriately precautionary TAC is a fundamental tool for pursuing sustainability and economic efficiency. TACs should reflect the intended level of actual take from the fishery for the period over which they are set.

In terms of maximising economic efficiency, transferability of quota is a key to encouraging market processes in fisheries to support efficiency and the resulting industry adjustment as quota moves to where it is valued the most. The existence of undercatch/overcatch impedes quota market operations. Overcatch also works against the market by allowing operators to adjust substantial individual above-quota catch without sourcing quota from the market.

AFMA recognises that the use of overcatch may provide advantages to operators who exceed their entitlement by small amounts in balancing end of season catches. This would also avoid exorbitant lease prices at the end of the year (with the potential for encouraging dumping). Administratively, overcatch also reduces the necessity for prosecution action by AFMA for small excess catch of quota.

In balancing such advantages against distortions of the quota market, a minimal level of overcatch could be administratively justifiable. It should take into account the characteristics of the fishery.

As the use of undercatch provides an ongoing opportunity to work outside the quota market, it would not appear warranted if AFMA is to better pursue maximising economic efficiency. However, given industry structures and practices, retaining a minimal level of undercatch for operator flexibility would seem appropriate.

To provide operators with a firm basis for decision making each TAC period, the setting of the percentage/quantity of overcatch and undercatch could be most appropriately done at the same time as the TAC. Like the TAC, the agreed percentage/quantity should not normally vary once the fishing year had commenced.

Under this approach, operators would be encouraged to use the quota market to adjust to their preferred level of annual take. Setting percentage/quantity limits at minimal levels would limit quota market distortions.

5. Principles

The principles set out below reinforce the pursuit of AFMA’s “economic efficiency” objective, while continuing to also support Ecologically Sustainable Development (ESD):

1. In quota managed fisheries, a correctly set and sufficiently precautionary TAC is the primary management tool for pursuing sustainability and economic efficiency.
2. The use of undercatch/overcatch arrangements can provide flexibility in the fishery, although it is recognised that such arrangements are likely to constrain the efficient operations of the quota market and may impact negatively on sustainability.
3. To minimise such distortions, the parameters for such arrangements should reflect the characteristics of the species/fishery in which they operate but generally percentage/quantity levels should be minimal (10 percent or below) or zero.
4. The level of undercatch/overcatch must be taken into account when setting a TAC. The level of undercatch is particularly important where TACs need to be reduced. If there is a high possibility that a TAC needs to be reduced or there is uncertainty in stock assessment advice, then it is preferable not to set a high undercatch/overcatch for that species.
5. Undercatch/overcatch arrangements should be set in conjunction with TACs for a fishing year and not varied once in place.

Page last updated 18 March, 2010