Long-run growth requires in our judgment a level of investment in new trawling equipment which probably will not be provided by the industry. Those changes which have taken place in the industry, and have induced investment, have been on the market and processing side, not to any great extent on the raw materials side. Thus we do not expect, under present circumstances, that most of the industry as presently constituted, with its present attitudes and prospects, is willing in the immediate future to meet the challenge and take the risks which are involved in conversion to freezing-at-sea. Yet many of the changes which conversion to freezing fish at sea would impose on the industry are beginning to emerge already, and others may well emerge in the future.

Among these is the tendency of some firms to tie more closely together their trawling and processing operations. Even those firms which specialize in one or the other branch of operations frequently maintain close financial ties with the other, so as to secure the economic advantages of intergrated operations.

The initiative, as well as the ability to survive, seems to be turning more and more with the large companies, those most likely to adopt freezing-at-sea if it is to come into commercial operation.

Many changes remain to be made, however, before freezing-at-sea will recommend itself to interests able to act. New handling processes, especially in unloading fish

from trawlers, and new kinds of labor are needed. Yet we know that resistance to the elimination of existing costly, inefficient methods is stubborn and deep-rooted. Fishermen will resist the imposition of longer trips, despite the financial incentives

Fig. 2 The U. S. Fish and Wildlife Service research vessel Delaware, equipped with an original experimental freezer, demonstrated the feasibility of freezing fish in brine on a fishing vessel at sea in studies conducted several years ago.. offered, if past experience is any guide. And a troubled history of labor-management relations will increase the difficulty of securing agreement on this and related crucial matters.

New methods, requiring new investments, will increase the risk of loss if accidents or bad weather (perennial risks in fishing) strike. These risks have always operated to limit, and to make unique, the men involved in fishing; for this reason the fishing industry is more dominated by tradition and history than most others. Such an industry offers more

than the normal resistance to new ideas and methods. Only the most persuasive arguments, coupled with extreme economic pressure, are likely to prove effective.

We conclude that the returns from freezing-at-sea are neither so great, so sure, nor so devoid of risk as to attract the firms presently dominant in the industry. It is important to note that some of the large national corporations involved in fish marketing and processing have watched with care the development of the freezing-at-sea technique. Such firms are, in our judgment, most likely to lead the way when and if the returns justify such a step.

Although we are not optimis

ware.

tic as to the likelihood of adoption in the near future, the long-run prospect is more favorable. The sea should furnish an increasing share of protein foods as populations continue to grow. At the same time, certain crucial advantages of foreign over domestic fisheries should diminish

as time passes; already some foreign costs have risen sufficiently to reduce the attractiveness of United States investment abroad. It may turn out that freezing-atsea has been developed ahead of its time in the United States, but will prove, at the proper time, a readymade solution to the problems of this industry.

BACKGROUND

The New England fishing industry has experienced growing economic difficulties in recent years. In an attempt to find a solution to these difficulties, the U. S. Bureau of Commercial Fisheries tested and developed between 1948 and 1955 techniques and equipment for freezing whole groundfish at sea. The result of these experiments was a method which, in the judgment of the Bureau, could readily be applied to the offshore fleet of large otter trawlers operating out of the Fish Pier in Boston, Mass., and to the processing firms which process and freeze most of the catch of

4. The attitude of key segments of the industry to the new method.

The conclusions of the study briefly were:

1. Adoption of freezing-at-sea would serve to smooth out the seasonal variation of catches and prices. It would thus make possible more efficient utilization of trawlers and packaging equipment, at lower cost and at higher rates of return than prevail under present conditions.

2. The investment needed to convert large trawlers presently operating out of Boston, on the basis of 1956 estimates, would be a minimum of $60,000 and a maximum of $87,500 if compression-type refrigerating equipment were used; a minimum of $58,750 and a maximum of $62,500 if ammonia-absorption equipment were adopted. On the other hand, the average age of the present fleet makes unlikely any investments of this size because they represent a range of 29.4 percent to 49.1 percent of the depreciated value of trawlers now in use.

3. Incorporation of freezing-at-sea equipment in new trawlers, if such are added to the fishing fleet in the future, would not materially increase the cost of such trawlers. In this case the total costs are so great that such new investment is unlikely without some assistance from the Federal Government.

4. Imports have grown steadily through 1956, an indication that the share of the market for domestic production will, under present conditions, continue to decrease. While precise comparisons of the costs of fishing and filleting abroad with those which could prevail in the domestic industry using freezing-at-sea are not possible, it is clear that the substantial savings in costs which the new method could make possible would improve the competitive ability of the domestic industry.

5. Facing a discouraging record of poor profits, unstable earnings for labor, and high costs of new capital equipment, few segments of the industry foresee adoption of the freezing-at-sea method in the foreseeable future, without substantial outside assistance. Fewer still were found who themselves would seriously consider adopting this new method.

ANALYSIS OF THE INDUSTRY

GENERAL DESCRIPTION: In recent years fishing activity in Boston has been dominated by the large otter trawlers. These ocean-going vessels, capable of staying at sea for up to 12-14 days at a time, sail as far as the waters off northern Nova Scotia. These vessels have the capacity to hold up to 320,000 pounds of iced drawn (gutted) fish, or an estimated average of 220,000 pounds. The port's fleet of large otter trawlers has decreased steadily, from 59 in 1947 to 30 in 1956. Landings at Boston by the large otter-trawler fleet declined from 142.0 million pounds in 1950 (83 percent of the total landed at the Boston Fish Pier) to 92.0 million pounds in 1956 (63 percent of the total landed). Thus the fleet of large trawlers continues to supply the bulk of the fish landed at Boston, though to a diminished degree.

Fish in Boston is processed by 42 firms. The bulk of their output, which has fallen in recent years, is in the form of frozen fillets, though there is a considerable local demand for fresh fish which varies seasonally.

In both trawling and processing, it is unlikely that greater efficiency and lower costs could be achieved with present methods. In processing, for example, increasing mechanization has apparently failed to increase the annual output per worker, because of large seasonal fluctuations in the volume of production. The same is true of trawling, which is also burdened by aging equipment, lack of new entrants into the labor force, and the necessity to travel farther in search of dwindling supplies of groundfish.

After a period of decline and demoralization, the industry in 1955-56 began to show evidence of new vigor. Average catches for Boston large trawlers improved in 1956; a Federal loan fund for repair and maintenance of vessels and gear was provided; a new processing and marketing cooperative came into existence; plans for redevelopment of the Boston Fish Pier and related facilities were worked out. Nevertheless, in 1956 as in previous years, the long-range outlook remained unfavorable.

RECENT TRENDS IN LANDINGS AND PRICES: Total United States production of groundfish (including ocean perch) fillets rose from 1947 to 1951, but has declined since then. Production in 1954 was 122.4 million pounds, compared with 148.8 million pounds in 1951. The decline affected all species of groundfish. The decline in landings at the Boston Fish Pier by large offshore otter trawlers, the focus of this study, is thus a part of the general decline in domestic landings of groundfish. But the decline in the activity of this sector of the industry has been larger since 1951 than the over-all decrease in domestic groundfish landings.

Prices received by fishermen and vessel owners for catches of large and scrod haddock on the Boston Fish Pier were fairly stable, on an annual basis, during the period 1947-1954, except for a decline in 1955. Since 1954, average annual at-vessel prices received by the large offshore otter trawlers have been slightly (about 2 percent) below the general at-vessel price level on the Boston Fish Pier, while in 1953 they were over nine percent above the general level.

Although annual average at-vessel prices have been fairly stable, seasonal fluctuations are great in both landings and prices. In 1956, for example, landings in January were only 39 percent of landings in April, the peak month. In other years there is a similar range from the lowest to the highest month: in 1955, the minimum was 52 percent of the maximum; in 1954, the minimum was 37 percent of the maximum; in 1953, the minimum was 58 percent of the maximum; in 1952 the minimum was 49 percent of the maximum. Analysis confirms that these fluctuations are truly seasonal, within a stable secular pattern.

In 1956, at-vessel prices varied greatly as well. The highest average ex-vessel price, $10.98 per hundredweight, occurred in January, as compared with a low of $5.26 in April. Thus the minimum average price in Boston was 48 percent of the maximum in 1956, as compared with 56 percent in 1955 and 58 percent in 1954.

On a month-to-month basis, prices fluctuate somewhat less than do landings, so total sales revenue of the fishing fleet follows changes in landings more than prices. This suggests that measures which can stabilize the level of fishing activity over the year would contribute more to stable incomes and economic operation of trawlers than would measures intended principally to stabilize prices.

Retail haddock frozen fillet prices have tended to follow wholesale prices rather than other retail prices or the general wholesale price index. While retail prices and the general wholesale price index both were fairly stable in the period 19521955, wholesale and retail haddock prices declined sharply and fairly steadily over this entire period, except for some strength exhibited in 1953. By September 1955, the index (1952 = 100) of retail prices of haddock had dropped to 90.6, while the Bureau of Labor Statistics Cost of Living Index, converted to the same base, was 101.2, and the general wholesale price index was 100.1.

All large trawlers landing large and scrod haddock in Boston received average monthly revenues of $821,700 in 1952; this declined in 1953 to $718,500, in 1954 to $670,500, and in 1955 to $556,300. In 1956 there was a slight rise, to $649,600, a level still below that of 1954 and previous years. The total decline from 1952 to 1955 was 32.8 percent, and from 1952 to 1956 it was 20.9 percent.

To the instability of prices, landings, and revenues still another destabilizing feature of present operations must be added, namely, the "sellover," a feature of ex-vessel sales peculiar to New England. Under the regulations of the New England Fish Exchange, there may be a resale of fish, after the original sale has been made, if fish being unloaded from the vessel do not qualify as first quality. This vague provision, which is at times invoked by buyers, tends to provoke controversy and to worsen relations between the fishermen and vessel owners on one hand, and the fish dealers on the other.

PROFIT AND EARNINGS: In offshore trawling there have been declines in both employment and the number of trawlers in operation; yet, even in a declining industry there are often wide variations in the performance of individual firms. Our analysis suggests that the profit position of some New England fishing establishments is quite favorable; these would be the likely sources of new investment if freezing-at-sea is deemed feasible.