ample, some fisheries are more industrial than others (e.g., the Alaska pollock fishery) and have not involved crew members as co-venturers in the same sense as other fisheries.

The committee also recommends that councils designing IFQ programs evaluate the block system and loan program in the North Pacific region for possible applicability elsewhere.

Processor Allocations

Findings: In the existing IFQ programs, processors were not awarded shares in the initial allocation unless they also were vessel owners during the control period. In some programs, they are also constrained from purchasing or leasing shares. Some processors and economists argue for allocating part of the quota to processors or for creating separate processor and harvester quotas. Just as the harvesting sector is overcapitalized in some fisheries, so too is the processing sector. Some processors told the committee they have been adversely affected by the introduction of an IFQ program or would be harmed by potential programs. Others benefited or were not greatly affected. Adversely affected processors assert that harvester-only IFQs may result in stranded capital, lower profitability, and significant impacts on isolated rural communities. These consequences would result from the fishery becoming more efficient, shifts in the timing of deliveries, and harvesters gaining bargaining power in relation to processors over exvessel prices. In some fisheries, processors seem to have responded effectively to the changes brought about by IFQs through a variety of contractual methods and vertical integration. If avoiding processor losses is considered an appropriate social goal, this could be accomplished by allocating separate harvester and processor quotas.

Recommendation: On a national basis, the committee found no compelling reason to recommend the inclusion or exclusion of processors from eligibility to receive initial quota shares. Nor did the committee find a compelling reason to establish a separate, complementary processor quota system (the "two-pie" system). If the regional councils determine that processors may be unacceptably disadvantaged by an IFQ program because of changes in the policy or management structure, there are means, such as buyouts, for mitigating these impacts without resorting to the allocation of some different type of quota, with a concomitant increase in the complexity of the IFQ program. For example, coupling an IFQ program with an inshore-offshore allocation would preserve the access of shore-based processors to fishery resources. Whatever method is chosen, it should not have the effect of subsidizing excess processing capacity. Depending on regional considerations, some councils may choose to allow processors to acquire quota share either through transfer or through ownership of harvesting vessels that are entitled to an initial allocation of quota.

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