Economic Effects of Trade Policies
on the Shrimp Fisheries of the
United States and the
Latin American Nations
David A. Whitaker, Jr.
A DISSERTATIO14 PRESENTED TO THE GRADUATE COUNCIL OF
THE UNIVERSITY OF FLORIDA IN PARTIAL
FULFILLMENT OF THE REQUIREML'ITS FOR THE DEGREE OF
DOCTOR OF PHILOSOPHY
UNIVERSITY OF FLORIDA
I wish to express my sincere appreciation for the
assistance of the many individuals who aided, directly and
indirectly, in the completion of this study. I am
particularly indebted to Dr. Carter C. Osterbind who
suggested the topic for study and guided me in the
completion of the dissertation. I am also grateful for
the suggestions of my supervisory committee which includes
Dr. C. A. Matthews, Dr. G. B. Hurff, and Dr. I. J. Goffman.
Two years of my graduate study prior to the undertaking of
this dissertation were sponsored by the Bureau of Cornercial
Fisheries under their fellowship program. I am indeed
grateful for the freedom this gave me to concentrate on my
studies. In addition to this financial support the Bureau
of Commercial Fisheries provided the bulk of the data used
in this study. Personnel of the Bureau were very cooperative.
I wish especially to thank Dr. L. W. Van Heir, Assistant
Director for Economics; Dr. Frederick Bell and his staff in
the Branch of Economic Researchi Don Whitaker in the Branch
of Current Economic Analysis; and Billy Greer in the
St. Petersburg regional office.
Special recognition belongs to Mrs. Nina Hilt who
with untiring good humor typed the first draft of the
dissertation. The final draft was efficiently prepared by
tUe Bon Air Typing Service.
The family of a student makes many sacrifices during
the writing of the dissertation. I have been especially
fortunate to have the understanding and encouragement of my
wife, Patricia, and my children, Teresa and Scott.
TABLE OF CONTENTS
ACKNOWLEDGMENTS . . . . . . . ii
LIST OF TABLES . . . . . . . . viii
LIST OF FIGURES . . . . . . . . . x
ABSTRACT . . . . . . . . . . . xi
I. INTRODUCTION . . . . . . . ... 1
Purpose of the Study . . . . ... 1
Validation of the Study . . . . . 2
Definitions of Terms . . . . . .. 8
Organization . . . . . . . .. 10
Procedure . . . . . . . .. 10
Recent Literature . . . . . .. 12
II. THE SHRIMP FISHERY: BACKGROUND AID
POLICY FRAMEWORK .. . . . . . 16
Shrimp Production and Distribution ... 17
Fishing Craft and Gear . . . . .. 20
The Marketing of Shrimp . . . . 25
Physical Distribution . . . ... 25
Trade Policy . . . . . . . .. 31
Direct Trade Policy Factors . . .. 31
Indirect Trade Policy Factors . . .. 37
Financial Aid to Fisheries . . .. 38
Maintaining a "Free Trade" Policy . . 40
Trade Policy and Economic Development 43
Public Policy Toward Foreign Investment .
Economics of a Fishery . . . . . .
III. DEVELOPMENT OF THE SOUTHERN SHRIMP
FISHERY, 1957-1968 . . . ..
Supply of Shrimp . . . .
Sources of Growth . . . .
Domestic Supply . . . .
Shrimping craft . .
Employment . . . . .
Costs . . .
Prices and productivity .
Price elasticity of domestic
Supply of Imports . . . .
Elasticity of supply of import
Demand . . . . . . .
Consumption . . .. .
Derived Demand . . . .
Elasticity of Demand . . .
Demand for Imports . . . .
Elasticity of Import Demand
Summary of Supply and Demand
Some Effects of a Non-restrictive
. . .
Policy 1957-1968 . . . ......
Influence of Imports on the Domestic
Shrimp Fishery . . . . ..
Income and Employment . . . . 136
Investment in Shrimp Trawling Craft . 139
Foreign Investment in the Development of
the Latin American Shrimp Export
Industry . . . . . . . . 140
IV. ALTERNATIVE TPADE POLICIES . . . ... 147
Theory of Trade Restriction for a Single
Commodity . . . . . . ... 153
Effects of Alternative Trade Policies . 157
Effects of a Restrictive Policy on United
States Imports . . . . . . 157
A United States tariff on shrimp . .. 158
A United States quota on shrimp . .. 166
Response of foreign suppliers ... .169
Effects of a Restrictive Policy on the
Domestic Shrimp Industry .... . 170
A United States tariff . . . ... 172
Response of the domestic shrimp industry
to a tariff . . . . . ... 174
A quota and the domestic shrimp
industry . . . . . . . 181
Effects of Tariffs and Quotas on the
Latin American Shrimp Trawling
Industry . . . . . . .. 181
Other Policy Measures . . . ... 182
Subsidies . . . . . . . . 184
Efficacy of Restrictive Trade Policies . 185
V. SUMMARY AND CONCLUSIONS . . . . .. 193
BIBLIOGRAPHY ..................... .200
BIOGRAPHICAL SKETCH. . . . . . . .. .206
LIST OF TABLES
I. Annual Supply of Shrimp . . . . 63
II. Origin of Imports by Area and Number of
Exporting Countries . . . . . 67
III. United States Shrimp Landings by Area
1957-1968 . . . . . . . 69
IV. South Atlantic and Gulf States Landings:
Value and Volume 1957-1968 . .. . 70
V. Shrimp Otter Trawl Boats and Vessels by
State ... . . . . . . .. 74
VI. Percentage Change in Boats Engaged in
Shrimping and Landings of Small
Shrimp by Years . . . .. . . 78
VII. Regular Fishermen on Shrimp Boats by State . 81
VIII. Casual Fishermen on Shrimp Boats by State . 82
IX. Fishermen on Shrimp Otter Trawl Vessels by
State . . . . . . . . . 83
X. Estimated Unit Value of Shrimp Imports for
Selected Countries, by Months 1958, 1959,
1967 . . . . . . . . . . 99
XI. Importance of Large Shrimp in Exports for
Selected Latin American Countries . . 103
XII. Per Capita Consumption of Shrimp and Certain
Other Fish . . . . . . . . 110
XIII. Annual Consumption of Shrimp in the
United States . . . . . .. 114
XIV. Processed Shrimp by Method of Preparation . 115
XV. Shrimp Imports by Product ....... 117
XVI. Average Receipts, Costs, and Profits for a
Selected Sample of Shrimp Vessels ... .138
XVII. United States Shrimp Imports from Latin
America . . . . . . . ... 142
XVIII. Relative Importance of Shrimp in Latin
American Exports to the United States,
1965 . . . . . . . .. ... 143
XIX. Estimates of United States Direct Invest-
ment in the Latin American Shrimp
Fishing Industry . . . . . ... 145
XX. Estimates of Tariff Reflected in Import
and Domestic Prices for Selected Supply
and Demand Elasticities . . . . .. .163
XXI. Estimates of the Import Cffect of a 35
Percent Ad Valorem Tariff on Shrimp
Under Varying Conditions . . . . . 164
XXII. Effect of a 35 Percent Ad Valoren Tariff
on Domestic Price, Supply and Demand
Under Different Supply and Demand
Elasticities . . . . . . . . 174
LIST OF FIGURES
1. Shrimp Marketing Channels . . . . . 28
2. Total Revenues and Costs with Respect to
Fishing Effort . . . .. . . .. 52
3. Increase in Demand . . . . . . . 55
4. Technological Change in a Fishery . . .. 57
5. Effect of a Tariff . . . .. . . .. 59
6. Domestic and Import Market Shares for
Shrimp . . . . . . . . ... 65
7. Relative Value of Domestic and Import
Market Shares . . . . . . . 66
8. Indexes of Exvessel Price for Selected
Shrimp Size Counts 1957-1967 . . . . 85
9. Fisherman Productivity and Price . . . 88
10. Shrimp Craft Productivity . . . . . 90
11. Index of Apparent Consumption . . . . 112
12. Market Effects of a Tariff . . . .. 154
Abstract of Dissertation Presented to the Graduate
Council of the University of Florida in Partial Fulfillment
of the Requirements for the Degree of Doctor of Philosophy
ECONOMIC EFFECTS OF TRADE POLICIES
ON THE SHRIMP FISHERIES OF THE
UNITED STATES AND TILE
LATIN AMERICAN NATIONS
David A. Whitaker, Jr.
Chairman: Dr. Carter C. Osterbind
Major Department: Economics
The purpose of this dissertation is to examine the
economic effects of United States trade policies on the
shrimp trawling industries of the South Atlantic and Gulf
States, and certain Latin American countries. The major
hypothesis examined is that a free trade policy with respect
to shrimp imports did not adversely affect the domestic
shrimp industry in recent years, and further that a restric-
tive trade policy would not contribute greatly to the future
prosperity of the domestic industry. A secondary hypothesis
is that United States trade policy has facilitated
development of the shrimping industry in Latin America.
A supply and demand framework is utilized in analyzing
recent conditions in the shrimp fishery. Arguments based
on estimated supply and demand relationships are utilized
in predicting the effects of alternate trade policies on
the shrimp industry and the implications of their use. The
common property or open access nature of the shrimp resource
plays an important role in the study. Common property
resources are subjected to special problems associated with
freedom of entry of fishing firms into the exploiting
industry and a tendency toward overinvestment.
It is concluded in the study that the growing demands
for shrimp products offset the steadily increasing flow of
imports and generally rising level of domestic production.
In one period imports appear to have been instrumental in
bringing about lower domestic prices, but in general prices
tended to be more closely related to domestic production.
The influence of a relatively fixed abundance of shrimp
in the domestic shrimping grounds, and the freedom of
entry nature of the industry combine to create a situation
in which a restrictive trade policy can contribute little
to improving the long run profitability of the industry.
The duty free status of shrimp has stimulated the
development of Latin America's shrimp export industries
in two ways. First, the free access to the growing United
States market provided a convenient outlet for foreign
shrimp producers. Secondly, since no penalty other than
transportation cost was attached to foreign landings, United
States investors were encouraged to develop foreign operations
near the heavy concentrations of shrimp along the Central
American and South American coasts.
Purpose of the Study
The purpose of this study is to examine the economic
effects of United States trade policy on the South Atlantic
and Gulf Coast shrimp industry and the shrimp industries of
certain Latin American countries which supply a large share
of the United States market. Specifically, it is concerned
with the determination of the influence of unrestricted
imports of shrimp and shrimp products on price, output,
employment, income, and investment in the primary phase of
the shrimp industry and the potential impact of alternative
policies which restrict shrimp imports. Primary emphasis
is placed on the events of the 1957-1968 period.
The 1957-1968 period is used since it represents a
time span in which imports grew rapidly after having been
rather stable during the earlier 1950's. Additionally,
extensive Gulf Coast shrimp data are available after 1957.
The hypotheses to be examined are that a United
States free trade policy for shrimp did not adversely
influence price, employment, investment, and supply
conditions in the United States shrimp industry during the
1957-1968 period, and that a restrictive trade policy
would not contribute to future stability and progress in
the industry. A secondary hypothesis is that the U.S. free
trade policy has facilitated development of the Latin
American shrimp industry.
Validation of the Study
Why study trade policy alternatives for a "healthy"
fishery? The shrimp industry has not had to face many of
the problems of the other fisheries, such as depletion of
the resource, foreign competition in the fishing grounds,
obsolescence of equipment and craft, or a generally
declining market. The ground fish industry has been
plagued with some of these difficulties and has turned to
government in an effort to obtain a wore restrictive trade
policy in order to preserve the domestic market and value
of the landings. Additionally, some of these fisheries
have found some form of regulation necessary to prevent
destruction of the resource. Is the shrimp industry
different or has it avoided the problems only because it is
a relatively new, unexploited fishery? Could the shrimp
industry remain generally profitable if imports were
substantially increased? For example, it is estimated
that the Brazilian fishery, if developed, could produce a
volume of shrimp equal to that of the remainder of Latin
America.I Could a proportionate share, relative to imports
1Richard S. Croker, "The Shrimp Industry of Central
America, the Caribbean Sea, and Northern South America."
from the remainder of Latin America, be absorbed by the
United States market? Or one might consider the future
consequences of Asian imports, which have grown 780 percent
during the past twelve years.
Related to the above questions is the problem of
identifying the source of difficulties within a fishery.
Some of the symptoms of overfishing, overcapacity, and
saturation of the domestic market by competing imports may
be similar from the fisherman's point of view. In these
cases there is a need to identify the source of the
difficulty, since different solutions would be in order.
Such a study appears germane at this time for a
number of other reasons. First, the shrimp fishery is the
largest United States fishery in terms of dollar volume.
Total value of the shrimp catch in 1967 was $103,100,000,
making it the first fishery to reach the $100 million
category. The next largest fisheries in dollar volume of
catch in 1967 were salmon with $48,600,000 and tuna with
$44,514,000. Still, the shrimp industry has been the
Bureau of Commercial Fisheries, United States Department of
the Interior, Foreign Fisheries Leaflet 74 (Washington:
Government Printing Office, 1967), p. 118.
2United States Bureau of Commercial Fisheries,
Shellfish Situation and Outlook, S-12 (March, 1969), p. 14.
object of comparatively little economic research relative
to the other fisheries.
It is not only the size of this fishery which makes
it interesting, but also the composition of the supply to
the domestic market. In 1968, shrimp imports accounted for
over half of the available supply. Twelve years earlier,
imports represented slightly over one-third of the total
supply. During this period, domestic landing of shrimp
increased about 23 percent while imports increased 200
percent. No consistent upward trend was observable for
domestic production, which fluctuated widely during the
period, but one was apparent for imports. The increasing
market share of imported shrimp suggests that trade policy
and its effectiveness are potentially very important to the
Another interesting aspect of the shrimp fishery is
that while there has been no upward trend in landings
there has been a rising trend in investment in boats and
vessels. Over the 1957-1966 period the number of vessels
and boats operating as shrimp trawlers in the South
Atlantic and Gulf Coast region increased from 6,808 to
Charles H. Lyles, Fisheries of the United States...
1967, Bureau of Conmmercial fisnerics, United States
Department of the Interior (Washington: Government Printing
Office, 1968), pp. 2-3.
United States Bureau of Commercial Fisheries,
Shellfish Situation and Outlook, op. cit., p. 18.
9,361.5 In addition to the increase in numbers, new
vessels have been larger and more expensive to equip in
recent years. In most recent years the larger number of
craft has shared a total catch smaller than the 1954-1956
average catch. This implies that returns to fishermen
would be declining. The declining share of the catch per
craft may have been at least partially offset in terms of
revenue by rising prices over the period. Exvessel prices
fluctuated widely, however, and it is questionable whether
or not any real gains resulted, since the slight upward
trend would hardly offset the effect of inflation on costs.
Shrimp fishermen recognized in 1960 that the production
segment of the shrimp industry was in danger of becoming
relatively less profitable and attempted to slow the flow
of imports through a restrictive trade policy. Their
efforts were unsuccesnful, but the question remained as to
whether or not a restrictive trade policy would have been
an appropriate solution to the problem.
United States Bureau of Commercial Fisheries,
Fishery Statistics of the United States, Statistical Digest
Number 44 (1957) pp. 374-J37; bt (196u) pp. 506-508.
National Shrimp Congress, Incorporated, Brief on
Behalf of the Domestic Shrimp Industry (Tallahassee:
National Shrimp Congress, Incorporated, 1961) pp. 251-252.
Reprinted in United States Congress, House of Representa-
tives, Committee on Ways and Means, Tariff Treatment of
Shriiip Imports, earningss before the Committee, 87th Congress,
1st Session, on II.R. 6168, August 8, 1961 (Washington:
Government Printing Office, 1961).
Another reason for the study is suggested by the
above data concerning the number of fishing units.
Fisheries are a common property resource, that is, there is
no single owner and the fish belong to anyone who takes
them. In general, entry into industries involving common
property resources is not restricted. Such is the case in
the shrimp fishery. H. Scott Gordon, Anthony Scott and
others have suggested that the tendency in the common
resource case is for an excessive number of firms to enter
the industry and eventually eliminate the rent attributable
to the free resource. The result is an overexpanded
industry in which a larger quantity of resources is used to
obtain the same product which could be obtained with a
smaller investment. In view of the Scott and Gordon
analyses, which are reviewed later, the question arises as
to the effect trade policy is likely to have with respect
to entry of new firms in a common property resource
industry. Or more simply, does a restrictive trade policy
lead to an uneconomic expansion of the domestic fleet in
response to an artificially created rent?
During the 1957-1968 period, the demand for shrimp
increased steadily. Per capital consumption of shrimp
H. Scott Gordon, "The Economic Theory of a Common
Property Resource," Journal of Political Econony, LXII
(April, 1954), 124-142. Anthony Scott, "'he ishery: The
Objectives of Sole Ownership," Journal of Political Economy,
LXIII (April, 1955), 116-124.
increased 75 percent, from .96 to 1.68 pounds.8 The
domestic shrimp fishermen could not, or did not, expand
production proportionately, so that imports were needed to
meet demand. Under these, or similar conditions, what
trade policy is appropriate? Would a restrictive trade
policy stifle increasing demand for shrimp and prevent
development of a market for years in which larger quantities
of shrimp were landed domestically? And would the same
trade policy be applicable during "good" and "bad" years?
United States commercial policy toward Latin American
countries in recent years has involved the goal of assisting
them in their economic development. The role which trade
policy can play in economic development is not well
understood, and much additional work is needed in this area.
This study examines only a very limited aspect of the
problem. Specifically, it examines the impact of a
restrictive and a free trade policy on the development of
the shrimp industries of Latin American countries. In
order to simplify the argument it is assumed that develop-
ment of this industry is desirable and contributes to the
economic growth of these countries.
United States Bureau of Commercial Fisheries,
Shellfish Situation and Outlook, op. cit., p. 18.
John F. Kennedy, Message to Connress on the
Reciprocal Trade Aqrcrents Proqr.am, January .5, 1962.
United States housu of Representatives (House Document
Number 314) 87th Congress, 2d Session. (Washington:
Government Printing Office, 1962), pp. 5-6.
Finally, United States processors, as well as
producers, have organized foreign operations to furnish
shrimp to home plants or to process shrimp for
importation.10 This creates a vested interest in a
particular trade policy which may not be consistent with
the needs of strictly domestic producers. There is a need
for a better understanding of the motives and conditions
which lead to this type of foreign investment. Of special
interest here is the role of trade policy in influencing
the investment decision.
Definitions of Terms
In order to increase the clarity of the study, some
of the frequently used terms which are common to the topic
under consideration are defined.
The shrimp industry is defined to include all
primary producers involved in the process of fishing for
shrimp. The close interdependence of local wholesalers,
packing houses, freezers, and fishermen is recognized, but
these firms will be specifically mentioned if they are
included in the discussion.
The South Atlantic and Gulf Coast shrimp industry
includes that portion of the shrimp industry located within
the states bordering the Gulf of Mexico plus the Carolinas
10Croker, op. cit., p. 4.
and Georgia. More than 80 percent of the domestic catch
is landed in this area.
A fishery enterprise is defined by Overden as "that
combination of factors operating as a fishing unit,
directly engaged in catching the fish and bringing it to
land."11 In the general literature the term "fisherman" is
used loosely to mean the fishing enterprise. Shrimp are
considered as fish for purposes of this definition.
Distributors are firms engaged in the movement of
shrimp from the dock to retailers. These include
cooperatives, local wholesalers, and secondary wholesalers.
Processors are those firms which normally alter the form of
the shrimp in order to preserve it or otherwise prepare it
for the market. Breading, canning, drying, and freezing
firms would be called processors.
Another term used frequently in this study is trade
policy. Basically the term refers to a country's control
over goods that cross its borders in trade. Traditionally,
trade policy has referred specifically to the country's
regulation of trade by tariffs, quotas or embargos, and
exchange controls. But other devices may achieve
essentially the same results, e.g. export subsidies, "Buy
A.E. Overden, Costs and Earninq Investigations of
Primary Fishing Entcrprises (Rome: Food and Agricultural
Organization of the United Nations, 1961), p. 11.
American" legislation, landing laws, and defense
provisions.12 Usage here will include policies which act
to control the flow of goods in the broader sense. Specific
policies will be reviewed in Chapter II.
This study seeks to analyze the behavior of an
industry under alternative trade policies. Chapter II
provides the less familiar reader with some background
relative to the shrimp fishing and marketing process, trade
policy pertinent to shrimp products, and some theoretical
aspects of economics applicable to the fishery. Chapter
III discusses recent development of the shrimp industry
under a non-restrictive trade policy and establishes
relationships between market conditions, the supply of
shrimp, and the economic behavior of fishermen. In Chapter
IV these relationships are used to estimate the response
of the United States and Latin American shrimp industries
to hypothetical, alternative trade policies.
Chapter V summarizes the conclusions of the study
and explores possible policy implications for the future.
In order to know how the domestic shrimp industry
would be affected by various trade policies, something
12Roland L. Kramer and others, International Trade
(Cincinnati: South-Western Publishing Company, 1959),
must be known about the behavior of domestic and foreign
supply and demand. The approach used in the study is to
estimate the nature of the elasticities of supply and
demand based on the experience of 1957-1968 and use these
in analyzing industry changes. In the case of supply it is
necessary to use assumptions supported by theoretical
considerations to explain the relationship between price
and market quantities found in historical data. For demand
some regression estimates of elasticities have been made by
others, which are used along with those by the author.
This approach, although subject to limitations, is
used for several reasons. First, different elasticities of
demand or supply would imply a different response by the
industry to price changes and hence to trade policy
designed to influence price. Secondly, elasticity
influences, and is influenced by, the share of the market
controlled by domestic and foreign producers. This is an
area in which trade policy exerts its influence and is
therefore important in evaluation of the influence of trade
policy on output, price, revenue, etc. Finally, this
approach facilitates organization of the data into
Development under a non-restrictive policy is
implicit in examination of the 1957-196B period. Hypo-
thetical restrictive policies must be analyzed abstractly,
using empirical supply and demand relationships developed
in Chapter III.
Consequences of restrictive and non-restrictive
policies for Latin American suppliers are discussed, but a
lack of data makes a thorough examination of their
influence impossible. However, it should be possible to
infer the direction, if not the magnitude, of the stimulus
of shrimp exports on investment, employment, and exchange
Most of the data used are available from the Bureau
of Commercial Fisheries in its many publications. While
some field visits were made, no attempt was made to obtain
significant quantities of original data.
Several important general economic studies of the
shrimp industry have been made in recent years. In 1959
the Bureau of Commercial Fisheries completed a series of
studies surveying the shrimp fisheries of the United States,
Latin America, and other areas.13 These studies were
primarily descriptive and did not attempt to subject the
industries to any form of economic analysis. They did,
however, include a considerable amount of descriptive
United States Bureau of Commercial Fisheries,
Survey of the United States Shrirp Industry, Volume I and
11, (Washington: Cov'rnrrnt I'rinting Office, 1958, 1959).
United States Fish and Wildlife Service, Survey of Shrimp
Fisheries of Central and South America (Washington:
Government Printing Ofice, 1957).
A more thorough economic study of the United States
southern shrimp industry was made by C.C. Osterbind and
R.A. Pantier in 1961, in which emphasis was placed on the
financial problems facing shrimp fishermen as a result of
the price decline of the late 1950's. The Osterbind and
Pantier study represents the most comprehensive complication
of cost and operations data published for the 1955-1959
An analysis of the utilization of shrimp vessels in
the Gulf area was made by Lassiter in 1964.15 The purpose
of this study was to determine if shrimp vessels could be
used more efficiently by changing their operation schedules
or engaging in other fishing activity.1 Lassiter concluded
that a large part of the shrimp fleet was under-utilized
during the "off season" and was not being used in
alternative fisheries. Alternative fishing activities were
limited by a lack of knowledge, skills, and equipment
needed in other fisheries.1
C.C. Osterbind and Pobert A. Pantier, Economic
Study of the Shrirp Industry in the Gulf and South Atlantic
States (Gainesvillu: bureau of Economic and business
Research, University of Florida, 1961).
Roy L. Lassiter, Utiliiation of U.S. Otter-Trawl
Shrimp "ossels in the Culf Are., 1959-1961 (Gainesville:
Bureau of Lconomic and business Research, University of
6Ibid., p. 111.
17Ibid., pp. 4-5.
The problem of a trade policy for the shrimp
industry came under intensive review in 1960-1961 as a
result of attempts to impose a tariff and quota on shrimp
imports. The arguments for both sides of the controversy
were brought together in hearings before the United States
House of Representatives Committee on Ways and Means.16
These hearings included not only testimony given before the
Committee, but also briefs prepared by shrimp fishermen's
organizations, an exporter to the United States market, and
the Tariff Commission. Both the pro and con briefs present
a strong case supporting the point of view of the interest
group concerned. In the case of the fishermen's document
it was held that the import segment creates instability in
the domestic market. The brief by El Salvador suggested
that the problem was not created by imports, but by
overexpansion of the domestic industry. Additionally, El
Salvador's representative pointed out that the proposed
legislation was contrary to the basic trade policy of the
United States and the General Agreement on Tariffs and
Trade. The less biased report of the Tariff Commission
surveyed the changing situation in the shrimp industry and
the consumer market. The Tariff Cormission concluded that
a more restrictive trade policy would arrest the expanding
18United States Congress, House of Representatives,
Committee on Ways and Means, Tariff Treatment of Shrimp
Imports, Hearings before the Committee, 87th Congro':s, 1st
Session, on H.R. 6168, August 8, 1961 (Washington:
Government Printing Office, 1961).
domestic demand without substantially altering the shrimp
landings of the United States fleet. These Hearings
represent a thorough statement on tariff policy for the
shrimp industry for the pre-1961 period.
THE SHRIMP FISHERY: BACKGROUND AND POLICY FRAMEWORK
This chapter provides background material in three
areas which will facilitate understanding the analytical
work in later chapters. First, there is a survey of the
Gulf and South Atlantic shrimp fishery and a brief descrip-
tion of the marketing channels for shrimp products. No
attempt will be made to provide details of processes at
each level of distribution, since this has been done
elsewhere.1 Secondly, United States trade policy relevant
to the shrimp industry is presented. This review also
includes broad agreements which indicate the overall trade
philosophy of the government. Finally, some theoretical
topics relevant to the economics of fisheries are put
United States Bureau of Commercial Fisheries,
Survey of the United Stateq Shrimp Industry, Volumes I and
II (Washington: Government Printing Office, 1958, 1959).
United States Congress, House of Representatives, Committee
on Ways and Means, Tariff Treatment of ShrinD Inports,
Hearings before the Committee, 67th Congress, 1st Session,
on H. R. 6186, August 8, 1961 (Washington: Government
Printing Office, 1961).
Shrimp Production and Distribution
Shrimp and its closely related species are found in
most parts of the world, ranging from tropic waters to the
coasts of Alaska. Considerable variations in size are
found among regions which influences the commercial develop-
ment of the fishery. Shrimp are found on both coasts of
the United States, but the most important fishery has
developed along the South Atlantic and Gulf coasts.2
The Gulf and South Atlantic shrimp fishery provides
over 80 percent of the shrimp caught by United States
fishermen. It extends along the Atlantic coast from North
Carolina to Florida and around the Gulf to Texas. Prior to
1950 most of this fishery lay within ten miles of the coasts
however, in the early 1950's fishermen entered two offshore
areas, Dry Tortugas and the Gulf of Campeche, which had not
been exploited previously. These areas have continued to
produce relatively large quantities of shrimp.3
United States Bureau of Commercial Fisheries,
Survey of the United States Shrimr Industry, Volume I,
(Washington: Government Printing Office, 1958, 1959).
United States Fish and Wildlife Service, Survey of Shrimp
Fisheries of Central and South America (Washington:
Government Printing Orfice, 1957), pp. 4-7.
3Ibid., p. 4.
There are five important commercial varieties of
shrimp which are taken in the Gulf of Mexico and South
Atlantic Ocean. In recent years brown shrimp (Panaeus
aztecus) has accounted for about 60 percent of the total
catch. The pink shrimp (Panacus duorarum) and white shrimp
(Panaeus setiferus) provided about 25 and 15 percent
respectively of landings. Two less important species, sea
bobs (Xiphopeneus Krogori) and royal red shrimp (Hymeno-
penacus robustus) contributed less than 1 percent to
domestic landings.4 The latter variety, although desired
for its large size, has not been taken in great quantities
primarily because of the difficulties involved in fishing
at the depth, 175 to 300 fathoms, at which it is found.
Sea bobs, on the other hand, are small and less desirable
than the other varieties.
These shrimps, except the royal red, spawn offshore.
Spawning begins in early spring, but may continue until
September, depending on the species and environmental
conditions. Each female produces a large number of eggs;
however, mortality is high so that a small percentage
estimates suggest less than 3 percent) reach maturity.
After hatching, the larval shrimp move toward the shallow,
brackish, inland waters along the coast. As they develop
they migrate back to the deeper coastal waters, and by
United States Bureau of Commercial Fisheries,
Shellfish Situation and Outlook, S-12 (March, 1969), p. 10.
the time maturity is reached most of the shrimp are again
in the open ocean. Growth is rapid during the surJmer
months, in which many of the juvenile shrimp reach lengths
of two inches just two months after spawning. After six
months the shrimp have grown to about six inches. Shrimp
may live as long as sixteen months, but in general they
should be considered an annual.5
The adult shrimp prefer to live on muddy bottoms in
relatively shallow water. Many such areas exist along the
continental shelf of southern North America, especially
along the coasts of Louisiana, Texas, and Florida. Similar
grounds with high concentrations of shrimp are found off
the coasts of Mexico.6
The spawning and development cycle accounts for the
seasonal nature of the shrimp landings. Since the various
species reach maturity at different times of the year,
seasonal patterns will vary throughout the fishery. For
example, pink shrimp catch reaches a peak during the
winter and is concentrated in the Florida and Campeche
area. The more plentiful brown shrimp reach a peak in
late summer and autumn and are more highly concentrated in
5William W. Anderson, "The Shrimp and the Shrimp
Industry of the Southern United States," Fishery Leaflet
Number 472, Bureau of Courrercial Fisheries (Washington:
Government Printing Office, 1963), pp. 2-3.
6United States Bureau of Commercial Fisheries, Survey
of the United States Shrimp Industry, Volume I, op. cit.,
the Louisiana, Texas, and Mexican area. Fishing for
juvenile brown shrimp reaches a peak in June or July,
while the young white shrimp are more plentiful in the late
fall.7 This pattern of development has encouraged migration
of shrimp fishermen over wide areas of the South Atlantic
and Gulf of Mexico. It is not unusual for fishermen based
in Jacksonville, Florida, to participate in the brown
shrimp fishery off the Texas coast.
In general, the larger the shrimp the more valuable
they are commercially. A general pattern of prices becomes
established which relates the various size categories.
Very small shrimp, used principally for canning, sell at a
considerable discount relative to larger classifications.
The price pattern is not fixed and appears to vary with
changes in supply and demand.
Fishing Craft and Gear
A number of different types of fishing gear are used
to capture shrimp; however, the otter trawl is by far the
most important and accounts for 97 percent of total catch.10
Ibid., p. 39.
Blbid., pp. 41-42.
United States Bureau of Commercial Fisheries,
Shellfish Situation and Outlook, op. cit., p. 12.
10United States Bureau of Commercial Fisheries,
Fishery Statistics of the United States 1966, Statistical
Digest Number 44 (1957) p. 505.
The otter trawl is a large, bag-like net held open in
front by two diverting planes called doors, and is towed
by a powered craft. Smaller craft use relatively small
nets, while the larger vessels frequently use two nets,
each of which may be seventy feet wide at the mouth. At
one time a single large net was common, but changing to
double nets resulted in economies in initial purchase,
repair, and, in some cases, labor used to handle the nets
on board. I1hile fishing, other traul gear is towed at low
speed near the bottom. Tickler chains or similar devices
arranged in advance of the net disturb shrimp resting on
the bottom, causing them to rise and be caught by the
following net. The trawl is recovered by winches on board
the craft and emptied at intervals depending on the
abundance of shrimp being caught.
In addition to the otter trawl, haul seines, bag
nets, beam trawls, pots and traps, push nets, cast nets,
and bush traps are used to catch shrimp. These devices
are usually employed in shallow water by fishermen using
small boats and do not contribute a large share to the
commercial output of shrimp. These techniques produced
6.4 million pounds in 1966.11
Individual states place restrictions on types of
gear which can be used in the area they control, but gear
used for catching shrimp in open water is not restricted.
1bid., p. 505.
Craft used in the shrimp fishery are classified as
boats (capacity less than five net tons) and vessels
(capacity of five net tons and over). The Bureau of
Commercial Fisheries classifies only those boats or vessels
using otter trawl gear for statistical purposes, but these
account for nearly all of the United States shrimp landings.
Boats are usually less than thirty feet in length and are
used primarily on inland or coastal waters near the shore.
Vessels, on the other hand, are from thirty to eighty feet
in length and have much greater cruising ranges. Most
vessels are less than seventy tons (gross), but the larger
craft may exceed 150 gross tons and be capable of staying
at sea for extended periods. The average gross tonnage for
vessels in the Gulf and South Atlantic is about thirty tons,
but the 10-19 and 60-69 ton classes predominate in numbers.12
Shrimp vessels in the Gulf and South Atlantic are
typically of wooden hull construction, although steel hulls
have been increasing in popularity among fishermen. Fish
Boat magazine in its annual survey of new boat construction
revealed that steel construction increased from 40 percent
of the total in 1965 to 60 percent in 1966 and 52 percent
in 1967.3 The wooden vessels, which are somewhat less
Ibid., pp. 505-506.
"1U.S. Fishing Vessel Construction," Fish Boat, X
(December, 1965), pp. 47-64; XI (December, 1966), pp. 58-75;
XII (December, 1967), pp. 43-67.
expensive initially, require more maintenance and have a
shorter average life. Diesel engines provide power for
essentially all of the shrimp vessels which operate on the
open seas. Larger engines have been installed in recent
years and appear to improve the performance of vessels.
Other modern equipment of several types has been increasingly
important to fishermen. For example, freezing equipment has
been installed on many vessels in order to preserve the
quality of the catch. Addition of this equipment permits
longer trips and reduces losses from the deterioration which
occurs with prolonged ice packing. Improved electronic
navigational and communications equipment, such as radio
telephone, loran, and depth recorders, add to the safety and
efficiency of the vessel. Radar has not been found to be of
great value to the shrimp fisherman.14
Typically, three men are employed on a shrimp vessel,
a captain and two crew members. This size crew is sufficient
to man some of the newer vessels which are somewhat larger.
On medium size vessels two crew members may be able to
operate the equipment using modern power devices, but a
third member is frequently desired to assist in separating
the shrimp from the nets and trash, especially during the
4United States Bureau of Commercial Fisheries,
Survey of the United States Shrinn Industry, Volume I,
op. cit., pp. 94-10J.
peak season.5 In general, a share system is used to pay
men employed on the vessels. The share system, which is
based to a large extent on local custom, may be altered to
fit the situation of particular vessels. For example, if
the owner is not the captain he may furnish ice, fuel, and
gear. In return the owner receives one-half to two-thirds
of the sales proceeds from the catch. The remainder is
divided among the captain and crew, perhaps favoring the
captain with the larger share. The crew is responsible
for repairing the nets, a measure which serves to reduce gear
destruction and loss. Cannery owned vessels usually have
the proceeds divided into five shares; one each for the
cannery, captain, two crew members, and the rig (until paid
for). On craft owned by the captain, the captain may receive
the owner's 50 percent share, plus one-third or more of
the remaining share, i.e., he may take about 80 percent
of the proceeds and divide 20 percent between the two
crew members. Adjustments are made in shares depending on
variations in crew size. A variety of share agreements are
used throughout the South Atlantic and Gulf area, so that
no one type can be presented as typical.6 The share system
has several important economic implications which will be
15United States Tariff Commission, Shrimp (washington:
Government Printing Office, 1961), p. 28. reprinted in
Tariff Treatment of Shrimp Inports.
16Ibid., p. 29.
The Marketing of Shrimp
Two factors which have been of primary importance in
the development of the processing and marketing system for
shrimp are location of the resource and its perishable
nature. During the early portion of the twentieth century,
when the Gulf shrimp fishery was developing, ice was used
to preserve the product. Since shrimp packed in ice deteri-
orates in quality after about five or six days, it was
necessary that the shrimp be sold fresh for consumption or
else be processed by canning or drying. Canneries and
drying plants tended to locate near the principal ports in
order to obtain the shrimp while they were still fresh.
Later, as freezer plants were built, they also located near
the ports so that they could obtain fresh shrimp while it
was still in good condition for freezing. Today the
majority of plants processing most of the domestic catch
are located in Texas, Louisiana, Georgia, Florida, and states
adjoining the Gulf.17
The first step in the distribution of shrimp takes
place at the landing facility sometimes called a shoreside
packing house. Packing houses receive the shrimp from the
United States Bureau of Commercial Fisheries,
Survey of the United States Shrimp Industry, Volume I,
op. cit., pp. 2, 2 2.
boats and in most cases wash, grade, weigh, and package it.
These facilities vary widely, but frequently they are small
units operated only during the season. Ownership of the
packing houses also varies. They may be operated by
independents, boat or fleet owners, processors, or coopera-
tives. Ownership may determine from whom shrimp will be
purchased. For example, fleet owned houses may receive
shrimp only from their own vessels, whereas some independents
may buy from any vessel. Usually more than one type of
buyer is found in a port. A packing house owner's compensa-
tion is based on the number of functions his plant performs.
In some cases he may not receive payment until the shrimp
have been prepared and delivered. Or the packing house may
purchase the shrimp outright, taking title to them and
paying the vessel captain a price discounted enough to pay
the landing fees, if any are charged. The fee and arrange-
ment for paying it vary throughout the Gulf.1
Packing houses and processors use several criteria
in setting the price which they will pay. For example,
published wholesale prices in major market areas, trend in
cold storage holdings, quantity of shrimp in the area, and
price recently paid there are considered in setting local
prices.19 These factors do not appear to bear equally on
1BUnited States Tariff Commission, op. cit., p. 32.
19nited States Congress, House of Representatives,
Committee on Ways and Means, op. cit., p. 460.
pricing decisions and vary in importance with changing
conditions. The pricing mechanism will be discussed further
in Chapter III.
Once the shrimp have been washed, graded, weighed,
and packaged, they are ready to move along to the next step
in the distribution system which will be determined by the
planned utilization of the shrimp. Figure 1 illustrates
a generalized view of the flow of shrimp from fishermen to
consumer; of course, exceptions exist. Broken lines
indicate where brokers facilitate the movement of shrimp
through the marketing channel, although they may not take
possession or title. The figure does not show the
integration of firms which perform more than one of the
functions or trade in more than one form of processed
The marketing of shrimp has been altered by the
increased use of refrigeration facilities during the past
twenty years. Shrimp markets which were once confined to
the coastal areas were expanded to include the entire country.
Although the influence of the trend toward prepackaging of
meats and seafoods on shrimp distribution will not be explored
here, a general reading of advertisements in food trade
periodicals suggests that it has been important in the retail
merchandising of many shrimp products.
V) C r
The relative importance of each marketing channel
depends on the demand for the various processed forms of
shrimp. The marketing of fresh and frozen shrimp is by
far the most important, since it handled 89 percent of
total product in 1967. The canning segment has a smaller,
but somewhat more stable output. Cured shrimp, which have
a very specialized demand, represent a very small portion of
The solid lines representing the physical flow of
shrimp products might also represent transportation
facilities, especially motor truck, among middlemen at
various levels. The perishable nature of shrimp requires
rapid transportation and, in most cases, refrigerated
facilities. Smaller refrigerated vans may be used for local
transfer while larger equipment would be needed to handle
shipments to major market centers. Railroad transportation,
once important, is no longer used extensively for shipping
Storage facilities may be required at each level of
distribution. This is especially important, since cold
storage is required for the various frozen products. Public
cold storage warehouses are used extensively by processors,
wholesalers, and jobbers. For example, public cold storage
20United States Dureau of Commercial Fisheries,
Shellfish Situation and Outlook, op. cit., p. 20.
holdings of shrimp were 62 million pounds in December,
1968.21 An additional undetermined amount of frozen shrimp
was held in private warehouses, but figures are not available
since these holdings are not reported to the Bureau of
Commercial Fisheries. Frozen holdings fluctuate during the
year, absorbing larger quantities during season and
distributing them through the remainder of the year. During
the peak season monthly stock levels sometimes reach as
much as 20 percent of the annual supply. This stock will be
discussed later in relation to supply, since it has the
potential for influencing prices and buying decisions of
The primary wholesalers shown in Figure 1 are usually
the initial purchasers of the shrimp. They may be packing
houses with large volumes or assemblers of shrimp landed
at smaller packing houses. Shrimp to be sold fresh will be
rushed on to the market by the local wholesaler, but frozen
shrimp can readily be sold by description in more distant
markets or to secondary wholesalers. Secondary wholesalers
typically handle larger volume and consolidate holdings in
central market areas, such as Chicago and New York. Imports
may act as a source of supply for the secondary wholesaler
in addition to his domestic volume.2
21Ibid., p. 17.
22United States lurcau of Commercial Fisheries,
Survey of the United States Shrimp Industry, Volume II,
op. cit., pp. 6-11.
Shrimp canneries obtain their supplies from their own
fleets, packing houses, and primary assemblies. They prefer
fresh shrimp whenever possible, since they make a better
canned product than previously frozen shrimp. Canned shrimp
are distributed in much the same way as other canned foods.
In fact, canneries usually combine other food lines with
their shrimp operations.
The development of quick frozen foods altered the
nature of shrimp marketing. Unlike the highly perishable
fresh shrimp, packaged frozen shrimp could be sold readily
from freezers in any grocery store throughout a national
market without quality deterioration. The result was a
widening of the market and an increase in the number of
available outlets. Figure 1 indicates that the marketing
of frozen shrimp products is considerably different from
that of fresh shrimp: it more closely follows the channel
of other frozen foods as opposed to fresh products.
This section and Figure 1 are intended to illustrate
the general distribution of shrimp. Related topics, such
as pricing, will be covered in greater detail in Chapter III.
Direct Trade Policy Factors
The foreign trade policy of the United States embodies
at least four basic principles: (1) official encouragement
23Ibid., pp. 4-5.
of international trade and cooperation on matters involving
trader (2) non-discrimination among trading partners; (3)
elimination of quotas and exchange restrictions; and (4) use
of tariff where protection is determined to be desirable.
Yet a fifth principle is implied in item (4), that trade
policy will not injure domestic industries.24 Current policy
based on these ideas evolved out of the experience of the
1920's and early 1930's and was expressed in the Tariff Act
of 1930 and the Trade Agreements Act of 1934. The latter
act, which has been a cornerstone of trade policy, has
undergone considerable revision to reflect a growing
preference in more recent years for multilateral agreements,
as opposed to the bilateral agreements of the 1930's and
1940's. The present state of the evolving United States
commercial policy is probably best exemplified in the General
Agreement on Tariffs and Trade (GATT), to which it is a
The purpose here is to select for discussion those
specific and general aspects of trade policy which relate to
the shrimp industry and trade in shrimp products. The most
significant element in this policy was provided by the Tariff
Act of 1930 (paragraph 1761) which placed shrimp in a duty
24William B. Kelly, Jr., "Antecedents of Present
Commercial Policy, 1922-1934, Studies in United States
Commercial Policy, William B. Kelly, Jr., editor (Chapel
Hill: University of North Carolina Press, 1963), pp. 3-68.
free category.25 Only one group, representing Texas Fisher-
men's Organization, appeared before the Committee on Ways
and Means to oppose the duty free status of shrimp. This
group recommended a ten cents per pound duty in order to
offset the lower cost of Mexican labor and equalize a cost
differential created by a state tax on shrimp landed in
Texas.26 Despite this objection the duty free status was
retained in the law and has continued to the present time.
A second basic element of United States trade policy
is the avoidance of quantitative restrictions, that is,
quotes and exchange restrictions. The United States
position, which rejected the use of quotas, was formalized
in the International Convention on the Abolition of Import
and Export Prohibitions and Restrictions, ratified in 1929;
however, no laws had to be altered in order to conform to
the Convention.27 The United States objection to quotas
was based on the idea that although the tariff creates a
price differential, the price system still operates.
However, the price system cannot overcome the restrictive
25United States Congress, House of Representatives,
Tariff Act of 1930, House Document 476, 71st Congress, 2d
Session (Washington: Covernment Printing Office, 1930),
26United States Congress, House of Representatives,
Committee on Ways and Means, Tariff Readjustment Act 1929,
Vol. VII, Hearings before the Corrmttcu on 11ays and I:Uans,
70th Congress, 2d Session. (Washington: Government Printing
Office), pp. 4261-4262.
27William B. Kelly, Jr., op. cit., p. 53.
effects of a quota, so the quota becomes discriminatory.
The discriminatory mechanism varies depending on the nature
of the quota limitation. For example, the quota may operate
on a first received basis, which would discriminate against
late arrivals of potential imports. The Convention failed
as an international agreement, but the principle was
retained and is expressed today in the General Agreement on
Tariffs and Trade, Article XI.
No prohibitions or restrictions other than duties,
taxes, or other charges, whether made effective
through quotas, import or export licenses or other
measures, shall be instituted or maintained by any
contracting party on the importation of any product
of the territory of any other contracting party or
on the exportation or sale for export of any product
destiny for the territory of any other contracting
Three exceptions to the above rule are also provided
by Article XI. First, temporary restrictions may be employ-
ed to relieve shortages of essential products in the
exporting country. Secondly, restrictions may be imposed
if necessary to facilitate classification, grading, and
marketing of commodities. And finally, agricultural and
fishery products may be exempted if their limitation is
necessary to the enforcement of governmental programs, such
as domestic production limitation, surplus disposal, or
control of production of animal products primarily dependent
28General Agreement on Tariffs and Trade, Basic
Instruments and Selected Documents, Volume I (ReviseI)
(Geneva: The Contracting Parties to the General Agreement
on Tariffs and Trade, 1955), pp. 22-23.
on imported materials.29 One additional exception,
provided by Article XII, permits quotas in the event of
need for a balance of payment safeguard.30 If quantitative
restrictions are applied under the above exceptions, they
should be assigned and administered in a non-discriminating
manner. Article XIII provides that "In applying any
quantitative restriction all countries should be treated
equally" and the quota "should attempt to approximate the
market share which would be expected to exist in the absence
Another important aspect of United States trade policy
is the "escape clause" which permits the government to
rescind an agreement on tariff concessions which causes or
threatens serious injury to a domestic industry. The
principle was included in the Trade Agreements Act of 1934,
and later included in General Agreement on Tariffs and Trade,
Article XIX. Prior to 1958, the escape clause could not be
applied to duty free products furthermore, such products
could not be transferred from a duty free status for this
purpose. The Trade Agreements Act of 1958 revised the 1934
Act and permitted a 50 percent ad valorem duty on
previously duty free items where injury to the domestic
industry was threatened. The Trade Expansion Act of 1962
2Ibid., p. 23.
3Ibid., pp. 23-24.
3Ibid., p. 27.
continued this provision and also permitted implementation
of a quota in cases where injury resulted from tariff cuts
under the Act. As an alternative to imposing duties, the
President could authorize economic assistance for the
In practice, it has been difficult to apply the
escape clause because of the problems involved in determin-
ing the presence, extent, and cause of injury to the
industry. No request has been made by the shrimp industry
for relief under the escape clause. However, in another
fishery the request for restrictive action against imports
of ground fish fillets was denied three times.33
Among the less significant ingredients of commercial
policy are export subsidies, which the General Agreement
on Tariffs and Trade opposes but does not effectively
regulate. These subsidies may be offset by countervailing
duties, but these may not exceed the amount of the foreign
subsidy. A similar offsetting duty can be imposed in the
case of dumping. (General Agreement on Tariffs and Trade,
Articles XVI and VI.)
32Congress and the Nation (Washington: Congressional
Quarterly Service, 155), p. 2uJ.
33John M. Leedy and Janet L. Norwood, "The Escape
Clause and Peril Points Under the Trade Agreements Program,"
Studies in United States Cor-mercial Policy, William B.
Kelly, Jr., v.ditor (Chapol Hill: University of North
Carolina Press, 1963), pp. 173-175.
Although the above list of trade policy elements is
not complete, it provides the direct policy background in
which the international trade of shrimp has taken place with
respect to the United States and its trading partners. All
of the listed policy elements have not been applied to the
shrimp trade, but they have served as a potentially useful
part of the generally established policy. The duty free
status of shrimp, the absence of quotas or restrictions,
and the non-discriminatory importing of shrimp have provided
an essentially free trade policy for the shrimp industry
for over forty years.
Indirect Trade Policy Factors
Some regulations outside the realm usually included
in the category of trade policy have significant effects
on international trade. Such controls as agricultural
inspections, subsidies, and pure food regulations are
usually put into this category, since their effect can be
similar to a quota or tariff with respect to the volume of
trade or goods included in international trade. This is
the case with shrimp, though to a relatively minor degree.
For example, only vessels constructed in the United States
may be used by United States fisherman if the catch is to be
landed in a domestic port.34 The effect here is probably not
a direct alteration of trade patterns, but an indirect
34Congress and the Nation, op. cit., p. 1070.
modification of trade patterns caused by different cost
structures in the trading countries. If domestic costs are
higher because of the requirement, then imports will be
given some advantage in this area. Incidentally, domestic
shipbuilding facilities have remained relatively efficient
in the building of shrimp vessels, and export sales are
Another regulation which attempts to preserve the
market and fishing grounds for domestic fishermen is a
requirement that vessels under foreign registry cannot land
fish in the United States. Certain exceptions to this rule
exist in territories where the fish is to be used for
direct consumption.35 The effect of this legislation is
to require foreign vessels fishing near United States
coasts to return to their home port or other foreign port
in order to discharge their catch, which may then enter as
imports. Additional travel time and expense thus incurred
tends to discourage foreign vessels fishing in international
waters near much of the United States coast.
Financial Aid to Fisheries
The Fish and Wildlife Act of 1956 (PL 84-1024)
created a Bureau of Commercial Fisheries which is charged
with protecting and assisting the fishing industry. This
Act also provided a fund from which loans could be made for
3546 USC 251 (1964 Edition).
financing and refinancing of operations, maintenance,
replacement, repair, and equipment of fishing gear and
vessels, and for research into the basic problems of
fisheries.36 Loans made under this authority are restricted
to those of less than ten years' maturity at interest of at
least three percent which could not reasonably be obtained
from other sources. For this purpose Congress authorized
ten million dollars to establish a revolving loan fund. In
1958 the limit was raised to twenty million dollars. Dy
1968, only thirteen million dollars had been appropriated,
but because of the revolving nature of the fund, a total
of $24,402,660 in loans had been approved.37
Another form of financial assistance to the fishing
industry is the subsidy for construction of fishing vessels
in shipyards in the United States.38 This program may have
some advantages for fisheries in which large vessels are
required, but it has been of little, if any, importance to
the shrimp industry, since the production of small vessels
has remained relatively competitive in domestic shipyards.39
370 United States Statutes 1121.
3United States Bureau of Cormercial Fisheries,
"Summary of Status of Fisheries Loan Fund as of December 31,
1968" (Washington: Bureau of Cor-cercial Fisheries, 1969),
p. 6. (Mimeographed)
346 USC 1401-1413.
United States Bureau of Commercial Fisheries, "Status
of Subsidy Applications as of December 31, 196B" (Washington:
Bureau of Commercial Fisheries, 1969), p. B. (Mimeographed)
No subsidies were indicated for the South Atlantic and Gulf
of Mexico region.
Also, this program is more properly a subsidy to shipyards
and, except for the requirement that vessels be constructed
domestically, would not seem to be necessary from a fisher-
Finally, the Fishing Vessel Mortgage Program, created
in 1960 by Public Law 86-577, provides government insurance
of privately financed mortgages on new or used vessels.40
Participation by shrimp vessel buyers has been extremely
small, although the program is generally popular in the
Maintaining a "Free Trade" Policy
Legislation has been introduced in Congress from time
to time to alter the essentially free trade status of
shrimp. During the 1957-1965 period, over fifty bills to
place a duty and/or quota on shrimp imports were introduced.
The volume of these bills reached a peak during the 1959-
1960 price decline.41 This prompted the Senate Finance
Committee to request a Tariff Commission study of the
situation. In 1961 similar bills were offered in the House
of Representatives, resulting in a second study by the
Tariff Commission. The bill (H.R. 6168) introduced by
4016 USC 742e.
41United States Congress, House of Representatives,
Committee on Whys and Means, op. cit., pp. 1-2.
Hale Boggs of Louisiana follows:42
Be it enacted by the Senate and House of
Representatives of the United States of America
in Congress assembled, That Paragraph 1761 of
the Tariff Act of 1930 (19 U.S.C. 1201, par.
1761) is amended by striking out "Shrimps,
lobsters, and other shellfish" and inserting
in lieu thereof "(a) Lobsters and other shell-
fish," and by adding at the end thereof the
following new subparagraph:
"(b) Heads-off, shell-on, vion-in shrimps
imported in any calendar year within the
limits of the applicable quota fixed in
Sec. 2. Paragraph 721 of the Tariff Act of
1930 (19 U.S.C., sec. 1001, par. 721) is amended
by adding at the end thereof the following
"(f) Shrimps, fresh or frozen (whether or
not packed in ice), or prepared or preserved
in any manner (including pastes and sauces),
35 percentum ad valorem, but not less than
35 cents per pound: except that heads-off, shell-
on, vien-in shrimps, not otherwise advanced in
condition may be entered or withdrawn from
warehouse for consumption free of duty in
any calendar year in an amount not exceeding
the total quantity of shrimps entered or
withdrawn from warehouse for consumption in
the calendar year 1960. The Secretary of
the Interior is authorized and directed to
allocate this duty-free quota among the
countries supplying imports of shrimps to
the United States in the calendar year 1960
in accordance with the volume of imports of
shrimps received from each such country in
that year; except that imports in any one month
during the balance of the calendar year 1961
shall not exceed imports during the same month
in the calendar year 1960."
Sec. 3. Nothing in this Act shall be deemed
to affect any rights conferred by paragraph 1730
42United States Congress, House of Representatives,
Committee on Ways and Means, op. cit., p. 1.
(a) of the Tariff Act of 1930 (19 U.S.C., sec.
1201, par. 1730 (a).
Sec. 4. The amendments made by this Act shall
apply with respect to articles entered, or with-
drawn from warehouse, for consumption, after the
expiration of thirty days after the date of
enactment of this Act.
Amendments to the bill were suggested by the participants in
the hearings which would have permitted the Secretary of the
Interior to adjust the quota to permit larger quantities of
imports during periods when domestic production could not
adequately satisfy domestic demand.
In general, shrimp fishermen's groups and their
Congressional representatives supported the restrictive
legislation. The fishermen's case was presented in a
"Brief on Behalf of the Domestic Shrimp Industry" prepared
by the National Shrimp Congress, Incorporated, an
organization composed of five Gulf fishermen's groups.3
The "Brief" was well documented and provides a rather
complete explanation of the 1960 problem from the producers'
viewpoint. They contended that imports and domestically
produced shrimp were competitive, so that the larger
increases in imports were causing all shrimp prices to be
depressed. Therefore, the solution to the problem was to
control imports in such a manner that domestic prices would
remain high. Opponents held that imports were not very
competitive with domestically landed shrimp, and that
national Shrimp Congress, Incorporated, Brief on
Behalf of the Domestic Shrimp Industry, Peprinted in Tariff
Treatment of Shrimo Injorts, op. cit., pp. 173-268.
United States production was inadequate to meet demands,
therefore imports were necessary to provide for expanding
consumption. Further, they suggested that an over-expansion
of the domestic fleet relative to the size of shrimp re-
sources had occurred and that declining earnings in 1959-
1960 were a reflection of this overcrowding in the shrimp
fishing industry. In addition to this argument, it was
pointed out that the proposed restrictive policy would
violate the General Agreement on Tariffs and Trade and be
contrary to the general trade philosophy expressed in other
agreements or laws.
House Rule 6168 died in the House Ways and Means
Committee, as did the many similar bills introduced in
recent years, as Congress reaffirmed a free trade policy
with respect to shrimp.44 Advocates of the tariff on shrimp
have been less active since 1961, which is an interesting
fact for later consideration.
Trade Policy and Economic Development
The role of commercial policy in economic development
is not completely understood. Kindleberger states that
"Commercial policy can hardly make much of a positive
contribution to economic development . But commercial
policy still falls short of refinement to the point where
44Congressional Record, 87th Congress, 1st Session,
1961, p. D602.
short run instability of prices of primary products ex-
ploited by underdeveloped countries can be overcome or
where its effects on development in underdeveloped countries
can be smoothly offset."45 Still, both developed and
underdeveloped countries must have a trade policy. The
most generally accepted for both categories has been that
of non-discrimination based on the most favored nation
principle, rejection of quantitative restrictions, and
general reduction of tariffs.
During the last decade this policy has been subjected
to a considerable amount of criticism, especially by those
concerned with economic growth and development. A new
policy which Myrdal calls a "double standard of morality
in international trade" has received wide advocacy from
the developing nations.46 The "double standard" policy
proposes that developing nations be permitted to use
restrictive measures in order to protect their foreign
exchange earnings. This, Myrdal concludes, would not
restrict total trade, since the earnings will surely be
spent for development needs. On the other hand,
developed nations with fewer serious foreign exchange
problems would restrict total world trade if they used
4Charles P. Kindlcberger, Economic Development.
(New York: McGraw-llill, 1965), p. 320.
Gunner Myrdal, An International Economy (N w York:
Harper and Brothers Publishing Co., 1956), p. 288.
protective devices.7 The conclusion reached by Myrdal is
that developed nations can aid underdeveloped nations by
permitting the existence of a protective foreign commercial
policy while liberalizing domestic trade policy.48 A
similar thesis was expressed at the United Nations
Conference on Trade and Development in 1964. The fiscal
policy statements called for more discrimination in favor
of underdeveloped countries. There may be a move toward
granting preferences in international trade, but the initial
response of the developed nations has been a reiteration of
the non-discriminatory principles of the General Agreement
on Tariffs and Trade.
Discussion such as those referred to above are set in
a multi-national framework which includes many commodities
with alternative sources. The aspect under study here is
much narrower in that it deals with one commodity and a one
way flow of goods. In this simple case, it may be easier to
see that the immediate effect of trade is to provide foreign
exchange earnings, which at best on the surface increase the
underdeveloped country's potential for growth.
4Ibid., pp. 288-289.
48Ibd., p. 292.
4United Nations Conference on Trade and Development,
Trade and Development: Policy Statements, Volume II,
Proceedings of the United Nations Conference on Trade and
Development, Geneva, March 23-June 16, 1964. (New York:
United Nations, 1964), pp. 60-61.
The realities of foreign trade practices are not
always consistent with the policies described in the
preceding pages. For example, quotas are rejected in
principle, but applied in practice. The sugar quota of the
United States has received much attention in recent years.
Other items subject to quotas are listed in Chapter IV.
Quotas are not always levied explicitly by the importer.
Japan has imposed "voluntary export quotas" on certain goods
traded with the United States. Recently requests have been
made for extension of those "voluntary quotas" to other
countries. "Voluntary quotas" are generally as unpopular
as import quotas and are imposed under pressure from the
The escape clause has also been an unpopular part of
United States foreign policy. The United States has been
one of the more frequent users of the escape clause.
Disposal of agricultural products abroad may also violate
the spirit of the export subsidy and dumping provisions of
Indirect trade policies have played a role in recent
foreign trade practice. The meat inspection provisions and
proposals for fish inspections are discussed briefly in a
later chapter. Although these regulations may be imposed
in the interest of safeguarding the public from unsafe foods,
they tend to be discriminatory in their impact on exporting
Public Policy Toward Foreign Investment
In general, the government tried to provide a favor-
able climate for foreign investment during most of the
study period 1957-1968. The United States policy was
reviewed in a speech by Dean Rusk before the National
Business Advisory Council in 1962.50 lie acknowledged the
role business played in foreign investment and encouraged
it to "expand its present important role in the world
economy.51 The administration was aware of the short run
balance of payments problems created by the outflow of
capital, but believed that "In the longer term . the
flow of earnings, foreign subsidiaries procurement from the
United States, and more generally the global scope, vitality,
and profitability of American firms all strengthen both the
international position of the dollar and our domestic
economy.52 This policy was modified somewhat by the
interest equalization tax, which was used in an attempt to
slow the pace of capital outflow and improve the balance of
payments position in the 1960's.53
Dean Rusk, "Trade Investment and United States
Foreign Policy," Department of State Bulletin (November 5,
1962), pp. 683-688.
51Ibid., p. 684.
5Ibid., pp. 684-685.
Congress and the Nation 1965-19G8, Volume II
(Washington: Congressional quarterly Service, 1969),
Secretary Rusk further indicated that "the United
States Government is prepared to intervene on behalf of
American firms and make strong representations to host
governments in case of economically unjustified expropriation
or harassment."54 In addition to the above action, the
government provides investment guaranty programs under the
Mutual Security Act and the Federal Assistance Act. For a
fee the businessman can obtain insurance against losses due
to non-convertability of earnings, expropriation, and war
damage. These programs indicate the interest of government
in improving the climate for investment spending, especially
in less developed countries.
Economics of a Fishery
In recent years a body of theory has been developed
to explain behavior in an industry which uses a common
property or, as some suggest, an open access resource.5
By open access resource is meant that title to the resource
in this case the fish cannot be claimed in advance of taking
the resource. Individual, and frequently national, claims
on the resource cannot be economically enforced if the
54Ibid., p. 686.
55James P. Crutchfield and Giulio Pontecorvo, The
Pacific Salmon Fisheries (Washington: Resources for the
Future, The Johns lopkins Press, 1969), p. 11.
resource is mobile and undergoes its development in
different geographical areas. International law may in
fact prevent national enforcement of claims to the resources
of the high seas. A second element which distinguishes the
fishery from some other national resources is that it is
capable of replenishment. This gives rise to the question
of maintenance of the species and the influence of fishing
on its reproduction and the general ecological balance of
the fishery. Traditionally, the fisheries have not been
regulated or managed by government in order to preserve or
fully utilize the resource; however, there are exceptions,
such as the Pacific halibut and salmon fisheries. The theory
which will be discussed represents attempts to rationalize
management of the fishery with a view toward its continued
and/or efficient use. No attempt will be made to review
the development of the theory of common property resources,
since this information can be found elsewhere. Instead,
the theory will be summarized in its current form with
56H. Scott Cordon, "The Economic Theory of a Common
Property Resource: the Fishery," Journal of Political
Economy, LXII (April, 1954), 124-142. Anthony D. Scott,
"The fshery: The Objectives of Sole Ownership," Journal
of Political Economy, XLIII (April, 1955), 116-124.7 altph
Survey and Jack Iiseman (editors). The Economics of
Fisheries (Rome: Food and Agriculture Organization of
the United Nations, 1957). Ralph Turvey, "Optimization
and Suboptimization in Fishery Regulation," Amcrican
Economic Review, LIV (March, 1964), 64-76. Francis T.
Christy, Jr., and Anthony Scott, The Cor.-on We.alth of
Ocean Fisheries (Baltimore: Pesources zor the future,
The Johns Ilopkins Press, 1965), pp. 6-16.
emphasis placed on those aspects which will aid in under-
standing developments in the shrimp industry.
The size, in numbers and weight, of the population of
a fishery depends on the rates of regeneration and growth
of the species, and on the rate of mortality caused by
natural forces and fishermen. To some extent the fishermen
capture fish which would otherwise die from natural causes
and their efforts do not reduce the population however,
beyond this quantity fishing will reduce the total population.
The quantity of fish taken can be maintained indefinitely
if the natural mortality and fishing mortality are balanced
by recruitment of new members of the species. The most
likely outcome to be expected by the addition of a new
predator, the fisherman, is the eventual reduction of the
population in the fishery. The effect of fishing also
depends on the ecological changes created by a smaller
species population. For example, a decrease in the species
may permit a competing species to over-run and destroy it.57
The weight, but not necessarily the number, of fish
may be reduced by increased fishing. This is a result of
catching the fish before they mature and may eventually
result in a decline in the yield of the fishery. Whether
or not the removal of fish at an early age is harmful to
57James Crutchfield and Arnold Zellner, Economic
Aspects of the Pacific Halibut Pishery, Fishery Industrial
Research, Vol. 1, r.o. 1 (lashington: Government Printing
Office, 1962), p. 11.
the species depends upon the ability of a smaller number of
mature fish to produce sufficient eggs to replenish the
population. If the species multiplies rapidly from a few
members, then heavy fishing will probably not threaten the
stock with depletion.58 The size and type of fishing gear
used largely determines the age at which the fish are
caught. Similarly, it influences the overall quantity of
fish taken by the fishermen.
The physical yield of a fisheries' stock which can be
maintained depends on the amount of fishing effort, i.e.,
labor and capital, which is applied. Application of
additional inputs of labor and capital to a given fish
stock will cause the catch to increase but by successively
smaller amounts until the maximum sustainable yield is
obtained. After this point, additional fishing effort will
result in a smaller yield since the population and the
recruitment of new individuals will have been reduced.
The maximum annual yield which can be sustained in the
fishery is illustrated by AM at fishing effort level OA in
Figure 2. From economic theory it may be recalled that the
rent maximizing output for a monopolist is the point where
revenue exceeds cost by the greatest amount. In Figure 2
this point is represented by DB where the rent maximized is
CD. This rent is attributable to the resource and is the
58Ibid., p. 12.
B A C
FISIINC EFFORT LEVEL
TOTAL REVENlUES AND COSTS WITHl RESPECT TO
amount which could be earned by the owner if the rights to
the fishery were appropriated. This point has been referred
to as the maximum net economic yield. Extensive fishing
effort applied beyond OA may result in a serious depletion
of the fish stock. How far this process could go, assuming
an increase in demand, is not certain. It has been argued
that this process will not continue to the point of
extinction of the resource.59 Instead, it becomes unprofit-
able to seek out the smaller population or the industry
accepts some regulation to restore the resource. Unprofit-
able "overfishing" of the type just described occurs beyond
OC in Figure 2.
Before proceeding, it should be pointed out that the
revenue and cost functions in Figure 2 are different from
those usually found in economics textbooks and depend upon
several implicit assumptions. Typical revenue and cost
curves treat output as the independent variable, while
fishing effort serves this purpose in Figure 2. In this
case, output is reflected in the level of the revenue and
cost curves. To obtain this result, it must be assumed that
per unit costs are constant for fishing effort and that
demand for the output is infinitely elastic so that price
will not vary with the size of the catch. Fixed costs are
assumed to be zero. In reality, these assumptions are un-
likely to be true; however, the outcome in the event that
59Christy and Scott, op. cit., p. 9.
costs are increasing or demand is not infinitely elastic
would be to accentuate the conclusions of the model rather
than repudiate them. The share system of wages, which
can cause a considerable variation of cost with output, will
be discussed later in the chapter.
The economic rent, which is represented by the
excess of revenues over costs in Figure 2, serves as an
incentive for more fishing units to enter the fishery. Each
of the new units will be acting rationally as it tries to
maximize its profits; however, as a whole the effect is
dissipation of the rent caused by the increasing total costs
and reduced catch. The total landings of fish may actually
be less than the maximum sustainable yield, as indicated
by Figure 2. Yet the smaller output is achieved through
the application of additional resources to the fishery.
As long as freedom of entry exists, the tendency will be
for excessive fishing effort to be applied to the industry
beyond the point of economic efficiency or maximum
sustainable yield of the resource. This "overfishing"
economic equilibrium depends on the particular relationship
of cost and revenue curves postulated in Figure 2. If the
slope of the cost function is increased, then the economic
equilibrium may occur below the maximum sustainable yield.
It is conceivable that the costs involved in taking the
resource would be so great with a given technology that
fishing would not be undertaken at all. The same result
can be produced by a very low market price, which would
cover cost only at low levels of effort or would fail to
cover costs at all. The conclusion which is most often
drawn from this model is that economic efficiency or conser-
vation of the resource to provide continued exploitation,
whichever goal is chosen, can best be served by some manage-
ment program to limit entry of firms into the fishing or
restrict the fishing effort which is applicable to it.
The model described above can be used to show how the
misallocation of resources can continue even though changes
occur which maintain the rent at least temporarily. One of
these changes is an increase in the demand for the product.
Figure 3 shows the effect on revenue, yield, rent, and
economic equilibrium of an increase in demand which results
in a higher price.
NEW TOTAL REVENUE
TOTAL COST TOTAL COST
INCREASE IN DEMAND
Profits of R'-R are restored to the industry and act as an
incentive for new firms to enter. Fishing effort increases
to OC' when money revenues are greater than previously, but
costs are higher. The catch is likely to be even smaller
than before the increase in demand. In the long run the
fishermen are no more prosperous.60 Technological changes
can also alter the yield curve associated with various
quantities of fishing effort. The consequence of improved
technology is illustrated by the new yield curve in Figure 4.
Initially, each fisherman is able to improve his catch; but
the more efficient technique eventually results in a more
rapid reduction in the fish population.61 Revenue yield is
then reduced and consequently the fishery is capable of
supporting fewer fishermen than it did using older techniques,
which may help explain why some fishermen prefer to maintain
a status quo with respect to fishing methods and gear. An
alternate method of showing the effect of the technological
change would be to lower the total cost curve in Figure 4:
the conclusions would remain essentially the same. The
effect of a subsidy on the industry might also be illustrated
by the latter method.
The generalized model described above is subject to
a number of limitations; however, it does offer an
60Christy and Scott, op. cit., p. 12.
61Ibid., pp. 12-13.
\ / 3 E
explanation of the observable long run tendency of some
fisheries to become chronically "sick" industries. The
model rests heavily on assumptions concerning the nature
of production functions for fisheries and the response of
fish populations to increased fishing effort. In a recent
empirical study which used a model similar to the one
described above, the authors concluded that "the generalized
model . works as a priori reasoning suggests it will."62
In applying a model to a particular fishery, one should take
into account the nature of the production function for that
industry. Unfortunately, these data are not readily avail-
able and perhaps cannot be obtained at all. It is possible
that the general model with its familiar production function
may need some modification for the shrimp industry, since
the relevant time span for the development of the shrimp
may be slightly over one year while a similar cycle for
halibut may cover seven to fourteen years. In the observance
of full information concerning the real production functions,
the general model as described above will be used.
The most common use of the model has been to show
how various management schemes might concerve the stock of
fish, rent, or both. It appears that the model is also
applicable in a discussion of trade policy. Unlike
62Crutchfield and Pontecorvo, op. cit., p. 196.
t S a
1 \ I
management policies, the intent of trade policy is to
conserve the domestic market for domestic fishermen instead
of restricting the landing of fish. In terms of the model,
the impact on the fishermen may not be too dissimilar. For
example, fishermen may observe the industry becoming
unprofitable but be unable to identify the cause, since
"overfishing" and a decline in market share may exhibit
many of the same symptons.
With respect to the model discussed above, the
situation in which a tariff or import restriction program
is used to support declining earnings in the domestic
industry might be described as in Figure 5.63 The
restriction of imports resulting from the added cost of the
tariff would be expected to raise the price in the domestic
market. At least temporarily, fishermen could earn larger
revenues since a rent would thus he created for the industry
as a whole. However, the same forces as before would operate
to attract additional investment, so that eventually the
rent would be dissipated, additional investment would be
undertaken, and the tariff might result in a smaller annual
catch per vessel. Again, this is something of an
6Arlon R. Tussing and others, Alaska-Japan Economic
Relations (College, Alaska: Institute of Social, Economic
and Government Research, University of Alaska, 1968),
Oversimplification. Some of the complications will be
examined in conjunction with the application of a tariff
as an alternative policy for the shrimp industry in a later
DEVELOPMENT OF THE SOUTHERN SHRIMP FISHERY,
The purpose of this chapter is to examine the devel-
opment of the Gulf and South Atlantic shrimp fishing
industry under an essentially non-restrictive trade policy
which has existed since the fishery began. Included will
be a discussion of the influence of imports on factors,
such as employment, investment, and incomes of fishermen.
The fishery background and policy perspective described in
the preceding chapter provide the setting for the following
discussions. Relationships established in this chapter
will be used in future chapters to analyze the efficacy of
alternative policies. As indicated earlier, a supply and
demand framework is to be used throughout the study. The
first portion of this chapter presents an analysis of
supply conditions followed by a discussion of demand
conditions for shrimp in recent years.
Supply of Shrimp
The total supply of shrimp available for a given
period depends on the volume of landings, imports, and
frozen stocks. Table I illustrates the annual quantity of
shrimp supplied for the years under study. tt should be
ANNUAL SUPPLY OF SHRIMP
Year (Million Pounds)
Bureau of Commercial Fisheries, Shellfish Situation
and Outlook, 5-12 (March, 1969), p. 18.
noted that the quantity of shrimp available in the market
increased in all years except 1961. Over the time period
shown the quantity of shrimp available more than doubled,
which represents an average annual growth rate in excess of
6 percent. This growth rate exceeded that of any of the
other major food fishes.
Sources of Growth
Increases in both domestic production and imports
account for the overall increase in the availability of
shrimp. Substantial increases in domestic production
occurred in the Alaska, Pacific, and New England fisheries;
however, these still provide less than one-fifth of total
landings. The Gulf and South Atlantic fishery, with only
irregular increases in output, continued to supply the
bulk of domestic shrimp. Import volume also continued to
grow. The rising importance of imported shrimp as the major
source of supply is shown in Figure 6. On the basis of
heads-off weight equivalent, the market share of imports
grew from 36 to 58 percent during the twelve year span.
On the basis of dollar value, imports claimed an even larger
market share, as indicated in Figure 7. This resulted in
part from increased processing abroad which increased the
value of shrimp in 2ach pound of imports. Another factor
influencing the shift in relative dollar values has been
the increasing proportion of smaller lower value shrimp in
the domestic catch.
Expanded imports from existing suppliers were supple-
mented by shipments from an increasing number of countries
not previously selling in the United States. The number
grew from thirty-eight exporters in 1957 to sixty-two in
1965. Asia, South America, and Africa posted the largest
percentage gains in the United States market. North
America, the largest supply area, experienced a decline
from 80 to 55 percent in share of the total market it
served.1 North and South America are of special interest
to this study, and the changes in production in each will
be considered in greater detail later. Table II indicates
ICharles H. Lyles, Historical Statistics: Shrimp
Fishery, Bureau of Commercial fisheries, United States
Department of the Interior (Washington: Government
Printing Office, 1967). pp. 28-31.
1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968
DOMESTIC AND IMPORT MARKET SHARES FOR SHRIMP
Charles II. Lyles, Fisheries of the United States...1967,
Bureau of Commercial Fisheries, United States Lopartrne'nt ot
the Interior (Llashing'ton: Government Printing Office, 1968),
p. 50: and United States Bureau of Commercial Fisheries,
Shellfish Situation and Outlook, S-12 (larch, 1969), p. 18.
1957 1958 1959 1960 1961 1962 1963 1964 1965
RELATIVE VALUE OF DOMESTIC AID
IMPORT MARKET SHARES
Charles H. Lyles, Fisheries of the United States. .1967,
op. cit., p. 50; and United States bureau of Comr.ercial
Fisheries, Shellfish Situation and Outlook, op. cit., p. 18.
W I DI
0 0 w
a a 0
N 4N-M r c- m
s- a en W 1
mw -r4 Nr4 -f m N P 4
N M O IUN 0 C 'C
N- N-b 0a% 0 00% C% 0% 0
-4 in qW rN1 rl n l C
NpUo 0-4 roN in P LA %O
In LCI LI %D %0 .D3 %D D D
0% 6% 0% Cl ON 0' 0% 0% 0% CA 6%
^ -4 -1-4 -4 -4-q -- -4 r-4
L. to 0
$4 > tJ L.
1 Ofl -.
w ul 0%
V) go m
J C CL U
00- ui r
U 7% '. a6
0) -4 0
0 c. -
0 0o u
9.- I- .
Uco c i
U* 0 J
Un .j C
C- I -
Ln '5 14 >
*-.M O 0
the relative importance of United States suppliers by
major areas in terms of number of suppliers and percent of
The dominance of the Gulf of Mexico and South Atlantic
regions in the domestic production of shrimp is shown in Table
III. New England has experienced a rapid increase in landings,
but in general the shrimp found in this area are smaller and
are used to fill a particular demand. The Pacific,
especially the waters near Alaska, has provided an increasing,
though variable, quantity of shrimp in recent years. New
England and Pacific shrimp fisheries have been excluded from
this study, but this should not be taken as an indicator of
importance. Both areas are estimated to have the potential
to supply very large quantities of shrimp in the future.
Landings in the South Atlantic and Gulf states
include quantities of shrimp caught in the high seas off the
coasts of Mexico, Central America, and South America, as
well as the contiguous waters. Fluctuations in landings
data for this region may reflect conditions which exist
over a very broad area. Landings for the South Atlantic
and Gulf states are given in Table IV in terms of volume
and value. It is difficult to identify a consistent
growth pattern in the data. It can be observed that rela-
tively low landings occurred during the earlier years,
while higher landings were recorded toward the end of the
UNITED STATES SIIRIMP LANDJINGS DY AREA 1957-1968
(Million Pounds Heads-Off Weight)
New South Gulf of
Year England Atlantic Mexico Pacific Totall
1957 17.0 99.2 4.9 121.4
1958 13.4 103.1 10.6 127.3
1959 15.5 115.2 12.3 143.0
1960 .1 18.6 122.4 7.4 148.5
1961 11.8 79.6 12.4 103.9
1962 .1 16.5 89.3 13.2 119.1
1963 .3 9.8 128.4 12.1 150.7
1964 .5 11.0 113.3 8.3 133.1
1965 1.2 16.7 122.9 11.5 152.3
1966 2.2 13.6 112.8 19.6 148.2
1967 4.0 13.1 141.4 31.0 189.5
1968@ 7.7 15.1 127.5 28.0 178.6
*Loss than 50,000 pounds.
May not add due to rounding. Total includes
quantities of shrimp frou other areas.
Bureau of Commercial Fisheries, Shellfish Situation
and Outlook, op. cit., p. 6.
SOUTH ATLANTIC AND GULF STATES LANDIIJGSz
VALUE AND VOLUItE 1957-196d8
(Million Pounds Value
Year Heads-Off) (000)
1957 116.2 $ 72,438
1958 116.5 71,829
1959 130.7 56,875
1960 141.0 66,134
1961 91.4 50,589
1962 105.8 74,814
1963 138.2 68,785
1964 124.3 69,328
1965 139.6 80,067
1966 126.3 93,785
1967 154.5 90,300
1968 142.9 113,0001
Charles H. Lyles, Historical Statistics: Shrimp
Fishery, op. cit., pp. 7-:v; urcau of Cor.crcial
Fisheries, Shellfish Situation and Outlook, op. cit.,
period. This is a result of the period chosen.
Extending the series back to 1953 would reveal that the
large landings of 1967 were some four million pounds less
than the 1954 catch and about equal to the 1953 supplies.2
A longer time span will be needed to verify whether or not
the larger landings of recent years can be maintained.
Landings in individual states have mostly followed
a pattern similar to that for the southern area. North
and South Carolina, Georgia, Florida, Mississippi, and
Texas experienced fluctuations in shrimp landings with no
observable long run upward trend. On the other hand,
Alabama more than doubled its landings, and fishermen
landing shrimp in Louisiana increased their catch from 18
to 42.7 million pounds from 1957 to 1968. In some years
the growth in these two states was offset by declines in
A change in the size distribution of shrimp in the
landings has occurred. The smaller sizes, 51 and over
per pound, have increased as a percentage of total landings.
During 1957-1960, these shrimp comprised on the average
20 per cent of the catch however, the 1965-1968 average was
31 per cent.4 If this pattern continues, it could have a
2United States Bureau of Commercial Fisheries, Shell-
fish Situation and Outlook, op. cit., p. 10.
3Ibid., p. 10.
4Ibid., p. 10.
significant effect on the character of fishing enterprises
and the nature of employment and investment in the shrimp
fishery. In particular, it could encourage increased
numbers of boats and casual fishermen as opposed to vessels
with full time fishermen.
The general characteristics of shrimp craft were
outlined in the preceding chapter. Attention is now turned
to examining relationships among the number of craft and
other variables, such as landings and price.
There are few artificial barriers to industry entry
and exit; anyone who has a suitably equipped craft is
permitted to fish for shrimp. Similarly, the craft may be
withdrawn from the fishery at any time. This should not
be taken to imply that financial, technical, and other
barriers to enterprise do not exist. They have been
discovered to be all too real by many who entered the
The different roles of boat: ?-" vessels in relation
to landings have not been thoroughly explored. In Survey
of the United States Shrimp Industry, shrimp boats are
loosely associated with the inshore shrimping areas while
vessels are associated with offshore areas, although the
relationship is not documented.5 Osterbind and Pantier
5United States Bureau of Commercial Fisheries, Survey
of the United States Shrimp Industry, Volume I, (Washington:
Government Printing office, 195B), pp. 63-67.
recognized the problems of aggregating unlike craft,
associating this total with total landings, and leaking
generalizations based on the derived averages.6 Tie
problems of aggregating unlike units constitute a serious
limiting factor in broadly analyzing the shrimp industry.
Data are not available for a separate analysis of boats and
vessels however, some indirect approximations of their
relative roles are attempted to show the problems involved
in treating all shrimp craft as homogenous units.
Table V shows the number of operating boats and
vessels by state. Vessel figures for each state are not
very meaningful for the present purpose because of
duplication in counting caused by the migration of vessels
from one area to another as tne season progresses. The
total exclusive of duplication figure is smaller than tne
sum of the state figures because a vessel landing shrimp
in more than one state will be counted only once. Boats,
which are less I.obilu, usually land shrimp in only one
state. It can be observed from the table that a concen-
tration of boats occurs in Louisiana and Texas, where an
extensive inshore fishery exists. l1hile boat operations
cannot be associated only with shrimp taken in shallow
inshore waters, there is some evidence that boats catch a
substantial part of the snail shrimp taken in these waters
which is bought by the canneries. For example, in
Carter C. Osterbind and Robert A. Pantier, Econonic
Study of the Shrimp Industry in the Gulf and South Atllntlc
States~[Cainesville: bureau of Liusiness and Economic ,iusearcn,
University of Florida, 1961) pp. 22-23.
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Louisiana there were 3,261 boats and 1,342 vessels
operating in 1966. Incidentally, the boats accounted for
slightly over half of total net capacity measured in yards
at mouth. Shrimp taken from water of less than five
fathoms accounted for 64.3 per cent of Louisiana landings.
Approximately 75 per cent of this shallow water catch was
composed of size count of 51 and larger shrimp which is
demanded by canneries in the vicinity.7 Canneries
purchased an amount of shrimp nearly equal to the landings
in the shallow water portion of the fishery. But the
relationships among inshore landing, small shrimp, boats,
and in some instances cannery operations, can only be
inferred. Concentrations of boats in areas where small
shrimp landings are important, combined with the coincidental
growth of small shrimp landings and number of boats,
support this suggestion. To the extent that by and large
the shrimp boats catch primarily small shrimp, their
revenue per pound would be considerably less than that of
vessels. It would be expected that costs of operating
boats would be less as well. Aggregating boat and vessel
data may be misleading, but it is a difficulty which
cannot be avoided in using existing data.
The above discussion, to the extent that it is
correct, implies that there are separate forces
United States Bureau of Commercial Fisheries,
Fishery Statistics of the United States, Statistical Digest
Number uO (196b), pp. JO6-307.
influencing expansion of numbers of boats as opposed to
vessels, such as local conditions influencing the
availability of juvenile shrimp or demand conditions facing
the canneries. Investment in vessels would be much less
dependent on the restricted shrimping area and the limited
market, since vessels are more mobile.
Factors influencing the decision of boat operators
to enter the shrimping industry are difficult to identify.
One possibility is suggested by an examination of Table VI.
Based on the assumption that boats, especially in the Gulf,
are associated primarily with the catching of small shrimp
in coastal and inshore waters, it would be expected that
the number of craft would tend to vary directly with
landings of these shrimp. Such appears to be the case.
In years when the catch of small shrimp is increasing, the
number of boats is increasing also. The relationship is
less consistent if large shrimp or total landings are
considered. The absence of a lag might also be expected,
since outfitting new boats or activation of idle boats
could be undertaken on short notice. Additionally, the
small shrimp season has two peak periods, one in summer and
one in winter. Increased availability of small shrimp
during the first period could induce preparation for the
second session several months later. An abundance of
small shrimp appears to act as an inducement to investment
in shrimp boats.
PERCENTAGE CHANGE IN BOATS ENGAGED IN SIIRIMPING
AND LANDINGS OF SMALL SHRIMP BY YEARS
Percentage Change in
Percentage Change Landings of 51 and
Year in Operating Boats Larger Count Shrimp
1958 3.3 9.6
1959 7.1 4.8
1960 6.3 17.6
1961 -4.1 -35.4
1962 28.6 59.3
1963 8.3 24.3
1964 -4.1 -21.8
1965 9.5 30.2
1966 4.2 .2
*Bureau of Commercial Fisheries, Pishing Statistics
of the United States, op. cit., passim; Bureau of
Commercial Fisheries, SlhllTish ituuation and Outlook, S-12
(March, 1969), p. 10.
Entry of vessels into the shrimp fishery would be
subjected to barriers similar to those facing boats, but
greatly multiplied. Vessels are much more expensive to buy
and maintain, so that a decision to enter the industry
would require a larger capital outlay. Also, a more experi-
enced and skillful crew must be found to operate the larger
vessels capable of making trips to offshore shrimp grounds.
The decline and recovery in numbers of operating
vessels during the 1960's is shown in Table V. It cannot be
correctly said that growth in number of vessels has been
consistent, because of the rapid decline in operating units
which lasted from 1958 through 1962. In 1966 the number of
operating vessels was still less than that recorded in 1958,
although high prices and landings have made the industry
more attractive in recent years.
The relationship between volume of landings and
number of vessels was not as consistent as it was for boats.
Again, this might be expected because of longer construc-
tion and outfitting times, not to mention the longer
planning and training periods needed. Some adjustment in
the number of operating boats could come about through
reactivation of idle, but seaworthy, vessels, which would
have the opposite effect of shortening any lag. A much
more likely explanation is that when investment in higher
cost vessel is involved, other variables, such as price,
revenue, and costs, must also be considered in entry or
From time to time throughout the study, it is
necessary to use number of operating boats and/or vessels
as an indicator of investment in the fishery. Several
problems are involved in this representation. First, there
is considerable variation in the number of fishing days,
defined as twenty-four hours spent trawling, among vessels.
Osterbind found a variation of less than five to greater
than 120 days per year spent trawling for shrimp based on
a selected sample. His data also indicated that vessels
which were very productive one year might be idle the
following year.8 Reasons for this were not given.
Osterbind and Pantier, op. cit., pp. 54-55.
Secondly, the term "shrimp vessel" includes craft of many
sizes, with varied types of equipment, capacity, and
power. Finally, the age also affects the dollar value of
vessels which enter or leave the shrimp fishery. All of the
above factors must be kept in mind when average figures are
used which treat vessels as homogenous units.
Employment in the primary shrimp fishing industry
increased during the 1957-1966 period, but at a lower rate
than the number of shrimping craft. The resulting decline
in the numbers of fishermen per boat or vessel illustrated
in Tables VII, VIII, and IX can be rationalized in three
ways. First, the increase in casual fishermen relative
to regular fishermen indicates that shrimping is increas-
ingly becoming a part time operation for many. This
suggests that capital in the form of less expensive boats
is being used, since there is apparently no intention of
year-round participation in shrimping. Secondly,
powered equipment installed on vessels makes it possible
for a smaller crew to operate the craft effectively,
especially during the slow season, when cleaning the nets
requires less time. Finally, there may be a shortage of
crewmen who are willing to work, especially during the off
season, so that some craft are necessarily undermanned.
The importance of shrimping to the Southern area in
terms of jobs is indicated in Tables VII, VIII, and IX. These
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data are similar to those for boats and vessels in that
they involve duplication in cases where a craft and crew
made landings in more than one state. The total
exclusive of duplication figure is the best indicator of
fishermen actively engaged and is a better measure of
economic importance of the industry in terms of full time
Although it would be very useful to examine changes
in boat and vessel operating costs occurring during the
period under study, this cannot be done. Reliable data
which would correspond with data in the Osterbind and
Pantier study are not available for the latter part of the
period. This represents a very important gap in
information concerning the shrimp industry, since profit-
ability and cost factors can only be inferred.
Prices and productivity
Exvessel prices have fluctuated widely during the
period under study, but no secular upward trend is apparent.
The indexes plotted in Figure 8 show the vacillation of
exvessel prices. Three separate indexes are plotted to
illustrate differences in price behavior of certain size
Indexes computed on the basis of moving averages
from unpublished monthly price data provided by the Bureau
of Commercial Fisheries.
..... 15 & UNDER PER POL
-.- \ WEIGHTED AVERAGE-
-**.**. I ALL SIZES
S\ / 68 & LARGER PER
\ / POUND
57 58 59 60 61 62 63 64 65 66 67
INDEXES OF EXVESSEL PRICE FOR
SELECTED SHRIMP SIZE COUNTS 1957-1967
categories. An upward price trend is suggested by the
index for larger shrimp of size count fifteen and under.
More extreme fluctuations are observable in the price of
smaller shrimp. Both of these indexes tend to move about
the weighted price index for all shrimp. The volume of
smaller shrimp landed exerts a considerable influence on
weighted average price. Incidentally, it is this problem
of the influence ou the size structure of landings on
average price which limits its usefulness. Widening of the
margin between prices paid for small shrimp relative to
that paid for larger sizes is also indicated by Figure 8.
Such a pattern has existed since 1962, when differences
between the largest and smallest size categories was
forty-five cents. By 1967 the gap had grown to eighty-eight
cents.10 Depending on the abundance of particular sizes of
shrimp, the effect on revenue of the above price
relationship can be rather large.
The broad and frequent nature of exvessel price
changes has already been indicated. Changes in the
productivity of fishermen employed in the industry appear
to be equally variable. Figure 9 shows the changes in
physical and value productivity for shrimp fishermen
during the 1957-1967 period. An index of exvessel price
has been included to show the importance of price on value
10United States Bureau of Commercial Fisheries,
Shellfish Situation and Outlook, op. cit., p. 12.
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