Economic aspects of the skipjack tuna industry in Hawaii

Abstract

Hawaii's skipjack tuna industry has exhibited a lack of growth during the past two decades in terms of quantity of catches. In order to compete with tuna fisheries in other regions the local industry has to make some improvements. To determine the most effective and feasible improvements which could be made, the economic factors which may explain the apparent lack of growth of this industry were first isolated. Population dynamics of the local skipjack fishery was examined to determine whether overfishing existed. The cost-price structure was analyzed in some depth by the cost-revenue analysis method to determine the profitability of potential investment. The possibility of replacement of tuna imports was also examined to determine the market demand for local catches. The results indicated that the catches of skipjack tuna in Hawaiian waters can be increased and there is no evidence of overfishing. However, the expected profitability of investment in this industry is low. The low profitability is apparently due to the low fish price and high fishing costs. The low fish price results from import competition and the market structure, while the high fishing costs are due to the labor-1.ntensive fishing technique and the bait problems. This cost-price squeeze situation, coupled with the increasing investment and employment opportunities in other sectors of the economy, makes the skipjack industry unattractive to both the investors and the labor force. Hawaii's skipjack tuna industry must increase its fishing efficiency in order to induce new investment in the industry, and to compete with tuna fisheries in other regions. The industry's fishing efficiency should be improved by the adoption of new fishing techniques in the long run. More immediate improvement should come from lessening the existing problems of bait supply and handling, increasing the availability of funds for new-boat construction within the state's loan program and improving the marketing efficiency of the industry.