The annual economic survey of federal Gulf shrimp permit holders : implementation and descriptive results for 2007

This report presents descriptive results of the Annual Economic Survey of Federal Gulf Shrimp Permit Holders (OMB Control # 0648-0476) for the calendar year 2007, and documents the survey’s implementation and preparation of data. The data collection was designed by the NOAA Fisheries Southeast Fisheries Science Center Social Science Research Group to track the financial and economic status and performance by vessels holding a federal moratorium permit for harvesting shrimp in the Gulf of Mexico. A two page, self-administered mail survey collects total annual costs broken out into seven categories and auxiliary economic data. Since this was the second year this survey was conducted, a section compares results from 2007 and 2006. The survey is repeated annually, and the first technical memorandum (NMFS-SEFSC-584) is intended as the central report describing the data collection methodology and should be consulted for details about the survey design.

Between March and August 2008, 636 vessels were randomly selected, stratified by state, from a population of 1,915 vessels with federal permits to shrimp in federal waters of the Gulf of Mexico. After many reminder and verification phone calls, 537 surveys were deemed complete, for an ineligibility-adjusted response rate of 87.2%. The linking of each individual vessel’s cost data to its revenue data from different data collections was imperfect, and hence the final number of observations used in the analyses is 505. By various measures and tests of validity throughout the report, the quality of the data is high. The results are presented in a standardized table format that links vessel characteristics and operations to simple balance sheet, cash flow, and income statements. In the text, results are discussed for the total fleet, the Gulf shrimp fleet, the active Gulf shrimp fleet, and the inactive Gulf shrimp fleet. Additional results for shrimp vessels grouped by state, by ownership structure, by vessel characteristics, and by landings volume are available in the appendix.

The general conclusion of this report is that the financial and economic situation actually deteriorated in 2007 from the already bleak outlook in 2006 for the average vessels in all of the categories that were evaluated. With few exceptions, cash flow for the average vessel has now turned negative, and the negative net revenue from operations and the “loss” have further increased to clearly non-sustainable levels. Interestingly, the effective economic environment actually improved somewhat from 2006 as shrimp prices increased proportionally more than fuel prices. However, with the liquidity constraint implied by a negative cash flow and following many marginal years, it seems the average vessel simply did not have the ability to exploit this improvement and had to cut its overall effort. In 2007, the average active Gulf shrimp vessel consumed 19% less fuel (in terms of gallons) and caught 30% less shrimp (in terms of pounds). After accounting for the price changes, the vessel spent 6% less on fuel and generated 12% less revenue from shrimp. But since fixed costs remained approximately the same, the overall economic and financial returns significantly deteriorated when compared to 2006. Finally, government payments, which helped the average owner just about break even in 2006, were significantly less in 2007. Overall, the financial situation in 2007 is economically unsustainable for the average established business.