Contributions of Tuna Fishing and Transshipment Operations to Local Economics

Tuna fishing and transshipment are important to the economies of American Samoa, Commonwealth of the Northern Mariana Islands (CNMI) and Guam. In American Samoa, the tuna canneries and the goods and services purchased by the fleets are the major sources of private sector economic activity. In Guam, transshipping and providing goods and services to tuna boats are minor industries compared to tourism. They are, however, one of Guam's few options for economic diversification. CNMI, also largely a tourism economy, is a major transshipment point for both cannery grade tuna through Tinian and sashimi grade tuna through Saipan bound for the Japanese market. CNMI has not, however, benefitted economically as much as American Samoa and Guam because of a lack of infrastructure and vessel support businesses.

The contribution of tuna fishing and transshipment to the local economies of American Samoa, the Commonwealth of the Northern Mariana Islands, and Guam will be defined. Such information has value in evaluating policy options among competing user groups (eg., recreational and commerical fisherman) and assessing development alternatives.

A final project report published as part of the SOEST-JIMAR publications series:
"The contribution of tuna fishing and transshipment to the economies of American Samoa, the Commonwealth of the Northern Mariana Islands, and Guam", 1996. Michael P. Hamnett and William Sam Pintz. SOEST 96-05, JIMAR Contribution 96-303.
See SOEST-JIMAR Publications page for other PFRP reports.

The following are excerpts from the project's final report, published in 1996 as a UH-SOEST publication, entitled The Contribution of Tuna Fishing and Transshipment to the Economies of American Samoa, the Commonwealth of the Northern Mariana Islands, and Guam, M. Hamnett and W. Sam Pintz, SOEST Pub. 96-05, JIMAR 96-303

Introduction

The tuna industries in American Samoa, Commonwealth of the Northern Mariana Islands, and Guam have been in a state of flux since this study was initiated in 1993. The purpose of this report is to assess the contribution of tuna fishing, transshipment, and processing to the economies of these island jurisdictions. Unfortunately, the pace of change of existing tuna transshipping, home porting, and processing operations in the American Flag Pacific Islands has been much more rapid than the pace at which quantitative data could be gathered and analyzed. Moreover, requests for short-term assistance by the three governments on urgent policy questions delayed the completion of this report far beyond the original project schedule. As a result, most of the quantitative data on tuna operations in the three jurisdictions are for the years 1993 and 1994. Nevertheless, this report is offered to the governments of American Samoa, Commonwealth of the Northern Mariana Islands, and Guam and to the Western Pacific Fishery Management Council in the hope that it will provide (1) a fairly comprehensive assessment of the 1994 contribution of tuna industries to the three economies, and (2) a much more extensive but less quantitative assessment of major trends in the industries that are already having an impact on tuna operations in the US Pacific territories and commonwealth.

This report has four sections. The first section contains an overview of trends that have affected the contribution of tuna operations in American Samoa, Commonwealth of the Northern Marianas and Guam since the early 1990s. Section two provides a detailed quantitative analysis of tuna operations in the sea ports of American Samoa and Guam in 1994.' The third section describes the contribution of tuna operations to the economies of the three jurisdictions. For American Samoa, the fleet expenditure results from section two are supplemented in the appendix by estimates of the direct contribution of the canneries to the economy of the territory. For Guam, the results of the quantitative fleet expenditure analysis and the benefits of transshipment of sashimi grade tuna through Guam's airport are discussed. For the Commonwealth of the Northern Marianas, the contribution of the Tinian cannery-bound tuna transshipment to the local economy is described along with the contribution of a sashimi-grade tuna transshipment operation through Saipan's international airport. The final section contains a summary, conclusions and recommendations, some of which are already being implemented as a result of discussion between the project team and the governments of American Samoa, Commonwealth of the Northern Mariana Islands, and Guam.

(' A similar analysis was not conducted for Tinian in the Commonwealth of the Northern Mariana Islands because shore expenditures by seiners calling at Tinian were very limited compared to those in American Samoa and Guam and detailed expenditure information was not available.)

Summary, Conclusions, and Recommendations

Comparative advantage has been the driving force in the establishment and development of the tuna industries in American Samoa, Commonwealth of the Northern Mariana Islands, and Guam, and comparative advantage continues to drive changes now taking place in the industry. The competitive nature of tuna fishing, transshipment, and processing have made the individuals and corporations involved extremely cost conscious. Downward pressure on prices for fish and canned tuna from global competition have made necessary for those involved in the industry to consider every opportunity to cut the costs of doing business.

Competition among the countries and territories seeking to attract fleets, transshippers, and processors has driven governments to seek ways to increase their comparative advantage by lowering the costs and increasing the supply of goods and services. As more countries and territories have gotten into the industry, it has become more difficult to predict what tuna boat owners and captain, transshippers, and processors will do. For American Samoa, Guam, and the Northern Mariana Islands, changes in US trade and tax policies further compound the uncertainty.

These competitive forces have made tuna fishing, transshipment, and processing very dynamic industries for many years. All three are potentially lucrative but extremely competitive. American Samoa, Commonwealth of the Northern Marianas, and Guam are relatively well placed geographically to continue to participate in different segments of the Pacific tuna industry. Understandably, developing countries in the Pacific also want to increase the value added by their tuna fisheries through participation in transshipment and processing. Many of those countries have lower wages, lower taxes, and less environmental regulation and some are closer to the primary fishing grounds than American Samoa, Commonwealth of the Northern Marianas, and Guam. They are, therefore, potential competitors and threats to the continued viability of the canneries in American Samoa, the transshipment operation in Tinian and Saipan, and the home porting and transshipment operations in Guam.

The analysis presented in this report shows that there are substantial economic benefits from tuna fishing and transshipment for American Samoa, the Commonwealth of the Northern Marianas, and Guam and that each jurisdiction has benefited in different ways. In American Samoa, the tuna industry is by far the largest private industry, the largest source of direct private sector employment, and the largest private consumer of power and water. While the canneries themselves are the largest identifiable private employer, the presence of the fleets could account for as many as 1,200 additional jobs. Fuel purchases by the fleets probably also contribute to the relatively inexpensive prices for petroleum products and electricity in the territory.

Guam's home porting and transshipment operations are small by comparison to the tourism industry and generate only a fraction of the jobs associated with the US military presence. However, vessel home porting and transshipment make important contributions to the diversification of Guam's economy. As a result of fluctuations in the tourism industry and recent cuts in military expenditures in Guam, the importance of diversification has increased. If the business community and government of Guam continue to be aggressive about attracting more tuna vessels and providing a greater range of services and supplies, tuna fishing and transshipment will expand in importance to Guam's economy.

CNMI's transshipment operations are also very small compared to the tourist industry in the commonwealth. The Tinian transshipment facility, while generating relatively few jobs and economic activity for the entire economy, has historically been very important to the local economy of Tinian. It is also one of the few industries not directly tied to government expenditure or to the volatile tourism industry. Air transshipment of tuna through Saipan is far less beneficial to the people of CNMI than the operation on Tinian but still makes a modest contribution through stevedoring services, fuel taxes, and landing fees.

There is scope for increasing the benefit from the presence of the tuna fleets in all three jurisdictions. The primary way benefits can be increased is to expand the provision of goods and services, and this should be encouraged in Pago Pago, Tinian, and Guam for the sea port operations. Unfortunately, there appears much less scope for increasing the benefits from the air transshipment, the activity that has experienced the most growth in the past four years.

In order to maintain the level of economic benefits from tuna fishing, processing, and transshipment, the governments of American Samoa, Commonwealth of the Northern Marianas, and Guam will need to closely monitor the tuna-related businesses now operating within their shores as well as changes in the costs of goods and services in neighboring countries and in the global tuna industry. Unfortunately, the three governments have little control over these external forces. However, if they can anticipate changes in their local industries and in the costs of fuel and other goods and services important to the tuna industry in neighboring countries, they may be able to respond to remain competitive.

While all three governments generously provided a great deal of information for this study and continue to gather valuable data on their tuna operations, there are gaps that should be filled. This is particularly important as new transshipment operations emerge such as the air transshipment operations on Guam and Saipan. The governments also need to develop the capacity to analyze the data they gather in the context of a good understanding of how tuna industries operate.

At some level, the economies of American Samoa, Commonwealth of the Northern Mariana Islands, and Guam are linked through their tuna fishing, transshipment and processing operations. Some of the fish transshipped at Tinian finds its way to the canneries in American Samoa. Seiners operating in the Western Pacific can choose to offload their catch in American Samoa, Tinian, or Guam. Agents involved in the sashimi trade can fly their fish into Guam or Saipan for transshipment to Japan. As a result of these linkages, decisions in one jurisdiction can have an impact on the tuna related industries in the other jurisdictions. Therefore, the governments may want to consider consultations on policies that will affect changes in the tuna related industries now operating and those that may develop in the future.

This page updated August 17, 2006