AN ECONOMIC ANALYSIS OF RESTRUCTURING THE SOUTH AFRICAN HAKE QUOTA MARKET

Abstract

Hake is the most valuable fisheries species in South Africa, with an estimated landed value of R658 million in 1997. The fishery is presently managed under an individual quota system, where total allowable catch (TAC) is set annually and divided up amongst quota holders according to past performance, without quota holders having to pay for it. Fundamental restructuring of the South African hake quota market is however due to take place in the near future as recommended by the White Paper on Marine Fisheries Policy (1997). Factor analysis of data collected from a postal survey of existing South African hake quota holders and rejected hake quota applicants suggests that distinct differences in attitudes towards restructuring exist amongst respondents. Four factors, representing groups of respondents defined as (1) applicants, (2) quota holders, (3) small scale respondents (comprising of both applicants and quota holders), and (4) larger, longer established quota holders, sharing similar attitudes towards restructuring were extracted. It was also calculated that a substantial annual rent of approximately R279 million is generated by the South African hake industry, which is presently harvested free of charge by those issued with quota. It is stated policy of the White Paper to capture these rents, however methods of accomplishing this have not been well accepted by the industry. This study aims at providing some solutions to these problems of restructuring.