However, the data also indicates that a majority of these firms are highly dependent on the processing of food shrimp. Unfortunately, with current data, it is not possible to determine with certainty how much of the shrimp being processed is domestic as opposed to imported. However, by cross-referencing multiple data sources, Keithly et al. (2005) attempted to approximate this figure.18 According to their findings, use of imports by domestic processors increased steadily through the 1980's and for example, in 1986, accounted for about one-third of production. Between 1992 and 1994, which was apparently the peak period, domestic and imported product accounted for nearly equal proportions of total processed shrimp products in the Southeast region. Even though, as noted previously, imports have continued to increase since then, Southeast shrimp processing activities have not increased proportionately as a result.
Keithly et al. (2005) hypothesized that this outcome is a direct result of a significant and steady decrease in the deflated price of processed shrimp from over $7.00/pound in the early 1980's to less than $4.00/pound in recent years. This decline has also precipitated a decline in processors’ marketing margins (i.e. per unit profitability). As a result of the declining margins, some processors have adjusted by increasing output in order to compensate; but many have been unable to make such an adjustment, and thus have been forced to exit the industry. This is illustrated by the fact that the number of Gulf shrimp processors has fallen from 124 to 72 between 1980 and 2001. Thus, the situation illustrates the classic case of an industry in economic decline, wherein the number of firms falls, and those who remain become larger in size (as measured by output). That is, the industry has become more concentrated. Moreover, Keithly et al. (2005) concluded that, if production of farm-raised shrimp continues to increase and a substantial portion of that production enters the U.S. market, the price of processed shrimp will continue to decline; margins will continue to narrow; and consolidation will continue to occur as additional firms exit and remaining firms attempt to compensate by increasing their output.
3.2 Fishing Communities
3.2.1 General Features
A “fishing-dependent community” is defined in the Magnuson-Stevens Act, as amended in 1996, as “a community which is substantially dependent on or substantially engaged in the harvesting or processing of fishery resources to meet social and economic needs, and includes fishing vessel owners, operators, and crew and United States fish processors that are based in such community” (Magnuson-Stevens Act section 3(16)). In addition, the National Standard Guidelines (May 1, 1998; 63FR24211) define a fishing-dependent community as a social or economic group whose members reside in a specific location and share a common dependency on commercial, recreational, or subsistence fishing or on directly related fisheries-dependent service and industries (for example, boatyards, ice suppliers, tackle shops).
18The one weakness with their approach is the assumption that all domestic production is utilized by the processing sector. While in normal economic times, this assumption would be plausible, it is less reasonable in dire economic times when harvesters shift from traditional sales channels and instead sell directly to the public.