ECONOMIC IMPACT OF THE PROCESSING AND MARKETING OF COMMERCIAL FLORIDA MARINE LANDINGS pdf

ee ee eee Ces 34 Florida Processed Fishery Products that Originated as Fish Landed Seafood Wholesaling, Processing, and Retailing Sectors - - an APPENDIX A Theoretical Framework Econom

ECONOMIC IMPACT OF THE

PROCESSING AND MARKETING OF

COMMERCIAL FLORIDA MARINE LANDINGS

by R Allen Morris & Fred Prochaska

ECONOMIC IMPACT OF THE PROCESSING AND

MARKETING OF FLORIOA COMMERCIAL

Page

List of appendix tables - ee wee ee eee ĨW

Introduction 6 6 ee ee ee n R kh kg "¬ 1 Background , - - Q HS hờ Q Se ee ee 1

DESCRIPTION OF FLORIDA COMMERCIAL FISH WHOLESALING AND PROCESSING

SECTORS

Employment and Number of Establishments 2

Descriptive Analyses 2 coe ee ee ee

Wholesaling Sector Characteristics 2 -.- -4- 2

Employment and establishments .00 Se 4

Geographical location of wholesale fish dealers 4

Processing Sector Characteristics 2.2 2.2.02 pee eee 5

Establishments and employment 2 2 ee eee eee 7

Processed fishery products 2 eee ee ee 8

Interdependence of processing and fishing .- 12 Geographical location of processing establishments 25 Retailing SeCtOTr Q Q Q Q Q Q Q vu 2x y2 và - 5

THEORETICAL FRAMEWORK OF ECONOMIC IMPACT

txpenditures by the Florida Fish Processing Sector - - - + 3

Qutput Effect 2 2 ee ee eee Ces 34 Florida Processed Fishery Products that Originated as Fish Landed

Seafood Wholesaling, Processing, and Retailing Sectors - - an

APPENDIX A Theoretical Framework

Economic Impact and Output Effect 62 ee ee te 46

APPENDIX B Procedures for Estimation of Primary Economic Impact of

APPENDIX BI Mathematical Procedures for Estimating Quantity and Value

of Fish Handled by Florida Wholesale Fish Dealers 52

REFERENCES - HQ nh nh nh ¬

ii

Geographical location and type of species handled by Florida

fish wholesale establishments, 1975 2.2.0 see

Total value of processed fishery products in Florida, 1960-

Total annual quantity of Florida processed fishery products,

florida processed fishery products by type, 1973-1974

Value of Florida East Coast processed fishery products by

Geographical location and type of species handled by Florida

fishery processing establishments, 1975

Expenditures per $100 sales by Florida seafood processors,

Expenditures, sales, income, and primary economic impact of

the Florida fish processing sector, 1975 cà

Expenditures, sales, income, and primary economic impact of

Florida processed fishery products that originated as fish

Janded in Florida, 1975

Expenditures, sales, income, and primary economic impact of

the Florida fish wholesaling sector, 1975 hoe

LIST OF APPENDIX TABLES Estimated expenditures for Florida wholesale fish dealers

Background

Early in the development of Florida's conmercial fishing industry

fishermen found it impractical to process and market their own catch

Consequently, people became involved in preparing, transporting, and

the fish processing sector and the fish marketing sector

The fish wholesaling sector consists of fish dealers who purchase

the fishermen’s catch at dockside, prepare it for sale in fresh form,

and sell it The fish processing sector is comprised of "food manufac~- turing” or processing plants that produce fishery products such as smoked, breaded, frozen, and stuffed fish, crab cakes, fish patties, frozen fish

dealers, terminal markets, and other available sources The fish retailing

sector consists of fish markets that sell seafood, supermarkets selling

various types of seafood products, and eating establishments

Purpose

The purpose of this report is to provide basic economic research

which can be applied to specific problems facing thase who engage in the marketing and processing of commercially landed fish This report is

limited to Florida marine fisheries, and does not include fresh water

fisheries Several specific areas of application are currently antici- pated The research will provide a data base for evaluation of fisheries management plans resulting from the Fishery Conservation and Management Act of 1976 Government agencies can use the information as an aid in

deciding use priorities concerning common property marine resources

Legislators use such information when enacting laws The information

should also provide data for economists and other professionals to use

sectors within that industry, for example, analyses of dredge and fill

operations, port facilities, and environmental regulations Industries

supplying inputs to the commercial fishing industry will find this study useful as an indicator of the inputs that are most important to the com- mercial fishing industry, and how input usage is related to sales of fish

making

Statistics on employment and number of establishments for processing and wholesaling were not reported separately prior to 1970 and therefore, separate trend analyses are not possible for these years Many firms are also considered both wholesalers and processors due to the range of 1 activities they are involved in with the various types of fish they handle There were 84 firms listed as both wholesale dealers and processors by

the National Marine Fisheries Service in 1975 In order to avoid double

counting, al] firms listed as both wholesalers and processors were con- sidered as only processors for this study This is consistent with data reported to state agencies as processed products, since some wholesalers produce processed products such as fresh packaged fish Quantity and

value of specific species sold by wholesale dealers were not available Consequently, the description of the wholesaling sector is not as extensive

as that of the processing sector

Employment and Number of Establishments

The combined number of Florida processing and wholesaling establish- ments increased from the early 1950's to the late 1960's, but since then has declined (Table 1} The minimum number of establishments was 324 in

1954 and the maximum was 494 in 1965 In 1975 there were 386 processing

and wholesaling establishments in Florida, compared to 348 in 1953

Comparing the 1953-1955 average seasonal employment to that of 1973-

1975, average seasonal employment increased from 3,356 to 5,788 during this time period with a maximum of 6,591 in 1971 Average yearly employ- ment also experienced an unsteady increase from an average of 2,536 in 1953-1955 to 5,025 in 1973-1975 Yearly employment was lowest in 1953 and highest in 1971 with 5,569 persons employed

Wholesaling Sector Characteristics

Primary Funct fons

Primary wholesalers consist of coastal area fish dealers that purchase

the fishermen's catch at dockside and prepare and sel} it in fresh form Most of these wholesalers also supply fishermen with inputs such as

fishing gear, fuel, ice, etc Fishery products that are marketed in fresh form undergo basic spoilage-retarding preparations and are shipped on ice

For example, shrimp are washed in a chlorine solution, deheaded, and

TTaken from a listing of Florida fish processors and wholesale fish

dealers, National Marine Fisheries Service, 1975 [15, 16]

Source: (1} U.S National Marine Fisheries Service Fisheries of the

United States, 1976 Washington: U.S Government Printing

Office

(2) U.S National Marine Fisheries Service, (formerly U.S

Bureau of Commercial Fisheries) Fishery Statistics of the

United States Washington: U.S Government Printing Office

Annuat issues, 1953-1973

(3) U.S National Marine Fisheries Service Processed Fishery

ment Printing Office

because gutting increases spoilage rates

Wholesale dealers sel] to processors, secondary wholesalers, terminal markets, smal? retail seafood markets, and in a limited capacity, to Toca]

wholesale fish dealers and resell] them in terminal markets Terminal

markets sell to various national and international retailers and processors

Employment and Establishments

The number of wholesale establishments declined steadily from 259

in 1970 to 230 in 1974 with the exception of 197] when there were 273 es- tablishments (Table 2) In 1975 the number of establishments increased

to 235, a level still below that of 1970

No trend exists in either seasonal or yearly employment The 1971 average was the highest during the time period The 1975 seasonal employ- ment average of 774 is almost the same as in 1970 when it was 775 The

1975 yearly employment average of 719 is larger than the 1970 level of

683 Overall, the number of employees per firm has increased

Geographical Location of Wholesale Fish Dealers

Florida was divided into four geographical areas in order to show the 9eographical jocations of both wholesale fish dealers and fish processors (Figure 1) The East Coast area consists of all counties in proximity to the Florida East Coast, except Dade and Monroe Counties Dade and Monroe Counties make up the southern geographical area The third geographical area is the Florida West Coast which consists of Collier County through Jefferson County The Northwest area consists of Escambia, Santa Rosa, Okaloosa, Walton, Holmes, Washington, Bay, Jackson, Calhoun, Gulf, Gadsden, Liberty, Franklin, Leon, and Wakulla Counties When a county was an in-

land county the relative location of cities in which fish wholesaling

and/or processing establishments were located was used to determine whether the county would be classified as East Coast or West Coast

The West Coast area, with 75 firms, had the greatest number of whole- sale establishments in 1975 {Table 3 and Figure 1) Dade and Monroe

Counties, with 40 firms, was the smallest geographical area and had the fewest establishments

However, Dade and Monroe Counties had the greatest

fumber of establishments per county of any of the regions The West

Coast area had 17 species listed as specific products handled and the

Northwest area mainly handled 16 species Dade and Monroe mainty handled nine different species, and eight species were mainly handled by East

Coast wholesalers, Shrimp, black mullet, and red snapper were listed as

Species handled in all four geographical areas in Florida

Geographical location of fish processing establishments is pre-

sented later in this chapter

Source: (1) U.S National Marine Fisheries Service Fisheries of the

United States, 1976 Washington: U.S Government Printing Office 1976,

(2) U.S National Marine Fisheries Service, (formerly U.S

Bureau of Commercial Fisheries) Fishery Statistics of the

United States Washington: U.S Government Printing Office

Annual issues, 1970-1973

(3) U.S National Marine Fisheries Service Processed Fishery

Products, Annual Summary, 1974 Washington: U.S Government Printing Office 1974

Processing Sector Characteristics

Florida seafood processors purchase fish from commercial fishermen,

wholesale fish dealers, secondary wholesalers, and terminal markets through- out the United States Foreign purchases are also made through various international brokers and importers Some processors have their own

fishing craft with captains and crew and are integrated vertically from

harvesting through processing

In processing plants, fish are smoked, breaded raw and cooked seafood,

Figure 1. Geographical divisions of Florida for showing locations

of fish wholesaling and Processing establishments, 1975

Geographical Ñunber of

East Coast 68 0ysters, shrimp, spiny lobsters, catfish,

black mullet, gray sea trout, hard clams,

red snappers, unclassified saltwater fin-

fish and shellfish,

Dade and Monroe 40 Sponges, spiny lobsters, stone crabs,

shrimp, groupers, red snappers, dolphin,

Spanish mackerel, black multet, unclassifed saltwater finfish and shellfish

West Coast 75 Crevalle, black mullet, pompano, oysters,

stone crabs, groupers, gray Sea trout,

Spanish mackerel, red snappers, shrinui,

red drum, sheepshead, king mackerel, king

whiting, blue crabs, bluefish, sponges,

unclassified saltwater finfish and shell-

fish

gray sea trout, whiting, calico scallops,

blue crabs, oysters, graupers, red snappers,

king mackerel, bluefish, pompano, croaker, Spanish mackerel

SNorthwest includes Escambia, Santa Rosa, Okaloosa, Walton, Holmes,

Washington, Bay, Jackson, Calhoun, Gulf, Gadsden, Liberty, Franklin, Leon,

and Wakulia Counties

Constructed From: U.S National Marine Fisheries Service Wholesale

Dealers of Fishery Products in U 1975.” Unpublished

data

frozen fillets and steaks, cakes and patties, stuffed frozen seafood, canned seafood, etc These products are sold to supermarkets, retail seafood mar- kets, and various eating establishments including institutions such as schools, hospitals, and military installations

Establishments and Employment

The number of processing plants declined from 183 in 1970 to 145 in

1974 (Table 2) In 1975 the number of processing establishments increased

to 151, but was still below the number of plants in 1970 Average season-

al employment and average yearly employment both declined steadily during the time period Average seasonal employment declined from 5,467 in 1970

time period while total employment declined

Processed Fishery Products

The total value of Florida processed fishery products was consistently

higher on the Florida West Coast than on the Florida East Coast during the 1960-1975 period (Table 4)3 Comparing the 1960-1962 average with that for 1973-1975, the total value of processed products (current dollars)

on the East Coast increased by approximately 247 percent This increase was not steady For example, the East Coast value of processed fishery products rose from $12.2 million in 1963 to $21.1 mitlion in 1964, and

then declined to $14.6 million in 1965 In real dollars, the increase

between the 1960-1962 average and 1973-1975 average was from $16 million

to $21.3 million which is 33 percent The lowest value during this period

was $13.6 million in 1963 and the highest was $26.1 million in 1971

Value of processed fishery products on the West Coast (current Dollars) increased more steadily than those on the East Coast, from an average of

$21.7 million in 1960-1962 to $104.3 million in 1973-1975 This represents

an increase of more than 38] percent In real dollars the increase was from

an average $26.3 million in 1960-1962 to $48.8 million in 1973-1975, an

increase of approximatley 86 percent Lowest vatue (real dollars) was

in 1961 at $24.2 million and highest was in 1969 at $72.2 million

Total value of processed products (current dollars) in Florida reached

a tow of $39.1 million in 1961 and a high of $157.9 million in 1973,

Generally the total state value of processed fishery products increased over the time period, going from an average of $34.8 million in 1960-1962

to $149.8 million in 1973-1975, an increase of approximately 33) percent

In real dollars, total value of processed fishery products increased from

an average of $42.3 million in 1960-1962 to $70.1 million in 1973-1975,

an increase of approximately 66 percent Real dollar values reached a

Tow of $39.9 million in 1961 and a high of $94.8 million in 1969

Total quantity of Florida East Coast processed fishery products in- creased from approximately 16 million pounds in 1965 to almost 28 million

pounds in 1972 {Table 5) Since 1972, the volume of Processed products

declined to approximately 23.4 million pounds On the West Coast, the

quantity of processed fishery products decreased from 59.9 million pounds

in 1965 to a low of 50.8 million pounds in 1967 They reached a high of 76.5 million pounds in 1970 Since 1970, quantity of processed products

declined to approximately 58 million pounds From 1965 to 1974 quantity

of processed fishery products on the West Coast has always been more than twice the volume on the Fast Coast Total state quantity of processed

Seast Coast counties include Nassau through Dade Counties, West

Coast counties include Monroe through Escambia Counties.

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Table 5 Total annual quantity of Florida processed fishery products

Derived from: (1) U.S National Marine Fisheries Service (formerly U.S

Bureau of Commercial Fisheries) Fishery Statistics

of the United States Washington: U.S Government

Printing Office Annual issues, 1965-1973

Fisheries Service

Summary, 1974

(2) U.S National Marine Fisheri

Processed Fishery Products,

Washington: U.S Government Printing Office

fishery products rose from 75.9 million pounds in 1965 to 101.2 million

pounds in 1970 By 1974 the quantity of processed products had declined to 81.4 mitlion pounds, approximately the level of the late 1960's

Total quantity of processed fishery products has decreased but the

the inflationary trend in food prices but there have also been changes in the type of processed fishery products produced over this time period

Quantity and value of Florida processed fishery products for 1973 and

1974 are presented in Table 6 Only the two most recent years were shown due

to the voluminous nature of the data Shrimp was by far the most important product in terms of both quantity and value in both years, accounting for

67 and 65 percent of the total quantity of processed fishery products in

1973 and 1974, respectively Second and third in both quantity and value

in 1973 were spiny lobsters and blue crabs, respectively Together, spiny lobsters and blue crabs amounted to 8.4 million pounds and $19.6 million

in 1973 Spiny lobsters ranked second in terms of value in 1974 while Spanish mackerel was third in quantity during that year

From 1960 to 1974 the highest valued species processed on the Florida East Coast was shrimp (Table 7) The various forms of processed shrimp accounted for approximately 70.8 percent of the total value of processed fishery products for 1960 This share had dropped to 59.2 percent by

1966 and by 1974 it was only 41.6 percent Processed shrimp accounted for an average of 53.5 percent of the tota? value of East Coast processed fishery products during the 1960-1974 period

Unclassified processed products was the second most valuable product category except during 1972 This category included many different species {Table 7, Footnote b), and often included some types of shrimp and other species listed elsewhere in the table Spiny lobsters were the second most valuable processed species in 1972, accounting for 32 percent of the total With the exception of 1972, spiny lobsters were the third most valuable species from 1968-1974 Blue crabs were the third most valuable processed species on the East Coast from 1960 to 1967, accounting for 12.4 percent

of the total 1967 East Coast value of processed products

The highest valued species of West Coast processed fishery products

was shrimp during the 1960-1975 period (Table 8) Processed shrimp

products accounted for between 68 and 82 percent of the total value of West Coast processed fishery products during the 1960-1975 peridd Blue crabs were generally second or third most valuable West Coast processed species during the period

Interdependence of Processing and Fishing

More than 65 million pounds of shrimp were processed in Florida

during 1974 (Tables 9 and 10) while only 32.5 million pounds were Tanded

in Florida that year This shows that Florida shrimp fishermen landed approximately half of Florida processors’ requirements in 1974 In 1973,

74 million pounds were processed in Florida but only 29.2 million pounds were landed Prior studies have indicated that Florida landings are a relatively unimportant supply source for shrimp processors, accounting for only 18 percent of the raw shrimp bought for processing in the state

in 1972 [1]

Assuming this 18 percent holds for 1973 and 1974, then processors Purchased 13,326,800 and 11,869,288 pounds of shrimp from Florida fisher- men_in 1973 and 1974, respectively A comparison with Florida landings

in Table 10 indicates that Florida processors purchased approximately

46 and 37 percent of the landings of shrimp in 1973 and 1974, respectively The remainder of the landings of shrimp were sold to other wholesale mar-

kets, retail fish markets, eating establishments, and other market outlets

while the remainder of the processors’ requirements were satisifed from Other U.S saurces (42 percent) and foreign sources (40 percent) [1]

There were 14.6 million pounds of blue crabs processed in Florida during 1973 while only 13.5 million pounds were landed in Florida that year (Tables 9 and 10) This indicates that processors had to purchase

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Table 9 Florida processed shrimp, blue crabs, and oyster in live

weight equivalents, 1973-197 4

Pounds

East Coast West Coast State total

1973 Shrimp: Raw, headless 457,662 10,021,705 10,479,367

Peeled and deveined (raw) 16,988,533 16,988,533 Breaded (raw and cooked) 12,689,236 33,880,642 46,569,878 Total shrimp 13,146,898 60,890,880 74,037,778

Blue crabs: Cooked meat 3,793,925 10,825,882 14,619,807

Oysters: Fresh and frozen,

1974 Shrimp: Raw, headless 149,908 8,791,835 8,941,743

Peeled and deveined (raw) 19,750,209 19,750,209

Breaded (raw and cooked) 9,780,632 27,467,907 37,248,539 Total shrimp 9,930,540 56,009,951 65,940,4 9]

Blue crabs: Cooked meat 3,979,258 10,860,883 14,840,141

Oysters: Fresh and frozen, 60,008 2,202,183 2,262,191

Live wt (heads on oun

Blue crabs: Pounds of blue cral

Oysters: Pounds of ayster meat

U.S National Marine Fisheries Service

Fishery Sta- Washington: U.S

more than one million pounds of blue crabs from other sources in 1973

In 1974, however, 17.6 million pounds of blue crabs were landed while

14.8 million pounds were processed Processors probably did not purchase

to restaurants and retail markets from the wholesalers

Approximately 2.3 million pounds of oyster meat was processed in

Florida during 1973 and 1974 (Table 9), while 2.5 and 2.8 million pounds

of oyster meat was landed in Florida during these years (Table 10} The difference in pounds processed (shucked) and total pounds landed repre-

sents the net difference in quantity of oysters that are sold in the

shel] and the quantity that is imported into Florida

Geographical Location of Processing Establishments

Northwest Flurida had 76 fishery processing firms, more than any of the four geographical reqions in Florida (Table V1 and Figure 1) fade and Monroe Counties, with 20 firms, was the smallest geographical area and had the fewest establishments However, Dade and Monroe Counties

accounted for 26 percent of the pracessing establishments and consequently,

had the greatest number of establishments per county of any of the regions Dade and Monroe Counties had 23 species listed as specific products

handled, the Nest Coast area listed 22, the Last Coast Jisted 16 and

the Northwest region listed 14 species Shrimp, blue crabs, red snapper, oysters, and Spanish mackerel? were processed species in all four geo-

graphical regions

Retailing Sector

Retail seafood markets include restaurants, diners, cafeterias,

grocery stores, supermarkets, and retail fish markets Collection of

primary information concerning al} retail seafood markets except retail fish markets was beyond the scope of this study 0nly linited secniiiary information was available on retail fish markets

wholesalers, and processors They usually sell fresh iced finfish anc shellfish as well as various forms of processed seafood such as frozen

lobster tails, frozen fish steaks, and fillets, canned and cured fish

products, breaded fish, fish cakes, etc Most of their sales are fresh finfish and shellfish Other items such as beverages, bread, eal, fish sauces, and other foods eaten with fish are often sold by these mark ts 4

Hen,

It is not possible to estimate the primary economic impact for fìorida retail fish markets due to lack of expenditure data Consequently, the following information is presented in order to afford the reader insignt

into the various economic activities of Florida retail fish markets

` gasad on limited interviews with Florida retail fish market owners, 1976

In 1972 there were 122 retail fish markets reported with a payro] 1.5 They had sales of $19,559,000, employed 433 people, and paid their employees

$1,873,000 in wages and salaries [12] Adjusting these 1972 sales by 1975

retail price indexes for fish (fresh, frozen and canned finfish and shel] -

fish) gives a sales estimate of $28,022,161 in 1975 dollars Adjusting

1972 payrolls by using the difference in 1972 and 1975 average weekly

earnings in retail trade [13] results in an estimated 1975 payroll of

$2,227,671 Assuming the number of firms with payrolls remained the same

between 1972 and 1975, the data indicate that there was an average of

$229,690 of sales per firm in 1975 and that each employee was paid an

average of $5,145 in 1975

THEORETICAL FRAMEWORK FOR DETERMINING ECONCOMIC IMPACT

Economic Impact

One method of determining the economic value or importance of an

industry to a national or regional economy is to estimate its economic

impact on that economy Economic impact may be defined as "the effect of

4 general change in a region’s economy or the effect on the whole of a

change in part of its economy" [10, p 90] Each dollar invested by any

given industry affects regional and/or national output, income, and em- ployment A change in investment will change these factors by an amplifed amount The magnitude of effect within an economy resulting from a change

in part of the economy is governed by the degree of interdependency that exists among the various industries (sectors) within that economy

Total economic impact, when considered in terms of output effect,

shows the effect of changes in output in a particular industry or sector®

on the output of all other industries or sectors in the economy This

effect consists of several "rounds" of impact For example, the first

round of impact involves only the industry of interest (primary industry)

and the industries that directly interact with that particular industry

(secondary industries) Subsequent rounds involve estimates based on the interaction of these secondary industries with other industries, and the

interaction of these other industries with still other industries, until

the effect originating in the designated primary industry is measured

throughout the economy

SRetail fish markets with no payrolls were classified in a broader category labeled "Meat and Fish Markets" by [12] and thus, it was not pos- sible to obtain specific data about them Consequently, owner-operated fish markets are not reflected in the present data These reported firms are used only as an indication of the importance of this sector since the number

of firms listed by [12] is an underestimation

5s “sector” is an aggregation of industries, and will be used inter-

changeably with “industry” in this study