Buyout nets coastal Alaska villages first direct ownership of Bering Sea crab quota
FAIRBANKS, Alaska (KTVF) -Fishing rights and vessel ownership are transferring from a Seattle-based fishing company to two Alaskan regional economic development organizations and 30 communities.
The seller is Mariner Companies, owned by pioneering Bering Sea crabbers Kevin Kaldestad and Gordon Kristjanson. Two Community Development Quota organizations have purchased the company’s crab boats, and 30 communities have formed limited liability companies to purchase the quota, which amounts to 3% of the Bering Sea opilio and red king crab fishery.
The direct ownership of quota by communities is new in the area served by both Bristol Bay Economic Development Corporation and the Coastal Villages Region Fund.
The BBEDC and CVRF are two of the six Community Development Program groups in Alaska, which are allocated portions of Bering Sea resources. The groups can then either lease their rights or develop owner-operator businesses themselves, but the proceeds return to the communities they cover through economic development programs.
Although the communities involved are included in BBEDC and CVRF programs, by establishing new LLCs for the communities, each one is able to have more control over how to best use the revenue the quota brings in.
“It’s a big deal. It really is a big deal. There is hopefully a significant level of revenue that will now flow directly to these communities,” BBEDC CEO Norm Van Vactor said.
Before the transaction, BBEDC was a 45% owner in Mariner Companies’ seven vessels. They will now own 100% of four vessels. CVRF will own 100% of three vessels in the deal.
Both CDQ groups have maxed out the amount of crab quota they are able to own. By taking ownership of only the vessels, the CDQ groups are able to let their communities benefit from owning the quota without the liability and expenses that come with owning expensive fishing vessels.
“All they have to do is sign a harvest contract that will guarantee we’ll go catch it for them and give them a check,” Eric Deakin, CEO of CVRF said. “If for some reason we have a breakdown or something catastrophic happen, the contract still guarantees payment for the villages, so they will still be able to get money.”
There are some communities in the Coastal Villages Region that are not a part of the deal. Deakin says that was due to the speed at which the transaction came together and the difficulties COVID-19 presented in terms of community members meeting. Deakin says that there are two opportunities in the future when those communities will be able to join the LLCs as quota owners.
“These communities are being set up just like we were in ’98 to be able to have the same type of success with crab. And this is actually more quota than the CDQs started with in ’98,” Deakin said. “It’s 3% of all, like the opilio and the king crab in the Bering Sea. Which 3% doesn’t sound impressive, but when you think of it in poundage and value, it’s quite a bit.”
The value of the quota was estimated at approximately $35 million.
A typical harvest agreement splits the ex-vessel, or price paid at the dock, 50-50 between the quota owner and the boat. In addition to the proceeds from the direct ownership, the communities will also continue to receive benefits from CDQ programs funded by the organizations’ gains.
The next crab season is for opilio. For the 16 villages in the CVRF, the quota they own equates to around 760,000 pounds of opilio. Deakin says he expects the ex-vessel value of that this season to be somewhere around $3 million.
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