| tlantic menhaden is one of a number of species harvested for the purpose of conversion into fishmeal and fish oil. This process, known as reduction, cooks, grinds, presses, and dries the fish, converting them into fishmeal and fish oil. There are two species of menhaden harvested in the United States specifically for reduction purposes: Atlantic menhaden and gulf menhaden. Gulf menhaden is a similar species but is found in the Gulf of Mexico.;The Atlantic menhaden fishery has existed since the early days of European colonization. Reduction of Atlantic menhaden into fishmeal and fish oil became common practice in the nineteenth century. Sold originally for fertilizer, today these products are used predominantly in feed mixtures for livestock and aquaculture. Aquaculture, in particular, is growing rapidly on a global scale, increasing the demand for fishmeal and fish oil. In addition to reduction, some Atlantic menhaden are harvested for use as bait in commercial and recreational fisheries.;This work endeavors to better explain the economics surrounding the Atlantic menhaden fishery. The following chapters look at what the Atlantic menhaden are, how the fishery operates, in what markets the fishery products are found, and how the Atlantic menhaden reduction industry has changed over time. Questions of market power and the welfare impact of new regulations are addressed.;Over the past 60 years, the Atlantic menhaden reduction industry has consolidated from 25 plants and 150 vessels to 1 plant and 11 vessels (ASMFC, 2011(a)). The remaining plant, located in Reedville, Virginia, is operated by Omega Protein, Inc. An event study conducted in Chapter 2 concludes that the closure of the second to last company in the Atlantic menhaden reduction industry had a positive impact on Omega Protein's expected profits. This would indicate a perception by the market that Omega Protein gained additional market power as a result of the closure.;On a global scale the United States is a top ten producer of fishmeal and fish oil, however it is not the leading producer. The markets for fishmeal and fish oil, as a result, are global markets. The extent to which the United States is part of the international market is investigated in Chapter 2. Tests for cointegration between international and domestic prices determine that the fishmeal market in the United States is a regional market. Similar tests for the fish oil market determine that the United States is part of the global fish oil market.;In Chapter 3, fishery regulations pertaining to Atlantic menhaden are investigated. Past regulations do not appear to restrict the fishery directly. Many of these regulations closed territorial waters for states after the Atlantic menhaden reduction industry left the state itself. In November 2011, the Atlantic States Marine Fisheries Commission adopted a new policy that will affect the fishery. This policy could reduce harvest up to 37%. The latter part of Chapter 3 assesses the impact on consumer surplus from the new policy. Estimates of the resulting loss in consumer surplus range between... |
