In an effort to lower the barrier to entry in the fishing industry, to retire a “graying fleet” of vessels, and to attract a younger group of fishers into the industry, the Local Fish Fund has announced a new and innovative loan program. Loans are structured based on quotas and shares rather than fixed payments, which creates a system that is flexible and spreads risk.
“The cost and risk involved in accessing Alaska’s quota share fisheries are comparable to purchasing a hotel as a first step in home ownership,” said Linda Behnken, founder of the Alaska Sustainable Fisheries Trust and director of the Alaska Longline Fishermen’s Association in Sitka. “We’re looking for ways to help the next generation of fishing families get that start and build sufficient equity to eventually access conventional loans. Part of what has made it really challenging to buy into the fisheries is the uncertainty and how that will affect their ability to make fixed payments that don’t fluctuate as catches or fish prices drop,” Behnken said. “We share and reduce that risk, so the payments are based on what fishermen are paid at the dock. If the price falls, so does the payment; conversely, if they go up, it’s a bigger share.”
A recent survey reported that the average age of an Alaska fisherman is 50. Fewer young people are entering the field due to financial barriers such as a limited number of permits available as well as high vessel and equipment costs. Participants in the new Local Fish Fund loan program must be willing to participate in fishery conservation programs and agree to a variable repayment structure based on the value of their catch. As young fishers work to repay these loans, they build equity as well as credit history, making future loans and refinancing with traditional lenders an option. The “quota shares” will act as collateral for the borrower.