As fishing fleet grays, newcomers find price of entry high

Cost of a 56-foot boat, gear and permits would be about $500,000

Posted: Sunday, December 11, 2005

PETERSBURG - For what it's going to cost Justin Peeler to elbow his way into Southeast Alaska's fishing fleet, he could have gone to Harvard Medical School. Twice.

The 26-year-old Peeler has been a crewman in the Petersburg fleet for 15 years, starting as a kid fishing with his father. He now plans to buy his own salmon seiner, and figures the cost of a 56-foot boat, along with the gear and permits needed to get started, will be about $500,000.

He's calculated that his yearly catch will bring in just enough to make his debt payments.

"The amount of money that I'm borrowing, if I pencil it all out, I barely make it," Peeler said. "I've bet everything on it."

Peeler says he's willing to take the risk. Good money can be made as a professional crew member, but it takes a back seat to captaining your own boat, he said.

The costs are steep for the next generation of fishermen like Peeler who are trying to break into the business. Besides buying a good boat and gear, they must pay top dollar for the right to fish in a crowded Alaska industry with limited entry permits and individual fishing quotas.

That's something the last generation of Alaska fishermen, who got their start when the state's waters were still mostly open to all, didn't have to deal with.

It's not just a problem for the young fishermen. Here in this coastal town of 3,100, where fishing is still the major economic driver, it could turn into a problem for everybody.

In Petersburg, most commercial fishermen are ages 40 through 60, and people are starting to ask about the future of the fleet as graying fishermen look to pass on their nets in the next 10 or 15 years.

"The concern is that as fishermen age and retire ..., that there won't be enough younger fishermen to purchase those rights ..., or those fishermen just won't have the resources available to purchase those rights," said Sunny Rice, an agent with the Marine Advisory Program, part of the University of Alaska Fairbanks School of Fisheries and Ocean Sciences.

To avoid it becoming a problem, she said, the question must be answered over the next decade: "What do we do to make sure that when this happens, we are fostering young people in the business who are able to buy the quotas?"

More and more Alaska fisheries have been limited to permit holders since the state constitution was changed in 1972 to protect popular species such as salmon from being overfished. Some 68 state fisheries are now limited entry, meaning commercial fishermen must pay one-time entry permits and annual fees to fish them.

The federal government's version, individual fishing quotas, gives a commercial fisherman the rights to a percentage of the year's catch of halibut or sablefish in federal waters off Alaska's coast. That program is meant to end a mad rush to fish those species that in the past would end a season in days.

But the cost of entry permits and quota shares are staggering for a newcomer. They vary by fishery but range from tens of thousands of dollars to hundreds of thousands - and they are rising as the market price of the catch rebounds from a long slump.

Petersburg fisherman Kurt Wohlhueter, 50, said he was recently looking at purchasing a 20,000-pound halibut quota - at a cost between $380,000 and $400,000. At those prices, not a lot of 20-somethings are going to start as halibut fishermen, he said.

"There's really no room right now for a young man to buy into that fishery because the profit margin isn't wide enough, not with fuel costs, not with the fickle price fluctuations," he said. "I can't imagine a young man trying to buy a boat, trying to buy a home, trying to support a family."

Wohlhueter has been fishing Alaska's waters since the open access days of the 1970s. He's got five daughters to whom he hopes to pass his floating business. But he, too, has been thinking about what will happen to the Petersburg fleet once he and his colleagues step aside.

"My retirement is resting on these guys," said Wohlhueter. "If we don't have a family member to pass it on to, for whatever reason, we have to make sure we have to keep guys like the Justins, his age group, involved and interested in this industry."

Some fishermen say a newcomer can buy a smaller boat or start in less expensive fisheries, then work his way up. Boats, permits and quotas can be financed through a private bank, and federal and state governments have loan programs, as well.

One state program will loan up to $300,000 to Alaska residents at low interest rates for quota shares, with repayment over 15 years. The program is for fishermen who can't get loans elsewhere, including young fishermen, said state Division of Investments Director Greg Winegar.

"That's partly why we have this program," Winegar said. "They need to have guarantors, and usually their parents provide the backing."

But Peeler plans to stay away from quota fisheries such as halibut and sablefish for now. They're just too expensive. He already has a salmon permit, which set him back $42,000.

To make a living while his debt looms, he's going to have to hustle. He plans to fish for salmon, then lease his boat and work as a crewman the rest of the year in exchange for a share of the profits.

"That will help me make it. That will hopefully (let) me be able to live in Petersburg," he said.

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