“What we’re seeing is a fundamental transformation of the fishing industry,” said Seth Macinko, a former fisherman and professor at the University of Rhode Island. “Labor is getting squeezed and coastal communities are paying the price.”
CommonWealth recently wrote an extensive article, flagging serious concerns about the actions, origins, and effects of private equity’s effort to take over the commercial fishing industry in New Bedford, MA, the nation’s top-earning commercial fishing port.
Squeezing Fisherman for Booming Profits
The article describes in detail how private equity owned companies like Blue Harvest have bought up vessels and fishing rights and made once independent fishermen reliant on them to practice their trade. “Blue Harvest charges [fishermen] for fuel, gear, leasing of fishing rights, and maintenance on the company-owned vessel.” After catching tens of thousands of pounds of fish over more than a year, one fisherman “netted about 14 cents a pound, and the crew, about 7 cents each — a small fraction of the $2.28 per pound that a species like haddock typically fetches at auction.”
“It’s a nickel-and-dime game,” said the 40-year-old Jerry Leeman, a fisherman working on a Blue Harvest vessel. “Tell me how I can catch 50,000 pounds of fish yet I don’t know what my kids are going to have for dinner.”
“Independent fishermen sell their catch at public auctions or to whichever wholesaler offers the best price. But Blue Harvest fishermen generally don’t have that opportunity. They must sell their fish to the company — sometimes at prices lower than they could get otherwise,” according to the article. r.
In addition to paying less, companies that control the industry can squeeze fishermen from all angles. The article documents how the vessels that Blue Harvest regularly operates were already past their prime when the company bought them, and the company charges fisherman for maintenance, as well as other charges previously unfamiliar to the industry such as “a 3 percent electronics fee” and a “$400 wharfage fee for pulling up at the company dock to unload fish.”
The consequences of private equity firms’ influence on fishermen and their communities are already being felt: “45 percent of fishermen reported working 18 hours or more per day in a federal survey published last year, up from 32 percent in 2012,” according to CommonWealth.
“Under the private equity takeover, regional economies like New Bedford’s are keeping less of the industry’s profits while a cut of the owners’ share is shuttled to skyscrapers in Manhattan and, in some cases, overseas.”
Blue Harvest and Bregal Partners: A long history of growth through exploitation
Blue Harvest is owned by private equity firm Bregal Partners, which, according to the article, is the “Manhattan-based arm of a firm owned by a Dutch billionaire family, with roots in expanding through theft of Jewish businesses and using prison labor during the Nazi regime. More recently, the company has been connected to labor rights abuses causing deaths in Bangladesh and other low wage textile operations around the world.”
The fishing industry seems to be a prime target for private equity firms looking to squeeze more profit from fishermen and have accounted for “34 percent of mergers and acquisitions in the fishing industry [in the first half of 2021], nearly double the 2017 average” according to trade publication Undercurrent News.
ACON Investments, purchased three seafood processing companies, including one with a 38,000-square-foot plant in New Bedford. Another private equity company — Solamere Capital, which boasts as partners former Speaker of the House Paul Ryan and Taggart Romney, son of former Massachusetts governor and current Utah Sen. Mitt Romney — also acquired processing plants.
“Private equity owns a piece of the waterfront now,” says New Bedford Mayor Jon Mitchell. “Remote ownership is always going to be driven by dollars and cents. Without any loyalty to the place, business decisions can become cold and harsh.”
Gaming the system
Blue Harvest is also reported to have gamed the fishing license process to control significantly more seafood coming from New Bedford than lax antitrust laws were designed to allow, as it buys and leases fishing permits and processing facilities in the region.
“Under ‘catch shares,’ as the system is called, regulators cap how much of each species can be fished and require permits to catch them. While consolidation started before catch shares, the new system accelerated the process. It “turned the privilege to catch a pound of fish into a commodity that could be bought or sold without owning a boat,” Macinko said. “It opened the door to private equity.”
CommonWealth documents how Blue Harvest has not only bought up as many of these permits as allowed by law, but also leases additional permits, evading regulations intended to limit one company controlling too much of any particular seafood commodity. With a scramble to dominate the industry by buying up fishing rights, “the price of a single permit climbed to as much as $500,000 for groundfish,” making it impossible for independent fishermen to buy in.
As Blue Harvest and others have bought up more and more of the industry with hundreds of millions in private equity money, they can control the supply chain to reduce costs but “it also means that the company doesn’t have to pay its fishermen the market price for their catch.”
Private Equity Seeks Further Expansion in the Industry
This article notes that Blue Harvest is now lobbying to relax a restriction on leasing scallop permits to further dominate the seafood industry.
“This is going to hurt the fishermen and the local economy,” said Tyler Miranda, a third-generation fisherman from New Bedford and captain of two scallop vessels who is leading the opposition. “The only people to benefit are the owners of the largest companies. How much do the biggest owners need to take out of our wages and bring into theirs? How much is enough?”