Losing money in the fishing business

March, 2015

When I was young and foolish (late 70s), I invested in a fishing boat. A kid who had worked for me at Computerworld, Brian Sweeney, decided that he never wanted to see a desk again and headed off for a life of fishing. A couple of years later, after working his way up from scallop shucking in New Bedford to deck hand on a “day-tripper” out of Chatham, he came to me with a plan to buy and run his own boat.

His plan was to buy a 29-foot Dyer from a local guy who was selling it and fit it out for what they called “jigging.” Jigging is line fishing – usually for Cod. It used to be popular in Chatham. You use sonar to find the school, and drop several lines overboard with rubber worms and lower them into the fish, which are on the bottom. The fish bite, and the machine “jigs” the lines a couple of times to set the hooks. Jigging is ecologically sound and “day boats” delivered very fresh fish to the dock every evening. The buyers in Chatham (there were only two allowed) paid extra for them, loaded them onto a trailer every night and sent them to New York City.

Sweeney had three revenue projections, optimistic, medium and pessimistic. Even the low one broke even. He asked me for $10,000, which I gave him. The first year the gross was lower than the lowest budget, and I was afraid Brian would ask for more money, but he didn’t. He found a way to make it; and after one more bad year he switched to gill netting.

Gill nets had not been used in Chatham before. They involved setting poles on the ocean bottom and stringing a net between them. The smaller fish would swim right through the large mesh, but mature Cod got caught. Sweeney would let the nets “soak” for 24 to 48 hours and then haul them in and take the fish.

This system caught a lot more fish, but if fish were in the net for any length of time, the Dogfish (a form of small shark) would attack them and eat them. Dogfish might also get caught in the nets, but there was no U.S. market for Dogfish (the British used them in fish and chips, Sweeney told me).

Around that time, the Wall Street Journal reported that the government had set aside half a million dollars to figure out how to change the name and perception of “Dogfish” to make it a commercially viable species. They are still at it. Just today (March 18, 2015) I read in the Journal that a few daring chefs are trying to popularize dogfish and other “trash fish” like hake, pollock and Acadian redfish.

At the time, the problem of diminishing cod stocks was just getting a lot of attention, and Sweeney was in favor of vigorous quotas. But he didn’t make his opinion public among his fellow fishermen because they would have expelled him from the fraternity. They wanted no quotas, and when quotas were eventually put on they fought to keep them generous. Now, the cod is almost gone and the quotas have finally been dropped way down. The fishermen are still complaining, and the popularizing of trash fish has taken on a new urgency. Sweeney also was unhappy with the price he got for his fish. He was forced to sell to one of two dealers at the fish pier in Chatham and both of them made the same price every day. It was much, much less than the fish sold for at the markets.

At one point Sweeney was dating a woman who bought the cod in Chatham and shipped it to Florida for all the New England snow birds who wanted their cod. One day the timing was such that she bought the cod he had just sold to the wholesaler on the dock. The difference in what Sweeney got and what she paid was unconscionable, he thought. He confronted the wholesaler, who lied about what he had sold the fish for, but it did him no good.

Sweeney’s argument made sense to me. He paid all his boat expenses, bought diesel, and worked long hours to catch the fish. Then he gutted them and got them ready for the fish market. All the wholesaler had to do was weigh them, put them in boxes and load them on a truck. Shouldn’t Sweeney get the lion’s share of the price?

Sweeney just wanted the same privilege as the shell fishermen who could sell to anyone they wanted. On the way in they would start making calls to the various Cape Cod restaurants and fish markets that wanted shellfish and those that paid the most got the most. Competition like that was good for the fishermen. But the people who bought the fish, both politically conservative, did not like the competition; so they insisted that all those who landed in Chatham sell to them, and then they fixed the price. So much for the free market.

Sweeney’s fishing business never made enough to throw off any money, but as it turned out I did better with that than with any of my other investments with friends or family. I got about $20,000 in tax deductions, as I recall, giving me most of my money back. Last time that happened.


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