New England groundfishermen have been invited to participate in a new business and model for selling part or all of their catch through a system similar to commodity market contract sales.
The term used by the founders of Open Ocean Trading is "forward market contracts."
Keith Flett of Duxbury, who comes from a Montauk, N.Y,. fishing family, introduced the commodity approach last week at the Cape Ann Seafood Exchange on Harbor Loop in Gloucester, which has agreed to offload fish sold in contracts brokered by Open Ocean Trading.
In his briefing, Flett said the new system would provide an option to sellers (fishermen) and buyers to agree in advance to virtually any transaction — small or volumes single or multiple species, daily or monthly or even longer, depending on the desires and matches of the two sides.
The approach was said to provide price stability to a market that has been plagued by wild swings of landings and price fluctuations.
The "market volatility," Flett told the attending fishermen, "was caused by "lack of market information."
He said his business, which began operating at the start of May, would allow boats at sea to offer catches just made to buyers at the dock or could be negotiated for longer periods. The nature of the transactions is virtually unlimited so long as there are willing providers and buyers.
Participants at the briefing seemed skeptical at first but as the two-hour presentation went on, their skepticism melted into understanding and willingness to consider the idea of having a set price for the fish they promise to catch and deliver.
About a dozen fishermen participated in the seminar.
"We currently have 14 active buyers — auction and non-auction buyers — seven active sellers, 30 seller viewers — including some sector managers — and 10 buyer viewers — some large institutions that are not part of the auction system," Flett said in an email to the Times.
He said Open Ocean Trading would not replace the existing auctions — locally, Cape Ann Seafood Exchange and BASE Gloucester on Fisherman's Wharf — but give fishermen and buyers a way to lock into product and price on a part of the harvest with the rest delivered to the inspection of buyers at the auctions.
The agreement with the Cape Ann Seafood Exchange could bring in additional boats, since to participate in the "forward market contracting" would require landing with Kristian Kristensen, who acquired the Gloucester seafood auction from the Ciulla family last year. The Ciullas and their former Gloucester Seafood Display Auction, at the center of a long-running dispute over NOAA law enforcement actions documented by a U.S. Commerce Department inspector general, were given a Cabinet-level apology for the federal government's actions and paid limited reparations last May.
"This is progress, it brings light into the industry," said Chris Duffy, Kristensen's operations manager. By that, he said he meant that the approach — with contracts guaranteeing price and quantity — allows fishermen to base business decisions, including how much quota to lease, on dependable prices.
The system also should allow fishermen to develop boutique relationships with buyers where the supply and demand needs match up.
The brokerage takes its share — 10 1/2 cents a pound for cod, for example — in equal parts from the seller and buyer. Thus, the system will not add to the landing fees now paid by fishermen.
Richie Canastra, who owns BASE, an auction business with outlets in Gloucester and Boston and based in New Bedford, said he has the capability to do the same thing with his auction software, but hasn't because he does not believe it would serve the interests of his sellers or buyers.
Flett will continue briefing fishermen in other ports in coming weeks.
Richard Gaines may be contacted at 978-283-7000 x3464 or firstname.lastname@example.org.