Examination of Witnesses (Questions 60
- 79)
TUESDAY 17 NOVEMBER 1998
MR STEPHEN
WENTWORTH, MR
ANDREW KUYK,
MR IAN
GORDON AND
DR JOSEPH
HORWOOD
60. You would look forward to the time when
some of this could be unravelled? Would that be a desirable objective
to set? Everything new that come from MAFF—I understand
why, because designated ports have been under discussion for decades—represents
yet another element of control and further public money spent
on enforcement, monitoring and research, which is not even co-ordinated
across the United Kingdom. God help us when we get the Scottish
Parliament and Welsh Assembly. At some stage does one not have
to ask: what is the bang for the buck? What does one get in return
for this colossal input? How does one start to unravel it? If
someone asked you to put a towel around your head and think up
a scenario for unravelling it what would be the first easy steps
that you would recommend?
(Mr Wentworth) A lot of these questions are ones that
you will want to put to Ministers.
61. They will ask you to do it.
(Mr Wentworth) One thing that we have seen over a
period of years is that the role of producer organisations has
become much more significant. A very high proportion of the quota
management is now done in effect for government by some 20 producer
organisations. The position of those organisations is also significant
in relation to the effort management arrangements under the MAGP.
They are being asked to manage the effort for the pelagic and
beam trawl fleets. Their role in quota management can potentially
develop as a result of fixed quota allocations. In these ways
there is a significant involvement of the industry which perhaps
a few years ago was not possible. There is an element of the industry
taking greater responsibility for its own management. The reasons
why we have the system as it is are in part historical. There
is also the requirement to operate the Common Fisheries Policy
which cannot be totally ignored. Underlying the industry is a
very large number of very small businesses. Some are very small;
others are much larger with perhaps individuals companies owning
half a dozen vessels. Those may be quite important enterprises.
If one had no fisheries management it would have a very unhappy
consequence for quite a few of those businesses with employment
effects in areas of the country where there were relatively limited
opportunities. There would be a huge adjustment problem. Looking
ahead at how we are developing, I have described how producer
organisations appear to have a growing role. We are looking rather
carefully at how to deal with inshore vessels—the under
10 m fleet—in which the interests of quite a large number
of individuals are at stake.
Mr Curry: Perhaps you would reflect on the fact
that up to now every response has been to tighten regulations
and introduce more controls. One has the costs of MAFF inspectors
and MAFF administration, the research facilities, assistance provided
by the Navy, aerial surveillance, the work that is commissioned
in Scotland and so on. I calculate that we are spending 7 or 8
per cent of the value of the landings in an industry that is smaller
than potatoes. At what stage does one say that it has gone far
enough? How does one begin to look for a different approach? I
would like to explore that in the course of this inquiry. It is
a political question which perhaps you would convey to Ministers.
But I think that we should indulge in war games and look a little
beyond the immediate perspective.
Chairman: I believe that to be a rhetorical
question.
Mr Hayes
62. I was surprised that in your answer to Mr
Curry you did not refer to the national interest. Not sharing
Mr Curry's faith in the benevolence of the marketplace, I wonder
whether it is the objective of public policy in this field to
protect the national interest in terms of jobs, related industries
and prices. Should that not be at the core of public policy in
this area? It is inconceivable to have a very diverse industry—a
lot of very small people are involved in it—trying to define
and implement that off their own bats. That is the defence, is
it not?
(Mr Wentworth) I think that we took the national interest
as given. Another factor is the environment. All of these are
parts of the reason and underlying justification for the operation
of the Common Fisheries Policy. If one looks at the motivations
for that, they include all of the points that Mr Hayes has mentioned
including the environment.
Mr George
63. To pursue the question of the restructuring
of the fleet, certainly the NFFO has commented on the age structure
of the fleet and compared the British fleet with the Spanish and
French fleets which it alleges have been substantially renewed.
It has even said that as a result of the failure to invest as
those other Member States have done the UK fleet has fallen from
first to third rank in the EU. Do you have a concern about the
old age of the fleet? What can the department do to encourage
the renewal of the fleet?
(Mr Wentworth) Perhaps I should first comment on the
reference to first and third rank. When I first read it I wondered
whether I should look up some statistics. Then I concluded that
it was simply a descriptive term meaning that it was felt that
our fleet was not as good as others in a qualitative sense. The
age of the fleet is as it is. We have provided you with some data
on it. I had a quick look before I came at some data eight or
10 years ago. I do not think that the age structure has changed
markedly, in the sense that as new vessels are being built and
coming in there are other vessels leaving the fleet. Obviously,
it is more complicated than that but nothing dramatic is happening
in the medium term. The efficiency of vessels in catching fish
is not necessarily age-related. Vessels with a fairly old hull
will nonetheless usually be equipped with replacement engines,
new fish-finding gear and new navigational equipment. The evidence
is that as a result of the age of the fleet we are not having
difficulty in catching our quotas. There is not a problem in that
sense. Comments from the Committee this morning indicate its concern
that we are catching more than is recorded. In the end, I believe
that the issue is how the vessel owner perceives its profitability.
He could scrap his vessel and replace it with a new one but he
would have to invest quite a lot of money. The factual evidence
is that fishermen choose to continue with their existing vessels
because the profitability of new ones would not justify the investment.
Having said that, certainly investment is taking place in some
parts of the fleet. There has not been a policy on the part of
the fisheries department directed to the age structure of the
fleet as such. The decommissioning scheme has tended to take out
the older vessels. The advice that we have from surveys is that
probably a significant part of the decommissioning money has gone
back into the industry and been used to refurbish other vessels.
64. But what about the NFFO's proposal and others
about scrap and build and a more interventionist approach; that
is, not simply to invite owners to scrap but to seek a target
of one new boat for every two that are scrapped?
(Mr Wentworth) In a sense, that has been happening.
If one looks at the restructuring that has taken place in the
fleet, one finds that very often new vessels use the licences
and track records of a number of other vessels that have been
taken out of the fleet. The market is generating that kind of
activity to an extent. The hope of the NFFO is that there will
be government funding for some sort of scheme. In recent years
administrations have decided to focus expenditure primarily on
decommissioning in order to seek to achieve the targets of the
Multi-Annual Guidance Programmes.
65. Does the department have a view on the safety
implications of the older age fleet? A lot of lives have been
lost. For example, recommendations have been made by the MAIB
that the Government should invest in improved winch gear in beam
trawlers. The response to it is that it would be seen by Europe
as investment in the overall fishing effort whereas it is a safety
measure. Do you work with your colleagues in the DETR on that
front?
(Mr Wentworth) As to support for safety, we pay grants
for some kinds of safety equipment. Obviously, one test is that
one should not be extending fishing capacity. It has not been
put to us by the Department of the Environment, Transport and
the Regions that there is a safety problem that is specifically
age-related. When one looks at accidents they happen in many different
circumstances. As far as I know, it is not just older vessels
that suffer accidents. I am not particularly well informed about
that. Perhaps it is a question that you will want to put to the
DETR.
Mr George: I turn next to the EU proposals for
the installation of satellite monitoring equipment. I believe
that the French and Spanish Governments are making grants available
to fishermen with vessels over 24 m. The UK has decided not to
do that. It is something that the industry would welcome. It appears
that everyone is in agreement that this is the way forward for
both monitoring and enforcement. Do you believe that it makes
sense to put money into that particular measure?
Chairman: Is the industry relaxed about it?
Mr Curry: The industry refused to have it on
board its vessels, did it not?
Mr George: The latest information I have is
that the industry at least in Cornwall broadly welcomes this move.
Chairman
66. Obviously, that is not the view of Grimsby.
(Mr Wentworth) I hesitate to walk into this gap of
perception. Historically, there was a good deal of resistance
to it. The main process of installation will take place next year.
We will discover practically whether or not there are problems.
Let us not anticipate that now. As to the position of the Government
on whether or not grants should be made available, I do not think
I should tread in this area. Mr Morley has made the position very
clear, for example by a letter to Fishing News a week or
two ago. If the Committee finds it helpful I can provide a copy
of that. In essence, the cost of satellite monitoring equipment
is quite modest. The vessels in which it is to be installed are
on average catching £600,000 worth of fish per year. If one
is talking about a few thousand pounds for a piece of electronic
equipment perhaps a balance must be struck.
Ms Keeble
67. I want to ask about the sea fish processing
and sales end of the industry from paragraph 3.14 onwards in your
memorandum. From which countries do we get most of our imports?
(Mr Kuyk) The imports come from a variety of sources.
We can let you have a note that breaks down imports. The main
ones would be Iceland, Faroes, Norway and so on. There is a long
list.
68. It would be helpful to have a breakdown
with the amounts. Presumably, some of those countries are outside
the EU?
(Mr Kuyk) Yes.
69. You refer to the changes in the pattern
of consumption. Presumably, we see that in the switch from wet
fish to fish fingers and so on.
(Mr Gordon) The change in the pattern of consumption
is from what is called primary processed fish—for example,
fish that has been filleted and so on—to fish that has been
subjected to a secondary process, such as being put into semi-prepared
meals with sauces and so forth. That has been the main change
in the preparation of fish products and their sale through retailers.
70. You say that about one third is fresh chilled
and two-thirds frozen. Presumably, the one third includes some
of the fish that has been through a degree of processing and is
not straightforward wet fish?
(Mr Gordon) It would include that kind of fish.
71. What proportion of that is fresh fish, in
the sense that it has simply been gutted and cleaned?
(Mr Gordon) We will provide a note on that.
72. It is quite surprising that a lot of processed
fish is imported. Are they prepared fish products? Does that give
rise to a labelling issue?
(Mr Wentworth) A lot of fish arrives in the form of
frozen cod blocks for the manufacture of fish fingers.
73. Would that count as processed fish?
(Mr Wentworth) These are rather technical questions
which we will consider in preparing the note for the Committee.
74. If that could be broken down it would be
helpful. You say that the "fish market is becoming increasingly
dominated by multiple retailers". Do you mean supermarkets?
(Mr Wentworth) Yes.
75. What happens to the price structure? Fishermen
always complain that they are poor. If one goes to a supermarket
one finds that fish is cheap but not that cheap. It is a little
like the argument that one hears in the meat industry. The question
arises: where does the profit lie in the production chain? Can
you say something about that?
(Mr Wentworth) I think that we should cover all of
these questions in a note. I suspect that as to that there will
be a big gap because the quayside price is for whole fish in boxes.
There are various stages of processing and transport, wastage,
the risk that some may not be sold and so on. All of that results
in the retail cost looking very high in relation to the quayside
price.
76. But it is not dissimilar from the argument
one hears about meat production, namely that at the end of the
day what the consumer pays bears very little relation to some
of the production inputs. Certainly, you have a lot of disgruntled
fishermen just as there are a lot of disgruntled pig farmers.
(Mr Wentworth) Some fish is sold directly, or fairly
directly, by fishermen in various ways which provides in certain
localities, not everywhere, a competitive market. It is not totally
without pressure to ensure that any increase in cost before fish
is sold retail is reduced.
(Mr Kuyk) Although there are similarities, one significant
difference is that the fish catchers essentially pay only a harvesting
cost and are not investing in the production of the resource,
unlike a producer of livestock who has feed inputs and so on.
77. Do you argue that because the cost to the
fisherman is different from the cost to the farmer the former
has more of a windfall profit?
(Mr Kuyk) Yes, if one takes the view that the fish
is a free resource to begin with and that fishermen are paying
simply a harvesting cost. Obviously, fishermen must invest in
the equipment that is necessary to harvest the fish, but they
are not putting in the same kinds of inputs as horticulturists
or farmers. To that extent there is a difference.
78. Has there been much discussion about the
pricing structure and profit levels?
(Mr Wentworth) It is not something that has been raised
with us by the industry in those terms.
79. You talk about changes in marketing in the
future. In paragraph 3.22 you refer to "more direct contracting
between producers and processors". Are you talking about
the kind of arrangements that exist between farmers and retailers
or other bits of the chain?
(Mr Wentworth) There is scope for many different kinds
of development in this area if the different parties feel it is
worthwhile and it constitutes a meaningful contract. If fishermen
are able to have a longer term contract with particular processors
or retailers that may give them a greater sense of security or
provide them with ways to improve their longer term returns. There
are some examples, not in the UK, of large scale fishing effectively
resulting in fish on the vessel being sold before it is landed.
The vessel reports back what it has caught and those interested
in buying it can bid for it and then it is landed to the appropriate
person.
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