Examination of witnesses
(Questions 180 - 199)
TUESDAY 12 JANUARY 1999
MR ALEXANDER
SMITH, MR
JOHN H GOODLAD
and MR HAMISH
MORRISON, OBE
180. Your Federation must have some view
because it is a complex problem and it does arouse many emotions
but you have already said the seal population is double what it
was in 1979. They are great consumers of fish and it seems to
me that we have three options. You may or may not agree. One is
that you cull seals quite heavily. The other is that you do something
to contain their population, a sort of birth control pill for
female seals which cannot be beyond the wit of the scientists.
The third one is to say that we do something about our quotas
to certain fishermen in areas where there are large seal populations
to correspond to their loss of fish because the seals have gobbled
them up. Do you think that is a correct scenario? If you do, which
one would you like to go for as a Federation?
(Mr Morrison) I think we have another problem in Scotland
with red deer which is almost identical. The population has exploded
and everybody is frightened to do anything about it because of
what is seen and portrayed to be gratuitous slaughter. Therefore,
the whole thing does require careful handling. I wonder if there
is a way of somehow farming, taking the seals for economic benefit.
One thinks of the petfood industry, for example. It would have
the morality of using the carcasses rather than just disposing
of them. There are other things like natural predators. In John's
part of the world, there are more killer whales now and perhaps
that could help the problem long term.
Mrs Organ: Can we farm killer whales?
Chairman: This is an interesting and important
area but it is not technically in the Committee's terms of reference.
Mrs Organ
181. You have talked about wanting to have
greater collaboration with researchers and scientists. I wonder
if you could elaborate about one or two particular areas where
you think there would be great usefulness in actually working
closely between fishermen and scientists? For these projects,
who do you think should be funding them?
(Mr Goodlad) I have two examples. Alec has already
mentioned both. Both are of great importance to the Scottish fleet.
One is the developing fishery for monkfish. It is now of enormous
importance to the Scottish white fish fleet. It is a fishery which
the scientific community acknowledges it knows very, very little
about. There has not been a properly funded or properly organised
monkfish stock assessment ever undertaken. The people who can
best advise the scientists where to find monkfish at certain times
of year, where monkfish spawn, what size they are at certain times,
are the fishermen. That is one example of where the fishermen
could have an enormous input into stock assessment. Secondly is
nephrops where there desperately needs to be some new stock assessment
because the fishermen's experience is that the quotas of nephrops
in both the west coast of Scotland and the North Sea could be
considerably in excess of what they are now and the fishing experience
of where to find prawns, nephrops etc., at certain times of the
year, would be invaluable.
182. Who should pay for the projects?
(Mr Smith) I can tell you who cannot pay for them
and that is the industry. There is a misconception that in Scotland
in particular they are all multimillionaires. I say to fisheries
ministers at times that we take them to the wrong places. We take
them to our best boats, the Rolls-Royces, and show them them instead
of taking them to the Ladas and the Skodas because there are many
more of these than there are of the big, plush vessels. The largest
percentage of the UK fleet cannot afford any more. They cannot
afford what they have, many of them. We touched earlier on the
compliance costs that we are subjected to in the UK compared to
other Member States. I have seen this with both the previous government
and the present government, where they are hellbent on removing
any financial assistance to the industry at all. If we were an
industry that could go out and do our own thing and were unrestricted,
then we could handle that. If we were an industry that was on
a level playing field where our competitors were subjected to
the same, then we could handle that as well, but we are not. With
restrictions in the amount of fish we can catch and land, restrictions
in the number of days we can spend at sea, these are all things
that make it impossible for us to be able to fund these kinds
of things. The other side, as John touched on earlier, is that
the Common Fisheries Policy dictates that Member States shall
do this so it needs to be done. We can play a part in this. I
suggested earlier on that the part we can play is in accommodating
scientists on commercial fishing trips to get extra data that
will give them a better database with which to assess the stock.
Mr Mitchell
183. You have given us various instances
where the scientific advice you think is not accurate, for instance,
in deep water fishing like monkfish. On the whole, do you think
that the new TACs reflect the real state of fish stocks around
Scotland?
(Mr Smith) The nephrops, west coast and North Sea,
are undoubtedly wrong compared to the stocks. The monkfish and
megrims are the same. Coley is another area. Sometimes the problem
with coley can be the percentage that we have of the total TAC.
That works very much against the UK and causes us great problems.
In general with the TACs this year, I suppose what we ended up
with was maybe reasonable. What was being put forward with the
precautionary principle fully implemented would have been fairly
tragic. When I say "tragic" I mean tragic because certainly
in Scotland we have moved from a fairly out of control black fish
scenario a few years ago to a system now where we are almost clean.
A lot of individual skippers who have found it impossible to land
all their catch legally have invested heavily. We have seen these
two licences, the pelagic ones, which were sold recently for £5
million and £6 million. We see the individual boat level
in the demersal sector where people are buying extra cod and haddock.
Some of the vessels who have the biggest problems in the north
east I know in the past year have managed to land all their fish
legally because they have invested very heavily in extra quota.
All in all, I suppose maybe the TACs, apart from the exceptions
that I have made, have ended up reasonable but what we really
need is stability. When currently we are projecting cuts of 30
per cent and things like that, no industry could handle that kind
of fluctuation. If we have a bad year class in particular stocks
and there is a requirement for us to reduce the TAC by ten per
cent, that is something that the industry can handle, but when
you start talking about 20, 30 and 40 per cent, we cannot. More
importantly, we cannot handle it if the advice is not accurate
because if we go to sea and the fish are there that is when the
major problems arise. If the scientists have got it right and
the fish are not there, then there is no problem.
184. You say that the black fish problem
has largely been dealt with. I think it was a more serious problem
in Scotland than in England.
(Mr Smith) Perhaps it was more publicised and highlighted
in Scotland than it was in England.
185. It must be a bigger problem if Scotland
has 70 per cent of the industry. Presumably a coastline like yours
has more opportunity for landing black fish anyway. If that has
been dealt with, does it mean that there have been more discards?
(Mr Smith) No. The one main reason for this is last
year we did have healthier TACs. The cod was up significantly.
The haddock was up as well. The major factor, I would say, is
that those who have had the major problem in the past have invested
in buying extra quota. They do have privately held quota. They
still work within a producers' organisation pool system but the
individuals who are catching more fish than others have bought
extra quota so that if they do catch more fish they then have
entitlement to land it legally. It would be wrong of me to say
that the black fish problem is totally eradicated but it is very
minimal and I say that sincerely. You are always going to have
a problem with vessels in the non-sector who have ridiculously
small quotas. There are other areas where maybe they are on 20
kilos of Dover sole per month or something like that, which is
something that nobody can really work with. There is always going
to be a small amount of black fish still going on but certainly,
as far as Scotland is concerned, the problem is almost eradicated
and the main reason is that people have invested heavily.
186. Do you think we will ever get rid of
discards? How would you deal with the issue?
(Mr Smith) It is so difficult. Having been a practical
fisherman all my days, I have seen discards. They have a no discard
rule in Norwegian waters but it does not work because the vessels
catching the fish just discard them and it is unenforceable. They
realise this as well. There are fewer discards in Norwegian waters
because the fish tend to be bigger there but we deal in a heavy,
mixed fishery and if you have X amount of quota for cod and you
are catching haddock that you have no quota left for, you either
break the law or you dump the fish. It is not that it can be done
with technical measures either. We are not really talking about
immature fish all the time. Coley is one of the main things discarded
in large numbers because very few people actually target coley.
You catch them in big quantities and if you have no quota for
them you just have to let them go. That is going to be part and
parcel of the industry for ever more. There are no easy answers
to that at all.
187. On the black fish problem, you say
it has largely been dealt with but is the fact that quotas are
lower in 1999 going to produce more black fish landing?
(Mr Goodlad) A few years ago, I think that might have
been a conclusion that you could have drawn but in addition to
what Alec has said about fish being purchased and people legalising
their position the level of enforcement is now much better than
it was several years ago. For example, on white fish, the introduction
of the designated landing port scheme will make any substantial
landing of over-quota fish much more difficult in the next year.
Likewise in the pelagic sector, with the complete demise of the
Klondiking operation where fish was sold over side at sea to Eastern
Bloc factory ships, most pelagic fish are now being landed in
Scandinavia where there is no black fish or at the very few pelagic
processing plants in the UK or Denmark, where levels of controls
are now very effective indeed. The answer to your question is
probably no.
Mr Curry
188. Mr Smith, you have just given us an
extremely interesting survey of how the market mechanism has been
used to tackle the problem of black fish. I asked Mr Deas earlier
on if he could outline for me the market mechanisms which were
actually happening in the fleet. You have referred to the trading
of licences and the sort of sums which they command. There are
differences I know between the different sectors of the fleets
and you may wish to answer in terms of the sectors of the fleet
but could you, without hesitation, deviation or repetition, explain
what happens in the industry in terms of those mechanisms? That
would be very helpful. Could you subsequently send a note—that
would apply to Mr Deas as well, through you, Chairman—outlining
the way it works in practice? Could you, for example, give us
an estimate of how much tonnage has changed hands through licence
sales?
(Mr Smith) I certainly do not have these figures but
my colleague, John Goodlad, is much more able to give you a clear
answer because he is the chief executive of a producer organisation.
(Mr Goodlad) In terms of quantification it is difficult
but we will do what we can to get something to you. The vast majority
of licences on fishing vessels in the UK have not changed hands.
We are talking about a minority. However, there is a market mechanism
whereby a fishing licence now changes hands for money. The fishing
licence has three parts to it which have a value. The first part
is the authorisation to fish. You cannot go out and fish without
the appropriate licence. The second part is that the licence is
quantified in terms of its VCUs, its vessel capacity units. You
will need a larger licence, a larger number of VCUs, to place
on a larger trawler than you will need to place on a smaller trawler.
These VCUs now have a value. If you were to build a new ship of
a certain size, you would need so many VCUs. The more VCUs you
need, the more you have to pay. The third element of the fishing
licence value is the so-called track record, the fishing entitlement
which comes with that licence. Each vessel has its own unique
fishing entitlement based on what that vessel landed in 1994,
1995 and 1996. That is loosely referred to as the quota entitlement.
Those are the three parts which are now bought and sold within
the industry and fishermen recognise the value attached to all
three parts of the licence.
189. Do you believe that this is likely
to become more prevalent? Let me draw an agricultural analogy.
If you are over quota on milk, then you can buy your lease quota.
From what Mr Smith has been saying, the same practice is becoming
prevalent in the fishing industry. Do you think this is a good
thing? Do you think there is scope for, if you like, the lubrication
of the system which the market can provide? When I made an earlier
remark about individual transferable quotas, Mr Deas said, "We
are getting quite close to them" and went on to specify.
Would you agree with that? Would you like to elaborate on that?
(Mr Goodlad) I would agree with the point which Barrie
made and certainly the position of the SFF is that we in many
ways regret what has happened. To elaborate a little, those of
us involved in the fishing industry are involved in an industry
where traditionally people have had the right to go out to sea
and pit their wits, their boat and their equipment against the
elements and catch fish. It is an industry whose culture is indelibly
associated with the freedom of the individual. The market economy
in terms of buying and selling of VCUs and fish quotas goes very
much against that deeply held tradition within all fishing communities.
I think there is a deep regret as to what has happened. However,
it is not unique to the United Kingdom; it is not unique to Europe.
It is happening all over the world in the fishing industry where
quotas are acquiring a property right.
190. If that is the spirit of the fisherman,
does not the whole regulatory system go even more against his
grain and is not the mechanism which you have just been referring
to a way of mitigating that? Is it not the lesser of the two evils?
(Mr Goodlad) No, I do not think so. You have one regulatory
system which might be replaced by a system of market regulation.
It is regulation as far as a fisherman would see it, I think.
However, it has happened and you made the analogy with agriculture,
which I think is fair. As organisations, our role is to try and
preserve as many jobs in the industry as we possibly can and as
many boats. Inevitably as technology advances there will be fewer
vessels in the fleet. I think everyone recognises that. However,
the big difference between agriculture and fishing—and we
may be very close through quota trading to a system of IVQs—is
that if someone buys milk quota in the United Kingdom, even if
that person may not be a British national, the actual operation
itself, the cattle on the fields, the milking of the cattle, the
production of the milk and so on all has to take place in the
United Kingdom for obvious reasons. You cannot take UK milk quota
and operate in France. You can with fish. That makes a very substantial
difference. That brings us to the whole flagship problem which
is a difficulty. The market trading of quotas which undoubtedly
will continue to grow has two problems. One is that an individual
fisherman can sell his quota and that quota can ultimately end
up in the hands of a non-UK company which may bring much more
economic benefit to another Member State or another country than
to the UK. The second problem with quota trading is that it will
inevitably concentrate the ownership of fish quotas and therefore
vessels in fewer and fewer hands. There will be a concentration
of capital. The problem of fish being sold abroad and the concentration
of fishing vessels and boats in fewer hands has very serious socio-economic
implications for fishing communities. It has very, very serious
implications for young fishermen who want to get into the industry
being able to get into the industry as vessel owners in their
own right. What some producer organisations are now doing and
something which we have done in Shetland is to look at the whole
concept of purchasing fish quota and holding that fish quota as
a Community held asset. We hope that by doing that we will retain
a pool of quota which will never be sold outwith the UK and will
be used by our producer organisation and then others in the United
Kingdom will then use that pool of quotas to provide a mechanism
whereby young fishermen can get into the industry.
191. Are you establishing a sort of quota
stock exchange? If Mr Smith has bought up more haddock because
he says he has been in a part of the world where the haddock are
very prolific, you are not going to chuck them out. Can you radio
and say, "Is there somebody who can buy my haddock and offset
my haddock against his quota?"? Are we talking about the
development of that sort of sophistication in terms of trading?
(Mr Goodlad) In the short term, that can happen very
easily through quota swaps between POs.
192. But it can be done in the short term.
He can lift his haddock and he can be on the radio and do it?
(Mr Goodlad) Yes, and it can be done in the longer
term by quota purchasing and quota leasing. It is not as simple
as Alec getting up his net and saying, "Can somebody take
this quota?" What can happen is that Alec's producers' organisation
can acquire additional quota which will then next week allow him
to have a higher quota.
(Mr Smith) This is something that has given us much
concern. As John has said—and I would support what Barrie
Deas said—the industry very much regrets the way this has
gone but that is the way it has happened. It has been allowed
to happen and it is there. To remove it or to go into reverse
is not an option now because of the amount of money invested,
but the concern that we have is that we strongly believe that
fish is there for fishermen to catch and fishermen only to catch.
Because of this trading and leasing of quotas, what we are seeing
is speculators coming into the market. This is a big concern of
ours because, as the rules stand just now, there is nothing to
stop yourself, for instance, buying up fishing licences of people
with big fishing entitlements and sitting on them, waiting until
I come to you to lease. That can happen and that is not what we
want to see in the industry. We do not want to see fishermen held
to ransom to lease fish from speculators. They are entering the
market now. We are in the process at the Federation of looking
at this to come up with proposals to put to ministers to prevent
this happening. I do not know how we are going to do it in the
short term but this has been a problem. The Icelandic fishery
of course is full of ITQs. I paid a visit there early last year
and saw the way it was working. That was one of the problems that
did arise. Speculators were in the market. It was done almost
like a stock market thing. As you say, with the Icelandic system,
if I hauled up and caught extra fish, all I had to do was go into
the Internet and make a deal there and then to buy extra quota
for the fish that I had caught. That sounds sensible and that
is fine if that is done between fishermen but if it is speculators
that can drive the price up —-
193. If you could manage it within the industry
through the POs, then your concerns would be less than the feeling
that outsiders would come in and exploit you?
(Mr Smith) Yes.
194. Finally, when you say that licences
can sell for millions of pounds, how justifiable is it for the
industry to argue that licences should not be charged for when
that asset which is not being charged for may be sold for millions
of pounds?
(Mr Morrison) I think there is a confusion here, Mr
Curry. That is rather like saying that, for example, you have
a fine house in London and therefore you ought to be a very wealthy
person in current terms. You may be in capital terms very wealthy
but if you sell it you then have to live somewhere else. There
are highly publicised instances of quota changing hands, but the
overwhelming number of people use the quota for what it is for:
to catch fish. I would caution the Committee against generalising
from the particular few cases that there and to build their case
on that for making a tax on licences.
195. If one were looking for a polemical
case of people selling licences for large amounts of money, they
are providing worthy ammunition for it, are they?
(Mr Morrison) Absolutely.
(Mr Smith) Within reason. The two large licences that
have been sold for that amount of money in the immediate past
are cases where that money has actually gone out of the industry
because the owners of the quota on both these occasions had got
it gifted by the government to them. They got something for nothing
and sold them for that amount, but the people in the industry
now catching that fish have used the capital to do it. They would
now be the licence holder, as you say, and they would be the ones
that would be chargeable for the licence. They can probably ill
afford it because of the amount of money they have invested, certainly
in the smaller cases where it is not companies, where it is maybe
individuals. They most certainly could not afford to pay a licensing
charge along with servicing the loan required to do it.
Mr George
196. I have a number of questions in the
area of management. I asked Barrie Deas earlier about your joint
proposals for the coastal state management post in 2002. Putting
it bluntly, what is in it for other EU nation states or, even
more bluntly, how can you persuade the Spanish to go along with
this proposal?
(Mr Goodlad) The thrust of the SFF/NFFO submission
is to reform the CFP in a way which makes it more efficient and
makes it more effective. Barrie has already outlined the idea
of zonal areas, different areas with an identity of difference,
at one extreme the Baltic right down to the Adriatic at the other
extreme. There is a feeling I think that often gets publicity
that the Spanish are rapacious and want fish everywhere. I do
not deny that that, on many occasions, is correct and is an impression
which we share. However, it was very interesting that at the Fisheries
Council in December when there was a major debate on tuna and
the allocation of the tuna fishery when some new proposals were
put forward that might have taken away some of Spain's historical
quota of tuna the Spanish were the first Member State to stand
up and evoke the principles of relative stability. We would all
like to believe that the Spanish were totally and utterly opposed
to relative stability and here was the Spanish Fisheries Minister
at the Fisheries Council in December saying, "We want relatively
stability because it suits us and we want it to apply to tuna."
Taking that point shows that when an idea benefits more than one
Member State, as relative stability does, when other Member States
and other fishermen's organisations have the chance to examine
our proposals, they will make sense to them as well as us. A zonal
approach for the Bay of Biscay, for example, will ensure that
the Scottish fishing industry, for example, will never be able
to set loose their fleet of both seiners and trawlers on the local
sardine fishery. I would have thought that would command enormous
support amongst inshore fishermen in Spain. I do not think it
is automatic that the Spanish will be against it. We have a lot
of work to do.
197. Through Europeche, you have been speaking
to the Spanish and you have not exactly threatened them but—
(Mr Goodlad) No. I was a little facetious perhaps.
198. You have heard we will be going to
Spain in about a month and a half. What questions do you think
we should be asking of them whilst we are there?
(Mr Goodlad) It would be very interesting to get their
viewpoint on this issue of zonal management and protection of
inshore fishermen. Of course, you have to be very careful who
you are speaking to and make sure that you meet not only the distant
water and the middle water fishermen from Vigo who may take a
different view, but the vast majority of Spanish fishermen consist
of fishermen who do not venture beyond 20 miles of Spain. I think
it is important you speak to them and get their viewpoint as well.
199. I have a further question about the
sea fisheries committees. They exist in the rest of the UK, not
in Scotland. Do you welcome the establishment of something to
manage up to the six mile limit and to protect the interests of
the inshore fishermen?
(Mr Goodlad) We do not have them; we do not want them,
but, as an alternative, we are examining in Scotland at the moment
the idea of regulating orders which is something which, in our
view, is better because it can be more industry driven. The problem
with sea fisheries committees is that it tends to be more driven
by local authorities than by the fishing industry. Local management
of fisheries is very important, but we do not think that England
and Wales have it quite right.
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