Select Committee on Agriculture Minutes of Evidence

Examination of witnesses (Questions 180 - 199)



  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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