Supplementary memorandum submitted by Dr Andrew
Palfreman (W21a)
1. GENERAL
The SU wants the fishing industry to become
a group of independent, competing businesses, and somewhat fewer
of them than there are at present, freely traded across national
boundaries within the EU. The alternative vision is for an industry
more widely dispersed over the whole of the UK coastline, consisting
of a greater variety of vessels, delivering value into the regions,
but of necessity, benefiting from some degree of protection from
the tendency to greater concentration. The legal and institutional
tools are already in place to do this—namely fish producer
organisations.
2. ITQS
In economic terms there are three broad classes
of problem with ITQs.
(a) An operating fishing vessel generates
a number of externalities
These include:
— stock externalities, or the impact
of each vessel on the fish resources as a whole, and therefore
on the economic performance of the fishing fleet. By restricting
the volume of fish that vessels are allowed to catch an ITQ system
appears to solve this problem. Protagonists claim that ITQs can
be set at such a level that the sufficient fish are left in the
water to reproduce and vessel owners and operators can optimise
on their employment of inputs, thus, theoretically, greatly reducing
the need for input controls. (Opponents argue that the negative
features—matching inputs with outputs under quota uncertainty,
incentives to get round restrictions, high grading, price dumping,
concentration of commercial capital, destruction of social capital—outweigh
the positive.)
— Congestion, or crowding, externalities.
These have nothing to do with the capacity of the resource to
reproduce. They refer to the impact of one fishing method on the
capacity of another to operate. Trawling—a proactive approach
to fishing—is now completely dominant as a fishing method.
But the technology reduces the ability of other fishing methods
to continue. I am particularly aware of the demise of anchor seining
from Grimsby. This is a low unit cost, low energy, semi-passive,
fishing method depending on the availability of large fish. The
change in the structure of North Sea cod stocks, due to trawling,
rendered this fishing method unprofitable. Similar arguments might
apply to other smaller scale fishing methods. Without additional
protection there is no guarantee that other, smaller scale, less
proactive, methods will survive. These smaller scale fishing methods
include sea angling.
— Environmental externalities. All
three recent heavyweight reports (SU, RSE, Royal Commission on
Environmental Pollution) place great emphasis on the environmental
issues. None of the reports explains this in economic terms. The
basic economic externality argument is that fishing influences
the characteristics of the production function of some other economic
activity, and hence the value of that activity for other economic
agents or for society as a whole. Thus if trawling affects the
seabed, and that seabed generates more value for society in its
pristine state than post-trawling, then some social value is lost
as a result of trawling. An Icelandic biologist, Jo«nas Bjarnason,
has written extensively about harmful genetic changes to the fish
stocks brought about as a result of trawling and the consequent
targeting of large fish. I am not qualified to comment on his
arguments, but it is another example of an environmental externality
which is not accounted for by ITQs. ITQs do nothing about this
class of externalities.
(b) The distribution of income
I do not need to add to what I have said in
an earlier submission. It should be obvious that careful social
cost benefit analysis of fishing activities may lead to a completely
different prioritisation of the importance of fishing to a locality
than much cruder dependency ratios or assessments of vulnerability.
(c) The long-term structural consequences
The Committee will have gathered, I am sure,
that a longer term dynamic consequence of ITQs is increasing concentration
of capital in the sector. The implications of this are regressive
especially if capital becomes concentrated in regions where the
opportunity cost of labour is high, and, by implication, deserts
localities where labour is in plentiful supply and thus where
the opportunity cost is low. It is also regressive if capital
leaves areas of the UK where the upstream and downstream multiplier
effects from catching fish are strong.
3. REGIONAL ADVISORY
COUNCILS
If RACs can become effective bodies, with significant
influence, or even control, over fish catching in their respective
regions, then that should lead to an improvement in management.
Whether or not they do so requires, not wishful thinking, but
analysis of the structure and powers. They criteria that I apply
are:
1. the operating rules have to be known by
the participants if the collective action is going to be sustainable;
2. because mutual gains can arise in a variety
of different ways so the economics of collective action requires
the benefit delivery mechanism to be explicit;
3. the magnitude of the expected benefits
should be predictable; and
4. risk and uncertainty need to be seen to
be reduced through collaboration.
POs meet these criteria, but RACs, as merely
advisory bodies, hampered by heterogeneous membership, do not.
A real linkage between participation and profitability needs to
be established; then they will flourish. Otherwise they become
just talking shops. As currently constituted they cannot adjudicate
between different interests, they cannot negotiate with outside
parties, and they do not have much money to commission research.
The proposed EU support (200,000 euros in the
first year) is conceivably consistent with the concept of a discussion
forum, but not with any real authority. A lot more thought needs
to go into how they might be financed over the longer term. That
is a major exercise which will require consultation with interested
parties and other Member States.
I do not see any major objection, in principle,
to the geographical coverage of RACs. As presently constituted
they are only going to be minor players anyway.
4. ENFORCEMENT,
COMPLIANCE, TRANSPARENCY
My impression from the Yorkshire and Humber
region is that the degree of hostility between the inspectorate
and the sector is greater than it ever has been. Under the current
circumstances on board observers could be a disaster. This is
quite simply because skippers do not feel as though the inspectors
are on their side. For acceptance of inspection etc. the fishermen
have to sense a link between what inspectors do and the benefits
accruing to the skipper and crew. I am not convinced that the
SU proposals really address this problem.
5. TRACEABILITY
The industry, rightly, is sceptical about more
exacting traceability requirements. For smaller scale wholesaling
operations a merchant would wish to take fish from a number of
different sources to meet an order, so strict traceability is
bound to be very difficult. But the Food Law (eg Regulation 178/2002)
is in place so it is hard to see how it can be avoided. My own
view is that Producer Organisations might be a way forward. Fish
can be said to come from the vessels of one PO and from a specific
fishing ground, and this might be enough to satisfy the legal
requirement.
6. EFFORT-BASED
SYSTEMS
A comparison between effort-based and output
based management systems raises many complex issues which actually
need detailed study from both biological and economic viewpoints.
SU, RSE and the Royal Commission have found output control to
be difficult and expensive, not surprisingly, so the experts are
turning more to input controls as a possible way forward. But
input controls raise lots of difficulties as well. The key issue
for either approach is winning the collaboration of the sector.
The greatest problem associated with input control
is determining how much effort is represented by one fishing vessel.
Vessels are of different size, they have different equipment and
gear, maintenance quality may vary and skipper skill differs between
vessels. The issue obviously applies to the UK fleet. For example,
the Committee will probably have found that effort based systems,
based on fishing days only, do not generate opposition amongst
smaller scale fishermen because many of their costs vary directly
with fishing time, their capital costs are lower, and they do
not expect to spend so long at sea. The owners and operators of
larger vessels, however, may have taken a different position,
depending as they do on longer periods at sea.
Determining the appropriate level of effort
is also problematic. For example some skippers may be able to
make much more effective use (implying higher levels of fishing
mortality) than other skippers. But effort is likely to be less
costly to monitor than outputs and control less costly to enforce.
As inputs rather than outputs are controlled, misreporting, discarding
and highgrading are not so serious, if they matter at all. I should
also point out that there is no absolute right or wrong with fisheries
management systems.
Your letter rightly points to the danger of
disruption of the relative stability principle. Whether or not
the UK would lose on a shift to an effort only based system depends
on how effort is calculated, and at this stage that is impossible
to say.
7. The Concept of the Fish Ranch
The idea of extensive, rather than intensive
fish culture receives comparatively little attention in each of
the three recent major reports.[7]
"Turning the Tide" (December 2004) states that 27 countries
now employ ranching as an alternative to aquaculture and outlines
one approach (on page 151), as applied in Japan, Russia and North
America. This involves tank production and release of juveniles.
The same report also acknowledges variants on this, including
the use of barriers to fish migration or artificial reefs and
points to some cost advantages of sea ranching systems. The Royal
Society of Edinburgh recommends further research into the culture
of what it terms "new species", such as cod (page 65).
The Strategy Unit (page 76) presents mariculture as an investment
opportunity for the inshore/shellfish (under 10 million) sector.
Meanwhile the European Commission has received a suggestion from
the International Council for the Exploration of the Sea (press
release dated 19 October 2004) that European coastal countries
should install macro-farms with a capacity for more than 14,0000
fish in their 200 nautical mile zones.
8. Anticipated Benefits
Offshore fish ranching might play an increasingly
important role in the UK and international fisheries sector. Subject
to careful species selection, marketing, quality management, food
safety and environmental friendliness, initial predictions suggest
that it can be profitable. Also projects around this theme may
meet the criteria for FIFG support.
The recommendations of "Net Benefits—A
Sustainable and Profitable Future for UK Fishing" are not
yet Government policy. However they include a smaller white fish
catching fleet than the UK has at present, a development which
can be predicted to reduce employment and incomes in several coastal
areas. Offshore fish ranching might substitute for some of the
lost income and employment in those regions which lose fishing
capacity as a result of changes in policy.
There may also be significant upstream linkages.
The upstream multipliers, which the aquaculture sector has produced
through the various servicing requirements of the fish farms,
correspond roughly to those that mariculture might be expected
to achieve. Downstream linkages can also be predicted. Fish ranches
could produce fish to supply those regional markets which can
be expected to lose supply as a result of national changes to
the whitefish fleet. It might also be feasible to use the structures
as a source of fish for restocking zones for sea angling.
9. Mariculture: One Approach
One innovative company (Maris Fish Ranches Limited)
has designed large, flexible, and submersible structures, planned
to be located deep enough to ensure that they are no hazard to
surface navigation. It is planned that the structures would be
anchored offshore in depths of at least 30 metres and able to
be serviced by fishing vessels. This should ensure that the detritus
from the fish stock within the structures is adequately dispersed,
thus alleviating some environmental concerns. The design could
also be adapted to employ redundant offshore platforms for mooring
purposes.
The location of the structures and the species
which are retained are expected to be interdependent decisions.
Northern locations might point to gadoids whilst a southwest locations
might suggest other high-valued species, such as seabass and possibly
hake.
10. A Recommendation for Pilot Studies
Mariculture developments need additional detailed
pre-feasibility modelling and planning for the specific environmental
context of selected and suitable UK maritime regions. They should
then be tested on a pilot scale. However, because of the many
legal and technical issues further progress on this can only be
achieved with official support and guidance.
January 2005
7 Strategy Unit, Net Benefits, A Sustainable and Profitable
Future for UK Fishing, March 2004; The Royal Society of Edinburgh,
Inquiry into the Future of the Scottish Fishing Industry, March
2004; Royal Commission on Environmental Pollution, Turning the
Tide: Addressing the Impact of Fisheries on the Marine Environment,
Cm 6392, December 2004. Back
|
