5 Improving the economic situation in
the fishing sector
| (27349)
7217/06
COM(06) 103
| Commission Communication: Improving the economic situation in the fishing sector
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| Legal base | — |
| Document originated | 9 March 2006
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| Deposited in Parliament | 15 March 2006
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| Department | Environment, Food and Rural Affairs
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| Basis of consideration | EM of 24 April 2006
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| Previous Committee Report | None
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| Discussed in Council | April 2006
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
5.1 According to the Commission, the fishing industry has in recent
years been facing difficult adjustments as depleted fish stocks
and unfavourable market conditions have eroded its profitability.
Moreover, although it says the reform of the Common Fisheries
Policy (CFP) will eventually lead to an economically healthier
industry, the restrictions it imposes will continue for the foreseeable
future. It also comments that the recent increase in operating
costs arising from higher fuel prices comes at a sensitive time,
and has created "unprecedented" difficulties for many
parts of the industry, particularly bottom trawlers using towed
gear and targeting demersal species. It has therefore sought in
this Communication to identify the reasons for these difficulties,
and to suggest ways in which the challenges facing the industry
might be addressed in both the short and long term.
The current document
5.2 In assessing the source of the current difficulties, the Commission
has looked at both decreasing income and increases in
costs. In the former case, it notes that prices for many commercial
species have stagnated or even declined in the first half of the
present decade, with the major factor being the concentration
of sales in large distribution chains and greater competition
between fish and other products, putting pressure on wholesalers
to reduce their margins, which in turn affects primary producers.
The Commission says that these factors have been reinforced by
the depletion of the stocks, particularly for the main white fish
species. This has on the one hand resulted in the market being
supplied almost exclusively by imports, and on the other hand
in a downward economic spiral whereby an increased fishing effort
is being deployed on a diminishing supply of fish. In the case
of costs, the Commission again highlights the significance of
rises in fuel prices.
5.3 As to ways of addressing these difficulties,
the Commission suggests that there is a need in the short term
to rescue and restructure enterprises capable of regaining profitability
through structural changes, but that it is also crucial to put
these measures into a longer-term perspective.
SHORT-TERM RESCUE AND RESTRUCTURING
5.4 The Commission stresses that rescue aid should
be seen as a means of keeping an ailing enterprise financially
afloat for the time needed to work out a restructuring or liquidation
plan, that it should last for no more than six months, and must
take the form of a reimbursable loan or guarantee. Where such
aid is followed by an approved restructuring plan, it can be repaid
with support received by the firm in the form of restructuring
aid.
5.5 The Commission suggests that further restructuring
to restore economic viability will often imply investment to adapt
vessels, and that certain types of modernisation not otherwise
allowed under the guidelines on state aid to fishing could be
considered if it is part of rescue and restructuring plans authorised
by the Commission. More specifically, the Commission says that
eligible investments could include:
- a first change of fishing gear
resulting in a less fuel-intensive fishing method;
- the purchase of equipment to improve fuel efficiency;
or
- one replacement of the engine, provided that:
- for vessels under 12 metres in overall length
and not using towed gear, the new engine has the same power as
the old one or less;
- for all other vessels up to 24 metres in overall
length, the new engine has at least 20% less power than the old
one; or
- for trawlers of more than 24 metres in length,
the new engine has at least 20% less power than the old one and
the vessel changes to a less fuel-intensive fishing method.
The Commission adds that state aid for temporary
cessation of activities for the time needed to carry out this
investment could also be acceptable if granted as part of a rescue
or restructuring scheme, and that any other aid, including Community
support, will have to be taken into account in the overall assessment
of restructuring plans and long-term viability.
5.6 The Commission also addresses the acceptability
of certain operating aids, pointing out that it would not approve
those simply intended to compensate for the recent increase in
fuel prices. Likewise, it says that, although some have advocated
a guarantee scheme (where money paid in by the industry in favourable
times could repaid as compensation when operating costs increase
suddenly), it could approve this only if it were to provide guarantees
of reimbursement of all public aid under commercial conditions,
which it believes would very unlikely in current economic conditions.
LONGER-TERM MEASURES AND INITIATIVES
5.7 The Commission notes that positive long-term
prospects for the industry can be assured only in the context
of recovered fish stocks and sustainable fishing practices, and
it says that it will continue to work towards these objectives
on the following fronts.
Improving fisheries management
5.8 The Commission points out that the reformed CFP
has inevitably concentrated so far on the recovery of the most
threatened stocks, but that the Johannesburg World Summit on Sustainable
Development in 2002 set an objective of managing fish stocks generally
at maximum sustainable yield levels by 2015. It says that such
an approach would bring greater economic benefits in the form
of a more predictable supply, increased quantities of larger sized
adult fish, and more plentiful fishing grounds yielding more revenue
per unit of effort. It therefore intends to open a debate in the
first half of 2006 on a Community strategy for gradually lowering
fishing mortality in all major fisheries, whilst continuing work
on existing recovery and management plans. In addition, it will
organise a debate at Community level on the methods for allocating,
sharing or transferring fishing opportunities, and it will also
review in 2007 the functioning of the Regional Advisory Councils,
which it says have played an important role in building trust
between scientists and fishermen, and have thus encouraged compliance
with the rules. Finally, the Commission notes the urgent need
to address the present overcapacity in the fishing fleet by means
of managed decommissioning, as well as other methods (such as
a premium for the reassignment of fishing vessels to other activities).
Better compliance
5.9 The Commission observes that non-compliance by
some fishermen poses a serious economic threat to others and to
the health of the stocks, with unreported catches often accounting
for a significant proportion of all catches. It notes that the
establishment of the Fisheries Control Agency will provide a great
opportunity to improve control and enforcement across the Community,
and says that, in co-operation with the new Agency, it will take
appropriate action against Member States which fail to fulfil
their enforcement obligations. At the same time, the Commission
also intends to step up its fight against illegal, unreported
and unregulated fishing in both Community and international waters.
Organisation and operation of fish markets
5.10 The Commission intends to launch a comprehensive
evaluation of the present market organisation to look at existing
mechanisms, new tools to improve marketing, and all other avenues
to improved added value for those marketing their products. It
also suggests that an industry-driven code of conduct on fish
trade would be useful, and that eco-labelling schemes could also
provide an incentive for more sustainable fishing.
Research into fuel-efficient and environmentally
friendly fishing methods
5.11 The Commission says that it will ensure that
the needs of the fishing industry will be adequately covered in
the annual work programmes to implement the Seventh Framework
Programme, with the development of new technologies, particularly
as regards gear design, being one of the priority areas. It adds
that special emphasis is being placed on the production of renewable
energy, with particular reference to new types of biofuels, and
that priority will also be given to energy efficiency and savings
through new concepts, where it intends in 2006 to organise a workshop.
The Government's view
5.12 In his Explanatory Memorandum of 24 April 2006,
the Minister for Local Environment, Marine and Animal Welfare
at the Department for Environment, Food and Rural Affairs (Mr
Ben Bradshaw) says that the Government agrees that long-term restructuring
of the fleet is necessary, and supports the observations made
by the Commission about the measures involved. However, it believes
that the short-term measures outlined may simply prop up, or even
increase, the catching capacity of European fishing fleets, and
in particular that providing grant aid for the construction of
vessels or replacement engines which increase fishing power is
not appropriate given the overcapacity of the Community fleet.
He adds that the UK has consistently opposed proposals to enable
grants for replacement engines, as it believes this carries a
significant risk of increasing the efficiency of vessels and hence
increasing fishing effort. However, if such grants were to be
allowed, he says that the Government considers that greater safeguards
than those proposed in this Communication would be required to
avoid any increase in fishing effort. On the other hand, the Government
welcomes the statement that operating aid would be incompatible
with the Treaty.
Conclusion
5.13 Although the high cost of fuel is a relatively
recent development, most of the problems identified in this Communication
are all too familiar, as are the longer-term measures which the
Commission has suggested to help bring about stock recovery and
aid sustainable fishing practices. Consequently, the main points
of interest arise on the short-term measures proposed, where we
note in particular the Government's views on the suggestion that
the guidelines on state aids might be relaxed for certain types
of modernisation which form part of an authorised rescue and restructuring
plan. Having said that, we think it sufficient simply to draw
these to the attention of the House, and we are therefore clearing
the document.
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