11 August 2011
Extreme positions are being adopted and incendiary language used on the issue of transferable quotas.
The question of how quotas have become tradable legal rights in the UK, and whether this is a good or bad thing is being conducted, in heated terms, between those who see tradable concessions as a panacea for the failures of fisheries policy and those who see it as a type of crime. This debate is important because it touches the current discussion on the way forward for the under-10m fisheries within domestic fisheries policy but also the direction of CFP reform.
Fishing Concessions and Sustainable Fisheries
On the one side of the argument are the European Commission, Defra and parts of the environmental lobby, which see the allocation of fishing rights, or “fishing concessions”, as a way of achieving sustainable fisheries and breaking free from the “tragedy of the commons”. Their core argument is that allocating fishing rights gives the fishing vessel operators who receive them a vested interest in thinking long term and fishing in ways that preserves or increases their share of the resource, which in effect have become one of their assets. Without that vested interest, the argument runs, individual operators act in a short-term way to maximize immediate profit, leading to the degradation of the overall resource. This is a way in which private interest can be aligned with public policy, with the goal of well managed fish stocks within a healthy ecosystem. It is also seen as a way of dealing with the problem of fleet overcapacity and building a high level of compliance. Vessels that are not viable in a business sense may sell their quota entitlements to other vessels, reducing the capacity of the fleet overall and increasing the profitability of the remaining units. In Denmark this arrangement is said to have produced “happy fishermen, happy ex-fishermen and a happy government”.
Stealth Privatisation of a Public Resource
The counter-view, sometimes expressed in vigorous language by a mix of journalists, lawyers and single issue fishing groups, is that the introduction of this form of rights-based management amounts to the stealth privatisation of a public resource. “The biggest property grab since the Norman invasion” according to one over-excited legal commentator. Not only does the allocation of transferable quota shares enshrine and make permanent injustices already inherent in the quota allocations system, it has developed in the UK without a proper basis in law. The “commodification” of the fisheries resource amounts to a grab by the haves to the disadvantage of the have-nots that parallel the land enclosures in the 18th century. It is suggested that the whole process of quota ownership in the UK is shrouded in mystery that disguises the fact that quota traders –middlemen – or corporate groups outside the fishing industry could, or already do, hold large chunks of UK quota. Even the Government, it is claimed, don’t know or won’t reveal who ultimately owns UK quota.
Polarisation
The polarisation of the debate on where the right balance lies between private access to, and management of, a public resource has not been very helpful. The reduction of the debate into simplistic slogans, misinformation and unsupported assertion might make good copy for a lazy journalist but it doesn’t help us as an industry find a way through undoubtedly difficult issues. We certainly need a debate, not least because fishing concessions and rights-based management are central to the Commission’s CFP proposals as well as Defra’s thinking on domestic fisheries reform. But the strident tone and wild assertions, with weak links to evidence, and failure to make any attempt to understand how the quota management system in the UK has evolved only gets in the way of a clear view ahead.
The polarisation of the debate on rights based management (aka Catch Shares) is a pity.
NFFO Position
The NFFO holds no ideological position on rights based management. We are interested in what works for the fishing industry as a whole. The evidence of the last two decades suggests that the development of a system of rights-based management has helped the UK industry to move beyond the anarchy of the era of black-fish, when under-reporting, misreporting and over-reporting undermined the viability, reputation and of the whitefish sector, along with the scientific assessments on which quotas are ultimately based. It has helped to achieve a high level of compliance and an industry that looks to the future in collaboration with fisheries managers and fisheries scientists. This is not to say that a rights-based system of allocations is automatically the best option in all circumstances. It is not the magic wand that its proponents suggest. It is also true to say that it is those parts of the UK fishing industry that have remained outside the rights- based system – the under-10m fleet – are where problems of quota management are their most acute.
This balanced, proportionate and cautious view is in stark contrast to both the advocates of rights-based management who see it as the solution to everything, and those who see it as a massive and stealthy conspiracy to privatise and monopolise a public resource. In order to draw some semblance of proportion into a debate, that threatens to spin into ever wilder claim and counter claim, we have described below some of the salient features of the current quota management system in the UK that should be taken into account for those interested in arriving at an informed judgement.
Some Salient Points
1. Evolution
The evolution of the UK’s quota arrangements into a system of rights- based management occurred in a fairly pragmatic, incremental, some might say, very British way and has been described elsewhere. There has been no blueprint or ideological driver. There was not so much a property grab as a gradual unplanned evolution towards transferable quotas on the basis of a number of pragmatic changes to the quota management and licensing rules for reasons that made sense in their own terms at the time. The main significance of the introduction of Fixed Quota Allocations in 1999 meant that whereas previously a vessel’s quota entitlement for the following year was based on an average of what it caught in the previous three years, FQAs fixed that amount, thereby removing the rough justice of engine breakdown or similar calamity undermining a vessel’s entitlement. It also removed some element of the race to fish, or in some cases over-reporting of catch simply to hold onto entitlement for the following year (the problem of “ghost fishing”).
2. Historic Rights
The ultimate basis for quota allocations in the UK both before 1999 and for the introduction FQAs in that year was historic access to the resource. Those with a demonstrable track record of participation in the fishery received an allocation proportionate to the level of that participation. This core principle is the same basic starting point as the principle of relative stability in EU and in other international fisheries agreements.
3. Quota transfers with monetary value evolved out of the arrangements for swaps of unutilised quota between producer organisations. Initially all swaps had to be balanced in terms of cod equivalents, and quota entitlements were attached to vessels rather that licences. All this made for a rather rigid system with too much quota underutilised because it was in the “wrong” PO, or attached to the “wrong” vessel in the “wrong” sea area. Allowing unbalanced swaps and attaching the quota entitlement to the licence rather than the vessel were pragmatic adjustments to address these problems but they were important first steps towards tradable quotas. The introduction of FQAs in 1999 and a number of fishing vessel decommissioning schemes where the Government, to save money, allowed decommissioning owners to retain their quota, were also important steps in the introduction of the market into fish quotas.
4. Legal Basis
It has been asserted that there is no legal basis for the kind of delegated responsibility that underpins the UK’s sectoral management system through which producer organisations manage their members’ quotas and tailor quota arrangements to local circumstances. It is true that there is no specific legislative basis for the allocation of quota entitlements to producer organisations; it has all been done on the basis of administrative provisions within existing fisheries legislation, underpinned by consultation with the fishing industry. But given that the Defra’s quota management decisions have been tested very recently in the Courts and found solid there seems no reason to think other than that the legal basis for the current quota management regime is pretty robust. Probably more significant is the fact that the type of delegated responsibility seen in the sectoral management system is a success story and may become the model for the governance of a radically reformed and decentralised CFP. Nevertheless, it would probably be wise, once the CFP reform is settled, that a more formal and transparent legislative footing for a system of explicit use-rights in fisheries is introduced.
5. Transparency and Control
Producer Organisations as collectives of fishermen and fishing vessel operators are the lynchpin of the system and remain the ultimate arbiter of the quotas allocated to them for that year. It is true that for whatever reason there is a lack of transparency at Government level about where “ownership” of the ultimate quota holdings lies, allowing daft stories about quota being held by bodies such as Manchester United to circulate. But POs have been requested by the MMO to provide comprehensive information on the ownership of FQAs within their membership and have complied. More transparency would serve to quell the rumour mill and so we agree that this information, subject to the usual strictures on data protection, should be made public. The suggestion of secrecy only serves to fuel those disposed to conspiracy theories and that is not helpful in the current febrile atmosphere.
6. CFP Reform
The CFP reform proposals published on 13th July include the introduction of a mandatory system of transferable “fishing concessions” applicable to all fishing vessels over 12metres in length and all mobile gear vessels whether they are above or below 12mts. Member states would hold the discretion to apply a system of rights based management to the small scale fleets if minded. Importantly, the new system, if adopted, would be compatible with the principle of relative stability as it would operate within the confines of each member state. “Fishing concessions” would be allocated for 15 years to allow investments to be planned and to provide a degree of security. These arrangements although requiring some changes to the UK’s domestic arrangements are essentially compatible, indeed to some degree based on the current experience of transferable quotas in the UK, Netherlands and Denmark. Nevertheless, there is always scope for concern when a pragmatic, evolutionary domestic approach is about to be replaced by a broad brush, top down European system.
7. Safeguards
What is important with any system of rights-based management is that is accompanied by appropriate safeguards to protect vulnerable components of the fleet from the full force of the market and to prevent over-concentration of quota in too few hands. It is not possible, or necessarily desirable to protect every vessel or fishing job, from the transfer of quota from outgoing vessels to more efficient vessels. But most observers and certainly the NFFO sees the sense in a one-way valve that would allow fishing-rights to be traded between small vessels and from larger vessels to small vessels but not from small vessels to large vessels, if rights based management is applied across the whole fleet. However, we remain to be convinced that extending tradable quotas, as proposed by Defra in its recent consultation, to the under-10m fleet would represent a step forward. The flexibility of the pool system, where vessels fish against monthly catch limits has many advantages for the inshore fleet which traditionally has maintained its viability by changing gear, or target species to adapt to changing circumstances. Equally, the jury is very much out on whether the extension of rights-based management to the crab and lobster fisheries is necessary or desirable.
Plea for a Reasoned Debate
The media thirst for pantomime villains in the fishing industry seems inexhaustible and it is not to the credit of some in our own industry who have pandered to it. Rights based management is important. Carefully and sensitively applied, with proper safeguards, it can in some circumstances, offer a superior way of managing quotas than cumbersome centralised government control. It has worked well for most of the time in the UK, Netherlands and Denmark. It is significant that those parts of the UK fleet not included in the mainstream rights-based management system are those that currently face the most acute quota problems. However, this is not to say however that strong arming the under-10m fleet into a catch share system is the right way forward either.
But rights-based management should not be considered a panacea. In some quarters it is being oversold. Partly this is because it fits with a small government agenda and ultimately as a way to extract resource rental form the fishing industry. It is also seen as a way of achieving low or no cost decommissioning where various EU grandiose fleet reduction policies have failed.
We have to navigate our way through the purists and the ideologues, past those with an axe to grind and those who make a living out of sensationalist nonsense. We have to thoroughly and calmly examine all of the options in front of us and adapt and adopt them to fit our industry’s needs. None of this is easy but it certainly isn’t helped by distorting the terms of the debate, finding conspiracies were none exist, or incendiary language.