The Future of Under-10 Metre Quota Management: the reintegration of under-10 metre vessels into the mainstream quota management system

Introduction and Background

In its response to the SAIF Group’s Propositions Paper1 the NFFO argued that the employment of the 10m break line by successive administrations, to apply differential quota management and licensing arrangements above and below that essentially arbitrary line, had given rise to a range of unintended consequences. These included a “threshold effect” through which an increase in the number and catching capacity of vessels just below the 10m cut-off was witnessed.

This expansion of effort at the top end of the under 10-metre fleet (as an essentially rational economic response by individual vessel operators subject to much more stringent arrangements in place for vessels over-10 metres) has, in effect and over time, destabilised quota arrangement which had been introduced to deal with de minimis catches by the small boat fleet. This became apparent when the introduction of Buyers and Sellers Registration, with more comprehensive catch reporting for under-10s, revealed the true scale of under 10-meter landings.

The NFFO paper argued that the solution to the serious problems facing the under 10 metre fleet would best be dealt with the reintegration of the under 10s into the mainstream system of quota management, which had, over time, evolved into a reasonably effective system of rights-based management.

This further paper examines the options for how this might be achieved in concrete terms.

Ways Forward

The work of the SAIF Group has made clear that there is no simplistic silver bullet that will solve the problems of the under-10s. In navigating our way forward through an indisputably difficult terrain some features are already clear:

• Effort control without quotas, or forced redistribution from the over 10 sector, carry with them as many legal, political and ethical dilemmas and adverse consequences as they would solve. And crucially, these approaches would still not solve the essential problem faced by the under-10s: achieving a broad balance between the capacity of the under-10 metre fleet and the quota available to it.

• In solving the problems faced by the under 10s there is one overwhelming salient fact. This is that in the region of 14% – 17% of the under-10 metre fleet catch 70% of the quota.

• Building or adapting vessels up to the 10 metre limit and the subsequent migration of active fishing effort from the over-10 metre fleet into the under 10m sector, has given rise to the class of under-10m vessel variously known as “rule-beaters, “super-under 10s” or simply “high catching under-10s”. The fishing activity of these vessels is more consistent with the over-10 meter fleet than the remainder of the traditional under-10 metre fleet.

• If integrating high catching under-10m vessels into the mainstream quota management system in the UK lies at the heart of any solution to the problems facing the under 10m sector, it is necessary to spell out in some detail how this could be achieved.

• As, in terms of fishing pattern, the high catching under-10s are indistinguishable from many over 10s, there is no intrinsic reason why these vessels should not join producer organisations and enjoy the advantages of tailored quota management, professional representation, and information flow, that comes with membership of a PO. The key issue here is that POs, in receiving new members who will then fish against PO allocations, also have a responsibility to ensure that their existing members are not disadvantaged. The core of the problem is therefore that there is a clear limit to what can be achieved through goodwill alone. This suggests that incoming vessels from the under 10m fleet, previously fishing against pool quotas, will have to take in with them sufficient quota to ensure that the impact on existing PO members is minimal. In many respects the problem of solving the under-10m quota issue boils down to the question of where that quota will come from.

• Extracting the high-catching fleet from the under-10 metre pool will leave vessels whose catches of quota stocks are very low to fish in the pool. To some degree this would return the under-10m fleet and the under 10m pool to its origins, as a de minimis fishery. Although we have serious reservations about the Commission’s enthusiasm for a differentiated fisheries regime, this residual fleet would be more likely to meet the criteria of small scale, artisanal, inshore, low impact fisheries that will receive specific support within a reformed CFP, should it develop in this direction.

Building a Solution

There are a number of ways through which integration of the high catching under-10s into POs might be achieved. The most important point here however is that all the options should be seen as elements of a solution in combination rather as alternatives.

The over-riding principle in moving forward is that the arrangements proposed should work for, and be acceptable to, four groups:

1. Under 10m vessels joining POs

2. Producer organisations

3. The residual de minimis fleet

4. Government

Elements of a Solution:

1. A proportion of the under-10m pool quotas, based on the vessel’s catch record over a recent reference period, would be transferred with the vessel leaving the pool and joining a PO

2. A realignment between capacity and quota entitlement in the under-10 metre sector, through the assignment of fishing rights to individual vessels (and the subsequent fleet consolidation as some vessels sell their entitlements to other under-10 metre operators). This Danish model could be used by high catching under 10s to augment their quota entitlements to the level that they would be viable within a PO.

3. Closely linked to 2 above is the facility for the larger under 10s to lease quota where this is a viable possibility, both from the perspective of quota availability and ability to finance these transactions

4. A publically funded decommissioning scheme, through which vessel and licence (both over and under 10m ) are scrapped but HMG retains the quota released and uses it to facilitate the entry of high catching under-10s into POs

5. Capacity reduction in the under 10 m fleet. Reducing the size of the under 10 meter fleet would re- balance catching capacity with available quota

Option 1: Proportion of the Under-10 m Pool Allocations

The overriding consideration with this option is that the residual pool quotas should be in equilibrium with the catching capacity of the remaining under-10 m fleet after the high-catching under 10s have departed to the producer organisations. Unless this objective is met next to nothing will have been achieved. Equally, consideration will need to be given to the levels of quota needed by the high-catching under 10s applying to join POs. Little progress can be made without the statistical ground-work, fishery by fishery, allocation by allocation, to establish in reasonably precise terms, the gap between:

• The residual pool allocations after extraction of the track records of the super under-10s and the quotas necessary to cover the remaining de minimis under-10 meter fleet in the pool fisheries

• The track records of the high-catching under-10s and the quota necessary to ensure that entry into the POs is not disruptive

Option 2: A Rights Based Management System on the Danish Model

The Danish Government, in consultation with the Danish fishing industry organisations, have successfully implemented the introduction of a rights-based management system which embraces the inshore fleets but also puts in places a number of important safeguards to prevent over concentration of ownership rights. Essentially, a one way valve allows inshore vessels to buy other inshore vessels’ entitlements and to buy from vessels outside the inshore sector; but offshore vessels are not permitted to buy allocations from inshore vessels. The result has been a 30% reduction in the fleet. In effect this amounts to an industry funded decommissioning scheme. Its key objective of securing a balance between available quota and fleet capacity appears to have been achieved. The Danish Fishermen’s Association is on record as having said that their system has produced “happy fishermen, happy ex-fishermen and a happy Government”. Clearly this example is worthy of detailed study, not as a template that could simply be transferred un-adapted to the UK but as a potential contribution to the elements of a solution.

Option 3: Leasing

Leasing for under 10s has already been sanctioned by the quota management rules and facilitated by fisheries administrations. This start should be built upon, but with the recognition that, on its own, the scope for leasing to make a difference is limited.

Option 4: A Publically Funded Decommissioning Scheme

The objection to the inclusion of this option to the list is obvious: the implications for public expenditure under a period of severe constraint on Government spending. Nonetheless it is worth including in the list for three reasons:

• Contrary to the prevailing orthodoxy within Defra and the European Commission, publically funded decommissioning has played a central, and sometimes a decisive part, in the rebuilding of cod and plaice stocks in the North Sea, and sole in the western channel and has played a positive role in reducing fishing pressure in a host of other fisheries. It has also increased the economic viability of the vessels which remain.

• Likewise, decommissioning has played a central role (along with Buyers and Sellers Registration) in achieving high levels of compliance in the UK fisheries to which it has been applied

• Against the initial cost of a decommissioning scheme, it is important to compare the repeat costs of failed fisheries management measures within the context of fleet overcapacity

A well designed publically funded decommissioning (using underutilised EFF funds where possible) could:

• Help to achieve a balance between capacity and available quota in the under 10 metre fleet,

• Make available to Government quota which could subsequently be used on a discretionary basis to ease the absorption of under 10 metre vessels into the POs, and to ensure that the residual de minimis fleet (where it fishes against quotas) is managed on a viable pool basis.

A decommissioning scheme for these purposes could be targeted at both under and over 10 metre sectors but would be principally focussed at where release of quota is a priority. An additional option could be a further (well designed) decommissioning scheme focused on the larger under-10s that could serve the dual function of reducing the capacity of the large-catching under-10m fleet whilst making available the quota to facilitate the entry of the remainder into POs.

Buyback: A variation on this same theme would be a government buy-back scheme through which Government would intervene in the market to purchase quota to facilitate the transition of high-catching under 10s into POs. Although convincing the Treasury to release funds for a one-off adjustment of this nature is undoubtedly a hurdle in the present climate, the possibility of using underutilised Axis 1 funds from EFF should be explored.

Option 4: Capacity Balanced with quotas in the Under 10 meter Fleet

Options 2 and 4 potentially go some considerable way to addressing the issue of capacity in the under 10 metre sector. The essentials of an approach, whether through a rights-based system, or through a publically funded decommissioning scheme, should be:

• that it should be entirely voluntary

• that it should be aligned with management objectives: in this case achieving a balance between quota and capacity in the under 10 metre fleet

• that latent capacity where it remains an issue should be addressed.

Under 10s in Producer Organisations

It is a central premise of this paper that producer organisations have a central role to play in resolving the quota issues facing the under 10m fleet. There are certain advantages to using existing POs for this purpose, simply because they exist; albeit that POs may have to adapt their internal arrangements to accommodate incoming under-10s. This does not rule out the under-10 metre fleet, or part of the fleet, forming a new PO, or regional under-10m POs, to achieve the same objective. The advantages of a dedicated, professional staff working daily on behalf of the members of the PO, in such areas as quota swaps, leases, transfers as well as information flow and representation, is something that is missing in the under 10-sector; and the under 10 metre sector has been disadvantaged because of it.

There are strong regional differences in the character of inshore fisheries and therefore the quota management issues experienced by under-10s. POs generally have a very strong regional focus that is an important part of their strength and relevance. This should be central factor taken into account as PO focussed approach to deal with the under 10s is developed.

Working Group

To progress solutions on the lines described above Defra has agreed to the establishment of a small working group, comprised of under-10 metre, NFFO and UKAFPO representatives (recognising some degree of overlapping membership of these groups) along with Defra/MMO officials, to develop concrete proposals for ministers on the integration of high catching vessels into the POs. This work would be done on the basis of:

• the conclusions of the SAIF Group final report

• Further statistical analysis on under-10m track records

Ingredients for a Solution

Quotas are a zero sum game and therefore allocations policy can be divisive. This paper suggests, however, that the ingredients are available to develop an approach that works for all parties. This paper is narrowly focussed on the integration of high-catching under 10m vessels into producer organisations. This is a crucial part of the means of alleviating the desperate situation in some under 10m fisheries but it should be seen within the context of the broader work, notably on shellfish policy and economic resilience necessary to put inshore fisheries in the UK on a sound footing.

NFFO July 2010

1 https://www.nffo.org.uk/news/sustainable_access.html

Sustainable Access to Inshore Fisheries (SAIF) Group Propositions paper: NFFO Response, April 2010.