Consultation on Reform of the English Fisheries Management Arrangements

Criteria

This paper responds to the Defra consultation paper Consultation on Reform of the English Fisheries Management Arrangements, April 2011.

The NFFO considers that the proposals contained in Defra’s consultation paper on reform of the quota management arrangements in England should be judged on the extent to which they makes progress against a number of key criteria. These are:

• Removing the arbitrary distinction between under-10 and over-10m vessels
• Achieving a balance between fishing opportunities and capacity within the whole English fishing fleet that lays the basis for an economic and environmentally sustainable future
• Providing the means through which operators of under-10m vessels can increase their fishing opportunities through access to professional quota management
• Providing the means through which the 130-160 “high catching” under-10m vessels are integrated into the mainstream quota management arrangements
• Providing maximum flexibility for inshore vessels to adopt the quota arrangements best suited to the specifics of their fisheries
• Managing the transition to the new arrangements, sensitively and without recourse to forced redistribution of quota
• Fleet/quota rebalancing on the basis of government led (but not necessarily wholly government funded) capacity reduction arrangements
• The interdependence of the fleets in supporting fishing infrastructures

Summary

Inevitably, it will be the redistributive proposals in the Defra consultation that will be the most controversial, divisive and will attract most attention during the consultation phase. However, we would make a number of important introductory points:

• It will be the structural changes to the way that under-10 quota management is undertaken that will prove to be most significant factor in delivering an economically sustainable fleet in the long term
• It should be recognised that it is unlikely that that the quota shortage problems in some fisheries will be solved through domestic quota arrangements alone because the root problems lie either with the allocation keys at EU level or the level at which the TACs are set.
• A good idea can be spoiled by poor implementation; therefore, how the transition is handled is of critical importance; this suggests that the timeframe for implementation should be re-examined and scope provided for vessels to opt-in to new arrangements rather than to be forced into them
• We are also concerned that the new concordat between Defra and the devolved administrations, which forms the administrative and political context for the reform, and of which we have only second-hand knowledge, will be to the serious disadvantage of the English fleet as a whole.
• Whilst we support the objectives of the proposals – a unified fleet, with maximum flexibility and significant management responsibilities delegated to industry/community organisations – we cannot support the proposals for realignment and redistribution of quota as they stand, which are divisive and inadequately thought through. How the transition to the reformed arrangement is managed will be of critical importance to all in the industry and is likely to colour the post-reform regime. We are pleased therefore that a working group with all interested parties will be convened to examine the redistributive elements in the proposals in detail.

General

The positive aspects in the consultative proposals are:

• The recognition that the arbitrary divide at 10 metres, with differential regimes on either side of that line, has created a number of perverse incentives that ultimately have been to the disadvantage of the vessels operating within the under-10m pool
• Recognition that the UK’s system of delegated responsibilities for quota management by producer organisations has provided the over-10m fleet with the basics of a workable rights-based management system; this provides a flexibility that is not available to vessels fishing within the under-10m pool system managed centrally at national level and this too has been to the under-10s’ disadvantage
• Reintegrating the under-10m fleet, and in particular the 130 under-10m vessels that catch around 60% of the under-10m pool catches, into the mainstream quota arrangements would put the whole industry on stronger footing and is the key to the reform.
• Bringing those under-10m vessels which catch significant quantities of quota species into existing POs, or by forming a new PO (or POs), or bodies performing similar functions, would considerably strengthen the position of the under-10 fleet both in terms of professional quota management and as a platform for representation at a national and international level.
• Within a system of rights-based management, safeguards are necessary to prevent the over- concentration of fishing rights in a few hands; this can be achieved, through the application of a one-way valve on quota transfers from the small scale fleet
• An undoubted strength of the approach outlined in the consultation paper, is that it recognises that the problems facing the under-10m fleet cannot be fixed through a superficial or piecemeal approach but only through a suit of measures in combination.

It is significant that a considerable degree of consensus has emerged around these ideas emerged from discussions in the informal working group convened by DEFRA and involving UKAFPO, NUTFA and the NFFO. This demonstrates the progress that can be made through tightly focused but balanced and representative industry groupings.

The significantly novel component in the Defra proposal is that the under-10m pool should be completely dissolved and that the under 10m (and over 10m non-sector) fleet should in future manage their own quota affairs individually, or as a member of a PO or as part of a newly established community quota group. Our view is that whilst there is no intrinsic reason why this approach should not succeed, its actual success will depend entirely on the effort, imagination, support and finance that will be at its disposal.

Destination and Transition

We believe that the destination outlined in the consultation paper (a diverse but unified English fleet, operating on the basis of a system of rights-based management and delegated responsibilities, with considerable scope for flexibility, and with appropriate safeguards) is an honourable, intelligent and attractive one.

The principal difficulties that we foresee are those related to the transition from the current dysfunctional arrangements to the new system.

In many regards the challenges of transition are interlinked:

• Ensuring that the new under-10m quota management bodies have sufficient quota for their members to be viable under the new arrangements – without destabilising arrangements in the over-10m sector
• How to provide adequate support for the community quota groups during their formative stage, given the costs involved, constraints imposed by geography and the inertia generated by the current arrangements and particularly given the ambitious timescale envisaged
• Dealing with the inevitable element of rough justice involved in allocating zero FQAs to latent/dormant licences
• Integrating over-10m non-sector vessels into the mainstream quota management arrangements
• The lack of clarity and confused methodology in the proposed realignment of under-fished quotas
• The divisive proposals for one-off redistribution which run the dual risk of harming one sector without solving the problems of the other

Community Quota Groups

Although economically and socially important, with some notable and important exceptions, the under-10m fleet in England is not organised in a way that allows it to shape its own destiny to any significant degree. Geography and sectoral distinctions, as well as a strong streak of individualism means that a lack of collective and cohesive organisation, beyond purely local, is the norm. The remote, top-down management system that has ruled for the last two decades has also tended to breed an apathy born out of a sense of powerlessness.

The exceptions to this general picture are important. Some under 10m operators are already members of POs and some POs have significant numbers of under-10m members who benefit from their PO’s marketing and representative roles. And some local fishermen’s associations have shown themselves to be highly organised.

Despite significant obstacles and hurdles we can see no intrinsic reason why under-10m vessel operators couldn’t pool their quotas and coordinate their quota management, marketing and representative activities in the way suggested in the consultation paper. Whether an under-10m vessel operator chooses to join an existing PO, or combine with others to form a new PO, or a more limited community quota group, the key to success will be closely tied to the amount and type of support that will be available over the transitional period. In the absence of a clear understanding of what could be available it is not possible to go further at this stage in predicting outcomes.

Realignment of Consistently Under-fished Quotas

According to the consultation paper, Defra proposes to redeploy 80% of those FQAs attached to English licences which are associated with certain consistently under-fished quotas. These are stocks where uptake by an individual PO or under -10m pool has been less that 90% of the allocation, and more than 100 tonnes has remained un-fished each year during the period 2007 -2010.

As we can identify very few stocks that would meet these criteria, we wonder if this is actually what is meant. And does the consultation paper really mean that it is Defra’s intention to reallocate 80% of a PO’s total FQAs of those identified stocks, irrespective of how that relates to the PO’s unused or used quota?

It is difficult to defend the retention of quota that is consistently under-utilised year after year, when there is a demonstrable need by other UK fishermen, specifically those in the under-10m sector. We therefore agree that where the market mechanism has consistently and demonstrably failed to ensure full uptake of UK quota, there is a case for administrative intervention. But this is very different from the arbitrary and apparently confused approach outlined in the consultation paper.

It is important to recognise that development of a lease market in quota (informally or formally recognised by government) has gone a significant way to ensuring that UK quota is better utilised than when reliance was placed on an annual allocation exercise. We know from previous experience how difficult it can be to reallocate underutilised quota through administrative intervention, given different seasonalities, competing priorities etc. We do not therefore in principle object to this kind of realignment; we do however, have a number of problems with the specific methodology suggested and do not think that sufficient thought or discussion has gone into this part of the proposal. It may be significant that this part of the proposal is precisely the component that has not been subject to detailed discussion in the informal working group and welcome assurances that the industry will have the opportunity to scrutinize the methodology in detail.

Our specific concerns relate to:

• The strange inclusion of west of Scotland stocks (haddock, nephrops, pollack and horse mackerel) in the stocks for reallocation. The obvious point is that, given the limited range of most English under-10m vessels, these redeployed quotas are likely to remain uncaught after realignment. It occurs that a possible rationale for including these stocks would be for swap currency but then they would appear to fail the criteria of direct need in the under-10 sector
• It would be logical to take catch trends as well as absolute levels of uptake into account;
• Situations where there is underutilisation by the sector as a whole whilst an individual POs may consistently catch its full allocation should be taken into account

All this suggests that inadequate thought and discussion with the industry has gone into:

• How to achieve the full utilisation of UK quotas
• Whether the market mechanism could be better adapted to achieve redistribution towards the under-10s
• Clearer and less arbitrary indices of underutilisation and need
• Exhausting the mechanisms for voluntary transfers of quota
• Ensuring that when administrative reallocation is the only recourse, proper dialogue about proposed redistribution is held with the existing quota holders

Un-fished Quota- Market failure

We strongly support the Fishing for the Market project as a step towards improving market acceptability of a number of under-valued species.

One-Off Redistribution

Realistically and given (as the consultation paper points out) that all parts of the UK fleet face limited catching opportunities, it is unlikely that any part of the UK fleet would currently vote voluntarily for an approach that would result in any reduction in its quota holdings. The painful contraction of the over-10m fleet over the last 15 years and the money spent on realigning quota with capacity are very real reasons why this element of the proposal will be seen as unfair. The over-10m fleet and POs do have a direct interest in bringing a resolution to the instability and turbulence in the under-10m sector but may well consider that the price that they are being asked to pay to achieve this is too high.

The obvious way out of this conundrum is via a publically funded and targeted fishing vessel decommissioning scheme that would release quota that could be used to ease the under-10m fleet into POs or economically viable community quota groups. It is not difficult to see that the principal obstacle to this approach would be current public spending constraints. We believe however, that Defra has been too quick to dismiss alternative ways of funding such a decommissioning scheme. More imaginative approaches involving private foundations, and under-spent EFF Axis 4 funds should therefore be considered as a matter of priority.

In the absence of a funded redistribution through decommissioning, Defra has cornered itself into making a series of value judgements about the scale and form of a one-off redistribution.

There is no disguising that any forced redistribution will be unwelcome to those required to surrender quota, as it will be unlikely to satisfy the demands from the under-10s, particularly on a number of key quotas.

As a trade-off for redistribution it may be politically astute for Defra to consider the simultaneous confirmation of use-rights to FQA holders with a reasonably long period of recall (the Commission in the CFP reform will propose 15 years) in order to protect investments and to provide assurance that further redistributions will not follow.

In any event, for both realignment and redistribution it will be important for Defra/MMO to talk directly to each PO to arrive at a reasoned assessment of the consequences of reallocation.

Over 10m (Non-Sector) FleetUnlike vessels in producer organisations, vessels operating in the over-10m pool have not had the opportunity since FQAs were introduced in 1998 to adapt their FQAs( through swaps, transfers, lease or purchase) to reflect their current fishing patterns. It would in our view be grossly unfair if the reform, as is proposed, would allocate to these vessels their FQAs on the basis of a 1994-6 reference period. And it is difficult not to conclude that the courts would share our view.

Vessels during the intervening period may have changed owners, areas of operation, gear, target species and could fairly level the charge of discrimination if the proposals go ahead as published.

Perhaps the most straightforward solution to this problem would be to offer the vessel a choice: An FQA allocation based on 1994-6 reference period or an FQA allocation based on a 2007 -2010.

Implementation and Timeframe

The dangers of a worthwhile scheme being spoiled through rushed and poorly thought-through implementation is very real where, as in the current circumstances, the interwoven issues are so complex. We therefore caution that, without losing momentum, it is essential that a very thorough and careful approach to implementation is adopted, with direct dialogue with every group affected by the reform proposals.

Despite the political pressures, it would make more sense to take time to ensure that the policy is implemented in an optimal way.

More progress will be made if there is broad industry support for the proposals than if we get bogged down in disputes about quota distribution. The only way to build support is through genuine dialogue. Integrating the under-10 fleet into the mainstream UK quota management system was never going to be easy or straightforward given the recent history of the fleet. But there are a range of possibilities through which the process could be made easier:

• Producer Organisations could play a direct role, either by absorbing under-10m vessels directly into membership, or by administrating a community quota scheme for under 10s, separate from their current sectoral allocations; or indirectly simply providing advice on the establishment of new quota groups
• IFCAs are well placed to coordinate and support local community quota schemes in their areas, even if their statutory management and enforcement duties, precludes direct control; control of the quota groups should remain with the groups itself
• It may be possible to channel Charitable Foundation and EFF funds into formation grants to launch the new groups

All of this will be made easier if the proper preparations are made.

Shellfish (Crab and Lobster)

We note that it is Defra’s intention to consult on the extension of a system of rights base management to the crab and lobster fisheries. Our views on this will be included in a separate NFFO paper currently in preparation.

Conclusion

Ministers will want to resolve the problems facing the under-10m fleet. The current Defra proposals represent an on the whole well-founded attempt to break out of a cycle of failure and mismanagement that has left many under-10m vessels unviable and which threatens to destabilise the UK’s quota management system.

The broad approach of reintegrating those under-10m vessels that catch significant amounts of quota species into the mainstream quota management system is correct, although given the uncertainties an approach which provides options and flexibility, along with interim support is likely to achieve more than prescriptive obligation.

Whilst we agree with the destination, we consider that the transition will pose many challenges. Most of these could be eased by obtaining quota through a vessel decommissioning scheme, retaining the quota attached to the vessel licences and using that quota to facilitate the reintegration of the under-10s into the mainstream quota management system, whether this is by joining an existing PO, establishing a new PO , or a new community quota group.

The NFFO will continue to engage constructively on this issue as much work will be required to see it through to satisfactory conclusion.