Overcapacity: European Court of Auditors’ Study

The study is a follow-up to its 2008 report into the CFP, which was one of the most stingingly critical of any EU policy since the Court was established. The Court of Auditors, as its name suggests, has a particular responsibility to ensure that EU funds spent on policy initiatives achieve good value for money; its comments and recommendations however, carry policy implications that run well beyond accountancy. Both the radical character of the Commission’s Green Paper on CFP reform and its rushed and ill-considered proposals for a new Control Regulation were directly driven by the Court of Auditors’ scathing report.

The Court of Auditors has requested views on whether there is fleet overcapacity within the CFP, where that overcapacity lies and what can be done about it.

Two points can be made immediately:

1. There is overcapacity within the CFP
2. The Commission’s generalised formula of “too many vessels chasing too few fish” is too simplistic and too undifferentiated to be of much use in designing effective policies to address those areas where overcapacity can be identified.

Overcapacity cannot usefully be understood according to any simplistic CFP formula with tonnage and engine power on one side and fish on the other. A fishery by fishery approach is required, taking full account of the wide diversity of fisheries within the CFP but also that some fisheries (and some member states) have already undertaken dramatic fleet reduction programmes over the last 15 years. In short there are wide variations in the degree of overcapacity and its spatial distribution.

The existence of technical capacity to catch allowable quotas many times over is not an adequate definition of overcapacity. The modern pelagic fleet has that technical ability; it is deployed on a highly seasonal basis to catch fish in an extremely efficient and profitable way. Moreover, it is now regarded as a highly compliant sector; catches are within quotas. A simplistic definition of overcapacity would categorise the pelagic fisheries as “overcapacity” but in this context it is hardly a helpful approach.

A more sophisticated and therefore realistic definition of overcapacity is required. This would recognise that physical capacity is only one dimension of a four cornered problem. Effective fisheries management1 requires that:

1. The fleet is profitable, meaning that the profits are sufficient to renew the fleet without state subsidies
2. There is a high degree of compliance; without a high degree of compliance the system is broken
3. There is a broad balance between the capital in the fishery and the available resources
4. Management decisions are based on sound information, including stock assessments

It is these interlinked and mutually supporting pillars that must be put in place on a fishery by fishery basis if overcapacity, where it exists, is addressed as part of an overall approach to fisheries policy.

If the Court of Auditors’ report is to avoid the twin fates of being ignored to gather dust, or in precipitating hasty, ill-considered, policy changes, it is important that its report on overcapacity is set in this broader context.

Decommissioning and Value for Money

Contrary to the prevailing orthodoxy that questions the value for money equation of publically-funded decommissioning schemes, we are of the view that vessel decommissioning schemes in the UK, Denmark, the Netherlands, Belgium and France have made a substantial, perhaps even pivotal, contribution, to reducing fishing mortality and rebuilding many stocks within the CFP. In the case of North Sea cod and plaice their effectiveness seems inarguable. But there are other ways to achieve fleet reductions where this is deemed necessary. Governments naturally favour schemes like the Danish rights based management system that appears to have achieved a balance between the fleet and available fishing opportunities with a minimum of public expenditure.

Whatever method is chosen to address overcapacity, where it exists, it is important that it is applied within the context of the approach described above.

1. Net Benefits (2004) A report prepared by the UK Cabinet Office