The Future of The Scottish Fishing Industry

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March 2004

Inquiry into The Future ofthe Scottish Fishing Industry


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Fin an cial sup po rt for the RSE Inqu iry into

The Future of the Scottish Fishing Industry

Aberdeen sh ire Coun cil Scottish En terprise Gram pian

Aberdeen City Coun cil Sh ell U.K. Exploration an d Production

Clydesdale Ban k Sh etlan d Islan ds Coun cil

J Sain sbury plc Western Isles Coun cil

Highlan ds and Island s Enterprise

Our visits were also facilitated by local authorities and other bodies in the fishing areas where

we h eld meetings.

The Royal Society of Edinburgh (RSE) is Scotlands National Academy. Born out of the intellectual ferment

of the Scottish Enlightenment, the RSE was founded in 1783 by Royal Charter for the advancement of

learning and useful knowledge. As a wholly independent, non-party-political body with charitable status,

the RSE is a forum for informed debate on issues of national and international importance and draws upon

the expertise of its multidisciplinary Fellowship of men and women of international standing, to provide

independent, expert advice to key decision-making bodies, including Government and Parliament.

The multidisciplinary membership of the RSE makes it distinct amongst learned Societies in Great Britainand its peer-elected Fellowship encompasses excellence in the Sciences, Arts, Humanities, the Professions,

Indu stry and Com m erce. The Royal Society of Edin burgh is com m itted to th e future of Scotland s social,

economic and cultural well-being.


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Foreword

The fishing industry is of much greater social, economic and cultural importance to

Scotland than to the rest of the UK. Scotland has just under 8.6 percent of the

UK population but lands at its ports over 60 percent of the total UK catch of fish.

Many of these are ports with relatively remote communities scattered along an

extensive coastline and which, for centuries, have looked to fishing as the main

source of employment.

Restrictions imposed under the Common Fisheries Policy (CFP) affect all European

fishing fleets, but they have proved particularly severe for the demersal or whitefish

sector of the Scottish fishing industry with the potential to inflict lasting damage

on the communities concerned.

There have been a number of recent or ongoing inquiries into the UK fishing

industry, but none has specifically focused on the particular problems for Scotland.

The Royal Society of Edinburgh (RSE) believed there was an urgent need for such an

inquiry. Given the differing views and disagreements amongst the various groups

involved in the fishing crisis (including fishermen, fishery scientists, regional and

government authorities and the European Commission) the RSE also believed such

an inquiry should be independent. As Scotlands National Academy, it has access to a

range of high quality scientific and non-scientific expertise appropriate for such an

independent inquiry. Further, while recent inquiries have been directed to analysing

the causes of the crisis, few have attempted to outline the realistic options for

developing fisheries which are genuinely sustainable and economically viable in the

long term.

As with previous inquiries, it would have been impossible to carry out our task

without the generous financial support and help of those organisations listed on the

opposite page. The RSE is most grateful to them. The response to the Committees

request for evidence met with an equally generous response with written evidence

forthcoming from a very wide range of bodies and individuals. This input was

absolutely essential to the work of the Committee and we are again most grateful to

all who made this contribution.

The Committee worked extremely hard to accommodate the widespread views put to

it. A particular debt of gratitude is owed for the efforts of Dr Marc Rands as the

Secretary to the Committee.

Sir David Smith

Chairman of the Inquiry

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Executive Summary

Introduction

1. The Scottish fishing industry has been managed under the Common Fisheries Policy (CFP) of the European

Union for the last thirty years. The policy has failed to achieve adequate conservation of certain key fish stocks, so

that an important part of the industry and the livelihoods of many in Scotlands fishing communities are now

under threat.

2. The catching industry is divided into three principal sectors. The pelagic sectorfor fish living in the upper

layers of the sea, such as herring and mackerel; the shellfish sectorfor prawns, shrimps, lobster, crabs and molluscs;

and the demersal sector for fish living near the sea bottom, such as cod and haddock. The pelagic and

shellfish sectors are currently profitable and stable. It is the demersal (or whitefish) sector that is in deep trouble;

several of its stocks are below safe levels and in risk of collapse, with cod stocks, in particular, seriously depleted.

Common Fisheries Policy (CFP)

3. The development of the CFP is described in the main report. This clarifies some common misunderstandings

about the original negotiations in forming the CFP and highlights in particular the agreement to give member

states exclusive coastal zones. The agreement on this was revised in 1983 to give protected 12 mile limits around

the coasts of all member states and this gave Scotland one of the most extensive areas of inshore fishing in the

European Union. However this agreement is subject to renewal every ten years. While we do not anticipate any

change, because of the importance of its coastline to Scotland, we recommend Ministers endeavour to have the

existing 12 mile limits made permanent instead of being subject to renewal every ten years. (para. 2.10).

4. Total Allowable Catches (TACs) and quotas were introduced in 1983, both to conserve fish stocks and as a

basis for their allocation between nations. These were based on each countrys historical share of the total catchbut this principle of relative stability also aimed to give preference (The Hague Preferences) to coastal

communities dependent on fishing, such as those in Scotland. The North Sea is by far the most important fishing

area for Scotland, and although there are other nations with a North Sea coastline to share this resource, the UK

has much the largest share, with Scotland having the preponderant part.

5. A potential threat to coastal communities and the principle of relative stability arises if the quotas on which

they depend are sold to fishermen and/or fishing enterprises from other countries. This has not so far been a

problem for Scotland and anyone purchasing quota from a Scottish skipper would have to acquire a UK licence,

register their vessel in a UK port, base their operation there and be subject to UK rules on inspection, employment

and social security regulations. Nevertheless worries about this remain in Scotlands fishing communities and

there have been cases of quota purchase in England by fishing interests from other member states.

6. European Union (EU) Structural Funds, in particular the Financial Instrument for Fisheries Guidance (FIFG),

can assist the fishing industry by helping to fund training, de-commissioning and infrastructure (such as harbours

and marketing facilities). But FIFG is also able to provide resettlement grants for fishermen leaving the industry

and to fund early retirement; the European Regional Development Fund can be used to support new business

ventures. Little has so far been used for these latter purposes and, given the current crisis, we recommend that

Ministers review the arrangements for use of the Structural Funds in order to make maximum use of FIFG

and the other Funds for the economic diversification of fisheries dependent areas. (para. 2.31).

7. Unlike almost all other activities, the conservation of marine biological resources is an exclusive competence

of the EU so that most important decisions about the CFP lie exclusively with the Council of Ministers. A major

shortcoming of the CFP is that it is far too centralised, and too remote from those that are affected by it. With the

imminent enlargement of the EU to 25 members, the problems of overcentralisation and the difficulty of reaching

rapid and satisfactory decisions are likely to get worse. We therefore recommend that Ministers reconsider their

position over the EUs exclusive competence for conservation of marine biological resources, with a view to

getting this deleted from the proposed EU constitution so that the principle of subsidiarity may apply to

fisheries, as it does to other matters. (para. 2.44).

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8. Many Scottish fishermen have told us they would like the UK to withdraw from the CFP. We see no prospect

of this without the UK trying to renegotiate the terms of its Treaty of Accession. It is unlikely that new terms for

remaining in the EU could be negotiated or that they would allow withdrawal from a policy that all other

member states accept. Withdrawal altogether from the EU would have major and damaging consequences for the

Scottish economy (e.g., it would impact on the 60% of Scotlands manufactured exports that go to the EU, it

would deter inward investment. and the substantial aid that Scotland receives from the EU Structural Fundswould no longer be available). Withdrawal would have to be followed by negotiations with the EU on behalf of

the member states with whom Scotland has traditionally shared fisheries as well as with countries outside the EU

such as Norway, Iceland and the Faroe Islands. Even for fishermen, it is doubtful this would lead to any better

situation than currently exists under the CFP.

Economic and Social Impact

9. Scotland has 8.6% of the UK population, but landed 62% by value of the total fish catch in 2002. Fishing is of

much greater importance to Scotland than to the UK as a whole. Direct employment in catching, aquaculture,

and processing amounts to 19,800, just under 1% of total Scottish employment; if indirect effects are taken into

account, the total employment dependent on these industries rises to 48,000, roughly half the direct and indirect

employment dependent on North Sea oil at its peak. (para. 3.2).

10. Viewed as a business, the overall commercial performance of much of the fishing industry has been good. In

the catching industry, the pelagic sector successfully survived the acute crisis of the late 1970s when the herring

fishery had to be closed for some years. It subsequently modernised, reorganised and is now very profitable, with

its fleet of 33 vessels generating gross earnings of 98 million in 2002. The shellfish sector is also profitable, but

there is concern that it is approaching over-capacity, requires modernisation, and that whitefish vessels might

divert their effort into catching shellfish.

11. In the whitefish sector, there has been a collapse in profitability as a result of quota restrictions. Although it

catches a diversity of species, its difficulties have been dominated by cod and haddock, which now contribute

only 40% of the total value of the landings. Earnings from cod declined from 45 million in 1998 to 24 million

in 2002. Landings of all demersal fish by the Scottish fleet declined from 300,000t in 1982 to 130,000t in 2002.

12. The whitefish sector now depends on public intervention in one form or another. The decline in profitability

places increasing pressure on vessel owners who have typically used debt finance for the purchase of vessels.

Hence, much of the government money for decommissioning passes to banks, with relatively little left for owners,

although in the absence of these funds the banks would stand to lose much of their money through bankruptcies.

The situation would be alleviated, and decommissioning money could be put to more constructive use, if a

moratorium on debt servicing could be arranged with the financial institutions and steps taken to ensure that the

remaining vessels are the most modern in the demersal fleet. We therefore recommend that Ministers and the

financial institutions should seek to negotiate an arrangement for debt rescheduling and restructuring

under which the demersal fleet is granted a debt service moratorium for an agreed period. (para. 3.69).

13. For the longer term, the financing of the Scottish fleets as a whole should be based on terms that are better

able to withstand the fluctuations in earnings that are characteristic of this industry. We recommend that

Ministers and the financial institutions should examine the case for establishing a Fishing Industry Finance

Corporation. (para. 3.69).

14. The traditional Scottish system of shared ownership, or owner skippers, while having many advantages, may

not be well suited to an industry that requires to raise so much capital. The case for reforming into a corporate

structure needs to be considered. It could make it easier to raise capital for investment, without the problems of

huge personal debt, and to buy quota to prevent them moving to other nations. We recommend that the

Scottish Executive and the Scottish fishing industry should jointly examine the industrys ownership

structure to establish whether a regrouping into a corporate structure would strengthen its ability to

compete in the future. (para. 3.69).

15. There would be much advantage if the institutions representing the fish catching industry could develop a

more cohesive structure. This would enable the industry to take a more responsible and effective role in

management issues and in discussions with government. We recommend that the Scottish Fishermens

Federation (SFF) and other representative bodies in the catching industry should consider how they can

come together most effectively to discuss issues of stock conservation with government scientists and

negotiate effectively on management and regulatory issues. (para. 3.69).

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16. Much of the fish catching industry is concentrated in coastal areas and islands where there are few prospects

of alternative employment. Whereas the shellfish sector is distributed right round the Scottish coast, the pelagic

and demersal sectors are concentrated in the North East and in Shetland with sizeable landings also in Caithness

and Sutherland. Employment in the industry has already declined over the last 10 years by 40 per cent. This is not

just because of the crisis in the demersal sector, but as a result of technological advance throughout the industry.

We expect this to continue, with technological advance, in the face of a finite resource, resulting in furtherreductions in employment in all three sectors. The impacts of the present and future reductions in the fleet are

discussed as they relate to the industry as a whole but with particular attention to the North East Coast

(paras. 3.54 3.58), Shetland (paras. 3.59 3.61) and Caithness and Sutherland (paras. 3.62 3.64). Despite the

job loss that has already occurred, both the North East and Shetland have unemployment rates below the

national average (2-3% and 1.5% respectively). (para. 3.57).

17. We recommend that consideration be given to early retirement schemes for fishermen wishing to leave

the industry and to resettlement grants, both of which are eligible for FIFG funding; and that the resources

of Highlands and Islands Enterprise and the Scottish Enterprise network as well as the EU Structural Funds

be used to the maximum extent possible to help retraining and the promotion of new small business in

fisheries dependent areas. (para. 3.69).

18. The processing industry in Scotland represents 49% of the UK total, employs more people than the catching

industry and much of it is currently in a healthy state. A substantial proportion of the fish it processes is imported

(e.g. for the UK as a whole only 8% of the cod used is from home sources). Although this figure will be higher for

Scotland, availability of imported supplies can protect it at least to a considerable extent from the current crisis in

the whitefish sector.

19. Priority should be given to exploiting the proposed introduction of traceability as a means of aligning the

catching and processing industries with retail trends and consumer preferences. It could also assist with high

quality branding. We therefore recommend that the Scottish Executive Process and Marketing Scheme

should be enhanced and greater effort put behind broadening the scope of traceability and branding.

(para. 3.88).

20. Public expenditure (via the Scottish Executive, UK Government and EU) to pay for enforcement, fishery

science, FIFG grants and decommissioning provided around 70m in 2002 in Scotland, in support of the fishing

and processing industries (Table 3.9 in main report). Most went to the catching sectors, (total turnover 329m),

and in particular the demersal sector (turnover 137m). But if the industry is well managed in future so that

stocks recover and are sustainable, the contribution it can make to the Scottish economy would be well beyond

the cost of any support it may be given.

The Science of Stock Assessment and its Role in Fisheries Management

21. The assessment of fish stock sizes for the setting of Total Allowable Catches (TAC) is based upon collation of

fishery landing statistics from the different EU nations by the International Council for the Exploration of the Sea

(ICES). The principal method used for calculating stock size is Virtual Population Analysis (VPA). This has been in

use for over 30 years, but is subject to error if misreporting, illegal landings and unrecorded discards occur to asignificant extent; stock sizes may then be overestimated and TACs set too high for sustainable stock

conservation. Much more accurate records of true landings and discards are needed but changes in the science

used are also necessary. We recommend that ICES should consider new statistical approaches as alternatives

to VPA for management of the fisheries, particularly methods in which uncertainty (and hence business

risk) can be quantified. (para. 4.24).

22. Trends in recruitment (e.g. the process of adding new individuals to a population by reproduction),

abundance and distribution of fish stocks can be studied by methods that are independent of commercial

fisheries. The International Bottom Trawl Survey (IBTS) and associated plankton sampling in which Scotland

plays a major role provide valuable data on the state of North Sea fish stocks.

23. While survey techniques, such as IBTS, provide valuable information on recruitment that cannot be obtained

from commercial vessels, we recommend that Fisheries Research Services (FRS) should begin to develop

methods for the use of commercial vessels to aid fishery surveys and also how accurate recording of

commercial catches can best be achieved. (para. 4.38).

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24. We also recommend ICES should convene a forum to review IBTS design, fishing gear and methodology.

Industry advice should be sought, especially with respect to gear improvement, trawl operation and how best to

sample hard ground. Greater standardisation across nations should be pursued. Assuming new procedures are

adopted, calibration should be addressed. (para. 4.38)

Review of ICES scientific advice on major fish stocks

North Sea Cod

25. Cod stocks have declined to historically low levels. Excessive exploitation of the cod fishery has resulted in a

reduction in landings from more than 200,000t in 1985 to only 50,000t in 2001 by all countries fishing in the

North Sea. Had fishing mortality been sustained at 1960s levels and not been allowed to rise, through more

effective conservation policies, the Scottish fleets share of this would have been an additional 50-60,000t, worth

around 80-100 million a year. The main cause of the decline has been high fishing mortality, with the removal

of over 60% of the stock each year. Adverse environmental conditions for the recruitment of cod since 1990

have made a minor contribution. The high fishing mortality has resulted in a stock comprised of mainly small

young fish that cannot generate the level of recruitment that older fish can achieve. This also impedes stock

recovery.

26. Unrecorded landings and discards have played a part in this, but it is not only fishermen who are to blame.

Calls by scientists for reduction in fishing mortality since 1990 have been rendered less effective by a persistent

tendency to set TACs that were too high, partly as a result of errors in scientific methods that over-estimated stock

abundance. This resulted in fishing mortality that was too high. A major strategic error was made in the

management of the abundant 1996 year-class in the North Sea, when scientists recommended increases in TACs

instead of recommending low fishing mortality that would, if accepted, have averted the current crisis. In general,

cod stocks have been over-fished in compliance with erroneous advice from ICES Advisory Committee on Fishery

Management (ACFM) until the last few years when advice was to reduce fishing for cod to the lowest levels and

then to close the fishery altogether.

27. In the light of the above, we recommend that the EU manage demersal fish stocks so that fishing

mortality is much lower than over the past 15 years, aiming for a value of fishing mortality (F) less than

0.4, corresponding to removal of less than one third of the stock each year. (para. 4.82). This strategy has

been successfully applied to mackerel and herring over recent decades and it will require modification of the 1999

EU-Norway agreement that specified a target F=0.65 for cod.

28. Also, ICES recommendations should aim to promote and sustain recruitment so that there is a good

spread of age classes of females up to age 5 years old and over in demersal stocks. (para. 4.82). Without fit

and older mother fish, prospects for stock recoveries are severely compromised.

The EC Cod Recovery programme

29. The European Commission has proposed a cod recovery programme with the aim of restoring the North Sea

cod to 150,000t in a time span of 5 10 years. At the time of writing, this programme has still not been agreed

even though it was first proposed three years ago. It is also flawed because it gives no indication of how to achieve

recovery of the stock from its present low level, (around 50,000t), to 70,000t, the level below which the stock isconsidered to be in danger of collapse (Limiting Biomass B lim). The subsequent rebuilding to 150,000t depends

on continuing to set low annual TACs and ensuring that they are adhered to.

30. We consider that the low TAC of 27,300t agreed for cod in the North Sea as a whole in 2004 may be low

enough to permit recovery. The theoretical minimum time for recovery of cod stocks is 5 years, with 10 years for

full recovery more likely. A well managed cod stock in the North Sea should sustain landings of ca. 200,000t even

with recent environmental changes. However, it is unlikely, even if a full recovery of cod stock is achieved, that all

of the existing demersal fishing capacity can be fully employed.

31. Since a recovery plan is necessary, we recommend:

The current TAC of 27,300t for cod in the North Sea should be used as the starting point for a recoveryprogramme and should be fixed until Bpa (the safe minimum spawning stock biomass) of 150,000t is

attained. (para. 4.82).

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The by-catch of cod in other fisheries should be minimised by ensuring the use of species selective fishing

gears; TACs should be supplemented by limits on effort and designation of closed areas. (para. 4.82).

Demersal stocks should be managed as a mixed fishery with a single overall limit on effort and no

discarding, coupled with measures such as selective gears, protected areas and real-time temporary

closures to prevent over-exploitation of individual species and immature fish. After the cod recoveryprogramme, TACs should be retained only to guide regulation of effort and ensur e relative stability. (para. 4.82).

32. It should be acknowledged that setting of TACs is not always possible, owing to lack of data, or the nature of

some demersal species. Management should be free to regulate by other means such as effort and closed areas,

without depending on precautionary TACs which often have little meaning.

33. Restriction of fishing activity through TACs and catch quota has failed in recent years and is unlikely to be

successful owing to fundamental shortcomings in both science and enforcement. If indicators of stock status,

spawning stock biomass (SSB), size composition, age composition or catch per unit effort (CPUE) require that

fishing mortality be reduced, management measures must therefore include other means to reduce effort on the

target species.

North Sea Haddock

34. Scotland has the largest share of haddock landings from the North Sea and it accounts for a larger share of the

fleets income than cod. Both west coast and North Sea haddock stocks are in a healthy state and can sustain 2003

levels of exploitation. In recognition of this the Council of Ministers agreed a substantial increase in the haddock

TAC for 2004. However, there is concern that this is a volatile stock and its current healthy state is due to

the single 1999 year-class. Subsequent year-classes in the North Sea are amongst the weakest on record.

We recommend that Ministers should aim to restore haddock landings from the North Sea to long-term

average values of 250,000t, given the importance of this stock to Scottish demersal fisheries. (para. 4.88).

Whiting

35. The status of whiting, both in the North Sea and off the west coast of Scotland, is very uncertain. Landings

have steadily declined. Although it has the potential to be the most abundant whitefish species, it is therefore

presumed to be below safe biological limits. Fisheries Research Services (FRS) and ICES should urgently seek a

valid method for assessing whiting in the North Sea and the EU should initiate a whiting recovery

programme. (para. 4.93).

Monkfish

36. Monkfish depend on recruitment from unknown sources of spawning females presumed to be located in deep

water. Landings peaked in 1997 and there is no logical reason to suppose that increased landings are possible from

this species. It is now widely captured in small numbers as a valuable by-catch. Management by TACs is

problematic for this species. Monkfish around Scotland should be managed through limitations on demersal

sector effort rather than catch quotas. (para. 4.96).

Nephrops

37. Nephrops (Nephrops norvegicus: e.g Norway lobster, Dublin Bay prawn or langoustine) fisheries make a majorcontribution to Scottish landings. The stocks are in a healthy state, and current levels of exploitation are

sustainable. The Council of Ministers has now also agreed a substantial increase in the TAC for 2004. Innovative

use of video surveys and catch per unit effort data has provided a good basis for management. We recommend

that the EU Commission and Scottish Ministers should ensure that Nephrops fishermen adopt selective gears

that do not capture white fish. Management should be vigilant against diversion of effort from the white

fish sector into Nephrops. (para. 4.101).

Pelagic fisheries (herring and mackerel)

38. Following the crises in the 1970s, management of pelagic fisheries has adopted a policy of low fishing

mortality values, removing less than 25% of the stock each year. Errors in stock assessments are small, so that

TACs are reliable. Production is now high and sustainable given good recruitment, so that management of pelagic

fisheries has been a success especially since it is simplified because these are single species fisheries.

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46. Environmental factors also affect fishing. It is known that there has been a rise in temperature in the North

Sea, and a recent article in Nature 1 has shown this has affected the distribution of plankton species which are part

of the food for juvenile cod although this article also states that over-fishing is nevertheless the primary cause of

the decline in cod stocks. A variety of marine predators also feed on fish: birds, seals, porpoises and other

cetaceans which eat just as much fish as seals. They target non-commercial as well as commercial species, and

the preferred food of seals, for example, is sandeels. Culling of seals is sometimes advocated to alleviate pressureon fish stocks, but there is no evidence that this would have the desired effect.

The Role of Aquaculture

47. Aquaculture has sometimes been viewed as being able to replace the shortfall caused by declining capture

fisheries. It is currently a major sector of the fishing industry and has grown at about 10% per annum in the ten

years up to 2002. It is dominated by the production of salmon yielding 145,000t in 2002. It accounts for ca. 50%

of Scotlands food exports and directly employs 2,000 (and a further 4,500 in associated support activities).

48. Cod farming in Scottish aquaculture is in its infancy. Significant investment has taken place in Norway, with

the most optimistic estimates suggesting a production of 400,000t in the next 10 15 years. The British Marine

Finfish Association suggests that 30,000t annually may be produced by 2013. However, there are current problemsin the areas of early maturation, slow growth, and lack of effective bloodstock selection programmes.

49. Although there is a clear role for aquaculture in cod production, it is likely to remain a niche product for the

foreseeable future and will not be able to substitute significantly for wild-caught cod in the short to medium term.

Also, aquaculture production of both salmon and cod relies heavily on the use of fishmeal and fish oil, derived

mainly from Southern hemisphere industrial fisheries. We recommend that further research should be carried

out into the substitution of fish oil in farmed fish diets with plant oil as a means of promoting

sustainability of industrial fisheries. (para. 6.29). While there is public concern over the

environmental impacts of aquaculture, the impact in Scotland is very strictly controlled.

50. The Scottish Executives recently launched Strategic Framework for Scottish Aquaculture envisages that an

essential feature of future development will be diversification into species additional to the current mainstays of

salmon, rainbow trout and mussels. We recommend that Scottish Ministers should consider how research

with new species such as cod can be supported to enable the diversification of Scottish aquacultur e

production. (para. 6.29).

Management of Scotlands Fisheries for Sustainable Development

51. Under the current CFP, the highly centralised process by which policy is determined and decisions made

suffers from a number of serious weaknesses:

lack of clear long-term vision for the future of European fisheries;

reactive rather than proactive approach to fisheries management;

non-transparency;

lack of involvement of stakeholders in policy formation;

lack of timeliness in decision-making;

distortion of rational policy proposals; and

lack of any accountability for bad decisions.

52. Against this background, the decision to establish Regional Advisory Councils (RACs) is welcome. This falls

short of what is ultimately needed, and the proposed regions (such as the North Sea) are too large for efficient

management, but it offers the opportunity to begin the process of decentralisation and greater involvement of

fishermen. We recommend that Ministers should press the EU Commission to set a timescale for the review

of the RACs so that transfer of some management responsibilities to them can be considered. The fishing

industry should seize the opportunities presented by RACs to demonstrate a responsible role in fisheriesmanagement. (para. 7.18).

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53. The Cod Recovery Plan proposed under the CFP is analysed. While we recognise that the exceptionally

serious condition of cod stocks requires regulation targeted at cod, we consider that, in a multispecies fishery,

there are difficulties in trying to manage a single stock. If the principal aim is to have a sustainable whitefish

sector, the better option in the longer term may be to focus on maximising the harvesting potential from the full

range of demersal fisheries in Scottish waters.

54. We consider that illegal landings and discards are always likely to be problems so long as regulation of the

demersal sector is based on catch quotas and single species TACs. We therefore recommend that the

EU Commission should replace the present system of catch quotas for the demersal sector and Nephrops

trawl fisheries with effort control (days at sea) and closed areas. The present system of catch quotas would,

however, continue for the pelagic sector. (para. 7.62). We envisage TACs continuing for relative stability and as

a guide for setting effort control.

55. We recommend that the EU Commission should phase in this new system over the lifetime of the cod

recovery plan; during this time the current system of catch quotas should continue alongside the evolving

effort control system. Thereafter TACs should be set only as guidelines for these sectors. (para. 7.63).

56. Transferability and ownership of fishing rights is an issue to which the Committee attaches importance, but

the present situation needs clarification. We recommend that the UK fisheries departments, in collaboration

with the fishing industries, should undertake a wide-ranging review of the existing system of quota

management having regard to the states responsibilities for the conservation and management of

the fisheries on the one hand, and the financial viability of the industry on the other. (para. 7.54).

57. We were favourably impressed by the system of community quotas which is emerging in Shetland as a result

of investment by the local Producers Organisation and the Shetland Islands Council, through their subsidiary

body Shetland Leasing and Property Development Ltd. But we recognise that Shetland is in a unique situation

with its oil revenues and that this course could not be readily followed by other local authorities that are

dependent on tax revenues.

58. The management of Scotlands inshore fisheries is in need of reform, and they face a distinct threat of

overexploitation. A recent study2 has analysed the strengths and weaknesses of the existing system, and identified

three guiding principles for future management which would be best achieved by the introduction of regional

inshore management committees. Namely, that they should be conducted at the local scale; they should be

stakeholder led; and that they should be based on an integrated approach to fisheries and the marine

environment. The Committee recommends that Scottish Ministers should establish inshore management

committees on a local scale, led by the industry and should follow an integrated approach to fisheries and

the environment. (para. 7.70).

59. The systems of governance for Scottish fisheries needs re-appraisal and the present gulf in understanding

between fishermen and scientists needs to be bridged. The industry needs to be more closely involved in its own

management, with a responsibility for collaborating with the scientists and enforcing compliance and policy

measures. As far as possible, technical issues relating to fisheries management should be removed from the direct

concern of the Executive.

60. We offer three suggestions that should help to meet these objectives. (1) A new body governed by a board

appointed by the Scottish Fisheries Minister with members drawn from the industry and other lay members with

relevant expertise. The body would take over FRS and Scottish Fisheries Protection Agency (SFPA) and advise the

Minister on policy and management issues. (2) Establish separate boards for the management of FRS and SFPA,

also appointed by the Minister and with industry representatives on them. (3) A forum should be established,

chaired by the Minister, with membership drawn from the industry, science and those with expertise in fishing

matters. This would be a deliberative body but provide an opportunity for all those concerned to debate the issues

confronting the industry and try to reach a shared understanding. This third suggestion could of course be

combined with either of the other two.

61. We recommend that Scottish Ministers should seek to bridge the gulf between fishermen and scientists

and should consider our alternative proposals for restructuring the institutional arrangements for fisheries

management as set out in Chapter 7. (para. 7.88).

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Building a Sustainable Future

62. A successful fishing industry has to be both profitable and sustainable; only then can it ensure the future

viability of fishing dependent communities. Although the pelagic and shellfish sectors meet this requirement, the

whitefish sector does not. Most stocks in this sector are in a serious condition and even the current relative

abundance of haddock is due to a single year-class. White fish stocks therefore need to be rebuilt and then

conserved with a fishing mortality that allows maximum sustainable yield to be maintained. It will require several

years of severe restraint, but, if this is done, the prospects of recovery in cod and other demersal stocks are good.

63. Apart from the problems with demersal stocks, we envisage that continuing technological advance will cause

further decline in employment in all three sectors of the catching industry. This would simply continue the trend

of the last decade, but it needs to be recognised, and the various development agencies and local authorities need

to do all they can to diversify the economies of the fishing dependent communities.

64. But provided the industry is well managed and on a basis that is sustainable, we envisage a good future for

the industry. It should continue to play a key part in Scotlands economy and providing a livelihood for the

fishing dependent communities.

References1Beaugrand, G., Brander, K.M., Lindley, J.A., Souissi, S. & Reid, P.C. (2003), Nature 426: 661-664.2Symes, D. & Ridgway, S. Inshore Fisheries Regulation and Management in Scotland: Meeting the Challenge of

Environmental Integration.University of Hull, 2003.

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Glossary

Term Meaning

Benthic Fish and other organisms that live on the sea bed.

Biomass The amount of living matter (as in a unit area or volume of habitat).

Blackfish Fish landed illegally, often at night or in small unregulated harbours (fish that are typically

undersized or from quotas that have already been exceeded).

By-catch Any organism that is caught in addition to the target species. Some by-catches are

marketable although much is discarded.

Demersal Fish living near the sea bottom (e.g. cod, haddock, halibut, ling and turbot) (cf Pelagic).

Eutrophication The process by which a body of water becomes enriched in dissolved nutrients that

stimulate the growth of aquatic plant life.

Gadoid Fish of the cod family (Gadidae), e.g. cod, haddock, whiting, saithe and Norway pout.

Helminth A parasitic worm.

Industrial fishing Large-scale fishing for low-value fish (e.g. sprat, pout and sandeel) to produce fish meal, oils

and fat.

Keystone Species whose loss from an ecosystem would have a disproportionately large effect on other

species populations or ecological processes in that system.

Nephrops Nephrops norvegicus: Norway lobster, Dublin Bay prawn or langoustine.

North Atlantic The North Atlantic Oscillation (NAO) is a phenomenon associated with winter fluctuations

Oscillation in temperatures, rainfall and storminess over much of Europe. It is measured by the winter

surface air pressure difference between Iceland and the Azores. When the NAO is positive,

westerly winds are stronger or more persistent, northern Europe tends to be warmer and

wetter than average, and southern Europe colder and drier. When the NAO is negative,

westerly winds are weaker or less persistent, northern Europe is colder and drier, and

southern Europe warmer and wetter than average.Norway lobster See Nephrops.

Pelagic Fish and other organisms living in the upper layers of the sea (e.g. herring, mackerel and

pilchard) (cf Demersal).

Phytoplankton A flora of freely floating, often minute organisms that drift with water currents.

Plankton Marine and freshwater organisms, which, because they are non-motile or because they are

too small or too weak to swim against the current, exist in a drifting, floating state.

Prawn Generic term, but generally applied to Nephrops.

Processors Fish processing companies.

Recruitment The process of adding new individuals to a population by growth and reproduction.

Round fish Round fish (such as cod, whiting, mackerel) as opposed to flat fish, (such as plaice or dabs).

Shellfish Generic term for Nephrops, lobster, all prawns, shrimps, crabs, molluscs (including scallops,

mussels, razor shells and cockles).Spawners Egg-producing fish.

Technological creep Increased productivity with less manpower as a result of investment in more and better

capital equipment.

Whitefish Fish with white flesh (mostly demersal) as opposed to oily fish such as herring and mackerel

(mostly pelagic).

Zooplankton Small floating or weakly swimming planktonic animals that drift with water currents and,

with phytoplankton, make up the planktonic food supply.

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Abbreviations

ACFA Advisory Committee on Fisheries and

Aquaculture

ACFM Advisory Committee on Fishery Management

Blim Limiting Biomass

Bpa Precautionary Biomass

CBD Convention on Biological Diversity

CFP Common Fisheries Policy

CITES Convention on International Trade in

Endangered Species

CPUE Catch Per Unit Effort

DEFRA Department of the Environment, Food and

Rural Affairs

EBFM Ecosystem-Based Fisheries Management

EcoQOs Ecological Quality Objectives

EEA European Environment Agency

EEC European Economic Community

EEZ Exclusive Economic ZoneEIA Environmental Impact Assessment

ERDF European Regional Development Fund

ESC Economic and Social Committee

ESF European Social Fund

EU European Union

EUR Euros

F Fishing Mortality

FAO UN Food and Agriculture Organisation

FDC Fisheries Dependent Communities

FIFG Financial Instrument for Fisheries Guidance

Flim Limiting Fishing Mortality

Fpa Precautionary Fishing MortalityFRS Fisheries Research Services

FU Functional Unit

GDP Gross Domestic Product

GOV Grande Ouverture Verticale trawl

HIE Highlands and Islands Enterprise

IBTS International Bottom Trawl Survey

ICES International Council for the Exploration

of the Sea

IFQ Individual Fishing Quota

IFREMER Institut franais de recherche pour lexploitation

de la mer (French Research Institute for

Exploitation of the Sea)

LPUE Landing Per Unit Effort

ITQ Individual Transferable Catch Quota

lim Limiting Value

M Natural Mortality

MAGP Multi-Annual Guidance ProgrammeMPA Marine Protected Area

MSY Maximum Sustainable Yield

N The number of fish in each year

NAO North Atlantic Oscillation

NFFO National Federation of Fishermens Organisations

NGO Non-Governmental Organisation

NPV Net Present Value

NTZ No Take Zone

OSPAR Oslo and Paris Convention

OST Office of Science and Technology

pa Precautionary Limit

PO Producer Organisation

RAC Regional Advisory Council

RIMC Regional Inshore Management Committees

RSA Regional Selective Assistance

RSE Royal Society of Edinburgh

SAC Special Areas of Conservation

SEERAD Scottish Executive Environment and Rural

Affairs Department

SEPA Scottish Environmental Protection Agency

SFF Scottish Fishermens Federation

SFPA Scottish Fisheries Protection Agency

SHOAL Shetland Oceans Alliance

SIC Shetland Islands Council

SLAP Shetland Leasing and Property Development Ltd.SSB Spawning Stock Biomass

STECF Scientific, Technical and Economic Committee

on Fisheries

SURBA Survey-Based Assessment software package

TAC Total Allowable Catch

TCM Technical Conservation Measures

TTWA Travel To Work Area

UN United Nations

VCU Vessel Capacity Unit

VPA Virtual Population Analysis

WGDEEP ICES Working Group on Deep-sea Fisheries

Resources

WWF World Wide Fund for Nature

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Contents

1 Introduction 1

Background 1

The Role of Scientists in Fisheries Management 3

The Marine Environment 3

Scottish Fisheries 3

Structure of the Report 4

2 The Origins of the Common Fisheries Policy 5

Six and Twelve Mile limits 5

Relative Stability: TACs and Quotas 6

Quota Hopping 7

EU Grants for the Fishing Industry 8

Withdrawal from the CFP? 9

Is EU Exclusive Competence Necessary? 10

3 Economic, Industrial and Social Impacts 12

The Scottish Fishing Industry 12

The Fish Catching Industry 12

The Catching Industry as a Business 17

(a) Pelagic Sector 17

(b) Shellfish Sector 17

(c) Demersal Sector 17Aspects Influencing Commercial Success 18

(a) Control and Regulation 18

(b) Finance 18

(c) Technology and Competitiveness 19

(d) Ownership Structure 20

(e) Involving Industry in Policy Decisions 20

The Social Impact of the Decline in Employment 2 0

(a) Pelagic Sector 21

(b) Demersal Sector 21

(c) Shellfish Sector 21

(d) Support Services Industry 22

Overall Employment Impact in the Catching Sector and its Supporting Services Sector 22Impact by Area 22

(a) The North East Coast 22

(b) Shetland 23

(c) Caithness and Sutherland 24

(d) Other Areas 24

The Processing Industry 25

Conditions of Success in the Processing Industry 26

The Outlook for the Processing Industry 27

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4 The Science of Stock Assessment and its Role in Fisheries Mangement 29

Assessment Methods and their Reliability 29

Fishery Dependent Methods 30

Age-Structured Stock Assessment Methods: Virtual Population Analysis 30

Alternatives to VPA 31

Conclusions on Age-structured Stock Assessment Methods 33

Indices of Catch per Unit Effort (CPUE) 33

Unrecorded Catch 33

Data from fishermen 34

Fishery Independent Methods 34

International Bottom Trawl Surveys (IBTS) 34

Surveys of Fish Larvae 35

Egg Survey Method 36

Acoustic Surveys 36

Video Surveys 36

Setting of Total Allowable Catches 37

Review of ICES Scientific Advice on the Major Fish Stocks 37

Demersal stocks 37North Sea Cod Area IV 37

Spatial Considerations 40

History and Causes of Decline in the Cod Stock 40

Recruitment 41

Precautionary Limit 42

West Coast Cod (Sub Areas VIa and VIIa) 42

Future Prospects for Cod 42

The Cod Recovery Programme 43

An Assessment of Recovery Strategies for Cod 43

North Sea Haddock 45

Whiting 46

Monkfish 47Nephrops 47

Pelagic Fisheries 49

North Sea Herring 49

Mackerel 50

Management of Pelagic Fisheries 51

Industrial Fisheries 51

Deep-Sea Fisheries 53

Overall Comments on Fisheries Science 53

The Structure of Fisheries Science 54

5 Fisheries and the Environment 56

Introduction 56

Ecosystem-based Management 56

Environmental Policy and Fishing 56

The Impacts of Fishing on the Environment 57

Could Other Factors Influence Fish Populations? 58

Impacts on Other Species 59

Marine Mammals and Fisheries 60

Seabirds and Fisheries 60

6 The Role of Aquaculture 62

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7 Managing Scotlands Fisheries for Sustainable Development 66

Introduction 66

Allocation of Management Responsibility 66

The Policy Process 67

Regional Advisory Councils 68

Reforming the Management System: the Cod Recovery Plan 69

Managing for Sustainability 71

Balancing Capacity and Resources 72

The Regulatory System 73

A New Approach 73

(a) The Demersal Sector 73

Effort Control 73

Technical Conservation Measures 74

The Transferability of Fishing Rights 76

(b) The Pelagic Sector 77

Enforcement 77

A Timetable for Change 77

Inshore Fisheries Management 78An Ecosystem-Based Approach to Fisheries Management 78

Taking the Politics out of Fishing 79

8 A Sustainable Future for the Industry 83

What has Been Wrong with the Policy? 84

What Needs to be Done Now? 84

Remedial Measures within Scotland 85

Appendices

Appendix 1: Membership of the RSE Inquiry into the Future of the Scottish Fishing Industry 87Appendix 2: Oral and written evidence submitted to the Inquiry and visits made 88

Appendix 3: List of Recommendations 93

Appendix 4: An Overview of the Demersal Scottish Fisheries 96

Appendix 5: FRS Sampling Area between 1997 and 2003 101

Appendix 6: FRS Sampling results for cod, haddock and whiting between 1997 and 2003 102

Appendix 7: ICES IBTS Sampling Area between 1997 and 2000 105

Appendix 8: ICES IBTS survey, numbers caught at age for cod, haddock and whiting, by year 106

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1 Introduction

Background

1.1 The Scottish fishing industry has been managed under the European Unions Common Fisheries Policy

(CFP) for several decades. It is now almost universally accepted that the CFP has failed to give adequate protection

to important fish stocks. In consequence, an important part of the Scottish fishing industry is in serious trouble.

1.2 For Scotland, and especially for the communities that depend on fishing, the reduction in quota for cod

and the restrictions on fishing for whitefish generally are the cause of much distress. But the overriding concern

must be to ensure that Scotland has a strong and sustainable fishing industry for the future. We are convinced

that it is possible to achieve this, but only if the right steps are taken. This report sets out the importance of this

industry for Scotland, critically appraises the science that underlies management decisions, discusses alternative

policies for conservation and makes recommendations for the future.

1.3 The current situation should be seen first in the context of how and why fishery management systems have

had to evolve. Most of the worlds commercial fisheries are currently being exploited at or beyond their ability to

sustain themselves. The overwhelming problem faced by fishermen, fisheries and environmental managers,

scientists and politicians everywhere is how to achieve an effective system of management. It should keep the

fishing industry and its activities to a level which successfully conserves fish stocks, minimises environmental

impacts, and gives fishermen confidence of reasonable economic stability; this is what we understand by

sustainability.

1.4 Sea fishing is one of the few industries remaining where the resource on which it depends is in common

rather than individual ownership. Where a resource is owned in common, it is not in the interests of any one

person seeking to exploit it to try to conserve it. Rather, there will be a chronic tendency to over-exploitation and

a race by all those trying to use it to maximise their share. This situation has been referred to as the Tragedy ofthe Commons3 and failure to address it has been a major flaw in fisheries management.

1.5 The fishing industry, like others, increases its efficiency as a result of technological progress year by year. In

most industries this is seen as something worth striving for, because it raises productivity and hence wealth. More

can be produced with less manpower, as a result of investment in more and better capital equipment. But in

fishing, this technological creep means that an industry that was once exploiting its natural resource well within

the limits of sustainability will sooner or later cease to do so.

1.6 Investment in expensive capital equipment, which is a feature of the modern fishing industry, increases the

pressure on fishermen to catch as much as they can. A fishermans primary concern will be to meet the interest

and repayment obligations on the loan that financed this investment. It is hardly surprising if this were to take

precedence over any anxiety about the sustainability of the stock he is exploiting.

1.7 Before such over-exploitation of fisheries became evident, management was somewhat ad hoc and based

upon limited knowledge of fish stocks. It was known that fish catches fluctuated, and this was at first explained by

natural events such as changes in temperature, currents and migration patterns. The picture became more

complex when research showed that stocks were structured in terms of sizes and ages of fish, and that fluctuations

were related also to spawning and recruitment. These could not be controlled, but it was hoped to understand the

influence of the environment and describe for each species how spawning and recruitment were related to the size

of the fish population. There were also reasonable assumptions that certain fishing practices should be avoided;

such as harvesting immature fish, spawning females or moulting crustaceans.

1.8 As it became recognised that intensive fishing could be a major factor in reducing catches, the current

philosophy emerged whereby management is focused on controlling the catching activity of fishermen. This

approach was developed over the decades following the Second World War. Recognition of the impact of fishing

on catches led to quantitative stock assessment by fishery scientists becoming the main factor in guiding

management decisions. This was underpinned by studies of population dynamics and the concept of maximum

sustainable yield, which predicted that, in theory, a population would be most productive when harvested to a

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level that sustained it somewhat below maximum natural size. It was further assumed that stocks would not

decline to the point of collapse because the fishery would become unprofitable long before this happened.

1.9 Unfortunately, these assumptions pivotal to management philosophy were not upheld in practice.

The reasons, largely due to human ingenuity, were varied: technological advances which enabled fishing to

continue under increasingly difficult circumstances; increased knowledge of the areas favoured by fish; subsidieswhich skewed the economics towards more fishing even as stocks declined. Occasional increases in fish

population stimulated increases in fishing capacity, but subsequent stock reductions did not lead to corresponding

reductions in capacity. This ratchet effect generated a mismatch between the effort available (vessels, fishermen,

processing capacity) and the resource. In order to gain the immediate economic survival of the industry,

emergency measures were introduced to reduce fishing mortality: vessel decommissioning, increased mesh sizes,

closure of whole fisheries, regulations restricting the fishing capacity of new vessels, and the introduction of quota

schemes to share out the amount of fish to be caught.

1.10 On the biological side of fisheries management, since excessive fishing reduces the number of spawners and

will reduce at some stage the recruitment of new fish, objectives switched from seeking maximum sustainable

yields to maintaining a spawning stock biomass that was believed to be sufficiently large to ensure adequate

future recruitment. Although spawning is clearly related to recruitment, the relationship is not exact, so there areinevitable statistical uncertainties which affect predictions of future fish population size. As with any important

procedures which involve risks, precautionary approaches become involved in setting safety margins, and this can

result in catch limits sometimes appearing to be set unreasonably low. In some cases the work of scientists has

failed fully to reveal the gravity of the threat to fish stocks, in others those responsible for management have

taken the risk of paying insufficient regard to scientific advice because of short-term objectives such as alleviating

immediate economic or political problems. However, if risks are taken continuously, some form of stock collapse

is sooner or later inevitable.

1.11 There is a variety of methods by which management can attempt to control the catching activity of

fishermen. When the conservation measures in the CFP were introduced in 1983, the method was to set Total

Allowable Catches (TAC) for each species in each fishing area. The TACs formed the basis for allocating catch to

the different fishing nations on a fixed percentage basis (relative stability). A major problem in implementing

TACs in a multi-species fishery is that when the quota for one species runs out, fishing for others still within

quota can continue, but the first species will still be caught and so will either be discarded back into the sea or

landed illegally. If the level of discards and illegal landings is significant, the accuracy of stock assessment

calculations is inevitably weakened.

1.12 Other types of management methods that aim to counter the race for fish are used in other parts of the

world. Some employ a rights-based approach, which confers ownership of the resource on individual fishermen,

and so encourages its rational exploitation and conservation. Several forms of Individual Fishing Quotas (IFQs),

sometimes fully tradable, are in successful use, and their advantages and disadvantages are discussed in a later

section of this report.

1.13 An unfortunate consequence of prolonged imposition of TACs under the CFP is that this traditional

management system focuses simply on individual target species. However, such species are a part of a complexecosystem and ideally they should be managed in a way which takes into account their position and importance

within that ecosystem and especially when they are part of a multi-species fishery, as is typical for fish such

as cod and haddock. Belatedly, the CFP has begun to take this into account with its recent recommendation

of Ecosystem-Based Fisheries Management (EBFM) even if it is not yet clear exactly what this implies in

practical terms.

1.14 Scotlands geography means that its fishery resource has historically been shared with other nations around

the North Sea and on the west coast. This inevitably adds complexity to any management system, but the

introduction of the CFP brought different complexities. The involvement of other nations in the European Union

inevitably increased both the difficulty and the slowness of decision-making. The centralisation of the CFP in

Brussels markedly increased the sense of the remoteness of the Scottish fishing industry from the decision-making

process, especially since the European Commission receives scientific advice from ICES but does not seek parallel

economic advice or advice on the state and future prospects from the industry. As fish stocks declined and TACs

became more restrictive, discontent with the CFP has led to widespread demands in the Scottish fishing industry

for the UK to withdraw from it.

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The Role of Scientists in Fisheries Management

1.15 Most systems of conservation work well when fish stocks are buoyant. The real test comes when they

decline and fishing effort has to be curtailed. Fisheries managers under the CFP rely upon scientists for advice on

setting TACs. As fish stocks declined and cuts were recommended, scientists and the Council of Ministers at their

annual meeting were seen by fishermen to be unfairly restricting the industry, destroying their profits and cutting

their incomes. Fishermen felt their experience was being ignored. Misunderstandings arose because of the

differences between what fishermen perceived as the state of the stocks and the assessments and predictions made

by scientists. Such differences may be expected in this kind of management system, especially where the

precautionary approach must include a safety margin to avoid the risk of stock collapse. Unfortunately, little

attempt was made to reconcile these differences of view, nor did a mechanism exist to do so. The distrust that has

grown between scientists and fishermen has been exacerbated because scientists have a poor reputation at

explaining themselves to the general public, who often have little understanding of the concept of risk. We

formed the view early in our investigation that this gulf in understanding between scientists and the fishermen is

immensely damaging to the industry and we try, later in this report, to suggest ways in which it might be bridged.

1.16 Stock assessment is not an exact science and in this report we indicate some of its weaknesses, but it has to

provide the basic biological information for management if proper conservation of the stocks and a sustainable

fishery are to be achieved. While the fishing industry criticises science, the lack of accurate data about the totalamount of fish actually caught (i.e., including discards and illegal landings) makes it very difficult to assess

present and future stock sizes within manageable limits of uncertainty.

The Marine Environment

1.17 Environmental issues also affect the fishing industry. Chemical pollutants used to be regarded as a

significant threat to marine organisms, but experience has shown that fish are surprisingly resilient, and concern

is now more for their market quality. Toxic algal blooms which can contaminate shellfish have become a

major problem for our inshore fisheries. More generally, marine ecosystem structures can be damaged by

nutrient enrichment, leading to eutrophication, while the implication of global climate change has yet to be

properly assessed.

1.18 The extraction of over one million tonnes of fish annually from the seas around Scotland is likely to have

important consequences for the structure of marine ecosystems. There is evidence of changes in the population

size of unexploited fish, and of changes in the genetic structure of exploited populations. The degree to which

such changes are undesirable or detrimental is a matter for debate, and is currently being examined by the Royal

Commission on Environmental Pollution. It is notable that environmental impact assessments have never been

formally applied to fisheries.

1.19 The increasing recognition of fishing impacts on the environment has generated a range of legislative

initiatives. Conservation legislation introduced under the EU Habitats Directive has led to the designation of

Special Areas of Conservation (SAC) which may restrict fishing activity within particular regions. These will add

an additional layer of complexity in management, and may also introduce objectives which might differ from

those of the CFP.

Scottish Fisheries

1.20 It is against such a background that this RSE Inquiry focuses on Scottish Fisheries. Scotland has always had

a major involvement with the sea, with fishing centred on near and middle-distance waters the North Sea, the

west coast and further afield in Norwegian and Faroese waters. More distant grounds were left mainly to English

boats designed for such trips, which landed their catch at ports such as Hull, Grimsby and Leith. Scottish

fishermen also landed distant-ground catches at Leith and Aberdeen. The pattern changed in the mid-1970s when

countries began to declare Exclusive Economic Zones (EEZ) extending to 200 miles and, in consequence, the

distant grounds became closed to British fishermen. The large deep-sea vessels could not operate economically in

home waters, but the Scottish fleet was much less affected. Today, in the league table of UK landings, Scottish

ports make up eight of the top twelve by weight, and nine by value.

1.21 Of the three broad sectors that make up the Scottish fishing fleet, the pelagic (gross earnings in 2002 of

98m)4 and shellfish (94m) are generally considered to be in good shape. It is only the demersal sector (137m)

that is currently in crisis. The marked decline in some stocks, especially cod and their possible collapse has led



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to severe reductions in TACs, with damaging socio-economic consequences, especially for certain ports and the

more remote communities which are heavily dependent on fishing. In 2002 the total employment in sea-fishing

in Scotland was 5,707 (Table 3.6).

Structure of the Report1.22 In the course of our investigation for this report we have focused particularly on the catching sector, and

visited many of Scotlands fishing communities in the North East, Fife, the Highlands, Shetland and the Western

Isles. We have had discussions with those responsible for fisheries policy in Iceland and the Faroe Islands, as well

as visiting ICES in Copenhagen and the European Commission and Parliament in Brussels.

1.23 The report begins with an account of the establishment of the CFP and attempts to allay some widespread

misunderstandings. The following chapter looks in detail at the economic, industrial and social consequences of

the current situation in the Scottish fishing industry. Two chapters then examine the science behind fisheries

management: the first deals especially with stock assessment and the current state of key stocks, and the second

with various environmental aspects. Chapter 6 explores the potential role of aquaculture, and Chapter 7 the key

issues of necessary changes in fisheries management. The final chapter, Chapter 8, examines the sustainable future

for the industry.

References3Garret Hardin, The Tragedy of the Commons, Science, Vol. 62, pp. 1,234-8.4Scottish Fisheries Statistics 2002.



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2 The Origins of the

Common Fisheries Policy2.1 The Treaty of Rome refers only briefly to fisheries. Article 38.1 says:

The Common Market shall extend to agriculture and trade in agricultural products. Agricultural products means

the products of the soil, of stockfarming and of fisheries and products of first stage processing directly related to

these products.5

2.2 Fisheries policy was seen, therefore, as an extension of the arrangements for agriculture, and the European

Commission interpreted this as requiring a common policy also for fisheries. 6 It is somewhat curious, especially

for countries where fishing is an important industry, that it should be dealt with as a subset of agriculture in the

Treaty. But in practice this is not important, as a quite distinct fisheries policy has evolved.

2.3 In 1968 the first proposals were put to the Council of Ministers for a Common Fisheries Policy. These were

embodied in two Regulations, one on the common organisation of the market and the other on structure7. The

Market Regulation required fixed quality standards for fish to ensure that price regulations applied to the same

product throughout the Community. Producers Organisations (POs) were to be established to regulate market

supply and assist in stabilising fish prices; and a price support system was to be introduced. When the price fell

below the intervention price for three successive days the product would be withdrawn and fishermen

compensated by the member state drawing on Community funds8.

2.4 The Structural Regulation provided for European funding to be available for modernisation and new vessel

construction to remedy the differences in age of vessels and efficiency between the fleets of the original sixmember states and put them into a state where there was fair competition. Article 2.1 of the same regulation

required that Community fishermen be given equal access to all fishing grounds within the jurisdiction of the six

member states. There was provision, exceptionally, under Article 4.1 to reserve the use of certain fishing grounds

to local fishermen. But this exception was to be limited in time and to apply only to a three mile coastal zone.

2.5 Implementation of the CFP was delayed by the difficulty in reaching agreement on these provisions. But

agreement on the two Regulations was eventually reached on the night of 30 June 1970, the day that negotiations

were due to start for the accession of the UK, Ireland, Denmark and Norway. This was obviously not pure

coincidence: the six existing members were clearly keen that a CFP should be in place before negotiations

began and should therefore become part of the acquis communitaire, which new members would have to accept as

settled policy.

2.6 Fishing was of much greater importance to the four candidate countries than to any of the six original EEC

member states. Norway would have been the largest fisheries nation had she entered the EEC; but the UK,

Denmark and Ireland also had substantial fisheries interests of major political importance9. The four, and

especially Norway, found the principle of equal access up to the beaches unacceptable. Each of them had, at that

time, exclusive rights for its own fleet within six miles of shore and exclusive rights, subject to the maintenance of

historical rights for other countries that traditionally fished there, between 6 and 12 miles of the shore. None of

the waters beyond this had been claimed by any of these states and the same applied to the six member states

of the EEC. Those who now assert that Britain should recover control of its own waters up to the 200 mile limit

are therefore mistaken in thinking that Britain had such control before its accession to the EEC.

Six and Twelve Mile Limits

2.7 The entry negotiations for the four candidate countries raised many problems, and fishing was one of themost difficult. It absorbed a great deal of time and much skilled negotiation10. The applicants were mostly united

7The market arrangements were set out in Council Regulation (EEC) No. 2142/70 and structural policy in (EEC) No. 2141/70.8This was to be financed by the guarantee section of the European Agricultural Guarantee and Guidance Fund (EAGGF).



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in their stance, but Britains position was complicated by the conflicting interest of the inshore and distant water

fishermen. The Scottish fleet had a strong interest in seeing the 12 mile limit retained; but the UK Government

was also pressed by the distant water fleet, mainly but not solely based in England, which wanted to continue

fishing off Iceland, Norway and the Faroe Islands. The fishermen in this fleet were, of course, strongly opposed to

any extension of territorial waters of any country. The drama of the cod war with Iceland was still to come, with

Britains vain attempt to protect the interests of its distant water fleet.

2.8 Eventually, it was agreed that the applicant countries would retain their 6 mile exclusive limits, and their

12 mile limits subject to existing historical rights, for substantial parts of their coastline. In 1983 these limits were

renewed and the 12 mile limit extended to the whole coastline of member states; they were renewed on this basis

in 1993 and again for a further 10 years in 2003. Although these rights are not a permanent feature of the policy,

it is unlikely now that they will ever be extinguished, especially in the light of the need to conserve fish stocks.

2.9 This outcome of the negotiations was considered by fishermens representative bodies at the time to be a

success11. The 1983 extension of the 12 mile limit to the whole coastline (including St Kilda and North Rona and

enclosing the Minch) gave Scotland one of the largest areas of inshore fishing in Europe, and the same limits as

before entry to the EEC.

2.10 Technically, however, this is in the form of a derogation from the Treaty and, however unlikely it may be,

there are those who fear that these limits will ultimately be lost. We therefore recommend that Ministers

endeavour to have the existing 12 mile limits made permanent instead of being subject to renewal every

ten years.

2.11 In January 1977, at the behest of the EEC, the UK and other member states extended their Exclusive

Economic Zones (EEZs) to 200 miles or to the median line with other countries. This followed the extension of

exclusive fisheries limits by Iceland, Norway, the United States and Canada to 200 miles. By this time Norway had

decided by referendum not to join the EEC, as had the Faroe Islands, which, as a Danish dependency, had the

option to join but did not do so. This extension of the EEZ, although under British sovereignty, is subject to CFP

rules under the terms of the Treaty of Accession.

Relative Stability: TACs and Quotas

2.12 In 1983 a conservation policy was included in the CFP. Total allowable catches (TACs) and quotas were

introduced based on the principle of relative stability. This principle restricted competition in the interests of

giving each member state a fair share and providing some stability for coastal communities dependent on fishing,

many of which were in areas where there were few alternative sources of livelihood. Quotas were allocated to

member states in accordance with a key based on their historical share of the total catch; but these shares were

modified under agreement reached at The Hague to give some preference for the special interests of some coastal

communities dependent on fishing, including Scotland, and to provide an element of compensation for loss of

distant water fishing12. The distribution of quota within member states was a matter for the internal arrangements

of each state.

2.13 Since its introduction, the principle of relative stability, including The Hague Preferences, has beenmaintained. There appears to be support for it throughout EU member states, though some might wish it

renegotiated to their own advantage. There is some persistent anxiety in fishing communities that it might be

abandoned, but this would certainly be opposed by most, if not all member states, and could be done only with

their agreement. We therefore consider this highly unlikely.

2.14 The present CFP, therefore, bears little relation to the policy conceived at the time when Britain started its

accession negotiations. This is partly due to the changes made during those negotiations and partly to the realities

facing the industry that have brought about substantial changes in policy. Furthermore, the extension of each

countrys EEZ to 200 miles under the auspices of the CFP enabled the Commission to exclude non-member states,

such as Russia and east European countries, from fishing in the North Sea and other territorial waters, which

substantially reduced pressure on fish stocks for a time. But in the years following the adoption of the policy there

was a major expansion of the fishing fleet in EEC countries. By 1987 estimated gross registered tonnage had

expanded by twice its 1970 value and by three times in terms of engine power (kW)13.

12These arrangements, known as Hague Preferences, were agreed at a Council meeting in The Hague in October 1976. They are

described in detail in Mike Holden, The Common Fisheries Policy, Fishing News Books, 1994, pp 41-50.



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2.15 The TAC and quota system created difficult problems for the regulation and management of fisheries. There

are three reasons for this: (a) effective enforcement of TACs is difficult and costly; (b) fish caught in excess of

quota may be discarded back into the sea although legal, such discards are unacceptable from a conservation

standpoint; and (c) fish caught in excess of quota may be landed illegally. If the amount of fish discarded and/or

illegally landed is at all significant, estimates of the proportion of fish stock removed by fishing become

unreliable. This in turn weakens the scientific process of stock assessment and the statistical procedures thatunderpin the setting of TACs for future years (see paras 4.21 and 4.22). There is no reliable estimate of the amount

of fish discarded but it is acknowledged that the practice is widespread among EU fleets and, in the course of our

Inquiry we have heard anecdotal evidence giving very high volumes of illegal landings by Scottish demersal

fishermen; sometimes this has been put at 50% of legal landings, and sometimes for certain species 100% or even

more. TACs have therefore proved ineffective as a regulatory tool, and failed to prevent serious decline in stocks.

2.16 The sharp reduction in demersal TACs by the Council of Ministers in 2002, following advice from ICES that

the cod fishery should be closed completely, was however, the immediate cause of the crisis that led to this

Inquiry. This cut profits, threatened the viability of the demersal fleet, and required a reduction in fleet capacity.

While illegal landings might soften the immediate effect of this, they threatened the existence of the industry in

the longer term, because they undermined the conservation policy.

2.17 The CFP has therefore neither preserved stocks nor maintained a healthy demersal fishing industry. The

scientific advice of ICES, which forms the basis of the proposals put by the Commission to the Council of

Ministers, is not balanced by economic advice on how to maintain the industry, its size or its shape, or how it can

be adapted to a viable role in the longer term. The result is maximum exertion of political pressure on Ministers

and an end result that is based more on horse-trading than on any vision of the future of the industry.

2.18 Within Scotland, although the complex issues are not widely understood, there is a perception that the CFP

has failed. This view, though often inaccurate, does serious and profound damage to Scottish support for the EU

more generally.

Quota Hopping

2.19 It has sometimes been suggested to us that there is a threat to Scottish fishermen from EU nations that do

not have a North Sea coastline, such as Spain, who may acquire resources that should be available to the Scottish

fleet. It is important to make clear that Spain does not have quota in the North Sea, while Scotland has about half

the quota for demersal species in this area, and that the remainder is shared only by the other states that have

North Sea coastline.

2.20 A threat to the principle of relative stability does however arise if fishing enterprises in one member state

acquire licence and quota in another; and if they then neither employ persons resident in that state nor land their

catch there. This can be done only if the foreign fishing enterprise registers a vessel and acquires both licence and

quota from fishermen in the state in whose waters it proposes to fish. It is not possible, under the terms of the EU

Treaties, for one state to discriminate against a business or persons of another on grounds of nationality. But it is

open to it to require operators of vessels holding licence and quota to have real and continuous representation on

shore, and to be responsible for technical and commercial management of vessels. The state will also beresponsible for allocation of quota between different types of vessel; it may require its vessels to be inspected at

regular intervals, though not more than three times a year; and it may require crews to be subject to its rules as

regards working conditions, wages and social security obligations14.

2.21 Quota hopping is a recognised problem and there are some vessels with Spanish crews or other EU

nationalities fishing in UK waters on this basis. This has happened mainly in England, where it dates from the

years before Spain was an EU member. So far it has not been a major issue in Scotland. The EU obviously does not

want to see the principle of relative stability eroded by this practice, and the conditions set out above constitute a

considerable restraint, even if they cannot prevent the practice entirely.

2.22 If the Scottish fishing industry is to continue and thrive, it is important that the principle of relative

stability in its present form should not be circumvented in this way. It is also important that the purchase of

quota by Scottish industry, much of which consists of owner partnerships, should not be disadvantaged by

competition from fishing companies from other countries with stronger financial resources at their disposal. This

is especially the case when seeking to buy quota from fishermen leaving the industry. This may have implications

for the structure of the Scottish industry, a subject that is discussed later in this report.



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EU Grants for the Fishing Industry

2.23 Assistance is provided to the fishing industry by the Financial Instrument for Fisheries Guidance (FIFG),

one of the four Structural Funds of the EU15. This has been used in all countries, although not in recent years in

the UK, for new vessel construction. It is also available to part-finance decommissioning, to provide increased

safety measures and for modernisation. It may be used to retrain fishermen to improve their fishing skills and for

social measures. These last can take the form of early retirement schemes for fishermen aged 55 with at least

10 years experience, who opt for retirement less than 10 years before the statutory retirement age. Grants of up to

EUR 10,000 may be given to fishing hands with at least 12 months experience, who lose their jobs when their

vessel is withdrawn; and grants may also be given to fishermen with at least 5 years experience to cover training

costs, if they wish to diversify and leave the industry16. The European Social Fund (ESF) may also help with

training for other occupations and the European Regional Development Fund (ERDF) can be used to grant aid

new businesses.

2.24 Support from ERDF is available only in qualifying areas, but Peterhead, Fraserburgh and the other North

East fishing ports in Aberdeenshire and Moray qualify as an Objective 2 area and Shetland may receive

transitional aid until 2006 as a former Objective 1 area17. This is in contrast to the situation under UK regional

policy where the Aberdeenshire and Moray coast are not eligible for regional selective assistance (RSA) grants,

although projects in Shetland still qualif

The Future of The Scottish Fishing Industry

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