Summary of Effort Control v ITQsWhy continuing with ITQs will fail in Britain

October 2017 SAVE BRITAIN’S FISH

www.ffl.org.uk

These words, in a 2005 Conservative Green Paper, were written after touring the countries of the NE Atlantic to see how they husbanded their marine resources far better than the EUs CFP. The paper was campaigned upon along with restoration of national control which, with leaving the EU, will now come to pass. Fish stocks have been shown to be increasing, and many are now at sustainable levels. This essential raw ingredient, when finally managed correctly, can allow Britain to become one of the world’s leading fishing nations. However – this increase in stocks has been in spite of the management of the CFP not because of it – the CFP has only achieved a reduction in fishing effort, allowing an increase in fish stocks, through a culling of the fishing fleet caused by the CFPs regulatory ineptitude – 60% of the UK fleet has been scrapped.

QUOTAS CAUSE DISCARDS

Stocks have managed to increase despite fishermen being forced to exert more pressure with discarding.

Government reports estimate that on average 40% of the fish caught across the North Sea fleet is needlessly discarded. As vessels are forced to catch more fish than necessary to find what their limited quota allocations allows them to keep. Practical experience of many FFL members suggests that this may be an under estimation of the scale of the problem particularly in some fisheries and vessels (1). As quotas only limit what vessels can land, rather than what they can catch, we currently have unlimited catching. With 4 out of every 10 fish being discarded this represents a 66% greater catch than was necessary and landed. That stocks have increased despite unlimited catching shows the fleet is in line with resources.

Quotas cause a race to fish in order to catch a lot to find what can be kept. This is defeating conservation rather than ensuring it. All Quotas have managed to do is to constrict landings, to match the Quotas, rather than restrict catches. The result is a slick of dead fish floating dead on the sea out of sight out of mind.

(1) www.gov.scot/resource/0045/00453348.docx - Discard Atlas

Britain’s marine ecology is a highly mixed fishery and vessels will always unavoidably catch a mix of species. The amount is determined by vessels time at sea, catching capacity/power and the skipper’s ability. The Quota system is working against this reality and will always cause discards as it’s impossible for fishermen to catch the specific amounts of each species to match their quota without catching others.

All vessels can legally do under quotas is to discard the "wrong" species of fish they have no quota for.

For anyone to claim that the current system has been successful or beneficial is deluded, when it has increased fishing pressure through discarding and economically and socially there is a list of ports, harbours, boats and families that reads like a war memorial.

The only way the fishing industry has survived economically is through being able to discard and through consolidation of quota into fewer hands. To continue with the same said system that has been recognised to be a failure, is environmentally improper and has caused economic emaciation, but put it on steroids is, for a lack of a better word – mad.

“The Common Fisheries Policy (CFP) has been a biological, environmental,economic and social disaster . . . Exchanging a disastrous system

run from Brussels for one run by London is no panacea”

FISHING FOR LEAVE

Prime cod discarded dead in the name of “conservation”

Summary of Effort Control v ITQsWhy continuing with ITQs will fail in Britain

(2) http://www.seafish.org/media/Publications/Seafish_landing_obligation_-_FINAL_REPORT_2_seafish.pdf

(3) http://www.seafish.org/media/1120923/dag_oct13_poconcerns.pdf

DISCARD BAN

The proposed solution to Quotas causing discards is to ban the symptom (discards) rather than address the cause of them – the quota system. Catch Quotas – where quotas will be counted as catches instead of landings will create ‘Choke Species’ as has been proved in trials and studies. Choke species are where vessels will have to stop fishing when they hit their lowest quota, otherwise they will catch fish they have no allowance for. When vessels hit their Choke Species they will have to tie up regardless of whether they have quota for the other species.

Diagram above illustrates that when the vessel hits its lowest quota allocationit will have to stop fishing despite still having plenty quota for other species.

Recent Seafish reports estimate that Choke species will leave approximately 60% of the available resources un-caught resulting in early closures of fisheries, tie ups of vessels and the bankrupting and ruination of much of the British fishing industry. (2)As quotas cause discards, and as fishermen will try to continue to discard to remain fishing, the only credible way to have a discard ban under a quota system is with full CCTV surveillance of vessels to ensure they do not discard.

Fishermen are hugely fearful that continuing with a bad management regime and enacting a ban to solve a problem rather than addressing the cause - quotas will be a suicide pill. This was detailed in a Cardiff University survey.

WORKING AGAINST REALITY AND DATA DEFICIENCY WILL ALWAYS BE QUOTAS KEY FAILING

The fundamental failing of the quota system in mixed fisheries is that humans are trying to impose a rigid system of individual quota limits on a dynamic and ever fluctuating wild marine environment. As landings by fishermen only reflect what quotas allow them to land, with much of what catch discarded, this vital source of data is misconstrued from reflecting the true mixture and predominance of species. Resultantly as the theoretical quota limits misconstrue landings this creates data that is a poor reflection of reality and therefore science suffers from the paucity of data the system creates.

Consequently, quotas are set out of line with species predominance and mix – the Quota system has created and generates a bad data loop. Where the science, quotas and the landings become further detached from the reality of the changes in the marine environment as humans aim to hit our own self-imposed quota targets. Rather than taking a sustainable, balanced harvest where we work with and align effort to what mother nature produces, and thereafter react to changes, the current quota system and its micro-management is an abject failure.

An ITQ Catch Quota Discard ban system (Fully Documented Fishery FDF) has already been trialled and was an operational and economic impossibility – the trial failed after 5 weeks. In 2013 one family business, attempted to replicate a Catch Quota, Discard Ban, ITQ fishery as some extol should be followed post Brexit.The vessels lasted 5 weeks before they had to call the trial off as it was impossible to keep fishing legally. They calculated they alone would utilise the entire UK North Sea Hake allocation such is the disparity between stocks and quotas (3).

If one of Britain’s bigger quota holders didn’t own or couldn’t source enough fish to cover the disparity between quotas and the stocks on the ground the rest of the fleet is doomed.

www.ffl.org.uk

CONTINUING WITH QUOTAS AND ITQs IS NOT THE SOLUTION

Many in Britain look to Iceland as a model of fisheries management to aspire to, however, just because they exceed the dismal CFP does not make their system operationally or ecologically aspirational for British fisheries..

Much of the Icelandic industry and fleet is an impeccable model of an integrated business where in many instances one company controls production from catching through to processing and sales.

However, behind this superficial attractiveness there are significant problems which means this system is inapplicable for best management of Britain’s fisheries and industry.

Nationally fishing is a hugely significant and vital part of the Iceland’s economy accounting for around 26% of GDP. Therefore, Iceland has pursued a model of management geared towards maximum economic output and efficiency to maximise what is the economy’s foundation and lifeblood.

Whereas for Britain it is the health and well-being of coastal communities that is of the most vital importance economically, especially in rural areas with few alternatives.

ICELAND v BRITAIN ECOLOGY

It is important to recognise that ecologically Iceland’s fishing waters are very different to Britain’s. Britain has a far more mixed demersal fishery than Iceland where fewer species live in less of a mix.

This makes it slightly easier to be able to catch the “right” species for which a vessel has quota, whereas around the British Isles it is exceedingly difficult to adhere to quotas in the highly mixed ecology, this has been proved over the last 30 years of CFP failure.

However as many in Iceland note although there’s certainly fewer species than Britain there’s still a high level of mix of species on the grounds.

One Icelandic scientist documented that until recently haddock was rare north of Iceland. After it bloomed there it became a choke species as haddock quotas were traditionally low in the area. This choke species hindered cod fishing as there was no haddock quota to obtain for the area as the quota system traditionally had none and couldn't account for this change in nature.

Resultantly, throughout Iceland there is a high level of discards of choke species as vessels try to remain fishing to find their quotas.

ITQs ARE BAD FINANCIALLY

Iceland operates an ITQ Quota system where the quota allocations are owned and can be bought, sold and traded, they can also be used as security to raise capital against and have consequently attracted significant monetary value.

Those advocating copying Iceland as some sort of bastion of admirable management miss that Britain ALREADY has a de-facto ITQ system of administering quotas in name only – it has been economically hobbling.

Iceland has a digitised electronic monitoring system where vessels catches and quota usage is recorded on an ongoing basis. This facilitates quota trading, swapping and leasing to deploy the quota to where it is needed. This misses the point that a swish electronic quota management doesn't compensate for the system failing operationally and economically. It also doesn’t account that there isn’t enough quota in the UK system to rent or swap with the price being punitive to do so.

In 1999 the British government created a system of Fixed Quota Allocation (FQA) Units which gave vessels entitlement to a fixed share of whatever quota the EU allocated Britain – in effect FQAs act like stocks and shares. Through a system of Producers Organisations (POs) - in effect co-operatives of vessels - quotas are able to be swapped and traded as in Iceland. The only difference is that Iceland has a more transparent system but that is of little material consequence.

Resultantly a public resource has been corporatised into the hands of a few with no heed or consideration as to the consequences for communities. As the EU incessantly cut the quotas vessels had to acquire more and more FQA units to maintain parity of fishing opportunity. An ITQ system propels a situation of consolidation into a few big company hands.

The current system is a 30 year long cul-de-sac. Brexit provides three options:

1) Keep quota – keep discarding to avoid choke species – not acceptable.

2) Keep quota– ban discards - decimate the fleet with choke species and consolidation – not acceptable.

3) Move to a new system of refined effort control which is the only way to end discards.

Initially 10 FQAs = 1 Ton.

If Quota was cut 50% 10 FQAs = 500kg.

Therefore, vessels had to buy 10 more FQAs so 20FQAs = 1 Ton.

The situation detailed in the table at the bottom of the previous page results in continuing consolidation as bigger companies with greater financial leverage have consolidated more and more entitlement to quota into fewer and fewer hands. This is exactly what has happened in Iceland already, where in many instances all quotas have been sold or taken from numerous fishing villages around the coast.

In Iceland this has seen the ruination of coastal communities, inshore fishing and family businesses and the Icelandic industry is now predominantly controlled and owned by a few big companies.This is one of the hottest and most divisive political issues in Icelandic politics. 10% of the fishing companies hold more than 50% of the fishing rights. and the 40 largest hold 84% of the fishing rights.

Family businesses are squeezed out, the supporting trades and shops close as the communities local boats are bought out, house prices fall, people move away in something akin to the highland clearances – this is the pattern we have seen repeated in Britain under the de-facto ITQ system we already operate and this will accelerate with a fully enforced Catch Quota Discard Ban.

Looking purely at the economics, an ITQ system puts a disproportionate financial drain upon the industry as ever-increasing amounts of liquidity have to be invested to acquire and maintain the right to fish. Rather than reinvestment in newer or upgraded vessels the majority of the industry who try to soldier on are doing so in a fleet with an ever increasing average age - as the debt to maintain entilement mounts, increasingly businesses are paying to work. To continue fishing, quotas cannot be sold and are therefore priceless. Consequently, the money invested is dead to the business.

The total debt of the fishing companies in Iceland amounts to around 3billion euros, much of it to foreign banks and it is possible that Iceland will lose some of its fishing rights to foreigners due to this network of capital investment – we have a similar situation currently in Britain too. An ITQ system is an impediment to the business of catching fish and reinvesting in the vessels to do so. The capital investment and equity locked into quota is a hindrance not a help.

QUOTA RENTALS – DARK UNDERBELLY

ITQ Quotas also creates the financially incontinent system of Quota Rentals. This is the dark underbelly of the British system that is little known about.

As a trade in quotas developed the majority of vessels could rent quota to substitute for quota they lacked. This created companies and individuals who became quota traders – ‘slipper skippers’.As quotas have been cut or lagged behind stocks, due to the poor science they generate, boats have increasingly had to rent – as demand has intensified so has price to exorbitant levels. With rentals on some species accounting for an extortionate 70% of the value of the fish landed.

Effectively vessels are paying for the privilege to work and have to rent more, and fish harder, just to maintian parity as a large proportion of the gross is used to pay for quota to fish.

Government statistics show that slipper skippers ashore are bleeding away 60% of what should otherwise have been profit from active vessels in the North Sea whitefish fleet, with an equally alarming 48% in the south west fleet.

NS Monks are at £2000 per ton to rent with a sale value of £3000 per ton.

NS Cod is £1800 - 2000 per ton with a sale value of £2500-3000 per ton.

NS Hadx and Saithe £600 per ton for £1200 on the market.

www.ffl.org.uk

Those slipper skippers now hold a dominant position as vessels have a necessity to access quota. This position of a minority, many

with prominent positions in the SFF and NFFO, is being used to keep the industry silent – there is effectively a racket revolving round a

cartel advocating retention of the status quo of a failed management regime to preserve their position, rather than looking to a vibrant

booming industry and communities. This situation will only intensify with a discard ban where all fish will have to be legally landed

rather than discarded as vessels will rent some species at a loss to be able to fish for others.

Renting fish is crippling the active industry, especially family businesses/boats which are the traditional bedrock of coastal

communities.

This is why the fleet is aging with any reinvestment being by a small number who managed to acquire quota. This is why there is a

recruitment problem to get young men to come to the industry and why coastal communities are dying despite the sacrifice of the

industry even though stocks are booming.

It is a result and caused by Quotas and Quota rental as every trip vessels have to discard half of their work, remain at sea for longer incurring extra running expenses. To add insult to injury quota rent takes half of wages to pay for the privilege.

This is the dark underbelly that government, NGOs and think tanks don’t know about. This is the situation that the SFF and NFFO are desperate to keep under wraps less it blows many of their positions as slipper skipper quota renters away.

Many think tanks have deluded themselves that attaching monetary value to entitlements is somehow good because it gives something to use as equity to lend and trade against. This ignores that it is operationally and economically punitive. the success of a fishing business and its equity should be the boat as a tangible asset and its ability to go to sea and catch fish. It is impossible and preposterous to try to farm and fence a wild marine environment.

ITQs STOP YOUNG MEN

An ITQ system crushes one of the main drivers of young men to go to sea traditionally, that they had the opportunity to work their way up and aspire through their ability and hard work to become an owner and skipper of a family business one day. With this incentive removed, along with having the indignity of having to dump half your labours into the sea with discards, and pay quota rentals for what is landed, many young men from fishing families, the traditional lifeblood of recruitment into a hard and risky industry, have chosen to pursue less arduous careers elsewhere if they are going to have to work for as an employee for a large company anyway.

ICELAND STILL HAS DISCARDS

Even more discouraging is that Iceland’s system has not managed to eliminate discarding. Discards are banned in Iceland but there is no at sea enforcement to make sure vessels comply - it is self-enforced.

If vessels do not have, and cannot acquire, quota through swaps or exorbitant renting costs they will always discard fish in order to keep fishing for species that they do have quota for. It would be financial illiteracy to do otherwise.

Unless fully monitored at sea with CCTV discards will always happen under any quota system in a mixed fishery. As Iceland is highly dependent on fisheries there is less political incentive to have a tightly enforced discard ban with the repercussion of choke species. In Britain public concerns on sustainability and good management demand that any discard ban is credible and under quotas this will necessitate full CCTV enforcement which with the resultant choke species will bankrupt the fleet.

A vessel catches 30 tons of fish. This grosses £30,000. 10tons must be rented at £1000 per ton.

£10,000 goes on rent and £10,000 on running expenses. This leaves £10,000. This gets split 50/50 to the boat (business £5000) and the crew (£5000/5 = £1000 per man).

The £10,000 for Quota rent should have been split

£5000 to the boat (business) and £1000 each per man in wages -

effectively doubling the businesses profit and doubling the crews wages.

SUMMARY ON ITQs

Consequently, pursuit of an ITQ system in Britain would mean the retention and intensification of the same system that has caused

the current malaise but on steroids. Britain is unofficially halfway down Iceland’s road and prescription of an increased dose of

the same bad medicine will kill the patient.

An intensification of an ITQ system, conjoined with the necessity of a fully enforced discard ban resulting in choke species, will

accelerate consolidation and contraction of the industry and coastal communities rather than achieve rejuvenation.

Taking the opportunity of leaving the EU to embrace a unique, real time monitored and managed fisheries system under Effort

Control, where all vessels can prosper (ending consolidation to a few), will allow coastal communities to boom. With Days-at-Sea

being discard free and generating real time science it means Britain fulfils her international obligation under UNCLOS to fish in the

most sustainable manner possible whilst also generating the best science available – this allows Britain to be world leading.

Most importantly it gives an equitable system where large and small can prosper which will allow communities and coastal

constituencies to rebuild and flourish for generations.

Not continue with the same ITQ quota policies as currently which are of perpetual decline and consolidation with the choke species

being the nail in the coffin.

We either move to a system that ticks all the boxes, or for ideological and administrative convenience (and to appease a minority of

quota interests) we drive ourselves off a cliff ecologically and economically.

We’ll never have success on this acid test if we continue the same bad management.

We will never rebuild coastal communities by keeping the same system of continual decline and consolidation.

Coastal communities didn’t vote Leave and Conservative to stay the same – with a continuation of an environmentally and

economically damaging system which will continue consolidation, as in Iceland, to the hands of a few.

THE ALTERNATIVEA SUMMARY OF EFFORT CONTROL (Days at Sea)

Britain must abandon the failed system of quotas or bankrupt the fleet in trying to make quotas work with the ill-founded discard

ban. Above we have set out why retaining and intensifying Quotas and an ITQ system will ruin the British fishing industry and

lead to a failure to rebuild coastal communities.

The alternative to quotas is Effort Control where vessels are limited to an ecologically sustainable amount of time at sea (Days-

at-Sea) in exchange for being able to keep what they catch. This level of time is determined by taking an ecology wide approach

of what is a sustainable biomass to remove from the ecology and how long it will take a fleet in a given area to catch this fish.

Effort Control accepts the reality that vessels will unavoidably catch a mix of species that is impossible to determine, that species

mixture fluctuates and that it is impossible to arbitrarily micro-manage each individual species in a dynamic mixed fishery.

By allowing retention of all catches this produces a discard free and more sustainable fishery both environmentally, as vessels

catch less fish in the restricted time at sea, and more sustainable economically, as being able to land all catches whilst spending

less time at sea increases profitability- especially as there is no need to rent and buy entitlement to fish (see Fig. 1 below).

Rather than cherry picking with quotas which are based on a paucity of data that the quota system generates (as landings do not

reflect catches), Effort Control allows all catches to be retained facilitating management that allows an ecology wide balanced

harvest of a slice of species from the ecology (Fig. 2).

As an Effort Control system generates real-time data, with a true reflection of fish abundance and distribution, this allows real-time

management in response to circumstances shown.

Allowing fishing effort, activity and management to react, respond and work with nature rather than trying to impose a rigid human

quota system upon it to create a continuing balance between what nature produces and the effort that humans exert.

Fig. 1 Fig. 2

RACE TO FISH

However, there are concerns that pure Days-at-Sea, where vessels can keep what they catch, does not take account the realities of

economics where vessels will target the most valuable species to maximise returns.This means economics contorts effort towards

high value species which can become over exploited whilst distorting catches from being a true representation of what is in the sea.

Resultantly, whilst trying to maintain overall effort to allow a balanced harvest, vessels can race to fish for high value species,

potentially resulting in over exploitation. Therefore, some secondary controls within effort control are required as refinements to

negate a race to fish within the overall allowance of time in an ecology wide approach.This avoids effort being linked and set to protect

the most valuable or vulnerable species as the lowest common denominator which would result in there no longer being an ecology

wide sustainable harvest of all species and economic un-profitability for vessels.

WORLD LEADING ALTERNATIVE

Fishing for Leave have taken the principle of effort control and heavily refined it by adding secondary systems to avoid any “race to

fish” or management being set to the lowest common denominator species. These were designed as answers to solve these problems

as previously implemented in other effort control systems.

The Key to this refined effort control is the secondary system of Flexible Catch Compositions (FCCs). FCCs works through setting

catch composition targets of a sustainable mixture of species that a vessel should aim to catch for high value or vulnerable species.

For example a vessel traditionally only caught 10% Cod and 10% Monkfish.

If the vessel exceeds this mix it needn’t discard but can exchange a value of time at sea, (effort), for the equivalent value of the “wrong”

species caught. As time is reigned in, this has the result that the more "wrong" species a vessel catches, the less environmental

impact the vessel can have due to the loss of time at sea..

This system therefore deters any race to fish for high value or vulnerable species to avoid loss of time, whilst still allowing vessels to

fish all year if they take a sustainable ecology wide balanced harvest. Whilst vessels needn’t discard as value of the “wrong” fish they

can now bring ashore compensates for the value of the time lost.

This encourages vessels to use their time wisely to allow utilisation of their total allocation of sustainable time by catching a

sustainable mix of fish - whilst allowing vessels some elasticity either side of where they should be by swapping time for fish.

Conversely, anyone going ‘tonto’ in a race to fish is reigned in quickly- although they may catch the wrong species the exhaustion of

their time at sea means they take less biomass from the eco-system leaving all the other fish they could have caught in the sea.

Therefore, this secondary refinement of FCCs avoids any race to fish for high value or vulnerable species and allows allocation of time

at sea to be set on an ecosystem wide basis. FCCs would be based on current track record of vessels which would maintain current

fishing effort and distribution. As FCCs would be based on track record this would see the system of FQA entitlements the industry

has invested in preserved.

The only difference is that FQAs would be entitlement to a composition of the catch rather than an arbitrary weight limit of a quota

which causes discarding.

This FCC system therefore provides the safeguards for Britain to move to discard free Days-At-Sea. With an integrated

system of modern monitoring technology to record catches, soak time, temperature, depth, weather facilitated and generated by the

management system above allows accurate real-time science and therefore real-time dynamic management in line and working with

mother nature.

Such a system will negate the current arrangements of annually attempting to set rigid allocations of quota based on a paucity of data

which is then extrapolated through complex mathematical models. Current management is based on estimates on an annual basis –

the alternative Britain has would be trail blazing in allowing an holistic, dynamic, responsive real time system that evolves with nature.

EFFORT CONTROL ALLOWS BRITAIN TO FULFILL OBLIGATIONS OF INTERNATIONAL LAW

Effort control would allow Britain to fulfil her international obligation under UNCLOS to fish in the most sustainable manner possible

under the best science available – allowing Britain to be world leading.

It allows Britain to husband and utilise efficiently and sustainably all the resources in the UK EEZ. By avoiding choke species

bankrupting the UK fleet it allows Britain to maintain her fishing fleet and catching capacity to avoid our EU neighbours invoking Article

62 of UNCLOS to claim the “surplus” fish that Britain is unable to harvest from lack of fleet capacity.

CONCLUSION

Britain either moves to a system that ticks all the boxes ecologically and environmentally or for convenience, and to appease a

minority of quota interests, we drive ourselves off a cliff.

Coastal communities didn’t vote Leave and Conservative to stay the same – saying we only need to worry about policy after Brexit is a

fudge for remain and the status quo by those who never wanted out in the first place and would happily continue consolidation, as in

Iceland to a few hands.

The public and fishing communities and constituencies will not accept what should be a tremendous Brexit dividend to be squandered

when with booming stocks and decent management Britain could become the equal of Norway as a fishing nation. The only way to

achieve this is to move to Effort Control and not have a continuation of the same Quota system with a de-facto system of ITQs that has

failed for 20 years.

This is the discard free system everyone’s been looking for with no success for six years.

The refinement of FCCs avoids any race to fish for high value or vulnerable species.

It allows effort to be set on an ecosystem wide basis. (Not to the lowest species like the CRP when effort was set like a quota).

It allows accurate real-time science, and therefore real-time dynamic management, working with and responding to mother

nature rather than imposing upon it with misconstrued quotas which misconstrue fishing effort.

Has less environmental and ecological impact as vessels will catch less fish with no discards.

It increase profitability as vessels catch less but land more in less time at sea.

It eliminates the debilitating situation of quota rental and slipper skippers which bleeds around 50% of profit from the industry

and is the primary cause of protest against effort control.

Most importantly it gives an equitable system where large and small can prosper which will allow coastal communities and

constituencies to rebuild and flourish for generations. Not continue with the same policies as currently which are of perpetual

decline and consolidation with the choke species being the nail in the coffin.

10th Floor, 60 York Street, Glasgow, G2 8JX

Email: contact@ffl.org.uk

www.ffl.org.uk

FISHING FOR LEAVE