A New Fisheries Policy - European Parliament

Ministry of Food, Agriculture and Fisheries Denmark

A New Fisheries Policy Re-thinking the TAC/quota machine

European Parliament, Committee on Fisheries Hearing 10. February 2009

Presentation at the Committee hearing

Annex 1 Check list for ITQ fisheries management Annex 2 Results of transferable quotas Annex 3 Illustration of COUNCIL REGULATION for 2010 Annex 4 Vessels participating in camera pilot project Annex 4 Speaking notes

Vessels equipped with camera observation. See all the vessels at www.fvm.dk/yieldoffish

A New Fisheries PolicyA New Fisheries Policy

ReRe--thinking the TAC/quota machinethinking the TAC/quota machine

European Parliament hearing 10. February 2009

Maximum Sustainable Yield

- How do we achieve it?

� Through a struggle of forces?� The CPF approach: “regulation and control”

Or

� By exploiting a common interest?� A New CFP, introducing: “incentives and documentation”

1. The CFP goal

2. The problem – in headlines

1. National management does not address the over capacity in fishing fleets properly

2. The CPF counts only the fish landed in port,

and leave it to a detailled regulation to reducethe uncalculated ”damage” at sea

3.1.3.1. A solution for overcapacityA solution for overcapacity

Thesis: Sustainability cannot be achieved unless fishermen can adapt their fishing opportunities to their changing needs

Solution: National management must allow fishers to pool, swap or trade allocations between vessels. ITQ in other words

Result: A fleet in balance, economic efficiency. Money wasted on excess vessel tonnage and fuel can be directed towards societal needs.

Info: Annex 1: Checklist for implementation of ITQ systemsAnnex 2: Results of ITQ introduction

Is the solution of transferable fishing rights enough to ensure sustainability?

No

It will balance capacity to catch opportunities

- but it does not encourage selective fishing, and it is not a panacea against upgrading, misreporting etc.

Statement

3.2.3.2. A solution for sustainabilityA solution for sustainability

Thesis: If the fishers economy depends on how much he can landhe will upgrade. If his economy depends on how he uses his total catch he will fish selectively

Solution: Give the fisher increased catch quotas if he can document all his catches, and let all catches count on his quota

Result: Correct outtake and biological data from the stock. User driven development of selective fishing. Access to certified markets. NokW regulation.

And a gain for the able and responsible fisher !

Info: Annex 3: Illustration of catch quota management

The political issue of a CFP transformation

Solution: Create a voluntary “second management track”,

where fishermen are given increased quotas and reduced control on the condition that they establish a reliable documentation (camera’s)

Consequence: No fish changes hand, but more fish from “the waste basket” is offered to the responsible fisher

All fish are counted: Precise data for biology.

Minimal management risk, due to gradual phasing-in

“Relative stability” is restored

The EU perspective

- Waste transformed to value

The global perspectiveThe global perspective

A New Fisheries Policy::

- EU as a global playmaker on ressource management?

Results of camera documentation

Final report and perspectives in relation to the CFP at conference in Aalborg 8. October 2009. Programme at www.fvm.dk/yieldoffish

Preliminary findings:

“Technical equipment functions to our satisfaction”

“Equipment cost is 5.-6.000 € and decreasing”

”data from 1-2 months fishery on a 500 GB harddisk”

“Videodata are reliable and accurate”

”time and cost in reading the data are not estimated yet”

”The fishermen are very positive participants”

(Ref.: Technical University of Denmark 28. January 2009)

Mogens SchouMogens Schou

Ministers adviser on fisheries and [email protected]; +45 22 61 05 75

See more atSee more at

www.fvm.dk/yieldoffish

Ministry of Food, Agriculture and FisheriesDenmark

CVReform of national fisheries policy

Reform of national aquaculture policy

ICES Council 1996 – 2005CFP Revisions in 1992 and 2002

Common Fisheries Policy 1983

Annexes, See all at www.fvm.dk/yieldoffish

Annex 1. Checklist for ITQ systems Annex 2. Danish result of ITQ

Annex 3 Illustration:

COUNCIL REGULATION for 2010

Annex 4. Vessels with camera

Ministry of Food, Agriculture and Fisheries [email protected] Rev. 1 10. February 2009 Annex 1

A check list for ITQ fisheries management

Background ITQ’s are the economist’s panacea for over capacity and bad economic performance of fishing fleets. At the same time ITQ’s are often considered as the way to capital concentration and closure of coastal communities. An important point missing in the discussion is that the amount of capital that can be set free by managing fisheries according to market principles is of an order that often leaves plenty of room for ITQ systems to take account of and even promote societal policies and developments. If the discussion of ITQ’s moved from the chambers of economist to the table of politicians this perspectives would gain the attention it deserves. Denmark introduced transferable quotas in 2007 with the result, that the fleet is now in balance with fishing opportunities and fishermen have got a robust economy. The Danish model allocates fishing right premiums to coastal vessels and fishing rights for new entry of young fishers (The Fishfund). Public money allocated for scrapping of vessels are now used for innovation and infrastructures, and fishermen’s money previously spent for superfluous vessel tonnage and fuel is directed towards added value investments.

1. What is ITQ? Individual Transferable Quotas (ITQ) are quotas or quota shares allocated to fishermen or fishing vessels in such a way, that the rights can be utilized, sold or rented out by the holder of the right. 2. Why ITQ The element of transferability is the core instrument in adapting fishing capacity to catch opportunities. In its pure form it is highly efficient, and has been claimed to be an efficient fisheries conservation tool (ref.: Can Catch Shares Prevent Fisheries Collapse. Christopher Costello et. al.) Ownership to a certain share of a fish stock is considered to favour fishermen’s responsibility for the long term utilization of the stock. This has to be taken with some reservation however. It depends on tradition in the given fishery, on the acceptance of biological advice and on legitimacy of rules. It also depends on the number of right owners, economic condition and fluctuations in on market forces.

ITQ will without question adapt capacity to “fishing opportunities”. If adherence to rules is low, control is weak and market drivers for upgrading are high the “fishing opportunities” will exceed the TAC’s however. In other words under those circumstances ITQ will not prevent illegal catches, upgrading and discards. Perceived negative elements of ITQ as capital concentration and the closure of coastal fisheries are likely effects of a purely liberal ITQ system. In most market economies such consequences are regulated by public policy measures. See below regarding coastal fishery, employment, regional priorities, new entrance etc. 3. ITQ and economic efficiency ITQ management is a machinery able to provide economic efficiency. In its pure form it produces the highest yield pr capital input. It does not necessarily produce the maximum yield for society, as it under certain circumstances of specialization will not allow for less valuable fishing opportunities to be utilized. Such so called negative externalities have not drawn much attention from economists. Economic efficiency is important in fisheries where a rational handling of catches is

fundamental to the economic result. Fisheries for a number of pelagic species as herring and mackerel depend on quantity and rational processing, and economic performance is sensitive to restrictions in the use of the rights. On the other hand ITQ may work well in a number of demersal fisheries for high value species, even with a societal regulation that favours e.g. coastal vessels. High value fisheries e.g. daily caught fresh fish has a competitive edge of a different nature than that of large scale economics. 4. Introducing ITQ 4.1. The type of right The right should be given as a certain share of a defined TAC/quota. The ITQ and its use can be restricted in a number of ways: It can be,

• allocated permanently to the owner of the right or subject to notice of termination

• allocated to certain groups e.g. persons qualified as fishermen • restricted with regard to transferability e.g. within given fleet segments or regional

boundaries • conditioned by its use on registered vessels (i.e. to avoid “slipper skippers”)

4.2. Initial allocation ITQ’s can be allocated in a number of ways:

• By auction. This method ensures that the value of the right (the resource rent) is immediately taxed by the public. In cases of severe over capacity the value is low. Auction is a relevant method for allocating new fisheries.

• Allocation to vessels according to physical or economic characteristics (the author knows of no examples)

• Allocation according to the individual vessels or owners historic catches seems to be a method acceptable to the industry and authorities as it reflects “real past performance”. Due to the considerable variability in vessel activities the initiate allocation will challenge the legal and administrative process of transformation.

4.3. How can the right be used The terms for the use of an ITQ have to be decided. Transferability is what makes the ITQ work. But it can be regulated or restricted in a number of ways: The trading of ITQ’s can be restricted in relation to

• geography, which is difficult to enforce • vessel segments – e.g. to protect coastal fleets

Renting of ITQ’s within a given quota year can be

• prohibited or restricted • made free • bound to pooling schemes (producers organisation or the like)

Trading favours structural changes and permanent capacity reduction while the renting favours continuous adaptation to fishing possibilities. In its extreme form – as in Danish

fisheries – a fisher having caught more than his vessel quota can rent the necessary fish with a phone call. 4.4. Resource rent An introduction of ITQ will result in a capitalization of the right. The value of the right depends on the earnings in the fleet. Overcapacity may have the result, that the increased capital value is nil. It should also be taken into account, that access to fisheries is often restricted with the effect, that the value of access e.g. in the form of a registered fishing vessel has already been capitalized. In fisheries with severe over capacity the main capital value does not lie with the right as such but with the transferability which makes it possible to conduct the fishery in an effective way. An estimation of the cost of maintenance, fuel and interest paid for a 20% fleet surplus gives a picture of the amount of money that can be saved or directed towards other activities. On top of that better catch opportunities will occur due to improved accessibility and reduced effort on the fish stocks. If resource rent is introduced it should be by way of auction or as a transparent mechanism

introduced not later than the allocation of the rights. Types of resource rent: In money,

• Yearly payment e.g. based on average earning indicators for the year • Revenue from auctioning the fish. This is a once and for all payment • Payment in connection with revenues from sale of rights.

In fish • A certain share of the TAC is reserved for allocations for other purposes (Fish Fund) • A certain share of the individual vessel quota is taxed in connection with sale of rights 4.5 Open Access Open access to fishing possibilities can be considered in relation to two aspects:

• Does the acquisition of fishing opportunities require formal access conditions as “fisherman status” or the like.

• Is access to fishing opportunities open to any citizen. The latter is seldom the situation. [In the Icelandic case for the Human Rights Committee (CCPR/C/91/D/1306/200414 December 2007) the committee questions the government’s right to exclude individuals from access.]

It should be considered if on the one hand if ITQ’s should be given as permanent rights (full privatization) or it should be time limited or subject to notice of termination (public asset) and on the other hand if a certain share of the rights should be reserved for new entry. 4.6 Social and policy considerations ITQ management can be designed to serve societal policies in relation to: Structural development of the fleet

• Restriction of capital- or owner concentration

• Defining fleet segments with no cross-border transferability Allocation priorities

• Premiums for coastal fisheries or geographical regions • Facilitating new entry e.g. young fishermen’s entry

4.7 Mortgage and property right registration

An important feature of ITQ is that the property right makes financing of the fishery easier as financial institutions can gain mortgage in the rights. National law should take account of this possibility and it should ensure a registration administration that enables a flexible trade and transfer of fishing rights.

Ministry of Food, Agriculture and Fisheries [email protected] Rev. 1 10. February 2009 Annex 2

Results of Transferable quotas in Danish fisheries Type of rights Fishermen obtained transferable fishing rights

• ITQ in the pelagic fishery in 2003 • Vessel quota shares in the demersal fishery in 2007

Flexible transfer mechanisms The fisherman can increase his allocation by buying or renting fishing rights (allocations can be swapped with a phone call) Rights are limited

• Withdrawal with 8 years notice • Rules of concentration • Bonus allocation for coastal vessels • Some of the fish is reserved for new entry and selective fisheries “the Fish fund”

Results Danish overcapacity of 30% in the demersal fleet disappeared in less than 2 years without public money for scrapping. Fishermen are earning money.

• Potential improved gross earning of 70 mill € p.a. • Fuel crisis had only little impact

Fishermen think in economic terms

• improve value – not quantity • Invest in your business! New constructions are taking place

• new generation into the fishery

10. February 2009

Annex 3

Illustration

COUNCIL REGULATION

Fixing for 2010 the fishing opportunities in

Community waters

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 2371/2002 of 20 December 2002 on the

conservation and sustainable exploitation of fisheries recourses……………………..

Having regard to the proposal from the Commission,

Whereas

(n) It is necessary to lay down conditions for the exploitation that will improve the function of

total allowable catches (TAC) to take account of all catches taken, thereby reducing the

uncertainty of misreported or discarded catches. It is thus appropriate to allow Member States

to count all catches of a given stock for defined and approved fleet segments against the

fishing opportunities allocated to the Member State. Such fishing opportunities should be

increased to reflect that all catches are accounted for, thus ensuring that the allocation of

fishing opportunities among the Member States, is based upon a predictable share of the

stocks for each Member State (relative stability).

HAS ADOPTED THIS REGULATION:

……………….

CHAPTER I

Scope and definitions

Article 1

Subject matter

This Regulation fixes fishing opportunities for the year 2010, for certain fish stocks and groups of fish

stocks, and the associated conditions under which such fishing opportunities may be used.

CHAPTER II

Fishing opportunities and associated conditions

for Community vessels

Article n1

Catch limits and allocations

1. The catch limits for Community vessels in Community waters and the allocation of such catch

limits among Member States and additional conditions in accordance with Article 2 of

Regulation (EC) No 847/96 and chapter N of this regulation are set out in Annex I.

.

CHAPTER N

Provisions for Community vessels fishing

under the provisions of full catch documentation

Article n2

Catch limits and allocations

1. The catch limits for Community vessels in Community waters and the allocation of such catch

limits to Community vessels fishing under the provisions of full catch documentation according

to this chapter are set out in Annex I.

Article 3

Catch documentation

1. Member States provide for vessels and fleets participating in a scheme of full catch

documentation the following information for the approval of the Commission

a. Vessel identification and layout of electronic documentation or the control scheme used by

an observer on board

b. Types of data

c. ……

Control measures

Vessels participating in the scheme of full catch documentation authorised to fish according to the fleet

management plan approved by the Commission are exempted from the following regulations and and

control measures

a. ……

ANNEX I

To

COUNCIL REGULATION

Catch limits applicable to Community vessels in areas where catch limits exist

and for third countries' fishing vessels in EC waters, by species and by area

(in tonnes live weight, except where otherwise specified)

All catch limits set out in this Annex shall be considered as quotas for the purposes of Article 5 of

this Regulation, and shall, therefore, be subject to the rules set out in Regulation (EEC) No 2847/93,

and in particular Articles 14 and 15 thereof.

ANNEX IA SKAGERRAK, KATTEGAT, ICES zones I, II, III, IV, V, VI, VII, VIII, IX, X, XII

and XIV, EC waters of CECAF, French Guyana waters

2010 TAC/Quotas(1)

Species: Plaice

Pleuronectes platessa

Zone: Skagerrak(1) North Sea

(PLE/03AN.) (IV; EC waters of IIa)

2010 TAC/Quotas(1)

Species: Cod

Gadus morhua

Zone: IV; EC waters of IIa; that part of IIIa not

covered by the Skagerrak and Kattegat

(COD/2A3AX4)

Belgium pm

Denmark pm

Germany pm

France pm

The Netherlands pm

Sweden pm

United Kingdom pm

EC pm

(1) Vessels fishing under the provisions of full catch documentation according to chapter N are allocated catch opportunities

increased with 80%. A maximum share of 20% of the Member States quota may be submitted for this purpose

Annex 4

Vessels participating in Pilot project:

”Documented fishery” HM 555 Kingfisher

H 79 Tiki

Homeport: Hanstholm

Vessel type: Trawler Building year: 2007 Length over all: 31.3 m BT: 467 Engine: kW

Homeport: Gilleleje Vessel type: Trawler Building year: 1976

Length over all: 17.1 m BT: 49.7 Engine: 309 kW

S 84 Frk. Nielsen

HM 423 Fru Middelboe

Homeport: Skagen Vessel type: Trawler Building year: 1997 Length over all: 16.7 m BT: 44.2

Engine: kW

Homeport: Hanstholm/Hirtshals Vessel type: Danish Seiner Building year: 1983 Length over all: 20.4 m BT: 86.1 Engine: 219 kW

ND 399 Meonia

S 530 Yokotani

Homeport: Klintholm Vessel type: Trawler Building year: 1974 Length over all: 15.78 m

BT: 19.98 Engine: 216 kW

Homeport: Skagen Vessel type: Netter Building year: 1987 Length over all: 14.39 m BT: 17.3 Engine: 80 kW

Annex 5 Speaking notes

1

Thank you for having invited me for this hearing which is so important for the outcome

of the reform of the Common Fisheries Policy (CFP) 2 The CFP goal is sustainability and economic prosperity. But it has not obtained the first and it has not begun thinking about the latter. The Danish government proposes that bureaucratic detailed regulation of fishermen’s behaviour should be replaced by fishermen’s own responsibility for the use of marine resources within a simple set of rules. After all the main public consideration is to ensure that the outtake of a stock does not exceed a given amount of fish. The CFP seeks to ensure that through some thousand rules with a complexity and consequence beyond anyone understands. We want to ask the fisher himself to be responsible for the correct documentation of all his catches. I think this is a universal, fair and understandable request to put to the user of our resources. 3 Basically the problem of the CFP is that the fleets are to large and that we do not know or control what or how much we catch The first is a problem for the individual member state, and a prerogative for the member state to solve. The second problem derives from the fact, that the CFP explicit defines catches as “landings”. Landings are registered and counted against the quota, and catches are sought restricted by numerous rules. A CFP philosophy is that “if you are restricted to 15 days of fishing a month” then discards and cheating is reduced with 50%” The problem have not been solved however, and the more regulation the less acceptance you will gain from fishermen. 4 Overcapacity is not my main point to-day. Denmark supports fleet management as a national policy. I just wish to point to the Danish experience that ITQ does not necessarily lead to uncontrolled concentration or capitalization.

Since the introduction of ITQ in Denmark we have obtained an effective concentration of fishing rights on fewer vessels in the pelagic fishery, but in the demersal fishery more fish has been bought into the coastal fleet (17 m) that out of this protected segment. All in accordance with our policy. More about ITQ design can be read in annex 1 5 ITQ has the effect that the capital used to finance the fleet is minimized. It does not ensure an optimal use of the fish. The only way to achieve this is if the fisher himself has an interest in getting the most out of the catch opportunity. 6 Is it possible to make it a good business for fishermen to fish not only sustainably, but with a fervent effort to maximize the biological yield, that the fish stocks can give. I think yes. And I think it is possible within a very simple set of rules. 7 Having participated in the 1983 decision on the CPF I am quite aware of the political and economic interests in the CFP. With regard to that, the proposal which is annexed has the following benefits:

• It is a voluntary option for the fishermen

• They get a strong incentive as they are offered to increase their fishery with an amount that reflects discards. In some fisheries it may be a premium of 10%, in other fisheries more than 100%.

• The fish comes from the “waste basket”, no allocation shares are affected

• No days at sea regulation is needed, and a number of controls can be reduced

• Fishermen not willing or able to participate will have to endure the satisfaction of the CFP in its progressing form.

8 Waste transformed to value 9 A New CFP as an example for a global retrieval of “The Sunken Billions”