Scottish government to make amendments on economic link licence condition

The Scottish government will introduce amendments on the economic link licence condition based on outcome of a consultation

Announcing the introduction of the changes in the Scottish Parliament, Fisheries Minister, Mairi Gougeon said:

“Each year Scottish vessels land around £100 million worth of fish outside of Scotland, often for species for which our nation already has ready processing capacity. This represents a lost opportunity to bring additional investment and downstream benefit to our coastal communities from Scotland’s fishing quotas.

“Our fish quotas are a national asset and I want to ensure that fishing opportunities allocated to our fleet, for the most important Scottish species, deliver a substantial economic return to our businesses and communities in Scotland.

“That is why today, I am announcing changes to the economic link condition contained in Scottish sea fishing licences. This change to the economic link conditions is a key policy in Scotland’s Fisheries Management Strategy, which supports sustainable and responsible fisheries management in Scotland. The delivery plan which supports the Strategy and outcome of consultation document for changes to the economic link.

“Changes to economic link licence conditions will take effect from 1 January 2023 and will require vessels that catch stocks of key economic importance to Scotland to either:

• Land a set minimum percentage of these stocks into Scotland.

Or

• Return some fishing opportunity to the Scottish Government for re-distribution amongst the Scottish fishing industry.

“These changes will help to redistribute economic returns from Scotland’s fishing opportunities to the Scottish Seafood sector and our coastal communities.”

Currently, Scottish vessels landing more than 2 tonnes of species subject to total allowable catch (TACs) are required to demonstrate a real economic link to the United Kingdom in one of the following ways:

• by landing 50% of quota stocks caught in any calendar year into UK ports (“the landings target”);
• by employing crew 50% of whom normally reside in the UK;
• by incurring 50% of operating expenditure in the UK; or
• if a licence holder fails to meets any of these options, or a combination thereof, they are required to provide quota to their relevant authority – so called “Gifted Quota”.

In the 2017 consultation, the Scottish Government proposed to make the following amendments to the economic link licence condition:

• remove the options for demonstrating compliance through crewing and operating expenditure;
• change the landings target so that landings must be made into Scotland rather than into the UK;
• increase the landings target to 55% of all quota species caught, with transitional arrangements proposed for pelagic species so that for pelagic

In summary, the Scottish Government will introduce the following amendments to economic link arrangements from 1 January 2023:

• landings into Scotland will form the main basis for compliance with the economic link licence condition;
• the options for demonstrating compliance through crewing and/or operating expenditure will no longer be available;
• the option to gift quota in lieu of landings into Scotland will continue with the formula used to estimate a suitable quota gift amended to better reflect the GVA from fishing;
• the minimum level for qualifying for economic link criteria will increase from landings of two tonnes to landings of 10 tonnes;
• the required rate to satisfy the landings target will increase from 50% to 55% for demersal and shellfish stocks covered by the provision;
• the landings target rate for pelagic species will be phased in and increased to 55% over a three-year period. This will see the introduction of the following landings targets for pelagic species:

o 30% landings in 2023

o 40% landings in 2024

o 55% landings in 2025

• the landings target will only cover the eight most important species, by landed value, into Scotland. These are – herring, mackerel, Nephrops, haddock, monkfish, cod, hake and whiting (“the 8 key species”) which account for 90% of the value of total landings by Scottish vessels of TAC stocks.

The policy will be kept under review and may be amended if required.

The responses to the consultation has been summarised below by Marine Scotland:

Impact on the pelagic fleet

Pelagic fishers, some Producer Organisations and fish agents took the view that changes to the economic link licence condition were intended to subsidise the processing sector at the expense of the pelagic fleet. There were recurrent concerns that if pelagic vessel owners were to shift their landings to Scotland from elsewhere in order to comply with the proposed new economic link licence condition, they could suffer financial loss as prices tend to be less competitive in Scotland than in other countries and the change could result in result in processors offering lower prices. Concerns were expressed that the anticipated financial loss could be such that it would impact their viability.

Scottish pelagic processing

Many opponents, including pelagic fishers and some Producer Organisations claimed there is insufficient pelagic processing capacity, cold storage and freezing facilities in Scotland to facilitate increased landings of pelagic stocks.

Some cited a report by Poseidon Aquatic Resource Management Ltd which was commissioned by two Scottish Producer Organisations to consider the impacts of a landings target on the pelagic sector (the Poseidon Report). The report, which focused only on the landings target without acknowledging the option of meeting the proposed new economic link licence condition through quota gifting, suggested alternative approaches to achieving increased landings into Scottish ports.

Concerns were expressed about a lack of capacity to deal with increased landings of certain species such as blue whiting for which there is little processing capacity or internal markets.

Others took the opposite view, with some setting out that pelagic processing in Scotland has suffered from pelagic fish being landed abroad in recent years.

They welcomed the changes, arguing this would provide new opportunities for processors and enable them to plan more effectively; give a sound platform for investment, stimulate confidence in the sector and redressing the balance between fishermen and the onshore sector.

Some wanted the Government to go further, and faster, with a landings target of 55% to be implemented straight away and additional, specific targets for high value pelagic species such as mackerel. It was considered that this would avoid redundancies in the processing sector and the consequential damage this would cause to coastal communities.

Economic impacts – local fishing communities

Processors, some representative organisations, most local authorities, a Producer Organisation and some fishermen considered that landings were the most important factor for distributing the economic benefits from Scottish fish stocks to local fishing communities. Increased landings would provide downstream, socio-economic benefits for processors, the wider onshore sector (such as haulage), coastal communities and Scotland’s economy as a whole.

To realise these benefits, increased landings of the most valuable species was needed. Other countries with high domestic landings were mentioned and described as providing a good model of how Scotland could benefit economically from higher domestic landings.

In contrast, opponents considered that the changes to economic link provisions would have a net negative impact on the Scottish pelagic catching industry with negative consequences on associated communities. It was felt there was no guarantee that it would result in greater economic activity overall with some citing the Poseidon Report to support this view.

Impact on the demersal and shellfish sector

There were concerns that the proposed changes would disadvantage Scottish demersal and shellfish vessels landing in other parts of the UK. It was stated that some of these vessels land their catch into UK ports outside of Scotland and transport it to Scotland for sale and processing with the result that Scotland receives the socio-economic benefits of this catch without it being landed it into Scotland. There were particular concerns by those connected to the plaice fishery for which there is limited Scottish processing capacity and for which key markets are abroad.

EU legislation and UK Fisheries Concordat and UK issues

Pelagic fishermen and some Producer Organisations stated that the proposed changes to the economic link licence condition would be in breach of the 2012 UK Fisheries Concordat. Further, it was stated that the changes would be a quantitative restriction on exports and in breach of Article 35 or Article 1 Regulation EU regulation 2015/470.

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