ECONOMIC DEVELOPMENT
Approval for a request to the Treasury and Resources Department for extraordinary funding to provide financial support to commercial fishermen for replacement and repair of fishing pots lost in the recent bad weather and for assistance with Marine Stewardship Council accreditation costs
Purpose of the Report
The report provides the rationale and background for a specific request to the Treasury to support elements of a fishermen’s aid package, negotiated between Government and the Jersey Fishermens’ Association (JFA) following damage to fishing gear and resultant economic hardship as a consequence of the winter storms in late 2013 and early 2014.
Background
Following the storms that hit the Island in late 2013 and early 2014, the Economic Development Minister has made a political decision to progress with support for the fishing industry and has therefore instructed officers to establish a one-off aid package to help compensate commercial fishermen for losses incurred during that period.
The package includes, amongst other measures, an additional 50% subsidy on mooring fees, and, (subject to the approval of the Treasury and Resources Minister), grant support for up to 80% of the costs of replacing up to 80 lost pots per eligible applicant.
The eligibility criteria set for the subsidy of mooring fees and the ability to apply for grant aid in respect of lost pots have been agreed with the Chairman of the Jersey Fishermens’ Association (JFA) and require applicants to meet the following;
• Vessel to have spent at least 80 days at sea during the period 1 January to 31 December 2013
• Vessel registered as a Jersey fishing vessel on 1 March 2013
• Vessel licensed to be a commercial fishing vessel on 1 March 2013
• Skipper must hold a sea survival certificate
• Skipper is first aid qualified
• Skipper has an appropriate firefighting certificate for vessel
A Panel will be established to:
i) Consider appeals for fishermen not meeting criteria for the aid package.
II) Assessing the applications made for grants in respect of lost pots.
The Panel will comprise of 3 officers (from the Economic Development Department and Marine Resources Section) and two members of the Jersey Fishermen’s Association (who fish using pots).
When considering applications for grants in respect of lost pots, the Panel will require evidence that the pots have been delivered and paid for and will not allow the fisherman to increase fishing effort .The applicants will also need to provide evidence that the pots were ordered during or immediately after the period of bad weather and that they hold sufficient “lost pot” or ordinary pot tags to allow the replacement pots to be used.
The Economic Development Department, supported by the Chief Minister, are working with the Treasury and Resources Department to secure extraordinary funding to be able to provide such a grant to commercial fishermen, in addition to financial support for the JFA’s 2014 and 2015 contribution to the annual Marine Stewardship Council (MSC) audit for accreditation of the lobster fisheries and providing the minimum order quantity of bands carrying the MSC logo.
Communication on the 14th of April 2014 from the then Treasurer of the States, Laura Rowley, indicated that the Treasury Minister has been supportive of EDD work to provide support for fishermen and wanted EDD to respond positively and suggested that If there is to be an additional budget allocation it would need to be an allocation from central contingency. The route to secure that funding is a CoM endorsement which is then given effect by a T and R Ministerial Decision.
If funding is secured from Treasury, grants will be awarded based on information provided to the Department that warrants that the losses have been incurred and that any grant monies awarded have been used for the purpose for which they were intended. All grants will be subject to published criteria.
Similar schemes have been established in the UK as a result of the winter storms. The Marine Management Organisation (MMO) established a Storm Damage Gear Replacement Scheme through the European Fisheries Fund (EFF). Fishermen could apply for 60% (vessels less than 12m) and 40% (vessels more than 12m) of the total cost of replacement gear up to 100 pots and rope for rigging. EDD have proposed that fishermen could apply for 80% of the total cost of replacement gear. The JFA have proposed a maximum figure of 80 pots and rope for rigging.
The MMO scheme did not allow for purchase of gear until after application was agreed. The proposed Jersey scheme requires a copy of the invoice from supplier and copy of and customs/GST payment prior to grant (re-imbursement scheme).
The importance of the lobster fishery to the fleet
The Jersey fleet has declined sharply over the last decade with the number of licensed boats and the total Vessel Capacity Units reducing by 28% and 31% respectively. Vessels Capacity Units (VCUs) are the way in which the fishing capacity of a vessel was measured until recently for licensing purposes. The number of VCUs of a vessels equates to the registered length overall in metres multiplied by the registered breadth of the vessel added to0.45 of the engine power in kWs. However, these changes have for the most part been in the larger (over 10m) fleet that traditionally fished away from local waters and the smaller (under 6m) vessels. Much of the latter category were not registered as fishing vessels until licensing was introduced and were in reality used only occasionally on a commercial footing. As the regulations surrounding licensing have become more complex and the value of licenses increased, the owners of many of these vessels have sold the licences and only fish on a recreational basis. The predominant vessels in the fleet, in terms of volume and value of fish caught, are in the 6-10m category and the Vessel Capacity Units for these has declined by just under 3%. This category provides for boats that are smaller and faster than their larger counterparts, that are perhaps more efficient in their operation, yet which retain sufficient size to allow a commercial level of operation. Such vessels are ideally suited for local waters and fish mainly within the Island’s territorial sea.
The numbers of larger and smaller boats is now declining less sharply. At 2010, there were 17 licensed vessels over 10m and 82 licensed vessels of less than 6m. The 6-10 metre category has remained stable at an average of 61 vessels since 2005.
A number of the larger (over 10m) boats are specialised, including beam trawlers and scallop dredgers. These specialised boats cannot readily change their catch without major investment. The over 10m vessels are responsible for the majority of the scallop and whelk catch and a significant proportion of the wet fish catch.
Whilst a small number of the 6-10m vessels are specialised wet fish boats the majority catch both wet fish and shellfish depending on stocks and value. This flexibility is considered essential for the ongoing viability of the fleet. The 6-10m vessels are responsible for the majority of the lobster catch.
The value of the catch at first landing is recorded for all commercial fishing and demonstrates the overall importance of the lobster fisheries (and markets) to Jersey’s fleet. In 2010 shellfish made up over 90% of the value of the catch, and lobsters alone made up 49% of the total value.
Although Jersey boats are more profitable and income is higher than equivalent UK boats, even in a good year the average net profit achieved by Jersey fishermen remains relatively low. Clearly there is variation between boats and skippers, so that some fishermen will perform better in terms of greater fishing income and some will perform less well; some fishermen will operate with greater efficiency and so reduce their operating costs whilst some will perform less efficiently.
Support for the commercial fishing sector
A large proportion of Jersey fishermen support the Jersey Fishermens’ Association and the Jersey Inshore Fishermens’ Association on a voluntary basis. These organisations provide representation of fishermen and some degree of collective industry development e.g. through joint purchasing of fuels and through the development of training for new entrants.
Within the UK the fisheries sector is subject to a compulsory levy, which is used to support the activities of Seafish (the Sea Fish Industry Authority). Seafish’s activities are aimed at promoting the profitability of the industry as a whole, for example, by providing market information and analysis, by raising standards through training and by providing a communications / public relations platform. The justification for a
compulsory levy is that for many collective actions there will be ‘free riders’, who benefit from the activity but who would not contribute voluntarily to the costs. The fisheries industry on Jersey is not of sufficient size and scale to operate a compulsory levy. However, the same problems of ‘free-riders’ are apparent and will present a barrier to the sector developing itself.
The impacts of this may be exacerbated by the revised EU Common Fisheries Policy, in which it is proposed that support will be provided through the European Maritime and Fisheries Fund with a focus on collective actions, including support to producer organisations, marketing and business development. That is, the fishing fleets with which Jersey’s fishermen compete will be in receipt of direct support through the EU.
Assuming that Jersey wishes its' fishing fleet to remain viable, but that it does not wish to undertake this at ‘any cost’, interventions that help the industry to help itself, should be examined, hence the scope of the aid package to include the commissioning a delivery of a long-term business development strategy.
Fishing industry - support from Government
Future support for the economic development of the fishing industry can also be justified by the contribution that fishing makes to the ‘look and feel’ of Jersey, by the potential value added by fishing through the hospitality and tourism sectors and by the fact that fishing employs many Jersey residents who would not otherwise find employment in the financial or other high-value sectors.
Data from the fish halls at Granville indicates that the price paid per kilo for lobster and brown crab is declining. From 2008 - 2010 the price achieved for brown crab fell by 4.5% whilst that for lobster fell by 14.5%. The price paid per kilo for spider crab increased by 17.7% in the same period, although over the longer term this too has decreased. Other fisheries are known now to be exporting brown crab to the live Chinese market. The seemingly steady decline in the price paid/kg of the principle catch presents a challenge to the economic development of Jersey’s fisheries.
Despite Jersey’s record landings in recent years, the overall lobster catch as a percentage of European lobster landings has dropped significantly. Further to this, price volatility related to bad weather spikes is now being offset by the universal nature of lobster catches and traditionally important European markets are threatened by wider economic uncertainties, whilst markets in the east appear to be opening up.
Jersey lobster is now Marine Stewardship Council (MSC) accredited. The MSC accreditation provides a form of market incentive to fishermen to better protect and manage the marine environment in which they fish, so delivering elements of the Marine Resource Section’s objectives without recourse to States intervention. As yet it is not thought that the accreditation has been fully commercially exploited, with limited buy-in from either fishermen or merchants. Lobster is sold primarily to France, on the wholesale market. However, it is also sold within Jersey and exported to
the UK. There is scope to develop market advantage using the MSC accreditation; in France but also in the UK. It is notable that the processed lobster which is sold in the UK’s higher-end retailers is neither MSC accredited nor from the UK.
As part of the aid package it is proposed that Government will fund the costs associated with the MSC accreditation audit until June 2015, after which point a part or all of such costs should be transferred to fishermen through formal agreements with the Jersey Fishermens’ Association and Jersey Inshore Fisheries Association.
MSC accreditation might also be used within a wider promotion of Jersey as a place that could and should be known for its fish. Jersey’s many restaurants, its recreational and tourist fishing and its coastal nature all lend themselves to the promotion of Jersey fish and shellfish.
Diversification of the fishing industry has limited but relevant potential. Further processing of the catch is not necessarily a trade that fishermen would immediately opt for but it provides the scope to add value. Whilst boats are run with very few hands there is limited capacity for fishermen themselves to involve themselves in such businesses. However, Jersey’s food businesses (including fishmongers) are relatively well developed and there is the potential for these to develop packaging
and branding for Jersey caught fish as has already been achieved in aquaculture.
Multiple retailers in the UK and elsewhere do sell processed shellfish such as dressed lobster, typically using Canadian lobster. Entering this market would require that Jersey fishermen and/or traders developed their own processing and trading organisation, either privately or through a public-private partnership.
Experience in other fisheries has demonstrated that a strong processing and trading organisation can support local fisheries to such an extent that additional traders prosper in addition to the main buyer and processer. Where ownership of such trading organisations lies, is less relevant than the branding of the processed fish and the use of the Jersey name to denote where caught.
Details
Further to discussions between Government and the fishing industry, ED has proposed a package of suggested short-term measures designed to support the commercial fishing industry following the unprecedented bad weather during the 2013/14 winter.
The package comprises:
- The Economic Development Department (ED) covering the remaining Harbour Dues and / or commercial moorings (Ports of Jersey already discount Harbour Dues by 50%) of commercial fishermen for 2014 (ED will pay Ports of Jersey who will reimburse dues already paid).
- ED, supported by the Chief Minister and the Treasury to secure extraordinary funding to be able to provide grants to commercial fishermen covering up to 80% of the cost of replacement or 20% of the cost of repairing, pots lost in the recent bad weather. If funding is secured from Treasury, grants will be awarded based on information provided to the Department that warrants that the losses have been incurred and that any grant monies awarded have been used for the purpose for which they were intended. All grants will be subject to published criteria.
- ED covering the Jersey Fishermen’s Associations contribution in 2014 & 2015 to the annual Marine Stewardship Council (MSC) audit for the accreditation of the lobster fisheries and providing the minimum order quantity of bands carrying the MSC logo.
- ED have arranged for fishermen to discuss with Social Security any feasible means to be exempted from contributions liability during times when businesses are suffering from reduced incomes with the previously supplied dedicated points of contact.
- ED have arrange for officers from Social Security to meet the JFA and other commercial fishermen to explain Income Support and/or discuss any problems fishermen may be experiencing in accessing the scheme. The Income Support scheme is available to self-employed people on low incomes, subject to their other family circumstances and can adjust to variations in earnings.
- The structure of contributions, particularly for the self-employed, including share fishermen, will form a significant part of the fundamental review of the Social Security contribution scheme from 2015 and officers of ED will be involved in proposing new structures and schemes.
- ED has arranged individual and collective business support as appropriate, in particular for marketing and export activity, by Jersey Business Limited.
- ED has facilitated discussions between the JFA and the Genuine Jersey Products Association with a view to promoting the consumption of local fish and shellfish.
- ED working with the JFA, and other industry representatives, will commission and deliver a long term business development strategy for the fishing industry in Jersey.
Required funding from Treasury
Maximum Exposure to proposed Gear Replacement Scheme
Number of fishermen qualifying under scheme criteria 25
Number of fishermen qualifying under scheme criteria fishing pots 22
Number of fishermen applied but qualification requires verification/decision 5
Number of fishermen applied but do not qualify based on information provided 7
*Cost of replacement pot + ancillaries (i.e. rope) £75 (80% = £60)
Maximum exposure (27 (22+5) fishermen)(80 pots)(£60 per pot) = £129,600
If additional fishermen that currently do not qualify are included = £33,600
Total maximum exposure (pot replacement) = £163,200
*Pot designs differ and therefore so do costs. Cost based on parlour pots design as this is the pots that tends to be most expensive and that used predominantly by the Jersey fishing industry.
MSC audit costs 2014 and 2015 (estimated as equivalent to 2014) = £10,000
MSC bands (1000 kg) = £3,500
Total cost for MSC support = £13,500
Total bid for funding from Treasury = £176,700
Recommendation
The Minister for Economic Development instructs officers to request the provision of £176,700 of extraordinary funding to support the fishermens’ aid package from the Treasury and Resources Department.
Written by: | Director Environmental Management and Rural Economy |
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Approved by: | |
Ministerial Decision Case Ref: MD-E-2014-0085
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