Speech by Lowri Evans at the European Association of Fisheries Economists 2013 Conference, Edinburgh, UK, 15 April 2013

Lowri Evans, Director-General for Maritime Affairs and Fisheries, European Commission

The political context for the fisheries sector, just like other sectors, is that Europe is committed to improving its economic performance. The impact on jobs and growth is therefore our primary focus. Over the last few years, the Commission has made an effort to develop a better understanding of the economics of the fisheries sector.  In the past we had traditionally focused on the biology of fisheries. This of course has its limitations – since fishing is an economic activity and fishermen are economic agents that take decisions and react to incentives coming from the policy side. More recently, with the reform of our fisheries policy, we have learnt to analyse not just the biological aspects of our policy, but also its economic and social impacts. It's not just about tonnes of fish anymore, but also about the economic value and consequences on profitability of TACs and quotas, about their social consequences.

Our legislative proposals for the reform of the Common Fisheries Policy, including the Common Market Organisation and the new European Maritime and Fisheries Fund, were each accompanied by an in-depth assessment of the impacts that different combinations of possible instruments and measures would have; not just on stocks, but also on jobs, income, and profitability for the sector as a whole. This was largely based on research going on in both academia and policy-making bodies; work that many of you have contributed to and for which we are very grateful. Such analysis gave us the arguments to affirm that a continuation of the current CFP was not an avenue to follow and that a significant change was needed as regards each and every part of the CFP. The industry can have more fish, and more money from that fish, if we manage things better, and if certain behaviours change.

With this analysis, Commissioner Damanaki has been well placed to promote and defend her proposals before the Council of Ministers, the European Parliament and vis-à-vis the stakeholders. Our analysis has pointed out that the biological, economic and social domains do indeed interact a great deal; and that there are clear economic benefits from restoring and keeping fish stocks at sustainable levels. We made this the cornerstone of our proposals. 

Let me turn to another area we're working on. In February the Commission adopted its annual fleet report.  For the first time, we have used a set of both biological and economic indicators to analyse the fleet reports handed in by Member States, with the help of our Scientific and Technical Committee for Fisheries (STECF). This work is a first step based on a limited number of fleet segments. This year we intend to increase the number of fleet segments and Member States under consideration. This is an important exercise, first because it will clear some of the fog around this admittedly complex issue and second because overcapacity measurement at fleet segment level is likely to be relevant in the context of the future European Maritime and Fisheries Fund (EMFF).

In sum, I think it is fair to say that we can no longer be accused of formulating policies without taking the economic aspect into account; but we do need to keep sharpening the quality and depth of our economic analysis.

This is where we need your help. We want to improve our in-house economic analysis capabilities but we also need external input and there are more of you than us.  We need for example your help in getting a better understanding of the impact that fisheries subsidies have on the sector and on fisheries-dependent communities, and of how fishing at sustainable levels changes the profits of the sector or of individual fleets.

For those of you active within the STECF Committee and contributing to the Annual Economic Report, we want to continue working with you to improve data quality and analysis on all parameters. And given that we now extend the effective scope of analysis for the CFP, we will also need to improve what we're doing as regards for example both aquaculture and processing.

Better economics goes hand in hand with effective use of biological data. And here there is significant progress: 80% of the TACs in the northeast Atlantic (including the North Sea and the Baltic) are covered by full scientific assessments, and advice about overfishing exists for 63% of the stocks analysed in the Mediterranean.  In addition, the TAC & quota discussions with the Council are demonstrably moving to more and more acceptance of science-based arguments. The divergence between the Commission’s proposed and the Council’s agreed TACs is significantly reducing; from 50% in the period 2004-2008 to 29% for 2009-2013 with the trend accelerating markedly since Commissioner Damanaki has taken the reins. We will have further progress quickly with the work underway to develop proxy or qualitative approaches to data poor stocks.

So the Commission's objective is to make sure that the CFP is rooted in a solid and wide set of data, both biological and economic – and notably including the jobs dimension.
Any new ideas that may come out of this conference will be more than welcome as far as the Commission is concerned.

Let me suggest for the future that from an economic and social perspective one issue that would bear further analysis is to know better how Member States distribute their quotas or fishing rights. If we look at this from a legal perspective, this is not for the EU to look at – it is Member States' competence. But if we want to know – if you want to know - how the CFP is working on the ground, then the way quotas are allocated internally by Member States is a significant economic and social variable. To have a good economic understanding – to understand the jobs and growth choices that are being made – this area would withstand more analysis. How are quotas allocated to small scale fleets? What are the linkages between quota allocation at sea and the benefits in terms of jobs? How do different quota allocation decisions translate into jobs – or not - in coastal communities, particularly in remote areas, and how can quota allocation decisions affect incentivisation of fishing behaviours – like discarding for example.

Let me turn now to the EMFF. The EMFF will be the main financial tool to help the industry achieve the CFP objectives, and to deliver growth and jobs.

The proposed EMFF puts a greater emphasis on innovation in new products, processes and techniques to foster the conservation objectives of the reform, to reduce the impact of fishing on the marine environment, and to meet the requirements of the discard ban. And to underpin the overall approach, the EMFF intends to increase support for data collection and control.

Increasing competitiveness of the sector (including catching, aquaculture, processing and inland fisheries) is very important, for instance through promoting added value and quality, including though support to production and marketing plans.

The EMFF has a strong social dimension, including by supporting measures designed to improve the attractiveness of the sector: health, safety and development of human capital. And the EMFF will ensure continuing focus on the sustainable development of fisheries-dependent areas. This - Axis 4 in our jargon - was the most significant novelty in the current financial instrument (EFF). Axis 4 has taken some time to take off but is starting to bear fruit. As of now, 3055 projects have been selected and there are 302 local action groups in 21 Member States. These are small projects that are successful at creating jobs - for instance, 4 jobs created in a project developing seaweed food products in Denmark with € 84,500 EFF support, or at increasing fishermen’s revenues - for example a project intended to develop and market new products based on goose barnacles by a group of 27 shellfish gatherers in Galicia with € 45,800 of EFF support. We expect Axis 4 to grow in the next 2 years, bringing with it concrete results at local level and this is an excellent platform for further expansion in the new EMFF.

The EMFF has to give the right incentives to the economic agents to which it will apply. This is why the Commission excluded from its proposal fleet measures, in particular scrapping and temporary cessation.

Regarding scrapping, we do not like this for two reasons: first and mainly because fleet measures have not been effective to reduce overcapacity, in spite of €1.3 billion of EU support invested since 2000. Nominal reductions of vessels, in tonnage and kilowatts, have not been accompanied by significant reductions of the actual capacity to fish. This is the point made in the Green Paper of 2009, as well as in the CFP report impact assessment, and more recently by the European Court of Auditors. It has been a bad result for the policy and the taxpayer.

The second reason is that we believe that the type of scrapping in the EFF inherently reduces the cost of exit from fishing. It acts as a sort of insurance premium that allows vessel owners to stay in fishing longer than what would be justifiable from an economic profitability perspective. So, paradoxically it helps to maintain capacity in the sector.
Along the same lines, construction aid in whatever form inevitably reduces the cost of entry, which certainly increases capacity.

A similar reasoning applies to temporary cessation subsidies. In the short term they reduce capacity but this effect is ephemeral. If there are longer term schemes, this increases subsidy-dependency and does nothing to help address the structural problems of the sector.

In its proposal on the EMFF, the Commission also excluded support for engine replacement. After the 2008 fuel prices hike, the sector has made significant efforts to reduce fuel consumption, in many instances without public support. Supporting engine replacement could jeopardise these efforts, and at the same time increase fishing capacity. And, by the way, recent studies show that direct fuel savings resulting from engine replacement are smaller than those from changes in daily fishing behaviour.

Making sure that the EMFF gives the right incentives requires analysing its effectiveness and efficiency with regards to the objectives to attain. This means looking into the added value of public expenditure beyond the mere checking of whether the money has been properly spent. We will be working from this perspective in our negotiations of the next generation of operational programmes.