I am Daniel Whittle from Whitby Seafoods, which is the UK’s largest scampi manufacturer. We are somewhat unique, in that we are entirely supplied from the UK and supply into the UK. I would say we are also representing Northern Ireland, because we have a factory there and are very dependent on its supply.
Q Obviously, some of our most important fisheries agreements are those with Norway and the Faroe Islands and the coastal states agreements on species such as mackerel, all of which are currently handled by the EU, where we do not have a direct seat at the table in the way the other coastal states do. Would you explain some of the consequences of that lack of representation by virtue of the fact that we are an EU member?
I have attended many of those meetings with teams travelling from the UK, and it is an extremely frustrating position to witness that power being taken out of the hands of a team representing the UK and placed in the hands of the EU, making decisions that are not best aligned with the interests of the UK catching and processing sector. We have seen in recent years this becoming a very difficult issue in terms of negotiating away access to UK waters, in the coastal states agreements, for a period of time that has been inconsistent with the best interests of the UK.
You will be aware that the EU-Norway negotiations are going on in London as we speak. They failed to come to a conclusion last week. I have been going to these negotiations for over 25 years, I think, and one aspect of the negotiations that we look at with envy is the Norwegian Government always sitting with their sector. They normally have five or six fishermen bound roundabout them so that they can feed from one another in terms of what the appropriate output should be.
I also feel sorry for some of the member state officials, such as the officials from the Department for Environment, Food and Rural Affairs and Marine Scotland, who sit in these meetings, because very often they are kept out of the heads of delegation meetings, where the detail of the discussions and sometimes the conclusion agreements are set. For 25 years, we have sat there, looking at Norway with envy, thinking that at some point we would like to do that, and I think that, as we move forward, perhaps we will. For us, it has always been a negative that the fishermen of Europe are not talked to in any way other than a loose way, and we are certainly not bound into any of the negotiations to feed in in an appropriate manner.
I can say a little about this: I used to be involved in these negotiations for the Scottish Government. It was very difficult to try to continue the dialogue with the industry as the negotiations went on. One of the roles I had was to speak to Mike and his like as the negotiations continued. I think there is something in what Mike has suggested.
I do not get to go to the negotiations, but in the previous session there was talk about TAC being set above the recommended scientific advice, and I know a good example of where that happens: area 7 in the Irish sea, for nephrops, where there is a large, 20,000-tonne fishery. Every year they set it above that because the French and the Spanish have quotas that are largely unused, so they set the TAC above what the recommended scientific advice is, to allow that to happen. There is nuance in when the TAC is set above what the scientific advice is.
Q In conclusion on this point of the important fisheries in the North sea, is it your view that British interests get traded away by the EU in order to get advantages for other member states?
The opportunity for us is not to be underestimated—to be at the table as a coastal state. That is the prize we in the industry see. Mike touched on that point about the industry working with Government to best achieve those objectives. There will be some trading and negotiations, but they need to be right for the UK and at this moment we are not in that position because we are not a coastal state, but this framework will enable that and delivery of a coastal state has to be the objective.
There is a typical example going on just now in the current negotiations, where the quota of North sea haddock next year will come down by approximately 30%. We would like to get some trade in from Norway to help us through next year, but that has now been balanced against north Norway cod, which the Spanish and French are lobbying heavily to get. That could mean that we do not get the haddock we want in the North sea. The answer to your question, Minister, is yes, it works against us at times.
Q All of you export some of your products. In the event of a World Trade Organisation scenario with most favoured nation tariffs, how high is the tariff on the fresh fish that you sell, and are you more worried about tariffs or the possibility of border inspection posing some disruption to the supply chain? Which concerns you most when it comes to trade?
As a shellfish processor, we are highly reliant on exports, particularly to Europe, which is the destination for 95% of our scallops, for example. At the moment we enjoy free and frictionless trade, so the implementation of MFN tariffs would have significant effects. We have done some calculations for the shellfish industry as a whole. We are looking at perhaps £43 million in additional costs on shellfish exporters if we moved to that, plus, with third-country agreements with the likes of South Korea, probably another £5 million on top of that—that is per annum. Whether some of that can be absorbed by the customers and buyers in Europe is a difficult one to see. It is a competitive market; therefore, we have concerns that this will have an impact on our competitiveness and on how well we are able to sell our product.
The non-tariff barriers are equally, if not more, important. If we move to a stage where we need health checks and border checks at both sides of the border, that will cause a delay. For shellfish—a highly perishable, high-premium product—a 12-hour delay can reduce value by almost 50%. If you are delayed for 48 hours, you have more or less lost that consignment. The non-tariff aspects are really significant for the shellfish sector and for other sectors.
Q On scallops, the MFN tariff is 8%. Arguably, that is a bit like VAT—it is a tax on the consumer, ultimately. I know some in the fish processing sector have said, “Yes, we would obviously rather have tariff-free trade, but don’t sell out the catching sector on our behalf.” I wondered whether an 8% tariff, at the end of the day, given the fluctuations in market price anyway, is hugely problematic.
Of course, we do not welcome such a tariff. We have to remember that the shellfish sector is not really gaining anything in additional quotas through Brexit. These are non-quota stocks, other than the langoustine, which we already have a very large share of, so there is no benefit to us—to the shellfish sector—from the Brexit process. We do not expect our catches to be able to go up much, and we require access to some European waters for scallops and crabs, so there are multiple threats to the shellfish sector. We need to ensure that the sector is not forgotten about in the larger discussion on fin fishing.
In previous sessions, you might have heard me asking about a national landing obligation—a requirement to land fish caught under a UK quota in UK ports. Would that have an impact on the processing side of the businesses that you represent? In the interest of complete disclosure, I also declare an interest, because Mr Pillar and Interfish are based in the constituency that I represent. What impact would a landing obligation to land fish in UK ports have on your sector? Would it be beneficial?
One of the key things in the port that we originate from, in Plymouth, is the market—the auction—and the opportunity for fishermen at all levels to access that and sell their catch. That is from the under-10 fleet right through to larger vessels. As it stands, that business has absolutely no security and no certainty that there will be a supply of fish coming into that marketplace if operators were to choose to put their fish into the back of a lorry and send it directly overseas, which can and does happen. In some ports around the country, that has evolved under the CFP to a situation where markets have failed and there has not been the opportunity to have a diverse marketplace for small, medium and larger vessels.
In the pelagic sector, the opportunities around employment export, upstream and downstream, are wide-ranging. To be competitive in many of those markets, it is essential to have a critical mass—a business must have that critical mass. In the UK, we operate with very different bases for business in terms of business rates, labour costs and harbour costs, which do not put processing on an even playing field with many of our competitors, but we must recognise that it is a competitive market. What we do have is some of the best, highest quality seafood that we will stake our case for being sustainably produced within British waters. That is a highly desirable product and not to be undervalued.
From a Scottish perspective, in terms of landing to the market, up in Scotland all our vessels operate locally. We do not fish north Norway, the Mediterranean or the Pacific or anything; we fish around our coasts.
The vast majority of the demersal fish comes in to ports such as Peterhead, which is the largest white fish port in Europe, and Fraserburgh, which is the largest nephrops port in Europe. You see the investment going on there: we have a new fish market there, and last week we landed 36,000 boxes of fish into that fish market, which is unprecedented elsewhere. You see a significant investment in new vessels—replacement vessels, not additional vessels. You see an enthusiasm up there, which is built on the fact that the stocks are on our shores, we take care of them and we land it back to our markets. There is a small amount that goes to northern Denmark for the Christmas market—we utilise their market for saithe over that period—but apart from that, everything largely comes back home to Scotland.
One of our concerns about the Bill is the potential for standards to be different on British fishing boats versus foreign fishing boats fishing in British waters. From your point of view, for those who trade here, is there a concern that there could be a differential in terms of cost base, compliance and regulations, environmental protections and marine safety if there is not a level playing field between British fishing boats and foreign fishing boats in our waters?
I have a suggestion on that front. There was discussion about remote monitoring. You could make that part of a requirement of fishing in UK waters, so that there would be a level playing field.
To give our perspective on the landing obligation, in Northern Ireland, it is challenging that there is a whiting bycatch. There has been a lot of work on selectivity to reduce it. I fear that the approach being taken, which is “Let’s have a deadline,” is not a practical approach. The approach should be that fisheries continue to try to remove unwanted catch from their nets, but it should not be deadline-driven; it should be a continuous improvement approach.
On the foreign vessel conditions, the Bill needs a little more explanation. Each fishing administration is able to establish its own licence and therefore its own licence conditions, and each fishing administration can in principle establish licences for foreign vessels as well. A problem could exist whereby a British or a foreign fishing vessel, fishing in different waters around the UK, might be subject to different licence conditions. It is not clear to me in the Bill how that will operate. That could indeed have an effect on UK fishermen who fish in more than one fishing administration’s waters and on what licence conditions will apply.
In Scottish waters, we do a lot to try and protect the stocks. We have closed areas for spawning females of cod. We have other areas for abundances, and of course we have a network of marine protected areas, like everyone else. One of the things that we ask for going forward—it is a positive, but a negative for our fishermen—is that we avoid the areas of high density. Chances are that that means we catch less fish in terms of economic viability. We could go to area A and catch loads of fish, but we do not; we avoid it. We go to area B where we catch less, but it allows stocks to recover. We do not feel there is equivalence across the EU because some of our EU colleagues enter these areas while we have them closed unilaterally. On issues like that, in the future we would have to ensure that whatever happens there is a degree of equivalence, so that when we make a rule in UK waters, that rule applies to everyone. I am sure it will.
Q We heard in one of our evidence sessions on Tuesday that some fish are caught in UK waters, exported to China for processing and then brought back. I think an awful lot of people will have found that very disturbing. The issue of food miles has dropped from the political agenda, especially with the focus on trade deals with countries far away. How do consumers know whether they are buying fish that has been caught, landed and processed in the UK, or something that has travelled all the way round the world and back again to get to your plate?
Q The difference is that there is a label so that I can see where it is made. As a consumer, if I rock up to a supermarket and buy some fish, how do I know where it has come from? Can we get clarity for British consumers who might be under the impression that, because we are an island nation, the fish we buy have simply been plucked out of the sea and brought in?
Perhaps I can answer the question that the hon. Member posed. In Scotland, I chair a group called the Scottish Fisheries Sustainable Accreditation Group. That group focuses on ensuring that we build stocks up to sustainable levels and that our fishermen harvest stocks appropriately in terms of selectivity and other things. Once we reach a certain standard, we put them through the gold standard of the Marine Stewardship Council certification. The consumer is more concerned about whether she is buying a sustainably caught fish—quality fish—than she is about where it is filleted. By attaching that mark we ensure we give comfort to the consumer. I think that where it is filleted or whatever is a bit of a red herring—excuse the pun. At the end of the day, the consumer is focused on whether the fish comes from a sustainable source and whether it is of good quality. That is what we as an industry group actually ensure.
One of the things that we would like to see strengthened is the recognition around labelling and for labelling to be consistent with the chain of custody and provenance—where a fish has been through its life cycle. That really is driven by point of landing. If something is British, that point of landing is key because you start to derive the value upstream and downstream in the chain of jobs dependent on that fish being produced.
I agree with what Mike said about accreditation. Macduff is working hard on accreditation for nephrops stocks and scallop stocks. That is important to us, and, post Brexit, accreditation and certification will become that much more important to guarantee the sustainability of our stocks.
Andrew, you commented that access to EU markets and the EU workforce is critical for business and industry. What will the ending of free movement mean for your industry? Have you seen any impact of Brexit already since the referendum? Also, what are your views on future immigration policy? The UK Government are talking about not allowing what they call “low-skilled workers”, and having a £30,000 threshold for qualification.
Q I have a question for Mr Brown about the importance of the shellfish industry. As the Member of Parliament for Argyll and Bute, I understand the importance of shellfish to my west of Scotland constituency the. Do you think that the shellfish industry has been adequately heard in the debate, or do you feel that you have been slightly subsumed into the big fishing producers and big organisations? Are your concerns adequately covered in the Bill?
Obviously, fisheries have played a prominent role in Brexit and there has been a lot of publicity about the possibility of additional quotas. The fact that inshore fisheries and shellfish fisheries will not gain from that has probably been underplayed. There is certainly that aspect to it. We want to see tools in the Bill to allow Ministers to manage shellfish stock sustainably. If anything, shellfish stock management has probably lagged considerably behind demersal and pelagic management because of some inherent difficulties in the stocks, given their patchy distribution across UK waters.
However, it has always been the kind of fishery that new entrants have come into, because if you are a new entrant to a fishery you need three things: a licence, a vessel and a quota. Those are all expensive, but to get into the shellfish sector you do not need your quota, because they are non-quota stocks. The main way to get into the fishing industry is through the shellfish sector, and to try to build up a quota from there. That means that the entrance to shellfish fisheries is not very well controlled. Consequently, it is difficult to use management levers.
We would try to increase the significance, or the relative importance, that shellfish fisheries have in the Bill. Scallop shellfish fisheries are the most important fisheries in England, and the third most important fisheries in the whole of the UK, in terms of value. They have not been given the kind of management, attention and science that they need.
Q You talked about the financial and time cost of any barriers being put up. It is essential that a lot of the live product gets to continental Europe as quickly as it can. Are you confident from what you have seen in the Bill, and from what you have heard from the debate surrounding the Bill, that those time costs in particular will not damage your industry?
I am not sure that much can be done on this on the face of the Bill, but obviously, on how ports are managed and facilities maintained, within the Bill there is certainly the power to award grants to support infrastructure to someplace where you might have looked into their storage and freezing facilities. But yes, you are right; any kind of delay becomes quite significant. A two-hour delay on a motorway heading towards a port can mean you miss the ferry, which can lead to a day’s delay. An awful lot needs to be done to ensure the smooth running of this. Local authorities are involved as well, because we need export health certificates from them. There is a lot of work to be done to ensure that delays are minimised to the smallest amount possible.
Earlier, you talked about how the likes of Norway, Iceland and others have been looked on with envy in negotiations, probably not just by us, but by other EU member states. In the future, as an independent coastal state, when we end up in those negotiations with that increased power, what role do you see Ministers and officials from devolved Assemblies playing, and how well is that covered in the BillQ ?
In the discussions that we have had with both the Scottish Government and with Ministers and officials at DEFRA, we have always tried to put across the point that now we have a blank sheet of paper, we should look at governance structures and good governance. It is essential that one of the lessons we learn from the CFP is that we should start to build policy from the bottom up. That is perhaps not how we should approach international negotiations, but it aligns with where the key areas should be.
It is essential that we build a suitable advisory structure, perhaps within the Administrations but certainly within the UK. I think, as we move forward into what will become trilaterals on setting tax and bilaterals on exchanges and balances, we should start to bind the sector in there. You referred to my previous comments about looking on in envy at our Norwegian colleagues, who are part of the Norwegian delegation. We would ask Ministers—or the people to whom we need to apply—to ensure that there are knowledgeable people sitting behind the officials and doing the negotiations.
In my experience—I have been to several rounds of mackerel coastal states talks this year—the officials representing the Scottish Government and DEFRA are very competent, well informed and, quite honestly, raring to go in what I see as individuals lined up to be taking that seat negotiating on our behalf as a UK coastal state. We are very enthusiastic about that.
I echo the points you have already heard about making sure that the industry is close to that. I have seen first hand how that has happened, with the likes of the Faroese Government listening very carefully to their industry and acting on their instructions to deliver for them.
Personally I would have liked to see some tighter wording around structures, governance and inclusion. The document talks about “interested persons” being asked to comment. I am not entirely sure how broad that goes. I would like to be classed as more than an “interested person”—not just me personally, but across the broader industry sector.
Q There has been a focus on the pricing aspects of the impact of Brexit, but I am also interested in the workforce aspects, particularly in more remote communities, such as the Western Isles, where there is a big shellfish industry. If we look at the skills profile of the fishing industry in the UK, 67% of the workforce is in the process. What long-term impact do you think that will have on the skills profile and the age of the workforce, and will that present any challenges for you?
Yes, there will be challenges going forward. Obviously it comes back to an earlier point that Mr Brown made about EU migration policy. We have a lot of reliance on that—76% of our workforce are EU migrants. In the longer term, we hope to see commitment of investment from Government into vocational training for workers, both on land and at sea. In the short term, it is very difficult to see where we can get staff. Retention of staff is really important for us. We do what we can to make the job as attractive as possible and to look after our staff, but going forward it is an issue we have to plan for.
In both Whitby and Kilkeel, in Northern Ireland, about 80% of the workforce are local. I personally believe that a high availability of low-skilled and low-paid people has perhaps made life relatively easy—not easy but easier—when businesses compete. I think the area of competition may lean more towards productivity—output per person and kilos per hour—and be much more focused on automation. Not everything can be automated, but if there is support to help with that process, and I think there is a mention of that in the Bill, then that could ease the situation.
May I mention the catching sector? It is perhaps not contained within the Bill. If you want me to stop I certainly will. This is in relation to our reliability on non-EEA crew in the fishing sector and the problems for communities in the west of Scotland, where we cannot bring in non-EEA workers because they come in on a transit visa and are not allowed to operate inside 12 miles. If you look at the west of Scotland, there are very few areas where they can work where they are not operating inside 12 miles, which means that they are struggling for crew.
Just to follow up, that has a significant impact on the nephrops fishery, which has historically been one of the top three high-value species in UK fishing over the past 10 years. This year—as of last week—that quota was 51% caught. It has been fundamentally undermined by the lack of crew available to fish on the boats, and that goes across the west of Scotland and Northern Ireland. In the North sea, where most of the fisheries are outside the 12 miles, the landings have actually increased.
Q Are you satisfied that the grant provisions in clause 28 are robust enough? Would you like to see further definition of what those opportunities might be, if you are looking at labour substitution with capital investment to offset the cost and scarcity of labour?
I ask this to everyone, with the exception of Whitby Seafoods, who I think source UK and sell UK catch for the other three panel members. I am sure the movement of fish products—catch—will be dictated by the consumers’ palate rather than by any Bill. I understand that there is a lot caught in UK waters and shipped abroad. There is Q almost a reversal; we like what somebody else catches and somebody else likes what we catch. Is there anything in the Bill that will impair that continued process, which is essential for the industry? Is there anything in the Bill that could improve that process for the future?
I do not think there is anything in the Bill. If you look at shellfish, for example, our only important market in the UK is for langoustine tails for scampi. Practically everything else goes abroad, mainly to the EU but to some other parts of the world as well. I think it is very difficult to change food culture. Traditionally, UK consumers have not eaten crab, scallops or dog whelks to any great extent. It would take a long time to change that, I think. Even if we could do that, we would still have more product than would be consumed by a UK market. It would not be just be a case of changing tastes. We would need to increase the general uptake of seafood in people’s diet as well. Even then, we would still have more product than could be sold.
In our experience of working with British retailers and consumer markets, there is a real opportunity to engage people with what British-produced, good fresh fish looks like and what it tastes like. I was with the Minister in the last 12 months, eating gurnard in a local restaurant in Plymouth. There is that opportunity, but we need to get the retailers and other points of the supply chain on board to recognise exactly what we have within our waters, and to think differently. When we put that in front of consumers, in our experience quite often we can see that they can be well-priced, competitive, very good offerings. We have to try to market that and it is not straightforward. It takes effort.
Q Going forward, do you see wider markets beyond the European Union? Do you see opportunities for the products caught off UK shores elsewhere in the world, other than the EU?
We have seen evidence of something similar of late, with brown crabs. There has been a significant increase in the price of brown crabs as a consequence of exports of live brown crab to China, which is driving up the price.
Q Generally, you have obviously set a lot of store by the prospect of us being at the top table, as it were, when we are a so-called independent coastal state. Are you worried that during transition we are going to be even further away from the top table than we are presently?
There is some concern that Europe could introduce some rules or plans that impact on us more than on other member states. There is that concern. How real those concerns are, I am not entirely sure. Pelagic is the area that should probably be most concerned, when they renew some of the plans. It is difficult to see how they could impact on us, other than to ignore us. For instance, the December Council is coming up. We are still a member state at that Council. Could they ignore us during that? We normally go with a shopping list. As the Minister will know, England has normally got its requirements and Scotland has its requirements. Whether we are in the IP or whatever—if the IP comes—and whether we are ignored during those events could impact on us. As yet that is an unknown, but yes, there is the possibility.
Q On tariffs, the Minister was implying that an 8% increase in tariffs on shellfish might not necessarily be a problem. You talked about £43 million of increased costs for the industry. Would we see more or fewer jobs in the industry if we had an extra 8% tariffs on our shellfish?
It is difficult to predict. Obviously, it will affect our competitiveness and it is a competitive market, so it cannot be a good thing for the industry, but different products have different premiums and can absorb different levels of tariffs. It really depends what stock you are talking about and what market you are talking about. There is an average of an 8% to 9% tariff value across all our stocks, so clearly that is not going to help us in terms of profitably.
Yes. I think we are, but it is reliant on a number of factors and the sustainability and management of the stocks. We are very dependent on, let us say, growth in China. Currently the situation is good, but that market can be subject to sudden and unexpected regulatory change, which can close off markets just as quickly as they open up. There are risks associated with that, and we have to build that into our business planning.
Q There is a scenario at present in the southern North sea where a significant amount of fish is caught, in particular by Dutch vessels, using particularly unsustainable practices such as electric pulse fishing, and it is processed in the Netherlands and then imported back into the UK. That presents three challenges: allowing UK fishermen to catch more of the fish in our waters; promoting sustainable fishing so electric pulse fishing just cannot take place in the way it has; and promoting our own processing sector. Does the Bill help us achieve those three goals?
We have expertise in the demersal sector but also in demersal processing. This is a stepping stone in that direction. There is clearly other work that will need to be done, but it is part of the enabling framework. It is clear from the work that was done in terms of the consultation and the White Paper behind the Bill, and from my engagement with the team who went out on the road and did the fact finding, that a tremendous amount of work went into producing the Bill. We recognise that, and we recognise that it is not all going to be there on day one. This is part of the framework. If we successfully implement the Bill and its spirit, we will set out a framework for sustainable production—for harvesting fish, for having access to markets and for domestic processing—and for enabling those people who are employed indirectly and have no direct association with fishing opportunities or quotas to find employment.
It allows fisheries to develop in a positive way. It does nothing to restrict that, and it does nothing overly to promote it. If you overly promote something and it is wrong, the chances are that is not a good thing. It does nothing horribly wrong. It should allow fisheries to progress into this highly sustainable and sought after product. As an industry we are very aware of the marketplace and of regulation. For us, that is essential, because as we leave Europe and the spotlight comes on us in terms of sustainability, we will have to do things better than anyone else if we want to increase our market share. That is where our awareness is currently focused, and the Bill does nothing to stop that.
I agree with that. It is a framework Bill. The proof will be in the pudding—in the policies that emerge from this framework. The principles of sustainability and scientific basis, which we support, should stand us in good stead.
I echo that. There are a lot of excellent policies in the Bill. I particularly support the focus on the devolution of licensing and so on. The challenges in Scotland and England are different from those in Wales and Northern Ireland. Allowing devolved Governments to control effort is a big step forward.
Q The standards of foreign and UK vessels have been mentioned. Mr Whittle, you mentioned electronic monitoring equipment. I did not quite catch—pardon the pun—what you said, so would you elaborate on that? In that context, Mr Brown, will you say a little about licensing if we have time?
I said if you were serious about implementing the landing obligation and seeing it as a source of data, which I believe it is, you should have remote electronic monitoring of UK vessels and make that a necessary criterion for fishing in UK waters, which would mean that any foreign boat wishing to fish in UK waters would need it, too. We feel it particularly acutely because we buy the smaller end of our species, and there tends to be high grading within the Irish fleet, which frustrates us.