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Monday 20 February 2012

Slipper Skippers! - Mystery cartels who control price of British-caught fish.

Here's an article published February 14th in the Times by David Sanderson. The story of how quotas, which were once allocated to individual fishermen are now traded on a global market worth millions - but very often no longer owned by individual fishermen is another story of intervention gone wrong - perhaps there was never a better example of the law of unintended consequences! 

Read on........
The Government allocates quotas, but loses track of them as they are sold to 'barons' interested only in profit!
The price of fish is being inflated by private organisations that have been given free access to quotas worth billions of pounds and are on the brink of securing permanent control of Britain's fishing rights. 
The Government has admitted that Britain's 23 privately run Fish Producer Organisations (FPOs), to whom it hands 94 per cent of the country's annual quota, manipulate the market to boost their profits. Fish prices increased by 11.4 per cent in the year to June 2011, twice the increase in meat prices, according to the Office for National Statistics. But despite concerns that the opaque yet highly lucrative market is now being controlled by "quota barons", including investment funds, the Government has resisted calls to publish a register of ownership. It concedes that it does not know who owns and profits from Britain's quota allocation because of "invisible" transfers within FPOs: many members lease out their allowance at huge profit. The Government also admits that the quota rights — originally attached to vessels fishing in British waters in the late 20th century — may end up permanently in the hands of the FPOs, who it says now have a "legitimate expectation" of ownership. 
Critics have described it as a "privatisation of the seas" without any benefit to the Exchequer.In 2010 the value of the 606,000 tonnes of fish landed by British vessels was £719 million; the leasing of a one-tonne quota of cod can fetch up to £2,500. Anne McIntosh, the Conservative MP who is chairman of the Environment, Food and Rural Affairs Select Committee, said it was astonishing that the Government did not know who owned the quotas it handed out. She called for the Government to publish a register, adding that it was not in the country's interests for fishing rights to be owned by non-fishermen. 
Peter Aldous, the MP for Waveney, which includes the fishing port of Lowestoft, described it as a scandal. He said that reform of the system would be difficult because of the "powerful vested interests that will resist change". 
The current system of quota allocation has also resulted in fishermen with boats of less than 10m (33ft) being denied access to the seas. They comprise 85 per cent of the UK fleet yet receive only 4 per cent of the annual quota as they are usually excluded from FPOs. If the owners of smaller boats want a share of the quota, they usually have to rent it from FPOs, but many said they could not afford the price demanded. Even if they could, FPOs are not offering shares to them. The small boat owners claim that the system forces them to discard tonnes of fish. 
Jerry Percy, the chairman of the New Under Ten Fishermen's Association, said that the Government had allowed the "family silver" to be taken away from working fishermen. "Nobody except the Producer Organisations know what's going on," he said. "It could be hedge funds, big international companies or even football clubs that are holding the quota and making money." Thomas Appleby, a law lecturer at the University of the West of England who has been trying to discover who owns Britain's quota, said a small group of wealthy people were renting out "public property" for profit. He said the Marine Management Organisation, the quango administering fishing, rejected his latest request for information but said that although the Government did "retain ownership of fish quotas ... the industry has an established legitimate expectation for access". "They now view it as theirs," Mr Appleby said. "But the Exchequer is losing out because usually when you privatise assets the public is compensated." He added: "Because we have FPOs trading among themselves and forming cartels, there's an element that they are controlling geographic areas. 
There could be abuse of a dominant position, which would be bad news for the consumer." Richard Benyon, the Environment Minister, acknowledged to the select committee that FPOs would restrict supply of quota to the under-10m sector.In a statement his department said that it would keep quota back for commercial reasons, including "to increase the prices obtained by their members for the quota they do land". Jim Portus, chairman of the UK Association of Fish Producer Organisations, defended the system. He said the organisations were not "secret", adding that the FPOs had been pushing Defra to publish a register. He said that any flaws in the system were because of "ministerial inefficiency". 
A spokesman for the Department for Environment, Food and Rural Affairs said it was "seeking a publicly available register of quota allocations". 'Slipper skippers' reel in the net profits.
The Marine Management Organisation, a government quango, administers the scheme but admits that many transactions within and between the fish producer organisations are invisible to it. This has led to speculation that investment companies and even football clubs now own FQAs, which they lease out for profit. Currently, some 96 per cent of the British allowable catch goes to the 23 FPOs. (One of these is the Cornish Fish Producers Organisation who manage the quotas for the majority of Newlyn and other Cornish vessels)
The remainder is distributed by the Marine Management Organisation, for free, to the small-ship fleet. In 2010, Britain had 6,477 registered fishing vessels — a reduction of 16 per cent from 2001. More than 5,000 of these were in the under-10m fleet. In the same year these vessels landed 606,000 tonnes of sea fish (including shellfish, which are not subject to quotas), valued at £719 million. The price of leasing fixed quota allocations varies depending on the fish stock, the time of year and the section of British coastal waters it has been allocated to.
In response, French fishing consultant Yan Giron gives his view from across the Channel - he is keen to point out that he is making an observation on the findings as they are of real relevance to the place the French operators find themselves - that is from the artisan fishermen's perspective

I am not involved in day-to-day UK fish system, but here are some views given from the other side of the Channel (how we see the FQA system and its consequences) After having read again this hot issue, hot for Britain and hot for whole EU because FQAs are ITQs of TFCs, and that is what EC want for everybody: - truly, the role of FQA in discarding is real for me and minimized in public debate regarding this issue. I am glad to see that written in fair words. And this makes us read differently Commission wish to implement both an overall ITQs system AND an overall discard ban. Otherwise, they cannot promote ITQs in multi-specific fisheries.

I wrote a tribune in Le Marin, our professional newspaper month ago. - Problem of FQA is not new, and ITQs too. I think there is a huge gap between neo-liberal economy principles and reality. ITQs promoter think that they let rule the fishing activity through the market forces. But, it means they have to follow economical rules, and one major is fair competition and no underneath constraints. BUT, they are in fact 2 markets working with close links and under constraints: the quota market and the landed fish market. And underneath constraints are strong: constraints to fish, access to fisheries, KW and GTU management, even composition of catches in mixed fisheries and implementation or not of a ban on discards.
Last point is huge too : you can’t catch your most valuable fish if you don’t have also low valuable fish quota. And you may pay the highest prices for these low value fish quota, especially if you absolutely need them to catch the good price fish, and if they are scarce. - Impact of speculation is thus huge. They wrote : price of cod quota :up to £/kg 2.5. It is a quota given to a species, not to the size of fish. Prices of landed cod range between £/kg2 to 4, depending on size of fish. Now consider all the value taken from your catches, I have dock rumours which said fish quota leasing accounts now around 50% of the fish value or catching expenses…. And you have to take out fuel expenses, etc.
Without a ban discard, you have no choice: you have to high grade / discard. With a ban discard, and with no improve of selectivity, you are economically dead. 
(He goes on to raise some further questions following the logical conclusion of the current line of thinking)
Is this what Europe want ?Artificially increase the catching expenditures ? without an economical return for the fishing boats ? How do you want to self finance modernisation and day-to-day profitability? Windsail your fishing boat (he's having a go Yan! ed) and recruit low cost manpower ? We may find cheap Libyan and Egyptian manpower. I have nothing against foreign crew, but we also have employment to safeguard.