Improving the economic situation in the fishing industry

This Communication describes the sources of economic difficulties facing the fishing industry at the moment. To meet these challenges, the Communication suggests a number of different measures. In the short term, it explains how the Commission will apply the "Guidelines on State aid for rescuing and restructuring firms in difficulty" to the fishing sector. In the long term, it recommends improving fisheries management, better compliance with fisheries management rules, more efficient operation of the market and making optimum use of research.

ACT

Communication from the Commission to the Council and the European Parliament of 9March 2006 on improving the economic situation in the fishing industry [COM(2006) 103 final - Not published in the Official Journal].

SUMMARY

In the last few years, the economic situation of many fishing businesses has deteriorated as a result of:

Stagnating or even falling market prices, partly owing to an increase in imports and the development of aquaculture, but primarily because of the concentration of sales in big distribution chains and greater competition between fish and other food products.

Lower fishing yields, because the reduction in fishing capacity has not kept pace with the reduction in fishing quotas for the main demersal and benthic species since the mid 1990s. Reducing vessel tonnage and engine power has failed to stabilise the situation, as this reduction has been offset by the steady increase in the efficiency of fishing vessels, resulting in widespread overfishing. According to an assessment carried out by the International Council for the Exploration of the Sea (ICES), for most of the stocks assessed, overfishing is running at two to five times the level that would generate the maximum sustainable yield. *

An increase in fuel prices between 2003 and 2005, which particularly affected vessels with towed gear. Fuel costs can account for as much as 36 % of the value of landings and can mean operating at a loss. Consequently, crew members who are paid a share of the income generated by the catch have also suffered a loss of income.

At the moment, businesses targeting demersal species and using towed gear are hardest hit.

In the short term, Member States could help fishing businesses facing difficulties by granting aid in accordance with the Guidelines on State aid for rescuing and restructuring firms in difficulty.

Rescue aid

Rescue aid is intended solely to keep an ailing business financially afloat for long enough to give it time to look into the possibility of restructuring. It must last no longer than six months, and takes the form of a loan or guarantee, which may be repaid using the support subsequently received in the form of restructuring aid.

Restructuring aid

The Guidelines for the examination of State aid to fisheries and aquaculture allow State aid for modifying, modernising and equipping fishing vessels, subject to the same conditions that apply to Community aid granted under the FIFG.

Other types of aid for modernising and equipping fishing vessels may be allowed in accordance with the Community Guidelines on State aid to firms in difficulty. However, Member States would have to obtain the Commission's approval for this. Aid should be limited to the minimum necessary, and restructuring must be based on realistic economic assumptions, which form the starting point for a restructuring plan. Furthermore, profitability must be ensured by reducing costs without increasing current overall fishing effort or capacity. The Commission will assess aid for the following investments in fishing vessels on the basis of the extent to which they contribute towards re-establishing the viability of the business concerned:

• Changing fishing gear for the first time, resulting in a switch to a less fuel-intensive gear;
• Purchasing equipment to improve fuel efficiency;
• Replacing the engine with a new engine, which, depending on the size of the vessel and the fishing method, must be either of equal power or less powerful. For trawlers of more than 24 m in overall length, this must be accompanied by a switch to a new, less fuel-intensive fishing method. The Commission will verify the power of new engines of more than 130 kW on the basis of the "NOx certificate". Any reduction in engine power funded by public aid will be deducted from the national fleet capacity ceilings. If a business operates several vessels, the Commission may agree to apply the reduction in engine power to that business as a whole. Similarly, where national schemes allow for the implementation of a restructuring plan put forward by a group of small and medium-sized enterprises (SMEs), the Commission may decide to apply the reduction to the group as a whole.

During the time needed to implement these investments on board fishing vessels, State aid for temporary cessation of activities is also allowed. Direct aid to subsidise fuel costs would constitute operating aid, which is incompatible with the Treaty. The fishing sector could, however, set up a contingency fund, but for this fund to be approved by the Commission, guarantees would have to be provided that all public aid would be reimbursed.

Member States should notify the Commission of planned rescue and restructuring aid schemes within two years of the publication of the Communication. The Commission will examine them as soon as possible on the basis of the relevant provisions of the applicable Structural Funds. Within two years of the Commission's approval of a scheme, Member States should issue their administrative decisions.

In the long term, further action is needed to ensure the recovery of fish stocks and build a positive future for the fishing industry.

Improving fisheries management

Fisheries management could be further improved by:

• Moving towards maximum sustainable yields (MSY). MSYs were adopted by the Johannesburg World Summit on Sustainable Development as a way of achieving stable management of fish stocks by 2015. Furthermore, they would bring economic benefits in terms of predictability of supply and revenue per unit of effort. Since the 2002 reform of the common fisheries policy (CFP), one of its aims has been the recovery of threatened stocks, which is a prerequisite for managing all of the major fisheries at MSY levels (see the Communication on the implementation of MSYs).
• Ensuring economic management of fisheries. The Commission will publish a Communication on the bearing that the methods used by Member States to allocate fishing rights have on the economic situation of the fleet.
• Improving governance of the CFP. The 2002 reform of the CFP provided for setting up Regional Advisory Councils (RACs) in order to achieve better compliance with the rules by increasing stakeholders' involvement in fisheries management. So far, three RACs have been set up and a fourth is in the process of being set up. In 2007, the Commission will look at how to improve the functioning of the RACs.
• Matching fishing effort to available resources. Overcapacity contributes to overfishing and reduces profitability, which is why it is necessary to decommission some vessels. A number of Member States have already set up decommissioning schemes. Both national and Community aid may be granted for decommissioning fishing vessels or reassigning them to other activities. Member States and the Community should also use the European Fisheries Fund (EFF) for this purpose.

Better compliance with fisheries management rules

In order to ensure fair competition, conservation of resources and the quality of the scientific advice on which the CFP is based, it is important that all fishermen comply with the rules. Steps should be taken to:

• Strengthen controls. The new Fisheries Control Agency will verify that Member States are implementing fishing Regulations across the European Union (EU).
• Step up the fight against illegal, unreported and unregulated (IUU) fishing, which some operators have adopted as a commercial strategy. The Commission will ensure that its action plan is implemented in order to deprive these operators of their gains from IUU fishing.

Improving the operation of the market

In order to give fishermen more added value, the Commission will look at new tools to improve the marketing of fish and fish products. It will also ask the Advisory Committee for Fisheries and Aquaculture to draw up a code of conduct for trade within the EU. Eco-labelling schemes could also promote sustainable fishing. The Commission's recent Communication on this subject should encourage fruitful debate. Member States should use the EFF to improve the quality, added value and marketing of fish products.

Research into sustainable fishing

The Commission will ensure that the annual programmes adopted to implement the Seventh Framework Programme support:

• Optimising, validating and demonstrating new concepts and new technologies which will enable energy savings to be made.
• Designing more fuel-efficient fishing gear.
• Generating renewable energy.
• Developing and demonstrating new types of biofuels.

Funding

The EFF is available to Member States within the framework of their rescue and restructuring schemes, as well as to help finance fleet adjustment measures and support the necessary social changes in the affected fishing communities. Member States should distribute the financial resources among the different EFF funding priorities, while ensuring that the necessary funds are allocated to fleet adjustment measures in view of the gravity of the economic situation.

Background

Rising fuel prices, coupled with declining fish stocks, have reduced the profitability of the fleet. The Communication identifies the main factors contributing to the economic crisis in the sector, and suggests both short-term and long-term responses to improve the economic situation for fishing businesses by promoting measures designed to restore the balance between fishing capacity and fishing opportunities.

RELATED ACTS

Communication from the Commission to the Council and the European Parliament of 4 July 2006 - Implementing sustainability in EU fisheries through maximum sustainable yield [COM(2006) 360 final - not published in the Official Journal].

Last updated: 20.06.2007