Thursday, 9 December 2021
Seafood Taskforce Final Report: Statements
I thank the Leas-Cheann Comhairle and colleagues. I apologise for the slight delay in starting.
I thank the House for this opportunity to update it on the outcome of the seafood task force process that I instigated in March this year in response to the unacceptable outcome for Ireland’s seafood sector of the EU-UK Trade and Cooperation Agreement, TCA. It is appropriate that I begin by recalling the details of the TCA as they pertain to our seafood sector. It was clear during the EU-UK Trade and Cooperation Agreement negotiations that fishing quotas were going to be a particularly difficult issue and it was one of the principal reasons for the protracted negotiations on the TCA. A no-deal Brexit scenario would have seen all EU vessels barred from UK waters and also possibly displaced into Ireland's fishing zone. That was the doomsday scenario. The Irish fishing fleet catches about one third of its catch in the UK waters and if access to UK waters was denied in a no-deal scenario, it risked losing access to that catch and in addition other EU vessels operating in UK waters would be displaced into our waters.
When the Taoiseach and I met the fishing industry this time last year it identified a no-deal Brexit as the worst possible outcome for the Irish fishing industry. The agreement reached was less severe than that, and less severe than it would have been had the Barnier task force agreed to the UK negotiating demands. Nevertheless, the trade and co-operation agreement was still a very painful outcome for Ireland. The agreement reached provided that, as the price for continued access by EU vessels to UK waters, there would be a transfer of quotas across a range of fish stocks from EU member states to the UK.
In January of this year, I published an analysis of the quota transfers for Ireland across the different stocks and the implications. The quota transfers are to be spread out until 2026. The aggregate final quota transfer by Ireland to the UK is valued at a €43 million loss to Ireland’s fishing sector by 2026, amounting to a 15% reduction compared to the overall value of Ireland’s 2020 quotas. The upfront loss for 2021 is very sizeable at around 60% of the total, or a loss of €26 million at the quayside.
My Department’s analysis also showed that because of the stocks concerned, Ireland is contributing a disproportionate share of its quotas, compared to almost all other member states and this is clearly inequitable burden sharing. Throughout 2021, I have consistently made it very clear to the Commission and other member states that Ireland considers that the transfer to the UK involves a very high share of some of our most important stocks. I pointed out that within the Common Fisheries Policy, CFP, Ireland contributes by providing rich fishing grounds for EU member states and our exclusive economic zone provides spawning and nursery grounds on many of the core stocks which are shared with the UK and on which the trade and co-operation agreement quota package and the Common Fisheries Policy depend. I also strongly expressed my disappointment that the principle of burden sharing within the EU member states has not been adequately respected. I made clear that the inequitable relative contribution of quota share by Ireland has contributed to a strong sense of grievance within our fishing industry and indeed more broadly. I have raised the matter of inequitable burden sharing at EU level and in bilateral exchanges with the Commissioner and other EU member states at each and every suitable opportunity that has arisen and I will continue to do so.
During his visit to Ireland at the end of September, Commissioner Sinkevičius met with industry representatives in Killybegs and heard directly from them that Ireland has paid too high a share of quota under the trade and cooperation agreement. I followed up with a bilateral meeting with the Commissioner on all the issues arising. The Taoiseach and I met the Commissioner to further emphasise, from a Government perspective, that addressing burden sharing is a priority for Ireland and the Taoiseach has pursued the matter with the Commission President.
I have made clear that this important element of the Common Fisheries Policy must be included by the Commission as part of the full CFP review and form part of the formal review and the Commission report to the European Council and European Parliament on the functioning of the CFP. Last week, the Taoiseach, having previously met the President of the European Commission on the burden sharing issue, again wrote to Ursula von der Leyen on the issue of the inequitable burden on Ireland in terms of quota transfer under the TCA and to reiterate the Government’s call to find practical ways within the EU to address this issue.
I, as Minister, have continually pushed strongly that a solution must be found, and I intend to continue to keep the focus on this situation and to use any opportunity available to seek constructive solutions that would help to alleviate this unacceptable position. Together with these initiatives on addressing burden sharing, I was determined that our fisheries sector and the coastal communities that depend on fishing should be appropriately assisted with the impacts of the trade and cooperation agreement.
In March of this year, I established a seafood task force whose terms of reference were to examine the impacts of the TCA on our fisheries sector and coastal communities and to identify initiatives that could be taken to provide supports for development and restructuring, so as to ensure a profitable and sustainable fishing fleet, and to identify opportunities for jobs and economic activity in coastal communities dependent on fishing. I asked the task force to consider and recommend constructive actions that would help to alleviate the inequitable relative contribution of quota share by Ireland in the agreement. I asked the task force to consider how all available funding streams could be used to address, to the extent possible, the initiatives identified and the State agencies to support those initiatives.
An important context for the work of the task force was an EU Brexit Adjustment Reserve, BAR, fund that was being negotiated at EU level at the time I established the task force. The BAR regulation was enacted on 6 October 2021, with Ireland allocated by far the largest share of funds at almost €1.2 billion in current prices, recognising that Ireland is the member state most impacted by the departure of the UK and by the Brexit co-operation agreement outcome. Fisheries and coastal communities were an important element of the negotiations on the member state BAR allocations, with fishing in UK waters and maritime border regions with the UK accounting for €184 million of Ireland’s BAR allocation. The purpose of the BAR is to provide EU supports to counter the adverse economic, social, territorial and, where appropriate, environmental consequences of the withdrawal of the United Kingdom from the European Union in those member states most adversely affected by the withdrawal, and to mitigate the related negative impact on the economic, social and territorial cohesion.
The BAR, understandably, has a particular focus on regions, local communities and sectors most affected by Brexit. Importantly, the BAR is 100% EU funded and the Commission will be providing pre-financing this year and in 2022 and 2023, making the BAR an invaluable tool for Ireland and other member states to use to counter the impacts of Brexit and the trade and cooperation agreement. The BAR will see Ireland implement Brexit mitigation measures this year and in 2023 across the economic sectors most impacted by Brexit. The eligibility period for the BAR ends in 2023. Formal BAR funding applications to the Commission will follow by 2024, which will make the pre-financing already provided definitive.
Another important context for the work of the task force was the new European Maritime, Fisheries and Aquaculture Fund, EMFAF, which again was being negotiated at EU level when I established the task force. The EMFAF regulation has since been enacted on 7 July of this year and Ireland is allocated €142 million in EU funds under the EMFAF, with the Government to provide co-funding for this level of EU investment.
Unlike the BAR, the EMFAF is solely focused on member states' seafood sectors and coastal communities. My Department is preparing a new seafood development programme under the EMFAF and I expect it to be adopted next year.
In establishing the task force, I strongly believed that a once-in-a-generation event such as the trade and co-operation agreement required a collective response involving the seafood businesses and coastal communities most affected by the TCA and with the intimate knowledge of the sector to know what initiatives are best able to address the impacts of the agreement. The task force comprised ten representatives of the fishing sector, including the four main fishing co-operatives in Castletowbere, Greencastle, Ros a' Mhíl and Clogherhead, the Irish South and East Fish Producers Organisation, the Irish South and West Fish Producers Organisation, the Killybegs Fishermen's Organisation, the Irish Islands Marine Resource Organisation, the Irish Fish Processors and Exporters Association and the National Inshore Fisheries Forum. It also included representatives from the aquaculture sector, coastal communities and a range of State bodies with an important role to play in addressing the impacts of the TCA, including Enterprise Ireland, Údarás na Gaeltachta, Bord Bia, Bord Iascaigh Mhara and coastal local authorities. The task force was led by Aidan Cotter, the former CEO of Bord Bia, who was assisted by a steering group of Margaret Daly, deputy CEO of seafood processor Errigal Bay Limited, and Mícheal Ó Cinnéide, former director of the Marine Institute and member of the aquaculture licensing appeals board.
The task force undertook its work with great enthusiasm and professionalism. It met on 14 occasions in a seven-month period and I know there was much work undertaken outside of those meetings as well. To assist its work, the task force undertook a public consultation and received 27 submissions. Task force members also made multiple submissions to inform its deliberations. These submissions, much expert analysis by Bord Iascaigh Mhara, BIM, and the expertise of the task force members helped to inform a full and detailed examination of the TCA impacts by the task force and a healthy debate within the task force on its recommendations.
I received the final report of the seafood task force, entitled Navigating Change, on 11 October. The report recommended 16 support schemes at a total estimated cost of €423 million. The task force acknowledged in its report that its recommendations would give rise to substantial public expenditure which will need careful consideration in order to ensure that the best possible value for money is obtained when public money is being spent or invested, as required under the Government’s public expenditure code. The task force report also acknowledged that the assessment of the range of measures recommended, the development of detailed schemes, and submission for state aid approval can only be approached on a phased basis, and accordingly will be progressed on a prioritised basis. The task force requested that a full assessment of the proposed support schemes by the relevant Departments and State agencies, in the context of the necessary Government criteria for public expenditure, be carried out with a view to implementing the schemes, subject to any necessary modifications.
It proposed in its report that in the period from 2021 to 2023, the measures necessary to implement the task force recommendations should, to the greatest extent possible, be funded from Ireland’s allocation under the Brexit adjustment reserve. Of the task force recommended support schemes, in the region of €300 million could potentially be eligible for funding under the BAR, subject to other funding priorities for the BAR and to Government assessment of the recommended schemes and their being accepted. The balance of the recommended schemes would fall to be funded over a longer period under my Department’s seafood development programme, should they be accepted by the Government.
I will now outline some of the recommended support schemes. Without doubt, the most significant scheme recommended by the task force is the implementation of a permanent voluntary decommissioning scheme for the whitefish fleet at a cost of €66 million, recommended to be funded under the BAR. The TCA quota cuts have had wide-ranging impacts on our seafood sector and coastal communities depending on the seafood sector, but most of all they call into question the economic viability of the whitefish fleet as it stands. With lower quotas available post Brexit which will continue to decline on a phased basis up to 2026, our entire whitefish fleet will suffer diminishing economic returns. This is not sustainable economically and risks being a catalyst for breaches of fishing regulations.
To inform the task force on the scale of fleet restructuring required, a profitability analysis was carried out by Bord Iascaigh Mhara. This analysis quantified the number of vessels required to be removed from the fleet in order to return the various fleet segments to the level of profitability prior to the TCA. This analysis estimated that some 60 whitefish polyvalent and beam trawl vessels of a gross tonnage of 8,000 tonnes would need to be removed so as to return these fleet segments to profitability. This equates to 26% of the whitefish fleet by number. Removing this amount of capacity would potentially free up approximately €38 million of quota for the benefit of vessels remaining in the fleet, thereby securing their future viability. The task force recommended a decommissioning scheme of this scale.
It is clear that this is a severe blow to the whitefish fleet and the coastal communities dependent on fishing. However, I note that the task force was unanimous in recommending this initiative and the task force included all of the main representatives of the fishing fleet. The recommendation, of course, reflects the post-Brexit reality of the TCA, which is that there are fewer fish to be shared among the whitefish fleet. The task force concluded that it is absolutely necessary to voluntarily shrink the fleet to this extent so that the remaining vessels can survive in business.
Permanently leaving the fleet and the livelihood many families have known for generations is a major decision for any vessel owner. The task force recommended that the scheme be voluntary and, of course, that is appropriate. It estimated the necessary compensation for those leaving the fleet at up to €12,000 per gross tonne. This amount would cover all costs, including vessel owner compensation, crew payments and costs for scrapping of vessels. I am mindful that crew members of fishing vessels being decommissioned must be compensated as a mandatory condition of the payment to the vessel owner and I will be ensuring that this happens. As an important complementary measure to the decommissioning scheme, the task force recommended that scheme payments be subject to similar tax treatment as the decommissioning scheme implemented in 2008. The task force believed this was essential to incentivise sufficient vessel owners to apply under the scheme if it is to reach its targets to take out sufficient capacity to restore incomes and fleet balance to the pre-TCA situation.
In an important recommendation to accompany the recommended decommissioning scheme, the task force report recommended that a scheme be implemented to essentially decommission off-register fleet capacity. Off-register or latent capacity is fishing capacity that is licensed for use but not currently in operation for reasons such as vessels being lost at sea, damaged, in need of repair or upgrade, or up for sale. My Department’s licensing authority for sea fishing boats maintains a register of capacity that is currently active or on-register, as well as capacity that is inactive or off-register. Off-register capacity is very relevant to the proposed voluntary whitefish decommissioning scheme because it is a possible route back into the fleet for vessel owners whose boat has been decommissioned. While off-register capacity is latent and does not use up quotas, should a former vessel owner purchase off-register capacity and use it to introduce a new vessel to the fleet, this would take up quota and negate the benefits of the voluntary decommissioning scheme.
This issue of off-register capacity was identified as a serious risk to the success of a decommissioning scheme in a cost benefit analysis conducted on behalf of BIM by Grant Thornton in 2016. Grant Thornton found there was a level of re-entry to the fleet following previous decommissioning schemes. Of 73 vessels decommissioned, 19 new vessels were reintroduced. The Grant Thornton report recommended that a decommissioning scheme should not be implemented unless the issue of off-register capacity is addressed in tandem.
At the time of the task force report, there were 15,466 gross tonnes of off-register capacity, which is almost twice the level of capacity the task force recommended be decommissioned. This is clearly a significant risk to the success of the decommissioning proposal. The task force recommended that we implement a once-off scheme to buy out off-register capacity, at a set price to be determined. The process of preparing the details of a decommissioning scheme is time consuming, including conducting a new cost-benefit analysis, as required under the public spending code for a scheme of this size, agreeing within Government that the proposed scheme should proceed, legislating for tax treatment of scheme payments and securing state aid clearance.
Should the voluntary decommissioning scheme proceed, vessel owners will need some time to reflect on their own situation and the payments offered under the scheme and there will be time taken for the application and approval process. Taken together, these matters mean it could be summer 2022 before the benefits of the scheme would be felt by other vessel owners in terms of available quota being shared across a smaller cohort of vessels. For these reasons, the task force recommended that a second round of voluntary temporary fleet tie-up scheme supports be implemented in 2022 for the whitefish fleet. As Deputies know, a voluntary temporary tie-up scheme is already being implemented over the October to December period, at a cost of €12 million, as recommended to me by the task force in its June 2021 interim report. That scheme is assisting the whitefish fleet with the reduced incomes in 2021 arising from the TCA quota reductions this year. A similar, second round of tie-ups in 2022 is proposed to support the income of the fleet, pending the full benefits of a decommissioning scheme being felt across the board. That proposal is costed by the task force at €12 million in 2022 and is recommended to be funded under the BAR.
I turn now to the wider impacts of the TCA quota cuts, which, as I said, undermine the viability of our fishing fleet. I have outlined a proposal from the task force to take out 60 vessels from the whitefish fleet. Should such a scheme proceed and achieve its targets, we could see perhaps 400 crew members lose their jobs. A separate impact of the TCA quota cuts is the significant loss of raw material supply to our vibrant seafood processing sector. Fewer fish being landed by Irish vessels means less raw material supply for our processors to be transformed into the added-value seafood products we see on our supermarket shelves, which have underpinned the strong growth in seafood exports in recent years. Replacing that raw material is not easy but there are possibilities. There are logistical difficulties and cost issues in seeking to import supply from the UK, particularly when other member states impacted by the TCA are seeking to do the same.
There is, of course, an abundance of fish caught off our coasts by other member state vessels, which generally return to their home ports to land their catch. Between 2015 and 2019, the Irish fishing fleet caught, on average, 38% of the value and 35% of the volume of all fish caught in our 200 mile zone. Clearly, there is significant potential, particularly with rising oil costs, to attract an increasing amount of the fish caught by other fleets into Ireland to drive the development of our processing and other marine support industries. We have seen some great successes in recent years, particularly in Castletownbere and Killybegs, in attracting these foreign vessels to land their catch in Ireland. By further developing our processing and support industries, we can create a more attractive market proposition to encourage more EU, UK and Norwegian vessels to sell their catch to Irish processors. The loss of raw material supply to our processors, if not addressed through positive interventions, as recommended by the task force, risks these processors losing hard-won markets and reducing their profitability, and may lead to loss of employment in coastal communities already impacted by the jobs lost from decommissioned vessels.
A further knock-on effect of the necessary voluntary decommissioning of up to 60 fishing vessels is the impact on ancillary and support service industries in coastal communities. Fewer vessels means less boat maintenance work, net-making and provisioning. This outcome risks further loss of employment in coastal communities. The widely representative task force I put together carefully considered all these interrelated impacts and recommended an integrated response via investment in marine infrastructure, seafood processing and aquaculture, supported by community-led local development.
In regard to the seafood processing sector, which comprises approximately 160 firms, the task force recommended facilitating substantial investment in seafood processing enterprises to support greater utilisation of raw material, improved efficiency, development of new offerings and demonstration of quality and sustainability, as well as building capability and innovation through people and processes. This investment will protect and enhance their viability and position them to attract additional raw material. While my Department's European Maritime, Fisheries and Aquaculture Fund, EMFAF, programme has been providing similar supports over the past seven years, the scheme recommended by the task force would provide temporarily increased graduated grant aid rates of between 30% and 50% during the period of BAR funding for 2022 to 2023, with the higher rates targeted at secondary and tertiary processing to provide an immediate stimulus to overcome some of the constraints arising from Brexit.
The task force recommended that supports of €90 million be provided, predominantly in 2022 and 2023, through the BAR and subsequently through the EMFAF, over the period up to 2027. The task force was of the view that this level of funding, when combined with industry funding, would give the sector a unique opportunity to implement the transformational change required in response to the TCA. Transformational investment on this scale would foster increased employment in the processing sector, mitigating the loss of employment arising from the TCA quota cuts, and could position our processing sector as an increasingly attractive market for foreign vessels operating off our coasts.
While there are direct impacts of Brexit and the TCA on the aquaculture sector, similar to many other areas of our economy, the recommendations of the task force for investment in the sector are primarily based on its capacity as an alternative native source of raw material supply to our processors and an alternative source of employment in coastal communities. The sector shares many elements of the skill set possessed by fishing crew and presents an ideal career opportunity for crew of former fishing vessels, benefitting both the aquaculture sector and former fishermen. Ideally, it will keep former fishermen in their coastal communities. The task force recommended that both the BAR and EMFAF funding sources should be utilised, as appropriate, to develop Irish aquaculture to mitigate against the negative impacts of Brexit that have been most pronounced in other sectors of the Irish seafood sector. It recommended that graduated grant aid rates should apply in order that the categories of activity that are most impactful would be incentivised, with total aid of €60 million being made available for investment over the period up to 2027. This would stimulate the modernisation of aquaculture sites in line with international best practice, increase resource efficiency and reduce environmental impact, advance understanding of market opportunities and innovation capability, and develop technical, marketing and management capability.
The task force report noted that public marine infrastructure, including piers, slipways, pontoons, etc., is a critical enabler to maximising the use of, and benefits to be gained from, our rich maritime resources. High-quality publicly owned marine infrastructure facilitates the development of myriad uses and enables commercial fishing, aquaculture, sea angling and other marine leisure and recreational activities to develop and flourish. The development of this range of water-based activities drives related onshore activities and helps to diversify and build resilience in our coastal communities. The task force recognised that modern public marine infrastructure is a central and essential element in creating an integrated response to the impact of the TCA on coastal communities. Accessible and safe public marine infrastructure would enable community-led local development through our fisheries local action groups, FLAGs, to support the development of a wide range of marine activities and help to diversify and build resilience.
The task force proposed that the earlier years of a support scheme should focus on small-scale, shovel-ready local authority projects, which would be funded under the BAR and would give immediate construction stimulus to the coastal communities impacted by the TCA. The resulting infrastructure development would provide a more long-term platform for the development of new and diversified economic activity in coastal communities. The provision of this enhanced, publicly owned marine infrastructure would be a key enabler in allowing integrated application at a local level of the task force's other recommended initiatives for the seafood sector, namely, locally led development and marine tourism initiatives. The task force is recommending an €80 million, five-year initiative for the development of publicly owned marine infrastructure.
Community-led local development, CLLD, empowers communities to support initiatives to create employment and economic activity to sustain livelihoods in an area-based approach and, accordingly, has a key role to play in addressing the impact of the TCA on Ireland’s coastal communities. For the past nine years, my Department has been implementing to great success a CLLD approach through the seven fisheries local action groups, FLAGs, through my Department’s European maritime and fisheries fund programme. Providing seed funding for new businesses, funding to diversify or expand and enabling capacity development that will allow people to use their skills for new opportunities in the marine sector is paramount to keeping these communities viable in the long term. The task force recommends that significant funding be made available through the FLAGs to support coastal communities impacted by Brexit to diversify their economies into the wider marine sector, where local skill sets are particularly suited.