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2 Analysis

2.1 General description of the sector³

2.1.1 Overview

The UK fisheries industry comprises three sectors: catching, aquaculture and processing, and makes a contribution to both national and regional economies.

The table below shows the contribution made by the fisheries industry to the UK economy. This shows the proportion of the Gross Value Added ( GVA) for each of the three sectors in £m, and as a percentage of the total GVA.

Total Gross Value Added - UK level - £ million (%)
2006 figures ⁴

The figures show that the fisheries industry makes a relatively small contribution to GVA. Although the direct contribution of the fisheries industry to the economy is relatively small, it contributes to other industries. For example, the catching sector supports boatbuilding and repair, marine equipment suppliers and port and harbour facilities. In some areas, the contribution made by commercial fishing and aquaculture supports other commercial and recreational activities (including tourism) and has wider beneficial social impacts especially in remoter areas in maintaining local services and communities.

The table below shows the total employment in the fisheries industry. It should be noted that these figures exclude those that are self-employed and so excludes a significant element of employment in the fish catching sector. The Marine and Fisheries Agency estimates that total employment in the fish catching sector is 13,000.

Total employment average during 2006 - UK level - thousands ⁶

The level of employment is relatively low but fish farming has remained stable. Although the fisheries industry is not a large employer at the UK level, it is a key source of employment in many rural communities. For example, although the fisheries industry accounts for 0.7% of the workforce in Scotland, there are some areas where this rises to over 10% of direct employment.

The table below shows UK trade in fish and fish products.

UK trade in fish and fish products as part of UK trade ⁸ - £mTrade in food, beverages and tobacco

Imports of fish and fish products account for a large proportion (18%) of imports of food, beverages and tobacco.

The remainder of this section describes each of the three sectors of the fisheries industry.

2.1.2 Catching

The UK fishing fleet is diverse, reflecting the wide range of fishing opportunities. The UK fishes over 100 EU quota stocks as well as a wide range of non-quota species.

In 2006, the UK catching sector comprised 6,484 fishing vessels. Some 4,000 of these were vessels of 10 metres and under in length which account for nearly half of all UK employment in the catching sector. The average age of UK vessels is nearly 24 years.

In 2006, 614,000 tonnes of fish were landed.

The key statistics of the UK catching sector are shown in the table below.

The UK catching sector (2007 figures)

2.1.3 Aquaculture

The relative importance of the aquaculture sector varies around the UK. For example, nearly all of the UK farmed salmon is produced in Scotland and the vast majority of farmed mussels are produced in Wales.

There are 431 fish and shellfish farming businesses in the UK, directly employing some 3,000 people. The main finfish species farmed are salmon (132,000 tonnes produced in 2006) and rainbow trout (13,000 tonnes). There is limited production of other species, such as carp, brown trout, turbot, halibut, cod and Arctic char. There are also emerging species such as tilapia, barramundi, bass and bream.

Farmed shellfish production was around 25,600 tonnes in 2006. Mussels are the major species produced, with oysters and clams also farmed. Scallop farming has been successful for many years and trials on scallop hatchery work have also proved to be successful.

In 2006, public bodies ⁹ invested around £7.1m p.a. in aquaculture research, particularly on fish health. These bodies and the aquaculture sector jointly sponsor research to promote the sustainable development of the aquaculture sector, the maintenance of high fish health status of farmed and wild fish stocks, and the evaluation of alternative species for cultivation.

The key statistics of the UK aquaculture sector are shown in the table below.

The UK aquaculture sector

2.1.4 Processing

The UK has a substantial onshore processing sector consisting of 388 businesses that employ some 17,000 people with a turnover of £2,247m. A high proportion of those employed are skilled and unskilled migrant workers primarily from Eastern Europe and mostly female. Processors are supplied by both the catching and aquaculture industries. The UK still has a large number of small to medium sized processors, although consolidation has taken place in recent years and is likely to continue as smaller processors face cost and supply-chain pressures.

The key statistics of the UK processing sector are shown in the table below.

The UK processing sector

2.1.5 Convergence and non-Convergence areas

As described in Chapter 1, the areas in the UK which qualify for Convergence funding are Cornwall and the Isles of Scilly, West Wales and the Valleys, and the Highlands and Islands of Scotland (phasing out region).

In Cornwall, increasing the area's wealth is based on providing assistance in regenerating the economy so that prosperity is increased, communities are made more sustainable and the environment is protected and enhanced. In West Wales and the Valleys the focus of the economic development strategy is to increase the number of jobs and raise skill levels. In the Highlands and Islands, progress has been made to the extent that it is not a full Convergence area and is a 'phasing out region'. However, the problems of remoteness and low population density still have to be addressed. The key aims are therefore to increase incomes in the region relative to the EU average, reduce economic and social disparities, create and safeguard employment, ensure communities and individuals can make a full contribution to the development of the region, reduce problems caused by peripherally and insularity, and enhance the environmental quality of the region in terms of sustainability and biodiversity.

It is important to note that the distinction between Convergence and non-Convergence areas is in terms of the relative economic development of these areas; there is no systematic difference in the fisheries industries in these areas.

2.2 Main lessons learned from the previous programming period

At the start of the previous EU grant programme, the Financial Instrument for Fisheries Guidance ( FIFG), in the non-Objective 1 areas, uptake of grants in the area of processing and marketing were reasonable, but poor in other sectors. In contrast, uptake in objective 1 areas was higher, thought to reflect higher grant rates in those areas and the greater need for economic support.

The mid-term evaluation of the UK non-Objective 1 Programme, suggested that a major factor contributing to low uptake was a degree of economic difficulty and uncertainty in the industry. This arose due to factors such as the impact of decommissioning schemes, operational costs and the availability of quota. It was felt that under the circumstances, individual businesses would have difficulty in making the private investment necessary (e.g. 80% of a vessel modernisation) for projects.

The mid-term evaluation also expressed concern over the monitoring of performance. There was more focus on the approval and expenditure process at the expense of evaluation of project impacts and outturns. Much of this was due to under-resourcing by Administrations. That said, the Monitoring Committee adequately discharged its functions laid out in the relevant EC Regulation.

In response to the mid-term evaluation, Administrations made changes to their delivery programmes. In England, a revised streamlined funding scheme was introduced. The grant rate for vessel modernisations was increased from 20% to 40%. The upper ceiling for eligible costs was raised to £2m for improving port facilities and to £1m for processing facilities, with grant rates increased from 20% to 30% for the development of new markets, improvements to food safety and traceability and waste treatment, and to 40% for new processing of locally caught produce. New grants of up to 40% were introduced for aquaculture and mariculture projects up to a ceiling for eligible costs of £500,000. The impact of these changes was an increase in grants applications.

In England, facilitators were appointed to promote the FIFG scheme and to assist with grant applications, namely:

• to ensure that applications submitted were compliant with the principles governing the grant of funding under EFF regulations;
• to liaise with the appropriate experts in central, regional and local government, industry and environment related professional bodies to secure comment on how a project might fit with national, regional and local plans and priorities, collating relevant comments with an application;
• to ensure that an applicant was entitled to receive a grant and that projects were appropriate prior to submission to the appraisal panel;
• to help reduce the risk of de-commitment, i.e. returning unspent funds to the EU.

Their contribution was deemed a success and their role will continue under EFF.

In addition, application forms were improved and a three month tranche system for applications was introduced.

In Wales, the role of the existing Objective 1 co-ordinator was extended to cover non-Objective 1 areas. Application forms were improved and a three month tranche system for applications was introduced in England.

In Scotland, stakeholders were closely involved in delivery of the programme through the use of Fisheries Management Groups ( FMGs) and with regard to the Processing and Marketing Grant scheme, Project Assessment Committees ( PACs). In the case of FMGs there was one group for the Highlands and Islands and one for 'Lowland Scotland' with representatives from the fisheries sector, local authorities and the enterprise network. The FMGs and PACs have been invaluable in bringing stakeholder insights to the management of the FIFG programme. In response to the mid-term evaluation, grant rates in the Scottish lowland programme were also raised to 40%, in certain circumstances, to provide increased targeted support and encourage greater uptake. However, this should be seen in the context of the improving economic health of the fisheries industry. In addition, a rolling tranche system was also approved by the FMGs to allow faster award decisions for vessel modernisation projects seeking less than £10k in grant support.

The key outcomes of the FIFG programme are as follows, it should be noted that these are not final figures for the programme as projects are still ongoing:

• a significant contribution to stock conservation has been made by decommissioning schemes (380 vessels decommissioned removing 126,000Kw and 39,000 gross tonnage from the UK fishing fleet);
• the processing sector has been made more competitive with 154 processing and marketing companies assisted with €16.9m public spend;
• the fund has contributed to the preservation of fishing communities and safety with forty harbour projects relating to upgrading harbours and market facilities and storage, gear supplies, access to services (icing, fuel etc) at a cost of €2.8m;
• there have been twenty-five projects under Innovative Measures concerned with gear selectivity, product development and environmental standards with €1.3m of grant aid, and seventy-one projects of collective benefit to the industry for example on traceability, accreditation schemes, lobster stock conservation - these contribute to creating the basis for a more forward looking sector which takes full account of environmental effects;
• the fleet has been modernised with €1.2m spent on quality enhancements in eighty-four projects and eleven additional projects on promoting alternative fisheries.

In summary, the main lessons learned from the previous programming period are:

i) it is important to recognise, and make appropriate adjustments for the economic performance of the various fisheries sectors. The different measures under the FIFG schemes met with varying levels of success. For example the level of uptake of vessel modernisation was low while the grant rate was 20% but did improve after the rate was increased to 40% which meant a lower level of private investment was required and therefore more likely to be forthcoming. Had the sector been more buoyant, that adjustment might not have been necessary;
ii) the level of grant has to be such that the private investment, where required, is forthcoming; we have learnt that raising the grant rates can improve uptake. Also in the Objective 1 areas, such as Cornwall and the Scottish Highlands and Islands, where a higher rate of grant was already available, and demand for grant support remained consistently high;
iii) grant rates need to be set at appropriate levels to reflect need;
iv) performance monitoring needs to be adequately resourced; and
v) grant facilitators and direct stakeholder input provide a valuable role in achieving the strategic aims of the programme as well as enhancing the delivery of it by promoting grants and assisting with applications.

These lessons have been incorporated into the preparation of this Operational Programme. The intention is that increased grants rates will continue to help ensure sufficient uptake of grants. The facilitation arrangements will continue in England.

From the audit reports done on monitoring FIFG, we have learnt that the Article 10 checks required by the audit authority should have started earlier so that a backlog did not build up. There was an issue about having the necessary resources for the various controls needed. We accept this, the point of Article 10 checks is to pick up any systemic problems on the way and put them right, not wait to the end to find problems. Audits have highlighted that we need to be properly resourced for Article 4 checks and Paying Authority checks.

2.3 Context indicators and statistics

Section 2.1 above sets out an overview of the UK fisheries industry at the time of writing. This section aims to set the industry into context by examining trends over the last 10 years (subject to data availability). Data tables can be found in Annex A.

2.3.1 Overview

The UK fisheries industry makes a relatively small contribution to GVA and this contribution is decreasing. However, the contribution to GVA from fish farming has shown a significant increase (132%) over the period 2000 to 2006.

The total turnover of UK businesses in general has risen by 32% since 2000. Of this, the turnover of fish farming has seen a significant increase (105%), whilst the turnover of the fish catching sector has decreased by around 8% over the same period.

Employment in the fisheries industry has seen a fall of around 27% since 2000. Employment in the aquaculture sector has remained reasonably stable, but fishing and processing have seen significant decrease. The proportion of female employees has dropped slightly in all enterprises. There is limited data regarding the number of employees by size of enterprise and as such conclusions cannot be drawn about any trends.

Imports of fish and fish products have increased by 82% over the past ten years. This is against the trend of imports of food which have remained static in the same period. Exports of fish and fish products have grown at a similar rate to food in general.

2.3.2 Catching

Over the 10 year period 1997 to 2007, the number of UK fishing vessels has fallen by 20%, with greater reductions seen in the English and Scottish fleets as a result of regional decommissioning schemes. However, the tonnage of UK fishing vessels has decreased by only 3% in the same period, and indeed has increased marginally in both England and Northern Ireland.

There has been a corresponding 30% reduction in the number of fishermen employed over that period, at similar levels across the four UK administrations. The average age of UK vessels (over 10m) has increased by 18%. In summary, the historic trend is an aging fleet of fewer but larger vessels.

There has been a fall of 11% of the quantity of fish landed by UK vessels since 2002 but an increase of 19% in value. The reduction in the amount of fish landed is a result of the fall in the catch of demersal fish and pelagic fish. Overall landings of shellfish in the UK rose by 2% but decreased in both England and Wales.

2.3.3 Aquaculture

Over the 10 year period 1997 to 2007, the total number of aquaculture enterprises has risen by 7%. The total turnover of these businesses has increased by 105% over the same period.

Total employment has increased by 50%, and correspondingly total employment costs have risen by 96%.

2.3.4 Processing

Over the period 1997 to 2006, the total number of processing enterprises has decreased by 1.7%, but total turnover of these businesses has increased by 32% over the same period. Turnover has increased in all UK administrations, with the exception of Wales where a decrease in turnover of 71% was seen over the period 1997 to 2005.

Total employment has remained relatively stable but has seen a slight decline in 2006. However, total employment costs have risen by 22%.

2.3.5 Convergence and non-Convergence areas

The contribution to GVA of UK non-Convergence areas increased by 64% over the period 1997 to 2006. GVA in UK Convergence areas saw an increase of 48% over the same period. Of this, the greatest increase in contribution to GVA was seen in Cornwall and the Isles of Scilly (74%), with increases also seen in West Wales and the Valleys (40%) and the Scottish Highlands and Islands (60%).

GVA per head rose by 52% in UK non-Convergence areas and by 44% in UK Convergence areas. The greatest increases in GVA per capita can be seen in Cornwall and the Isles of Scilly (61%) and in the Scottish Highlands and Islands (59%).

2.4 Driving forces and developmental tendencies

This section assesses the future development of the fisheries industry, including the sectoral and regional dimension of the socio-economic development of the industry.

Overall, the UK, which mainly competes with developed countries such as Iceland, Denmark, Ireland, Spain and France for supply of wild fish and Norway, Denmark and Turkey for farmed, is seeing increasing demand for fish and fish products ¹⁰. Total UK consumer purchases of fish were estimated to be £2.2 billion in retail in 2003 and £2.6 billion in foodservice ¹¹.

2.4.1 Catching sector

The operation of the days at sea regime under the cod recovery programme, continues to exert a considerable influence on the activities of fishermen subject to the controls. There is a significant and increasing market for traded days, as cuts become more severe, with the transactions adding demonstrably to enterprise costs. Additionally, the value of licences for a significant proportion of the over 10 metre sector is directly linked to their ability to fish in the cod recovery zone, with those without this entitlement witnessing a substantial drop.

Reductions in the 2008 Total Allowable Catches ( TACs) for a small number of key stocks, notably North Sea sole and whiting and English Channel cod, have had a disproportionate impact on the under 10 metre fleet who rely on them for a significant share of their income.

For some stocks however e.g. mackerel and North Sea haddock, TAC cuts triggered by the respective management plans have had less of an impact than might otherwise have been the case, because they have been accompanied by firming market prices. Incomes have thus been generally maintained. More significant negative impacts on profitability have been generated by other factors such as increasing fuel costs.

Over 60% of turnover in the UK catching sector comes from stocks that are currently sustainably exploited and demonstrating reasonable levels of profitability. Where stocks exploited are under threat and fishing activity therefore restricted (particularly the whitefish sector) the levels of profitability are generally lower.

The UK's sea fisheries catching sector is important to the socio-economic well-being of coastal communities right around the country. It spans a wide range of different types of operation from small, often part-time inshore vessels, to multi-million pound pelagic vessels ranging widely over offshore waters. The communities in which sea fishing is important are similarly diverse, facing a wide range of challenges and opportunities depending on their differing socio-economic positions. There are challenges with regard to skills/labour shortages, a lack of training, an ageing fleet and an ageing workforce, especially in the catching and processing sectors. Transport infrastructure and other services are further limiting the ability of the industry to maximise its potential and therefore its contribution to sustainable fishing communities.

Of increasing importance is the need to safeguard the quality of the marine environment. The way that fisheries are managed can make a positive contribution to this objective as ultimately the stocks depend on healthy marine ecosystems. However, a new element is that the market is increasingly demanding a product with a high environmental reputation and credentials.

Fishing businesses across all sectors have become increasingly focused on maximising the value of the catch rather than focusing on volume alone. This trend is partly driven by reduced quotas and restrictive management measures but also by the challenges facing all businesses - operating costs (including fuel prices) quality initiatives and market demands. There are opportunities to reduce the sector's environmental footprint at the same time as reducing operating costs through the use of modern fuel efficient engines, gear and fishing methods, equipment to protect catches and gear from wild predators and to protect sensitive biota and habitats. Value and profitability can be maximised for all involved by improving the efficiency and cohesion of the supply chain through greater collaboration between catchers and processors. The sector has an excellent opportunity to capitalise on rising consumer demand for fish and to further develop high value, niche and differentiated products and markets.

In addition to these aspirations, there is growing enthusiasm for Marine Stewardship Council ( MSC) accreditation in the industry which is an independent not for profit organisation that promotes responsible fishing practices. In England, under the previous programme there were several projects that received funding for MSC accreditation.

The introduction of the Registration of Buyers and Sellers of first sale fish has facilitated the tracing of almost all landings of fish with a consequent reduction in undeclared landings. This is expected to lead to improvements in the scientific understanding of the stocks, allowing prices to more accurately reflect supply and demand and pave the way for a more targeted, risk-based approach to fisheries enforcement. A key challenge is to reinforce this move to improved compliance by pressing on with moves to simplified and better regulation.

The catching sector as a whole is critical of the regulatory burdens placed on it and for this reason the UK is seeking to streamline them as far as is practicable. Other current initiatives in fisheries management include reform of the quota management arrangements; securing greater catching sector involvement in fisheries science; establishing a better compliance culture; and reducing discarding and by-catch. We expect this to lead to stability of catching opportunities and supply to the market in the long-term.

There are a number of communities in the UK for which fisheries activity provides important income. Many of these communities are rural, with few existing employment alternatives; contraction of fishing opportunity will have significant socio-economic implications for these communities. Similar effects may be felt in more urban areas.

In summary:

• the UK's sea fisheries catching sector is important to the socio-economic well-being of coastal communities right around the country, but contraction of fishing opportunity will have significant socio-economic implications for the rural fishing communities;
• there are challenges with regard to skills/labour shortages, lack of training, and an ageing fleet and workforce;
• value and profitability can be maximised by improving the efficiency and cohesion of the supply chain through greater collaboration between catchers and processors; and
• the sector has an excellent opportunity to capitalise on rising consumer demand for fish and to grow high value markets, and the growing enthusiasm for MSC accreditation in the industry.

2.4.2 Aquaculture

The aquaculture sector is for the most part economically stable, and technological advances are leading to improving productivity and improved welfare and environmental protection. There are strong brand identities in established products such as Scottish salmon and the sector is beginning to diversify into other species (for example cod and halibut) where there are significant new market led opportunities.

Since commercial aquaculture began in Scotland in the early 1970s, the industry which now includes a significant and growing organic sector has developed into an important employer. Techniques to farm alternative finfish species such as halibut and cod have now reached commercial fruition and there is an interest to diversify. Production, especially of cod, is rapidly expanding, e.g. production of 'other species' increased from 467 tonnes in 2005 to 1,047 tonnes in 2006.

Expansion of the shellfish farming sector continues. Diversification of species (both molluscan and crustacean) can have a minimal impact on the surrounding environment. However, this must not lead to escapes into the marine or freshwater environment (as required by Regulation ( EC) 708/2008). The shellfish sector has indicated that it is looking to increase production as market demand remains robust across the sectors. However, future expansion is dependant on the availability of suitable farming sites and obtaining the necessary consents.

It is important that aquaculture works in harmony with the environment. Best practice site management is therefore being pursued and developed with the industry and wild fish interests at the local level through such initiatives as the Scottish Tripartite Working Group ¹². The plenary group and its associated management group, Regional Development Officers and Area Management Groups, work to identify solutions for ensuring the maintenance of a healthy stock of wild fish whilst at the same time promoting a healthy aquaculture industry in Scotland.

In summary:

• there is scope for continued market-led growth; and
• there may be potential for further growth of new species aquaculture.

2.4.3 Processing

UK processors face cost and supply-chain pressures. There are significant opportunities for processors associated with the increase in demand for fish products. This is partly driven by growing consumer awareness of the health benefits of fish and an increasing range of species on offer. Growth, particularly in the chilled and pre-packed markets, is expected to continue. There are also opportunities for the development of niche markets and promotion of higher quality fish both nationally and worldwide, particularly sustainably sourced products.

The processing industry has undergone considerable change over the past decade, particularly with the introduction of EC and UK legislation on hygiene, health and safety along with the increased reliance on quality standards. Another significant driver of change is the growing influence of multiple retailers which has resulted in many processing companies requiring modernisation of their operations and investment to improve the standard of processing facilities and equipment.

In addition to the changes noted there will also be new opportunities over the period 2007-2013. The possibility exists to increase the provision of produce to the food service sector, both private and public. It is estimated that for every pound spent on food, 30% of this is on food service ¹⁰. Public sector guidelines on procurement and nutritional standards now provide greater opportunities to access the public sector market which is worth some £85m annually.

The importance of improving the efficiency of the supply chain has already been highlighted. Generally, this tends to be fragmented, with catchers, agents, sellers, processors and retailers failing to co-operate, and instead, duplicating investment in e.g. cold storage and transport. A focus on greater collaboration will support the further development of sustainable trading relationships. Along with any increased investment in the processing sector there is also the need to improve competitiveness to deal with the prospect of growing pressures in core markets from low-cost producing countries, technological advancement, and the continuing development and innovation by market leaders in value-added seafood products.

In summary:

• there are significant opportunities for processors associated with consumer demand for fish;
• there are opportunities for the development of niche markets and the promotion of higher quality and sustainably sourced fish;
• processing companies require modernisation of their operations and investment to improve the standard of processing facilities and equipment to facilitate delivery to multiple retailers;
• there is potential to further increase supply to the customer;
• there is a need to improve the efficiency of the supply chain with a focus on greater collaboration to support development of sustainable trading relationships; and
• there is a need to improve the competitiveness of the industry through new quality and value enhancement for fisheries and aquaculture products and access to improved market information.

2.5 SWOT Analysis

An overall assessment of the strengths, weaknesses, opportunities and threats ( SWOT analysis) of the sector was prepared for the UK National Strategic Plan. This section refines the SWOT analysis to highlight those issues that can be addressed through the EFF programme.

SWOT Analysis of the UK Fisheries Industry

Strengths

• Good diversity of available species with some stocks healthy and fished at sustainable levels
• Proximity to good quality fishing grounds in many regions leads to lower costs and fresher products
• Strong local fishing tradition and heritage resulting in a good name for seafood
• Fish is seen as a healthy food and benefits are well documented (e.g. omega-3 fish oils); increasing marketability and demand for fish products
• Fish are the fastest growing component of the protein food market with potential for further growth
• Some aquaculture markets are well established (salmon, trout, mussels, oysters)
• Good quality products recognised by the public and some brand loyalty including premium brands (e.g. Scottish salmon, Whitstable oysters, Conwy mussels)
• Organic aquaculture production standards are already established for some species (e.g. salmon, trout) and being developed for others (e.g. cod, oysters)
• High aquatic animal health status allows controls that help reduce the likelihood of introduction and spread of diseases
• Business support for the processing sector e.g. SFIA, regional bodies, leading to good customer service and a strong customer base
• Some processors are technically advanced with some high levels of investment in equipment

Weaknesses

• Environmental challenges, e.g. discards and by-catch, water quality and animal welfare issues
• Over capacity in some parts of the fleet leading to increased damage to the marine environment and reduction in long-term fishing opportunity
• Ageing fleet; many engines are relatively fuel inefficient and polluting
• Some areas lack skilled labour and the workforce is ageing; poor levels of profitability are leading to problems with recruitment and retention
• In some parts of the fishing fleet, fragmented representation, lack of cohesion and limited co-operation with authorities
• Some examples of poor working conditions and safety standards
• Poor business management skills in some areas
• Lack of trust and co-operation between processors
• Lack of supply chain coherence and too many middlemen - supply chain too long; not enough customer feedback
• Insufficient focus on good practice amongst catching sector in relation to quality and product handling
• Poor levels of traceability
• Processing capacity not matched to supply in some areas, e.g. a lack of processing capacity for pelagic species and overcapacity of whitefish processing
• Reliance of sector on wild-caught species for fish feed
• Dependence on wild-caught spat for culture of some species of shellfish (environmental impact; leaves the sector vulnerable to variation in spatfall)
• Disease control can be difficult in open systems; lack of licensed medicines
• Some media reports have portrayed a negative image of farmed fish
• Product quality standards could be better developed for the shellfish sector
• Lack of local processing
• Limited number of funders of research and development in comparison to other animal production industries

Opportunities

• Satisfying a increasing consumer demand for sustainably sourced seafood products
• Scope for innovation and diversification into new species, both caught and farmed
• Development of practices to increase catch value, e.g. best practice in catching and handling
• New geographic and product markets; regional brands and product development
• Market premium for quality initiatives
• Niche markets in the catering sector
• Local branding; local promotion of seafood (awareness of food miles)
• Improved incentives to encourage sustainable fishing practices and supply chain cohesion through strategic alliances and marine stewardship
• Availability of cleaner, more efficient vessel engines
• Assurance schemes of quality and of sustainable sourcing, improving standards of labelling, traceability and freezing
• Availability of high quality training
• Ability of stakeholders to influence policy and work more closely with scientists
• Scope for utilisation of by-products
• Improvements in packing and shelf-life technology
• New technology has the ability to significantly mitigate environmental impacts
• Potential for aquaculture in new areas (e.g. opportunities further offshore)
• Water quality may be improved through culture techniques (e.g. bivalve mollusc cultivation)

Threats

• Non-native introductions and associated impacts including competition and disease transmission
• Disease and parasites/availability of disease control - relevant to all farmed species
• Fleet size may fall below the critical mass that can sustain local infrastructure
• People leaving the catching sector to alternative employment
• Resource competition and conflict (e.g. with tourism)
• Inability to compete with imports to the UK
• Fluctuations in local raw material supply and quality
• Lack of market processing capacity for pelagic species; UK's leading share of home market is declining
• More efficient and cost-effective processing abroad
• Potential negative image of fish products, partly related to environmental damage, partly to inadequate labelling to identify source, capture method, etc
• Availability, sustainability and quality of fish meal, oil and other feed ingredients (considerable fishing pressure on the industrial fisheries)

2.6 The Environmental Situation and Results of the Strategic Environmental Assessment ( SEA)

This section provides an overview of the environmental situation in the UK and summarises the results of the environmental assessment conducted in compliance with the Strategic Environmental Assessment ( SEA) Directive ¹³. The initial SEA Environmental Report can be found at Annex B. Further work on the SEA analysis will be considered in conjunction with the Commission's comments, prior to adoption of the Operational Programme.

2.6.1 Description of the environmental situation

The seas of the United Kingdom extend to some 867,400 km ². Of this, about 161,200 km ² lies within territorial waters (including Rockall, but excluding the Crown Dependencies of the Isle of Man and the Channel Islands), while the remainder extends over the continental shelf and some areas of the adjacent continental slope.

In coastal districts, and in the southern North Sea, the seas are shallow, usually less than 50 m in depth, while in the northern North Sea, the Channel, south-west approaches, Irish Sea and inshore waters off the western coast of Scotland, the seas are rather deeper, shelving to some 200 m depth at the upper edge of the continental shelf. West of St Kilda, and offshore from Shetland, the seabed descends rapidly to the foot of the continental shelf at about 1,000 m. Beyond this, the sea floor is interrupted by a number of banks and seamounts. Further offshore still, a succession of deep-water banks and troughs descend to an extreme depth of over 3,000m, 200 miles west of Rockall ( CHM, 2002).

The UK coastline encompasses almost all types of temperate intertidal habitat, from hyper-saline and brackish lagoons, estuaries, coastal marsh and mudflats, shingle and sand dunes, sea cliffs to sandy and rocky shores with every degree of exposure and widely varying profile. Some sections of the coastline are unspoilt and contain internationally important examples of habitats and species. Other areas are the focus for intense human activity which can affect the natural environment. At present six percent of UK territorial waters are covered as a Special Area of Conservation under the Natura 2000 system.

The UK targets a wide range of demersal and pelagic fisheries. Many of these stocks are shared with other European nations and are managed accordingly. The stocks below the Safe Biological Limits ( SBL) that are of particular concern for the International Council for Exploration of the Seas ( ICES) are shown in the table below, which indicates the spawning stock biomass and recruitment of age 1 fish over the period 2002 - 2006.

Key UK fish stock status indicators (2002 - 2006) for species of concern to ICES

Note that (o) does not imply that there is no biomass or recruitment, but that the assessment was not accepted by ACFM.

During the 1990s, the percentage of fish stocks considered to be 'harvested sustainably' was no more than 20 per cent. By 2000 this was 10 per cent, but has increased to 35 per cent in 2005. Despite such increases, these trends show that around 70 to 75 per cent of fish stocks in seas around the UK have suffered reduced reproductive capacity and have been harvested unsustainably each year since 2001. Further information can be found in Section 3 of the Environmental Report.

A recent analysis of marine environmental trends around the UK's seas is documented in Charting Progress: An Integrated Assessment of the State of the UK Seas (Defra 2005). A summary of this analysis can be found in annex C of the Environmental Report.

The UK has significant obligations to meet in terms of nature and the environment in accordance with a range of EU Directives.

EC Shellfish Directive - There are currently 98 designated shellfish waters in England, 108 in Scotland, 26 in Wales and 9 in Northern Ireland, a total of 241 shellfish waters in the UK. Shellfish waters are formally designated under the EC Shellfish Waters Directive. Generally shellfish water quality has been improving and over the last five years an average of 93 per cent of shellfish waters reached the standards of the Shellfish Directive.

The UK is committed to maintaining a broad match between designated shellfish waters and shellfish harvesting areas. More designations may be made in the future, if necessary, to maintain the broad match between designated shellfish waters and shellfish harvesting areas.

The Directive will be repealed in 2013 by the EC Water Framework Directive. When this occurs, the Water Framework Directive must provide at least the same level of protection to shellfish waters.

Water Framework Directive - In the UK, much of the implementation work will be undertaken by competent authorities. To help deliver a consistent approach to implementation of the Directive, the Agencies responsible for the implementation of the Directive have established a UK Technical Advisory Group ( UKTAG) comprised of experts from the UK environment and conservation agencies.

We are working hard to ensure that development of the UK Marine Bill and implementation of the Water Framework Directive ( WFD) are consistent in approach. Plans outlined in the Marine Bill for the possible reform of the current licensing regime for example, could help deliver a number of WFD objectives within the Transitional and Coastal areas, and this will be discussed as details of changes to marine licensing regimes are developed over the coming months. It is possible that the proposed Marine Management Organisation ( MMO) will also have an important regulatory role to play in delivering WFDTRAC objectives in England in the future, this prospective role will be determined as the Marine Bill itself is developed.

Natura 2000 - There are a total 614 designated SACs, SCIs or c SACs in the United Kingdom (excluding Gibraltar), covering a total area of over 2,630,000 ha. There are currently 76 SACs with marine components in the UK.

The majority of existing SACs with marine components are coastal; a further phase of site selection is underway to select marine sites beyond coastal waters. There are seven possible SACs and one draft offshore site under consideration.

UK Biodiversity Action Plan ( BAP) - The UK list of Priority Species and Habitats was comprehensively revised in June 2007, and contains 1149 species and 69 habitats that have been listed as priorities for conservation action under the UKBAP. The process to refine priority actions will be achieved through consultation. Further detail can be found in Section 3 of the Environmental Report.

2.6.2 Results of the Strategic Environmental Assessment ( SEA)

The Strategic Environmental Assessment ( SEA) of the UK Operational Programme is being undertaken by Poseidon Aquatic Resource Management Ltd and Mott MacDonald under the direction of the UK fisheries administrations.

The Environmental Report details the potential environmental effects of the plans and measures to be undertaken as part of the UK Operational Programme for the EFF. It responds to the European Commission's SEA Directive (2001/42/ EC) and the corresponding UK regulations, representing an important step in the overall SEA process. The assessment has been prepared on the basis of existing data and knowledge and at a level appropriate to the programme. Further work on the SEA analysis, following consultation on the Environmental Report, will be considered in conjunction with the Commission's comments.

Non-technical summary

The core objective of the UK Operational Programme is to contribute to the overarching aim of fisheries and aquaculture management in the UK - a fisheries industry that is sustainable, profitable and supports strong local communities, managed effectively as an integral part of coherent policies for the marine environment.

A number of other plans, programmes and legislation influence the UK Operational Programme (see Annex B of the Environmental Report) by establishing the overarching environmental objectives against which the specific actions of the UK Operational Programme are assessed. The UK Operational Programme must ensure that EFF funding does not compromise the environmental objectives associated with these other plans and programmes.

The environmental assessment indicates that the baseline conditions of UK fish stocks are currently poor, with only 35 percent of fisheries being harvested sustainably. Whilst this situation is improving (in the 1990s this figure was around 10%), it is essential that any activities funded under the Operational Programme support recovery measures and do not lead to an unsustainable increase in fishing effort in the UK. Other baseline issues of concern include the high discard levels from certain gear types and fisheries which particularly reflect the overfishing of demersal resources. The bycatch of sea mammals, especially porpoises, has also been of concern in the past but recent measures have seen an improvement in the situation. Seabird bycatch is of lesser concern in UK fisheries, although this may rise with the increasing uptake of longlining by UK fishermen. There is also concern about the stocks of a number of skate and ray species mostly taken as bycatch in fisheries directed towards other species.

Other important baseline indicators include the growing level of coastal and marine areas under nature protection, especially from the EC Habitats and Birds Directives (Natura 2000). This is likely to expand with the development of a 'marine protected area' network into offshore areas. Amongst the most common effects of fishing activity includes concerns about habitat degradation, particularly through physical disturbance of the seabed by some types of fishing gear, leading to an adverse effects on seabed habitats and communities.

A number of key marine, freshwater and migratory species have been listed as threatened or endangered and some have also been provided Biodiversity Action Plans by the UK. Some of these species - salmon, European eel and river lamprey - are of particular importance to the UK and thus their current status is of relevance to the Operational Programme.

Other environmental baseline conditions are generally of lesser relevance, although some need to be considered in respect of EFF activities. These include river and coastal water quality, since coastal aquaculture can be an important localised source of nutrient discharges. Fish processing can also utilise high volumes of water and generate significant quantities of organic waste, although there are more options for water management and effluent minimisation. Fuel consumption by the fishing industry, although not very large in relative terms, is also a growing economic issue to the industry. The effect of fisheries and aquaculture activities and infrastructure on landscapes and national heritage also needs to be considered, although there is equal concern over the potential loss of traditional fisheries related heritage in fast changing water-front areas and coastal communities.

The UK Operational Programme will assist in helping to achieve the environmental protection objectives established at international, community and Member State level, which have influenced the development of key environmental objectives in relation to implementation of the UK Operational Programme itself. For example, within the coverage of strategies established under the OSPAR convention is the protection and conservation of marine biodiversity and ecosystems, a key environmental objective in relation to the UK Operational Programme.

The environment assessment has looked at the effects of the UK programme on a number of environmental issues including, biodiversity, population, human health, fauna, flora, soil, water, air, climatic factors, material assets, cultural heritage and landscape. Overall the assessment does not identify any significant negative environmental issues.

Axis 1: Measures for fishing fleet adaptation

The measures to both assist young fishermen purchase second-hand vessels and to modernise the fleet, may unwittingly increase fishing capacity and effort as a result of increased catch rates and efficiency. Whilst this increase is likely to be controlled, since the EFF Regulation restricts such projects to ensure that effort and capacity are not increased, the effects of this measure need to be monitored and periodically evaluated particularly in relation to technological creep. The modernisation of the fleet also raised a precautionary note that this may have the potential to affect the cultural place of fishing fleets in traditional settings and landscapes, although it is noted that the risk is very low and heavily outweighed by the potential benefits. The socio-economic compensation measures were all considered to be environmentally beneficial with no significant negative effects. In summary, both the Operational Programme and the National Strategic Plan emphasise the need to match fleet capacity to available resources but there is a need to detect unforeseen increases as the Programme unfolds.

Axis 2: Aquaculture, inland fishing, processing and marketing

This axis has a number of wide-ranging measures with varying environmental implications. Aquaculture development in particular has the potential to cause environmental harm through the introduction of exotic species as well as highly domesticated native strains. The risk is amplified by both the nature of the measures, which are aimed at diversifying aquaculture into new species, as well as the general rate of expansion of the industry. Allied to this is the promotion of new or improved production facilities that may impinge upon sensitive conservation areas or result in additional avenues for stock escapement. These new technologies may also create additional visual conflicts with seascape and landscapes and heightens the need for appropriate consultation and sympathetic design. The inland fishing measures are very much designed with stock conservation in mind but may again result in unintentional collateral effects, especially as new fisheries development opportunities appear as riverine water quality improves under the Water Framework Directive. Finally, the development of processing and marketing enterprises was generally considered to be environmentally benign, although there was some concern raised over additional water consumption by fish processing and the general impact of new building site development upon soils, both in brown field sites (i.e. the disturbance of contaminated soils) and green field sites.

Priority Axis 3: Measures of common interest

The development of fishing ports, landing sites and shelters may result in increased fishing pressure as a result of increased efficiency, or may displace effort to new areas that might be sensitive to fishing activities, although these impacts are considered unlikely. Similarly these measures might divert pressure to alternative species - whilst this may be environmentally desirable in most cases, there may be occasions when this might result in additional pressure on threatened or endangered species or habitats. The development of new markets might also have similar effects, although this was generally seen as environmentally positive, especially if it reduces pressure on less sustainable stocks. The funding of pilot studies was also seen as environmentally benign, although some concern was raised over the potential effect on traditional fisheries should such activities result in a change in their nature. Again, this was seen as low risk and such projects may also be beneficial if they result in securing the position of traditional fisheries and processes.

Priority Axis 4: Sustainable development of fisheries areas

Many areas of the strengthened competitiveness measure under this axis reflect the concerns raised in the first three axes. However, the potential for realisation of these effects is considered low and very much dependent on the nature of the management regime under which funded activities are conducted. Realisation of these effects is likely to be locally significant at the spatial scale and be permanent in nature. The development of small fishing community activities also reflected a concern over raising fishing pressure on inshore resources and habitats, as well as possibly increasing bycatch and discard levels. The likelihood is considered low and the effects spatially restricted, but may be locally significant. The diversification of small fishing community activities away from fishing based activities would obviously reduce pressure on fisheries resources, but may have socio-economic, cultural or heritage implications that would need to be understood and where possible avoided.

The identification of the broad environmental effects that might result from implementation of the UK Operational Programme has allowed various mitigation approaches to be developed. However a major constraint is that the Operational Programme must remain consistent with the original aims and legal requirements of the EFF. Where significant negative and positive effects might arise from implementation of the Operational Programme, broad guidance can be provided on how negative effects might be prevented, reduced or offset and how positive effects could be enhanced and replicated. This advice can be practically applied at two levels:

Changes to the Operational Programme: the environmental analysis did not result in the identification of any major environmental issues, and thus it is the conclusion of the analysis that the Operational Programme is broadly environmentally sound and that no major changes to any of the axes and measures are required. Full details regarding the environmental assessment can be found in the Environmental Report. However broad guidance has been provided on clarification and development of the Operational Programme where significant potential environmental effects were determined.

Mitigation at the project design and development stage: it is recognised that the initial SEA was conducted at a broad level on an Operational Programme that was in draft form. Therefore a second level of mitigation is recommended, whereby a simple environmental risk assessment is applied during the funding application stage. This allows applicants to describe the potential environmental implications of their proposed activities and develop project-specific mitigation measures.

The assessment process has involved the consideration of each of the principle measures proposed under the UK Operational Programme against environmental objectives. This included the assessment of short, medium and long-term effects, permanent and temporary effects, positive and negative effects, and secondary, cumulative and synergistic effects. The assessment was undertaken by a group of fisheries and environmental experts using a matrix approach. Where potentially significant negative effects are considered possible, a second more detailed assessment was undertaken to determine the nature of the predicted effects.

It was assumed that all additional legal and regulatory obligations associated with measures would be undertaken, e.g. improvements to infrastructure will be carried out in compliance with planning and environmental legislation. The analysis undertaken dealt with a data poor environment when compared to the ability to identify significant terrestrial environmental effects. Determination of effects in the aquatic environment can be difficult to identify and monitor and an aspect of professional caution was therefore included in the analysis, so that more significance was given to uncertain negative effects. Identification of effects is also limited by the absence of detail on the specific actions and spatial regions into which activities under the UK Operational Programme will be focussed, which cannot be determined until applications are received.

Monitoring of the environmental effects can be undertaken at two levels. The broad scale monitoring of key fisheries-related environmental conditions such as stock status, by-catch levels will continue to be undertaken through on-going CFP, regional and national initiatives. Other key environmental indicators such as water quality, are also subject to recurrent monitoring programmes. These should be assessed at the mid-term appraisal stage.

Project-level environmental monitoring would be linked into the mitigation approaches designed for individual projects, where the effect of significant risks would be measured through the use of appropriate scale indicators that would be identified and agreed at the grant award stage. The results from these would be used to inform the environmental appraisal of future grant applications and where necessary, used to refine the Operational Programme at the mid-term appraisal stage (see the description of monitoring measures below).

2.6.3 Information on consultations with public and environmental authorities

Scoping consultation

In accordance with Article 5(4) of the SEA Directive, a Scoping Report establishing the environmental issues, topics and objectives, and our approach to the SEA process, was issued for consultation on 5 ^th October 2007. A five week period of consultation was undertaken specifically seeking views on:

• environmental issues in relation to the UK Operational Programme;
• environmental objectives and assessment criteria;
• SEA assessment methodology;
• data sources and baseline data gaps and
• the potential for positive and negative effects of the UK Operational Programme.

The scoping consultation was sent out to the eleven designated UK environmental consultation bodies, which in turn provided opportunities for other stakeholders within their area of competency to express views. Transboundary consultation was also undertaken with other Member States. A full list of those consulted during the SEA process can be found at Annex C.

The scoping consultation resulted in 10 replies; Federation of Scottish Aquaculture Producers; Environment and Heritage Service, Northern Ireland; Scottish Natural Heritage; Aberdeenshire Council; Countryside Council for Wales; Scottish Enterprise Grampian; Historic Scotland; Scottish Environment Protection Agency; the Environment Agency; and the Scottish Fishermen's Federation. No formal submissions of views on the Scoping Report were received from other Member States.

Consultation on the Environmental Report

In accordance with Article 6 of the SEA Directive, an eight week consultation on the draft UK Operational Programme and SEA Environmental Report was issued on 13 ^th February 2008.

The consultees included the UK environmental consultation bodies, key stakeholders and transboundary consultation with other Member States (see Annex C).

The Environmental Report consultation resulted in 10 replies; Countryside Council for Wales; Department of Agriculture, Fisheries and Food, Ireland; Aberdeenshire Council; Environment and Heritage Service, Northern Ireland; the Environment Agency; the Joint Nature Conservation Committee and Natural England; Scottish Natural Heritage; Scottish Environment Protection Agency; the Federation of Scottish Aquaculture Producers; and the Ministry of Agriculture, Rural Development and Fisheries, Portugal.

2.6.4 Statement foreseen by Article 9 of the SEA Directive - summary of environmental considerations and the opinions expressed during consultations

The environmental assessment did not result in the identification of any significant negative environmental issues. Therefore it was concluded that the UK Operational Programme is broadly environmentally sound and that no major changes to any axes or measures would be required.

However, where potential for significant negative/positive effects might arise from implementation of the Operational Programme, further conditions will be attached to the application to ensure that negative effects can be prevented or reduced and positive effects can be enhanced and replicated.

In addition to ensuring that minimum legal and regulatory obligations associated with measures are undertaken (e.g. planning consents), we will seek further information in the application process regarding potential environmental effects and what practical steps the applicant might take to minimise/enhance these. We will also develop an environmental screening capability at the application review stage to ensure that assessment of environmental effects has been rigorously conducted, to seek clarification from the applicant where ambiguities remain, and to ensure the decision to fund projects includes an appraisal of the overall environmental costs and benefits against the wider benefits of the project.

Opinions expressed during consultations

The scoping consultation responses resulted in a broadening of the scope of the assessment to include all SEA defined environmental topics, and further work to clarify and refine the proposed environmental objectives against which the UK Operational Programme would be assessed. A wider scope of plans, programmes and strategies which affect or influence the Operational Programme were also considered. Further data was collected to establish baseline environmental conditions and to broaden the focus of key environmental issues to be assessed.

The key common themes arising from the Environmental Report consultation, and our response to these are detailed in the table below.

Description of monitoring measures

In accordance with Article 10 of the SEA Directive, monitoring of the environmental effects of the implementation of the Operational Programme will be undertaken in order to identify unforeseen adverse effects, and to take appropriate remedial action.

We will utilise the results of monitoring of key fisheries-related environmental conditions such as stock status and by-catch levels, undertaken through on-going Common Fisheries Policy, regional and national initiatives. Other key environmental indicators such as water quality are also subject to recurrent monitoring programmes in the UK. These will all be assessed as part of the interim evaluation of the Programme.

A risk based approach will be applied to monitoring. Where a decision is taken to grant funding, the relative environmental risk will be determined by reference back to the predicted risk in the Environmental Report and the results of the project specific risk assessment.

The obligation for carrying out monitoring requirements will rest with the UK fisheries administrations and the Monitoring Committee (in accordance with Article 66 of the EFF Regulation). The Monitoring Committee will periodically review progress made towards achieving the specific targets of the programme and examine the results of implementation. Responsibility for monitoring will also fall to the applicant, with funding being tied to a monitoring agreement, for which we will work closely with applicants to ensure accurate monitoring data is collected. The four UK administrations will work closely to ensure a compatible approach to data collection so that monitoring data can be compared at a UK scale.

2.7 Equality

In general there are very few women employed in the fisheries sector. Women account for only approximately 1% of those employed in the UK fisheries sector as a whole. However, this is largely because of the small number of women employed in the fish catching sector. In 2006, women made 11% of those employed in aquaculture and 35% in fish processing. ¹⁴ The main reason for this comparative under-representation in the fish catching sector is the nature of much of the work undertaken rather than constraints on specific groups.

The UK has a well-established legal structure that prohibits discrimination on the grounds of race, sex, sexuality, religion or disability. The UK is also a signatory to the European conventions on Human Rights and is committed to implementing the reforms under the Lisbon Agenda, which includes increasing the number of women in work.

The delivery bodies for the EFF programme for the UK, are all government and public bodies. The Equality Act 2006 places a statutory duty (the Gender Equality Duty) on all Government departments and public authorities, when carrying out their functions, to have due regard to the need to promote equality of opportunity for women and men. The delivery of the Programme will operate within the established UK legal framework covering equalities.

Delivery bodies will be responsible for ensuring the proactive promotion of equality at all stages of programme implementation (design, implementation, monitoring and evaluation). This will include, for example, the preparation of literature and publicity material, guidance for delivery staff, and the criteria for targeting of support under the programme. All applications for support under the Programme will be equally judged on their merits by the respective delivery bodies.

The Monitoring Committee, as formed under Article 63 of the European Fisheries Fund Regulation (Council Regulation ( EC) No. 1198/2006), in conjunction with the Managing Authority, as formed under Article 58 of the same regulation, is responsible for the promotion of equality between men and women at implementation, monitoring and evaluation stage as required under Article 59 of the same Regulation. In accordance with Article 65, the Monitoring Committee will be consulted on the criteria used for approval of financed Schemes under the Programme, and this will allow oversight of the selection criteria to ensure that equal opportunities are promoted.

2.7.1 Avoidance of discrimination in programme implementation

In addition to obligations outlined above, the EFF delivery bodies will put processes in place that will seek to prevent discrimination on grounds of gender, race or ethnic origin, religion or beliefs, disability, age or sexual orientation.

The Monitoring Committee and the Managing Authority are responsible for ensuring discrimination is prevented at the implementation stage, and also by ensuring that elimination of discrimination is factored into the monitoring and evaluation phases of the Programme.

The programme will not impose any restriction or involve any requirement which a person of a particular gender would find difficult to comply with. Conditions apply equally to all individuals and businesses who apply for funding under the programme.

Consultation on the UK Operational Programme will be open to all interested parties via the Administrations' websites. In the UK, both men and women are represented in the same unions and trade organisations, and there are also some specialist women's fisheries organisations with whom we will aim to engage with during the consultation process on the UK Operational Programme.

2.8 Main Outcomes of the Analysis

The UK's catching and aquaculture sectors are widely-distributed around the country and is diverse both in the nature of operations and in the pressures and challenges which each faces.

One of the most important challenges for the catching sector is the need to develop higher profitability and greater economic confidence, while at the same time respecting the need to maintain or improve the sustainable management of fish stocks as well as wider environmental considerations.

Central to delivering sustainable stock management are the problems associated with mixed fisheries in terms of discards and by-catches. Improvements in fishing gear would contribute to more sustainable stock management in these fisheries and to reducing wider environmental impacts. In the latter context, further development is needed to ensure that the handling and treatment of waste - notably from the shellfish sector - meets the highest environmental standards.

Industry profitability can be enhanced by reducing operating costs (e.g. by switching to more energy-efficient vessel engines, which also deliver environmental benefits, notably reduction in CO2 emissions) and exploiting new technology, as well as diversifying into other (including non-quota) species (where these can be sustainably exploited). There is also scope for identifying new/niche markets and improving product quality at all stages of the production chain, from catching and storage through processing and transport. In addition, support for time limited projects for new technical measures is an important area, and some short term projects are likely to be developed with issues concerning climate change in mind. For example, identification of new fish species in new fishing areas.

In a number of areas, the industry - especially the catching sector - is finding it difficult to retain skilled labour. To a significant degree this reflects the concerns mentioned above regarding profitability and the long-term future of the industry. In addition to specific measures aimed at addressing those concerns, improvements in working conditions should also contribute to labour retention, while additional support for training would help to address the shortfall in skills, and improve the number of people entering the catching sector. Retraining opportunities will also be available for fishermen to diversify and to be retrained in occupations outside sea fishing.

Safety training funding under the previous scheme appeared to contribute to a significant increase in the take up of fishermen attending safety courses. Non mandatory safety training funding will continue in a bid to help reduce the number of fatalities and accidents in UK commercial fishing. In 2006, the death rate was 1.3 per 1000 fishermen (a decrease of 15% over the previous ten year period) and an accident rate of 50.5 per 1000 vessels (a decrease of 10% over the same period).

In terms of marketing, there is clearly scope to achieve greater efficiency by improving the coherence of the supply chain and through vertical integration. Marketing initiatives could also be directed at local branding and promotion of local and niche markets, along with assurance schemes to meet consumer demand for a high-quality product.

While the aquaculture sector is generally economically stable, and is using technology to improve its productivity and reduce its environmental impact, there is scope for this sector to enhance employment opportunities and to improve working and safety conditions in all areas. There is also scope for increasing both the volume and value of sales, and for the enhanced protection of farms from wild predators. More can also be done to ensure that best environmental and welfare practices are followed across the industry, in terms of mitigating environmental and welfare concerns. As with the catching sector, there is scope to improve the handling and treatment of waste to achieve high environmental standards.

The demand for fish products, and the growth in niche/quality markets, creates significant opportunities for processors. Here too the need to maintain/improve profitability will necessitate some restructuring in the light of changes in supplies of raw materials and in consumer demands. Some processing facilities will require upgrading to maximise returns, improve product quality and ensure that high standards are met in terms of hygiene, public health and environmental impacts, including the handling and disposal of waste and measures to prevent the spread of disease through untreated effluent.

Contraction of fisheries-related activity in some (especially rural) locations will have significant implications in areas where there is currently limited scope for alternative employment. Support will be needed to mitigate the socio-economic consequences of industry restructuring.

In delivering support under EFF to address these challenges, account will be taken of experience under FIFG in terms of allowing for differences in the economic performance of the various fish sectors; setting grant rates at appropriate levels; ensuring adequate performance monitoring; and involving stakeholders and facilitators in programme delivery.

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