Ministers Statement to the Dail on the Seafood Taskforce Report – Navigating Change -9th December 2021
I want to thank the House for this opportunity to update 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 Trade and Cooperation Agreement between the European Union and the United Kingdom.
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 TCA 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 possibly displaced into Ireland’s fishing zone.
That was the doomsday scenario. The Irish Fishing fleet catches about one third of it’s 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 they all identified that a No Deal Brexit was 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 TCA 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 in terms of 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 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 TCA quota package and the CFP 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, whenever suitable opportunities arise, 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 TCA. I followed up with a bilateral with the Commissioner on all the issues arising.
An 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 EU CFP 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 Council and Parliament on the functioning of the CFP.
Last week, an 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 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 TCA.
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 also 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 TCA.
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 TCA 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 Union, in Member States most adversely affected by the withdrawal, and to mitigate the related negative impact on the economic, social and territorial cohesion.
The BAR 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 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 TCA.
The BAR will see Ireland implement Brexit mitigation measures this year and in 2022 and 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.
Ireland is allocated €142 million in EU funds under the EMFAF, with the Government of Ireland to provide co-funding for this level of EU investment.
Unlike the BAR, the EMFAF is solely focussed on Member States’ seafood sectors and coastal communities.
My Department is preparing a new Seafood Development Programme under the EMFAF and I expect this to be adopted next year.
In establishing the Task Force, I strongly believed that such a once in a generation event as the TCA required a collective response, involving the seafood businesses and coastal communities most affected by the TCA and who have the intimate knowledge of the sector to know what initiatives are best able to address the impacts of the TCA.
The Task Force comprised 10 representatives of the fishing sector, including the four main fisheries cooperatives in Castletownbere, Greencastle, Ros a Mhil and Clogherhead, the Irish South & East Fish Producers Organisation, the Irish South & West Fish Producers Organisation, the Irish Fish Producers Organisation, the Killybegs Fishermans Organisation, the Irish Islands Marine Resource Organisation, the Irish Fish Processors and Exporters Association and the National Inshore Fisheries Forum.
It also included representatives of the aquaculture and 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, BIM, and coastal local authorities.
The Task Force was led by Aidan Cotter (former CEO of Bord Bia), who was assisted by a steering group of Margaret Daly (deputy CEO of seafood processor Errigal Bay Ltd) 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 fourteen occasions over a seven-month period, and I know there was much work undertaken outside of those meetings.
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 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 – Navigating Change, on the 11th of 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 to ensure that the best possible value for money is obtained whenever public money is being spent or invested, as required under the Government’s Public Spending 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 Government Departments and State agencies, against 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 during the 2021- 2023 period, the measures necessary to implement the Task Force recommendations should, to the greatest extent possible, be funded from Ireland’s allocation under the BAR.
Of the Task Force recommended support schemes, perhaps in the region of €300 million could potentially be eligible for funding under the BAR, subject of course 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 of time under my Department’s Seafood Development Programme, again should they be accepted by Government.
I propose now to 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 white fish fleet at a cost of €66 million, recommended to be funded under the BAR.
The TCA quota cuts have 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 white fish fleet as it stands.
With the 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 BIM.
This analysis quantified the number of vessels required to be removed from the fleet in order to return the various fleet segments to the current level of profitability, pre-TCA.
This analysis estimated that some 60 whitefish polyvalent and beam trawl vessels of a Gross Tonnage of 8,000 GT would need to be removed, so as to return these fleet segments to profitability.
This equates to 26% of the white fish 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.
This is a very severe blow to the whitefish fleet, and to the coastal communities dependent on fishing, that much is clear.
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, that is, less fish to be shared among the white fish fleet, and so 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 vessel owners.
The Task Force recommended that the scheme be voluntary and of course that is appropriate.
And 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 that 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 a variety of reasons, such as vessels being lost at sea, being damaged or in need of repair or upgrade and vessels that are up for sale.
My Department’s Licensing Authority for Sea Fishing Boats maintains a register of capacity that is currently active or on-register and capacity that is inactive or off-register.
Off-register capacity is very relevant to the proposed voluntary white fish 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, negating 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 that there was some level of re-entry to the fleet following previous decommissioning schemes. Of 73 vessels decommissioned, 19 new vessels were re-introduced.
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 was 15,466 gross tonnes of off-register capacity, almost twice the level of capacity that the task Force recommends be decommissioned.
This is clearly a significant risk to the success of the decommissioning scheme proposal.
So, the Task Force recommends 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, conducting a new cost benefit analysis as is required under the public spending code for a scheme of this size, agreeing across Government that the proposed scheme should proceed, legislating for tax treatment of scheme payments and securing State Aid clearance is all of course very time consuming.
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 up by the application and approval process.
Taken together, these matters mean that it would be perhaps 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 supports be implemented in 2022 for the white fish fleet.
The House will be aware that a voluntary temporary tie-up scheme is already being implemented over the October to December period at a cost of €12million, as was recommended by the Task Force in its June 2021 Interim Report.
That scheme is assisting the white fish fleet with the reduced incomes in 2021 arising from the TCA quota reductions in 2021.
So, a second round of tie-up in 2022 is proposed to similarly support the income of the fleet pending the full benefits of a decommissioning scheme being felt across the fleet.
That proposal is costed by the Task Force at €12 million in 2022 and is recommended to be funded under the BAR.
I want to now turn to the wider impacts of the TCA quota cuts.
I said earlier how the TCA quota cuts undermine the viability of our fishing fleet and I outlined a proposal from the Task Force to take out up to 60 vessels from the white fish 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.
Less fish being landed by Irish vessels means less raw material supply for our processers, to be transformed into the added value seafood products we see on our supermarket shelves and which have underpinned the strong growth in seafood exports in recent years.
Replacing that raw material supply is not easy, but there are possibilities.
There are logistical difficulties and cost issues in seeking to import supply from the UK, particularly so 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, and these 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, but 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 Taskforce, risks these processors losing hard-won markets, risks reducing their profitability and risks loss of employment in coastal communities already impacted by loss of employment from decommissioned vessels.
A further knock-on effect of the necessary voluntary decommissioning up to 60 fishing vessels is the impact on ancillary and support service industries in coastal communities.
Less vessels means less boat maintenance work, less net making, less provisioning.
This outcome risks further loss of employment in coastal communities.
The widely representative Task Force that I put together carefully considered all these inter-related impacts and recommended an integrated response via investment in marine infrastructure, seafood processing and aquaculture supported by community led local development.
In relation to the seafood processing sector which comprises about 160 firms, the Task Force recommended facilitating substantial investment in those seafood processing enterprises to support greater utilisation of raw material, improved efficiency, developing new offerings, demonstrating 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 and Fisheries Fund 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, between 30-50%, during the period of BAR funding (i.e. 2022/23), with the higher rates targeted on 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 believed 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 risks of 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.
In relation to the aquaculture sector, while there are direct impacts of Brexit and the TCA on this sector, similar to many other areas of our economy, the recommendations of the Task Force for investment in aquaculture are primarily based on the sector’s capacity as an alternative native source of raw material supply to our processors and an alternative source of employment in coastal communities.
The aquaculture 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 keeps former fishermen in their coastal communities.
The Task Force recommends 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 industry.
It recommended that graduated grant aid rates should apply so that categories of activity that will be 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 notes that public marine infrastructure, such as piers, slipways, pontoons etc, is a critical enabler to maximising the use of and benefits to be gained from our rich marine resources.
High quality publicly owned marine infrastructure facilitates the development of a myriad of 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 recognises 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 FLAG groups, to support the development of a wide range of marine activities to diversify and build resilience in coastal communities.
The Task Force proposes that the earlier years of a support scheme would 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 longer-term platform for the development of new and diversified economic activity in these 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 Forces other recommended initiatives for the seafood sector, 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 or 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 or FLAGs through my Department’s EMFF 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 is 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.
The funding would target entrepreneurial initiatives to drive real economic development, thereby allowing operators and their communities to restructure, reconfigure, retrain and diversify post Brexit.
The Task Force recommends funding of €35 million to support the FLAG initiatives, to be derived from both BAR and the EMFAF over the period up to 2027.
Furthermore, the Task Force recommends an additional €10 million to support FLAG initiatives with a direct connection and relevance to the inshore fisheries sector.
I want to turn now to our inshore fisheries sector.
The Task Force report acknowledges the importance of the inshore sector to local communities and that is something I am very committed to.
The report acknowledges that while large parts of the inshore sector have not been directly impacted by the quota transfers under the TCA, many have been impacted by route to market issues and increased operating costs.
The Task Force recommends a range of specific initiatives to assist this vulnerable sector.
These initiatives include a range of short-term and longer-term measures that aim to return this to a vibrant sector, providing employment across coastal communities, as well as specific measures to assist in the marketing and processing of catches from inshore vessels.
The Task Force report recognises that there are clear indications from the inshore sector that an imbalance between capacity and available fishing opportunities exists that needs to be urgently addressed.
It recommends that a voluntary permanent cessation scheme targeted at inshore vessels should be developed in consultation with the industry representatives, in order to bring the inshore sector back into balance with the available fishing opportunities, while ensuring profitability of the sector going forward.
While no specific targets and level of payment have been recommended, the Task Force does recommend a budget of €6 million should be sought to fund this scheme.
Separately, given that it is estimated that as much as 40% of inshore vessels less than 12 metres are inactive, the Task Force recommends that an investigation is needed into ways to remove a proportion of this inactive tonnage.
Pending more permanent restructuring of the inshore fleet, the Task Force recommends a scheme of short-term support be developed.
This would assist the inshore sector with the immediate impacts of Brexit and help it transition and adjust its business model post Brexit.
Lastly, in order to assist the inshore sector to overcome the serious challenges posed by Brexit, the Task Force considers that a dedicated marketing scheme for inshore stocks is warranted.
This should specifically focus on growing value in existing markets and in the development of new markets, achieved through market research, market intelligence and promotional campaigns.
The Task Force recommends that a detailed, costed marketing plan be prepared by Bord Bia in conjunction with BIM, the inshore representatives and the main shellfish exporters and processors by early 2022.
To implement this marketing plan, the Task Force recommends a dedicated marketing fund of €2.5 million channelled through Bord Bia be put in place over a 5-year period.
In addition to these various investment schemes that I have outlined today, the Task Force recommended a number of short-term liquidity support schemes for various sub-sectors of our seafood industry, including the pelagic fleet, scallop fleet, processors and fisheries cooperatives.
Since receiving the Task Force Report in October, I have been urgently considering each of its many recommendations on their individual merits, in close consultation with the Ministers for Finance and Public expenditure and Reform, assisted by relevant State agencies.
The recommended measures are being considered with regard to available funds, eligibility for support under the BAR and EMFAF, State Aid compliance and under the Public Spending Code.
That process is ongoing, but is being conducted with the utmost urgency, and on a phased and prioritised basis as recommended by the Task Force.
To conclude, I wish to again thank Aidan Cotter for his leadership in chairing the Task Force and thank Margaret Daly and Mícheal Ó Cinnéide for their dedication and hard work in assisting Aidan in steering the work of the Task Force.
I also wish to again sincerely thank all of the members of the Task Force for their constructive engagement with the work of the Task Force and for the many hours and days they put into the process.
I would also like to thank my Department for the hard work they put into assisting and facilitating the Taskforce and which they are putting into taking forward the recommendations of the Taskforce. Finally, I would also like thank BIM for their hard work on the Taskforce and as secretariat and I wish to acknowledge the importance of their research and analysis in informing the work of the Task Force.