Fishing - pelagic quota cuts 2026: business and regulatory impact assessment

Section 1: Background, Aims and Options

Background to Policy Issue

Following the outcome of international negotiations, it has been agreed that the Northeast Atlantic mackerel Total Allowable Catch (TAC) will be reduced by 48% for 2026, alongside a significant reduction for herring of 22%.

These cuts present a serious risk to the viability of Scottish pelagic processors and the wider supply chain. Without intervention, the reductions are likely to lead to decreased landings into Scotland, undermining local economies, reducing employment opportunities, and weakening investment in processing infrastructure, thus undermining the aims of the amended economic link policy.

To summarise our aims in amending the economic link licence condition in 2023 were:

• Increasing landings into Scotland - ensure a greater volume of valuable fish stocks are landed in Scotland rather than abroad.
• Support sustainable growth of local economies - Strengthen coastal economies by increasing the volume and regularity of fish supply available for processing in Scotland.
• Attracting greater investment and employment - Reduce supply chain risks for Scottish fish processing and handling businesses to encourage investment and create secure jobs.
• Spreading social and economic benefits more widely - Share the benefits of fishing quotas across Scottish fishing communities by making landings into Scotland the main compliance route.

These aims remain directly relevant in assessing whether exceptional circumstances in 2026 warrant further, emergency intervention.

1. Summary of Current Situation in the Policy Area and Why Action Is Required

What Issue has Been Identified?

These cuts pose a serious risk to the viability of Scottish pelagic processors and the wider supply chain. Without intervention, reduced landings into Scotland could undermine local economies, lead to job losses, weaken investment in processing and port infrastructure, and harm the long term sustainability of this sector.

The processing sector is well accustomed to fluctuations in quota allocations and has historically managed seasonal and year-to-year variability. However, the scale of the reductions agreed for 2026 is unprecedented – and represent a level of contraction not seen in recent decades. These exceptional cuts pose risks far beyond normal operational adjustments, threatening the viability of processing facilities, investment plans, and employment in coastal communities.

Current Policies and Frameworks in Place

Economic link licence conditions have been part of UK fishing licences since 1999, applying to vessels over 10 metres in length. They aim to ensure that UK vessels fishing against UK quota deliver genuine economic benefits to UK communities. Historically, compliance options included landing a percentage of catch in the UK or transferring quota if targets were not met. In Scotland, following consultation, amended provisions were introduced from 1 January 2023, making landings into Scotland the main basis for compliance, removing alternative options such as crewing or expenditure, and increasing the minimum qualifying landings threshold from 2 tonnes to 10 tonnes. The landings target was raised from 50% to 55%, with phased targets for pelagic species: 30% (2023), 40% (2024), and 55% (2025). Quota gifting remains as an alternative compliance route. These changes have increased the proportion of mackerel and herring landed into Scotland - from a pre-policy average of 50% to 57% in 2023 and 63% in 2024 - and driven investment in Scottish processing facilities and ports.

Other Relevant Policy Developments

English authorities introduced a range of changes to its economic link conditions in April 2022. Their arrangements differ from Scotland’s approach, which focuses primarily on landings. The policy aligns with the national benefit objective in the Fisheries Act 2020, supporting coastal communities and maintaining the role of the seafood sector in employment and food supply.

Policy Proposals Explored Previously

The Scottish Government consulted previously on strengthening landings requirements to address increasing quantities of fish—particularly mackerel and herring—being landed abroad, reducing benefits to Scotland. The outcome was published in September 2022^[4], and the amended economic link provisions were introduced in January 2023.

Why is a New or Different Action Being Considered?

Despite improvements, the unprecedented scale of the ICES-recommended cuts means that existing measures may not be sufficient to maintain throughput for Scottish processors. Processing facilities have called for government intervention to support their sector, warning that reduced landings could undermine investment and pose a serious threat to ongoing viability. At the same time, catching vessels have raised concerns that stricter landing requirements could negatively impact operational flexibility, increase costs, and threaten business viability—particularly for vessels that rely on landing outside Scotland for logistical or market reasons. These concerns must be balanced against the need to protect processing capacity and local jobs. Wider market conditions also need to be considered: mackerel prices have increased markedly in recent years, but these could fall sharply if supply constraints ease or global demand shifts, compounding the economic impact of quota reductions.

2. Desired Aims and Outcomes

What Change or Other Outcome is Desired?

The assessment seeks to determine whether additional measures are required to respond to the ICES-recommended quota reductions for 2026, The desired outcome is to ensure that Scotland’s pelagic sector remains viable and that economic benefits from quota allocations are spread as widely as possible through fishing communities, while balancing the interests of the different sectors.

How does this help meet Scottish Government’s strategic aims and objectives?

The amended economic link licence condition was introduced in January 2023, with the aim of:

• Increasing landings into Scotland - ensure a greater volume of valuable fish stocks are landed in Scotland rather than abroad.
• Support sustainable growth of local economies - Strengthen coastal economies by increasing the volume and regularity of fish supply available for processing in Scotland.
• Attracting greater investment and employment - Reduce supply chain risks for Scottish fish processing and handling businesses to encourage investment and create secure jobs.
• Spreading social and economic benefits more widely - Share the benefits of fishing quotas across Scottish fishing communities by making landings into Scotland the main compliance route.

This assessment supports strategic objectives under the Fisheries Act 2020 and Scottish Government priorities for:

• Sustainable fisheries management
• Fair distribution of economic benefits
• Resilient coastal communities and local employment
• Maintaining Scotland’s competitiveness in global seafood markets

What would happen if SG or other stakeholders did not take any action?

Without intervention, quota reductions could lead to:

• Significant reductions in landings into Scotland (for mackerel alone we estimate a reduction of around 60% relative to 2024 landings figure)
• Reduced throughput for processing factories giving rise to potential job losses and possible threat to factory viability
• Negative impacts on investment in ports and infrastructure
• Increased vulnerability to market volatility and price shocks

What is the ideal outcome and what would be a necessary minimum acceptable outcome?

• Ideal outcome: A balanced, evidence-based decision on whether government intervention is necessary to secure continuity of supply for processors (as far as possible), while maintaining operational viability for catching businesses, and maximising public benefit.
• Necessary minimum: Guidance on whether current measures are sufficient or require adjustment.

How will outcomes be measured?

• Economic indicators: Proportion of pelagic landings into Scotland, and processor throughput.
• Social indicators: Employment levels in processing and catching sectors,
• Compliance indicators: Adherence to economic link requirements.
• Market indicators: Price trends for mackerel and herring

Options (considered so far)

1. Maintain current economic link arrangements (status quo)

• No further changes beyond the 2023 amendments.
• Type of action: Policy continuity.
• Rationale: Avoid additional burden on catching sector while monitoring impacts of existing measures.

2. Voluntary measures

• Encourage industry-led agreements to increase landings into Scotland without regulatory enforcement.
• Type of action: Self-regulation.
• Rationale: Lower compliance burden, but previous experience suggests voluntary measures are unlikely to deliver sufficient landings.

3. Strengthen regulatory requirements under the economic link licence condition

• Increase minimum landings percentage for pelagic species beyond 55% (up to 100%) and/or introduce species-specific targets.
• Type of action: Regulatory intervention.
• Alignment with Better Regulation principles:

4. Allocate Additional Quota, to incentivise/require landings into Scotland

• Either instead of or in addition to (3.) above
• Type of action: Administrative intervention.

What options have been discounted and why?

Purely voluntary approach – Discounted due to evidence from previous experience that voluntary measures do not deliver sufficient landings to protect processing capacity and general feedback that voluntary measures would not be effective.

Sectors/ Groups affected

Directly affected sectors:

• Pelagic catching sector – Businesses operating large vessels targeting mackerel and herring. These vessels are based in the North East and Shetland. Some are part of a vertically integrated business or closely associated with the Scottish processing sector. Employment in this sector includes highly skilled crew, from coastal communities who support significant local economic activity.
• Pelagic processing sector – Processing facilities located mainly in Peterhead, and Shetland. These businesses employ a mix of skilled and semi-skilled workers, including seasonal staff, and support significant local economic activity.
• Ports Focusing on the ports of Peterhead and Lerwick which benefit greatly from pelagic landings.

Indirectly affected sectors:

• Supply chain businesses – Transport and logistics providers, cold storage operators, packaging suppliers, and engineering services supporting vessel maintenance and processing plants.
• Local communities – Coastal communities reliant on pelagic landings for jobs and income. Reduced throughput/landed value could impact socio-economic stability in these areas.

Employment profile and location:

• Catching sector crews are predominantly male, drawn from Scottish coastal communities.
• Processing facilities employ a diverse workforce, including local residents and migrant workers, often in areas with limited alternative employment opportunities.

Other groups impacted:

• Consumers and retailers – Potential changes in supply and price of pelagic products could affect domestic and export markets.
• International partners – Ports and processors based outside Scotland (e.g., Norway) may experience reduced landings if new requirements are introduced.

Scottish Government officials have considered both direct impacts on catching and processing businesses and indirect impacts on supply chains, communities, and consumers. The assessment also recognises that any changes must balance the interests of processors and ports seeking continuity of supply with catching businesses concerned about operational flexibility and viability.