Publication - Research publication

Economic impacts for Scottish and UK seafood industries post-Brexit: report

Published: 5 Jun 2018
Directorate:
Marine Scotland Directorate
Part of:
Brexit, Marine and fisheries
ISBN:
9781788519755

The report presents findings from research examining the possible impacts of EU exit on Scottish and UK seafood industries.

101 page PDF

2.8 MB

101 page PDF

2.8 MB

Contents
Economic impacts for Scottish and UK seafood industries post-Brexit: report
Appendix I: Wider Economic Impacts Method

101 page PDF

2.8 MB

Appendix I: Wider Economic Impacts Method

I.1 Applying the model outputs to the primary and processing sectors

The trade model combines production of unprocessed and minimally processed fresh/chilled product, as well as processed products such as fillets, smoked, canned and prepared/preserved products. The input-output ( IO) tables include sectors that relate to the two primary industries of fishing and aquaculture production, as well as the secondary industry of fish processing. The outputs of the model were therefore disaggregated, or apportioned, between the relevant primary industry and the processing industry, to be run through the IO tables.

The apportionment of output was based on the output of the fishing sector (value of landings by UK vessels to UK and non- UK ports), the output of the aquaculture sector (value of production), and a calculation of the output of the processing sector for each species. The latter is based on the turnover of the fish processing industry (from Seafish data), apportioned based on the processing output attributed to each species. This in turn was calculated from the FTEs in processing demersal, pelagic and shellfish species (from Seafish data), apportioned by the volume of landings to the UK (by UK and non- UK vessels) of the species as a percentage of landings of the species group. The employment per species, as a percentage of processing sector employment, was then applied to the turnover of the processing sector to derive the output of the processing sector for each species. For example, the value of landings of cod to the UK as a percentage of the value of demersal landings to the UK was applied to the FTEs in the demersal processing sector. This figure, as a percentage of processing sector employment, was applied to the processing sector output.

For salmon, the turnover of the aquaculture production industry was based on the value of salmon production. The turnover of the salmon processing industry was based on the value of output of the salmon and sea trout processing industry (derived from Seafish data on the overall value of the fish processing sector, less the value of the sea fish processing sector), with 98% attributed to salmon and 2% to sea trout, based on the volume and value of aquaculture production of these two species.

The apportionment percentages for output are provided in Table I.1.

Table I.1. Apportionment of output to primary and processing industries

Species Fishing Aquaculture Processing
Cod 37% 0% 63%
Crab 16% 0% 84%
Haddock 22% 0% 78%
Hake 27% 0% 73%
Herring 18% 0% 82%
Mackerel 31% 0% 69%
Nephrops 29% 0% 71%
Saithe 11% 0% 89%
Salmon 0% 34% 66%
Scallop 17% 0% 83%

These apportionment percentages were applied to the model results for ‘change in output’. More detail of the calculations is provided in Table I.5. The percentage change in output for each species from the trade modelling was applied to the calculated value of output from fishing, aquaculture and processing sectors for each species at the UK level. This assumes that the percentage changes from the trade modelling (which captures a proportion of output of each species) will apply to the rest of the sector.

I.2 Identifying impacts on the Scottish economy

The outputs of the trade modelling are for the UK as a whole. In order to determine the proportion of these impacts that might occur in Scotland, the UK-level impacts were apportioned to Scotland for each species, based on the importance of the production (catching or aquaculture) sector and of the processing sector in each case.

The fishing sector impacts were apportioned based on the value of landings by Scottish vessels as a proportion of the total value of landings by UK vessels (to the UK and overseas); the aquaculture sector impacts were apportioned 99% to Scotland, to take account for the small amount of salmon aquaculture that takes place in Northern Ireland (actual volumes and values are not published for confidentiality reasons). Seafish provided data on the output, GVA and employment of the processing industry in Scotland and for the UK as a whole, broken down by demersal, pelagic, shellfish and salmon. The percentages for apportionment of output between Scotland and UK are shown in Table I.2. Further details of the calculations are provided in Table I.6.

Table I.2. Apportionment percentages for output of fishing, aquaculture and processing industries between Scotland and Rest of UK

Species Fishing Aquaculture Processing
Scotland Rest of UK Scotland Rest of UK Scotland Rest of UK
Cod 46% 54% - Cod 47% 53%
Crab 37% 63% - Crab 29% 71%
Haddock 83% 17% - Haddock 47% 53%
Hake 54% 46% - Hake 47% 53%
Herring 65% 35% - Herring 59% 41%
Mackerel 82% 18% - Mackerel 59% 41%
Nephrops 74% 26% - Nephrops 29% 71%
Saithe 62% 38% - Saithe 47% 53%
Salmon 100% 0% 99% Salmon 77% 23%
Scallop 59% 41% - Scallop 29% 71%

I.3 Determining direct, indirect and induced output, GVA and employment impacts

The outputs of the trade modelling are provided for each of ten (shell)fish species as percentage change from the baseline in terms of:

  • Prices
  • Output
  • Imports
  • Exports

Based on the apportionment calculations outlined above, the direct impacts on output were determined for fishing, aquaculture and processing in Scotland. The relevant multipliers (Type I and Type II, for fishing, aquaculture and processing) from the IO tables were applied to the change in output (split between the fishing or aquaculture primary industries, and the secondary processing industry and apportioned to Scotland) to give, for Scotland:

  • Direct impact
  • Indirect impact
  • Induced impact

The change in output (quantity) and change in price from the model outputs were combined to give the percentage change in GVA. GVA will change pro rata with quantity. It will also change linearly (but more than pro rata) with price, the ratio being (1 / GVA share of value of output). The indirect and induced GVA impacts were calculated using the relevant multipliers from the IO tables.

Because the change in GVA was calculated from the model results (rather than being based on the change in output and a GVA percentage), the change in GVA was apportioned across fishing, aquaculture and processing sectors, and between the UK and Scotland according to percentages that were calculated specifically for GVA (Table I.3).

Table I.3. Apportionment percentages for GVA

Species Change in GVA by Sector Processing GVA Apportioned to Scotland*
Fishing Aquaculture Processing
Cod 52% 0% 48% 46%
Crab 26% 0% 74% 28%
Haddock 34% 0% 66% 46%
Hake 41% 0% 59% 46%
Herring 29% 0% 71% 37%
Mackerel 45% 0% 55% 37%
Nephrops 43% 0% 57% 28%
Saithe 19% 0% 81% 46%
Salmon 0% 47% 53% 69%
Scallop 27% 0% 73% 28%

* Fishing and aquaculture GVAs are apportioned to Scotland using the percentages in Table I.2. Further detail on the processing GVA apportionment calculation is provided in Table I.7.

In relation to employment, employment is assumed to change linearly with volume of output. Change in volume of output specific to Scotland is derived by weighting UK changes by the percentage landings attributed to Scotland relative to total UK landings. MMO employment figures on part- and full-time equivalents ( FTEs) by administration port were used, assuming that part-time is 0.5 FTE. The Seafish Processing Industry Report (Seafish, 2016) includes FTEs for the fish processing industry. The employment impacts were calculated for Scotland based on employment in fishing, aquaculture and processing sectors in Scotland, and then apportioned between the sectors, according to percentages that were calculated specifically for employment (Table I.4). Based on this, the indirect and induced employment impacts were calculated, using the multipliers from the IO tables.

Table I.4 Apportionment percentages for employment impacts in Scotland

Species Change in Employment by Sector
Fishing Aquaculture Processing
Cod 75% 0 25%
Crab 37% 0 63%
Haddock 58% 0 42%
Hake 65% 0 35%
Herring 25% 0 75%
Mackerel 40% 0 60%
Nephrops 55% 0 45%
Saithe 39% 0 61%
Salmon 0% 37% 63%
Scallop 37% 0 63%

I.3.1 Identifying the main sectors affected

The changes in output and GVA (apportioned between the fishing, aquaculture and processing sectors, and apportioned to the Scottish economy), were run through the IO tables as a ‘shock’ to identify the impacts on other upstream and downstream sectors of the economy. This was used to identify those other sectors that are likely to be subject to the greatest impacts.

I.4 Reference

Seafish (2016) Seafood Processing Industry Report. Prepared by Struan Noble, Marta Moran Quintana and Hazel Curtis. Seafish Report No SR700. Edinburgh: Seafish Economics.

Table I.5. Detail of calculations of fishing/aquaculture and processing output apportionment percentages

Species Quantity Landed to UK (tonnes) (from UK and Non- UK Vessels) Percentage of Total Quantity of Landings Value of Landing of UK Vessels, to UK and Overseas (£1,000) Percentage of Species Group Total Percentage of Set Total Landings Value Estimate of FTE Processing Jobs by Species ( UK Total) Percentage of Total Processing Employment Estimate output of Processing Per Species Through Share of Employment Total Output Per Species (£1,000) Percentage of Species Output in Processing Percentage of Species Output in Fishing/ Aquaculture
Cod 16,737 11% 48,881 36% 8% 355 3% 81,869 130,750 63% 37%
Haddock 33,487 22% 45,119 33% 7% 711 5% 163,801 208,920 78% 22%
Hake 15,892 11% 29,335 22% 5% 337 2% 77,735 107,070 73% 27%
Saithe 18,846 13% 11,737 9% 2% 400 3% 92,186 103,923 89% 11%
Total Demersal 150,008 - 135,073 - 22% 1,804 0.13 415,590,299 - - -
Herring 42,043 25% 32,948 17% 5% 633 5% 145,731 178,679 82% 18%
Mackerel 103,935 61% 159,804 83% 26% 1,564 12% 360,267 520,071 69% 31%
Total Pelagic 169,332 - 192,753 - 31% 2,196 0.16 505,998,038 - - -
Crabs 29,317 21% 43,993 23% 7% 991 7% 228,220 272,213 84% 16%
Nephrops 25,860 18% 82,680 43% 13% 874 6% 201,308 283,988 71% 29%
Scallops 41,424 29% 64,335 34% 10% 1,400 10% 322,465 386,800 83% 17%
Total Shellfish 142,421 - 191,008 - 31% 3,264 0.24 751,992,385 - - -
Total seafish 461,761 617,577 13,554
Salmon 171,722 100% 637,089 1,273 98% 1,247,175 1,884,264 66% 34%

NB. For salmon, the figure in ‘Estimate of FTE processing jobs by species’ is the salmon and sea trout processing sector turnover (£million). The 98% is salmon aquaculture production as a proportion of salmon and sea trout production. These figures are used to estimate the output of processing for salmon.

Table I.6. Detail of calculations of Scotland/ UK apportionment percentages for output of fishing and aquaculture sectors

Species Fishing Aquaculture
Value of Landings of Scottish Vessels (£000) 2015 Value of Landings of UK Vessels (£000) 2015 Scotland as % of UK Value of Scottish Aquaculture Production (£000) 2015 Value of UK Aquaculture Production (£000) 2015 Scotland as % of UK
Cod 22,664 48,881 46% - - -
Crab 16,225 43,993 37% - - -
Haddock 37,375 45,119 83% - - -
Hake 15,894 29,335 54% - - -
Herring 21,307 32,948 65% - - -
Mackerel 130,512 159,804 82% - - -
Nephrops 60,924 82,680 74% - - -
Saithe 7,220 11,737 62% - - -
Salmon* - 2 0% 637,089 N/A 99%
Scallop 37,930 64,335 59% - - -
Data sources MMO Scottish Government

* N/A. Value not disclosed due to confidentiality. Assumed 1%.

Table I.7. Detail of calculations of apportionment percentages for processing sector

Species Category Turnover (£000) Turnover with Mixed Category Reallocated (£000) GVA (£000) GVA with Mixed Category Reallocated (£000)
Scotland UK Scotland UK Scotland % Scotland UK Scotland UK Scotland %
Demersal 76,783 156,933 188,233 400,886 47% 15,981 31,960 33,530 73,268 46%
Pelagic 177,798 288,473 435,871 736,904 59% 25,463 62,460 53,423 143,190 37%
Shellfish 240,196 790,292 588,839 2,018,800 29% 43,009 138,116 90,236 316,635 28%
Salmon and other freshwater 312,018 441,695 764,911 1,128,310 68% 75,438 100,293 158,273 229,925 69%
Mixed 1,171,059 2,607,507 - - 175,572 430,190 - -
Total 1,977,855 4,284,900 1,977,855 4,284,900 335,463 763,019 335,463 763,019

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