Fishing - Quota Management Group (QMG) trial: evaluation

2. Background

2.1. Quota management in Scotland

All Scottish fishing vessels are subject to detailed fishing quota management rules. The Scottish Government issues most of its fishing quota allocations to “sectoral groups” that include Fish Producer Organisations (POs) and, trialled since 2020, Quota Management Groups (QMGs). POs are made up of member fishing vessels and manage members’ quotas on their behalf. The landings of vessels that are not PO members (known as the "non-sector" in the case of over 10 metre vessels, and the 10 metre and under fleet) are managed directly by the Scottish Government. Vessels in these groups fish against catch limits set by the Government. These limits are enforced in fishing licenses.

In 2023, there were eight POs and two QMGs registered in Scotland. These ten organisations were responsible for the management of almost all of the quota distributed to the Scottish Government and virtually all the quota derived from Fixed Quota Allocation (FQA) units. There is also an Additional Quota which makes up about 15-20 % of the total quota allocated to Scotland, but quota allocated based on FQA units makes up the vast majority of the rest of quota. FQA units are a mechanism by which quota holders are guaranteed a fixed share of the UK’s Total Allowable Catch (TAC). In general these units were set and allocated in 1999 and under certain restrictions can be traded between vessels and fishing groups. The UK TAC is decided annually with the process laid out below. Once allocated, quota may be exchanged between vessels and fishing groups within that calendar year.

Process of quota allocation:

• ICES issues scientific advice on catch limits for individual stocks based on the principle of Maximum Sustainable Yield.
• Coastal state negotiations take place. Representatives from coastal states meet to negotiate Total Allowable Catch and quota shares for each stock.
• Quota is allocated to the four UK Fishing Administrations by the UK Government.
• Quota is allocated to Sectoral Groups by the Fishing Administrations.

In contrast to the sectoral groups, the non-sector was responsible for less than 1% of the FQA units available under Scottish administration. Although the non-sector has a very low share of FQA units overall, they have a notable share of the nephrops quota (their main fished quota species) with under ten per cent of the nephrops quota managed by the Scottish Government for the Scottish non-sector vessels. Other key stocks targeted by the non-sector include: scallops, crabs and lobsters which are not controlled by quotas. These species comprise a small share of the overall fish landed by the Scottish fleet. The significant volume of the Scottish fisheries allocated and landed by the sectoral groups shows how pivotal POs and QMGs are in the management of the Scottish fish quota.

Only approximately one fifth of the active Scottish registered fleet are members of a PO or a QMG. However, they managed the majority of available quota and over a half of Scottish fishers work on vessels managed by a PO or QMG. This shows that while the majority of tonnage and value was caught by the PO or QMG managed fleet, the non-sector fleet remains an important employer and stakeholder within the Scottish fleet. As such this evaluation will also look to gather opinions from the non-sector fleet on any impacts from the trial.

2.2. QMG Trial

POs were created at a European Union (EU) level with their regulations most recently updated in 2013 as part of the Common Fisheries Policy. They have a variety of objectives some of which are not directly related to the management of quota, such as promoting sustainable fishing and stabilising fish markets.

In 2018, the EU Commission commenced infraction proceedings against the United Kingdom (UK) in relation to the governance of POs. The EU Commission noted that POs were created to strengthen fishery and aquaculture bargaining power and promote collective and sustainable management of fishing and farming activities. The EU Commission stated that UK authorities had not verified that POs complied with EU regulations (e.g. see the Reasoned Opinion). Some UK POs did not meet the requirement of the plurality of members within POs due to their ownership structures.

Following on from the EU Commission’s Reasoned Opinion, and to inform the Scottish Government’s approach to sectoral management (as the suitability of the PO system in Scotland has been highlighted), the Scottish Government undertook a trial of QMGs. The QMG trial was intended to test alternative management arrangements for sectoral vessels in Scotland. This included the removal of the requirement for a plural membership and allowing single entities to have responsibility over their fleet (see Quota Management Groups). QMGs were created as officially recognised private bodies that have been granted sectoral management rights and responsibilities for the quota associated with licenses of vessels they manage. Similarly to POs, vessels managed by QMGs are also known as sectoral vessels to differentiate them from those managed directly by the Scottish Government.

The objectives of the QMG trial were set out as:

• Help inform future policy around sectoral quota management as part of the Scottish Government’s Future Fisheries Management initiative.
• Gain insight into the benefit returned to Scottish communities by QMGs/sectoral groups.
• Gain a greater understanding of the utilisation of quota, a national asset, by private bodies.
• Establish whether private bodies outside of the PO structure can manage quota effectively, and in line with Scottish Government objectives.

While the original trial was launched in February 2020 and intended to finish by 31 December 2021, the deadline has been extended due to delays in formalising these organisations, impacts of Brexit, Covid-19 pandemic and the cost of living/fuel crisis. The trial was therefore extended to 31 December 2026.

2.3. Key characteristics of QMGs and POs

While both QMGs and POs have quota management responsibilities, the other responsibilities of these organisations differ. There are three main areas of difference between QMGs and POs:

• Objectives;
• Creation requirements;
• Annual reporting requirements.

The objectives set for QMGs differ from POs. QMGs are required to achieve only three objectives in comparison to POs that are required to achieve six out of nine objectives. See QMG and PO objectives below, summarised from PO recognition criteria and QMG recognition criteria.

QMG objectives:

1. Optimise annual quota opportunities across Scotland's fish stocks.

2. Optimise the sustainable harvesting of wild fish.

3. Support Scottish communities where fishing is a viable career option and value is added throughout the supply chain maximising the contribution fisheries makes to Scotland.

PO Mandatory Objectives:

1. Promoting the viable and sustainable fishing activities of their members.

2. Avoiding and reducing as far as possible unwanted catches of commercial stocks.

3. Contributing to the traceability of fishery products and access to clear and comprehensive information for consumers.

4. Contributing to the elimination of illegal, unreported and unregulated fishing.

PO Selective Objectives (2 required):

5. Improving the conditions for the placing on the market of their members' fishery and aquaculture products.

6. Improving economic returns.

7. Stabilising the markets.

8. Contributing to food supply and promoting high food quality and safety standards, whilst contributing to employment in coastal and rural areas.

9. Reducing the environmental impact of fishing, including through measures to improve the selectivity of fishing gears.

The difference in objectives reflected the change in expectations, with much of the market support previously expected of POs no longer expected for QMGs. This is also reflected in the language of the objectives. For example, QMGs are expected to optimise sustainable harvesting, utilisation of quota, and support Scottish communities. Meanwhile the PO objectives are often more detailed and proscriptive, setting out specific methods to achieve economic and environmental objectives. The QMG objectives can be more adaptive depending on how the Scottish Government enforces these requirements. For example, the PO objectives of avoiding unwanted catch, contributing to the elimination of illegal fishing and reducing the environmental impact of fishing could all be tested under the QMG objective of optimising sustainable harvest of wild fish.

The four Fisheries Administrations of the UK produced comprehensive guidance on the standards and rules expected of POs (UK Government, 2019). This guidance details how POs should meet many of their obligations, particularly on the technicalities of internal record keeping and processes. For example, it notes that POs are required to raise a levy which has a genuine and material contribution to the organisation.

With regards to the creation requirements, QMGs also have different set of rules in comparison to POs (see below, summarised from QMG recognition criteria and Applying to be a fish Producer Organisation). The internal governance requirements are similar for QMGs and POs. However, economic activity criteria are notably different.

It is important to note that the QMG trial was limited to vessels and legal entities based in Scotland. Organisations could not hold QMG and PO status simultaneously. This meant that the newly established QMGs did not have access to funding available to POs under the European Maritime and Fisheries Fund, and they were not exempt from the EU competition rules under the CMO regulation.

The reporting requirements between POs and QMGs have a similar core of questions. Both types of organisations require details on how the groups are adhering to their objectives and allow space to discuss challenges the groups have been experiencing. They also need to sign a memorandum. However, there are also notable differences in the reporting requirements. PO reporting includes sections on selective objectives, such as marketing. QMGs, on the other hand, need to report on quota distribution within the group. This information is not presently reported under the PO structure. A detailed analysis of the reporting requirements is presented in the Review of annual reports.

QMG requirements

• Evidence of experience in fisheries management related to the objectives, and an explanation of measures planned to achieve the objectives.
• Legal entity based in Scotland with only Scottish registered vessels.
• Satisfy internal governance requirements notably by:
  • Ensuring there are processes in place to allocate quota, pro-actively monitor quota uptake, and to govern the vessels administered.
  • Establishing a transparent process to manage quota internally.
  • Establishing transparent internal rules to govern the conduct of vessels, particularly in relation to the uptake of quota.
  • Establishing processes and penalties for dealing with non-compliance of vessels with set quota limits.
• QMG economic activity requirements (need to meet one criteria of each part A and part B):
  • Part A. QMG vessels dispose of at least 5% of total:
    • nephrops production landed into Scotland by Scottish registered vessels. Or;
    • demersal (quota species only) production landed into Scotland by Scottish registered vessels. Or;
    • pelagic (quota species only) production landed into Scotland by Scottish registered vessels.
  • Part B:
    • The number of vessels operated by the organisation is at least 20% of the total number of vessels habitually present (means at least 50% of a vessels’ total number of landings) in the economic activity area.
    • For the fish species or group of fish species specified, the organisation disposes of at least 15% of the total production in the fishing districts.
    • For the fish species or group of fish species specified, the organisation disposes of at least 30% of the total production in a fishing district.

PO requirements

• Explanation of measures planned to their objectives in accordance with article 7 of the 2013 regulation on the common organisation of the markets.
• Legal personality in the United Kingdom.
• Satisfying Article 14 of the 2013 regulation on the common organisation of the markets on the functioning of producer organisations, through:
  • Compliance by its members with the rules adopted by the PO.
  • Non-discrimination among members.
  • Levying of a financial contribution from members to operate.
  • A democratic functioning to allow scrutiny.
  • The imposition of penalties for infringement.
  • Clear rules on admission and withdrawal of membership.
  • Clear accounting and budgetary rules.
• PO economic activity requirements (need to meet one of the following criteria on an ongoing basis):
  • number of vessels operated by PO members is at least 20% of the total number of vessels operating in its area.
  • PO lands at least 15% by weight of total production in its area.
  • PO lands at least 30% by weight of total production in a major port or market in its area.
• Two additional possible criteria are available for PO’s registering in England:
  • PO has a minimum of 200 members that are active fishermen (the PO must provide a list of vessels and their landings data over the previous 3 years, where applicable).
  • PO lands at least 5,000 tonnes of fishery products.