Fishing - Quota Management Group (QMG) trial: evaluation

4. Review of QMG and PO annual reports

The annual reports provided by eight Scottish POs and two QMGs to the Scottish Government were analysed as part of this project. These reports are used by the Scottish Government to manage the sectoral groups and contain commercially confidential information, therefore, the reports are not currently published. Information provided by QMGs was compared to information provided by POs. The methodological approach to the review is described in Annex A: Methodology. The main trends discovered through the review are discussed below.

4.1. Fish Quota Data

QMGs are required to provide additional information on quota management in relation to their obligations. This includes details on how the group allocates its quota as well as planned quota leasing and the motivation for leasing. This is in addition to the information provided on their distribution of vessel quota based on a pool system, individual quota allocations, or other methods.

This data is a notable improvement against what PO reports provide as it allows the Scottish Government to better understand how groups utilise the quota they administer and the leasing market (e.g. motivations for leasing, prices). Currently, it appears the value of the information outweighs any concerns of increased data collection, as the information provided should be collected by the group for its own management anyway. The two current QMGs both operate small fleets and predominantly pelagic stocks. However, the level of burden is likely to be significantly larger for a group operating a large demersal fleet.

The additional data supports the objective to gain a greater understanding of the utilisation of quota and provides information on a previously opaque area, thus improving the Scottish Government’s ability to monitor and evaluate these groups.

4.2. General Information

Both the QMGs and POs have space to detail general challenges and opportunities in their annual reports. The PO reports include more subsections than the QMG reports to elaborate on this information. However, the most detailed and useful information was generally seen outwith the proscribed subsections. The mandatory subsections often repeat similar information year on year. For example, the PO reports ask about the management of the landing obligation. This subsection was very informative when this was first introduced, but in the subsequent years this subsection has become gradually less informative and repeated information from the previous years.

The QMG reports thus do not seem to lose value by not covering certain subsections or by not proscribing details in certain subsections. Whilst it is possible that in future proscribed subsections could be added for new policies, these may need to be time bound to ensure value in the reporting.

The QMG reports also lack two notable subsections that are present in the PO reports providing firstly, general information on marketing strategies and secondly, on managing stocks that are challenging to sell. As QMGs do not have objectives to support fish markets in the same way as POs, this section is excluded from their report. Some POs managed their own direct marketing. Other POs used affiliated groups either to pool resources for marketing or to allow their members to pool resources for marketing. This shows that marketing often takes place beyond the PO level. This indicates that QMGs do not need to fill this gap and thus is not a detriment to the system to drop this requirement for QMGs.

4.3. Mandatory PO Objectives

POs are required to report against the four mandatory objectives. The responses from the POs were generally consistent, with some noting additional positive actions to those listed below.

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

• Regularly referred to their quota trading/leasing operations to support the fisheries, or their engagement with groups who support fishers.

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

• Regularly referred to meeting mandatory mesh sizes, as well as support for an information sharing system to avoid choke species, and some gear trials.
• For gear trials it was less clear if this was PO run or PO supported.

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

• Regularly referenced obtained, or efforts to obtain, Marine Stewardship Council (MSC) certification that sets standards for sustainable fishing.
• Also noted that POs have significant traceability information, as legally required, but they are unable to ensure this reaches the customer as they lose control after the first sale.

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

• Regularly referenced review of available data to ensure illegal fishing is not occurring. All POs were of the view that illegal fishing was exceedingly rare in their fleets.
• It is unclear how effective POs would be at supporting this objective if there were notable incidents in the Scottish fleet, given their apparent reliance on the same data that the Scottish Government can access.

With regards to the mandatory objectives, POs often referred to their adherence to required standards or their support of associated organisations where standards were exceeding that legally required. In these instances it is not clear how successful POs actually are in achieving these higher standards. Instead it appears that POs support industry standards and/or best practice, for example in the case of the Marine Stewardship Council (MSC) certification.

4.4. Elective PO Objective

POs have to choose at minimum two elective objectives out of five elective objectives (see 2.3. Key Characteristics of QMGs and POs) and report on what they have done to meet those objectives. Elective objectives of improving the market conditions and stabilising the markets were the most commonly chosen. Objectives focused on improving economic returns appeared to be used interchangeably with objective focused on improving market conditions but was used less often. The responses focused on the following types of activities:

• Expanding MSC certification.
• Support through land based processing.
• Supporting reports or working groups looking to improve outcomes for fishers.
• Direct market intervention during the Covid-19 pandemic.
• Observing the market to try and smooth leasing prices and giving advance notice to vessels on TAC changes.

Objectives focused on contributing to the food supply and reducing the environmental impact were only used by some groups or were only used in some years. These responses focused on:

• Work undertaken to improve the quality of landed products.
• Items noted under objective 2 such as gear trials.
• Where their fisheries were particularly low impact due to species or gear use.

The objectives on improving market conditions were notable in showing significant involvement from several POs and were often one of the most robust examples of where POs add value. The stabilising of markets objective was evidenced by POs’ actions during the Covid-19 pandemic but thereafter POs relegated to watching the market without interventions. However, this does show that the POs can intervene when necessary even if this is a rare occurrence.

4.4. QMG Objectives

Similarly to POs, QMGs are required to report annually against their objectives (see 2.3. Key Characteristics of QMGs and POs). The QMG reports presented much less narrative than the PO reports as they have fewer objectives and reduced additional data requirements. While the sample is small (there are only two QMGs in Scotland), the responses appear to be consistent. This means that any new entrant would have to meet the set standard of responses, as there would be certain expectations of the level of detail QMGs are required to provide in their reports. Below are the main findings of the review.

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

• This objective was evidenced in the utilisation rates of quota and the trading of quota opportunities provided in the quota data sections. As such this objective did not have its own additional narrative requirement.

2. Optimise the sustainable harvesting of wild fish.

• This section specifically requires responses to be above and beyond current legislation.
• The QMGs often reference industry accreditation schemes and mentioned the new technologies seen on their vessels, as well as benefits of these technologies.

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.

• The QMGs often referenced their support through linked land based processing, landings into Scotland directly, and support of local enterprises.

The questions asked in the QMG report were similar to those covered by the POs, with environmentally conscious fishing and economic opportunities being the two key themes. QMG reports did not cover market stabilisation, traceability and contributing to the elimination of illegal fishing.

As QMGs no longer have an exemption from the EU competition rules under the CMO regulation, without a comparable UK exemption QMGs could not intervene in the same way as POs.

PO responses to traceability and contributing to the elimination of illegal fishing relied heavily on meeting of mandated requirements. It is likely that QMG responses to these questions would have yielded the same responses as PO responses.

This indicates that the QMG questions capture largely the same information and encourage the same actions as POs, provided the standard accepted by the Scottish Government is maintained.

4.5. Comparison between QMG and PO annual reports

The information and the level of detail in both the QMG and PO reports was quite similar, with the reduced number of objectives for QMGs not resulting in less valuable information. The exception is the objective on stabilising the market for which the QMGs do not have an objective.

POs indicated that they provided additional services to the sector in meeting their elective objectives. However, the review showed that often information about the additional services cited their support of or participation with other groups (such as MSC). It was not clear how involved the POs are in these groups and if the objective encouraged their involvement in these groups, given that these were industry wide standards. While these groups are likely to benefit from PO involvement, it was not clear whether having a specific objective improved or increased PO engagement, or whether POs would disengage in the absence of a specific objective.

There were also objectives where POs did not provide much additional information, particularly on traceability and the elimination of illegal fishing. While these may have been more relevant in the past, reviewed reports usually referenced their adherence to regulations utilising the same information available to the Scottish Government through compliance and enforcement work. Therefore, it is not clear if these objectives are necessary.

Currently, QMGs are not expected to be involved in the fish marketing. If such objectives are added to QMG reports in future to match PO requirements, there should be careful considerations to these additional for QMGs requirements.

Both in the PO and the QMG reports there were notable examples of objectives that did not see much change year on year. This was usually due to the multi-year payoffs in some projects (e.g. example marketing operations) or due to a standard having been set and then maintained for some time (e.g. updated ways of working due to the landing obligation or upgrading a fleets gears). The reports could benefit from noting where questions are time bound. For example, reports could ask for information for the past 3 years or specifying that a question will be asked for the next 5 years.

4.6. Summary: QMG and PO annual reports

The additional data provided in the QMG reports over and above the PO reports are valuable, helping support the Scottish Government’s management of these sectoral groups.

The general information and supporting narrative for the objectives provided by both reports is similar with the exception of the information on marketing and market stabilisation. Marketing is an activity often taking place beyond the POs’ activity. If QMGs were to make up a larger share of the sector in future, there would be a need to consider whether the market stabilisation objective needs to be added to QMG objectives (to match PO objectives).

The review found that the annual reports’ subsections focused on the traceability, contribution to the elimination of illegal fishing, and stabilising the market objectives do not always provide new information and are often repetitive (e.g. stating adherence to industry standards). There is a scope for considering whether these objectives need to change.

There are possible benefits for adding time bound objectives for both QMG and PO, to avoid repetition of the same information every year.

Overall, the QMG reports appear to be a suitable alternative for the PO reports, as they provide relevant information to support the Scottish Government’s aims for the trial and help to understand the utilisation of quota and the benefits to Scottish communities by sectoral groups.

Further, as noted in the Literature review, the lack of publicly available information was a likely reason for the limited academic interest in QMG and PO reports. Publishing the reports or part of the reports in future could help improve the literature and provide more scrutiny of these groups, both from the public and other sectoral groups.