Review of the Amended Economic Link License Condition

7. Scottish Government response

Following this exploration of landings data, feedback from stakeholders, and information gathered from other sources, we will now move to set out the Scottish Government response.

Whether the aims and objectives of the policy intervention have been achieved.

It is clear that the policy intervention has resulted in a greater quantity of mackerel and herring being landed into Scotland than would otherwise have been the case. This is borne out in landings data and in stakeholder feedback. There has been a step change in behaviour whereby pelagic vessels are landing an increased proportion of their catch into Scotland. As seen above it is estimated that an additional £6 million of herring and £52.5 million of mackerel have been landed into Scotland in the time that the policy has been in place.

The policy change has been an important driver of business activity and helped support the long-term growth of these economies by increasing the volume and regularity of the supply of fish landed and available to process in Scotland than would otherwise have been the case. It has also helped with food security.

The policy has also attracted greater investment in the fishing industry by reducing supply chain risks for Scottish fish processing and handling businesses. This is attested to by the recent significant investment in processing facilities in Scotland in anticipation of increased supply. Processors set out that they have improved their facilities and are now able to provide better and more secure employment for their staff. There has also been a significant growth in the export of mackerel to premium markets (a key concern expressed by many in response to the 2017 consultation was that Scottish processors did not have access to such markets). Scottish mackerel exports to Japan have increased markedly from 2% of the total market to 20% over a four year period^[20] . With the amended economic link licence conditions being seen as a key enabler of this growth^[21].

Based on landings data and feedback from stakeholders, the policy has brought greater social and economic benefits to Scotland by spreading the benefits arising from fishing quota more widely through fishing communities.

In general terms, the policy can be categorised as succeeding in its stated aims.

The views of those impacted by the policy intervention

Turning now to the views of those impacted by the policy intervention. There still exists polarisation of opinion amongst many in the Scottish pelagic sector in relation to the economic link licence condition.

We will not explore all the themes/views expressed but focus on the key areas of concern arising from the intervention from those opposed to the change introduced.

The price differential between Norway and Scotland is one key area of concern for vessels that have required to amend their fishing activity. When consulting (ahead of the policy change) there were fears that it could result in a decrease in the price Scottish processors paid for mackerel and herring. For mackerel, the real price received in Scotland increased in 2024 (Graph 7) after a slight decrease in 2023 is seen in both Scotland and Norway. Herring prices (Graph 8) have decreased in Scotland since the policy change, but they have also decreased in Norway, indicating this price decrease is not driven by Scottish processors paying lower prices, but a broader price trend for herring in general (perhaps attributable to higher than average TAC for the species). The amended economic link policy does not therefore appear to have resulted in a lowering of price being paid by Scottish processors.

In discussions with pelagic processors it was set out that reduced supply to Norwegian processors (as a direct result of the economic link policy change and lower mackerel TACs for 2025) and very strong market demand, alongside other factors (such as subsidies, differing business structures and energy costs), have given rise to the price per tonne received by Scottish vessels in Norway being well above historic averages. It is likely that the increase in prices being offered in Norway is to some degree attributable to the change in economic link provisions due to a consequential drop in supply to that market.

Another factor which may be contributing to the price differential is that access arrangements for Norwegian vessels to Scottish waters have become more restricted following Britain leaving the EU and the end of the UK’s Transition Period with the EU (31 December 2020). Therefore, catches from Scottish vessels, which enjoy the right to fish all of their catches from Scottish waters (where the shared mackerel stock reaches its peak condition) achieve a premium. As per Graph 7 & 8, it is noticeable that in 2022 (the year before the amended economic link licence conditions were introduced) there was a marked divergence in the average PPT received by Scottish vessels landing into Scotland and Norway. Analysis of Norwegian landing data shows that, since 2021, Scottish vessels landing into Norway have received a higher PPT for mackerel compared to Norwegian vessels landing into Norway (Graph 9), further suggesting that the location of the catch may have an influence on the price differential. Scottish vessels landing herring into Norway have held a price premium over Norwegian vessels landing herring into Norway since 2016 (Graph 10). Whilst the premium grew between the years of 2020 to 2022, it has since closed in 2023 and 2024, with both sets of vessels receiving similar prices.

It should be noted that Scottish pelagic vessel owners are benefitting from high prices in both Scotland and Norway. The portion of catch landed into Norway (and as set out above many vessels appear to be landing as much mackerel as possible into Norway) is achieving this higher price.

The impact on business revenues of vessels that have required to change their landings patterns is more difficult to establish. The view of stakeholders was that, had their previous pattern of landing into Norway continued, their revenue would have been higher. As such, this policy change was seen as an immediate cost to these businesses. These stakeholders set out that the change has also resulted in increased business costs such as increased wear and tear on vessels and increased equipment, fuel and staffing costs. However, the impression was never given that there was any threat to business viability or in some discussions that there had been a reduction in profits. Indeed, in other discussions, it was stated that current conditions are very favourable for the pelagic catching sector, especially following Brexit and the significant increase in the quota share of mackerel and herring received. Vessels are receiving a greater quota share and achieving a higher price per tonne compared with historical averages both in Scotland and in Norway. Scottish fisheries management data would appear to support these claims, with the total value stemming from mackerel and herring landed by Scottish vessels in 2024 rising to £332 million, a real increase of 9% from 2023 (£305 million), and 13% from 2022 (£293 million)^[22]. It should also be noted that for many pelagic vessels their quota allocation of stocks not covered by economic link provisions will have increased following Brexit.

Changes in fishing operations were reported, with vessels reporting going to sea more often, whilst simultaneously limiting catch for processing capacity (which has added business costs). There was some concern expressed at potential health and safety issues, although not all vessel owners cited this concern and processors set out that they would certainly not encourage vessels to go to sea in dangerous conditions. Some vessels had experienced increased wait times to unload catch and the experience in Scotland was compared unfavourably with conditions elsewhere. In discussions, processors stated that this situation could be alleviated through better business planning and spreading landings throughout, and lengthening, the seasons. Issues around unloading of catch appeared to be particularly acute in relation to the herring fishing season. Though some opponents of the policy change stated that vessels associated with Scottish processors have switched to increase landings abroad, our analysis of landings data found that the landing pattern of these vessels have remained consistent.

In relation to how the economic link amendment had been put in place there was a strong and consistent message from supporters of the change that there was significant lost benefit from the mackerel fishery. It was reported in stakeholder feedback that vessels were seeking to land their full allocation of herring into Scotland in order to maximise landings of mackerel abroad. This appears to be borne out in figures above and appears to be exacerbating issues around unloading herring catch into Scottish processors.

In relation to feedback from those supportive of the policy. It was felt that the amendments had achieved their aims and objectives. However, it was felt that the policy was not as effective as it could be.

Recommendations for potential changes to the policy intervention

From the evidence above it can be seen that amended economic link licence conditions have achieved the aims and objectives of the policy intervention in the two years and a half years in which it has been in place.

The policy change continues to be controversial (particularly in relation to its impact on around 10 pelagic vessels). Though the potential revenue of these vessels is lower than it may have otherwise been, it does not appear to have impacted on their viability, nor does profitability seem to have declined – indeed these vessels have benefited from additional mackerel and herring quota and buoyant prices for the species. It is also worth noting that we continue to see investment in new vessels^[23],[24]. It is recommended that the policy continues to be kept under review and the price differential continues to be a key focus of future reviews.

Extra landings have brought benefits to Scottish ports and processors allowing for improved business security and investment. However, this benefit is less than it could be as some vessels are landing as much of their herring allocation as possible into Scotland in order to land the maximum the quantity of mackerel abroad. Under the current economic link provision, the 55% landing target provision applies to total landings of all species covered. Given that pelagic vessels will have an allocation of quota consisting of a mixture of mackerel and herring, some vessels are choosing to land as much herring as possible into Scotland (typically these vessels have a smaller allocation of herring relative to mackerel) in order to land as much mackerel as possible into Norway. This is resulting in lost economic opportunity to Scotland, as well as adding to congestion during the short, summer herring season. The Scottish Government will therefore consider acting to compel, or incentivise, vessels to land more mackerel into Scotland, either through amending the current economic link provisions to apply on a per species basis (so that vessels are required to land 55% of mackerel and 55% of herring into Scotland), or using the allocation of mackerel Additional Quota to incentivise greater landings into Scotland.

As we heard in stakeholder feedback sessions there are occasions where vessels are having to wait to unload their catch. However, delays in unloading catch are not a new feature and it was reported by processors that this had not resulted in a decline in quality. There does appear to be increased communication between the catching and processing sectors and we encourage improved communication/engagement.

In terms of the demersal and shellfish Scottish fleet, consideration is to be given to instances where vessels are fishing in the waters of other UK fisheries administrations they are not required to return to Scottish ports to land their catch.

Summary of recommendations:

• The policy continues to be kept under review.
• Consideration is given to increase landings of mackerel into Scotland, either through amending the current economic link provisions to apply on a per species basis (so that vessels required to land 55% of mackerel and 55% of herring into Scotland) and/or using the allocation of mackerel quota to incentivise greater landings into Scotland.
• The price differential between Scotland and elsewhere will continue to feature as part of future reviews of the policy.
• Consideration is given to instances where demersal/shellfish vessels are fishing in the waters of other UK fisheries administrations and whether this should be removed from economic link provisions.
• Improved communication between the catching and processing sectors.