The Scottish Aquaculture Sector
Finfish aquaculture farming has been prevalent in Scotland since 1965 when a trout farm was established in Loch Ailort, Inverness-shire. It developed into the first salmon farm in 1971 (SalScot, 2022; The history of Scottish salmon farming). Since then the industry has developed as have shellfish farms (mainly mussels and oysters), and now seaweed farms (of many varieties). Aquaculture now forms a significant and sustainable part of the Scottish economy contributing to both exports and local communities in mainly rural areas of Scotland. Annexe B shows the development of the finfish and shellfish industry both in terms of volume and number of sites.
To be clear this report covers only those parts of the aquaculture industry that are 'farmed' and not those shellfish, seaweed or other species that may be harvested from shore line or 'fished' in whatever way from the sea.
There are three parts to the sector, namely finfish farming (mainly salmon but also some trout), shellfish (mainly mussels and oyster), and seaweed of various varieties. They all come under the same regulatory framework at present but through this investigation it is my opinion that they have developed and are developing differently. The similarities that perhaps were once there due to their location and size no longer exist.
Therefore my first recommendation is that there should be different regulatory solutions for finfish, shellfish, and seaweed with each based on a framework specifically designed for that part of the sector and in which the consenting and all other regulatory processes will sit and be driven by.
In the early stages of the aquaculture sector, there was little knowledge or incentive to establish a proper and cohesive regulatory system around it. It was small and much came as adjuncts to crofting etc. in rural areas. As the industry and knowledge has expanded, it appears that regulation has effectively been bolted on in an ad‑hoc basis as issues have emerged. This has resulted, as one contributor to the review stated:
"in a fragmented system of regulatory bodies, without in some cases the devolution of appropriate powers of enforcement, with a lack of clarity regarding a specific remit of responsibilities (resulting in regulation gaps), disjointed areas of responsibility, and poor accountability of regulatory decision making."
This sentiment was reflected in varying degrees by the majority of consultees.
In recent years Government Committees and working parties have produced a number of recommendations on new policy to address some specific issues relating to the industry. Good new regulation on its own of any type, going into an ineffective process will become poor regulation.
From my examination I believe that it is the process itself that is at fault and needs rectified. However, fixing that process on its own will not work either if it does not sit within a framework that provides guidelines and boundaries on how and in what parameters decisions and judgements are, and should be made on the sector. Without that framework, even with an effective process, you get inconsistency and poor decision making as different parts of the process create their own parameters and boundaries which may conflict with others and make the process even more dysfunctional.
Although the above has resonance across most of Scotland, which is involved in aquaculture, it is not as prevalent on Shetland. The aquaculture sector on Shetland is seen as a key economic driver. It has the resource in place with skills and expertise to make decisions, has the support of the public and local bodies, and also critically the community. That is not to say that the system works perfectly on Shetland. From my discussions with them it is clear that they believe that some parts could be done better both in terms of consistency of decision making by other parties involved in the process but also in resolving most of the issues through pre application, multi-lateral consultation, which they believe strongly in.
Therefore, while I do think Shetland should be included in all the recommendations that I make in this report I believe that they could implement it quicker than other parts of Scotland.
The rationale behind this is:
- It has an established and locally supported aquaculture sector that supplies over 20% of all farmed salmon, and over 70% of all farmed mussels in Scotland and is a key driver of the economy on the island;
- It has established expertise across the island and the Council already works well with the industry;
- There appears to be support for the industry within the community, and
- The Shetland Islands Council have jurisdiction over aquaculture planning through the Town and Country Planning Act 1997 and the Zetland County Council Act 1974 applies a works licence to seaweed cultivation (up to 12nm), as set out in the Shetland Islands Regional Marine Plan.
The sections below set out what I think both a framework and a consenting process may look like for each part of the aquaculture sector, which will allow sensible and agreed decisions to be made within a vision and framework for the Aquaculture sector in Scotland.
The vision gives the overarching statement on what the Scottish Government wants from that sector, the framework sets out the operating principles, boundaries and guidelines in which that vision will operate and the consenting system will operate within that framework to ensure that decisions are made consistently and transparently on evidence that the framework creates. Therefore, in terms of timing the Scottish Government led Vision for Aquaculture needs to be put in place first before the others can be concluded. However, there are some parts of the process where I believe work could begin now, prior to production of the Vision.
The finfish industry started in 1965 as a 'cottage industry' and while it took some time to develop, today it has become a very sophisticated industry with a view to develop even further over the coming 5 to 10 years.
Scottish salmon is the UK's biggest food export, and supports 12,000 jobs in Scotland. It competes in a global market with the main competitors being in Norway, Faroes, Chile, Canada, and Iceland.
Annexe B shows the growth in both salmon and trout over the last 2 decades. While the tonnage has grown significantly since it began, it has plateaued in recent years. The industry has indicated that one of the reasons for this is the ineffective regulatory system that is in operation, in terms of the length of time taken to make decisions and how uncertain and inconsistent the outcomes are. Given that the sums of investment required to take the industry forward in a sustainable way are significant, that uncertainty can halt or slow down those development plans. While I understand their concerns, I am not convinced that the regulatory system itself is entirely at fault. I believe the erosion of trust has a part to play. It is clear, however, that the timescales for consenting process, set out in Annexe F are not an encouragement to the sector and are the current minimum times taken.
It should also be noted that it has taken 10-20 years to increase and maintain a 50 tonne increase in production, industry is predicting an uplift of 40 tonnes in one year according to the latest production statistics issued by the Scottish Government, coinciding with better modelling by SEPA and the removal of the biomass cap of 2500 tonnes. In terms of international brand share over the past 10 yearsScottish salmon's share of world wide salmon sales has dropped from 10% to around 6% (Iversen et al., 2020 and reported from meetings with industry).
The industry have also indicated that some of the historical sites they currently operate may not now always be the most optimal, based on advances in knowledge of site suitability and operational experience. The location of active Atlantic salmon sites throughout Scotland is shown in Annexe C.1. Industry have again indicated that there are options to move some or all of those to more appropriate locations with the possibility of consolidating some of those sites. The current regulatory system makes it difficult to implement consolidation plans to close smaller sites and relocate to a single larger site elsewhere.
Finfish and mainly the salmon sector is now made up of a number of large international businesses who have and will continue to invest heavily in the industry as long as they feel the return on their investment is satisfactory. While there are other smaller players, the cost of entry into the finfish industry has and will continue to increase due both to their customers' expectations and technological changes in the production process. Regulation also plays a part in that cost for a variety of reasons and as long as it is sensibly and scientifically based should remain so.
I had not visited a fish farm for almost 20 years and like many, I expect who have done the same, found it totally different than I remembered. Having spoken to the industry before visiting, it is clear that salmon farming now is a much more sophisticated industry than it was even perhaps 5 years ago, and that pace of change is accelerating.
Annexe H shows the lifecycle and current production cycle of a farmed salmon. The industry appear to be moving toward a production process, which shortens the time fish are in sea water. How long that process will take and how far that can go is still unclear. The current aspiration is to grow larger smolts in order to reduce the marine cycle to a maximum of 1 year. If this is achieved, it will alleviate some of the disease, sea lice, and other issues including their interaction with other species. Also to look at other ways of achieving a similar outcome there are pilot operations investigating different types of offshore containment. Advances in science and data gathering are the driving force behind this plan.
As is stated above the finfish industry in Scotland is dominated by a number of large international companies. Those larger companies have been encouraged to invest, to date, due to the fact that Scottish Salmon has managed to maintain its position as a premium product. However, in recent years, Scottish salmon's share of the world market has fallen. According to industry this is, in part, due to the regulatory process slowing down growth of the sector, but it is also, due as well to the increasing production in the Faroes and the arrival of new players such as Iceland. One of the purposes of the new framework would be to establish levels of biomass for the sector in terms of future tonnage of finfish. This should be implemented by Government and not by individual bodies or regulators as that biomass figure needs to include economic as well as environmental factors. Our experience during the COVID-19 pandemic has demonstrated why Government should make those important decisions and not individual bodies.
There is a SNP manifesto commitment to "support innovation in aquaculture, for example, by exploring the development of closed containment fish production on land". RAS (Recirculating Aquaculture System) technology, is being explored in southern USA, South America, and in parts of Europe and has been advanced rapidly in recent years. There are RAS hatcheries in Scotland for smolt production that didn't exist 5 years ago. The energy cost involved in RAS to produce fully grown salmon is also significant resulting in a bigger carbon footprint than open net pen farming.
It is, however, important to address the previous point that Scottish Salmon has maintained its premium compared to elsewhere. This is likely due to the quality of the waters it is grown in. If the Scottish industry were to fully progress to onshore RAS then I doubt it could maintain its premium or indeed its rational for being in Scotland at all given that proximity to its customer would become a key determinant.
In summary from what I have read and heard during this review leads me to believe that there is still a perception that the finfish farming practices remain in the cottage industry. A better understanding of the reality and the direction it is heading might improve the image of fish farming. Even in Shetland where the development of aquaculture has been integral to the community they commented that:
"We feel the public perception of the aquaculture industry in Shetland is very different when compared to other parts of Scotland and developments around our coast have been accepted as part of our progression to using our ability to make the most of our assets. We have considerably less public opposition to aquaculture developments when compared to other aquaculture authority areas in Scotland and development is generally supported by our communities as an established source of jobs and income. This can also be attributed to having fishing communities that have progressed and diversified to take on aquaculture in the last 40 plus years."
Finfish farming is a key rural employer with companies now recognising that keeping people in these communities is critical to their future supply of labour by building houses in communities where they operate. Aquaculture companies also help create and maintain infrastructure as well as provide support to community activities including tourism. Companies have also created their own supply chains using local suppliers, where possible. I have been told tourists are interested in how fish and other farms operate and companies are now considering how they might turn hatcheries and farms into visitor centres based on that demand. One operator who runs boat services and other excursions around aquaculture sites told me that the fish farms they passed always stimulated positive interest from visitors.
It's clear that those that live in the communities where aquaculture is prevalent and are economically active in that community are generally supportive, where it is understood and trusted that the environmental impacts are appropriately considered and regulated as well. There is however strong opposition to further growth of the finfish sector which has gained momentum in recent years. This is not peculiar to aquaculture but mirrors the picture in other sectors, where objectors are prevalent.
The industry could and should do a lot more to promote the benefits it is providing to communities and others through its activities. It is my understanding that some within the industry are looking to promote their new sites as visitor attractions. This would be a positive step in promoting the industry and could help to restore trust.
The majority of shellfish production is centred on mussels but oysters and scallops are also grown. Farming tends to be located on the west coast, Western isles and Shetland. Shellfish need pristine waters to grow. Oysters are normally grown in bags whereas mussels tend to be grown on ropes. While spat (juveniles) can be purchased from a hatchery many (particularly mussel farmers) rely on the spat arriving naturally in the tide.
The cost of planning in relation to profitability is an issue due to the number of years it can take for a shellfish farm to be deemed productive. It can take up to 5 years for a farmer to establish whether the site is in the right location. This essentially renders that farmer unproductive in the early years.
Annexe C.2 shows the location of active shellfish sites throughout Scotland.
The shellfish industry, with the exception of some of the Shetland farms, is essentially still a cottage industry with small operators and crofters adding it to their current activities.
Annexe B.3 shows the tonnage of mussels produced for table in Scotland. The tonnage has been fairly stable for the last 10 years with only the odd fluctuation. Other than Shetland, where aquaculture is seen as an integral part of their economy, accounting for about 70% of all shellfish produced from farms, no large scale shell fish farms have been established. International companies have not invested as heavily and the sector is still made up of a multitude of smaller companies on small-scale sites scattered across Scotland from Hunterston to Shetland.
In discussing with the industry and others why shellfish has not reached the same size and structure as finfish one factor seems to stand out, namely the margin that shellfish farms can make compared with that of finfish. As one industry expert said:
"For mussels to be obtaining the same margin as finfish it would have to be selling at £15 a kilo rather than the £3 per kilo that it is achieving."
This is reflected in much of the feedback that I have had from operators. Cost of compliance, licencing etc. was frequently mentioned, compared to the finfish sector, who either never mentioned the costs or never to the same extent.
There are issues around regulation that the sector need addressed, mainly to do with planning and the associated costs of providing impact assessments. Without a way of obtaining a premium for their product the industry may continue to exhibit slow growth as it has in recent years.
The seaweed sector in Scotland is still in its infancy and I would categorise it currently as in the exploratory phase of establishing what it could realistically be in the future and what are the optimal operational practices needed to produce efficiently and effectively.
Applications to grow and harvest seaweed by farming began in 2017 (Annexe J). As of May 2021 there were 12 registered Crown Estates Scotland sites but only 1 fully commercial cultivation agreement with the others being pilot studies (CES, 2021). Annexe J details all seaweed marine licence applications up to December 2021, totalling 17. The basic challenge is the different types of seaweed that could be farmed and their end uses. It's not yet clear which species will dominate. There are a number of researchers looking at sea weed farming practices and the optimum species to grow and their end uses. Some of that is determined by the waters around Scotland where only certain types of seaweed will grow well.
Seaweed farms are much larger than traditional finfish or shellfish farms in terms of the hectares they cover. The seaweed grows on horizontal ropes that sit just below the surface as they need sunlight to develop. The size of the farm is linear in terms of the tonnage production. The site I visited was over 60 hectares. In simple terms, to produce 1000 wet tonnes of seaweed you need plots which are approximately 5 km by 7 km of seabed. Certain species will have preferences for certain conditions (e.g. more wave exposure and strong tidal current). Shelter from different wind directions is also important to reduce the sea days lost to poor weather. Increasing the density of seaweed farming structures (i.e. more growing rope per hectare) will come at a cost of inefficient deployment and harvesting.
Unlike finfish and shellfish, sea weed does not require planning permission or CAR consents. It is consented through a marine licence, and requires a Crown Estate lease and Works License in Shetland.
The size of the industry is undetermined and will remain so until a stable market is identified. However, I do still believe that like the other parts of the aquaculture industry, it needs a framework. The Scottish Government has already set up a Seaweed Review Steering Group to better understand the sector.
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