Retrospective Evaluation of Scrapping and Temporary Cessation Measures in the EFF EFF Committee Brussels, 6 November 2013 DG MARE/A3

Objectives of the study  To what extent have cessation measures are used in practice in line with their intended objectives in the EFF, which are: For permanent cessation: promote a sustainable balance between resources and the fishing capacity of the fishing; and For temporary cessation: maintain activity and jobs in periods where activity is interrupted for reasons beyond the control of fishermen.

Methodology  The study is a retrospective evaluation. It focuses on the EFF, although some comparisons are also done with the FIFG. It looks at whether measures where relevant, effective, efficient, coherent and acceptable.  It includes also counterfactual element (what would have happened if permanent & temporary cessation would not have been available?)  Sample of 9 Member States analysed (DK, EE, FR, IT, PL, PT, ES, SE and UK) representing 90% of scrapping expenditure, 60% of vessels scrapped and most of temporary cessation expenditure.  Managing Authorities were interviewed. A sample of 734 vessel owners were also surveyed, including a group made of these that either did not scrap or applied for supported scrap but were rejected or scrapped without support (the comparison group)

Facts on permanent cessation It helps to reduce the number of vessels and the capacity of the fleet (GT) Between 2000 and 2011, the EU fishing fleet decreased by 25% in number of vessels and by 24% in GT. Largest reductions(> 30% of GT removed) observed in the North Sea and Baltic areas (BE, NL, DK, SW, LV, EE). Reduction of 24% to 30% in large-scale fishing fleets in ES, ITA, FR, UK. 75% of exited GT were trawlers. Compared to the FIFG, the EFF was more focussed (large vessels operating with trawls). Few schemes have targeted SSCF. 78% of GT reduction can be attributed to scrapping under the EFF. 50% in the FIFG. Less scrapping under the EFF than under the FIFG (800 vessels/ GT/year vs 1600 vessels and 50000GT/year). Increased to GT/year during the peak of the crisis (fuel crisis regulation. Little unsupported scrapping and mostly SSCF vessels until Rising fuel prices and the economic crisis are changing incentives for scrapping.

Views on permanent cessation  Managing Authorities interviewed are split on their views on permanent cessation : 2/9 consider it an ineffective tool to achieve balance and poor value for money. These privilege now market-based approaches. 5/9 consider it an effective if often inefficient tool to reduce capacity in a quick and socially acceptable way. Other tools are available and many are considering market- based approaches to manage capacity in the longer term 2/9 consider it as the main way to reduce capacity now and in the future. Market- based instruments inadequate in the Mediterranean and for SSCF.  Nevertheless, many MA consider that the adjustment of their fleets is largely achieved. Consequently, there would be less need to use scrapping in the next programming period.  Most vessel owners having scrapped with support would not have done so in the absence of the scrapping premium. However, the main motivations to scrap were having reached retirement age and lack of profitability. Interestingly, the economic situation of the comparison group was better, in general.

Findings on permanent cessation No clear link between permanent cessation and the reduction of capacity. Other factors play a role: reduction in fishing opportunities or greater competition from imports. Reductions in fishing activity during the EFF more related to regulatory restrictions (recovery and management plans) than to the reduction of the fleet size itself. Several MA recognise the lack of a clear link between fleet capacity and resource status and an inability to measure the impact of cessation measures. Despite this, some MS have implemented permanent cessation to: Improve the economic efficiency of the fleet (e.g. Scotland); Remove fuel inefficient vessels (e.g. Denmark); and Modernise the fleet (e.g. Estonia)  46% of vessel owners with more than one vessel (14%) used funding to modernise their remaining vessels. In 7 out of 9 case studies there are examples of (multi)vessel owners having bought vessels with the premium.  Funding has had some effect on modernisation. Multi-vessel owners scrap their most technically outdated, unprofitable vessels. Permanent cessation has slowed down the trend of increasing average vessel age.

Temporary cessation  Temporary cessation has been used to compensate for unexpected loss of fishing opportunities (as applied in the Baltic during the cod fishery closure or as applied in France for pollution events) or to freeze capacity at certain times of the year (as applied in Italy during the Fermo Biologico).  Temporary cessation is therefore not attempting to reduce (over)capacity in the European fleet. Rather, it is useful in rendering the measures politically acceptable.  This is especially the case in instances, such as Italy, where temporary cessation subsides have become entrenched and incorporated into yearly payments to cover vessel owners’ fixed costs during periods where they would be inactive anyway or fishing with other gear.

Temporary cessation  In no country under study did the case study conclude that the measures had been effective at curtailing fishing effort in relation to the counterfactual.  Temporary cessation may have helped to maintain jobs (or to preserve unemployment allocations) in the short term but, at the same time maintains capacity.

Recommendations  The effectiveness & efficiency of permanent and temporary cessation in the long-term is questionable. Any funding of cessation measures should be limited and highly targeted.  Capping the amount of public funds to be spent on permanent cessation would encourage MS to focus it where it is most needed and increase efficiency in terms of spending per vessel or per GT scrapped.  Capping will also leave MS enough flexibility to take into consideration their different needs (type of the fleet, stocks status, etc.).  Capping the amount of public funds to be spent on temporary cessation should be accompanied by greater efforts to ensure that funding is used for the intended purposes of maintaining jobs and viable fleets during unforeseen fishery closure events rather than regular, anticipated payments.

More recommendations  Permanent cessation should only be used in conjunction with a specific fishery recovery plan, but other measures (including market-based tools) not to be forgotten).  Competitive bidding processes for permanent cessation have shown they could improve efficiency by ensuring appropriate premiums are set. This can be considered as good practice.  Competitive bidding could be linked to weighting selection criteria in line with the objectives of EU and national policy.  However, care should be taken to ensure this does not result in overly complex application procedures that may be a disincentive particularly for small-scale operators.

Thank you for your attention