Transformation in the South African Commercial Fishing Industry and Marine Aquaculture Sectors P RESENTATION TO THE SELECT COMMITTEE ON L AND AND E NVIRONMENT 14 JUNE 2011

Introduction Fishing rights - highly contentious and politically sensitive Large capital intensive offshore fisheries initially developed without controls, but effort & quota controls were introduced in 1970s & 1980s In inshore fisheries such as rock lobster, abalone and linefish, traditional fishing communities were main users. Increasing use by recreational fishers over time. When these fisheries were regulated, rights not given to traditional communities. As the resources declined & compliance effort stepped up, traditional small-scale fishers were forced into poverty. 2

Post 1994 Prior to 1994, almost all valuable rights held by large, white owned companies. Green & White Papers and Marine Living Resources Act (1998) set guidelines on fisheries management & transformation No specific reference to traditional or small-scale fisheries addressed in the medium and long-term rights allocations in 2001 and Long Term Rights Allocation Management Process (2005) put business principles first, but criteria for allocation not conducive to traditional or small-scale fisheries gaining rights, and community or collective allocations not considered Subsistence Fisheries Task Group made recommendations on small- scale sectors in 1998, but still left as an unresolved issue in

Post 1994 (continued) Although many small-scale fishers applied for individual rights in 2005, no allocations were specifically set aside for small-scale fishers in any of the main inshore sectors All rights allocated to individual right holders and companies within a Total Allowable Catch (TAC) or Total Allowable Effort (TAE) allocation. Since 2006, Department has been developing a Small-scale Fisheries Policy to address this issue – to be finalised by end of Ultimately all fisheries will be managed in an integrated way under a single TAC or TAE, although there may be different management models for different fisheries 4

Transformation in Commercial Fishing Sectors The medium- and long-term rights allocations achieved significant transformation in the fishing industry, measured in terms of black ownership of the TAC, to a varying extent in the different sectors. Transformation criteria have not generally been agreed upon. No targets for transformation been set by government in any of the sectors, neither is there a transformation charter for any sector or for the fishing sector as a whole. This is currently being addressed by DAFF. Some of the consequences of decisions taken during the LTRAMP process have been negative, e.g. vessel ownership criteria led to exploitation of the small rightholders and to many of them becoming “paper quota” holders Small right holders encouraged to develop sharing agreements with existing vessel owners who often put their own interests first. 5

Percentage black ownership in 2001, 2005, 2009, as % of rightholders with > 50 % ownership allocation / total allocation. * exact % ownership allocation/total allocation. SECTOR * Hake Deep Sea Trawl South Coast Rock Lobster Horse Mackerel Hake Inshore Trawl Small Pelagics Patagonian Toothfish KZN Prawn Trawl Demersal Shark Hake longline Seaweed Tuna Pole Squid West Coast Rock Lobster (Offshore)

% Black ownership (No. of Black rightholders/ total no. of rightholders) in a number of small-scale fisheries 7 SECTOR Hake Handline W Coast R Lobster (Nearshore) 6693 KZN Beach Seine5037- Netfish-5147 Oysters2660- White Mussels-100- Traditional Linefish284443

SUMMARY OF RESULTS Black ownership in the various sectors has generally shown an increasing trend since 2001 with a few notable exceptions, such as small pelagics, hake longline and seaweed. In 2001, the average black ownership across the main commercial sectors (calculated as an average of black ownership per sector where black ownership is defined as the percentage allocation of black rightholders holding more than 50%) was 49%. After the LTRAMP process in 2005, the average ownership per sector had increased to 58%. The current level is 59%, calculated by the same method. If the exact percentage of ownership by black rightholders as a percentage of the total allocation is used, the average is 57%. 8

SUMMARY OF RESULTS Although various methods can be used to calculate ownership, they do not produce markedly different results and it is likely that the methods used provide a fairly good measure of the ownership criterion In general, the most important commercial sectors are well transformed if the ownership criterion is used as a measure 9

Transformation in Commercial Fishing Sectors For informed discussion and debate around transformation, correct facts and information must be available, e.g. economics and status of transformation in each sector and statistics about revenue, jobs and level of industrialisation, dependence of communities, etc. It is necessary to look at the recreational sector as well, since it is well known that recreational fisheries generate valuable economic spin-offs and create jobs in a number of associated industries The department has not done in-depth research in these areas and there is a great need to collate existing information. This is being addressed in the current business plan. Transformation includes economic activity in other parts of the value chain, e.g processing, marketing, exporting and wholesale and retail sales, support, decentralization of services, job creation, capacity building, development of small business skills, and value adding initiatives (inc. review of import rebates, products R&D) in the sector. The draft Small Scale Fisheries Policy aims to address this. 10

Performance Review and Future Rights Allocations The Department is finalizing a Performance Review of the fishing industry. This is not a Rights Review, but it makes information available that can be used in a rights review process. Reports are available for each sector to inform the extent of transformation, investment and effective use of rights since In 2005, rights were allocated for periods of 8, 10 and 15 years. Rights allocation policies will be therefore be revised in years preceding 2013, 2015 and 2020, based on socio-economic information and new policies such as the Small Scale Fishing Policy, due to be finalized by the end of The Marine Living Resources Act will also need to be revised to accommodate new policies. Preparations are currently being made to revise rights allocation policies for squid, demersal sharks,traditional linefish, KZN prawn trawl, hake handline and tuna pole in In parallel, a Fisheries Transformation Charter is being developed to set transformation targets in each of the 22 current sectors 11

Challenges & Solutions Poaching remains a major threat to transformation and development of many fisheries, especially abalone and rock lobster – financial support to IFSS is crucial Many resources are already declining - rebuilding strategies for hake, abalone and rock lobster are in place. Shareholding in fisheries does not necessary translate to benefits – scoring criteria for future rights allocations need to be revisited Skills training, especially for small scale fishers is inadequate - will be addressed through the small-scale fisheries policy implementation Involvement by government in institutions to support the value chain is crucial - this is also addressed in the draft SSFP. 12

Transformation in the Marine Aquaculture Sector The Marine Aquaculture sector is a relatively new sector and has a transformation challenges. The industry has developed in RSA because wild fish stocks cannot meet the food security needs of the country and as a result of investment in a lucrative export industry. It is skills and technology-based and capital-driven; therefore funding is a major issue for all participants and a challenge for new entrants. The SA Marine Aquaculture industry began about 35 years ago as a small self- regulated industry. Marine Aquaculture Rights issued since BBBEE first addressed through the inclusion of the seven pillars in the assessment criteria for new applicants in 2008/2009. There are currently 43 farms in the sector. The sector employs 1120 individuals are non – HDIs; 907 are HDIs. 13

Employment in the Marine Aquaculture Industry 14

Profile of the Sector Current trends in the Marine Aquaculture sector are similar to trends in other research, technology and high capital-driven South African industries (Forestry, Tourism and Agriculture) compared in a transformation study of the sector. HDIs predominate the unskilled and skilled labour sector while non-HDIs dominate the management sector. The skilled labour group of the Marine Aquaculture sector differs from the other sectors investigated because HDIs dominate the skilled sector. This sector was dominated by non-HDIs in the Forestry, Tourism and Agriculture sector. The South African Marine Aquaculture industry has transformation disparities in the ownership, management and unskilled employment levels. A concern is the high percentage (60%) of unskilled workers; this is reflective of a lack of skills transfer and training programmes in the sector. There are few academic institutions and training facilities such as SETAs (Sector Education and Training Authorities) offering training in aquaculture because it is an emerging sector 15

Employment Profile 16

Objectives & Challenges in Marine Aquaculture The key objective of BBBEE is to increase the number of HDIs that participate in decision-making (management) and ownership levels in the South African Aquaculture Sector, because there is less than 15 percent representivity of HDIs at these levels. Fewer than 15 percent of Marine Aquaculture companies are black owned. Clear transformation strategies must be developed, and include existing farmers; Enabling environment must be created for the participation of HDIs through direct ownership of enterprises and increases in the management and professional levels A challenge that need to be addressed is the failure of black-owned enterprises in the sector, most of which are not operational or operate in a non-sustainable manner. A study needs to be done to identify the resons for the failure and address them. Sectors such as Agriculture, Forestry and Tourism used identified transformational challenges and problem areas as an initial step in transforming their sectors. This approach will be followed. 17