Written evidence submitted by the National Federation of Fishermen’s Organisations’ (NFFO) (FS0017)
NFFO RESPONSE TO THE CALL FOR EVIDENCE ON FOOD SECURITY
Food security for the seafood sector essentially reposes on three different elements – the production sector, the consumer sector and the linkage sector that connects the two other elements.
The primary production sector has faced considerable headwinds over the past few years as various factors of production have seen increased costs[1]. For example, in the demersal fleet[2] raw material costs have all increased: costs of gear, rope and steel, have increased by 20 – 30%, fuel has doubled in the past year and is now c.90p a litre and provisions have increased roughly 25%. Crew costs are normally met through payment of crew share which depend on profitable trading. Fixed costs, such as interest on loans, insurance, licences and electronic rental payments have also to be met. In addition, there are other indirect costs that have to be met such as the need to cover catches with additional, rented, quota. The regulatory costs of additional closed areas and displacement entailing longer steaming times and less efficient operations ultimately mean the permanent loss of productive fishing grounds.
Government policy to mitigate these impacts appears limited. There is a lack of an integrated approach towards energy problems. Such assistance as the Government is offering industry is limited to six months which means little or no future security for micro businesses and SMEs. The assumption appears to be that the provision of red diesel is sufficient even if prices have risen to unprecedented levels. Moving towards green energy is theoretically a solution but it remains in its infancy. SIF has provided funding for pilot studies of the use of electricity in inshore vessels but this is not yet a commercial proposition for vessels that operate further offshore. The importance of the electoral cycle appears to limit the time span of policies that need to be on a long term basis.
Offsetting these costs against first sale prices varies according to the species in question. The latest figures, according to EUMOFA[3], for January to April 2022, show, in relation to the same period in 2021, an overall decline in volume of 6% but an increase in value of 9% (8% in £sterling). In general, however, these figures mean that the profitability of the UK fishing industry is under serious threat[4].
It is often repeated that the UK imports what it eats and exports what it catches and this is a function of consumer preferences and the types of fish that they prefer to eat.[5] The top species consumed are cod, haddock, tuna, salmon and warm water prawns (the two latter being farmed). At the present time, farmed salmon is the most popular fish consumed in the UK and is both imported from other countries and exported to others. Cod and haddock are the archetypical species used in fish and chips and may be sourced from the UK or from waters further North. Farmed warm water prawns typically come from South East Asia.
In so far as the increase in prices due to the Ukrainian war and the supply shortages caused by covid (and particularly China’s zero covid policy) are global phenomena, the cost of labour is often the decisive difference among producers. The key factor influencing the availability of fish products is therefore that of linking the producers to the consumers and ensuring distribution. Here the reduction in communications brought about by covid, such as the reduction in flights and the additional costs of air transport, has highlighted the cost of distance from the consumer. The impact of the Ukraine war has amplified these costs since kerosene accounts for such a major proportion of them[6].
It would seem that one obvious policy solution would be to encourage UK domestic consumers to eat more domestically sourced fish but it has to be admitted that Seafish has been endeavouring to increase domestic fish consumption for the last two decades but the amount consumed on a per capita basis has declined. Although there have been some improvements during the covid lockdowns it cannot be assumed that they will be maintained. Fresh fish is a relatively expensive source of protein for the average consumer even if its environmental impact is low. The average consumer is not happy confronting eyes and bones and much prefers prepared filets avoiding such unsightly scenes.
Processing, to a greater or lesser extent, allows consumers to avoid such difficulties and tends to prolong the shelf life. Fresh fish have a very limited shelf life, 2.5 -5 days. Anything that can prolong shelf life will reduce wastage and should lead to improved prices for fishermen at the most vulnerable point in the supply chain. Whilst fish processors are also facing increased prices of energy, raw materials, bread (for fishfingers), sunflower oil and tin for canning the fact remains that chilled, frozen, primary processed and secondary processed fish do have the advantage of having a longer shelf life for their products.
Government policies to improve domestic consumption to the recommended two portions of fish per person a week have been feeble in comparison to the effort that was put into encouraging eating five vegetables or fruit a day, many of which are imported. Even less effort is focused on developing a preference for UK sourced fish and unfamiliar species. The Government Food strategy mentions the health benefits of increasing fish consumption but there is little detail as to how this is to be achieved. Suggestions that Government catering should include fish sound helpful but, unless there is no alternative and the fish is well cooked, is unlikely to have much impact.
One of the problems is due to the fact that demand for fish is generally thought to be inelastic[7]. That does not mean that consumers are impervious to price changes – they may switch from fresh to frozen when their budgets are stretched – but that essentially a drop in price will not necessarily increase consumption by 1% nor vice versa all other things being equal. At a time when consumers are under pressure demand for cheaper versions of the same fish or frozen or tinned fish will rise; shelf life will become increasingly important.
Resilience, or the ability to respond to change, may vary. Typically, it is thought that resilience resides in the ability to change suppliers or use alternative sources once there are shortages, but it is not as simple as that. The UK fishing industry, particularly the inshore fishery, faces problems of profitability and critical mass in certain areas. There is a labour shortage that has been exacerbated by Brexit. Moves to drop the required minimum salary required for visa issuance may represent a short term solution but the age structure of the industry means that in the medium term there will be a shortage of qualified individuals. The increase in regulation, the Spatial Squeeze[8] and the importance attached to recreational activities mean that going forward inshore fishermen are likely to be pushed ever outwards towards offshore areas causing damage to coastal communities[9].
In addition, there is the risk of the permanent loss of food production capacity due to damage to grounds caused by offshore construction. Habitats are disturbed when the seabed is dug up. Heavy metal accumulation in benthic species has been reported around some offshore wind farms, due to the sacrificial anodes used to protect them from corrosion (and this is another impact that will probably be significantly amplified by floating wind farm anchor chains). EMF from trailing electricity transport cables has been reported to change migration patterns in some finfish species in a Danish study and these are likely to be further increased by floating wind farms. Floating wind farms not only preclude food production within their footprint while operational, they may also create permanent changes in local stocks and habitats. Given their 25 year maximum lifespan, it could be argued that wind farms represent an exchange of permanent food production capacity for temporary energy generation capacity.
The stress on fisheries management and the increase in sustainable fishing would seem to be beneficial all round, but there is the problem that demand for fish and fisheries products tends to remain stable in a changing environment. It is in this context that the evolution of imports and exports becomes significant and self-sufficiency comes under examination.
Brexit has resulted in increased costs in terms of doing business to the EU the major market for UK exports. The shellfish industry has been particularly badly hit, especially the export of Live Bi-valve Molluscs. Although there have been some moves to increase funding for export initiatives, £1 million of the UK’s £100 million UKSF has been earmarked for this purpose, they do not offset the loss in shelf-life. On the other hand, the continuing lack of import controls has provided advantages to the EU producers. The impact of this situation on UK food security is not positive.
For cod and haddock the degree of self-sufficiency, domestic production as a percentage of domestic production plus imports, amounts to less than 10% and c.30% respectively. Alternative sources of supply are critical. The fiability of the linkage sector over time thus becomes a significant variable, particularly as climate change is affecting the UK’s ability to continue to provide the same security of supply[10].
In the short to medium term global distribution networks are likely to suffer from higher fuel costs and supply bottlenecks. Recession in developed economies and increasing demand in South East Asian economies for fish is likely to mean less fish becoming available on the international market, (fish is the most traded food commodity with c.70% sold on the world market). The cost of transportation may come down from the artificial highs of the post-pandemic period but, until the green revolution takes place for air and sea transport, fuel costs are likely to remain high by historical standards.
There is therefore a premium on importing from countries that are closer to the UK at a time of increased linkage costs. The difficulty here is obviously climate change and the northward movement of stocks. For the present time this situation is working in the UK’s favour as most imported white fish – the exception is Alaskan pollack – come from Norway, Iceland and the Faroes. In the long run, however, there is no guarantee that this situation will continue to work in the UK’s favour.
To summarise, there is an absence of integrated policy that takes into account the exposed nature of the supply of UK fish. It is exposed to fuel price movements that affect both production and linkage sectors. Consumers tend to have traditional tastes and the market is relatively static whilst profound changes are taking place in terms of the availability of sustainable domestic supply and climate change. Although there is growing awareness of the problems facing fishermen, little is being done by Government to help prepare the industry, and consumers, for the future.
28/09/2022
