An assesment of the De Minimis Exemption in the CFP discarding regulation: for Scottish Fleets

Introduction

The new 'basic' regulation of the Common Fisheries Policy (1380/2013), for the first time in EU waters, introduces an obligation to land all catches and for them to be counted against quotas.

As an exception, de minimis (Article 15 paragraph 3(c)) allows for discards of up to 5% ^[2] (7% in years 1 and 2; 6% in years 3 and 4) of "total annual catches of all species" where either selectivity is deemed "very difficult" or there are "disproportionate costs of handling unwanted catches". ^[3]

The application of this rule is a new approach in fisheries policy. Theoretically, costs are disproportionate if they exceed the monetised benefits of achieving the discard ban or if they exceed benefits by a certain "safety margin". However, in practice, this can be shown for catch that is "unwanted" across a period of time, for example several months or a year. Considering this at a trip level would increase the complexity of implementation as the short term behaviours of fishermen could influence the determination of species that for the most part add little to no economic value to a vessel's catch. Therefore, as argued by the STECF working group on landing obligations, the fact that little to no revenue is achieved from the designated "unwanted" catch means that all costs associated with landing an "unwanted" species are disproportionate. This is evident by considering the net benefit a vessel gains for each species, proportioning out costs based on landed weight.

This project has been commissioned to assess the options available to policy makers regarding the potential implementation of the de minimis exemption in Scotland.

Aims

The expected outcomes of this work are to define what constitutes a disproportionate cost providing guidelines which help to identify a disproportionate cost and to provide guidelines to help calculate that cost. A methodological approach has been taken in order to provide consistent policy guidelines for the application of the de minimis exemption.

Several observations can be made about de minimis:

• De minimis is not designed to be unlimited. Article 15 (5)(c) limits the total de minimis available to 'only 5% of total annual catches' and Article 15(5)(c)(ii) places a further condition where unwanted catches of stocks applicable to this exemption should not exceed a certain percentage per fishing gear.
• Catch designated de minimis would be unwanted and discarded at sea, so no revenue could be directly gained from discarded species however de minimis may enable the fleet to continue to access other quotas.
• To be useful, conditions of de minimis need to be known to fleets before they sail as de minimis catch is discarded at sea.
• The evaluation of de minimis needs to consider the option to use de minimis Vs the option to land the catch.
• Traditionally vessels target species for which they have quota ( e.g. based on fixed quota allocations, FQAs). However, the relative applicability of de minimis across fleets must be judged on all species, not necessarily those where a fleet has quota. For Scottish fleets therefore, the basis for allocation may not follow FQAs.

Discarding

Discarding, of bycatch, or unwanted catch, is commonplace in multi-species fisheries. Currently, vessels are legally obliged to discard fish for which they lack either a permit or quota. As a result, the Common Fisheries Policy recognises that discarded fish do not count towards a fisherman's quota.The impact of discarding varies by gear and species: some have low survivability when discarded ( e.g. cod, haddock etc) whereas others may have higher survival rates ( e.g. sharks or crustaceans, such as Nephrops). From an economic point of view, discards add no value to a vessel's income, but because of the difficulties in multi-species selectivity discards enable the use of quota allocated to a vessel to be maximised.

Currently, discarding happens for several reasons ^[4] :

• lack of quota,
• fish that are below the legal minimum landing size,
• catch composition rules, limiting the percentage of a species within the catch
• to retain only the most valuable fish in order to maximise the value of quota (high grading), or
• species for which there is no or low market value.

The reformed Common Fisheries Policy ( CFP) will change this. From 2015 to 2019 in a phased approach, it will become mandatory for fishermen to land all catch caught. Pelagic fisheries will start with a discard ban in 2015, demersal fisheries in 2016 and across all TAC species by 2019. This will affect the fishing operation significantly and is considered by many to be the greatest change in fisheries management in Europe since the initialisation of the CFP in 1983 and possibly before that.

In general, there are three possible means of bycatch reduction:

• modifying fishing methods including gear, timing or location of fishing or other aspects of the methodology, such as the introduction of bycatch reduction devices
• changing fishing gear or fishing methods entirely, e.g. the change from trawls to traps
• reducing fishing effort and therefore the amount of fishing gear in use overall

Any one of these methods alone does not necessarily guarantee the reduction of bycatch, but one or more must be a component of any conservation program to reduce the loss of resources due to bycatch. Better aligned catch composition to the quota system would reduce unwanted catch but in a management system built on relative stability with variable stock dynamics this is difficult to attain.

The discarding ban promotes the premise that as soon as a vessel has caught its quota (or landing limit) of a particular species it must stop fishing. This means that a vessel must stop fishing as soon as one of its permitted species goes beyond its quota. Therefore, fishermen will not be able to catch fish where they have remaining quota for the likelihood of catching a species already at their limit. One option open to fishermen in this case includes purchasing (or leasing) additional quota. However, the new CFP discard regulation does not distinguish between a vessel's main species (for which they often have quota) and the vessel's other species (for which they don't have quota). Therefore if a vessel has minimal or no quota for a species then that species, sometimes referred to a 'choke' species, if caught will prevent the vessel fishing.

In addition, landing all catch will change the market for quota dramatically as vessels from different fleets and using different technology will be chasing the same quota. In past years, it can be observed in some instances that fishermen will pay up to the same price for a tonne of quota for a given species ( e.g. cod) as they will obtain when landing that same tonne. When the discard regulation becomes a reality, this will undoubtedly be amplified as it may make financial sense for a fisherman to pay more than the landed value of a quota if it allows him to continue fishing for those species where he still has quota.

The regulators are aware of this and have as a result also introduced a number of exemptions to the discard regulation, including the de minimis exemption. The de minimis exemption appears ^[5] to be specifically designed to deal with the above example, allowing vessels to catch more of an unwanted species (including some 'choke' species) to enable continuation of fishing for a time. ^[6]

The magnitude of this change regarding the impact of discards to fishermen ^[7] , will be significant as quota will equal catch rather than landings ( i.e. catch minus discards).

For species that are targeted by a vessel where it has a good allocation of quota, discards will be minimal (if not zero), however for species where this is not the case and other exemptions do not apply ( e.g. based on high survivability) then two options are available:

• landed and sold (where quota is found via leasing or transfer),or
• discarded at sea as de minimis.

TACs will continue to be set in line with MSY objectives and it is expected, where there is high confidence that there is no discarding, that TACs will increase relative to a business-as-usual baseline to include the amount of fish ICES currently estimates are discarded. However, the industry does not believe that current ICES estimates take full account of the current level of discards.

The Scottish Government has already taken a number of steps to reduce discarding in the Scottish fleet by promoting behavioural change through Conservation Credits, for example:

• using more selective fishing nets and other gear;
• observing temporary closures, or seasonal closures;
• CCTV scheme and observer programmes to monitor vessels on agreed trials;