Economic Link licence condition: consultation

Annex C: Arrangements for the calculation of quota gifts in fulfilment of economic link licence condition

UK Fisheries Administrations have operated quota gifting arrangements in lieu of landings since the introduction of the economic link condition in 1999 and this arrangement is provided for under (d) in the table above.

The purpose of the quota gifting arrangement is to replace a proportion of the economic benefits lost to downstream industries (such as processing) as a result of fish being landed abroad. The quota is tonnes of fish for fishing, not FQA units.

Current quota gifting formula

Value of catch in £ ÷ 2 (50%) = UK link arrangement (a)

÷ (a) 10 (assume 10% profit) = b

(b) ÷ 65 x 100 (65%) = sum due to FA for economic link in £.

Take value in £ of sum due and divide by average price of species per tonne required.

The quota gifting formula above is equivalent in value to just over 15% of the gap between the fish landed in the UK and the level of landings that would have been necessary to meet the present 50% landings threshold. It, therefore, does not replace all the economic benefits lost. For example, a vessel landing fish to the value of £1 million, of which only £400,000 is landed in the UK will be expected to provide quota gifts with an estimated landed (not leased, if relevant) value of £15,400.

The quota that is gifted under the economic link condition has been traditionally distributed by the Scottish Government to the under 10 metre fleet who make use of it to increase their catches or fish for longer.

The Scottish Government has reviewed the current quota gifting formula and proposes to adjust it so that it is based on current estimates of Gross Value Added ( GVA) ^[4] from fishing. GVA lost by downstream sectors (such as fish processing) can be estimated by applying standard downstream economic multipliers on direct GVA from fishing, to reflect the economic activity that would have been generated by downstream sectors. The revised formula represents the missed economic value resulting from landings outside Scotland.

Based on the available evidence, it is estimated that for each £1 in additional fish landings into Scotland, around £0.65 is created downstream in additional value. On average, GVA from fish landings is equivalent to 40% of the total value of the landings.

The Scottish Government considers it is reasonable therefore to seek quota gifts from licensees that are equivalent in value to 65% of the direct GVA missed when fish is landed abroad, which is 26% of the value of the gap between fish landed into Scotland and the level of landings that would have been necessary to meet the landings target. This represents an increase in the value of the quota gift sought from vessels that choose this option from 15% of the value of the gap now to 26%.

In the example given above, and assuming that a 55% landing target applied to the whole catch, the value of the gifts sought would therefore be £39,000. Any quota that the licensee has itself received via quota gifting will be discounted.