Economic impacts for Scottish and UK seafood industries post-Brexit: report

Appendix I: Wider Economic Impacts Method

I.1 Applying the model outputs to the primary and processing sectors

The trade model combines production of unprocessed and minimally processed fresh/chilled product, as well as processed products such as fillets, smoked, canned and prepared/preserved products. The input-output ( IO) tables include sectors that relate to the two primary industries of fishing and aquaculture production, as well as the secondary industry of fish processing. The outputs of the model were therefore disaggregated, or apportioned, between the relevant primary industry and the processing industry, to be run through the IO tables.

The apportionment of output was based on the output of the fishing sector (value of landings by UK vessels to UK and non- UK ports), the output of the aquaculture sector (value of production), and a calculation of the output of the processing sector for each species. The latter is based on the turnover of the fish processing industry (from Seafish data), apportioned based on the processing output attributed to each species. This in turn was calculated from the FTEs in processing demersal, pelagic and shellfish species (from Seafish data), apportioned by the volume of landings to the UK (by UK and non- UK vessels) of the species as a percentage of landings of the species group. The employment per species, as a percentage of processing sector employment, was then applied to the turnover of the processing sector to derive the output of the processing sector for each species. For example, the value of landings of cod to the UK as a percentage of the value of demersal landings to the UK was applied to the FTEs in the demersal processing sector. This figure, as a percentage of processing sector employment, was applied to the processing sector output.

For salmon, the turnover of the aquaculture production industry was based on the value of salmon production. The turnover of the salmon processing industry was based on the value of output of the salmon and sea trout processing industry (derived from Seafish data on the overall value of the fish processing sector, less the value of the sea fish processing sector), with 98% attributed to salmon and 2% to sea trout, based on the volume and value of aquaculture production of these two species.

The apportionment percentages for output are provided in Table I.1.

Table I.1. Apportionment of output to primary and processing industries

Species	Fishing	Aquaculture	Processing
Cod	37%	0%	63%
Crab	16%	0%	84%
Haddock	22%	0%	78%
Hake	27%	0%	73%
Herring	18%	0%	82%
Mackerel	31%	0%	69%
Nephrops	29%	0%	71%
Saithe	11%	0%	89%
Salmon	0%	34%	66%
Scallop	17%	0%	83%

These apportionment percentages were applied to the model results for ‘change in output’. More detail of the calculations is provided in Table I.5. The percentage change in output for each species from the trade modelling was applied to the calculated value of output from fishing, aquaculture and processing sectors for each species at the UK level. This assumes that the percentage changes from the trade modelling (which captures a proportion of output of each species) will apply to the rest of the sector.

I.2 Identifying impacts on the Scottish economy

The outputs of the trade modelling are for the UK as a whole. In order to determine the proportion of these impacts that might occur in Scotland, the UK-level impacts were apportioned to Scotland for each species, based on the importance of the production (catching or aquaculture) sector and of the processing sector in each case.

The fishing sector impacts were apportioned based on the value of landings by Scottish vessels as a proportion of the total value of landings by UK vessels (to the UK and overseas); the aquaculture sector impacts were apportioned 99% to Scotland, to take account for the small amount of salmon aquaculture that takes place in Northern Ireland (actual volumes and values are not published for confidentiality reasons). Seafish provided data on the output, GVA and employment of the processing industry in Scotland and for the UK as a whole, broken down by demersal, pelagic, shellfish and salmon. The percentages for apportionment of output between Scotland and UK are shown in Table I.2. Further details of the calculations are provided in Table I.6.

Table I.2. Apportionment percentages for output of fishing, aquaculture and processing industries between Scotland and Rest of UK

Species	Fishing		Aquaculture		Processing
	Scotland	Rest of UK	Scotland	Rest of UK	Scotland	Rest of UK
Cod	46%	54%	-	Cod	47%	53%
Crab	37%	63%	-	Crab	29%	71%
Haddock	83%	17%	-	Haddock	47%	53%
Hake	54%	46%	-	Hake	47%	53%
Herring	65%	35%	-	Herring	59%	41%
Mackerel	82%	18%	-	Mackerel	59%	41%
Nephrops	74%	26%	-	Nephrops	29%	71%
Saithe	62%	38%	-	Saithe	47%	53%
Salmon	100%	0%	99%	Salmon	77%	23%
Scallop	59%	41%	-	Scallop	29%	71%

I.3 Determining direct, indirect and induced output, GVA and employment impacts

The outputs of the trade modelling are provided for each of ten (shell)fish species as percentage change from the baseline in terms of:

• Prices
• Output
• Imports
• Exports

Based on the apportionment calculations outlined above, the direct impacts on output were determined for fishing, aquaculture and processing in Scotland. The relevant multipliers (Type I and Type II, for fishing, aquaculture and processing) from the IO tables were applied to the change in output (split between the fishing or aquaculture primary industries, and the secondary processing industry and apportioned to Scotland) to give, for Scotland:

• Direct impact
• Indirect impact
• Induced impact

The change in output (quantity) and change in price from the model outputs were combined to give the percentage change in GVA. GVA will change pro rata with quantity. It will also change linearly (but more than pro rata) with price, the ratio being (1 / GVA share of value of output). The indirect and induced GVA impacts were calculated using the relevant multipliers from the IO tables.

Because the change in GVA was calculated from the model results (rather than being based on the change in output and a GVA percentage), the change in GVA was apportioned across fishing, aquaculture and processing sectors, and between the UK and Scotland according to percentages that were calculated specifically for GVA (Table I.3).

Table I.3. Apportionment percentages for GVA

Species	Change in GVA by Sector			Processing GVA Apportioned to Scotland*
	Fishing	Aquaculture	Processing
Cod	52%	0%	48%	46%
Crab	26%	0%	74%	28%
Haddock	34%	0%	66%	46%
Hake	41%	0%	59%	46%
Herring	29%	0%	71%	37%
Mackerel	45%	0%	55%	37%
Nephrops	43%	0%	57%	28%
Saithe	19%	0%	81%	46%
Salmon	0%	47%	53%	69%
Scallop	27%	0%	73%	28%

* Fishing and aquaculture GVAs are apportioned to Scotland using the percentages in Table I.2. Further detail on the processing GVA apportionment calculation is provided in Table I.7.

In relation to employment, employment is assumed to change linearly with volume of output. Change in volume of output specific to Scotland is derived by weighting UK changes by the percentage landings attributed to Scotland relative to total UK landings. MMO employment figures on part- and full-time equivalents ( FTEs) by administration port were used, assuming that part-time is 0.5 FTE. The Seafish Processing Industry Report (Seafish, 2016) includes FTEs for the fish processing industry. The employment impacts were calculated for Scotland based on employment in fishing, aquaculture and processing sectors in Scotland, and then apportioned between the sectors, according to percentages that were calculated specifically for employment (Table I.4). Based on this, the indirect and induced employment impacts were calculated, using the multipliers from the IO tables.

Table I.4 Apportionment percentages for employment impacts in Scotland

Species	Change in Employment by Sector
	Fishing	Aquaculture	Processing
Cod	75%	0	25%
Crab	37%	0	63%
Haddock	58%	0	42%
Hake	65%	0	35%
Herring	25%	0	75%
Mackerel	40%	0	60%
Nephrops	55%	0	45%
Saithe	39%	0	61%
Salmon	0%	37%	63%
Scallop	37%	0	63%

I.3.1 Identifying the main sectors affected

The changes in output and GVA (apportioned between the fishing, aquaculture and processing sectors, and apportioned to the Scottish economy), were run through the IO tables as a ‘shock’ to identify the impacts on other upstream and downstream sectors of the economy. This was used to identify those other sectors that are likely to be subject to the greatest impacts.

I.4 Reference

Seafish (2016) Seafood Processing Industry Report. Prepared by Struan Noble, Marta Moran Quintana and Hazel Curtis. Seafish Report No SR700. Edinburgh: Seafish Economics.

Table I.5. Detail of calculations of fishing/aquaculture and processing output apportionment percentages

Species	Quantity Landed to UK (tonnes) (from UK and Non- UK Vessels)	Percentage of Total Quantity of Landings	Value of Landing of UK Vessels, to UK and Overseas (£1,000)	Percentage of Species Group Total	Percentage of Set Total Landings Value	Estimate of FTE Processing Jobs by Species ( UK Total)	Percentage of Total Processing Employment	Estimate output of Processing Per Species Through Share of Employment	Total Output Per Species (£1,000)	Percentage of Species Output in Processing	Percentage of Species Output in Fishing/ Aquaculture
Cod	16,737	11%	48,881	36%	8%	355	3%	81,869	130,750	63%	37%
Haddock	33,487	22%	45,119	33%	7%	711	5%	163,801	208,920	78%	22%
Hake	15,892	11%	29,335	22%	5%	337	2%	77,735	107,070	73%	27%
Saithe	18,846	13%	11,737	9%	2%	400	3%	92,186	103,923	89%	11%
Total Demersal	150,008	-	135,073	-	22%	1,804	0.13	415,590,299	-	-	-
Herring	42,043	25%	32,948	17%	5%	633	5%	145,731	178,679	82%	18%
Mackerel	103,935	61%	159,804	83%	26%	1,564	12%	360,267	520,071	69%	31%
Total Pelagic	169,332	-	192,753	-	31%	2,196	0.16	505,998,038	-	-	-
Crabs	29,317	21%	43,993	23%	7%	991	7%	228,220	272,213	84%	16%
Nephrops	25,860	18%	82,680	43%	13%	874	6%	201,308	283,988	71%	29%
Scallops	41,424	29%	64,335	34%	10%	1,400	10%	322,465	386,800	83%	17%
Total Shellfish	142,421	-	191,008	-	31%	3,264	0.24	751,992,385	-	-	-
Total seafish	461,761		617,577			13,554
Salmon	171,722	100%	637,089			1,273	98%	1,247,175	1,884,264	66%	34%

NB. For salmon, the figure in ‘Estimate of FTE processing jobs by species’ is the salmon and sea trout processing sector turnover (£million). The 98% is salmon aquaculture production as a proportion of salmon and sea trout production. These figures are used to estimate the output of processing for salmon.

Table I.6. Detail of calculations of Scotland/ UK apportionment percentages for output of fishing and aquaculture sectors

Species	Fishing			Aquaculture
	Value of Landings of Scottish Vessels (£000) 2015	Value of Landings of UK Vessels (£000) 2015	Scotland as % of UK	Value of Scottish Aquaculture Production (£000) 2015	Value of UK Aquaculture Production (£000) 2015	Scotland as % of UK
Cod	22,664	48,881	46%	-	-	-
Crab	16,225	43,993	37%	-	-	-
Haddock	37,375	45,119	83%	-	-	-
Hake	15,894	29,335	54%	-	-	-
Herring	21,307	32,948	65%	-	-	-
Mackerel	130,512	159,804	82%	-	-	-
Nephrops	60,924	82,680	74%	-	-	-
Saithe	7,220	11,737	62%	-	-	-
Salmon*	-	2	0%	637,089	N/A	99%
Scallop	37,930	64,335	59%	-	-	-
Data sources	MMO			Scottish Government

* N/A. Value not disclosed due to confidentiality. Assumed 1%.

Table I.7. Detail of calculations of apportionment percentages for processing sector

Species Category	Turnover (£000)		Turnover with Mixed Category Reallocated (£000)			GVA (£000)		GVA with Mixed Category Reallocated (£000)
	Scotland	UK	Scotland	UK	Scotland %	Scotland	UK	Scotland	UK	Scotland %
Demersal	76,783	156,933	188,233	400,886	47%	15,981	31,960	33,530	73,268	46%
Pelagic	177,798	288,473	435,871	736,904	59%	25,463	62,460	53,423	143,190	37%
Shellfish	240,196	790,292	588,839	2,018,800	29%	43,009	138,116	90,236	316,635	28%
Salmon and other freshwater	312,018	441,695	764,911	1,128,310	68%	75,438	100,293	158,273	229,925	69%
Mixed	1,171,059	2,607,507	-	-		175,572	430,190	-	-
Total	1,977,855	4,284,900	1,977,855	4,284,900		335,463	763,019	335,463	763,019