The Importance for the Fish Processing and Merchanting Sector of Landinsg of Fish from the Waters of Pentland Firth and Orkney to the Local and Scottish Economies

Executive Summary

• The objective of this study is to assist ongoing work at Marine Scotland which seeks to examine the importance of the fish processing and distribution industries in the Pentland Firth and Orkney waters relative to alternative uses of the local waters.
• The specific objective is to estimate the contribution of the fish and shellfish processing industry and the fish merchants in providing returns on landings from the waters of the Pentland Firth and Orkney area, first to the local economy, and secondly, to the Scottish economy.
• The contribution is measured in terms of output, income and employment from the fish processing industry and fish merchants in the North Highland region and the Orkney Islands based on landings from the Pentland Firth and Orkney waters.
• The method used is that of calculating Leontief demand-driven upstream multipliers for output, income and employment from Input-Output Tables and applying them to activities of the Pentland Firth and Orkney waters fish processing industry and fish merchants in the context of both the local and the Scottish economies.
• The Ghosh supply-driven downstream multipliers are set out in Annex 1 for completeness.
• The results for the Scottish economy exclude the impact of the oil production industry, for which no allowance for its contribution has been made at the request of the client.
• The concept of the multiplier, an explanation of Input-Output Tables, and the methodology for calculating the multipliers are set out in the Appendix.
• To protect commercially sensitive information, given the small number of larger firms in the fish and shellfish processing industry around in the Pentland Firth and Orkney area, the Consolidated Transactions Matrices both for the local economy and for the Scottish economy are not shown but the Technology Matrices derived from them are shown in the Appendices.
• Unless otherwise stated the comments in this report relate to the product of the Pentland Firth and Orkney waters.

The Local Economy of North Highland and Orkney

• More than £40m of fish and shellfish is landed annually to ports in the waters of the Pentland Firth off Northern Scotland and around the Orkney Islands. Of this some £7.4m comes from within those waters themselves.
• The waters are particularly productive of crustaceans, mainly crabs, whose value exceeded £4.7m in 2011.
• The product of the fish and shellfish processors and merchants, especially crab, enjoys a widely-recognised reputation. Some produce finds its way as far afield as the Far East.
• In 2011, the output of the fish and shellfish processing and merchants sector of product from Pentland Firth and Orkney waters was worth nearly £6m and crustaceans accounted for nearly 90% of sales.
• This is achieved from the official figures for input of raw material from Pentland Firth and Orkney waters set out by value for 2011 in Table E1 below.

Table E1: Input of Raw Material from Pentland Firth and Orkney Waters to the Fish Processing and Merchanting Sector, 2011

• The results suggest that £18m of output in the local economy depends on the initial £6m of output. £5.7m of income depends on the £1.4m direct income. 243 ^[1] full-time equivalent jobs depend on the 112 jobs estimated to exist in the industry.
• Output in the local economy resulting from the initial output in the shellfish segments (including the initial output) is as set out in Table E2 below:
• Income in the local economy resulting from the initial output in the shellfish segments (including the initial output) is as set out in Table E3 below.
• The number of jobs in the local economy resulting from the initial jobs in the shellfish sectors (including the initial jobs) is as set out below in Table E4.
• In most cases, the multipliers ^[2] for the segments of the industry are close to but generally above those for other businesses in the local economy.

Table E2: North Highland and Orkney Output Dependent on the North Highland and Orkney Fish and Shellfish Processing Sector Use of Pentland Firth and Orkney Landings, 2011.

Table E3: North Highland and Orkney Income Dependent on the North Highland and Orkney Fish and Shellfish Processing Sector Use of Pentland Firth and Orkney Landings, 2011.

• The multipliers imply that the productivity of the fish processors and merchants is greater than that for the average of the economy. This conclusion is to be expected in an area where there are relatively few large businesses and where the fish and shellfish processors are among the larger operations.
• The bulk of the product is exported directly from the processors and merchants. It is estimated that more than 90% of output is exported from the locality.

Table E4: North Highland and Orkney Employment Dependent on the North Highland and Orkney Fish and Shellfish Processing Sector Use of Pentland Firth and Orkney Landings, 2011.

The Scottish Economy

• The results suggest that £12m of output in the Scottish economy depends directly and indirectly on the initial £6m of output. £6.3m of income depends on the £1.4m direct income.
• 261 full-time equivalent jobs depend on the 112 jobs estimated to exist in the industry.
• Output in the Scottish economy resulting from the initial jobs in the North Highland and Orkney fish and shellfish processors and merchants (including the initial output) is as set out below in Table E5. The inputs are the same as those for the local economy set out above in Table E1.

Table E5: Scottish Output Dependent on the North Highland and Orkney Fish and Shellfish Processing Sector Use of Pentland Firth and Orkney Landings, 2011.

• Income in the Scottish economy resulting from the initial income in the North Highland and Orkney fish and shellfish processors and merchants (including the initial income) is as set out below in Table E6.
• The number of full-time equivalent jobs in the Scottish economy resulting from the initial jobs in the North Highland and Orkney fish and shellfish processors and merchants (including the initial jobs) is as set out below in Table E7.

Table E6: Scottish Income Dependent on the North Highland and Orkney Fish and Shellfish Processing Sector Use of Pentland Firth and Orkney Landings, 2011.

Table E7: Scottish Employment Dependent on the North Highland and Orkney Fish and Shellfish Processing Sector Use of Pentland Firth and Orkney Landings, 2011.