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

1. Introduction

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 over £7m comes from within those waters themselves. The waters are particularly productive of crustaceans, mainly crabs, whose value exceeded £4m in 2011.

This activity provides the opportunity to fish processors and fish merchants to add value to the raw material as it progresses through the supply chain to local consumers and consumers in the remainder of Scotland and elsewhere. The product, especially crab, enjoys a widely-recognised reputation. Some produce finds its way as far afield as the Far East.

Adding value provides income and employment in the locality and further afield through so-called multiplier effects which create additional income and employment based on supplying inputs to processing and marketing.

1.1 Objective

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 therefore to estimate the contribution of the fish 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, from Input-Output Tables, for output, income and employment for firms in or supplying the Pentland Firth and Orkney waters fish processing industry and fish merchants. This exercise is undertaken in the context of both the local and the Scottish economies.

For completeness, the Ghosh supply-driven downstream multipliers which relate output, income and employment in firms dependent on purchases from the Pentland Firth and Orkney waters fish processing industry and fish merchants for both the local and the Scottish economies are given in Annex 1.

The concept of the multiplier, an explanation of Input-Output Tables, and the methodology for calculating the multipliers are set out in Annex 2.

In order to protect commercially sensitive information from the small number of larger firms characterising the fish processing industry in the Pentland Firth and Orkney area, the Consolidated Transactions Matrices both for the local economy and for the Scottish economy are not shown. However, the Technology Matrices derived from the Consolidated Transactions Matrices for the both economies are able to be presented along with the results because the magnitude of the turnover is disguised by the conversion to percentages.

At the request of the client, and in conformity with common practice in Scottish Government statistics, no provision has been made for including a proportionate share of the output of the oil production industry.

1.2 Data

General economic data for Scotland and for the North Highland and Orkney areas have been obtained from the websites of the Office for National Statistics and the Scottish Government. Data on the sources and purchasers of fish and shellfish have been provided by Marine Scotland. Other information and data have been provided in telephone interviews with industry participants in the locality.

1.3 Raw Material Input from the Waters of the Pentland Firth and Orkney Areas

Official figures for input of raw material from Pentland Firth and Orkney waters set out by value for 2011 in Table 1 below.

Table 1: Input of Raw Material from Pentland Firth and Orkney Waters to the Fish Processing and Merchanting Sector, 2011