Review of Management Options for the Landing Obligation

Section 2: Discarding in Theory and Practice

2.1 Discarding occurs when unwanted catch is caught during the targeting of commercial fish stocks. This incidental catch is called bycatch and is usually thrown back into the sea dead or dying, i.e. discarded. Though discarding is an incredibly wasteful practice, it is not purposeless. Under the current operation of landings quotas, fishermen are able to discard parts of their catch in order to affect the composition of their landed catch. The principal intent is to increase the landed value of the catch and avoid landing illegal catches. The current ability to discard therefore represents a value to fishermen.

What are the causes of discarding?

2.2 A consensus within the literature is that patterns and levels of discarding vary highly across fisheries and even within fisheries, with the act of discarding often driven by a multitude of changing economic, sociological, environmental and biological factors (Catchpole et al., 2005).

Market forces

2.3 A strong economic incentive exists for fishermen to discard species of low or nil commercial value. This type of discarding tends to occur in mixed fisheries where it is almost inevitable that a mixed catch will be caught. Discarding in this situation can be driven by a lack of demand as some species are culturally unpopular amongst consumers and also by the use of less selective gear. For example, dab is an abundant species in the North Sea but the Scottish fleet only lands around 15 per cent of its dab quota, with high bycatch and discard rates reported. The key driver is the low market price of dab caused by low consumer demand. In this situation, the landing price of dab does not offset the costs of retaining and landing the species as it takes up valuable hold space and requires labour to sort and ice, which could instead be used for more valuable species.

2.4 Market forces also work to incentivise a form of discarding associated with pre-market selection. Illegal 'high grading' is incentivised as target species that are of a small size (but above the Minimum Landing Size MLS) or in a poor condition are discarded for specimens that will receive a higher price. In Scotland, high-grading is believed to be relatively common in the demersal and Nephrops sectors and 'slipping' (the deliberate lowering of the net to allow the fish to escape but they do not survive) has been witnessed in the pelagic sector. Market forces drive this behaviour as fishermen aim to increase their profits by using their quota to land larger, more valuable fish.

Regulatory measures

2.5 A principle aim of the regulatory measures implemented through the CFP is to bring fishing mortality to a rate consistent with achieving Maximum Sustainable Yield ( MSY). MSY represents the point at which the largest catch or yield can be taken continuously from a stock under existing environmental conditions. The intent is to allow the population to be indefinitely productive, with maximum fishing opportunities balanced against the threats of stock overexploitation and eventual collapse. Regulatory measures can take several forms; input controls that manage fishing effort such as entry limitation and Days at Sea restrictions; output controls that manage catch such as Total Allowable Catch ( TAC) and quotas; and technical measures such as gear restrictions and spatial and temporal closures. Despite the vital and necessary operation of these regulations, there are circumstances in which the regulations can incentivise discarding.

Minimum Landings Sizes

2.6 MLS regulations refer to the smallest length at which it is legal to keep on board or land a species, with sizes varying on a species by species basis. The intent is to create an incentive for fishermen to avoid juvenile fish, in an effort to protect spawning (an individual will survive to the size of first maturity and have an opportunity of spawning at least once) and to allow the individual to grow and add to the future biomass of a catch, thereby increasing the economic yield. Currently, fish caught under MLS must be discarded. A key factor contributing to the discarding of MLS is the use of less selective gear.

Total Allowable Catch and Landing Quotas

2.7 Currently, quota entitlements provide a legal right to land a specific weight of fish. Fishermen are able to catch fish for which they do not hold quota and then discard to meet the legal landings requirement. While quota induced discarding is often created by quota restraints that reflect an imbalance between stock abundance and quota holdings, this type of discarding is exacerbated by the use of less selective gear, individual fisher choices regarding location and timing of fishing activity, the mixed nature of Scottish fisheries and the mechanisms through which quota is managed and allocated at a regional and national level.

Types of Discarding

Table 1. Types of discarding

Type of Discarding	Driver	Influenced by
Catching of fish under legal Minimum Landing Size discarded	Regulatory	MLS regulations, non-selectiveness of gear and mesh sizes
Quota Restraint	Regulatory	Imbalance between stock abundance and quota holdings, mixed fishery and catch compositions, less selective gear, overcapacity
Quota Management	Administrative	Imbalance between quota holdings and catch composition at national and individual level, overcapacity, inefficient trading mechanisms
High-grading of target species of lower quality (size and condition)	Market	Landings quotas, market values, hold capacity, overcapacity and poor economic performance
Bycatch discarded due to nil or low market value	Market	Low market demand for less popular species, constraints on hold space, less selective gear, mixed fishery and catch composition
Bycatch Regulations	Regulatory	Imposition of rules governing what proportion of landed catch may be of one species or another

Quota Allocation and Fisheries Management

2.8 The mechanisms through which quota is allocated and managed can create pressures to discard. A key driver of discarding is a misalignment between quota holdings and catch compositions. This is induced at several levels within the allocation process and influenced by a number of factors.

Relative Stability

2.9 European TACs are allocated between MS through the principal of Relative Stability. Relative Stability came into operation in 1983 and largely reflects a political allocation of fishing opportunities. Relative Stability is a key driver of discarding across European fleets as it produces a gross imbalance between national quota portfolios and catch compositions given the changing nature of relative abundances of species. While a general objective within the CFP is that if a Member State has too few quotas for some species it should swap quotas with other Member States, mechanisms for facilitating this are often regarded as inefficient. In Scotland, a key current issue concerns hake stocks, which have recently recovered and are currently more abundant (Baudron and Fernandes, 2014). While an uplift was awarded in autumn 2013, on the basis of Relative Stability, Scotland receives a relatively small share of the total TAC, with swaps from other countries generally infrequent given the species' high value.

Overcapacity

2.10 Overcapacity creates a strong downward pressure upon the efficient use of quota as it restricts the ability of quota to move to where it is needed. Under conditions of overcapacity, demand for quota is strong and it tends to be spread thinly across a fleet that is in excess of its optimal operating capacity. Under these conditions, demand for quota far is in excess of supply. Incentives to discard are created as fishermen find it difficult to purchase or lease in additional quota. This situation not only limits the quantity of quota that individual fishermen hold for individual species but the portfolio of quota holdings will be constrained and unlikely to reflect true catch compositions. On account of the high fixed costs which define overcapacity, market drivers of discarding are also promoted as under conditions of excess capacity fleets tend to forgo profits and the general economic performance and rent of the fishery is dampened. This incentivises fishermen to maximise the prices they receive for fish through illegal acts such as high-grading. Technical overcapacity exists across the European fleet and within Scotland.

Quota Transferability

2.11 With the misalignment between quota holdings and catch compositions a key driver of quota-induced discarding, inefficient or absent mechanisms that inhibit quota from being moved to where it is needed will incentivise fishermen to discard catches rather than lease in additional quota. Under conditions of inefficiency, the market price of quota is likely to increase as transaction costs will be high.

Discarding of Commercial Species by the Scottish Fleet

• Whiting: Whiting is an important bycatch in the Nephrops fisheries and is discarded when caught as bycatch in other whitefish fisheries (haddock) due to its low price.
• Saithe: Saithe is discarded principally by the TR1 fleet due to low quota holdings and by the TR2 offshore fleet due to a reported lack of selectivity.
• Hake: Hake is a bycatch in cod fisheries as is abundant in the North Sea. It is discarded due to quota restrictions and a lack of international swaps. Discarded by TR1 fleet is reported to be due to a lack of quota and by the TR2 offshore fleet due to a lack of selectivity.
• Dab: Dab has a high discard ratio on account of its high abundance in the North Sea and its low market value. The Scottish fleet utilises around 15% of its dab quota, with the majority of catches caught as bycatch and subsequently discarded, predominantly by the North Sea TR1 fleet.
• Cod: A high discard rate within the Scottish fleet due to an abundance of cod in the northern part of the North Sea. Due to catch composition rules, in particular in TR2 are a driver for discards, limited individual quota and high quota lease prices.
• Sole: It is reported that discards of sole are relatively low, on account of the high market value and ability of fishermen to avoid unwanted bycatch of the species.
• Nephrops: Discarded principally by the TR2 inshore fleet.
• Mackerel and Herring: Illegally high-graded / slipped by the Scottish pelagic fleet
• Skate: Issues surrounding skate for the TR2 Nephrops trawl fisheries. Low quota holdings and low market value.

Discarding of Commercial Species by the Scottish Fleet

Table 2. Discarding of Commercial Species by the Scottish Fleet

Species	Area	Fleets	Drivers of Discarding
			Market	Abundance	Quota Restriction	Other
Dab	North Sea	TR1	Low Market Value	High abundance in the North Sea
Whiting	North Sea West Coast	TR1 Nephrops Inshore	Low Market Value ( TR1)		Quota restraints (West Coast, Nephrops)
Saithe	North Sea	TR1 TR2 offshore			Low quota holdings ( TR1)	Lack of selectivity ( TR2)
Hake	North Sea	TR1 TR2 offshore		High abundance in the North Sea	Restricted quota and low individual holdings ( TR1)	Lack of selectivity ( TR2)
Cod	North Sea West Coast	TR1 TR2		Abundance in northern part of North Sea	limited individual quota and high rent prices	Catch composition rules ( TR2)
Nephrops	North Sea West Coast	TR2 inshore	High-grading
Herring	North Sea	Pelagic	High-grading
Mackerel	North Sea	Pelagic	High-grading

Fleet Sectors and the Landing Obligation

Pelagic fleet

2.12 The main catches of pelagic stocks in the North Sea are for herring and mackerel. While discard rates for the pelagic fisheries are generally low, it is estimated that high rates occur during 'slippage' events, a form of high-grading. The decision to slip a catch can occur following the haul of a catch that contains a large percentage of smaller-sized pelagic species that would produce a lower market value than a catch of larger-sized individuals. Slipping can also occur following a catch that is particularly mixed, or for practical reasons when there is insufficient storage space on board a vessel to accommodate the entire catch from an individual haul.

2.13 This type of discarding is carried out by the Scottish pelagic fleet and is driven by profit-maximising behaviour. The expected impact of effectively stopping the illegal practice of high grading will be a reduction in the sector's profit margins. However, a strong consensus within the interviews was that even if the discard ban is strongly enforced and monitored, this sector will remain profitable: the reduction in profits is not enough to render the fleet unprofitable. This is partly due to the low operating costs of the sector following its transition to a concentrated number of highly-efficient vessels.

2.14 Moreover, the financial effect upon the sector- a reduction in profits as smaller fish are landed- may only occur in the short-term. Just now, the premium is for 500g mackerel; therefore fish below this size are often discarded. Under the landing obligation, the market may not be able to source enough 500g fish to fulfil orders. It will therefore become more reliant on a mixed catch, which may cause the price of smaller mackerel to increase. Profits may, therefore, recover in the medium term. In addition, the pelagic sector is unlikely to be affected by a choke species that could potentially work to undermine its ability to utilise its quota holdings for the key target species. If this case did arise, the regional pelagic sectors in the North Sea operate a high number of swaps and transfers that could be used to facilitate a solution.

TR1 and TR2 Fleets in the North Sea and West Coast of Scotland

2.15 From the interviews, it is clear that the major concern lies with how the landing obligation will affect the TR1 and TR2 fleets in the North Sea and on the West Coast. As identified in Table 2, both these fleets discard various species for a variety of reasons, with several of these likely to become choke species under the landing obligation. For the TR1 fleet, cod, hake, dab, saithe and whiting have the potential to constrict operations, while for the TR2 fleet problems will arise with cod, haddock, hake and whiting.

2.16 The key issue is the extent to which these fleets will have access to a full year fishery, even with quotas increase under the uplift as access is given to 100 per cent of the discards for the key whitefish species. Marine Scotland Science modelling forecasts in 2013 depicted that the North Sea would be closed to 60% of the Scottish fleet from the end of August if vessels maintained current fishing practices with only cod, haddock and whiting subject to a discard ban and a quota uplift equivalent to 75% of current discards. Moreover, even with the expected quota uplift it will still be possible for quotas to decrease. Since it is reported that a considerable degree of discarding by the TR2 fleet is driven by a lack of gear selectivity, a first point of contact will be to improve the use and enforcement of selective gears that are effective.

Section Summary

2.17 Discarding by the Scottish fleet is shaped by a combination of often interacting forces such as; market conditions, regulation, Relative Stability, and national quota allocation and management policies. The Scottish pelagic, TR1 and TR2 fleets have individual discarding and bycatch patterns and is often influenced by the region in which they operate. Though the pelagic fleet will be financially affected by the Landing Obligation in the short to medium-term, the principal concern within the interviews was the impact of Landing Obligation on the TR1 and TR2 fleets in the North Sea and West Coast of Scotland.