The report's authors, Curtis and colleagues at Seafish, explain that the study was carried out to address the requirements of the Scottish Government to evaluate the economic effects of the cod recovery plan, the West of Scotland measures and the economic downturn on the UK fleet.
The background was that key segments of the UK fleet have reported difficulty in operating profitably under the 2009 management measures, according to the report. In addition, the fishing industry has been affected by the global recession. The primary aim of the study is to determine the likely economic impacts on different fishing fleet segments resulting from the implementation of effort reductions and conservation measures imposed by cod recovery and emergency measures.
The Scottish Government's overall objective of this study was to assess the impact of the Cod Recovery Plan, the West of Scotland measures and the economic downturn on the fishing industry. The authors selcted four key fleet segments:
- North Sea/West of Scotland with more than 24 metres demersal trawl (single rig)
- North Sea/West of Scotland pair trawl/seine
- North Sea nephrops twin-rig, and
- West of Scotland nephrops twin-rig.
Seafish addressed this issue by undertaking industry interviews and by producing detailed profit forecasts and scenario analyses to isolate the effect of key variables on the financial performance of the agreed segments.
The authors interviewed thirty-six vessel owners to determine and understand the typical business choices that vessel owners are making in response to the restrictions of the CRP and the WoS measures. The interviewers explored vessel owners' views on fisheries management measures and the key factors affecting financial performance in 2009.
The Seafish Profit Forecast Model estimates annual landings, activity, costs and earnings one year ahead of base line data. Information on fuel price, fish prices, quotas, quota uptake level, segment activity and days at sea restrictions are all inputs into the model. Therefore it is possible to alter these variables to test alternative scenarios and isolate the effect of key factors on actual landings, activity, earnings, cost and profit.
Seafish examined five key scenarios:
- best estimate of outcomes for 2009
- as A but higher fish prices (to estimate impact of recession)
- as A but more days as sea (to estimate impact of days at sea restrictions)
- as A but higher quota, and
- as A but higher fuel price (current low prices could also be an impact of the recession).
Sensitivity analyses allowed assessment of the relative importance of selected key variables as profit drivers.
"A 17 per cent increase in North Sea cod quota would offset most of the effect of the quota decreases envisaged for 2010 for the whitefish vessels."
The authors report that 2009 is proving to be a difficult year for the UK fleet and profit levels are likely to be lower than in recent years, and that low fish and fuel prices and days at sea restrictions are likely to have a major impact on vessel profit levels this year.
They found a close tie between the findings from the industry interviews and the results of the profit forecasting model. Low fish prices and days at sea restrictions were both highlighted in the interviews as having a major impact on financial performance in 2009.
Restrictions in days at sea have had an impact on the financial performance of the demersal segments but limited impact on the nephrops segments.
Lower fish prices were found to have had an impact on the earnings and profit level of the four segments. The impact on operating profit has been most pronounced for nephrops vessels and least for the over 24 metres demersal vessels.
On the other hand, The Seafish report says that the lower fuel price has significantly reduced cost pressures for all segments in 2009 and helped to off-set the fall in profits from lower fish prices and from reductions in days at sea.
The impact of the West of Scotland measures was difficult to assess and the authors state that it has not been possible to determine the impact of the West of Scotland measures through the Seafish Profit Forecasting Model. However, quota uptake indicates little change in fishing patterns on the West Coast between 2008 and 2009.
Finally, the report makes it clear that further effort reduction in 2010 would lower profit levels for all segments. In a context of effort limitation, a 17 per cent increase in North Sea cod quota would offset most of the effect of the quota decreases envisaged for 2010 for the whitefish vessels.
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