EU package to tackle fuel crisis in the fisheries sector - guide

08 July 2008
by eub2 -- last modified 08 July 2008

The European Commission adopted on 8 July an emergency package of measures to tackle the fuel crisis in the fisheries sector, as announced on 17 June. As foreseen, the package consists primarily of a proposal for a Council regulation instituting an ad hoc special, temporary regime which will derogate from some provisions of the European Fisheries Fund (EFF) regulation for a limited period (up to the end of 2010). The proposed regulation is accompanied by a Communication outlining the Commission's analysis of the current economic crisis, the principles which should guide action at the EU level, and the nature and rationale of the specific actions proposed.

Five main kinds of measure are envisaged:

• emergency measures
• restructuring measures (Fleet Adaptation Schemes)
• horizontal measures (falling outside Fleet Adaptation Schemes)
• market measures, and
• measures facilitating the use of the EFF.

In addition, the Communication also examines possible changes to the de minimis rules for the fisheries sector, social aid in the form of decreased social security contributions, and the scope for additional funding outside of the EFF.

1. Emergency measures

Exceptional emergency aid for temporary cessation of fishing activities

In order to allow Member States and fishing enterprises to elaborate the necessary restructuring and adaptation initiatives, Member States should be allowed to grant emergency aid by financing the temporary cessation of fishing vessels for a maximum of three months (to be started before 30.11.2008). Such a measure may finance crew costs and fixed costs of vessels. This measure will only apply in cases where there is an explicit commitment that the enterprises benefiting from it will be involved in restructuring measures within six months (failing which the aid must be repaid).

The total public financial contribution to this measure shall be capped at €400 million, and will be shared between Member States in accordance with EFF national financial allocations. This temporary cessation shall not be taken into consideration against the limits (duration and budget) set by the EFF Regulation. Measures implemented as of 1 July 2008 will be eligible for support under the EFF.

This temporary cessation should be tailored with a view to enhancing economic benefits by supporting stock recovery and/or by promoting more favourable marketing conditions. To that effect, Member States are encouraged to link the period of temporary cessation with considerations of biological dynamics, seasonality and market aspects.

2. Restructuring measures (Fleet Adaptation Schemes, FAS)

Special support measures will be made available to fleets for which Member States adopt Fleet Adaptation Schemes which meet the following requirements:

• fuel represents at least 30% of the fleet's production costs; and
• the FAS will bring about a permanent reduction of at least 30% in the fleet's capacity. For Member States whose fleet is less than 100 vessels, this threshold can be lowered to 20%.

The following measures will only be accessible for vessels and/or fishermen involved in FAS.

Facilitate access to EFF premiums for permanent cessation of fleets in restructuring

It is proposed to derogate EFF rules in order to lift any limitation to the access of permanent cessation premiums for the fleets involved in the Fleet Adaptation Schemes.

Additional aid for temporary cessation

Vessels involved in Fleet Adaptation Schemes should be allowed to receive aid for additional months of temporary cessation to be carried out before 31.12.2009. This temporary cessation shall not be taken into consideration against the limits (duration and budget) set by EFF Regulation. It will be consented within the following thresholds:

• 3 months to vessels which are going to be scrapped or to change engine; a maximum of 3 additional months may be allocated after 1.1.2010 in case restructuring is still ongoing
• Six weeks to other vessels involved in the FAS and subject to the other measures of the FAS.

Such a measure will finance crew costs and vessels fixed costs.

Increase the aid intensity for modernisation schemes

Currently the mandatory private financial participation in relation to financing investments on board is 60% and 80% for gear and engine replacement, respectively. In order to give additional impetus for fishing companies to use more efficient vessels and gears, the mandatory private financial participation should be reduced. The actual percentage will be defined by Member States on the basis of objective criteria such as the age of the vessel, the energy efficiency improvement, or the degree of capacity reduction included in the restructuring plan. The minimum mandatory private financial participation should is 40% of the costs.

Partial decommissioning aid in case of replacement of an old vessel with a new smaller and more energy efficient vessel

A vessel owner scrapping one or more vessels and replacing it by a new smaller and less fuel consuming vessel, may receive the scrapping premium (i.e. "partial decommissioning") in relation to the difference between the capacity of the scrapped vessels and the capacity of the replacing vessel. Member States shall under partial decommissioning only be allowed to replace 25% of the total capacity permanently withdrawn in the Fleet Adaptation Scheme to which partial decommissioning is applied.

This proposal introduces more flexibility into scrapping policies. It must however be carefully designed to support fleet restructuring, but also the overarching policy objectives of conservation. The capacity of the new vessel shall be smaller than the withdrawn capacity; the maximum replacement ratio allowed per vessel should not be higher than 2:5. Furthermore, the measure should only be permissible if the Fleet Adaptation Scheme comprises a high percentage of vessels in a homogeneously defined fleet.

3. Horizontal measures outside Fleet Adaptation Schemes

Increase the EFF aid intensity for fuel-saving equipment

It is proposed to apply a lower rate for mandatory private financial participation (40%) for investment on board concerning equipment which helps to significantly reduce fuel consumption.

Expertise in relation to energy audits and the development of restructuring plans

It is proposed to adjust EFF rules on collective actions to make sure Member States can provide financial assistance to vessel owners for seeking expertise in relation to energy audits and expert advice on the development of restructuring/modernisation plans.

Expand the rank of eligible beneficiaries of EFF socio-economic measures

Currently EFF early retirement aid is granted only to fishermen. Such aid should also be allowed for other workers in the fisheries sector (auction halls, port services etc.), in order to tackle the difficulties arising from situations where ports are scattered along the coasts and closures and consolidations are expected as a consequence of reduced fishing activities.

Promote research on technical improvements for vessels/engines/equipment/gear to reduce fuel consumption and extend the eligibility of pilot projects

Research activities concerning energy efficiency in fishing remain vital in the longer term. More funds should be made available for technical developments for fuel savings. EFF eligibility rules should be amended to enable MS to promote pilot projects concerning technical improvements aiming at reducing fuel consumption.

4. Market measures to increase the value of fish

Enhance EFF use in the area

Member States should be encouraged to promote actions to improve the value of fish by using the largely unexploited possibilities offered by the EFF. The Commission will engage actively in promoting initiatives on:

• increasing fishermen's bargaining position vis-à-vis the processing industry and distributors, by joining forces within larger POs or local marketing associations
• improving planning of EU production and its adjustment to demand
• promoting quality initiatives e.g. labelling and better handling and processing
• promoting information to consumers (health, nutrition, responsible fishing, etc.)
• improving predictability of sourcing for EU origin products for the industry
• developing tools to analyse value chains and prices: market audit/assessment, establishment of a price monitoring system
• strengthening monitoring so as to ensure compliance with labelling provisions and the fight against IUU

Measures under the Common Market Organisation

To ensure that production is adapted to the needs of the market, and in particular of the distribution sector, producer organisations (POs) established under the Common Market Organisation can make use of operational programmes. These are a powerful instrument, and the Commission recommends that POs make use of them in the current situation to maximise the value of their catches through initiatives such as redirecting products to different outlets, raising their quality, voluntary labelling schemes and other promotional activities, as well as concentrating production in periods when it will attract higher prices.

Producers organisations can also establish quality improvement plans to add value to their products, yet these have so far not been widely used. The Commission invites the Member States to support their POs in preparing and implementing quality improvement plans.

The Commission also encourages Member States to promote the establishment of inter-branch organisations, in order to strengthen cooperation and coordination between different operators throughout the market chain.

Observatory/price-monitoring system

The Commission will put in place the necessary measures to establish a price-monitoring system for fish and aquaculture products throughout the market chain. This will lead to developing a tool for analysis and decision-making with the aim of improving knowledge of how prices are set and understanding how added value is generated from the first sale. The aim of this tool is not to influence prices directly, but to improve capacity to anticipate price movements. It should also help producers adapt their supply so as to get better value for their products.

The Commission is currently conducting a study on supply and marketing of fish and aquaculture products within the EU, with a specific focus on price mechanisms. The first results of this study should be ready for discussion with stakeholders in early 2009.

Specific stakeholder initiatives

The Commission will examine the possibility of modifying the second fisheries instrument to finance directly stakeholder organisations' initiatives in the area of market monitoring, labelling, etc, through calls for proposals.

5. Measures facilitating the use of the EFF instrument

Reprogramming

Member States are strongly encouraged to use the EFF to the greatest extent possible, where necessary by adjusting operational programmes, with a view to maximising the financial support to initiatives aiming at tackling the fuel crisis.

Strengthening EFF support to these initiatives may in some cases only require a re-distribution of funds between measures within Axis 1 (adjustment of the Community fishing fleet), which can be decided autonomously by the Member States. In other cases, it will require a programme modification. The Commission will examine and approve all such modifications in the shortest time-frame possible to allow for their rapid implementation.

Easing the use of EFF funds

In order to make it easier for those Member States that may have difficulties in quickly making available the national co-financing funds for Axis 1 measures, the permitted EFF co-financing rate for actions taken in the context of the proposed ad hoc measure may be increased to up to 95% of the total public expenditure.

In addition, it is proposed to double the EFF pre-financing amount paid by the Commission after the adoption of the operational programmes, from the current 7 % to 14% of the total EFF contribution to the operational programme, for those Member States which request it. . This will considerably increase the funds immediately available for Member States to quickly pay for emergency measures.

6. Other measures

De minimis aid

Currently the de minimis rules limit of 30,000 € is applicable on a company basis, which creates large disparities in relation to the benefit fishermen can obtain from Member States regimes financed under the de minims threshold. Based on further economic analysis, it could be considered to modify the de minimis regime for the fisheries sector by allowing the concession of the €30,000 de minimis aid per vessel instead of per firm, but with an overall cap of 100,000 € per enterprise. The Commission undertakes to carry out the necessary economic analysis in the very short term.

Social aid in the form of decreased social security contributions

In view of the importance of safeguarding employment the Commission, through a modification of the Guidelines for the examination of state aid to fisheries and aquaculture, will open the possibility for Member States to take responsibility for part of the rates for social security contributions for fishermen.

This shall be limited only to the contributions payable by fishermen (and not the contribution payable by the enterprises employing them), and provided that there is no associated reduction in the normal remuneration of the employees in question by the employer. The specific case of those artisan fishermen working as the sole employee on their own vessel should also be covered.

This will bring about a direct benefit to employed fishermen, including sole self-employing ones, as these are able to continue receiving the benefits of social security while they may be allowed to pay a decreased social security contribution. The measure would be possible for a maximum period of two years.

Additional funds

It is essential that the package is applied in a way that safeguards a level playing field across the European Union, and does not distort competition among EU fishermen. There should also be no discrimination against Member States which have already engaged in restructuring. The best way to do this is to use the EFF as the main instrument for the structural adaptation of EU fleets. However, a number of problems cannot be solved by the EFF, including:

• those countries which have large fleets, but small EFF allocations;
• difficulties for certain Member States to mobilise EFF funds outside convergence regions;
• the long timescale over which some existing restructuring plans have been scheduled;
• the unprecedented scale of the restructuring effort required by the crisis.

The financial requirement only for permanent and temporary cessation of fisheries activities, in relation to fleet segments that are badly hit by the crisis, is estimated to be in excess of €1.6 billion. The total financial requirement is estimated to be in the region of €2.0 billion. The current programming of EFF axis 1 for these measures is estimated to cover around €600 million, with an estimated additional €250 million coming from national co-financing. The Commission further estimates that €550 million will have to come from reprogramming of EFF Operational Programmes. The remaining amount is estimated at up to €600 million. Part of that amount could be financed through the unallocated margin under Heading 2 of the Financial Framework ceilings for the years 2009 and 2010, with the bulk coming in 2009.

Before any additional funds can be mobilised, the Commission will first ensure that Member States have made available the significant resources highlighted above through OP reprogramming and national funds. For implementation purpose, the Commission will examine the possibility of establishing an ad hoc financial instrument. This instrument would have a limited duration aligned with the fuel crisis measures under the EFF. Resources under this new ad hoc facility would be allocated to Member States using specific criteria.

In particular, in order to benefit from this additional support, Member States should previously have made a substantial contribution of their EFF allocation to the measures needed to tackle the crisis, by way of reprogramming the funds of their operational programmes in favour of Axis 1, or they should have set up ambitious Fleet Adaptation Schemes involving a significant share of the national fleet.

Source: European Commission