Thursday, 01 January 2015 00:00

Industry, authorities, and research together can foster growth

A group of associations from the aquaculture, fisheries, and related sectors have been tasked by the government to formulate a strategy for the growth and development of their industries as part of the government’s overall growth plan. The team has made concrete suggestions that can help remove barriers to growth, where they exist, as well as promote innovation and creative thinking to increase the competitiveness of the sectors.

The Danish fishing fleet has seen a number of changes since the introduction of individual transferable quotas, which started with the herring fishery in 2003 then encompassed other pelagic fisheries, and, finally, since 2007, demersal fisheries have also been managed based on property or user rights. Numbers, capacity, and engine power have all fallen since these changes in management were introduced, though some segments of the fleet have been more affected than others. The Danish fleet is complex as it comprises vessels of different sizes, uses a variety of gears, and targets several different species both for human consumption and for industrial use. The fleet is categorised by vessel length, gear, engine power and capacity. Between 2003 and 2013 the total number of vessels in the fleet fell by a third to 2,634, while gross tonnage dropped by 37% to 68,000 GT, and engine power by 36% to 243,000 kW. However, these changes were distributed unevenly across the fleet. The biggest changes were seen in the 24-40 m segment which lost almost two thirds of its vessels, power, and capacity.

Source: The Danish AgriFish Agency
Structure of the Danish fishing fleet
Vessel length 2010 2011 2012 2013
         
<12 m 2,316 2,302 2,287 2,202
12-15 m 196 186 167 153
15-18 m 127 124 119 118
18-24 m 102 96 95 90
24-40 m 49 47 42 40
>40 m 29 29 31 31
Total 2,819 2,784 2,741 2,634

Seafood forms 11% of the value of Danish food exports

The Danish fisheries and aquaculture sector is an important part of the Danish economy. Food exports from Denmark amount to some 178 billion kroner annually of which fish and seafood contribute some 20 billion kroner based on a first hand value of farmed and wild fish of DKK4bn. In addition, Denmark has a significant industrial fishery which supplies the raw material for the production of fishmeal and fish oil products, which were exported for a combined value of over DKK3bn. Another aquaculture-related industry that has evolved over the years is the fish farming equipment sector that exports products and knowhow to many of the world’s countries. Further, equipment for the seafood processing industry is also designed, produced and exported from Denmark. Fish and seafood and the industries related to this sector are important for Denmark for their contribution to the economy, but also for the knowhow and innovation they generate and for the jobs they create, sometimes in areas where other employment opportunities are few or non-existent.

These factors contributed to a decision by the Ministry of Food, Agriculture and Fisheries to approach the sector organisations involved in the fisheries, aquaculture, and related sectors to develop a growth plan for these sectors that would strengthen their competitiveness and enable them to contribute to the Danish economy, jobs, and the maintenance of the Danish regions both now and in the future. The organisations involved in formulating this plan for growth, Team Fish Growth (TFG), a group of industry associations from the fisheries, aquaculture, processing, fishmeal and fish oil, and manufacturers of equipment related to these sectors, feel that if the recommendations are followed, the result could mean closer collaboration between industry, the authorities, and research leading to a 40% increase in the value of production already at the first link in the value addition chain. The organisations warn however that this depends on certain pre-conditions including growth in the supply of raw materials, innovation, effective administration, and a results-based regulation of the industry.

 

Increased raw material supply a prerequisite to growth

The need to increase the supply of fish is one of the primary preconditions for the growth envisaged by TFG. While catches for human consumption over the last five years have fluctuated between 170,000 tonnes and 200,000 tonnes TFG thinks that this could be increased to 350,000 tonnes by 2020 assuming that the fishing quotas allocated by the EU increase as stocks do better and if fishers are allowed to choose the most effective gears. The authors also take into account the discard ban introduced by the reformed Common Fisheries Policy which is gradually being phased in and which will result in the landing of a certain quantity of fish that would otherwise be returned to sea. Species that are currently not being optimally utilised by the industry, such as brown crab and flounder, and species that have moved to Danish waters due to climate change are also potential ways of increasing catch volumes. Cockles and razor clams that grow outside traditional fishing areas could also add to the catches if pilot fisheries were allowed to find out the potential of these stocks. Finally, if the industrial fishery was better managed the authors of the report feel that annual catches of 800,000 to one million tonnes is realistic although the average of the last five years is about 700,000 tonnes.

Certified fish may be one of the ways to penetrate new markets. The Danish fisheries sector aims to have all its fisheries certified to the Marine Stewardship Council standard.

 

Increasing landings will thus call for several factors to fall into place if they are to be realised. Fishermen feel that this should be achievable. Tamme Bolt, for example, a fisherman from Thyborøn, caught 1,000 tonnes in 2014 and feels it should be possible to catch an additional 10% in 2015 if the quotas are increased. With regard to fish that instead of being discarded is now expected to be landed he is less sure. We need to have clear guidelines on how to implement the rules governing fish that would normally be discarded, he says. Limited quantities of small fish that cannot be used for other than fish meal and oil is one issue, while fish for human consumption that gets caught without having quota for it is another story. In general TFG is of the opinion that a 30% increase in raw materials from traditional fishing and an additional amount from the exploitation of hitherto unused resources should be possible by 2030. The aquaculture industry is also expected to produce more, and sales from fish production, fishmeal and fish oil, as well as equipment are expected to grow from DKK5.6bn in 2012 to almost double that by 2020 and create 1,800 more jobs in outer areas.

 

Involve fishers more closely in data collection

Altogether the report from TFG contains 14 recommendations subdivided into six categories. The main categories are, increasing the supply of raw material; administration of the sector in a way that prioritises growth; and research, innovation and education to promote growth. Better data is one of the first points that the authors bring up under the increased supply of raw materials as reliable data on fisheries is the only way to know how much can be fished. They suggest that the data foundation, which forms the basis of the advice to the authorities, should be strengthened and quality assured, and should also integrate information from the fishermen themselves. The fishing industry should therefore be much more closely involved in the cooperation between the authorities and DTU Aqua with regard to fisheries data and the advice that is based on this information. The report emphasises that many of the demands placed by the Common Fisheries Policy (CFP) on the fisheries sector including the landing obligation, and the ban on fishing in the case of mixed fisheries if quota for one species is lacking, have economic consequences that will stunt growth in the sector if they are not taken into account in the advice that is given to the authorities.

The landing obligation introduced by the CFP will bring in quantities of fish that would, under the former policy, have been discarded. This fish could be a raw material for industry, however research followed by demonstration projects are needed to evaluate how this material as well as other currently under-utilised resources, could be used optimally. The latter include industrial catches which could be used in the production of added value products such as fish oil for human consumption or for pharmaceutical and nutraceutical applications; low value fish such as flounder; and other species including aquatic plants, which are sources of proteins, fats, and other nutrients. Bivalves, that is, mussels, cockles, clams, and oysters, too are a resource, whose potential is not fully utilised, thanks partly to a lack of tradition and partly to a restrictive regulatory framework. The fishing and processing industry with support from the European Maritime and Fisheries Fund will take the lead in investigating the possibilities offered by these under-utilised species.

 

Tamme Bolt, a fisherman who supplies fish to the Thyborøn auction, thinks it should be possible to increase landings by a small margin as envisaged in the growth plan.

 

Better collaboration between harbours to make them more attractive

The Danish harbours play a major role in the landing, trade, and distribution of fish and attracting more raw material to harbours is another avenue to be followed to increase the overall supply of fish. Harbours need to be competitive and to offer services that will attract fishermen and fishing vessels both from Denmark and from abroad. Between 2009 and 2013 total landings in Danish harbours fell by 20% to 847,000 tonnes, chiefly due to a fall in catches of industrial species. However, the value of landings increased by 27% to DKK3.4bn. Landings by foreign vessels to the ten largest ports decreased steeply over the same period from 1,800 to 600, of which roughly half were landings of fish for human consumption and the other half were industrial catches. The need to attract more vessels to the ports is important not only for the supply of fish but also for the survival of the ports themselves. Greater cooperation between ports to increase synergies and win efficiencies of scale is already being practiced in some ports, for example, Thyborøn, Hvide Sande, and Thorsminde, on the Danish west coast have established a cluster called Konsumfisk, that brings together the auctions, fisheries organisations, service companies, and the port authorities, to develop ways of securing the long-term future of the ports and the towns behind them.

Denmark is Europe’s largest industrial fishing nation and exports of fishmeal and fish oil amounted to DKK3.4bn in 2013. In terms of exported volumes Denmark is the second largest exporter of fish oil in the world and the third largest exporter of fishmeal. However, in the five-year period up to 2013 average annual catch volumes of industrial species fell by half to 750,000 tonnes compared to the previous five-year period’s annual average, which was 1.5m tonnes. As a result the industry is looking for a strategy that will illustrate how the current excess capacity can be better utilised and how greater volumes of industrial species can be fished.

 

The Danish fleet is complex as it comprises vessels of different sizes, uses a variety of gears, and targets several different species both for human consumption and for industrial use.

Higher nitrogen quotas, fewer administrative burdens will unleash aquaculture growth

Globally, the main sources of fish and seafood in the future will be the aquaculture industry. Farmed production, thanks to an average annual growth rate of 6.2% between 2002 and 2012, overtook capture production for human consumption in 2014 according to projections from the FAO and the OECD. While capture production is expected to increase from 72m tonnes in 2014 to 75m tonnes in 2023, aquaculture production is forecast to reach 90m tonnes that year. The growth however is in Africa, Asia, the Americas, and in non-EU countries. Within the EU production has stagnated and in Denmark this is attributed to the stringent restriction on the levels of nitrogen that may be emitted by fish farmers. These restrictions have inhibited growth in the sector, but have also forced the industry to look for alternative ways of expanding production. One of these is the use of recirculation systems which use complex filters to remove and detoxify impurities in the water, which is then recirculated. The drawback of the system is that they are expensive, require skilled personnel, and need to be adapted to the species being farmed. In the case of marine aquaculture another type of mitigation that is being considered is the compensatory cultivation of mussels and seaweed. The theory is that by farming mussels and seaweed nitrogen is absorbed from the environment and this can compensate for nitrogen that is released into the environment by fish farming.

At the Danish Shellfish Centre, Jens Kjerulf Petersen, the director, says that mitigation culture of mussels has been shown to be a cost efficient tool that compensates for the effects of eutrophication of coastal waters caused by agricultural run-off. Some marine fish farmers would like to apply the same logic to the cultivation of fish. Called IMTA (integrated multi-trophic aquaculture) it envisages the cultivation of the volume of mussels and seaweed required to take up an amount of nutrients equivalent to those emitted by the fish farming. The use of IMTA as a mitigation measure for fish farming is not without controversy. Some believe the mussels and/or macroalgae should act as a physical filter and be grown in the vicinity of the sea cages. This would, however, probably prevent the adequate exchange of fresh seawater in the cages and could ultimately suffocate the fish. Jens Petersen feels that it makes far more sense to locate the mitigation culture in an area, where it would be most efficient, for example, where there is the highest nutrient uptake, where there is an upwelling, or good conditions for mussel farming, so that the highest yield is obtained.

Source: The Danish AgriFish Agency
Danish landings of fish for human consumption, tonnes
2010 2011 2012 2013 2014
167,342 173,288 186,179 186,376 198,657


Mitigation culture is one of the areas the Team Fish Growth would like to see develop including having its effects documented, such as its contribution to biodiversity. It also recommends the regulation of mitigation culture with rules that specify where such cultures should be located, and how their impact can be calculated and used to compensate for emissions. But TFG also recommends increasing the limits for nitrogen emissions, enabling the merging of quotas, and using integrated coastal planning to identify sites where aquaculture can be practiced, as well as where offshore farms can be placed, if the aquaculture industry in Denmark is to live up to its potential.

 

Simplify raw material imports

Finally, to increase the supply of seafood, imports of raw material need to be simplified. In Denmark two thirds of the raw material for the processing sector is imported, the remainder comes from domestic catches and a small part from aquaculture production. This raw material formed the basis for exports worth DKK22bn in 2013 (including fishmeal and fish oil). Liberalising the import of raw materials, reducing customs duties, and speeding up the administration of imports will contribute to the increased inflow of raw materials. The TFG report also underlines the importance of parity with neighbouring countries in terms of rules and regulations governing imports and with regard to the import fees to which the processing industry is subject.

 

Jens Kjærulf Petersen, director of the Danish Shellfish Centre.

 

Administrative procedures too cumbersome

The growth plan put forward by the industry includes recommendations for how the administration of the sector should be changed in order to foster development. A long standing demand from the fishing sector is that the administration should set the overall goals and then let the fishermen themselves decide how to achieve these. The aim is have a results-based management. The Common Fisheries Policy introduces a number of new elements, such as fishing at Maximum Sustainable Yield, and banning discards, but how this is to be implemented is unclear. The industry thinks that a hands-off approach from the administration after setting the overall goals will unleash innovations in gear, fishing methods, and technology. As fisheries policy is set at the EU level it will be necessary for the Danish authorities to communicate their point of view clearly with a view to influencing policy developments there. Fishers should be allowed to choose the gear and fishing methods they use, and the MSY principle and the allocation of TACs should take into account mixed fisheries and that all fish must be counted against the quota. The results of demonstration projects should be swiftly incorporated into legislation and the political side of the process must not be underestimated, so politicians must carry the procedure through negotiations in Brussels.

What applies to the fishing sector is also an issue with for the aquaculture industry, where permissions can take months to obtain as they have to be processed by several different authorities. In 2010 an aquaculture committee tasked with finding ways that would allow the sector to expand came up with several recommendations, many of which have still not been implemented. The industry would like to see these recommendations implemented and the processing times for environmental approval for applications to start or expand aquaculture production to be reduced to half a year. The introduction of transferable quotas for nitrogen should be prioritised so as to allow the development of the sector to be controlled by the market rather than the authorities. Long timeframes for processing applications make investments in the sector less attractive, which runs counter to the thinking behind the support that is available from the government and the EMFF for the development and expansion of the sector. The industry would like therefore to see a more efficient and rapid administration of the support schemes so that funding can quickly be disbursed and utilised.

 

Source: The Danish AgriFish Agency
Danish aquaculture production, tonnes  
  2010 2011 2012 2013
Trout and salmon 36,795 37,962 37,672 41,114
Eel 1,532 1,154 1,401 1,079
Other species 75 76 134 306
Mussels 731 537 527 560
Total 39,132 39,729 39,735 43,058

Collaboration between research and industry should be systematised

A factor critical to the sector’s growth is the degree of symbiosis between the industry and the research and educational establishment. Close collaboration between universities, research and teaching institutions on the one hand and the industry on the other will benefit both parties and contribute to increased growth and greater innovation in the sector. While there is already a degree of collaboration between the industry and the research establishment this can be improved and made more efficient. In this regard the growth team has suggested that the constituent parts of the aquaculture cluster – farmers, technology producers, feed manufacturers – will enter into a discussion with the research establishment to identify research priorities. All existing research papers within fisheries and aquaculture should be collected into a database that is accessible to the industry. Regarding education within fisheries and aquaculture, the recommendation is that they should be evaluated for their relevance and their ability to equip students with the means to confront and solve the problems that are likely to develop over the medium and long term.

 

Potential new markets overseas – and in Denmark

Exports of Danish seafood are traditionally to neighbouring markets. However, there is significant potential in markets further afield, in Africa, the Middle East, and Asia particularly in China. Selling to these markets will however call for a concerted effort by both the industry and the government to promote Danish seafood and overcome commercial, political, and cultural barriers. An export strategy that identifies markets with the most potential followed by Information campaigns, export advisory services, and support for promotion are among the proposals from the growth team. The potential of new products and species should be explored and potential buyers in new markets identified.

Selling Danish fish, seafood, and equipment for the sector will call for a concerted effort by the industry and the government to overcome commercial, political, and cultural barriers.

Finally the growth team feels that the domestic market has the potential to absorb more Danish-caught fish. Today only 5% of Danish fish is sold in Denmark, a figure that could be increased with the right incentives. Campaigns to increase fish consumption both of traditional and non-traditional species are one tool, emphasising the environmental benefits of eating locally caught fish, and looking at ways to reduce costs connected with the production and distribution of fish are other ways of increasing consumption of Danish caught fish.

The recommendations put forward in the growth plan offer a way to trigger growth in the Danish seafood industry, but, more generally, should also increase the long-term competitiveness and resilience of the sectors involved. This is of critical importance for the many small coastal and inland communities, which are dependent on fisheries- or aquaculture-related industries, and which form a distinctive part of Denmark’s social structure.