Rural Economy and Connectivity Committee

Meeting date: Wednesday, February 10, 2021

Official Report 833KB pdf

---

Post-Brexit Requirements (Impact on Exports and Supply Chains)

Good evening, and welcome back to the committee’s fifth meeting in 2021, which follows on from an earlier part of the meeting that took place this morning. I remind everyone to make sure that their mobile phones are on silent. The meeting is being conducted in virtual format. Apologies have been received from Stewart Stevenson and Richard Lyle. I believe that Mike Rumbles is unavoidably detained; he hopes to join us later.

Item 4 an evidence session on the impact of post-Brexit requirements on Scottish exports and supply chains. We will take evidence in a round-table format from a panel of stakeholders from across the food production and logistics sector.

I welcome Mike Park, chief executive, Scottish White Fish Producers Association; Ian McWatt, deputy chief executive and director of policy science and operations, Food Standards Scotland; Belinda Miller, head of economic development and protective services, Aberdeenshire Council; Eddie Green, head of cold chain, DFDS; Georgina Wright, head of sales, Mowi UK; Tom Gibson, director of market development, Quality Meat Scotland; and Andrew Charles, partner, J Charles LLP. James Cook was due to attend this evening but is unable to do so, unfortunately. He has submitted written evidence, which has been circulated to committee members.

It says in my notes that I will ask committee members to “kick off” discussions. I hope they are not going to kick off; I hope that they will introduce discussions on a few broad themes during the meeting. I will then invite witnesses to contribute their views. If you want to come in, you should type R in the chatbox and I will bring you in. Of course, the danger is that, if no one types R in the box, the last witness to look away will be the person who I call to speak. Therefore, the witnesses should either look away quickly or type an R in the box.

I want to try to bring in as many of you as possible, so the shorter that you can keep your answers, the more chance I will have to bring somebody else in, which means that you will not upset them.

Those are the rules of the game. The deputy convener, Maureen Watt, will introduce the first topic.

To set the context, will some of the witnesses give examples of what new non-tariff barriers they are experiencing? I direct that to Tom Gibson first, and then to Andrew Charles.

In relation to non-tariff barriers, we have seen a fair few challenges with our exports. We know that there is a whole host of issues related to the export health certificate, that there are some new customs procedures that exporters must follow and that there are issues around rules of origin and so on. These are the main aspects that are giving us difficulties when we are exporting to the European Union under the new trade agreement.

We are experiencing everything. If you want to be a successful exporter, you need reliability, quality and consistency; you also need to be competitive. The Brexit agreement has smashed every single one of those principles out of the water. The forms are incredibly complicated and open to interpretation. Customs—the border control posts—can easily hold up lorries if they want to and if there is Government will to do that.

We have a huge certification problem, but the cost of that is an even bigger problem for the small to medium-sized exporters, who have been forgotten. The charges go from £150 to £220 per invoice transaction. That kills the ability of every single small exporter and knocks out of an awful lot of the medium-sized ones to pay premium prices on the market. We have a massive problem. It needs to be sorted and Government must put in a support package, particularly in relation to the certification charges, to try to get the competitiveness back in the market.

We will come back to specifics later. Belinda Miller, what role do local authorities play in meeting the new export requirements? How has the landscape changed for you in Aberdeenshire?

We now need a team who is dedicated to working only on export health certificates. We are not involved in any other part of the set-up; we are just issuing export health certificates. At this point, we are dealing only with single load exports, because all the groupage—in other words, different loads from different companies—is being dealt with elsewhere. We are working Monday to Friday. Generally, the end of the week is the busier part. We are learning as we go, because there is a whole pile of new information that we must gather that we have not have to before.

In terms of your finance, resources and the level of readiness for 1 January, how has that gone? There has been money for local authorities to meet the changes. Have you managed to access that? Were you as prepared as you could be? Have other problems come up that were not thought about?

We knew this was going to happen. Peterhead and Fraserburgh are key ports in Scotland, so we knew that there would be a significant amount of work for us in issuing export health certificates. We have probably been working on the issue for two years, and we have had a dedicated team on it since June 2020. The team members have discovered lots of things that they did not know until they put their heads down. That includes the need to inspect vessels—we inspected more than 296 vessels before 1 January. There was a significant amount of getting ready in terms of the paperwork, how the systems would work and how to interpret them. We did all that and the systems have been in place now since 1 January.

On accessing funding, each local authority got funding for Brexit preparedness. We utilised that for the dedicated team. However, in all honesty, staff time was the greatest resource. We did not necessarily need the financial funding to deal with the situation; we needed human resource to deal with it.

Does anyone else want to come in at this point?

I see that Emma Harper would like to come in, so I am happy to bring her in at this stage, which may widen out the discussion. I also see that Ian McWatt wants to come in—I will come to you next.

My question picks up on what Andrew Charles said about the paperwork and the process. I have received information from a local fisherman and a processor, West Coast Sea Products in Kirkcudbright. They said that there is a massive issue with VAT and that they had to register for VAT in France. Even though they can claim that back, that will take a whole month. They have had to freeze their scallops because they cannot ship them out. Is that issue for our queen and king scallop exporters in Kirkcudbright a widespread issue across other parts of the industry and across the rest of Scotland?

We will go to Andrew Charles because that was directed at him, and then to Ian McWatt.

VAT has been a financial burden. We have had to set up accounts and lodge money in those accounts, because when you export now the money must be available for the VAT to be paid immediately—the cash has to be available to be drawn down by the haulier or the clearing company straight away. That has placed a burden on the companies that have to do that. It is a massive problem.

Whoever sat down and considered this to be a reasonable free export system has to question what has gone on. A system has been created that will destroy exporting. There is absolutely nothing easy about what industry is being asked to do. We were prepared, ready to go and had everything in place, but a lot of the stuff that we have been hit with has been open to interpretation and that has been different from one checkpoint to another. The haulage companies have been battered pillar to post trying to get our products through. It is incredibly difficult to understand how we have been led down this path with this agreement.

I very much take your point. The committee is quite keen to find solutions as well, so we would love to hear the witnesses’ solutions.

It is very interesting to hear Andrew Charles’s comments. FSS recognises all that, as, indeed, we recognise some of the challenges that Belinda Miller from Aberdeenshire Council has articulated.

It is fair to say that this process is new for everyone, whether that be from the Government, local authority or industry side. The feedback that has been presented to us on the groupage export side of things is that we are facing unprecedented challenge as far as the number of issues that are holding up the certification process goes, which is principally around the information that has been supplied from the smaller to medium-sized enterprises. They have reported back to FSS that, essentially, a lot of their concerns are around not knowing what it was that they had to prepare for, right up until Christmas eve.

We have been working closely with industry to ensure that the requirements for certification are clearer, but—picking up on Andrew Charles’s point around the design of the system—the simple fact is that we are a third country having to respond to the requirements of the European Union as far as certification components are concerned and, in doing so, I absolutely acknowledge that there is significant complexity in the system. The range of issues that we are finding that are slowing down the certification process is fully evidencing that.

We will go to Georgina Wright and then Peter Chapman.

I would like to quickly summarise the situation before and after 1 January. Previously, a CMR was required, which was effectively a delivery note. Now, the paperwork is the export health certificate, an export declaration, an import declaration, a transit document and a trailer seal. That number must be on all documentation. For organic food, on top of that, we require a certificate of inspection. For exports, all that information must be loaded into the customs handling of import and export freight—CHIEF—system. For imports into Europe, the information must be loaded into the trade control and expert system—TRACES—and Conex. There is also a transit document registration. We have moved from a small pile of paper to an enormous pile of paper in the space of a month.

18:15  

Okay. I am going to change my mind, as I can do as convener. It is probably better for Eddie Green to come in at this point, and then we will go to Peter Chapman.

I echo what has just been said by Georgina Wright about complexity. Our job is to carry a lot of the fish out of Scotland. We have seen from the start an extremely complex system, a lot of unfamiliarity with it and a lot of the things that should jell together, such as state-operated French and British information technology systems, failing.

However, the situation has become much better in the past couple of weeks. The complexity has not gone away, but familiarity with it has improved. To pick up on Andrew Charles’s point, the overriding issue is that the cost and the time to market have not gone away. That is the key thing about making the industry competitive. Our costs have rocketed and, of course, we have to pass those on to our customers.

I fully accept that it is necessary to adhere to them, but I feel that the application of some of the processes are very rigid. Given the amount of checking that is being done on the United Kingdom side compared with what is being done when the goods arrive in France, there may be some scope to relax some of the checks and maybe not certify or check every single consignment but certify the supplier. Georgina Wright might want to comment on that. She has had experience in exporting to the far east previously, and I think she might comment that it has been easier to export to the far east than it is to continental Europe right now.

Before I go to Peter Chapman, could you clarify that point, to ensure that I understand it? Are you saying that the checks that are carried out when entering France or into Europe are much more stringent than goods coming into the UK?

I did not actually say that, but that is the case currently because there is a time lapse or derogation for six months when goods can flow freely into the UK until 1 July, whereas everything is being checked at the border on entry to continental Europe. That is another issue.

My point is that we are taking truckloads of fish into France and, for the time being, some of them are receiving full turn-out and a full examination of the goods, while others are just having a cursory check, in as much as the seal of the truck is checked or the back doors are opened and the goods are looked at.

You should bear in mind that we are taking the same products from the same customers to the same destinations day in, day out. Therefore, it is important to consider how the rules are being applied in Scotland and across the UK—we are carrying fish from other parts of the UK as well—to ensure that we are not making it too difficult for ourselves to carry out all of those tasks.

My questions are about the issues at the Larkhall depot. Maybe Ian McWatt and Eddie Green could answer some of these questions.

Was Ian McWatt content that he had enough Food Standards Scotland staff at the various depots? Were they properly trained for the job that they needed to do? Does he believe that his staff were too particular? Eddie Green made the point that we are maybe being a bit too picky about what we are doing. Did Ian McWatt have enough staff, and were they well-enough trained? Will Eddie Green comment on how he felt the hub was working? I am pleased to hear that things are better now, but will you give us a feel for how things have moved on since the first week or so? Can Ian McWatt address those issues first, please?

Certainly. On whether we had enough staff, we as an organisation were preparing for resourcing the hubs as far back as 24 August, when FSS became involved in the matter. We employ a large number of veterinary personnel and environmental health officers in our organisation. In our discussions with the hubs, each considered its service demands, and each hub gave us an idea of what it expected the service demand to be. The Animal and Plant Health Agency had used detailed modelling to determine what the certification time period should be, and it suggested that 45 minutes to two hours per certificate would be required. In advance of that, we had access to the export health certification training system, which allowed us to make a determination and agree specific service requirements for each of the hubs.

From 31 December, we had 11 staff to service the three hubs. That was not what we had available and at our disposal. From day 1, I could have trebled the number of staff who were deployed to the hubs if that had been required but, in practice, that would have meant that staff would have been tripping over themselves. Although there was a lengthy period for some export certificates to be completed, there was more than enough capacity, with the numbers of certificates that were going through. I could have deployed many more staff into the hubs if I had required to do so; the number of staff was not an issue. I was also pretty confident that the staff whom we put in were well experienced and suitably trained to undertake the role.

You asked whether we have been too picky. I think that there has been specific reference to some loads being pored over and some export certificates taking as long as 10 to 11 hours to complete. I go back to my previous reference to some of the challenges that our hub colleagues are finding across all three logistics hubs—I believe that local authority colleagues who are certifying directly to businesses are experiencing the same things. We are finding that there are missing supplier declarations. There are incorrect identification marks and labelling issues. There are incorrect batch numbers, incorrect net weights, incorrect commodity codes, errors in product schedules, incorrect importer details, incorrect approval numbers and incorrect trailer numbers, and incorrect destinations are being put on the supplied paperwork. Every single one of those errors or pieces of missing paperwork creates back pressure in the system. The logistics hubs have had a horrific task in trying to unpick that, trying to gain resolution to it, and trying to match up loads with the correct paperwork so they can be processed in a timely fashion.

It is absolutely not about being too picky. We have had issues coming out of France and Holland. Loads of fish sailed through—Eddie Green referred to this—on day 1 and were held up for six hours on the following day because the ink that was used on the stamp did not meet the importing officer’s requirements.

A huge degree of inconsistency has surfaced from border controls in Holland and France. We are raising that with the European Commission through the Department for Environment, Food and Rural Affairs, which is the competent authority, in an attempt to achieve better consistency.

If it had not been for FSS staff going through some of the loads with a fine-tooth comb, loads would have been held up for much longer in continental Europe, and consignments would have been sent to landfill. My view was that it was much better and safer to try to resolve the issues and ensure that we were satisfied that export health certificates and supporting documentation were all absolutely correct to avoid any waste or delays at the border control points.

Are things getting better? Are you finding that the paperwork is now properly filled in and therefore your guys’ jobs at the hubs are now becoming a bit easier? I would like to think that that is the case. Is that true?

Things are getting better. As Eddie Green mentioned, we are seeing improvements but, to be honest, there is still some way to go. We are still seeing that around 25 to almost 50 per cent of certificates have to be reworked. I have already described the main reasons for that.

To support the industry further, FSS has managed to find money from my budget to support the hubs and the FSS transaction side by engaging the Scottish manufacturing advisory service. It is working through the hubs and with us to look at the processes and see whether there is any scope to improve the approach further. The Scottish Government has also provided funding for two Brexit advisers to work directly with Seafood Scotland.

I am looking at the issue very positively, but there is still some way to go and, obviously, we still need to await the outcome of direct discussions with the European Commission to address the irregular treatment of loads on the continent side.

There is no exaggeration at all when Ian McWatt speaks; all the things that he said are true. All that we experienced with the chaos with paperwork from all directions led to our suspending our groupage service for 10 days, but that is back on track now, and I think that it is correct to say that things are much better. People are more educated and understand what needs to be done. That is certainly no criticism of anybody involved.

On being picky about the consignments, there has been a different level of control over goods that have been taken through Heathrow airport, for example, compared with those that have been taken through continental Europe. I am trying to share our experience in France in particular, where things have become easier. As I said, some loads are completely turned out and checked, whereas others go through quite quickly.

I take Ian McWatt’s point about different countries applying the standards in different ways. We can get a different interpretation even between two border control points in different ports in France. We challenge those interpretations on a daily basis and get them ironed out. Things are coming closer together, but the situation has been quite extreme in the first few weeks.

My question is on that topic, and I will direct it to Eddie Green again—apologies for that. You and Ian McWatt referred to issues that have been raised before, such as the wrong-coloured ink being used and blocks at different borders—I think that you mentioned France and Ian mentioned Holland. You talked about inconsistency at different borders. How big has that issue been? How large was that part of the initial problems? There is only so much that can be done in this country if hauliers are being stopped by perhaps inexperienced border officers in France or other places. Are you hopeful that the importance of that issue has been put across to the French Government, for example, and that things are moving slightly more easily through Calais and Boulogne-sur-Mer?

Absolutely.

Let us go to Ian McWatt first and then I will come to you, Eddie. I ask you both to be relatively short because I want to get back to Maureen Watt for a couple more questions before we move to the next topic.

18:30  

I also have an important point to make about costs, if time permits.

On the point that Jamie Halcro Johnston raises, what concerned us at the start was that, in some respects, the feedback loop was not quite there. It is only by working with the likes of DFDS and the hubs that we are now getting a feel for some of the challenges that hauliers have been facing on the other side of the straits. I would say that customs officers interpreting the rules in different ways was, and still is, a significant contributory factor both in Holland and in France.

For example, in Holland we found that a load was held up because we had not translated all the fish species into Dutch, but there is no requirement for that. A load was also held back because the certifying ink that the officer had signed in was of a different colour from the health stamp ink. There are no requirements there at all, so there is some funny business going on, and we are relaying that with urgency to DEFRA for it to discuss with the Commission. We are simply waiting on the response from that. There has been an initial commitment from DEFRA to look into that but—to be honest—I am waiting for the response to that.

Could you make your point about costs quickly, Ian?

I want to make it clear that it is in everyone’s interests to make groupage work. Estimates from Scottish local authorities indicated that, as a result of Brexit, the burden of certification on local authorities and business in Scotland would be between 150,000 and 250,000 certificates required annually. Previously, all certificates that local authorities were used to issuing would be for a single consignment from a small business that would then go to a third country, where a range of charges would be applied. Equally, small businesses could also engage their own private veterinarian.

We have had a range of charges, as Andrew Charles referred to, that are much more expensive, ranging from £100 to £800 for one certificate. The whole purpose behind groupage—and this is why it is critically important that we make this work—is to reduce the burden on local authorities for certification. They simply do not have the resources to address this. Equally, the industry could not afford it. Grouping those together and having one or maybe two export health certificates for a group consignment drastically reduces the costs.

We are working on sending out our invoices to the hubs in the next week or so, and it will then become clear just what cost burden is passed on to industry. The green shoot in all of this is that we are getting better, but we really need to maintain momentum to ensure that groupage remains a success in Scotland.

In the first couple of weeks, the issue was very much a lack of familiarity with the systems and rules almost being made up as they went by certain officers. Again, there are the examples of the colour of the ink used in stamps and whatever, even though what was there was all relevant and correct. We experienced the same and we went back to the different authorities saying, “No, these are the rules—it should not be this way.”

It has got a lot better. Our main port of entry is Boulogne, and we see a fairly consistent approach being taken there now, with the clearances going through fairly quickly every day. To reiterate the point that keeps coming up, the cost does not go away. The cost of doing all this is huge, and that message has to get through very loudly.

Belinda Miller, could you clarify the costs involved? Are local authorities making more money and, therefore, will they be taking on more staff to speed up the process?

We had an agreed fee for non-EU exports before the transition of £79 per export health certificate. I was given delegated authority by the council to set a fee based on what we thought might be the volume and the cost. The only thing that the council has to do and should do is cover its cost. We are not here to make money out of business—certainly, that is the last thing that I, as the head of economic development, want the local authority to be seen to be doing.

We set a fee of £42 per export health certificate and our estimate is that, in the first month, it was definitely costing my team more to do each export health certificate than £42. As they have become more experienced and—to pick up what was said by others—as the businesses have become more experienced, that cost is coming down. The errors have gone down and the efficiency has gone up.

We have decided to leave it until June before we see what the pattern of the number of EHCs that we have to issue is and what the true cost of that is. At the moment, I have around 8.5 full-time equivalent officers working on this from admin up to a team manager. We will need more staff because of the rota system—at the moment, we are limited in the number of people who can take leave and things like that. We will have to staff up a bit further if we get the pattern, so we will then make a call on the cost that we will apply to each export health certificate.

We are starting to see exports going up in volume. At the beginning of January, exports were down a lot because people were waiting to see how they were going. Already this month, we have had 92 certificates issued to go to Europe, whereas all of last month we only had 148, so we can see an increase happening. The catching sector is also changing every month. At the moment, it is pelagic time and a lot of fresh mackerel is being exported. That will move to frozen in a few weeks’ time. The pattern has to be developed that will allow us to work out what the annual cost will be and how we will apply it to business.

In the interests of time, I will ask both my questions together, although they do not relate to each other particularly.

Georgina Wright, Mowi is a company that has product in Scotland and in Norway, which is also not in the EU. Is it much easier to export through Norway, and is that what Mowi is doing at the moment to the detriment of the trade from Scotland?

Can the panel see any benefits of the new trade agreement that can be gained from the new set-up? How does the panel feel about the advice from Boris Johnson, which was to set up companies in the EU? Is that seriously an option that could be available to any of you?

That is a pretty wide question. Let us go to Georgina Wright first, and then I will look to see whether anyone wants to come in on the other question.

Scottish and Norwegian are two quite distinct origins—we must be very clear about that. Norway is part of the European Free Trade Association and, within that, it has a sanitary and phytosanitary agreement so, in exporting to the EU, it does have to do an export declaration and an import declaration. The majority of product goes through Sweden and Denmark, but the process is pretty streamlined and automated and online. There is not the mountains of paper that we are all having to deal with. Interestingly, though, from 1 April, products of animal origin coming into the UK from Norway will require a paper health certificate. It will be interesting to see how that development goes.

To touch on the detriment of our product, it was our darkest hour when we were forced on the first Friday to cancel two trucks of Scottish origin going into a French retailer and to push the retailer towards product of Norwegian origin because we had no certainty that the Scottish product would arrive.

There is always the fear that, if I could not find somebody to look away quickly enough, I would have to nominate somebody to talk. Belinda Miller, you popped up, and Tom Gibson, you might find yourself up next.

I just want to address the deputy convener’s question on whether there is any upside to the additional processes that we are going through. The one upside that I can foresee, although it is definitely not present at the moment, is that, if Scotland’s certification process is of excellence and we can get it absolutely right, the Scottish product itself will have an additional value to the consumer at the other end. Therefore, in the medium to longer term, there may be a higher value for product that has to go through the additional checks and balances. Speaking for the north-east certainly, and I am sure for the rest of Scotland, I can say that we have the best product. We want to be exporting the best product and, therefore, getting the best price for our businesses. If we can get to that stage, there may be a value in having the best and exporting the best and, therefore, economic development will follow from that point of view.

When I spoke to a range of exporting processors today, I certainly did not hear about any rays of hope about where we could expand our export business in the EU. What I heard about was the challenges that they face—and we have heard many of them so far this evening—and the complications, cost and delays in trading. There are other complications to do with the export certificates—there are still unanswered questions for DEFRA about export certification—that are causing challenges.

Our red meat processors are dealing with the challenges here and now in trying to export to the EU. Bear in mind that we are still suffering and in the midst of the Covid pandemic. That has had a massive impact on our red meat trade to the EU as well, and there have been complications for the processing sector in Scotland in trying to deal with those issues. At the minute, I am afraid that we are finding it difficult to find any green shoots or rays of hope when it comes to business with the EU.

Good evening, panel. I have been having some connectivity issues. If they continue, perhaps broadcasting could put me to audio only, which would benefit everyone.

Much of the ground that I was going to cover has already been touched on, but I want to ask a question to each panel member on disruption at the border. It is a fundamental question, which a couple of the panel members have already answered. Could the current difficulties in getting goods to the EU market be considered to be teething problems or are they more fundamental difficulties due to the terms of the new trade relationship between the EU and the UK? Are they teething problems or is something fundamentally wrong? Perhaps Mr Green will kick off on that, followed by other members, please.

There were teething problems, but I think that the issues are here to stay. This year—2021—is in the digital age, but we have to take a paper health certificate with us all the way to France or wherever we are going. If there is something wrong with our paper certificate when we get to France, we have to send another one the next day, which means that the load could be held up. If the UK Government had agreed to go on to the electronic system that is operated in continental Europe, we could make those amendments electronically.

Some teething problems have largely gone away. Some problems are here to stay, but I think that there are some solutions as well. Lobbying needs to be done to get those solutions put in place. The system should be digitised; it is far too manual at the moment. I understand that every page of the health certificate has to be signed and rubber stamped, which does not seem to fit in this day and age. That is a really important consideration.

We will go to Mike Park. Sorry, John—do you mind if I just keep the answers moving along?

I had a particular question, but on you go.

No, you go for it. Sorry, I was just trying to stop everyone answering at the same time.

Thank you. I was conscious that Mr Charles had been very forthright in his view earlier. Mr Charles, do you think that there is a fundamental issue or are the teething problems surmountable?

18:45  

I would say that there is definitely a fundamental issue. The deal is a very bad deal and there is not much that we can do about it.

There are two streams. I am sure that the haulage companies and the departments will slowly grind towards making something reasonable happen, but if we want to get back to where we were, which was delivering quality product into Europe within 12 to 24 hours, something has to fundamentally change. That requires renegotiating with Europe a much more streamlined and better system.

If we rewind, we can see that none of what is happening now was necessary pre-Brexit. Basically, the EU is starting with a blank canvas. As a past partner, which was something new, we were negotiating for what we could get for exporting our product into the market.

Scotland—or Britain—has massively powerful levers here. We have a European fleet fishing and taking our British and Scottish asset and delivering it back into Europe with no scrutiny whatsoever and very little management. If every kilo that that European fleet caught was put under the scrutiny that fish exporters in Britain are having to undergo to transfer goods into Europe, there would be chaos. Surely there is a negotiation to be had there. That needs to be the solution. We need to get Government over there to negotiate a deal that makes for a far better and more streamlined system.

We have powerful levers to do that negotiation, and it will need an awful lot of courage from Government. The system that we have right here, right now is destroying our export industry. We will not stop, but the system is leading to a situation in which lorries are being filled with whole fish, with one certificate, heading into Europe. All the gross value added that provides great economic benefit for our fishing communities is being lost, and we are playing into the hands of the trucking industry. We were already losing about 60 per cent off our markets to trucking prior to Brexit, and that will get worse.

I think that we will be coming on to ask about elements of that. Can I bring in Mike Park, please?

Thanks for the question and the opportunity to answer it. A lot of what Andrew Charles said makes sense. There will be legacy issues regarding the cost of getting product to the continent and the time that that will take.

Unlike Mr Charles, I believe, without a shadow of a doubt, that all the powerful levers were traded away. At the end of the day, the system will become smoother. Things will be ironed out, but they will not be removed completely. The legacy issues of cost and time to market will be the difference between now and what happened in the past. Those are certainly the main issues.

Andrew Charles is right: we have some levers regarding fish coming into the UK from foreign vessels and going directly to France, but that is because they are not selling it in the UK. They are just transhipping it to Europe.

We always thought that non-tariff barriers would be the French kicking off at the Channel. We knew that the system would not be great, but no one ever believed that it would be as bad as it is. In the fishing industry, we have a saying: “It all comes out at the cod end”. Maybe some would disagree with that, but at the end of the day we are now struggling for prices. We are now trying to get supply matched to demand. We have vessels tying up and we have vessels landing into Denmark. Loads of distortion has been created by the current method of getting product to the market.

Ms Wright, you used the phrase “darkest hour”. Are there brighter days ahead? Are there teething problems or fundamental problems?

They are fundamental problems. We are coping and we are exporting. We will not stop pushing to export our product, but it is taking huge resource in Scotland and France to move the product through. In essence, the new normal is not acceptable. The system is archaic and, as Eddie Green said, it needs to be streamlined.

Would anyone like to comment on reports that one of the implications of the present situation is doubt over the future viability of a number of companies? We have heard already about the increased haulage charges.

That is certainly a concern. We have businesses that export. At the minute, because of the groupage issues, some of our smaller exporters have no route to market for their EU customers and they are not planning to do anything soon. There are certainly concerns there.

There will also be concerns that businesses will contract some of their export ambitions because exporting will become too difficult. There have been teething problems, but I agree with the other panel members that the problem is systemic. This system was never designed for the situation we are in just now. It was really designed for sending containers halfway round the world.

An urgency is required here, because my real fear is that the problems will keep coming further down the line, fairly quickly. I mentioned earlier that, due to the loss of food service markets in Europe and the UK because of Covid, we are looking at reduced numbers of exports. In January, the red meat companies exported probably only 25 per cent of what they exported last January.

If food service markets start to come back on as we come out of Covid, and the volumes start to increase, where will we get to at the ports when products are being distributed to France and Holland? The issues will just become exacerbated. There has to be some urgency in finding solutions.

The issues are systemic and fundamental. Let me take this back to the sea sector side. We have problems that are different from the shore sector’s problems with getting the product to market. Our problem now is having enough fish to land to market to make a living for the fleet. Our situation is difficult and we have wider issues about lack of crew income and finding crew from non-UK sources, but if the processors cannot buy fish with confidence in getting that fish to the marketplace, everyone suffers. We all know that uncertainty is the devil of business, and unless you can remove the uncertainty from every link in the chain, we all have a problem.

One focus point that might change things is when Europe has to do the same as us. That point is approaching soon, and that might hold Europe’s feet to the fire on working with the UK to solve some of the issues.

Would any of the panel members care to comment on the arrangement for the border between Scotland and the north of Ireland? Are there any implications for your operations?

We have a couple of exporters that have been challenged by that. There is a red meat company that supplies many of the main UK retailers that does a lot of its packing and processing over in Northern Ireland. It has additional challenges in getting product across to Northern Ireland and then bringing it back here. It also takes product into the Republic of Ireland for certain processes, and that gives rules of origin issues when it brings it back to the UK. The first couple of weeks were difficult, but things are a lot smoother now and that company is used to the process that it has to go through.

The issue comes back to the time and cost that the processes require. The product is getting through, but everything is slow and there is extra cost.

Are the arrangements for Cairnryan to Larne exactly the same as those for Dover to Calais?

There are slight differences in terms of export health certificates. Certain schemes are in place for Northern Ireland in which if you are a trusted trader, you can go over there without export health certificates and so on. Further easements have been put in place to smooth the process for taking goods over to Northern Ireland, although there are other requirements if you do not have a trusted trader status. It is slightly easier in some terms, but there is still a lot of added complication and paperwork where there was not before.

John, could I come in briefly and ask a question on that?

Yes, of course, convener. I was going to say that I am conscious of time and I am content to leave my questions there. A wide range of them were covered earlier.

We are still importing quite a lot of goods into the UK, such as Irish beef. Are exporters into the UK facing the same problems that we face with our exports? Does anyone have knowledge of that? Tom Gibson, you are being very quiet. Eddie Green has offered to speak, so he has got you off the hook, Tom. I do not know whether that is a good thing or a bad thing.

Currently, it is much easier for exporters—certainly those in continental Europe—to send their cargo to the UK. The health certificates are not being checked at the point of entry, and that is the challenge for us at the moment. When we enter continental Europe, everything is checked on the border. There is a six-month period in which that is not necessary for goods being imported into the UK. On 1 July, the situation will change dramatically, as everything will be checked at the point of entry. As was said earlier, when the situation is seen from the other side, there will perhaps be a different reaction from continental Europe. As it stands now, the process is much easier for continental Europe. There are very few barriers to export into the UK.

Do you think that when exporters to the UK experience the difficulties that we are experiencing at the moment, there will be a fundamental change of opinion and a different way of dealing with things?

I very much hope so. I cannot say that there will be, but I very much hope so. I know for sure that Dutch transport companies that bring meat into the UK refuse to take exports back, which they used to do. It takes too much time out of their schedule to be held up at the border when they go back into Holland or France, so they just go back empty—it makes more sense for them. That creates a distortion in the market, of course. That is their experience: it is easy to export into the UK but extremely difficult to export from the UK, so they do not do it.

I am interested to know how the catching sector is responding to all of this. We have heard of volumes in Peterhead being down considerably and the price of fish in the market being down considerably. Where are we now? Are volumes coming back to more normal levels for the time of year and are prices beginning to improve? Is the fleet all at sea or are there still boats tied to the harbour wall? Where exactly is the catching sector at the moment, Mike Park?

Obviously, the catching sector is not just one métier; there are a number of métiers in there. The scallop sector is currently struggling with price and increasing fuel costs. The nephrops sector—the langoustine sector—is trundling along. It managed to empty its cool stores towards Christmas, so it is moving along, although obviously at lower levels of catches, because it has to be very careful. The white fish fleet is trying to get supply to meet demand, as I mentioned earlier. Demand from the continent is now weaker because of the uncertainty. We have a number of vessels tying up for refit and taking two or three weeks ashore, and we have a number of vessels now landing into Denmark.

One problem that we have not discussed is the catching sector’s output from the total allowable catch. We now have significantly less fish to catch than we did previously. In fact, in Peterhead we will be short by about 4,000 to 5,000 tonnes of fish compared to where we were previously. When an industry is dealing with a finite resource in terms of the quota, and that is all that it can land, we have to watch that we do not land that to market for a lesser price than we could do if we held on to that quota until later on in the year.

We are trying to manage a very fickle situation, and an onshore situation aligned to that that is in itself fickle. We know that the income of the demersal sector last year was down a third from the previous year. That is a significant downturn, and there was significant downturn again in the level of income at the start of this year.

Going by the initial results, unless we can pull a rabbit out of the hat in the bilateral negotiations going on with the EU and Norway, the TAC will mean that we could have to consolidate up to 20 per cent of our fleet. It would just have to go missing—it would have to be taken out of the system because we would no longer have the opportunities to keep those boats at sea.

19:00  

The problem with that is that the Scottish catching sector is made up of a number of small family businesses. When you have to sell up because you do not have enough quota to stay at sea and make money, the deepest pockets buy that quota, which means that things gravitate towards big business or whatever else. We start to lose that family infrastructure and we employ fewer people at the ports. We have to be very careful about where we go from here in the catching sector.

You mentioned quota, which is obviously vitally important for the sector. Where are we with international quota swaps? We are still hoping that we will be able to get that system up and running again, as far as I am aware. Do you have any knowledge about how that negotiation is going? Can we start getting the international quota swaps back up and running any time soon?

There were two parts to that question. If you do not mind, I will tease them apart. One is that we have the on-going bilateral coastal state negotiations, with the Faroes, the EU and Norway. We are looking to try to trade some fish out of there and back into the country. Those negotiations are going on just now, and they probably will not be concluded until maybe the first or second week of March. Ordinarily, they are done by the end of the year.

The mechanism that you are talking about for international quota swaps is basically a mechanism between organisations in the UK and in Europe. We understand that that largely will shut down, and we will have very infrequent swapping between the EU and the UK.

I will explain for people who are listening. The problem that we have in the industry is that a lot of people cannot understand the complexity. The Government is saying that it got a 25 per cent increase in volume—it did not, it was an increase value—so everyone gets more. The reality is, in fact, that we used to take 60 to 70 per cent additional fish out of Europe—fish that Europe never caught but which we had to buy and lease and swap with it. That came into the sector, so in any year, we always dealt with 60 per cent more haddock or saith than we were allocated. That has gone now, and that is the problem that we now find ourselves in. About 20 per cent of our demersal sector does not have enough fishing opportunities to go past the first three months of this year. That is dire for the processing sector as well. Immediately you can see the issue that we have: the fish will just not be coming in, at a time when we should have been feeding off the sea of opportunity.

I will bring in Emma Harper for a brief question that she wants to ask.

It was a quick supplementary question for Tom Gibson, but it is probably for everyone to think about or comment on. We got a late submission from the Scottish Creel Fishermen’s Federation. I know that James Cook was supposed to attend the meeting, but he apologised for not being able to take part. In his submission, he says that

“A pallet load can cost as much as £650 for documentation prior to reaching the market at Boulogne Sur Mer”

and he talks about

“Transport costs, wages and ferries ... waiting times at ferries”.

James Cook’s submission was basically asking who will pay for all those costs. Tom Gibson, you mentioned that increased documentation for the red meat sector added extra cost as well. Who pays for all of that? Is it the customer, the consumer or the fishermen? Who pays for it all?

Hold on. That was a huge question, and you asked to ask a brief one. Could you direct it at the one person whom you would like to answer? I need to move on to the other sections, as we are halfway through our time.

I will get Peter Chapman to take over the next section from Jamie Halcro Johnston, who has dropped off the call.

Apologies, convener. I did not intend it to be a massive question. I would appreciate Tom Gibson answering, because he was the one who made my mind go that way.

As we go through this process, companies that I have been speaking to are trying to work out how the cost structure will have to be rescheduled, if you like. My concern is that they will have to put an increase on the price to the end customer in the EU markets, which again will make us less competitive. There will then be potentially a reduction for farmers in the farm gate prices for beef and lamb. I think that the effect will be felt at both ends of the spectrum.

Peter Chapman, will you lead off on the next section of questioning, as Jamie Halcro Johnston seems to have lost his wi-fi connection? If you are not happy to do it, I am very happy to do it for him.

That is fine, convener—I will do my best.

There are a lot of questions to ask about the IT systems. We have already heard quite a bit about the IT systems being difficult and clunky; we have also heard that it is important that we get rid of the paper and do it electronically. It is crucial that we make the system work a bit better. With the just-in-time supply chain that we have been used to, it was possible, in many cases, to get fish into Europe in less than 24 hours. Is that possible at all now, or have we lost that unless we can streamline the systems?

Andrew Charles, you might like to lead off on that, because you are right at the sharp end of the system. Do you think that we can get back to somewhere near where we used to be? What we need to do is find solutions, as the convener said. When it comes to where the issues are, do you have solutions, so that we can find a way forward that allows the job to become sensible again?

I think that there are two routes. First, we need to work with the systems that we have to make them more streamlined, more cost-effective and as fast as possible. It is also important that we work to rebuild the relationship with our European trading partners. If we win over our European trading partners again and regain their confidence, they will direct the customs authorities to treat us a little bit better. If the customs and import authorities are on board and on our side, we can make this horrible system bearable.

On the other channel, there must be negotiation. We must get back to Europe and talk about having a trusted trading relationship, whereby we can fill lorries and get the fish directly to market as quickly as possible. That must be our goal, because the current situation is devastating. I do not mind telling anybody that my export business has not sold one kilo of fish since 21 December. I refuse to send any fish until somebody guarantees me 24-hour delivery or guaranteed delivery on frozen. At present, I have no guarantees from the haulage services that they can do that. There are many small processors like me, who will not export, because of the extra charges and the inability to guarantee delivery to their customers. I will reduce the size of my business and have fewer staff. I will think small. As Mike Park said, when it comes to the “sea of opportunity”, I scratch my head and wonder what that was all about.

At least the catching sector was lucky enough to have 10 golden years of profitability, whereas the processing sector—we did a presentation on this to the Scottish Government—which, on average, has a margin of about 2.5 to 3 per cent, has been dying. While the catching sector was growing and prospering, the processing sector was losing processors. At the back end of last year and into this year, five further processors have gone. Somehow or other, the processing sector will need a huge amount of support to get us through the exporting carbuncle that we are facing at the moment.

You must be concentrating on the home market at the moment, because you are not exporting anything. If you were exporting, would you be part of the groupage scheme? Because you could never fill up a lorry with your fish, you would have to send a part load. Is that how you would have to do it?

I have always been a small exporter. My customers buy small amounts of extremely high-quality product. I will give an example. I supply a company in Germany that I have dealt with for many years. My average price to sell my product, which was monkfish, was £12 a kilo. With the certification charges, I now have to charge my German customer £19 a kilo. He will not buy; he will buy from Iceland, Norway or Denmark. He will never buy from me at that certification level.

If the Government is serious about pulling the small exporter back into the market, it must put in a certification support fund. I make a very good price for the fishermen. I might not buy huge volumes of fish, but I will bid on fish, which makes it expensive. There are many exporters like me. If you take people like me out of the process, the price of the product on the market will be much lower. The Scottish Government must put in a certification support fund, as that would immediately allow me to quote my customer a reasonable and fair market price and get back into the market.

There are solutions. The certification charge for exporters who export less than 250kg could be capped at £15 a certificate and a fund could be created to pay for the balance. At the end of the day, the money that is being raised on certification is going into the Government’s coffers anyway.

I would like to bring in Eddie Green on the transport issue, and then Belinda Miller on certification.

To go back to Peter Chapman’s original question, the just-in-time service has definitely not gone away. We have been delivering fish from Scotland into France the next day. Our cut-off times are earlier—we now need our orders to be in by 10 or 11 o’clock in the morning. On that basis, we can still deliver groupage and full loads into France by 10 o’clock the next day, which can meet up with onward connections across Europe. I would say that the overnight service into France is back to where it was, except that the cut-off time for receiving is now six or seven hours earlier. That is the extension that we see. It is important that I point that out.

To answer Peter Chapman’s question, a lot of it will be down to knowing our customers. From our perspective, we are here as much as possible to be as efficient and as quick as possible to issue an export health certificate. If an export is going to a single destination in Europe, that is probably the easiest thing to do, because we are talking about one language and one set of paperwork. If an export is going through a number of countries, a more process-orientated approach is necessary, which takes slightly longer. For example, if an export was going to Spain, the documentation would need to be in French, Spanish and English and, as was mentioned earlier, every page would have to have annotations stamped on it.

In the past six weeks, we have found that the most important thing is that if we know that a business wants to get something by 10 o’clock in the morning and it tells us that it wants it by 10 o’clock in the morning, we will definitely be able to do that, but if it suddenly says, “I want it now,” we just do not have the time. The amount of paperwork that requires to be printed off and checked and double-checked would not allow us to do that. There will always be a delay, as Eddie Green has just pointed out, but once we get to know our customers even better, we will probably be able to do things more quickly and more efficiently in the next few months.

19:15  

Ian McWatt, would you like to come in on that?

Yes. I support what Eddie Green said. We are now seeing day 1 for day 2 consignments happening more frequently, so it is absolutely possible.

It is important to note that there are issues with the IT systems, including the export health certificates online system. There are issues with consignment numbers, commodity codes and so forth with Her Majesty’s Revenue and Customs. The overall message here is that we are dealing with clunky UK Government systems that we are trying our best to work around. Today, FSS met Scottish Government, Animal and Plant Health Agency and DEFRA officials to share with them the challenges that we are experiencing in the certification process. We were advised that a project is kicking off to resolve those and at least prioritise the challenges that exist with the certification process, so there are further green shoots to report.

After we have heard from Georgina Wright and Andrew Charles, I will bring in Jamie Halcro Johnston, whose wi-fi has come back.

We have moved day 1 to day 2, but because the system and the procedures are so complex and disparate, there is so much room for error. Things are wobbly. We are not just talking about going into France; connections across Europe have to be met. Fundamentally, we are losing our logistical advantage. It is just over 500 miles from Larkhall to Boulogne, but it is close to 1,500 miles from Ålesund on the west coast of Norway, and the products are getting there at pretty much the same age and the same time. We really need to get back to a just-in-time operation and a much slicker system.

I promised that I would come back to Andrew Charles. Perhaps you could develop the issue that you raised of difficulties that are put there to slow things down. It sounds a bit like going with your passport and checking letter by letter rather than understanding the principle of what you are trying to do. It sounds as though it is a case of making sure that the paperwork is correct rather than what you are trying to do is correct.

As was mentioned earlier, we have to be absolutely meticulous with our certificates. All the i’s must be dotted and the t’s must be crossed. Everything has to be done perfectly. Reference was made to things having to be done six hours earlier. Where on earth do we get the hours in the day to allow that to happen? We start at 6 o’clock in the morning. We have to get the final product, along with information about volumes, species and so on, ready by 11 o’clock. As processors, we will not be able to do that, which immediately means that we will have to sell for the next day. Our product is now 24 hours older than it used to be. We would normally have sent away same-day product, but it is physically impossible to do that now if we are to do the paperwork correctly. Therefore, we are dealing with a product that is an extra 24 hours older.

I agree with DFDS. Given what it has been put through, I have to say that it has done a fantastic job in attempting to manage the situation. It is now getting same-day delivery, but the members I speak to find that although the fish arrives in Boulogne at 9 or 10 o’clock in the morning, it is then held up by checking by European officials, which means that it is just in time to miss the transfer to the next destination. Missing that next link means that the product is a further 24 hours older. We have lost 24 hours and then we lose another 24 hours, so we are two days’ quality behind where we used to be. That is massively important, particularly if you are dealing with very specialist species, especially rays. It means that we lose the ability to trade.

Jamie Halcro Johnston, I think that you are back in the meeting. Peter Chapman has taken your areas and you have been following the discussion, so I will let you go on from where you want.

Yes, sorry about that. I would say that, as a Highlands and Islands MSP, I sometimes suffer from IT issues, but unfortunately I am in Edinburgh at the moment, so there is no real excuse there.

I wanted to follow up on some of the questions that have been asked. Hopefully I am not repeating anything that has been asked before. I was interested in the comments that Andrew Charles was making about paperwork and IT systems. I think that that was a question to which we knew the answer, but I wondered whether, if we had the e-systems or e-certificates that I think that everybody wants to have as a bare minimum, how would that improve things like pre-population of information on those certificates? If the information were entered automatically, would the issues around paperwork still arise? Would that provide scope for an improvement? I know that the issues relate to health certificates rather than some of the other bits of the paperwork. Could Andrew Charles answer that? Also, could he say what discussions he has had with Government around the idea of a support fund to cover some of the costs of the certificates until the smoother system that everybody agrees that we need is in place?

Anything—any electronic system, any improvement, any way that we can speed up the process in order to reduce the 48-hour delay that we are experiencing with our fish—would be hugely welcome. If we can get back to next-day delivery by streamlining everything, we have a chance. That does not help with the cost that I spoke about, which knocks out all the small exporters that will not be able to bid in the market and make the premium prices our fishermen have been used to. We must drive very hard to streamline that process.

On our question about informing Government, there is a frustration. Two years ago, we told the Government that we would have massive problems. I cannot help feeling that we are missing not having a dedicated fisheries minister in Government. Had the concerns that we raised time and time again been taken seriously, we could have possibly been setting up systems in our negotiations with Europe a year and a half ago that would have avoided all this happening in the first place. It would have been helpful if, a year and a half ago, we had had systems in place that were streamlined and perhaps involved a trusted-trader arrangement. The French and other European boats are landing in Scotland and we want to sell our fish to Europe. There was a huge amount of vested interest in Europe and Scotland talking about having a good system, and I think that that has been a missed opportunity.

You are talking about the UK Government, but have you mentioned the idea of a support fund to the Scottish Government?

Yes.

Have you had any encouraging sounds?

None whatsoever. It is a bit like business rates. When people in the processing sector mention support, it falls on deaf ears. For some obscure reason, manufacturing is not taken seriously by Government. That is not just the Scottish Government, it is the British Government as well.

I will certainly note that, Andrew. I am very conscious of time, convener—I think that you want us to move fairly quickly.

What impact will the ban on the export of unpurified shellfish from the UK to the EU have on Scottish shellfish exporters? Who would like to respond to that?

No one is raising a hand and no one is looking away very quickly. I am not sure who I will go to on that. Ian McWatt, could you come in on that to start with?

We are aware of the challenges around live bivalve mollusc exports and scallops. The position that the EU is taking on that is under current challenge. The UK Government’s position on that is that it does not accept the Commission’s view with regard to the restriction on the export of LBMs. I believe that that is being worked through and negotiated as we speak. I have nothing further to add, other than to say that the issue will have an impact. Until the matter is resolved with the EU, I do not see that there is much more that can be done.

The restriction is limited to bivalve molluscs. We do not tend to export many live scallops. That is not to say that there are not any exported, but we do not export many. I know that the restriction is devastating news for the mussel sector and some of the large mussel farms down in England and Wales but, hopefully, the Government can resolve the situation. We have seen the letter that George Eustice wrote to the European Commission setting out the Government’s thoughts on the issue. We hope that the UK Government and the Commission can resolve the issue because, if they cannot, it will wipe out a small but necessary sector of the industry.

I was of the opinion that the restriction concerned only molluscs in class B waters. As all the waters around Scotland are class A, it should not be an issue as far as the Scottish fishing fleet is concerned. Am I correct in that assumption?

There are no shellfish from class B waters in Scotland being exported.

It looks like that is a problem and it is a pity that we do not have James Cook to answer. He may be listening and he may be able to submit evidence for our information.

Colin Smyth has some questions he wants to lead off on.

The next questions are focused on the implications of post-Brexit requirements, specifically for supply chains, haulage and logistics. I am very conscious that a lot of the points have already been covered. We have talked a lot about problems associated with multiple consignments being loaded on to the same lorry and the lateness of the roll-out of processes. If anybody wants to expand on those points, I am sure that we would be quite happy to hear that.

Given that this is a Scottish Parliament committee, I would like to know about any specific issues around supply chains that are the responsibility of the Scottish Government rather than those that have arisen as a result of UK-wide processes. What could be done specifically through the Scottish Parliament and the Scottish Government to ease some of those supply-chain issues?

Who would like to head off on that? It might be an Eddie Green issue, to start with.

I can try, but I am not aware of anything that has been imposed by the Scottish Government that makes a difference to what is going on. It is a UK-wide thing.

I agree with Eddie Green. The Scottish Government and Food Standards Scotland have been working flat out to do what we can. A lot of the systems that we are talking about here are driven by the UK Government, and a lot of them is reserved.

19:30  

We are working with APHA and DEFRA to resolve some of the systemic challenges that are fundamental to the process. It is worth reflecting that we are now a third country to the EU and we are subject to the processes that the EU expects and the IT systems that we are working with at the moment. All we are doing in Scotland is reflecting those challenges. I do not know whether you picked up the comment I made earlier about two Brexit advisers having been funded to work in Seafood Scotland by the Scottish Government. FSS has brought in SMAS to undertake a further independent review of all of the system transactions that have taken place in Scotland in the hope that we can identify any possibilities to streamline further.

That was specific support. So, is the work that the Scottish Government and the Scottish Parliament can do purely around support for companies to deal with the challenges? Obviously, we cannot change the mechanisms. Do any of our witnesses have any views on what additional support might be available?

The systems are clearly defined. The policy responsibility for them sits in DEFRA and APHA and we are simply contributing to that. Over and above the huge amount of support that we are providing with SMAS and Brexit advisers, and all the additional official time that is going in, we have loaded in additional support that we are not charging for to help the hubs. The issue is more about the support mechanism locally. I cannot think of much else.

I completely agree with Ian McWatt. This is a British structure, but I think that the Scottish Government could use it to do a huge amount to engage with Europe. For example, why can we not custom seal a lorry in Glasgow with a European customs seal and drive that lorry straight through to market? The Scottish Government could negotiate that kind of relationship, and it would be a good example of Scotland engaging with Europe. Has it attempted to do that?

We raised the fact that there were going to be problems a year and a half or two years ago. Although the system is a British one, and we have to work with it, has there been any discussion around coming up with an arrangement for Scotland? We need the Scottish Government to step up to the plate and try to devise systems that can get our industry back to where it was. I would be interested to hear from the haulage industry about whether it is feasible to have a system where a lorry could be European custom sealed and driven straight to market.

We have a blank canvas here. It is very rare to have a partner who has left the EU, so we are making new rules. The £70 import charge and the £50 British charge for exporting were just plucked out of the sky—they were just made up—so let us create the rules to get the industry back on track, because we really need that to happen. Given what is going on with Covid, the fact that we have an army of vets checking dead fish instead of giving people vaccinations is a really poor show for Government. We must learn to be more resourceful.

Does anyone else want to come in on that? Raise your hand if you want to. Colin, you have frightened them all away. Do you have another question you want to ask?

I think that we are at a loss with regard to other means of help. Andrew Charles raised an important point. The rules of trading with the EU were never intended for a country that has such a huge level of trade with the EU. That is clearly one of the challenges that have been highlighted this evening. It is a valid point: can we find a way to manage processes that clearly were never designed for the scale of trade that we have with the rest of Europe?

I want to support the point that Andrew Charles made. If you think of the sheer volume of fish that is going from Scotland into Boulogne and the checks that are being made in Scotland, if there was a closer co-operation between the authorities in Boulogne and Scotland some understanding and agreement could be made reached that would result in some of the everyday checks being taken away. We are moving fish and seafood for the same people every day to the same people—it is the same product—so it should be a simple and streamlined process. It would make everybody’s life a little easier if that co-operation could increase.

I am going to go to Belinda Miller. Aberdeenshire Council is going to waive all its charges, is that right? [Laughter.] No, sorry.

Good try. I suppose that I would not be allowed back in to see my team if I did not make a plea for thought to be given to where we are going to get the long-term qualified staff to do what needs to be done. Under the regulations, the process must involve a qualified vet or environmental health officer. The latter are not easy to come by. We do not have enough environmental health officers and we do not have enough coming through the education system, either. If I was putting in a plea for something it would be for more environmental health officers—because of Covid, as well as export certificates. We need more people skilled up and able to do that piece of work. I think that the Scottish Parliament and the Scottish Government has more influence over that than over some of the other elements.

There needs to be a little bit of a reality check, because the ability to change these rules is not necessarily entirely within our gift. They are laid down by the EU and are informed explicitly by the nature of the deal that has been negotiated by the UK Government. I hate to use the term, “the new normal”, but there are elements of what we are seeing now that we will simply have to adjust to. We will get better at processing and will become more effective and efficient with fewer mistakes throughout, but there are elements of the process that we will have limited opportunity to influence.

Georgina Wright, you have kept very quiet on this. Can you think of areas where help could be given?

I agree with Andrew Charles. I do not see why there could not be an export lounge in Larkhall. That makes complete sense. The Scottish Government is communicating directly with the EU, but there also needs to be very strong co-operation between Scotland and the UK Government, because, fundamentally, the situation is the responsibility of the UK Government and, specifically, DEFRA and APHA. There needs to be a greater push for a review of the interpretation of the standards. Ian McWatt has mentioned in previous meetings that the process is being handled through the supplier declaration. For everyone’s benefit, I note that the supplier declaration is released each day, and, in it, we confirm that we are the same supplier that we were the day before and are exporting from the identical premises that we were exporting from the day before.

The push needs to continue because, fundamentally, we cannot accept the new normal as it is and we all need to keep pushing the Scottish Government and the UK Government and communicating with the EU to improve the current situation.

Thanks. Most of my points have already been covered.

I will kick off on the next bunch of questions, which are about the support that is available from the UK Government and the Scottish Government. Our briefing paper says that, on 19 January 2021—which was 19 days after the end of the transition period—the UK Government announced financial support for fishing businesses that export to the EU. The support is worth £23 million and aims to

“support businesses most adversely affected by the COVID pandemic and the challenges of adjusting to new export requirements”.

I had to read that twice. We are talking about the impact of post-Brexit requirements on Scottish exports and supply chains. We know that there are challenges with Covid and with exiting the EU, which makes me wonder why we did not extend the exit transition period.

There has been funding from the Scottish Government and the UK Government. I am interested in your thoughts about support and whether additional support is required, for not just the seafood industry but the red meat industry.

Everyone looked away very quickly there. I ask Tom Gibson to start.

Our processors are certainly looking for an element of support to help to cover some of the additional costs that they have incurred. The Scottish Association of Meat Wholesalers carried out a survey of export costs and additional costs to its members in January. It passed the numbers from that to the cabinet secretary for forwarding on to the UK Government. There are support elements out there that could be put towards things such as the extra £1 million of export health certificate costs that businesses have to incur, a lot of which is through private export health certificates.

As well as those areas, there are areas of lost business. For example, there is the export health certificate issue that means that we cannot export fresh mince. The company that has the biggest issue with that has lost a £1.5 million contract. Where do we get that back from? That has knock-on effects on the carcase balance. It raises the price of the other elements of the carcase and again makes the industry less competitive. The red meat industry has issues on a number of fronts and on which we could do with some support from the UK Government.

I ask Mike Park if he wants to come in on that.

Can I pass on that for now? I am trying to get rid of one of my grandchildren for a second.

Sort out your grandchildren, and then we will come back to you.

Andrew Charles has made some suggestions on that issue. Do you want to add any more to what you have said already, Mr Charles?

Interestingly, many businesses feel that they will not get any assistance whatsoever from the £23 million of funding that has been announced. For example, I will not get any assistance, because I have not exported, but I have lost out through no fault of my own.

Assistance on that would be greatly appreciated and it could come in many ways. Let us get rid of business rates and allow manufacturing businesses to drive forward over the next few years. The certification fund, by pulling the very valuable traders back into the market and giving the small and medium exporters the ability to get back into the market and re-engage with their customers, will have a massive impact after Covid starts to fade away.

19:45  

Of course, Covid has had a huge impact on the industry, so support is needed there. There are a lot of invisible losses. It is about what we have not done, not what we are doing. It is about what we used to do compared with what we are doing now. That is all very provable, so it is not a question of just handing people a cheque for no reason. It is easy to ask how many kilos someone exported last year compared with this year.

You can find ways to support the processing sector and, my goodness, the processing sector, particularly the fish processing sector, will need a huge amount of support. We have a lot to look forward to, because we have one of the finest fishing fleets in the world. We have a great resource and we have great opportunity. It is just so sad to see the GVA disappear into the backs of lorries and whole fish being taken away from our fishing communities. We are losing a massive opportunity.

It is frustrating, because we have been informing Government for the past 10 years about what needed to be done. We produced a plan for recovery, growth and expansion in our industry but, unfortunately, the fish processing sector has not really received the attention that it has desperately needed. However, let us hope that things are changing. Maybe Government will be a bit more focused and a lot more support will be heading our way in the near future.

I have a question for Ian McWatt. I put Belinda Miller under pressure and suggested that she might waive all her invoices, which she denied. Is one way to provide support for you to waive all your invoices, or do you have a better idea?

Clearly, we are in a similar position to Aberdeenshire Council, in that we simply aim to cover costs. We are doing all that we can to lessen the impact, and we have quite positive numbers coming out. We can get the cost of one certificate down to about £20, if the process is consistent and is maintained in the same way. However, when we are adding in lots of hours because there is a need to ensure that information is correct and we have people having to sit on their hands waiting for corrections to be made, we have to recognise that somebody somewhere has to pay for that.

We are not profiteering, although there are examples of profiteering out there. As I mentioned, a price of £800 has been quoted for one export certificate by a veterinary certifier in the private sector. We are much less expensive than that, and we are interested only in covering our costs. To do anything other than that would place a further burden on the taxpayer.

A lot of information has been covered already. I was interested in Andrew Charles’s point about criteria for support that certain businesses cannot meet.

I am interested in our inshore fishermen and live exporters. Should the live exporters be put at the front of the queue when they are trying to get their produce to the European markets?

That is probably for Ian McWatt or Eddie Green.

I think that it is more for Eddie Green.

Was the question about whether we can put certain things at the front of the queue?

Yes.

As soon as the goods arrive, we get them out as quickly as we can, so it is difficult to say that some things can go faster than others. We take things as quickly as we can. Everything goes out the same day where possible and, most of the time, that is possible—it literally takes hours. If I am honest, I am slightly distracted by looking at the departure times of all the trucks from Larkhall this evening. I see that most of them are away by 6 o’clock, which is what we expect, and the groupage traders are a little bit later. The smaller consignments are a bit behind, but they will all be in France in the morning.

We still do not have an equivalent of a protected geographical indication status for our beef, lamb and salmon. That might or might not be linked to getting the best produce to the European markets. Is that a concern if we are looking at supply chains and the best produce getting to the European markets?

Salmon have been mentioned, so Georgina Wright might want to talk about that.

I am not fully up to speed on that. There was discussion about it pre-Brexit, but I have not caught up in the past month.

That is fine. Mike Park or Tom Gibson might want to come in.

We had a worry about whether we could keep the EU PGIs and what would happen with them. The EU PGIs are still in place and are still recognised. We are still members of the EU scheme, so we will be proudly displaying the EU PGIs on our products. There is no requirement to take them off, because we are still part of the EU scheme.

The UK GI scheme that is being introduced was announced at the start of the year. Our understanding is that, if you have a PGI from the EU, that will be carried into the UK GIs. The UK GIs will be mandatory on 1 January 2024. In the meantime, it will be interesting to see how the UK Government markets that to the consumer, because we have absolutely no idea of that. We know what the logos look like, but the consumer has not seen them yet. We are speaking to our processors and retailers to say that the scheme is coming down the line but, because there is so much equity in the EU PGIs, we are advising our retailers and processors to continue to use them where possible.

Maureen Watt has a question but, before she asks it, I will give everyone a warning of my final question. Given that we are where we are, what is one thing that could be done to make things better? That will be my final question, so I will give you all a moment to think about it. While you are doing that, the deputy convener, Maureen Watt, has a quick question.

I am the deputy, so you have the last word, convener—that is fine.

We are in a perfect storm with Brexit and Covid, but is there an opportunity for organisations such as QMS and Seafish Scotland to help to expand the market? We hope that all the things that we have talked about will be ironed out and will settle down. When the tourism sector and the economies in Europe and in the UK start to open up again, what can Seafish Scotland and QMS do to start great export drives?

We have a lot lined up for when things get back to normal to try to drive market development and business. A number of elements in the Scotland Food & Drink recovery plan are QMS suggestions that will take us forward in the UK market and the export market. We are working with Scottish Development International on a virtual global food service summit to look at export business development in Europe and further afield.

Over the past two years, we have had great success in getting exports of Scotch beef to Japan and Canada. Over the five years from 2015 to 2020, the non-EU export business has risen by around 80 per cent. Part of that is because we were trying to build those markets with the threat of Brexit coming up.

The big issue now is with export trade shows, which we previously attended regularly. They keep getting postponed or pushed back because of Covid, so we are not as hopeful of seeing as many of them in future, but we think that the virtual approach will be a new opportunity for us. It will just be a different way of doing things. Rather than take processors to trade shows to meet potential customers, the big opportunity for us is to do the initial face-to-face meeting in the virtual environment and follow that up with specific in-market visits to potential importers, buyers and distributors.

We have potential new markets coming online. Again, things have slowed down with that but, potentially, we have the USA opening up for our processors this year. There are other countries. The issue of exporting beef to China has been kicking about for a while, although not much progress has been made on that, but there are other countries and markets that we can look to. We can do a lot in the UK, and we can do plenty in Europe once we get some of the issues ironed out, and there are some third-country markets out there in which we think Scotch beef, lamb and specially selected pork could do incredibly well.

The group that Maureen Watt referred to is called Seafood Scotland—Seafish is the national body, which derives its money from a levy against the fish at first sale. It has always been restricted in what it can do in labelling product as Scottish or whatever, because of state-aid rules. We are moving away from state-aid rules so, perhaps nationally, Seafish can help to identify the product as well.

Seafood Scotland is doing a great job. Donna Fordyce, the new chief executive, is doing a tremendous job. With others, Seafood Scotland is working to invest in the future and trying to find new markets. As Tom Gibson said, it has been difficult, and a lot of trade shows have been cancelled, but there is huge optimism. In Scotland, we land and supply an extremely high-quality seafood product, and we hope that, in future, we can take that to market and expand the base that we currently supply.

I will go to my final question, because we are coming up against the clock. Given that we are where we are, what one thing can we do to make things better?

From the breadth of the issues that we have discussed, there is one particular issue that makes the catching sector’s life extremely difficult this year, which is having enough fish to land to market. We would dearly like to have the international quota swapping mechanism reinstated to allow us to suck fish out of Europe for our vessels to land to market. As Andrew Charles has mentioned twice, it is galling when we see foreign fishing vessels fishing in our waters, landing into our ports and trucking the fish immediately to Europe. That grinds us significantly.

If we could change one thing, we would reinstate the international mechanism whereby we can suck more fish into the UK for our vessels to land. In the absence of that, we will start to see a slow demise of the industry over the next five and a half years.

Obviously, I look at the issue through the lens of certification. For me, the one thing would be improved functionality of UK Government systems coupled to improvements in the accuracy and completeness of supplier paperwork.

Similarly to Ian McWatt, my comment is through the lens of the process. We would like clarity on the destinations when we get to Europe. We have talked about the difference in colours of stamps and ink. If we could have one system, that would speed up an awful lot of the processes at our end and, I would hope, in Europe.

My point is almost exactly the same as Belinda Miller’s. We should digitise the whole system, get rid of the paper and connect to the systems in Europe. There is a huge amount of duplication of input right now. We put the data in for an export declaration and we have to repeat that for the import declaration on the other side. Streamlining the whole process so that we do not have to carry paper certificates from England to continental Europe and we have electronic certification would make things much easier.

20:00  

Quite simply, I would streamline the system. The costs are spiralling and they need to get back under control. It is all about streamlining the system.

Scotch beef and lamb exports to the EU account for a high percentage—in the high 90s—of our exports. For us, it is about building a new relationship with the EU and improving engagement with it. We will not see resolution of a lot of the issues until we have a new relationship that fosters co-operation and there is a will on both sides to continue to trade positively.

We should very much simplify the process. We are crying out for a support fund on certification costs. I suppose that the biggest idea of all would be to rejoin the EU, but we might have to wait for an election for that one.

Perfect—thank you for that.

Thank you all for joining us this evening and contributing to the evidence session. I am conscious that I started the committee meeting at 8 o’clock this morning and I am finishing it at 8 o’clock this evening, which is a long day for everyone. I thank all our witnesses for their evidence and all the committee members for helping me this evening to ensure that we got the best from our session, which I think we did. That concludes our committee business today.

Meeting closed at 20:01.