Aquaculture
Agenda item 1 is on the aquaculture industry. I declare an interest in the issue: during the summer recess, I was taken to Norway on a study tour on aquacultural issues by Aquascot Group Ltd. John Farquhar Munro also has an interest to declare.
I hereby declare that I was part of the delegation that went on the study tour to Norway, which, I understand, was hosted by Aquascot.
I welcome the Deputy Minister for Environment and Rural Development and the officials Jinny Hutchison, Gordon Brown, Dave Wyman, Professor Ron Stagg and Andy Rosie—I hope that I pronounced that correctly. Sorry. I see that Mr Rosie is not here. Members of the Transport and the Environment Committee were invited to join us, but, sadly, none of them has taken up the invitation.
Members will recall that the Parliament's consideration of the issue has a long history. In response to petition PE96, the Rural Affairs Committee—as it was then—and the Transport and the Environment Committee called on the Executive to launch an independent inquiry into the environmental effects of aquaculture. As the Executive declined to do so, the Transport and the Environment Committee subsequently undertook a rolling inquiry into the subject. Members have a summary of the inquiry's conclusions.
The Executive announced that it intended to develop a strategic framework for the aquaculture industry and it has engaged in a consultation process with relevant stakeholder groups. The draft strategic framework document, which we have in front of us, is a result of that process. I understand that the consultation period has now closed and that the intention is to publish the final strategy prior to the dissolution of Parliament. The Executive seeks the views of the committee. This is our opportunity to have input into the process and to comment before the strategy is finalised.
Members will recall that, while considering petition PE272, which was from the National Farmers Union of Scotland, we dealt with the issue of infectious salmon anaemia. The petition sought changes to various rights under the Diseases of Fish (Control) Regulations 1994 and compensation for stock that is slaughtered or damaged as a result of slaughter or containment orders. When we considered the issue, the committee was in favour of investigating the option of insurance for farmers. I understand that the issue has now moved on and that the minister will bring us up to date on that.
I ask the minister to make a brief opening statement on both those issues.
I apologise on behalf of the two members of our team who are unable to be here—they were prevented from attending by the adverse weather conditions.
As you say, convener, this is the opening gambit in what promises to be a long meeting. My previous record for the length of time that I was before the committee was when we discussed the Cairngorms national park and I am expecting to achieve a new record today.
I am grateful for the opportunity to discuss the draft strategic framework for aquaculture with members of the Rural Development Committee and the Transport and the Environment Committee, as both committees have played a key role in its formulation. The timing is important, as we meet at the end of the final round of consultation, with the task nearing completion. We have indicated that we are prepared to extend the consultation deadline to accommodate those who have said that they might be a bit late in submitting their views.
Before we proceed, I pay tribute to all those who have put so much effort into developing what is a comprehensive strategic framework document. I congratulate on their ideas and suggestions all the many stakeholders whom my officials and I have been meeting over a protracted period of time and I pay tribute to everybody in the working group. Members of the group came from a diverse range of backgrounds and sometimes had very different perspectives on aquaculture. I pay tribute to those whom the working group co-opted for advice during the framework document's drafting stages and to all those who have commented, or are commenting, in the recent consultation phase. I also pay tribute, of course, to the officials who have provided the secretariat over the piece.
Developing the strategic framework document was never going to be an easy task. It has taken 15 months so far, which is longer than I envisaged, but it became apparent at the outset of the working group meetings that it was more important to get things right than to proceed quickly. Give and take has been required all round. It has been a challenge to try to balance the socioeconomic benefits, which undoubtedly exist in relation to providing employment in some of our remotest communities, with the environmental impact, which any development entails. The process has provided an opportunity for an overdue public debate about the issues surrounding aquaculture and, more important, its future direction.
There were prolonged and sometimes absorbing discussions in the working group about certain issues, which have benefited all participants. Together we have drawn up a programme for action that is designed to raise public awareness of the benefits of aquacultural products, which is important from a number of perspectives. The programme is also designed to make the industry internationally competitive—we operate in a global marketplace—to tackle some of the environmental concerns that have been raised and to improve the relationship between the industry and the communities within which it operates, which is not always as good as it could be.
Members will note that the draft strategic framework document is based principally around a vision, which in itself took the best part of a full meeting of the working group to agree and which was subject to subsequent amendments. There are a number of guiding principles around the overarching principle of securing a sustainable future for the industry, which runs right through the document. There are a series of objectives and a programme for action. The document also recognises the regulatory framework within which the industry is currently required to operate and the various policy and other initiatives that are under way to address issues of concern from whatever quarter.
We intend the strategic framework document to be a working document in which progress will be reviewed regularly and any new issues addressed. Self-evidently, our task is not yet complete. We have still, as I said, to consider responses received in the latest round of consultation and to decide with working group members how we reflect those in revising the draft document for publication. That will obviously incorporate the committee's comments where that is apposite and appropriate.
Since the draft strategy was issued for consultation on Christmas eve, there have been developments that will lead to changes—for example, the enabling provision in the Water Environment and Water Services (Scotland) Bill, which the Parliament passed only last week, to pave the way for the introduction of local authority planning powers over fish farming. We have to consider the responses to the final consultation round, as the closing date was only yesterday.
I will, therefore, chair one final meeting of the working group later this month, at which the final version of the document will be agreed, in particular the programme for action. That will also secure the buy-in of the various stakeholder interests to resourcing and delivering the programme. Neither the Executive nor the industry can do that alone; it requires the commitment of all stakeholders in the various fora in which they meet to address the objectives as laid out. It will then be my aim officially to launch the strategic framework for aquaculture at the "Sea Change" conference in Stirling on 24 March.
Before we discuss the document and hear members' views, I would like to close with a word about the process through which we have come. It has taken 15 months. Some people thought that that was too long; others thought that we unnecessarily rushed the process. More recently, the Executive has been accused of failing to consult and of secretly trying to conclude the process. I state at the outset that that is complete nonsense. Before any documentation was prepared, my officials and I spent the first six months of last year meeting and listening to a wide range of key stakeholder interests about the issues in the strategic framework that we needed to address.
We also undertook a range of visits over the past year to hear at first hand people's views. The working group and its sub-groups co-opted others with specific expertise to develop proposals. We invited a member of the Parliament's Transport and the Environment Committee, which has been conducting a rolling inquiry into aquaculture, to join the strategy working group. Notes of the working group's meetings, once approved by members, have been made publicly available. Finally, we are in the process of concluding a six-week public consultation to round off the exercise. That is shorter than usual, admittedly, but it is entirely appropriate, when so much consultation was conducted over the preceding 12 months. The right balance must be struck between concluding that consultation and producing the documentation, which is the culmination of the deliberations. To suggest that the process was anything other than public and transparent, in which everybody had the means to participate and influence the outcome, is fallacious.
On that note, I am happy to take questions from members of the Rural Development Committee or the Transport and the Environment Committee on the draft strategic framework.
Do you want to say anything about infectious salmon anaemia at this point?
No. There are a couple of references to the issue in the strategic framework documentation, which points out that the matter was considered. However, it is fair to say that the working group did not, by and large, discuss the response to ISA—either historically or in the future—in depth or in the detail in which the committee intends to discuss it this afternoon. Nonetheless, there is a crossover, so I am happy to address the issue now or later. I intended to speak separately about ISA, if that is what the question was asking.
Right.
Because we thought that we were coming before the committee for an hour to discuss ISA, I have a fairly substantial speaking note on the subject, which I have cut down to a few minutes—after I have dealt with that, I can take questions on the subject. However, if you wish, I can speak about ISA now and take questions on the entirety of the aquaculture industry.
Committee members are indicating that they would find it helpful if we covered both subjects together, if that is all right with you, minister.
No problem.
The meeting today is an opportunity to discuss compensation and insurance for fish disease losses in concert with, as opposed to subsequent to, the discussion on the draft aquaculture strategy. I will begin by updating the committee on the outcome of our discussions to date. As the committee is aware of the history of the issue, I do not intend to go into that in detail. I can, however, answer questions on what is quite a long story.
There are two principal reasons why the insurers have been reluctant to provide cover for losses that are attributable to the serious notifiable fish diseases such as ISA that had a major impact on the Scottish aquaculture industry in 1998 and 1999. The first reason is that, at that time, European law required the immediate slaughter of all stock on an infected farm. The second reason is that the decision to slaughter the stock was the responsibility of the national fish health authority—in other words, the Scottish Executive—guided, in our case, by the advice of our scientists at the Fisheries Research Services.
Following the lessons that we learned from that experience with ISA, the Executive successfully persuaded the European Commission and other member states to change European law to provide greater flexibility over the slaughter and clearance of stock from infected farms. Heaven forbid that there should be another recurrence of ISA, but it would now be open to member states in such an event to order a phased slaughter and withdrawal of stock from those parts of the farm—those cages—that are confirmed as being infected with the disease. I think that everyone would welcome the fact that that flexibility for ISA became law in May 2000. The change was important, as it gave member states much-needed discretion over how to respond to and manage a serious disease outbreak.
At the same time, the Executive and the fish farmers worked closely together to introduce better practices on farms. In August 2000, the ISA code of practice was introduced. It is clear from compliance checks that the Executive has carried out that farm working practices in biosecurity have improved greatly. That situation is, for the most part, being maintained.
Those of us who have read the Official Report of the last committee meeting at which the subject was discussed, as I have done, will find it interesting to note that some of the predictions that were made at the time have—thankfully—not come to pass. We believe that better working practices have reduced significantly the chances of a recurrence of ISA.
Against that background, officials entered into discussions with representatives of the fish farmers and insurers. One of the first tasks was to provide detailed oral and written information about the 1998 and 1999 ISA outbreaks. I am happy to go into detail about that information or to answer questions on it.
The insurers took many months to review their position. When discussions with officials resumed last year, the insurers' representatives made it clear that the insurance underwriters were still not prepared to cover losses as a result of ISA. Despite welcoming the more flexible statutory framework to which I have referred and the improvement in farm working practices, the underwriters felt that the main stumbling block continued to be the legal requirement that allows national authorities, which in our case is the Executive, to have the final say over the fate of infected stock.
Our view is that it is entirely appropriate that the Executive as the national fish health authority should have the final decision in such matters. We are not prepared to raise that issue with the Commission and/or other member states. Despite everyone's best endeavours, the insurers have ruled out the prospect of any form of commercial insurance cover for losses resulting from ISA. In our view, that commercial decision is regrettable. I am not sure whether it was influenced by the commercial influences that prevail at present in the sector, but in any event it is the commercial decision that was reached.
As members know, the industry challenged our position in the domestic courts, which referred the matter to the European Court of Justice for a view. The reason for the referral was that the issues related to human rights legislation on which our courts felt unable to take a decision at the time.
Since the spring of 2001, the matter has been with the ECJ. In the autumn of 2001, the Advocate General to the European Court of Justice offered his opinion, which was strongly supportive of the United Kingdom Government's arguments. Although that of itself is reassuring, we await the court's final judgment. Our officials have made several informal inquiries to the court authorities, but they have failed to elicit an indication of when we might expect to hear the outcome. Although the ECJ's view will be an important milestone for all concerned, it will not mark the end of the road. The issue will then revert to the domestic courts, which will have to reconsider the argument in the light of the ECJ's judgment.
Until the legal process that I have described has been concluded—which has not yet happened—the position of the Executive and of the UK Government will not change. Thereafter, it will be for the ministers of the day to decide future policy. If the courts uphold the Executive's arguments, as the Advocate General to the ECJ has done, it is likely that the status quo will continue to apply. However, if the ECJ rejects the opinion of its advocate—which can happen, although it does not happen too often—and upholds the industry's argument, ministers in the Executive and the UK Government will want to reflect on the implications of that judgment.
Such an outcome could not only set a precedent for the provision of compensation to fish farmers, but mean that similar arrangements would have to be considered for the compulsory destruction of crops and plants, as well as for other areas unrelated to agriculture or aquaculture. That could expose the taxpayer to significant levels of new public expenditure. We are talking about a hypothetical situation, but we must bear the possibility in mind.
I understand that fish farmers must feel vulnerable. The fish on their farm represent the main asset of their business. It takes almost two years for a fish to grow and for its full market value to be realised. The prospect of stock becoming infected by or sick with a notifiable disease, which may result in compulsory slaughter without the ultimate safety net either of commercial insurance cover or of some form of state compensation, is a cause for concern.
However, there is no suggestion that the Executive would not help if the industry were confronted by another serious and potentially damaging disease outbreak. In 2000, after ISA had broken out, my predecessor John Home Robertson introduced a three-year scheme, backed by £9 million, to assist those businesses that were directly affected by the disease. It would be open to the Executive to consider providing similar assistance in the future, should circumstances warrant that.
I have provided the committee with a truncated version of the explanation that I intended to give. We are seeking to create the conditions within which the insurance sector might be able to offer some form of commercial cover. Because of the constraints of European law, we can go no further without running the risk of compromising the disease-control regime that has served us well in the interim period. Together with others, we await with interest the judgment of the ECJ on the issue of compensation. After that has been made, we will review the position, as I have explained.
Thank you, minister. I inform members that I intend to move to item 2 on our agenda at 3.15 pm at the latest.
As the minister knows, Scottish Quality Salmon has responded to the draft strategic framework document by saying that it has
"fundamental concerns about the discrepancy between the Vision and the detail of the remainder of the draft document."
I will ask about some detailed matters, the first of which relates to the Crown Estate Commission. The minister said that he wanted the industry to be internationally competitive, but surely he agrees that Scotland is alone among countries that fish salmon in paying rent to a body—the Crown Estate Commission—to use the sea bed. Last year, that burden was £2.5 million. The charge is a tax for nothing that the industry in Scotland must pay, but which the industries in Chile, Norway, Ireland and in our other competitor countries do not pay. That has been the case for as long as salmon farming has operated in Scotland.
According to Brian Simpson of Scottish Quality Salmon, to whom I spoke this morning, that £2.5 million constitutes about one third of the Scottish industry's profits. How on earth can that contribute to the industry's being internationally competitive? Why has the Labour Government at Westminster allowed the situation to persist? Does the minister agree with me and other members that responsibility for dealing with the Crown Estate Commission should be devolved to this Parliament, so that we can end that ridiculous tax, which one would expect from Fidel Castro or the like, but not from a Government that seriously believes in what the draft strategic framework document says?
I disagree with Fergus Ewing on several important aspects. I understand that Scottish Quality Salmon's response, which Mr Ewing paraphrased, is in draft form. As the closing date for the receipt of responses has only recently passed, it will come as no surprise to hear that I have not read every response, although I fully intend so to do. Therefore, it would be inappropriate for me to comment on any one response over another or to make rash judgments about what might or might not be contained therein.
Had Mr Fergus Ewing performed a cursory examination of the draft strategic framework, he would have seen that the Executive intends to examine the industry's overall competitiveness. Competing claims are made about the industry's competitiveness globally. It is clear that the industry has expanded and continues to expand in an extremely competitive international market, so the evidence is that the constraints to which Mr Ewing referred have not in total impacted adversely on the industry's competitiveness or on its ability to expand and to fill gaps.
Mr Ewing has a habit of using statistics particularly selectively. His comments were not dissimilar to his comments on the vehicle fuel tax, which he consistently claims is the single factor in the transport costs equation and renders the British haulage industry uncompetitive against its European counterparts. An examination of the whole shows that, if vehicle licensing, road taxes and road tolls are taken into account, the British transport industry is competitive in Europe.
A similar argument can be made about the overall competitiveness of the UK aquaculture industry in comparison with European and other global competitors. We cannot take one factor in isolation and say that the industry is competitive or uncompetitive as a consequence of that factor. We must consider the whole. That is what the Executive will do. As part of that process, we, the Crown Estate Commission and other stakeholders, including the industry, will be involved in a professional analysis of the impact, if any, of sea-bed rentals on our industry's competitiveness. The study is designed to consider competitiveness as a whole and not to isolate one factor from others.
Given the brevity of the time available, I encourage members to keep questions short and the minister to give short answers, if possible.
The minister says that I have not read the document. That is nonsense, because I have read it. Paragraph 3.4 talks about the response on the matter, which is that an independent study might be conducted to consider the regulatory costs of operating aquaculture businesses in Scotland and to compare them with other countries.
We learn that the Crown Estate is to be involved in considering whether a study should be undertaken. The minister did not say that any piece of information that I gave in my first question was wrong, because he could not, as he knows that what I said was correct. If the Crown Estate is to consider whether a study should be commissioned, is not that like asking Al Capone to determine whether prohibition should be removed? That is ludicrous.
Will the minister give one example of a country where those in the salmon fishing business bear a tax such as that which Scottish producers bear? Does any country have a similar burden to the rental for the sea bed that Scottish producers pay?
Mr Ewing obviously did not take account of what I had to say. I made it abundantly clear that I would need to look in detail at the responses of Scottish Quality Salmon and everyone else to the consultation document; I have not had the opportunity to do that. That will properly involve the Crown Estate Commission—there is no question of consulting with one factor of the equation and not the others, as Mr Ewing would have us do. We must take an holistic view. When considering the Scottish industry's international and global competitors, we must take into account all the relevant factors, which include the premium that a quality product can attract in global markets. The industry is well aware of that, and Mr Ewing does its case no service by his disparaging references to the other partners in that process.
I welcome the document and its emphasis on research and development. However, I am a little concerned. The minister will be aware that the shellfish institute in Ardtoe is currently up for sale. That seems to go against the whole thrust of this document, in that Ardtoe is the only independent aquaculture institute in the UK. It is funded through the Sea Fish Industry Authority, which will be part of a forum that will examine their support to the aquaculture industry. It appears to me that the two things do not add up.
I understand that the Sea Fish Industry Authority is funded through the Department for Environment, Food and Rural Affairs—DEFRA—so the Scottish Executive might not be involved in the future of Ardtoe. Could the Scottish Executive do anything to help to keep Ardtoe in the public sector for the next few years, as it will be self-financing in a few years and 90 per cent of the UK's aquaculture is based in Scotland?
That is principally an operational matter for the Sea Fish Industry Authority. The authority is accountable to its levy payers, and ministers have no locus to intervene. I understand that the Sea Fish Industry Authority plans shortly to publish a strategy for its future involvement in aquaculture.
The enterprise network—through which the Executive takes an interest in any enterprise-facing closure—stands by, ready to offer any assistance available under the myriad programmes established. Beyond that, I am unable to intervene.
Do you feel that it would be difficult for the aquaculture industry if it were to lose the research centre, given that it is the only one in the UK? Could the Scottish Executive do anything to intervene? Perhaps it could not intervene through DEFRA, but could it pull together some industry groups to ensure that the research centre stays within the industry and stays independent? I fear that one company might buy the facilities and expertise at Ardtoe and then go against all the other companies in Scotland that might benefit from the research.
I am conscious of the issues that you raise. We have to wait and see what the SFIA says and respond to real rather than hypothetical issues.
It was remiss of me not to welcome visiting member Tavish Scott. We are pleased to have him with us, and I invite him to put his questions.
Thank you for the invitation. I declare an interest as someone who also attended the study tour courtesy of Cermaq back in August. I have the pictures to prove it.
My first question relates to the global pressures that were discussed earlier. Does the minister accept that any fish farm, whether owned by someone within or outwith Scotland, is under acute financial pressure because of the competition that he mentioned in a reply to an earlier question? In that context, is it not important that the framework document focuses hard on the costs that are within his department's and the Government's control, and aims to make the industry more competitive against the pressures that I am sure he is acutely aware of?
For example, I am aware that the comparative cost of production in Scotland and Chile varies by about one third. There are potential changes to the pigment regime as a result of European legislation, which could add 2p to 3p per kilo to Scottish producers' costs, as well as to those of producers within the European Union. There is a multitude of additional costs.
What can the minister tell members about the strategy's approach to reducing costs to the industry at such a desperately competitive time?
Generally, I agree with you. Where I could influence the outcome of issues that were strategically important to the development of the industry—in the areas that come within my direct remit—I have been at pains to try to do so. That has been my objective in the talks and in the development of the strategic framework. I have discussed infrastructure issues with my transport colleagues and I have discussed skills training and equipping the industry with the appropriate information technology tools with my colleagues in enterprise and lifelong learning. Throughout the strategic framework document, there are numerous references to bringing together Scottish Executive departments to answer the industry's calls for greater co-ordination in promoting a sustainable aquaculture industry.
Against that, we must set the demands from other quarters. An increasing number of regulations and cost burdens are being imposed through the need for environmental controls and conservation measures. The strategic framework document represents a fair balance of those interests and shows a way forward to a sustainable future for the industry.
I repeat that the industry has been growing, despite the constraints that it has been said exist in a number of areas. We anticipate that the industry will continue to grow, not least as the fish gap widens and as the wild catch decreases. If demand for the product remains at existing levels, the gap will have to be filled by alternative sources. I see the Scottish aquaculture industry expanding to fill that fish gap and to meet market demands.
We can exploit that growing market competitively and globally. It is to be hoped that we can secure a greater share of the quality market and of the developing new-species market. The industry has tremendous opportunity. I am, and have been, happy throughout the process to assist the industry in achieving objectives, targets, and increased production levels that are compatible with the carrying capacity of our waters and other important environmental and quality control constraints. It is vital for consumer confidence that we address some of the issues that several of our global competitors do not. Those issues will increasingly come to bear as consumers exercise a choice about product quality.
I agree with the minister about the tremendous opportunity that the world demand for protein will bring. Does he accept that there is an argument for a one-shop-stop approach, similar to that in Norway, to the regulatory regime imposed not only by his department but by other departments, local government and—dare I mention it?—the Crown Estate? Will the final strategy consider a one-shop-stop approach with the specific aim of reducing costs and making the industry more internationally competitive, which the minister rightly mentioned?
I think you mean a one-stop shop rather than a one-shop stop.
I am sorry; did I say that the wrong way? I meant to say one-stop shop.
When the responses to the consultation come back we will look again at the regulatory regime. Our intent has been clear, but the different statutory responsibilities and the statutory implications of moving quickly to a one-stop-shop approach must be taken into account. I am happy to give reassurance on that.
We continue to take an holistic view of competition. You referred to Norway, but Norway charges significant sums for licences to operate a fish farm. That licensing regime is different from ours. The variations in different countries have an impact on their respective competitiveness. I made the same point to Fergus Ewing: one cannot remove one factor and consider it in isolation; one must consider the position holistically. However, generally I agree with you.
The minister previously mentioned ISA. My recollection is that the ISA restart scheme, which was announced a couple of years ago, had a budget of £9 million for three years. I understand that that was underspent, and that it now sits with Highland and Islands Enterprise—HIE. I appreciate that the minister may not be able to answer today, but it would be useful to know whether HIE will retain the moneys that are still available from that scheme and whether they will be specifically targeted at aquaculture. That is the industry's and my preferred solution.
It is for HIE to allocate any prospective balance.
When this matter was before the committee, the industry and the Executive were left to co-operate to devise an insurance scheme to cover the problems of mass slaughter. The Executive—rightly—fully compensates our livestock farmers for disasters such as foot-and-mouth disease, but it struck the committee that there was no such scheme for mass slaughters ordered by the Executive in relation to this issue.
Later, we will consider the Agricultural Holdings (Scotland) Bill. I have certainly been impressed by the Executive and the industry. With one or two exceptions, tenant farmers and landowners have come together and almost agreed the way forward. There is a remarkable degree of consensus, which there has not been with ISA and insurance.
You said that insurance companies have been reluctant to provide cover and have ruled out commercial cover. If that is so, surely the only way forward is for the Executive to step in. Will the Executive do so in the interests of policy fairness and consistency across the board? If it does not do so, ministers will not have been fair and consistent.
The answer to your question is no. The Government is not an insurance business and the taxpayer cannot be exposed to unquantifiable liability. I am aware of the arguments that fish farmers have made about discrimination against them in the light of compensation arrangements for terrestrial livestock farmers for serious diseases such as foot-and-mouth disease. However, the comparison with livestock farmers is not valid. When diseases such as foot-and-mouth disease regrettably strike, cattle and sheep are destroyed and carcases are disposed of, but things are different under fish disease control legislation. With ISA, for example, a farmer can market his stock unless it shows clinical signs of disease. Therefore, no ready comparison can be made with livestock disposal.
May I follow up that point?
Please do, although I have not finished what I was going to say.
What you are saying is a little false. I am not saying that you are intentionally misleading the committee, but what you are saying is a little misleading, as it would be commercially unacceptable for fish farms to market the dead fish as having been slaughtered as a result of a disease programme—the fish would not be bought. You are not making the right comparisons. Ordering the mass destruction of fish to prevent disease is similar to the Executive ordering the mass slaughter of livestock to prevent disease. Is not the case clear?
No. The two issues are different. The mass slaughter of animals with foot-and-mouth disease will result in carcases that are not marketable, whereas the vast majority of slaughtered fish have been marketed—in percentage terms, the figure is certainly in the high 90s. I have some sympathy with arguments about the depreciation in market value of stocks—there is a grey area in that respect. However, even if we had the legal obligation or powers to provide compensation—which we do not—successive Governments have argued that the industry must take the necessary steps in the first instance to mitigate its exposure.
The industry can take steps. We have eradicated the disease since its outbreak, which people argued was impossible—we have shown that it is possible. To be honest, I am surprised that the industry has not taken steps to set up a levy among members, for example, to prepare for such an eventuality under the new control regimes that will operate. We would like to discuss that matter with the industry in the context of the grey area to which I referred.
So the issue is not dead. You have not put a stopper in it.
It is not dead for two reasons. We await the judgment of the European Court of Justice, which might well impose a legal obligation on us, in which case we would obviously have to comply with the judgment. Beyond that, we have always indicated a willingness to discuss with the industries measures by which they might mitigate their loss, such as a levy system among operators.
I turn the minister's attention to a part of the paper that deals with the concept of genetically modified farmed fish, which has not been addressed so far. I am concerned by some of the comments in the strategy paper on that extremely controversial issue.
The paper says that, in the past,
"there have been expressions of public concern about the use of genetically modified crops in the food chain."
As I am sure the minister is aware, concern about genetically modified fish is even greater than that about genetically modified crops.
There are a couple of real concerns. First, genetically modified farmed fish might jeopardise Scotland's reputation for good food production. Secondly, we know that wild fish populations have been affected by farmed fish populations. If those farmed fish populations were to be genetically modified, that could have horrific ramifications for wild fish stocks.
As the minister says in the paper, there is no commercial production of genetically modified fish at present and I understand from speaking to the industry that no one in the industry supports that concept. Scottish Quality Salmon told me last year that it was opposed to the concept and I understand that consumers are opposed to it, too.
I want to know why the minister says that
"the application of genetic techniques may be expected to play some role in the future."
He expressed no opposition to that, so he is leaving the door open to it. Why is he leaving the door open and is the Executive opposed to genetically modified fish?
You raise an important point. The draft strategic framework is very clear from an industry point of view. The industry in Scotland has declared that it will not use the genetically modified vegetable products that you mentioned, not least, I suspect, because of the consumer confidence issue to which you referred. Consumer confidence in the product is an important part of Scottish salmon marketing, and I believe that it will become increasingly important in a global context.
The paper says:
"The second application is the use of GMO technologies … in breeding fish for commercial aquaculture use."
Again, that plays no part whatsoever in Scottish commercial aquacultural production.
However, I have the advantage over Richard Lochhead in so far as I have travelled to look at some of the experimentation in genetically modified fish in other parts of the world, particularly North America. That experimentation continues apace. I noticed a comparatively recent press report that mentioned the applications for potential commercial exploitation of that product.
The situation is hypothetical but, given the global market that exists in farmed fish production, I assure you that the product would have a substantial impact on that market. Members might argue that it would have a negative impact in relation to consumer choice and that the Scottish product, which eschewed GM feed or GM production, would rise in value and demand and that there would be a consequential downturn in the industry of countries that had turned to GM production. I assure members that, were the opposite to happen—if there were no consumer reaction, all environmental concerns were heeded and consumer confidence grew—the competitive position of the industry would be damaged severely by our opposing genetic modification of fish. That would have considerable implications.
We cannot be Luddites and turn our backs on scientific development. We must take account of developments elsewhere, even if we are not directly involved in them. We do not leave open the door to such developments here, but we say that we must have regard to developments elsewhere. If we ignored those developments, we would be doing our industry and our consumer interests a disservice.
If every other country adopted genetically modified fish and Scotland did not, that might help the Scottish market and Scottish producers. We would have a niche market and people would be more likely to buy non-modified fish.
We do not know that. Such an approach could have a damaging effect. I have seen at first hand that genetic modification can more than halve production costs and the ultimate cost of the product. People's inherent fear or distrust of GMOs might lead them to reject genetically modified products and to have increasing confidence in Scottish fish. However, if the consumer response were driven purely by market considerations—by the price of the product—rejection of genetic modification could have a very damaging effect on the Scottish industry, which might be priced out of the market. All that the strategic document says is that we cannot ignore developments elsewhere that may impact on our market in future.
We will disagree on that issue.
My final question relates to an issue that is hanging over salmon farmers in Scotland, especially in the independent sector: the perceived threat of dumping cheap imports on the European market. That issue is causing great concern in Shetland and elsewhere. What influence is the minister bringing to bear on the European Commission, given that next month there will be an important meeting at which decisions will be taken on that matter? How does he envisage European policy impacting on the aquaculture sector in the future, given that we know from painful experience that European policy and fisheries do not always have a productive relationship? That relationship is often disastrous for Scotland. Does he believe that Europe will play an even bigger role in determining the development of the aquaculture sector in Scotland?
Richard Lochhead raises an important issue. I hope that I am having considerable influence on the outcome of the process to which he refers, as that is certainly my intention. I have been very active in support of the Scottish indigenously owned sector of the industry, which—as he knows—is not the same as the industry per se.
The issue of dumping must be addressed by the member states of the European Union. The position is not dissimilar to the one in which we found ourselves when dealing with wild stock recovery action plans—we must build a coalition of states. It is difficult to secure a consensus around the position of one member state. Because of the fish gap to which I referred earlier, the Commission, the European Union and the member states will have an increasingly important role to play in determining the future direction of EU aquacultural development. It is quite proper that that should happen.
Our advantage is that Scotland is ahead of the game in developing its strategy. We must take account of the fact that the Scottish strategy is being developed in parallel with an EU strategy but, by virtue of the fact that we are ahead of the game, we are in the fortunate position of being able to shape the outcome of events. Inevitably, the Commission will have an increasing role to play in the development of our indigenous industry, European aquaculture and, beyond that, the global market to which I referred in, for example, transgenics.
I welcome the draft strategic framework. The process has been invaluable in bringing together every stakeholder in these important industries.
I will pick up on the minister's last point about the dumping of salmon. It is of phenomenal importance that he and his colleagues at the Department of Trade and Industry and the Commission all work together to prevent the illegal dumping of salmon and to reduce the amount of salmon that is being dumped within the European Union. He mentioned that the matter is exercising indigenous companies. Is he aware that it is also concerning non-EU-owned companies that operate in Scotland although, for reasons of divided loyalty, they have as yet been unable to articulate those concerns?
Some of the questions that I was going to ask about the regulatory regime and other issues have been answered.
I listened to what the minister said about the European strategy. Will the Executive's strategy genuinely help to inform what the Commission is about? How does the Executive's timetable fit in with the timetable that has been established by the Commission?
My final point is on the type of support for which Scottish aquaculture is looking. As someone who lives in the Highlands and regularly engages with aquaculture operators and fish farmers, I know that what they are looking for from the Executive and the Parliament is not constitutional nit-picking, but sensible, pragmatic and intelligent steps to help to sustain those industries and allow them to expand. I make the point again to Mr Ewing—the industry continues to expand and, as someone who lives in the Highlands, I am aware of that daily.
My question is on the EU strategy and new species. In the context of the European strategy, how does what the minister and we are doing fit in with what our colleagues at the European Commission are doing?
I am glad that Alasdair Morrison welcomes the production of the documentation, because it represents 18 months of hard work. We had to bring together all the parties, who often have conflicting viewpoints and interests. The fact that we have reached this stage and that there is such consensus is a considerable achievement. I take his comments, together with those of Tavish Scott, as recognition of the work that everybody has put into the process and of the tremendous opportunity that the strategy affords the industry and other stakeholders in developing the opportunities to which Alasdair Morrison referred.
As I said in my response to Richard Lochhead, I think that the European Union will increasingly set attitudes in the market in farmed fish. We are developing our strategy in parallel and in concert with the Commission and with the European Union more generally. The person who is principally responsible for driving that forward is Constantin Vamvakas, a Greek who is in the lead in Europe on the issue. He will speak with me at the conference to which I referred, when the final documentation will be unveiled for public approval. Although we are working in parallel and in concert with the EU, we have the advantage of having put in 18 months of hard work in developing the strategy. I continue to hold to the view that the strategy offers the opportunity for our industry to grow and expand in a sustainable manner.
I echo Tavish Scott's comments about the single-stop shop.
I notice that under research priorities, paragraph 25 in appendix 4 of the draft strategic framework recommends:
"Studies into the causes and ecological consequences of the decline of wild salmonids."
I do not know whether the minister remembers but, in 1996, the Scottish salmon strategy task force under Lord Nickson produced about 63 recommendations on the subject, one of which was on a single regulatory body for the aquaculture industry. I have spoken to many people in the aquaculture industry who want to live in sustainable co-existence with other stakeholders around the coast, such as people who are involved in wild fisheries. The same applies to people who are involved in fin-fish aquaculture and those who are involved in shellfish aquaculture, which is a different ball-game.
A single regulatory body would make things much easier. For example, it would become easier to get permission to use new medicines that have been certified by the Scottish Environment Protection Agency. I have been told again and again that it is enormously difficulty to get things done quickly in the industry. Will the minister help to make the industry less regulated, which would make it easier for the industry to advance?
My second point is about the transfer of responsibility for planning permission from the Crown Estate to councils. Councillors and others have asked me whether good guidelines will be issued on where salmon and fin-fish cages should be placed. There have been cases—for example, in Ardlair in Wester Ross—in which it was proven that the tidal flow was not sufficient to carry away the detritus on the sea bed. Such pollution can be a time bomb. The aquaculture industry wants to live sustainably with other industries. I am asking for good, well-thought-out guidelines for councils so that they know which places are good, and which are not good, for fish cages.
Jamie McGrigor raised a couple of important points, but, to an extent, his second question answered his first. A single regulatory authority was an option, but it did not find favour among the majority of stakeholders, whose preference was for the introduction of planning powers for local authorities, to which he referred. I provided for that measure last week in advance of the finalisation of the strategy. If we accept, as I do, that the optimum means of developing planning for fish farms involves local authorities and that the optimum means of controlling discharge consents is through SEPA, we must accept that a minimum of two regulatory bodies will be involved.
The guidance on the new planning duties that we will issue to local authorities, which will become a national planning policy guideline, will be critical to the operation of local authorities' new powers—there is a broad consensus on that in the industry. We might be better able to co-ordinate the process if an existing regulator oversaw and co-ordinated applications. We are exploring that possibility actively. A range of regulators might be involved in the process, as happens with terrestrial agricultural production, but the idea under consideration is to have a lead authority to co-ordinate applications.
The vision, which was developed with such effort, says:
"Scotland will have a sustainable, diverse, competitive and economically viable aquaculture industry".
In response to other members, the minister said that we should not consider one factor in isolation. In response to Alasdair Morrison, he said that we must develop the industry in a sustainable manner. I direct the minister to the feed sustainability study that is referred to in paragraphs 3.57 et al, which point to the real difficulties in the total ecology of the industry. The large majority of feed stock is derived from industrial fisheries and, as we know, in the North sea in particular, the Danes are extracting something in the order of 1.5 million tonnes per annum of sand eel, pout, and other smaller species.
In the document, the minister says that after the European seafoods workshop in April 2003, we shall receive information on global aquaculture feed supplies. However, are we in line for any support—at long last—to eradicate the pernicious industrial fisheries that are so damaging to the wider wild fish stocks in the North sea? Can the minister give us any hope that the Danes and the industrial companies behind their fisheries—a very small number of very large industrial companies—will finally be brought to heel? Can he at the same time offer us a way forward for an increasingly important aquaculture industry?
I agree, in large part, with Stewart Stevenson's fundamental point, which has concentrated my mind and the minds of the working group. For the industry to be sustainable in the long term, we must address the sustainability of its feed stock; that is a fundamental issue. A wide range of research and other activities is being generated largely by the Executive, in concert with colleagues in different parts of the world. We want to ensure that we can produce sustainable feed stocks for an expanded level of aquacultural production, and that that does not threaten the current stocks of sand eels and the like, which provide the majority of feed stocks. That is a major challenge, which the strategy document recognises; indeed, it is globally recognised. A range of research is also going on into alternative foodstuffs.
Does the minister agree that a sustainable future depends on attracting more young people into the industry? I note on page 64 of the document the suggestion that present vocational courses may not be sufficient for the industry's needs. Is the minister optimistic that we can ensure in the future that vocational training not only meets the industry's needs, but encourages young people to get involved in the industry and motivates them to stay in their rural communities?
Absolutely. We have had bilateral discussions with Iain Gray and others in the enterprise and lifelong learning department, and with people in academia, all of which were designed to stimulate growth in better-orientated training for the industry. We want to produce trained young people who stay in their local areas, earn their living there, bring up their children there and support local schools and the local community. All that is dependent, in large part, on the local economy and the contribution that aquaculture makes to some of our most remote communities. It is all interlinked. The strategy document recognises that skills training, and investment in skills training, will ensure that kids find an economic future in their locality and secure the future of some of our remotest communities. The strategy deals with important social aspects, and I assure members that the Executive's efforts across a range of departments will be directed towards securing those objectives.
Many of the recommendations that have been drawn from this long-term inquiry would, if implemented, ensure a viable and sustainable sea-cage fishery, which is particularly desirable as much of the activity takes place in remote parts of Scotland. Everybody would support that.
We have heard a lot of criticism—which will continue, and may become more active—about the cage locations and the applications of chemicals and medicines. Who will police the activities of those remote sites in the event that the sea-cage industry moves even further offshore?
There are a number of important aspects to the issue. The recently revised relocation guidelines, the area management agreements and the regulation of fish medicines all contribute in various ways towards a more environmentally sustainable industry. Each makes an important contribution to that objective, and that will continue. It is fair to say that, in Scotland, we operate to higher environmental standards than any of our global competitors and that, as a consequence, we can guarantee our product's quality.
There will always be people on the fringes of the argument who will argue against any form of aquacultural production and others who will argue against any form of regulatory regime, claiming that it would interfere with their competitiveness. We have the right balance. Increasingly, we will be seen to be leading the way in aquacultural development in an international context. That offers a sustainable path for future expansion, which will create jobs and other economic opportunities down stream in constituencies such as John Farquhar Munro's and in other remote areas.
One of the main complaints that we heard in the localities that we visited—but not from the industry—was that, although SEPA was given the authority to control and monitor what was happening and to approve the location of the cage, the biomass involved and the application of medicines and compounds to a particular formula, there was little scrutiny afterwards. I am sure that the minister, in his deliberations on his final conclusions, will take that point into consideration.
Time is against us and we must draw this part of the meeting to a close. In order to have meaningful input into the final strategy, we will have to act swiftly. I hope that members will agree that we should ask the clerks to write a letter highlighting the concerns that have been raised and that the letter should be given to our reporters to sign off by Thursday.
If members have any other points to raise, now is the time to do so.
I understand that the point that the Scottish Salmon Growers Association wants to be pursued relates to the allegation by Brian Simpson that, when the Commission decided that there was no evidence to substantiate the claim that the market had been presented with the dumping of below-cost salmon from Chile, the Faroes and Norway, it did so because it examined only a six-month period that was too early to show the actual impact of the dumping. Westminster should ensure that the European Commission examines the subsequent six-month period when the market was being flooded with low-cost salmon.
I hope that the letter that the clerks will draft will include concerns about the extra costs that are being imposed on Scottish producers because of EU directives or rules reducing the amount of canthaxanthin—a substance that determines pigmentation in fish—that can be added to fish feed from 80mg/kg to 25mg/kg. The salmon growers argue that the EU's approach has been inappropriate and that the regulation is entirely unnecessary. They tell me that, for anyone to suffer, they would have to eat one pound of salmon—six or seven salmon steaks—every day throughout their lives. This is a serious matter as extra costs are being imposed on the industry, and I hope that it will be considered properly.
Finally, I have had the benefit of reading the SQS response to the Executive's draft framework document. The response praises the Executive's aspiration but criticises it on the detail. Does the minister regret that, of the 24 people on the working group, not one was actively engaged in managing a salmon farm? Surely it is not a surprise that that has resulted in criticism from SQS? Many distinguished people with a lot to offer were included in the composition of the group. However, according to Brian Simpson, the two people from the bodies representing the industry are not actively engaged in salmon farming. Does the minister agree that that is poor? Perhaps the convener will pursue that point in the letter.
Our continuing discussions with Westminster colleagues and others in the development of wider European policy mean that we are obviously aware of the points that were raised.
On Fergus Ewing's latter point, as the more astute members of the committee will be aware, the industry nominated the people who were to represent the salmon farmers. If Mr Ewing has problems with the talented individuals who comprised the industry representatives on the working group, he should raise the matter with the industry representatives rather than with me.
I assure Fergus Ewing that the contributions that were made by David Sandison of the Shetland Salmon Farmers Association and Mark Davies of the British Trout Association, or by Jamie Lindsay and others in respect of the salmon farmers, were of very high quality. They represented their industry viewpoints very effectively. That is reflected in the strategy document that is before the committee today. I pay personal tribute to the contribution of those individuals. Mr Ewing's criticism of them is extremely misplaced.
I want to reinforce that point. As I said, I engage regularly with the industry on a weekly or fortnightly basis. I have heard not one chirp of criticism about the composition of the working group. Everyone welcomes the group; they see it as a useful vehicle to do things for a fundamentally important industry. It is unfortunate that committee members have chosen this stage in the debate to denigrate what are, as the minister rightly said, the substantial efforts and contribution of a great number of talented people.
I think that we should leave the discussion at that point. Do members agree to my proposed course of action?
Members indicated agreement.
The reporters will try to sign off the letter by the end of the week.
I thank the minister and his officials for attending the meeting. Given that there will be a changeover of officials, I suspend the meeting for five minutes to allow members to gird their loins for the session to come.
Meeting suspended.
On resuming—