Aquaculture Industry
Maureen Macmillan has been waiting patiently. I am not sure whether Fergus Ewing was so enchanted by the previous discussion that he has decided to stay on, or whether he came specifically for this agenda item—welcome, Fergus. I ask Maureen Macmillan to take us through her paper and its key findings, after which we will ask questions.
As they say: now for something completely different. The report starts with the background and the terms of reference. We wanted to examine the effect of the European regulations on the salmon farming industry and other fish farming industries. The terms of reference give a potted history of infectious salmon anaemia and viral haemorrhagic septicaemia, their effects, and the response of the Executive.
Page 3 shows the specific aims of the report—to examine the incidence and clinical effects of ISA; the current regulations; the impact on the industry; waste disposal; the support from the Executive for affected businesses; insurance for the industry; the comparison with Norway; and possible future developments. For VHS, the aims are more or less the same, but are not as extensive, because the disease has appeared only once and the industry does not have the history of VHS that it has of ISA.
On page 4, the main body of the report begins. The introduction emphasises the importance of the salmon farming industry to the Highlands and Islands: it provides 6,500 jobs and is worth around £500 million a year. It is extremely important, economically and socially, in the west Highlands and in Orkney and Shetland.
The report points out that the diseases are virulent as far as fish are concerned, but pose absolutely no threat to human health. ISA was first recorded in Norway in 1984. It is transmitted through water by means of material such as blood and mucus. The disease came to Scotland in May 1988. It was classified as a list 1 disease. Consequently, tough control measures had been put in place to prevent and control its spread in any farm suspected of harbouring the disease and its neighbours. Those measures had been put in place in Europe as a result of the disease appearing in Norway and they had a severe impact on the Scottish industry.
Although VHS is classified as a list 2 disease, if the disease is found, the control measures are as draconian as those for ISA. VHS is harmful to white fish, and the reason why it was included in the report is that, with more and more of the aquaculture industry thinking of farming white fish such as turbot and halibut, we do not want the same to happen to the white fish industry as has happened to the salmon industry.
On the confirmation of the presence of ISA, the initial response was the setting up in 1998 of a joint Government and industry working group, which reported earlier this year. I will come to that later. The working group tried to establish the measures required to prevent further outbreaks of ISA or to minimise their impact; it reported in January 2000.
The next part of the report deals with the effects of the regulations on the industry: the depressive effect on the market; the fact that stock became uninsurable; the vulnerability of small, local farmers and the drop in prices at the supermarkets—the supermarkets used the ISA outbreaks to push down prices.
The industry was particularly concerned about the harm done to sites that were designated as suspect, when such sites often proved to be clear of the disease. Newspapers carried headlines that claimed that a killer disease was suspected in such and such a farm; that had a significant impact.
The financial impact was considerable. The process of fish slaughtering had to be tightened up because of the spread of the disease. However, most significantly, a plethora of litigation arose around the issues of compensation and insurance.
Environmental considerations were also expensive because everything had to be tightened up—all waste materials and packaging could carry the virus and were therefore subject to strict controls. The effluent from the industry had to be treated and the preferred method—ozonisation—is expensive. We must consider how that is to be funded.
The industry in Scotland has been compared unfavourably with that of Norway. The Norwegian method of dealing with the disease—control rather than eradication—was seen to be much friendlier to the fish farming industry. As paragraph 51 of the report suggests, ISA seems to be returning to Norway. A question mark hangs over the success of the Norwegian approach; only time will tell.
The report outlines the relevant Community legislation. It is fairly technical, including the various directives that deal with fish farming and an explanation of their purpose. Directives refer to the placing on the market of aquaculture animals, which must show no signs of disease; eggs and gametes must come from disease-free fish and so on. Council directive 93/53 relates to the control of fish diseases and aims to ensure a rational development of the aquaculture sector and to contribute to the protection of animal health in the Community. The directive requires certain control measures to be introduced as soon as the presence of the disease is suspected and further measures when the presence of the disease is confirmed.
Vaccinations were prohibited, but there has been a derogation that means that we can now use vaccines if we can find efficacious ones. The report sets out the measures that must be taken if the disease is suspected or confirmed on a farm.
Council directive 2000/27 takes a more flexible approach than the previous two directives. We have spent some time writing to the Executive to find out what is meant by "flexibility". Members have copies of the correspondence from the Executive. The derogation came through the European Parliament Fisheries Committee to which Ian Stewart Hudghton MEP was acting as rapporteur. He submitted a report asking for a number of significant changes to be made to directive 93/53. That was undertaken with the co-operation of all Scottish MEPs. The correspondence from the Scottish Executive rural affairs department outlines what the new flexibility means.
Council decision 90/424 on the absence of Community financial assistance is quite important. Livestock farming receives assistance from the Community if, for example, there is an outbreak of swine fever; other diseases such as anthrax and foot-and-mouth disease qualify for Community financial assistance. Currently, ISA and VHS do not qualify for such assistance. Fish farmers have no recourse to compensation from the European Community. That decision seems rather capricious; it is difficult to understand why fish farmers should be treated differently from other farmers. One of our recommendations is that we lobby Europe to include fish diseases in categories for compensation.
Vaccinations are dealt with in paragraph 88 of the report. Although vaccination is allowed, we do not have an efficacious vaccine. We have had correspondence with SERAD on where and when such vaccinations could be used.
Page 15 of the report sets out our recommendations on the legislation. We are seeking action at Community level to add ISA and VHS to the list of diseases qualifying for Community financial assistance. More generally, we want Community regulation of expenditure in the veterinary area to become more transparent and consistent. The Community approach to the availability of financial assistance is rather capricious. Control measures to combat certain diseases qualify for financial assistance, whereas other measures do not. However, both the Community system for fisheries and aquaculture and the common agricultural policy must support the general objectives of EC article 33.
The Scottish Executive could do more to explore all possible avenues for alternative Community funding. We mention the financial investment for fisheries guidance—FIFG. There might be some measure of flexibility in structural funds. Perhaps the Commission could change the relevant regulations to allow structural funds to assist in dealing with pathological risks in aquaculture.
The Scottish Executive's response is laid out from paragraph 100 onwards. Initially, the Executive provided the industry with a limited compensation package. The industry could not use that package because it required match funding. About £9 million was offered—I am not certain of that figure. That was extended to farms that were indirectly affected, such as farms that had been suspected and which had suffered financial losses—that was not covered in the original proposals.
The Scottish Executive then proposed a financial aid package to help people to restart their businesses. The report includes comments by John Home Robertson, on compensation to people who had lost their jobs—he turned down that suggestion.
The European Commission agreed to the £9 million aid package. I note that the UK Government could have decided to compensate farmers for those losses and that such a scheme would probably have been considered compatible with the EC treaty, as it would have met the criteria in the guidelines. Paragraph 111 explains that further.
We want to find out where the compensation scheme is heading. At the moment, not many people seem to have access to it. We want to ensure that it is not too bureaucratic and that there are no hurdles for people to clear.
Although the threat to Scottish aquaculture cannot be underestimated, a number of positive steps can be taken, both here and at Community level. We recommend that we follow the example of good husbandry that is outlined in the report of the joint working group, which included representatives of both the industry and the Executive. At Community level, further and detailed attention needs to be paid to the legislation that currently exists, to see what further financial assistance is available. We recommend strongly that ISA and VHS be added to the list of diseases that are covered by decision 90/424 and that qualify for financial assistance.
We urge the Scottish Executive to ensure that all avenues of support have been examined and to press the European Commission to change the relevant regulations to allow structural fund aid to be used to combat pathological risks in aquaculture. We welcome the restart initiative, but we want to ensure that the process is straightforward and that assistance goes to those who need it most. We ask to be kept up to date annually on the progress of the scheme.
The material appended to the report relates to litigation about compensation that is pending. Those are European convention on human rights cases and are currently being heard by the European Court of Justice, which means that they are sub judice.
Was not that fascinating?
Thank you very much. This is an extremely comprehensive report, containing a great deal of factual detail. You have obviously taken time to get an overview and to get behind some of the details of the issue. I would like questions to concentrate on the report's conclusions and recommendations.
Before I invite questions from members, I would like Maureen Macmillan to clarify something. In paragraph 112, you recommend that the committee be kept informed on a yearly basis so that it can judge the effectiveness of the aid scheme. Does that mean that there will be a yearly report?
I meant that the Executive would tell us what is happening. It could simply send us a note that would indicate whether the scheme was being accessed. The scheme is designed to run for three years and we have already reached the end of the first year. So far, there have been only three applicants. [Interruption.] I have just been informed that the Executive has to submit an annual report to the Commission.
We could ask for a copy of that report.
My second query relates to paragraph 113, in which you say:
"The Committee would like to ensure the method of applying for grants is not overly bureaucratic and that ultimately farms get the right amount of money they deserve."
That sounds fairly subjective. Is there an objective way of determining what farms deserve?
Rather than being so wide that multinational companies could apply for money that they do not need, the gate has been set up in such a way that grants go to people who genuinely need the money. People have to show that their business would go bankrupt if they did not receive this money.
The language in paragraph 113 is perhaps unhelpful. Could it be changed to say that the money should be targeted at where it is most needed and that people should have to provide evidence to show that they could not restart their business without the grant?
That is exactly what I mean.
I have to tell Maureen Macmillan what a good report this is. I do not consider myself an expert on this subject, but I now understand what it is all about. I wonder whether we should add a recommendation. If I am not mistaken, ISA is a list 1 disease.
ISA is a list 1 disease, and VHS is list 2.
Norway and Canada do not classify ISA as a list 1 disease. Some of the problems that we encounter with the way in which the EU makes us deal with ISA arise because it is classified as a list 1 disease. Unlike foot-and-mouth disease or anthrax, which are harmful to humans, ISA is not regarded by some advanced countries as harmful, so should we recommend that the EU removes it from list 1?
I would not go so far as to say that, but the committee may take a different view. ISA is a serious disease for fish and we should try to keep it out of fish farms. As we have noted, the Norwegians treat ISA differently, but it has not yet been proved whether their methods are more successful. Although the incidence of ISA in Norway fell, it seems to be rising again.
You say that the Norwegians prefer to approach ISA as a disease that is endemic, whereas scientists believe that we may be able to eradicate it in Scotland. Should we set a time limit after which, if ISA has not been eradicated, we should handle it as an endemic disease?
That question could be revisited. Although scientists think that the disease could be eradicated, many people in the industry think that it is endemic in the wild. That view has not been proved, but one cannot prove that something does not exist. There has not been a case of the disease since May 1999. There have been a few suspected sites, but nothing has developed.
Are we too severe in the UK, in that we name suspected sites?
I think so.
We could recommend that sites should not be named until ISA is confirmed there.
Yes. Fish farmers feel that a stigma is attached to their sites if they are suspected, even though it may turn out that they do not have the disease.
Members will have noticed that the convener had to go out to take an urgent phone call. I am now frantically reading his notes. I call Fergus Ewing, who has been waiting patiently.
Thank you for your words of welcome—I have had a very pleasant afternoon.
It is obvious that much work has gone into this report. I endorse what Maureen Macmillan has said about the importance of fish farming to the north of Scotland. I was pleased to read in paragraph 73 of the report—the clerks were kind enough to give me a copy—a reference to Ian Hudghton, whose report influenced the terms of directive 2000/27. As we are concentrating on recommendations, I will cut to the chase.
That would be helpful.
It seems that the view adopted in the recommendations is that the Executive has the power to make payments of compensation. The report invites the Executive to explore all possible avenues to make such compensation payments. If such powers are available, as is suggested in paragraph 110, the question arises why those powers have not been used. I would like the report to address that. People in the industry who have talked to me are pretty hot under the collar about that matter, as is manifest by the fact that some of them are busy suing the Government.
I mentioned the fact that there is legislation that allows the Government to compensate the salmon farmers if it felt that it had the funds to do so and that that was appropriate. The Government offered a package that the industry said that it could not access, as it needed matched funding. Part of the problem is that no money—such as farmers would get for swine fever—is coming from Europe to help. The Government could offer compensation if it wanted to, but it might have felt that the sums involved were too vast.
Some people in the salmon industry felt that there was a European convention on human rights dimension—that is what is being pursued in court. All those cases go back to the time before the Scottish Parliament got its powers, so it was the UK Government and the Scottish Office that were involved.
Paragraph 98 states that there are arrangements under the financial instrument for fisheries guidance for a payment package. I think that, in paragraph 98, the committee is asking the Executive to supply details of the projects. That would be useful.
I do not think that we know that there are powers under the financial instrument for fisheries guidance. We want the Executive to explore that.
I am no expert, not having studied the prime documents, but the scallop fishermen, for example, who were here at the first meeting after the recess—a meeting at which I was not present—and other fishing experts and representatives clearly stated that such powers existed and that those powers were not being used to access European money. I appreciate that I have not been fully involved with the report, but it seems important to pin down whether there is European money and, if there is, why it has not been accessed.
Paragraph 98 should cover that. We want a reassurance that all avenues have been explored. We also want details of the projects that are eligible for assistance.
I want to correct something that I said. When I said that a European convention on human rights dimension was being pursued in court, I meant an EC law dimension.
Okay.
The information that Fergus Ewing is talking about should be obtained by paragraph 98. We are asking for a reassurance that the Executive has explored all the avenues and we want to know what projects are eligible for assistance.
That deals with that point. The other point that is considered in detail in the report is to do with looking to the future rather than the past—seeking not compensation but flexibility in terms of the way in which the member state interprets directive 2000/27. In particular, we want to know whether the Norwegian experience of control rather than eradication is followed.
Although Maureen Macmillan has said that cases of ISA have been reported in Norway this year, a little more quantification might be helpful. Perhaps understandably, that paragraph does not go into a great deal of detail. It is early days yet and I know that it is difficult to obtain the information, but Norway has had ISA since 1984 and has pursued a policy of control rather than eradication with, I believe, some success. It might therefore be helpful to say expressly in the recommendations that the matter should be revisited, as Maureen suggested, rather than couching it in the terms that are in the report and saying that the matter might be given more consideration.
I am perfectly happy to do that if the committee wants me to. However, in discussions with the fish farming industry, I did not detect great enthusiasm for doing what is done in Norway, although I had expected to. It could be a red herring to say that we should do what Norway does; the fact that ISA appears to be returning to Norway may give credence to that view. This may be something that we want to keep an eye on and come back to in future.
If I am not mistaken, Norway is allowed to be more flexible. We are bound by the EU directive on control of list 1 diseases. If we discover ISA, we must, by law, eradicate it. Norway does not have that restriction.
Norway sells its fish to the EU, so that fish must be of a standard that the EU will accept.
Does not the flexibility lie in the fact that Norway has the ability not to have to eradicate if a case of ISA is found? It can control the disease, individually, and sell the remainder of its stock to the EU. We are bound by the EU directive.
I suggest that Maureen Macmillan and Fergus Ewing liaise to see whether there is an appropriate form of words that reflects what Maureen means. We need to clarify paragraph 98, but I think that there is general agreement on the sentiment. We need to ensure that we get the information that we require.
I have two points. The first follows on from what Fergus Ewing and Ben Wallace have said. Maureen has suggested revisiting the comparison between the Norwegian and the EU approaches, but it would be nice to include something in the conclusions about the state of research. We need to quantify it. That is what Fergus was alluding to. If there is no evidence, we should say that that needs to be addressed.
Secondly, paragraph 45 mentions that fact that the chlorinated effluent from organochlorates is not biodegradable; it can get into the food chain and be carcinogenic. That may be a side issue, but it is important and may be worth flagging up.
As paragraph 45 says, the Scottish Environment Protection Agency would prefer different kinds of disinfectant, such as ozonisation and particle screening, to be used. That would presumably have financial implications, so we could perhaps make a recommendation on help for people to transfer from chlorination to those methods.
Given current concerns about shellfish, fish farms and nutrients, that is an important area.
Paragraph 45 does not refer to the fish farms themselves so much as to the fish processing factories.
It is still effluent, however. Although it is a side issue, I think that it is important. If SEPA thinks that it should be examined, perhaps that should be flagged up in the conclusion.
I am happy with that, if other members of the committee are.
There seems to be a dearth of labour market information on the people affected—either those working in the industry or those who work in downstream activities. The document says that there are
"approximately 6,500 people working in salmon farming and other associated activities."
I would like to know what proportion of those people work directly in salmon farming and what proportion are working in other activities. The document goes on to say:
"At present some 10% of Scotland's fish farms are affected."
What does that mean for the people working in those industries? I have a constituency interest in associated downstream activity, and such information would inform the debate on the support and compensation that some people are arguing for.
That is a good point and we should develop it.
I know that Tavish Scott has some comments on the matter. I suggest that Maureen Macmillan should take into account what we have agreed and discuss things with Tavish, to see whether his proposals are acceptable. Then we can finalise the report at another meeting, but we will discuss only the things that are changed as a result of today's discussion. I suggest that we highlight the paragraphs in which changes have been made as a result of today's questions and comments. If Fergus Ewing has any further comments, he should submit them to Maureen and we shall try to incorporate as many views as possible.