Salmon Farming
We now move to members' business and motion S1M98, in the name of Mr Tavish Scott, on the crisis in salmon farming. The debate will last 30 minutes and will be concluded without any question being put.
If they are not staying for the debate, I ask members to be courteous and to leave quietly and quickly in fairness to the member whose motion is being debated.
Motion debated,
That the Parliament recognises the financial pressures the Salmon Farming industry in Shetland is facing, and notes that the industry creates employment for 900 people in this peripheral area of Scotland and contributes £60 million per annum to the Shetland economy.
One of the joys of living in Shetland is that one cannot rush for a train at this time of night. I am stuck here in Edinburgh until Friday morning, but that creates time to speak on this subject, which is important for my constituency and, I would argue, for Scotland as a whole. I am grateful to the Parliamentary Bureau for allocating time in the busy parliamentary day for this debate and I would like to bring a number of issues to do with the salmon farming industry to the attention of the Parliament.
I will give the example of the island of Skerries, which is 10 miles off the east coast of Shetland and is home to some 80 people. The island has white fish trawlers, inshore fishing boats, a fish farm processing factory, and—of course—a salmon farm. The salmon farm is not owned by a multinational, nor is it owned from outwith the island—it is owned and managed from within the island of Skerries. It is the community—more than half the jobs on the island rely on it. The community grows, harvests and packs its own fish.
Skerries salmon farm had a suspected case of infectious salmon anaemia—ISA—in May, which could lead to the forced slaughter of the fish and a six-month fallow period on the farm, during which there can be no restocking. The regime that now dictates the future of the farm puts the community in jeopardy. Along with the rest of the industry in Shetland, the Skerries salmon farm needs solutions, urgent action and a Government that cares about peripheral communities.
Skerries epitomises all that is best about a go- ahead determined community that is living, literally, on the edge of the world. Failing the people there, and many others like them, is not an option. Skerries is a microcosm of Shetland.
Aquaculture has kept communities alive: it means new houses, rural schools growing and not closing, active public hall committees, and active communities throughout Shetland.
Turnover in the industry in the islands has grown from some £220,000 in 1984 to some £57 million last year. The industry produces 35,000 tonnes of salmon. A total of 46 farms employ more than 400 people directly and 900 in total, representing 8 per cent of the working population in Shetland. That is how important salmon farming is to the community I live in.
Those of us who are aware of ISA know that it is a naturally occurring viral disease that cannot affect humans. It is simply the fish equivalent of the common cold. The advice of the Advisory Committee on the Microbiological Safety of Food is that the disease poses no threat to humans.
The disease was first formally recorded in Norway in 1984. Incidents were then reported in Canada. Today, we must discuss how the Executive's policy of ISA eradication can be adapted to give the industry some hope for a sustainable future. Last Monday, in a statement released to the salmon industry, Mr Home Robertson said:
"There is no room for complacency, but I believe some adjustments to the current policy would be appropriate. This would lessen the burden the disease is imposing on the industry and discussions to that end are underway with the EC".
I welcome that statement and I hope that the minister can add to it by announcing what adjustments will be made.
The minister's view that the industry must act is acknowledged in Shetland. Many positive measures have already been—or are in the process of being—introduced. In Shetland, salmon farmers have been proactive in improving procedures, in ever tightening their hygiene standards and in working towards a sustainable future. The industry is setting up a series of blood water treatment plants, which amounts to £600,000-worth of future investment from a variety of financial sources and which includes input from the Shetland salmon industry.
The industry is also working towards a fundamental reform of the works licence policy, which is happening with the co-operation of environmental organisations, the local authority and the industry, and a code of best practice that will cover all aspects of salmon farming, including husbandry, stocking and hygiene.
Shetland has its own independent quality control mechanisms and individual farms are completing accreditation and proceeding through to the Scottish food quality certification status which, as Mr Home Robertson and Mr Finnie know, covers
not just salmon but all of Scotland's food output.
Although the industry is making progress, it needs the support of the Government. I welcome the minister's announcement on 6 September of £3 million a year in a reinvestment package through Highlands and Islands Enterprise. That is a step forward, as is dropping the matching funding requirement in light of the PricewaterhouseCoopers report. However, the industry needs to have details worked out quickly and I am hoping for such a commitment from the minister today.
It took from February to September to get the reinvestment package right. The relaxation sought by the industry must happen. I hope that the minister will accept the urgency of the situation and that he will pass that urgency on to his officials to get them out to farms to work with practical people in order to get the situation right quickly. I hope that, for example, he can send his officials to Shetland to work with the Shetland salmon industry towards practical solutions, because people there want to work through the problems quickly so that the industry knows where it is going.
Mr Home Robertson's statement rejects the industry's call for a Government-funded insurance scheme. The minister knows that commercial insurers will consider insuring against ISA only if the European Union's regime moves towards a set of control measures as used in Norway, which includes a cage-by-cage slaughter regime.
The time scale by which fish must be removed is also hugely important. I ask that the minister, after his statement last week, update the industry on those changes with considerable urgency so that commercial insurance—the big step forward—can be included in the equation as soon as possible.
Such changes will mean adaptation or interpretation of the EU rules. In his closing remarks, will the minister describe what stage discussions on the matter are at and what progress the department is making in Brussels? Will he also set out the time scale within the EU for approving a vaccine as part of the eradication plan?
The costs of ISA to Shetland salmon farming are huge. Losses between September 1998 and June 1999 have been calculated at £1.9 million. Forecast losses due to the deferral of smolts— baby salmon—that have been put in cages as part of the eradication regime are estimated at £5 million, which amounts to 20,000 tonnes of farmed salmon and 900 jobs. What happens to those jobs if production is cut in half?
In the past six to eight months, some 36 jobs have gone. I want that process to stop. I want the industry, which is the future of the island in so many ways, to stop haemorrhaging.
The final issue I ask the minister to address is the production tax levied by the Crown Estate. Skerries Salmon—a small farm—pays corporation tax; it does not need to pay yet another tax. It pays £19.50 a tonne to the Crown Estate. For what? Members may well ask.
In the past year, £650,000 was removed from an industry in Shetland that was in crisis. I am sure that colleagues from other parts of the Highlands and Islands could give similar figures. I want that £650,000 to be reinvested, for example in research, and not used for a little help here or a little research project there. We need a real long- lasting worthwhile project that benefits not just the current generation of salmon farmers but future generations.
I want to suggest that the Crown Estate tax is put back into the industry using, for example, the highly skilled educational and research facilities at the North Atlantic Fisheries College in Scalloway, which I know the minister visited on his recent trip to Shetland. The industry must have a sustainable and viable future and we must build that future. The Executive should tell the Crown Estate, which has for so long taken money out of the industry, that its time is up and that it is time to put the money back into building the future.
Building a new future must be the Parliament's commitment in support of a hugely important Shetland and Scottish industry. I ask the minister to consider some of those points in his reply.
I ask members to keep their remarks to three minutes to accommodate as many members as possible.
I will be brief as I appreciate that many local members want to make a speech. I congratulate Tavish on his motion and on bringing the subject before Parliament.
The motion reminds us of the important contribution that salmon farming makes to the Scottish economy. The industry sustains more than 6,000 jobs in fragile communities around the country and in places such as Shetland in particular. Given that the income from the industry has materialised during the past 15 years or so, the industry reminds us how a relatively new industry can contribute to the Scottish economy. Pressures such as infectious salmon anaemia, which affect the industry, are causing a decline in profit margins. Salmon farming needs to be much higher up the Government's list of priorities.
Many other crises similar to those being
experienced in salmon farming affect our rural communities. I feel that we need much faster Government responses to them. I would like to know whether there are any plans in the Scottish Executive rural affairs department to create fast response units. I want to get people and officials into rural communities to speak to the people concerned and to come up with solutions as soon as a crisis arises.
The seven-month delay—from the announcement of the original £9 million package, with strings attached, to the most recent announcement, with the strings removed—is unacceptable. Officials and industry representatives do not want to spend their energies lobbying the Government for assistance. They have other things to do with their time, such as trying to make a living and addressing the issues that concern them.
We need a long-term and comprehensive strategy from the Government in connection with salmon farming and all fisheries—aquaculture, freshwater fisheries, inshore fisheries and deep- sea fishing—so that research needs and other matters can be taken into account. I look forward to the minister's response to my comments and those of my colleagues.
I thank Tavish for bringing this motion before the chamber. I think that it is extremely helpful. The issue I want to focus on is fairly technical and, indeed, slightly obscure. Having spoken to Tavish before the debate, I appreciate that it may not be a particularly visible part of the problem in Scotland, but it affects other areas of salmon farming.
My point concerns the anomaly that arises when a salmon farmer is required by law to slaughter his salmon stock. That has immediate effects on jobs and the financial sustainability of that salmon farm. There is also a more insidious and corrosive consequence. The loss of the stock in those circumstances would appear to fall between two stools. It is not an insurable risk. If the salmon has died not as a direct consequence of ISA, but because of the mandatory need to slaughter following the Government directive, that is not an insurable risk, nor is it a case for statutory compensation by Government.
In no way am I seeking to criticise or blame—I realise that this is an obscure and difficult situation—but the practical effect is that, literally overnight, millions of pounds can be wiped off the balance sheets of the industry and its participants. That can have a devastating effect on the viability and sustainability of the industry's operating capacity. Many farmers will be operating with loan funds and they may be pledged by way of security. It will be an alarming consequence to find suddenly that a capital asset in the balance sheet has been eradicated overnight.
I have benefited from the submission to me of a legal opinion, produced by one of the major salmon farmers in Scotland. I would be very happy to pass that on to the minister.
I think that we have seen it.
I suspected that that would be the case. From the point of view of this chamber, what is important is that article 1 of the first protocol to the European convention on human rights states:
"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law."
If the United Kingdom compels a fish farmer to destroy his fish stocks, that would appear to amount to a prima facie interference with the farmer's peaceful enjoyment of his possessions.
I appreciate that the minister may not be able to give a simple—or indeed any—answer on this point, but I am compelled to raise it and I thank Tavish again for letting me take part in the debate. I am compelled to raise the point because it strikes at the very heart of the commercial sustainability of a major part of our industry in Highland and rural communities. I shall be grateful if the minister responds in any way that he can to that concern.
I thank Tavish for raising this matter. The crux of the problem is that we are tied up in quite inappropriate European regulations, which treat the fish farming industry as if it were land-based farming.
One of the directors of Aquascot said to me yesterday, "If you have a field full of cows, you don't have to worry about wild cows poking their heads through the fence and passing a disease to your stock, but if you're fish farming, it's all too easy for wild fish to pass on disease to farmed fish." Fish farmers believe that ISA is endemic in the wild fish population.
Under present regulations, ISA need only be suspected in one fish, in one cage, for the farm to be quarantined and the stock ruled unable to be moved. A farm that, in the end, does not have the disease can suffer considerable financial loss through having its operations halted. That happened to Wester Ross Salmon Ltd. Farms that
contract ISA have to slaughter their stock, even if only a few fish are affected. Supermarkets will not buy perfectly healthy fish from that zone, because of the perception that the fish are diseased. Ironically, the supermarkets will then buy their fish from Norway, where the regulations are less strict and the fish may come from areas in which the disease has been controlled rather than eradicated.
Another problem, which has already been mentioned, is the ban on movement of young fish within zones. If young fish cannot be moved, they outgrow their cages, become stressed and are more susceptible to disease.
The stock of fish is the farmer's collateral with the bank. With ISA so prevalent and impossibly expensive to insure against, the banks will stop lending money against a farm full of fish that may have to be slaughtered before they are sold. Fish farmers believe that ISA can never be eradicated.
If the industry is to survive and develop by farming other species of fish such as cod and turbot that are also susceptible to diseases— which do not affect human beings but are borne by wild fish—we need a regulatory system that allows control of the disease rather than one that insists on total eradication. The Executive has sympathy with this point of view and I ask it to pursue with all speed the possibility of control regulation.
Some farms were brought to the verge of bankruptcy because, although disease free, they were closed down on mere suspicion. I hope that any compensation or help package will be applied to such farms and not be strictly confined to those that suffered the disease.
I, too, welcome this debate, initiated by my colleague Tavish Scott. The salmon farming industry is important to Argyll and Bute, where it employs around 1,000 people directly and indirectly. Many businesses have been badly hit by the ISA outbreak. It affects not only direct employment, but many of the small businesses in our remote rural areas that rely on a successful salmon farming industry. MacDonald's filling station at Salen on Mull, for example, has experienced a 50 per cent drop in turnover since the outbreaks of ISA were discovered on Mull some eight or nine months ago.
I would like the minister to take action on two points. The first is the policy of eradication. Annabel Goldie hit the nail on the head on that issue. We have already welcomed the minister's statement to the industry in which he said that he wanted a much more flexible approach to the eradication policy, but we need to know what the details of that are. I would emphasise that the industry needs to know quickly.
Underlying the need for quick action is the fact that the salmon farming industry in Argyll and Bute believes that the Executive should abandon the policy of eradication, which it considers to be fundamentally flawed. The industry believes that we should pursue a policy similar to that in Norway and Canada where ISA is managed and controlled.
The current policy of eradication means that capital assets vanish overnight when ISA is discovered in stock. That means that many businesses are wiped out, because their capital reserves suddenly drain away. There is, of course, no compensation. I believe that the policy is flawed and all the producers to whom I have spoken in my area believe that it needs to be reconsidered.
The second point that I want the minister to address is the issue of insurance, which a number of people have raised. The eradication policy means that producers cannot insure against the crisis. That needs to be considered also.
I ask the minister to give an undertaking that the Executive will seek to have the eradication policy changed in Europe. I also ask him to ensure that smolt and brood stock producers will qualify for the £9 million that is available under the new Highlands and Islands Enterprise scheme. Finally, I want to reinforce Tavish Scott's point on the production tax levied by the Crown Estate commissioners, which—as Tavish rightly pointed out—is equivalent to a poll tax on the salmon industry, which sees the tax as extremely unfair.
I call on Jamie McGrigor to make a brief contribution.
I do not know how, but I will try to condense my remarks.
I am pleased to support Tavish Scott's motion and congratulate him on raising this issue.
Shetland is, of course, part of the Highlands and Islands, although with its admirable independence, it has the Shetland Salmon Farmers Association. Shetland has a reputation for producing the best salmon in Scotland—the fish certainly look and taste better than most.
I want, however, to widen the debate to cover the problems faced by the Scottish Salmon Growers Association, the other main relevant body in the Highlands and Islands, whose members face the same problems as those faced in Shetland.
ISA was classified as exotic by the European Union, which unfortunately means that stock has to be destroyed. Unlike in Norway and Canada, where ISA is simply controlled, we try to eliminate it. That has led to the slaughter of many thousands of perfectly healthy salmon of different sizes. In any other business, especially agriculture, which is similar to aquaculture, compensation would be paid for slaughtered stock, if the slaughter was deemed to be in the public interest.
The Executive's response was to say that £9 million would be made available to the industry, provided that the industry could match that sum pound for pound. That was unacceptable to the salmon farmers, who were not only reeling from the effects of ISA, but were having to deal with the collapse in salmon prices. The farmers posed the question—which I asked in the chamber—whether the Executive would act as a guarantor for the insurance of the salmon farmers' stock. The Executive's answer was non-committal, although it was obvious that the matter was being considered.
Such a solution seemed good—a Scottish solution to a Scottish problem—and was what the industry wanted. In any other fish farming country, insurance can easily be obtained with the payment of a sum equal to the value of a small percentage of the farmer's stock. However, in Scotland, because ISA-infected stock is completely destroyed, there is no collateral on which to obtain such insurance.
The Executive has liaised with Westminster and produced a £9 million package for Scottish salmon growers. The earlier demand for a pound-forpound match has been removed, and I will not call the sum of £3 million insulting, as any help for the industry is welcome. However, why was it necessary to go to Westminster? If the Scottish Parliament is meant to act closely with the Scottish people and with Scottish industry, why could it not—and, better still, why cannot it now—change its mind and accept a uniquely Scottish solution to a uniquely Scottish problem? Under these difficult circumstances, I ask the Executive to act as a guarantor for the insurance of Scotland's salmon farming industry.
Mr Hamilton, you will have until 17:32 and 30 seconds.
I will do my very best for you, Mr Reid.
I congratulate Tavish on securing this debate, and I echo most—virtually all—of the comments that have been made and the questions that have been raised.
We should bear in mind the strength of the pound, as, although this Parliament has no control over that, it is none the less a major contributing factor to the crisis that the industry is facing. When we discuss the problems in the industry, we must pay due attention to that most important issue.
I would appreciate specific answers from the minister on the question of the £3 million per annum that is now under the auspices of Highlands and Islands Enterprise. First, what are the criteria for deciding which businesses will be successful in accessing that money? The industry would appreciate clarification on that point. Secondly, will the minister give an undertaking that the decision-making process will be as transparent as the industry—and, indeed, this Parliament— would wish it to be?
Finally, the Government's information pack says:
"The industry's response was to welcome the £9 million HIE proposal".
Well, yea and nay—yes, the industry did welcome it, but, on the other hand, I can quote back. The Scottish Salmon Growers Association was "deeply disappointed" with the measures that were announced, for the very reasons that Mr Scott, Mr Lyon and others gave. I ask the minister to address the industry's concerns.
Mr Michael Foxley, the chairman of Highland Council's land and environment select committee, said:
"I don't think it is acceptable the £9 million fund will be administered solely by HIE."
Therefore, I do not think that the industry universally welcomed the proposal.
I am not sure that I have time, but I will give way if I am allowed to.
Mr Hamilton, you have five seconds.
In that case, I am afraid that I will not give way.
I would welcome the minister's comments on the specific question of reassuring the industry on the £3 million per annum given to Highlands and Islands Enterprise.
I call on Mr John Home Robertson to wind up the debate.
I am grateful to the member for Shetland and to the other six members who have taken part in the debate. I do not have long to reply, but I will do my best. If I
miss any specific points, I will ask the officials to write to the members concerned.
It is abundantly clear from the debate that the industry is important, particularly in many fragile, remote areas of the country such as the Shetland islands; Mr Scott referred to the Skerries as an extreme example. The industry is tremendously important and has achieved much. It could achieve a lot more, and that is the way in which we would all wish to look at it.
There is a need for the highest possible standards of husbandry and I know that most people in the industry acknowledge and strive to achieve that. It is important that the industry has proper regard for the environment, for wild fish and for other people who use our seas.
Much has been said about the industry's needs and the case for financial support. It would be unfair, and a mistake, not to make some reference to the fact that the industry has received quite a lot of public funding over the years, and rightly so. It has received £5 million over five years—structural funds from the financial instrument for fisheries guidance—and £14 million over nine years from Highlands and Islands Enterprise and its predecessor. Very properly, it has had access to local funds, particularly in the Shetland islands, and I could add centrally funded research and development moneys—and the rest of it—to that list. Over the piece, the industry has had the benefit of quite a lot of public funding. I put that on the record as I think that it is important to do so.
The debate has focused on the crisis arising from the outbreak of infectious salmon anaemia last year. That has given rise to a series of major problems for the industry and to substantial costs. That is why we responded—after protracted discussions with the industry—with last week's announcement of £9 million-worth of support through Highlands and Islands Enterprise for fish farming companies affected by ISA. That is a substantial sum of public money and it will be provided without the preconditions that were attached to the offer that was made in February. I point out for Mr McGrigor's benefit that the new offer had nothing to do with Whitehall or with the Ministry for Agriculture, Fisheries and Food; it is a Scottish Executive package, and properly so.
I recognise the frustration at the time that it has taken to reach a decision, but there were good reasons. Look at the background. At the outset, industry claimed compensation for fish losses attributable to ISA. Successive Governments— and this Executive—have rejected the principle of compensation for losses arising from fish diseases. It is important to emphasise that the controls on ISA as a category 1 disease were put in place by the European Union in the interests of the industry. As someone said earlier, that has nothing to do with public health, but is to safeguard the interests of the industry. understand that some people in the industry take a different view, and that that point will be tested in the courts in due course—quite possibly in the European Court. We must await a judgment. I think that is the point that Miss Goldie was making.
The previous Administration recognised the industry's plight and earlier in the year offered £9 million towards a fund if the industry would match it. In the event, the industry said that it was unable to match it. Industry then proposed that the Government should act as insurers for any ISA- related losses. We considered that proposal carefully too, but we concluded that the Government is not an insurance company and that it would not be right for us to underwrite unquantifiable risks at the taxpayer's expense.
Will you take an intervention?
I am sorry. I have not got time. There have been a lot of speeches and I have a lot to say.
The Executive recognises the value and importance of the industry to the rural economy and that is why we announced last week that £9 million would be made available to Highlands and Islands Enterprise over the next three years. There will be no need for the industry to raise matching funds through a national levy, as was originally envisaged.
The source of the disease is as yet unknown— there is much conjecture about it—and we may never discover where it came from. However, I would emphasise again the importance of good husbandry to minimise the risk of further outbreaks. I accept that the eradication measures have hit the industry hard.
Will you take an intervention?
I am sorry, I do not have time. I apologise. The eradication measures that are required—compulsory slaughter, movement controls and a fallowing period—have hit the industry hard. Given the financial costs of ISA and the potential damage to the industry's public image, eradication is in the best interests of the industry and will remain our ultimate goal. I accept that in some respects—the fallowing of sites, for example—we should be able to exercise greater discretion in future and, in so doing, bring some relief to the industry.
I also recognise that there may be a case for greater flexibility within the statutory rules, such as a more managed approach to the slaughter of infected stocks. Mr Scott made the case for that more flexible approach, as did George Lyon and my colleague Maureen Macmillan. The Executive
has now submitted proposals to Brussels to secure additional flexibility if we reach a position where the present strategy appears to be unsustainable. I hope that the industry will work with us in consideration of that contingency, if it arises. It may take until the end of the year before we get a conclusive reply from the European Union, but we have set things in motion.
In conclusion, Presiding Officer, £9 million of public money has been found by the Executive despite many other competing priorities. That demonstrates the Government's desire to support the salmon farming industry, because it is so important to the remote areas of Scotland. Government energies must now be urgently directed into working out the details of the Highlands and Islands Enterprise scheme and securing appropriate state aid clearance from Brussels. Applications will be invited as soon as possible, and we expect Highlands and Islands Enterprise to be in a position to publish their plans within the next couple of months. We are doing as much as we can, as fast as we can.
I am grateful to Mr Scott and to other colleagues for raising this important issue and I hope that I have been of some assistance.
That concludes this debate on the crisis in salmon farming.
Meeting closed at 17:40.