Oral evidence: Fisheries, HC 489Wednesday 13 December 2017

Oral evidence, 13 December 2017.

Witnesses

Euan Beaton, President, Macduff Shellfish (Scotland) Ltd; Daniel Whittle, Managing Director, Whitby Seafoods; Jimmy Buchan, Business Manager, Scottish Seafood Association, gave evidence.

Chair

Good morning, gentlemen. Thank you very much for coming to give evidence to our fisheries inquiry. Please introduce yourselves, and then we will start taking evidence. Good morning, Jimmy.

Jimmy Buchan

Good morning, Chair. I am Jimmy Buchan. I work for the Scottish Seafood Association. We have a national membership across Scotland, with 74 members. Some of them are ancillary members from industries like transport—logistics is important—or box‑making, but the bulk of it is primary seafood processing. The bulk of them, again, are located in Aberdeenshire, but we do have members across the islands, in the Western Isles and the Northern Isles. We are quite spread.

Chair

There is a very wide spread, but it is right in the north, basically.

Jimmy Buchan

Basically, our HQ is in Peterhead, serving Fraserburgh, Aberdeen and Peterhead, but we have members in the Shetland Isles as well. We are very much focused on probably the primary processing of the fish, not so much the secondary processing.

Daniel Whittle

I am Daniel Whittle, Managing Director of a company called Whitby Seafoods and its sister company Kilkeel Seafoods. Whitby Seafoods is based in North Yorkshire, and Kilkeel Seafoods is based in Northern Ireland. We focus almost entirely into the UK market, i.e. UK retail and UK food service. The majority of what we make is scampi, which are Nephrops norvegicus or langoustine. We supply from about 200 boats around the UK, Northern Ireland and the Republic of Ireland. We buy something like 4,000 tonnes of the 6,000 tonnes of scampi tails being landed in the UK. We are somewhat unusual in that 80% of our landings are caught by UK boats, and the entirety is sold within the UK.

Chair

The vast majority is sold within the UK.

Daniel Whittle

Yes.

Euan Beaton

I am Euan Beaton. I am President of Macduff Shellfish. We are a vertically integrated business. We own a fleet of scallop vessels, but we also process langoustine, brown crab, whelk and velvet crab. It is the complete opposite of Daniel here: 95% of our business is exported. We have a £75 million turnover and employ 475 people.

Chair

With the exports, is most of that to Europe?

Euan Beaton

It is split: 60% is within Europe and the remainder is exports outwith. We are exporting to 21 countries in total, with South Korea being one of our primary countries, and China as well.

Chair

Good. Welcome, again. Our first question is: what are the main risks and opportunities of Brexit for the fish‑processing sector?

Jimmy Buchan

Very high in our priorities is access to labour. It is at a critical level now. We are finding it very hard to recruit even through agencies. In Grampian, we are 70% dependent on immigration labour. Whatever goes forward here, it is very important that there is access to people. Without people, the businesses just cannot operate. We are of the opinion that, possibly post Brexit, we will have to look worldwide for markets. If we are going to compete in the world, we have to be competitive in the world. In being competitive, the biggest expenditure to our company will be raw material and labour. If we have to have a future in a global market, we must have access to a good workforce. It is semi‑skilled. In some cases, it is highly skilled, but there is a lot of semi‑skilled work. You cannot just take people off the street and train them in a few months. Fish filleting is a skill—and it takes many years to get people to that level where you are getting the maximum production.

Chair

Is your labour force at the moment nearly all central and eastern European?

Jimmy Buchan

It would be, yes. In Grampian, it is 70% dependent on immigration labour. That is how critical we are at the moment.

Chair

How are you finding the availability of labour at the moment?

Jimmy Buchan

It is very hard—even using agencies. We are being told on the ground that, because European economies are growing, some of the Polish workers are now seeking to return to their homeland to pursue a career back at home. We have had a change in the value of the pound, so it is no longer so attractive to come here and work. There are a lot of variables now coming in, and it is affecting how we can access labour. It has been said to us, “Take people and train them.” We would gladly take people and train them. We are putting a facility in place in Peterhead for the opening of the new market, but our biggest problem is that we have to get people to train, and we cannot find them—whether they are home‑grown or from immigration. Therefore, we may have to look elsewhere in the world for that skill set.

Chair

That is interesting.

Mrs Murray

Just very quickly, Jimmy, do you operate anything like apprenticeship schemes in fish hygiene and fish filleting? I can gut a fish, and I can fillet one, but I know there is a skill to it. It takes me ages. Do you run apprenticeship schemes?

Jimmy Buchan

It is a very good question you raise. Right now, we have an opportunity through the FLAG—the fisheries local action group—up in north‑east Scotland. We have just had a grant approved to put a two‑year pilot training facility into the new Peterhead market, which is some new infrastructure that is now being built. This is to go out and try to encourage people to seek a career in fish processing. When we speak about a career, that career could be very wide‑reaching. It is not just all about fish. We need marketing; we need engineers; we need IT. There is a raft of skills there that are involved with this.

Chair

Can you mechanise more?

Jimmy Buchan

Robotics and automation are definitely on our list, but, again, it means a huge investment in infrastructure. That may lead us to look at what the Government are going to offer in the way of enthusing business to look at that particular field.

Chair

You think they have a role to incentivise the move to more robotics and generally more equipment, basically.

Jimmy Buchan

Yes. Again, from my particular members, I am taking a delegation of six or maybe eight, depending on the final numbers, to Iceland in the new year to look at what they are doing, because they have already gone down that route. They had a workforce problem, and they have solved part of that problem with automation and robotics. We need to look at what other people are doing and how they have been successful.

Chair

Euan, can I bring you in? How do you see the export market in the future, especially the one going to Europe? I know you are a big exporter of fish.

Euan Beaton

It is going to be very challenging. We are going to be depending on what tariffs are levied against us and what the export tariffs and duties are going to be for our end consumer. The particular part of the landscape that is most concerning for us is our competitive peers in terms of countries such as Denmark, Belgium, Holland, France and the Republic of Ireland. They are all also fishing the same species as we are. Depending on what species and what levy, whether it is WTO rules that will apply to us, we could be looking at anything from a 20% to an 8% increase on our raw material and our end product sold to our customers. That has to come from somewhere, so my main concern is that our competitive peers will sell their raw material into the market first, because they will automatically be cheaper because of the tariff—and we will always place second until we can compete on a level playing field.

Chair

You do not want a tariff set against you, basically.

Euan Beaton

That is correct. Wherever it sits, whether it is our consumer who has to pay that tariff or we have to pay that tariff, somewhere along the line, somebody has to pick up that bill. Ultimately, that will always come back to the fisherman. Ultimately, the cost of the raw material has to be adjusted. Yes, we can increase the quota, but it is not always as simple as going and catching more. Generally, they would probably catch more if they could anyway. It is not just as simple as that.

Chair

Basically, you need a market at a good price for what you catch.

Euan Beaton

That is correct, yes. Yes, absolutely.

Chair

Otherwise you are chasing your tail, aren’t you?

Euan Beaton

Yes, always.

Angela Smith

I have a very quick question for Mr Buchan. It is fascinating to hear what you have said about learning from Iceland, i.e. in terms of skills infrastructure. Of course, 30 or 40 years ago Iceland was learning from us in the Humber in terms of developing their own catching and fishing industries. Do you have any idea how long it has taken Iceland to develop that very modern infrastructure?

Jimmy Buchan

I presume it will be part of our fact‑finding mission to see what they did two or three decades ago and why they had to start looking at automation. I am led to believe, from what I am being told by the people I am speaking with, that it was driven because of a labour‑force problem. They had to start looking elsewhere.

Angela Smith

Yes. They were taking people from the Humber actively applying for the lifestyle.

Jimmy Buchan

My experience in this industry is that, yes, robotics and automation will play a significant role—there is no doubt about that—but there is no substitute for the human eye being able to be the final person in that process.

Chair

It is interesting. In Iceland, you will probably find out the things that were successful and the things that probably were not. It will probably be very useful for you in terms of some of the pitfalls as well as some of the successes.

Mrs Murray

I have a quick question for Mr Beaton. Do you see our negotiations as far as the trade in fish is concerned could be linked to other products that the EU perhaps wants to export to us rather than access to fishing opportunities?

Euan Beaton

Hopefully, that would be the route it would take. I would not want to bargain off one against the other. They are two separate items, in my opinion. Can I just add a little on automation?

Chair

Yes, please do.

Euan Beaton

It is quite specific to whitefish commercial species, and pelagic fish as well. The research and development in automation of finfish—we will call it finfish, as that is probably easier—is far greater. It is multi‑billions of dollars of business. The R&D that is spent on that is huge. In the shellfish industry, where we are, even though it is the second and third largest species caught and landed in the UK, the R&D is tiny as far as automation is concerned. I know Daniel and I have trodden the same paths, if you like, in trying to develop this. We have had to develop any automation ourselves. There is far less encouragement for big robotics companies to learn our species, and they are very fickle and very difficult to handle. You have spikes that you are dealing with and moving objects. It can be very tricky.

Chair

There are also different shapes, I imagine. They do not come in a standard size, do they?

Euan Beaton

Everything is ocean‑run. It just comes in all shapes and sizes, so labour is hugely important for us. 70% of staff in our factories are eastern European or southern European.

Chair

That is very interesting evidence. Like I said, this afternoon we are going to do our forward programme. I suspect one of the things we will do is look again at the labour situation generally across not only fish processing but food processing generally, availability for picking vegetables and farming and everything. We will be looking at that. Daniel, did you want to make a point on this one?

Daniel Whittle

Yes. On the labour front, a key point about fish processing is that it is often in rural and far‑flung places where there are not large populations. Often, the younger generation are moving away because there is more opportunity elsewhere. I suppose we are slightly different both in Whitby and Kilkeel: 80% of our employees are UK nationals, but that is not representative of other businesses in Kilkeel. Even though we might say, “It is not a problem,” when it comes to recruitment in the future there is a smaller pool to choose from, because the other businesses that were using eastern European labour are now competing in the same pool. I will echo what Euan said: if you are going to automate in our industry, you have to do it yourself. You talk about Iceland and it being highly automated. They lead the way in terms of machine manufacture for filleting fish and finfish processing, along with Norway. Being pushed to automate does have some spin‑off benefits, I suppose.

Angela Smith

To all three of the panel, have you modelled the potential effects of no deal on the UK fish‑processing sector?

Chair

Euan, you started to talk about tariffs, didn’t you? Have you given it some thought?

Euan Beaton

We have certainly given a lot of thought to what the implications are, but modelling it is very difficult. In our South Korean business for example, if WTO rules apply, there is a 20% tariff against whelk. That is worth £2.8 million of tariff that either he has to pay or we have to pay; someone has to pick it up somewhere. That is just on one particular species. That accounts for 20% of our business. Further out than that, we do not know exactly what the tariff could be on all our species, so we do not have an exact number.

Angela Smith

Is there anything you have thought through in terms of total liberalisation of trade, i.e. no tariffs at all? There are two sides to WTO: you can have a WTO scheme with tariffs or you can remove the tariffs altogether and just be totally liberalised.

Euan Beaton

That is where we are at the moment.

Angela Smith

We are within the single market, so we do have tariffs.

Euan Beaton

Well, there is a tariff in China that our customers do pick up. Of course, it is a relatively young market or a less established market, we will say. Only in the last five to 10 years have we been exporting to China, where there is an acceptance that they pick up that tariff at the moment. But with South Korea we have just spent the last five or six years reducing that tariff from 20% to zero. Our customer has only had the last year of zero tariff.

Chair

We are stealing Paul’s question here at the moment.

Angela Smith

I would like to hear what the other two members of the panel think about this as well, but I would also like to ask about the 25% of plants that do not use domestically sourced products. I do not know whether this applies to you. Do you use domestically sourced product?

Daniel Whittle

We use both. We import squid, warm‑water prawns and cod from other countries, and we also use locally caught domestic product. Our approach on anything imported is that, if there are tariffs, we try to pass it on as quickly as possible. That means the UK consumer pays at the end of the day. We are not sufficiently profitable to swallow 15% or 20% tariffs.

Angela Smith

Is some of the product you import from Norway or Iceland?

Daniel Whittle

Yes, the cod we buy would be.

Angela Smith

Much of that is then exported, I assume, tariff‑free to the European Union. Is that the case?

Daniel Whittle

We would be buying goujons, effectively, i.e. pieces of already skinned and boned fish. We are coating it and selling it into UK retail.

Angela Smith

You do not export back into the European Union.

Daniel Whittle

No.

Angela Smith

Does any of you?

Jimmy Buchan

The bulk of our members would be buying fresh fish to process locally, coming from the markets of Fraserburgh, Peterhead, the Shetland Isles, Scrabster and Kinlochbervie. We are pulling the fish in from our own local fishing fleet, but export is very important. Our members definitely favour a free and frictionless border regardless, because that is the market they have been working into. If we have to absorb tariffs, as Euan said earlier, we have an uncompetitive edge compared with other fishing nations like Denmark or even Norway, who are not in the EU but have a deal with the EU, and Ireland. These would then be competitors to us, and we would be disadvantaged if we had to pay a tariff to trade into that same market.

Daniel Whittle

Can I just make a point about the concept of exchanging fishing rights for access to the market? On day one, it would be unlikely that the UK could go and catch the entirety of the fish within its EEZ, but that is not to say the processing and fishing capability could not grow towards that with sufficient investment. Rather than making all the boats in the EU redundant on day one, you could in theory take this phased approach where we grow over years.

Chair

It is just how long, isn’t it? That is the controversial bit.

Angela Smith

The damage is done then, yes.

Chair

Can we have Alan, please? We know Alan wants to ask a supplementary, and then we will have Paul. They have all but stolen Paul’s and Sheryll’s questions.

Alan Brown

I am going to touch on a point Paul was going to ask about. You have made the point about the South Korean market, where the tariffs have reduced from 20% to free trade—to zero. I assume that is because of a bilateral agreement the EU has reached with South Korea. Therefore, even that market is at risk in the future, depending on the UK’s negotiation.

Jimmy Buchan

Yes, absolutely.

Paul Flynn

Your evidence this morning reflects all the evidence I believe we have had on this Committee from the food industry: that is, a Brexit nightmare of lost markets, threatened markets, higher costs, greater competition and lost labour, which no one has a practical way of replacing. What are the advantages of Brexit to you? Are there any? We have not heard any. Every week, we hear that it was not as simple as, “There will be extra money for the health service.”

Jimmy Buchan

It will all depend on the agreement at the end of the day, but the one big advantage to the members I represent would be access to more materials. The split is 40% of the fish are caught by the UK and the remaining 60% are caught by other EU nations. That is the immediate advantage. But, as Daniel says, surely not from day one are we going to disadvantage our European counterparts. There is going to have to be a phased period where they slowly see less and the UK market can absorb that and grow. That would be obvious. Of course, the other advantage is about whether we will have the opportunity to go and trade elsewhere in the world. If the agreements are that we can open up new markets worldwide, we have some great produce. It is world‑class produce. There are opportunities there. To do that, Government need to help the businesses to go to the trade fairs and to go and market that. The one thing I do see when I attend other trade fairs—I am sure Euan will agree with me—is that Norway is absolutely brilliant at promoting what it does in terms of catching fish. Helping the industry to find that global market will also be an important factor.

Paul Flynn

I am aware of the relationship between the Icelanders and their fish industry, which is immensely important. They nearly lost all their trade to Germany overnight at one time because of a fish worm that was advertised on a German television programme, but they have a very good record of being innovative. You are saying that, as far as automation is concerned, they are ahead of us now. You mentioned Government help a moment ago. What do you mean by that? If there is innovation, I cannot visualise exactly what the innovation would be on this in terms of automation. Automatons catching fish does not seem to be a practical possibility, but I am sure it is working somewhere.

Chair

I do not think they are catching them; they are gutting them.

Paul Flynn

Innovation must require major investment. In order to compete with the Icelanders, what sort of investment would you require? Should the Government pay for it?

Jimmy Buchan

For decades now, we have had EMFF grant funding, which is European monetary funding to help industry improve, innovate and remain competitive in the market. If we stop that—

Paul Flynn

We will stop that, surely.

Jimmy Buchan

I am sure the Government have then got to step in and say, “What are we going to do to help our industry remain competitive in the market?”

Paul Flynn

Could we have a frictionless move, as promised by Government, without staying in the EU? It is something that we talk about endlessly here. The Government have settled a political problem with some words, but is not the only way to ensure there are frictionless borders between Northern Ireland and the Republic of Ireland to stay in the EU? We have had an advisory referendum. Is it not time we had a confirmation referendum as the public realise what horrors they have voted for?

Jimmy Buchan

Unfortunately, I am just here to give evidence. I am not at the negotiating table. I am not in a position to give you an answer, though I know what answer I would like to give you.

Chair

Jimmy, that was a very good answer.

Jimmy Buchan

I am afraid I cannot give you that answer.

Paul Flynn

That is a shame. What of the langoustines going to Korea? Again, we have mentioned the possibility of tariffs. You mentioned 20% extra in tariffs. Is this not going to have a killer effect on the competitiveness of your industry and provide a great shock or a cliff edge, as it is described now? How are you going to get over that? We are only a couple of years away from this.

Euan Beaton

Yes, it certainly will have an effect. As I have said, over the last five or six years we have reversed from having a 20% tariff. It is on whelks, by the way, which are sea snails. That is all that is exported to South Korea, but, yes, it will definitely have an effect. Over the last two or three years, there have also been new markets that have opened in South Korea, Turkey and elsewhere.

Chair

I imagine you were not selling them much before, not in terms of tonnage.

Euan Beaton

We have been exporting to South Korea for 20 years.

Chair

Right. Is it building up?

Euan Beaton

Yes: every year it has increased year‑on‑year.

Paul Flynn

Will new tariffs and new bureaucracy create a time factor that might be a problem to you?

Euan Beaton

It is going to be a problem. I cannot sit here and say it will not be a problem. Someone somewhere has to pay for it down the line.

Paul Flynn

Who?

Euan Beaton

That is it. Daniel laboured on the fact that we do not have fat margins such that we can accept a 20% tariff. Whether it is the consumer who is going to have to swallow it or the fisherman at the end of the line who is going to have to accept that the prices we pay for the raw material are less, we have fixed costs; we are a low‑margin producer.

Paul Flynn

Just to be practical, Boris Johnson has promised 150% of the money we get back from Europe to the Health Service. The Environment Minister has promised to pay 40% to farmers. That is 190% of any money we get back from the EU that has already been promised. Where is the help going to come from for you guys?

Chair

In fairness, Paul, Government have said that where the European money has come in, they will try to match that as we leave.

Paul Flynn

It will come from these magic money trees.

Chair

Yes, yes, but the processing side of it will be important.

Mrs Murray

That is your party.

Chair

That is your ask, is it, basically? Is there a role for Government grant in this? Is it one the industry can sort out through the price of the fish that is caught and the end consumer? Where do you see it? Is it a combination of all those things?

Euan Beaton

As far as the grant position is concerned, we have been barred from being able to apply for grant aid because of the size of our company.

Mrs Murray

Is that an EU rule?

Euan Beaton

It is an EU rule.

Mrs Murray

We have the potential, as the UK, to be able to gear any funding or tailor any funding to suit UK fishermen and fish merchants when we leave. Am I right?

Euan Beaton

Absolutely, yes. It is probably one of my largest asks that this is revisited, because we are a company of a size that cannot invest in innovation and perhaps we do not as much, because we cannot take that extra foot we would like to invest in automation.

Chair

The Secretary of State is very keen on productivity across the farming industry. This could help with productivity across the fishing industry, couldn’t it? It could help with the sale of the end product as well, so it is an interesting one.

Daniel Whittle

For me, if you are talking about increased fishing opportunity, as a processor, the more fish we have, the more we can process. For me, the priority would be about enabling the catching sector to be more efficient. If we look at the fleet in Northern Ireland, it is generally 30‑year-old boats. When you look over the border at the Republic of Ireland, they have these brand‑new massive great boats with freezing on board. The standard is much higher, because the Government decided to support investment in newer and more efficient vessels. We are failing in terms of competition there.

Chair

There are opportunities. Alan wanted to come in quickly. I am conscious this was Paul’s question. I do not know whether there are any other points you want to make, Paul.

Paul Flynn

I just have a final point. Do you gentleman think the problems of Brexit are certain and enormous and the advantages are entirely speculative?

Chair

That is what you call “leading the witnesses”, I believe.

Paul Flynn

It is just a general point. Where are these extra staff coming from? Where are you going to get the new people? Nobody has any idea. The fruit will rot on the trees; the harvest will not be collected. No one seems to have an idea what alternative there is to European labour. A lot of it has gone already. How is it going to be replaced?

Daniel Whittle

For us, if we had 50% more volume, we would process it without a problem. Whether it is through increased productivity or exporting to be processed overseas, we would make it work.

Paul Flynn

Mr Buchan has his problems, doesn’t he?

Jimmy Buchan

The world is your oyster. If the opportunity is there, businessmen are entrepreneurs and they will find the way and the means to find the market—but they need to have access to their raw materials. For decades now, through contraction of the catching sector, the seafood industry in north-east Scotland has gone down and down. Official seafish figures for 2014 show that we are still a contacting industry in processing. Fish stocks are now increasing; infrastructure is going in at port to receive those fish; but the next bit in the chain is the processing. Without good processing and people coming in to that industry, there could be a problem where the industry stalls or slows down. It is important that we get the message across to this Committee that Government have a part to play. We are willing to play that part and take the lead, but we need to be encouraged and enthused to do so.

Chair

We will take great note of that. Alan, you wanted a quick point. Sheryll, I do not know what is left of that particular question.

Alan Brown

To go back to the point you made, Chairman, about EMFF funding, obviously you are saying you would want the UK Government to replicate that. What kind of look‑ahead do you need? If I am right, part of the upgrading at Peterhead Harbour has been through that funding. Therefore, that kind of infrastructure planning takes years. When do you start needing a look‑ahead for the money the UK Government are going to put in so you can start to plan any necessary infrastructure upgrades?

Jimmy Buchan

Again, until we know what the rules and the deals are, this is very hard. We know what our ask is, but it is a question of whom we ask. It is great to be able to come here and give our take on what we think it needs, but, again, you are the people who can facilitate that and start to pave that route. We will definitely be there to support it, but we need—

Chair

That is the key. Whatever your asks are this morning, ask them, all of you. Like I said, that is what we will do. We will take the evidence and we will present it to Government. I cannot promise you the Government will take up every bit of it, but that is what you are here for this morning.

Jimmy Buchan

If I can just expand a wee bit on the processing, this is about the members I represent; it is not necessarily the views of my colleagues. We have the living wage; we have pensions; we have the minimum wage; and we have business rates, which is a big thing up in Scotland. We are uncompetitive in the north‑east of Scotland compared with the same businesses in the Humber. We are all selling into the same market. That is a local government issue, but until we all start working together for the good of the industry, rather than the good of the authority, we are never going to grow. To be able to grow, we need to be enthused. Part of the thing that could come out of this Committee is to look at how we get local government to embrace the opportunity that we all see.

Chair

That is an interesting one. That is not necessarily Government, is it? We can certainly advise them, and business rates is always a big issue across lots of businesses. Daniel, Euan, do you want to make any comments on that or not? You are all right for now. We have many more questions.

Euan Beaton

On grant funding, Peterhead Harbour has probably taken five years in planning to get to that point, knowing there is a potential grant award to get. We know that does not exist at the moment for businesses like ours, which is a disadvantage. It does stop you investing or spending as much money as you could do in R&D.

Chair

It is the big infrastructure projects like a harbour or whatever that you think Government should provide, and then the industry can take up the rest and have some grants in between. Is that the way you see it?

Euan Beaton

Yes. If we knew there was potentially 20%, 30% or 40% grant funding available—and in some instances as high as 80%, in the west coast—you could start to build plans, plans that we do not perhaps exercise at the moment that we otherwise would if we knew that there was assistance of a sort and it is not a complete loss leader.

Mrs Murray

I am an optimist, so I see that there are great opportunities. It is mainly catching in my constituency; my fishermen tell me that they are optimistic. But in a mixed fishery, which most of the UK has, the British housewife is very reluctant to buy species she is not familiar with. With the increased catching potential that the UK fleet will have, is there an opportunity to catch more species, like gurnard and red mullet? Do you see this as an opportunity for you to perhaps diversify into processing some of those species and growing the British market?

Daniel Whittle

You are suggesting that we try to break the UK consumer’s love of cod and haddock, which seems to be what they love to eat. We see massive increases in hake in the UK catch. People are becoming increasingly aware, but it is not becoming a staple of UK retail. It is something you could only do over time. Certainly, on day one it would be very difficult.

Mrs Murray

Is there a potential for non‑tariff barriers to provide you with opportunities to export more to other nations? We will be free to negotiate more trade agreements outside of the EU.

Daniel Whittle

That would be highly speculative.

Mrs Murray

Are you working towards that? Are you looking at that as a potential opportunity?

Daniel Whittle

We would need the Government to make clear what progress they are making before we make any plans to take it as any kind of strategy.

Jimmy Buchan

There are opportunities to export fresh produce by airfreight, for example.

Mrs Murray

Yes, exactly.

Jimmy Buchan

Would you, however, believe that there is not a holding fridge at an airport in Scotland? Everything has to be taken to Heathrow for airfreight, because fresh produce needs to be held there. Back in Scotland, there is a huge opportunity to install some sort of refrigeration so we can fly to Canada or America. We are talking about six hours. Six hours after it is out of the water, it can be in another nation. That is the opportunity that I see, but for that to happen we need the onshore infrastructure and the logistics to be in place so that opportunity can happen.

Mrs Murray

Your message to those people who are pessimistic and say, “We cannot export fresh seafood,” would be that we need to improve the infrastructure to enable us to do that.

Euan Beaton

I am also an optimist. It is always completely full; that is the only way I ever look. Regarding your constituent fishermen catching all these mixed species, there is always a market. It is always a question of price. Is there a tariff? There may be. Unfortunately, it comes back to what I said earlier. What price can the fishermen catch it for, for it to be viable? In this country—that was the point in the question at the start—we eat to live. In Europe, and probably in probably in other parts of the world, they live to eat. There are two completely different cultures. To get out of cod and haddock is going to be difficult.

Chair

Is there a percentage of society now, probably especially in the south—I do not know whether it is so much in the north—that is beginning to get much more conscious of the fish they are eating?

Euan Beaton

No doubt, yes—absolutely.

Jimmy Buchan

Chair, I would just like to add something into that. I have been very much involved in a programme up in Scotland called Seafood in Schools. I am a great believer that education starts at a very young age. It is a two‑pronged attack: you teach people about an industry and you teach people how to eat and cook food at a very basic age. That is really important. The second thing is that a school is a state‑aided facility. If a child gets a bad experience with a fish because it was a poor fish, you have lost that person for life. Therefore, there should be an emphasis on us using our own produce in schools rather than importing seafood from the other side of the world. Again, that is probably a debate for a whole other day. It can change, but it will take generations to do. It is not an instant change. I believe it starts in school, and there should be a bit of a focus on that.

Chair

Over the years, we have been doing a lot on farm food in a way and perhaps not so much on fish, but I am conscious that we have stolen question 7 on this one.

Alan Brown

I have a supplementary question about what you have mentioned, Jimmy. Obviously, it has been touched on today that business finds a way to reach markets, but you mentioned about there being no holding fridge at any Scottish airport. What are the barriers to that? If there is an opportunity for a Scottish airport to start facilitating exports directly, I would have thought it would happen. What are the actual barriers to that?

Chair

It is quantity, I suppose, is it?

Jimmy Buchan

I presume the airport has never thought of putting it in. If it is there, business will find it and use it.

Euan Beaton

Historically there has not been such a demand for airfreight as probably exists at the moment. There is such a good freight link between Glasgow and Heathrow that the infrastructure was not required before. It has changed: there is a lot more being exported to China, which is mainly airfreight. There is that demand. Demand will necessitate a fridge to be built.

Alan Brown

Obviously, Heathrow combine passenger flights with it as well. Does that not give them the competitive advantage?

Daniel Whittle

Certainly, in my experience in Ireland, if boats land at a port not very far from Dublin Airport, the fish can be in Dublin Airport in two hours. It goes on an overnight flight to China fresh, and within 24 hours it has landed on a plate.

Jimmy Buchan

As I say, it is much easier to come up with solutions than to solve them, but, for example, Prestwick Airport is logistically well placed. You have a huge coastal inshore fishery that could be feeding into an export market there; you have Northern Ireland just across the water; and there is the rest of Scotland. It is an opportunity.

Chair

I take it at the moment that the fish is taken by refrigerated lorry all the way from Scotland down to Heathrow, is it? Then it is flown out.

Daniel Whittle

Yes.

Jimmy Buchan

Yes.

Chair

From an environmental point of view, it seems crazy, let alone from an economic point of view. That is a very interesting point.

David Simpson

Gentlemen, I am sure you will take the opportunity to congratulate Northern Ireland on their deal yesterday.

Chair

They are waiting for their own at the moment.

David Simpson

In the press recently, we have heard a lot of, in my opinion, nonsense as regards the standard of food whenever we leave the European Union and all that. How can you guarantee to your customers and others that food standards will be upheld after we leave the European Union?

Chair

They will also possibly be improved.

David Simpson

Yes, they could be improved.

Jimmy Buchan

There are two fantastic experts here who can give that evidence, because they are doing it.

David Simpson

There are two experts. That is good.

Chair

You are experts now. It is always dangerous to be an expert.

David Simpson

Daniel, you work in Kilkeel.

Daniel Whittle

With seafood, it is about temperature a lot of the time and keeping temperature control. That is also known as quality, and you trade on it. I am not likely to just start letting quality standards disappear, because I will not get repeat business.

David Simpson

Earlier, the Chairman mentioned having the facilities and the infrastructure within the ports and different places. I understand there are some plans afoot in the Kilkeel area to do that.

Daniel Whittle

Absolutely, yes. Again, this is to facilitate the landing of pelagic fish. Currently, they are predominately landed into either Denmark or the Republic of Ireland. The harbour is not deep enough, so there is a £25 million plan to extend the harbour, which would bring a lot of processing jobs and opportunity to Kilkeel and Northern Ireland. It is very much about taking large pelagic vessels and processing locally.

David Simpson

Yes, in Kilkeel’s position it is very hard to get some of the money the Tories are giving us, so we have to work hard in relation to it.

Euan Beaton

The question, or certainly the panic, around standards is more about us as a country importing. Our standard of materials being received will drop. Our customers all demand or certainly drive us to keep a standard, and we strive to achieve above the standard that our customers require of us—and indeed the British Retail Consortium standards are the ones we adhere to. There are unannounced audits: they will just walk in at any time, any day or any night. Those are the standards we will continue to operate at. It is probably more a question for the Food Standards Agency: how are they going to monitor imported goods with these competing countries? America was one I read about, with their chicken and their beef and all those different issues. For us, generally speaking working with a wild organic product, it is much easier. It is not easy; it is far from easy. But our standards are exceptionally high anyway.

David Simpson

I am sorry for cutting across you. Daniel, in relation to the comment you made earlier about the Republic of Ireland and the standard of boats there and other issues, is that simply because there has been substantial investment into that over the past number of years and Northern Ireland, for example, has lacked that investment?

Daniel Whittle

Yes, that is correct.

David Simpson

It is a question of catch‑up for us, is it?

Daniel Whittle

The equivalent of Seafish in the Republic of Ireland has a remit to increase the productivity and profitability of the Irish fishing industry, so there has been a focus on allowing the boats to operate efficiently. A lot of that goes down to the type of boat you are fishing from. To the point about the standards, we are already seeing a bit of a non‑tariff barrier. There is a dispute about imports coming from Vietnam and India at the moment, and it smells of protectionism slightly. There may be individual processors who are doing something that is untoward, but it is a bit of a generalisation to say that the entirety of a country is cheating. It is important to have good standards and to do random testing and so on, but I am suspicious of it.

Chair

Are you?

David Simpson

That is interesting.

Chair

I imagine fish—I know fish species vary—to be a bit like poultry meat. I imagine that when it is chilled, if it is not frozen, it only has a limited time, and the fresher it is, the better. Of course, the key for processing—I am sure you do it—is to make sure you have the right dates for the fish, when it was landed and when it was caught, and to keep it very cool before it is sold. I imagine that there is huge potential for risk there, and also quality issues. Can we do more? How can we be sure that fish that are being imported have the same standards?

Jimmy Buchan

As far as imports are concerned, it is not a field I am very strong on. But for all the fish being landed in the UK—I can vouch for this, certainly in Scotland—there is traceability all the way through from the vessel that caught it to it being sold at market. The MSC scheme is a chain of custody. Our standards in the UK are very high. They are above those of a lot of our competing nations in the world. Going forward, post Brexit, our standards should not be lowered. If anything, we should try to maintain our standards and improve them. If we have got to go out into the world, we have to have that cutting edge. That cutting edge should be our standards, which we are already doing. As far as EU export numbers are concerned, post Brexit, again, if we can trade into the EU, we already have that standard there; we have our EU exporting numbers. All of that should be a transfer so there is no disruption to business, because the worst thing you could do would be to make us go and change all that. Small business will not be able to cope with it. While they would not want it, it would be easier for the bigger guys, who have the resources to be able to function with that. For smaller traders, it would be a nightmare if we had to go and change all that legislation.

Julian Sturdy

I have a very quick question on something you said about adding quality and standards. How can the UK compete on line‑caught fish—line‑caught cod for example? We are seeing in retailers that can get a price uplift of 20%. How can the UK compete? Maybe you can just fill me in on that.

Jimmy Buchan

I would put it down to good marketing.

Julian Sturdy

We compete on line‑caught fish against Iceland, Norway etc. as well as anyone else, then.

Euan Beaton

You are absolutely right. The price is always higher for a line‑caught product. It would be a superior product as far as stress on the fish, how it has been handled and how it has been caught. It has not been bruised in a net; it has been taken on board and handled properly. That element is absolutely right. The way for us to compete in that is probably to have different quota allocation. Perhaps there could be a pool of fish that is available for line‑caught boats. The boats have to have the ability to go and target that species. At the moment there are very few line boats physically in the British fleet. If you made people aware that there is this potential quota available, the boats would certainly target it.

Chair

If we are going to see, which we should, increased quotas, there would be an argument, if line‑catching was going on, to have a quota for them.

Euan Beaton

Yes.

Mrs Murray

We already have it for squid and mackerel, don’t we?

Euan Beaton

Yes.

Julian Sturdy

Just for my information, at the moment the majority of line‑caught fish is imported into the UK. What I am trying to get at here is that there is an opportunity for the UK to grow that top end of the market.

Jimmy Buchan

Absolutely, yes—but we need the quota to do it.

Chair

We have the Fisheries Minister coming next week, so we can ask him some of these questions.

Euan Beaton

Can I come back to the free borders, if you like? They are really important for the exporting of fresh fish particularly. Jimmy, you will remember this. When I started the business with my mum and dad, we were a very small business. We needed a certificate of origin; we needed a health certificate with every consignment we dispatched. We had to run all over the county trying to get this piece of paper and get the vet to sign and stamp it. It was really difficult. God forbid that we go back to that set of circumstances again. We also do not want to be holding fresh fish up in Calais or Dover.

Chair

No—fish above all things.

Euan Beaton

It is really important to keep that free trade and movement open.

Chair

We are very aware in this Committee that with food and fish there is a potential for it to go off.

Angela Smith

Jimmy and Euan, you have both made that point about free borders. The only way we are going to establish a free border in terms of your current marketplace and current exporting destinations is by staying within the single market. Is that the favoured option?

Jimmy Buchan

That is a question I could not answer. I am not at the negotiating table. That is a question for David Davis and his team to sort out. We have a wish. The wish is that we have a free and frictionless border—regardless of how we get there. It is important for business.

Chair

That is right. You need to be able to freely trade across the border.

Jimmy Buchan

If we are to trade with the rest of Europe, we cannot have our produce sitting in a car park waiting to leave the country. It is a fresh produce. It is spoiling hour by hour.

Angela Smith

There is a free‑trade deal, the single market or WTO rules. Effectively, they are the three broad options. The free‑trade deal does not necessarily deliver a frictionless border. That is the point, isn’t it?

Chair

Yes, and that is going to be the same for meat products and across the piece. We would have thought in this day and age that we could have an electronic system, but that is what has to be agreed and put in place, doesn’t it, Angela? That can be done: they call it a bespoke deal. It is about how we do this bespoke deal, I suspect.

Daniel Whittle

There is a point here specific to fish. Fish is different from meat. You raised the point about date codes and things like that. You cannot mess around with date codes in fish, because it stinks if it is old. That goes to Jimmy’s point about frictionless borders. A consignment of meat could be held up for 24 or 48 hours and it might not be a problem.

Chair

It would not be the end of the world.

Daniel Whittle

It might be the difference between acceptance and rejection of a consignment of fish, and it is often very high‑value.

Chair

It will be off.

Daniel Whittle

The cost could be significant.

Mrs Murray

Do you export outside of the EU at the moment? Do you have a problem with fish being held up?

Daniel Whittle

A small proportion of our product is processed by hand and exported to the Far East. Currently, we have a container held up in the destination country because of a tit‑for‑tat with the EU and the EU saying that the Vietnamese are not adhering to regulations, so they are finding faults with our exports. Having said that, it is something we have done for many years without too much difficulty.

Mrs Murray

The hold‑up was because the EU was causing a problem.

Daniel Whittle

Yes, they are saying, “New problems are being found with our exports, so we are going to start making life complicated for you.”

Chair

You raise an interesting point about tit‑for‑that. Of course it may become a problem when we are dealing with the EU again if there are tit‑for‑tat arguments. That is what we have to try to iron out.

Alan Brown

I wanted to return to labour now. We have already touched on potential issues in access to EU labour. On the turnover of staff, how long do EU migrant workers tend to stay in Scotland in the processing industry at the moment? What is that turnover? What effect are you seeing now? Assuming the UK leaves the EU, ending free movement of labour, what is that likely to mean in terms of future labour short‑falls? Obviously that affects Daniel and Euan more.

Jimmy Buchan

Again, because these guys are the direct employers, they would be able to give a much better answer.

Euan Beaton

There is always a movement in staff. 10% is probably the rule. Most of the time it is a control point that we watch and we monitor. It goes to the point that we are seeing a restriction in the amount of European people who are presenting themselves for employment as well. That has probably has been emphasised since Brexit came out, with people not wanting to travel to Scotland. However, 70% of our staff, as I mentioned, are European. Generally, they do not move. They have been here for years. We have had some of them for maybe 15 years. Some of them are mortgage‑holders and have established a family. They have had children in this country and they have put down roots here.

Daniel Whittle

I would echo that. I know that certain species can be very seasonal in pelagic fisheries and things like that, where you are not processing the whole year round. There is a much shorter period. A number of processors would have an EU workforce. They are the same people: they come, they process through the season and then they return to their home country. I can see that being a bit of a problem if that is not feasible in the future.

Jimmy Buchan

I have a different slant to this, which relates back to the catching. We have a huge problem in attracting the right people to be fishermen. The industry became dependent on labour from the Philippines and such places to crew the boats. Due to border‑control issues and the 12‑mile limit, on the west coast it is very hard for a boat to be outside 12 miles. You have to be 60 or 80 miles off, and in a small boat, that is just unsafe. That has created a problem where the boats fishing in the western waters have been displaced either into other areas to fish further offshore, which is much more dangerous, or even to the stage where two of these vessels have had to be sold. Therefore, one of the factories of one of my members in Prestwick is now having a raw‑material problem, because he cannot get access. This is the knock‑on effect. The access to migration workers is having an effect at the coalface of the industry. It is now having the next effect. I have written to our Scottish Minister about this, and he has a great answer: “We are going to train people.” My question is: where are these people? If they were there, we would be training them. I emphasise again: we must open up the market to be able to attract the right people who are willing to come and do the job. I have been a fisherman for 30 or 40 years. I know how difficult this job is, and it takes a certain kind of person who can do it. Not everyone can endure the cold hours working through the night, the unsociable hours, or the hard work.

Chair

It is wet and cold.

Jimmy Buchan

It takes a certain kind of person. I keep going back to this: if we are going to compete in the world, we have to have access to the people of the world to do that job.

Daniel Whittle

I would echo that. We have the same problem UK‑wide. If there is to be any hope of catching increased fish from increased opportunity, there needs to be support on the crewing issue. There needs to be allowance of the concept of non‑EEA job permits, whether temporary or full‑time.

Chair

If you had more mechanisation, there is an argument that the job may not be quite so taxing, not quite so cold and not quite so wet. Is this an argument? If you had more mechanisation, could you get the labour you needed? Is it the concept of what people think they are going to be doing as well as what they are doing? Jimmy is shaking his head there.

Jimmy Buchan

Automation will play a part, I am sure; it always has. Robotics will play a part—I said it earlier on in giving my evidence—but there is no substitute for the human eye and the human hand. These are the guys who are operating in the factories. It takes a certain skill.

Daniel Whittle

Certainly, it is something you could work towards. If you are in control of your immigration policy, you can control the amount of permits. If there is no longer the need or we have increased efficiency on board boats, the amount of permits required for fishing would reduce—but there needs to be support. The thing you have to understand about fishing boats is that they are very diverse and they tend to be quite small individual operators. Our supply comes from over 200 boats. They are not particularly co-ordinated, so the idea of them all getting together and finding a machine they can all benefit from is—

Chair

We will definitely put your points to Ministers. Alan, I am conscious I have interrupted your question.

Alan Brown

I just want to come back to a point you made, Chair, about access to non‑EU workers on the west coast. I do not know whether you are aware that Brendan O’Hara raised this in the fishing debate on Thursday; he put that to the UK Minister. But from what you said about Fergus Ewing saying that we can train UK personnel to fill the slack, obviously you are a wee bit cynical about that. What is it that Government and the processing industry can do, working together, to try to attract people? It is clearly an issue and you have touched on it. Do you have any suggestion as to what can be done to facilitate this?

Jimmy Buchan

Again, I had a meeting with the Scottish Fisheries Minister, Fergus Ewing, last week. He took ill and that meeting never took place, but my ask from him was that he needed to put a programme in place so we can go and train these people. We have to spread the message. We have to go to schools; we have to go to colleges. We have to make fish processing a career. For three decades, it has been an industry of contraction. The perception is, “Do not get into fish processing; it is a dead duck.” I say the contrary: it is very much alive. Fish stocks are increasing; the fishing fleet is being renewed. Port infrastructure is going into place. We are missing a trick with seafood processing, because it is there and we need to grow it. The only way we can do that is by collaboration and the will of both Governments, in Scotland and the United Kingdom, making it happen. That is why we are here today.

Daniel Whittle

You certainly could have more chance of a locally sourced crew, effectively, but you would need to be increasing the price of fish sufficiently.

Chair

It would mean you would have to pay more, basically.

Daniel Whittle

You would have to make it comparable to working offshore in oil. Currently, that kind of money is not splashing around the fishing industry. It is not a very nice job, but people will do it if it is £50,000 a year. They will say, “Yes, I might think about crewing.”

Chair

That is an interesting point you make: who is going to pick up the prices? If you can catch more fish and you can deliver more fish, those wages can be covered over a bigger amount, but otherwise if it is the same amount, it is going to impose a significant cost.

Alan Brown

Euan, I just want to go back to a point you made. A lot of the EU staff who work for your company have been here 10 or 15 years. Do they have any concerns at the moment about Brexit in terms of residence applications and what that means? We are now hearing the UK Government have made an outline agreement that is supposed to protect citizens’ rights, but, at the same time, for me, they are still saying that nothing is agreed until everything is agreed, so therefore that certainty is perhaps not there. How do your workers feel at the moment?

Euan Beaton

Absolutely, they are concerned. Right from the outset, they have voiced their concerns about what the future is for them. Are they safe? Will they be allowed to stay? There is a probably an element of that as well. You found that mum came along, and then the cousins and the auntie and the mother of the auntie. That has now stopped. We are not seeing that same flow of the availability of relatives, who were coming for a long time. That has certainly all but stopped at the moment. Of course, they are concerned—and they are voicing their concerns, yes.

Julian Sturdy

My question follows on from that. It was touched on earlier. Jimmy, you touched on the currency situation. As we sit here today, are you struggling to attract labour into the industry? Is that becoming a bigger and bigger issue even before we leave the EU?

Jimmy Buchan

Certainly, for my members it is one of the things that is raised every time we have a meeting. There is a serious shortage of recruitment.

Julian Sturdy

That is brought up at every meeting you have with your members.

Jimmy Buchan

At every meeting I attend, they say they are struggling to attract people; they are short‑staffed; they really are struggling to attract people. On the logistics side, five or six members of our association are transport companies. They are equally having the same problems, as are the box‑makers. There seems to be a shortage of labour right across our sector.

Julian Sturdy

Is it also at a higher skilled level as well?

Chair

It is a combination.

Jimmy Buchan

Certainly up in the north-east and Grampian area, we have been struggling against a very successful oil and gas sector, which has been able to attract people with great careers. We wish them well, but we are at the food‑producing end of the sector.

Julian Sturdy

They pay more, as well.

Jimmy Buchan

They are paying more; conditions are better. Therefore, that is where we have a recruitment problem. I come back to the question around saying, “We will train more people.” We would if we could find them. They are simply not there—and therefore it is back to this argument. We need to open up access to workers from across the globe, in my opinion.

Julian Sturdy

Daniel, is that the case in your specific business?

Daniel Whittle

Not so much, no.

Chair

At the beginning, Julian, Daniel was saying that 75% to 80% of his workforce is home‑grown.

Daniel Whittle

We are in two separate locations. They are both rural, I would say. Kilkeel is an hour and a half from Belfast and an hour and a half from Dublin. Whitby is an hour and a half from York, which is the nearest city. There is not a lot of population. We pay relatively well compared with other businesses, which helps us. There is also a big tradition. In Kilkeel, there is quite a tradition of fish processing and families who are used to it. Having said that, around the harbour there are other businesses that are highly dependent on migrant labour and would be 80/20 the other way.

Julian Sturdy

Are they seeing shortages?

Daniel Whittle

Yes, and they would be very concerned about what they are going to do next.

Julian Sturdy

Euan, is that the case for you?

Euan Beaton

It is exactly the same. We are concerned.

Julian Sturdy

I want to drill down into this. Is it starting to bite already?

Euan Beaton

Yes, it is. Absolutely, it is, yes.

Julian Sturdy

That is just because of the possibility of it and the issues that arise from this.

Euan Beaton

Yes.

Chair

When we had an Inquiry here about a year ago, the Ministers were saying, “What is the problem?” The problem was getting tighter then, but it has got tighter since. When we have perhaps another short inquiry in the spring—we still have to agree to it, but I suspect we will—we have to make sure we are in a situation where we can prove to Ministers very much that the situation is tight. Are there any last points on your question? We probably stole most of it. Carry on.

Angela Smith

I will get over the slur on northern eating habits you indulged in earlier, Chair.

Chair

I did say not necessarily, but, yes, perhaps it was not terribly diplomatic. Yes, carry on.

Angela Smith

Chair, rather than asking a question, I am very interested in the trip that is taking place to Iceland and the work you are doing to look at how Iceland developed its infrastructure both in skills and investment in hard infrastructure—partly because it has so many close relationships with my hometown in the Humber. I also think it would be very relevant to this Committee if Mr Buchan could inform the Committee of the findings. I do know that Iceland took many years to develop its capacity to where it is now. Initially, it had to depend on the infrastructure we had in the Humber particularly. It had to develop very close relationships with the Humber in order to take itself forward. I would really be interested, Chair, in having those findings fed into the Committee.

Chair

When are you going?

Jimmy Buchan

Hopefully on some dark afternoon in January when things are quiet.

Angela Smith

It will be dark.

Jimmy Buchan

It is a working programme; we are pulling it together. It is certainly something we are looking forward to doing.

Chair

As soon as you have done it, we would not mind seeing it. It does not have to be the works of Shakespeare; it can be lots of bullet points of things where you think we could really learn something and what you think the Government could do to help facilitate that. It would be really useful if we could get it into evidence then. We will be taking evidence all the way along, because we are expecting a Fish Bill very soon, and so therefore we can follow it with that as well. Are there any last points? Gentlemen, thank you very much. That was very good. Thank you very much for making it all the way down to London to come and see us. We appreciate that. Thank you very much. Panel 2

Witnesses

Andrew Kuyk CBE, Director General, UK Seafood Industry Alliance; Mark Simmonds, Policy Manager, British Ports Association; Martyn Boyers, Chief Executive, Grimsby Fish Dock Enterprises, gave evidence.

Chair

Just before I welcome you all, gentlemen, Angela just wanted to make a point.

Angela Smith

I just want to make a declaration of interest. My uncle is a freeman of the Borough of Grimsby. It is a historic role, but it does involve a very small financial interest, as Mr Boyers will know, in some of the land of Grimsby docks, on Freeman Street.

Martyn Boyers

It is very small.

Angela Smith

It is very small, but I still need to put it on the table.

Chair

Angela, we respect that. It will be noted. Thank you very much. Can I start with you, Martyn? That will give Andrew the chance to catch his breath. Introduce yourselves and we will fire away.

Martyn Boyers

Good morning. I am Martyn Boyers; I am Chief Executive of Grimsby Fish Dock Enterprises Ltd. It is a private company that runs Grimsby Fish Market. I have always worked and lived in Grimsby, and I have been in the fish business for some time. My father and grandfather were both fish processors. I am involved in Seafish in various committees they are involved in. I am also involved in the Programme Monitoring Committee of the European Maritime and Fisheries Fund, which looks at funding for fisheries. I was also invited to attend as a stakeholder something that was put together by Defra through Mr Eustice, the Seafood 2040 vision, which was launched about three weeks ago in this place.

Mark Simmonds

Good morning. My name is Mark Simmonds. I am the Policy Manager at the British Ports Association. We represent over 100 port members across the whole of the UK, including 47 of the top 50 fishing ports by landings.

Andrew Kuyk

Good morning, Chair. I am Andrew Kuyk; I am here representing the UK Seafood Industry Alliance, which is a body bringing together members of two different trade associations, the one that is my day job, the Provision Trade Federation, and the Food and Drink Federation. The alliance has the fish processing and trading members of both organisations come together in this umbrella alliance, and I am representing the alliance here today. We are the processors and traders in fish and seafood products.

Chair

That is right. Andrew, you have had quite a lot to do with the Food and Drink Federation over the years, haven’t you? That is how I have known you before in another place.

Andrew Kuyk

Yes, I have had a varied career. The main part of my career was in the UK Civil Service: the former MAFF, Defra and also postings in UKRep in Brussels and Paris. Then I had five years with the Food and Drink Federation, and I am now running the Provision Trade Federation. My roots in fish go back many years to the very earliest days in my career.

Chair

Thank you very much. The first question is quite a big question, but it is relatively straightforward. Will Brexit be a good or bad thing for trade in UK fish? Who wants to start? Mark, go on. You blinked. It is always dangerous to blink.

Mark Simmonds

It entirely depends on the deal that is negotiated with the EU, frankly. We certainly hope so. There are certain challenges that we need to overcome, but there is certainly potential.

Chair

Indeed, where do you see the pitfalls and opportunities?

Mark Simmonds

Some of the potential pitfalls are with the potential barriers that could be put up, particularly the non‑tariff barriers at ports. A lot of fish leaves the UK on a lorry going through ferry ports. If those are now going into an EU port once we have left, they will be subjected to documentary checks at least and potentially also physical checks.

Chair

Yes—if we are not part of the customs union or we do not have anything in place to replace it properly, that could be an issue.

Mark Simmonds

Yes—some agreement.

Chair

It would be an issue especially for fish.

Mark Simmonds

Anything that holds up consignments at ports will cause problems, particularly at ferry ports, which are predicated on traffic flowing as quickly as possible. Our ferry ports are all exclusively EU‑facing, so they are not really set up to deal with customs or port health checks or any other manner of checks that could be imposed.

Chair

Martyn, do you have a view?

Martyn Boyers

At Grimsby Fish Market, in the last 12 months, we have handled over 12,000 tonnes of fresh fish at auction. About 75% of that fish has come from Iceland, so we have a great association and relationship with Iceland. We are hoping that continues. From a Brexit point of view, we would like to think the trade rules allow Iceland to export fish in the manner they do at the moment. We also have a lot of landings of fresh fish and particularly shellfish. We have a lot of crabs and scallops from Macduff Shellfish, as it happens, landing through the port this year. We have got quite a diverse operation. Grimsby Fish Market is also central to a very large processing capacity around the Humber, and there are about 4,500 jobs connected to fish processing. Grimsby Fish Market, and Grimsby itself, is just a hub for processing and fish activity. I see Brexit, whatever the turnout, as an opportunity. There will be chances to do things. I also look at this from the point of view—this was mentioned before—of Iceland and the cod wars. Whether we won or lost, I am not too sure, but I do not see how whatever happens could be anything worse than what happened to Grimsby and Hull then—fleets were decimated. Grimsby, the people, can adapt to whatever comes up. We will just deal with it.

Chair

There could be greater access to fish, all being well.

Martyn Boyers

All being well, yes.

Chair

Yes, all being well. Andrew, what is your view?

Andrew Kuyk

If we are talking specifically about trade, I would echo the point that it depends what you mean by Brexit. It will really depend critically on the nature of our future relationship with the EU. If we succeed in the Government’s aim, which we would fully endorse, of a free and frictionless deal with the EU, certainly on the trade side there may not be much impact. It is quite important to understand, though, that we are very much a deficit market for fish. It may sound odd: we are an island, we are surrounded by sea and fish are abundant in that sea, but we still import two-thirds of what we eat.

Chair

We export a lot of what we catch.

Andrew Kuyk

We have what I call the supply paradox: most of what we eat is imported; most of what we catch is exported. About 80% of our catch is exported. There is another asymmetry in this, which is that most of what we import comes from outside the EU, whereas most of what we export goes to the EU. Again, there will be a differential effect. At the moment, in terms of what we get from outside the EU, some of that is governed by the EU’s external tariff arrangements. Fish from Norway, for example, comes into the EU single market under the umbrella of Norway’s EEA agreement.

Chair

Regarding Norway and EEA agreement with Europe, how much of that fish would come into the UK? Is it quite a lot?

Andrew Kuyk

Quite a lot of it, yes.

Chair

Is it 50% or not as much as that?

Andrew Kuyk

Do you mean of total Norwegian exports?

Chair

Yes.

Andrew Kuyk

It will not be as much as 50%, but it will be a significant proportion.

Chair

It will be 30% or something like that.

Mrs Murray

We could negotiate our own deal with Norway once we leave.

Andrew Kuyk

It very much depends on what the framework is. If we are in a close relationship with the EU, where we are more or less replicating the terms we have at the moment, we might either a) be constrained from doing that—because it might be a condition of that new regime that we were limited in some way in what we could do with third countries—or b) it might not be necessary, because we get good access to Norwegian fish at the moment. If that were to continue, there would not be a burning need to have our own free‑standing deal. There are different layers in all of this. There is another thing that is important to know about these basic relativities. Two-thirds of what we eat is imported and 80% of what we catch is exported, but it is also a question of the species. The so‑called big five in terms of the UK market are cod, salmon, haddock, tuna and shrimps and prawns. Clearly, the tuna, shrimps and prawns are things that cannot be caught in our waters. Nephrops is a subset of that, but here we are talking about warm‑water prawns and some cold‑water prawns from Canada and so on. That is different. Any increased opportunities for the UK fleet cannot apply to those, because they are not fish that are in EU waters at the moment. In some of those other areas, the supplies of fish that are available in EU waters, let alone UK waters, are very short of the market demand. In whitefish, the total availability in EU waters is something like 500,000 tonnes. The market demand in the EU is 3 million tonnes. Total EU cod TAC for everybody is only about 50% of UK consumption. Even if we somehow magically had control of absolutely everything, it would still fall far short of current market demand. It is important to understand those relativities.

Chair

Yes—we need to understand what we actually eat and how the fish market works. That is basically what you are saying. There is a big export market and a big import market.

Andrew Kuyk

Yes. The reason we export so much fish is because it is by and large species for which there is no ready market at the moment in the UK. These are pelagics such as herring and mackerel and some crabs and shellfish, which are eaten in the UK but are much more highly prized in some other European markets. Quite a lot of that is landed directly into those markets or exported live, and it also commands a higher price than people are prepared to pay in the UK. Lots of efforts have been made over the years to try to develop and broaden consumer tastes not just in terms of the market dynamic but in terms of relieving pressure on some of those other key stocks.

Chair

We will go on to talk a bit about that in a minute. That is a good start.

Angela Smith

It is the same question I asked the previous panel, but I will use a different word: “model”. Have you thought through the potential impact of a no-deal, “falling off the cliff edge” scenario? What would that do to the seafood‑processing sector?

Martyn Boyers

We need to recognise there is a huge difference between the UK and the continent in the way fish is consumed, in that everything in this country is processed. If you go for fish and chips, it will be a piece that is filleted; there will be no bones in it; and it might be skinless as well. There is a huge demand for processed fish in the UK, and I cannot see that changing. I also cannot see that the great British public are going to change their habits. There will always be a demand for fish and chips, for example. You could go into any of the—I do not know how many there are—10,000 fish-and-chip shops in the UK, and they will sell either cod or haddock. As Andrew alluded to, they are the main species and they will continue to be so. The habits of fish consumption are not going to change. In terms of fish processing, the fish needs to be processed. There has been an expansion of fish processing in Iceland. You mentioned the crash in Iceland in the previous session. What really happened was that skill went to Iceland, but, after the financial crash in 2008, they then looked at how they could increase the value of fish in Iceland—and that was through processing. They increased it, and now it has reached a peak and fallen back a little, so they are looking to export fish. Processing fish is adding value. Peterhead, Aberdeen, Grimsby on the Humber and the south-west around Brixham and Plymouth are significant areas of fish processing. I do not see that changing, because it has to be led by consumer demand. I believe the consumer demand is there, because fish is a good protein; it is healthy; it is well regarded. I cannot see there being any problem. The only issue about it is going to be price. We could price ourselves out of the market. That is going to be the issue—but the demand will not change.

Mark Simmonds

As I have said before, no deal would likely cause significant disruption at roll-on roll-off ferry ports, at the likes of Dover, where there are currently no or very few checks. Depending on how long they had, they would suddenly have to change how they do things. A lot of fish goes out through those ports. I understand the WTO tariffs are around 10% on average for seafood, so that would have an impact. I am sure Andrew has a view on that. But for ports it is non‑tariff barriers, the checks at ro-ro ports, that would be very disruptive. That is not just in terms of seafood but in terms of trade in general, of which seafood is a part.

Andrew Kuyk

If by no deal you mean a situation where we revert to the infamous WTO rules, it is less dramatic for fish than it might be for some other foodstuffs. For the EU’s common external tariff, for meat and dairy you are looking at tariffs of 40%, 50%, 60% or more. Ordinary industrial tariffs are in the low single figures: 5%, 6%, 7% or 8%. Things like meat and dairy are at the high end, and some can even go over 100%. Fish is somewhere in the middle, between about 5% and 25%. If we are talking about no deal, we are talking about the EU tariff schedule applying to trade between the EU and us, because, in the short term, if we are lifting and shifting the EU’s external tariff to become the UK’s external tariff from day one, on day one you would then have those tariffs between us and the EU. For example, fish from Norway or Iceland at the moment comes to us tariff‑free from the EU, but in the no‑deal scenario it would pay 10% or 20% on day one, so it would face a barrier coming through the EU to us. You then get a whole other set of issues that might arise. In that scenario, the UK Government could decide unilaterally to cut tariffs on those fish imports, either to the levels that they currently are or even to zero. At the moment, the European Union operates a system of so‑called autonomous tariff quotas. It recognises that the EU as a whole is a deficit market. That two‑thirds ratio applies to the European market as a whole, so in recognition of the fact that the EU market cannot be supplied by EU‑caught fish, even though those tariff barriers are there in the schedule, autonomously—that is to say, it is a unilateral thing on the part of Europe—it lets in certain quantities at reduced tariff. Now, the UK could operate its own ATQ system. The EU one would not apply to us under a no‑deal scenario, but we could have a UK autonomous tariff quota system. In theory, we could also negotiate a UK‑Norway or a UK‑Iceland deal. The issues are going to be ones of timing on that, because of the nature of supply chains for fish, particularly for frozen fish. I would certainly echo what Martin has said about the value added in processing. That is the economic engine of the industry in the UK: it is that added value from processing. The raw material is quite often a frozen block or a fillet. It has been pre‑processed—i.e. headed and gutted or whatever—either at sea on a factory vessel or it has possibly gone to China or somewhere else, and it then comes in as a semi‑finished raw material that we then add value to.

Chair

There is a higher tariff on that, though, isn’t there?

Andrew Kuyk

There are different tariffs. That is why you cannot say there is a single tariff. You get what is called tariff escalation, in the jargon. The other thing is that, if you are dealing with a frozen product, the supply chains are quite long. You would be ordering forward in January what you would be processing in the following six, nine or 12 months. If no deal is obvious some way out from when it happens, people would start thinking about ordering; the Government would start thinking about the tariff regime they might put in place unilaterally when that point was reached. If, however, there was an expectation that there would be a deal and then at the last moment you had no deal, you would get a great crashing of gears. You would have people committed to supplies; you would have things in the pipeline; and you would then have to have what would effectively be emergency legislation to unilaterally change UK tariffs in the event of that.

Chair

In an ideal world, you would like to know either that there is going to be a good deal or that there is not going to be a good deal. You would like to know that in advance, but you are probably not the only one who wants to know that.

Andrew Kuyk

What business craves, above all, is certainty. Business will adapt to whatever hand it is dealt. Obviously, there is a strong preference to stay as close as we can to existing trade arrangements. Trade is a mutually beneficial activity. It is reciprocal; that is why it happens. There are benefits to buyers and sellers in a trade relationship. The ideal will be this aspiration of a free and frictionless deal on trade, and we would ideally also like to see trade dealt with as part of food trade in general, separately from other issues related to fisheries, which we are not discussing here.

Angela Smith

I just want to ask one further question. I had to smile at what Martin said about skinless and boneless fish. My father fished in Iceland, and he could fillet a fish brilliantly. He would always fillet it, and there were no bones in it whatsoever. That was the standard, if you like. That is just an anecdote. I wanted to raise a point about the supply chain and the tariffs. This is a question for all three panellists. It may well be that we get a deal or that we do not get a deal at all, either with tariffs or no tariffs. However, exporting our processed fish onwards into the European Union is also a question that has to be considered by the industry. Has any of the panellists thought through the potential impact in terms of exporting our products processed from fish imported from Norway and Iceland in particular? What might the impact be on that either in a no‑deal or a deal scenario?

Martyn Boyers

In Grimsby, we have a lot of fish that is imported. It comes into Grimsby and it is processed. Sometimes it is just repacked and it goes off into France and into Europe. Grimsby acts as a hub. The principle is not going to change; it is the terms of engagement that are going to change. It is about what goes around it. The French and Spanish demand for fish is not going to change; the UK demand for fish is not going to change. It is what happens around that, what the rules are and what the costs are. One of the things we have to bear in mind with all this, particularly from our point of view as Grimsby Fish Market, is that we are a private business. We are there to make money. Sometimes we talk about fish in a very sort of romantic way, but we must not forget that it is a business. It is about commercial fisheries. The fishermen have to make money; the processors have to make money; we, the fish market, have to make money; and then the retailers have to make money. Everybody is taking a bit of something out of it all the way along. When you have this sequence, every one of them is a buyer and a seller. That is why you will never get an agreement within this fish industry, because it is a sequence of buyers and sellers—who always disagree. Ultimately, as we go forward, the issues will be resolved, but it comes down to how much we will pay. If you go for fish and chips, and it is going to cost you £10, you will not bother. If it around £5 or £6, you will say, “That is all right.” Price is always going to be critical, and there is a cost involved. Processing is a cost, and it is an added value. It turns it from being a whole fresh fish into an actual fillet, but that balance is going to be the difficult thing. What will be to cost of the rules of engagement that allow the trade to continue? If it gets too daft, people simply do not buy. It is not because they do not want to buy; they will not be able to afford to buy.

Angela Smith

They just will not be able to buy.

Chair

They will buy something else.