Dutch pelagic sector sees strong quotas, demand

Pelagic organization’s president talks about the uncertainty faced by the industry with the United Kingdom’s impending ‘Brexit’ from the European Union.

It's been a time of change for the Dutch pelagic fleet, but Gerard van Balsfoort, president of the Pelagic Freezer-Trawler Association, tells IntraFish this year is looking positive.

How did the EU pelagic fishing sector develop in 2016?

Overall 2016 was a rather okay year, I would say. The quotas in the northeast Atlantic were good and the development of the stocks more or less showed a good outlook.

The North Sea outlook for mackerel, herring, and blue whiting was also good, as well as for Atlantic herring, and the Norwegian spring spawning herring. They are on the recovery, they were a bit low for the past few years but it is recovering quickly.

There is a doubling of the total allowable catch (TAC) for Norwegian spring spawning herring from last year to this year, for example, and there is almost a doubling of the TAC for blue whiting from 2016 to this year. There is almost a stabilization within margins of North Sea herring, while mackerel is stable with a small increase year on year, but at a high level.

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So overall I would say the stock situation for pelagics in the northeast Atlantic is ok.

The coastal states are still discussing to get mackerel, blue whiting and Norwegian spring spawning herring in order, but I think we are getting a bit closer to an agreement on the mackerel where we’ve seen a three party agreement for four years now.

This year is the fourth year between EU, Norway and Faroe Islands, they run the mackerel management.

While it is not a huge thing on mackerel for Norwegian spring spawning herring there is still an issue of getting everybody into the agreement, into the management, so there is still a road to go there, but for now I can see the stocks are healthy.

So if you look at the supply side it looked good in 2016 and even a little bit better in 2017.

What is your outlook for the pelagic sector in 2017?

If you look at the stocks it is quite positive, but stocks can go up and down very easily in a short time, so there is no guarantee and it’s also something we have to manage well and that’s of course a point of concern if not all coastal states are inside the  agreements.

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For mackerel it is almost all the coastal states involved in the agreement but for blue whiting and Norwegian spring spawning herring this is not the case at the moment, so that is still a way to go.

But the stocks are OK still so we really need to make an effort to get everybody in the deal.

But for the time being stocks are doing quite well, with even an increase since 2016 in mackerel, blue whiting and Norwegian spring spawning herring -- and these are the major stocks, together with North Sea herring and that is almost stable maybe a little bit down around 7 percent.

Overall the outlook on the supply side, pretty good.

Are there any particular challenges?

Well there is this big elephant in the room, which is Brexit of course. That is the major challenge for the pelagic industry.

The Brexit vote in June 2016 really was a hammer for the fisheries sector and also a hammer for the sector in the UK as well, who of course voted predominantly pro-Brexit.

But there will also be a big potential impact and really a lot of negotiations and discussions needed, for those not in the UK, for us, and not only the EU but Norway and the Faroe Islands.

If you look at the northeast Atlantic, it is really about pelagics and more about Scotland than the entire United Kingdom.

So that of course will have a lot of consequences, they have to totally renegotiate the management of the stocks.

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The UK is becoming a new coastal state after Brexit and Scotland within the UK is of course not independent but with the devolution processes going on between London and Edinburgh, you already see the shadow of Brexit being cast before it’s even happened. And Scotland is of course a major player for pelagics.

So I think this is the big challenge and will be for 2017, 2018, and 2019.

There is a lot of uncertainty -- and of course it is too early to say anything about the outcome as everyone is still setting out their positions. We don’t even have the information yet from Theresa May what the real position is.

We see also in the UK a lot of positioning from the different parties. The NFFO, the SFF, and then of course Fishing For Leave, which from the outside looks like an action party representative of fishermen.

The fishermen belonging to Fishing For Leave may also be part of NFFO or SFF but they also have own agenda, and you see they are not always in agreement what Brexit means for fisheries.

Many people in the UK see this as a 'sea of opportunity.'

For the moment it seems the opportunity lies mostly with the UK but then they are most vocal on this. If there are opportunities, it may be from a business point of view, but that is for individual businesses to decide.

But for the sector as a whole, I think it may be the UK industry sees it as an opportunity, but it is not only an opportunity but also a threat that if we do not solve this in a decent manner, we will have mayhem or chaos for years to come at sea.

And it’s easy to have chaos at sea, you don’t have to go too far into recent history to see it. Even now there is still conflict with coastal states, on the sharing of blue whiting, and the sharing Norwegian spring spawning herring, and even a little bit with sharing of mackerel.

Although the three parties, the EU, Norway and Faroe Islands, have agreed a plan for five years, that will end in 2018.

So in June 2018 in the midst of the Brexit negotiations, when the UK is still inside the EU and not yet a coastal state, we have to discuss the management and the sharing of the mackerel stock from 2019 onwards so it is really complicated.

Also, recently we have quarreled on different stocks, so if a big player like the UK suddenly wants to change the equilibrium strongly, and it seems that is their ambition, then you can imagine throwing a big stone a relatively wide and quiet pond and there will be ripples for many years to come.

Also if people do not agree on the management, in the end it is the stocks that will suffer and if the stocks go down then the TACs and fishing opportunities will go down and everybody loses.

So you really need wisdom on all sides to get out of Brexit in a decent way and I don’t hear a lot of wise words yet coming from the UK, but it is maybe too early to judge.

Aside from Brexit, what else is affecting the pelagic markets?

In general the markets for pelagic species in the long run are very promising.

It is a cheap source of protein, and the world population is increasing, especially in markets such as western Africa, where there is a deficit of animal protein which pelagics could easily fill.

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But at the same time, some of these big pelagic markets are very dependent on oil income -- Nigeria and Egypt for example -- and if you look at last few years fuel prices have been low.

You can see they lack currency, specifically dollars, and there is big inflation of the Nigerian Naira against the dollar, which makes it difficult for them to buy even cheap protein from us.

So market-wise, overall there is a market, but there are hiccups, especially in western Africa and Egypt where there has been for some years.

But there are still exports to these markets of course, just the conditions are a bit more difficult, so I see a downward trend on prices.

Do you expect any consolidation in the sector?

The industry is already very much consolidated. That is the case in all member states – Ireland, Denmark, Netherlands, Germany, France, England, and Lithuania, so the structure is already rather concentrated and consolidated.

What I have seen over the years, is companies are also considering diversification or integration in the value chain, rather than just buying out other companies. That time has gone a little bit I don’t see it coming back.

Additionally, part of the Brexit discussion is not just about access and quotas, but also about the free right to establish companies in another country and vice versa.

So if there are companies thinking of taking over or establishing themselves, either way, it’ll be part of the negotiations, this type of investment.

Brexit as it is a bit unclear how it will work out.

What are your hopes for the sector with Brexit on the horizon?

These are very confusing political times, and we know fisheries are very much dependent on good integral decision making much more than most other industries.

It can change very quickly and we are very much dependent on scientific advice and good management of our shared stocks.

We have more than 100 shared stocks between the EU 27 and the United Kingdom, for example, so for fishing companies they have to follow very closely political negotiations and how they are developing.

We can only wish the industry offers wisdom to the politicians, and calls for calm in their attitudes.

Too much shouting, too much vocalism in the end will create more confusion and more uncertainty which is very bad for business in general.

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