Taking a too formalistic approach to issues such as equal competition and resource ownership can do more harm than good, policymakers looking to reform fisheries legislation are warned by the Faroe Fishing Vessel Owners.
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Over the last decade, the Faroese fishing fleet, for good reason, has had to twist some basic accounting conventions in order to be able to conduct business as normal. Instead of writing-down the value of their fishing rights, vessel owners retained the booked value of their vessels including licenses and quotas. Overvalued assets or not, this clearly made the industry more financially viable. Otherwise it could rightly be asked how—with a reduced overall capacity as a result of a weaker financial position—the Faroese fishing industry would have been able to prove, through actual catches for the record, what sort of volumes indeed could be found within the Faroese EEZ. At a time, national figures regarding migratory pelagic fish stocks were subject to contests and disputes at the international level; in light of this, the performance of the Faroese fishing industry would, at least to some degree, influence the ability of the Faroese negotiating team to secure their relatively high shares of the total allowable catch.
Arguments along these lines have been raised as a response to some politicians who have wondered why Faroese fishing vessel owners have not written-down the booked value of their vessels, as all licenses are set to expire by the end of 2017.
“I have occasionally pointed out that, fortunately, vessel owners have opted not to have these assets written off by that time,” said Herálvur Joensen, managing director of the Faroe Fishing Vessel Owners’ Association (Føroya Reiðarafelag), “as that would have stopped them from making investments and it would indeed have prevented them from taking on the challenge posed by the suddenly growing abundance of mackerel in Faroese waters. Remember this took place years after the 2007 notice of cancellation for fishing licenses had been issued.”
Now with the pressure on for the government to make the final push to introduce new legislation for commercial fisheries, Minster of Fisheries Høgni Hoydal launched a commission in early 2016, tasked with giving advice on a range of key issues with a reporting deadline on 1st August.
Among the controversial questions being considered is that of auctioning out fishing rights as opposed to keeping the internationally widely used ‘grandfathering’ principle, which has its historical basis back in the day when commercial fishing was largely free and unregulated. The main argument leveled against the current system has been spearheaded by a group of economists who maintain that competition for resource access is a key deficiency from an economic viewpoint. However, with that argument failing to find strong popular support, a more emotionally charged argument has materialized at the political level, centered on perceived inequality of wealth with widespread claims of entitlement emanating. This is part of the political thrust of the fisheries reform—discontent over the fact that some are making good money while others are not.
‘Able to resolve’
The Faroe Fishing Vessel Owners—represented by Mr. Joensen as a member of the officially appointed reforms commission—has publicly cautioned against the idea of introducing an auction system for fishing rights. The ‘equal competition’ argument, he maintains, is flawed in that it seeks to explain the fishing industry’s fundamental need for access to its core resource as simply a market subject to similar mechanisms as any other market—a market that should therefore be subject to the same rules of fair competition.
Mr. Joensen pointed out that there is barely any market on the resource access side, considering that the number of Faroese vessel owners capable of participating in the more attractive, and costly, sectors of fishing is hardly a handful.
“We need to remember what kind of reality we are living in,” he said, “with a population of 50,000 and not much of anything in absolute terms, except fish, we should be careful not to endanger our very livelihood merely for the sake of changing things.”
“We need more clarity and less politics around this and hopefully that is what will result from the work of the reform commission,” Mr. Joensen said.
“As for equal competition, depending on how narrowly you define it, bear in mind that everyone has had pretty much ‘equal opportunity’ to join the industry over the years. Of course, it costs money and effort, timing is important, and so on. But several of the existing operators have a history that goes back a long time, even up to more than a century. The fact that we’ve had some years of consolidation, and some good profits of late, doesn’t necessarily mean that today’s leading players have obtained their positions unfairly.”
“However,” Mr. Joensen added, “most of us agree that some changes are needed. So we should look at all issues of concern, including how to allocate and administer rights, to which extent to restrict foreign ownership, what kind of fees should be applied to licenses or catch, any special taxes, and more.
“We should be able to resolve all such issues.”
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