When Russia first invaded Ukraine almost 12 months ago, the European Commission quickly provided appropriate measures and gave E.U. member-states new tools to mitigate the impacts of the conflict and the sanctions that were adopted across the bloc, according to the Market Advisory Council (MAC). However, E.U. member-states haven’t been as prompt in their implementations, it found in a newly-issued report.
Composed of organizations representing the entire value chain and other interested groups, and co-funded by the E.U., MAC provides advice to the E.C. and E.U. member-states on the global seafood market.
At an E.U. level, among the measures adopted to support the fisheries and aquaculture sectors, the E.C. introduced a Temporary Crisis Framework to enable flexibility under state aid rules. Through this, member-states were able to set up schemes to grant up to EUR 35,000 (USD 37,700) for companies affected by the crisis active in the fisheries and aquaculture sectors.
Additionally, the Commission activated a crisis mechanism allowing member states to grant financial compensation to fishery, aquaculture, and processing operators for income foregone and additional costs, as well as compensation to producer organizations for the implementation of storage aid.
However, with implementation of the support measures done at a national level, member states have taken different approaches. For example, the fishing sectors of Ireland, Denmark, and the Netherlands didn’t put in place compensation for fuel price increases. Instead, these countries have used the Brexit Adjustment Reserve to compensate fishers, even though the objectives of the instrument are different.
Elsewhere, Sweden granted aid to compensate for higher prices, but this was conditional on the landings taking place in Sweden, so a large proportion of pelagic catches weren’t eligible. And Spain has been the only country to use the mechanism that compensated for income foregone and increased costs, but this support was only provided to the producing sectors and didn’t cover the rest of the supply chain.
As a result of these varying measures, an uneven playing-field now exists at the national level in regard to the implementation and effectiveness of the support measures, MAC said. And processing and retail sectors haven’t always been covered in the mitigation plans implemented by the various E.U. member-states
To address those issues, MAC has proposed a further set of recommendations to tackle the market disturbances currently buffeting the E.U.’s facing the fisheries and aquaculture sectors.
MAC Secretary General Pedro Reis Santos said the “swift manner” with which the E.C. acted to deliver assistance and the “continuous collaboration” that occurred between the council’s members demonstrated lessons were learned from the Covid-19 pandemic crisis.
“Unfortunately, E.U. member states have not been so prompt in the implementation and different approaches have been taken, including in terms of instruments used, amount of aid provided, and access conditions,” Santos told SeafoodSource. “The differences in approaches show differences in national budgets and priorities, but also hesitancy in the use of E.U.-developed measures.”
Santos said some “very significant damage” has already been inflicted to the entire supply chain due to the mounting costs of energy and raw materials, high inflation, and decreases in consumer demand. Furthermore, there has been a downswing in per capita seafood consumption across the E.U., he said.
“With the current inflation rates, consumers are likely to continue shifting away from fisheries and aquaculture products, an important source of healthy and sustainable proteins. Therefore, member-states must act as soon as possible, since there are already operators leaving the sector, which will irreversibly damage coastal communities,” he said. “Even in the case of member-states that provide support, parts of the supply chain (processing and retail) have been excluded, which represents a significant risk of a breakdown of the chain, plus the disappearance of essential services and infrastructures.”
MAC’s new recommendations include:
- Coordination between the E.C. and member-states to ensure national authorities use all available aid instruments;
- Avoiding the creation of an uneven playing-field across the E.U., including the amounts provided and access conditions, and covering the entire fisheries and aquaculture chain;
- Continued implementation of aid measures and increases made to the maximum amount of support given to each individual undertaking in the sector;
- Monitoring and reporting on the ongoing shifts in purchasing habits of consumers, particularly the substitution of fisheries and aquaculture products for cheaper products;
- Conducting work on crisis prevention and the increased resilience of E.U. agri-food systems (accounting for the dependency on imports and restricted scope to increase domestic supply as well as the sector’s added-value for the environment, food security, and local and coastal development).
Santos said the E.C. and member-states should prioritize the coordination and use of all available aid instruments to ensure the entire fisheries and aquaculture chain is supported and that the support is equivalent across the E.U.
“The reduction in the administrative burden in the access to aid measures is essential, because, otherwise, companies will be bankrupt despite the existence of aid measures. Additionally, the European Commission and member states should prioritize the monitoring and reporting on the ongoing shift in purchasing habits of consumers, to avoid a new crisis in the fisheries and aquaculture supply chain,” he said.
MAC said that across the E.U., and following Russia’s invasion of Ukraine, fisheries operators have faced huge fluctuations in fuel prices, aquaculture ventures have been hit by soaring feed ingredient prices and shortages, and processors have experienced difficulties sourcing raw materials. There are also worries about potential energy cuts in shortage situations.
At the same time, the retail trade has suffered significant increases in the cost of energy, fuel, and raw materials, while facing a weak demand with decreases in consumption. In this regard, the council points out that in Spain, there were year-on-year decreases ranging between 13 and 20 percent in every month of 2022 until October.
Additionally, market prices have been impacted by volatility and a reduction of offer, and that the increases in costs were not always passed on to consumers.
The chain has also faced employment difficulties connected to the need to increase wages as well as difficulties in finding and maintaining personnel, which can translate in the loss of business opportunities, it said.
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