Report on the application of the system of compensation for the additional costs incurred in the marketing of certain fishery products from the Azores, Madeira, the Canary Islands and the French department of Guiana as a result of their very remote location
Date: 1997-07-22
Institutions: European Commission
Subjects: economic development, financial equalisation, fishery product, peripheral region, regional aid

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 22.07.1997 
COM(97)  388  final 

REPORT ON THE APPLICATION OF THE SYSTEM OF COMPENSATION FOR 
THE ADDITIONAL COSTS INCURRED IN THE MARKETING OF CERTAIN 
FISHERY PRODUCTS FROM THE AZORES, MADEIRA, THE CANARY ISLANDS 
AND THE FRENCH DEPARTMENT OF GUIANA AS A RESULT OF THEIR VERY 
REMOTE LOCATION 

(presented  by the Commission) 

CONTENTS 

PREFACE 

Introduction 

Specific case of support for  marketing  certain fishery products 

Subject of the present  report 

Application  of the system in the regions  concerned 

I. 

THE AZORES 

II.  MADEIRA 

III. 

THE CANARY ISLANDS 

IV.  GUIANA 

3 

4 

5 

6 

16 

25 

40 

p:\uper\projet\005en.doc 

PREFACE 

Introduction 

By its Decisions 89/687/EEC1, 91/314/EEC2and 91/315/EEC3 the Council set up programmes 
of  options  specific  to  the  remote  and  insular  nature  of  the  outermost  regions.  These  have 
provided  an  appropriate framework for  the  adoption  of  measures  in  the  various  sectors  of 
activity that require special attention as regards increasing Community support to reduce the 
permanent  constraints  suffered  by 
(POSEIDOM,  POSEICAN  and 
POSEIMA Programmes). 

these  regions 

The programmes aim to take account, in the application of Community policies, of the special 
characteristics  and handicaps of these regions resulting from their remoteness  and isolation. 
Their  economic  dependence  on  a  few  products,  the  smallness  of  their  markets  and  their 
twofold  nature  as both  Community  regions  and territories  situated  in  a developing  country 
environment determine the economic and social situation of these regions. 

Symbols  of  Community  solidarity  with  its  most  distant  regions  and  essential  for  their 
integration in the internal market, the programmes were intended as reference frameworks for 
the application of Community policies in these regions. 

The Joint Declaration on the Outermost Regions of the Community annexed to the Treaty on 
European  Union  acknowledges  that  special  measures  have  to  be  adopted  to  assist  these 
regions  in  order  that  they  can  achieve  the  average  economic  and  social  level  of  the 
Community4.  The Council has adopted  a series of programmes  covering  various  sectors of 
economic activity, including fisheries, which plays a particularly important role in the socio 
economic development of these regions. 

l 

OJNo L 399 of 30 December  1989. 

O J N oL  171 of 29 June 1991. 

O J N o L 1 71  of 29 June 1991. 

The full  text of the Declaration  is as follows: 

"The  Conference  acknowledges  that  the  outermost  regions  of  the  Community  (the  French  overseas 
departments,  Azores  and  Madeira  and  Canary  Islands)  suffer  from  major  structural  backwardness 
compounded  by  several  phenomena  (remoteness,  island  status,  small  size,  difficult  topography  and 
climate, economic  dependence  on a few products), the permanence  and combination  of which  severely 
restrain their economic and social development. 

It  considers  that,  while  the  provisions  of  the  Treaty  establishing  the  European  Community  and 
secondary  legislation  apply  automatically  to  outermost  regions,  it  is  nonetheless  possible  to  adopt 
specific  measures  to  assist  them  inasmuch  and  as  long  as  there  is  an  objective  need  to  take  such 
measures  with  a view to the economic  and social development  of those regions. Such measures  should 
have  their  aim  both  the  completion  of  the  internal  market  and  a  recognition  of  the  regional  reality  to 
enable the outermost regions to achieve the average economic and social level of the  Community". 

p:\uper\projet\005en.doc 

Several  factors,  in particular  the extent  of the exclusive economic zones  and  the jobs  created 
by  the  activities  related  to  this  sector justify  an  approach  at  Community  level  which  takes 
account of both the importance of the sector and the constraints resulting from the remoteness 
of these regions. 

In  this  context,  the  programmes  of  specific  options  constitute  an  appropriate  framework  for 
the implementation  of a set of measures which allow these regions to be gradually  integrated 
into  the  dynamics  of  the  internal  market  and  to  enjoy  the  advantages  of  their  economies 
reaching levels of development closer to those of the rest of the Community. 

Specific  case of support for marketing certain fisheries products 

The  absence  of  regional  markets  and  the  additional  transport  costs  already  referred  to 
constitute permanent  constraints  regarding  access to markets.  This  is  a situation  common  to 
the three outermost regions. 

It  was  precisely  for  this  reason  that  the  Community  decided  to  take  action  to  assist "the 
producers  in  these  regions  regarding  the  marketing  of  fishery  products.  A  system  was 
introduced  in  19925,  which  met  with  considerable  success.  It  was  extended  in  1994  by 
Council  Regulation  (EC)  No  1503/946,  which  provided  support  for  the  marketing  of  the 
species  most  concerned  by  making  possible  external  marketing  activities  in  conditions 
comparable to those of economic operators in mainland Europe. 

In  the  regions  of  the  Azores  and  Madeira,  local  canning  industries  account  for  a volume  of 
production  equivalent  to  almost  half  of  exports  and  employ  a  sizeable  proportion  of  the 
working  population.  Nevertheless,  the  specific  conditions  of  these  regions  resulting  from 
their  small  size  and  geographical  situation  mean  additional  production  and  marketing  costs, 
which weaken their competitive position compared with similar activities in mainland  Europe. 
Consequently,  the  levels  of pay  in the  sector  are much  lower  than  the  Community  averages. 
The  factors  determining  this  lie  in  the  industry's  operating  conditions:  additional  transport 
costs  and  financial  charges  resulting  from  the  capitalisation  of  the  factors  of  production  (in 
particular salt, oil and cans);  additional  energy costs and the cost of transport insurance.  The 
situation  is the  same in  the  Canary  Islands, where the  additional  costs  are  also  linked  to  raw 
materials,  energy  and  transport.  This  is  also  true  of  the  department  of  Guiana  where,  in 
addition  to  the  above-mentioned  factors,  there  are  special  circumstances  which  worsen  the 
operating conditions (e.g. absence of maritime credit for financial  charges, need to create large 
stocks  of  spare  parts  for  ships,  difference  in  the  purchase  price  of  ships  in  continental 
shipyards,  given  the  absence  of  local  supply,  and  competition  of  exports  from  certain 
countries  in  South  and  Central  America,  which  enjoy  advantageous  conditions  under 
Community  legislation).  This  situation  cannot  be  overcome  in  the  short  term. 
It  was 
therefore  necessary to follow-up  the measures undertaken with a legal  instrument to  introduce 
a  stable  reference  framework  for  the  economic  operators  concerned.  This  took  the  form  of 

Commission  Decision  of  30  July  1992  on  the  grant  of  Community  aid  for  certain  specific  measures 
implementing  the  programme  of  options  specific  to the  remote and  insular  nature  of  Madeira  and  the 
Azores (Poseima). OJ No L 248 of 28 August  1992. 

OJNoL162of30June  1994. 

D:\uner\riroiet\OORpn rloc 

Council Regulation (EC) No 2337/957, which provides for the continuation of the system until 
31 December 1997. 

Subject  of  the  present  report 

In  accordance  with  Article  6  of  Council  Regulation  (EC)  No  2337/95  of  2  October  1995 
establishing  a system  of compensation  for  the additional  costs incurred  in the marketing  of 
certain  fishery  products  from  the  Azores,  Madeira,  the  Canary  Islands  and  the  French 
department of Guiana as a result of their very remote location , the Commission has to submit 
to  the  European  Parliament,  the  Council,  the  Economic  and  Social  Committee  and  the 
Committee  of  the  Regions  a  report  on  the  application  of  the  measures  provided  for 
accompanied by the appropriate proposals if necessary. 

In accordance with that provision, the present report provides  a description of the results of 
the application of the system of support for marketing certain species produced in the regions 
concerned  (tuna  in  the  Azores  and  Madeira;  tuna,  sardines  and  mackerel'm  the  Canary 
Islands; prawns in Guiana).  It also reports on the constraints  currently  faced  by the fishery 
sector  regarding  the  species  which  are  marketed  in  significant  quantities  and  outlines  the 
prospects for Community action in this  field. 

OJNo  L 236 of 5 October  1995. 

See footnote  7. 

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APPLICATION  OF THF  SYSTEM IN THE REGIONS  CONCERNED 

1. AZORES 

1 

General economic situation 

The Azores archipelago consists of nine islands in three groups - Western (Flores and Corvo), 
Central  (Terceira,  Graciosa,  Sâo  Jorge,  Pico  and  Faial)  and  Eastern  (Sâo  Miguel  and  Santa 
Maria)  -  spread  along  a  WNW-ESE  band  measuring  approximately  630  km  by  130  km 
between  39° 43' 23"  and  36° 55' 43" N,  and  24° 46'  15"  and  31°  16' 24" W  in  the  southern 
part of Division X of the International  Council for the Exploration of the Sea (ICES). 

The  Azores  are  a  geographically  isolated  region,  lying  1600 km  from  the  coast  of  mainland 
Portugal and 4 000 km from the Eastern coast of the United States. 

This isolation is further  compounded by the marked dispersion of the islands themselves. Faial 
and Pico  are the closest to each other,  some 6 km apart, while  Santa Maria and  Corvo  are the 
most distant, at a distance of almost 630 km. 

The  islands'  dispersion  and  isolation  from  others  and  from  the  continents  have  led  to  the 
definition  of an extensive Exclusive Economic Zone (EEZ) of approximately 938 000 km2. 

Population and employment 

The population of the Azores, in marked decline since  1960, totalled 237 795 inhabitants as of 
31 December  1991  (the  date  of  the  last  census). At  the  end  of  1994, the  resident  population 
was estimated at approximately 240 520. 

The  population  of  working  age  in  the  Region  at  the  end  of  the  third  quarter  of  1996  was 
approximately 94  121, 89 184 of whom were in employment. 

The  unemployment  rate  in  the  Region  in  the  third  quarter  of  1996  was  5.2%  of  the  active 
population. 

As  a  result  of  the  considerable  distance  from  the  continents,  geographical  and  population 
constraints  and  limited  Gross  Domestic  Product,  the  islands'  economy  has  all  the  essential 
features  of small island economies. 

The concentration/specialisation of production  is focused  on primary-sector products, some of 
which  undergo  industrial  processing.  The  primary  sector  clearly  exhibits  the  best  levels  of 
productivity. 

Its  island  location  gives  the  Region  an  Exclusive  Economic  Zone  of  approximately  938  000 
km2.  The Region has to make the best use of this economic potential by efficient  and rational 
exploitation  of  the  sea's  resources  for  its  own  supply  and  for  processing  and  sale beyond  its 
shores. 

2. 

The  importance  of the  fisheries  sector in the  region 

Two sorts of fishing are pursued  in the Region.  On the one hand, thunidae are almost  entirely 
exploited  for  industrial  canning  and  export  to  mainland  Portugal  and  some  other  European 
countries;  on  the  other  hand,  various  pelagic  and  demersal  species  are  fished  on  a  much 
smaller scale for consumption  on the islands or export fresh or  refrigerated. 

p:\uper\projet\005en.doc 

6 

The balance of trade in fishery products  shows a marked  surplus in the regions'  favour  which 
has  grown.  Exports  of  fishery  products  accounted  for almost  60% of the Region's  total 
exports, and Italy is the Number-one customer. 

Balance of trade (ESC 000) 

1994 

1995 

PRODUCTS 

Imp. 

Exp. 

Balance 

Imp. 

Exp. 

Balance 

Fish, 
and crustaceans 

molluscs 

industry 

Food 
products 
(canned tuna) 

Other products(*> 

TOTAL 

486 922 

756 031 

269  109 

618 893 

2 015 619 

1 396 726 

253 820 

2.203 308 

1 949 488 

1 549 646 

1549 646 

63 

0 

-63 

2 435 

0-

-2  435 

740 805 

2 959 339 

2 218 534 

621 328 

3 565 265 

2 943 937 

External trade 

IMPORTS 

EXPORTS 

PRODUCTS 

1989 

1994 

1989 

1994 

ESC  000 

% 

ESC 000 

% 

ESC 000 

% 

ESC 000 

% 

Fish, molluscs 

234  500 

2.4% 

740 805 

5.2% 

"2 413 000 

56.1% 

2 959 339 

58.4% 

crustaceans  and canned 
products 

Other products 

TOTAL 

9 637  300 

97.6% 

13 432  143 

94.8% 

1 889 000 

43.9% 

2  105 207 

41.6% 

9 871  800 

100.0% 

14 172 948 

100.0% 

4 302 000 

100.0% 

5 064 546 

100.0% 

General description  of the fisheries  sector 

Fishing areas 

Fishing  in the Azores  concentrates  on exploiting  fishing  grounds  less  than  500 m  deep 
(inshore and banks), usually designated as potential fishing  areas, which yield virtually all the 
demersal  and the bulk  of the pelagic  species, and the thunidae in particular,  which are landed 
in the ports of the Region. 

(*)  Including  the import of fishing vessels 

p:\uper\projet\005en.doc 

As regards the potential of the Azores Exclusive Economic Zone (EEZ), the following  factors 
should be borne in mind: 

The  wealth  of  the  Azores  EEZ  is  disproportionately  small  for  its  scale,  because  it  is 
conditioned  by  a  series  of  factors  which  greatly  reduce  its  potential  (particularly  by 
comparison with the areas of the continental  shelf): 

- 

the lack of a continental shelf; 

- 

- 

- 

the  existence  of  fishing  banks  scattered  across  the  ocean  plateau  but  separated  by  vast 
depths  which  are  an  obstacle  to  the  migration  of  demersal  species  and  the  probable 
existence of sub-stocks; 

the morphology of the ocean bedr rugged and, typically, deep, determines the conditions of 
the ecosystem to the disadvantage of the region; 

the  geographical  situation  of  the  archipelago  exposes  the  area  to  the  effects  of  natural 
imbalances; 

-  -the movement of masses of Mediterranean waters makes for an unstable  environment; 

- 

the  low primary productivity of this zone in relation to the continental shelf. 

-  The  exploitation  of  the  wealth  of  the  Azores  EEZ by  its  fishermen  could,  however,  be 

greatly increased by modernising the various components of the sector. 

Fishing fleet 

Vessel types and their  characteristics 

The Region's fleet  is still inadequate in view of the area of the EEZ. 

At present, the fleet numbers approximately  1  747 vessels totalling some  13 063  GRT. 

The Azores fishing fleet - tonnage and engine power 

AREA 

ZONE 

SEGMENT 

Number 

GRT 

SITUATION AS 
OF  30.06.96 

Engine power 
(kW) 

AZORES 

Coastal zone 
and  Community 
waters 

Multi 
purpose 

International 
and third-
country waters 

Deep-sea 

1 745 

11480 

44 766 

2 

1 583 

2 354 

TOTAL 

1747 

13 063 

47120 

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The vast  majority  are  small  craft  with  engines  of  less than  75 kW which  fish  small  demersal 
species, scad  and  chub mackerel  along the coasts  or in inshore  waters,  landing  catches  of  the 
order of a few hundred kilos, and which therefore pursue what is designated as "local  fishing". 

There  are  some  268  slightly  larger  craft  with  greater  autonomy,  classed  as  "inshore  fishing 
vessels".  They  generally  fish  close to  the coast, but  the  larger  vessels  in this  category  work 
grounds  located  within  the  200-mile  zone,  where  they  fish  thunidae  and  other  migratory 
pelagic and demersal species. 

The tuna  fleet  currently  numbers  34 vessels,  15 of which  are  independently-owned  while  19 
are  directly  or  indirectly  linked  to  canning  firms.  Most  of  these  vessels  have  chilled  water 
facilities  for storing fish, permitting trips of 8 consecutive days. 

Main fishing  gear 

The local and inshore fishing vessels use a great variety of fishing  gear, often  in combinations. 
These can be divided into three categories: lines, nets and traps. 

Fishing  with  lines,  surrounding  nets, gill nets  and  traps  is practised  all  along  the  coast.  Drift 
lines are also in evidence, albeit in specific areas. 

The gear used varies with specific  techniques: e.g. veranda netting is especially geared to tuna 
fishing,  and trolling to demersal  species like hake, wreckfish,  seabream, boca negra and pargo 
bream. 

Employment 

The fishing  fleet provides direct employment  for some 4 400 seamen, including  fishermen  and 
other  categories.  Of the economically  active population  of  87 888  in  1995, an  estimated  5% 
are directly linked  to  fishing. 

Most  of the  fishermen  are  engaged  in  local  fishing,  often  part-time.  Virtually  all  the  inshore 
fishermen are full-time  professionals. 

Registered  fishermen 

YEAR 

1992 

NUMBER 

4 436 

1993 

4 433 

1994 
m 

4 081 

— 

1995 

4 420 

Considerable efforts  have been brought to bear on vocational training in recent years. 

Fishing ports 

Scale and location 

The  geographical  dispersion  of  the  Azores  archipelago  means  that  there  are  fishing  ports  all 
along the coast. 

There  are  currently  49  working  ports,  most  of  them  small  or  extremely  small.  Only  three  -
Ponta  Delgada  (Doca),  Santa  Cruz  (Horta)  and  Praia  da  Vitôria  (still  under  construction)  -
provide a permanent safe birth for large-draught vessels, behind man-made breakwaters. 

p:\uper\projet\005en.doc 

The fisheries cannot be expected to develop in the absence of working ports with the requisite 
facilities.  There  is  therefore  a  pressing  need  for  very  considerable  investment  in  port 
infrastructures. 

Main species landed 

The fishing of thunidae and similar species is crucial in the Azores, in that these account  for 
approximately  57%  of  the  species  landed.  Catches  have  oscillated  over  the  years,  due  to 
abnormal  environmental  conditions  in the North  Atlantic,  as  shown  in  the  following  table. 
The Azores are also one of the regions where most tuna is fished in Community waters. 

Demersal  species  account  for  26%  of fresh fish, the  commonest  being  hake,  boca  negra, 
wreckfish,  seabream,  kitefin  shark,  peixâo  and  scabbard fish, with  landings  of  the  order  of 
3 200  tonnes.  By  far  the  commonest  small  pelagic  species  is  the  horse  mackerel, 
approximately 2 000 tonnes of which are landed every year. 

Of molluscs and crustaceans only squid are significant, and 250 tonnes were landed in 1995. 

Fish landings in the Azores 

Unit: Ton. 

SPECIES 

1992 

1993 

1994 

1995 

TUNA 
Bigeye tuna 
Bonito 
Long-fmned  tuna 
Other 
MOLLUSCS 
Squid 
Other 
CRUSTACEANS 
OTHER 
Hake 
Boca Negra 
Mackerel 
Wreckfish 
Horse mackerel 
Conger 
Swordfish 
Seabream 
Kitefin  shark  (Gata) 
Peixâo 
Scabbard  fish 
Other 

6 216 
2 439 
2 554 
1 209 
14 
89 
76 
13 
42 
7 550 
442 
575 
304 
234 
1 255 
339 
344 
611 
761 
431 
255 
1 998 

10 676 
4  158 
2 243 
4 275 
0 
117 
108 
9 
34 
7 808 
327 
652 
265 
309 
1739 
320 
404 
357 
591 
430 
264 
2  149 

6 591 
1 895 
3 360 
1 335 
1 
124 
113 
10 
22 
8 012 
284 
698 
353 
428 
1781 
312 
288 
388 
309 
520 
373 
2 278 

11 689 
4915 
592 
6  183 
0 
261 
250 
11 
24 
8 482 
290 
581 
474 
240 
1 820 
266 
461 
450 
321 
573 
778 
2 229 

T O T AL 

13  897 

18  635 

14  749 

20  457 

p:\uper\prqjet\005en.doc 

10 

Cold stores 

There are three public cold  stores in operation  in the Azores, in the ports of Vila do Porto  (on 
Santa Maria), Santa Cruz (on Faial) and Madalena (on Pico). 

Virtually all the fish frozen in these stores supplies the regional  industry. 

Processing and  marketing 

Processing 

In the Azores, processing of fishery products means, virtually exclusively, tuna canning. 

Set up in the Archipelago around 60 years ago, the tuna canning industry today comprises  four 
firms which own five factories  located on four different  islands  - Sâo Miguel, Sâo Jorge, Pico 
and Faial. 

These  firms  compete  on the national  and  international  market  on  specific  conditions  dictated 
by the special features  of the activity pursued in the Azores: 

- 

- 

the raw materials  are seasonal  and can be caught  close to the  factories.  Virtually  all of the 
output is absorbed by local industry; 

the other physical  factors  of production  (oils, salt, packaging,  etc.) are more expensive  due 
to the costs of transport and storage over long periods; 

-  power 

is  expensive,  and  the  supply  is  irregular,  necessitating 

the  installation  of 
autonomous  generators, which are costly and tie up capital which could be better put to use 
in direct production. 

The  following  table  summarises  the  quantity  of  fish  used  by  the  canning  industry  in  the 
Region over the last five years: 

Quantity offish  processed 

1992 

1993 

1994 

1995 

1996 

9 985 697 

9 509 682 

7 568 760 

8 592 646 

8 597 635 

Increased  production  capacity  and  the  modernisation  of  some  factories  has  enabled  the 
canning  companies  to maintain  their  exports.  High-quality  canned  products  from  the  Azores 
easily find an external market, primarily in Italy. 

Labour-intensive  by  its  very  nature,  tuna  processing  is  a major  employer  in  the  Region,  and 
more particularly  a large employer of female  labour. 

p:\uper\projet\005en.doc 

11 

Marketine 

The marketing  sector consists of small  and medium-sized  businesses  which  essentially  export 
fresh or refrigerated fish and canned tuna. 

Other than thunidae, which  are virtually  entirely used  for canning  in Azorean  factories  (albeit 
with  the  exception  of  the  long-fmned  tuna,  all  of  which  is  exported),  the  bulk  of  the  fish 
caught  in  the  waters  off  the  Azores,  particularly  that  with  the  greatest  commercial  value,  is 
sold on the national and intentional market. 

Prospects for the development of the fleet and catches 

The Azorean  fishing  fleet  has  seen changes, as new vessels are commissioned  and others  laid 
up. 

is  intended  to  provide  the  Region  with  vessels  which  can  guarantee  an 
This  effort 
improvement  in  the  conditions  in  which  fish  are  stored  on  board  and  rationally  exploit  the 
sea's resources for own supply and the external market. 

Rising numbers  of working  vessels  obviously  increase the volume  of catches  and  landings  \A 
the Region.  Catches are forecast  to progress as follows: 

Changes  in  catches 

DEMERSAL 

THUNIDAE 

TOTAL 

1997 

9 000 

11 500 

20 500 

1998 

9 500 

12 500 

22 000 

1999 

10 000 

13 500 

23 500 

2000 

10 500 

14 500 

25 000 

The effectiveness  of application  of the compensation  system 

The situation before the system was introduced 

Council Decision No  91/315/EEC of 26 June  1991 set up a programme  of options  specific  to 
the remote and insular nature of Madeira and the Azores. 

Subsequently,  by  Decision  No  92/448/EEC,  in  granting  financial  support  for  specific 
measures to overcome the remoteness of the Azores and Madeira, the Commission  recognised 
the difficulties  faced  by the two archipelagos which prevented  them  from  fully  participating  in 
the  dynamics  of  the  internal  market  and  their  economic  backwardness  in  relation  to  other 
European regions. 

In fact, the specific  conditions  of the Azores archipelago, dictated by its small size and  remote 
location,  give rise to obvious  extra costs in the production  and  sale of canned products  which 
distort  the  conditions  of  competition  with  similar  activities  in  continental  Europe  and  have 
clear negative repercussions on the levels of remuneration of the tuna fishing  sector. 

p:\uper\projet\005en.doc 

12 

In  the  interests  of  harmonious  growth  in  the  sector  and  with  a  view  to  complementing 
investment  in  other  areas,  it  was  important  to  create  the  conditions  so  that  the  existing 
industrial  units  and  any to be set up could  increase their production  capacity, becoming  more 
cost-effective  and capable of absorbing all the fish caught by the vessels of the region. 

3. 

The  consequences  of the  application  of the  system  in terms  of employment,  export 
flows  and market behaviour 

The  support  granted  under  the  system  to  offset  the  extra  costs  incurred  in  marketing  certain 
fishery products due to the islands' remote location has provided  lasting stability in the  sector, 
affording  ship owners and industrialists acceptable margins for their activities. 

Under  this  arrangement,  240  new jobs  have  been  created  in  the  existing  four  firms,  one  of 
which was replaced by a new unit located in an area that is heavily dependent on fishing. 

The fact  that these firms can place all their production on the external market  at prices  similar 
to those of their Portuguese  and European rivals guarantees Azorean ship-owners  that all their 
catches will be absorbed by industry. 

Ship owners and industrialists may be said to be generally satisfied  with the application  of the 
scheme in the Azores. 

4. 

Identifying  the beneficiaries  under the scheme and the administrative  mechanisms 

Beneficiaries 

The beneficiaries  of the compensation  system are the owners of tuna fishing  vessels registered 
in  ports  in  the  Region  and  pursuing  their  activities  in  the  EEZ  of  the  Azores  and  Madeira 
archipelagos  as  well  as  the  tuna  processing  industries.  Charterers  of  foreign  fishing  vessels 
pursuing their activities in the EEZ of the Azores may also receive aid. 

Administrative  measures 

Further  to  the  publication  of  Decision  No  92/448/EEC  of  30  July  1992,  Council  Regulation 
(EC)  No  1503/94  of  27  June  1994  and  Council  Regulation  (EC)  No  2337/95  of  9  October 
1995, the Regional  Secretariat  for Agriculture and Fisheries of the Autonomous  Region of the 
Azores drew up orders defining  the rules  for the application  of Community  aid to the  canning 
sector which were then published in the Official  Journal. 

Every  quarter,  ship  owners  and  industrialists  submit  applications  for  aid  payments  to  the 
Regional  Secretariat  for  Agriculture  and  Fisheries.  After  checking  the  applications,  the 
Regional  Secretariat  sends  the  files,  to  the  Institute  for  Financing  and  Supporting  the 
Development  of Agriculture and Fisheries (IFADAP) for payment in due course. 

Payments  in respect  of  quantities  of tuna  from  chartered  vessels  and  imported  tuna  are  made 
only at the end of each year, after final balancing of the deliveries made in that year. 

The IFADAP is responsible  for the supervision and financial  management  of the measure. 

p:\uper\projet\005en.doc 

13 

CONCLUSION 

The  situation  described  above  indicates  that  the  application  of  the  system  set  up  in  1992 
concerning tuna has been fairly  satisfactory  as regards the average annual quantities laid down 
and the consequent  benefits  for  the  economic operators concerned.  On the other hand,  it has 
to be borne in mind that the situation which gave rise to the extra costs providing the grounds 
for  this  scheme  still  obtains.  This  means  that the considerable  distance  from  the market  still 
entails extra costs which  local  operators  have no chance of overcoming.  This being  so, there 
are grounds for applying the compensation mechanism to this product. 

5. 

Demersal  species in the Azores 

In  recent  years,  the  production  and  sale  abroad  of  demersal  species  has  achieved  significant 
proportions within local activities in the Azores. 

In  1996, demersal  species  represented  29% of the  fresh  fish,  the commonest  being  haker  red 
bream, boca negra, wreckfish,  conger,  seabream, alfonsino, kitefin  shark, peixâo and  scabbard 
fish.  Landings of these species were of the order of 3 900 tonnes. 

A substantial  proportion  of the Azores  fishing  fleet  catches demersal  species.  Most  are  small 
craft  working  along  the  coast.  Some  268  larger  vessels  with  greater  autonomy  work  fishing 
grounds within the Exclusive Economic Zone. 

These vessels directly employ 4 000 fishermen, around 90 % of the seamen registered in  1995. 

The bulk  of the  fish  caught  off  the Azores, and particularly  that with  the greatest  commercial 
value, is sold on the national and international market. 

The  following  table  shows  the  quantities  of  fish  exported  (gross  weight  =  fish  +  ice  + 
container) by air in  1995 and  1996, and the main destinations: 

Exports  of fresh  fish 

DESTINATION 

Tonnes 

% 

Tonnes 

1995 

1996 

USA 

Canada 

Mainland  Portugal 

Madeira 

Europe 

Other 

T O T AL 

127 

260 

3516 

101 

381 

118 

2.82% 

5.77% 

78.08% 

2.24% 

8.46% 

2.62% 

155 

236 

2 950 

463 

32 

123 

% 

3.92% 

5.96% 

74.51% 

11.69% 

0.81% 

3.11% 

4  503 

100.00% 

3  959 

100.00% 

Exporting  demersal  species  generates  extra  costs  for  air  freight  (the  sole  means  of  ensuring 
that  the  fish  reaches  the  consumer  without  quality  suffering):  a  minimum  freight  rate  is 
imposed  by  the  airline  with  the  monopoly  on  links  with  the  continent,  and  for  packing  and 
packaging (insulated  containers  and ice). 

p:\uper\projet\005en.doc 

14 

To offset  this situation, intervention  should be approved under the POSEIMA programme to 
offset  the  extra  costs  and  disadvantages  suffered  in  exporting  fish  to  the  outside  world 
occasioned by the islands' remoteness. 

The species to be covered should be those with the greatest commercial value and for which 
demand is greatest on consumer markets, such as seabream (including peixâo), wreckfish, red 
bream, alfonsino, boca-negra and scabbard  fish. 

Average annual exports are of the order of 3 500 tonnes. 

p:\upeAprojet\005en.doc 

15 

II. MADEIRA 

1. 

The general economic situation of the region 

Productive  activity  in the Autonomous  Region  of Madeira  exhibits  a marked  dependency  on 
the outside world. 

Madeira  is  located  in  the  North-East  Atlantic,  between  the  parallels  defined  by  latitudes 
30°  1' 38" and 33° T  34" N and iongitude  15° 51* 11" and  17° 15' 52" W. 

Taking  the  far  points  of  the  Island  of  Madeira  and  the  farthest  points  of  the  geographically 
closest regions, the island of La Palma in the Canaries archipelago is closest, at  approximately 
400 km, followed  by Cape Sin, on the coast of Africa,  at approximately 625 km, and Lisbon at 
approximately 950 km.  The distance from Brussels is some 2 700 km as the crow  flies. 

In view of these distances, Madeira can not only be defined  as the island region it is but as-one 
of the outermost regions of the European Continent and of the European  Community. 

The region  is  an  archipelago  consisting  of the  islands  of  Madeira  and  Port  Santo,  which  are 
inhabited,  and  a  group  of  islets  which  make  up  the  Désertas  and  the  Salvage  Islands 
(Selvagens). 

The  archipelago  has  an  area  of  approximately  779  km  .  All  the  islands  were  formed  by 
volcanic  activity,  have  steep  irregular  coastlines,  rugged  terrain  and  precipitous  slopes. 
Madeira is the largest island in the archipelago, and is home to nearly the entire population  of 
the region.  Approximately 34% of the total area serves agricultural and human needs. 

Natural  constraints 

-  extremely steep relief, with marked gorges caused by pronounced  erosion; 

-  generally poor-quality  land; 

-  a coastline consisting mainly of huge  cliffs; 

-  a sudden drop in the ocean  floor. 

Main  effects 

- 

increased time and costs required for any work and structures, due to the rugged  terrain; 

- 

- 

- 

limited  feasibility  of  work  entailing  land  movement  because  of  the  complexity  and 
variability of the rock formations  in some parts of the region; 

reduced  tourist  potential  for  beach  or  inland  holidays  in  the  region  because  the  coastline 
does not afford  easy access to the sea; 

relative  scarcity  of  fishery  resources,  due  to  the  drop-off  of  the  ocean  floor  and  resulting 
poverty of the waters in plankton. 

p:\uper\projet\005en.doc 

16 

factors  of location 

Identification 

- 

island  location; 

-  great distance from the continent, outermost  situation. 

Main effects 

- 

isolation;  effects  with multiple repercussions  on the whole region  (economy,  social  fabric, 
labour-force  skills, education, etc.); 

-  specific  regional  problems;  some  difficulties 

in  monitoring  and  coordinating  certain 

national and Community policies and programmes. 

Factors associated with the past (pre-autonomy) 

Identification 

- 

reduced  investment; 

-  centralism. 

Main effects  (after  the process of autonomy) 

-  underdeveloped,  vulnerable economic  fabric; 

-  poor intra-regional access, requiring subsequent heavy investment; 

- 

the  quality  of  life  enjoyed  by the population  is decidedly  inferior  to  that  of the rest  of the 
country; 

-  marked dependence on the outside world. 

Population  and Employment 

Although it has always been borne in mind throughout the process of development  of Madeira 
and  Port  Santo  that  every  measure  and  undertaking  of  any  kind  has  to  be  geared  to  the 
population, there can be no doubt that a visibly low standard of living is still typical of the vast 
majority  of the inhabitants of both islands. 

Particularly  in  terms  of  pay,  education,  vocational  training  and  various  welfare  indicators, 
there is still a very long way to go to attain a quality of life which would put the population  of 
the Region on the level  of other countries, even the  least developed  countries  in the  European 
Community. 

In the last five years, the population  of the Region has increased  slightly (0.7%) to the current 
figure  (1996)  of  approximately  255  100  inhabitants,  giving  a  population  density  of  327.5 
inhabitants per km2. 

The unemployed population is 5 238, a rate of 4.68%. 
The employment rate is 43.9%. 
Employment  breaks  down  by  sector  as  follows:  the  tertiary  sector  employs  60.6%,  the 
secondary sector 27.7% and the primary sector  11.7% of the active population. 

p:\uper\projet\005en.doc 

17 

It should be mentioned that the population of Funchal, representing almost half the total of the 
archipelago, is mainly employed in the services sector.  It will therefore be easy to separate out 
the relative weight of the primary sector in the rural municipalities of the Island of Madeira. 

Exclusive Economic Zone  (E.E.Z.) 

The region has an Exclusive  Economic Zone of around  110 000 square miles, over  500 times 
the  land  area, which  is physically  characterised  by the absence  of a continental  shelf,  limited 
continental talus and an ocean floor  at an average depth of some 4 000 metres and a maximum 
of approximately  5 400 metres, interrupted only in little areas where some underwater heights, 
popularly known as "banks", rear up from the abyss. 

2. 

The fisheries sector in the region 

Local importance of this activity for each island within overall economic  activity 

The  vast  majority  and  core  of  the  fisheries  sector  is  concentrated  on  the  two  decidedly  rural 
municipalities of Câmara de Lobos and Machico. 

Between  fishermen,  merchants,  factory  employees  and  government  officials,  approximately 
2  150 people are directly linked to the sector, representing nearly 2% (sic) of the population  in 
employment. 

Comparison with other sectors of activity 

Due  to  the  constraints  mentioned  above,  Madeira's  economy  is  heavily  dependent  on  the 
outside world,  and the balance of trade shows a pronounced  deficit.  Both the primary  and the 
secondary  sector  are  predominantly  built  on  fragile  structures.  Bearing  the  permanent 
difficulties  of some areas of production in mind, fish processing plays a leading role in exports 
as  well  as  generating  added  value,  with  consequent  advantages  for  the  economy  as  a  whole 
and for the sector in particular, especially as a focus for production, employment  and income. 

Description  of existing  infrastructures 

Fishing ports 

The main port for  landings is in Funchal, and handles around  10 000 tonnes of fresh fish every 
year, or some 95% by volume of the fish landed in the Region. 

Porto  Santo,  Caniçal  and  Câmara  de  Lobos  deserve  mention  by  virtue  of  the  volume  of 
landings made there. 

Another  quay,  in  Porto  Novo,  in  Santa  Cruz  municipality,  has  recently  been  extended  and 
modernised,  essentially  for the purposes of direct landings to the fish factories  in that area. 

Cold stores 

Only five of the twelve ports  in the region have cold  stores. In addition  to these, the Regional 
Government  also bought  a cold store in the municipality of Santa Cruz which, after  upgrading, 
came  into  operation  in  1993.  The  cold  stores  provide  freezing,  storage,  and  refrigeration 
services, and sells ice. 
Virtually  all  the  frozen  fish  supplies  regional  industry,  while  any  surplus  goes  to  industry  in 
the Azores and mainland  Portugal. 

p:\uper\projet\005en.doc 

18 

Fleet and fishing  gear 

The regional  fishing  fleet consists of 538 small  craft. 
Most  of  these  are  wooden  vessels,  with  limited  range,  insufficient  ancillary  navigation  and 
detection equipment  and poor accommodation, safety and on-board storage  facilities. 
The  small  craft  mainly  catch  various  species  by  line  fishing.  The  vessels  which  fish  black 
scabbardfish  are slightly  larger (8-15 metres)  and use longlines.  Surrounding nets are used  to 
catch  small pelagic  species, and  vessels  are authorised  to use this technique.  Tuna boats  are 
larger (18-30 metres in length), and use veranda nets. 

Nearly all the vessels operate inshore and in the Portuguese exclusive economic areas. 

Fish  landings 

The  following  table  shows  the  relative  weights  of  thunidae  and  black  scabbardfish  landings 
within the totals for the ports of the region. 

Fish landings in Madeira 1992 - 1996 

SPECIES 

1992 

1993 

1994 

Weight 

(%) 

value 

(%) 

Weight 

(%) 

value 

(%) 

Weight 

(%) 

value 

(%) 

Thunidae 

8 095 

61.5 

1068 

49.1 

4 725 

45.7 

567 

35.3 

5 245 

50.8 

Black  scabbardfish 

2 812 

21.4 

676 

31.2 

3 466 

33.6 

640 

39.9 

3  132 

30.3 

Other 

2 261 

17.1 

426 

19.5 

2 151 

20.7 

400 

24.8 

1968 

19.1 

709 

683 

467 

TOTAL 

13 168 

100 

2 170 

100 

10 342 

100 

1607 

100 

10 345 

100 

1859 

38.2 

36.8 

25 

100 

SPECIES 

1995 

1996 

Weight 

8  851 

3  432 

(%) 
64.1 

25.0 

value 

(%) 

Weight 

1205 

54.4 

6 3 31 

634 

28.6 

3  279 

1484 

10.9 

380 

17.0 

2  116 

'  (%) 
54.0 

28.0 

18.0 

value 

1  180 

662 

429 

(%) 
52.0 

29.2 

18.8 

13 767 

100 

2 219 

100 

11726 

100 

2 271 

100 

Thunidae 

Black  scabbardfish 

Other 

OTAL 

The canning  industry 

The  canning  industry  in  the  region  currently  boasts  four  factories.  These  have  capacity  for 
roughly  40  tonnes  of  raw  materials  per  day  and  take  in  an  average  of  around  4 000  tonnes 
every year, although they exceeded  6 200 tonnes in  1992.  It should be pointed  out that two of 
these  factories  began  production  in  early  1997,  for  which  reason  the  values  given  above  are 
bound to change significantly  as of the current year. 

Virtually all the processed product is caught in the region by vessels registered  in local ports. 

The raw materials used  are basically  thunidae and the like, and the finished  product  is sold  on 
the Community  market. 

This industry employs a total of 395 people. 

p:\uper\projet\005en.doc 

19 

Application  of the POSEIMA  Programme  1992/1996 (TUNA) 

Y E AR 

Production  kg. 

ESC 

Regional 

Imports 

TOTAL 

Industry 

Ship  owners 

TOTAL 

6 270 893 

3 408 040 

0 

-  0 

6 270 893 

203 804 023 

0 

203 804 023 

3 408 040 

22  152 260 

88 609 040 

110 761 300 

3 036 512 

772 076 

3 758 588 

27 888 723 

90  123 676 

118 012 400 

5 538 966 

0 

5 538 966 

41054  816 

164 235 881 

205 290 697 

2 387 872 

112 460 

2 500 332 

21 867 012 

70 802 793 

88 505 868 

1992 

1993 

1994 

1995 

1996 

T O T AL 

20  642  238 

834  536 

21 476  774 

316  766  834 

413  771  390 

730  538  224 

The fish processing Industry 

Beyond  any  doubt,  the  tuna  fishing  industry  as  a  whole  was  the  leading  component  of 
Madeira's  fisheries  sector in 1992. 

Direct  and  indirect  employment  in  this  sector  is  estimated  at  around  one  thousand jobs.  At 
present,  there  are  four  firms  processing  this  type  of  product,  all  of  which  goes  to  the 
Portuguese and Italian markets. 

The underlying  assumptions  for  setting up the Community  aid  scheme for  the tuna  sector  still 
hold,  given  that  the  specific  conditions  of  the  archipelago  continue  to  obtain,  entailing  extra 
costs  in  producing  and marketing  products, with  negative  repercussions  on  the  remuneration 
of economic operators in the sector. 

The  case  made  in  1992  at  the  time  of  the  initial  study  which  led  to  the  aid  scheme  for  this 
sector being set up is still valid. 

There is also one plant in this sub-sector which fillets black  scabbardfish. 

It completed  its production trials in early  1997.  Its fully  operational capacity will be 7/8  tonne 
of  raw  material  every  day,  for  3/4  tonne  of  finished  product.  The  industrialists  are  relatively 
satisfied "with the uptake  on their product  on the regional  market  and  on  external  markets  on 
which the product has been launched, and have excellent business prospects. 

This factory  has created some 45 jobs, mainly for female  staff. 

Other  initiatives  with  smaller-scale  production  are  also  contributing  to  the  progress  of  this 
sub-sector. 

Other initiatives on these lines are forecast  for the near  future. 

p:\uper\projet\005en.doc 

20 

The effectiveness  of application  of the Community system to offset  extra costs 

The situation before the system was introduced 

In  1991 when, pursuant to Council Decision No 91/315/EEC, a programme of options  specific 
to the remote  and insular nature  of Madeira  and the Azores was  instituted,  and  subsequently, 
in  1992, when,  pursuant  to  Commission  Decision  92/448/EEC,  Community  aid  was  granted 
for  specific  measures  to overcome the remoteness  of Madeira and the Azores, this  recognised 
not  only  the  development  difficulties  faced  by  the  two  archipelagos  which  prevented  them 
from  fully  participating  in  the  dynamics  of  the  internal  market  but  also  the  specific 
disadvantages  entailed  in  their  geographical  situation,  their  specifically  mountainous  terrain, 
serious shortcomings in infrastructure  and their general economic backwardness 

With  regard  to  Madeira  and  the  fisheries  secfor  in particular,  the positive  effects  of  the  fleet 
modernisation policy have been manifest  since the late  1980s and the early  1990s in  increased 
catches,  mainly  of  thunidae.  As  a result,  for  lack  of  industrial  infrastructure,_surpluses  have 
begun  to  emerge  which  have  made  it  seriously  difficult  for  producers  to  sell  their  product  at 
adequate prices. 

In  the  interests  of  harmonious  growth  in  the  sector  and  with  a  view  to  complementing 
previous  investment  in  other  areas  (port  infrastructures,  cold  store  facilities  and  the  fleet),  it 
was  important  to  create  the  conditions  for  setting  up  industrial  units  with  the  principal 
objective of absorbing all the thunidae which the fleet was capable of catching. 

For  this  development  strategy  to  succeed,  it  was  necessary  to  create  the  conditions  for 
industrial  units  to  achieve  cost-effectiveness  despite  operating  costs,  dictated  by  the  remote 
island  location,  which  had  to  be  offset.  The  growth  of  the  sector,  which  in  1991  had  only  a 
single factory  in operation  and could boast  four  factories  by  1996, is tied to the application  of 
POSEIMA  to  create  conditions  equivalent  to  those  faced  by  other  rival  units  in  continental 
Europe. 

3. 

The  consequences  of the  application  of the  system  in  terms  of  employment,  export 
flows and  market  behaviour 

As  stated  above, it was no  coincidence  that the creation  of canning  factories  working  regular 
hours throughout the year dates back to the application of POSEIMA. 

This aid has created  lasting stability in the sector, giving ship-owners  and the canning  industry 
acceptable margins for their activities. 

Under POSEIMA,  some  300  jobs  have  been  created  in  the  three  companies  which  began 
operations in the  1990s. 

If  these  firms  can  place  their  product  on  the  external  market,  they  will  need  to  obtain  raw 
materials,  which  means  that  all  fish  not  consumed  locally  will  go  to  industry  and,  on 
occasions, quotas will even have to be exchanged with the Azores when local production  turns 
down momentarily, which guarantees vessel owners a market for their entire thunidae catch. 

Briefly,  exports of canned tuna quadrupled between  1990 and  1996; employment  in the  sector 
grew at the same rate  and, more importantly,  has remained  stable.  The course of the  thunidae 
market  has  been  steadied  to  the  satisfaction  of  ship  owners,  fishermen  and  the  local  canning 
industry,  to the  extent  that  one  of  the working  factories,  the  oldest,  has just  begun  to  build  a 
new unit to replace its existing one. 

p:\uper\projet\005en.doc 

21 

4. 

Identifying  the beneficiaries  under the system and the administrative  mechanisms 

The beneficiaries  and the administrative  mechanisms  are identical  to those  in the Azores  (see 
above). 

CONCLUSION 

The  situation  described  above  shows  that  the  application  of  the  system  set  up  in  1992 
concerning tuna has been fairly  satisfactory  as regards the average annual quantities laid down 
and the consequent benefits  for the economic operators concerned. 

On  the  other  hand,  it  has  to  be  borne  in mind  that  the  situation  which  gave  rise  to  the  extra 
costs  which  provide  the  grounds  for  this  scheme  still  obtains.  This  means  that  the 
considerable  distance  from  the  market  still  entails  extra  costs  which  local  operators  have  no 
chance  of  overcoming.  This  being  so,  there  are  grounds  for  applying  the  compensation 
mechanism to this product. 

5. 

The  Madeira black  scabbardfish 

Fishing  the  black  scabbardfish  is  an  ancient  tradition  in  Madeira,  and  around  40%  of 
professional  fishermen  currently depend on it. 

Landings  of  this  species  are  in  the  area  of  3 500  tonnes  per  annum,  and  represent 
approximately  one-third of all the fish landed in the ports of the region.  Scientific  monitoring 
of  the  fishing  of  this  species  indicates  no  decline  in  stocks,  as  proved  by  the  fact  that  the 
average weight/size  ratio  of  catches  has  remained  stable  for  15 years.  This  species  may  be 
considered  underfished. 

In  fact,  fishing  has  changed  considerably  in recent  years.  The  fleet  has  declined,  as has  the 
number of days' fishing per year.  Fishing activities have therefore  contracted  since  1992, and 
these activities  are not influencing  stock numbers.  Furthermore, appropriate measures  for  this 
type  of  fishing  have  been  taken  by  the  regional  government,  in  monitoring  the  number  of 
days'  fishing  and the number  of trips in the spawning  season.  It should, however, be pointed 
out that only adult fish are caught,  for the simple reason that juvenile specimens  are not  found 
in the deep waters fished. 

In terms of regional  consumption, this species is part of the staple diet of Madeira,  and is also 
appreciated on external markets. 

This  product  is  mainly  aimed  at  external  markets,  and  exports  account  for  90%  of  the  raw 
material used by the processing industry. 

Until  the current  year, catches of black  scabbardfish  were limited  to what  the regional  market 
could absorb fresh, because there was no other type of industrial processing. 

Because the resources held out the potential for stepping up fishing, three plans were approved 
for  industrial  units  to  process  and  market  this  species,  (these  projects,  approved  and  co-
financed by the European Community are of considerable  importance: the creation of some 60 
jobs,  mainly  taken  up  by  young  women,  made  a decisive  contribution  to  settling  population 
groups in their community of origin). 

p:\uper\projet\005en.doc 

22 

Overall, these three projects  involve a maximum processing capacity of 2 000 tonnes of black 
scabbardfish  as raw material every year. 

These industrial  units,  two  of  which  are  already  working  while  a third  is  in  the  final  stages, 
fillet and freeze fish, primarily for the markets of Europe and some third countries. 

Nevertheless,  the  specific  conditions  of  the  archipelago,  dictated  by  its  small  size  and 
remoteness,  give  rise  to  obvious  extra  costs  in  the  production  and  sale  of  products  which 
distort  the  conditions  of  competition  with  similar  activities  in  continental  Europe  and  have 
clear  negative  repercussions  on  the  levels  of  remuneration  and  employment  in  this  sector  in 
the region. 

CONCLUSION 

The  extra  costs  incurred  in marketing  this  species  are  generated  by  the  conditions  which  the 
economic  agents  concerned  have  to  face.  The  costs  arise  from  charges  for  sea  transport 
(including  insurance), the  difference  in energy costs  and the  immobilisation  of  stocks  of  raw 
materials and finished product. 

These  circumstances  justify  Community  intervention  to  offset  the  extra  costs  incurred  in 
selling  this  species.  Calculations  indicate  that  this  would  entail  using  approximately  1 800 
tonnes of raw material in product for export. 

6. 

Outlets for Madeira chub mackerel 

Chub mackerel {Scomber Japonicus) has been fished in Madeira for generations, and there is a 
long  tradition  of  mackerel  processing,  although,  for  several  reasons,  it  has  not  be  used  for 
canning since  1985. 

Five small surrounding  netters are licensed to fish chub mackerel,  and  some  90 fishermen  are 
dependent on this activity. 

In  recent  years,  annual  catches  have  been  in  the  region  of  1 000/1 200  tonnes,  representing 
gross value of the order of ESC  100/120 million. 

Relatively little fresh mackerel is eaten; it has to be exported. 

The commissioning  of  a new  cannery  employing  170 people will  increase the volume  of  fish 
caught,  since  resources  are  abundant.  It  should  also  be  pointed  out  that  the  processing  and 
marketing conditions  are entirely identical to those in the tuna sector.  Industrial processing  of 
chub  mackerel  increased  significantly  in  the  first  quarter  of  1997, complementing  industrial 
tuna  processing  and  thus  maintaining  or  increasing  these  factories'  activity  levels,  which  is 
vital for safeguarding jobs, the product, value added and the competitiveness of this industry. 

Catches  during  the  current  year  should  be  of  the  order  of  2 000  tonnes.  All  industrial 
production goes to Italy. 

However,  the  specific  conditions  of  the  archipelago,  determined  by  its  small  size  and 
remoteness, clearly generate  extra costs in producing  and marketing  the product  which  distort 
the  conditions  on  which  it  has  to  compete  with  similar  activities  in  continental  Europe  and 
have clear negative repercussions on levels of remuneration and employment  in the region. 

p:\uper\projet\005en.dec 

23 

The extra costs incurred in selling this species arise from transporting ancillary materials and 
one unladen leg of a round trip, the immobilisation of stocks, electricity and insurance and the 
delivery costs associated with transport. 

CONCLUSION 

The  conditions  on  which  this  species  is  produced  and  marketed  justify  Community 
intervention to offset  the extra costs incurred in terms of the quantity processed and exported 
(2 000 tonnes), which is insignificant  in absolute terms but is of considerable socio-economic 
importance with particular regard to employment. 

p:\uper\projet\005en.doc 

24 

III. THE CANARY  ISLANDS 

Introduction 

Fishing  has  traditionally  been  a  major  economic  activity  in  the  Canary  Islands,  given  their 
situation and highly favourable  climate. 

The  easternmost  point  of  the  archipelago  is  115  km  from  the  coast  of  Africa,  while  its 
northernmost point is  1 100 km from Cadiz, the nearest port on the Iberian peninsula.  Madrid, 
the largest market for fish in Spain (172 000 mt/year), is  1  600 km away. 

The  archipelago  is  made  up  of  seven  islands  divided  into  two  provinces,  Las  Palmas  and 
Santa Cruz, with a total area of 7 273 km  , representing  1.44%  of the total area of Spain. 

For more than three hundred years, non-industrial and coastal fishing  has coexisted with deep-
sea  fishing  on  the  Saharan  fishing  bank  The  latter  has  to  some  extent  overshadowed  the 
former,  which  is much  more  limited  and has  fewer  resources. Fishing  has  thus  been  of  great 
importance  to the  islands  and is one of their basic  economic  activities.  On  some  islands  such 
as Lanzarote, it is second only to tourism as an economic activity. 

Most of the coasts on the islands are steep, with few interruptions, inlets or bays. There are no 
shallows between the islands, with sea depths sometimes exceeding 3 000 metres. The seabed 
is composed  of basic rocks and lava and is full  of craters which prevent trawling, as practised 
in other sea areas. 

Like the  seabed  and the underwater  geology, the marine  species  inhabiting  the waters  around 
the islands are highly distinctive. 

There  are more  than  350  species  offish  around  the islands  - an unusually  high  figure  for  the 
Atlantic.  Because  of  the microclimates  in the deep  waters  between  the  islands,  these  species 
are well adapted to the rugged underwater topography of the archipelago. 

This  proliferation  of  species  in the  oligotrophic  waters  and  the  deep-sea  microclimate  of  the 
islands derives from two  factors: 

1.  Marine  species  native  to  northern  Europe,  the  Mediterranean  and  tropical  America 
which reach the islands because of the meeting between the cold Canary Current and the 
current from the Straits of Gibraltar. 

2. 

Species  from  the  coast  of  Africa  which  reach  the  islands  because  of  the  trade  winds. 
These  constant  winds  from  the Atlantic  are diverted  by  the winds  from  the  Sahara  and 
push the ocean current to the west of the Canaries. 

The waters off the Canaries are inhabited by two types of marine species: 

a) 

b) 

Various  demersal  species  inhabiting  the  deep  waters  but  not  in  sufficient 
quantities to justify  industrial-scale  fishing. 

Pelagic  or  surface  species  such  as  tuna,  bogues,  mackerel, jack  mackerel  and 
sardines, which reach the islands in large numbers. 

The  salinity  and  temperature  of  the waters  of  the  Canary  Islands  are  distinctive,  in  that  they 
rise as a function  of the distance from  the African  coast, and the temperature can be up to 6°C 

p:\uper\projet\005en.doc 

25 

higher  than  that  of  the  water  off  the  coast.  The  result  of  this  is that  the  marine  fauna  of  the 
islands  differ  considerably  from  that  off  the coast  of  continental  Africa,  particularly  below  a 
depth  of  200  m,  because  of  the  meeting  of  the  underwater  currents  from  the  Mediterranean 
and the Atlantic. 

As a result of the uniqueness of the marine topography  and the lack of resources in the waters 
of the Canary Islands, only 5% of catches are strictly speaking from these waters. The rest has 
traditionally come from the Canary-Saharan bank. 

When these  fishing  grounds  came under  Mauritanian  and Moroccan jurisdiction  in  1975, the 
fleet  based  in  the  islands  was  obliged  to  engage  in  periodic  negotiations  on  the  size  of  the 
catches,  reduce  the  numbers  in  the  fleet  and  pay  royalties  for  fishing  rights,  as  well  as  to 
conduct  technological,  vocational  and  industrial  cooperation  with  those  countries.  These 
developments introduced an element of uncertainty into the fishing industry in the Canaries. 

Of the  fishing  resources  mentioned  above, it is mainly the pelagic  species  which  support  the 
non-industrial  fishing.  Their  presence  off  the islands  is seasonal  and  can  even  vary  from  one 
year  to  the  next.  The  main  pelagic  species  are  bigeye  tuna  {Thunnus  obesus),  skipjack 
(Katsuwonus pelamis),  long-finned  tuna  (Thunnus alalunga), bluefin  tuna  (Thunnus  thynnus) 
and yellowfin tuna (Thunnus  albacares). 

A large part of the fishing  fleet  based in the islands plies the waters off  West Africa,  catching 
mainly cephalopods but also sardines, black hake, shrimps, anchovies and other species. 

Cephalopods  are the main catch in the northern area off  West Africa  in terms of both  volume 
and economic value. The fishing  grounds for cephalopods lie between Gape Bojador  and Cape 
Verde (Senegal). The main species of cephalopods are octopus, cuttlefish  and squid. 

The octopus belongs to a single  species,  Octopus vulgaris, while the cuttlefish  belongs to the 
genus  Sepia,  with  its  varieties  officinalis,  hieredda  and  berttheloti.  The  squid,  finally,  are 
represented by the species Loligo vulgaris and Loligo forbesi. 

Socioeconomic  data  on the  sector 

In  1995  the  Canary  Islands  had  a  population  of  1601498,  of  whom  647 200  were 
economically  active, with 518 000 in employment  and  129 200 unemployed.  The activity  rate 
was 50%, the employment rate 40% and the unemployment rate 23.73%. 

GDP breaks down  into  5% for  agriculture and fisheries,  9% for  industry,  7% for  construction 
and 79% for services. 

In pesetas at current prices, GDP per capita per year is Ptas  1  719 167. 

The fisheries sector accounts for 2% of the islands' GDP. 

p:\uper\projet\005en.doc 

26 

According  to  the  data  available  to  the  Secretariat-General  for  Maritime  Fishing,  the  Canary 
Islands fleet  is currently as follows: 

No of vessels 

GRT 

TOTAL  kW 

Trawlers,  multi-purpose  vessels 
and dredgers from EEC waters 

Seine  netters,  pelagic  trawlers, 
drifters,  etc., in EEC waters 

and  multi-purpose 
Trawlers 
third 
vessels 
countries and international waters 

in  waters  •  of 

Trawlers, 
trawlers, 
pelagic 
drifters,  etc. in the waters of third 
countries and international waters 

2 

472.10 

1 220.10 

1353 

5  148.65 

27 078.13 

142 

35 503.09 

94 239.49 

57 

7 251.86 

19 792.08 

T O T AL 

1554 

48 375.70 

142 329.81 

Employment  in  the  non-industrial  fleet  represents  53%  of  the  total  economically  active 
population  in  fishing,  although  production  accounts  for  only  23%.  The  remainder  are 
employed in the industrial  fleet. 

According  to the data for  1996, landings of fresh  fish  amounted  to  74 946 mt  and frozen fish 
153 053 mt. 

ANACEF's  industrial  fleet,  as  registered  with  the  OPP43,  comprises  156  vessels  of  an 
average of 280  GRT  and a total  crew  of 2 550, with  an induced  employment  of  some  12 000 
workplaces.  Its  catches  of  cephalopods  come  to  about  50 000  mt  per  year,  except  for  1995, 
because of the problems caused by the signing of the Agreement with Morocco. 

These catches have the following  destinations:  50% to Japan  and  50% to  EU  countries  (60% 
to continental Spain and 40% to Italy, Portugal and Greece). 

The  sardine  fleet  based  in the port  of Arrecife  on Lanzarote  comprises  eight  vessels  of  some 
4 500  GRT  and  a  total  crew  of  184.  Catches  in  1996  were  122 000  mt,  broken  down  as 
follows:  93% for fishmeal  and oil, 5% for canning and 2% for freezing. The Iberian  Peninsula 
is  the  final  destination  for  90% of  canned  and  frozen  sardines,  and  of  100%» of  the  fishmeal 
and oil produced by the island of Lanzarote. 

The  tuna  fleet  comprises  some  60 vessels  with  a total  of 3 000  GRT  and  400  crew.  Catches 
come  to  20 000  mt per  year.  Most  of  this  is  sent  fresh  to  the  Iberian  Peninsula,  followed  by 
Japan and the other EU countries, apart from  catches intended for preserving. 

The two land-based factories  are situated on the island of Lanzarote. 

One of them is the company AGRAMAR  which, apart  from  fishmeal  and  oil, produces  fresh 
and  frozen  tuna  in  a refrigeration  plant  with  a freezing  capacity  of  750  mt/day  and  a  storage 
capacity of 3 000 mt. It also has an ice production plant with a capacity of  140 mt ice per day. 
AGRAMAR  employs 315 persons directly and indirectly. 

p:\uper\projet\005en.doc 

27 

This year its processing capacity is 750 mt of raw material per day, and it has built a drinking-
water plant. 

Another of AGRAMAR's  activities is the marketing of tuna, most of which is sent fresh to the 
Iberian Peninsula  or,  if there is no demand,  frozen  for  sale  later.  Trials  were  started  last  year 
on  cleaning  and  filleting  the  fish,  which  were  wrapped  in  plastic  and  sold  mainly  in  Las 
Palmas. The results of these trials were  successful. 

The  other  factory  is  owned  by. the  company  GARA VILLA,  which  preserves  sardines  and 
tuna,  with  a  production  in  1996  of just  over  200  000  tins  of  sardines,  of  which  50%  were 
consumed  in  the  European  market.  The  rest  went  to  third  countries.  GARA VILLA  employs 
45 persons directly or indirectly. 

Consumption  of  preserved  sardines  is  relatively  high  in  Spain,  although  it  is  difficult  to 
compete from the Canary Islands because of the high  additional transport  costs per  kilogram. 
To  these  must  be  added  the  transport  of  other  necessary  but  uncompetitive  inputs:  tin  plate 
from the Iberian  Peninsula,  the cartons from Tenerife  are relatively  expensive,  the high  price 
of water on Lanzarote, etc. 

Due to the seasonal nature of the catches, which are concentrated  in the months  September to 
November  and  practically  vanish  between  January  and  May,  freezing 
is  an  essential 
requirement involving high costs. 

The Iberian Peninsula  takes  10% of the production  of fishmeal,  the'EU accounts  for 40% and 
the remaining  50% goes to the Far East. The main competitors are1 Chile and Peru. 

20%  of  the  fish  oil  is  sold  in  the  Iberian  Peninsula.  The  remainder  goes  to  the  EU  and  the 
Nordic  countries,  where  it  is  used  in  medicines,  cosmetics  and  foodstuffs.  Quality  (as 
measured by the iodine index and the degree of acidity) is highly important in those markets. 

Aquiculture  - an  activity  for which the Canary Islands were judged  a suitable  area by the EU 
because  of  its  climatic  and  meteorological  characteristics  - has  been  facing  great  difficulties 
for ten years. It has already has to abandon the production of turbot  and shrimps, and only sea 
bream  and  bass  remain.  At  this  stage, production  is  only  20% of  what  was  aimed  for  in  the 
MGPs. 80% of this production goes to the European market, essentially Italy. 

In some ports  there  is  also  a need  for  fish-landing  cranes  and weighing  scales  on  the  landing 
quay,  so  as  to  avoid  transport  losses  and  the  resultant  lowering  of  the  quality  of  the  fish, 
which has to be taken far from the landing point for weighing. 

Despite  these  infrastructural  weaknesses,  there  has  been  a  very  considerable  increase  in 
refrigeration  facilities  in  recent  years,  although  even  now  the  refrigeration  capacity  of  Santa 
Cruz de Tenerife  is below  what  is needed,  and this  forces  the tuna  fleet  to  land  its catches  at 
other ports. 

In  1995  the  port  of  La  Luz  on  Las  Palmas  saw  the  arrival  of  2 490  vessels  with  a  total  of 
1 640 347 GRT and landings of 225 950 mt  offish. 

p:\uper\projet\005en.doc 

28 

Assessment of competition  from neighbouring countries in this sector 

In  the  last  few  years  exports  to  Spain  from  Morocco  -  which  is  the  Canary  Islands'  main 
competitor  -  have  increased  continuously,  going  from  25 859  mt  in  1986, with  Oa value  of 
Ptas 5 509 million, to 54 887 mt, with a value of Ptas 23 501 million. 

The main item in this  is  16 000 mt of frozen  cephalopods per year in direct competition  with 
the deep-sea fisheries of the Canary Islands. 

Morocco's situation, with the total freedom from customs duties on its exports to the EU since 
the  cooperation  agreement  in  1987,  gave ,its  products  preferential  treatment  over  Canary 
Islands products until their total integration into, the customs system in  1993. 

The Japanese market,  which is one of the main destinations  for Moroccan products,  applies  a 
more  advantageous  scheme  to  the  Moroccan  products  than  to  Canary  Island  products,  since 
the latter are covered by the scheme applied to the EU. 

On the  other  hand,  it must  be pointed  out  that  production  costs  are  generally  much  lower  in 
Morocco than in the EU and, hence, in the Canary Islands. 

The  conclusion  is  that,  because  of  the  favourable  conditions  for  its  products  on  the  world 
market,  combined  with  the  lower production  costs, the Moroccan  fisheries  sector  has  greatly 
damaged the Canary Islands sector in recent years. 

In  1995 Mauritania  was still denying  access to its waters for EU vessels. However,  it  allowed 
18 vessels  to  fish  for  cephalopods  in  its waters  in the month  of November,  and  this  to  some 
extent  made  good  the  reduction  imposed  in  the  first  year  of  the  agreement  between  the  EU 
and Morocco. 

FINAL  CONCLUSIONS 

If there  is one  negative  characteristic  which,  amongst  others, springs  to mind  in the  fisheries 
sector of the Canary Islands, it is its permanent state of dependence. 

-  Dependence, above all, on Morocco for its fishing grounds. 

-  Dependence on very few markets, essentially in Japan. 

-  Dependence on limited means of transport - an inherent result of their island  situation. 

-  Dependence on one single factory  for packaging materials. 

-  Dependence on one single preserving  factory. 

This  dependence  is  not  the  only  adverse  circumstance,  however,  since  a  whole  series  of 
changes  have  taken  place  in  consumer  behaviour,  and  the  result  of  these  is  that  the  primary 
sector has to "produce" with higher quality and less presentation. 

The  improvements  in  quality  and presentation  always  involve  an increase  in costs, and  these 
costs are also much higher due to the geographical  isolation and great distances  involved. 

The industrial fisheries  sector in the Canary Islands has been gradually shrinking, and has now 
nearly  succumbed  to  competition  from  third  countries  which  are protected  by  virtue  of  their 
socioeconomic  features  (developing countries, countries with cooperation  agreements, etc.). 

p:\uper\projet\005en.doc 

29 

We are therefore  talking about a European economic sector which, because of its geographical 
location,  is  obliged  to  compete  strongly  with  developing  countries  which  it  can  match  only 
through compensation for its isolation and distance from the centres of activity. 

ANALYSIS OF THE ADDITIONAL COSTS BY SECTOR 

Frozen  and fresh  tuna 

Fishing  for  tuna,  catches  of  which  are  very  large  in  terms  of  volume,  is  carried,out  solely 
using  non-industrial  hook-based  methods  which  are  nevertheless  highly  efficient.  On  the 
development  of this  form  of fishing  - and mainly  on  the ease of marketing  tuna  in  general  -
depends  much  of the  future  of  fishing  activity  in the  Canary  Islands, tfecause its  importance 
may determine whether the resQurces of the fund  are utilised more or less intensively. 

The additional costs derive essentially from the costs involved in transport, including the costs 
for  insurance,  handling  and  port  or  airport  dues.  This  expenditure  comes  to J33.61%  of  the 
total  cost  for  fresh  tuna  and  13.08%  for  frozen  tuna.  It  should  be  borne  in  mind  that  air 
transport  is  the  only  way  in  which  the  islands  can  ensure  that  their  fish  reaches  consumers 
without any deterioration in quality. 

The  tables  below  show  the  quantities  produced  in  the  last  few  years  and  the  aid  paid  in 
application of Regulation 2337/95 for both fresh and frozen tuna. 

POSEICAN aid 

1. - Applications  for aid (tonnes) 

TUNA 

YEAR 

No of applications 

Fresh 

Frozen 

TOTAL 

1992 

1993 

1994 

1995 

194 

174 

186 

172 

4 095 

4 903 

11 185 

11703 

7 184 

2 746 

1420 

872 

11 279 

7 649 

12 605 

12 575 

2  - Aid granted (tonnes) 

YEAR 

1992 
1993 
1994 
1995 

No of 
applications 

TUNA 

Fresh 

Frozen 

TOTAL 

194 
174 
186 
172 

4 095 
4 903 
10 400 
10 400 

7 184 
2 746 
1420 
872 

11279 
7 649 
11 820 
11272 

p:\uper\projet\005en.doc 

30 

AMOUNT OF AID PAID 

1) Tuna for marketing fresh 

Year 

No 
applic. 

mt 

ECU/mt 

Total 
ECU 

Exchange 
rate 
Ptas/ECU 

Total  Ptas 

1992 
1993 
1994 
1995 

125 
149 
190 
149 

4 095 
4 903 
10 400 
10 400 

150 
150 
125 
151 

614 250 
735 450 
1300 000 
1 570 400 

149 
158 
193 
167 

91 697 547 
116185 276 
250 947 312 
263 020 883 

2) Tuna for marketing frozen 

Year 

No 
applic. 

mt 

ECU/mt 

1992 
1993 
1994 
1995 

192 
151 
43 
23 

7 184 
2 746 

1420 
786 

50 
50 
45 
54 

Total 
ECU 

359 200 
137 300 
63 900 
42 444 

Total  Ptas 

Exchange 
rate 
Ptas/ECU 

149 
158 
192 
168 

53 625 849 
21 692 228 
12 287 932 
7118 993 

ANALYSIS  OF THE ADDITIONAL COST BY SECTOR 

Sardines and mackerel, frozen  and canned 

Because of the life cycle of the sardine, its fishing  season lasts only seven months  - from June 
to December  - which means that it is necessary to store both the raw material and the  finished 
product  in order to meet  sales commitments  during the rest of the year.  This results  in higher 
financial  expenses for maintaining stocks compared with factories  in continental  Spain, which 
can work all year round with a much wider range offish  products. 

Frozen sardines and mackerel 

These  -higher  financial  expenses  are  accompanied  by  additional  costs  for  energy  and 
packaging,  both  of which  are more  expensive  in  the  Canary  Islands  than  in  mainland  Spain. 
The  result  is  a  15%  increase  in  the  price  of  the  product.  To  this  must  be  added  the 
aforementioned  sea  transport  costs1 which  apply  only  to  the  Canary  Islands,  as  well  as  the 
insurance and handling  charges  and the harbour dues, which come to 42.22% of the total  FOB 
cost. 

The  tables  below  give  the  quantities  and  the  amount  of  aid  granted  in  recent  years  in 
application of Regulation 23 3 7/95. S 

p:\uper\projet\005en.doc 

31 

Canned sardines and mackerel 

The  difference  in  costs  between  the  Iberian  Peninsula  and  the  Canary  Islands  affects 
practically all the inputs needed for production. AjDart from the cost of the raw material, which 
is lower in the islands (by way of example, one kilo of product  is currently some 219 pesetas 
cheaper in the Canary Islands), energy, packaging, depreciation  on the plant  and the  financial 
expenses are all more expensive in the archipelago. 

As can be  seen  from  the table below,  there  is a difference  of up to  9 pesetas  for  energy,  297 
pesetas  for  packaging,  5 pesetas  for  depreciation  on  plant  and  325  pesetas  for  the  financial 
expenses. 

Energy 
Packaging 
Depreciation 
Plant 
Financial expenses 

CANARIES 

PENINSULA 

114 
1 847 
71 

1200 

ÏÔ5~ 
1 550 
66 

875 

Depreciation 

The additional costs for depreciation derive from  two  factors: 

a) The higher cost of machinery  and installations  as a result of transport  to the islands and the 

expenses for the engineers and mechanics who install the plant. 

b) The effect  of imputing the annual depreciation to only six months of activity. 

General  and  financial  expenses 

The  general  and  financial  expenses  incurred  are  higher  than  those  for  any  factory  in 
continental  Spain  because  of  the  seven-month  season  (June  to  December)  and,  particularly, 
the  islands'  situation  (obtaining  supplies  of  auxiliary  raw  materials  such  as  packaging,  oil, 
etc.). All this  involves  holding  stocks  to cope with production,  as well  as maintaining  stocks 
of finished  products to cater for twelve months of production. 

a)  General  costs 

The factors  involved in such costs are as follows: 

-  Repair  and  maintenance  of  the  plant  and  installations,  because  of  the  additional  cost  of 
replacement  parts,  as well  as  technical  assistance  from  labour  from  other  islands  or  from 
continental  Spain. 

- 

Insurance.  Additional  costs  because  of  the  higher  value  base  for  calculating  premiums, 
affecting  fixed  assets  as  well  as  stocks,  replacement  parts,  raw  materials  and  finished 
products. 

-  Communications.  Increased  consumption  because  of  more  intense  use  of  telephone  and 

fax, as well as the sending of documents and small spare parts. 

p:\uper\projet\005en.doc 

32 

Costs  for  administration  and  travel  to  continental  Spain.  Additional  costs  for  internal 
auditing and in-house administrative and technical services, as well as travel by head  office 
staff to continental  Spain. 

b) 

Financial  expenses 

Additional costs for extra stocks of raw materials (cans, packaging, oil, sauces, seals and other 
components), finishes  products and spare parts for machinery and installations, with a view to 
ensuring  that the  state of the production  plant, the production  process  and market  monitoring 
are all  satisfactory. 

To all these costs must be added the added cost of sea transport, which  is even more  onerous 
in the case of this production chain because of the effects  of the so-called "double insularity" -
the fact  that the production is located  one island, Lanzarote, whereas-the port of  consignment 
is located on another, i.e. either Gran Canaria or Tenerife. 

The tables  show the volume  (in metric tonnes) and the amount  of aid applied  for  and  granted 
in application of Regulation 2337/95. 

Production of sardines in the years  1993 to  1996. in mt 

FOR CANNING 

FOR  FREEZING 

= 

\ 

1993 
1994 
1995 
1996 

6 634 
6 694 
-- 
6 501 

* Because of difficulties  with Morocco 

2 530 
3 583 
677* 
2 563 

POSEICAN aid 

1) Applications  for aid (mt) 

SARDINES /  MACKEREL 

Year 

No of appl. 

Processing 

Freezing 

TOTAL 

1992 

1993 

1994 

1995 

3 

3 

4 

3 

5 984 

6 506 

9 721 

1 000 

1 077 

2 630 

3 616 
676 

7 061 

9 136 

13 337 
1 676 

p:\uper\projet\005en.doc 

33 

2) Aid granted  (mt) 

Year 

1992 

1993 

1994 

1995 

SARDINES /  MACKEREL 

No of appl. 

Processing 

Freezing 

TOTAL 

3 

3 

4 

3 

5 984 

6 506 

9 721 

1000 

1077 

2 630 

3 616 

676 

7 061 

9 136 

13 337 

1676 

AMOUNT OF AID  GRANTED 

3) Sardines/mackerel  for processing 

Year 

1992 

1993 

1994 

1995 

mt 

ECU/mt 

Total  ECU 

Pta/ECU 
exchange 
rate 

Total  Ptas 

5 984 

6 506 

9 721 

1000 

100 

100 

598 400 

650 600 

149 

89 336 735 

158 

102 790 289 

85 

„ 826 285 

.  V  192 

158 912 089 

103 

103 000 

160 

16 521 075 

4) Sardines/mackerel  for freezing 

Year 

mt 

ECU/mt 

Total  ECU 

Total  Ptas 

Pta/ECU 
exchange 
rate 

1992 

1993 

1994 

1995 

1077 

2 630 

3 616 

676 

50 

50 

45 

54 

53 850 

131 500 

162 720 

36 504 

149 

158 

192 

167 

8 039 803 

20 773 308 

31 293 818 

6 098 440 

1992 

1993 

1994 

1995 

SARDINES 

mt 

Ptas 

mt 

Ptas 

mt 

Ptas 

mt 

Ptas 

Processing 

5 984 

89 336 735 

6 506 

102 790 289 

9 721 

158 912 089 

1 000 

16 521  075 

Freezing 

TOTAL 

1 077 

8 039  803 

2 630 

20 773 308 

3616 

31 293  818 

676 

6 098 440 

7 061 

97 376  538 

9  136 

123 563 597 

13 337 

190 205 907 

1 676 

22 619 515 

p:\uper\projet\005en.doc 

34 

CONCLUSIONS 

The  situation  described  in the preceding  pages  shows how application  of the  scheme  set up in 
1992  has  operated  extremely  satisfactorily  for  all  the  species  involved,  as  regards  both 
calculation  of  the  production  benefiting  under  the  scheme  and  the  actual  operation  of the 
scheme.  In  the  same  way, the  benefits  deriving  from  application  of  the  scheme  for  the 
economic  operators  involved  have  allowed  the various  sectors  to maintain  an adequate  level 
of production  and development. 

Bearing  in mind  that  the specific  situation  lying  behind  the existence  of the  additional  costs 
analysed  above  and affecting  production  in1 the  archipelago  has not changed  and is unlikely  to 
do  so  in  the  near  future,  since  it  derives'  from  the  difficulties  posed  to  Canary  Islands 
producers  by the islands'  ultraperipheral  location,  it is evident  that  marketing  of the  products 
involved  will  continue  to face  the extra  costs  analysed  above.  Producers  in continental  Spain 
do  not  have  to  bear  these  additional  costs,  nor  can  the  islands'  producers  bear 
them 
themselves. 

For  all  these  reasons,  continued  application  of the  compensation  scheme  for  the  additional 
costs,  with  a  view  to  facilitating  marketing  of  the  products  in  question  on  the  European 
market,  is fully  justified,  so as to allow  the islands'  producers  to access  the internal  market  in 
conditions  similar  to  those  applying  to  mainland  producers.  Such  similarity  of  conditions 
would  be impossible  to achieve without the  support  given to the sector by the present  scheme. 

Aquiculture 

The  first  research  in aquiculture  in the Canary  Islands  started  in 1978. 

The  Autonomous  Community  of  the  Canary  Islands  established 
the  development  of 
aquiculture  as  one  of  its  priorities,  once  it  had  established  this  activity's  viability  and 
importance  for  diversifying  the  region's  highly  inflexible  economy  based  on  only  a  few 
activities  and products  and with  a  fishing  sector  showing  serious  structural  problems  and in 
the throes of recession. 

The  first  aquiculture  programme  submitted  by  Spain  to  the  Commission,  for  the  five  years 
from  1987 to 1991, was approved  by the Commission  Decision  of  11  December  1987  (OJ No 
4,  7.1.1988).  For  Spain  -  and  within  Spain  for  the  Canary  Islands  -  the  objective  was to 
achieve the following  annual  rates  of production by the end of the  period: 

S P E C I ES 

Sea bream 

Sea  bass 

Turbot 

MT 

T O T AL  SPAIN 

TOTAL  CANARIES 

7 500 

6 000 

4 700 

1  400 

5ÔÔ" 

2ÔÔ~ 

p:\uper\projet\005en.doc 

35 

At the end of this  first  MGP for  aquiculture, the Commission  Decision  of 20 December  1991 
(OJ No  29 of  5.2.1992)  approved  the second MGP which  Spain had presented  for  the  period 
1992-1996.  This  maintained  the  same  target,  in  terms  of  annual  production  volume,  as  the 
previous MGP  for  sea bream  and turbot, while reducing  the production  target  for  sea bass  to 
just  half  the  previous  figure.  These  three  species  were  considered  of  most  interest  to  the 
Canary Islands. 

In the present decade there has been hardly any movement  in aquiculture, except  for  transfers, 
divisions  and  conversions  of  some of the initial projects.  The results reveal  a clear  slowing-
down  in  the  promotion  of  new  projects  and  a  marked  delay  in  the  implementation  of  the 
projects  approved.  The  sector  is thus  far from achieving  the production  targets  set  out  in  the 
MGP,  ten  full  years  after  the  commencement  of  official  support  for  aquiculture  from  the 
European Union, Spain and the Autonomous  Community. 

Nevertheless, those firms which set up in the sector with help from FIFG and national  funding 
have managed to put production on a stable footing, with tonnages rising each year despite the 
fact  that  they  suffer  from  a  serious  competitive  disadvantage  in  that  they  have  not  yet  been 
compensated  for  the  additional  costs  borne  by  aquiculture  because  of  the  insularity  and 
remoteness of the Canary Islands. 

We discuss below  a number  of social, economic  and technical  factors  which  demonstrate  the 
effects  of the remoteness and peripheral situation in this sector. 

1  Social and  economic  factors 

All  aquiculture  installations  in  the  Canary  Islands  are  located  in  areas  which  are  "highly 
dependent  on  fishing",  as pointed  out  in  a  1992  Commission  report.  It  is  precisely  in  those 
areas that the conversion of the fishing  industry is affecting  the social fabric most  seriously. 

One  of  the  measures  for  retraining  the  population  dependent  on  fishing,  the  Community's 
"Pesca"  initiative  (OJ  No  C  180  of  1.7.1994),  aims  to  promote  diversification  of  fishing 
activity,  since  aquiculture  is  highly  labour-intensive  and  is  thus  a  suitable  activity  for 
absorbing many of those who are unemployed after  the cessation of fishing  activities. 

Of  the  twelve  projects  presented  between  1986  and  1989  in  the  Canary  Islands,  only  four 
succeeded  in  developing.  This  initial  failure  did  not  affect  all  the  firms  because  of  the  high 
prices  being  paid  at  the  start  of  the  1990s  and  which  attenuated  the  impact  of  the  costs  of 
distance  and  remoteness.  Unfortunately,  prices  -  and  hence  margins  -  have  fallen,  leaving 
transport costs as a factor which is limiting competitiveness. 

The  Canary  Islands  are  home  to  Spain's  largest  industrial  producer  of  fish  meal,  one  of  the 
main  components  of  animal  feeds.  The  sector  is in  the middle  of being  restructured,  and  the 
development  of  a  viable  aquiculture  in  the  islands  will  be  a  positive  factor  in  this  difficult 
process. 

The  present  fishing  agreement  between  the  Kingdom  of  Morocco  and  the  European  Union 
expires  at  the  end  of  1999.  If,  as  seems  likely,  its  renewal  runs  into  serious  difficulties,  the 
fishermen  on  the  more  than  170  boats  based  in  the  Canaries  and  totally  dependent  on  the 
fishing  grounds  involved  will  have  to be  laid  off.  Against  this  background,  winding  down  a 
fisheries  subsector such as aquiculture does not appear a sound move. 

p:\uper\projet\005en.doc 

36 

2  Technical  factors 

The following  additional  costs  affecting  fish  farming  undertakings  in  the  Canary  Islands  can 
be easily  quantified: 

l.Fiy 

The additional costs for importing fry derive essentially from transport and insurance. 

Although shipments are insured in the usual way, the breeding cycle is interrupted in the event 
of  massive  mortality,  leading  to  months-long  breaks  in  production.  Because  of  the  keen 
competition between producers, any temporary absence from the market can mean losing it. 

If such  accidents  occur,  installations  in mainland  Spain  can receive  replacement  fry  within  a 
few  days.  In  the  Canary  Islands,  however,  the  minimum  time  for  obtaining  replacements  is 
two months. 

On the other hand, the long supply lines cause mortality of around  10% (in mainland  Spain it 
is normally below 2%) and high rates of deformity  and morbidity, the effects  of which have to 
be borne  entirely  by  the  firms,  since  they  are not  observed  at  the moment  of  delivery  of  the 
fty. 

2  Feedstuffs 

Because  of the  slowness  of delivery  to the  islands, minimum  stocks  are  several  times  higher 
than  for  similar  installations  in the rest of the Union.  This  leads to competitive  disadvantages 
because  it  requires  increased  financial  resources  to  maintain  these  stocks  and  lowers  the 
quality of the highly perishable feedstuff.  The difference  in transport costs is another source of 
additional costs. 

3  Transport 

Quality is of fundamental  importance  in the market  for  sea bream  and  sea bass. To  ensure  it, 
producers  in  the  Canary  Islands  have  to  incur  costs  which  are  minimal  for  producers 
elsewhere.  More  ice  is  required  (up  to  20%  of  the  weight  of  produce),  for  instance,  at  an 
average cost of Ptas  8 000/tonne, to which must be added the transport  costs. Other  examples 
have  to  do  with  the  resistance  of  the  packaging,  maintenance  of  the  cold  chain  during  the 
various  transhipments,  etc.  Air  safety  standards  stipulate  an  additional  plastic  packaging 
which is not required  for land transport. 

There  is  also  the  problem  of  transport  between  islands,  which  has  to  be  effected  by  sea  at 
costs much higher than those incurred by operators in mainland  Spain. 

4  Other costs 

In  addition  to  the  operating  account,  the  remoteness  and  isolation  of  the  islands  also  affects 
the costs  of  fixed  assets  and  other  costs which  cannot  be quantified  in monetary  terms,  such 
technology transfer,  publicity, opening-up of new markets, etc. 

Within  the  fishing  sector  in  the  Canary  Islands,  aquiculture  is  the  activity  which  is  most 
dependent on inputs supplied from abroad. 

p:\uper\p~rojet\005en.doc 

37 

5  Non-tariff  barri ers 

Since  the  advent  of  the  single  market,  products  from  mainland  Spain  are  not  subject  to  any 
duty in either the country of origin or the country of destination. 

All  shipments  from  the Canary Islands, on the other hand, have to go through  Customs,  with 
all  the  attendant  administrative  costs.  Nowadays,  a  tin  of  fish  can  go  from  Cadiz  to  Rome 
without  being  subjected  to  checks, whereas  a tin  from  the  Canary  Islands  has  to  be  checked 
several times and be accompanied by the relevant SAD. 

V 

6  Packaging 

An extra cardboard  box  and a plastic bag  for  each tin are required  for  shipments by air to  the 
European market, while for mainland  Spain only the plastic bag is required. 

3.  Conclusion 

The  POSEICAN  programme,  as  devised  at  the  time,  can  and  must  cater  for  fish  farming 
products  from  the Canary Islands. These are fully  in line with the thinking of the programme, 
since they are affected  by the competitive disadvantage caused by the distance from the main 
sources  of  supply  for  raw materials  and from the main  markets  for  the products,  to the  same 
extent as all the agricultural and fishing products from the Canary Islands. 

ANALYSIS  OF THE ADDITIONAL  COSTS BY SECTOR 

Cephalopods, sole and sea bream 

At the time when  the Canary Islands were integrated  fully  into the Community  in  1991, most 
of  the  exports  of  the  islands'  industrial  fishing  fleet  (mainly  cephalopods,  but  also  some  sea 
bream  and  sole)  went  to  the  Japanese  market.  Once  the  islands  were  totally  covered  by  the 
common policies, Japan  started  levying duties on these exports which were much higher  than 
those  applying  to  the  islands'  competitors,  and  in  particular  Morocco.  In  view  of  this 
situation,  the  Council  introduced  a  transitional  measure  intended  to  compensate  for  these 
differences  in duties. 

Two  Council  Regulations  laid  down  this  aid between  1993 and  1997, with  an  annual  budget 
of ECU 3.6 million, for subsidising 30 000 mt at the rate of ECU  108/mt. 

In addition, for the same period  and under the POSEI programmes, there was another  Council 
Regulation establishing a scheme for compensating for the additional costs deriving from their 
remote situation, applying also to the French department of Guyane. This Regulation has been 
extended on various occasions, most recently by Council Regulation No 2337/95. 

Production  of cephalopods,  the percentage  share of which  in  exports to the European  market 
was  low,  was  never  the  subject  of  a  Spanish  request  for  inclusion  in  this  scheme  for 
compensating  for  the  additional  costs  involved  in  marketing  certain  fisheries  products  from 
the Canary Islands. 

However,  in recent  years there have been changes  in the market  trend  for  cephalopods, to the 
point that such exports to the European market currently account for nearly half of production, 
and it is expected that this trend will continue upwards in future  at the expense of the Japanese 
market. 

p:\uper\projet\005en.doc 

38 

In this context, the  situation is that, in recent years, the Japanese market has taken only  small 
octopus, while the remaining production is exported to the countries of the European Union. 

This  turnround  in  exports  is  demonstrated  by  the  volume  currently  sold  on  the  European 
market,  amounting  to  an  average  of  22 000  tonnes  in  the  last  six  years,  including  sales  of 
cephalopods,  sole  and  sea  bream.  This  is  very  close  to  the  30 000  tonnes  exported  to  the 
Japanese market. Within the Union, exports go mainly to Spain, Italy, Greece, the Netherlands 
and the United Kingdom. 

In  the  immediate  future  this  volume  will  increase,  since  the  number  of  licences  to  fish  in 
Moroccan waters is expected to decline by about  10% per year, and this will deflect part of the 
fishing  fleet  into  Mauretanian  waters,  where  the  composition  of  catches  is  completely 
different  and  catches  of  species  which  are  exported  to  the  Community  market  will  rise. 
Therefore, we can expect the sales volume in the EU to reach 25.000 Tm. 

It  must  be  added  that  the  fleet  is  very  large,  comprising  135  vessels  employing  2  300 
fishermen  and  some  10 000 persons on land. It operates  in the waters near the  islands  and  in 
Moroccan and Mauretanian waters. 

It is this new situation in the sector which prompts the request that these species (which  suffer 
from  the  same  additional  costs  for  transport,  packaging,  services,  depreciation,  etc.)  be 
included  in  the  new  Regulation  to  replace  Council  Regulation  2337/95  after  31  December 
1997. 

Since both Council  Regulation  712/97 "setting up a specific  measure in favour  of  cephalopod 
producers  permanently  based  in  the  Canary  Islands"  and  Council  Regulation  2337/95 
establishing  a  system  of  compensation  for  the  additional  costs  in  the  marketing  of  certain 
fishery  products  from  the Azores, Madeira,  the  Canary  Islands  and the  French  department  of 
Guyane  as  a  result  of  their  very  remote  location"  expire  on  31  December  1997, this  would 
mean  terminating  the  transitional  system  set  up  in  1993  by  means  of  a  specific  measure  for 
cephalopods and incorporating the sector into the POSEI system set up for fishery products. 

This  inclusion  would  result  in greater  consistency  in the  aid  granted  to  the  sector  and  would 
reflect  faithfully  the  current  situation  in  the  sector,  in  which  exports  have  been  profoundly 
affected  by the full  integration of the Canary Islands into the European Union, to the point that 
the  Community  markets  are now  the  islands'  main  source  of  income,  and  this  trend  is  set  to 
continue in  future. 

p:\uper\projet\005en.doc 

39 

EL  GUIANA 

General socio-economic <ifinti"1 

The  French  department  of  Guiana  is  situated  in  the  equatorial  zone  between  Surinam  and 
Brazil and covers an area of 83 534 km2. 

The population of Guiana is currently estimated at 160 000 inhabitants. 

Apart  from  its  considerable  growth,  the  population  is  also  characterised  by  its  youth,  with 
more than one in two inhabitants under 25 years of age in  1990 and one m three under  15. The 
bulk  of  the population  lives  on  the  coast  and  on the  large  frontier  rivers,  with  over  half  the 
population living in Cayenne.  ' 

Between  1982 and  1990, the working population rose from 31 200 to 48  700, an increase  of 
56%. However, the unemployment rate is still very high (21%); GDP per capita is 39% of that 
of metropolitan France. 

The fishery sector in Guiana 

The sector in the Guianan economy 

The exclusive economic zone of Guiana covers an area of  130  140 km2. 

Guiana has  a straight,  low  coastline  which  consists  mainly  of mangroves  broken  up  by  river 
outlets of varying size. 

The continental shelf is enormous (40 000 km2) and descends gently out to the open sea. 

The coastal environment  is favourable  to the presence of rich fish stocks, which  are linked  to 
the presence of fresh water brought in by the large estuaries. There are also areas which can be 
trawled. 

There are two types of fishery resource in these waters: 

-  prawns,  which  are  the  department's  main  fishery  product  given  their  abundance  on  the 

continental shelf; 

-  fish,  which  are  mainly  exploited  on  a non-industrial  basis  with  "white"  fish  as  the  target 

species. 

The fishery sector  is very important  to the department's  economy.  It is one of Guiana's  main 
activities, with  an  estimated production  of around FF 250 million  a year.  With  exports  worth 
FF 200 million, it accounts, mainly because of prawns, for a quarter of Guiana's total  revenue 
from exported goods. 

p:\uper\projet\005en.doc 

40 

The following  table shows the volume of the main products exported by Guiana. 

EXPORTS 

Sub-total 
main  products 

Fish 

Prawns 

Rice 

Timber 

Gold  and  alloys 
of unrefined  gold 

tonnes 

1991 

1992 

1993 

1994 

1995 

19.660 

29.369 

23.845 

22.702 

23.221 

918 

4.068 

9.625 

5.049 

781 

3.801 

19.451 

5.335 

1 

1.078 

3.038 

16.844 

2.884 

2 

1.187 

3.813 

10.868 

6.385 

1 

1.161 

3.597 

13.619 

4.843 

2 

Jobs related to prawn  fishing 

With  146 fishing vessels, including  65 prawn trawlers, the Guianan  fisheries  sector  employed 
around 614 people at the beginning of  1997, almost 400 of whom worked on prawn boats. 

Of  these  614  workers,  57%  were  at  sea  and  43%  were  on  land.  Fifty  were  directly  sub 
contracted  local workers working  as refrigeration  technicians, welders, chandlery  employees, 
etc. 

At  the  beginning  of  1996,  with  a  total  population  of  160  000,  the  working  population  was 
estimated  at  56  140. This indicates  the importance  of the prawn industry, which  accounts  for 
1.1% of the working population. 

Infrastructure 

The  port  of  Larivot  is  the  fifth  French  fishing  port  in  terms  of  value  on  landing  (sales  by 
auction). The prawn boats work from this port, modernisation of which began in 1996. 

Catches  are  either  sorted  and  frozen  on board  or  factory  processed.  The bulk  of  the  catch  is 
then put on the export market frozen. 

The trade is organised through a number of structures. The Regional Sea Fisheries  Committee 
is  the  organisation  which  represents  the  sector.  It  groups  together  industrial  shipowners, 
owner  masters,  ship  crews,  fish  processors  and  wholesale  traders,  co-operatives  and 
employees.  It  has  its  own  powers  which  enable  it,  in  its  territorial  waters,  to  take  measures 
strengthening  Community or national provisions. 

In  1996  two  nationally  recognised  producers'  organisations  were  set  up  in  Guiana,  in 
accordance with  Community  legislation,  on the organisation  of the market  in sea products  for 
action concerning the prawn and fish sector. 

Apart  from  the. fisheries cooperative,  Guiana  has  cooperatives  on  the  coast  which  help  with 
the organisation  of the trade by gradually  assuming  responsibility  for  collective  services' (e.g. 
supply of ice to vessels, fuel, fish distribution, etc.). 

p:\uper\projet\005en.doc 

41 

Prawn  fishing  a regnlgfrfl  artjvity 

Prawn fishery resources  consist  of four  main  stocks  in tiers  off  the coast, but  most fishing 
takes  place  on  the  continental  shelf.  In  order  to  ensure  the  renewal  of  the  species,  total 
allowable catches (TAC) of prawns have been determined  annually  since  1985. Since  1988 
some  boats  have  extended  their  fishing  activity  to  non-TAC  species  from  the  continental 
slope, the sales prices of which are higher on the European markets. 

Production of prawn  fisheries 

The  average  number  of  boats  actually  working  each  year  is  considerably  lower  than  the 
number of equipped boats. Of the 67 equipped trawlers at the beginning of 1995, the average 
number of boats in the zone over the year as a whole totalled 51 (compared with 46 in 1994). 

Prawn  fishing  activities 

Number  of  authorised 
prawn boats 

Average  number 
boats in the zone 

of 

Total  catches 
(in  tonnes) 

1991 

1992 

1993 

1994 

1995 

1996 

72 

56 

72 

58 

70 

57 

66 

46 

68 

51 

68 

62 

3.653 

4.208 

3.431 

4.241 

<•  4.343 

4.344 

Guianan production  in  1995 accounted  for  0.16% of world prawn production  (0.2% if only 
wild prawns are considered). 

Demand on the world market is growing, but there is also a rapid increase in the production of 
aquaculture  prawns.  Located  mainly  in  South-East  Asia  and  South  America,  aquaculture 
farms  enjoy  relatively  low production costs. Consequently, sales prices on the world market 
have fallen considerably, obliging Guianan shipowners to reduce their profit margins in order 
to be able to continue marketing their production. 

However, in 1995 the average prices of prawns continued to rise to some extent. The increase 
meant that Guiana's prawn exports fell by only  1% in value terms in  1995, whereas they  fell 
by 6% jn terms of volume. 

p:\uper\projet\005en.doc 

42 

Geographical distribution of exports in terms of volume 

tonnes 

1991 

1992 

1993 

1994 

1995 

3.258,9 

3.443,0 

2.712,8 

3.376,7 

3.039,0 

143,4 

180,8 

228,8 

339,9 

349,0 

21,0 
122,4 
80,6 
327,0 
173,6 
0,3 
3.983,8 

39,^ 
141,1 
41,6 
6,7 
50,2 
79,1 
3.801,4 

52,6 
176,2 
74,1 
13,5 
0,0 
8,5 
3.037,7 

74,8 
265,1 
93,8 
0,0 
0,0 
3,1 
3.813,5 

9,7 
289,3 
191,0 
0,0 
0,0 
18,1 
3.597,1 

" 

Metropolitan 
France 
West Indies 
of which: 
Guadeloupe 

Martinique 
Spain 
Italy 
United Kingdom 
Miscellaneous 
Total 

In  the  1993-1996  period,  the  volume  of  exports  rose  by  24%. In  Europe,  the  main  markets 
were  metropolitan  France  and,  in  the  form  of  re-exports,  Spain,  Portugal  and  Italy.  Of  the 
main  local products  exported  (sea products, rice, timber, gold  and fruit), prawns  are the  most 
important in value terms, accounting for 44.5% in  1995 and 38.7% in 1996. 

Prices  in  metropolitan  France  are  subject  to  pressure  from  imports  from  Asian  and  South 
American  countries.  The  Guianan  prawn  is  also  subject  to  competition  from  high-quality 
fished prawns from, for instance, Madagascar, where shipowners have much lower production 
costs. 

Note  should  also  be  taken  of  the  effects  of  the  Community's  Generalised  System  of 
Preferences  (GSP), which involves reductions in customs duties or even zero tariff  rates.  This 
is the case of prawns from Andean Pact and Central American countries, as aid  against  drugs. 
The Community has also recently introduced  an autonomous zero-duty import  quota of 6 000 
tonnes of prawns. This system is tending to reduce prices on the European market. 

In view of the above, the situation can be assessed as follows: 

-  since  1992, production has increased then levelled  off; 

-  between  1993 and  1996, exports increased by 24% in terms of volume and  17% in terms of 
value;  destinations  diversified,  particularly  as  from  1994  (Spain,  Portugal,  Italy,  etc.,  in 
addition  to  metropolitan  France);  the  medium-term  trend  appears  quite  favourable  in  this 
respect. The annual volume stabilised at around 4 200 tonnes; 

-  alongside  this,  however,  competition  became  tougher  on  the  international  market,  with 
increased  production  by the countries  of Central  and  South America,  South-East  Asia  and 
Madagascar,  where  production  costs  are  of  course  much  lower;  the  retailing  and 
distribution  industry of metropolitan France is putting pressure on prices by bringing  these 
new possibilities of supply into play; 

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43 

- 

- 

the  Community  has  itself  made  it  easier  for  competing  products  to  enter  its  market  by 
introducing an autonomous tariff  quota of 6 000 tonnes at zero duty in  1997 for a period of 
12 months; 

the  far-reaching  restructuring  of  businesses,  which  began  in  1994,  is  continuing,  which 
shows the sector's ability to start afresh  on an improved basis; 

-  nevertheless,  the number  of jobs  has not  fallen,  standing on a long-term  basis  at over  600 
including  sailors, the  land  staff  of the  shipowning  companies  and  the  employees  of  direct 
sub-contractors; 

- 

finally, the activity of the fleet has increased, with the proportion of boats at sea rising from 
81% to 91% between  1993 and 1996. 

This  description  of  a  situation  both  dynamic  and  fragile  should  not  underestimate  the  role 
played  by  the  Community's  marketing  support  system.  It has provided  businesses  with  vital 
aid in most cases, whilst  still allowing competition and competitiveness to have a stimulating 
effect. 

There  is  little  doubt  that  if  this  support  had  not  been  provided  many  jobs  would  have 
disappeared  and  several  businesses  would  have  been  taken  over  by  foreign  interests. 
Moreover,  from  the biological  point  of view, the system  is improving  resource  management. 
Without  it,  the  search  for  economic  viability  through  the  tonnage  produced,  rather  than  by 
fishing  focused  on the categories most popular on the export market, would have increased the 
proportion  of  small  prawns  in  the  total  catch,  to  the  detriment  of  the  sustàinability  of  the 
resource. 

'  '•  •  • 

* 

Assessment  and  updating  of additional  costs 

Tropical  shrimp  fishing  in  Guiana  has  no  equivalent  in  the  European  Union,  which  is  why 
assessing the additional costs encountered by businesses in that department has to be based on 
an analysis of the charges which a comparable activity would incur in metropolitan France. 

In previous years the estimate drew a distinction between industrial and non-industrial  fishing. 

However,  in updating the additional  costs for  1997, account has had to be taken of the  effects 
of  the  restructuring  of  the  non-industrial  sector,  which  began  at  the  end  of  1995.  The 
restructuring  plan  provides  for  a  semi-public  company  to  buy  up,  by  1998,  non-industrial 
trawlers previously exploited directly by their owner-masters. 

In the near future  all of the Guianan fleet will be exploited  industrially.  This means in general 
that a more heterogeneous  fleet  should be counted on, with average production costs  different 
from  those of the previous industrial  fleet. 

Beneficiaries  of the system  and  aid  distribution  mechanism 

Community  aid  is  managed  by  the  Fonds  d'intervention  et  d'organisation  des  marchés  des 
produits  de  la  pêche  maritime  et  des  cultures  marines  (FIOM  -  Fund  for  Intervention  and 
Organization  of  the  Markets  in  sea  fishing  products  and  sea products),  a public  body  whose 
aim  is  to  improve  and  regulate  the  markets  in  fishery  and  marine  aquaculture  products. 
Annual  instructions  define  the  conditions  and  methods  of  payment  for  aid  introduced  under 
the  compensation  scheme.  They  define  the  beneficiaries,  the  level  of  aid,  the  conditions  of 
eligibility,  the  breakdown  of  compensation  between  the  beneficiaries  and  the  lay-out  of  the 
application for  aid. 

p:\uper\projet\005en.doc 

44 

Each beneficiary must submit to FIOM, via the Departmental Director for Maritime Affairs: 

-  an application for payment; 

-  a table showing production according to the production statements used for the calculation 
of crew pay and according to the export declarations submitted to the customs' services; 

-  a table summarising sales; 

-  a copy of each of the prawn sales invoices. 

« 

The payment of aid is carried out after local inspections by the Maritime Affairs  services and 
central inspections by «the FIOM before the expenditure is authorised. As the representative of 
the EAGGF-Guarantee Fund for France in the Sea Fisheries  Sector, the FIOM also has  four 
inspectors who may, on the basis of  a defined  programme, carry out a priori inspections of 
aid. 

This framework for the payment of aid provides strict guarantees regarding the observance of 
Community regulations. 

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45 

ISSN 0254-1475 

COM(97) 388  final 

DOCUMENTS 

EN 

03  08  07  13 

Catalogue number  :  CB-CO-97-390-EN-C 

ISBN  92-78-23038-3 

Office  for  Official  Publications of the European  Communities 

L-2985  Luxembourg 

Dch