The subsidies of others / by Francisco Blaha

The EU is a big subsidiser of it primary production, and fisheries take a solid chunk of it. But they are not alone in that practice, even if they get the brunt of the criticism for it. And as in many areas in fisheries, while they do stuff one can find challenging, they are quite transparent about it, and if you know where to look, you can find information. The other big players are less so open, hence finding info about subsidies is complex. I assume then, this was rational behind when the EU commissioned a recently released report on subsidies by major fishing nations beyond the EU.

Total subsidy values by country (EUR million) sourced from the above linked report

Total subsidy values by country (EUR million) sourced from the above linked report

Is a big document that can only be of interest to people (like me) that think that the elimination of subsidies is one of the key tools that can bring fisheries to a more stable and rational operational level. Since (for me at least) the main redeeming factor of commercial fisheries is that it has to be commercially viable, and subsidies distort that need.… but I have written sufficiently in the past against subsidies (herehereherehere).

I quote straight from the report that was authored by a consortium of consultants that lead by MRAG, but there are no individual names to acknowledge. Yet from reading it, I assume that it must have been a quite frustrating and tedious work, since many of the countries have absolutely no interest in sharing this data. Yet this report, while bringing some needed clarity, still does not allow us to see the bottom of the subsidies conondrum. In any case, my full respect to the authors for giving this a good shot.

What is a subsidy?
A ‘subsidy’ is a form of direct or indirect government support, often monetary and often provided to the private sector. Subsidies to the fisheries sector have been attracting increasing attention and are identified as important in terms of monetary value and the potential impact on fleet capacity, fishing effort, production and market value. However, there are difficulties in defining precisely what is meant by a ‘fisheries subsidy’ and existing information regarding such subsidies appear uncertain and somewhat patchy

For the purpose of the study, subsidies are defined and categorised based on their objective and the stage of the production chain that they intend to support. This work develops a framework for defining and classifying fisheries, aquaculture, and seafood-processing and marketing subsidies that are compatible with internationally recognised methods of classification.

Subsidies are placed within four broad categories:

  • Services: transfers that are not received directly by actors, but that reduce the costs faced by the sector as a whole. This includes common infrastructure, fisheries access management, enforcement of fishing regulations and research.
  • Production: individual transfers to fishers that impact profitability through cost or revenue adjustment. Those which reduce input costs are categorised by the type of input they affect, such as fuel, ice, gear, vessel construction and engine purchase. There are others which relate to infrastructure, such as storage and some relating to marketing. Subsidies for modernisation are recorded separately from those for vessel construction.
  • Social assistance: individual transfers to fishers that impact labour input via direct and indirect income support to fishers. This can include payments to establish businesses, subsidised training and learning and income tax exemptions.
  • Resource access: include payments for withdrawal of access rights on a temporary or permanent basis and payments made to third countries to allow access for national vessels to third country fisheries.

Subsidies are further classified as either direct or indirect payments depending on the type of transfer. Direct payments are made by the government to the fisheries sector, whereas indirect payments involve active government intervention which does not involve a direct financial transfer, for example tax exemptions.

Information regarding subsidies is made publicly available in Japan – in the form of an online depository of official fishery subsidy programmes dating back to 2008. Data used in the analysis of subsidies to the fisheries sector were from this official source.   

The total amount of subsidy was about USD 1.3 billion (EUR 1.2 billion) in 2015, mostly in the form of direct grants and loans to the catching subsector – accounting for 99% of the total subsidy. Value of catching subsector subsidy as a proportion of landed value of catch in 2013 was 7%; representing EUR 170 per tonne in 2015. Conversely, the aquaculture subsector subsidy was approximately EUR 54 per tonne in 2015. Aquaculture, and marketing and processing subsidies are negligible. Estimates provided by this study are lower than those reported to the OECD, but higher than subsidies reported to the WTO.

Much of the subsidy was specifically orientated towards providing disaster (Earthquake, Tsunami) protection and insurance to port facilities, coastal infrastructure and fishing vessels, after re-establishing their fishing industry following natural disasters. Subsidy to the fishery sector, peaked in 2012 (EUR 2 billion) following the 2011 earthquake and Tsunami - financing efforts to re-establish the fishery, increase vessel construction, rebuild port facilities and increase the workforce. Funding then reduced in the years 2013 and 2014 (EUR 616 and 676 million, respectively) before steadily increasing to amounts available pre-2011 (EUR 1.2 billion). Almost 50% (EUR 576 million) of the catching subsector subsidy in 2015 is provided in services to infrastructure, providing financial support for regional fisheries improvement plans, infrastructure improvements for port facilities, sanitation, storage, vessel construction and disaster protection. Often in the form of loans and grants to help rebuild lost and damaged infrastructure. Subsidies are often implemented through a range of semi-public entities, however, the Ministry for Agriculture, Forestry and Fisheries retain the centralised database of information.

Data used in the analysis were collected from an official document on public transfers and subsidies for the period 2009 to 2014, published by the Ministry of Ocean and Fisheries. 

Total value of fisheries subsidies in 2014 was USD 1.7 billion (EUR 1.53 billion), 20% higher than in 2009. The total amount of subsidy is similar to previous estimates in the existing literature, greater than the values reported to the OECD and lower than those reported to the WTO. The catching subsector accounted for over 90% of the total subsidy between 2009 and 2014. The precise form that these subsidies took was not clear form the available information. Subsidies represented EUR 770 per tonne for the catching subsector in 2013. There appear to be no marketing subsidies in South Korea and aquaculture and processing subsidies are small, despite the increasing production, and importance, of the aquaculture subsector in recent years.

Data used in the analysis were collected from a single official source, the official fisheries yearbooks and a range of secondary sources.

The total value of subsidies at the federal level in the 2011 to 2013 period was estimated at EUR 17 billion, representing an average annual figure of EUR 5.56 billion (additional subsidies may be available at the sub-national level). Approximately 98% of federal subsidy was for the catching subsector and 2% for the aquaculture subsector. Value of catching subsector subsidy as a proportion of value of landed catch in 2012 was approximately 17%. Within the catching subsector, about 90% subsidy was for fuel, which classifies as an indirect production subsidy. Subsidies represented EUR 78 per tonne and EUR 2 per tonne for catching and aquaculture subsectors, respectively for 2011-2013.

Comparisons with other sources are not straightforward and there is considerable uncertainty about the scale of subsidies, especially at the sub-national level. This results in subsidy figures for 2013 ranging from EUR 3.6 billion to EUR 6 billion. These are all greater than the figure for subsidies reported to the WTO (EUR 2.7 billion in 2013).

Subsidies in China support development of the fisheries sector in China, which is in turn framed by the national policy aim of ‘going global’. This policy is in some way a recognition of the depleted state of some local resources, as well as a means of creating additional employment and business opportunities, particularly, via increasing the DWF and its scope to explore new waters. This expansion of the fisheries sector as a whole, and the focus on the DWF, calls for increased government subsidies. Specific reference was made to adjusting the subsidy ratio to as high as 30-50% for projects involving modernisation of fishing vessels. The report identified government subsidies for exploratory fishery license fees, diesel fuel, shipbuilding and ‘external economic cooperation’ as contributors to the success of the DWF industry.

The subsidies go to the catching subsector, and have largely the same between 2001 and 2015. They focus on management, vessel purchase and construction, research and enforcement. Within aquaculture, research and infrastructure are the largest subsidies. About 60% of subsidies are in the form of direct payments, such as management and enforcement. The total amount of subsidy was estimated to be USD 308 million (EUR 277 million) in 2015. The catching subsector accounted 63% of the total subsidy in 2015. In 2005 subsidies to the catching subsector represented around 9.5% of the landed value. Aquaculture subsector subsidy increased to 33% of the total subsidy in 2015. This may be related to government plans to implement a program to support aquaculture expansion in an effort to overcome food availability. Processing and marketing subsidies are small. Subsidies represented EUR 42 per tonne and EUR 57 per tonne for catching and aquaculture subsectors respectively for 2014. Subsidies are clearly administered at various levels in the Russian Federation – at national, regional and local levels.

Subsidies reported by the OECD and other studies are higher than estimated by this study but they include fuel tax concessions that were reported to not be provided by the Russian Federation. All studies report higher levels of subsidies than are reported to the WTO (EUR 75.45 million in 2013).

Data for Taiwanese subsidies has proved to be scarce - official sources were reviewed but recent data proved hard to obtain. Furthermore, access to officials in Taiwan has proven difficult. As a result it has been necessary to rely on subsidies figures reported to the OECD.

The total amount of subsidy was estimated to be in the region of EUR 25 million in 2013. The catching subsector accounted for 88% of the total subsidy in 2013. The precise composition of the catching subsector subsidy changed somewhat between 2004 and 2013, with focus shifting from management subsidies towards research and vessel buyback programmes. Aquaculture, processing and marketing subsidies are small. Value of catching subsector subsidy as a proportion of value of landed catch in 2011 was approximately 3% - representing EUR 21 per tonne and EUR 5 per tonne for catching and aquaculture subsectors, respectively for 2011. Subsidies reported to WTO were EUR 72.3 million in 2013, although this includes EUR 62.0 million of agricultural loans that include fisheries.

In terms of the nature of the subsidies programmes, in the catching sector a government vessel reduction led to the scrapping of 183 large-scale tuna longline vessels between 2005 and 2007. A future goal of the government is to increase production from marine and brackish aquaculture and in the marketing and processing subsector the government aims to continue to facilitate transportation and sale channels and develop global markets in order to increase the nation’s fishery products for export.

While the US is known to provide subsidies to the fisheries sector, it is widely recognised that the specific details are difficult to identify. Data for the US is dispersed and the US Government does not appear to maintain a centralised database of all the funding and programmes or projects benefitting the fisheries sector. This information is instead held at the regional level and aggregated with other data. Information on subsidies is consequently both difficult to obtain and hard to aggregate. The analysis therefore uses subsidy information as reported to, and published by, the OECD to provide a national picture of subsidies to the US catching, aquaculture and processing and marketing subsectors.

The total subsidy in the United States was estimated to be EUR 1.5 billion in 2013. The catching subsector accounted for 100% of the total subsidy in 2013. Aquaculture, processing and marketing subsidies are very small. The composition of catching subsector subsidies has not changed much between 2004 and 2013 - data indicates that management and enforcement subsidies are the largest. Value of catching subsector subsidy as a proportion of the landed value of catch in 2013 was approximately 30%. Subsidies represented EUR 379 per tonne for the catching subsector in 2012. While information collected on loans from the regional programs suggests that the loan amounts were small, around 5% of the total catching subsector subsidy. Information relating to the aquaculture subsector point to the fact that there are few subsidies going to the US aquaculture subsector, most being in the form of Federal grants.

The analysis is consistent with other sources that indicate that around 85% of total subsidies in the US catching subsector in 2012 were for management, enforcement and research. Estimates are higher than the figures reported to the WTO


China, the US and South Korea have the highest absolute value of subsidies. In all three countries, over 95% of the subsidies are dedicated to the catching subsector Catching subsidies per tonne of catch are highest in South Korea, the US and Japan. Russia has the highest per tonne subsidy for aquaculture, closely followed by Japan. About 33% of total subsidy for Russia in 2015, EUR 91 million, was allocated to the aquaculture subsector. China has the highest absolute value of aquaculture subsidy but per tonne subsidy for China is quite small. Subsidies for marketing and processing are small in all countries. Russia has the highest absolute value of processing subsidy.

The estimates in this study are more detailed for Japan, South Korea and Russia, than existing data from the OECD, the WTO and other estimates in the literature. These have been obtained from fisheries ministries of these countries or the federal budget documents. For the other countries, the country teams found the data difficult to obtain because it has not been published, is otherwise not disclosed or is widely dispersed or administrations were not accessible.

The two main official sources of fisheries subsidies data – the OECD and the WTO – provide significantly different values of total fisheries subsidies for the countries analysed in this study. Country submissions to the WTO are not periodic and lack a systematic template for reporting subsidies across countries. The level of granularity in the data varies among countries but is in general quite low. Although the OECD has a standard reporting template and reports the subsidies data periodically, a more detailed breakdown of subsidy categories is required to enable comparisons between countries and to comprehend which fisheries subsector are being subsidised and the nature of the subsidy. Additionally, the reporting of subsidies data should be consistent across countries, for example, it appears that fuel subsidies are published regularly only for some countries.