New York Times
POSTED: 2:36 a.m. HST, Sep 30, 2012
CADIZ, Spain >> Millions of Spaniards took advantage of cheap financing to buy new houses during Spain’s decade-long economic boom and housing bubble beginning in the late 1990s. The country’s fishermen, many encouraged by European Union subsidies, did much the same for their own homes away from home: new boats.
Since then, they have run into problems: declining fish stocks, tighter quotas on catches, rising operating costs and a sharp economic downturn that has slashed both fish prices and demand.
The impact has devastated much of Spain’s coastal economy. It has also generated intensifying criticism of EU policies that, environmental groups and experts say, have increased fishing communities’ dependency on subsidies to make up for the decline in both revenues and fish populations, even as the bloc continues to pay generous subsidies to scrap older vessels to upgrade Europe’s fleet. The new boats are typically bigger and more powerful, adding pressure on declining fish populations.
Coastal regions, they warn, are in the grip of a vicious downward spiral, with steep economic and environmental costs that they are urging leaders to halt.
“Spain has been one of the worst examples of using public money to modernize and increase the capacity of the fleet,” said Saskia Richartz of Greenpeace in Brussels, the group’s EU oceans policy director. “We have now reached a crisis point, with a generation of fishermen whose boats are owned by banks and who have no fish to catch.”
In coastal areas like Sanlucar de Barrameda, a town in the south near Cadiz, as fishermen struggle to repay the mortgages on their vessels, many say they resent that bloc policies distorted their financial incentives and then left them high and dry once Spain’s economic crisis hit.
The EU stopped directly financing boat purchases in 2005 to curtail the size of Europe’s fleet, but for many here the damage was already done. Jose Antonio Diaz Leon, the president of the fish market of Sanlucar, home to about 100 fishing boats, estimated that “95 percent of the owners here have a mortgage on their boat, which many simply can no longer afford.”
Among Sanlucar’s disillusioned is Jose Odero, who bought a new boat worth almost $650,000, with twice the tonnage of his previous vessel. Although the world financial crisis was already under way at the time, Odero said he had no difficulty securing a bank mortgage and had felt confident that the investment would translate into higher revenues. He declined to say whether he received an EU subsidy.
The investment was “a massive mistake,” Odero said, as quota restrictions, falling fish prices and rising fuel costs left his income stagnant. This year Odero was forced to ask his bank to delay his mortgage payments of about $1,025 a month.
“I’ve been given a bit more time, but I’m slowly drowning in financial problems,” Odero added. “I would love to sell my boat now, but there’s nobody willing to pay decent money for it.”
His story is repeated in places like the northwestern city of Vigo, Spain’s biggest fishing port, where fishing helps sustain about 60,000 of its 300,000 residents, according to local officials.
Claudio Fernandez Ibanez, chief executive of Hermanos Fernandez Ibanez, a fish brokerage house in Vigo, said many fishermen had no choice but to scale back or shut down.
“Those who have not managed to amortize fully their boat purchase costs before the crisis are now really suffering, trying to sell unaffordable boats for which there is really no demand,” he said.
Given the economic crisis, he said, Spanish consumers are downgrading to cheaper and largely imported fish, with prices for products like swordfish dropping 40 percent this year.
“The EU is putting all the focus on the environmental impact of fishing and ignoring completely our economic problems,” he said.
Wholesalers like Santiago Manzanares are sharing the pain. Sando, his family-owned distributor of frozen fish to Vigo-area restaurants, has had a 40 percent drop in revenue from a year ago, Manzanares said. Before the crisis, Sando would buy enough supplies in June to cover the whole summer. This year “we’ve been stocking only a week ahead, given how uncertain demand has become,” he said.
On a recent day, as inspectors working for Spain’s agriculture ministry boarded a boat to measure nets and check the catch stashed on ice in the holds, the captain, Enrique Yegua, confessed that he was less concerned about any possible violation of regulations than about falling prices. Usisa, a producer of canned seafood that Yegua supplies, was now paying less than 30 cents per pound of mackerel, down almost 7 cents from two years ago, he said.
“We’re being inspected a lot, but what will determine whether I continue working is not a possible fine but whether fish prices continue to fall,” said Yegua, fishing in the Gulf of Cadiz.
While European politicians are negotiating over the fisheries policies that they will pursue after 2013, Spain remains by far the largest beneficiary of European subsidies, receiving slightly more than a quarter of a European fisheries fund worth $5.5 billion.
Environmental groups have denounced such subsidies, which have encouraged many boat owners to upgrade and then scrap boats within just a few years. Between 1994 and 2006, owners of 860 European vessels — 326 of them Spanish — used subsidies this way, according to a study by Fishsubsidy.org, a project financed by EU Transparency, which analyzes the disbursement of European public money.
Manuel Varela Lafuente, a fisheries expert and professor at the University of Vigo, said larger Spanish operators should reduce their reliance on subsidies, especially for fleet modernization. But he added, “we’re also talking about a country full of small fishing communities that simply cannot survive the current economic crisis without subsidies.”
On Aug. 16, the agriculture ministry temporarily closed the anchovy fishery by the Gulf of Cadiz, saying it had reached the EU quota. The local fishing association warned that the ban could ruin 100 boat owners. Such steps have increased dependence on “compensation subsidies,” which pay fishermen for the fish they can no longer catch, sustaining what is verging on a phantom industry.
Environmentalists say such subsidies continue to warp the industry’s economic incentives. Until 2013, according to Greenpeace, Spanish fishermen will receive domestic and EU subsidies worth almost a fifth of the value of their catch, equivalent to around $10,000 per fisherman per year.
In one of the more daunting estimates of decline, a study published a year ago by Oceana, which promotes ocean conservation, said that of the bloc’s 27 countries, 13 had been getting more subsidies than the value of the fish that arrive in their ports.