Subsidy methodology

Introduction

The International Consortium of Investigative Journalists acquired data on public aid benefiting the Spanish fishing industry between the years 2000-2010. As the European Union’s most powerful fishing nation, Spain is its largest recipient of fishing subsidies.

The World Trade Organization defines fisheries subsidies as “a financial contribution by the public sector that provides private benefits to the fisheries sector.” The contribution can be direct or indirect (such as tax breaks). Worldwide estimations on fisheries subsidies exist, but no detailed analysis of real spending has been conducted of the Spanish fishing industry, which is the largest recipient of fishing aid in the European Union – the world’s third largest fishing “nation.”

To obtain the amounts related to direct government payments to the industry, ICIJ analyzed datasets from the European Commission’s Directorate-General for Maritime Affairs and Fisheries, Spain’s central government, and autonomous communities (regions) within Spain to account for public aid flowing to the industry between 2000-2010.

To help in the analysis, ICIJ hired software developer David Cabo, vice-president of Pro Bono Publico, a non-profit organization based in Spain devoted to transparency and open records issues.

For EU funding under the Financial Instrument for Fisheries Guidance (FIFG) for 2000-2006, ICIJ relied on raw data provided by the Directorate General to the non-profit transparency advocacy group Fishsubidy.org in December 2008. ICIJ requested the data directly from the Directorate General, the body in charge of publishing data from 2000-2006. Although it once provided the data to Fishsubsidy.org, the Directorate General said it would not release any more data until the operational programs were completed, which may take years.

Because of the Commission’s interpretation of “confidentiality,” the data provided to Fishsubsidy.org was stripped of any beneficiary information. The data included the breakdown between the EU funding and co-financing by Spain, but the amounts were only for money allocated, not paid. In years prior to the introduction of the euro in 2002, the Directorate General already had calculated the exchange rates for pesetas to euros.

From 2007, the responsibility of publishing the subsidy data shifted to the EU member states. For the remaining EU funding under FIFG and the European Fisheries Fund (EFF) for the years 2007-2010, ICIJ relied on data provided by the Spanish Ministry of Environment, Agriculture and Fisheries.

To uncover additional subsidies provided to companies by regional governments and complete the Fishsubsidy.org data with beneficiary information, ICIJ requested data from the five regional governments that received most EU fishing aid: Galicia, Andalucía, Basque Country, Cataluña and the Canary Islands.

ICIJ interviewed Ignacio Gandarias, the director general who oversees subsidy expenditure in Spain, to understand the funding processes and available data. Gandarias said the amounts published by his office regarding EU subsidies in 2007-2010 only included EU money – not the co-financing by the state or the regions. However, when ICIJ crosschecked the data with more detailed information provided by the Basque Country region, ICIJ found that it did appear include state and regional money.

To avoid duplication ICIJ only used the regional data where lines of subsidies matched on the file number. This was the case of the Basque Country and Andalucía, although in the latter only FIFG money could be used, as many file numbers did not match. When possible, ICIJ based its calculations from Brussels and Madrid on amount “paid” rather than amount “allocated.”

Despite the majority of fishing funds coming from direct subsidies from the EU, countries are allowed to provide additional funding directly from their budget. This is called “state aid” and includes money for industry groups, private security, help to pay for fuel during economic crisis, and low-interest loans. To obtain this data, ICIJ analyzed records published in Spain’s official bulletin (BOE). ICIJ disregarded the information also published in these documents related to EU funding because it was impossible to verify potential overlap with the other acquired data, as the subsidies don’t include file numbers. When in doubt, ICIJ erred on the conservative side, so that the amounts accounted for state aid could be considerably higher. For example, Spain was allowed by the EU to give up to €127.8 million for help to the fleet paying for fuel in the period 2007-2010, but in the published subsidies only €10 million were published as specific to that line of aid.

ICIJ also accounted for the subsidies provided by the Infrastructure Ministry for security for the national fishing fleet for items including lifejackets and radio navigation beacons.

Fishing Partnership Agreements are a distinct pocket of aid also funded through the Directorate-General for Maritime Affairs and Fisheries in Brussels. For the year 2000, ICIJ used the figure calculated by the Institute for European Environmental Policy upon commission by WWF. ICIJ omitted the information for 2001-2003, as the Directorate General could not provide the data by publication deadline. For the period from 2004-2008, ICIJ based its calculations on the 2009 Directorate General working paper “A Diagnosis of the EU Fisheries Sector.” For years 2009-2010, ICIJ analyzed detailed data provided by the Directorate General. The file contained a breakdown by year and by vessel of all active agreements. Those agreements span the period of 2005-2012. ICIJ calculated the per-vessel subsidy value based on overall partnership figures available on the Directorate General’s Website.

Fuel tax breaks benefit the agriculture, aviation, transport, forestry and fisheries sectors, among others, although vessels are among the few vehicles to get completely tax-exempt fuel. Spain’s tax agency (Agencia Tributaria) publishes annually a report on special taxes such as the fuel tax. The 2008 report – the latest available – shows the amount of fuel consumed by the fishing sector for 2000-2008. Following the advice by its author, Antonio Juárez, ICIJ multiplied that figure by the various taxes that would be paid if a ship owner were to fill a Honda (“gasóleo uso general”) instead of a trawler (“gasóleo bonificado”). For the years 2009 and 2010, Juárez provided the figures he says are to be published in coming months.

In previous years, if vessels did not get their fuel from tax-exempt stations, the fishing industry could get a rebate for the tax. However, this method has been in decline since 1996, and Juárez recommended disregarding the figure. In 2008, for example, rebates amounted around €1 million.

One-in-Three Fish

ICIJ wanted to find out how the value of Spain’s industry compared to the subsidies it receives. Economists recommended different methodologies for our analysis.

Rashid Sumaila from the University of British Columbia conduced a global analysis of subsidies versus value published last year. He estimated the value of subsidies – both direct (i.e. building vessels) and indirect (i.e. gas tax savings) – to the industry, and compared that to the value of the landed fish. In his estimation, he included subsidies to the whole industry, which includes the processing sector as well as catching or aquaculture.

Andrew Dyck, a fisheries economist from the University of British Columbia who worked with Sumaila said, “We do include many of the processing subsides in our analysis because we define a subsidy as a payment from government that adds value to fishers. So a processing subsidy, although it goes to a cannery or marketing program, increase demand and add value for fishermen.”

Fernando González Laxe, a fishery economist at the University of La Coruña, said that the FAO and famous fisheries economists such as Milazzo and Sumaila compare total subsides to value of landed catch. He said it becomes too complicated to try to parse out subsidies to the processing sector and recommended using the same methodology as the world’s foremost experts.

Sebastián Villasante, fishery economist from the University of Santiago de Compostela, said no one has undertaken a thorough and accurate accounting of the value of Spain’s fishing industry compared to the subsidies it receives. He felt that any analysis should account for the value of the processing sector, although he said there is no accurate figure for the value of that sector.

Manuel Varela, a fisheries economist at the University of Vigo suggested that ICIJ subtract from our subsidy data any direct aid to the processing sector. He suggested using the Gross Value Added of the fishing and aquaculture sectors to the Spanish economy (GDP) instead of the value of landings.

ICIJ chose to follow Manuel Varela’s suggestion, using the Gross Value Added (valor añadido bruto) for the fishing and aquaculture sectors. As the Gross Value Added is not available for the processing sector, it seemed fairer to take these subsidies out of the calculation. ICIJ extracted from the subsidy analysis all direct aid to the processing sector based on subsidy area coding detailed in EU legislation. ICIJ analyzed a five-year period, 2005 to 2009.