Germany
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Composition of the German seafood sector
In 2015, German fish catching companies generated EUR 141 million in landings income (Table 32). Processing companies generated a further EUR 2.1 billion in production revenue in 2016.
Germany had a trade deficit in fish and fish products of EUR 2.7 billion. In 2016, it exported EUR 2.3 billion in fish products, while it imported products with a value of EUR 5.1 billion in the same year. A third of Germany’s fish imports originated from other EU countries. Its main import partners were Poland (18%), the Netherlands (14%) and Denmark (14%).
More than 88% of Germany’s fish exports were destined for other EU countries. The main export destinations for German fish products were the Netherlands (17%), France (12%) and the United Kingdom (11%).
As of year-end 2017, the German fishing fleet operated a total of 1,398 vessels, continuing the decrease from previous years. 386 vessels, 28% of the fleet, are inactive (STECF, 2018). In 2015, the fleet still counted 1,478 vessels, with 404 inactive (STECF, 2016). Around 70% of enterprises only operate one vessel. In addition, a comparatively large number of enterprises operates several small vessels of different sizes and for different types of coastal fishing. The traditional role of fishing as a secondary employment remains important in Germany (BLE, 2017a). This is especially the case at the Baltic Sea coast.
The fish catching segment employed 1,202 FTE in 2015. The processing segment employed a much larger workforce, 7,160 FTE. This proportional relationship is also reflected in the income generated by the different segments as described above.
Figure 49 illustrates the development of the German fishing fleet in the years from 2008 to 2016, showing the decline in the overall number of vessels over the years. Engine power and tonnage showed a somewhat smaller decline and a slight increase in 2016.
In 2016, the German fishing fleet landed 238,400 tonnes of fish and seafood catch in German and foreign ports (based on landing weight), a small increase by 0.2% from the previous year. Of this total, mussels, shrimps and other crustaceans and molluscs accounted for 30,000 tonnes (BLE, 2017a). High-sea fishing contributed 144,600 tonnes or 61% based on produce sold, resulting in revenues of EUR 107.7 million. Cutter fishing accounted for 93,700 tonnes or 39%, with revenues reaching EUR 142.6 million. Foreign landings by German vessels predominantly took place in Denmark and the Netherlands. Domestic landings by German vessels totalled 78,200 tonnes or 36% in 2016, creating revenues of EUR 124.8 million (BLE, 2017).
Germany’s self-sufficiency rate for fish only stands at around 24%. It remains an important industry sector in the coastal regions though, as in addition to own catch large quantities of fish are imported from around the world and further processed and marketed. This includes notably imports from Norway and China, but also from other EU countries (Federal Ministry of Food and Agriculture, n.d.).
However, the sector only plays a small role in the overall German economy. In 2015, the combined income from landings, processing and trade reached a total of EUR 5,425 million, or 0.17% of the country’s GDP (Table 32). In 2016, the sea, coast and freshwater fisheries (including on-board and onshore personnel, excluding aquaculture and secondary employment) employed around 4,200 people. The broader fisheries and fish processing sector including wholesaling and retailing employs around 43,000 people (FIZ, n.d.).
20% of vessels are assigned to the large-scale fishing fleet (>12 metres LOA), with the remaining 80% classified as small (<12 metres LOA) scale. Small-scale vessels fish almost exclusively in the Baltic Sea. Cutters (<500 GT) above 12 metres operate in the North Sea and in the Baltic Sea (STECF, 2017). Other categorizations also split out a medium segment in the German fleet, comprising around 200 shrimp trawlers between 9 and 27 metres length, fishing exclusively in the North Sea, and around 70 ground trawling cutters (10 to 45 metres in length), fishing among other on cod and saithe (Thünen Institut, n.d.).
The overall catching capacity reached a gross tonnage (GT) of 62,742, of which the pelagic high-seas fleet accounted for 26,922 GT (43%) and the demersal high-seas fleet for 12,898 GT (21%). Another important section is formed by beam trawlers with 10,708 GT or 17% of the total gross tonnage (Federal Ministry of Food and Agriculture, 2017).
The eight large-scale high-sea trawlers that together accounted for around 64% of catching capacity in 2016 operate predominantly in the North Atlantic and Eastern Arctic area, and to some extent in African and Southern Pacific waters (STECF, 2017). Four of these fishing and processing vessels were engaged in pelagic fisheries and four were demersal trawlers (DHV, 2017). In 2018, two vessels have been replaced with new trawlers, while the old ones were sold to respectively Portugal and Poland (Deutscher Fischerei-Verband, 2018). The high-sea freezer trawler factory ships produce frozen fish, fishmeal and fish oil (Bundeszentrum für Ernährung, 2018). No high-sea fishing for white fish took place in 2016. The quota were passed on to the cutter fisheries in the form of swaps (DHV, 2017). The high-seas freezer trawler segment is controlled by two foreign companies, Icelandic Samherij via Deutsche Fischfang Union (DFFU) and Dutch Parlevliet & van der Plas (PP Group) via Doggerbank Seefischerei. Both companies are profiled below in sections 11.3.1 and 11.3.2, respectively.
The bulk of the German fleet consists of about 1,100 small, so-called ‘fixed netters’, ranging from 4 to 10 metres length. Small coastal fisheries operate along the Baltic shoreline and contribute 2,678 GT or around 4% of the German catches (Federal Ministry of Food and Agriculture, 2017). Their number has decreased by about one third during the last decade. This is largely driven by both decreased quota and revenues for the important target species cod and herring. Most of these small cutters are operated as a side business or hobby, with one fisherman often owning several small vessels with distinct specializations. The economic outlook for these small operators is not favourable for the near future as investment levels are low and retiring fishermen often fail in finding successors. It is expected that the number of German ports which are home to small fishing vessels will decrease further in the coming years (Thünen Institut, n.d.).
Table 33 shows the most important species caught by German fishing vessels based on landing weight. Herring, mackerel and blue whiting are on top of the list, all of them pelagic species. These top-3 species accounted for around 53% of the total value of the German fleet’s landings in 2016, and around 32% of the landed volume. Important demersal species caught by the German fishing fleet are cod and pollack, together accounting for 7% of the value and 21% of the landed volume in 2016 (BLE, 2017a).
87% of Germany´s landed weight takes place under EU TACs. Germany has a nontransferable system of publicly-owned quotas in place. This includes individual quotas, pooled quotas and rationed quotas. Full-time fishers receive individual quotas. These are attached to vessels and are non-transferrable or leasable. Quotas can be used by the same operator on a different vessel, however, the quota-holding vessel needs to be kept in a sea-worthy state. POs can pool quotas, meaning that the quota associated to a particular vessel can be used by other PO members. Part-time fishers have access to a national quota (Carpenter & Kleinjans, 2017). Non-regulated fish such as perch, roach and flounder are targeted for example in the Baltic Sea as a way to compensate for economic losses from decreasing quota (Der Tagesspiegel, 2017).
Five species account for about 75% of the total amount of fish and fishery products consumed in Germany, with salmon as the favorite fish, followed by Alaska pollock, herring, tuna, and trout. Most fish products are sold via supermarkets, with discounters growing in importance also for sales of fish and seafood (USDA FAS, 2018).
As mentioned in Table 33, the German fishing fleet is partly landing its catch domestically, partly in other countries. In turn, foreign vessels also land catch in Germany.
Based on value, the most important fish products on the German market were:
1. breaded fish products, fish stick: EUR 537 million
2. herring products: EUR 280 million
3. smoked salmon: EUR 210 million
4. fresh and chilled fish filet: EUR 199 million.
The fisheries industry supplies more than 1.1 million tonnes of fish and seafood to the consumer market. The per capita consumption in Germany stands at around 14 kilograms per year (Federal Ministry of Food and Agriculture, n.d.). An estimated 21,000 tonnes of fisheries products were used as feed in 2016 (BLE, 2017).
58% of the fish and fish products that enter the German market are sold as fresh, and approximately 30% is sold as frozen. Canned and dried/smoked/salted account for small proportions of all fish and fish products sold in the German seafood market. Three quarters of all fish and fish products are sold through retail outlets, the remainder is sold through food service. Slightly over 70% of all fresh and frozen fish and fish products is sold through retailers (see Figure 50). The shares of canned and dried/smoked/salted products sold through retail are higher at 94% and 81%, respectively (FFT, 2018).
The total value of fish for final human consumption in retail, catering and artisanal markets in Germany reached EUR 7.4 billion for fresh fish and EUR 3.8 billion for frozen fish in 2016, adding up to EUR 11.2 billion. Of this total, retailing contributed EUR 8.0 billion or 71.4%. Food services accounted for EUR 3.2 billion or 28.6%. Of fresh fish consumed on the German market, an estimated 50% are sold unbranded. Around 10% are sold under own labels and the remaining 40% are branded (see Table 34; FFT, 2018).
54 food companies with business activities focusing on fishery products and 20 or more employees reported revenues of EUR 2.13 billion in 2016. Of this total, EUR 1.67 billion were generated domestically, EUR 461 million in other countries (Bundesverband Fisch, 2017).
The largest German marketer of fish is Deutsche See, which was acquired by the Dutch PP Group (see section 18.3.1) in 2018 (JUVE, 2018). Iglo (part of Nomad (UK)) is the leading brand of frozen fish products in Germany with a market share of around 30%, while Costa (part of Apetito Group) accounts for approximately 15% of this segment. In the canned segment, Heristo with key brands Appel and Norda holds a market share of around 20%, while Hawesta (part of Thai Union (Thailand)) holds a share of around 14% of the canned segment. In the dried/smoked/salted segment, Nadler (part of Theo Müller Group) holds a market share of approximately 18%, while Deutsche See has a share of about 10% (FFT, 2018).
Producers organisations
Table 35 provides an overview of the producer organisations in Germany currently recognized by the European Union authorities that represent activities in deep-sea, high-sea or coastal fishing. This includes producer organisations (PO) and associations of producer organisations (APO). Due to lack of data availability, the number of vessels and members is not available for all POs.
Vereinigung der deutschen Kutterfischerei: This association organises five producer
organisations with activities focussing largely on coastal fishing.
- Fischereigenossenschaft Elsfleth: this organisation of coastal fishermen has 33
members (Firmenwissen, 2018b). In 2017, the PO had 23 cutters (NWZ, 2017). It is
not trading its catch itself but delivers it to fish auctions. Its cutters land the catch
among others in Denmark and the Netherlands. While operating under German flag,
its cutters are often operated by Dutch (NWZ, 2015). According to 2012 data, the PO
landed more than half of the German catch of plaice. Other important species are cod,
sole, langoustine and turbot (Fischerblatt, 2013). - Erzeugerorganisation Küstenfischer Nord: this organisation has around 30 members engaged in coastal fishing in the North and Baltic Sea, Skagerrak und Kattegat. They fish on cod, herring, sprat, plaice, and pollack (Küstenfischer Nord, n.d.).
- Erzeugergemeinschaft der Nord- und Ostseefischer: the only shareholder of this PO is the Erzeugergemeinschaft der Hochsee- und Kutterfischer with 20 members.
- Erzeugergemeinschaft der Deutschen Krabbenfischer: this PO organizes North Sea
shrimp fishers, operating around 100 small cutters (Erzeugergemeinschaft der Deutschen Krabbenfischer, n.d.). - Erzeugergemeinschaft Küstenfischer der Nordsee: this PO has 24 members engaged in coastal fishing, operating 32 cutters. They mostly fish for North Sea shrimps, but seasonally also plaice, sole and cod which are marketed regionally
(Erzeugergemeinschaft Küstenfischer der Nordsee, n.d.).
Vereinigung der Erzeugerorganisationen der Kutter- und Küstenfischer Mecklenburg- Vorpommern: members of this associations are producer organisations engaged in local coastal fishing:
- Erzeugerorganisation Zentrale Absatzgenossenschaft Rügenfang
- Erzeugerorganisation Stralsund und Umgebung
- Erzeugerorganisation Wismarbucht
- Erzeugerorganisation Usedomfisch
Seefrostvertrieb: the PO has eight shareholders active in high-sea fishing, all belonging
to two international parent companies, PP Group (Netherlands) and Samherji HF
(Iceland). These two companies are the operators of the German high-sea fleet
(Firmenwissen, 2018).
Company analysis
The German fishery sector is dominated by a small number of large or medium-sized companies on the one hand, and many small operators of fishing vessels that are difficult to track down on the other hand. Based on available industry information and interviews with stakeholders, it can be assumed that the five companies profiled below are important players in the German sector.
Deutsche Fischfang Union (DFFU)
Deutsche Fischfang Union (DFFU) is a wholly-owned subsidiary of the Icelandic fishery company Samherji (see sections 10.3.4 and 19.3.1), via its holding company CR Cuxhavener Reederei (Germany). In 2016, DFFU reported a turnover of EUR 27.6 million (Firmenwissen, 2018a). Delivered in 2017, DFFU’s two new freezer-trawlers, Cuxhaven and Berlin, cost more than EUR 80 million and were the first new vessels added to the German high-seas fleet in more than 25 years (NDR, 2018) (Table 36). With 3,969 GT each, the replacements have a bigger capacity than the previous DFFU trawlers with respectively 2,348 GT and 3,071 GT (European Commission, 2018).
Samherji’s German processing subsidiary, IceFresh, produces and markets fresh fish and has close trading relationships with Norway and Iceland. Its most important customer is the cash&carry retailer Metro (IceFresh Seafood, n.d.).
DFFU holds a 55.8% share in Seefrostvertrieb, with several PP Group subsidiaries holding the remaining 44.2%. The company is engaged in the joint marketing of the frosted fish and fish products landed by the high-seas fishery vessels of the German fleet (Firmenwissen, 2018).
In 2016, DFFU generated revenues of EUR 27.6 million, an increase by 7% from the previous year. It had total assets with a value of EUR 43.1 million (Orbis, 2018az, Firmenwissen, 2018a).
The parent Samherji, one of the largest Icelandic fishing companies, has made continuous upstream and downstream investments in recent years. In 2016, the vertically-integrated company reported turnover of EUR 635.2 million, an increase by 11% year-on-year, and a net profit of EUR 107 million, up 12% from the previous year. Among others, the company commissioned the construction of six new vessels in recent years and increased its stake in Norwegian whitefish and pelagic fishing firm Nergard in 2017. Next to that, investments were made in processing plants in Iceland and the UK (Undercurrent News, 2017; FoodManufacture UK, 2017).
Samherji is also described in section 19.3.1.
The above analysis shows that DFFU is part of a large structurally vertically and horizontally integrated seafood group. The group has fishing activities in numerous countries, evidence of horizontal integration. The group also has processing facilities in numerous countries, as well as joint distribution and marketing networks, such as Seefrostvertrieb in Germany in cooperation with PP Group (Netherlands).
Doggerbank Seefischerei & Mecklenburger Hochseefischerei (Parlevliet
& Van der Plas, Netherlands)
The Dutch PP Group has important business activities in Germany. See section 18.3.1 for information on the parent company and a detailed company structure.
Initially buying herring at auctions and selling it on, the company put its first pelagic fishing vessel, the “Jan Maria”, into operation in 1959. The first freezer-trawler, “Annie Hillina” was acquired in 1967. From 1986, PP also diversified its German activities into demersal fishing.
In 1998, PP further strengthened its position in Germany, with the acquisition of Mecklenburger Hochseefischerei (MHF). In 1999, German Seafrozen Fish (GSF) was founded, with the responsibility to market P&P’s groundfish product range. In 2003, the fish processing plants of Euro-Baltic Fisch Verarbeitungs GmbH in Rügen were added to PP’s German portfolio (PP, n.d.). With the acquisition of Deutsche See in February 2018 (see section 3.6), PP added Germany’s largest supplier of fishery products to its portfolio. PP was already for several years one of the largest suppliers of Deutsche See (JUVE, 2018).
As shown in Table 37, the company nowadays operates six high-sea freezer vessels under German subsidiaries. Four of these are engaged in pelagic fisheries, two in demersal fisheries (PP, n.d.a). However, according to other sources at least some of the ships may be operating in both types of fishery. Together with the Deutsche Fischfang Union (DFFU) it forms the German high-seas fleet, with marketing activities organised via the producer organisation Seefrost Vertrieb Gesellschaft (section 11.2).
Figure 52 visualises the company structure of PP Group subsidiaries in Germany.
PP Group subsidiaries Doggerbank Hochseefischerei and Mecklenburger Hochseefischerei are members of the German High-seas Fisheries Association (Deutscher Hochseefischerei- Verband). The vessels registered in Germany are all operated under subsidiaries of Doggerbank Seefischerei. The subsidiary has 72 employees and reported revenues of EUR 37.5 million in 2016. The only shareholder of Doggerbank Seefischerei is Rederij Samenwerking I, a wholly-owned Dutch subsidiary of PP (Firmenwissen, 2018d, Orbis, 2018). Doggerbank Seefischerei owned total assets with a value of EUR 73.9 million in 2016 (Orbis, 2018ba).
Mecklenburger Hochseefischerei, a direct subsidiary of PP Groep, is engaged in processing, transporting, marketing and trading of fish and fishery products. The company has 11 employees and reported revenues of EUR 17 million in 2016. Euro Frost, German Seafrozen Fish Handelsgesellschaft are wholly-owned subsidiaries of Mecklenburger Hochseefischerei. In addition, Mecklenburger Hochseefischerei as well as Doggerbank Seefischerei and its subsidiaries hold a 44% interest in Seefrostvertrieb Gesellschaft, while the remaining 56% are held by DFFU (Firmenwissen, 2018e). Mecklenburger Hochseefischerei owned total assets with a value of EUR 39.0 million in 2016 (Orbis, 2018bb).
The above analysis shows that Doggerbank Hochseefischerei and Mecklenburg Hochseefischerei are part of a large structurally vertically and horizontally integrated seafood group. The group has fishing activities in numerous countries, evidence of horizontal integration. The group is also showing signs of vertical integration as it operates processing facilities in numerous countries, as well as distribution and marketing networks.
Kutterfisch-Zentrale
Kutterfisch-Zentrale (Kutterfisch) is engaged in catching, processing, wholesaling, marketing of fish and the operation of restaurants. Part of the catch is sold on auctions. With its ten cutters, Kutterfisch is the largest producer organisation of the small high sea fisheries in Germany (NWZ, 2017a). Of the 110 employees, 60 are working on board of the vessels. Fishing predominantly takes place in the middle North Sea and the entire Baltic Sea. 35 people are engaged in the processing of the landed catch (Kutterfisch-Zentrale, n.d.).
In 2016, Kutterfisch-Zentrale generated revenues of EUR 24.5 million. Its total assets had a value of EUR 11.6 million (Orbis, 2018bc).
Table 38 shows the vessels operated by Kutterfisch Zentrale. Not yet included in this list is a recent expansion of its involvement in North Sea shrimp operations. In January 2018, Kutterfisch acquired the North Sea shrimp fishing cooperative Butjadinger Fischereigenossenschaft in Fedderwardersiel including its 13 employees and five cutters. One of the managing directors of Kutterfisch is at the same time the managing director of the producer organisation of the German North Sea shrimp fishers that is in charge of the marketing of the catch landed in Fedderwardersiel (Fischmagazin, 2018a, Fischmagazin, 2017b).
During the last years the company has bought up vessels to access the attached fishing rights. It has recently invested EUR 16 million from own funds in two new trawlers focussing on pollock fishing, with delivery scheduled in August and December 2018, respectively. On these vessels, the quota of four of its current boats (Bianca, Iris, J. von Cölln and Susanne) will be consolidated, leading to a fleet reduction from ten to eight vessels. While not planning further purchases of quota-holding vessels, the company aims to modernize the whole fleet in a step-by-step process.
Kutterfisch catches and processes around 50,000 tonnes of fish per year. Its quota includes approximately 10,000 tonnes each of saithe and herring, around 12,900 tonnes of sprat, around 5,000 tonnes of different cod species, as well as 1,000 tonnes of quota for mixed species that cover by-catches (Undercurrent News, 2018a).
Kutterfisch Zentrale is engaging in horizontal integration as is shown by its investments in shrimp catching as well as the acquisition of vessels in recent years to access the attached quotas. The company also shows signs of vertical integration. Next to the shipping companies, also the processor Salz- und Trockenfisch is part of Kutterfisch. It has invested in its factory over the past years to nowadays producing 3,000 tonnes of finished products per year. Key markets are Germany and France. The rest of its catches are sold in neighbouring markets including Denmark and the Netherlands (Undercurrent News, 2018a). Its subsidiary Kutter- und Küstenfisch Rügen markets fish, operates a restaurant and food market, and engages in tourism (Kutterfisch-Zentrale, n.d., Kutter- und Küstenfisch, n.d.).
Hullmann Seefischerei Brake
The Hullmann family from Brake has been involved in fisheries since 1922. The family-run company Hullmann Seefischerei Brake was established in 2004 and operates a fleet of four vessels that fish in the North and Baltic Sea (Table 39). The total catch per vessel reaches around 250 tonnes per year (Neptun Fischvermarktung Brake, n.d.).
Hullmann Seefischerei’s total assets had a value of EUR 1.2 million in 2016. No revenue figures are available (Orbis, 2018bd).
The company has two shareholders: Dieter Hullmann holding 51% of the shares, and the Dutch Rederij J&F Kraak en Zonen holding the remaining 49% in the company (Firmenwissen, 2018c) (Figure 54).
While part of Hullmann Seefischerei’s catch is marketed directly, the majority is sold via the fish auction in Lauwersoog (Netherlands). Dieter and Uwe Hullmann are also the managers of the PO Fischereigenossenschaft Elsfleth. As of 2013, the most important species fished by the PO was plaice (more than 2,200 tonnes in 2012, or more than half of the German quota for plaice). Other important species are cod, sole, turbot. The PO Elsfleth also included nine cutters fishing on North Sea shrimps (Fischerblatt, 2013). In 2014, the PO landed a total of 5,000 tonnes of fish and shrimps. Most of the catch is sold on auctions in the Netherlands and Denmark (Kreiszeitung Wesermarsch, 2015).
Hullmann Seefischerei is showing signs of vertical integration already since more than 20 years. In 1993, the Hullmann family founded the “Neptun” Fischvermarktungs-Gesellschaft, a fish marketing organization based in Brake. The objective of this addition was to directly market part of its own catch and landings of the other PO members. It includes a shop, a fish snack-bar, as well as freezing and cooling installations for the landed catch (Fischerblatt, 2013).
Küstenfischer Nord
Küstenfischer Nord was founded in 1949, originally under the name “Fischverwertung Heiligenhafen-Neustadt”, with initially 17 members. The name was changed in 2009, to account for the business and geographic expansion. Today, the cooperative is organizing around 30 fishery companies active in different types of fishery and with vessels of varying lengths, from 8 to 40 metres. Smaller vessels with up to 12 metres are predominantly active in demersal gillnet fishing, larger vessels are engaged in trawl fishing. The company has 20 employees. When also considering the independent member companies, an up to an additional 80 people are directly involved in fishing operations (Küstenfischer Nord, n.d.).
Küstenfischer Nord’s total assets had a value of EUR 3.4 million in 2016. No revenue figures are available (Orbis, 2018be).
The key objective of the cooperative is the marketing of the catch of its members. A majority is exported in own trucks to the Netherlands, France or Denmark. The remainder is marketed regionally. The aim is to increase local value and job creation from fishing (Küstenfischer Nord, n.d.).
Depending on the fishing area, the catch is landed in different ports: cutters operating in the Baltic Sea land their catch in the ports operated by the PO, Heiligenhafen, Kappeln und Maasholm. Vessels fishing in the North Sea, Skagerrak and Kattegat land their catch in foreign ports or on the German north-west coast (Büsum).
The vessels predominantly fish on cod, herring and sprat in the Baltic Sea, and plaice, cod and pollack in the North Sea (Küstenfischer Nord, n.d.).
Küstenfischer Nord is showing signs of horizontal and vertical integration. On the one hand, the number of members has roughly doubled since its founding. At the same time, marketing and additional activities in related segments has been continuously expanded through own shops and gastronomy (Küstenfischer Nord, n.d.; Figure 55).
Integration
The development of the sector on the two German coastlines shows similarities and deviations. Differences are caused by different quota developments on the one hand, and different fleet structures on the other hand, with small cutters and boats dominating on the Baltic coast (Schütt, 2018). The economic situation of fishermen in the North Sea is developing quite positively in recent years. North Sea fisherman can currently achieve a good income (Marckwardt, 2018). This is due to recovering fish stocks in the North Sea, meaning that there are good quotas for cod, plaice and haddock to ensure sufficient income generation by fishermen (dpa-AFX, 2017; Aar Bote, 2016).
As several interview partners confirmed, stagnating or decreasing employment in the North Sea sector is rather due to the difficulty to motivate young people to choose a career in fish catching. As one interviewee put it, “the reason why no new operators joined the PO in recent years is less a result of fishery politics than of societal developments”. Long stays on sea, possibly on outdated vessels, are perceived as incompatible with the outlook on life of the young generation (anonymous respondent from German fish catching company, 2018). This trend can be observed on both coastlines.
Where vessels with North Sea quota become available, these are often taken over by a PO. In line with the German requirements, the vessel is kept in operational condition, but the quota gets moved to other vessels in the PO. This became increasingly of interest also due to the discard ban and requirement to obtain by-catch quota (anonymous respondent from German fish catching company, 2018). In other cases, foreign companies acquire vessels becoming available and operate them under German flag in order to access the attached quota (see below).
The looming Brexit is raising fears among North Sea fishermen though. Significant volumes of fish are caught in British waters and it remains unclear whether fishing quotas remain in place after the Brexit. It is expected that a hard Brexit would endanger hundreds of jobs on the German North and Baltic Sea coast (NWZ, 2018; MLU, 2018). In case the UK claims half of the North Sea area, this would affect 50% of the total German quota and 30% of total revenues, among others for herring, mackerel, blue whiting, flatfish and langoustine, according to the German High Seas Fisheries Association. 100% of the German North Sea herring quota is caught in the British zone (LZ, 2017).
In comparison with the North Sea coast, fishing on the German Baltic Sea coast is marked by a smaller scale and often done as a side business. The significantly decreasing stocks and consequently cuts in quotas especially for herring and Baltic cod during the last decade had considerable impact on small fishermen. Both are commonly referred to as “bread fish” due to their outstanding economic importance for small Baltic Sea fishing businesses). While it was possible in the past to compensate for reduced quota for herring with cod and vice versa, the limitations on both quotas in recent years made this impossible (Der Tagesspiegel, 2017). While the need for quotas is widely accepted, many fishermen do not understand why such drastic cuts for Baltic cod and herring are required while the quota volumes can be caught quite quickly (Schütt, 2018).
In the meantime, fuel prices increased, and the old age of many vessels brings an additional financial and material burden of maintenance for the owners in order to keep an outdated fleet operating. For example, in Schleswig Holstein 74% of cutters operating from the Baltic Sea coast were older than 30 years in 2017 (LLUR, 2018). Due to low quotas and prices, only larger fish catching units with more modern vessels and additional investments along the value chain have the potential to be profitable still (anonymous respondent from German fish catching company, 2018).
The decreasing economic viability of fish catching, termination of businesses for reasons of age and lack of a successor as well as a publicly subsidized scrapping bonus as compensation for shrinking quota lead to a continuously decreasing fleet (LLUR, 2018). While Mecklenburg- West Pomerania counted 1,200 fishermen around the time of reunification (catching much larger volumes than under the EU quota system), this number has dropped to 234 in 2017 (Der Tagesspiegel, 2017). In Schleswig-Holstein, 15 artisanal full-time cutter fisheries enterprises in the Baltic Sea stopped operating in 2017 alone, a loss of 15% (LLUR, 2018). Especially small, Baltic Sea fishermen with fishing as main activity exit the business (Schütt, 2018).
Even if young people are interested in the job, the hurdles for accessing finance are high as banks are hesitant to invest in a sector seen as volatile. In the Baltic Sea area an additional stumbling block is formed by the old age of many cutters, which then no longer qualify for financial support payments for acquisitions by young fishermen (Marckwardt, 2018a).
As one strategy of attaining some additional income, fishermen also target other, nonregulated species. However, these catches cannot make up for the losses as the market is limited and prices achieved for these species are much lower than for cod or herring (Lübecker Nachrichten, 2017; Schütt, 2018). Taking over the quota of those giving up is described as the only way for the remaining fishermen to survive (Der Tagesspiegel, 2017).
Horizontal integration can be observed where local fishing businesses take over the vessel to access the attached quota. The vessel often stays inactive in the port and the quota is fished with the previously operated vessel. Such a quota transfer is only possible if also the capacity of the acquired vessel is installed on the existing vessel. Partly also larger trawler operators from the German North Sea coast take over vessels and quotas in the Baltic Sea. Investments by Swedish or Danish companies are not seen at the Mecklenburg-West Pomeranian coast but rather in Schleswig-Holstein (Schütt, 2018).
Fishermen that caught Baltic herring with trawlers under MSC-certification were satisfied with the achieved prices in recent years. The news in August 2018 that the Marine Stewardship Council (MSC) decided to withdraw the MSC certification of the Baltic Sea herring from trawler fishery due to an unsustainable size of the population will put further pressure on local fish catching business (Schütt, 2018). As German retailers almost exclusively purchase fishery products with a sustainability certification, this is expected to lead to a development where the Baltic Sea herring can only be sold at lower prices in Denmark or Poland (TAZ, 2018).
The reduced quotas for herring and cod had no positive influences on prices. Prices achieved for herring caught with gillnets were already lower than fishermen would require for sufficient profitability. Gillnet fishery was still under MSC assessment until 2018. The low profitability of herring fisheries in the Baltic Sea is also due to the fact that the catch volume is much smaller than in the North Sea. In addition, the Baltic Sea herring is less fatty and consequently less interesting for example for marinated products as the weight loss in processing is bigger (Schütt, 2018).
As the company analysis in section 11.3 shows, horizontal integration in the German fishery sector can be observed in different ways. In the large-and medium-sized fisheries targeting demersal as well as pelagic species this is notably marked by foreign companies investing in German fisheries. The German high-sea freezer trawler segment accounting for more than 60% of landed catch is fully-controlled by large, vertically integrated Dutch and Icelandic companies that also have presence in various other EU countries. Samherji, the Icelandic parent of DFFU, is described as one of the key players in the cross-border and cross-sector consolidation in the seafood sector (Undercurrent News, 2017a).
Dutch investments are also found in the medium-sized sector operating in the North and Baltic Sea and small (shrimp) cutters operating in the North Sea. Dutch fishing companies have a long history and strong position especially in flatfish fisheries, which explains their interest in taking over German vessels and attached quota. Other EU nationalities are also operating fishing vessels under German flag or show interest in vessels becoming available, among others Danish, Swedish, British and French (Marckwardt, 2018a). However, no hard data on the number of vessels in foreign ownership operating under German flag and quota are available.
The opposite movement of German players investing in vessels in neighbouring countries does not seem to play a role. There are different reasons why companies from other countries pertain over more investment capital than German operators, including different tax systems, easier access to finance and an overall larger, more influential fishing sector and lobby (Marckwardt, 2018a). Another reason can be national cessation schemes. For example, Swedish vessel owners profited from a permanent cessation scheme during 2009 and 2010 with quite generous scrapping premiums for vessel owners (EC, 2013). As an interviewee noted, some Swedish fishermen used this money to purchase German vessels quota (anonymous respondent from German fish catching company, 2018).
The German fishery sector is also showing developments of vertical integration. This refers to both players in the high-seas fisheries sector that accounts for around 61% of German landings, where the first stages of processing already take place on board and on-land processing facilities are integrated into large vertically integrated international seafood groups. As the example of PP Group in Germany shows, processing capacity is further increased through acquisitions (see section 11.3.2) Informal vertical integration through longer-term supply relationships with retailers can also be observed for the high-seas fishery sector.
POs are in several cases owned by fishing companies. At the same time, there is further vertical integration through these POs, as they set up processing facilities and market distribution networks to support access to markets for their members as well as generating additional income from direct marketing or tourism-related activities (see e.g. sections 11.3.3 and 11.3.5). This is notably the case in the North Sea coast region, where the catching season is overlapping with the main tourism season (Schütt, 2018).
While a large share of the catch is sold on auctions in the Netherlands and Denmark, it is aimed to also open up direct marketing channels, for example through direct sales of fresh and value-added fish and the operation of own fish restaurants. For example, an interviewee reported that one of the larger companies of the small high-seas fishery markets fresh fish filets throughout Germany, in the Netherlands, UK and Denmark, as well as direct sales to wholesalers and discounters (anonymous respondent from German fish catching company, 2018). Value creation can also be observed on a smaller scale, where individual fishermen may sell some of their catch in own fish joints.
Vertical integration in the small-scale Baltic Sea herring fisheries is less pronounced. A large share of the herring catch from gillnet fishing in the Baltic Sea goes to Denmark for processing (Schütt, 2018, Der Tagesspiegel, 2017). The Danish industry has processing capacities that need to be filled outside the local catching season. A small share of the gillnet-caught herring goes to Euro-Baltic in Mecklenburg-West Pomerania, a wholly-owned subsidiary of the vertically integrated Dutch PP Group that is also a key actor in the German high-seas freezer trawler segment. The herring caught by trawlers goes almost exclusively to Euro-Baltic. This represents about 60% of the German Baltic Sea quota. Agreements with the processor are made on a yearly basis. Prices are dependent on various factors, such as the price that the processor achieves for herring roe sold to Asia or whether herring fillet is sold to Poland at low prices (Schütt, 2018).
Euro-Baltic mostly relies on herring from the North Sea. In addition to 10,000 tonnes of Baltic Sea herring also 40,000 tonnes of North Sea herring, mostly from British waters, are processed annually (MLU, 2018). This is the reason why the fish processing industry located on the Baltic Sea coast also fears significant negative impacts from Brexit, as in combination with a looming catching stop for herring in the Western Baltic Sea in 2019, this would endanger the whole industry in Germany (MLU, 2018). Vertical integration in the Baltic Sea herring segment is not viable. The catching season is short, which means that investment in own processing is uneconomical for smaller producer organisations. Tourism is peaking in the summer months, und has thus little overlap with the local catching season (Schütt, 2018).
In summary, the German fish catching sector shows both signs of structural horizontal and vertical integration, however, there are regional differences as well as differences between the different types of fish catching. The large high-seas fishery companies show a high degree of both horizontal and vertical integration. In the medium and small-sized fishery of the North Sea coast area, vertical integration is used to diversify the fishing business and secure income with tourism-related activities and direct marketing. Signs of informal vertical integration can be observed in the form of temporary offtake agreements with processors or regular deliveries to retailers. Horizontal integration is observed across all types of fishery, as fishermen are giving up the business while others are interested in taking over vessels and attached quota. Competition is driven by the quota system, as companies are trying to purchase additional vessels to access the attached quota.
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