Scottish fish farming companies given millions in grants despite huge profits

SIX fish farming companies in Scotland given government handouts of more than £10 million have made profits of £926m since 2010, The Ferret can reveal.

A total of 20 aquaculture industry bodies received 104 grants amounting to nearly £20m over the last ten years from the Scottish Government, its enterprise agencies and the European Union.

Critics argue that “taxpayer bailouts” should not boost profits for an industry which they claim has dumped 300,000 tonnes of pollution in lochs and harmed marine wildlife. Campaigners question whether fish farming in its current form is environmentally sustainable.

Government and industry, however, point out that fish farming is worth £885m a year to the Scottish economy and contributes £94m in taxes. The industry disputes the level of pollution and says that lochs have “good” water quality.

The Ferret has uncovered how much taxpayers’ money has been funnelled into fish farming companies, and the profits they have made. The public grants were designed to help businesses by funding equipment, aiding management and encouraging growth.

Our analysis was founded on Freedom of Information responses we and others received from government bodies, as well as on annual reports from fish farm companies.

Our investigation was carried out as part of a series on fish farming in partnership with the Italian journalist, Francesco De Augustinis. It was funded by journalismfund.eu, an independent, non-profit organisation in Brussels that supports cross-border investigative journalism.

Five of the six companies who have been given £10m in grants and made £926m net profits since 2010 are owned abroad. They all market their salmon as Scottish.

The most money went to Loch Duart, a company based in Sutherland. It aims to produce “the finest salmon in the world” which is “born and raised in north-west Scotland”.

Since 2010 Loch Duart has been given 21 grants totalling £4.4m by the Scottish Government and its development agencies, Scottish Enterprise and Highlands and Islands Enterprise. Over the same period it made net annual profits after tax totalling £4.4m, with profits in six years and losses in four years.

In addition to grants, Scottish Enterprise made a “commercial investment” of £3.1m in Loch Duart between November 2012 and April 2016 to match private sector investment.

In February 2020 Loch Duart was bought by a US investment firm, Vision Ridge, based in Boulder, Colorado. Scottish Enterprise said it sold its shares with a “positive return” but declined to say for how much.

Scottish Sea Farms, which is owned by two Norwegian companies, Salmar and Lerøy Seafood, has received public sector grants of more than £2m since 2010. Over the same period it made profits after tax of over £225m. Mowi Scotland, which is also Norwegian-owned, received £1.2m in grants and made profits of £413m. Canadian-owned Cooke Aquaculture got £824,000 and made £198m profits.

The Scottish Salmon Company, which is owned by the Faroes firm Bakkafrost, received £207,000 in grants and made net profits of £76m. Locally owned Wester Ross Fisheries were given £1.6m and made net profits of nearly £10m.

Campaigners have demanded an end to public funding of the industry. “The sheer scale of taxpayers’ money the Scottish Government has poured into the pockets of the billionaire salmon barons will be difficult for many to accept,” said the activist and researcher, Corin Smith, who runs the Inside Scottish Salmon Feedlots website.

“Questions should rightly be asked about the undue influence the open cage salmon farming industry has over ministers. We need serious long term economic thinking and leadership, not political vanity projects.”

Using official figures, Smith calculated that 300,000 tonnes of salmon sewage have been dumped from fish farms into lochs around Scotland in the last ten years. He pointed out that other countries were investing in replacing farms in open waters by closed, land-based farms.

Pouring more money into an industry that pollutes the seas “while the rest of the world invests heavily in a transition to land-based salmon farming would be akin to Scotland investing in diesel cars while the rest of the world is going electric,”

he argued.

Professor Andrew Watterson, an environmental expert from the University of Stirling, urged the Scottish Government to only fund activities that do not damage the environment. There should be an effective and transparent environmental assessment of government subsidies to companies, he said. “It is very surprising to see that the Government and its agencies have been giving substantial subsidies to the profitable fish farming industry. This cannot be right,” he told The Ferret.

“If government subsidies do not support sustainable economic activity, it may damage the environment and impact on climate change, they should not be supported. If open-net fish farms fail to meet such assessment criteria they should not receive government subsidies.”

Another Norwegian-owned salmon farming company, Grieg Seafood, is quitting Scotland after being given more than £630,000 of taxpayers’ money. Its subsidiary, Hjaltland Hatcheries in Shetland, was given £315,000 by Highlands and Islands Enterprise in 2010, along with an equal sum from Shetland Islands Council.

Grieg’s annual reports submitted to Companies House reveal that the firm made losses in five of the last ten years, with a net loss of £6.4m. The Herald reported in November 2020 that Grieg was planning to sell its farms in Skye and Shetland “when the timing is right” to focus on its businesses in Norway and Canada.

Two joint industry and government research groups were also given public money. The Scottish Aquaculture Innovation Centre, based at the University of Stirling, received seven grants totalling £4.6m between 2016 and 2020.

THE Scottish Aquaculture Research Forum, based in Pitlochry, was given 14 grants amounting to £2m by the Scottish Government between 2009 and 2018. Others awarded grants included trout farming companies and fish hatcheries.

A portion of the funding for the industry in Scotland came from the European Union (EU) via the European Maritime and Fisheries Fund, which also covers the sea fishing industry. Across Europe the EU has allocated the fish farming industry £2.5 billion (€2.9bn) since 2001.

But official guidance on what activities should be judged as environmentally sustainable for EU grants has been delayed. An expert working group involving fish farm companies started work on sustainability indicators in 2014, admitted delays in 2016 and now says the earliest it will publish is 2022.

The UK’s departure from the EU in January 2020 means that European money will no longer be channelled to Scotland. To replace all EU fisheries funding, the Scottish Government has sought £62m a year from the UK Government.

But according to the Scottish Government, Westminster has only allocated £14m for the first year. It is not yet clear how much might go to the sea fishing industry and how much to fish farm companies as Scottish Government “priorities for funding are currently under development”.

The bulk of Scotland’s farmed fish are salmon, with more than 200 farms of caged salmon scattered along the west coast and around islands. The industry has expanded rapidly since the 1970s to make salmon the UK’s largest food export, with 94,300 tonnes being sent to 54 countries in 2019.

The vast majority of the farms in Scotland are run by multinational companies owned abroad. Backed by the Scottish Government, the industry wants to double its business from £1.8bn in 2016 to £3.6bn by 2030.

But concerns over the pollution, waste and environmental harm caused by fish farming have been growing. Over the last five years The Ferret has reported on pesticides contaminating lochs, mass salmon mortalities, lice-infested fish and a range of other issues.

Fish farming has been investigated and strongly criticised by two Scottish Parliament committees. They both concluded in 2018 that “if the industry is to grow, the status quo in terms of regulation and enforcement is not acceptable”.

The Government’s green watchdog, the Scottish Environment Protection Agency, has been attempting to tighten regulation of the industry. But it has faced resistance from salmon companies, and agreed to relax some of its rules during the coronavirus pandemic and because of export problems blamed on Brexit.

The Coastal Communities Network, which brings together 18 local groups in Scotland concerned about the marine environment, suggested that open-net farms should be replaced by “closed containment” farms. It objected to “really rich companies receiving very large sums for the problems they have caused”.

The network’s John Aitchison accused fish farming companies of being “hungry for handouts”. Many of the grants were aimed at “treating the symptoms of the sea lice problem in open-net farms, rather than its cause,” he argued. “The Scottish public can see that there are serious problems on many of these farms and they are increasingly aware of the truth behind the industry’s spin and political manoeuvring,” Aitchison said.

“This industry needs to clean up its act. The companies involved can well afford to solve their own problems without being given public money.”

According to the Scottish Greens, fish farming companies in Norway were being made to invest in closed containment systems. “Scotland has become a dumping ground for open-cage salmon farms bringing all the problems of pollution, fish escapes and disease,” said the party’s environment spokesperson, Mark Ruskell MSP (above).

“This is a hugely profitable and rapidly expanding industry which is failing to meet its environmental responsibilities. It needs stricter regulation to drive investment and change, not taxpayer bailouts.”

Individual fish farm companies declined to comment, saying that the Scottish Salmon Producers Organisation (SSPO) was responding on their behalf. It pointed out that grants were only awarded “after suitable rigour set against strict criteria”.

SSPO also highlighted that the fish farming sector didn’t receive anything like the £450m annual subsidies to beef, cattle and other agricultural farmers. “The funds provided to support the aquaculture sector’s growth and innovation are fully recovered through economic activity, jobs created and taxes paid,” said an SSPO spokesperson.

“Science shows marine salmon farming as being the lowest carbon footprint form of livestock farming on the planet. The Scottish Government understands that such grants offer a wise return on investment, help support many of our country’s communities and the nation’s ambition to be net zero by 2045.”

The spokesperson added: “Scottish aquaculture, the vast majority of which is marine salmon farming, is annually worth £885m to the Scottish economy. It contributes £94m in taxes with 76% of the money spent by companies, which was £1.4bn in 2018 alone, staying in Scotland.”

The SSPO dismissed the suggestion that salmon farms had dumped 300,000 tonnes of pollution in lochs over the last ten years. “These claims are simply wrong because they are based on flawed reasoning, an outdated paper and over-simplistic calculations,” said the spokesperson.

SSPO pointed out that the Scottish Environment Protection Agency (Sepa) currently classified lochs where salmon have been farmed for 50 years as having “high” and “good” water quality. “Such positive classifications are a clear reflection of the environmental sustainability of Scottish salmon farming,” stated the spokesperson.

“All Scottish salmon farm environmental licences are granted following rigorous site-specific environmental risk assessments by Sepa with regular monitoring of the environment occurring to ensure that there is no adverse impact on biodiversity.”

The Scottish Government and its enterprise agencies defended the grants they had given to fish farming companies. “The sector also supports 11,700 highly paid, highly skilled jobs across the country, many of which are in our most remote and fragile communities,” said a government spokesperson.

“Grant support to Scottish aquaculture has benefitted Scottish start-ups and smaller businesses, skills development, and innovation. Not least — given the significant impact the Covid-19 pandemic and Brexit is having — the Scottish Government will continue its efforts to support the sustainable growth Scottish aquaculture and its wider supply chain.”

Scottish Enterprise stressed that the salmon industry was “hugely important” to Scotland’s economy. “Scottish Enterprise has supported the sector throughout the years to help businesses improve sustainability practices, drive efficiencies and develop more humane processes,” said a spokesperson.

“The Scottish and UK governments place regulatory requirements on companies receiving public sector support. It is Scottish Enterprise’s role to implement the policy decisions of legislators on business support, delivering economic growth for Scotland.”

Highlands and Islands Enterprise argued that aquaculture was “a particular boon” to parts of the rural economy. “Much of our investment in the sector goes to support innovation, research and development,” said the agency’s head of food and drink, Elaine Jamieson.

“We’re interested in the potential of recirculation technologies such as closed systems and have commissioned studies to examine how these might be commercially applied in Scotland. At present, however, the industry as a whole continues to have a major focus on improving the efficiency of open net production and we expect this will continue to benefit coastal communities in our region for a long time to come.”

This story is the first in a series on fish farming funded by journalismfund.eu, an independent, non-profit organisation in Brussels that supports cross-border investigative journalism. Our investigations were carried in partnership with the Italian journalist Francesco De Augustinis

The Ferret is an editorially independent, not-for-profit co-operative run by its journalists and subscribers. You can find it at www.theferret.scot and can subscribe for £3 a month here: www.theferret.scot/subscribe