5. Costs

Analysing, or generalizing about the potential costs of different forms of certification and branding, is extremely difficult because of:

• The different scale and complexity of fisheries and companies involved in certification.
• The private nature of previous certification and branding processes, and the corresponding and associated lack of documentation on costs.
• The differing levels of effort and resources that can be deployed when initiating and implementing a branding exercise.

Certification

With regard to the MSC certification process, fishery and chain-of-custody assessment and certification costs are paid directly to the independent third party certification body. The main elements of the assessment and certification process that carry a cost can be divided into five main components:

1. pre-assessment;
2. the fishery assessment;
3. re-assessment;
4. chain-of-custody assessment; and
5. logo license fees (not paid to the certification body).

The cost of pre-assessment, fishery assessment and periodic re-assessment depend on the size and complexity of the fishery and are typically paid for by the producers (although fisheries are largely assisted by other funding sources including NGOs, charitable funds, governments and retailers). MSC costs range from a few thousand dollars to US$20 000 for a pre-assessment (which determines the fishery unit for certification, the scope of the full assessment and likely issues that will need to be covered by both technical investigation and stakeholder assessment, and any gaps in management that may need improvement before gaining certification is likely) and US$10 000 to US$500 000 for full assessment, depending on the complexity and size of the fishery. Once a fishery is certified, it is required to undergo an annual audit to ensure that the fishery is operating within the parameters identified by the original assessment and that any conditions of certification have been met. The annual surveillance cost is usually low, unless there are significant issues that need investigation. After five years the fishery must undergo complete re-assessment, although re-certification costs will be lower than before, especially if stock impacts, bycatch and other environmental issues as well as management monitoring have been rectified as a result of the original certification (Peacey 2000).

Chain-of-custody assessments are commissioned and paid for by the companies that want to use the MSC logo. This also varies depending on the size and complexity of the supply chain. Companies wanting to use the MSC logo must enter into an agreement with MSC International, the trading arm of MSC. The fee for on-product use of the logo has been set at 0.1 percent of product value with a minimum fee of US$500, and is set to increase to 0.5 percent from 1 April 2008. The fee for off-product use of the logo is set at a level required to cover the administrative costs of the license system.

The Friend of the Sea initiative profiled in Section 3.1 charges a yearly fee of just †1 000 per approved product to cover audit costs (once every three years), logo licensing and promotion of products during Friend of the Sea events. This fee is expected to rise to †1 500 to 2 000 in 2008. As noted the sustainability of this scheme is not known given the low charges involved.

In Section 3.1 presented a number of non-certification initiatives run and paid for by those establishing them. Appendix E profiles some of the many supermarket schemes, and a number of consumer guides. Producers in the Asia–Pacific region could pay to engage with those running such schemes, to lobby them about fisheries which they feel are sustainably managed. The costs of doing so could be minimal in terms of publication materials and perhaps some travel budgets to visit those implementing the schemes, but the potential impacts in terms of ensuring the benefits of market access (perhaps the main benefit of more costly certification schemes) could be significant. Some other Australian fisheries for example have convinced European retailers that their products are sustainable because they have a permit to operate and that the issuing of a permit is in accordance with a law that requires sustainability.¹⁹ However, the limitations of this approach would be that:

• Fishing industries often claim/feel that their fisheries are sustainable when they are not.
• Certification and labeling could be badly undermined by self-claims and potentially misleading information to the public.
• It would not enhance fisheries management and sustainability.

In addition, one should also consider any costs involved with making the management improvements necessary for fisheries to successfully pass through the certification process, or for supermarket fish buyers and publishers of consumer guides to be convinced that fishing practices are sustainable. These could be considerable, depending on the management improvements required, and might for example include: increases in budgets for monitoring, control and surveillance; resources for improved stock assessment work; or decommissioning schemes.

With respect to the costs involved with the Statistical Certification system for exporting tuna to ICCAT countries, they are borne by the customer, although clearly governments in the producing country have to pay for the statistical/data collection actually required. For the United States' safeguards on shrimp fishing not being damaging to turtles, costs could relate to both those borne by governments in establishment of processes/procedures, and those borne by the catching sector in terms of new gear costs, as well as potentially reduced catch levels. ISO 14001 costs will obviously vary greatly depending on the size of the company involved, but could involve certification costs themselves as well as any costs required to comply with certification conditions and requirements. It has not been possible to access examples of specific costs for ICCAT and ISO 14001 certification as part of this study.

Of course, there may well be a strong relationship between costs, and benefits. Relatively expensive schemes such as the MSC may provide for greater benefits (in terms of both market access and resulting environmental improvements) than cheaper schemes such as the Friend of the Sea Scheme, because of greater levels of proof and up-to-date information required for certification, thereby increasing the value of the logo to retailers and consumers, and ultimately the benefits to producers. This is why the assessment of benefits alongside those of the costs, as discussed in Section 6 is so important. Low cost options for producers may not result in greater net benefits.

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¹⁹ MSC, personal communication, 2007.