Review of the Catch Balancing (Deemed Value) Guidelines

Purpose

139. This paper seeks your views on the Ministry of Fisheries proposals to:
     1. Amend the catch balancing (deemed value) guidelines; and
     2. Establish a group responsible for reviewing deemed value rates.
        
140. The views in this paper are preliminary and are provided as a basis for consultation with stakeholders. Once the guidelines are revised following consultation, they will constitute the Ministry of Fisheries Standard on setting and reviewing deemed values.

Executive Summary

141. The guiding principle for setting deemed values will be that the annual deemed value is set above the ACE price that would exist if the total allowable commercial catch (TACC) was constraining catch recognising that deemed value rates should be set on a stock by stock basis. The deemed value should also reflect the transaction costs associated with purchasing ACE. The table in Appendix 1 sets out the proposed catch balancing (deemed value) guidelines.
     
142. A centrally run deemed value review group will take responsibility for recommending deemed values as part of the sustainability rounds and when new species are introduced into the quota management system (QMS). It is also proposed that the commercial seafood sector will be represented on this review group through SeaFIC.

Introduction

143. In October 2001 a new way to control catches within the QMS was introduced – the catch balancing regime. The new regime no longer made it an offence to fish without quota¹. Under the annual catch entitlement (ACE) framework, fishers are now required to balance all their catch at the end of the fishing year through acquiring ACE or paying a civil penalty (deemed value).
     
144. Deemed Values are set for each fish stock in the quota management system (QMS) using the catch balancing regime guidelines produced in 2001. The Act details five ways the balancing regime provides incentives for fishers to cover all their catch by ACE. These are:
     1. Annual deemed values (s 75 & s 76) are intended as the main deterrent to a fisher having catch in excess of ACE at the end of the fishing year;
     2. Interim deemed values (s 75 & s 76) are intended as a “reminder” for fishers to obtain ACE to cover catch during the fishing year;
     3. Permit suspension provisions (s 79) ensure that a fisher is prevented from fishing if they do not pay interim or annual deemed values (further fishing while suspended is a criminal offence);
     4. Overfishing thresholds (s 77, s 77A & s 78) ensure that when fishers continue to catch in excess of ACE an overfishing threshold, specified as a percentage of ACE held by the fisher, is applied and the fishers permit is conditioned to prevent the fisher fishing in the relevant QMA; and
     5. Tolerance levels (s 77 & s 78) (specified as a fixed quantity of catch) are designed to prevent overfishing thresholds being triggered by trivial amounts of catch in excess of ACE.
        
145. In addition to interim and annual deemed values, differential deemed values have been used as an extra deterrent by ramping up the annual deemed value invoice for an individual as more and more catch is taken in excess of the ACE held.
     
146. Finally, if a fisher’s outstanding deemed value invoice reaches $1 000 and remains unpaid then the fisher faces a permit suspension and is unable to continue fishing until the outstanding deemed value amount is reduced below $1 000.
     
147. The Fisheries Act also sets out that the Minister of Fisheries is responsible for setting annual and interim deemed values for each stock at the start of the fishing year and is required to ensure that deemed values encourage fishers to balance all their catch with ACE.

Policy Principles

148. The purpose of the deemed value framework is to provide an incentive for fishers to acquire sufficient ACE to balance against catch. The objectives operating within the catch balancing framework are:
     1. Catch is not harvested and landed in excess of available ACE;
     2. ACE is not left unused at the end of the fishing year when there have been significant deemed value payments; and
     3. Individual fishers are not able to deliberately use deemed values to undermine the QMS.
        
149. In every instance, MFish strives to identify the optimal point that balances these objectives.
     
150. The balancing regime is also a key fisheries management tool contributing to both sustainability and utilisation objectives. The sustainability objectives are achieved when deemed value rates encourage fishers to balance catch with available ACE and in so doing constrain harvesting to the TACC. The utilisation objectives are achieved by providing flexibility for operators to manage unexpected and small overruns in ACE holdings and allowing periodic rather than continuous balancing.
     
151. MFish acknowledges that TACCs of some low knowledge stocks may not be set appropriately and past policy has been to encourage reporting of all catch by permitting some over-catch through setting low deemed value rates. This policy will no longer continue. There is a process in place to review the total allowable catch (TACs) of low knowledge stocks and future policy will ensure deemed values defend the TACC.

Part 1: Why are we updating the Guidelines?

152. There are concerns that we are not operating the catch balancing framework as effectively as we should. The existing guidelines are considered overly prescriptive and do not allow sufficient flexibility to set appropriate deemed values, particularly for low information stocks. A summary of the existing catch balancing (deemed value) guidelines can be found in Appendix 2.
     
153. Under the existing guidelines, the port price for each fish stock is the predominant information tool used to determine the deemed value. Research commissioned by MFish has shown that there are other information sources that can be used to better set deemed values². Part of the purpose of this review has been to assess each of these proposed information sources for their suitability.
     
154. Finally, MFish considers it good practice to periodically review frameworks to evaluate their performance, effectiveness and if appropriate to identify improvements. The catch balancing framework was implemented in October 2001 and, apart from a minor review in 2003, has remained unchanged since that date.

Proposed Changes to the Catch Balancing (Deemed Value) Guidelines

155. MFish propose four key changes in the updated guidelines:
     1. Allow greater flexibility in setting deemed values;
     2. Set deemed values following the analysis of a range of information sources;
     3. Maintain interim deemed values but allow greater flexibility in how they are used; and
     4. Maintain differential deemed values but allow greater flexibility in how they are used
        
156. These proposed changes are discussed in more detail in the following section.

Greater flexibility to set deemed values on a stock by stock basis

157. The existing deemed value guidelines assign each stock to one of only three distinct categories. The method for determining the deemed value for each category is prescribed making it difficult to set deemed values on a stock by stock basis. These three categories are discussed in more detail in Appendix 3.
     
158. The inflexibility of the existing guidelines could contribute to distortion within the ACE market. The existing guidelines do not account for the relationship between ACE prices, deemed values and TACC overruns. If deemed value rates are set without due regard to current ACE prices, there may be no incentive for fishers to balance catch with ACE if deemed value rates are significantly less than the ACE price. If fishers wait until the end of the fishing year to balance their catch with available ACE, the TACC could be overcaught because not enough ACE is available to balance catch at the end of the fishing year.
     
159. This practice also undermines the value of ACE held by quota owners if fishers find it less costly to balance their catch through deemed value payments rather than acquiring ACE. Therefore, for the majority of fishstocks deemed values should be set, at a minimum, above the price of ACE (recognising transaction costs) to encourage fishers to purchase ACE to balance their catch.
     
160. The proposed deemed value guidelines recommend that the previous characterisation of stocks into the three categories high value, low information and all other stocks will no longer apply. Rather, deemed values will be considered and set on a stock by stock basis based on the analysis of a range of information sources. The exception to this will be those fishstocks which are considered to be of:
     
     1. High value/single species targeted: The nature of these fisheries, no bycatch and simple harvesting methods, means that fish should not be taken in excess of the TACC unless fishers are deliberately overfishing for economic gain. For these stocks the annual deemed value will continue to be set at 200% of the highest port price and will be considered for further increase should the TACC be exceeded. These high value fisheries include:
        1. Rock lobster;
        2. Paua;
        3. Certain scallop fisheries;
        4. Certain oyster fisheries e.g. Foveaux strait oysters; and
        5. Eels.
           
     2. High value shared fisheries: Fisheries where recreational and customary stakeholders are significant users and where continued overcatch of the TACC by the commercial sector undermines these non-commercial rights. For these stocks the deemed value will be set at a level to provide a greater disincentive for fishers to catch in excess of the TACC. Fish stocks will be included in this category on a case by case basis, as part of the analysis to determine deemed value rates.
        
161. Deemed values will be set or reviewed:
     1. When a stock enters the QMS;
     2. Following a change to one of the indicators listed below:
        1. Significant catch in excess of the TACC/available ACE;
        2. Deemed value payments made in the previous fishing year but significant ACE remained unused; and
        3. Significant changes in the port price for the fish stock
162. Once one of these indicators is activated the decision to adjust the deemed value will be taken following a scan of the fishery which will include:
     1. Consideration of whether there have been any TACC adjustments in recent years;
     2. An analysis of any significant changes in the structure of the quota owning/ACE market; and
     3. Significant changes in the structure of the market for the fish product.
        
163. A diagram depicting the process for reviewing, adjusting and setting deemed values can be found in Appendix 4.
     
164. These proposed guidelines will not create specific decision rules that state if the TACC is overcaught by X% then the deemed value should be increased by Y%. Rather each fishery will be assessed on an individual basis but persistent harvesting in excess of the available ACE will result in significant increases in the deemed value rate.
     
165. If correctly set, deemed values should encourage fishers to balance catch with ACE while allowing fishers to reduce transaction costs by allowing periodic rather than continuous balancing of their catch. To ensure deemed values provide the appropriate incentives to encourage balancing of catch with ACE, the deemed value rate should be set, as a minimum, as close as possible above the ACE price for that fish stock.
     
166. Information may not be available for fishstocks that are about to enter the QMS. This will be considered when recommending deemed value rates for these new stocks.
     
167. Once new deemed values are proposed a compliance analysis will be completed to gauge the risk of illegal dumping and misreporting. Detecting some types of misreporting offences, for example dumping, is more effective from aerial than surface surveillance assets.  There will be some improvement in our ability to detect such offending in the next few years as surveillance capability is increased.

Information sources

168. Under the existing guidelines the port price for each fish stock is used to set the deemed values for that stock. Port price data is collected at a stock level through an annual survey of the greenweight price a fisher receives from a LFR.
     
169. There are several limitations to the port price survey:
     1. Survey replies may be skewed where respondents are aware that the survey results are a factor in determining cost recovery levies, commodity charges from industry organisations, and deemed values.
     2. The survey does not differentiate between all species in a fishstock. For example, the oreo fishery consists of a number of different species (black, smooth and spiky). Each have significantly different values but there is only a single port price.
     3. The survey price does not differentiate the method of catch, e.g. longline caught fish and trawl caught fish. This is relevant if fish caught by one method over another command a price premium.
     4. The ownership structure, such as integrated versus non-integrated, of the licensed fish receiver (LFR) can influence the price paid for fish. For example, ex-vessel prices might be influenced by ACE transactions between the fisher and the LFR.
     5. Some prices paid to fishers include a fee for other consideration such as processing at sea, so prices are not directly comparative.
     6. There is no differentiation between different ‘grades’ of fish in certain species, e.g. scampi, squid and rock lobster.
     7. Port prices do not indicate the net value of fish to the fishers.
     8. There can be no distinction in the price paid for a species that comes from different fish stocks.
        
170. These limitations suggest setting deemed values based solely on an analysis of port price is misleading.
     
171. MFish has identified alternative information sources which could be used, in conjunction with port price, to set deemed values. These information sources are:
     1. ACE trading prices;
     2. Export prices;
     3. Cost recovery levies;
     4. Bycatch ratios; and
     5. Previous deemed value payments.
        
172. An assessment of each of these information sources, how they could be used and their suitability to set deemed values is discussed below.

ACE trading prices

173. Deemed values are a direct substitute for ACE in that a fisher can either balance their catch by acquiring ACE or by paying the deemed value. The Minister is required to encourage fishers to balance catch with ACE which suggests that the deemed value should be set so that the preferred option would be to balance catch with ACE. An analysis of the prices paid for ACE provides the lowest level the deemed value should be set.
     
174. Deemed values should be set above the ACE price for two reasons:
     1. If the deemed value is set too low quota holders trying to sell ACE will be forced to sell at the lower deemed value rate and quota owners will not be maximising their return; and
     2. If deemed values are set lower than the ACE price it provides an incentive for fishers to fish beyond the TACC/available ACE, violating s 75 which can lead to sustainability concerns.
        
175. The deemed value should be set above the ACE price where demand for ACE equals supply. This is not a straightforward calculation. Although there is a set quantity of ACE available each year, not all of the unfished ACE is made available on the market for a variety of reasons including:
     1. ACE holders hold ACE to mitigate any risk of paying deemed values if they catch more than intended, before balancing catch at the end of each fishing year;
     2. After balancing catch, the amount (kg) of remaining ACE that can be sold is not worth selling given the associated transaction costs (including administration costs) of selling that ACE;
     3. ACE is carried forward to the next fishing year (up to 10%) – except for stocks listed on schedule 5A; and
     4. Cost manipulation - firms may withhold ACE from the market to increase its price, traditionally at the end of the fishing year when fishers are prepared to pay higher prices for ACE rather than an annual deemed value bill.
        
176. A further difficulty of using ACE price to set deemed values arises because not all ACE trades are ‘arms length transactions’ which can distort the competitive ACE price - trades can be within company transfers which do not reflect the full market price. For example fishers may pay less for ACE if they agree to land to a specific LFR.
     
177. Information on ACE trades is available from FishServe. MFish has a process in place to groom this data to remove outliers (unusually high or low trade prices) and non-market trades (trades where no price is recorded) which may distort the ACE price. Details of this process can be found in Appendix 5.
     
178. The transaction costs, including the administration costs, of acquiring ACE should be included in the ACE price used to calculate deemed values. When ACE is traded FishServe levy a transaction cost. The transaction costs paid by the seller to FishServe (e.g. electronic transfers incur a flat charge of $16.65) is likely to be included in the ACE price. However, deemed values should also reflect the administrative costs of sourcing and purchasing ACE and should be set at a level so that the preferred option is still to balance catch with ACE.
     
179. MFish recommends that ACE trade price information is used to inform the minimum deemed value rate.

Export prices

180. The export price, free on board (FOB), is the value of export goods, including raw materials, processing, packaging, storage and transportation up to the point where the goods leave the country as an export. The export price would be the upper limit that a fisher is prepared to pay to catch and land a fish. Therefore the export price marks the upper limit of where a deemed value for a stock should be set.
     
181. Export price information is collected by New Zealand Customs and supplied to Statistics New Zealand. However, there are some difficulties in using export price information to set deemed values because there is a degree of incompatibility between how MFish categorises stocks and how Customs collect the export information. For some species the export categories are too broad – for example there is an export category for ‘other finfish’. For other species the categories are too narrow, for example export information for hoki is available by processing type – whole, chilled, frozen etc. Also, export information is at the species level and does not reflect the different fish stocks that make up that species.
     
182. The export price can also vary from producer to producer. Some companies which are highly vertically integrated may have a lower output price while companies supplying to niche markets may have higher output prices. This would suggest that the upper boundary for the deemed value rate will be different for different clients. The export price may not be a reliable upper boundary for certain bycatch species where fishers are prepared to pay more money to land bycatch species, than it is actually worth on the market so as to continue fishing for the target species.
     
183. MFish considers the incompatibility between export information and fish stock information means that for many fishstocks it will be difficult to accurately use export information to set deemed values. In addition, there are some fish stocks where export information is unavailable because the fish is only sold on the domestic market.
     
184. However, for some fish stocks export information is available at the species level. When appropriate MFish propose to use the export value of the greatest volume product state to inform the maximum deemed value rate.

Cost recovery levies

185. There is a school of thought that considers cost recovery levies act as de facto deemed values and therefore may limit overcatch. This argument rests on the assumption that since quota owners have to pay cost recovery levies they have less money to pay deemed values. Based on this information, deemed values should be set at a lower level in those fisheries where fishers fish their own ACE and cost recovery levies are paid.
     
186. In mixed fisheries (where fishers are both quota owners and ACE purchasers) ACE purchasers who do not pay cost recovery levies are in a better position to purchase additional ACE or pay deemed values. However, ACE fishers will purchase ACE from a quota owner for a price that presumably reflects the requirement the quota owner has to pay cost recovery levies. Therefore cost recovery levies are paid either directly by the quota owner or indirectly by the ACE fisher.
     
187. MFish does not propose to analyse cost recovery levies to set deemed value rates.

Bycatch ratios

188. MFish considers target/bycatch ratios are a valid tool to better inform the setting of deemed values. Target/bycatch ratios detail the interdependence between those stocks that are targeted and those stocks that are inevitably caught as a bycatch. This ratio is an important information source for setting deemed values in fisheries where the bycatch species cannot be specifically avoided or targeted and where the ratio remains static over time.
     
189. While the ratio is not directly applicable to setting a deemed value rate it does show how a change in the deemed value of one stock could influence the catch rates of another stock. This may in turn necessitate a deemed value change for the other stocks in the ratio.
     
190. Target/bycatch ratios are available within MFish from the Fisheries Science group and also from the Compliance Business group. However, these ratios are not available for all fisheries so they will only be used where available.
     
191. MFish proposes that the target/bycatch ratio information will not be used to set the deemed value rate; rather it will be used to assess how a deemed values change for a bycatch stock will impact on the target stock. This assessment may result in additional changes to deemed value rates for both the target and bycatch stock. MFish may recommend a deemed value rate in excess of the ACE trading price or port price to prevent over catch of a bycatch species.
     
192. Therefore MFish recommends that, where available, bycatch ratio information is used to assist accurate deemed value setting in the future.

Previous deemed value payments

193. MFish considers the analysis of deemed value payments and the functioning of the ACE market in the previous fishing year are important information sources to see if previous deemed value payments were sufficient to keep catch within the TACC. There may also be benefits in assessing trends in deemed values payments over a range of previous fishing years.
     
194. An analysis of deemed value payments are an indication of a firm’s willingness to pay for the right to land fish above their ACE holdings. Analysis of this information can also be used to show if there are any trends in overcatch, such as the same firms/fishers repeatedly catching in excess of their ACE holdings. High deemed value payments could also be an indicator that efficient allocation of ACE has not been achieved by the market, or that fishers are prepared to pay high deemed value payments for a bycatch species to continue harvesting the target species. Equally, high deemed value payments may be an indicator that the TACC has been set incorrectly.
     
195. Section 75 (7) of the Act states that any change to deemed value rates only take effect from the first day of the fishing year. If MFish wish to use this information source to set deemed values in the future, there will be a one year lag period.
     
196. MFish recommends that information on previous deemed value payments should be used to set deemed values in the future. MFish also consider that a one year time lag is acceptable and we do not consider it necessary to amend s 75 (7) at this time.

Information sources: conclusion

197. Based on the above analysis the proposed guidelines for setting deemed values include the following information sources which should be used to set deemed values:
     1. Port price;
     2. Export price (where appropriate);
     3. ACE trading prices;
     4. Target/bycatch ratios (where appropriate); and
     5. Review of previous deemed value payments (within one year time lag).
        
198. These information sources are within the scope and purpose of the Act and will aid in promoting the purpose of the Act by better meeting the sustainability and utilisation objectives discussed in paragraph 11 above. These sources provide the upper and lower boundaries, and associated relevant information within which an effective deemed value rate will generally be set. Stakeholders will continue to have an opportunity to comment on the deemed values set for individual stocks through regular consultation rounds.

Interim deemed values

199. Interim deemed values are a monthly penalty for fishers catching in excess of their ACE and are currently set at 50% of the annual deemed value rate. The purpose of interim deemed values is to allow fishers to land catch, to remind them of the need to balance and to reduce ACE transaction costs since fisher’s can consolidate their trades rather than having the cost of acquiring ACE to balance their catch after each fishing trip.
     
200. If, at the end of the fishing year, a fisher still has catch in excess of their ACE holdings they then face the higher annual deemed value payment. Interim deemed value payments are refunded to fishers when they acquire sufficient ACE to cover the catch for which deemed values were paid.
     
201. Interim deemed values provide a cheap alternative for fishers to land fish legitimately without having to continuously balance catch with ACE throughout the year. However, interim deemed value payments may encourage fishers to delay sourcing ACE until the end of the fishing year when there is rush to purchase ACE to avoid paying the higher annual deemed value payment. It then may not be possible to balance all catch with the TACC since sufficient ACE may not be available. There is a risk that interim deemed value rates may encourage catch in excess of available ACE.
     
202. MFish recommends a more flexible and effective use of interim deemed values and proposes to set the interim deemed value as a proportion of the annual deemed value on a stock by stock basis. Some stocks will continue with interim deemed values set at 50% of the annual rate while other stocks. Where more regular balancing throughout the year will assist with the management of stock interim deemed value rates will be set close to the stocks annual deemed value rate. Changes to a stock’s interim deemed value rate will only take place once the stock is reviewed using these new guidelines. Until then the interim deemed value rate will remain at 50% of the annual rate.

Differential deemed values

203. Differential deemed values are a ramped annual deemed value penalty that applies to an individual when specified thresholds of catch in excess of ACE are reached. These specified thresholds are expressed as a percentage of over-catch above ACE holdings. The annual deemed value for a fish stock would apply until the first threshold of catch in excess of ACE is reached, with the differential deemed values applying to any catch above this level. The differential deemed value only applies to the portion of the catch that is within the specified range. The existing deemed value notice set out the trigger points for applying differential deemed value guidelines as per Table 1 below.

Table 1: Differential deemed value trigger points

204. The existing guidelines require differential deemed values to be set for all fish stocks apart from those classified as low knowledge, with the purpose of creating an increasing disincentive for fishers to pay deemed values rather than balancing catch with ACE.
     
205. MFish recognises there is a place within the balancing regime for differential deemed values but acknowledges the risk that differential deemed values could create market distortions. Some ACE holders may retain ACE until near the end of the year when fishers, faced with an increasing differential deemed value bill, may be prepared to pay a higher price for the ACE. However differential deemed values are an important tool to constrain the activity of fishers who use deemed values to catch in excess of their ACE holdings thus undermining the QMS. For example, some fishers may have lower fishing costs that their competitors and are prepared to pay deemed values on fish caught in excess of available ACE because there is a financial return from doing so – differential deemed values should be used to limit this type of activity.
     
206. The willingness of firms to pay differential deemed values is also valuable information to use in deciding where to set the annual deemed value.
     
207. M Fish recommends that differential deemed values are not applied by default. If deemed values and TACCs are set correctly from the outset then there is sufficient incentive to encourage fishers to balance their catch with ACE. Differential deemed values should be applied with greater flexibility and it may be for some fish stocks there will also be flexibility in deciding when the ramping rates apply. For example, a differential deemed value rate may only apply if an individual fishers catch exceeds ACE holding by greater than 141% or alternatively the ramping could kick in at 121%. In high value shared fisheries ramping could occur when the percentage overcatch is 105%.
     
208. MFish recommends that the differential deemed values will only be considered for a stock if:
     1. The TACC has been over caught in the previous fishing year – this could have occurred because the basic deemed value has been set too low;
     2. Evidence that individuals are deeming significant quantities of fish rather than balancing it with ACE. This would suggest that it may be more cost effective to pay deemed values rather than source and purchase ACE; and
     3. The current deemed value has not yet been reviewed or set using these proposed guidelines.

Overfishing Thresholds and Tolerance Levels

209. Overfishing thresholds specify a percentage of catch over a fisher’s ACE holdings, above which an automatic permit condition prohibiting fishing in an area takes effect. An overfishing tolerance level specifies an amount of catch (kgs) over a fisher’s ACE holdings above which the automatic permit condition takes effect. Like differential deemed values, these tools put in place a penalty at the individual fisher level rather than imposing a restriction across the fishery as a whole. It is the responsibility of the Minister to determine if an overfishing threshold or tolerance level should be applied to a stock.
     
210. Having both tools available is important since the size of the ACE holding will vary considerably from one fisher to the next. For example, a threshold of 10% of ACE for a fisher who holds 100 tonnes of ACE for a fishstock would amount to 10 tonnes over-catch before the prohibition takes effect for that fisher. In contrast, a fisher with only 100kg of ACE would be penalised if their catch exceeded ACE by 10kg resulting in a prohibition on fishing in that area. In these circumstances a tolerance level would be fairer and gives the fisher the opportunity to balance the small amount of catch taken in excess of their ACE whilst continuing to fish in that area. Tolerance levels also permit fishers, who would not normally hold ACE for a species, to source ACE for incidental catch without the automatic permit prohibition applying.
     
211. The Fisheries (Over-Fishing Thresholds for Quota Management Stocks) Order 2001 sets out the thresholds and tolerance levels for selected stocks. The order applies predominantly to high value or single fishery stocks and sets as standard an overfishing threshold of 5% and tolerance level of 25kg. Details of these overfishing thresholds and tolerance levels can be found in Appendix 6.
     
212. At this time, MFish do not propose to create or amend overfishing thresholds and tolerance levels for any fish stock

Part 2: Deemed Value Review Process

213. MFish is also proposing to review, adjust and recommend deemed values through a newly created centralised deemed value review group. This will improve understanding of how the deemed value system is working and how deemed values have been set for particular stocks ensuring greater accuracy and transparency.
     
214. The review group will consist of MFish staff from the relevant business groups (Fisheries Operations, Policy, Science and possibly Compliance). Participation will be determined by the proposed stocks under review. SeaFIC will also be invited to participate in the review group to provide industry input.
     
215. An analyst from Fisheries Operations will be assigned as the permanent member of the review group. This analyst will provide a shortlist of stocks for further consideration by the review group based on the indicators listed in paragraph 22 (b). The analyst will also collect all the relevant information for each of the fishstocks, as recommended in the section on Information Sources.
     
216. The deemed value review group will meet to:
     1. Consider if a deemed value adjustment is warranted;
     2. Consider the information and analysis and to recommend deemed value rates for the relevant stocks. This information and discussion will form the basis of the advice to the Minister; and
     3. Identify those fishstocks where the TACC may need to be examined.
        
217. The deemed value review group will operate to the same timeframe as the existing sustainability and introduction of new species management and consultation rounds.
     
218. The deemed values recommended by the deemed value review group will be made available for stakeholder consultation through the normal process. This review group will also be responsible for reviewing the submissions on the recommended deemed value rates.
     
219. The deemed value rates for all fishstocks should be reviewed using these proposed deemed value guidelines, but given the number of stocks in the QMS (c. 600 stocks), stocks will need to be prioritised. Therefore the deemed value review group will focus efforts on ensuring accurate deemed values are set for the high value commercial fish stocks and the high value shared fish stocks, in the first instance. Stocks for which sustainability controls are being considered will also be reviewed by this group.
     
220. The deemed value review group will first meet to recommend the deemed value rates for the April 2007 sustainability round.

Preliminary recommendations

221. MFish proposes to:
     1. Amend the catch balancing (deemed value) guidelines; and
     2. Establish a deemed value review group responsible for the annual setting and adjusting of deemed value rates