:
Thank you very much, Mr. Chair.
I welcome all of my colleagues to western Newfoundland, to Deer Lake in particular. We're celebrating our 60th anniversary of municipal incorporation this week in Deer Lake.
Deer Lake is also a place where, while it's not a port city, fishers and fishing industry stakeholders have met before. It's a central location that allows easy access for people from Labrador, the northeast coast, the west coast, and from all over the province. We're back at a table where we've been before.
Mr. Chair, this is a great opportunity for us to study and be involved in an issue that is of critical importance, not only to the province of Newfoundland and Labrador but to eastern Canada. The House of Commons Standing Committee on Fisheries and Oceans decided to embark on a study of the eastern Canadian snow crab industry because this industry is in a certain amount of turmoil, no doubt about it.
The issues throughout eastern Canada are not identical. In Newfoundland and Labrador, for example, it's not so much based on a resource issue, per se, although there are definitely resource concerns. Economic issues, rationalization and long-term industry stability and viability issues, seem to be the predominant considerations that you may or may not want to bring to the table. In the southern Gulf of St. Lawrence, as we know, the issue is starkly different. They have had a 63% cut in quota, which is impacting their industry extremely negatively. On the eastern side of Nova Scotia there are other management issues.
The committee will be travelling throughout eastern Canada to hear from various industry stakeholders like you, to hear your input on not only specific issues but on specific recommendations for solutions as well. The objective of the committee will be to table a report in the House of Commons based on the testimony that each of you provides us and to synthesize that testimony into specific recommendations to the federal government for action. That's why I think it's exceptionally important for you to be here today, as key industry stakeholders, as opinion leaders, but as people who understand the industry in-depth as well.
It goes without saying that this industry is absolutely vital to the overall well-being of rural Newfoundland and Labrador, but it's important to rural eastern Canada as well.
Some of you have travelled far distances to be here. I appreciate that. I wish that everyone who was invited would have made the effort to be here. I think it would have been extremely valuable if the Association of Seafood Producers had taken the call and responded positively to the opportunity to testify, because this committee will be making recommendations. It will analyze the industry as it exists, as you present it to us, and we will be making specific recommendations to the federal government. We want everyone to be included in that, and that's why we asked all industry stakeholders and representatives to be here to be part of that. Unfortunately, the Association of Seafood Producers declined the invitation to attend and therefore declined the invitation to be part of this process. But our work goes on. We will be making recommendations based on what we hear.
The committee has assembled to hear this testimony because of a motion that I tabled before the Standing Committee on Fisheries and Oceans. I'm delighted that each and every one of you has taken the opportunity to be part of it, and I'm delighted that my colleagues have chosen to come here.
With that, Mr. Chair, I think it's time to hear the testimony from the witnesses.
I'm a three-hull-based full-time crab fisherman. I bought my first boat when I was 22. I have two sons-in-law involved in the fishery with me now. Unfortunately it's becoming more and more difficult coping with the policies and regulations that DFO is putting on us. I'd like to outline some of the regulations that maybe we could change, and I'd like someone to look at them.
We have a family business, and DFO is telling us that we cannot fish our three licences on one vessel. They're telling us to buy a second vessel. I don't see why we should have a second vessel when we can bring all licences in on one. Also, crab has a four-month season. DFO put a 12-month rule in place. I don't see why a boat in your name has to stay there for 12 months. That's hindering us when we're changing boats to catch our three licences. I don't see why DFO can't change the wording and maybe put in one change per calendar year.
Two or three years ago, I remember DFO took the 12-month rule out and put in a six-month rule. The following year, they put the 12-month rule back in place. So it's not as though they can't do something about it. When we're fishing, our two buddied-up individual quotas take about 10 weeks to catch. The other licence takes four weeks to catch.
So this 12-month rule, when we're trying to combine licences, or purchase more licences to build up our business, is crippling us. We're not able to do it without buying a second vessel. I don't want to invest another $300,000 or $400,000 to buy a vessel.
Also, this year in particular, our fishery opened April 1. So fishermen went in and picked up their licences April 1. Because I was buddied up with my son-in-law, my licence wasn't available until April 12. So I lost 12 days of fishing time. Our season closes July 30. I don't know if they're going to give me 12 days more than the other fishermen at the end of the season. I'm very doubtful. So paperwork should be available April 1 or even before April 1.
Our vessel can carry 55,000 pounds in an RSW tank. It's top-quality crab. We've been doing it for 10 years with RSW. DFO is telling us we have trip limits. Now the trip limit for an RSW vessel I think is 50,000 pounds. Some boats can carry 55,000 or 60,000 pounds, and I don't see why we have to judge how much crab is in those tanks. We fill them up. They can stay in the tanks forever. Quality is not an issue. So fill up your tanks, and bring them in. If the production plant can handle it, offload it. Having trip limits to me is not conservation; it's interference, especially for RSW boats. Trip limits should be gone. To my mind, DFO shouldn't have anything to do with trip limits. Let the processor deal with his own fishermen. If the processor can handle it, bring it in.
I'm John Sackton. Just to give you a very brief background, I publish Seafood.com News and I'm a market analyst. I deal a lot with fish commodity prices. I've been involved with the Newfoundland crab fishery for about 12 years.
After a strike in 1998 or maybe 1997, I came in the following year because the province developed a final-offer selection process and wanted a third-party market analyst to report on crab prices in the U.S. and Japan. Those crab prices were used at that time by the FFAW and FANL to negotiate a formula that adjusted the prices to the boats. The rationale behind this was to get the season started without either side or either party taking excessive risk.
The history of the crab fishery, particularly with the heavy landings that occur towards the end of May, is that the prices invariably go down in the market from the start of the fishery in late April and May until the end of May or the beginning of June. If you know that these crab prices are going to go down, it's very hard to judge who's going to take the risk, so at that time the market-based formula was designed to adjust prices to the harvesters up or down, depending on the market performance. Adjustment was initially on a biweekly basis. Also, for most of those years there was a much more favourable Canadian dollar exchange rate in the U.S. market for crab exporters, and because of that there was room in the value of the commodity for all of this to adjust.
My role in terms of providing a market price that then adjusted actual vessel prices ended in 2008 or 2009. It ended in the first year that the U.S. and Canadian dollars got to parity, which I think was 2008. That put a tremendous amount of pressure on Canadian crab exporters, and the market-based formula in that year would have returned a crab price to harvesters below $1.50. I'm not quite sure how it was decided, but at that point there was certainly a feeling that the $1.50 price had to be maintained. As a result, the market-based formula was abandoned.
In that year, it so happened that if you took all of the prices into consideration, $1.50 was in fact a good, accurate price. Even though for a few weeks you might have seen $1.45, in other weeks you would have seen $1.55 or whatever, and it averaged out.
For the last two years I've been under contract from the province to do market monitoring for the crab markets and give a report at the end of the year, but I've had no involvement in directly providing information for price-setting.
The point I want to make is that I think a lot of the stress the industry's been under is directly related to the U.S. dollar exchange rate. When we had the price formula, the U.S. exchange rate was included as a factor in the formula. When the prices were changing every two weeks, often the biggest single factor in that change was the volatility of the exchange rate, and when the exchange rate moved towards parity, it made a very significant reduction in income to the entire industry.
Looking back at the last 10 or 12 years, my view is that when the exchange rates were favourable for exporters, it really provided the industry with a cushion to negotiate. There was room for processors to make money and there was room for harvesters to make money. Now that the cushion has been eroded and our dollar is at par, it's put an extreme amount of pressure on the industry.
:
Good morning. I'm Leo Seymour.
I want to speak a little bit about what John just said about dollar parity. I can understand a little bit about the exchange rate. I'm no expert on it, but Nova Scotia is a part of Canada, with the same dollar; in New Brunswick, it's the same thing. How is it that crab right now is $2.40 in New Brunswick to the fishermen, and to me it's only $1.35?
The list goes on, with cod and everything else. I got 50¢ a pound for cod last year, and in Nova Scotia it was $1.70 a pound. Does the exchange rate have anything to do with that? I don't think so. I just can't get my head around it. All I can do is say it in plain English: it's nothing but a goddamn rip-off, as simple as that.
I could go on. I've been fishing now for, let me see, 36 years. I got into the fishery with a loan of $300 from a fellow when I bought a power saw when I was 17 years old. I went into the woods and I built a skiff and I went fishing. Now it is all gone; we've been on a so-called moratorium since 1992, which doesn't even exist. It's just the likes of me who's not allowed to catch a fish, but everybody else—the foreigners and whatever—can do what they like. It's going on now, as we're sitting here. They're out there now, and our own factory freezer trawlers are out there catching shrimp. They caught 600 tonnes of shrimp in 21 days. What did they do? They destroyed 1,800 tonnes of capelin, the most precious fish in the water. Everything else has to depend on it.
Now we have another problem. I know you all see this. Even the scientists now will agree that there are around nine million seals. We know, we fishermen and sealers, that there are more than that. Where's it all going to end up?
This is the coast of Newfoundland and Labrador. The fishery is our mother, and she's on life support, and nobody cares. That's the way it seems to be. You can talk all you like, you can do what you like, and nobody cares.
If something isn't done about the seal population.... If we think we're in a mess now, then boy, listen here; wait and see what's ahead. Like buddy said, the perfect storm is yet to come.
I don't see any way out of it. This is total destruction. The only thing I know to do when I leave here is to pack my bag and head west, after 35 years of investing in boats and wharves and fishing gear and one thing or another. Now, if I go out in the summer and get a few capelin, while my buddy is there having bad luck, I'm not even allowed to give them to him. I have to dump them. Then they talk about conservation. Sure, they don't have a clue what they're talking about.
I'll go on a little bit more. I'm not going to stick to the crab fishery, because as far as I'm concerned, the fishery is the fish.
One of these days there will be a food fishery open. You're allowed five fish a day. If you get a tomcod only so long, you have to keep it. You're not allowed to throw it away to try to get a better one; you have to keep it. I asked DFO the question why. He said that catch and release could harm the fishery.
I can haul a fish out of thirty fathoms of water in probably less than a minute and unhook to let it go. But at the same time, you have a regulation up on the rivers. There's a salmon up there to spawn, eight months pregnant. I can heave out the hook and I can battle it for a full half-hour, maybe an hour, trying to get myself a salmon of 14 or 15 pounds. Does that make sense to you? And right now, this summer coming, I'm not even allowed to carry a dead salmon. If I get a salmon tangled in my gear and he's dead, I'm not even allowed to carry him in. I have to throw him away.
Saint-Pierre and Miquelon, with their ten-mile corridor that extends out beyond the 200-mile limit, are catching away at our salmon all summer long.
I could go on and on. I could write a jaysus book, but what's the good of it?
Anyway, thank you.
:
Good morning, Mr. Chairperson, members of the Standing Committee on Fisheries and Oceans, and fellow panellists.
I want to thank the Standing Committee on Fisheries and Oceans for the opportunity to make a presentation concerning the snow crab industry in Newfoundland and Labrador.
As an introduction, my name is Lyndon Small, president of the Newfoundland and Labrador Independent Fish Harvesters Association, NLIFHA, and co-owner and operator of a 65-foot fishing vessel.
The NLIFHA consists of members in the over-40-foot fleet in division 3K, which extends from Cape Freels to north of Cape Bauld. The mandate of this association is to ensure that the issues and concerns that affect our enterprises daily are being presented to both levels of government.
The crab industry in this province has great potential but has been crippled by low raw material prices in comparison with those in other jurisdictions within Atlantic Canada. Today, dry crab in New Brunswick is at $2.15 a pound; RSW crab is at $2.40 a pound; and in this province dry crab, and RSW, is at $1.35. At this price differential, fishers will lose thousands of dollars in income and revenue for their fishing enterprises.
What are the reasons for this huge difference in price? It's simply that competition is non-existent in this province's crab industry. Provincial legislation prohibits outside buyers from coming into the province to buy and truck the crab to their plants in the Maritimes. This form of protectionism enables the processors of this province to have a monopoly on the industry and provides an avenue for collusion to seep in, resulting in basement prices for crab fishers.
Presently, the NLIFHA have a confirmed buyer in the Maritimes willing to buy 3K crab at $1.90 a pound, but the provincial government will not allow this form of free enterprise to flourish.
The second major reason why the raw material price is deflated in Newfoundland and Labrador is the control processors have over the harvesting sector in this province. Over the years, fish companies have provided financing and loan guarantees for the purchase of vessels, licences, and equipment. Essentially, the processors own and control the vast majority of enterprises within this industry. This control guarantees the producers a lock on the crab before it is harvested from the water and the ability to dictate a low-end price to the fisher.
In this era of combining and rationalization, trust agreements are alive and well. Just under the surface, the fleet separation policy has been seriously eroded, to the point that vertical integration, which the processors so much desire, is a reality.
In conclusion, former provincial Minister of Fisheries John Efford discussed the same problems in a recent fisheries magazine interview, which stated:
In order to be a truly free industry, the market has to be opened up to outside buyers and harvesters can't be forced to do things they don't want to with their products, he now argues. “Processors actually own large numbers of fisheries enterprises. So that gives them an extra advantage and that is then one of the reasons why a lot of the small boat fishermen can't increase their quotas, ” he says. “Their own boats could keep the plants going. So they can squeeze.”
Therefore competition, free enterprise, and independence have to be the cornerstones of a viable crab fishery in Newfoundland and Labrador.
Thank you.
:
Thank you very much for giving me the opportunity.
I want to talk about snow crab. When we got into the crab fishery, 15 or 16 years ago, it was after the moratorium when they took away our cod fishery, which was a deepwater fishery for us.
Over the years we've been successful in lobbying to get into the bays for small boats under 40 feet. Most of us are in the 27- or 28-foot range. When DFO allotted that portion of water to the small boats, they said, “You live and die within that”, with regard to crab. That's fine, but the problem with it is that there are too many of us in those bays to make a living off that amount of crab.
I'm not faulting DFO on their management of the resource. It's about the only species there is for which we have a relationship with DFO in which we basically sit down and between the two groups come up with a quota that doesn't devastate the bay. We try to stay within a sustainable quota, and I must say it's worked well. The problem we have in the bay is that there's not enough resource for the number of us harvesters there; that's problem number one. Number two is that there are so many regulations in place that we can't economize on what we have, such as by fishing with three or four in a boat, or changing the boat around, as you suggested. That's crippling us.
Take Green Bay, where I fish. We have 11,000 tonnes of crab and basically little or nothing else. It makes a lot of sense to us as harvesters if we can get the most dollars we can out of that by economizing and buddying up. Whatever we need to do, we should do it. We can't survive on that.
The question I ask here today is this. Everybody's talking about a fishery that “can” be good, but you gave us four minutes to talk, and I think that's more than we've got to fix this: there's nobody after me. I'm 57 years old. There's nobody after me. In my community, the one I fished out of, is dead. I had to move out of it two years ago, because nobody has an interest. Nobody wants to go into a fishery in which they can't survive. They don't have enough money for groceries on a regular basis; they can't make their payments. We haven't got a resource.
When we fished cod, we didn't have a limit. We worked hard and caught what we could get, but with crab we have a quota. You can't make the resource any bigger than what it is, but we have to fix it. Today, this thing called the independent owner-operator has been pushed by everybody...and I support it; you can't own a licence unless you're a fish harvester, and that's the way it should be. But I'll tell you something right now, and you mark my words: within the next five to ten years, you'll see people like me out on the street lobbying you and the provincial government to let us sell our licence to buyers.
When I'm ready to get out--and I have no choice, because my age and health tells me to--no one else is there to buy it. If we don't fix this now—and we don't have another 15 years, or another 10—there will be no fishery; there will be no little bays; there will be no little communities.
So what happens to all these licences and this quota? Someone has to catch it; it's going to come out of the water. What I'm saying is that we have to fix this fishery.
Leo spoke about seals. One guy killed a seal in Green Bay this year, one hooded seal, and he documented it. He took the pictures and he posted them on the Internet. It had 85 female crabs in its stomach. I've been fishing crab for 16 years, and—I think Lyndon can back me up—I haven't destroyed five female crabs. That one seal took 85. How long can that resource last?
When I fished cod in deep water, that's all we knew. We fished, 150 of us, out on the water with gillnets. If we cut its throat and slit the stomach, we used to ruin our knives on the crab. It was female crabs. We don't want the cod back to that state anymore, or we won't have a crab fishery. We need to get control of this and we need to put something in place so that there's a future beyond me.
I have seven or eight years left, but every little community in Newfoundland is going to be gone without that resource. It's like Leo said this morning, coming in: do you know the biggest employer in Newfoundland today? Alberta.
That's stupid. We have a fishery that can support three times what is there, if we had run it right in the first place.
I'd like to close by saying that right now, in my opinion, and I speak for a lot of small-boat fishermen, the problem in this fishery is that there's not enough fish in the industry and too much politics.
:
Thank you and good morning. I'm Earle McCurdy with the Fish, Food and Allied Workers Union. I'll just touch on a few points. A lot of the points I wanted to talk about have been made and I'll just try to be brief.
It's not quite clear what exactly the focus was to be, other than the crab fishery, but I think the crab fishery, as one of the previous speakers said—it might have been Leo—is really all part and parcel of an overall fishery. Crab for the province as a whole is the single most important species in terms of total dollars in export value. In terms of the degree of dependence on it, crab is number one, although not everybody in all areas of the province has access to it.
I guess one of the principal issues of federal jurisdiction, because really we're dealing with a federal committee here, is the whole area of resource management, but there are some issues under that that I would just like to touch on. One has been raised already by Ray and Leo and perhaps others.
You hear a lot about ecosystem management. I really find myself wondering what that means when people say it, because if there was an ecosystem management, we could at least say what are our aims and objectives with respect to the management of the seal herd, with respect to the cod fishery, with respect to the crab fishery and the shrimp fishery. When you set a goal for one, that has a real impact on another.
For example, COSEWIC, the Committee on the Status of Endangered Wildlife in Canada, recently came out with a pronouncement that cod was in danger, within the definition that's in their legislation. It's absolutely a ludicrous outcome, yet the implications are very serious in our province. They're twofold: first of all, the amount of crab people have access to, and the issue Ray just raised, the impact of cod on species like crab, of which it's a predator.
I don't think it's realized at all by either level of government, I have to say, the extent of the financial crisis that exists in the harvesting sector of our fishery. A lot of it is the unfinished business of the moratorium on cod stocks, not only the northern cod but the other cod stocks as well, back in the 1990s, when the number of people who remained in the industry was just insufficient for the amount of resource available. What Ray described for his area is absolutely true of other areas as well.
There is a solution. We do have an opportunity to have a future of some sort in this province for a fishery. It will not happen without the conscious effort and contribution of the two levels of government to really a rationalization and a rebirth. The number of people who are there now, there are too many for the amount of resources there. A public sector investment would allow for an orderly transition of the baby boomers—we have an aging population of licence-holders—and allow them to leave.
Policies that say the solution is self-rationalization, which was proclaimed by the two levels of government back in 2007, and the people buy out each other, have really proven to be kind of a poisoned chalice. What it does is it encumbers the person who does the combining with so much debt that it makes a bad situation worse. If there's a single problem that exceeds all others in our industry, it's the huge amount of debt that is there.
There are a number of provincial issues. I won't dwell on them, other than to say that there has been a process between the industry and the provincial government to try to deal with some of these things. The federal government has been noticeably absent from that table, which is unfortunate, particularly given the principal responsibility of the federal government in the management of the fishery and in really creating the crisis of the late 1980s and 1990s that we're still finding the effects of today and that are having such an impact on our industry.
My name is Trevor Decker. I'm part owner and director of the TriNav Group of Companies. We're involved with marine brokerage and fishing licences, vessels. We're involved with fish harvesters in Nova Scotia, brokering crab for those guys in the water. We publish a navigator magazine. We have other companies that are involved with the fishing industry throughout Atlantic Canada.
I'd like to speak on three areas, one being competition, two being marketing, and three being financing.
When it comes to competition, as I see it, competition ends at the wharf. When the fishermen land their product there is one buyer for the product, and that's where it stands. The price is negotiated and nobody else from outside is coming in. To allow outside buyers won't solve the problem, but it would ensure that competition exists.
We have many diversified fishing operations throughout Newfoundland and Labrador, therefore the loss of product to outside buyers will be very minimal due to the fact that many people who'll come in will probably only be looking at one resource, and that will be crab. As people have already said, many fishermen in Newfoundland depend on turbot, shrimp, capelin, mackerel, herring, and so on.
What has happened in Nova Scotia, New Brunswick, and P.E.I. is that they have commissioned buyers who channel product to buyers from outside that particular province. Therefore the price has a tendency to stay. We see this, we've been involved with this, and I'll explain a little more as I go on.
Looking at the marketing of our product with respect to the quality of crab, there is no incentive for RSW vessels that have invested in Newfoundland. Extras are paid in other provinces. New Brunswick has a tendency to pay more for crab that are landed with RSW vessels. Newfoundland does not, as earlier on Clarence Andrews referenced the problems he has seen.
The area 19 model we are involved with concerning the crab fishermen in Cape Breton, we market product in the water. We broker the product. We take a percentage of the fishermen's product and we sell it not necessarily to the highest bidder but to the best qualifier, somebody who has a good financial background, somebody who can offer the fishermen what the fishermen are looking for. This is an association of fishermen in the Cape Breton region that markets their area 19 crab, which is known to be top quality.
If we want to look at the general promotion of snow crab overall in Atlantic Canada and if we compare that to the Alaskan king crab, Maine lobster, and even look at Newfoundland tourism, the marketing that is there with respect to the tourism industry is phenomenal. Wherever you go, you see it. When it comes to Alaskan king crab, there are things they have done; Deadliest Catch gives that more limelight than anything else you look at. Now, Maine lobster: Maine lobster is known to be the best.
This is all through the marketing campaigns that have existed.
There is something I want to throw on the table that I'd like everybody to look at: an Atlantic Canadian crab council.
The last point I want to focus on is financing. Rationalization is happening. Fishermen do need extra product, but we need to have proper bank security and fishermen need to have better terms.
Fishermen have bought out other fishermen for years. This is not something new. It's been passed down from an older generation to a younger generation, but with a lot less money. But I'm into the business. People buy and sell on a daily basis, and the selling is done voluntarily. People come in. They offer. Someone puts something up for sale. The market comes forward and they offer on a licence or quota, whatever it may be.
Nobody has been forced to do anything. However, this is the way things happen offshore. Things are happening more like this inshore. Fishermen need to have the ability to get adequate financing.
The minister has the right, as we see in New Brunswick with the percentage cut...the value of that licence has dropped tremendously. So if people want to invest in the fishing industry, the government needs to be involved with respect to at least guaranteeing the financer that the product, the quota in which they finance, has not lost 50% of its value overnight.
Fishing enterprises are businesses and should have the right to grow or consolidate, or do what anybody else would have to do in the industry. But there are more restrictions existing within the industry that we need to see relaxed. I've seen it over and over and over, the CCRA rule with respect to fishermen wanting to buy licences with the corporations. Yet they're taxed individually, so this is another area of concern. That's on the minister's desk right now, and has been for probably a year and a half. The industry voted in favour of the companies owning a fishing licence, and that hasn't been signed off on.
There are other issues that I'd like to bring forward, and probably as we speak today I can, but I'll end it at that.
Thank you very much.
:
Good morning, Mr. Chair and committee members. My name is Phil Barnes. I represent the Fogo Island Co-Operative Society Limited, out of Fogo Island. The co-operative was formed back in the sixties as part of an initiative that was taken on by fishermen on the island, and with the aid of the provincial government they developed an industry and continue to build in that industry. I wanted to give you a little bit of background about that.
My presence here today basically is to speak on some of the issues and challenges that we face in the industry, as a processor. We have an aging population, as was mentioned by some of the people here earlier. We have young entrants trying to get into the industry, young entrants in terms of fish harvesters. I have been presented with this challenge for the last two years. There's a couple of fishermen I've devoted my time to trying to put into a boat, and the challenges are that the banks won't look at them. These young people are in their twenties and they don't have the cash or the equity to put into an enterprise at this point in time. However, they've been fishing for seven or eight years and have good backgrounds. They have their licences. They're qualified. Yet we run into stumbling blocks. The banks won't look at them. They have no equity.
Those are only a couple of issues. Skilled labour continues to be a big issue at our plant. How do you replace an electrician? Today I'm going to run my shrimp operation in Fogo without an electrician. You have a tremendous cost. You'd probably end up making more money than I do if you came to the island to work for us, but that's the challenge we face. Skilled labour, maintenance people, and the list goes on.
I want to go back to the aging population. In our workforce today, it's tough. We have people who are in their mid-fifties, the average age in our plants. How do you replace these workers? There are no young people staying around who want to work in this industry. There are no jobs they're going to want to do, as young people graduating from school and so on. So these are big, big changes, and we have to look at modernization of our plants, new technology. Or we have to look at immigration, workers coming in from other countries. So those are some of the challenges that we do face.
I want to also touch on, I guess, the biggest question. Every time I go anywhere, someone asks how the Fogo Island co-op could open its doors this year at $1.35 on crab and all the other processors could not.
Well, we do a lot of thinking when it comes to this time of the year, and we looked at the dollar being at par. Basically, that's what we built our business model on, that we'd look for a break-even, because at the best of times the only thing we're trying to do is to keep our fishermen and our plant workers working. We're a different beast. We're a different animal. We have a different chemistry.
The Fogo Island Co-Operative Society has a membership and the fishermen and the plant workers own that business. We're not profit-driven to the extent that the big corporations are, so in a nutshell, I'd have to say that that's what it came down to. You have two risks basically. The risk not to open, and the risk to open, and we felt the former was the worst to do at the time.
That's where it was, and I hope that answers the question that you were looking for, Gerry, in terms of our position. If there are any other questions, I'll gladly take them.
Thank you to our witnesses for their very concise but as well very compelling testimony about issues in the industry.
I want to thank Clarence Andrews for providing the committee with very specific recommendations on issues that affect your industry. You've provided us with specific ideas and recommendations as to how we can improve your industry.
We have over an hour of further discussion, so if there are other things that you want to raise, hopefully we'll be able to do that through our question and answer period.
What strikes me, Mr. Chair, in addition to some of the things we've heard, is one compelling but interwoven thread amongst just about all the testimony, and that is the price differential between Newfoundland and the Maritimes. For the purpose of the record, Mr. Sackton raised the issue of the final offer arbitration by the price-setting panel. For the purpose of the record, as we discuss this in our report, this year the price-setting panel set a price of $1.35 a pound, based on that final offer selection. The price was initially refused by the buyers, by the Association of Seafood Producers. It was accepted, albeit begrudgingly I guess, by the harvesters, the FFAW, but eventually the fishery did start at $1.35.
What we're hearing testimony about is the confusion, uncertainty, and frustration about the fact that the price differential seems to be extreme between the Newfoundland and Labrador region and the Maritimes region.
Lyndon Small said that the Independent Fish Harvesters Association has secured a Maritimes buyer at $1.90 a pound.
We've heard Phil Barnes, who is a former member of the Association of Seafood Producers, say that he is initially going to purchase at $1.35 a pound. I think Mr. Barnes will also indicate that he was actually thrown out of the Association of Seafood Producers for agreeing to buy at $1.35 a pound, which was the established rate.
What I'd like to do is ask Mr. Lyndon Small to further elaborate on his association's acquired offer of $1.90 a pound, and ask Mr. Sackton if he could elaborate further on what he perceives as the reason for the price differential between Newfoundland and the Maritimes.
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Mr. Andrews, thank you for the question.
First of all, in terms of the first part of your question, the $1.50 per pound that I described earlier is above board. That's right on the table. That's receipted right at the dock.
In terms of bonus payments, I can only speak for myself, but doing some active negotiating prior to starting fishing this season, bonuses were a non-issue. Bonuses weren't available. You were lucky if you were able to squeeze out perhaps 5¢ or 10¢ if you landed to the plant. But suddenly circumstances have changed. Now, as Mr. Byrne alluded to, 30¢, 35¢, 40¢, or 50¢ may be there. And I say that with a maybe, because that is the individual enterprise owner's own business relations—you know what I'm saying—with individual buyers within this province. But there's no doubt that incentives are being offered and are being paid, quite substantial incentives.
In terms of the other part of your question, with regard to fleet separation, for an owner-operator, as we speak, that is probably the most significant problem we have in this industry. There's no way to get an accurate percentage on the amount of control in this industry, but I would hazard a guess that in the range of 80% to 90% of most of the enterprises in this province are controlled by processors, whereby they have guarantees for loans or purchase of licences, vessels, and equipment. Automatically, if I'm a producer in Newfoundland and Labrador, I have a guarantee; I have a lock on that product.
With the dispute that went on this past spring, it was said that there would not be a crab fishery. There will always be a crab fishery in Newfoundland and Labrador regardless of what dispute is there, because the processors of this province control that product that's down there on that seabed now, crawling around waiting to be caught. The only way we can solve this huge problem that we have is through independent financing.
A group of licence-holders—namely, the chairs of the shrimp fleet in this province—put forward a proposal to the provincial department whereby the purchase of enterprises and vessels and equipment would be guaranteed at, say, a low interest rate of 3%, when we know we're in an environment where, in the near future, interest rates are going to climb. It would be minimal risk for the provincial government to take part in those guarantees. Over a 15-year period, being able to rationalize the industry and make operations more efficient, it probably would have cost the provincial government, I think, $45 million over 15 years, which is absolutely peanuts in terms of the moneys being put into the industry.
So I think, Mr. Andrews, that's the road we have to go down, some way we can find independence financially, because right now we're in dire straits. The harvesting sector is in dire straits in terms of independence and financing and being able to run their businesses, their fishing operations, in an independent, true businesslike manner.
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With the business I'm involved in, marketing is a very important portion of what we do. We basically market fishing licences and fishing vessels, now to the point of basically all products, on behalf of our clients, primarily fishermen.
The first thing we have to do is get out there—we don't see as much marketing process with respect to snow crab, which I think is more an Atlantic Canadian way—and through the development of the Atlantic Canadian crab council, probably, work together in each province, competing with one another, with respect to the markets that we have available to us.
What had transpired through that area 19 model that we were involved in with the marketing program there last year was that we started out with a price offer a few days before the fishery started. The price would be dropping as the season continued over the next few weeks. But through our efforts, we managed to find a buyer that was willing to pay the price—a suitable buyer, mind you, basically somebody who qualified—and we managed to get the price up 20¢ more than what was offered at the wharf. So the fishery went ahead, the price never dropped, and the fishermen got to sell their crab in the water.
Through the marketing efforts, we went around through Atlantic Canada and this was the product that was being sold. Area 19 crab is a large crab. It is of a colour...basically you don't have any pencil lines underneath. It's a very high-quality crab. We managed to get the best price available through the marketing efforts that were done by us, with the association. Again this year, the area 19 crab fishery is only a short distance away and we'll be doing the same thing.
As another example, it's no different from what we do on a daily basis with fishing vessels. We've been marketing fishing vessels throughout the world, but by the same token, it doesn't necessarily mean that we're selling to the same people all the time. We're continuously looking for new markets, and I think it's where we need to go with respect to the crab fishery. We need to work together.
If there's anything that this standing committee can do here, it's to basically bring together everybody within Atlantic Canada, all the crab fishermen in Atlantic Canada. Be it in Quebec or in the Maritimes, we have snow crab. Yes, there are some crab that are a smaller size than others. Yes, there are some crab that probably have a different appearance than others, but let's try to get the best we can in the marketplace we're trying to sell into. Let's stop undercutting each other, to the point where the government involvement here could be something that we could work towards, helping these companies obtain the best price for it. Why shouldn't we be selling the pristine crab that we have that comes out of the water through Atlantic Canada? Why do we have to undercut ourselves with the product that we have? It's quality product.
I'm very doubtful, Phil, that you're dumping much of the product that's coming to your wharf. I'm assuming that you're selling everything you receive, and I'm assuming that you're receiving quality product.
So what we need to do in a marketing strategy is to get out there, and through this process, everybody work together to get the best we possibly can, rather than one undercutting the other and then people like Lyndon Small and the other fishermen around the table being the ones who are getting less from the industry.
These are the primary people. Without the harvesters, we have nothing. The harvesters are getting less, from what I can see, as people who are presenting quality product to the marketplace. Yet all we're doing is selling; we're not marketing. We're just going in and dumping our crab on the market, and somebody else is holding it and receiving the best price, when the market can pay the best price, which we're not doing.
I'll just end there.
We're a little bit late getting here; we didn't think we'd ever have to use the GPS in Deer Lake to find the spot to get to, but we managed to get here.
Thank you for this opportunity to meet with your committee to discuss issues related to the snow crab sector. I have a presentation that will probably take about 12 minutes .
Last year in this province approximately 2,200 individuals were employed in our fishery, and close to two-thirds of those participated in processing and harvesting of snow crab. These individuals come from some 450 communities throughout our province, primarily from rural areas where few employment alternatives exist. Snow crab has become the most important species in the Newfoundland and Labrador fishery, so there is a keen interest in ensuring that this resource is well managed for the benefit of our rural communities.
During the next few minutes I'll be providing a brief overview of the importance of this resource to the province, outlining our views on resource management issues, providing an overview of the growth and status of the crab harvesting and crab processing sectors, and outlining the importance of the fishing industry renewal strategy and the memorandum of understanding on fisheries, fishing industry restructuring to improve the viability of these sectors. Following these statements, I certainly would be open for questions for more detail.
During the 1970s a directed snow crab fishery started to develop along the northeast and south coast of this province, in NAFO divisions 3L, 3K, and 3Ps. During the mid-1980s to late-1980s, the crab fishery expanded to the west coast and to Labrador. During this developmental stage, total landings were modest and only a very small proportion of the harvesters and plant workers were involved. At that time groundfish were still the mainstay of our fishery, and following the groundfish moratorium in the early 1990s, a more lucrative shellfish industry replaced the tradition of the groundfish industry.
Due in large measure to the tremendous growth of the snow crab and shrimp resources, total production value for the province's seafood industry peaked at $1.2 billion in 2004, the highest level ever achieved, even beyond the best years of the groundfish fishery. Since then production value was relatively stable at approximately $1 billion annually until 2009, when the value fell to $827 million due to weaknesses in the market and the strong Canadian dollar.
In 2009 the combined landings for all species in our province totalled just over 300,000 tonnes with a landed value of $420 million. Our crab landings totalled over 53,000 tonnes, which was more than half of the total crab landings in all of Atlantic Canada, and had a landed value of $165 million, almost 40% of the overall landed value for all species.
For most of the 1970s, snow crab landings in all areas combined for less than 5,000 tonnes but increased to over 10,000 tonnes by the end of the decade. Crab landing were more or less stable at these levels during much of the 1980s. However, with the decline in the groundfish stocks in the late 1980s and early 1990s, quotas in landings for snow crab grew rapidly and peaked in 1999 at more than 69,000 tonnes. Since then, landings have never been less than 44,000 tonnes and over the last two seasons have averaged 53,000 tonnes, and for this year, the quota is a little higher at approximately 55,000 tonnes.
Even though the biomass appears to be relatively stable over the past several years and overall landings have been relatively consistent over the past decade, there has been great variability in certain zones. For example, in Labrador 2J, troubling resource indicators required that quotas be reduced in the order of 50% a few years ago. Fortunately, this strong action has had a positive impact and quotas have subsequently increased in this area. More recently, scientific advice in 3K and 3L, the areas with the highest crab quotas, has been inconsistent from year to year. It's clear that considerable uncertainty exists about the overall status of the crab resource, with survey results varying from area to area in recent time periods.
Given the dependence that now exists on the snow crab resource, any significant downturn similar to what has occurred in the southern gulf would be devastating for our fishing industry. Therefore, it is essential that crab receive a high priority for science expenditures, and an abundance of caution must be employed in managing this resource.
To that end, we strongly endorse means such as quota reductions where necessary and soft-shell closures. We also encourage DFO and industry to seriously consider establishing the use of cod pot escapement mechanisms and biodegradable materials as mandatory requirements.
Driven by the growth of the crab resources, but more particularly by the collapse of the groundfish stocks and the lack of fishing opportunities for fishing enterprises, participation in the crab harvesting sector has expanded far beyond any sustainable level. Prior to the mid-1980s, there were 71 snow crab harvesters in Newfoundland and Labrador. They were designated as full-time licence-holders. Virtually all of these licence-holders currently operate vessels that are in the 50-foot to 64-foot-11-inch range.
Initially these harvesters operated in areas fairly close to shore, but as access to the crab resource was expanded to include the small boat sector, these larger vessels have since been moved further offshore. They now harvest their crab between 50 miles to 200 miles from shore. In the mid- to late eighties, as the incomes for the groundfish harvesters suffered from declining groundfish resources and the value of the crab fishery became more evident, access to the crab resource was expanded beyond the initial full-time licence-holders to supplement declining groundfish revenues.
During the 1985 to 1987 period, approximately 650 supplementary licences were issued in 2J, 3K, 3L, and 3PS. Some supplementary licence-holders, in all areas, utilize vessels ranging from 34 feet, 11 inches, to 64 feet, 11 inches. In 1994 the supplementary fleet in 3L was subdivided into small and large supplementary fleets. The large supplementary fleet fishers fished farther from land in the same areas as the full-time fleet, and the small supplementary fleets fished inside the 50 miles. In divisions 3J, 2J, and 3K, the supplementary and full-time fleets fished in the same areas.
I know this is lengthy, but it provides the detail and background to point out some of the things we can't let happen again.
With the continued growth of the snow crab resource during the mid-nineties, and in recognition that the groundfish stocks were going to be more protracted than originally anticipated, in 1995 DFO issued 400 temporary seasonal snow crab permits to operators of vessels less than 35 feet to help offset the impacts of the loss of the groundfish. From 1996 to 1998, access to temporary seasonal permits was further expanded to include all heads of core enterprises with vessels less than 35 feet. The number of participating enterprises increased annually as overall snow crab quotas increased and groundfish declined, and the moratoria continued.
In 2003, the federal minister announced the conversion of these temporary seasonal permits to ensure snow crab licences. Any fisher who held a temporary snow crab permit in either 2000, 2001, or 2002 was eligible to receive an inshore snow crab licence. As a result of these various categories of licence over the past two decades, there are currently some 3,200 enterprises licensed to fish crab in Newfoundland and Labrador, of which nearly 2,500 are the inshore crab fleet of vessels that are less than 35 feet. These are traditionally fishing within 50 miles of land.
The crab harvesting sector is seriously oversubscribed. To a large extent harvesters are trying to make a livelihood on the strength of a crab resource that is spread too thin, particularly when market and exchange rates result in reduced raw material prices.
The high level of overcapacity also makes it more difficult to implement tough resource management measures when stock assessments suggest that quota reductions are required. Indeed, the FRCC report on snow crab in 2005 identified this concern and recommended that steps be taken to address the excessive fishing capacity.
Spurred by the tremendous increase in the crab harvesting capacity, which served to exacerbate the seasonality of crab landings, as well as the lack of recovery of groundfish, additional snow crab processing licences were issued in Newfoundland and Labrador. During the mid- to late 1990s, the number of snow crab processing licences more than doubled, ultimately peaking at 41 active plants. During the period from 1998 to 2003, it became increasingly clear to the provincial government that overcapacity in the crab sector could erode the industry's viability in the future even though good contribution margins in both the harvesting and processing sectors were still possible, largely as a result of the relatively weak Canadian dollar.
In 2003 there was a two-month delay in the start of the crab fishery because harvesters and processors were unable to reach an agreement on raw material price that would provide substantial returns for the large number of participants on both sides. The fishery finally got under way in June after the provincial government assured the processing sector that it would commission a review of the fish processing policy aimed at identifying measures to foster long-term viability.
In 2004 the Government of Newfoundland and Labrador implemented the recommendations of the Dunne report on fish processing licensing policy. As a result, this province now has the most rigorous processing licensing policies in Canada. New applications must go through a transparent approval process in which the proponent must advertise the intent to apply for a licence, and the application is reviewed by an independent licensing board, which makes a public recommendation to the minister. After receiving the board's recommendation, the minister retains the authority to approve or reject the application.
Under this new policy regime, the licence of a fish processing facility that has been inactive for two consecutive years is permanently cancelled. In addition, any inactive species authorizations associated with a facility licence will be removed after two years. The effect of this rigorous “use it or lose it” licensing policy has been to reduce the total number of species authorizations in the province's processing sector from 2,400 to less than 400. Latent capacity has been substantially eliminated.
In the case of snow crab, no new processing licences will be considered until a resource threshold, an average amount of snow crab available for plant, is achieved. The resource threshold for snow crab is currently 2,200 tonnes, whereas the average amount currently available per active plant is only about 1,500 tonnes. At today's quota levels, 10 crab processing licences would have to be eliminated before consideration will be given to issuing any new licences. Based on this more rigorous processing policy framework, there has been a reduction in the number of snow crab processing licences. In 2009 there were 33 active snow crab plants, a significant decline from the 41 active licences in 2002.
Nevertheless, despite the relative success to date of this passive policy approach to snow crab processing capacity rationalization, market weakness and a much stronger Canadian dollar over the past two years in particular have made it clear that a more aggressive approach is required. Building on the fisheries summit initiated by Premier Williams in cooperation with the Minister of Fisheries and Oceans, our perspective governments jointly developed the Canada, Newfoundland and Labrador fishing industry renewal strategy, which was announced in 2007.
During this process, both our governments committed to creating a sustainable, economically viable, internationally competitive, and reasonably balanced industry that is able to adapt to changing resource and market conditions, extract optimal value from world markets, provide an economic driver for communities in vibrant rural regions, provide attractive incomes to industry participants, and finally, to attract and retain skilled workers.
Some key elements of that strategy included federal fleet rationalization measures, including new combining rules, revisions to vessel length restrictions to allow a move to vessels up to 89-foot-11, and facilitating the use of fishing licences as collateral; changes to capital gains rules applicable to the sales of the fishing enterprises; improvement to the provincial vessel loan guarantee program; further strengthening of the provincial process licensing policy; a provincial R and D program for the industry; provincial funding for market promotion; provincial funding to improve fishing industry occupational health and safety; and provincial funding for a workforce adjustment program for workers affected by permanent fish plant closures.
While progress has been made on the implementation of some key elements of the strategy, in the case of the harvesting sector rationalization—this is a really important point—DFO has not yet adequately addressed the issue of facilitating the use of the fishing licences as collateral. This has impacted on the province's ability to effectively modify its vessel loan guarantee program. While some permanent enterprise combining has occurred over the past two years even in the absence of these elements, harvesting sector rationalization efforts will not accelerate until they have been addressed.
The renewal strategy approach consists primarily of regulatory reforms that provide for a passive approach to the industry renewal. However, the global economic crisis, the cost of fuel, the adverse exchange rates that have arisen since the strategy was announced, have had a profound negative impact on our fishing industry and require a more rapid and more aggressive level of intervention.
The recessionary pressures of 2009 were quite alarming to our fishing sector and underscored its precarious position. The continued ability to maintain viable operations and to make a reasonable livelihood from the fishery has been called into question. Although there had been recognition during the development of the FIR strategy that this was the case, the recession delivered this message loud and clear. At the behest of the Newfoundland and Labrador fishing industry in July of 2009 the provincial government signed a memorandum of understanding with the Association of Seafood Producers and the FFAW, aimed at addressing and finding satisfactory solutions to structural, resource, market, and policy issues that negatively impact on the economic viability of the industry.
The Department of Fisheries and Oceans has committed resources from the Newfoundland and Labrador region in an ex officio capacity to work with the parties on these issues. Specifically, work under this MOU is building on the momentum of the FIR initiatives by focusing on the identification of more aggressive capacity reduction options, whether you're in the harvesting and processing sectors, and on the development of new seafood marketing initiatives.
The Government of Newfoundland and Labrador committed $800,000 to cover the operational and administrative costs to pursue the MOU objectives. Mr. Tom Clift, a professor of marketing with the school of business at Memorial, is overseeing the work being conducted under the MOU as the independent chair of the steering committee comprised of the FFAW and the ASP, as well as DFA and DFO officials from Newfoundland and Labrador region who participate in an ex officio capacity.
To date, financial assessments have been completed on the status of the fish harvesting and the fish processing sectors. The results indicate that a significant portion of our fleets and our processing sectors are not viable. Working groups are currently assimilating this information and developing and examining options to promote long-term viability--
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It's clear that the processing sector rationalization cannot be achieved without a concurrent reduction of harvesting sector capacity. Despite the high processing capacity levels that currently exist, gluts each spring are common, as a large percentage of the more than 3000 crab harvesting enterprises engage in the fishery at the same time, even though the extent of their fishing activity is usually only a few weeks.
A more orderly landing pattern brought about by major harvesting sector capacity reductions will facilitate associated reductions in processing capacity. The mechanisms to bring about this harvesting sector rationalization, and whether they will be self-financing or require government intervention, have not yet been determined. However, it is possible that these capacity reductions may be very costly, and to the extent that the fishing industry cannot self-finance the process, demands will be placed on governments to assist.
The other area of work under the MOU relates to seafood marketing.
Our industry is a predominant player in certain seafood sectors and should be able to achieve better returns. This is especially true in the case of snow crab. This year, we will account for 65% of all the North American crab supply. We are the dominant supplier in the marketplace, and we should be taking full advantage of this strength. This requires that we be as efficient as possible. While Newfoundland and Labrador has more than two dozen crab processing companies operating close to three dozen processing plants, Alaska, a key competitor, has four companies selling crab produced in 15 plants. Most Newfoundland and Labrador producers depend on intermediaries, such as brokers, to market their product, while Alaskan suppliers better coordinate their efforts and sell directly to end users.
Our industry has come to recognize that we are not being as efficient and effective in the marketplace as we could and should be. Consequently, the seafood marketing working group established under the MOU is actively engaged in identifying collaborative marketing opportunities with an initial emphasis on crab and shrimp. Some of the challenges that have to be addressed are underfinanced companies, the lack of collaborative marketing, the lack of continuity and stability, and an overdependence on brokers.
There is an important role here for the federal government in seafood marketing. Some valuable activities that can be enhanced are to work to reduce the tariffs and the trade barriers, including the removal of the EU tariffs on shrimp and crab; assistance with the formation of collaborative marketing structures to help processing companies market their products as efficiently and effectively as possible; assistance with eco-certification and eco-labelling of products; and continued efforts by trade offices in promoting Canadian snow crab in international markets.
In conclusion, the fishing industry continues to face challenging economic circumstances. The problems in the industry relate to a host of structural, resource, market, and policy issues that compromise the long-term economic viability of the industry. The current economic environment has exacerbated these problems, and the industry is seeking solutions to support long-term viability.
This matter is of sufficient concern to have led our premier to raise the issue twice with the Prime Minister over the past few months. The situation in which our province's crab industry currently finds itself has been created, in large measure, by the harvesting policies of the federal government during the 1990s. The inordinate expansion of the harvesting sector also contributed to the processing sector capacity growing to an unsustainable level.
When we developed the fish industry renewal strategy, both governments recognized that capacity adjustment is required. Unfortunately, the unanticipated challenges our economy has faced since 2008 dictate that a passive rationalization model will not bring about the required adjustments in a timely manner. More aggressive approaches must be examined. In particular, the federal government must find ways to bring about significant and timely capacity reduction in the harvesting sector.
It is likely that many small boat enterprises with limited resources will need assistance to rationalize. This may entail much more flexible buddy-up and combining policies, and quite likely significant financial inducements.
In recent meetings with federal government counterparts, I have concluded that the federal government appears to have no interest in financing the harvesting sector rationalization. This is not an acceptable position. In the case of the snow crab sector, the federal government chose the 1980s and 1990s to issue crab harvesting licences to virtually every fishing enterprise in Newfoundland and Labrador. While this served to mitigate the continued impacts of the groundfish crisis, we now find that the crab resource is so oversubscribed that even with reasonable margins, harvesters are unable to make a reasonable livelihood. This situation is compromising the viability of our fishing industry and indeed the future of our rural communities that rely so heavily on the fisheries. The federal government must acknowledge its responsibility for the extreme level of overcapacity that currently exists and actively participate in the necessary adjustment that must occur.
I thank you for the invitation. My point again is that even though it's rather lengthy, this document gives the background as to how we arrived at this place and, more importantly, the need for some activities to see how this fishery is going to be restructured and some of the requirements that are going to be needed along the way. I certainly hope you will take this and read it, as I've rather rushed through it a bit.
Dave and I would be more than willing to answer some questions.
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If you look at whether the parties have lived up to it, I think we have lived up to it as a government. We've been very stringent in our licensing policy: as I said, we have a licensing board that's independent, and recommendations are brought to the minister. We've only had one case in which our ruling was different from what the licensing board had committed.
I think, though, that in living up to the commitment at both levels of government, the first thing that's got to happen is that we've got to recognize that there is an issue here. I emphasize again to you the importance of having all of you read this, because you may not be as familiar with the history of it as the people in the back here, who live in this province. They will know most of what happens here. I think it's really important that politicians at the federal level understand the history of it and where we need to go. Then hard decisions have to be made, and if we need financial support along the way, it has to be a shared responsibility.
In terms of marketing and moving control from the processors to the harvesters, I have to say that this is no different from other business ventures in some ways. We have a commodity that's for sale, and over the past number of years, crab and shrimp—shrimp in particular—have driven many processors and harvesters to enter into arrangements whereby some processors have control of the people who operate the boats.
We've got a loan program in our government that hasn't been subscribed to much yet, but we have to get that control back to the harvesting sector. I do believe that, but again I go back to the overall picture: the big picture needs to be understood before we can move on some of these things.
In terms of marketing, I was very pleased to hear the FFAW this year in the MOU process. The FFAW, by the way, have agreed with the marketing from the outset. We offered to buy a marketing arm under the FPI renewal program a number of years back, but that offer was refused by the processors. Last year we offered a substantial amount of money through the MOU to do some marketing; again it wasn't taken up by some of the processors and didn't get ahead, but I was very pleased to hear this year that they are interested in moving ahead with some marketing strategy. I'm hoping that will come through and that we can see some positive results.
There are other sectors of the industry renewal strategy that we have worked on. Safety is one example. We know the dangers of taking part in this industry, and through a combined effort of a sector of the FFAW, government, and the Marine Institute we launched a safety video this past week.
Many things have been worked on cooperatively, but the biggest thing is going be some hard decisions around rationalizing of the harvesting sector and the processing sector. You're definitely not going to get everyone to agree, but I think the majority of people in the province feel that the rationalization has to take place first on the harvesting side. That's going to take a commitment from both levels of government and, I think, a recognition by the FFAW as well.