Fisheries Committee on June 8th, 2006

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

I have a question, but before that I have a comment.

In terms of violence in various parts of Canada, if we could urge all levels of government--federal, provincial, and otherwise--to come to the table and bargain in good faith around treaties, comprehensive land claims, and specific land claims, I think we might see some of that sorted out.

With regard to enforcement, you made a comment about DFO, that a central-coast enforcement officer admitted he'd been instructed not to enforce illegal harvesting on the central coast. Again, enforcement is a theme that we come up with consistently at DFO, about the lack of enforcement.

I wonder if you could comment on that. Are there enough enforcement officers, or is it more that they've been instructed not to enforce?

[Randy Pilfold]

You have to have a balance between the enforcement and science, and we don't have that in the Pacific. The problem we're having is that we don't know how much the stocks are. I'll give you an example. The north-coast salmon has a wide-open fishery, and the south-coast salmon has been closed, basically, for ten years on sockeye. We have no test boat program on salmon that goes out and assesses the numbers to balance with the quotas.

Roe herring is done to open the fishery, and the timeframe is only done a little bit before you do roe herring and a little bit after. We used to be a charter boat in the original roe herring, back in the seventies, when it first got going. We used to start way before the roe herring got going. We went through the whole roe herring cycle, and we went until they fell off the map, until there was almost nothing. Then we knew exactly where some of the points of impact were.

We don't do that any more. Almost as soon as the roe herring is over, it's over. Enforcement does do a good job; the problem is that they have no science to go there. You can't go and tell them we have a problem here. If an enforcement issue comes up, they can't really prove their own charge.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

I think that's been a concern. Again, any number of critiques have come out about the state of the department's science. I'm from the west coast, so I'm quite familiar with the challenges out there.

I appreciate your presentation today. Thank you for bringing it to the attention of the committee.

[The Chair, Conservative, Gerald Keddy]

Thank you, Ms. Crowder.

Mr. Kamp.

[Randy Kamp, Conservative, Pitt Meadows—Maple Ridge—Mission, BC]

Thank you, Mr. Chair.

Thank you for coming. You've'e made a compelling case, and we appreciate your taking the time to be here.

You're here, I suppose, for a number of reasons, but part of it, I'm sure, is that you're interested in making a living. It's difficult to do so now, with the current price. I just want to be clear, in my mind, about the basic economics here.

My understanding is that the landing in tonnes of spawn-on-kelp hasn't changed much in the last several years. You can correct me if I'm wrong, but was it not 400 tonnes of spawn-on-kelp....in, say, 1996...? I don't see, according to the figures I've seen, that that's changed in recent years. It would seem that the supply coming out of the industry hasn't changed very much from the Canadian side.

Now, basic economics says that the price has collapsed, but that's due to supply and demand. Has the supply changed? Has it increased from Alaska or Russia, say, to push down the price, or do you know if the demand has changed internationally? Are the Japanese not so fond of spawn-on-kelp any more, as they used to be in, say, 1996?

[Don McNeil]

To answer your question as quickly as I can, in 1994, for instance, about 100 tonnes came from San Francisco Bay and approximately 400 tonnes came from British Columbia. A total of 500 tonnes entered the Japanese market--give or take not counting illegal product.

San Francisco Bay produces nothing now. British Columbia--including Heiltsuk, who take 50% of the product--is now back to approximately 400 tonnes, and Alaska produces 400 tonnes.

The Japanese currently eat about 1,100 tonnes. What has driven the price down, we believe, is the same thing as when you issue a milk quota to somebody. It is not only the increased milk production that drives the quota down but also the perception that more milk quota might be handed out next week. That's what makes it go down even further than just the increased milk quota would suggest.

The point is that the Japanese perception of the government's intent to issue more quota to Heiltsuk drives the.... They just can't perceive that they have this product, valued at $30 or $40 a pound, that can be produced in an unlimited amount by a central coast band. That drives the price right to the ground, because they can't market it properly if they don't know the amount.

[Randy Kamp, Conservative, Pitt Meadows—Maple Ridge—Mission, BC]

But in actual fact, the Canadian production has not doubled or tripled, based on the Heiltsuk--

[Don McNeil]

Yes, it has, sir. Not this year, because we had the election not to fish, but that being said, we elected not to fish because we have to get the horse in front of the cart. The increased production drives the price down. Fishermen elect not to fish, so the quota stays at approximately 400 tonnes, but 50% of the people aren't fishing or aren't participating. Had everybody participated, the production from British Columbia, including Heiltsuk, would probably be 650 tonnes to 700 tonnes.

[Randy Kamp, Conservative, Pitt Meadows—Maple Ridge—Mission, BC]

I can understand why that would then drive the price down, but if it stayed at 400, you're saying that then the explanation has to be this perceived economic model.

[Don McNeil]

The perception may do more damage to the price than the actual production.

[Randy Kamp, Conservative, Pitt Meadows—Maple Ridge—Mission, BC]

I understand the point. I'll need to think about that one.

Thank you.

[The Chair, Conservative, Gerald Keddy]

Thank you, Mr. Kamp.

Mr. MacAulay, a quick question, please.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Thank you, Mr. Chairman.

After listening to Mr. Kamp, I gather that the quota didn't go up. The quota was there, if I understand it correctly, gentlemen, but you're not taking the quota. The perception, like many things, turns out to be reality when you're dealing with the markets in Japan.

What I would like to know is, what needs to be done? Before I heard Mr. Kamp ask the question, I thought that you would want a reduction in the quota, you would want some buyout of licences, or you would need something taken out of the system. In the end--Mr. Kamp is absolutely correct--you want to make a living. You can't make a living today when you go from $40 to $4 a tonne.

If it is 400 tonnes, how much could you ship? Could you ship 800 tonnes? Is that what the Japanese feel could come? Or what's really destroying the market?

Again, I think there has to be a control on how much can be taken. Obviously, if the price is at $4 or $5 and you're not taking as much as you could--if I understand it correctly--then you are very close to destruction, or very close to the end. You need something to happen.

[Randy Pilfold]

The total market for North America is 1,000 tonnes.

[Lawrence MacAulay, Liberal, Cardigan, PE]

But North America--we don't have control.

[Randy Pilfold]

No, but what I'm getting at is that we produce about 600 of it, and there's a market for that. What happens is that with Heiltsuk's increases every year, we're into around 800. That is the problem.

When you read this agreement, you'll see that this is not a one-year agreement. When you read some of the other ones, they're not one-year agreements. It just keeps going on and on--

[Lawrence MacAulay, Liberal, Cardigan, PE]

And that has to stop.

[Randy Pilfold]

Yes, but it's not stopping. That's why we're here.

[Lawrence MacAulay, Liberal, Cardigan, PE]

That's why you're here. We hope--

[Randy Pilfold]

The point of all this is that we can't afford to go out there because of the cost of production. They don't pay a licence fee. We have a licence fee. I mean, it just goes on and on. It's not an even playing field.

We know what the market is. We know what the market can take. The problem is that when you give somebody 40% of the market, who are you going to deal with? You're going to go to the guy with the 40% of the market, and then you leave everybody else out. That's what's happening. They're doing that, and that's our problem.

What's happened there is that if we keep increasing it and they get 50% of the market, you don't go and deal with us. For instance, if you go by chronological order in terms of where I am, I'm in the Prince Rupert area; it's after Heiltsuk. Just as a quick lesson, herring spawn from south to north, and salmon spawn from north to south. If I'm in the salmon business, I'd do better in Prince Rupert, hypothetically, on the Skeena sockeye than on the Fraser, but the Fraser's not open.

When you deal with herring--

[Lawrence MacAulay, Liberal, Cardigan, PE]

They're ahead of you.

[Randy Pilfold]

--the spawning and roe-on-kelp starts basically in San Francisco and just keeps moving all the way up until you're up to Bristol Bay, Alaska.

What happens is that when you hit the central coast of British Columbia, with 40% to 50% of the total production of roe-on-kelp, as soon as you hit there, it stops. And DFO just keeps adding and adding and adding.

I mean, what are you going to do?

[The Chair, Conservative, Gerald Keddy]

Thank you, Mr. MacAulay.

Mr. Cummins, a short last question; we're 15 minutes over.

[John Cummins, Conservative, Delta—Richmond East, BC]

I have just a couple of questions on this pricing.

Number one, the Canadian product, as I understand it, was a desirable product on the market, more desirable than the stuff in San Francisco and Alaska, actually. It was a high-quality product, highly sought after in the market. But now you have....

You still don't have a number on the black market stock that's being peddled, so you really don't know how much of an influence that has on driving down the price. As well, you have this product in cold storage. That's got to have an impact on driving price down also.

As I see it, a whole lot of variables out there are driving the price down right now. Is that really not the case?

[Don McNeil]

Yes, John. There's oversupply. Basically, if you have one group supplying 50% of the worldwide market or thereabouts, or 40% of B.C., and the illegal product....

Some of the numbers we get on illegal product come from the Canadian embassy in Tokyo. They suggest that the product exported into Japan from Canada legally is this amount, but the actual amount is that amount. If you reverse the numbers, you find out, for instance, that somehow there's a product entering Japan from Canada that didn't go through the proper systems.

How to reverse it? If the government thinks it can pull back the production of Heiltsuk, then I would suggest our industry has a chance to recover. But as long as they keep issuing quota and not pulling any back, then they'd better get it from industry, the same as the milk quota thing. If they're going to give somebody a milk quota, then they had better get it from the existing producers, to give them a chance to retire, or to hold the production and price at a certain level. To issue it indiscriminately is just disastrous to the industry.