Fisheries Committee on Oct. 27th, 2011

[Lawrence MacAulay, Liberal, Cardigan, PE]

Okay.

[Kevin Stringer]

Our understanding is that their cost of production is significantly higher than the cost of salmon at the moment. It's $4.90, whereas the price for salmon is $2.30—at least it's $2.30 in North America. I don't know what it is in Denmark, but presumably it's not that different.

They're going to be challenged. This is information that we're picking out of the stuff they're releasing. So we'd have to get more detail than that. We don't know enough to be able to say how viable it will be. The figures we've seen show that it will be a challenge. But it's part of the effort, similar to what we're doing in trying to find ways to prove these things out.

[Lawrence MacAulay, Liberal, Cardigan, PE]

They're using a lot of private money.

[Kevin Stringer]

Yes, it would seem so.

[Lawrence MacAulay, Liberal, Cardigan, PE]

In the study, their RAS system showed a marginal profit. Is that correct?

[Kevin Stringer]

Yes.

[Lawrence MacAulay, Liberal, Cardigan, PE]

And that, if I understood you correctly, was for salmon at $2.60, and not at $2.30.

[Kevin Stringer]

That was the assumption we used for the study. It was $2.60. That's correct. It made a bunch of assumptions. It assumed an exchange rate, because the vast majority of this resource is exported to the U.S. It assumed power costs. It assumed a number of things. And one of the things it assumed was a price for salmon, which turned out to be accurate for the time, but not for today.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Would you invest in a closed containment system?

[Kevin Stringer]

Would I?

[Lawrence MacAulay, Liberal, Cardigan, PE]

I know we have to study this, but I believe it's mostly the responsibility of the public purse to come up with new technology is this area. And it's good to have the private sector involved, but we're a long piece away. If I understand it correctly, with the open-net concept you can have a decent profit; but with closed containment you're most likely going to lose money.

[Kevin Stringer]

They have been profitable. They've been particularly profitable in recent years, because the Chilean production went down significantly. But we understand that the Chileans are coming back with their production. So we'll see what happens with the future economic viability. But right now, it has been and looks like it will continue to be economically viable.

I'd make two points, but I won't say whether I would invest in it. In our view, what's appropriate at this time are investments in the demonstration projects, with private funding—and not government doing it on its own. In our experience and our view, we've wanted to see private partnerships. There is a benefit to industry in doing this, to whomever takes this on. And the benefit is that they get the intellectual property if the thing works.

But what we've seen so far is that most of industry is not willing to take it on, on their own, because there's not a sufficient economic margin to make it viable. We've even seen one instance in Canada where a company was saying that it was going to do it and that it was applying for government funding to support it, but then recently they said they didn't want to proceed because of the market conditions. They're not saying they won't do it; they're saying they don't want to do it right now.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Regarding this Middle Bay institute, you say that you're involved heavily in it and that there's another partner in China involved in basically the same thing? If I understand it correctly, the Chinese technology is more advanced.

[Kevin Stringer]

As I understand it, the group that's running the Middle Bay facility—and we have worked with them—also has arrangements in China, which I think involve different technologies.

I'll ask Alistair to jump in on this one.

[Alistair Struthers]

Actually, I think they're using the same type of technology in China. It's just that the regulatory hurdles in China are less than they are here.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Thank you very much.

[The Chair, Conservative, Rodney Weston]

Mr. Donnelly.

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

Thank you, Mr. Chair.

I have more of a comment before my question. With the open-net pens, I'm assuming that in looking at the energy costs, you're also considering the fallowing and moving of those pens, because that's obviously a factor in those operations.

My question is this. If we just look at the west coast and are considering the feasibility of closed-containment systems there, profit is certainly one factor, but also, I would assume, another is whether the industry can expand, whether the industry is going to relocate, or come to, or continue to invest in that location. But there have been no new licences granted on the west coast for fish farms, that I'm aware of, for the last eight plus years—though I'm not sure of the exact number. So it seems that we're at a standoff.

I wonder if the department could comment on the fact that there seems to be no incentive for new licences. However, at the same time, the kind of closed containment technology that could offer a way forward may be years away.

So is there some kind of a strategy to move us forward?

[Kevin Stringer]

I'm not going to comment on whether there is significant interest from industry. I understand that Industry will be here, and you may want to ask them about their views on that.

What I can tell you, and we've told Industry, is that in terms of applications for new facilities and expansion of current facilities, while the Cohen commission is ongoing and until we've had an opportunity to see what they say and to consider their views and advice on aquaculture in their report, we're not going to be looking at significant expansions and new facilities.

There are some requests out there to do it, but we are taking the opportunity to think through very carefully about how we should position ourselves in the future. I don't think you will see any statement from us on that until we see what the Cohen commission is going to say. That's what we think is most appropriate at this time.

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

Switching coasts to the east coast then, how are the other fisheries, the wild fisheries or commercial fisheries, faring in terms of any real impacts from aquaculture on that coast? I'm thinking of the lobster and shrimp fisheries. Are they thriving? Are they noticing any impacts? Are they raising any issues related to impacts they feel are associated with aquaculture in the east?

[Kevin Stringer]

There are impacts. They're raising issues. It's been an emerging issue, no question about it, from traditional fishers, particularly in southwest New Brunswick and in Nova Scotia. As new facilities are being established in Nova Scotia, issues and concerns are coming forward from local fishers.

The jurisdictional arrangements are different there right now. We have New Brunswick and Nova Scotia, but we do work closely with those jurisdictions. In New Brunswick, we have an integrated sea lice initiative, a management initiative that we're trying to bring to the table...the aquaculture industry, the traditional fishers in the two jurisdictions.... But New Brunswick at this point has the lead on that.

In terms of impacts, whenever a new facility is established, as was the case in Nova Scotia—there were more than two recently—we do an impact analysis. We provide that to the lead responsible agency, which in this case was Transport. We concluded that we didn't believe there would be significant adverse environmental effects from this; and, partly on the basis of that and other things, it proceeded. The interaction is quite interesting.

I would also point out that this is not the case everywhere in Atlantic Canada. My sense is that in Newfoundland and Labrador, in particular in the south of Newfoundland, there are pretty good relations between traditional fishers and the aquaculture industry.

It is something we're mindful of and working on in terms of bringing people together. Our belief is that it is possible for the two to co-exist effectively. Our job is to try to make it so.

[The Chair, Conservative, Rodney Weston]

Thank you.

Mr. Allen.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you, Mr. Chair.

Thank you to our witnesses for being here.

I just have a couple of clarification questions on the deck, in particular on slide 11 and slide 12. Can you clarify what you mean when you talk about flow-though with no aeration, supplemental aeration, and liquid oxygen injection for the floating rigid-wall tank system, as opposed to the floating flexible tank system where there are cross marks? It's not in any other system. You've highlighted it for these two. I'd just like to understand what the difference is.

[Alistair Struthers]

The two red Xs that appear on slide 12, in particular, just mean that those two factors weren't analyzed in that case, because with flow-through and no aeration, the amount of water required for the stocking densities for the flow-through was unfeasible. I can't remember the numbers offhand, but they were unattainable. It was not possible to pump that volume of water through that size.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Going back to the testimony of the other day, my understanding of the closed containment and land-based systems is that it's more the warm water species of fish this is used for. Tilapia and things like them seem to be the more prominent species, and there was discussion of 50 kilograms per square metre of those. In this case, if I understand correctly, based on a 10-pound market size Atlantic salmon, which is typically what we go for, we'd be talking somewhere in the area of an open net of three fish per cubic metre, as opposed to ten fish per cubic metre based on that financial model. Is that true?