Fisheries Committee on May 23rd, 2013

[Geoff Irvine]

The short answer is that it doesn't matter. In lobster, it doesn't matter. Canners can be beautiful. Jumbos can be beautiful. Market size can be beautiful. It's not about size at all.

In this case, it's about recovery from moult. It's that simple. A lobster can be beautiful if it has recovered from its moult. If you remove it from the ocean when it's fully recovered, it's going to be beautiful. If it's not, you won't be able to do certain things with it.

[Philip Toone, NDP, Gaspésie—Îles-de-la-Madeleine, QC]

So why the fascination with size, then, without wanting to pursue that question too far...?

[Geoff Irvine]

Well, size matters in the market. You can't ship live lobster below three-and-a-quarter inches to the U.S., for example. It has to be processed, and then we can sell it to the U.S. In some markets, jumbos are sought after. China is one. The Chinese love large lobsters. They eat it like turkey. Jumbos have bumped in value recently, if they're high-quality jumbos, for the Chinese market.

[Philip Toone, NDP, Gaspésie—Îles-de-la-Madeleine, QC]

In looking at your graphs, I'm seeing that the areas that are going for the larger lobsters, the ones that don't have to be processed finally, those that are being sold live, are fetching much higher prices. Is there a reason why we would want to continue to pursue the industry of having smaller-sized lobster? Is the future not larger-sized lobster?

[Geoff Irvine]

I think it's both. We have excellent markets for smaller lobster. We have excellent markets for larger lobster. There are markets for all sizes of lobster. Size is not the issue in this case.

[Philip Toone, NDP, Gaspésie—Îles-de-la-Madeleine, QC]

But again, if I look at your graphs, what I see is that we're fetching a much lower price, and the whole crisis is about price. What I'm hearing from fishermen back home—harvesters—is that if we sell the live product, we're looking at a more solid future for the industry versus selling processed product. Processed product seems to be very popular in the States, where essentially the bottom fell out the market in their last economic crisis.

The future seems to be in Asia, and in Asia they want the live product. Is that not the future of this industry, or do we want to continue to be tied with the United States and the variations that this has brought to the market?

[Geoff Irvine]

Well, that's a great question. I don't have the answer, except to say that we need both at the moment. We have such high volumes. We need all the different markets. You have to remember that in some parts of the gulf, the catch of the smaller sizes is quite high. It's important to those areas to have that smaller lobster.

You're right. It's a challenge with the market the way it is, but I don't think we're going to see that changing anytime soon. As the processing sector grows—and it is a huge growth area—I think we can sell all the product we're landing.

[Philip Toone, NDP, Gaspésie—Îles-de-la-Madeleine, QC]

Let's get back to the fall product, then. We might be able to sell the product, but the problem is that the price is awfully low in the fall. What can be done to improve that situation?

[Geoff Irvine]

There's actually a bi-provincial committee working on that right now. New Brunswick and P.E.I. share LFA 25, and Nova Scotia marginally. I'm sorry, it's a tri-provincial committee that is working on that. They've been trying to figure out how to deal with the issues in LFA 25. We're not involved in that directly. That's a harvester and processor issue in that area.

There are a lot of things on the table. There's changing the season. They're thinking about moving the season a week or two either way. There are a lot of options, but we're not getting directly involved in that.

[Philip Toone, NDP, Gaspésie—Îles-de-la-Madeleine, QC]

The seasonal issue sounds interesting. Have I run out of time? I'll bring it up in another question. Thank you.

[The Chair, Conservative, Rodney Weston]

Thank you very much. Mrs. Davidson.

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

Thank you, Mr. Chair. Thanks very much, Mr. Irvine, for being with us this morning. This is a very interesting discussion. I was interested in your comments that the live market has stayed steady, whereas the processed market is low. That's where most of the issues appear to be.

You said in your presentation that you spend the least time promoting Canadian lobster, but you spend lots of time on market access issues. I'm wondering why that is.

When you talked about your long-term strategies you talked about developing the quality grading program and the Canadian brand strategy. Is the council working on eco-certification? Is that part of the branding and part of the work that you're doing to try to improve the process market? What's happening with that eco-certification issue? Are the provinces participating in that? What's their status if in fact you're pursuing that? Can you talk a bit about that?

[Geoff Irvine]

Sure. I'll take your first question first. We've managed to do a number of different things with the promotional work we do. I didn't explain that very well. We've worked a lot with chefs in the U.S. and we've done a lot of work with food journalists, but our challenge is that we don't have funds, which is why we need the levy. We don't have our own money to do anything in terms of mass promotion.

We also know from the long-term value strategy. This massive work tells us marketing is the second thing we need to do after working on these marketability issues. We're following our plan and focusing on marketability issues as they're outlined in here: short price setting, branding, and quality grading. We're focusing on that first as a precursor to successful marketing. Most marketers and branders will tell you it's useless to go out there with a brand and a marketing strategy if you can't back it up with your products. That's the background there.

Eco-certification has been on our agenda every meeting for the last three-and-a-half years. One of the reasons the council was started was to drive eco-certification. I'm happy to say that as soon as Maine got certified about three months ago, we got serious about it. We hadn't had the momentum, but have the momentum now. Virtually every area is embarking on full certification with the Marine Stewardship Council.

In the Magdalen Islands, LFA 22 is about to be certified, which will be the first Canadian inshore fishing area to be certified. Our offshore area is certified already; Clearwater owns all that. The eight-day fishing licence is there, so they are certified. We're on the go. I expect within 12 to 15 months we'll have one of the major areas certified as well.

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

Once this happens, and it sounds as if you've made some good headway on this, how far would that certification take the Canadian product in the world market? Is it extremely important in new opportunity areas, or are you going to see an impact everywhere?

[Geoff Irvine]

Today it's become part of doing business. It's not going to give us better prices—it may—it's not going to hurt us. Essentially it's become a market access issue in Europe. If we want to sell in some European countries we have to be certified. It's becoming more important in Asia and in North America. We tell stakeholders it's the cost of doing business in the seafood world today. You have to have a third party certify that your fishery is sustainable.

Yes, the provinces are helping fund it, as well as the industry.

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

All the provinces have been involved?

[Geoff Irvine]

I won't say all. They've all been involved in either pre-assessment or a full assessment, or they're getting involved. It's very active right now. It's very much in play today.

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

I'm trying to understand your dependence on the U.S. market. We saw the huge figures there. Do we need to reduce that dependency? Is your council working toward that goal? We've seen emerging markets come up in the charts you've shown us. Is reducing the dependence on the U.S. market one of the goals of the council, and is that going to help the pricing?

[Geoff Irvine]

We don't directly talk about it that way, but certainly you always want to be expanding into new markets, if they are good new markets.

Yes, I would say the industry is doing things like that. Look at some of the really aggressive exporting companies, such as Clearwater. Their goal is to have $100 million in sales in China within five years. That's a huge number.

The Far East is a bright light for lobster, processed and live, and absolutely where we should be focused, but the U.S. will always be our biggest trading partner in lobster. We buy huge volumes from them. It's very much a back-and-forth relationship.

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

Would the levy you're talking about provide a self-sustaining revenue stream when it comes to marketing and some of the issues you need to be working on? Could you talk more about this levy and how it would work?

[Geoff Irvine]

Sure. I'd be delighted to.

Yes, we think it will. We know it works in other industries. In agriculture, the beef industry has a levy that funds all the Canada beef work. The pork industry has levies. In agriculture, it works very well. There's no real history in seafood though, so we're blazing new trails here. There's not a lot of history of this type of program in eastern Canada. It's tough to get people to think about it and it's tough to get people to think about regulating it. It seems that regulating and legislating anything new is very tough, but we simply have to make it happen.

The other example I like to use is the Alaska Seafood Marketing Institute. What Alaska has done is to raise $25 million a year on levies and on grants. They are the world leader in marketing seafood; likewise, Norway. Norway has an $80 million budget for their seafood export council—$80 million—and Norway, as we all know, is a world leader in seafood, and it works. It really works. I always try to pitch it this way. If we invest a penny in marketing lobster, we will make back a dime or a nickel or a quarter, in a heartbeat, but we need that penny. So it's tough.

[The Chair, Conservative, Rodney Weston]

Thank you very much. Mrs. Davidson, your time is up.

Mr. MacAulay, go ahead.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Thank you, Mr. Chair.

Welcome, Mr. Irvine. It’s good to have you here.

Eco-certification is basically driven by the retail sector anyhow. Do I understand correctly that if you don't have eco-certification when it's put in place, you'll just not sell your lobster some day down the road?

[Geoff Irvine]

That's correct in parts of Europe, not all of Europe, and it's a retail thing.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Yes, it's a retail thing for sure.

Also, you mentioned that you have 9,500 fishers you work for and 60 corporations. How much in funds do you retrieve from the fishers?