Fisheries Committee on May 7th, 2014

[The Chair, Conservative, Rodney Weston]

I call this meeting to order.

I apologize for the delay, gentlemen. It's obviously one of those things when you're dealing with a parliamentary committee. House votes take precedence.

Mr. MacAulay.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Thank you very much, Mr. Chair.

I would like to make an amendment to the main motion: following “more than”, instead of “four meetings”, I would like to move it to seven meetings at the most, because of the fact that we did not have enough time to hear the witnesses.

[The Chair, Conservative, Rodney Weston]

Mr. MacAulay, you can't amend the motion. The motion has already been adopted. The committee is acting on the motion now, so you can't amend that motion. You have to make a new motion.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Well, I'd like to bring in a new motion.

[The Chair, Conservative, Rodney Weston]

Do so, please.

[Lawrence MacAulay, Liberal, Cardigan, PE]

It is: that the committee immediately undertake a study—

Is he ready for this or not?

[The Chair, Conservative, Rodney Weston]

I'm sorry, Mr. MacAulay. We were just conferring. Go ahead. I apologize.

[Lawrence MacAulay, Liberal, Cardigan, PE]

It is: that the committee immediately undertake a study of the changing ocean conditions or other factors off the coast of Newfoundland and Labrador that have led to the stock fluctuations in northern shrimp and other species, and that the study include a review of the Department of Fisheries and Oceans science related to the shrimp fishery and conservation management measures, and that the study consist of no more than seven meetings.

[The Chair, Conservative, Rodney Weston]

Thank you, Mr. MacAulay.

Do you have a copy of motion?

[Lawrence MacAulay, Liberal, Cardigan, PE]

I have it right here.

[The Chair, Conservative, Rodney Weston]

Thank you.

It has been moved by Mr. MacAulay that the committee immediately undertake a study on the changing ocean conditions or other factors off the coast of Newfoundland and Labrador that have led to stock fluctuations in northern shrimp and other species, and that the study include a review of the Department of Fisheries and Oceans science related to the shrimp fishery and conservation management measures, and that the study consist of no more than seven meetings and include the following witnesses.... We've already gone through the list of witnesses.

On the motion, Mr. Kamp?

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

Yes, Mr. Chair. I'm a little surprised by the motion given that we have witnesses we've been waiting to talk to, but I would like to move that we follow our usual practice and go in camera.

[The Chair, Conservative, Rodney Weston]

Thank you, Mr. Kamp.

It has been moved by Mr. Kamp that the committee proceed in camera. Those in favour?

(Motion agreed to)

We'll suspend until we move in camera.

[Proceedings continue in camera]

[Public proceedings resume]

[The Chair, Conservative, Rodney Weston]

I call the meeting back to order.

Gentlemen, I apologize once again. Our time is running short. I guess I'm going to have to ask you to limit your comments to no more than five minutes. I will have to cut you off at five minutes. I don't like to do that. I know that members will want to ask some questions as well. If you could keep your comments to no more than five minutes, I certainly would appreciate it.

Translation is available to you through the earpieces.

If you don't mind, Mr. Barnes, would you mind leading off on the presentations?

[Phil Barnes, General Manager, Fogo Island Co-Operative Society Ltd.]

Well, I can ask for more time, but you're going to cut me short. I can't get through this. The guts of this are in the back end of it. I've been up all night at this, for two or three nights, until two o'clock to three o'clock in the morning, trying to present this, and we come here and get shafted. That's how I feel.

I can't present for five minutes. I'm not going to do justice to it, and I'm not going to present it.

[The Chair, Conservative, Rodney Weston]

Thank you.

Mr. McCurdy, would you like to...?

[Earle McCurdy, President, Fish, Food and Allied Workers]

Thank you. I'll be brief because I don't have much choice.

Unlike fisheries with centuries of history, as many as our fisheries have, northern shrimp is a very recent fishery. Mr. Genge from the northern peninsula, who's behind us here, who came from Newfoundland with me because he's an owner-operator in this fishery and has a lot at stake here, started fishing in 1970, which is before any of the offshore boats. You want to know who was the first in? He was, along with his colleagues in the gulf, in smaller than 65-foot boats.

I'm going to try to correct as best I can, in a very limited timeframe, some of the.... I've read some of the transcripts, and I can understand why people on the committee would likely be confused about some of the facts, because of the way some of the evidence was presented.

There's an interesting document—it's hard to find, but I found it eventually—that was done by the economics branch of DFO in 1980. It talks about.... I was looking for the basis on which the offshore boats claim this great long history, when really they only started in 1978. What this report that was done for the economics branch of DFO made clear was that when those boats started, there was a requirement that at least 50% of their landings be processed in shore-based plants, and that rule subsequently changed.

There were existing shrimp fleets in the gulf, but they weren't licensed in the northern shrimp fishery. Why was that the case? It was the case because at that time the shrimp were too far north for boats that didn't have freezing technology aboard to pursue them. It was way down in the north.

I have some tables here that I'd hoped to go through with the committee, but I'm told by the clerk that because they're not translated, I'm not allowed to circulate them, which is unfortunate, because it would have helped to illustrate things. But anyway, there's nothing I can do about that, I guess. Rules are rules, except—

[The Chair, Conservative, Rodney Weston]

Mr. McCurdy, do you want to leave them here so we can have them translated and the clerk can distribute them after they're translated?

[Earle McCurdy]

I appreciate that, sir. It's really helpful to actually walk through things and explain them as opposed to....

In any event, one of the tables goes into the landings by area of the offshore fleet. There are areas ranging from area 0 in the far north, which is way down the Davis Strait. So 0, 1, 2, 3, 4, 5, 6, and 7 are the management areas of northern shrimp.

The Newfoundland and Labrador inshore fleet, which Mr. Watkins, Mr. Russell, and Mr. Genge, who came with me, participate in, has access in only two of those areas. Some of them have access to only one, and some have access to two. They all have access to area 6. Some have access to area 7.

Area 6 is the main shrimp area for these people and for Mr. Barnes' plant and other plants in Newfoundland. There are 10 of those, in small communities, each supporting about 160 direct jobs and all kinds of spinoff jobs. There are about 250 fishing enterprises with very heavy debt loads that are trying to survive in that business.

For most years out of the first 10 in offshore-sector fishing in area 6, their landings were zero. When you see those tables I've presented, once the headings get translated—the numbers are the same in French and English—those will show that.... In fact, there was no history for that fleet, in the area where these gentlemen fish, until about 1987. This fleet, the inshore fleet, started in 1997. In fact, as I indicated, Mr. Genge fished in the gulf before there were any offshore boats licensed to fish shrimp in Atlantic Canada.

Last week I sat in on a presentation by DFO scientists. The implications of what they said for the future of rural Newfoundland and Labrador were very serious. As I said, there's a tsunami coming, and we have to decide if we're going to get plywood for the windows or just take a chance on not getting hit by flying glass. I think what is important out of this process is that what they talked about gets acted on in terms of putting out scenarios of where they see the resource going and then doing economic analyses to understand what that means for the people—I guess for Canadians generally, but in particular, for the people of coastal Newfoundland and Labrador. It's very serious, and I would certainly hope the committee would endorse that being done in a transparent manner.

The same factors that led to the crash of groundfish stocks 20-odd years ago—the warming water conditions that the scientists spoke to—also allowed the shrimp to blossom.

The original press release that Minister Mifflin, at the time, put out made no mention of LIFO. That acronym did not appear in that document. That came up several years later.

He did have thresholds in place. If the stock fell below a certain threshold, then there was protection for the offshore. The graphs in here will show it. From 2000 to 2010, the inshore share averaged 40%. Now it's less than 30%. The LIFO, when it was first implemented, made no reference to allocations. It first showed up in the plan six years after Mifflin's press release. It was another four years before LIFO was applied to allocations.

I want to deal with the claim that the offshore received virtually none of the increase. That was mentioned by several witnesses who appeared before you. They did not give the full picture.

In fact if you look at the entire northern shrimp fishery in all the areas, in 2007, when then Minister Hearn changed the temporary permits that Mr. Watkins and others held over to regular licences, the offshore share of northern shrimp was 63,500 and the inshore share was 64,800—roughly the same. This year the offshore share will be the same as it was then—63,000. The inshore share will be 33,000. So to suggest that the offshore got none of the increase is simply not true and is taking absolute liberties with the facts.

[The Chair, Conservative, Rodney Weston]

Thank you very much, Mr. McCurdy.

Mr. Watkins.

[Brad Watkins, As an Individual]

I don't have a lot of time either, I guess, but I did pass around my business card with my number and email address, and I'd appreciate hearing from anybody who has any questions, because I have a lot to say. We've been years trying to get up here to speak on the mess in the fishery, the mess we're in.

I'm going to show you my own personal enterprise. I'm going to give you my own personal numbers of what's happened over the past eight years with our fishery.

Let's take the crab quota first, because for crab, for shrimp, for everything, our fishery is in a mess. The rationalization that DFO brought upon us has caused this problem.

Back around 12 years ago, I had one licence. I had 173,000 pounds of crab. That got cut down to 93,000 pounds in 2007. Because this was being cut, we had to buy into rationalization, which DFO came out with, with no help. They took away our tools—buddy-up and leasing—and we had to rationalize and go to the banks and purchase.

Today, I have two licences and I'm down to 90,000 pounds of crab. That's on two licences, whereas eight years ago I had 215,000 pounds of crab, so I'm down about one-third of the crab in the last eight years. Things were supposed to get better. We were going to rationalize. The industry was going to get better.

On the shrimp quota, I had 1.1 million pounds of shrimp in 2007. I'm now down to 400,000 pounds of shrimp. I took on a debt load of $1,980,000 to rationalize, which DFO told me was the fix for the fishery. We had to rationalize, so I took on the debt load. I'm paying $115,000 a year in principal payments, and I'm paying $99,000 a year in interest payments. That's $214,000 a year in loan payments alone.

Gentlemen, I had a business plan eight years ago that worked well, worked wonderfully, with the quotas that I had. Today, eight years later, I have a 20-year term on that loan. I'm down to one-third. My business plan is gone. It doesn't work anymore.

There are 1,200 other fishers in Newfoundland in combined enterprises, and they have the same debt loads. We're talking debt loads of $1 million, $2 million, and $3 million, and today you're cutting me again, probably by 25% on the shrimp and 10% on the crab? We can't pay the bills. There are no fish anymore to pay the bills.

We face environmental changes. The groundfish are coming back. They're rebounding. DFO has been denying this, but we know the difference. I have a brand new vessel myself, with the highest of technology. I had it built last year. There are 100 boats in 3K alone with the same technology. We're seeing the cod. We're seeing the redfish.

Years ago, they never had the sounders and technology that we have; they only had gut feelings. They didn't know what was on the bottom. We know what's on the damn bottom. It's no good for DFO to come out and tell us there are no groundfish. We have 200 miles of water and grounds that haven't been fished for 25 years that are thriving in groundfish: cod, turbot, and redfish. We're not allowed to catch it. They won't give us quota.

We also have the problem of the fisheries policy that cites that the Minister of Fisheries and Oceans has full and absolute discretionary power. This power has been greatly abused.

In the shrimp industry alone, we've had decisions where provinces like P.E.I. got quota off our waters. We got no quota at that time. P.E.I. got it all. They're not adjacent to our waters. Quebec, foreigners, and every NAFO division got shrimp to catch in our waters, but we're stuck in 3K and not allowed out. This policy lets the minister of the day use it as a political tool to get re-elected, and that is very unfair. It's very disruptive to our fishery, and it's not helping us one bit. I saw an ad in Seafoodnews.com, which is a worldwide magazine. They speak of this and they talk about how this is the ruination of the Canadian fishery and the Newfoundland fishery. It's time for that policy to change.

I have some solutions.

First of all, on the debt load that has been forced on fishers to take on in the industry, DFO has to realize that they can't ask the fishers in Newfoundland and Labrador to take on hundreds of thousands of dollars in debt load to rationalize the industry, and then pull the quotas away from us again, leaving the investing harvesters with a huge debt with no fish to catch to repay the loans. This has been done in the past and has got us in serious trouble.

One thing we could do is that if a quota of crab or shrimp has to be cut by 20% because of a falling biomass, then cut 20% of the harvesters. Don't cut the individual harvesters. Take 20% of the harvesters' licences out of the fleet.

Number two, let the harvesters purchase licences elsewhere in Canada. I was in Denmark. They fish around their country, I'm stuck in 3K. I'm not allowed to go buy a licence in 3L. I'm not allowed to go to P.E.I. to buy a licence, but P.E.I. can have quota in 3K. It's all one-sided. Why can't Rendell Genge behind me in 4R go buy a crab licence in 3L to help his enterprise thrive so that when it's bad in one area, he can thrive in the other to keep his enterprise on an even keel? This needs to be done. This needs to be looked at. It works in other countries. Why can't we use that model?

Again, take the policy of full discretionary power out of the system. This is very disruptive. This is causing us all of our headaches.

When we talk about our groundfish coming back, if a quota is caught on crab or shrimp or any other species, DFO can and should replace it with another species of the same value. As business owners buying into rationalization, we cannot be expected to take on these million-dollar debt loads as species fall, at the hands of DFO pushing us into it; then we have to foot the bill with nothing to replace it. They can't just cut me from 215,000 pounds of crab down to 90,000 and expect me to pay my bills without anything to come behind. We must have other species to catch. This species is there, just 200 miles aground; it has been 25 years and it hasn't been taken. It's time for us to start to reap the benefits from that species again, as we've done traditionally. I come from a family of at least four generations of fishing on these grounds, from Greenland halibut, cod, capelin, herring, mackerel, crab, shrimp, everything. I am a traditional harvester in Newfoundland.

In closing, I would like to say that the Government of Canada has put us in a very bad position. They have put the investing harvesters of the fishery in Newfoundland and Labrador at risk in owing hundreds of thousands of dollars to banks. The onus here is on DFO and the Government of Canada to step in and help us out, because our companies are going to start to go back to the banks with the keys in our hands. We have no choice. We cannot continue to take these cuts and debt loads.

Thank you.

[The Chair, Conservative, Rodney Weston]

Thank you very much, Mr. Watkins.

We're going to start off with an eight-minute round.

Mr. Chisholm, I believe you're going to start off and share with Mr. Cleary.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Thanks very much, gentlemen.

I want you to know that we worked very hard to try to get the voices of the inshore here to present on this issue. We heard from the offshore, from the all-party committee, and from DFO. Your voices were absent. I think it's extraordinarily unfortunate, given the complexity of this issue and given the impact this issue has on your communities as well as your businesses, that this has been cut so short.

We're certainly going to work hard to try to get you back, because we think you have a story to tell. But I want you to know that I am pretty much convinced that the government has decided that the LIFO policy is something that has existed...they support the decision by the Ernst & Young review in 2012, and they figure that's all done. I just want to tell you that we're going to work hard to try to get you back and keep making sure that many of the points you've made are going to be part of this discussion.

I'm going to turn it over to my colleague Ryan to direct some of our questions towards you. Maybe you'll have a chance to respond to some of what I said.

Go ahead.

[Ryan Cleary, NDP, St. John's South—Mount Pearl, NL]

Thank you, Mr. Chisholm.

Mr. Barnes, I feel your frustration, sir.

Mr. Watkins—I say to the Conservative members opposite, have a good look at Mr. Watkins because he's a rare breed. He's a 42-year-old fourth-generation fisherman, and he's a rare breed, because we're losing them all the time. The average age of fishermen in my province, as Mr. McCurdy can tell you, is 60, 65. It's going up and up because of bad management policies like the one we're discussing today.

My question is for you, Mr. McCurdy. I want to touch on something that Mr. Watkins raised, and I want to ask you this question. We have 17 offshore licences, Mr. McCurdy, and I believe that eight of those are at least partly owned by Newfoundland and Labrador interests.

I only have a few minutes, so if you could, be as pointed with your answers as you can.

What is the amount of foreign interest in those licences?

[Earle McCurdy]

My understanding of those is limited to what the public documentation of this is, because most of these companies aren't publicly traded. There are three that I know of that are entirely Newfoundland owned. There are two, the Labrador Fishermen’s Union Shrimp Company and the Torngat Co-op. Ocean Choice International has two, with at least 30% Icelandic ownership in the company.

There's one called Harbour Grace Shrimp Company Limited. As far as we're able to ascertain, the control of that is now entirely in the hands of a subsidiary of a Danish company. There's one called Newfound Resources, which again is significantly—if not the majority—held by a subsidiary of a Danish company. There's one in Labrador called Pikalujak Fisheries, which is a fifty-fifty venture between an Inuit group and what was originally National Sea Products. They sold their share to a company with foreign roots. So there's a significant foreign ownership in the so-called Newfoundland licences. There's no foreign ownership in Mr. Genge's, Mr. Watkins', or Mr. Russell's enterprises.