Madam Chair, I am pleased to speak tonight to a sector that is vital to the Canadian economy. I will follow up on some of the points and comments made by the minister.
This sector employs a lot of people and our Conservative government has shown our support time and time again for it. Those people who may watching may not realize the contribution that our seafood industry makes to our economy and our coastal communities. In fact, Canada is the world's sixth largest seafood exporter, with fish and seafood being Canada's largest single food export commodity. The seafood sector contributes $3.9 billion to the Canadian economy through the activities of harvesting, aquaculture and processing industries. Together, these industries employ approximately 80,000 people across the country, including fish harvesters, crew members and plant workers.
The shellfish industry is at the heart of Canada's seafood sector, especially in the coastal communities and regional economies of eastern Canada, the subject of our debate tonight.
Canada's commercial fisheries have evolved since the early 1990s, shifting away from groundfish to the more lucrative shellfish fisheries. Key species, such as lobsters, snow crab and shrimp, have become cornerstones of the commercial fishery driving industry growth for nearly two decades.
To date, shellfish represents over three-quarters of the total value of commercial marine and freshwater catches in Canada. At the same time, shellfish aquaculture production has also grown considerably, increasing four times it value since 1990.
The Atlantic provinces and Quebec define the Canadian shellfish industry. Total shellfish landings from Nova Scotia, Newfoundland and Labrador, New Brunswick, Prince Edward Island and Quebec account for over 90% of the overall landed value of shellfish in the country. In 2008, more than 429,000 tonnes of shellfish worth $1.4 billion were landed in those provinces. Lobster, snow crab and shrimp are the industry's most valuable species, but we cannot overlook other important products. such as scallops, clams, oysters and farmed mussels.
The east coast shellfish industry contributes significantly to the rich variety of harvested and processed seafood products exported worldwide. Atlantic lobster is Canada's most lucrative fishery and provides a high quality, healthy food with high consumer appeal. In 2007, landings were valued at $560 million. In 2008, they climbed to $600 million and exports earned $920 million, or 24% of all Canadian seafood exports.
There are almost 10,000 licensed lobster harvesters employing almost 30,000 Canadians and Canada produces over half of the world's lobster exports, mostly sold to U.S. markets. Hard shell lobster has higher value, often sold as live product, but also has higher storage costs. About one-third of lobster landings are soft shell, the lower value, processed into frozen products and inventories sold throughout the fall and winter months.
The lobster industry competes directly with the Maine lobster industry in the U.S. which can often plug the U.S. market with live lobster. The luxury status accorded to Atlantic lobster as a food item, significantly affected it during the economic downturn during which demand dropped due to consumers cutting back on discretionary spending. Our government recognized that lobster-dependent harvesters were being severely impacted by the economic downturn, which is why we implemented the $15 million short-term transitional measures program to assist them.
It is important to recognize, not only how vital lobster and other shellfish are to Canada's economic prosperity, but also how flexible, resilient and innovative the industry is. For instance, a new dock-to-dock transport system recently made its debut in Halifax which will allow the shipment by a container ship of fresh seafood to European destinations. This could help reduce costs to Canadian lobster exporters.
Snow crab is another important fishery in Canada and it is caught in the Atlantic provinces and in Quebec. It is a high volume, low value-added fishery and has a relatively short season with the majority of catches being landed within the first few weeks. Harvesters take their catch quickly in order to take advantage of early season high catch rates and also to avoid soft shell problems. Most snow crab exports are destined to mid-priced restaurants like buffets and casinos in the U.S. Despite supplying over one-third of the world's crab exports, Canada is considered a price-taker in this market. While it is not the only crab species harvested in Canada, the snow crab is by far the largest, making it the cornerstone of our Atlantic crab industry. In 2008, Canada exported $509 million worth of snow crab to 18 countries, with 67% to the United States, 21% to China and 9% to Japan.
The northern shrimp fishery is found mainly in Newfoundland and Labrador, as well as Quebec and Nova Scotia. The main method for catching shrimp is trawling, which is fuel-intensive and vulnerable to upswings in fuel prices. The European Union is the main market for northern shrimp, particularly the UK and Denmark.
Cold water shrimp prices have declined over the past 10 years because global markets have been saturated with larger warm water aquaculture shrimp and prawns. The financial crisis and economic recession have had predictable effects within the industry. The economic climate has also magnified the long-term structural challenges for businesses that carry high debt loads and have trouble accessing conventional financing.
Total shellfish exports were $2.1 billion in 2009, dropping 8% from their value in 2008. At the same time, 2009 saw large decreases in the market prices for lobster, crab and shrimp, which generally represent half of Canada's fish and seafood exports.
As general consumer spending decreased, the demand in import and export markets also plummeted, especially for high end seafood products. The drop in demand in Canada's major export markets, the United States, Japan and the EU, has been especially problematic for shellfish exports. A strong Canadian dollar has further diminished revenues and the relatively small margins for profit that did exist in some fisheries have been eroded or lost entirely.
Steep increases in the price of oil have placed considerable pressures on the overall costs incurred by fishing fleets and processing plant operations. Fuel costs generally account for 10% of fleet operating costs but could be as high as 19% or 20% for relatively fuel-intensive fleets, such as shrimp harvesters.
Recent domestic economic projections for Canada have been positive. Improved consumer confidence in both the Canadian and American markets is expected to boost the demand for fish and seafood products, however, anxiety over market prices remains. Expectations of a strong Canadian dollar in 2010 continue to put additional pressure on the industry. Forecasts of high crude oil prices throughout 2010 pose a significant potential burden on overall costs of operations. As well, resource stock declines will have direct short-term implications for affected fleets.
The next two to five years will be an important period of transition for Canada's shellfish industry, as the need to increase productivity, become more innovative and strengthen its domestic and export markets reaches a critical level.
DFO is committed to facilitating industry transformation into a self-reliant, high value-added shellfish industry. We recognize that more emphasis in analyzing all the elements of the value chain is required, from harvesting to processing to marketing and distribution of shellfish products. We also must remain vigilant and proactive in terms of our programs and policies with respect to emerging drivers, such as new requirements related to catch certification, food safety and security and market access issues.
For example, new European Union regulations that went into effect in January of this year require imports of seafood from other countries to have catch certificates to verify that the catch is legal and reported. The EU is the second largest market for Canada, importing almost $500 million in fish and seafood products in 2008.
Our Conservative government recognized the importance of the EU market to the Canadian seafood industry, so we have acted decisively. Budget 2010 provided $7.2 million over two years to support a new catch certification office. Through this office, Fisheries and Oceans is issuing certificates to exporters, ensuring that the Canadian fish and seafood industry remains competitive and maintains employment in both the harvesting and fish processing sectors. We expect that consumers and global markets will increasingly demand this kind of evidence, and our government's foresight on this issue puts Canada's seafood industry in a competitive position.
I know that change will not happen overnight. That is why our government remains committed to working with the industry and key stakeholders to improve industry resilience and prosperity so that it can withstand and rebound easily to short-term shocks, including economic, market or resource pressures.
Atlantic Canadians know that it is our Conservative government that will support the long-term development of the seafood and shellfish sectors.
