Okay. I'll do my best to keep to that.
The BC Seafood Alliance is the largest commercial fishing organization on the west coast. Our full members are both harvester associations, representing the owners and operators of commercially licensed fishing vessels in most major fisheries in B.C., and processing companies, which process about 70% of B.C. salmon, herring, groundfish and some specialty products. We really appreciate the opportunity to give you a sense of the impact of COVID-19 on west coast fisheries.
Our experience started in the last week of January, when sales of geoduck, Dungeness crab and other live products ended when the important lunar new year markets in Asia shut down. Those products have a wholesale value of about $150 million annually. We've since seen that extend to virtually all food service sales worldwide. That matters to B.C., because many of our species, though not all, were destined for the high-end global restaurant trade.
Some species are adapting reasonably well to a market that is now predominantly domestic and retail. That means lower prices to the processor because of higher retailer margins and so too to the harvester.
Some of our species—geoduck, herring roe, sea cucumber—will never have a domestic presence, so we need to figure out the air cargo and container problems that prevent our getting them to the Asian markets that are starting to recover. These species, with a couple of others in the same predicament, amount to almost half the west coast wholesale value.
With slow markets, we reduced processing production and then reduced it again to space out the line for physical distancing in the plants. We've been working with our plants to make sure that each has a COVID-19 plan. Since these are all federally inspected plants, we do need co-operation between the CFIA and the provincial health authority to review those plans and provide some reassurance that they are sensible and careful of workers' safety.
For both vessels and plants, access to PPE is essential. The funding that has been offered is nice, but access is proving difficult, and we fear that plants could run out, with serious implications for domestic food security.
Plants of course need fish to be able to operate at all, so we need to be able to go fishing, which means keeping our harvester crews and communities—often in remote parts of the coast—safe. We've been working with other B.C. harvesting organizations to implement fleet-specific guidance covering every aspect of a commercial fishing trip: fourteen days' isolation beforehand, on-board practices, in-port procedures and offloading and end-of-voyage procedures.
For almost all species, production has dropped 50% or more, and prices to harvesters have dropped as well, by about 25% for halibut, 45% for geoduck and perhaps as much as 75% for the prawn fishery when it opens next month. Across the board, whether for harvesting or processing, we are getting less money, while our costs have significantly increased.
On the emergency support measures, we appreciate the recent announcement of the seafood stabilization fund, although realistically this will not cover much more than PPE and the emergency costs of operating. Automation technology and capital expenditures on freezing capacity start at about half a million dollars. For instance, automated equipment for vacuum packaging for retail costs about that much.
The CERB has worked well in many fisheries, but not for salmon harvesters, many of whom had a disastrous season in 2019 as a result of poor returns. Most essential for us, however, is access to the CEBA and the CEWS, especially the former. The CEBA should fit us exactly—a program to help small to medium-sized businesses continue to operate—but the employment structure in the fishery sector differs from conventional business. In most fisheries, the crew are not wage-earning employees but co-adventurers who share in the value of the catch.
While they are hired and employed by vessel owners, crew are usually paid directly by fish buyers based on direction for the remuneration formula from the vessel owner or skipper. Each individual crew member receives their T4 with earnings in box 78 or 80, rather than box 14, from the fish buyer, but they’re not actually employed by the buyer. The actual business, the fishing enterprise, therefore has no payroll according to the T4 and the current CEBA rules. We suggest that vessel owners be considered small businesses and all earned income from their crews submitted to the CRA on a T4, no matter the box and including dividends, be accepted.
Fish harvesters have many costs in gearing up for a season, including DFO licence fees, and often do not get fully paid until the product has sold, which can be months later. Normally they borrow money from processors or banks; neither source is readily available this year. For them, the CEBA would do exactly what it’s supposed to do.
I want to leave you with a last message. Canada and B.C. have both recognized that fish harvesting and seafood processors are an essential service, providing food for Canada and the world and contributing to food security. There are many things that government can do to help, but perhaps the most important one, as we struggle to get fisheries open and operating safely, is for Fisheries and Oceans Canada to be open to creative and flexible temporary management measures that do not threaten conservation but help us operate, and in some cases, help us reduce costs.
Thank you very much. I appreciate the opportunity.