Fisheries Committee on Feb. 8th, 2007

[The Chair, Conservative, Gerald Keddy]

Pursuant to Standing Order 108(2), the committee is engaged in a study of herring spawn on kelp.

I'd like to welcome Paul Sprout, the regional director general for the Pacific region, Department of Fisheries and Oceans. Paul, welcome to committee.

We have enough members for a quorum to hear our witness. If you'd like to proceed, we'll have more time for questions.

[Paul Sprout, Regional Director General, Pacific Region, Department of Fisheries and Oceans]

Thank you, Mr. Chair.

I'd like to start off with a short presentation on the subject of the spawn-on-kelp fishery. In a moment I'll explain what this actually is, but I'd like to cover three things.

First of all, I want to start with a brief history of fisheries management. I want to talk a little about the market for the spawn-on-kelp fishery. I then want to talk about an important Supreme Court decision called Gladstone. From there, I'll talk about the evolution of the fishery since Gladstone. Finally, I'll talk a little about the next steps.

I'll begin with a description of the history of the fishery, but before I do that, I'd like to describe what the fishery is.

For those who haven't had the opportunity to see it, the spawn-on-kelp fishery is a fishery where, for marine plants, in this case, giant kelp, the fronds are removed from the kelp. They're tied to a string, and the strings are tied to beams or posts or booms that are usually rectangular in shape. You have a series of strings across this set of booms from which kelp fronds hang into the water.

Herring are then introduced into an enclosed pond—in other words, there's a net around the boom—or the boom itself, with the strings, is pushed into a spawning location where herring are spawning. The herrings spawn on the fronds.

When the spawning depth is of a sufficient amount, and usually it's several layers of herring eggs, the fronds are removed from the strings. The kelp fronds are cut to length, they're put into a tote, and salt is added. That is the spawn-on-kelp fishery.

I want to describe the development of this fishery over the last number of years.

The commercial spawn-on-kelp fishery began in British Columbia in the early 1970s, and it really took off in 1975. The level of interest was initially modest, but it grew over time. We started with roughly 13 licences, and today we have 46 licences in the spawn-on-kelp fishery in B.C.

In 1996 there was a Supreme Court decision, which I'm going to come to in a moment, that provided the Heiltsuk—and I'll describe the location of this community in a moment—with increased commercial access to the spawn-on-kelp fishery.

As I've noted, today there are 46 licences. This is mostly a first nations fishery. Of the 46 licences, 26 go to first nations communities, and these are individual first nations communities, Heiltsuk, Haida, and so forth. There are 20 licences that go to individuals, a portion of which are actually first nations as well.

The harvest is fixed. The total allowable harvest is 434,000 kilograms, and the Heiltsuk proportion is roughly 119,000 or approximately 28% of the total allowable harvest.

I want to talk about the market. There is only one market for the spawn-on-kelp product, and that is in Japan. That market has changed over the history of the spawn-on-kelp fishery.

When the fishery developed in the 1970s and through the 1980s, the market was a high-end luxury market. The product was highly valued. It was sold principally at Christmas time, and it was usually through gift giving. The Japanese would purchase the product in boutique stores and the product would be exchanged or provided as a gift. It was a very expensive product.

Since the early 1990s, the market changed for several reasons. First of all, within the demographics of Japan, the population has aged and the younger generation is not as interested in gift giving and, in particular, the acquiring of this very expensive product. The market shifted from a high-end market to effectively a grocery-store market or a low-end market. As the market shifted, the price of the product declined.

Two others things happened at the same time. The Canadian dollar appreciated relative to the Japanese yen. It became more expensive for the Japanese to purchase the Canadian product. As the demographics changed, and as the interest of the young Japanese versus the older ones changed, it became less accessible.

The next important issue was global competition. The Alaskans have a roe herring and spawn-on-kelp fishery, and when the Canadian market was high-end, the Canadian quality, which is a very high quality, out-competed that of the Alaskan market. But as the market shifted to a low-end consumer product, the Alaskan product competed successfully with the Canadian product.

As a consequence of the changing nature of Japanese consumption, the appreciation of the Canadian dollar, and global competition, price for the product declined beginning in the mid-1990s. The historical high peak for the product was actually in 1995.

Page 5 talks about the Gladstone decision. This is a Supreme Court decision that came down in 1996, and it applied to the Heiltsuk First Nation. The Heiltsuk First Nation is a first nations community located north of Vancouver Island and south of Prince Rupert. It's actually situated in Bella Bella. So this is an isolated first nations community. In 1996 the Supreme Court held that this community had an aboriginal right to harvest spawn on kelp for commercial purposes. The committee, citing lack of evidence, did not go on to say whether there had been an infringement of this right, but they did say that we needed to take into consideration the priority of this right in determining an allocation.

As I've noted, the court decision did not specifically describe or define an allocation, a quantum, or a quota for the Heiltsuks. It did not direct that the Heiltsuk Nation had a separate or exclusive spawn-on-kelp fishery. Instead, as I've noted, it indicated that the Heiltsuks' right to harvest spawn on kelp could be accommodated by some level of priority.

Following the decision in 1996, the department entered into negotiations, into discussions with the Heiltsuks to determine how to apply the Supreme Court decision. We looked at how to manage the fishery and the role of the Heiltsuk community in that responsibility or in that area, and we also looked at the issue of the allocation.

From 1997 to 2001, we increased the amount of spawn on kelp provided to the Heiltsuks. This was phased in over a period of several years. Since 2001, there has been no increase in the Heiltsuk quantum, with the exception of an economic allocation in 2006. But from 2001 to 2005, the allocation for the Heiltsuks has been constant.

Although the department believes that it has acted in a reasonable way with the Heiltsuks and that the quantum provided to them over the course of the period that I described was appropriate, the Heiltsuks don't accept that view. They believe that the priority determined by the court has not been recognized. They think their harvest is inadequate. Further, they believe that the roe herring fishery that takes place in this area at the same time and catches many more herring is out of proportion to the amount that they're allocated for spawn on kelp.

Just to pause on this for a moment, members, in the central coastal area, we have a spawn-on-kelp fishery and we have a roe herring fishery. The roe herring fishery is where we typically use seine vessels and gillnetters to capture whole herring, which are then transported to plants where the roe is removed, and that herring is sold again to Japan. That fishery is a very large fishery in comparison with the spawn-on-kelp fishery. It's about ten times larger.

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

The roe is removed.

[Paul Sprout]

The roe is removed and sold to Japan—the same market and only market. So the spawn-on-kelp fishery relative to the roe herring fishery is small, and therefore the Heiltsuk believe the quantity provided by the department through the negotiations is inadequate.

In a couple of years, we've had protests and challenging situations that have destabilized both the spawn-on-kelp fishery and the roe herring fishery on the central coast. In two instances, the RCMP was involved to try to stabilize that situation, along with our fishery officers.

In order to bring some stability to that situation, particularly to try to stabilize both the spawn-on-kelp fishery and the roe herring fishery, the Department of Fisheries and Oceans, the commercial roe herring fishery, and the Heiltsuk entered into a memorandum of understanding in 2006. That memorandum of understanding essentially laid out some roles and responsibilities, clarified who would do what to whom under what circumstances, and resulted in very strong cooperation in 2006.

In 2006 we implemented the fishery for spawn-on-kelp for the Heiltsuks, and we carried out a roe herring fishery for both natives and non-natives, and we did so without incident, with exceptional cooperation among all the parties. We believe we had a very successful 2006 fishery.

In terms of the next steps, we are continuing to work with the Heiltsuk First Nation, with the herring industry advisory board—the board comprised of the roe herring industry, both first nation and non-native—spawn-on-kelp license holders, bait pond impoundments, and all interests that use herring to arrive at a consensus on the management of the 2007 fishery, beginning sometime in the spring. All spawn-on-kelp license holders have been contacted to participate in this exercise. We are also looking at the opportunity for mediation between the parties—again to try to seek long-term solutions to the impasses I referred to earlier. We will continue also to work with the roe herring fishery, because the roe herring fishery, like the spawn-on-kelp fishery, has faced similar market forces: a single market, changes in the Canadian dollar relative to the Japanese yen, and so forth. They too are struggling to adjust to the new economic realities that we have in the roe herring fishery. We are also working with an integrated management group, including not only the herring users, the commercial industry, but also recreational interests and NGO interests to talk about the integrated use of herring as we move forward to the future.

I have included the final point, members, in the appendix as a table. The table notes the landings from 2001 to 2005 in the spawn-on-kelp fishery. The middle column is the landings in kilograms and the right-hand column is the price per kilogram. As you will note here, the landings from 2001 to 2004 were relatively stable, at about 400,000 kilograms, and the price declined significantly. In 2005 the landings were less, and the price still declined. It's our view that the shifts in the Japanese market and the global factors I spoke of are the principal reasons for this decline in price.

Thank you.

[The Chair, Conservative, Gerald Keddy]

Thank you, Mr. Sprout.

We'll go to our first questioner, Mr. Matthews. I think Mr. Simms will take....

[Bill Matthews, Liberal, Random—Burin—St. George's, NL]

I won't take much time, Mr. Chairman.

I want to thank our witness for coming.

Mr. Sprout, I guess it's pretty evident that the department and the government had no choice but to allocate to the Heiltsuk Nation. Is that the interpretation you had, to engage and allocate some of those resources to them?

[Paul Sprout]

Yes, that is our view.

The court decided there was a right to harvest spawn-on-kelp commercially and said it was a priority. It was clear, from our perspective at least, that if we had gone back without increasing the allocation and there had been a new court situation, we would be in a very difficult position had we not provided for some additional access.

[Bill Matthews, Liberal, Random—Burin—St. George's, NL]

Just for clarification, what do you mean by your second point on slide 7, “A one-time economic opportunity”?

[Paul Sprout]

The Heiltsuks proposed a marketing approach to market product in a different way in 2006, and they felt they had an opportunity and a market they could explore in 2006. As part of the discussion we entered into, and in the memorandum of understanding we arrived at, we agreed to a one-time allocation to see if that market could be proven and if it would in fact be helpful to achieve future stable arrangements.

[Bill Matthews, Liberal, Random—Burin—St. George's, NL]

Was that an increased allocation?

[Paul Sprout]

That was an increase above their regular allocation.

[Bill Matthews, Liberal, Random—Burin—St. George's, NL]

Yes, because they were allocated between 2001 and 2005, it seems, so for this one time you increased that.

[Paul Sprout]

That was in 2006. That's correct.

[Bill Matthews, Liberal, Random—Burin—St. George's, NL]

Do you foresee the increase continuing?

[Paul Sprout]

No. It was a one-time allocation. That was it.

[Bill Matthews, Liberal, Random—Burin—St. George's, NL]

Thank you.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Is that the reason why the Heiltsuk Nation is upset about the amount of quota they had? Is that going to be a continuing problem? You're talking about mediation, but how is this going to be resolved? I expect they're going to continue to indicate clearly.... What rights do they get under the Gladstone decision? They feel they didn't get the proper amount of quota, and that's going to continue.

[Paul Sprout]

It's true. They do believe that, or at least they're saying that at this point in time.

That's not the only issue up for discussion. The other issue is how we manage the roe herring fishery generally in their area. They are concerned that the roe herring fishery, which is substantially larger, adversely affects their ability to catch spawn on kelp. The approach we've taken with the Heiltsuks and with the roe herring fishery is to try to find some sort of collaborative arrangement whereby the roe herring fishery--which means the commercial fishing interests--the Heiltsuks, and the department are collaborating on the management of the fishery so that we can remove, to the extent possible, the fear that the management of the roe herring fishery is adversely affecting the spawn-on-kelp fishery. Last year we agreed to observer arrangements and other types of approaches that effectively dealt with this concern.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Was that cooperatively with the Heiltsuk Nation?

[Paul Sprout]

That was cooperatively with the Heiltsuk Nation. It was an MOU signed by the first nations, the department, and by the industry itself. We had extensive cooperation in season.

I remain optimistic, but you're right: there's still a difference. We still have to work it out. We haven't yet arrived at a long-term arrangement. Using 2006, when we had good cooperation, good collaboration, and the relationships were much better, is a good starting point to build from. We remain optimistic, but mindful of the fact that it's still a challenge.

[The Chair, Conservative, Gerald Keddy]

Mr. Simms.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

It's a shade over 119,000 kilograms for the Heiltsuk Nation, yet there is 434,000 in total allotment for spawn on kelp. Is that correct?

[Paul Sprout]

Yes.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

What organization do the other fishers involved in the balance of the 434,000 have? To what extent are they organized in the same way as are the Heiltsuk--or are they?

[Paul Sprout]

Each licence holder has a choice as to whether they want to belong to the spawn-on-kelp organization, which is a commercial organization of licence holders. Most spawn-on-kelp licence holders do belong to that organization. That's the organization the department interacts with. When we want to get advice, for example, from the spawn-on-kelp industry, we interact with the spawn-on-kelp organization.