Fisheries Committee on Feb. 8th, 2007

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

It is easy to understand there are a few bits and pieces I cannot grasp. You are talking about breaking the impasse with a MOU that is often mentioned and which we did not necessarily read. If there is something we should do to deal with this issue and we do not have the MOU... I really think we do not have all we need to fully understand the issue.

Thank you very much.

[Paul Sprout]

Merci. I'll look into our ability to distribute that document to the committee. I'm not sure if there are privacy issues, but if not, then that will be provided. That will describe a bit more of the detail around what we agreed to in 2006.

[The Chair, Conservative, Gerald Keddy]

Thank you, Monsieur Blais.

Before we go to our next questioner Ms. Bell, I would just remind members that using your BlackBerry at the table interferes. This is a small room, with interpretation, and it interferes with the interpreters. There is quite a little buzz in their ears. It's not so bad for us, but it is quite annoying to interpretation when it happens. You can read your messages, that's one thing, but if you're actually sending one, I don't know how far away from the booth you need to be.

Ms. Bell.

[Catherine Bell, NDP, Vancouver Island North, BC]

Thank you.

Thank you, Mr. Sprout, for your presentation.

I have a few questions. I read through the presentation that was given in June by the Spawn on Kelp Operators Association. I found it very interesting, but I have a few questions.

You mentioned that the Spawn on Kelp Operators Association feel the Heiltsuk quota affected the price, but you explained about the market. Was there any effect? Did the quota affect the price, in your opinion?

[Paul Sprout]

Certainly some of the spawn-on-kelp licence holders believe the increase in the Heiltsuk allocation affected the market price.

From our perspective, in looking at that question, we noted a few things. We noted the following. The price peaked in the mid-1990s, before the Heiltsuk decision in 1996 and before the quota started to be phased in, in 1997, 1998, and 1999. In fact, the price was already at a historical high and was declining before the decision was actually put into place.

We also noted that the allocation for the Heiltsuk was held constant from 2001 to 2005, while the total landings in British Columbia were basically constant or declining. The price still declined through those years.

The other thing we noted was that for the roe herring fishery, which has the same Japanese market, their price also declined during the same time period.

In analyzing this situation, it's our view that the dominant factors are the Japanese demographics, the change in consumption patterns, global competition, and the value of the Canadian dollar.

I recognize that some spawn-on-kelp licence holders don't accept that, but the empirical evidence we have suggests that the dominant factors are the ones I have mentioned.

[Catherine Bell, NDP, Vancouver Island North, BC]

Thank you.

I'm going to read the presentation they made to this committee back in June:

The Spawn on Kelp Operators Association respectfully requests that the Standing Committee on Fisheries and Oceans consider funding a spawn-on-kelp licence rationalization plan proposal based on Marshall.

I know it is a big case. Could you give us a very brief explanation of what the Marshall decision would mean to the spawn-on-kelp operators? Would it solve their problem, or would it create other problems?

[Paul Sprout]

I think what the individuals are requesting is this. When the decision of the Supreme Court came down in the case of the Heiltsuk, and then the department increased the allocation of the Heiltsuk over the period I've described, those individuals asked the department to compensate them for increased first nations access. I think that's what they are looking for.

They drew a parallel to the Marshall decision because in the case of Marshall, where crab licences and other licences were acquired, it reduced the allocation to other licence holders. The department purchased those licences and transferred them to first nations. I think it's the parallel they were attempting to draw.

In the case of B.C., we actually did not reduce the allocation of any of the commercial spawn-on-kelp licence holders. The reason we didn't is that the total allowable catch for roe herring was not actually being achieved in B.C. We could have actually caught more product or more fish. We did not have to reduce the spawn-on-kelp allocations to the spawn-on-kelp licence holders. From our perspective, we did not see this as the parallel that they've described.

All the spawn-on-kelp licence holders are allowed to harvest roughly 16,000 pounds per licence, and they continue to be permitted to harvest 16,000 pounds per licence. There was actually no reduction in the amount of harvest with the increase in first nations access, based on the Supreme Court decision.

It's different in other situations where first nations access is increased. You're transferring in order to allow that increase and not to affect other licence holders who are transferring licences and purchasing those licences, because you're going to reduce what's going to be left over for others.

It wasn't done in B.C. because of the fact that we still had TAC available, and compensation was therefore not provided.

[Catherine Bell, NDP, Vancouver Island North, BC]

Do I have more time?

[The Chair, Conservative, Gerald Keddy]

Actually, you don't.

Mr. Kamp.

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

Thank you, Mr. Chair.

Thank you, Mr. Sprout, for coming. It's an interesting issue and is complex in some ways. Thank you for helping us to understand it a little bit better.

As Ms. Bell has pointed out, there are two primary issues that are before us, and I think you've responded to them. One is the issue of transfer without compensation, and that's what was raised by the witnesses; at least two made a fairly passionate case for that when they appeared before us. You would agree, I think, that it is the department's position that when we transfer allocation we do compensate for it. Your position is that isn't what happened in this case because the existing spawn-on-kelp fishers continue to get their 16,000 kilos. Does that summarize your position?

[Paul Sprout]

That's correct--16,000 pounds. Where other allocations have to be reduced to increase first nations' allocations, then compensation is provided for; where that is not the case, then it is not. In this instance, no reductions in spawn-on-kelp quotas were applied.

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

The other issue, of course, is the notion that with these new licences there's a whole new increase in supply, and that supply ends up in the market and the price goes down based on that. You've responded to that partially with your table in appendix 1. You've made your case there.

What happened prior to 2001, when all this started to happen post-1996? What was the supply coming from Canada being sent to Japan? If we were to see a table like this that was pre-1996, would it show us anything of interest other than this? Was there a big spike in supply post-Gladstone?

[Paul Sprout]

It would show an increase for a couple of years based on the allocation provided to the Heiltsuk. That would be roughly somewhere in the order of 25% of the total production in B.C. At the same time, you'd have to factor in the global production, which would include, typically, the Alaska production, which would mask that small increase in B.C., and then take into consideration the other market forces I've mentioned.

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

Is there a black market for spawn on kelp?

[Paul Sprout]

There certainly has been in the past. There have been black markets. For the members, what this is referring to is we have spawn on kelp being harvested illegally and then attempts to put that product into the legal market. We've definitely had instances of attempts to do that and product entering into the black market in the past.

We feel more comfortable today that we have a better control of that, and that we're not seeing the degree of that entry we have in previous years. I think the short answer is that in the past, yes, there have been instances when that black market has shown up.

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

How do you monitor that?

[Paul Sprout]

In a couple of different ways. Typically, during the spawn-on-kelp season, while the kelp is in the ponds, the herring are spawning, and so forth, we will do surveys in various locations where the potential to remove the product is possible. In other words, the herring are there, the kelp are present. So we will survey those areas periodically.

The second thing we do.... This product usually has to go through some sort of plant; it has to be processed in some sort of way along the lines I've described. So we will look at various plant operations to see whether they're actually storing spawn on kelp, and if they are, if that can be traced back to a valid licence holder, and it's legitimate versus product that's not legitimate.

These are the two principal ways we use to try to stay on top of whether there's black market product showing up.

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

Is there any chance that the black market product is affecting the price, by supply?

[Paul Sprout]

I can't say for sure. In the past, where we had evidence of black market product, that was when the price was very high. It was quite attractive to people to go out and take the risk of being caught, because when you're potentially making $30 or $40 a kilogram, the payoff can be quite high. When it's closer to $6 a pound, the incentive to do that is much reduced. So the market itself probably affects the behaviour of people who would like to do that.

Recently, in the last few years, the black market has not been brought forward as a strong issue by the spawn-on-kelp industry. Previously, when the price was very high, that was more of an issue.

So my answer is that I don't think it's influencing price today. I don't think it's as extensive as it may have been historically. I think that's probably a reflection of a couple of things, but certainly the value is one of them.

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

I have just a couple of final questions.

If I'm a spawn-on-kelp fisherman, I hold a licence to do that, I assume. What does that licence cost me?

[Paul Sprout]

I forget. You have a fee. There's a fixed fee for all the licence holders.

[The Chair, Conservative, Gerald Keddy]

You can get that.

[Paul Sprout]

I can provide that to the committee. I think I know what it is, but I don't want to say, because I'm not sure I'm right. But it's a fixed fee, and you would pay that.

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

Right. I recall it to be $10,000, and that may or may not be correct.

You said there are 46 licences, and 26 are held by first nations communities. Are all of those 26 first nations licences held by the Heltsiuk?

[Paul Sprout]

No. They hold nine of those licences, and the others are held by other communities or individuals.