Fisheries Committee on March 30th, 2009

[Marc Gallant]

As Mr. Chevarie was saying, other players have been appearing on the Quebec market over the last four or five years. Economically speaking, there was more of an attraction to the U.S. market about four, five or six years ago. Exchange rates reached a peak of about $1.50 early in 2000. At the time, it was more profitable to sell your product to the U.S. In the past five or six years, and even in 2007, the exchange rate achieved parity, which had an extremely adverse effect on exporters and everyone else, given the speed at which it occurred.

It is not easy to develop a new market quickly. For example, we would like to develop a market in Europe in the coming years, but that will require work over several years before we succeed.

The exchange rate went up so quickly that no one had time to react and find alternatives. No one predicted the crisis that we have been experiencing since 2007-2008; we did not see it coming either. New markets are not easy to develop. We thought Europe could be a more attractive market than the United States, but that is not necessarily the case. The fact remains that practically no one predicted the difficult situation we are experiencing now and over which we have no control.

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

Thank you very much.

[Jacques Chevarie]

I would like to add something. We really want to stress the need for assistance in relation to our expenses. If we pay 5¢ more here for lobster than in Nova Scotia, that means it has cost a producer 35¢ more. Our expenses are so high that, in order to pay the same price, it costs us more—which is something that a lot of people forget. We need some help in that area, because fishers are experiencing the same problem. Their expenses are increasing because of transportation costs. Everything is connected and there is no way around that. If the same category of lobster sells for $5 in Newfoundland, Nova Scotia, Prince Edward Island or the Magdalen Islands, we also receive $5. If we have to pay 30¢ more for transportation costs, we are losing money; that is our weakness.

We do not have access to European markets like the other provinces. In Halifax, there is an international airport. They can export their product anywhere in the world. If we ship Magdalen Island lobster by boat to that airport, there will be no need to scan it as it clears customs before boarding the airplane, because it will already be dead, given the time it takes to get it there. We have access to the same markets, but we don't have the same facilities. The same applies to Moncton, Newfoundland, the Magdalen Islands and the Gaspe. As Mr. Gallant was saying, selling live lobster to European countries is practically impossible.

[The Chair, Conservative, Rodney Weston]

Thank you.

Mr. Stoffer.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Thank you, Mr. Chairman.

Merci, gentlemen. Thank you for coming.

On the 27th of February the Minister of Agriculture, the Hon. Gerry Ritz, along with Gail Shea, the Minister of Fisheries and Oceans, announced an Atlantic lobster industry marketing plan working in conjunction with the three maritime provinces. I notice that Newfoundland and Labrador, as well as the Province of Quebec, were not included in this. Were you aware that the announcement had taken place on the 27th? Basically, it's over $328,000. It's a combined federal and provincial program to market lobster. There will be media campaigns, promotions, chef events, consumer promotion, etc., in the United States, Asia, and Europe. I am just wondering if you were aware of that. If you were, I am wondering why Quebec would not have been part of that. Would Quebec have its own marketing plan with the federal and provincial governments?

[Jacques Chevarie]

Yes, you are absolutely right. Because there are two of us in the Gulf—Newfoundland and the Magdalen Islands—they forgot all about us. Although we have no idea why, we know that Quebec was not included in the program.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

You indicated that your transportation costs are a little higher here than they would be in, say, New Brunswick or Nova Scotia. Has your organization or anyone asked the federal government, along with the provincial government, to develop a marketing plan for this specific area in order to assist you in developing markets for your lobsters?

[Jacques Chevarie]

In cooperation with the fishers association and producers, the Quebec government is currently working on a lobster marketing plan at the provincial level, but nowhere else. This is a provincial program.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

As a processor, do you get together with other processors in the Atlantic Canada region to develop best practices and to see where you can develop synergies to work together in order not only to reduce costs but also to be able to market your lobsters as well, as an industry?

[Jacques Chevarie]

Yes. At the present time, we are even part of an enterprise in New Brunswick, as co-owner. We work a great deal with the other provinces with a view to improving our processing, but if you compare the costs of the two plants—I keep coming back to this—there is a very big difference.

Someone referred to insurance. Before 2000—in other words, between 1998 and 2000—we were paying about $30,000 to insure a plant. Today, for our three plants, we will be paying between $260,000 and $275,000 in insurance costs. That $30,000 underwent a considerable increase in 10 years.

For electricity, which is something we use a lot of, it's exactly the same thing. Electricity costs for processing are much higher. We have a system which makes it higher because the rate is such that we are unable to use as much as we pay for—in other words, there is a special rate for plants which means that our expenses are very high, even though we are not able to use the amount of electricity we pay for; it's as simple as that. The mandatory rate, when there are peaks, is exactly the same as the rest of the season.

To answer your question, we make regular comparisons and visit the other provinces, just as the other provinces visit us, in order to try and improve our costs and the way we operate.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

How many employees do you employ, sir?

[Marc Gallant]

In 2008, if we're talking about regular employees, we had approximately 400.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Regular and seasonal?

[Marc Gallant]

Yes.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Thank you.

[The Chair, Conservative, Rodney Weston]

Good timing.

Mr. Kerr.

[Greg Kerr, Conservative, West Nova, NS]

Thank you, Mr. Chair. Welcome. I'm delighted we could make it in this morning. I'm very pleased with the interchange we've had. I'll try not to use my full five minutes in case someone wants to be ready.

I guess as a bit of a clarification, as I did mention before to Mr. Poirier, it would be nice to get some kind of written presentation of what we heard this morning, about the effort made by the industry here because of the circumstance. You're sort of backing up the fact that the islands face some very interesting but challenging times.

I noticed when you said about your company coming together that you deal with a number of species, and yet this morning we're hearing it's basically lobster and some crab left. Could you quickly tell me what other species you are handling here on the islands?

[Jacques Chevarie]

In 2009, we will be processing mainly lobster and crab. In the Magdalen Islands, there is not a large crab quota, but we also receive crab from elsewhere. The biomass is available all around the Magdalen Islands, which is to say that the largest concentration of crab, for all the provinces, is located around the Magdalen Islands, which gives us an opportunity to receive crab from other boats. Either it will take them too long to get back to their home port, or the wind is too strong, and so on. Others come in order to lower their expenses. They fish three hours away from the Magdalen Islands. If it takes them 17 or 18 hours to return to their home port, they sometimes start thinking about their expenses and decide to come and pay us a visit, which is great. At the same time, those two species are the main species that we work with. We also work with the small quantities of pelagic fish that are available, such as mackerel and herring. We process the mackerel for canning or we process it into blocks for the European markets. Cod is practically non-existent. Therefore, it is processed for the domestic market. As for redfish, last year we processed between 300,000 and 400,000 pounds of it. It, too, has practically disappeared. We also do some processing of mussels, Stimpson's surfclams and what are known as quahogs. There is also a little halibut. Those are pretty well all of the species we handle.

[Greg Kerr, Conservative, West Nova, NS]

Thank you.

The reason I was asking was that the other presentation talked about a 10-year plan that the industry has to move towards rationalization. I assume that's part of the reason your industry has to continue to consolidate. If your main business is lobster and there's more rationalization, then you have less processing to do. I expect that trend will continue, will it not?

[Jacques Chevarie]

As I see it, if we decided to merge, it is not because things were going well. In the Magdalen Islands, there were previously five plants. Now, there are four, including two main plants. Another plant will be closing this year. It may operate processing shellfish. There will be two main plants operating—one specializing in crab, and the other, in lobster.

This consolidation occurred because there were problems associated with the fishery and the resource was declining. There is no doubt that, if the fishers could operate their boats for seven or eight months of the year catching other species, the crisis would not be having the same effect. For us, it's exactly the same. I said earlier that the cost of insurance is astronomical. The same applies to oil and electricity. If we could operate these plants 12 months a year, by processing other species, it would certainly bring down our fixed costs, which are terribly high. If we rationalize our activities, I think we will be able to remain in production a little longer.

[Greg Kerr, Conservative, West Nova, NS]

Thank you.

[The Chair, Conservative, Rodney Weston]

On behalf of the committee, I'd like to say thank you for appearing this morning and providing advice to us on this important topic, the Magdalen Islands.

We will take a couple of minutes as we change witnesses.

[The Chair, Conservative, Rodney Weston]

We're ready to resume. I'd like to welcome at this time Mayor Joël Arseneau.

Mr. Arseneau, I will let you begin, if you would like, and you can introduce your accomplice, Madame Landry.

Please proceed, Mr. Mayor.

[Joël Arseneau, Mayor, Municipalité des Îles-de-la-Madeleine]

I guess most of you are here for the first time on the islands, so I wish you the warmest welcome. I hope you can come when our fishermen are out at sea. It's quite nice to see when they leave at the beginning of May. We're starting to feel the excitement around the island ports. The fishing industry is very important to us.

I would like to thank you for being here. I am honoured to have been invited to appear before the committee. The fishery is fundamental to our economy. Our region is one of the rare regions in Quebec to be as attached to this way of life and to both be highly dependent and have a major attachment to the fishery, while still believing that the fishery is also the industry of the future. That is the message coming from the community and partners representing both the municipality and the fishing community.

I would like to extend my sincere thanks to Mr. Raynald Blais, who is our member of Parliament, for being part of this committee. He is providing strong support to the lobster industry, while at the same time dealing with issues related to the seal hunt. I also would like to convey my greetings to the Chair, the Vice-Chair and all the members of the committee. I would have liked to have a little more discussion with you, but I realize that you are pressed for time.

I am going to go directly to the heart of the matter. The Islands' economy rests in large part on the fisheries. We believe that, thanks to the fishery, we have been able to continue to live here and develop from a socio-economic standpoint. The fishery is also the present and the future of our island community. One third of all the jobs in the archipelago are in the fisheries industry, 80 per cent of which are in the primary and secondary sectors. You have noted that forestry development is a thing of the past.

In the Islands, we also say that it is difficult to escape the fishing industry and the marine world because, the further away we get from one coast, the closer we get to the other coast. We move away from one shore to end up on the other side. We are completely surrounded by the sea and the fishing industry, economically as well. Here are some figures about the fishery: 1,900 jobs, 1,100 fishers and assistant fishers, some 800 plant workers, direct spinoffs of $80 million, indirect spinoffs of almost $12 million and 300 additional jobs. Therefore, we are talking about $90 million that is injected into the economy. By contrast, the second largest industry on the Island—tourism—represents about $50 million. Those are the underpinnings of our economy. The services sector and a salt mine that employs 150 people could also be added to the mix.

The Islands are a small, fragile area with significant population density. We face the constant challenge of striking a balance in terms of the optimal exploitation rate of our marine resources, but without compromising the sustainability of the resource or our environment. This requires constant vigilance, as well as a way of life that respects the limitations of the environment. That is what we believe we are doing and what we aspire to in all the different fisheries in which we are involved.

You probably already know this, but I would still like to remind you that we have 72 per cent of all the lobster landings in Quebec, and that 71 per cent of the value of landings in Quebec is associated with production here in the Magdalen Islands. That represents 34 per cent of landing volumes in the fisheries at large. Right?

[Gabrielle Landry, Project Manager, Consolidation de l'exploitation des ressources halieutiques aux Îles-de-la-Madeleine, Centre local de développement des Îles-de-la-Madeleine]

We are talking about landings in the Magdalen Islands. Just to illustrate the importance of the lobster fishing industry, let us just say that lobster landings represent more than 70 per cent of all the landings in the Magdalen Islands, and specifically, 71 per cent of the value and 34 per cent of the volume. So, this is an extremely important fishery for the economy of the Magdalen Islands.