Fisheries Committee on March 31st, 2009

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

I was just saying that Lawrence had asked this committee to consider that part of our work reference is a study of the Atlantic lobster fishery, knowing the impacts and the troubles the industry is going through here on the Island as well as Atlantic-wide. That's one of the reasons we're here. When Lawrence put this idea forward, one of the main reasons we jumped at it was that we knew this was going to be a very troubled season, and we're looking for solutions to try to help out. We want to be able to report back to the House and to the government with different ideas for what needs to be done.

The lobster fishery has never been necessarily on a purely solid footing. It's had its ups and downs in the past. But this year, 2009, it seems particularly vulnerable, not only from a resource point of view but from an economic one.

Could you talk a little bit about your situation, in terms of access to capital?

Maureen, in her presentation on behalf of the seafood processors association, said that as far as their financing went--I forget the exact line--it was basically that they were looking to finance the equivalent of a Lada.

Could you explain to the committee some of the differences you've already seen, in terms of your access to capital, your access to credit, your access to a line of credit or whatever, to get started, comparing 2008, if need be, to 2009, so that we get a better picture of where exactly this industry might be going this spring?

[Mark Bonnell, President, Mariner Seafoods]

In 2008 financing was not readily available, but there was some financing available. The banks in Canada have taken the attitude that they don't want anything to do with the seafood industry, and, therefore they have driven some of the larger companies overseas, into the Icelandic banks, and have caused some of the problems we're seeing in Iceland and some of the problems facing some of the larger companies that are financed through Iceland.

I don't know why the Canadian banks don't want to do any business with the seafood industry. I guess they must have been burned at one point or another. Personally, I've tried to get financing from as many as seven or eight different financial institutions and have been turned down for financing just because I'm in the seafood business. I was banking with the Royal Bank, and they told me, “Listen, we're not interested in the fish portfolio anymore. Please leave.” So we had to leave the Royal Bank. Many of our members are experiencing the same problems. Some of them are lucky enough to be dealing with credit unions, which have a little different idea and outlook on the problem because they're local. But financing is a problem.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

I'll turn it over to Lawrence in a second.

Has anything changed? Are you aware of anything? There have been improvements to, say, for example, the Business Development Bank of Canada and other things. Fundamentally, in your business, has anything changed that you now have access to in 2009 that you didn't have access to before?

[Mark Bonnell]

Our biggest problem, personally, is that we have inventory carried forward from last year and inventory carried forward because of the recession. Since we are not able to sell that inventory, it's tying up our working capital.

But, no, there's nothing available. There's nobody who's come forward. As far as I can see, all these bailout packages from the government are not going to affect us in the fishing industry. They are not going to help any. So what's going to happen, I don't know.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Mr. Chair, I'll share with Lawrence.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Thank you.

Mark, it's good to see you and Lorne.

I certainly understand the situation you're in. Do you have a large amount of inventory left, and do you know if there's a lot of inventory left in the province?

[Mark Bonnell]

Well, there were reports back in October that there was $25 million worth of inventory still on hand from the previous season. How active that is, I don't know, Lawrence. I know personally that we have more inventory than we'd like to have. It is more inventory than in other years.

Basically, we've had as much inventory but have been able to move it during the period between lobster season and now. Because of the recession, because of people not wanting to eat lobster and not being able to sell the product, we're left with inventories that are well above normal levels. I know that everybody in the association has excessive inventory. The inventory is mostly in whole-cooked products--popsicle packs and fully cooked. In those products, the lobster has turned red. If it were green, we could have moved it. Tails and meat and that sort of thing have been pretty well cleaned out. There is some inventory, but mostly it is in the whole-cooked product.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Tell me this. There's been some discussion here, and previously from fishermen, that indicates to me that they would like to have a storage facility put in place. It would not necessarily be owned by the processors, but it would be a way to keep the fish and have an orderly form of marketing. Would you see this as being a way to perhaps help the price or help with inventory? How would you respond to that, as a processor?

[Mark Bonnell]

What type of facility are you speaking about?

[Lawrence MacAulay, Liberal, Cardigan, PE]

Well, I....

[Mark Bonnell]

Live? Frozen?

[Lawrence MacAulay, Liberal, Cardigan, PE]

It would be live.

[Mark Bonnell]

Well, certainly, there is not enough live capacity on Prince Edward Island.

[Lawrence MacAulay, Liberal, Cardigan, PE]

There's not enough.

[Mark Bonnell]

No, there's not. There's not enough processing capacity on Prince Edward Island anymore, either. I've been in this business for 35 years, and in 35 years, a number of processing plants have almost disappeared. Even with the Polar amalgamation, we've lost six or seven processing facilities. Our friends in Beach Point announced the other day that they're going to close that plant.

With all these plant closures, there's nobody left. Our fish processing capacity has gone down on Prince Edward Island, and we still have the provincial government thinking there's overcapacity. Yes, at one point there was overcapacity. In the pre-Polar days, yes, there was overcapacity, but not any longer. That situation has changed.

[Lawrence MacAulay, Liberal, Cardigan, PE]

It's been explained here before, and the committee has had it explained a number of times, what took place when Polar was put in place. They felt that it took competition away instead of possibly helping the fishing industry. Would you agree with that?

[Mark Bonnell]

Yes, sir. It took the competition away.

[Lawrence MacAulay, Liberal, Cardigan, PE]

You feel that if companies could come in and compete with you, that would be acceptable.

[Mark Bonnell]

Yes.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Government would be involved.

[Mark Bonnell]

Well—

[Lawrence MacAulay, Liberal, Cardigan, PE]

As it used to be over the years.

[Mark Bonnell]

The Government of Prince Edward Island is not involved in the fishery anymore. It's not allowed to be. It signed an agreement with Ocean Choice that it can't do anything. It's handcuffed itself. Whether it's something they wanted to do or something that happened, I don't know, but the Province of P.E.I. can't assist anybody to do anything.

[Lawrence MacAulay, Liberal, Cardigan, PE]

It was explained to the committee that if you gave $1,000 to a processing company, they had to give $4,000 to Ocean Choice.

[Mark Bonnell]

But they're not given any....