Evidence of meeting #15 for Fisheries and Oceans in the 40th Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was industry.
Chief Executive Officer, Clearwater Seafoods Limited Partnership
I'm CEO and chairman of Clearwater Seafoods Limited Partnership. Apparently I try to lead the organization.
Chief Executive Officer, Clearwater Seafoods Limited Partnership
Our head office is in Halifax. The more global company has sales offices in China, Beijing, Guanjo, Shanghai, and Tokyo. We have sales offices in Europe. We have a harvesting operation down in Argentina. We harvest most of our product off Atlantic Canada. We have sales offices throughout the U.S. and in Toronto.
Was that the question?
Bloc
Raynald Blais Bloc Gaspésie—Îles-de-la-Madeleine, QC
The company interests me to some extent, but it is you I mostly wish to get to know. Are you the Chief Executive Officer of Clearwater as a whole or just of its Atlantic section?
Chief Executive Officer, Clearwater Seafoods Limited Partnership
No, it's for all of Clearwater. John Risley and I started Clearwater 32 years ago. We have a company called Clearwater Fine Foods Inc., which is the parent company that owns 55% of Clearwater Seafoods Limited Partnership. We have interests in a cable network throughout the Caribbean, as well as interests in ONC. We're the majority owner in both of those operations. I'm a 50% partner with him in the parent company. I'm CEO of the public company, which is about a $300 million seafood company situated around the world. I am the chair and CEO of that organization.
I would say that I'm a Habs fan and have been since Belliveau, Richard, Plante, and the Rocket were around. I was born and raised in Halifax. So there are some good things about me.
Bloc
Raynald Blais Bloc Gaspésie—Îles-de-la-Madeleine, QC
I can understand that you are trying to be friendly, but that will not necessarily suffice. I would like you to talk to me about the Canadian banks.
I come from Quebec. I represent the riding of Gaspésie—Îles-de-la-Madeleine. From what I understand, it is very difficult to deal with Canadian banks in matters relating to marine industries. However, in the Atlantic region, this activity is more than a tradition. The economic activity in this area has more than flourished here over the last few years.
I would like you to tell us about the way in which the situation has evolved with regard to Canadian banks and how the situation of 30 or 40 years ago compares to today's. I imagine that things have evolved in a negative way, but I would like to understand just how this happened.
Chief Executive Officer, Clearwater Seafoods Limited Partnership
I'm not trying to be a friendly guy; I was trying to share the camaraderie of hoping for the same team. I can't say that I continue to hope for it, since they got rid of their coach.
The Canadian banks are obviously among the world's best. In today's crisis, there's tremendous praise being heaped on their conservative structure, etc. Their job is to lend money in an environment that has limited risk. They look for a return.
The banks have, over the 32 years, been less and less willing to lend money to the Canadian seafood business because it has been so unprofessional; it's been so poorly run. It's been such a high-risk business. It has been chaotic. It's a difficult business because it's very unpredictable at its base.
There's a lack of professionalism in going to market. We've really treated the products we harvest from the ocean here as commodities. Even in the cod fishery, part of the reason for it collapsing was the fact that we sold it as cod blocks. We did not increase the value in the marketplace or realize the value in the market for the underlying product, and as a consequence, to offset higher costs we had to take more out of the water.
The lobster fishery is unfortunately a victim of its own circumstances, a victim of its own actions, in the sense that the marketplace does not value the product as it does caviar or champagne. Even though we carry the same reputation or the same image in the marketplace, we don't protect that image. We don't deliver on the promise. We don't give our customers their right to a profitable experience.
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Raynald Blais Bloc Gaspésie—Îles-de-la-Madeleine, QC
Would you be in favour of a quality control system that would enable you to avoid the deficiencies you have mentioned?
Chief Executive Officer, Clearwater Seafoods Limited Partnership
I would like to see the structure changed so that quality control would become a significant factor in the business, and the only way I know of doing that is to change the buying side so that you have serious players on the buying side. I have no interest in swallowing up the fishermen or the harvesting rights. I'm happy to leave it in the hands of the participants. I just think you need to afford the same limited entry to the buying side of the business and the shipping side so that in fact people will invest in building a marketplace and an image for the product.
I think you need to continue to have the round table discussions, which were recently truncated by a lack of funding, where the industry comes together and starts talking about the problems. I think this crisis is a tremendous opportunity for the industry, a tremendous opportunity to improve the industry, to change the industry, to bring the players together to actually work in accord with one another.
NDP
Peter Stoffer NDP Sackville—Eastern Shore, NS
Thank you, Mr. Chairman, and again, Mr. MacDonald, thank you very much for taking the time out of your schedule to appear before us today.
For those who don't know them, Mr. MacDonald and Ms. Richardson are probably two of the best-known business people in the entire Atlantic region, so it's really nice to have them here.
Sir, how many buyers for lobsters are in this particular region, Southwest Nova, right now?
Chief Executive Officer, Clearwater Seafoods Limited Partnership
Oh, God, who knows? I mean, everyone's a buyer. There may be 100 to 200 well-known buyers, and then there's just a myriad--a thousand--other buyers. You can be a buyer today, if you want.
Peter Stoffer NDP Sackville—Eastern Shore, NS
Who is your major competitor in terms of your type of operation?
Chief Executive Officer, Clearwater Seafoods Limited Partnership
The entire industry becomes a competitor, based on price. We have a very sophisticated operation, and we've built a customer base around the world. Just as an example, we developed a customer in the Middle East, in Bahrain, or Abu Dhabi--the Emirates airline--and we had priced them at $85 a kilo for some of our high-pressure lobster meat. One of our competitors from P.E.I. went in at $65 a kilo. They'll remain nameless. I'm tactful, aren't I? Notice that I mentioned the province.
We managed to keep the customer because we have a larger promise. We have a larger offering, and we have a larger commitment to the marketplace, although we had to sacrifice our price to do that. We didn't have to come down to their level. Their response to the customer--and we got a copy of the e-mail--was, “Tell us whatever we have to sell at to get the business and we'll drop our price to that.”
That is our biggest competitor: the industry's desire to use price as its only marketing weapon.
NDP
Peter Stoffer NDP Sackville—Eastern Shore, NS
Sir, Clearwater does have some lobster licences. I believe they're in the offshore. How many do you have?
Chief Executive Officer, Clearwater Seafoods Limited Partnership
We have eight offshore lobster licences that work on a quota basis of about 90 metric tons each. Those are larger lobsters than the inshore ones. Their average size is around three pounds. We market that product to a restaurant chain in the U.S. and to some customers in Asia, and we give them, just as an example of what needs to happen, a fixed price on an annual basis, so there's predictability, and we give them a guaranteed supply, so there's predictability.
NDP
Peter Stoffer NDP Sackville—Eastern Shore, NS
I have two questions that are not necessarily related.
As you know, the Georges Bank debate, in terms of oil and gas exploration, is heating up again. I'm just wondering what the company's position is on the possibility of either seismic or oil and gas exploration on the Georges Bank.
Chief Executive Officer, Clearwater Seafoods Limited Partnership
I would have to say it's negative. It's a precious, very rich harvesting ground of seafood for Atlantic Canada, and I would have a very negative view towards allowing activities that would disrupt that, or potentially disrupt that.
NDP
Peter Stoffer NDP Sackville—Eastern Shore, NS
I've been to the Boston Seafood Show a couple of times. We asked Ocean Choice yesterday about what their reflection was on the Boston Seafood Show just a little while ago. Clearwater has always been a major player down there. I'm just wondering how you felt the Boston Seafood Show went this year, not just for lobster markets but for all seafood products internationally.
Chief Executive Officer, Clearwater Seafoods Limited Partnership
I attended the minister's lunch, and at that there were people from Whole Foods, people from Wal-Mart, people from Shop & Stop, people from Darden Restaurants, and a number of other American buyers; and there was Cisco, a big distribution outfit in the U.S.
They came across with the same message. The industry has to stop cheating. The industry has to stop adulterating seafood. The industry has to become professional. They are not going to buy or continue to buy from an industry that is unsustainable, that doesn't have MSC-certified products, so it's not being properly managed or marshalled at the harvesting end, and they are not going to buy from companies that will adulterate their product by soaking it or misrepresenting it, and in particular with regard to the lobster business, by presenting a lobster that's less than healthy or full-meated. Whether it's to yourself or to any other company, your reputation is going to make a difference.
NDP
Peter Stoffer NDP Sackville—Eastern Shore, NS
In your total operation, how much are lobsters to your bottom line?
Chief Executive Officer, Clearwater Seafoods Limited Partnership
About 22% or 23%.
NDP
Peter Stoffer NDP Sackville—Eastern Shore, NS
In terms of the lobster buyers, that's a provincial issue, as you know. Have you made your views known to the province, and what has the province told you about the number of buyers and what can be done to rationalize it, if indeed that's the direction they're going in?
