Fisheries Committee on April 1st, 2009

[Scott Andrews, Liberal, Avalon, NL]

Thank you.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Do you do some processing?

[Denny Morrow]

There's a little bit of lobster processing done in Cape Breton. There's a small company in the Pictou area, and then Clearwater does some at its Lockport plant.

[Lawrence MacAulay, Liberal, Cardigan, PE]

There were statements made that there were difficulties with the holding facilities. Some of the holding facilities aren't up to scratch, if you know what I mean. So they don't have the proper holding facilities. I don't know if you wish to comment on that, but we've heard that certain areas have the proper holding system and some do not, and this affects the quality of the product that's being shipped.

Also, the popsicle pack is obviously causing a major problem in the lobster fishery.

My colleague is right, private companies seem to be reluctant to indicate all their details, and I suppose that's their right to do or not to do.

I'd just like you to comment on that.

[Denny Morrow]

In southwestern Nova Scotia, I think we have more than enough—

[Lawrence MacAulay, Liberal, Cardigan, PE]

But what is your general opinion, overall?

[Denny Morrow]

In Prince Edward Island and New Brunswick and the gulf fishery, you could maybe use more holding facilities for live lobster.

When you talk about holding in this region down here, it depends on whether you're talking about fishermen holding or you're talking about buyers holding. Most of the buyers have invested in pretty good facilities. Fishermen's holdings sometimes can just be in the crates, in the water. If they hold them for very long, waiting for the price, then sometimes the lobster is not good quality.

[Lawrence MacAulay, Liberal, Cardigan, PE]

That's not good to do.

[Denny Morrow]

No.

[The Chair, Conservative, Rodney Weston]

Thank you.

Monsieur Blais.

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

Thank you very much, Mr. Chair.

Good afternoon, gentlemen and welcome to the committee.

We have been talking about solutions that may be considered to deal not only with what has happened, but also with what is coming. I would like you to talk about very short-term solutions. We all know there is another player in this game, which is the provincial government. The province can take some measures but, for the time being, I want you to talk more specifically about federal solutions.

[Denny Morrow]

The recession conditions are the big factors that are driving the market down. I think I said earlier that we received a review from John Sackton of Seafood.com at the lobster round table at the end of January or in February. His research had shown that restaurant buys were off by 50% in the U.S. A lot of lobster goes to that food service sector. We had to reorient to the grocery chains. The price points for grocery chains are lower. They need to run specials to get people to buy them.

I don't know what we can do to stimulate demand. The federal government gave us some money. The Minister of Fisheries found approximately $300,000 and the provinces kicked in some money. We've produced some generic marketing material, but it takes time. It was a short-term thing.

We need to think about the future. We had our lobster roundtable meeting in Halifax. Quebec was represented, as well as Newfoundland and the three maritime provinces. We're going to form a steering committee. We're going to look at long-term promotion of the product. Marine Stewardship Council certification is another big issue. I know that P.E.I. has already done a pre-assessment on that.

I think the industry is very fragmented. We have to get together, buyers and harvesters, if there's anything the federal government can do to facilitate that. But I don't think there is a fix in the short term.

It's going to be supply and demand right now. If the supply is really heavy this spring, I expect the price will go down.

Other than playing around with supply, I really don't have any answer to that. I don't think there's anything the government can do.

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

There is also the Atlantic Canada Opportunities Agency, ACOA in English and APECA in French. Do you think this agency can be part of the solution?

[Denny Morrow]

Targeted generic promotion is a good thing. We've produced some materials. Unfortunately, these materials will be used by distributors and wholesalers. They were used at the Boston Seafood Show and the Brussels European show. Targeting consumers with generic material is a good thing, so that we pull some consumers into our retail grocery and restaurant chains.

I'm a firm believer that, on our side and on the buyers' side, the industry should be the primary contributor or a primary contributor. There's certainly a role for the federal government, whether it's through ACOA or Agri-Food Canada, but we need an industry body to put its 25-cent dollars or its 50-cent dollars into the pot. We need a steering group from the industry to manage how it gets done and what markets to target.

Yes, there are certainly things that we can do on the demand side, but I don't think there's a quick fix.

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

Clearwater Seafoods CEO told us this morning that one element of success may be the quality of the product at all levels. In your opinion, is this part of the solution?

[Denny Morrow]

Certainly it is in December. We land a lot of lobster in a very short period of time. It's not always handled properly on the boats. That could be improved. You have warm-weather fisheries taking place in the gulf, where the lobster is stressed, so handling is very important. Again, there's the holding capacity in the southern gulf, so that it's held properly.

Another issue, I'm told, is where the fishermen are fishing seven days a week and the plants are processing. They don't even get to close down on Sunday. They don't get to catch up. Sometimes they have to force product through into popsicle packs, something that they would rather not do. But it's coming in so fast, that's all they can do with it.

There is one other thing I would mention as a role for the government. It's not short term, but we pay, I think, an 8% tariff on live lobster going to the European Union, and that's not 8% on the wharf price. That's 8% where it's landed, with shipping and all that in there. We pay about a 20% tariff on our processed product, which is formidable when you're trying to competitively market a product in Europe against the shrimp and a lot of other products from around the world.

That's a big market, the European Union, so if you want to do something for lobster, the Canadian government could negotiate with the EU. Let's go after tariff reductions.

[The Chair, Conservative, Rodney Weston]

Thank you.

Mr. Stoffer.

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

Thank you, Mr. Chairman.

Mr. Morrow and Mr. Gloade, thank you very much for coming.

Adrian, you indicated that some of your guys want to go out crabbing, but since lobster is an optional item to buy in a store, as would crab be, wouldn't the crab industry have similar concerns as the lobster industry?

[Adrian Gloade]

As of last year it really wasn't. We didn't get hit too bad. It was still very profitable on our part. The way we paid our fellows, through cents per pound, still worked out really well for them, other than their having to fend for themselves for fuel, bait, and so on.

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

Now, you are one out of 34 bands in Atlantic Canada, if I'm not mistaken.

[Adrian Gloade]

Yes.

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

Are the other bands having similar difficulties to the ones you're having?

[Adrian Gloade]

Yes. I go to various meetings, whether it's through APC, with management of the fisheries; we all meet probably once a month, and everybody is facing the same dilemma.

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

Who do you sell most of your lobsters to?

[Adrian Gloade]

It depends. We fish in basically three or four different regions. We just basically send to the local buyer.