Fisheries Committee on April 2nd, 2009

[Neil Withers]

It's nice to get the lobster out there—more people get a taste for it. As for Subway, more people run through Subway in a day than through any high-end restaurant. I haven't had much time to think about it, but off the top of my head I wouldn't think this would be a terrible thing, because more people would be tasting it. But if they end up with one of these lobsters with nothing in it and no flavour, that wouldn't help at all.

So I guess it could go both ways.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Mr. Ferris.

[Norman Ferris]

My daughter is in Alberta, and when she comes home our season is usually closed, so every time we go somewhere she's looking for a lobster. If we stop in at a place to have dinner, she'll order lobster. Anybody who has tasted it when it's fresh will keep going until they find it. At least, that's the way it was for her.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

One of the things that strike me as odd here--and I think I got a bit of an answer for a question I had in mind--is why are we catching lobsters in April and May that we're selling in November? Why aren't we catching them in November, ready for market? Is it the migration of the stock? I heard you say, Mr. Withers, that they're here for only a certain amount of time.

It doesn't make any sense to me that a company would go through the expense of storing a lobster that they have no intention of selling or know they can't sell for five or six months down the road. You have the moult; lobsters moult once a year. I'm sure the timing is different throughout the region, but if DFO knows when that is, why are we doing a rush for the fish in a few weeks, putting a glut on the market for the most part, storing these lobsters and paying incredible costs to chill water down to two degrees? I don't know what the carbon footprint is on that, but it just doesn't seem to make any sense to me.

It's one thing for a farmer to stick his wheat in a bin. It will keep for years. But to get a product like this fresh to the market, why are you catching so much of it so far away from when you're going to market it?

[Norman Ferris]

Could I answer that?

On the south shore they open November 26, I think. When they take our lobsters, they're not sure how good the south shore is going to be, weather-wise or whatever. So they hold a lot of our lobsters until they find out what the south shore is going to do. The reason for that is that they don't want to lose the market. If somebody calls them and says they want 10 tonnes of lobster, for example, they have to make sure they have that lobster on hand. I think this has a lot to do with holding the lobsters.

When a big glut hits, if the south shore has a big season, which they usually do, then we have a problem, because we have all these lobsters caught in October and November, and a lot of them are still in the pounds. That is one of the problems.

To keep that market, it's going to cost, and you're going to pay for it one way or the other. That's my view on it.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

The other thing I'm going to ask is on something that was brought up when we were in the Magdalen Islands, when an individual who appeared before the committee saw the relationship between agriculture and fishing and was actually calling for an amalgamation of agriculture and fisheries into a common department so they could have access to some of the financial programs that are available to farmers. We usually call these income stability programs.

I'll give you an example. There's a program where a farmer, during a good year, can take excess money and, rather than pay taxes on it or reinvest it in equipment if they don't need to, can put it into a tax-deferred type of account. Then during a year when they might have a bad crop or bad conditions related to the weather, when it's no fault of their own, they can draw down on that account. If they don't draw down on that account, they can pay the taxes in that particular year to help them meet their bills.

The problem is that you have to make enough money in the good years to be able to put a little bit of it away. But at the end of their career, that farmer can then use that account as a retirement account and draw the money out after they sell their farm, use it as retirement.

Has there been any thought given to accessing some type of income stabilization? When you have those good years, you're encouraged by your accountant to buy a new boat or a pick-up truck, or whatever you need, to avoid paying taxes, but when the tough years come along you're stuck with the payment on the truck that your accountant told you to get, and you don't have access to any funding to help get through the leaner times.

Do you guys have any ideas for our committee about some programs the government could put in place that don't really cost the taxpayer anything but would allow you to use more of your own resources and your own profit to keep your businesses afloat?

[Neil Withers]

We've never thought of anything like that. It's the first I've ever heard of any program like that.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Is the fishery profitable enough during the good years that you could put $10,000 or $15,000 away in a given year and still make enough money? In some areas, I hear that it's not enough. Looking at the different LFAs throughout Atlantic Canada, I think it's a different situation. But I'd be curious to hear if you guys have any ideas or suggestions along those lines.

[Neil Withers]

In the last three or four years my biggest worry has been making those payments. It's $9,000 a season, and then there's interest on top of that. So there's over $20,000 going to my banks. That's my biggest concern right now, getting them paid off. There would be no extra to go anywhere.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Is that a typical situation for most fishermen, that there's just not enough there, that a program like that wouldn't have much uptake? Is that fair to say?

[Norman Ferris]

Every year we invest a lot in gear--rope, buoys, traps, and boat maintenance. That's what we try to keep up mostly. The biggest retirement package is what we're standing in, the boat and the gear. That's our retirement total.

[The Chair, Conservative, Rodney Weston]

Gentlemen, on behalf of the committee, I'd like to thank you for taking the time today to meet with us and provide us with feedback and recommendations.

We're going to take a short break while we set up for the next presenters.

Thank you very much, gentlemen.

[The Chair, Conservative, Rodney Weston]

Could I ask the members to please take their seats so that we can get started?

We have with us Mr. Steven Thompson and Mr. Dale Mitchell. They're going to be presenting as individuals this morning.

Gentlemen, I'd like to thank you both for coming to meet with the Standing Committee on Fisheries and Oceans. In case you didn't hear earlier, there are some time constraints that we try to adhere to. We generally provide 10 minutes for presentations. The members have specific timelines that they are required to adhere to for asking questions, as well as for the responses. I'll guide you along in that sense if I think you need to speed it up or whatever.

Starting off will be Mr. Thompson. You're going to make some opening comments, Mr. Thompson?

[Steven Thompson, As an Individual]

Yes, thank you.

I'm a lobster fisherman from Chance Harbour, New Brunswick, and I fish district 36. I had my first lobster licence in 1964, so my memories go back a few years. I can speak from personal observation only, and from talking with the older fishermen. Never in the history of area 36 has the lobster catch been as good as in the last 12 to 15 years. There are unheard-of catches in area 36.

Here's a personal observation. For me, looking out the windows of my 160-year-old ancestral home, it was common to see several purse seiners with purse seines out on any fine winter's day in the 1960s. Along came quotas and dockside monitors. There are no more sardines, and no more purse seiners. Jump ahead to the late 1970s and 1980s. Several boats out of Chance Harbour are catching good catches of codfish. Along came quotas and dockside monitors--no more codfish. Perhaps you can see where this is headed. Quotas and dockside monitors mean no lobsters. To use a tried and true saying, if it ain't broke, don't fix it. Instead, DFO wants to foul up a good thing by using Red Green's saying: if it ain't broke, you're not trying hard enough.

The increase in catch in area 36 may be attributed to many factors, some of which may be that we in area 36 gave up 75 traps, reducing the trap limit from 375 to 300 traps. We gave up two and a half months of open season. Enforcement of regulations has improved greatly in the last few years, thanks to the dedication of enforcement officers. And the decline of predators--codfish, hake, pollock, and catfish--has no doubt increased the lobster catch. All these factors, along with having a season instead of a quota, along with an increase in carapace size and no quota for dockside monitoring, help guarantee the sustainability of the fishery.

In conclusion, I say there should be no quotas on lobsters and no dockside monitors.

There's one more thing. A change that could be made in the lobster fishery is to go back to the owner-operator role. And I mean owner-operator, not some agreement that makes the operator look to DFO as if they were the owner.

Thank you.

[The Chair, Conservative, Rodney Weston]

Thank you, Mr. Thompson.

Mr. Mitchell, do you have some opening comments?

[Dale Mitchell, As an Individual]

My name is Dale Mitchell. I also live and fish in area 36, on Deer Island, New Brunswick. I'm a multi-licence holder. I fish in winter for scallops, in spring for lobster, in summer for sardines and herring, and in fall for lobsters. At one time my income was split at about a third from each. Now it's about 80% lobsters because of the much larger lobster catches, more than I ever thought I'd get.

I brought with me a set of my landings and prices. I don't want to give them out publicly. But 20 years ago, in 1988, the price of lobsters started out at $4.55 and ended up at $4.85. That's 21 years ago, so we can see that our lobster prices have gone up $7.60 one year and down last year.

Last fall, September and October, we watched Maine prices drop to $2 U.S. We had the same feeling as after 9/11. At that time, the market dipped as bad but picked up again during our season in November. The same rumours were floating this year—the processing industry in northern New Brunswick had too much inventory, restaurant sales were slow, people have turned to other products, the Canadian dollar was high. This time we could see the stock markets declining, U.S. banks being propped by the government, hedge funds losing money, jobs disappearing, high fuel prices, and general pessimism.

What choice did we have? We had hoped for good prices and good-quality hard-shell lobsters. Then we heard the price, which was $3.50 for most buyers. My usual buyer set his price at $3.90 for under five-inch carapace size; and $2.30 for jumbos above five inches, mostly going to processing. This was my usual buyer, but I'll sell anywhere if I can get 5¢ more. My buyer buys at a two-price system. We reward people who catch fewer jumbos, and encourage people to land better-quality lobster.

On a one-price system, the buyer looks at the price mix for all his fishermen and does an average. Those with fewer jumbos lose, and those with a high jumbo mix gain. On a single price, the idea is to catch as many as you can, with no regard for quality or size. The Nova Scotia rumours came out last fall that by December 15 they would stop buying, because of too much inventory. When Nova Scotia 34 opened in late November, our price fell 25¢ everywhere, but on Deer Island, where I fish from, it stayed up at $3.60 or $3.70.

I had a chance to get 5¢ more from someone else, but I was scared to change. I was afraid that this buyer might take me on and then drop me, because he might quit buying. I figured it was better to stay where I knew the guy I was dealing with. For the first time in 32 years, my buyer was telling me that he could not exceed his credit limit, which before he could increase with just a phone call. If he was not selling enough lobsters and wanted to hold some, he could up his credit limit from the Bank of Commerce with a phone call. Now he said that the bank told him that he needs to come in and do all the paperwork, and maybe they'll let him increase his credit and maybe they won't. He was worried about moving his lobsters.

Jim Flaherty is right on this point: the credit crunch is hurting everybody, including lobster fishermen. In the November-December period, I checked on the market, and the American dollar was trading in a 15.6% range during the opening of our season. That's a hard job for buyers. It made it bad, up and down. Even Europe was often dealing with American dollars. That was bad. A lot of things were going on that made you wonder what was happening.

My buyer was also saying that lobster wholesalers were slow in paying him. I was in his 500,000-pound tank house around December 15. It was almost empty. He planned to have it cleaned out by the New Year's but preferred to have it done it by Christmas, which he managed to do. At that point he was glad that they were gone and that he wouldn't have high hydro bills for the winter, what with holding a lot of inventory. He had nothing to sell and was glad of it. He claimed to be ahead and happy.

Between Christmas and New Year's, I called a minister friend of mine on Cape Sable Island, district 34. He said lobsters were jumping every day in price. I held 1,200 pounds at this point. I got $4.20 for them and thought I had done great. I called back in four and five days, and the price was $5. In a few more days, it was up to $6.50. This was after New Year's, when even in the best of times lobsters usually drop in price because of a drop in demand. What happened?

I think the low price for fresh lobster markets helped. It got a lot of publicity on U.S. and Canadian TV and radio. Fishermen selling in Atlantic Canada from the back of pickup trucks helped Superstore and Sobeys and other retailers to lower their price, which they had not done until this point. We were getting $3.50; in Saint John lobsters were still $11.95 for a pound-and-a-half lobster. This is a huge fault of the whole system. It seems that whenever the price drops to us, there's not a drop in the price on the retail end of it. It seems to just happen on our end, much like the farmers, as we were saying earlier. I don't understand this at all.

One announcer on Canada AM said on December 30 in Toronto that she could not buy any fresh lobster at three different retailers she had been to. There was just no lobster available in that area, which was good, I thought; it meant we were getting the product through. It just shows the low price did get our inventory moved.

One fellow, a local buyer, claims the big companies got together over Christmas, added up all the held inventory for the next four months--because they basically knew most lobsters were spiked and the catches were dropping at that point due to cold water--and said, “Yes, we can raise the price”, and that's what happened. In my opinion, when the price does go above $7 for the boats, lobsters get priced too high, so people stop buying them and substitute another product. The price then has to go dirt cheap to get people interested again in buying.

Where do we go? It's the end of March. We hear there's a huge inventory of processed lobster in northern New Brunswick. We are seeing the world economy slowing, with 300,000 to 400,000 Canadian jobs being lost this year and four million to five million U.S. jobs being lost this year. Many of these jobs are banking and union jobs, which are good-paying jobs that give people disposable income.

One of my ideas to help the price in the future is to land more first-quality lobsters. An example would be to land no more one-claw lobsters, which end up in the processing industry and help to glut that industry. The same applies to jumbos, which also usually end up in that industry. We need to do away with the mindset of landing anything that floods the market and lowers the price because of our one-price system. The jumbo, if left on the bottom, will stay there to breed, and the one-claw lobster, within a couple of years, will grow that claw back and be able to be sold as first-quality lobster. However, can we trust the industry above me, the wholesalers and the whole way through, to reward the fishermen for landing a better-quality lobster, or will they just drop the price for the lower quality? We have no way of knowing.

Then there is the question of tank houses. Deer Island, where I live, and Grand Manan were a couple of the few places you could hold a lot of lobsters in open tidal pounds. At that time they were fed on a regular basis, and many times the lobsters gained weight there. Now these tank houses are all over the place. Have you heard this before? They can build them anywhere. Clearwater has one in Kentucky, I see in The Economist magazine, because it's the closest place for FedEx to ship from. Lobsters are held there in refrigerated tubes at 37 degrees for months. This reminds me of a bear that is fat in November, hibernates for several months, and comes out thinner in the spring. We know lobsters have a higher survival rate in the tank houses, but their protein or meat count is lower than that of lobsters held in traditional tidal pounds.

In the fall fishery, we have a lobster that is not completely filled out because he or she has shed in the fall. It is put in a tank house, held for four months, and sold for a watery lobster dinner at a premium price. An example of this is that in March and April of last year Nova Scotia fishermen who had rented tank house space hadn't move the lobster because of the low price in the space they'd rented. They took the lobsters back aboard the boat and out to sea when they went fishing again, mixed them in with their fresh-caught lobsters, brought them back to shore, and tried to move them at a higher price, because a tank house lobster always has a lower price than a fresh-caught lobster, due to poorer quality.

Those Canadian lobsters arrived on the market in New England. The price of all Canadian lobsters dropped at that point, one reason being that Canadian lobsters were perceived as being of low quality due to these poorer-quality, watery lobsters being mixed in with the others. It just shows what can happen. One thing can ruin the selling price on the shortsightness of a few fishermen.

In many cases the local dealer is disconnected from the process. He is on a commission to connect the fishermen with a larger company. His only interest is to buy as many as possible, with no regard for quality. At a meeting two weeks ago I heard a buyer say he had no idea what happened to his lobster when it left his wharf. He needs to be educated and connected to the buying process.

In terms of conservation, DFO has talked for at least 15 years about protecting more spawning biomass. First a jumbo measure, a carapace of 5 to 6 inches and above, was mentioned to us. This would have helped breeding and removed poorer-quality lobsters from the market. Lately I have heard talk of a window, which means not fishing lobster roughly from 4 1/2 inches to 5 1/4 inches carapace size.

[The Chair, Conservative, Rodney Weston]

If you could start to wrap it up, it would be greatly appreciated.

[Dale Mitchell]

It meant fishing at a jumbo size, which the market does not want. Conservation and social economics need to go together. Too often I see a real disconnect between DFO science and economics.

Winter closing. Three districts in the Bay of Fundy, Grand Manan, and southwestern Nova Scotia--districts 33 and 34—should be closed for a two-month period in the winter to help the market to absorb the stored product from the fall fishery. There is a fear by lobster wholesalers if you have a mild winter and add unforeseen fresh lobsters to the market. Most lobsters have moved offshore, and those caught are the larger size, which also hurts the brood stock. It is not a large fishery, but it does keep the market nervous. To do this, however, we need to increase the quality of tank house stored lobster. More research is needed by DFO in this, I think.

The winter closure was discussed last fall, in December I think, in southwest Nova Scotia for a closure from January 15 to March 15. This did not happen, though.

I must say, this winter fishery is supposed to get larger. In a few years it has grown in size, and I think the buyers seem to feel it affects their price quite a lot.

Overcapitalization. The lobster fishery has become overcapitalized. The boats have become much more efficient, but also a lot more costly. With the high catches and the high prices in the early part of the decade—

[The Chair, Conservative, Rodney Weston]

Mr. Mitchell, apparently the translation is having—

[Dale Mitchell]

I can go faster, not slower.

[Voices]

Oh, oh!

[The Chair, Conservative, Rodney Weston]

Mr. Mitchell, maybe I could get you to wrap up. We could address some of the—

[Dale Mitchell]

About another minute and a half, I can do it in. With the highs, I go faster.

Fishermen shortsightedly bought too many expensive boats and licences. With DFO outfitting native groups, a licence in my district, 36, went from $25,000 to $400,000. A licence has now dropped back to $100,000, which is still too high, but it is now following a trend to make them affordable.

My congratulations to DFO for trying to turn us back into owner-operators.

Spring season changes. Around the first of May lobster fisheries open in Newfoundland, the Magdalen Islands, the eastern shore of Cape Breton, some in northern New Brunswick, part of P.E.I., and Gaspé Peninsula. Southwestern Nova Scotia lands 80% of the spring lobster in May. Grand Manan, mainland New Brunswick, and the Bay of Fundy are also open, and also this area around here. There's a huge amount of lobster landed, along with the New England fishery, at this time of year. We should be looking to spread the fishery out over May, June, and July. Our district voted 90% in favour last year of an April closure and fishing into July for the 2008 season. The surrounding districts, by political means, stopped us. What a help it would have been last year if this had been spread over the longer period.

I'll skip some.

Advertising. A month ago I stood in the fish aisle in a Costco in Montreal and watched shoppers for 20 minutes or so. Frozen salmon moved steadily, but frozen cooked lobster, a pound and a half each, never moved, not one. Not a big price difference either. I was telling a buyer when I got home. He said, “You don't see lobster on cooking shows very often.” We need to better educate consumers on all the ways to enjoy lobster, maybe on these cooking channels. DFO or the government could do some advertising or really help to build that up, just so people know there's more that we can do with lobster.

My wife works in a small office in Saint John, with I think 12 or 14 people. Those people would never buy a lobster in a store, but they buy 700 pounds from us in the course of a fall or spring. I don't know why that is; it just is a thing.

Trap limits-and I'll make this shorter here. Maine has cut back on the trap limit from 2,500 to 600 or 800 traps in the last five years, with no loss of catch. The catch was just as high then. Obviously their catch per trap has gone up, and their costs have to have gone down, if you commission that many fewer traps. My question: why are we still fishing 375 traps in some districts in this area? We should be looking to the bottom line of profit, not seeing how quickly we can land lobsters. All you're going to do in that case—in my opinion, what I have seen—is spread the catch out over a longer time, instead of getting that high spike at the first of the season. It would be a help there.

Pricing. As I said earlier, I have my own lobster car and hold some lobsters, but it's getting harder and harder to do, with so many rumours in Nova Scotia being such a big part of the whole thing. Is there any reason why fishermen and dealers in the Bay of Fundy, all sharing the same resource, all fishing a small season, all relying on the same market, can't trust each other enough to work out a price by October 1 that we could all live with and that would allow the dealers to go to the world and guarantee a stable selling price throughout the season? We need more trust among the whole thing.

I'll stop there.

[The Chair, Conservative, Rodney Weston]

Thank you, Mr. Mitchell.

Before we proceed to the questioning, let me say that one of our colleagues will be leaving us; he has to catch a flight. I want to thank Wayne Steeves, the local MLA. He's going to give him a drive to the Moncton airport. Wayne assures me you'll be a changed man by the time you get to the airport, Mr. Stoffer.

Mr. Stoffer, do you wish to speak?

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

Thank you, Mr. Chairman.

Thanks to our witnesses as well, and thanks to the committee for doing the tour. I thought it was very good information, and hopefully we can up with a unanimous report with recommendations to help the minister and the department move this issue forward. Once again, thank you.

I would like to generously donate my short five minutes to my colleague Mr. John Weston.

Thank you very much.