Fisheries Committee on May 14th, 2009

[The Chair, Conservative, Rodney Weston]

I call the meeting to order.

Ladies and gentlemen, thank you for joining us this morning. We appreciate your making the effort to travel to Ottawa to have a discussion with the committee this morning.

I'm going to open the floor for opening comments. I believe, Mr. McCurdy, you're going to lead off. Ms. Inniss, you're going to follow, and Mr. Frenette, you're going to bring up the rear.

Monsieur Blais.

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

I have a point of order, Mr. Chairman.

First of all, I want to thank the people who are here today.

However, I would like to emphasize to the members of the Committee that the delegation from Quebec has not been able to come. At first, the meeting with the minister was supposed to take place today, but then it was moved to tomorrow. However, the people from Quebec had planned to go to that meeting.

In my view, in all fairness, the representatives from Quebec, Mr. Cloutier and Mr. Poirier, should be allowed to appear before the Committee next Tuesday, after the break week.

[The Chair, Conservative, Rodney Weston]

Thank you, Monsieur Blais.

Possibly we can go in camera to have a discussion following the presentations and the question and answer period with our guests today. We can have a further discussion on where the committee should go beyond this point today. Thank you very much for raising this, Monsieur Blais.

Before we begin, ladies and gentlemen, we have certain time constraints that limited us in presentations and in the questioning and answering session. I have a little timer, so if you hear a beeping noise, try to wind your comments up as soon as possible to allow for everyone to have input and to allow for a fair and equitable opportunity to question you as well, based on your comments.

Having said that, are there any questions or concerns from any of our witnesses here today?

If not, I'll ask Mr. McCurdy, please, to proceed with the presentation.

[Earle McCurdy, President, Fish, Food and Allied Workers]

Thank you, Mr. Chair. About the only concern we have relates to the price of lobster.

I appreciate the opportunity to come up to deal with this issue. I will be attending the meeting tomorrow the member just referred to, with the minister in Moncton.

Our organization represents the lobster harvesters in Newfoundland. There are about 2,900 licence holders, but that number includes some who are relatively inactive or for whom lobsters are a relatively minor part of their livelihood, because there are parts of the province where lobster is not terribly abundant. There are others for whom lobster is the number one species. I noted that the average landed value per licence in the province of Newfoundland is $32,000, but it would be relatively little for some and higher for others. For some it's really the principal thing.

There are whole communities that are significantly affected by this issue, the lobster fishery being probably the single biggest source of income for the community. For example, in Mr. Byrne's district there would be quite a few. I know there was a meeting held there last night with a couple of hundred lobster fishermen in attendance, and none of them are going on the water. We're starting a tie-up this morning, because prices have gone to levels at which you don't even cover your costs.

It's probably 25 years since the price of lobster was as low as $3 a pound, which is what the current price was after it dropped 50¢ or 60¢ earlier this week. The break-even point, if you're depreciating your assets and running your business properly, is every bit of $5 a pound, and possibly more. When you get down to a price with a “3” in front of it, there's no way in the world that you're even covering your direct costs, let alone contributing to overheads.

Crew jobs are being lost hand over fist. It's a tough situation. The landed value for lobster in our province is significantly below what it is in other provinces—roughly comparable to Quebec's, as I understand it, but well below the maritime provinces'. But as I said, for those who fish it, it's still a very important part of their livelihood, and for some of them it's really the number one part.

I apologize for not having a prepared presentation; this came together on short notice. But I appreciate the opportunity to raise these issues. We're certainly interested to follow the debate in the P.E.I. legislature in recent days and trying to understand exactly what's going on there, with an issue over some kind of joint federal-provincial initiative on lobster having been not exactly leaked, but it was prematurely made public knowledge. Our view is that what we have is an Atlantic-wide problem, and any solution should be looked at from the point of view of Atlantic-wide solutions as well, certainly insofar as the federal government's participation would be concerned.

In our judgment, there are essentially two categories of measures needed to deal with this situation. There is quite a serious short-term situation. We're being buffeted by the same forces that have caused problems in industries from automobile to aerospace to forestry, and so on. The world economic forces are making it a tough world in which to do business at the moment.

Lobster is seen as a luxury item, and in tough times, people tend to cut back on those types of purchases. Even though you can go into a supermarket and see lobster priced just as cheaply as hamburger, people buy hamburger because they can't afford lobster. That's the psychology, even though if they looked at the price tag a bit more closely they might say it's not a bad deal. We had Mother's Day specials listed this past weekend in St. John's for under $6 a pound retail, which for lobster is exceptionally cheap. It's great for consumers but an absolute disaster for primary producers, because that's not the price to the harvesters. That's the price with two or three middlemen in between.

So there are really two categories of things needed. One is short-term, for people who are in dire straits on a short-term basis, and the other is longer term. The statement issued by the Premier of P.E.I., or at least a version of it that was published in the press, certainly touched on a number of items that would be useful to pursue in dealing with the situation, including emergency inventory purchases of live lobster, an industry rationalization program, a low-interest loan program, flexibility in the EI program, and marketing and product development. So those are issues. I guess the latter ones are perhaps more provincial in scope than federal. The others have a significant federal flavour to them.

In particular, in terms of doing something quickly, the EI program probably lends itself to this fairly well because of the provision for pilot projects. I believe it will be possible through that program to do something relatively quickly to meet the need. Presumably in the meeting tomorrow we'll be getting into some of the detail around that.

It seems to me that, in terms of addressing the problem, we have to try to find solutions that don't add to the problem. In other words, right now we have a serious inventory problem. We don't have processed lobster in Newfoundland. Our lobster is pretty well all sold live. We don't have the canning and things that they have in the other value-added packs that are more prevalent in other provinces. But some of those markets, I understand, are really badly flooded with inventory. It would seem to me that something that adds to the inventory problem is probably not the best direction to go in. Something that maybe pulls back on the supply to try to get the inventory more in balance with the demand would be the direction that makes sense to me. It would happen to coincide with the conservation objectives as well, because it would give the resource a bit of a break.

In the long term, clearly, rationalization of the fleets is critical. Most of the fishing fleets in Canada are out of whack with the available resource. If we're going to compete with other countries that are selling into the same markets as we are, I think it's important for people to realize that, virtually without exception, the other countries are contributing government or public money into a rationalization program to buy out effort from the fleets. We have a rationalization program in Canada, but the entire bill is being passed to industry, which doesn't have the dollars to afford it.

I'll let it go at that and leave it to my colleagues, and I'll be glad to address any questions thereafter.

[The Chair, Conservative, Rodney Weston]

Thank you very much, Mr. McCurdy.

Ms. Inniss.

[Ruth Inniss, Organizer and Coordinator, Special Projects, Maritime Fishermen's Union]

My name is Ruth Inniss. I work with the Maritime Fishermen's Union.

The Maritime Fishermen's Union, for those of you who don't know, is made up of membership in New Brunswick and Nova Scotia, with about 1,600 members. The lion's share of the members are in New Brunswick. In Nova Scotia there are a number of other organizations.

We're here, as Earle said, to talk about the crisis in the price of lobster in the industry. In New Brunswick, the lobster industry accounts for 55% of commercial landings revenues, $82.8 million. That was in 2006. The export value for the lobster industry in New Brunswick in 2006 was valued at $377 million. The asset value for the east coast of New Brunswick inshore is valued at approximately $180 million. There are 1,200 New Brunswick inshore captains, plus an average of two helpers per enterprise; these enterprises directly employ approximately 3,600 people and provide fish for 5,000 workers in plants.

That gives you a bit of a snapshot of what's going on in New Brunswick. Earle has covered a lot of the short-term and long-term points we've talked about.

The Maritime Fishermen's Union is one of the organizations that are part of the Atlantic Alliance for Fisheries Renewal. It's a fairly new alliance that's come out of this lobster price crisis, and so on. Most of you who have anything to do with fishermen's organizations know how difficult it is for them to come together on anything; this is an Atlantic-wide alliance. I feel it is really important that the Atlantic fishermen's organizations have come together.

As Earle said, there are two groups of objectives. They are broken into short-term and long-term objectives. Earle went over them for you, so I won't reiterate. One of our biggest concerns is that the short-term goals need to be met, and they need to be met quickly, by 2009 or 2010, but we can't lose sight of the fact that we have to do something with the fishery on the east coast. There have to be, as Earle pointed out, rationalization plans. There has to be work done on fisheries renewal on the east coast. It has to change the way it looks. There are too many fishermen fishing. Earle talked about the overcapacity, and so on.

I have some documents that I will leave with the standing committee. One of them is a pilot project that the MFU has put together in looking for money to deal with this. One thing we're doing is asking harvesters in return to be stronger on conservation measures, and so on. We're not just looking for an infusion from the federal and provincial governments; we realize that organizations and the harvesters have to move on conservation issues as well.

In terms of moving on conservation issues, through the winter and the spring a lot of work was done in the southern gulf on conservation. Groups came together and put forward their plans for conservation, and it was really difficult. It was difficult to get fishermen to agree on that, and at the end of the day the minister came out and said, “You can do it or you don't have to; it's up to you.” That was really difficult for organizations that wanted to move forward with conservation and take some responsibility.

I think I'll leave it there, because Earle has covered most of the details, but the one point that I want to make sure we're all aware of is that we can't lose sight of the long-term goals.

[The Chair, Conservative, Rodney Weston]

Thank you, Ms. Inniss.

Please go ahead, Mr. Frenette.

[Ed Frenette, Executive Director, Prince Edward Island Fishermen's Association]

Thank you, Mr. Chairman.

It's nice to see you all again after your trip to the east coast a short while ago. The weather has improved slightly. Let's hope it improves some more.

I really reiterate what my colleagues said here earlier. There is a very deep crisis in the Atlantic lobster industry, not only in Prince Edward Island but through all the five eastern provinces. I've given you information in the past at a previous meeting, but I'll just perhaps give you a reminder of the situation in Prince Edward Island.

P.E.I. has 1,300 lobster harvesters. The lobster fishery is their primary source of income. While there are other species, they're minimal, and everyone in Prince Edward Island is fully dependent on lobster as their primary income source. We're divided into three lobster fishing areas, two in the spring and one in the fall.

At the present moment this year, prices are $2.75 a pound live for canners—that's the 71 millimetre to 81 millimetre size—and $3.50 a pound for markets, which is over 81 millimetres. These are the lowest prices in the region, and we wonder why. We look across the strait at parts of Nova Scotia where they fish essentially the same waters, the lobster are the same size, they have similar resource management schemes, and the prices there are $3.50 and $4.00. So we have some very strong concerns about what is actually going on through the marketplace, particularly at the level of brokers and wholesalers, but we don't have the answer at this point.

Nonetheless, these prices fishermen are receiving are far, far below their basic cost of production, and they are in crisis mode right now. We've seen in Prince Edward Island already fishermen being put on daily boat quotas by processors. We've seen some buyers refuse to buy on particular days. This is the first time in the history of the P.E.I. lobster industry that this has ever happened.

As I mentioned, there are two spring zones in Prince Edward Island. Landings on the north shore of P.E.I. in LFA 24, as it's known, are reasonable. However, with the low price it's very, very difficult for people to earn a profit. In LFA 26A, which happens to be Mr. MacAulay's riding, landings are low and prices are low. People are dismissing long-time crew members; members who have worked with their captains for 15 and 18 years are losing their jobs. Working wives are taking leaves of absence from their traditional work to work on the backs of the boats with their husbands just to try to make ends meet. It's a very sad situation. This is on top of what happened last year, when there was a full 25% reduction in the shore price of the raw product. So now we're seeing, in two years, more than a 50% reduction in the price to fishermen. They simply can't afford it.

Again, in conjunction with my colleagues here, we fully agree that there has to be both a short-term and a long-term approach to this issue. We would argue there has to be some sort of price stabilization support from both federal and provincial contributions, so people can in fact make some sort of a living out of this industry for this year.

The adjustment of the fishers' EI program is vital to the welfare of all fishing families over the course of this coming winter. We have submitted a document to the government and to members of this committee in the last number of weeks arguing that EI should be based on 2008 levels. This would ensure that people in fact could at least feed their families and pay their household bills over the course of the winter. Without that, we're going to see a large number of bankruptcies and we're going to see people going on welfare. And I'm not exaggerating at all when I say this. It's very, very serious.

We suggest that an EI program, possibly with pilot projects as Earle had mentioned earlier, may have to continue into 2010 and 2011 if this recession does not ease.

In Prince Edward Island, of course, we're going after our provincial government for an expansion of their low-interest loan program to fishers. We're looking for a debt repayment holiday where necessary for fishers who are in the most serious trouble, and certainly special consideration for recent new entrants to the industry who bought in at relatively high prices, have very high payments to make, and are facing the brunt of this whole process.

We suggest that there has to be some level of credit support to the processing industry. We know that processors have not been able to access their usual lines of credit. The private lenders have been very reluctant to fund them, as in all manufacturing industries. That's affected somewhat the processors' ability to buy, and if they're not buying, fishermen aren't fishing, and of course money is not going through the system.

For the long term, obviously, we need immediate action to begin on a licence rationalization scheme. We agree that it has to be Atlantic-wide. As most of you may understand, in Prince Edward Island and certainly in New Brunswick, for a number of years now we've been looking for a licence rationalization scheme, particularly in the Northumberland Strait. We started this, I guess, around the year 2000. There was some slight buyback through crab money allocations in 2004 and 2005, but the situation so far has not improved, and we're hoping that the government and the minister will go forward with a licence rationalization scheme.

Down the road we feel that in terms of a total industry restructuring at other fleets, other fisheries, we have to put proper funding to an extensive international marketing and sales initiative to market Canadian fish products. It hasn't been done extensively to this point, but we hope we will move in that direction.

There also has to be a program of industry information and education to the rank-and-file fishermen. When we look at the east coast of Canada, we're looking at 10,000 fishing enterprises. They're spread out over a host of rural communities. Many of the fishers' organizations do not have the capacity in terms of funding or personnel to reach out to all of them, to advise them and inform them of all the issues are that are going on. We're urging both our provincial and federal governments to really get onside in terms of developing a proper program of information going to fish harvesters. In that case we see a good deal of effort has to be put towards the whole issue of equal labelling, the ocean-to-plate or fishing-for-the-market concept, and we're looking forward to some assistance in that regard.

I'll leave it there, Mr. Chairman, and allow you to ask your questions.

Thank you.

[The Chair, Conservative, Rodney Weston]

Thank you very much, Mr. Frenette.

Mr. Byrne, I believe you and Mr. MacAulay are going to share some time here.

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

Thank you very much, Mr. Chair.

Thank you to Ed Frenette of the P.E.I. FA, to Ruth Inniss from the Maritime Fishermen's Union, and to Earle McCurdy of Newfoundland and Labrador's FAAW for appearing before us.

You've highlighted very well the crisis in the fishing industry, specifically in the lobster sector. This being a billion-dollar industry to Atlantic Canada, we share your concerns.

We have some time together this morning, so we'll be able to flesh this out better through the questions that we'll be presenting to you. But I will say that we hope you get your meeting soon with the Minister of Fisheries and Oceans. My colleague Lawrence MacAulay from Cardigan in P.E.I., and Scott Andrews from Avalon, and I think it's very important that you meet with the Minister of Fisheries and Oceans soon. We understand that it's tentatively set for tomorrow. We hope that becomes a little more solid in terms of the date.

I'll be sharing my time now with Mr. MacAulay, but I want to head back to some questions about that rationalization, that Atlantic-wide effort, as well as some very specific issues about access to credit and certain circumstances in Newfoundland and Labrador that are related to lobster fishermen and ice conditions.

Mr. Chairman, Mr. MacAulay can take the microphone.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Thank you very much.

Thank you, Mr. Chair.

I want to welcome my neighbour Ruth Inniss, and Earle McCurdy and Ed Frenette, who are only too well aware of the many problems in the lobster fishery.

There are many questions to ask, but I would like to ask you, Ed, on the rationalization. Of course I have a motion before the House of Commons. I truly believe it has to be eastern-Canada-wide, Quebec and the rest of eastern Canada. And I try not to be political, because you do better if you're not political. I don't want to offend my good friends across the table, but I think rationalization and licence rationalization is much more of a federal responsibility.

I don't know what's going to be announced—and there was a problem in the provincial legislature, whatever happened, whether politics was being played or not—but we're playing with lives here. We're playing with people surviving and being able to stay in the province. If we're not successful in dealing with this, in my opinion, we won't have any rural community in my district and on the south shore of Prince Edward Island. But, again, I stress it should be for all of eastern Canada.

I would like your opinion, Mr. Frenette, on the rationalization, and also address if we involve the province, if we involve the industry, keeping in mind that example. I think in Pinette one fisherman took in 14 lobsters one day. I don't know where they're going to find funds or anything else to be involved in a rationalization.

And I also want you to elaborate on what you think will take place if employment insurance is not adjusted. It's an insurance program that can be a pilot project or whatever. This is an emergency. This is a crisis in the fishery. What will happen to not only the fishermen and the people who are involved in the industry, but to our communities and everything else? I can see a disaster coming.

[Ed Frenette]

Thank you, Mr. MacAulay.

In terms of rationalization, we've had lengthy discussions over the years with a series of federal ministers from both the major parties. In latter years, we've been told directly that it would have to be a self-rationalization scheme, that the industry itself would have to bear—

[Lawrence MacAulay, Liberal, Cardigan, PE]

Can I interrupt you for one minute?

Are you telling me you've been told it's the industry itself, the people who are catching little or no lobster have to be part of the payment process of the rationalization?

[Ed Frenette]

I was building up to something like that, Mr. MacAulay.

The previous minister certainly let it be known that his approach was only on the concept of self-rationalization, and the industry would have to bear the full price and brunt of that process. In more recent months and weeks, we've had discussions with Minister Shea; we've had discussions, at least in P.E.I., with our own provincial government; and we've had various discussions within our own organization and our membership.

Basically, there is agreement in principle, at least in terms of the P.E.I. lobster fishery, that people are prepared to go forward with a three-party approach to rationalization. While no definitive plan has been designed yet, and no amounts of money have been determined, it appears as if we're moving in the direction where there may be a federal cash infusion off the top, a long-term loan provided by the provincial government that would be repayable by those remaining in the industry at low or no interest rates over a 25- or 30-year period. We feel that is feasible, in terms of the industry involvement and provincial involvement.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Would this apply to the LFAs or the total industry?

[Ed Frenette]

We're talking about the P.E.I. lobster industry, so we're looking island-wide at our three LFAs. But we're starting in the most hard-hit areas, which are areas 25 and 26A.

[Lawrence MacAulay, Liberal, Cardigan, PE]

But in the proposal being discussed you would be asking LFA 24 to contribute to the rationalization program if they do not wish to be directly involved in it.

[Ed Frenette]

No, we haven't gone that far yet. We're envisioning that there may be an overall packet of money, but there are three different approaches because of the variances in each fishing zone. The interests of people in LFA 24 may be for other types of licences besides lobster. But in the Northumberland Strait, the major concern is lobster licences.

[Lawrence MacAulay, Liberal, Cardigan, PE]

And the EI issue?

[Ed Frenette]

The EI issue is vital. Already as a result of the decrease in prices last year, we've seen a number of bankruptcies. There are a number of fleets for sale that no one can buy. Landings in areas this year are extremely low, as we expect them to be in the fall. This is on top of five to seven years in 26A, and probably ten years in area 25, in which landings have been consistently low.

At our last meeting in Montague, Prince Edward Island, I mentioned DFO figures that were published in 2006. They put net fishing income in area 25 at slightly over $7,000, and in area 26A at slightly over $11,000. People cannot live on such a low income. If they don't have access to EI based on last year's landings program, in P.E.I. we're going to see dozens, if not hundreds, of bankruptcies. We're going to see declines on many sides in our rural communities—in infrastructure, small business, and tax base. People cannot even go out west any more for jobs, as they've been doing for the last number of years. There's nothing to fall back on.

[Lawrence MacAulay, Liberal, Cardigan, PE]

I realize it's a very serious problem. It's a provincial issue, but it involves the total package.

Will the lack of competition in the processing industry in Prince Edward Island have an effect? You mention that there's a better price in Nova Scotia than in Prince Edward Island. To me, there's a monopoly in the processing industry in Prince Edward Island. Do you see that as helpful or harmful in what's going on?

[Ed Frenette]

From the producers' point of view, with the restrictions on access to processors and buyers, the competition has been strongly reduced and they have no place else to go. For the first time, people are not buying fish for a day or two, and boat quotas are being put on arbitrarily. This sort of thing has never been heard of before. There is an argument among the harvesters that the so-called Ocean Choice agreement signed between the company and the provincial government in Prince Edward Island should be broken to lift the moratorium on processing licences. In fact, I think I saw in this morning's Charlottetown Guardian newspaper that last year someone had been fined $10,000 for processing lobster illegally in a plant that's fully prepared to process.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Thank you.

[The Chair, Conservative, Rodney Weston]

Thank you, Mr. Frenette and Mr. MacAulay.

Monsieur Blais.

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

Thank you very much, Mr. Chairman.

Welcome gentlemen, madam.

We have already heard many things. I know that the lobster industry was considered some time ago as a very prosperous one. Everything was going fine, or almost. It was not obvious because there were some fishing areas where the incomes were very low, but they were somewhat better in others. Nevertheless, on the whole, the market was rather good.

We are now in the throes of a recession that hits mainly the United States but that also spills over here. Tell me if a scenario such as I will describe is possible, because I have no idea: if we did not have this global recession, do you not feel that we would still have problems in the lobster fishery? We are focussing a lot on the price at this time, but the malaise might go much deeper than that.

Do you believe one short term and very circumscribed intervention would be enough to solve the problem? I would like to hear your comments on this.