Fisheries Committee on May 14th, 2009

[Earle McCurdy]

I think you're correct. The way I would characterize it--and it's based probably in large part on the sheer number of licences and people who are participating in the fishery in relation to the total value of the resource--is that even in reasonably good times things are pretty marginal. We can get by in a reasonably good year, but there's very little strength to survive the kind of downturn we've gotten. In fact, there are not many sectors that really can, but I think we're particularly vulnerable.

It happens to coincide with the moving of the baby-boom generation out of the fishery, and I'm sure a lot of other industries have the same situation. In a way, that presents an opportunity. In our organization, we did a survey of our members, and over 70% were either definitely interested or said they might be interested in selling their enterprises. Who bears the cost of that? That's the problem. To date, it's been, as I made reference to a minute ago, self-rationalization. The industry fully funds that. The problem is that the associated debt load means that even though you hope that if in the long run there are fewer people there will be more to go around, if the debt associated with buying somebody out doesn't make that pay off, you're no further ahead; you're further in debt.

I think we were vulnerable before this tidal wave hit the economy. That vulnerability was exposed pretty quickly once the recession took hold, and I believe it's key. If there's going to be a fishery of any vibrancy in the future to maintain populations in those rural communities Mr. MacAulay spoke of a minute ago, I think that issue of right-sizing our fleets has to be dealt with. As I mentioned earlier, virtually all our competitor countries, the people we're competing in the market with, have put major funding into fleet buyouts, because they have much the same problem. The cliché is too many fishermen chasing too few fish. I think it might be too many fishermen chasing too much debt. But in any event, there is that overall level of debt in the industry in relation to the annual landed value, which means that we're always vulnerable, always on the brink. If anything comes along like this current economic recession, we get swept away in it.

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

Would you like to say a few words, Ms. Inniss?

[Ruth Inniss]

I'd just like to add to what Earle said. One of the numbers that we in the AAFR, the alliance, have been looking for is a one-third reduction of the fleets and enterprises in Atlantic Canada. That would increase the viability, the stock rebuilding, and so on, of the market. So that's the sort of number we're looking for.

Earle was talking about debt, and the debt is huge. We have some members who have just bought into the lobster fishery within the last couple of years. When we're talking about the short-term actions we can take to help, the loan relief that Ed was speaking to is very important for these particular members.

Another part of the problem—from the past—is that the prices of lobster licenses and lobster gear were, for a number years, completely inflated. Because of that, people are still dealing with the price inflation of lobster gear. Those prices haven't flattened out or levelled out yet. So that's another thing adding to the crisis, besides just the market you were talking about.

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

I have one last question, if I may.

Could we not contemplate for this industry a kind of stabilization insurance program that would involve some costs for the participants but that would be managed by the government or in some other fashion? Would a stabilization insurance program that would be based mainly on prices — obviously — not be something that could provide a far brighter future to the industry?

We have a crop insurance program in agriculture. However, in the fisheries industry, there is no such thing at this time. Could this be an avenue, a solution?

[Ed Frenette]

Mr. Blais, thank you.

I think there is a host of ideas and notions that have to be considered. The one you raised is one that we've discussed internally for some years now. We've offered the suggestions to government. They certainly haven't been picked up on to this point. Essentially the only protection for fishers is the EI system at this moment. But if we're going to readjust and restructure our industry over the long term, I think those are the types of issues and solutions we have to examine closely and perhaps apply.

[The Chair, Conservative, Rodney Weston]

Thank you.

Mr. Kamp.

[Randy Kamp, Conservative, Pitt Meadows—Maple Ridge—Mission, BC]

Thank you, Mr. Chair.

Thank you, Mr. Frenette, Mr. McCurdy, and Ms. Inniss, for appearing. I know we've heard from two of you before on this issue, but it never hurts to hear some of the same things again, and to get into some other matters as well.

Let me start with the issue of rationalization. Maybe I can start with you, Mr. McCurdy.

You mentioned or made a statement of some kind that other countries, or most other countries—or maybe it was all other countries—who enter into rationalization programs have those programs funded by their governments. I just wonder if you could flesh that out a bit for us, and give us some examples, and so on, of how that works.

[Earle McCurdy]

Yes, I can mention a few. I don't have all of the particulars on all of them, by any means.

Argentina, for example, in recent weeks has come out with one. There was a significant one announced recently in New England. I know the European Union has put money in place.

The only figures I've seen have been for the British Isles, but they have an ongoing program of fleet reduction; it's an ongoing strategy to buy out excess capacity. I just wish they'd use a bit more of it on the fleets that fish on the nose and tail of the Grand Banks.

There are a few more examples. Australia had a fairly major one recently. Victoria, a province in Australia, had a very localized one for their rock lobster fishery.

There is a host of these, the idea being the recognition that the sheer capacity in relation to the resource creates a couple of problems. Number one, there are real viability problems for fishing enterprises; and second, there is the pressure on the resource from the sheer pressures to meet payments, and so on. These fleet reduction strategies really address both.

In the case of our industry—which is probably true of those other countries as well—you form a strategy for dealing with this inter-generational shift that's about to take place, because a very substantial percentage of the licence holders are 55 plus in age. And I guess the question is, are we going to inflict on the next generation of licence holders the same over-capacity that has bedevilled the current generation, or are we going to say here's an opportunity to make some significant structural change for the long-term benefit and stability of the industry?

[Randy Kamp, Conservative, Pitt Meadows—Maple Ridge—Mission, BC]

So most of those are long-term solutions, and not reactions to the economic downturn or world economic forces, I think.

[Earle McCurdy]

I think they're a bit of both. I've read press clippings and stuff like that; I wouldn't call myself unduly knowledgeable about what's happening elsewhere, but keep up with it as best I can.

I might have a couple more examples here.... Anyway, I've given you an idea.

It's a combination of measures. Some are related to the immediate economic situation in the world, and some are long-term structural adjustment programs.

[Randy Kamp, Conservative, Pitt Meadows—Maple Ridge—Mission, BC]

With respect to the lobster industry, how long has there been a sense that we need to deal with access, the capacity issue, and rationalization? How long has there been a consensus, I suppose, within the industry that we really need to do this?

[Ed Frenette]

If I can speak for P.E.I. and perhaps the three maritime provinces—at least in the southern Gulf of St. Lawrence—I'd say it's been since the late 1990s. Certainly the organizations were lobbying for assistance for rationalization in the Northumberland Strait as early as 2001, and were able to access money from crab distribution in 2004 and 2005, in minimal amounts, to buy out a few fleets. However, as we know, legal decisions have interfered with that, and now we're in a situation where we haven't had any since 2005.

[Randy Kamp, Conservative, Pitt Meadows—Maple Ridge—Mission, BC]

Okay, thank you.

I think we probably all agree that the solution for what the industry is facing at the moment is going to require both levels of government and industry being in some kind of collaborative solution.

As far as I know, the meeting is firm. I know Mr. Byrne isn't sure about that, but I understand it will be from noon to five tomorrow in Moncton. I think that's a good thing.

Ms. Inniss, you referred to conservation measures the industry is putting in place, partly to respond to the situation they find themselves in. I just wonder if you could tell us a bit more about these. Or perhaps the broader question is, what do you think the role of industry should be as we move forward here? I think I've heard you say what you think the role of the federal government should be—at least with some measures—but what should industry's role be?

[Ruth Inniss]

What I have here is one of the documents that I plan to leave with the committee. There was a pilot project that was put together by the fishermen in New Brunswick. This will give you an example of that. I'll just read from it: “The program would essentially require that existing government programs...”--community investment funds, EI programs, and so on--“be used to top up fish harvester revenues to a breakeven point for 2009.”

That has been discussed already. They're talking about around $200 a week for captains and their helpers, and in return for that, for somebody to take advantage of that exchange, inshore fish harvesters in communities who are willing to entertain the pilot project would have to move to a 76-millimetre lobster. I don't know if that means anything to you or not, to move to a 76-millimetre lobster from a current 70-millimetre lobster. So that's a fair jump. That's one of the concessions that the industry within New Brunswick and the MFU have been talking about back and forth to make it work.

So we're not just saying we want you to give us money and help us get through this year and so on. We're taking responsibility for it into the future.

That's one example. Does that answer your question?

[Randy Kamp, Conservative, Pitt Meadows—Maple Ridge—Mission, BC]

Partly. What about in terms of supply? If it's actually that part of the problem is that the processors already have a fair bit of inventory, which they're having difficulty selling--that may be arguable, I know, but let's assume for argument's sake that this is the case--are fishermen on the ground already putting in measures to restrict the number of lobsters they're catching?

[Ruth Inniss]

I have to say no to that. At this point they're not, not in New Brunswick.

[Ed Frenette]

It remains a wild fishery. There are no quotas, so it's basically get as much as you can in the short time you have available.

[Ruth Inniss]

And I think that's an effect on the price as well. When the price is so low and their livelihoods are at stake and so on--that's what they see and they have to pay the bills and feed their families and so on--they're going to harvest as much as they can.

[Randy Kamp, Conservative, Pitt Meadows—Maple Ridge—Mission, BC]

And in effect, although unintentionally, I know, they make the problem worse in some ways.

[Earle McCurdy]

That's the irony of it. I think they're driven to it by circumstances. I haven't said this. I guess what our fishermen are engaged in today and for the next several days is in fact a cutting off of supply, but it's hard to do that on any kind of long-term basis. So that's probably more by way of a protest as much as anything. It does make sense in addressing the problem to consider whether we can find a way to improve the inventory situation, not to make it worse. That seems like a logical way to approach it.

[Randy Kamp, Conservative, Pitt Meadows—Maple Ridge—Mission, BC]

And I understand if you're the individual fisherman who has the bills to pay, it's a theoretical concept that's not as easy to work out in practice.

This is more of a general question. Do you think there are some Canadian fisheries that are better structured to respond to an economic downturn, a crisis, perhaps, that we're facing, than others? Or would you say in the way the lobster industry is generally structured--a wild, competitive fishery, for example--that it's less able to respond to a crisis like this than another fishery that might have a quota system, for example?

[Earle McCurdy]

I don't think having a quota system in place necessarily makes the problem any less severe. I think part of the reason that lobster is getting particularly hard hit at the moment is there's just a perception that lobster is a luxury item. I don't know if it's psychological or what it is, but people just sort of say “These are tough times, and you don't eat lobster in tough times”.

Some of the other fisheries we're engaged in are more of a commodity nature. We've had some impact on our snow crab fishery, but not to the same extent as the hit on prices in lobster. It has been particularly severe. Whenever you get a large number of participants, as there are in the lobster fishery, it makes it all that much tougher to find solutions. I don't think having a quota system in place necessarily makes that problem any better.

[The Chair, Conservative, Rodney Weston]

Thank you very much.

Mr. Byrne, I believe you and Mr. Andrews are going to share your time.

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

Yes. Thank you, Mr. Chair.

This is a very tough and bleak picture you're painting. We've heard from you that the industry standard on the break-even price is approximately five dollars a pound. If the industry is now fishing for $3.00 to $3.25 a pound, in essence harvesters in Atlantic Canada seem to be subsidizing Red Lobster and The Keg Steakhouse. That has to be difficult on harvesters.

The response to that circumstance is different across the Atlantic provinces. I know individual fishermen and regions have approached the circumstance differently. What you have stressed is that there is a need for an Atlantic-wide approach. You all stated a value to a federally funded capacity reduction or licence retirement and a need for greater access to capital; you mentioned that the current mechanisms and stimulus are not working for the fishing industry—I think I heard you correctly on that—and also mentioned the need for income support and EI changes for fishers, among other elements. That's what we've heard.

One interesting thing that has come out recently in the past number of days is the circumstance in P.E.I. There was what's termed a “leak” within the P.E.I. legislature of a lobster industry support program. The premier of the province called it a leak—not a proposal, but a leak. It seems to indicate that there was something on the table between the federal government and the provincial government of P.E.I. that was being worked out, potentially using community adjustment funds. I say that because, if federal community adjustment funds were to be applied to a lobster strategy, it would have to be both levels of government that were involved in it. And yet an opposition member from the provincial legislature provided information to the House that the premier called a “leak”.

We want things to happen in P.E.I.; we want a program to occur there. But you also said there's a need for an Atlantic-wide program.

Is there a concern there? I'll ask Ms. Inniss and Mr. McCurdy—and Mr. Frenette, if you would reply as well. Could the federal government be one-offing this and only dealing with one province at a time, and only dealing in this particular case with P.E.I., using community adjustment funds? Why would this be called a “leak” rather than a “proposal”?

Earle, would you be able to provide us with some insight?

[Earle McCurdy]

No, I'm afraid I can't to any extent. The only information I have on it is what I've read in the media. It seems to me that the federal government is going to be participating along with a particular province. I would assume that whatever arrangement is made would at least be made available to other provinces.

The problem I was getting at is that there really is a very similar problem Atlantic-wide. The numbers of participants or the dollars may vary from one jurisdiction to another, but the severity of the situation on individuals and families in small communities is very similar right across the region.