Good morning, Mr. Chairperson, members of the Standing Committee on Fisheries and Oceans, and fellow panellists.
I want to thank the Standing Committee on Fisheries and Oceans for the opportunity to make a presentation concerning the snow crab industry in Newfoundland and Labrador.
As an introduction, my name is Lyndon Small, president of the Newfoundland and Labrador Independent Fish Harvesters Association, NLIFHA, and co-owner and operator of a 65-foot fishing vessel.
The NLIFHA consists of members in the over-40-foot fleet in division 3K, which extends from Cape Freels to north of Cape Bauld. The mandate of this association is to ensure that the issues and concerns that affect our enterprises daily are being presented to both levels of government.
The crab industry in this province has great potential but has been crippled by low raw material prices in comparison with those in other jurisdictions within Atlantic Canada. Today, dry crab in New Brunswick is at $2.15 a pound; RSW crab is at $2.40 a pound; and in this province dry crab, and RSW, is at $1.35. At this price differential, fishers will lose thousands of dollars in income and revenue for their fishing enterprises.
What are the reasons for this huge difference in price? It's simply that competition is non-existent in this province's crab industry. Provincial legislation prohibits outside buyers from coming into the province to buy and truck the crab to their plants in the Maritimes. This form of protectionism enables the processors of this province to have a monopoly on the industry and provides an avenue for collusion to seep in, resulting in basement prices for crab fishers.
Presently, the NLIFHA have a confirmed buyer in the Maritimes willing to buy 3K crab at $1.90 a pound, but the provincial government will not allow this form of free enterprise to flourish.
The second major reason why the raw material price is deflated in Newfoundland and Labrador is the control processors have over the harvesting sector in this province. Over the years, fish companies have provided financing and loan guarantees for the purchase of vessels, licences, and equipment. Essentially, the processors own and control the vast majority of enterprises within this industry. This control guarantees the producers a lock on the crab before it is harvested from the water and the ability to dictate a low-end price to the fisher.
In this era of combining and rationalization, trust agreements are alive and well. Just under the surface, the fleet separation policy has been seriously eroded, to the point that vertical integration, which the processors so much desire, is a reality.
In conclusion, former provincial Minister of Fisheries John Efford discussed the same problems in a recent fisheries magazine interview, which stated:
In order to be a truly free industry, the market has to be opened up to outside buyers and harvesters can't be forced to do things they don't want to with their products, he now argues. “Processors actually own large numbers of fisheries enterprises. So that gives them an extra advantage and that is then one of the reasons why a lot of the small boat fishermen can't increase their quotas, ” he says. “Their own boats could keep the plants going. So they can squeeze.”
Therefore competition, free enterprise, and independence have to be the cornerstones of a viable crab fishery in Newfoundland and Labrador.
Thank you.