Fisheries Committee on May 26th, 2010

[Lyndon Small]

Mr. Andrews, thank you for the question.

First of all, in terms of the first part of your question, the $1.50 per pound that I described earlier is above board. That's right on the table. That's receipted right at the dock.

In terms of bonus payments, I can only speak for myself, but doing some active negotiating prior to starting fishing this season, bonuses were a non-issue. Bonuses weren't available. You were lucky if you were able to squeeze out perhaps 5¢ or 10¢ if you landed to the plant. But suddenly circumstances have changed. Now, as Mr. Byrne alluded to, 30¢, 35¢, 40¢, or 50¢ may be there. And I say that with a maybe, because that is the individual enterprise owner's own business relations—you know what I'm saying—with individual buyers within this province. But there's no doubt that incentives are being offered and are being paid, quite substantial incentives.

In terms of the other part of your question, with regard to fleet separation, for an owner-operator, as we speak, that is probably the most significant problem we have in this industry. There's no way to get an accurate percentage on the amount of control in this industry, but I would hazard a guess that in the range of 80% to 90% of most of the enterprises in this province are controlled by processors, whereby they have guarantees for loans or purchase of licences, vessels, and equipment. Automatically, if I'm a producer in Newfoundland and Labrador, I have a guarantee; I have a lock on that product.

With the dispute that went on this past spring, it was said that there would not be a crab fishery. There will always be a crab fishery in Newfoundland and Labrador regardless of what dispute is there, because the processors of this province control that product that's down there on that seabed now, crawling around waiting to be caught. The only way we can solve this huge problem that we have is through independent financing.

A group of licence-holders—namely, the chairs of the shrimp fleet in this province—put forward a proposal to the provincial department whereby the purchase of enterprises and vessels and equipment would be guaranteed at, say, a low interest rate of 3%, when we know we're in an environment where, in the near future, interest rates are going to climb. It would be minimal risk for the provincial government to take part in those guarantees. Over a 15-year period, being able to rationalize the industry and make operations more efficient, it probably would have cost the provincial government, I think, $45 million over 15 years, which is absolutely peanuts in terms of the moneys being put into the industry.

So I think, Mr. Andrews, that's the road we have to go down, some way we can find independence financially, because right now we're in dire straits. The harvesting sector is in dire straits in terms of independence and financing and being able to run their businesses, their fishing operations, in an independent, true businesslike manner.

[The Chair, Conservative, Rodney Weston]

Thank you very much, Mr. Andrews. We'll return to your questions in the next round.

In the interest of time and fairness, we have to give all members an opportunity to pose their questions.

Monsieur Blais, you're the next questioner. The floor is yours.

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

Thank you, Mr. Chair.

I would like to ask you some questions about the species of snow crab itself, here in Newfoundland, as distinct from—

[The Chair, Conservative, Rodney Weston]

Can we make sure everybody has their translation device turned to channel 1?

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

My first question is about the resource itself. I will not venture into the subject of price because, there again, there are significant differences. For example, if we compare Quebec and New Brunswick, the price is $1.75 in Quebec as opposed to $2.45 in New Brunswick.

My question is more about the resource itself. Is the species of snow crab fished in this area different from the one fished in area 12? And is there a cycle? You probably know that quotas in area 12 have gone down 63% this year. That is huge. It hurts a lot, especially when there are no programs to mitigate the impacts.

So I would like to understand the possible differences in the snow crab here and the snow crab in Quebec. I would also like to hear what you have to say about the snow crab cycle we hear so much about. I imagine that your crab is cyclical as well. But catch numbers in the last few years are more or less the same, except for 2005. I am not sure who can answer that question. If anyone thinks he has the answer, he can jump right in.

[Clarence Andrews]

When it comes to difference in the crab, I don't know a lot about the gulf crab, but I do know that Newfoundland crab is of a smaller size, especially in the area that I fish, which is 3L. In 3K, where Lyndon Small fishes, I think they're fishing the larger crab, but down in our area, the majority of our crab is five- to eight-ounce sections, and we get a fair portion under five ounces.

In the marketplace there's a big difference in price. Under five ounces is probably going right now for maybe $3.10 or $3.20, while five to eight ounces is going for maybe $3.60 or $3.70. When you get up into the larger sizes of eight and ten ounces, you are up over $4. That's a big difference.

A few years ago, I transported crab into Louisbourg, Nova Scotia. I made a couple of trips. In an RSW vessel, I could do it. I brought mine up, and the size was no comparison to the gulf crab. Plus, when I went into Nova Scotia with my crab, I had to pay all the benefits. I had to pay EI and workers' compensation.

There's a lot of difference, but the big issue is the size. Newfoundland crab in 3L in southern Newfoundland is much smaller.

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

Do you mean the life cycle?

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

I don't know about a cycle. Perhaps I could just comment briefly on some of the things that are happening in the management of our resource here.

I read an extremely patronizing, offensive column in The Globe and Mail last week from Jeffrey Simpson. It effectively told us that we were too stupid to understand that if you don't manage a resource, you won't have it around for the long term. Apart from the fact that he did a tremendous amount of revisionist history, he didn't even bother to inform himself on some of the things that are happening currently.

In our crab fishery we've been concerned for some years about the degree of dependence on a multi-species autotrawl survey as the vehicle for determining crab abundance, for the simple reason that's not a type of gear you fish crab with. It certainly was better than having nothing, and I'd say it probably served us reasonably well for a period of time, but we ran into a scare on the resource in the year 2000.

We really felt we needed to have something more than that survey to base critical decisions on, to give the scientists more to work with, so we started, our organization, to work with DFO on a post-season crab pot survey. We use the traps that are used to catch the fish. We use crab fishermen to use them. There are about 100 enterprises per year that participate in a survey designed in conjunction with DFO scientists to try to measure, after the fishery's over, how much crab is left as a starting point for next year. I think that's been an important factor.

We've had pretty stable quotas. There are some fleets, including the one that Lyndon participates in, that got a nasty jolt in terms of the quotas this year—certainly nothing in the order of 63% but painful nonetheless. But overall, I think over the years we've been successful in having pretty stable fisheries, although I think everyone would do well to heed the warnings that were made earlier about the impact of the runaway seal herd. It has a huge potential impact.

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

Mr. Small?

[Lyndon Small]

Yes, Mr. Blais, on the first part of your question concerning the $1.75 as it relates in comparison to northeastern New Brunswick, I've had some conversations with fishers in the northern part of Prince Edward Island, which is pretty adjacent to the same fishing grounds. There is a major discrepancy in price for the fishers in northern P.E.I. to northeastern New Brunswick, where the traditional, well-established licence-holders and plants in that region secured the most high-end price.

From an educational point of view, I don't know the biology of your crab. As Mr. Sackton alluded, and Mr. Andrews, the larger sections do have a higher return in value in the marketplace.

With regard to the science part of it and the management, from our perspective they are in Newfoundland and 3K. Crab is a very mysterious shellfish. It goes through many cycles of moulting, where it moults its shell, and in that process, that's crab that's within the biomass of the stock, but DFO does not consider any soft-shell crab as being part of the overall biomass.

You know, as I said, from an educational point of view I'm not absolutely up to speed with the biology in your area, but crab is also a shellfish that at times does not eat, does not crawl. It buries up in the mud. Crab live in an environment with lots and lots of mud. If you have mud around your crab pots, you're going to have good catch rates.

I'm sure Mr. Andrews can validate the same comments I'm making. Sometimes you can set your gear and the catch rates are very poor, and then go back the next trip—say, after two or three nights' soak time—and the catch rates are phenomenal. It's a shellfish that's very fickle in its manner and in the way you can catch it.

But there's no doubt there's a serious problem on the management and science part within the southern gulf, because there's no way that 63% cut is a number that's even realistic for proper management within that industry.

[The Chair, Conservative, Rodney Weston]

Thank you.

Mr. Donnelly.

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

Thank you, Mr. Chair.

I just want to say it's good to be here in Newfoundland. I am from a different west coast--the west coast of Canada. I'm from British Columbia. I apologize right up front for my accent. I hope you can understand me. I'm also a new MP. I just got elected in November. I got on to the fisheries committee, and this is of great importance on the west coast.

When I heard the motion on the east coast, I thought this committee needs to look at the snow crab issue.

My colleagues have raised some points, but I wanted to touch on management and marketing. A number of points have been identified, but it seems that one of the main problems identified here is too many harvesters chasing too few resources. Obviously we have an issue there.

Mr. McCurdy, maybe you could elaborate a bit more. You talked about an orderly transition in terms of those currently in the industry. Perhaps you could talk a little bit more about what you mean by that.

Mr. Decker, you talked about the importance of marketing. It seems as if there's real opportunity here. Perhaps you could maybe touch a little more on how we could go about marketing this product.

[Earle McCurdy]

For sure we've got too much debt chasing too few fish. I guess what we have—and it's not a numbers game, in my mind—is a combination of a demographic profile, an age profile of the fishing fleet of people nearing retirement age with a heavy overall debt burden. Are we going to have any kind of a fishery in our coastal communities in the future, and if so, what shape is it going to take?

For that to happen there are two choices. Either we'll have an organized licensed buyout program in some fashion, or a rationalization program with shared industry and public funds to execute it in some kind of an organized manner, or we'll have rationalization by bankruptcy. The choice is as blunt as that, where people will be forced out of business because the bills are stacking up and the revenue is not matching that. In so many cases the pie is being divided into so few pieces, as Ray indicated earlier.

The provincial government has offered to cost-share a program with the federal government. We have offered, on behalf of our members, to have an industry-federal-provincial cost-shared arrangement. We've had a proposal on lobster in for months for an industry-federal-provincial cost-shared rationalization program that could become, I think, a model for other fisheries, if it works. But the federal government to date has been the missing party at the table.

Just briefly, if I could, on the marketing, I support the thrust of the comments Trevor made earlier on marketing. It is something that's being aggressively pursued at the provincial level under the restructuring discussions that are going on here, and something that's desperately needed because we haven't had nearly the attention to marketing and promotion that we should have.

[Trevor Decker]

With the business I'm involved in, marketing is a very important portion of what we do. We basically market fishing licences and fishing vessels, now to the point of basically all products, on behalf of our clients, primarily fishermen.

The first thing we have to do is get out there—we don't see as much marketing process with respect to snow crab, which I think is more an Atlantic Canadian way—and through the development of the Atlantic Canadian crab council, probably, work together in each province, competing with one another, with respect to the markets that we have available to us.

What had transpired through that area 19 model that we were involved in with the marketing program there last year was that we started out with a price offer a few days before the fishery started. The price would be dropping as the season continued over the next few weeks. But through our efforts, we managed to find a buyer that was willing to pay the price—a suitable buyer, mind you, basically somebody who qualified—and we managed to get the price up 20¢ more than what was offered at the wharf. So the fishery went ahead, the price never dropped, and the fishermen got to sell their crab in the water.

Through the marketing efforts, we went around through Atlantic Canada and this was the product that was being sold. Area 19 crab is a large crab. It is of a colour...basically you don't have any pencil lines underneath. It's a very high-quality crab. We managed to get the best price available through the marketing efforts that were done by us, with the association. Again this year, the area 19 crab fishery is only a short distance away and we'll be doing the same thing.

As another example, it's no different from what we do on a daily basis with fishing vessels. We've been marketing fishing vessels throughout the world, but by the same token, it doesn't necessarily mean that we're selling to the same people all the time. We're continuously looking for new markets, and I think it's where we need to go with respect to the crab fishery. We need to work together.

If there's anything that this standing committee can do here, it's to basically bring together everybody within Atlantic Canada, all the crab fishermen in Atlantic Canada. Be it in Quebec or in the Maritimes, we have snow crab. Yes, there are some crab that are a smaller size than others. Yes, there are some crab that probably have a different appearance than others, but let's try to get the best we can in the marketplace we're trying to sell into. Let's stop undercutting each other, to the point where the government involvement here could be something that we could work towards, helping these companies obtain the best price for it. Why shouldn't we be selling the pristine crab that we have that comes out of the water through Atlantic Canada? Why do we have to undercut ourselves with the product that we have? It's quality product.

I'm very doubtful, Phil, that you're dumping much of the product that's coming to your wharf. I'm assuming that you're selling everything you receive, and I'm assuming that you're receiving quality product.

So what we need to do in a marketing strategy is to get out there, and through this process, everybody work together to get the best we possibly can, rather than one undercutting the other and then people like Lyndon Small and the other fishermen around the table being the ones who are getting less from the industry.

These are the primary people. Without the harvesters, we have nothing. The harvesters are getting less, from what I can see, as people who are presenting quality product to the marketplace. Yet all we're doing is selling; we're not marketing. We're just going in and dumping our crab on the market, and somebody else is holding it and receiving the best price, when the market can pay the best price, which we're not doing.

I'll just end there.

[The Chair, Conservative, Rodney Weston]

Thank you very much, Mr. Decker.

Mr. Kamp.

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

Thank you, Chair.

Thank you, gentlemen, for appearing. It's always good to be in Newfoundland. I'm also from British Columbia and have spent some time here working with this minister and the previous one as well.

You've raised some fascinating issues around pricing and marketing, and so on. Some of those are largely provincial issues, so I'm going to try to stay away from them as much as possible. I think in the next panel we might be able to raise some specific questions with them. So let me start on some other issues.

First of all, I'd like some clarification from Mr. Andrews.

You referred to the 12-month rule. Largely what we're trying to do here is come up with some recommendations of things that we can actually fix at the federal level that will make the industry more sustainable, and so on. So could you just tell me more about what that 12-month rule is, and specifically how you think that should be changed?

Let's just begin there.

[Clarence Andrews]

Well, I'll give you a good example.

I buddied up with my son-in-law, so that's classed as one licence. My second son-in-law has another crab licence. To fish the two licences that are buddied up, I need about 10 to 11 weeks, maybe 12 weeks. My other son-in-law needs about three weeks--he's got a lesser individual quote, or IQ--so right now I'm fishing the two licences that are buddied up. We're going to finish around July 1.

If I go into DFO, within that day, or two days, the boat goes over into my other son-in-law's name. He is going to fish for three weeks, so he owns the boat at DFO.

The next April, he owns the boat, so he goes fishing first. He'd fish for three weeks in April, catch his IQ, then we go to DFO to switch the boat back to me under the 12-month rule.

Because we made the switch last year on July 1, I cannot get the boat back until July 1. So my 65-foot boat--I paid $1.5 million for this boat--is sitting at the wharf from the end of April until July 1.

Now, DFO will give you a 30-day grace, so going by the guidelines, my boat is going to sit at the wharf until June 1. So for four weeks the boat is tied up to the wharf and cannot fish, because it's in my son-in-law's name waiting for the 12 months to run out.

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

So how do you think the policy should be changed?

[Clarence Andrews]

I've been at DFO for a couple of years. The policy, as far as I'm concerned...crab in Newfoundland is a four-month fishery. My season is four months. A 12-month regulation cannot apply to something that only has a four-month duration.

My view is that we change the wording. Keep the transfer system in place, but with maybe one change per season, one change per 12 months, and then I can change my boat back in 6 months or 8 months. But this 12-month rule and sticking to the 12 months simply doesn't work in a Newfoundland fishery.

They've talked about combining licences and rationalization. If fishermen like me want to buy up IQs, we must have the flexibility to pick out the best vessel and fish that vessel to harvest the best crab we can, and my RSW boat fits that perfectly.

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

How long have you been involved in the buddy-up with your son-in-law?

[Clarence Andrews]

I would say about four years, ever since the buddy-up system came into place.

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

And do you think that system should be expanded to allow three fishers on one vessel?

[Clarence Andrews]

Well, with the buddy-up, we're doing three on one vessel now. But DFO said last year in 2009, there would be no more buddy-up after 2009, but 2010 is here and we still have buddy-up.

I could go into DFO tomorrow, if there was no buddy-up, and combine with my son-in-law and put it all over in my name. Then we'd still have two licences. But the 12-month rule is still in place and to flip the boat back and forth.... Now, of course, if I had a fall crab season and I could go fishing in October, November, December, if I was fishing 12 months of the year, the 12-month rule would be okay. But my season ends July 30. If I have 100,000 pounds of IQ left in the water, I cannot go out and get it. So that 12-month rule has to be flexible.

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

I think Mr. Wimbleton also talked about buddy-up, and maybe Mr. Small has some comments to make about that.

I know it was supposed to be a temporary program but there is some thought that if you make it permanent or expand it in some way, that will act as a disincentive to doing the permanent combining or rationalization that I think everyone here suggests needs to be done. Are there any suggestions about buddy-up, particularly about whether that should come to an end or be expanded and maintained?

Mr. Wimbleton, first of all.

[Ray Wimbleton]

Without the buddy-up, Mr. Kamp, I wouldn't be here today as a fisherman. When I started fishing with my father, he could share the catch with me because two of us could catch more than one. But with an IQ on crab, a crew member was an unknown species...in my fleet of less than 40 feet.

Everyone I know--I think Earle can vouch for this--in order to land at least in 3K, are buddied-up two, sometimes three. We simply would not be here today; the 15 years of the crab we had would be no good to us if we didn't have that.

I fished with my friend who is 64 years old, and he fished with his friend who is 62. That's the only way we can squeeze enough dollars out of that bit of crab to barely survive. So we've got to keep the buddy-up. I don't think it's really an issue in our fleet. We should probably look at applying it to other species, more than we are today.