Fisheries Committee on Nov. 1st, 2011

[Ruth Salmon, Executive Director, Canadian Aquaculture Industry Alliance]

I'll start.

Thank you, Mr. Chairman, for the invitation to address the committee today on the topic of closed containment.

My name is Ruth Salmon. I am the executive director of the Canadian Aquaculture Industry Alliance. It's a national industry association headquartered here in Ottawa. We represent both shellfish and finfish operators, as well as feed companies, suppliers, and regional aquaculture associations. Collectively we probably represent about 90% to 95% of the industry in Canada.

I would like to introduce my colleague and a CAIA board member Mr. Clare Backman who is joining me today. Mr. Backman is the sustainability director at Marine Harvest Canada. He is very knowledgeable on the topic of closed containment and will be sharing his company's perspectives with you after my opening comments.

Just as a little bit of background context for some of the new members, the aquaculture industry now generates $1 billion in sales annually and its gross value is $2.2 billion. We account for one-third of the total value of Canada's fish production and we operate in 10 provinces, including the Yukon. With the depletion of stocks in the traditional fisheries, aquaculture has become an important employer and economic mainstay in many coastal rural communities in Canada, as well as aboriginal communities. We currently employ 14,500 people.

Unfortunately, the size of the industry is not going in the right direction. In fact, production in 2010-11 was less than it was in 2001-02. Mr. Backman will be addressing this a little bit more later, but closed containment is certainly not going to help take it in a more positive direction.

Before we get into that I want to step back for a minute and ask the question, why would we want to grow salmon in tanks on land in the first place? To answer the question, we really need to think about the early forays into closed containment of Atlantic salmon. At that time, it was really more about farmers wanting to address business risk, business risk that obviously occurs when nets are moored in the ocean.

There are really three major business risks that I want to quickly highlight. The first one is that if our fish are exposed to a disease or a parasite transferred from wild fish, they can die. They can also die from water quality issues, either naturally occurring or man-made pollution. Naturally occurring issues include dissolved oxygen, for example. Our fish can also be killed by predators, or they can escape due to large storms. There are a number of issues that become a business risk for farmers.

This was all addressed in the Canadian Science Advisory Secretariat process that the DFO talked about last week, the CSAS process, to provide you with some context. Addressing business risk is still really appropriate and of interest to the farmer today, but the current focus on closed containment is more now about avoiding any impacts to the environment.

Mr. Backman and I are here today to challenge the assumption that net-pen aquaculture is not environmentally sustainable. In fact, last week in DFO's presentation, I heard Mr. Kevin Stringer state that we have a safe environment now with adequate protocols in place.

Industry agrees with the DFO that current practices for salmon aquaculture using net-pen cage technology in the ocean are both sustainable and responsible. This industry operates under some of the strictest regulations in the world. Our production systems meet or exceed provincial and federal regulatory standards and requirements for both environmental and fish health standards.

There's no question that net-pen aquaculture results in impacts on the environment, as does any activity. But each and every impact has been assessed and found to be insignificant when subjected to careful risk management processes. This is the function of the Canadian Environmental Assessment Act screening, which does review salmon farms. The CEAA considers and reviews the location of a farm, and it reviews the species and whether the production level is appropriate. This, together with ongoing monitoring that industry and government does, gives us the confidence that in fact we are farming sustainably and responsibly.

It's our organization's experience that critics of salmon farming often impose the argument of closed containment in order to attain a level of conservation and protection that calls for extreme measures, which are often not required for other aquatic users and go beyond the good governance of the existing regulatory structures.

That being said, industry is interested in further research and pilot testing of innovative technologies that could assist with our environmental performance and/or business risk. In fact, for the last 10 years the industry has been on a road of continual improvement, and we are a better and more sustainable industry today than we were 10 years ago, and will be even better in the future.

It's with this fundamental understanding of the sustainability of our industry and the appropriate place for closed containment aquaculture systems that we provide information on the status of the technology to you today.

With that, I'd like to pass it along to Clare Backman.

[Clare Backman, Director, Sustainability, Marine Harvest Canada]

Thank you, Ruth, and thank you, Mr. Chairman, and members of the committee.

It's good to be here again. I have a couple of quick points to make on the company, Marine Harvest, as I haven't met some of you before.

Marine Harvest is the largest producer in the world of farmed salmon, accounting for about a third of the farmed salmon produced. In British Columbia last year, we produced 40,000 tonnes, and we employ about 550 people on the coast of British Columbia.

I like to think of us as scientists and biologists who have become farmers of fish in the ocean, because we have a very strong affinity to the environment where we grow our fish. All of the fish I mentioned--those 40,000 tonnes--were grown in floating net pens.

We're here today to talk about closed containment, because we're very interested in the technology of growing fish in a closed system for the benefits it offers farmers. It has become more and more a part of how we grow our fish. Right now all the fish we put into the ocean spend the first third of their lives growing in a closed system. I'll be touching more on that as I go forward.

In addition to the fish we harvest right now being in a closed system for the first third of their lives, 50% of our brood stock grow to beyond harvest size in a brood stock facility in British Columbia. So we have some knowledge of how to grow fish to a large size, as well as a small size, and some knowledge of the challenges involved in that.

Let me just touch on a couple of points that were made by other speakers last week on this subject, and then I'll move on to our own experience. It was mentioned that the DFO study in 2010 looked at a number of closed containment systems and found two of them to be financially viable. They were the net-pen production and the recirculating aquaculture systems. I think the comment was made that the return on investment was 53% and 4% respectively. The capital costs to get the water in the net water pens and RAS systems were $5 million and $22.6 million. This was in the DFO's 2010 report.

Keep in mind that this was the average situation. When they went to the worst case scenario and factored in all of the things that could go wrong, net pens remained profitable, dropping from 53% to 27%; whereas the RAS systems dropped down to a -23% return. That is why the international community continues to work with the net pens to make them increasingly more sustainable, and is reluctant to move in great measure to recirculating aquaculture systems until we have a lot more certainty about the return on investment.

Why is Marine Harvest interested in closed containment? We have an interest beyond our activities in hatcheries and with the brood stock. We've also been engaged with the environmental movements in British Columbia for the last six years, looking at a number of sustainable projects. One of them is a project on how viable it is to actually do closed containment for commercial-level Atlantic salmon production. That's going to require demonstration projects, as you've heard already.

It's going to take demonstration projects, because most of the production we can currently look at is small scale, whether we're talking about SweetSpring's coho production in Puget Sound; Swift Aquaculture in Agassiz, B.C.; or some of the projects that are at the planning stage, like the one by the Namgis First Nation in Port McNeill, a planned RAS facility that hopefully will begin construction next year; or others across North America that we've heard about. For instance, a Hutterite community is planning a 1,000-tonne production in the Midwest, and there's also a 1,000-tonne coho facility being planned for the Lower Mainland.

These are all exciting developments that will help us learn more about closed containment and how applicable it is to growing fish.

I want to point out that all of those taken together add up to the production from one conventional net-pen farm. These will all go through a struggle to achieve the kind of production they're planning to achieve, and they will not add significantly to the production base of farmed salmon in British Columbia.

We're looking at meeting a 3% to 5% growth market in the United States. We need a new farm at a 3,000-tonne level every couple of years. We won't get that from all of this material currently being looked at in terms of closed containment facilities. In fact, we may fall behind if we're not able to continue to grow both the conventional nets as well as invest in these new structures.

I just have a couple of points on the marine harvest plan. We have developed a pilot proposal to actually test closed containment in a recirculating aquaculture system in order to assess its feasibility for growing fish to market size, given the current state of technology development in British Columbia.

We undertook a site survey plan and a review of the current engineering, done by an engineering company in Victoria, B.C., Worley Parsons.

Interestingly enough, the site survey looked at 16 locations on the coast of B.C., where we seem to have all the water in the world we could ever want. Of those 16, only two were found to have water of sufficient quality and quantity to be useful for an RAS facility. That is because, although the facility recirculates most of the water, it still requires a significant amount of water on a day-to-day basis for things like cleaning, cleansing the fish from off-flavours, and the makeup of the water. It's not as easy to find a good location as one might think.

The second thing that came up was that the available engineering has basically reached the stage of being doable, but it still is very expensive work to invest in. Our exploration for a 2,500-tonne farm looked at making about a $35 million investment before taking into account the cost of land, as opposed to $5 million investment for a net pen, according to the DFO report.

I know I'm running to the end of my time, and I'll have to make time for questions. I'm just going to ask where we see all of this going. What is the bright light going forward for this technology and for farmed salmon in general?

I see a blend of cultures going forward, in terms of culture styles. There is going to be the net-pen culture, which will continue to become more sustainable, growing in the ocean off British Columbia. There are going to be fully closed systems, like we're talking about here today, which are going to meet those markets willing to pay for that product and those consumers who wish to purchase that product.

And there's probably going to be a blend of the two. For example, my company is looking at having our fish in closed systems even longer than they now are, going from the 100 gram smolt entry size to perhaps half a kilogram or a full kilogram, or maybe even larger. Why? That way we will reduce the time our fish are in salt water, maybe getting them down to less than a year, or maybe 10 months. That's good for everybody. We are not exposed to the vagaries of the salt water ocean, and the fish are not in the ocean with the attendant environmental impacts that everyone is concerned about.

With that, I'll end our comments and turn it over to you, Mr. Chair.

[The Chair, Conservative, Rodney Weston]

Mr. Stechey, do you have some opening comments?

[Daniel Stechey, President, Canadian Aquaculture Systems Inc.]

Mr. Chair, I don't have opening comments, per se, but I will just take a moment to introduce myself. My name is Dan Stechey. I started Canadian Aquaculture Systems in 1984, when the Canadian aquaculture industry was worth $7 million, as opposed to the $1 billion that Ruth just talked about.

For the past 27 years, I've been engaged exclusively in aquaculture, providing help with design, management, and productivity for our clientele throughout North and South America and the Caribbean. I've lost count of the number of projects we've worked on during that time. We do a fair bit of work, as well, for provincial and federal governments, particularly on the strategic policy area.

From 1992 to 1996, I put Canadian Aquaculture Systems in trust at the request of the Canadian Aquaculture Producers Council, the predecessor of CAIA, and the government of the day. It was a joint request. I served as the first director of aquaculture at the Department of Fisheries and Oceans, where I was the principal architect of the federal aquaculture development strategy. During that four-year period, we established a lot of policy and made some regulatory changes to help move the aquaculture industry forward.

From 1999 through about 2004, I also served as an internal consultant to the Office of the Commissioner for Aquaculture Development.

I'm honoured to be here to help this committee in its work. I think it's important work. You've got a lot of information to review. You need to make some key decisions for the benefit of this entire country, not just one sector or another.

I'm happy to answer questions to the best of my ability. Please feel free to ask anything that I may be able to help with.

[The Chair, Conservative, Rodney Weston]

Thank you very much. We appreciate that.

We'll move right into questions with Mr. Allen.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you very much, Mr. Chair, and thank you to our witnesses for being here today. It's always good to see you.

I have a few questions. Hopefully, I'll have time to get them all in.

Ms. Salmon, one of your comments was about the business risks, that the whole first foray into closed containment was all about managing the risks. One of them was with respect to the disease aspect of it. We've recently engaged in some debate on ISA, and we had some of that challenge in Atlantic Canada at one time.

I would like to know your perspective on that issue at this point in time, that is, the perspective of your producers. Maybe more specifically, what are some of the things you're doing right now to protect against that or what are some of your action plans regarding ISA?

[Ruth Salmon]

It might be more appropriate, if you don't mind, for me to pass it on to Mr. Backman, because he's been involved in that in British Columbia. I'm certainly involved as well, but I think Clare might be able to respond more appropriately.

[Clare Backman]

Sure. I think it's important, first of all, to put this into a bit of context. Then I'll answer about what our plans are at this particular point in time and how we plan to look at this going forward.

The context is that everyone has received information that two fish out of 48 samples sent to a lab in eastern Canada returned a positive test result for ISA. Now, what does that mean? Well, it stands in contrast to our existing testing done on our farm sites. What I'm talking about here is the government of B.C., and now Canada, who have a random audit program that involves their going to farms in British Columbia and taking samples of fish every month. They've been doing this for years and years, and have examined 4,700 samples since 2003, with 70 more added each month, for a variety of diseases, including the presence of ISA. All of those samples have been examined for the presence of ISA. All of them have come back negative. It means that we as an industry are in the position of having a lot of information from all of our farm sites, all of which have shown no ISA. So we're surprised by the positive test.

The other thing is that the information we have about ISA and its effect on wild salmon in the Pacific region is that it has a very low effect, almost insignificant. The studies that have been done with Pacific salmon and Atlantic salmon exposed to ISA show that the Atlantic salmon suffer greatly, and the Pacific salmon not so much—it's almost insignificant for them.

This makes us very curious about these tests. We want to see the tests replicated, which is the normal process when you get a positive. You do an independent test to find if the result is replicated with another positive test. Then if you get that test, which is a tiny piece of the DNA indicating that you might have that virus, you move to replicating the entire DNA of the virus. None of this has been done yet.

If this is done and we know what variant of ISA it is, then we can start to discover the next steps that are going to be useful. From our perspective, we certainly don't want to see ISA transferred to our farms, so we would want to see if this is a pathogenic or a non-pathogenic form, and what steps we need to take to make sure it's not going to be transferred to our farms and our fish.

In parallel, we want to ensure that the public knows that these 4,700 tests are not wrong. We're perfectly willing, and are starting to take steps now, to step up the amount of testing on our farm sites, to ensure that we can verify even more samples than the 4,700 we have had over time and know what's happening today on every farm site so that we can be doubly sure that we don't have it on our farm sites.

As I say, beyond that, we need to know what this is and what steps can be taken. In the past, our industry has successfully developed vaccines that we inject into our fish to protect them against locally and naturally occurring bacterial infection. In the case of the IHN virus carried by sockeye in British Columbia, we developed a vaccine against that. So that's something that we would look to down the road as a management response, but until we have all of this other information.... We need to get the results of the tests.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Is there any timeline on when you expect this testing to be available?

[Ruth Salmon]

There was an excellent press release by the federal government a couple of weeks ago, saying that none of this had been confirmed and that CFIA was taking steps to do a comprehensive study. At that time, they said the tests would take four to five weeks. We're trying to work with them and provide more samples, if necessary, and we're looking forward to that information.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Mr. Backman, you also talked about the fish that you raise spending the first third of their lives in the hatchery, and then you talked about your brood stock. I have a producer in my riding who raises brood stock as well, Gray's Aqua. You talked about the challenges of doing that.

Some of the comments that were made by DFO the other day suggested that we'd need to raise fish in around 50 kilograms per cubic metre of space to make closed containment work. What are some of the challenges that you see in raising the brood stock? I don't imagine you're packing them in at 50 kilograms per cubic metre. Could you talk a little bit about that?

[Clare Backman]

We're growing our smelts currently at about 50 kilograms per cubic metre, or 40 to 50, and that's to make the most efficient use of those hatchery facilities in recirculating aquaculture for our hatcheries. For the brood stock, it's not so much. We're growing those in recirculating facilities, but much lower densities, maybe 10 to 15 kilograms per cubic metre. The reason is that each fish has quite a high value, because it carries the eggs and milk for the next generation.

In our engineering proposal for the pilot that we're considering, in order to get the combination with the best chance of being economically viable, we have to operate at 80 to 90 kilograms per cubic metre for an extended time. That's higher than we're used to, though not as high as has been done by some test groups that have gone to maybe 100 kilograms. But we have to hold at 90 for most of the life of the salmon; plus we must have essentially zero mortality while we're doing it. So things have to go just right to get the best viability output.

[The Chair, Conservative, Rodney Weston]

Thank you.

Mr. Donnelly.

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

Thank you, Mr. Chair, and welcome to our guests.

I wanted to pick up on Mr. Allen's question about ISA and salmon disease, or disease in general. I understand this would be a concern to your operations. Some scientists are already pointing the finger at aquaculture and making claims about the eggs. They say the virus must have been from imported eggs or that it could have come from the Atlantic salmon. This will be revealed shortly, I hope, because it would affect farm salmon and wild salmon. It could be a pretty disastrous situation for the Pacific salmon.

I'm wondering if you could comment on whether operating in closed systems would have any impact on preventing the spread of disease.

[Clare Backman]

Mr. Donnelly, both the open nets and the closed systems prevent the disease from occurring. Every fish we grow in our hatchery has to have a disease-free status the entire time it's there. But the testing that we've done for this virus shows that our fish that come from the hatcheries and then go into the ocean are completely free of this virus. So in this case, there is no difference. But in a general sense, the fish in the closed systems, by virtue of the type of culture we must have there, are 100% free of disease.

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

You mentioned the need for expanding the market and the industry. Thinking of British Columbia over the past five to ten years, can you talk a little bit about how many new licences have been granted to fish farms in B.C.?

[Clare Backman]

I've been working with the present company for 10 years, and in that period of time three licences have been issued, the last of them in 2008. So in 2007-08, there were three licences issued, two of them to my company, and one to the Greek seafood company. There's been a hiatus since 2009, largely due to the shift in the regulatory regime from the province to the Canadian government.

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

So there have been two or three over the last 10 years?

[Clare Backman]

Since 2008, so that's within the last four years.

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

And were there others previous to that?

[Clare Backman]

Yes.

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

I'd make a comment on some of the statements you've made, namely, that I would take it that nature does a pretty good job of producing salmon and containing its waste for free, and that it gets harder to replicate that system, whether with open nets or closed containment systems. That's more of a comment than anything else.

Moving to marketability, in your opinion would moving to closed systems increase or reduce the marketability of your product?

[Clare Backman]

I'll take a shot at answering that, but I should probably pass it over to Mr. Stechey as well, if he wants to comment on it.

There is a part of the market that is looking for a unique and more environmentally focused product. So it is true that this product attracts the attention of those segments of the marketplace. It is a small part of the marketplace at this point in time. For example, the 40,000 tonnes that we produce on an annual basis would completely saturate the market that's looking to receive this kind of product and, I have to add, is looking to pay a premium price that goes along with representing that.

So our interest in the pilot project is not as much to address that market as to put actual knowledge to the costs of growing fish in a closed system.

Dan.

[Daniel Stechey]

I don't have much to add, but I would concur with that.

I don't see the marketing of closed containment salmon, or any fish in particular, as any different from marketing free-range chickens as opposed to traditional broiler chickens, or marketing organic product versus product raised on a conventional farm. It has a market niche. There will always be demand in that niche. Hopefully that demand will pay the premium price that is offered for that product. I think that's as simple as it gets on the marketing side.

I don't see our converting the North American or Japanese markets to having a very strong demand for closed containment salmon over net-pen salmon. I just don't see that as a reality.

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

As a quick follow-up, there seems to be a limited number of licences and a small niche—just thinking about the west coast of Canada, anyway. For instance, closed systems would provide only a small niche.

Are we at a standoff then in terms of industry expansion, or do you see the federal government looking to approve open-net systems to continue to satisfy this growing demand around the world, or wherever that demand is?