Fisheries Committee on Nov. 15th, 2011

[Alan Craig, Vice-President, Sales, True North Salmon, Cooke Aquaculture Inc.]

Perhaps I could answer that.

The comment I can make is that we compete globally with our product in the marketplace. Our competition in North America is Norwegian, Scottish, Chilean. It's a rough market today at certain times; the market goes up and down. We would not have the luxury to recover the extra cost involved in closed containment unless the rest of the world went the same way.

[The Chair, Conservative, Rodney Weston]

Thank you.

Mr. Donnelly.

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

Thank you, Mr. Chair.

Again, welcome to our presenters. Thank you for being here and taking the time.

I want to focus on Cooke Aquaculture. Cooke Aquaculture was recently charged with the discharge of illegal pesticide in the Bay of Fundy. The investigation was launched after lobster fishers discovered dead and dying lobsters from Campobello region, Deer Island, and Grand Manan. Environment Canada launched an investigation and found that the chemical used was cypermethrin. That's banned in Canadian waters and known to be harmful to crustaceans. Environment Canada has found 11 instances where this chemical was discharged, and fishers are concerned about the traditional fishing grounds, obviously for good reason.

Cooke Aquaculture claims that aquaculture and traditional fishers can coexist, but this incident might suggest otherwise. There seems to be growing opposition to aquaculture on the east coast.

Do you believe that the illegal discharge would have been stopped or contained by a closed containment system?

[Nell Halse]

Obviously, I can't discuss the nature of these charges, in this case laid by Environment Canada, because that's now before the courts and that's not the topic for today. But the broader question about how we manage fish health on our farms is a very important one, and what products we would use, how we would use them, and how much they are used. I guess the allegations, as you outlined, are referencing some lobster deaths investigated by Environment Canada. There has been no massive lobster kill. Lobster landings continue to be at record levels in the Bay of Fundy in the area right around our farms.

In fact, if you were to fly over our farms—and we just had some photographs taken last week, lobster season having just opened on Grand Manan—the whole farm is peppered with lobster traps all around, around the cages. That's been a practice going on for many years. It's a very good example of how we do coexist. Fishermen and farmers work off the same wharves. They're often the same families. Our kids go to school together. So it's not like two solitudes. If there really were this terrible devastation occurring, you would not continually find fishermen setting their traps—choosing to—right around the farms. We provide a natural habitat for lobster. Those are the facts.

In terms of sea lice management, in recent times in New Brunswick we had a real struggle with managing sea lice because a treatment we had been using in feed was no longer as effective. We had exceptionally warm water temperatures and we had no other options, even though for a whole year before we worked with both levels of government to develop a national fish health program with access to the kinds of treatments available in other countries. We didn't have anything to use. It got out of control, and that has created a lot of fear in the community about what the industry is doing. But I think if the industry were using a whole lot of illegal chemicals, we wouldn't have problem with sea lice. You have to sort of think that through to its natural conclusion.

I don't mean to diminish the concern. It's very important to us that we sit down directly with the fishermen, have a dialogue, and tell them what we're doing. That particular summer, information on all the treatments that occurred on the farms was shared with anyone who wanted it—the fishermen, the conservation groups got that data. There was some confusion about how to understand it, unfortunately. I can tell you that since we had that problem summer, we've invested millions of dollars in well-boat technologies so that we could use a closed containment system for treating sea lice. The fish are pumped out of the farm into the hold of this huge vessel with sea water, a very small amount of an approved treatment is administered under a veterinarian's care, and then the fish are pumped back into the cages.

This past year, we have only used bath treatments with hydrogen peroxide, which is a benign product; the fishermen have supported that. In Grand Manan, for example, we didn't do any bath treatments at all. Last week was our first one. It's a manageable problem with the right tools. We can handle it.

Over and above that, we've been investing in green technologies. We consider well boats and hydrogen peroxide to be one, but also we're exploring something that's being done very well in Norway. Some of you have been to Norway. They've discovered there's a native fish called the wrasse that actually eats sea lice. So you can put them in the cage with the salmon. It's worked so well that they are now actually having hatcheries where they grow these wrasse so that they're not depleting the wrasse from the wild. We can't bring those fish here because they're not native to our area. But we can explore if there is a native fish that would do the same thing. So our company has invested in a project with cunner fish that come from the Bay of Fundy. We've had some trials at the Huntsman Marine Science Centre that worked quite well. We got our first field trial.

There's no silver bullet. We're doing whatever we can to invest in good solutions.

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

If the industry were to shift to closed containment for whatever reason over some period of time, what would happen to Cooke or Gray?

[Nell Halse]

Well, I think....

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

It sounds like the numbers you're talking about would put you out of business.

[Nell Halse]

As I said in the beginning, I think it's a question of whether we can do it, and should we do it? There would be challenges, as Terry already said. The stocking density would be a huge one. Where would you find all the land? Which forest would you like to clear-cut? Which farm land would you take away? Do you want tank farms taking up precious freshwater resources that are going to be in high demand? Those are all big philosophical questions that need to be asked as well.

One of the things, it's a type of science, is life cycle analysis. We have some experts in Atlantic Canada. There's been some work done. I'm looking at what the carbon footprint is of doing things a different way. I think if we moved all our farms out of the ocean onto tank farms, that whole life cycle analysis would show a really large environmental footprint that would be negatively perceived I think by the public.

[J. Terry Drost]

I would just go to your first question on disease and chemical disease from closed containment. Would it be less or more? I truly believe there would be more disease, and there would be more chemical discharge from closed containment, just from my experience. There are several examples that I spoke about, and there are more just on the east coast of Canada that have shown it becomes a very difficult husbandry issue in getting these fish up to these large biomasses in closed containment systems.

Would we survive? DFO has done a lot of work on studying various technologies. There are emerging technologies. Could there be a paradigm shift? Could something come up that we just haven't thought about? Maybe, but I would say we would very likely not survive if we were required to go to closed containment and based on the fact that our competitors would not be going to closed containment in other parts of the world.

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

In terms of the status quo operation or your current operations, do you have any plans for expansion?

[Nell Halse]

Yes, we do. Cooke Aquaculture has grown tremendously in the last 25 years. Most of our investment has been in Atlantic Canada and Maine. We did buy a company in southern Chile, and frankly, the Canadian integration model is working very well there. And we just bought a sea bass and sea bream operation in southern Spain. That is our first shift to a completely different species.

Yes, we have plans to grow and invest, but it's not status quo. There is nothing status quo about this industry. It is constantly changing--

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

I'm sorry, I just meant about the regulation.

[Nell Halse]

Okay. In terms of containment.... I think it is an important point, though, because we're constantly exploring new technologies, new ways of doing things, and investing in innovation, so that's just part of how we do business.

As a company we want to grow. The question is where. We'd like to grow in our own backyard. We have plans for growing in Nova Scotia. We approved two new farms this past year. We have an application in the system for three new farms on the south coast. We are going through that whole process of consultation, environmental assessment work, and public consultation.

You did reference the opposition in Nova Scotia, and there is no question there is a very loud group of people who are very opposed to what we're trying to do there. But there is also a really strong grassroots movement of people who live in coastal communities, who want their kids to stay home and have good jobs. What is really interesting about this group is that they are arm's length from our company. They ask their own questions. They've formed a Facebook site. They're reading the science and they're saying they want the jobs to develop it, but not at any cost. They want to make sure it's done right, so I think that bodes well for that province, in particular.

In Newfoundland we've seen much of the same thing. The government is very engaged there, building really tough regulations.

That was one comment that was made. The regulations in Maine and in eastern Canada are not comparable. There are jurisdictional issues or differences, for sure. It's our company that's doing both, so we have good experience, but because of our eco-label we have standard operating practices and we operate exactly the same way in Maine as we do in New Brunswick, Nova Scotia, and Newfoundland.

[J. Terry Drost]

Gray's Aqua Farms has formed another company to farm salmon in the ocean. It's called Gray Aqua Group. They currently have two sites in production in Newfoundland, and that will grow in the years to come. They definitely plan to become a significant producer of Atlantic salmon in Canada. The south coast of Newfoundland as well represented some very interesting environmental challenges.

I echo Nell's point about new technologies. There have been tremendous changes in technologies over the last several years. We've been able to go into places that we couldn't farm 10 years ago, and we are doing it quite successfully, with relatively no escapes. And the growing conditions for these fish have been tremendous.

I think it is an enormous opportunity for the south coast of Newfoundland. It's an enormous opportunity for Atlantic Canada to develop the salmon farming industry.

[The Chair, Conservative, Rodney Weston]

Mr. Leef.

[Ryan Leef, Conservative, Yukon, YT]

Thank you, Mr. Chairman.

Welcome. I want to quickly go back to an estimate you made on the $40 million projected costs for the closed containment. So that we have a comparison, what would an average cost of operation be right now for the open net?

[J. Terry Drost]

Without feed and labour--and feed and labour in the ocean are by far and away the biggest costs--they would represent.... Feed and labour would represent well over 75% of the cost. Then there would be your capital costs and other operating costs, which would be your vessels to service the site, and also insurance and so on.

It would be significantly less. I can't give you the exact number on 20,000 tonnes. Maybe you could without feed and labour, but it would be easily less than 20% of that number. I would say less than $8 million.

[Alan Craig]

I was going to say a quarter of the cost of the $40 million. So our estimates are close to the same.

[Ryan Leef, Conservative, Yukon, YT]

That was a test.

Moving over to the track record, and I don't want to get specifically into your track record for the containment of salmon, we heard a little bit earlier that there were over 200,000 escapes. The first part of the question is, would that be a number that you're aware of or would agree with?

Secondly, as you indicated, your containment and escape prevention program is something you're proud of, and it's low in your testimony. You did touch on your escape strategies or the prevention of escape, and your technologies were pretty good. Do the industries vary tremendously in the strategies employed for escapees? When I heard the number earlier of 200,000, I initially thought you just stop the fish from escaping and figure out a way to put in technology to stop them from escaping.

Could you give me an overview of how the technology in that escape prevention varies or doesn't? What would be the difference between your company and others?

[Nell Halse]

One of the things that has happened to the salmon farming sector over the last year is there's been a lot of consolidation, so there are not a lot of players. The people who are in the business now are all family owned companies who have lots of experience and have been there around the same amount of time. I'm specifically referring to New Brunswick, but that's true for.... Other than the Grays, who are fairly new players in the farming side of the business, they're all companies that have been doing this for a very long time.

You would probably find, even though our company has eco-certification, that another company has a quality certification program, so there are some differences there, and of course we like those differences. They help us in the marketplace.

In terms of structure, and we all have to adhere to the same regulations, I can say that having 25 years of not just farming but of developing, designing, and building the equipment, not just the cages and the nets but the mooring structures on the ocean floor that hold everything in place...those are really the main reasons, I would say, why our escape record has dramatically changed. It's good. That isn't to say there couldn't be some devastating event. I think the farm that did lose the fish last Christmas or last fall--they were smolts, very young fish, so they didn't go very far. They just disappeared.

We recognize the importance.... I mean it's our investment. We are not going to want to see those fish leave and go up the rivers either. Also, as I said, we have this same interest in the conservation. We also share the same interest as the ASF.

Then there are the regulations in terms of reporting. We have an insurance sector that we have to answer to. We have a banking sector that we have to answer to. It's not like a hobby farm. It's serious business. We have a lot of checks and balances all throughout. We have divers in the cages all the time who are checking on the fish, but also on the equipment. And that's year round.

[J. Terry Drost]

I would add that sometimes the new technology we try doesn't work. In this particular case there was a failure with the new technology. All of the prototype testing that was done for that technology looked good. The salmon farming company obtained insurance and did their due diligence. Everybody did a lot of background work before they put the fish on that site, and it failed fairly early. It was a good thing for the farmer because he hadn't invested a lot in the ocean. I also truly believe those escapes represented absolutely no risk to the wild population.

New technology is not always going to work the way you want it to work. That goes with closed containment. We have had several past experiences with very large-scale closed containment developments. One of the biggest ones in Atlantic Canada was a company in Cape Breton. They really wanted to make a tank-based salmon farming operation go economically, because of the rough environmental conditions there. A lot of government money was put into that project, and a lot of investor money--many millions of dollars. You can go today and probably look at those tanks. That technology did not work.

[Ryan Leef, Conservative, Yukon, YT]

We heard some conflicting opinions on the availability or accessibility of land-based plots. I think earlier testimony suggested it would be a bit easier to find land-based plots now than open net plots.

Excuse me if I'm not using the right words. I'm from the Yukon.

Would that statement be more accurate for new people getting into the business? If I were trying to get into the business, would it be smarter for me to look for land-based options?

[Nell Halse]

One of the things we have to remember is that there are species of fish that work really well in land-based facilities. We're not saying land-based as a technology doesn't work; it's just not great for Atlantic salmon.

Did you say you're from the Yukon?

[Ryan Leef, Conservative, Yukon, YT]

Yes.

[Nell Halse]

They have great Arctic char operations there, and they work well. That's one of the points--for Atlantic salmon it just doesn't work for their whole life cycle.