Fisheries Committee on Feb. 24th, 2014

[The Chair, Conservative, Rodney Weston]

I call the meeting to order. I'd like to thank our guest for being with us here today.

Ms. Salmon, I know you're no stranger to this committee and not a lot has changed in the procedures with our committee.

Having said that, we'll welcome you and ask you to proceed with your presentation.

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

Thank you, Mr. Chairman, and thanks for the invitation.

I'm not a stranger to the group, but there are a few new faces, so it's good to be here.

I'll just get the slides going here.

[The Chair, Conservative, Rodney Weston]

We'll just suspend for a moment until you're ready.

[Ruth Salmon]

Thank you very much, Mr. Chairman.

For those of you who don't know, we're a national industry association headquartered here in Ottawa, representing the interests of Canadian seafood farming operators, feed companies, and suppliers, as well as provincial finfish and shellfish aquaculture associations.

I will be talking about CETA today—obviously, that's why you invited me here—and the benefits to our industry. But I wanted to start by talking about aquaculture worldwide and the potential that exists for aquaculture, because it's really pertinent to the discussion. Aquaculture is the fastest growing food industry in world, with an annual growth rate of 6% to 7% per year. That's a very large annual growth rate, so you might be asking what's fuelling that increased demand.

The FAO has a very compelling message about the global demand for food. They tell us that collectively we face a huge challenge to attain food security for a population that will exceed 9 billion by 2050, which is a 34% increase over today’s population. They also project that we will need an additional 50 million tonnes of seafood to meet that demand—and we know that the wild fishery can meet less than half of that. The FAO director general, Dr. Árni Mathiesen, spoke to our annual meeting in November. He said that because Canada is an advanced and environmentally conscious country, we have “...a chance to lead the way: to disseminate the knowledge, secure investments, and contribute significantly to achieving our common goal of global food security.”

Other influential international organizations are starting to see and talk about the benefit of aquaculture. A new World Bank report estimates that in 2030, 62% of all the seafood we eat will be farm-raised to meet the growing demand.

In December our association welcomed the recommendations contained in the newly released Conference Board of Canada study of how to improve the economic viability of Canada’s seafood industries. This study confirmed the vital role of farmed seafood in Canada's future food supply and the unique opportunity it provides in terms of new jobs and growth. In addition to recommendations from this standing committee in the closed containment report, we were very pleased to see that the Conference Board report called for the creation of a federal aquaculture act to help achieve increased growth, employment, investment income, and export opportunities.

The Conference Board study also highlighted the health and nutritional importance of increasing the share of seafood in Canadians’ diets. It's well recognized that seafood contributes to human health but Canadians are not even eating the minimum amount of seafood recommended by Health Canada. By ensuring greater awareness and access to healthy, nutritious seafood products, our industry can contribute to the potential reduction in health costs, thus an additional benefit to the Canadian economy.

Looking at aquaculture today, we're valued at just over $2 billion. We employ over 14,000 full-time workers, and we farm in every province and the Yukon. The bulk of our production comes from the two coasts, but we do farm in every province. The value of our industry is a third of the value of Canada’s fisheries production. Approximately 80% of farmed seafood is exported.

However, many of you in this committee know that Canada has the potential to do so much more. Canadian aquaculture grew rapidly from the early eighties to the end of the nineties. But since that time, even considering small pockets of growth—and we've seen pockets of growth in Newfoundland—overall industry growth has basically been stagnant. Despite our enormous competitive advantages, Canada’s share of the world’s farmed fish market has fallen by 40% during the past decade. We now account for only 0.2% of global aquaculture production. This stagnation has taken place while other producers in New Zealand, Norway, Scotland, and Chile have raced ahead. As a result, our rural communities are forgoing greater prosperity, our food processors are losing out on export opportunities, and our economy is missing out on potential growth. But not only is this a missed opportunity for Canada at a time when there is such a huge demand for food globally, it's really a missed opportunity for the world.

The natural question, then, is why we have flatlined.

The principal challenge confronting our sector is the complicated set of regulations that restrict growth and limit investment. Rapid development of the sector in the eighties and nineties resulted in a myriad of federal, provincial, and local regulations. Many of these were implemented before commercial-scale aquaculture was even a significant activity. A patchwork approach resulted, and many of the policies and regulations are reactive and inefficient.

As many of you know, we're regulated by the Fisheries Act, which is a wildlife management act that was never intended for an innovative food production sector. It doesn't even mention the word “aquaculture”. It is a piece of legislation that dates back to Confederation, when commercial aquaculture didn't even exist.

But I think it's important, when we look at what has kept the industry stalled, to stress the important point that our industry is not looking for less regulation—we are a food-producing industry, and regulation is very important—but is looking for more efficient and appropriate regulation. In response to this need, our sector launched a comprehensive national aquaculture development strategy in 2012 to advocate for legislative, regulatory, and policy reform. The next slide illustrates some of the growth that is projected in our industry, if we can get the kind of regulatory, legislative, and policy reforms we are hoping for. It shows that over the next 5, 10, and 15 years there is significant investment waiting to come to Canada.

In the first five years, for example, the slide indicates—we're currently at 160,000 tonnes—that we could move to 200,000 tonnes, without even an increased footprint, by just approving amendments and allowing for more efficiencies. From there, after 10 years and 15 years, with new sites there would be a significant increase in growth and jobs for Canada.

This projected growth not only impacts economic activity for rural and coastal communities, but would also allow us to capitalize on trade agreements such as CETA.

Now that we've talked about the potential of aquaculture and about how Canada is falling behind, let's take a closer look at CETA. For us, the EU is the largest seafood import market in the world, and it's a growing market. And it is not just for farmed seafood: Canada's fish and seafood exports to the EU are currently $400 million.

These exports have attracted an average tariff anywhere between 11% and 25%, making access very difficult. In fact, I was talking to one of my members this morning, who farms sturgeon caviar, and he said that the tariff for him has been 20%, while the tariff on European caviar coming into Canada has been 3%. With CETA, we've been told that 96% of tariff lines will become duty-free immediately upon signing the agreement, and others will be duty-free within seven years. This is obviously very encouraging news, and we hope it is actually the case.

What is the current situation and the near-term opportunity? As you can imagine, with limited potential to increase farmed seafood production, any new markets require diverting products from existing markets. When you add the high tariff rates to this supply limitation, you can see why the EU has not been a priority export market for us. When CETA is implemented, however, those companies that are doing business in the EU now will look to expand. Companies that have expressed interest in expanding are in farmed salmon—particularly value-added products—sablefish, oysters, mussels, and sturgeon caviar. However, if the industry is allowed to grow, the EU will become a natural new market for high-end value-added farmed seafood products. This will also result in new jobs here in Canada, as the value-added products will require additional labour.

Our association supports and applauds the federal government for its work on CETA; however, our industry requires increased growth and competitiveness to really take significant advantage of this new market opportunity. Aquaculture in Canada offers tremendous opportunities. Working together we can renew a vibrant aquaculture industry in Canada and unlock the full range of economic, environmental, and public health benefits that flow from a competitive, sustainable, growing farmed seafood sector.

In our mind, that will require regulatory reform, which we are working on with DFO, a national aquaculture act, and a vision for growth.

Thank you, Mr. Chairman. I am happy to answer any questions.

[The Chair, Conservative, Rodney Weston]

Thank you very much, Ms. Salmon.

We're going to start out with a 10-minute round.

Mr. Chisholm.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Thank you very much, Mr. Chairman.

Ms. Salmon, it's a pleasure to have you before the committee.

I have to tell you, though, that I wish we were having a fulsome discussion about aquaculture and its pros and cons. You presented material that I certainly am familiar with, and it continues to impress me by the potential, the growth, and the expansion of aquaculture around the world and here in Canada.

Of course, with that expansion come a few problems, one could say. The Cohen Commission report on the west coast had a section in it—the final report by the commissioner—that talked about finfish aquaculture, open-pen finfish aquaculture, and the impact it had. It was interesting.

What I most took from what he said was that he didn't think that in all the testimony he heard, we could deny there is an impact. It's a question of degree. Then he went on to make some recommendations, which we're still hoping to discuss further. Likewise, there are some issues on the east coast. Some of my colleagues will want to ask you a couple of things about that.

My point is that it's an important issue in this country, and an issue....I would love to see the end of the table filled with people directly involved in aquaculture, people involved in the traditional fisheries who have some concerns, some scientists, and people involved in regulation, so that we could really have a fulsome discussion of the industry and where it intersects with what else is going on, on our coasts, and for that matter, in fresh water.

That's not what we're here for. We're here to talk about CETA. I appreciate some of the things you've raised about the whole market issue. That, of course, is important as well. We need to make sure that we have some idea of how we're going about this and that we're doing it the right way. But markets are extraordinarily important too.

I was curious about the....Countries like Scotland, Norway, and other countries have been doing this a lot longer than we have. You talked about sturgeon caviar and that our Canadian producers were meeting, I think you said, 20% tariffs to export, and yet the import duties were in the area of 3%.

I wonder if you could talk about products like smoked salmon and mussels, and fresh salmon as well. What are the tariffs coming into the country? When we talk about any industry—and this trade deal, or any other trade deal—it's not just about the markets we can access but about the competition we open ourselves up to. That raises some concerns. So if you wouldn't mind....

[Ruth Salmon]

I'm happy to address it. I don't have the specifics in terms of each product, but certainly exporting for us is anywhere between 11% and 25%. My understanding is that most of the competing products coming in don't have that high a level, so from all my discussions with members, whether they're salmon or mussels, they're at a competitive disadvantage.

Now, that's not to say that some haven't made inroads into the European market, because it's a market that really values high-quality, high-end products, and many of our products fit that kind of a niche market. We wouldn't export, at this stage, fresh farmed salmon into the EU; because of the tariffs, it makes more sense to go to the United States.

I think once you've levelled that playing field, you'll see that this will become a market that has stronger appeal for a wider variety of products. Right now it just isn't that viable for the majority. It's viable for a few high-end products—they can still do well given that tariff—but not for the majority.

Again, it comes back down to growth, because it's hard to look for new markets when you don't have a sense that your industry and your production will grow.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Right.

Just quickly, to take P.E.I. mussels as an example, have you heard any concern from that industry about CETA and the potential competition, and/or do you have any idea what the tariffs are specifically with respect to mussels?

[Ruth Salmon]

I don't have a number for mussels. It would be in the 11% to 25% range, but I can get that for you specifically.

I know that a couple of my members who farm mussels in P.E.I. are currently doing some vacuum-packed mussels. As soon as the tariffs are reduced, they're looking to make that a significant market.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

They'll be ready to go.

[Ruth Salmon]

Everybody is watching it very closely and is very excited about the possibility of what that will mean.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Thank you.

[Ruth Salmon]

To go back to your first question, we're happy at any time to talk about the industry. We'd always be open to having that discussion, and so would—

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Yes, I'm sure you would be. I appreciate that. I wanted to raise it because I knew you would look forward to that opportunity.

[Ruth Salmon]

Absolutely.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Maybe we'll get some other committee members speaking to that.

[Ruth Salmon]

We've been well studied, but we're happy to share more.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Yes. Thank you very much.

I'll turn it over to my colleague now.

[The Chair, Conservative, Rodney Weston]

Mr. Cleary.

[Ryan Cleary, NDP, St. John's South—Mount Pearl, NL]

Thank you, Mr. Chair.

Thank you, Ms. Salmon, and thank you for your opening remarks. A few things struck me about your opening remarks. Number one, you mentioned that Canadian seafood products account for 0.2% of global aquaculture production, which is interesting, and that companies will obviously look to expand with this Canada-EU free trade deal. The lowering of tariffs is seen as a great thing for our seafood markets, and we can do nothing but expand.

The third thing I found interesting about your opening remarks was that you spoke about the principal challenge confronting Canada's aquaculture sector as being a complicated set of regulations that restrict growth and limit investment. Now, some people say that our aquaculture regulations and rules aren't strict enough, but let me come to my question.

It was uncovered by the local media in my province of Newfoundland and Labrador just a few months ago that $33 million had been paid in compensation to Gray aquaculture for five outbreaks of infectious salmon anemia on the south coast of the province. Again, that was a total of $33 million. The Minister of Fisheries and Oceans stated that the Gray aquaculture company needed to be compensated a high amount so that there's an incentive to report disease outbreaks in the water.

For me, if that's actually the case, that's a reflection of the fact that it's that clear that federal regulations are lacking.

Moving on to my question, what are your thoughts on Canada's regulations for open net-pen aquaculture, and how does the reality of ISA and culls impact trade with the European Union? You can't effectively trade if you don't have a stable, reliable product. Would you say that's the case?

[Ruth Salmon]

Oh, absolutely. When you get into discussions around fish health, it's a global issue. ISA is not a Canadian problem. Fish health, as with any other agricultural commodity, deals with health issues.

I would say that we have a very good system of early detection so that we can minimize and reduce the spread. CFIA works closely with our industry on that. No one likes to have a fish health issue or an outbreak, but I would say that this government has the controls in place in order to be able to deal with it quickly and expediently.

[Ryan Cleary, NDP, St. John's South—Mount Pearl, NL]

If we've had major fish culls, not just in Newfoundland and Labrador but also in the Maritimes, and as a result of those culls we've had millions and millions of dollars in compensation, I can't say it impacts the quality, because the quality of Atlantic salmon and char is fantastic, fabulous, but it does impact the brand, the reputation of that product.

Do you think that with the Canada-EU free trade deal our ability to capitalize on that incredible market is going to be jeopardized because of our diseased fish, our fish culls, our escapement, and some of the negativity that's been surrounding the industry?

[Ruth Salmon]

You have to realize that this is a global industry. Because we're here, we think we're the only ones who have issues in our industry. But, in fact, other countries as well have fish health issues. Escapements, for example, have gone down globally. This industry is not that old. It's 35 years old. We've come a long way since the beginning in terms of knowing more about where to farm and how to farm sustainably. The science has been done by DFO. We're in a position now of being among the best in the world in terms of growing a high-quality and responsible product.

It's unfortunate when these things happen. But our reputation for farmed seafood products is excellent. We're heading to the Boston seafood show in March. Our problem will be that we won't be able to meet the demand of the buyers. They understand. The people who are in the industry understand there are issues that we continue to work on and improve. And we'll do that. This is a continuous improvement industry.

Looking at where the industry was 10 years ago, we've made leaps and bounds. All of our salmon-farming companies in Canada right now are certified to a third-party audit. It's not only strict government regulations; we're audited to third-party standards.

I understand your concern, and we will continue to do more research on fish health issues. But it hasn't impacted the good reputation of our product.

[Ryan Cleary, NDP, St. John's South—Mount Pearl, NL]

Thank you.

[The Chair, Conservative, Rodney Weston]

Thank you, Ms. Salmon.

Ms. Davidson.