Thank you.
I have a very short presentation, and then I'll turn it over to questions.
On the principles of fisheries management, DFO manages fisheries in accordance with our roles and responsibilities outlined in the Fisheries Act, and we use credible science, affordable and effective practices.
Key priorities include environmental sustainability, economic viability, and the inclusion of stakeholders in the decision-making process, but I would emphasize that ecological environmental sustainability is the cornerstone. We need that to have all things, because without it we have nothing else, we have nothing to allocate, etc. So that is the priority.
We make use of any instruments and policies to guide us in the conservation and sustainable use of the marine resources, and we've learned a lot from the past.
What we have done now is that we've created a sustainable fisheries framework, a framework of new and existing policies that provide the foundation for our ecosystem-based and precautionary approach. I'd refer you to Annex B, which outlines our precautionary approach in a very simple way.
We have enhanced monitoring surveillance. So what have we added? We've added dockside monitoring, better use of observers, hail in hail outs, logbooks, etc. Those have all been added to the suite of monitoring control and surveillance tools to make sure that we have a better understanding of fishery-induced mortality, not just on the target species but also on bycatch, etc.
We have stable access and allocation, and predictable allocation and adjustment processes. That was done, and a bit more on that is on the next slide.
Integrative fish management plans detail how a fishery is managed, how access and allocation processes are established, and provide an implementation instrument for the sustainable fisheries framework and other management initiatives. Those are discussed on a regular basis with stakeholders, and in the public domain they are on our websites.
On slide 4, stability of access and allocation, prior to 2004 and following essentially what happened with the huge shift in resource availability and the moratorium on ground fish, etc., we had a lot of movement of fishermen from one fishery to another, or fish from one group of fishermen to another. It created a fairly chaotic and conflictual environment. It jeopardized the sustainable use of resources and self-reliance, people solving problems with somebody else's fish, and it impeded the proper business environment needed to get the better value out of the resource. It put us as a department and the minister in the middle of conflicts about sharing.
Subsequent to that, in 2004 we clarified the processes and the criteria for determining best use and acknowledging legitimate uses. We established decision-making guidelines for commercial access and allocation, stabilized sharing arrangements in quota-managed fisheries in the commercial fisheries, and we created a predictable operating business environment. We also changed policies to allow use of licences as collateral in dealing with banks, etc., and we gave enough stability to those processes to give some confidence on the part of lending institutions that they had the value of their loans covered by assets.
Slide 5, however, shows what you were talking to science about last week. Oceanographic conditions are changing quickly on the Newfoundland Shelf, more so than in other locations in the North Atlantic, and the green area shows you where the biggest changes are taking place. They are affecting resources.
Species that are particularly sensitive to these changing environmental conditions include shrimp and snow crab. I will be talking about snow crab, and you may wonder why. The offshore shrimp fishery is 85% dependent on shrimp. The inshore fishery has a varied dependency from 96% down to about 50% or a little bit over 50%. The rest of what they are dependent on is crab. So between those two species it makes up to 98% of the earnings of the inshore fleet so if something's happening to crab, it has an impact.
Given the life cycles of shrimp and crab, those fisheries are based on the relatively narrow range of ages. It takes a shrimp four years to enter the fishery to be big enough to be caught, and then we only fish it for a period of about six years. So you're highly dependent on recruitment, and it's the same thing for crab. It takes eight years to get big enough to be caught in the fishery, and then it's around for about five years thereafter.
On slide 6, the northern shrimp fishery, as noted by the previous witnesses, is a big fishery: $300 million from Baffin Island in the north to southern Newfoundland. It's managed under a precautionary approach with very conservative exploitation rates. When the stock was in its heyday, hitting a maximum of 176,000 tonnes, the harvest rates were very low. The markets were not there to take it all, and the process was such that in getting it to market, not all of it was used. The harvest rates were very low, and we were well within what was called the healthy zone.
That's changing now. Originally fished by a specialized offshore fleet that developed the fishery, it started to expand rapidly in the late 1990s, and it became a place where we could have some opportunities for displaced cod fishers and other interests. At the time of unprecedented growth, there was an expectation that it was too good to last, that we didn't want to enter into a fisheries management regime that didn't look at the possible downside of eventual declines. There were policies introduced at that time. Subsequent, however, to that growth, there were investments made in this fishery by both fleets. It provides employment, etc.
I would say, just regarding some of the questions that were asked before, with regard to the early entrants, it was a temporary permit with the understanding that should the resource fall back down to pre-growth levels, there would be people removed in the order in which they came. Subsequent to 2007, when the licences were made permanent...and that was as a result of over 40 meetings jointly held with communities and stakeholders by the Province of Newfoundland and Labrador, and by DFO. The RDG of Newfoundland region, and the deputy minister of the Department of Fisheries of Newfoundland and Labrador went to those communities and asked, “What do you need to change in the fishery?” As noted, there were changes to allow for use of licences as collateral. There were changes made to the tax system to allow for capital gains.
One of the things asked for was to move the shrimp fishery from temporary permits to permanent licences so there could be combining, etc. At the time that took place, that's when Minister Hearn made it abundantly clear that, okay, it's no longer an access issue. You don't get out altogether, you don't lose your temporary permit, but rather you have your allocation of the resource linked to that kind of policy framework that became known as LIFO in 2003.
So they made investments, and that's not disputed. There's a lot of money associated with this particular fishery. Special allocations were provided as well to aboriginal groups and other organizations that were allowed to benefit from the tremendous growth. It went from 37,000 tonnes, as I said, to 176,000 tonnes, so there was a lot of growth.
Since that time, however, scientific advice indicates the size of the northern shrimp biomass has been trending downwards, more predominantly in the south than in the north. As much as 70% to 90% in southern Newfoundland over the last six or seven years has been lost. The total allowable catches have declined by 47% in areas 6 and 7, from the peak. You'll note the total allowable catch hasn't declined as much as the biomass. The reason for that is the harvest rates, as I mentioned earlier, were very, very low. Our target is to keep them in the 15% range, with a cap at 20%. So we were able to keep harvesting opportunities available by having the TAC reduced, yes, but by allowing the harvest rate to go up, but not into a dangerous level of harvest.
Just on the life cycle, you heard last week that there was a problem in linking shrimp abundance to the temperature of the water. It relates, however, to that pelagic larval, one- to four-month stage. If that happens to coincide with a good bloom of algae, as it does in cold-water years, then there's a high degree of productivity. If it happens after the bloom of algae because it's a warm-water year, then the larval shrimp don't have as much food. The males recruit into the fishery. They're big enough to catch after they're about four years old, and then they're available as males for three years and as females for three years and then they're dead.
On other fisheries, the key one being snow crab, as I mentioned, between snow crab and shrimp, those enterprises that fish shrimp in Newfoundland and Labrador are 92% to 98% dependent on those two species. So we harvest only mature males. There are no juveniles or females fished, which allows them to reproduce before being fished. The males are harvested at a rate in the 30% range. That allows most of the males to reproduce before they're caught in a fishery, and the way they reproduce is such that even after they've mated, the females will use sperm from a sperm sac for up to two years after they've mated. So even the fish that are caught in the fishery may still be reproducing under those circumstances.
Overall, exploitable biomass has changed little since the mid-2000s, but the biomass in 3LNO has gone up and the biomass everywhere else has gone down, and in 3K it has gone down by two-thirds, 66%. So there's a real issue in that particular area, and the reason for that is the water temperatures in 3K are warmer than in 3LNO. We expect further declines.
Changes in the ecosystem over the long term may help groundfish, and here you can see the size difference, on page 8 or 9, and that shows you how we can configure the gear to avoid catching anything else.
Page 10 shows that what's in the square is about what's going to be big enough to catch in the fishery in the next couple of years. You can see healthy stocks in 99 and not too bad in 2009. What's there in 2013 means that there's very little recruitment into the fishery expected in the next number of years. That's a very bad sign and indicates that we are going to have further drops in the crab resources.
We will continue to discuss with industry the best response to changing environmental conditions, but I would say that based on all the information we've received from science to date, on crab it looks like a lean period of years and on shrimp, while the predictive capacity of science is less so, we are expecting to see further declines in shrimp as well. So between the two of those, it's a problem.
On cod, we see high productivity on the Flemish Cap, good productivity on 3PS, and while there have been some encouraging signs on cod in 2J3KL, the northern cod stock, it is not yet there to take up the slack from shrimp and crab. And even if it were back in prior abundance, the value would not be enough to make up for the shrimp and crab.
We don't have good news, evidently, and we are going to have to look at a way forward on this fishery.