Thank you.
Grand Hale Marine is a small-to-medium sized family-owned and -operated seafood processing and export company located in Richmond, B.C. It was founded by immigrants from Hong Kong. Starting with nothing in the early 1990s, we quickly became known for our quality sea urchin harvested from B.C. and exported to Japan for the sushi market. From there, we expanded to process other products such as salmon, spot prawns, sea cucumbers, herring roe and salmon caviar—mostly for the Japanese and Asian markets, but we also expanded into new markets in Europe.
Now we have three processing buildings, two located in Richmond and one in Port Edward, B.C., near Prince Rupert. That one's for sale. They're all self-funded.
We employ up to 180 people per year—or we used to—many of whom were first nations. We buy fish from independent B.C. fishermen up and down the coast in small coastal communities and follow the fish and seasons.
For sea urchin, it was a free-for-all fishery with about 110 licences. Just before voluntarily becoming a quota fishery, catch was basically doubling year over year to about 23 million pounds, which was totally unsustainable. The boom-and-bust catch caused all sorts of problems. Oversupply dropped prices. Processing was a nightmare, trying to process it before it went bad, and the quality of the harvest from some divers was a problem.
Now we have a total allowable catch of 10 million pounds, but only about 30 active vessels, plus or minus. The IVQ system weeded out harvesters who cared more about quantity than quality. It also controlled the supply to accommodate the market and made it more sustainable. Fishermen get paid for quality, and we pay more for it.
Remoteness of fishing areas, weather, size of vessels and limited daily harvests are all limiting factors. Also, the age of divers and workers and limited recruitment into the industry are some of our biggest challenges. For the most part, we have divers and boats that have fished for us for 20-plus years. They are a very important part of our business. It's long-term thinking and relationship building that make for a strong industry.
Grand Hale owns and also leases licences. We own vessels, but everybody can tell you that a boat is just a hole in the water that you pour money into. Some of our divers own licences and operate vessels, but some don't own licences, just the vessels. In those cases, we designate our licences to their vessels. Sometimes we charge a lease fee and sometimes we charge zero. If we lease it out to the diver, it's 1¢ a pound; it's basically a zero lease. We also pay for the DFO licence fee, which takes up about half of that lease.
We fund in advance to help our fishermen get started, to gear up for the season. We prepay the validation and catch monitoring fees. All of our loans to our fishermen are interest-free. We have also financed fishermen to get their own licences when the banks would not.
Since the volume of available TAC has been reduced in most fisheries—for example salmon—for various reasons, mostly conservation, a boat needs to do a few licences in a season to make the operation work, or it does other species or other businesses in the off-season.
Operations and licences have been passed down in some families from father to son or kept in estates. Whether the licence was obtained before quota or after, the right to realize the value of the licence must be maintained, just as with a farmer in the supply management system. They buy in, produce and pass it on to their descendants or sell out. Fishermen 55 or younger in the industry do have an opportunity to work, make a living, own vessels and own licences. As in all industries, it does take effort, sacrifice and hard work to continue, and choosing the right partner is important.
For sure, this is not an industry of instant gratification. Part of the reason that Grand Hale holds licences is to secure supply and provide orderly processing and marketing to supply our customers' demands and achieve the highest product quality. We provide the quota to fishermen we trust to harvest quality and they voluntarily accept our quota.
We pay competitive, fair prices to our fishermen, otherwise they would not fish for us and our quota would not be fished. Capital to finance and build an urchin operation is not easy to find, and the banks are not willing to lend on licence or quota because of the risk that the government will take it away without compensation.
I would watch out for unintended consequences. Some of the largest licence-holders and quota holders are first nations people and some are first nations bands. Some of our first nations fishers lease salmon licences from their bands or from other first nations, and we advance those funds to them to do so. Many first nations communities have lost their infrastructure, people, skills and knowledge to conduct fishing.
In our view, PICFI didn't really help the situation because they changed the rules. Basically, there was a willing buyer, and they raised prices, especially around fiscal year-end. They did not buy vessels to match. Many first nations just lease back to commercial fleets at higher rates, undermining the intention of PICFI: getting first nations into the industry and employment.
PICFI also took licences out of the commercial sector and gave them to first nations free of charge, and did not replace the lost revenue to DFO, so DFO has less funding. Then, shortfalls and program funding were forced on industry if we wanted to have a fishery opened. This just increased the cost of doing business.
Why not make a PICFI-like grant or loan program for all young Canadians who want to fish for a living?
For shared benefits our answer is, basically: find a better boss. We have a boat working for us whose diver was on a competitive vessel. He didn't like the situation there, so he went out, bought a vessel and gear, and now he fishes for us and he gets better prices.
Thank you very much.