Good afternoon, Mr. Chair, and committee members. I would like to thank you very much for granting me the opportunity to speak to you today. It's a long way from the fishing grounds in B.C. to here, and it means a lot to be able to speak to you, our elected representatives, so thank you for that.
My name is Fraser MacDonald. I'm a first-generation fisherman from Vancouver Island. I'm 32 years old, and I have been commercial fishing for 14 years. I own two small commercial fishing vessels. I participate in three to four fisheries each season, and I own no licences. I lease everything that I fish.
Today I will tell you about my personal experience within B.C.'s commercial fishing industry and specifically my experience with relying on the lease market. I will describe how the current and past fishing policies have created roadblocks for me and other young fishers or people trying to grow within the industry.
Without a doubt the licensing policies that were introduced in B.C. over the past 25 years have helped stabilize and improve management and sustainability—and safety, to some extent—in the fisheries. The benefits have increased the market value of our common resource and have made B.C. a world leader in management. Simultaneously, though, these policies have attached a value to access. This is something that should never have been allowed to be valuated, bought, sold or invested in from the start.
Quotas and licences should never have been opened up to free market, but they were. Now the licence and quota markets more closely resemble a speculative stock market than a fisheries management tool. The implementation of this system created winners and losers then and today. Some lost out and left the industry or were priced out when ITQs were introduced. Others were initially gifted ITQ allotments and limited-entry licences that have valued to the point where they are worth millions of dollars.
B.C.'s access to harvest fish was privatized and profited from. This privatization of access has created insurmountable entry costs and what I will call a lost generation of fishers. I have watched this take place within my own group of friends. Ten years ago, in 2008, there were 15 to 20 men and women from my close network of friends where I grew up who actively commercial fished. In 2018, there were three of us left from this group. My friends chose to leave the commercial fishing industry, often reluctantly, for other careers because they could not see a stable and profitable future for themselves. Buying a boat and licence package was financially unrealistic due to the high cost and lack of access to capital for young people. This exodus has caused a serious labour shortage for crew and is foreshadowing a successional crisis that we will soon face as the current generation of fishermen ages out and needs to retire.
In 2011, after a couple of seasons of working as a hired skipper, I realized that I needed to increase my earnings if I wanted to make a decent living and stay in the fishery. Buying a vessel would increase my share of the catch's revenue, so I started looking for a boat. The price of a prawn licence for the boat that I bought in 2012 was $750,000, putting the boat and licence package at almost $1 million. As the licences were out of my price range, I would rely on the lease market to secure my access. I used equity from my home to get a loan for $200,000 from a federal government-funded loans program, and I got a boat.
In 2012, when I bought the boat, it happened to coincide with the full implementation of PICFI. I do agree with the stated objectives of PICFI, but from my experience and as the committee heard yesterday from Chris Cook, PICFI's stated objectives have not been achieved. By implementing PICFI the way it did, DFO actually created a lot of negative effects in many fisheries through the lease market and by driving up costs as well. For time's sake, I won't get too much into that, but I'm going to submit a written summary of my experience with PICFI to the committee.
My biggest obstacle as a boat owner was securing access to leasable licences. I had to convince fish buyers to take a chance on someone new and young, guaranteeing them my product if they would cover the lease costs up front for me. Paying a lease up front is a condition demanded by almost all lessors, and I learned quickly that banks aren't too keen on approving $50,000 lines of operating credit for 26-year-old seasonal business owners, regardless of equity or a co-signer. I learned the hard way that if you don't come from an established fishing family on our coast, entering the industry without a licence is nearly impossible. The uncertainty of access each year was very stressful and made growing a business extremely challenging. It was only because of stubborn optimism that I managed to keep my fishing business moving forward. My challenges were witnessed by many of my close friends and reinforced their lack of faith in the licensing system.
In 2017, I bought my second boat, a 40-foot fibreglass freezer troller capable of fishing multiple fisheries. This boat's versatility meant that if one fishery was poor during the year, I could rely on income from the other fisheries and still put a year together. With my previous lessons learned, I was not about to go buy another boat without making sure I had secure access to licences. An offer was made to me by a processing company to form a partnership, and after some negotiation, we came to an agreement and I bought that boat.
This arrangement meant that I had purchase financing, access to the buyer's pool of licences and quota, and access to operating credit, if needed. In return, the company will maintain a minority stake in my boat indefinitely and have first access to my product as long as it is willing to pay market value. I will say that the company's partnership offer was very forward-thinking, and it has been mutually beneficial.
I'm happy with how things are going in this particular case, but this is not a solution to our licensing problem on the coast. This is only available to a very small number of people. When I speak to people who have joint ventures with other companies, they don't speak very highly of their situation.
As has been previously explained, halibut ITQ owners get paid up front each season for their quota before the season opens, usually by processors who have to secure quota to ensure their market share of the catch. As processors work on margins, their business is one of scale. The more quota they can secure in their pool, the more they can market and, theoretically, the more money they can make. This has turned most fish buyers on our coast into quota and licence brokers, which adds a huge financial and administrative burden to companies whose main objective is to buy fish, market it and process it. The current structure completely insulates quota owners from price fluctuations during the season, and leaves 100% of the risks on fishermen and fish buyers.
I had an experience in 2017 fishing leased halibut quota that illustrates how the current system is out of balance. In April 2017, I leased 32,000 pounds of halibut quota from a buyer for $7.50 a pound. This was the going lease rate at the time, and the landed value for halibut had been between $9 and $10 for the past two seasons, so we estimated that we would be able to get $2 of gross profit to the boat after paying our lease. By August, the landed price had fallen to $7.50, so we were waiting until the end of the season, hoping the price would come up a little bit so we could make a small profit to pay for the expenses. However, the price did come up a little bit, and there was a small margin, but because I had to wait so late in the season for the price to come up, we had only a few days of fishable time due to weather, and I wasn't able to land all of my quota that I'd leased. Luckily, I was able to carry over the additional 16,000 pounds of quota that I didn't land until the 2018 season.
When the season opened in March, a few months later, I went back out to the grounds to catch this last 16,000 pounds of quota, but the market price had fallen to $7.50. We had to go fishing because the buyer had leased this fish 12 months before and had already paid $124,000 to that quota owner, so I couldn't not go. I had to go so they could recoup their costs. We went out and we landed the fish for a net gain of nothing to me, and I actually borrowed $30,000 from the buyer who leased the fish for me so I could pay the trip expenses and pay my crew fair wages, because they did the work and they deserved to get paid.
The two quota owners I leased from in 2017 both got cheques for $120,000 for their quota. My crew and I spent a month on the water and landed over a quarter million dollars' worth of fish, and I finished $30,000 further behind where I started, not including the $50,000 in capital expenditure to rig my boat up to long-line that fall.
Going fishing and losing money on a trip is very much a reality in this business, and I accept that financial risk every time I leave the dock, but it's a lot easier to accept a loss when the landed value of the fish simply doesn't cover the trip's expenses. In this case the landed value was substantial, but my crew and I just weren't in on the take.
One point I'm sure all stakeholders can agree on is that if we continue operating the way we are now, eventually we will not have enough active fishermen left to sustain the harvest requirements of our industry. Fishing is both a trade and an art. It takes years of experience on the water to master, which means we need to start reforming licensing policy now to avoid a critical labour shortage in the near future. It's essential that the recommendations from this study aim to solve the problems we face today, and not just put a Band-Aid on their symptoms. We need urgent action with set timelines for industry and DFO to introduce balance to the leasing market and ensure fair distribution of wealth from the landed value of our fish. A one-size-fits-all policy won't work, as was mentioned by our previous guests. It needs to be done fishery by fishery, but it needs to happen quickly. Any delays or strategies from the corporate side of things, I believe, would be extremely short-sighted, and I hope we can all work together to find a solution that benefits the industry.
Looking at the long term, we need to find common ground and look at where we need to be 10 years from now as an industry, and then design and implement well-thought-out specific policies that will get us there. I see a sustainable fishing industry in B.C.'s future being made up of fishermen and fish processors. The timelines for the industry's future must allow sufficient time for investors and retiring fishermen to divest and retire with dignity. The fishing industry is tight knit and many of the retired investor fishermen are still mentors and close friends to active fishers.
In conclusion, I think there's recognition here that our system is not working as it was intended to, and I think it's crucial that we seize this opportunity to transition our industry into a brighter future.
Thank you very much for listening to my experiences today, and I'm sorry if I went long.