Fisheries Committee on Sept. 26th, 2016

[Keith Sullivan, President, Fish, Food and Allied Workers]

Thank you.

It's certainly a challenge to talk about the northern cod fishery in 10 minutes, so I'll get going.

Welcome. Good morning to members of the committee. I'm Keith Sullivan, president of the Fish, Food and Allied Workers Union, an affiliate with Unifor. The FFAW is the largest private sector union in the province, representing over 12,000 members, the vast majority in fish harvesting and fish processing.

It's understood that the cod fishery has a deep connection with our province. I'm going to talk about the value of the cod fishery to our members and our communities.

The FFAW union movement started in 1970 when the cod price was 2.5¢ per pound. Back then, we didn't refer to it as “cod”, but simply fish. Cod was our fishery and our identity. The northern cod moratorium in 1992 put tens of thousands of FFAW members, including my family, out of work and dependent on government subsidy programs. The calamity of the cod moratorium forever changed the relationship between fish harvesters and fisheries. The change applied to all aspects of the fishery, from science to marketing to management.

In the wake of the moratorium, it was critical for fish harvesters and the FFAW to establish a larger role in fishery science. To that end, over the past 25 years, the FFAW has developed a full fisheries science program on a variety of species. The union also has a full-time fisheries scientist on staff, so that when DFO discusses matters of science we are in a room with a vast array of knowledge and a voice.

With respect to cod, our two most important science programs are the cod sentinel and cod tagging programs. Sentinel started after the moratorium as a response to a deep disconnect between what harvesters were saying on the water and the results of the stock assessments conducted by DFO in the years prior to the moratorium and that were being given to us. Before the moratorium, information from the inshore harvester was not systematically collected and used to inform management of the stock. Up to the moratorium, information on abundance was collected from the catch of offshore vessels that fished when cod were aggregated and vulnerable. There was limited information from the inshore fisheries on cod.

The cod sentinel program was designed to systematically collect information from the inshore to use for use in stock assessment and management. We now have information on catch rates and much more biological information.

The information that the FFAW collects from its tagging program is crucial. It provides a direct estimate on fishing mortality, and it allows us to estimate the amount of cod removed during a season. It even accounts for removals of recreational catch. Our tagging program is conducted in partnership with DFO and involves attaching spaghetti tags to northern cod in inshore waters. Just this week, we have technicians on the northern peninsula and southern Labrador.

What are our science programs telling us? In sentinel, catch rates have increased substantially over the past five to 10 years. The increase started in division 3K, where experimental nets that once caught four fish are now catching 15. In division 2J, the increase was slower in developing, but over time the catches from experimental nets have gone from one to two to 30 fish per net. What this means is that catch rates are much higher than they were at the beginning of the moratorium, particularly in 2J.

With respect to mortality, the level for this stock is very low at the moment. Fishing mortality refers to the mortality of the species from fishing over the year. For the past three years, fishing mortality of northern cod stock was about 2%. In historical terms, in the 1980s, fishing mortality was around 20%. We're currently at one-tenth of that rate and, more importantly, biomass is expected to grow considerably over the next three years, which is the projection we have from our latest stock assessment.

What all of this points to is the long awaited return of northern cod stock and the corresponding environmental shift. Harvesters and processors have primarily focused on shellfish for the past 20 years. Now the focus is switching to groundfish, and not just cod, but turbot, redfish, and others. Though we're encouraged by the return of cod, we have not lost sight of the importance of conservation.

There is no harvester in this province who wants to relive the challenges of the cod moratorium. The new cod fishery is going to be managed correctly. To that end, we have the WWF, processing companies, and FFAW members attending meetings on a fisheries improvement project for northern cod. It's a very important partnership, with the goal of meeting sustainability standards for the new cod fisheries, which means things like the marine stewardship certification.

The shift back to groundfish is exciting and challenging. The cod fishery is certainly different from shellfish, and all in the province are aware of this. With shrimp and snow crab, we are major suppliers to the market. For cod, we're certainly a relatively small fraction of the overall supply.

In many discussions and debates on how to approach northern cod as it returns, the one point that came back is that we would approach the cod fishery in a much different way than before. Prior to the moratorium, we were a quantity-based fishery serving the fish-stick market. As we rebuild our cod fishery, our focus is on quality, a deliberate and necessary shift for the harvesters of our province.

With quality in mind, the FFAW is part of the Newfoundland and Labrador Groundfish Industry Development Council. We have developed a ocean-to-plate approach. We're looking first at what the market needs and where the most value can be achieved, and then we're building our cod fishery to meet those needs. For example, we know there is a demand for high-quality, fresh, and once-frozen cod for white tablecloth restaurants and high-end consumers. These markets exist in a variety of places. Icewater Seafoods mentioned their markets in Europe, for example. Iceland has increased the value of its own fishery by providing fresh cod to the eastern United States. With our current connections to Europe and our proximity to the U.S., we have much potential in the cod market.

While it's important to tie our new cod fishery to market needs, we also need to build a fishery that works for our harvesters and plant workers in the future. Harvesters need to be able to land high-quality cod, and they need to be compensated accordingly for the value they're bringing into this industry.

The first thing that needs to be done—and it is within the power of the federal government to do so—is to protect the owner-operator principle. The attack on the owner-operator principle in the last 20 years, primarily but not exclusively by processing companies, has been terrible for the economics of the fishery in our coastal regions. Of particular concern is the impact of trust agreements, that method of undermining the owner-operator and fleet separation policies and its impact on the cost of fishing licences, which has made it extremely difficult for the next generation of harvesters to enter the fishery.

Processing companies with large resources have circumvented owner-operator and fleet separation policies and have bid up the price of crab and shrimp licences to the point where only well-established harvesters—or in most cases, processors—can afford to pay. Harvesters who are in trust agreements often receive less money for their catches. Fortunately, the impact of trust agreements on the cod fishery today is a little smaller. It is not the same as those other fisheries. However, this could change, particularly as the value of the cod fishery increases. Therefore, the owner-operator policies must be protected.

The focus on quality also requires an understanding of what quality cod is and how a quality cod can be landed. As I mentioned earlier, the pre-moratorium fishery was focused on quantity. Harvesters haven't landed northern cod in a meaningful way in 25 years, so we still have some work to do.

We've spent a significant amount of time, at all levels of the industry, on fully understanding what constitutes a quality fish. For the past two years, we've been engaged in a cod quality project, in partnership with ACOA and the provincial government. Teams of harvesters monitor a whole host of variables, from the temperature of the fish, to how it's handled when removed from the net or hook. When this process is finished, we should have a comprehensive guide for achieving top-quality cod, and we'll be able to disseminate this information to all in the industry, including harvesters.

Harvesters also need to be properly compensated for providing quality fish. On this point, we have made important steps. For the past three seasons, we've had a quality-grade price system, where grade A cod receives a higher price than grade B cod and so on. This certainly has its challenges, but harvesters recognize the need to be paid for the quality, and this will be key to increasing value.

The new cod fishery is going to require significant investment, from both a harvester and a processor perspective. For that investment to pay off, the harvester price needs to be good, and the fishery needs to be managed and structured properly. One management change that began this year is having a longer season to allow harvesters to catch more cod so that we can supply a steady stream to the market. The best cod, the cod that provides the best price to harvesters and processors, is one that is landed quickly and shipped to market. We need to move away from a condensed fishing season and to spread out landings and avoid gluts in the processing sector.

In years past, harvesters were limited to 5,000 pounds, which they landed in a week or two. This year, there are limits for weekly landings, but the season is stretched out considerably and over several months. We have many harvesters who have landed 15,000 to 20,000 pounds of cod this year. I've spoken with one experienced harvester who has caught 36,000 pounds of cod using just hook-and-line, just he and his daughter in a boat each day. Landing 36,000 pounds of quality cod is a positive change, albeit a first step for the economics of our cod fishery.

There have also been positive steps taken by the federal government to encourage investment in the inshore cod fishery. Last year, during the federal election campaign, Prime Minister Trudeau committed to allocate the first 115,000 metric tons of northern cod to the inshore fleet. This allocation existed before the moratorium, and inshore harvesters were given every expectation that it would once again exist, once a normal commercial cod fishery restarted.

In late July of this year, Minister LeBlanc confirmed to me and the senior executive of the FFAW that this commitment stands. The first 115,000 metric tons of northern cod will be granted to the inshore sector. This is an extremely important commitment. We are building a cod fishery from a very small base at the moment. If we are going to change how we catch, transport, process, and market large amounts of cod, those engaged in that sector need to know that there is a consistent allocation of fish, so they can invest with some security.

The commitment to 115,000 metric tons is the best security the industry and our country can receive. It will give us time to rebuild at a reasonable pace, to build markets, to build expertise in catching and processing quality cod, and to figure out how best to fish and manage the new northern cod fishery.

For the harvesters of Newfoundland and Labrador, the cod fishery is not about revisiting the past; it is about charting a new future. Our hope is that, 30 years from now, the idea of a cod fishery won't bring to mind images of 1992 and the dreaded moratorium. Rather, we hope it brings to mind images of 2016, images of a man and his daughter catching 36,000 pounds off a hook-and-line, and how we've just started, as I will remind you, the process of turning a sustainable cod fishery into a pillar of prosperity for coastal communities from Newfoundland and Labrador.

Thank you.

[The Chair, Liberal, Scott Simms]

Thank you. I was a couple of minutes generous there, but you might want to thank the other two gentlemen for coming up short. You took it from them.

I have a reminder before we get into questions and answers. This is a pretty big room with a high ceiling, and as we say here in Newfoundland, if you're not handy to the mike, it ain't gonna happen. Please keep that in mind.

We are going to start questioning with the government side.

Mr. McDonald, please, for seven minutes.

[Ken McDonald, Liberal, Avalon, NL]

Thank you, Mr. Chair.

I welcome the three gentlemen who are here today and thank them for taking the time to appear before the committee.

My first question is for the FFAW president, Mr. Keith Sullivan.

Keith, in your talk you referred to the importance of the cod, the coming back to the cod, and the fact that the first 115,000 tonnes would be allocated to the inshore, but what about when that point comes and beyond that, when that stock finally gets to the biomass where we can open the commercial fishery?

I guess I have two questions for you. As a person who represents not just the fishers but processors throughout Newfoundland in a lot of small rural communities, when the cod fishery returns, at what level do you think the biomass should be to return to that full-fledged commercial fishery? What significance do you think it will have for rural Newfoundland when we get to that point?

[Keith Sullivan]

Thanks for that question. That one has been debated for many years.

We're happy that the science is picking up the growth of the stock. In the next three years, what we see from the science is an expected doubling. It's really matching up with what harvesters are seeing. The growth is happening at a significant pace, and the fish mortality is very low. We're happy to see that year-after-year increase. I think the main thing, particularly for this stock, is that we have a sustainable fishery, and because all eyes will be on it, that will be important to market it.

You have to keep in mind the amount of fish that there actually is. We're talking about 260 million pounds of fish, which is a considerable amount to market. That can represent $500 million to the economy of our province. That's why I speak of that going to owner-operators, staying within our coastal communities.

We have an advantage in the province in being able to supply fresh fish, first of all to important markets in the eastern United States, and it's a very good once-frozen product that certainly is superior to much of the twice-frozen product that remains in the rest of the world. I think it is really important that we build those markets and our capacity as we go along, because from the small fishery we have now—the few thousand tonnes—to get up to 115,000 tonnes, the fishery, our infrastructure, and our markets are going to have to grow at the same time. We need a considerable amount of focus, and this year was only a very small first step focusing on having a longer supply.

I think we have much potential. We'll have to do a lot of working together to realize the value of that hundreds of millions of dollars in potential for everyone in the province.

[Ken McDonald, Liberal, Avalon, NL]

Thank you.

The next question is for both Mr. Butler and Mr. Wareham.

What type of investment is needed in the processing sector to make sure we're ready for the fishery and ready to provide the product that will dictate the demand we're going to have on our fishery in the future?

[Alberto Wareham]

Thank you for your question.

We're fortunate in the sense that we have the only state-of-the-art plant in Newfoundland today, so we have the investment. Obviously, we're continuing to invest, but if you were starting from scratch, you would need $25 million or $30 million for one plant, and you probably need five to six plants.

We can't go back to the fishery of the past, when we had a fish plant in every community. I'm not saying there's no place for small fish plants, but if we're going to compete with the best in Iceland and Norway in the world market, five to six plants at $25 million to $30 million each would probably be okay.

[Derek Butler]

I would echo that in terms of the numbers. We don't need the number of plants we used to have. We've had a significant reduction from 200-plus in the groundfish days. As we've gone through shellfish, we're down now to somewhere around 60 to 70 plants in the province. I've always joked that we need one per electoral district, and we'd be happy with that, with 40-odd—I guess it would be 30-odd now—at the provincial level.

We need tens of millions of dollars, and here's the trick. As the biomass goes up, if we trickle up in terms of supply or landings it won't support the investment. You need to have a significant quantity of fish available to you to support the investment. My members are principally in shellfish right now. If we're going to transition to groundfish, we need a lot of capital, and we need the fish to sustain it. That's going to be the challenge: finding the balance between increasing fishing now and getting a sufficient amount to justify the investment.

[Ken McDonald, Liberal, Avalon, NL]

Thank you.

Mr. Wareham, what are the markets going to demand in terms of a finished product? What type of quality? What kind of price range are we looking at achieving by doing that?

[Alberto Wareham]

I should probably answer those in the order you asked them.

I'm in Iceland once or twice a year and looking at technology on a yearly basis to make sure we have the best. You have to understand that Marks and Spencer is one of our largest customers in the U.K. When the Marks and Spencer people come to our facility, they have just left the facility in Iceland or the facility in Norway. They have to see the same style if they're going to take any comfort. There are only four processing plants in the world that are approved to supply Marks and Spencer with cod, and we're one of those, so we need to have the best.

When I'm in Iceland, I see fish being landed. Mr. Sullivan referred to the grading system that we have in Newfoundland. We've been working with them on that for the last three years. Ninety-five per cent of the fish landed in Iceland is grade A. We're not there yet in Newfoundland. We have a long way to go. We have seen improvements this year. Basically, you almost need the perfect fish if you're going to compete in those markets, both fresh and frozen. We haven't competed in the fresh market because we have not up till now had a constant supply of a superior quality of cod that allows us to be in the market 12 months of the year. That's why our focus is on the frozen production.

[Ken McDonald, Liberal, Avalon, NL]

Thank you.

I have time for one more question, Mr. Wareham. As a person who has a successful operation right now when it comes to cod—I think you said something about just over 200 cod specialists—are you concerned about having a high-level skilled workforce when the fishery returns in a major way? What are we going to do to make sure we have that workforce?

[Alberto Wareham]

First of all, if you had the opportunity to come to our facility, you would see that it's not like a typical fish plant that people have in their minds. It's like an operating room. We have people with an average of 21 years' service in our facility and an average age of 50 years. That's amazing in any industry. In the seafood industry, it's off the charts.

We have that because we've stayed focused on what we're good at, which is cod. We give our people full weeks of employment. We bring in frozen raw materials to supplement what we can get locally, so they're getting 25 to 30 full weeks of employment. If you can give people full weeks and pay them good wages, I think you'll attract people.

The other thing is automation. We're investing as much as we can to make sure we have the best in the world, but we still need 210 people to operate the plant—

[The Chair, Liberal, Scott Simms]

Thank you, Mr. Wareham. I'm sorry, but I have to cut it off there.

Mr. Doherty, please, for seven minutes.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Thank you, Mr. Chair.

Gentlemen, I thank you for appearing before us today.

I have a few questions.

This is for the panel. First off, we had DFO testify before us last week regarding the numbers from their studies, which are a third of what they would like to see. However, we've also heard testimony where there was some skepticism about those numbers, testimony that the numbers are actually greater than that. Are you satisfied with DFO's numbers? Or do you believe they're higher than what DFO is reporting?

[Keith Sullivan]

I can start it off. I think we need continued investment in science. The recent investment in having more science staff hired by DFO is a good start. That said, we do a relatively good job on cod.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Sorry, but do you think—

[Keith Sullivan]

I was just working up to the numbers and what I want to say. I'll go quickly.

The observations of the inshore harvesters are that they see generally more cod throughout the region than they did in the 1980s. The concern is whether the 1980s estimates were higher than they really were and whether we are underestimating now. Those are some concerns. That observation is certainly widely held. To summarize the point, we have to continue to make sure that we have the best science available.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Mr. Butler.

[Derek Butler]

I would concur with Keith. We always appreciate the science—more science and good science. I made the point, and I was explicit in making it in my remarks, that we need to avoid an impressionistic sense of what's out there. Open-line radio can't rebuild cod.

The old joke around where I'm from, Clarenville, is that the only place you can't catch cod is out in the woods, but I say we default to the science, in light of the precautionary approach, until we have greater certainty.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

I can appreciate that.

Mr. Butler, you mentioned that restraint—continued restraint—is needed. Do you support DFO's decision to extend Newfoundland and Labrador's recreational fishing by 14 days this year?

[Derek Butler]

It's a very political question in Newfoundland and Labrador. We understand, as an industry, that there will be a role for the recreational fishery.

Let me leave it at this. We would think that removals have to be tracked. We support the tagging initiative of the minister. I don't think that expanding the recreational fishery right now is the best approach in light of our concerns around the stock, in light of where it is in terms of the critical zone. That may be saying more than I wanted. We probably would have defaulted to past practice and understanding the necessity of that or the politics around it, but not the increase.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

I'll keep it as “restraint is needed”.

[Derek Butler]

Absolutely.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

I would agree with that.

Mr. Wareham, that was a great presentation. I would love to be able to see your plant.

As a committee, we have a question. Our moratorium has been on since 1992. Norway's cod stock was replenished in three years, whereas we're still sitting 25 years out. What are they doing differently from what we did?

[Alberto Wareham]

You're talking from a stock perspective?

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Right.