Fisheries Committee on June 17th, 2020

[The Chair, Liberal, Ken McDonald]

Good afternoon, everyone. I call this meeting to order.

Welcome to meeting number 11 of the House of Commons Standing Committee on Fisheries and Oceans. Pursuant to the motion adopted by the House on May 26, 2020, Standing Order 108(2) and the motion adopted on June 1, 2020, the committee is resuming its study of the impacts of COVID-19 on fishing industry stakeholders.

Today's meeting is taking place by video conference. The proceedings are public and are made available via the House of Commons website. So that you are aware, the webcast will show the person speaking rather than the entire committee.

Regular members know these by now, but for the benefit of witnesses who are participating in a House of Commons virtual committee meeting for the first time, I will remind you all of a few rules to follow.

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I would now like to welcome our witnesses for today.

From the BC Seafood Alliance, we have Christina Burridge, executive director. From the Maritime Fishermen's Union, we have Martin Mallet, executive director. From my home province, we have Keith Sullivan, president of Fish, Food and Allied Workers.

Ms. Burridge, we will go to you first, for six minutes or less, please.

[Christina Burridge, Executive Director, BC Seafood Alliance]

Thank you very much, Mr. Chair.

The BC Seafood Alliance is the largest commercial fishing organization on the west coast. Our full members are both harvester associations, representing the owners and operators of commercially licensed fishing vessels in most major fisheries in B.C., and processing companies that process about 70% of B.C.'s salmon, herring, groundfish and some specialty products.

We do appreciate the opportunity to give you a sense of the impact of COVID-19 on west coast fisheries.

Our experience started in the last week of January when sales of geoduck, Dungeness crab and other live products ended when the lunar new year markets in Asia shut down. Those three products have a wholesale value of more than $150 million annually. We've since seen that shutdown extend to virtually all food service sales worldwide. That matters because many, though not all, of our species were destined for the high-end global restaurant trade. Some species are adapting reasonably well to a market that is now predominantly domestic and retail, which means lower prices to the processor and the harvester because of high retail margins.

Some of our species such as geoducks, herring roe and sea cucumbers will never have a domestic presence, so we need to figure out the cargo and container problems that complicate getting them to Asian markets. Markets were beginning to recover until the new cases in Beijing linked to a seafood market. We're seeing those markets shut down again.

Those species, with a couple of others in the same predicament, amount to almost half of the west coast wholesale value.

With slow markets, we have reduced processing production and then reduced it again to space out the line for physical distancing in the plant. We've been working with our processing plants to make sure that each has a COVID-19 plan. Of course, for both vessels and plants, access to PPE is essential. Funding is certainly nice, but access is essential. I'm glad to say that this is finally improving.

Plants, of course, need fish to be able to operate at all, so we need to be able to go fishing, which means keeping our harvester crews and communities, often in remote parts of the coast and often indigenous, safe. We've been working with other B.C. harvesting organizations and Fish Safe, our B.C. health and safety association, to implement fleet-specific guidance covering every aspect of a commercial fishing trip.

There are 14-day isolation periods beforehand, on-board practices, import procedures, off-loading and end-of-voyage procedures. These protocols have been reviewed and approved by both the Province of B.C. and WorkSafeBC.

For almost all species, production has dropped by up to 50%. Prices to harvesters have dropped by about 25% to 50% at this point, slightly recovering in some cases. Across the board, whether for harvesting or processing, we are getting less money while our costs have significantly increased.

On the emergency support measures, we appreciate the announcement of the Canadian seafood stabilization fund, but we are disappointed that B.C. has been shortchanged on that fund. We also need to understand exactly what we'll be eligible for.

Reorganizing processing lines for physical distancing or retooling for the domestic market and online sales is expensive. Automation technology and capital expenditures such as automated equipment or vacuum packing for retail can start at $500,000.

The CERB has worked well in many fisheries but not for salmon harvesters, many of whom had a disastrous season in 2019 as a result of poor returns. It has complicated labour issues for processors, particularly on Vancouver Island. Of course, we're waiting to see what the harvester benefit and grant will look like. Again, we believe that salmon harvesters may lose out. Since 2019 was such a poor season, it will be difficult to meet the 35% decline in revenue.

We're also disappointed that the grant of up to $10,000 for harvesters is less useful than a tweak to the Canada emergency business account, which is a loan of $40,000, of which $10,000 is forgivable if repaid by December 2022. That is much more useful for small fishing businesses, exactly the kind of small and medium-sized businesses that the CEBA was designed to help. The tweak would simply have been to allow all earned income evidence from crews submitted to the CRA on a T4, no matter which box they filled out.

Fish harvesters, of course, have many costs in gearing up for a season, including DFO licence fees, and often do not get fully paid until the product has sold, which can be months later. Normally, they borrow money from processors or banks. Neither source is readily available this year, so for them, the Canada emergency business account would do exactly what it's supposed to do.

One other piece of COVID-19 assistance would be appreciated, and that's help with unexpected incremental costs of at-sea observer programs and science surveys. For instance, the at-sea observer program for Pacific spot prawns is essential to managing the fishery. If there's no—

[The Chair, Liberal, Ken McDonald]

Ms. Burridge, I'm going to have to end it there. We've gone way over the six-minute mark.

[Christina Burridge]

My apologies.

[The Chair, Liberal, Ken McDonald]

That's not a problem. Hopefully anything you haven't said in your opening statement will come out in the question and answer session, or please submit your written submission as well and we'll include it in the testimony.

We'll now go to Martin Mallet from the Maritime Fishermen's Union for six minutes or less, please.

[Martin Mallet, Executive Director, Maritime Fishermen's Union]

Good afternoon.

I will speak in French for a few minutes.

The Maritime Fishermen's Union (MFU) represents over 1,300 independent inshore owner-operator fishermen in New Brunswick and Nova Scotia. Since its creation in 1977, the MFU's mission has been to represent, promote and defend the interests of inshore fishermen and their communities in the Maritimes. The MFU is also an active member of the Canadian Independent Fish Harvesters Federation.

Since the beginning of the COVID-19 pandemic in January, fishermen's associations across Canada have been assessing its impact on the livelihood of their members, the economic sustainability of the industry as a whole and the coastal-rural communities that depend on it.

In Atlantic Canada and Quebec, one of the most important fisheries in Canada is underway, the lobster spring fishery. As predicted, the COVID-19 pandemic is making life difficult for many fishers and crew members.

Last April, the MFU, in collaboration with other fish harvesters associations, requested short-, medium- and long-term financial support measures to provide a basic income, assistance for operating expenses, and business cash flow. These emergency support ideas were put together rapidly and with the objective that they could also be rolled out rapidly by the federal government because they are based on existing programs.

Today, while some support programs are available to our fishers, many of them will need to access the benefits and subsidies for fishers announced on May 14. However, the wait for details and access to new programs is damaging the fishing industry by creating confusion and hampering the planning process as our fishers move ahead with a fishery. Fishermen are questioning their ability to fish and cover their expenses this year, all the while supporting their families and crew members.

Here are a few industry particularities that need to be taken into consideration and addressed.

First, the seasonality of the industry is extremely important to consider. Many fishermen have a very short nine-week fishing window to make enough revenues to cover their fishing expenses and have enough net benefits to cover their living expenses until next year's fishery. This year, the window has already been reduced to seven weeks for many, due to season delays. In addition, fishers are faced with expected low lobster shore prices and daily catch limits.

Fishers are not paid before they start fishing and selling product. Therefore, they cannot demonstrate any financial impacts of the crisis before they begin fishing. However, many operational costs need to be covered, including wages, in order to get ready for the season. So, although several programs are now available to help fishers who are currently at sea, some of them will expire this summer and will not be available to support the upcoming fishery in August and later in the fall. In addition, details of and access to new benefit and subsidy programs for fishers, which could help many of them, are still expected.

The second point deals with crew members. Following the announcement of the new industry assistance programs on May 14, even though the employment insurance issue seems to have been resolved for EI claimants who are fishermen, crew members who are receiving benefits under the regular program are being left out in the cold. Many of our crew members are in this situation.

Third, family enterprises are extremely common in this industry. For instance, the fishermen's crew will many times consist of the wife, brothers and sisters or sons and daughters. The no-family-relations criterion needs to be eliminated for all wage subsidy programs in order to help this industry.

The fourth point is fishermen earnings and payroll structures, which are sometimes complex and difficult to use as a benchmark for program access for many of the existing programs. Many of our fishers fall through the cracks of the system because there are many business structures and strategies in the fishing industry. For example, many fishermen are not incorporated, nor do they have a business account with their financial institutions. Once again, the benefit and subsidy programs that were supposed to help fishermen who find themselves in these cracks are still not forthcoming.

Finally, the fifth point deals with new entrants to commercial fishing. They have bought fishing enterprises at historically high prices within the last year. Like many, they are not incorporated and did not have a fishing revenue and payroll history before the start of the 2020 fishery. They are completely left out of most assistance programs. They are the most indebted fishermen, and they are among those most in need of assistance.

The regional relief and recovery fund (RRRF), which provides support for small businesses, can help some of these fishers. However, many of them do not meet the demanding criteria of this program. We are even told that, in some cases, budgets are almost exhausted.

In conclusion, the MFU will continue to collaborate with the federal government and applauds its continued efforts to ensure the health and safety of all citizens. We believe that the current situation in the fisheries requires a broad and proactive approach from our federal and provincial governments, that recognizes the usual fishery management considerations, but also the economic impacts of this pandemic on the fishing sector as a whole. Financial support measures for the fishing industry need to be provided now and tailored to the realities of this industry. The goal is to ensure the sustainability of the economic pillar of the fishery for coastal and rural communities in the Maritimes and for Canada as a whole.

Thank you for the opportunity to share our views with you.

[The Chair, Liberal, Ken McDonald]

Thank you, Mr. Mallet.

We'll now go to Mr. Sullivan from the FFAW.

You have six minutes or less when you're ready.

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

Thank you and good afternoon, Mr. Chair, and members of the committee.

My name is Keith Sullivan. I'm here on behalf of the Fish, Food and Allied Workers-Unifor. FFAW represents nearly 15,000 working women and men throughout Newfoundland and Labrador. Most of our members are employed in the fishing industry and are spread out in more than 500 communities all around the province. About 10,000 are fish harvesters and some 3,000 are employed in fish-processing plants.

COVID-19 has had a serious impact on our province's fishing industry. Some fisheries were delayed by more than a month, at what would have been the beginning of valuable snow crab and lobster seasons, due to safety concerns related to the pandemic.

Now that fisheries are up and running in Newfoundland and Labrador, market challenges are severely impacting incomes. To put it in context, last year the fishery was worth $1.5 billion to the provincial economy. The snow crab fishery was worth $350 million in 2019. Entire fisheries, such as northern shrimp, are in jeopardy due to impacts from COVID-19. Losses related to the pandemic could amount to hundreds of millions of dollars. For small coastal communities, this is devastating.

Fisheries workers continue to be concerned about safety on the job, and how a shortened season will impact their income. Both harvesters and plant workers rely on employment insurance to supplement their incomes during the off-season.

With most harvesters expecting a significant decline in earnings this year, many were rightfully worried about qualifying for benefits once the season ended, and were relieved to hear the federal government's announcement on changes to fishing EI, so that harvesters can use the previous year's earnings to qualify in 2020, in addition to the new wage subsidy and grant for fishing enterprise owners.

Unfortunately, since the federal government's announcement last month, no further details on changes to fishing EI or details on the other harvester benefit programs have been released. This has created massive frustration and anxiety for harvesters. Each day our union receives dozens and dozens of calls from our members looking for information or clarification on these programs. While we understand that changes to EI and the rollout of these programs won't happen overnight, the challenges facing our industry are impacting harvesters today. They can't wait any longer to know how these programs will help them and their families.

Right now, most independent owner-operator harvesters in our province can't avail themselves of the CEBA. This must be fixed. We have young harvesters who have just invested huge amounts of money, sometimes millions of dollars, in gear and boats, for example, and now they can't access a program that will help them get through 2020 in order to participate in the financial recovery.

Fish-processing workers will face similar struggles. These workers rely on seasonal EI benefits and were left out of the federal announcement to support fish harvesters. Like harvesters, processing and other fisheries workers are on the front lines, providing fresh, high-quality seafood to domestic and international markets, feeding coastal communities and supporting fishing families.

Given the delays in the fishing season and market challenges that have limited the amount of seafood we will process and export this year, many processing workers will not have enough hours to qualify for adequate EI, or will have extremely low benefits to carry them through until next year.

These workers will need support from the federal government, either through changes to seasonal EI, similar to the recent changes to fishing EI that will ensure they will qualify based on last year's insurable hours, or by adjusting the program in consideration of the pandemic. An example would be to decrease the number of the best weeks in the calculation of benefits.

In terms of other federal policy that I believe will safeguard the inshore fishery, the new Fisheries Act offers some opportunity.

For Newfoundland and Labrador, it's not hyperbole to say that the fleet separation and owner-operator are two of the most important economic development policies for our coastal communities. These policies have kept the viable inshore fleet in place and have provided significant wealth to every corner of our province.

Many billions of dollars have originated and remained within coastal communities because of owner-operator and fleet separation policies. They have succeeded in widely distributing fishing incomes, and play an integral role in our tourism industry, sustaining a vibrant cultural and social fabric in rural Newfoundland and Labrador.

However, corporate interests, both domestic and foreign, have influenced and interfered with the application and enforcement of fleet separation and owner-operator policies. As a result, corporations have gained control of fishing licences and are siphoning the wealth and benefits of inshore fisheries from our coastal communities.

In light of COVID-19, it is more important than ever to enforce these policies, particularly given the economic uncertainty facing fish harvesters.

Amendments to the Fisheries Act adopted by Parliament last year give these owner-operator policies the force of law. Enforcement will be more robust, with legal consequences. By changing this policy into law, the federal government acknowledged the principle that the inshore fishery should be guided by what is best for independent owner-operators and coastal communities, not corporate interests. This is a principle that we must protect now more than ever. Action to eradicate these under-the-table controlling agreements that undermine our coastal communities and economy must be taken now.

The inshore fishery is the primary economic driver in the majority of the coastal communities in Newfoundland and Labrador. Jobs in the fishery provide good middle-class incomes in rural communities, which is why support for the industry in the short term is so critical.

Protecting and promoting a fishery that serves communities, addresses challenges in food security and provides good wages and safe workplaces—these must be the priorities for all levels of government and all stakeholders in our industry if you want to come out of this pandemic with vibrant, sustainable coastal communities and an economy where nobody gets left behind.

Thank you.

[The Chair, Liberal, Ken McDonald]

Thank you, Mr. Sullivan. You were a little bit over, but we'll manage that.

We'll now go to our questioning.

First up for the Conservative Party is Mr. Arnold, for six minutes or less, please.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Thank you, Mr. Chair.

Welcome to our witnesses. I think we've all met before at this committee. It's good to see your faces again.

Currently, we see fishermen needing more and more support because they're not getting good prices at the docks and the government has yet to deliver a single dollar through the fisheries programs announced to date. How big a factor are the market conditions in the challenges facing you and your members during the COVID-19 crisis?

[Keith Sullivan]

I can start, and I'm sure everybody can speak to it.

That's really the biggest consideration for many right now. At first, the health and safety considerations really dominated the conversation, and rightfully so, but now we're seeing the impacts of most restaurants and food services trades really driving our prices down, as we've seen in lobster, for example, just with respect to the ability to market all of the lobster that usually would be in restaurants or on cruise ships.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Thank you.

Ms. Burridge, I see you nodding your head. Would you agree? I want to keep moving on to questions here.

[Christina Burridge]

Yes, I would certainly agree. As I mentioned, for most species, prices to the fish harvester have dropped by between 25% and 50%. That's strictly because of market conditions, the absence of food services and the difficulties in accessing export markets. At the same time, production is down by about 50% because of slow markets and because of the need for physical distancing. It's pretty severe.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Thank you.

Mr. Mallet.

[Martin Mallet]

Yes, just briefly, I'm going to echo what the others have just mentioned. It's a combination of market prices and volume limitations at the wharf. In the case of lobster, for instance, it's a double whammy. When you look at it overall, I think you can probably estimate it at between a 40% and a 60% reduction in revenues for this year up to now for most of our members.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Thank you.

I'll go on to my next question. Would restored market opportunities and increased domestic markets and demand for Canadian fish and seafood reduce or possibly eliminate the economic harm being experienced by your members? Are you aware of any actions—not discussions, but actions—taken by the government to restore export opportunities and increase domestic market demand for Canadian fish and seafood?

Mr. Sullivan.

[Keith Sullivan]

Most of our markets are international so I think we have an undervalued domestic market right now. We've been looking for additional marketing, particularly domestic, for many years. I know the Lobster Council of Canada is considering this, and has done some in recent years, but I think absolutely it's an untapped market for many of us. It's certainly not the answer to all our problems with the size of the issues we have on international markets, but it would certainly help.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Thank you.

Ms. Burridge.

[Christina Burridge]

Yes. We too see opportunities in the domestic market, certainly east of the Rockies. There are some pretty big cities there, and I think there are real opportunities for west coast seafood there. However, as I pointed out, about half the value of our fishery is derived from products like geoduck or sea cucumbers or sea urchins, and the prospect of a domestic market for them is pretty slim so we need to get those export markets back.

Of course the Canadian fish and seafood opportunities fund launched today so that is a way to access some funding for the domestic market.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Mr. Mallet.

[Martin Mallet]

Yes, I would agree with my colleagues. I think a domestic market initiative would help, also depending on where you are in Canada, let's say in the Maritimes, the biggest city is Montreal, and it's several hours away.

It's food for thought. I think it can only help in the medium- and long-term to try to increase the interest of Canadians in consuming more seafood in general. That's been an issue for years.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Thank you.

Have any of you seen any actions by the government yet to promote either international or domestic markets for Canadian seafood?

[Martin Mallet]

Not specifically this year, but I would echo what Christina just mentioned, that new fund that was announced today. I think there's potential there. Hopefully, there's not going to be too much bureaucracy involved in getting these funds rolling.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Ms. Burridge or Mr. Sullivan, have you seen any movement from the government on promoting marketing?

[Christina Burridge]

I think the Canadian fish and seafood opportunities fund will do that.