Fisheries Committee on May 31st, 2021

[The Chair, Liberal, Ken McDonald]

I call this meeting to order.

Welcome to meeting number 33 of the House of Commons Standing Committee on Fisheries and Oceans.

Pursuant to Standing Order 108(2), and the motion adopted on April 21, 2021, the committee is meeting on its study of corporate offshore licences.

Today's meeting is taking place in a hybrid format, pursuant to the House order of January 25, 2021. Therefore, members can attend in person in the room and remotely using the Zoom application.

The proceedings will be made available via the House of Commons website. The webcast will show only the person speaking, rather than the entirety of the committee.

To ensure an orderly meeting, I would like to outline a few rules to follow.

Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. You have the choice at the bottom of your screen of “floor”, “English” or “French”. You will also notice the platform's “raise hand” feature on the main toolbar should you wish to speak or alert the chair.

Before speaking, please click on the microphone icon to unmute your mike. When you are not speaking, please put your mike on mute.

I would now like to welcome our witnesses for the first part of our meeting today.

For the first panel, from the Canadian Independent Fish Harvesters Federation, we have Melanie Sonnenberg, president. From Unifor, we have Keith Sullivan, president of the Fish Food and Allied Workers Union. From the Maritime Fishermen's Union, we have Martin Mallet, executive director. From the Prince Edward Island Fishermen's Association, we have Ian MacPherson, executive director.

I would like to welcome Madam Desbiens in place of Madam Gill. As well, I want to thank Mr. Bradgon for filling in as chair of the meeting last week, as I wasn't available.

We will now proceed with opening remarks from Ms. Sonnenberg for five minutes or less.

Ms. Sonnenberg, when you're ready, the floor is yours for five minutes or less, please.

[Melanie Sonnenberg, President, Canadian Independent Fish Harvesters Federation]

Thank you, Mr. Chair.

On behalf of our members across the country, we want to take this opportunity to address the honourable members today. Again, we express our appreciation for this opportunity.

The Canadian Independent Fish Harvesters Federation is comprised of member organizations representing more than 14,000 independent owner-operator enterprises that harvest most of Canada's lobster, crab, wild salmon, shrimp and groundfish. With 43,000 crew members across the country, independent owner-operator fleets make up the single largest private employer in most Canadian coastal communities. Combined, our harvesters spend more than 20 million hours on the water per year. Together, we produce over five billion meals and $3 billion in landed value, generating over $7 billion throughout the value chain .

Canada's fisheries bring great value to our coastal communities. This extends far beyond their economic value. Fisheries connect us to our oceans and define the economic, social and cultural fabric of our country's coastal communities. On top of this, local fisheries feed millions of Canadians, protecting our collective food security.

COVID-19 has reminded us of the importance of protecting our domestic food supply. As the stewards of Canada's coastal communities, our members have profound concerns about the corporatization of the fishery, particularly by vertically integrated and multinational corporations and especially from foreign countries. We thank the committee for its attention to this critically important issue.

The simple message is the following. Our public resources are at risk of being swallowed up by foreign owners driven by one thing and one thing only, securing our wild fisheries production for their profit. Access to the fishery by these vertically integrated and foreign multinationals threatens our coastal communities whose livelihoods depend on the economic vibrancy of the fishery.

Take for example Royal Greenland, the fishing company wholly owned by the Government of Greenland and Denmark. Royal Greenland's operations in Canada illustrate the severity of the threats posed by corporatization of the fishery. Keith Sullivan will speak to this as well, I'm sure, but this is a really good case in point. Royal Greenland has nine production units in Canada. They do not support the owner-operator fishery. They explicitly promote full vertical integration, a business model not permitted in the Canadian inshore fishery.

Royal Greenland bought into the Newfoundland and Labrador fishery in 2016. By 2020, the year after their shareholders made record profits of over $52 million Canadian, they were the largest processor in the province. They recently purchased the second- and fourth-largest processing companies in the province. They also continue to secure considerable financial stakes in the province through several smaller companies.

Royal Greenland's arrival in Newfoundland drastically accelerated the pace of foreign corporate consolidation. They now have significantly more capital than any other local processing company. This aggressive business model of control and purchase completely stifles local competition.

Royal Greenland also operates a plant in Quebec. Their plant in Matane produces 45 tonnes per day of prawns and snow crab, only 5% of which stays in Canada. The remainder goes to Europe. In 2019 and 2021, Royal Greenland's Matane plant offered extremely high landing prices to snow crab fishermen to cut supply to local Quebec- and New Brunswick-owned plants.

Royal Greenland is not only swallowing up local processors and producers; their shareholders are also reaping all the benefits from our fisheries, leaving only a small fraction of their food supply and economic value for Canadians.

The corporatization of the fishery has several far-reaching, long-term consequences. It puts at risk our collective food security and increases prices to the end Canadian consumer. It takes corporate profits out of local communities and puts them in the hands of corporate shareholders. It jeopardizes the future of independent, locally owned factories, which can prevent independent fish harvesters from negotiating a fair landing price. Finally, it undermines the owner-operator principle, which is the backbone of Canada's coastal communities.

Our coastal communities have the potential to be resilient, sustainable and prosperous drivers of coastal economic and cultural wealth for generations to come. We must do everything we can to protect this public resource which, critically, also ensures that we are never cut off from our own domestic food supply. Fisheries access must remain in the hands of our harvesters and our coastal communities. Our fishing licences must only [Technical difficulty—Editor] be granted.

The federation supports a competitive market environment, but we must ensure that control of these precious public resources remains in Canadian hands for generations to come. We need to ensure fair and equitable opportunities for our future generations of fish harvesters, the new entrants in the industry.

As such, we support the collaborative development of clear regulations to limit foreign ownership and corporate control of our fisheries. This could include reducing the threshold for foreign acquisitions under the Investment Canada Act and the implementation of regulations requiring transparency of corporate agreements signed with respect to fishing licences.

We will forward a more expanded written response with some case studies for your review as we have such a short time and we want to be able to use it for questions, Mr. Chair. I'll close by saying again that we're appreciative of the opportunity and we're looking forward to answering any questions you may have.

Thank you.

[The Chair, Liberal, Ken McDonald]

Thank you, Ms. Sonnenberg.

We'll now go to Mr. Sullivan for five minutes or less, please.

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

Mr. Chair, I hope you're hearing me well. Thanks very much for this opportunity on behalf of our 13,000 members here in what is, at least today, sunny and warm Newfoundland. I'm not sure if that's so for all of the province.

The Fish, Food and Allied Workers represent all inshore harvesters in our province: 3,000 owner-operator enterprises and their crew members as well. Our scope of membership also includes those in the processing sector.

In Newfoundland and Labrador, the value of the inshore fishery cannot be understated. It is closely connected to our culture and continues to support our coastal communities. Throughout our history, hard-working men and women have devoted their lives to the ocean around us, a dedication that has been the backbone of our province.

Today, our collective success depends on keeping the value of this industry in their capable hands.

Year after year, we witness the increased concentration of the provincial processing sector. Our members have continued to raise concerns about the corporatization of the fishery, particularly by multinational corporations owned by other countries. Thank you for paying attention to such an important issue for us.

It is significant to note that this high degree of corporate concentration in the fish processing sector in the province has not been a positive development. It has depressed competition for prices at the wharf, stifled the ability of harvesters to seek new buyers and has really swung the labour relations environment in the direction of the processing companies, without the transparency we need. These negative impacts are only exacerbated when corporate control is in the hands of foreign entities.

A foreign-owned crown corporation has become the largest processing company in Newfoundland and Labrador. It has taken over two major companies and other small companies. Royal Greenland, as Melanie said, is owned by the Government of Greenland. The company is beholden to the people of Greenland and Denmark and is able to access unprecedented capital to further expand into any market.

As a government-owned company, Royal Greenland has certain social responsibilities and accountabilities to Greenland that it doesn't have in Newfoundland and Labrador or Canada. This creates conflict, whereby Royal Greenland prioritizes Greenlandic harvesters and employees over the best interests of harvesters and employees right here. We saw this in shrimp in 2020, when they wouldn't buy shrimp in Newfoundland and Labrador but bought large amounts in Greenland. The success of Royal Greenland depends upon vertical integration between fishing fleets and the processing side of the seafood industry. They really have to circumvent the rules here in Canada, the federal regulations. Royal Greenland has created its own form of vertical integration through these controlling agreements.

When the purchase of a large processing company in the province was announced late in 2015, Royal Greenland stated, “If we want to invest in developing existing markets and building new ones, it is imperative that we consolidate and co-operate within our core species.” The intention was to dilute competition among processing companies and instead focus on competition with other proteins.

This perspective is incredibly harmful to independent fish harvesters who rely on fair competition to get fair and reasonable prices. Without the ability to access competitive pricing, harvesters are bound to financial relationships, sometimes with processors, that don't serve them. Royal Greenland seeks consolidation and co-operation across national borders. This is not to the benefit of workers or of harvesters and is really against policies that limit this foreign ownership.

We cannot allow one of our most valuable public resources, one with incredible socio-economic value and that quite literally puts food on our national table, to be sold to the highest international bidder. To do so would be a social and financial miscalculation that will be suffered by generations.

Continued access to our resources by foreign multinationals threatens our coastal communities that have been the stewards of our seas for generations. The survival of our coastal communities, which we proudly showcase as synonymous with Newfoundland and Labrador, relies on the protection of adjacent marine resources that provide meaningful employment and quality of life.

The recent changes to the Fisheries Act included “the preservation or promotion of the independence of licence holders in commercial inshore fisheries” in the purpose section. We recommend this committee propose tangible supports to follow up on this purpose.

There are several ways to do this, such as limiting corporate concentration with a special emphasis on foreign interests, ensuring an aggressive crackdown on illegal controlling agreements where corporate interests siphon the value of adjacent resources from our communities and focusing on supporting new owner-operator harvesters in this sector.

It is incumbent upon every member here and all who value our oceans to protect the public resource and ensure it is the people of Canada who enjoy the economic and societal benefits that come from our waters.

I know I'm up against my time limit, so I would be happy to have more conversation and answer questions.

Thank you for your time.

[The Chair, Liberal, Ken McDonald]

Thank you, Mr. Sullivan.

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

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

Thank you, Mr. Chair and the committee, on behalf of the Maritime Fishermen's Union for giving us the opportunity to speak today.

Our organization represents over 1,300 independent inshore owner-operator fishermen in New Brunswick and Nova Scotia.

We are grateful that all parties supported changes in the Fisheries Act that protected owner-operators and fleet separation in legislation, with the purpose of keeping Atlantic Canada's public resources in the hands of fishers in their communities and protecting the inshore fisheries from corporate control and influence. However, we are still very much at risk of losing our fisheries from other angles.

In recent years, mom-and-pop, family-run and community-based fishing and processing enterprises have been on the international menu to be bought and agglomerated by large corporate interests owned by foreign nationals—

[The Chair, Liberal, Ken McDonald]

Mr. Mallet, I'm getting some notice from the interpreters that they're having a problem with the sound.

Tina, could you advise us on that please?

[The Clerk of the Committee, Ms. Tina Miller]

It looks like there might be a problem with your headset.

[Martin Mallet]

Mr. Chair, a suggestion would be to pass it on to the next speaker.

[The Chair, Liberal, Ken McDonald]

That's what we'll do. We'll ask IT to get in touch with you to see if we can straighten out that issue.

We'll jump ahead now to Mr. MacPherson for five minutes or less, please.

[Ian MacPherson, Executive Director, Prince Edward Island Fishermen's Association]

Thank you very much.

Good afternoon, committee members.

Once again, the Prince Edward Island Fishermen's Association appreciates the opportunity to present to the Standing Committee on Fisheries and Oceans during this busy time for all.

As a representative organization for over 1,260 captains, our harvesters have experienced many changes in the past few years related to on-board equipment, regulations and export markets, but the fact that our members participate in a profession that contributes directly to the local economy has not changed.

Fishing has been a cornerstone of local coastal economies for many years, and if we play our cards right, it will be for many more, but there are storm clouds on the horizon that are cause for concern. We should all be concerned about the risk of moving from having independent owner-operators supporting our local communities to a consolidation of the industry around big corporations that have too much control over the fishery and who may export significant profits.

The concept of independent owner-operators managing their own businesses has been key for the survival of coastal communities since the start of the commercial fishery. Captains and crews that live in these communities buy their food, pickup trucks and supplies locally so that local businesses can continue to survive.

On P.E.I., most fleets employ three to four crew members with the 1,260 core licence fleets. This represents wages for between 3,700 and 5,000 individuals and their families on the harvester side alone. This is an example of how our independent small businesses contribute to and impact local economies. Our sector was one of the few industries that started last spring and generated much needed jobs and business revenue for Canada when most of the country and world was shutting down due to the COVID-19 virus.

Much of what I've outlined is at risk if we allow corporate interests to gain control and have power over the fishery. The recent sale of Clearwater Seafoods of Nova Scotia to Premium Brands of Vancouver and FNC Holdings Limited Partnership is of great concern. The issue is about the consolidation of power and corporate interests in the fishery, regardless of who owns the corporation.

There are many unanswered questions surrounding that deal that need to be answered by the federal government. The largest corporate sale in Canadian seafood history was announced on November 9, 2020, and approved less than 60 days later, on January 6, 2021, with much of the review time taking place over the traditional holiday season. The December 23 letter expressing concerns and questions by the PEIFA to Minister Freeland was not replied to until May 7, 2021.

Here are some of the key questions and concerns we have:

One, it is unclear why the existing grandfathered midshore and offshore licences are being transferred to one part of the ownership group.

Two, since the conclusion of the sale, the new entity has purchased more assets in the seafood and cold storage sectors, which speaks to a target model of full vertical integration. This model typically lessens competition on the wharf.

Three, if either the new entity or one of the shareholder groups becomes insolvent or bankrupt, will section 15 of the DFO licensing policy, regarding licences held by a corporation in receivership, still apply?

Four, will the existing midshore and offshore licences be granted any additional provisions? We are still awaiting a reply from the Department of Finance on what tax changes may occur under the new ownership group.

The issuing of licences to midshore and offshore fleets has always been contentious as the focus first and foremost is shareholder return.

Our ocean resources are collectively owned for the benefit of all Canadians. Our concern is that there may be unintended consequences to all harvesters and their communities if the requested licence transfers proceed without full disclosure and transparency and preferential corporate access to a Canadian resource is permitted.

At the very least, all potential negative impacts need to be assessed.

Food security for all Canadians is of primary importance. Transactions of this magnitude must be scrutinized in their entirety and all impacts, positive or negative, assessed. We believe independent local owner-operators, whether they be indigenous or non-indigenous fishers, not big corporations, are the best way to keep the fishery and our communities strong and our resource sustainable.

Thank you.

[The Chair, Liberal, Ken McDonald]

Thank you, Mr. MacPherson.

Now I'd like to go back to Mr. Mallet if the sound issue has been rectified.

You can start from the beginning if you'd like.

[Martin Mallet]

Can you hear me? Can the translators hear me speak?

[The Chair, Liberal, Ken McDonald]

No, wait one second. They're still checking on it.

[The Clerk]

Mr. Chair, could we suspend for two minutes, please?

[The Chair, Liberal, Ken McDonald]

Yes, no problem. We'll suspend for a few minutes.

[The Chair, Liberal, Ken McDonald]

We'll now go to questioning with Mr. Bragdon, for six minutes or less.

[Richard Bragdon, Conservative, Tobique—Mactaquac, NB]

Thank you, Mr. Chair. It's good to have you back.

We'll get under way with our questions this evening. Thank you to all the witnesses. It's good to see you here today sharing your thoughtful considerations. We appreciate the input you're providing to this committee.

Royal Greenland's growth in the Canadian fishing sector has been cited as an example of the growing trend of foreign-owned [Technical difficulty—Editor] Canada's shared fisheries resources. We also know that the principles of owner-operator and fleet separation have been established in Canada's Fisheries Act.

How are multinationals able to grow and consolidate the power they have in Canadian fisheries even though owner-operator and fleet separation have been established in the Fisheries Act?

I'll put that out to each of you, and I'll start with Ms. Sonnenberg.

[Melanie Sonnenberg]

The issue around the access through controlling agreements, given that the regulation came into play April 1, we've had a policy in the fishery which prohibited this from happening, but because it was a policy as opposed to a law, we had a considerable amount of creep, I'll call it. Now we've moved into a different phase where the implementation is starting, and hopefully, we will see the department do more investigative work and be more attentive from a regulatory standpoint to expose some of these things that are going on behind the scenes.

With the legislation and the regulation, we're very hopeful in the industry that some of this will come to an end, but we need the support of all parties on this. It's not a matter of just hoping for the best and wait and see what happens. We need to make sure that everybody understands the importance of protecting our coastal communities in this country and ensuring that these licences stay in the hands of the individuals in the communities.

[The Chair, Liberal, Ken McDonald]

Ms. Sonnenberg, I have to interrupt, because you're coming through, but there's a lot of static and interruption in the answer you're providing, and the translators aren't able to actually translate.

I don't know if it's related to your headset, or the placement of your headset, but we'll go to Mr. Bragdon for some more questions, and hopefully, somebody can check on that for you.

[Richard Bragdon, Conservative, Tobique—Mactaquac, NB]

Thank you, Ms. Sonnenberg, and thank you, Mr. Chair.

To each of you, and you may want to comment on the original question, all parties supported the addition of fleet separation and owner-operator to the Fisheries Act when Bill C-68 was before the committee in the 42nd Parliament. In your opinion, did Bill C-68 properly establish these principles in the Fisheries Act?

I'll start with you, Mr. Sullivan, and then Mr. MacPherson, followed by Ms. Sonnenberg after that.

[Keith Sullivan]

First of all, for foreign companies to get access into the processing sector, there are very few limitations, and that's part of the consideration here. Do we want foreign governments controlling that much of our food security and being able to come right into the fisheries, and certainly, have that level of power and control?

The second part, and Melanie was about to [Technical difficulty—Editor] talking about the ease with which these companies have just flouted the owner-operator policy and fleet separation. We know there have been court cases around this for some time. I recall the Elson case with Quinlan Brothers Ltd. in Newfoundland and Labrador. They were able to control these inshore licences.

Right now, when we go out to our communities on the wharves and everything, it doesn't look like anything has changed. We are hopeful that the changes in the Fisheries Act and the regulations will give us the teeth where the Department of Fisheries and Oceans and the Canadian government will be able to dig into these controlling agreements that are really undermining our coastal economy.

Up to this point, the regulations came into effect April 1. We have not seen the evidence of this, but I really suggest this is where we need to put our focus. We've seen this slip way too much, so much so that we're [Technical difficulty—Editor] in the fishery. Fish processing companies are buying all these up, and the value of the fish on our doorstep can go to foreign shareholders. That's not the vision we had for the Fisheries Act.

We really need to focus on cracking down on those controlling agreements.

[Richard Bragdon, Conservative, Tobique—Mactaquac, NB]

Thank you, Mr. Sullivan.

Mr. MacPherson.

[Ian MacPherson]

The thing I wanted to touch upon.... We're working with DFO, and a lot of the folks in DFO did an excellent job on the legislation and in putting the regulations in place or drafting them. However, there are some areas that we have some concerns about. I'd loop this back to the financing part.

Typically, before the changes were made, only charter banks or credit unions could make these types of financial loans. That was probably too restrictive, as it excluded family members. They could have been in contravention if they helped. On the other hand, we really have to make sure that this doesn't get opened up too much so that we have offshore companies helping to finance licences and purchase fleets, because that was the very point that made us advocate for these changes. We have to be very diligent—not just fishing groups, but political representatives—to make sure we don't slide back down that slope.

[The Chair, Liberal, Ken McDonald]

Thank you, Mr. Bragdon. Your time is up.

We'll now go to Mr. Morrissey for six minutes or less, please.