Fisheries Committee on June 16th, 2021

[Adam Burns]

It would be a matter that is managed by our DFO regional colleagues in the Pacific region.

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

It's not your purview, then.

[Adam Burns]

That's correct. I understood that the study today was related to the offshore, so that's what we came with prepared items on, but I'm happy to get you the necessary response to your question.

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

Thank you.

I'll turn to Ms. McCready now.

Many B.C. fishermen feel that they have no choice but to sign co-venture agreements. Recently, one such fisherman passed away and his family thought the fishing quota identified in his will would go to family members, but the co-venture agreement actually gave it all to the processor.

How do we reform these agreements involving DFO fishing licences and quota so that there can be equity and equality for Canadian harvesters and their partners?

[Heather McCready]

Thank you for the question, but I'm not sure if that's really an enforcement question.

I run the conservation and protection program, which enforces the laws that the DFO puts in place. It's not my area of responsibility to be changing laws or policies.

I'm not sure if any of my other colleagues have an answer or some thoughts on that.

[Adam Burns]

Mr. Chair, it is definitely true that the policy regime on the east coast and west coast are different. I don't have the specifics of the case you're referring to and wouldn't want to speculate on the particulars of a particular case without looking at it in its entirety.

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

Thank you, Mr. Burns.

Could you tell us what the current level of foreign investment is in Canadian offshore fisheries? If you have to break that down to the east coast, because you say that's what you've come prepared with, please do so.

[Adam Burns]

In fact, there are only east coast offshore fisheries. Such a class of licence doesn't exist on the west coast. I don't have the particular percentage of Canadian ownership of each of the 97 licences, other than to say that in all cases, all 97 are greater than 51% Canadian owned.

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

Thank you.

In the context of the 2019 study on west coast fisheries, the committee recommended that the federal government establish a public online database that includes information on the beneficial holder of all fishing quotas and licences, as well as all sales and leasing of quota and licence holdings.

In the government's response to the report, that recommendation was not addressed, though it did note that it will begin consultations on issues raised in the report. These consultations have been delayed by COVID‑19.

Should a public registry be required for east coast offshore fisheries to increase the transparency on quota licence ownership and transactions?

[Adam Burns]

That would be a question for the government. I wouldn't want to speak to that.

In particular, what I can say is that our policy around the 51% Canadian ownership is strictly enforced and, of course, the ownership structure of public companies is publicly available.

[The Chair, Liberal, Ken McDonald]

Thank you, Mr. Arnold.

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

[Serge Cormier, Liberal, Acadie—Bathurst, NB]

Good evening.

My thanks to all the witnesses for joining us today.

I am going to turn to Mr. Burns and continue along the same lines as my colleagues, on the subject of foreign interests, which have an ever greater presence in our country.

Mr. Burns, you are probably aware that the fishery is going well in our regions. Quotas are up. The resources are there, both lobster and crab, and the prices are currently extremely good. The concern is that more and more companies are coming into our regions and offering fishers ridiculous prices. They are sometimes offering two or three dollars per pound more for crab or lobster.

I fully understand that the provinces are responsible for processing those products. However, before they arrive at the wharf, they are still a resource that belongs to Canadians, for which the Government of Canada is responsible.

Do you know a company called Royal Greenland, which has an ever greater presence in our region? It has made some offers for shrimp, in Quebec and in Newfoundland, if I'm not mistaken. On the wharf this year, it was even paying two dollars to four dollars more per pound for both lobster and crab.

I don't need to spell out the consequences of that practice for you. Our fishers are going to sell their product to those companies, including Royal Greenland, which is subsidized by the government of Denmark. If those companies operate in our region and are offering prices like that, our fishers are going to sell their products to them. We will then have problems when they take control of the market.

I could name a number of other companies, such as Champlain Financial Corporation, which is buying up more and more plants in our region.

Are you aware of those investments and of the presence of those companies that are also subsidized by the government of Denmark?

What are you doing to make sure that our fishing industry stays in our coastal communities, as you said earlier?

[Adam Burns]

In terms of a response to ensure that Canadian licences remain in our coastal communities, certainly the inshore regulations and the 51% Canadian ownership requirement for offshore licences ensure that and achieve that objective within the licences themselves.

In terms of the processing sector, as mentioned, it is outside of our jurisdiction. We don't have any jurisdictional space to regulate the processing sector itself. That would be outside of DFO's—

[Serge Cormier, Liberal, Acadie—Bathurst, NB]

I understand that, Mr. Burns, but let me put it this way. Before they're taken to the processing sector, these resources belong to Canadians. Royal Greenland is backed by the Danish government. Companies like that are coming here on our wharfs and offering higher prices than the market can pay for it. If we just let this resource be processed by them, sometimes in New Brunswick, sometimes in Quebec and sometimes elsewhere, after a while, when they take control of all of this, it will create some kind of monopoly. We will have lost all our industry in our region.

Are you doing something right now? Are you monitoring this company or other investors who want to come to New Brunswick and do business like that?

[Adam Burns]

In terms of the processing sector, that's outside of DFO's jurisdiction. It's a provincial jurisdictional question.

[Serge Cormier, Liberal, Acadie—Bathurst, NB]

Mr. Burns, I understand what you're saying, but when it comes to companies like Royal Greenland, again, backed by the Danish government, are you aware of these companies that are coming to Canada and trying to have control over our fisheries? You stated earlier that it's important to have the licences stay in our communities. Yes, the licence is one thing, but if the resource goes everywhere but in our communities, and the prices go so low as compared with now, what will we do 10 years from now?

[Adam Burns]

Inshore regulations would prohibit inshore licence-holders from passing any of the rights and privileges related to their licence to any processing company, including one that may be owned by Royal Greenland. That requirement of maintaining the rights and privileges with the licence-holder would prevent that licence from entering into control by a processing company. In fact, the licence-holder's eligibility would end should that occur.

[Serge Cormier, Liberal, Acadie—Bathurst, NB]

So basically—

[The Chair, Liberal, Ken McDonald]

Thank you, Mr. Cormier.

[Serge Cormier, Liberal, Acadie—Bathurst, NB]

Thank you, Mr. Burns, for your answer.

[The Chair, Liberal, Ken McDonald]

I want to thank our witnesses, Mr. Burns, Ms. McCready and Mr. Whorley, for being here today and providing much-valued testimony.

We're now going to suspend for a couple minutes while we change to our next panel of witnesses. Then we'll get to some statements and questions.

We'll suspend for a moment.

[The Chair, Liberal, Ken McDonald]

I now call the meeting back to order.

I would just like to make a few comments for our next slot of witnesses. When you are ready to speak, click on the microphone icon to activate your microphone. When you are not speaking, your microphone should be on mute. When speaking, please speak slowly and clearly.

I would like to welcome our second panel of witnesses.

From the Maritime Fishermen's Union, we have Mr. Martin Mallet, executive director; from Regroupement des pêcheurs professionnels du Sud de la Gaspésie, Claire Canet, project officer; and from the Unified Fisheries Conservation Alliance, Colin Sproul, president.

We will now hear opening remarks from Mr. Mallet for five minutes or less, please.

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

Thank you, Mr. Chair.

Good afternoon.

Thank you 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 to the Fisheries Act, protecting 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 and 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 or out-of-province investors. Whereas locally run enterprises would reinvest most of their business revenues within their community and province of origin, large-scale corporations are interested in profits for shareholders, not sustainable rural communities that depend on a local fishery's resources.

There are more and more examples of foreign ownership takeovers of our marine resources and benefits across Canada. On the east coast, we can cite, for example, Royal Greenland in Newfoundland and Quebec, Thai Union in New Brunswick, Clearwater in Nova Scotia with the recent involvement of the Premium Brands Holdings component and, as was mentioned earlier by Monsieur Cormier, Champlain Investment in New Brunswick and Nova Scotia—and the list goes on.

For today's presentation, I'll use the example of the Champlain Capital company, based out of the U.S., but with an affiliate company, which is the Champlain Financial Corporation out of Montreal, to illustrate the concerns since 2017.

Champlain has taken control of eight processing plants in small rural communities across New Brunswick and Nova Scotia. Officially, this investment group has tried to promote the positive impact of this merger for the regions by stating the creation of more opportunities for synergies and reduction of costs, as well as the development of new products.

However, it is also the creation of a monopoly, with the potential of creating an uneven business environment for the remaining local processing plants, potentially driving them out business to remove competition, and opening the door to fix the price of fish for local fishermen. Furthermore, dividends from local businesses that would have generally remained in the communities to the benefit of other supporting businesses and community members now go to out-of-province and international shareholders.

Also, will they shut down some of the less efficient plants in order to improve profits to further consolidate and improve bottom lines? To this question, the answer is “yes”. For example, back in 2020, one of their recently bought plants in eastern New Brunswick burned down and was never rebuilt. Instead, they reinvested in their other processing facilities, thus consolidating and improving company profits at the expense of the community that lost their plant. Most of the 150 plant workers when the plant burned that day lost their jobs—in a small coastal community where the fisheries sector is the main employer.

In closing, our organization supports the need in our industry for appropriate access to capital for continued maintenance and growth of the fishing and processing sectors. However, there is an urgent need, number one, for an effective set of strategies for the monitoring and hedging of foreign national interests in our public marine resources. Maybe a working group of federal and provincial governments, industry and economic, financial and legal experts could be struck to do a thorough study of the situation and develop strategy options to address the issues. Currently, and as stated in the presentation by DFO just before mine, the present DFO and provincial management fisheries structures do not have the tools necessary to address foreign ownership control issues of our Canadian fisheries resources and benefits.

The second point I want to raise is the need for appropriate financial aid programs to support intergenerational transfers of owner-operator fishing licences to new entrants, but also, incentives to support processing sector businesses so that they can remain locally owned and operated. However, even the best programs here will not be able to compete with the deep pockets of international corporations.

Finally, our public fisheries resources must be considered as part of our Canadian national interest and food security priorities. Currently, they are being taken away from Canadians at an alarming rate. This issue has to become a priority for our elected officials and policy makers.

Thank you. I'm looking forward to your questions.

[The Chair, Liberal, Ken McDonald]

Thank you, Mr. Mallet.

We'll now go to Madame Canet for five minutes or less, please.

[Claire Canet, Project Officer, Regroupement des pêcheurs professionnels du Sud de la Gaspésie]

Thank you very much, Mr. Chair.

Distinguished members of the committee, thank you for hearing the testimony today from the Regroupement des pêcheurs professionnels du sud de la Gaspésie, which represents 148 lobster fishers.

The coastal communities of the Gaspé depend heavily on the commercial fisheries, including the lobster fishery, for their economic well-being. Lobster fishing represents employment for almost 600 people.

In Quebec, seafood processing plants, which depend on the catch in order to operate, employ 3,500 people. In 2019, commercial fishing in Quebec, which includes fishing by First Nations groups, represents a total value on the wharf of $378 million. Lobster harvesting in the Gaspé represents 24% of that total value.

No less than 80% of that catch in Quebec is exported, with 20% remaining in Canada. However, when we look at the corporate structures, such as Clearwater or Royal Greenland Québec, the percentage of the catch that is exported is clearly greater. For example, Royal Greenland, which owns the processing plant in Matane, makes offers on the wharf to guarantee itself as much of the catch as possible, as Mr. Cormier pointed out earlier. The company exports 95% of the catch to Europe or the United States, leaving only 5% of the seafood products harvested here to feed Quebecers and Canadians.

In 2019 and 2021, Royal Greenland used the techniques that Mr. Cormier mentioned. These are very alarming for the health and vitality of our Canadian processing plants, which provide the fishers with a number of buyers.

In its annual report for 2019, Clearwater emphasized that its main market was export. Indeed, more than 90% of its sales are made abroad. Its strategy is to continue to benefit from its wide range of species, its scope on the world market, and its customer base to generate profitable growth and broaden its sales through new markets and outlets. For example, we can point to its association with Premium Brands in increasing productivity and reducing costs. These are the input costs, of course, meaning the price paid for the catch. This generates higher margins because of the vertical integration of its global supply chain.

Royal Greenland and Clearwater are two examples of foreign companies becoming involved in processing and therefore in the fisheries themselves. This also applies to Canadian companies with a strategy of vertical integration focused overseas. This has a direct impact on Canada's food security, because the amount exported is clearly greater than normal exports by companies that are local and wholly Canadian.

Clearwater and Premium Brands are actually not holders of commercial inshore fishing licences. As we have heard from the Department of Fisheries and Oceans, the DFO, these companies cannot obtain inshore fishing licences. However, Clearwater is now 50% owned by a number of First Nations groups, who themselves own several dozen commercial inshore fishing licences. These are communal licences, so the protection afforded by the new owner-operator regulations does not apply since these licences are communal.

By a twisted logic, communal-commercial fishing licences, both current and future, that commercialize the catch owned by those First Nations groups, do not protect the licence holders. This runs counter to the spirit of the regulations and to the protection of our resource for the benefit of the fishers and of Canadians.

In a situation where access to the fishery by First Nations is increasing in order to allow them to achieve a moderate livelihood, we cannot but see an increase in the number of communal licences. This will result in more control over, and commercial sales of, vulnerable catches. This will be the result unless the DFO ensures that all fishing licences that allow the catch to be sold commercially enjoy the same protection.

To us, it seems fanciful to believe that these companies, such as Clearwater, which are part of a strategy of vertical integration and control over fishery markets, do not see an opportunity in unprotected access to an increasing number of commercial communal fishing licences and in the catches that result.

With the corporatization of the fisheries, without safeguards, we will clearly be seeing an erosion of the scope of the Coastal Fisheries Protection Regulations, which also provide protection to owner‑operators. In addition, an increasing number of commercial fishing licences will be exposed to takeover by a small number of companies.

The corporatization of fisheries through vertical integration and private investment serves only to pay dividends to a few shareholders— individuals, families or foreign governments, as in the case of Royal Greenland—rather than having the profits pass to coastal communities as the priority.

Without anyone noticing—