Fisheries Committee on May 15th, 2023

[Claudio Bernatchez]

It doesn't really hurt.

However, if we were to take away a licence from someone who obtained it in a questionable or illegal way, that could start to hurt.

[Caroline Desbiens, Bloc, Beauport—Côte-de-Beaupré—Île d’Orléans—Charlevoix, QC]

Thank you very much.

[The Chair, Liberal, Ken McDonald]

Thank you, Madam Desbiens.

We'll now go to Ms. Barron for two and a half minutes or less, please.

[Lisa Marie Barron, NDP, Nanaimo—Ladysmith, BC]

Thank you, Mr. Chair.

My question is for Mr. Sproul.

If we were to move ahead with ending foreign ownership and quotas, what are your thoughts around enforcement? Do you feel that it would be easily manageable?

[Colin Sproul]

My expertise is in fisheries management and in fisheries, not in regulations, but I think that there needs to be some type of an ownership test applied to the corporations that are involved. If they're found to be in violation, the quotas they're possessing should be returned back to the Canadian public and used for the principles of new entry into the fishery and for reconciliation.

[Lisa Marie Barron, NDP, Nanaimo—Ladysmith, BC]

Thank you, Mr. Sproul.

Do you have any additional thoughts around the differences that we're seeing in the east versus the west, and the advantages, benefits and takeaways that we should be considering as a committee?

[Colin Sproul]

I certainly do.

I think that the dire and sad situation of independent inshore fishermen in British Columbia should be a warning to everybody in this room. The government and fishermen should work together and do everything we can to prevent a similar situation from destroying east coast fisheries, which have proven to be the bedrock of our economy and an economic renaissance in Atlantic Canada.

In British Columbia, where we see overwhelming corporate concentration of the industry, there's a massive difference between the scale of the benefits being returned to coastal communities from the fishery and what we see here in Atlantic Canada. I think that we should heed it as an ominous warning.

[Lisa Marie Barron, NDP, Nanaimo—Ladysmith, BC]

Thank you, Mr. Sproul.

Mr. Bonnell, I asked you quite a few questions in the last round. I want to provide you with an opportunity before I wrap up my questions. Do you have any final thoughts for the committee that we should be considering in our recommendations moving forward?

[Carey Bonnell]

No. I made the point earlier that all I can do is speak for the Atlantic coast. Certainly on the Atlantic coast, we have a high level of compliance, both in terms of domestic ownership as well as in following the existing inshore policies. We'll continue to operate within that framework and respect that, and hopefully provide value for both the harvesting and processing sectors.

We're all committed to rural Newfoundland and Labrador in our case—and rural Atlantic Canada—as businesses and operators. We need to focus on more co-operation, from my standpoint.

[The Chair, Liberal, Ken McDonald]

Thank you, Ms. Barron.

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

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

Thank you, Mr. Chair. I'm yielding my time to Mr. Perkins. Thank you.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Mr. Sproul, the issue of supply agreements was discussed earlier by MP Small. We used to have trust agreements, but the owner-operator policy made trust agreements illegal. Smart lawyers managed to find another way around that through supply agreements.

While you mentioned earlier that fishermen always have a choice as to which buyer they sell to, in the case of supply agreements—or our supply agreements in Nova Scotia, as I understand it—they don't really have a choice, particularly when it involves financing their vessel. Is that correct?

[Colin Sproul]

Yes. I think what we've seen is that companies that were attempting vertical integration through trust agreements have diverted to other legal mechanisms, be they controlling financial agreements or supply agreements. These agreements demand that harvesters deliver their lobster to a certain lobster buyer, who was the real owner before that, when the operator was a nominal owner, and now they're being forced to sell to those vertically integrated companies at a depleted price, below everyone else in the industry.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I'll go back to the first question I asked you, which was about LFA 41 and the impact of giving Clearwater a larger TAC. The current TAC is 72,000 tonnes, I believe. Is that it?

[Colin Sproul]

I don't have the numbers right here.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

The impact of their having a larger TAC, without, as far as I can see, any science to support it, would mean what to the inshore?

[Colin Sproul]

One thing it means to the inshore fishery, which is more subtle to discern, is that it would create downward price pressure on the industry, allowing Clearwater to put lots more lobsters onto the market in advance of the opening of the winter lobster fisheries in southwest Nova Scotia, which is an activity we've seen over and over for decades. This would further strengthen the corporation's ability to affect lobster prices regionally.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Is China's acquisition of fish buyers and other businesses having any impact yet on price?

[Colin Sproul]

I think it was clear to all fishermen that the entry of Chinese buyers into the marketplace has initially had an upward influence on price.

Lobster fishermen, prepandemic and during the pandemic, were enjoying good lobster prices. I think the fear lies in the conglomeration. The clear answer here is that there needs to be some mechanism put in place to deter companies from owning more than a certain amount of lobster processing or exporting ability.

I don't want to paint all Chinese entry into the marketplace with one brush and say it's negative. Clearly, we need markets in Asia and we need to keep developing more markets for lobster, but we need to do it in a way that prevents any one company from gaining too much control. We need to grapple with the issue of collusion among these companies to set region-wide price fixes in the lobster industry, which is unlawful.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Are they paying market price for these companies?

[Colin Sproul]

We wouldn't be party to what they're paying, but I suggest they're paying really high prices for these companies.

The other thing we're seeing is the original ownership of the companies nominally staying in place, which I believe is an attempt to retain the personal relationships between fishermen and the buyers.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I've heard that lobster buyers in southwest Nova Scotia have to take their lobsters now to Moncton, New York or Chicago to get them out, because of the foreign control of the live seafood terminal at Halifax. Is that true?

[Colin Sproul]

Yes, I've heard the same reports as well. It's putting Canadian-owned buyers at a disadvantage, clearly.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

It's a disadvantage not only in transportation, but also in terms of, I presume, the cost that the freight forwarders are—

[Colin Sproul]

Yes, certainly the cost would be greater.