Fisheries Committee on May 18th, 2023

[The Chair, Liberal, Ken McDonald]

I call the meeting to order.

Welcome to meeting number 69 of the House of Commons Standing Committee on Fisheries and Oceans.

This meeting, of course, is taking place in a hybrid format, pursuant to the House order of June 23, 2022.

We will begin today's meeting in public to hear witness testimony. Afterwards, we will switch in camera for the second hour.

As a reminder to all, please address your comments through the chair. Screenshots or taking photos of your screen is not permitted.

In accordance with the committee's routine motion concerning connection tests for witnesses, I am informing the committee that all witnesses have completed the required connection tests in advance of the meeting.

From 3:30 p.m. to 4:30 p.m., we're resuming our study of foreign ownership. Pursuant to Standing Order 108(2) and a motion adopted on January 20, 2022, the committee is resuming its study of foreign ownership and corporate concentration of fishing licences and quota.

I would like to welcome our panel of witnesses. Appearing as an individual, we have Mr. Christensen, professor; representing Aero Trading Co. Ltd., we have Brad Mirau, president and chief executive officer, by video conference; and representing Skipper Otto Community Supported Fishery, we have Ms. Strobel, co-founder and chief executive officer.

Thank you for taking the time to appear today. You will each have up to five minutes for your opening statement.

We'll start with Mr. Christensen, please.

[Dr. Villy Christensen, Professor, As an Individual]

Mr. Chair and members, thank you for the opportunity to address the committee.

I am a Canadian citizen born in Denmark, where I worked for a decade for the Danish DFO. I spent 10 years with an international research organization, followed by 20 years as a professor at UBC. I'm a fellow of the Royal Society of Canada specializing in ecosystem-based management, notably the combination of ecological, social and economic trade-offs that so often are your headache in FOPO.

I have witnessed the result of a flawed objective for fisheries, which is maximizing economic yield and that fisheries should be managed to maximize profit. On the west coast, DFO has adopted such a policy to make fisheries efficient, leading to easier-to-manage big-scale fleets, to the detriment of local communities. In parallel, management has moved towards individual vessel quotas, which are often made tradeable in the name of efficiency. B.C. is unusual in that there is an almost complete absence of ownership restrictions.

The B.C. halibut fishery has been called the poster child for successful management, but my former Ph.D. student Danielle Edwards documented how processors now control the quota market through leasing and how harvesters now own less than 15% of the quota.

The quota system has enabled investors and corporations to buy more quota, instead of harvesters building new boats and providing livelihood. The system leads to corporate concentration and vertical integration. The price is paid by new generations entering the fishery and by their communities. Many who fish have no choice but to lease quota from a processor, which ties them to selling to that processor at the price offered. Harvesters cannot earn from the fishery to reinvest and maintain their boats. Earnings do not offer a path to quota ownership, nor a path to boat ownership for a crew.

Despite clear socio-economic objectives for fisheries in Canada, there's an almost complete lack of consideration for socio-economic objectives in west coast fisheries. I blame DFO, full stop—not just for the mistakes of the 1990s, but even more for continuing down that road.

The move from owner-operator to corporate dominance has been devastating for fishing communities. Owner-operator fisheries provide livelihood not just for those on board, but for the service industry in coastal communities. It's been argued that seasonal income from fisheries is too low to provide livelihood, but such income is crucial for maintaining coastal communities, where people often have a portfolio of income and do not rely on high income from any one seasonal fishery.

Community-based fisheries serve as magnets for tourism, providing local seafood, jobs and livelihood. That is not considered with policies that make fisheries efficient. Value does not come from exporting raw products or products that can compete with low-cost import, but from value-added processing and marketing. Local value chains provide jobs and income. It really is value-added.

Rural coastal communities are dying throughout B.C. That notably includes first nations losing livelihood and traditional knowledge about fishing. We need to consider fisheries as strategic assets if our rural coastal communities are to survive.

What needs to be done is clear. FOPO pointed the way four years ago in the “West Coast Fisheries” report: Make the owner-operator principle, where only active, independent harvesters are allowed to own licences and quota, a requirement on the west coast, just like it is on the east coast.

It's time to right the ship.

Thank you.

[The Chair, Liberal, Ken McDonald]

Thank you. That was almost dead-on with the time.

We'll now go to Ms. Strobel for five minutes or less, please.

[Sonia Strobel, Co-Founder and Chief Executive Officer, Skipper Otto Community Supported Fishery]

Thank you, Mr. Chair and members of the committee, for inviting my testimony today.

My name is Sonia Strobel. I bring a few different perspectives to this study and to the impacts of foreign ownership and corporate concentration of fishing licences and quotas, and I'll try to focus my remarks in areas that haven't been covered by other witnesses already.

The first perspective I bring is that of a fishing family. I married into the fisheries in B.C. over 20 years ago and have witnessed the same struggles that you've heard from other harvesters. We couldn't afford to buy the licences in our family, so now every year my husband leases, and he faces the same uncertainty as thousands of other harvesters who lease licences.

For many, leased licences come with conditions around whom they must sell to and for what price. They take on the lion's share of the risk setting up for the season, yet they have no agency over the market for their catch. Fishing is inherently uncertain but disproportionately so for small-scale, independent harvesters in B.C. Uncertainty around whether or not you'll even be able to fish is something that our friends and colleagues on the east coast inshore fleet never even have to think about. As you've heard from other witnesses, this is in no small part because of the extent of corporate concentration of licences designed to control both the access to the resource and the price.

Some will say that DFO's beneficial ownership survey will provide evidence that there are no monopolies in fishing in Canada, and the survey may indeed make it appear that way, but be careful what conclusions you draw, because the survey is studying the wrong thing. The reality is more nuanced than just who owns a licence or quota on paper. Corporations don't have to own all the quota to control it, and I can provide a general example of this if we have time during questions. Anyone working with the industry knows this but will be cautious about speaking publicly about it for fear of repercussions.

The point is that, in B.C., even many of the few remaining owner-operators aren't independent. They can't sell their catch to the highest bidder, and they have no agency over their enterprises.

My second perspective is as a seafood consumer. Before marrying into a fishing family, I rarely ate seafood, because it was next to impossible to get local seafood in my coastal community of Vancouver, even though I was watching the offload of some of the most abundant, well-managed seafood in some of the cleanest water in the world.

I later found out that, in Canada, we export about 90% of what we catch, and, at the same time, about 80% of the seafood Canadians consume is imported. The pandemic and subsequent supply chain shocks laid bare just how vulnerable our food system is. It's a simple fact that the average Canadian can scarcely access Canadian seafood, and the seafood they can buy often comes from fisheries with far worse environmental and human rights track records than Canadian seafood. Concentration of licences and quotas into fewer and fewer export-oriented hands is a big part of the problem.

Third, my perspective is as a small business owner. My husband and I started Skipper Otto Community Supported Fishery in 2008 to de-risk fishing for fishing families and to provide direct access to Canadian seafood for Canadians. Since then, we've grown from supplying the fish from one family—my father-in-law, Otto—to supplying the fish from 45 fishing families in B.C. and Nunavut and providing their catch directly to over 8,000 home cooks across the country, from Victoria to Ottawa.

There is significant, growing demand from both the supply side and the demand side of our business. Because of our lean, direct-to-consumer model, we pay fishing families more than they can get anywhere else. As a result, we have more demand from harvesters than we can meet and, because we provide the most fisher-direct, transparent food in Canada, there's huge demand from consumers across the country as well.

Ultimately, what this whole issue of foreign ownership and corporate consolidation comes down to is that the Government of Canada has privatized access to the commons. There's a good reason why we don't privatize, for example, our national parks. They're a common resource for all Canadians. I'm sure big companies could make a fine go of providing services in parks and charging admission, but we don't go for that, because it wouldn't equally benefit all Canadians.

Foreign ownership and corporate concentration of licences and quotas privatizes the commons. It takes away the power of the boots-on-the-deck fishing families, and it de-risks an inherently risky industry for the big players while placing the risk squarely on the shoulders of the little guy.

If we care about retaining the social, cultural and economic benefits of the fisheries in our indigenous, rural and coastal fishing communities, then the Government of Canada must tackle foreign ownership and corporate consolidation alongside a made-in-B.C. fleet separation and owner-operator policy.

Thank you for your time, Mr. Chair and members. I'll be pleased to answer questions.

[The Chair, Liberal, Ken McDonald]

Thank you.

Again, you're just under the time. That's the first time yet.

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

[Brad Mirau, President and Chief Executive Officer, Aero Trading Co. Ltd.]

Thank you for allowing me to speak today on foreign ownership and corporate concentration.

My name is Brad Mirau. I'm the president and CEO of Aero Trading, a fish-processing company in B.C. that was established in 1978. We have a plant in Vancouver and one on the north coast near Prince Rupert. I appreciate being able to speak on this, because we are a Canadian company that happens to be foreign-owned, and we also happen to own multiple fishing licences and quotas.

We operate primarily within the small and medium-sized fishing fleets. To give you some idea of the size of our company, we have dealings with as many as 300 independent Canadian fishermen in any given year. Over my 35-year career doing this, I have developed a level of expertise in licensing and quota transactions that has allowed me to help or advise individual fishermen and first nations organizations, as well as some of the industry advisory bodies.

I've seen the industry change immensely over these decades. I should point out that there are very few remaining processing facilities on the B.C. coast, and that many over the last three or four decades have ultimately failed or been consolidated into other existing companies. In Prince Rupert, for example, Aero Trading—we're in Port Edward, actually—is the only remaining full-fledged fish-processing facility that's left. Other people just operate off-loading facilities.

We own a variety of licences and quotas that I feel are integral to our being able to maintain the operation of our processing plants year-round, and we've made these necessary investments not just in licences, but in equipment. We've also always provided financial assistance to some of our fishermen in order for them to be able to buy licences or upgrade their vessels, as traditional banking arrangements are not always available to them.

The “licence bank” we have created, as it's called, or a “licence pool”, benefits all of our stakeholders, including fishermen, and we think it's a sustainable model, which we are very proud of. In fact, many of our retiring fishermen leave their licences in this pool for us to manage for the other fishermen who still fish for us.

At the plant we operate in the north, where most of our acquiring happens, we also off-load for competitors, many first nations fishermen and the first nations partners we have in the various communities.

I think over the last two or three decades of the industry, the decline of the salmon and herring fisheries sped up the consolidation of processing companies, which is why there is some corporate concentration in these two licence categories, especially herring and salmon. But I think there are some narratives—which I've heard—that also exist around our industry that all fisheries have excessive corporate concentration, and I do not believe this to be the case. I'm happy that studies like the beneficial licence ownership survey are at least starting to get some true aspect of who owns what.

I'm not going to take the position that there shouldn't be any changes to the status quo, but I would hope that while considering any change we use good data and evidence and meaningful consultation with all the affected parties, so that any changes won't continue to harm the various participant groups in the Pacific region.

The main thing I'd like to say is that the licensing system in B.C. has become so complicated and so interconnected—so much more complicated than most people think—that any changes will most certainly require lots of planning and will have significant impacts on many.

I don't profess to know what the threshold for corporate concentration is, but if you look at some of the licence categories, I don't believe there is more than 5% or 10% corporate concentration in a lot of these fisheries. The landscape of licence ownership is changing rapidly. Through PICFI, the first nations community is now becoming one of the larger licence owners in many licence categories. It's important to realize that a lot of these first nations groups are operating through normal, legal companies and have joint ventures with companies such as ours and individual fishermen, so any changes made to the licensing system would have impacts on all parties, including first nations fisheries.

I would be cautious about changes before we know all the impacts, and I would love to be a part of those discussions, because I think I have a lot of information to offer.

Thank you.

[The Chair, Liberal, Ken McDonald]

Thank you. Again, it was under the five-minute mark, so everybody has been good today.

We'll now go to our first round of questions.

We'll first go to Mr. Small for six minutes or less, please.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Thank you, Mr. Chair.

Thank you to the witnesses for taking part in this study.

I'm going to ask the same question of Mr. Christensen and Ms. Strobel.

Since the last similar study in 2019, what progress has the minister made on key recommendations from that study and that report?

[Dr. Villy Christensen]

None.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

How about you, Ms. Strobel?

[Sonia Strobel]

I would say the same. No progress has been made.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

What key recommendations in that study have yet to be addressed that really need to be addressed, in your opinion?

[Dr. Villy Christensen]

I think the most crucial one is the one that talks about the owner-operator requirement for B.C., the made-in-B.C. solution.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

If this situation exists as you've laid it out for us, if that's actually the case—and I'm just trying to be a little bit impartial here—how do we walk it backwards and turn it into something that works for coastal communities and fishing families?

[Sonia Strobel]

I think fleet separation is an important first step. It was the first step on the east coast as well, to separate processing licences from fishing licences. It boggles my mind that we haven't begun with a fleet separation on the Pacific coast. I think that would be the first step.

I know there's often the argument that you can't unscramble an egg, that this is what we have. I agree with many who say it is very complicated, but I don't think its being complicated is a reason not to uncover a way to create policies that create better outcomes. I think fleet separation is a place to start, and the owner-operator aspect needs to be examined as well, for sure.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Ms. Strobel, we've had testimony here that a lot of this licence ownership is untraceable, held by numbered companies and whatnot. Are you suggesting that these licences be basically confiscated and redistributed? How would that be possible? How could we make that work?

[Dr. Villy Christensen]

You can look at how it has been done on the east coast. You could have a period, say seven years or 10 years, for disinvestment. That would be one way of doing it. The key factor is to get this started. For over 30 years, this has been discussed. Things have just grown worse and worse. How do you change that? The first thing is, you need to get DFO to work on it. They don't seem to be doing so.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Do you think there would be any way that the individuals involved in this corporate concentration would be able to skirt around new laws that are brought in? For example, we hear talk of supply agreements. How can you be sure that the legislation would actually work for you? There's the widespread belief on the east coast it hasn't really worked for them.

[Sonia Strobel]

I don't think there's a really simple, clear answer here. We have learned a lot of lessons on the east coast about supply agreements and how we need to be careful how those can take place under the existing framework on the east coast, which is why we need a made-in-B.C. solution that takes the best lessons we've learned from the east coast and applies them to do something different on the west coast and the Pacific region.

I think you're going to hear testimony next week from Rick Williams. I heard him speak recently at the Fisheries for Communities gathering about a number of proposals for how the government could even buy back licences and not have an owner at all. What would that look like? I think there are a lot of creative solutions. There are a lot of folks who've done research. They've looked at other jurisdictions, and I think it's up to the department to do some research, to look out there at other examples, and then to come up with solutions and not say, “Well, it's too complicated. We're not going to touch it.”

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Ms. Strobel, I heard you talk about repercussions for harvesters who could have witnessed here. What type of repercussions were you thinking about? Would you like to elaborate on that?

[Sonia Strobel]

It's uncomfortable to elaborate on repercussions that harvesters face, that our harvesters, the 45 families that fish for Skipper Otto, have experienced.

The industry is very much controlled by some big companies that control a lot of quota, licences, off-load facilities, ice plants and things of this nature. Those kinds of services can be declined to harvesters. Even if they are technically independent owner-operators, they aren't necessarily operating in an independent way. I can give you an example if you'd like to hear how quota works in terms of independents.

I'll give you a very, very common example. Fishing families may have inherited some quota from their parents, for example 5,000 pounds of quota. That's not enough quota to make a living for the year, so they have to lease some additional quota from somewhere else in order to make a living for the year. They will usually go to a company that owns quota, a company that they need to lease from. The company will lease it to them under the condition that they sell back their fish, that 10,000 pounds, for example, at the price that the company sets, but they must also sell the 5,000 pounds of quota that they own to that company in order to get that additional 10,000 pounds.

This is why I say that the beneficial ownership survey might provide some misleading evidence, because many of the independent families that do own quota aren't operating in an independent way. It's really just smart business. I'm not finger-pointing at businesses that do this. They are operating legally within the framework that's been set up by the government. Naturally, the smartest business move for them in that framework would be to own the minimum amount of quota that they need to own in order to control the rest. That's what we're experiencing, and the survey won't demonstrate that.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Thank you.

[The Chair, Liberal, Ken McDonald]

Thank you, Mr. Small.

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

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Thank you, Mr. Chair.

Thank you to our witnesses for being here.

Ms. Strobel, on vertical integration, you can understand that, if you're putting a lot of money into a processing facility, you obviously want to have the material coming in that you can process. If that's not really such a bad notion, is the issue or the question then the sharing of the wealth among the harvester, the processor, and the wholesaler/retailer? Is that really what's out of whack? Do we really need to put the effort into unscrambling the egg, to use that analogy, or would it be a lot simpler to prescribe what percentage of the total value each person gets as a share?

[Sonia Strobel]

I have heard examples of that, where there is a prescribed maximum percentage of the value of the catch that can go to a licence owner, and I think that would go a long way. I know that, in British Columbia, in many cases, upwards of 75% of the landed value of the catch goes to the licence owner, and what remains isn't enough to have a viable fishing operation.

This is why I say that, under the current system, I understand entirely that fishing is risky, that opening a plant is expensive and that the businesses on the B.C. coast provide a valuable service for all of us who are in the industry by opening plants and by operating off-loading, providing ice and that sort of thing. It's the disproportionate de-risking of those companies in order to make it viable for them at the expense of fishing families that is the problem, so there needs to be a more equitable distribution of the wealth.