Fisheries Committee on May 29th, 2023

[Melissa Collier]

That's correct. If you're leasing extra quota from a fish processor or a buyer, like we do all the time, I think it's really important to understand that transferable quota is critical for the economic viability of some fisheries. For example, with salmon, if you're given only 150 pieces, say, it's not economically viable to fish only 150 pieces. Therefore, fishermen will trade with each other or access extra quota through a processor. But if you do it through a processor, you don't necessarily know whose quota you're accessing.

[Blaine Calkins, Conservative, Red Deer—Lacombe, AB]

Mr. German, do we have any idea how much of our quota is actually owned by foreign state actors?

[Dr. Peter German]

I don't have any current knowledge, as it's not something I've researched recently, but we did reference public source material in our report in 2019 when we issued it.

[The Chair, Liberal, Ken McDonald]

Thank you, Mr. Calkins. You have two seconds left. You'll hardly get two words out in that length of time.

[Blaine Calkins, Conservative, Red Deer—Lacombe, AB]

Thank you.

[The Chair, Liberal, Ken McDonald]

We'll now go to Mr. Morrissey for a couple of minutes.

[Bobby Morrissey, Liberal, Egmont, PE]

I'm going to give my time to Mr. Hardie.

[The Chair, Liberal, Ken McDonald]

Okay.

Go ahead, Mr. Hardie.

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

Thank you, Mr. Chair.

I'll go back to you, Ms. Collier. I really enjoyed your answer to my last question, so I'm going to ask you to speculate here.

There's no family involved. The family doesn't want to fish. Can you put yourself in the shoes of a current active fishing family that basically wants to dispose of their licences or quota, or their boat, for that matter? Can you describe a fair kind of transition that would ensure that the ability to fish ends up with people who are actually fishing?

[Melissa Collier]

The biggest problem right now that's facing that issue is the fact that licences are married. If you have a couple of licences, as most owner-operators do, because you need to access multiple fisheries in order to make a living, they're married together. No new entrants can possibly buy a licensing package like that. I think that's the first step, because if you unmarry licences, then these individual licences could be sold to new entrants to access those fisheries, and you could sell off those assets to active fishers.

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

That was, in fact, a recommendation in the 2019 report.

The issue of a bank of licences and quota has come up. What would you say to one that's basically run by the federal government, where the federal government is the one that sets the price and leases it out or some kind of revenue-sharing agreement? Would that be workable?

[Melissa Collier]

I'm not too sure, to be honest. I'd have to really sit down and put some thought into how that could work. I think I'd need a lot more information on the framework of how it would operate to be able to say whether or not I think it would access.... The only things I can even reference now are some of the first nation licensing banks, and, just from hearing from fellow first nations, it's not working for them. I'd be hesitant to sign on until I understand exactly how it would work.

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

Very clearly, getting to what everybody seems to agree is a better system, which is owner-operator and fleet separation, may not be like unscrambling an omelette—we've used that analogy a few times—but you would have to agree, Ms. Collier, that it isn't necessarily going to be easy to keep everybody whole, given the current situation.

[Melissa Collier]

Absolutely not. I think it's going to be a substantial transition, and I think that's why a lot of people also talk about a made-in-B.C. strategy because of the way our current system works.

The process is going to have to be different from what happened on the east coast, but knowing that they had a seven-year transition to help make that work, I think something like that could work here if you have a slow transition to help all parties involved.

[The Chair, Liberal, Ken McDonald]

Thank you, Mr. Hardie.

That concludes our first hour of committee testimony.

I want to thank the witnesses who have appeared here in the first part of this particular meeting. If they want to stay online to be able to answer more questions if anyone has any for them, they are more than welcome to do so.

We have one witness joining us in person for the second part of our meeting today. We haven't been able to contact the other witness, and we've been trying since early this morning, so we'll have to get him another day.

We'll suspend for a couple of moments just to get things straightened out for the next session.

Thank you.

[The Chair, Liberal, Ken McDonald]

I think we're ready to get started.

I would now like to welcome our witness for the second hour. Representing the Canadian Council of Professional Fish Harvesters, we have Mr. Richard Williams, research director.

Mr. Williams, you have up to five minutes for your opening statement.

[Richard Williams, Research Director, Canadian Council of Professional Fish Harvesters]

Thank you, Mr. Chairman. Thank you for the opportunity to appear here.

I am the research director for the Canadian Council of Professional Fish Harvesters, which is a national human resources sector council for the fish-harvesting industry. The comments I'm making here, however, are my own views and opinions.

I've been working with the council since its foundation in the mid-1990s. We've been tracking economic performance, the labour market and labour supply trends in the industry since that time. I've been paying close attention to the fisheries on both coasts and what's going on in them. I've provided you with a presentation that has some numbers in it about comparing the socio-economic outcomes of the industries on the two coasts. I won't go into the details; maybe we'll have time for discussion around that.

Basically, fishing incomes in the fishery in British Columbia have grown since the great recession. We're using tax filer data here up until 2019, before the pandemic. After inflation, incomes in the B.C. fishery did improve, but only at about a third of the rate of the east coast fishery.

The harvester workforce in British Columbia is the second-oldest, next to Newfoundland and Labrador, but much older than what we see in the Maritimes. We have an aging workforce and a paucity of young people coming into the industry. We have a situation where.... When we look at landed value issues and so on, one of the things that jump out at me from the numbers most dramatically is that in the Atlantic region the total harvester income—income earned from fishing employment and contributing to local economies in the Atlantic region—represents 37% of total landed value. That share of the total value of the fish being landed remains with harvesters in their communities. In British Columbia, the proportion is 29%, significantly less. If there was the same proportion of total landed value being returned to fish harvesters as employment income, there would be an increase of $6,000 in the average income of fish harvesters in British Columbia. It's just one measure of how the fisheries are structured. The different licensing systems and industry structures produce very different socio-economic incomes.

Mr. Hardie referred to the omelette, the famous omelette. I'll make the argument that we don't have an omelette situation here; we have a failing policy system that needs to be fixed. Questions, I know, have been raised in previous testimony about whether that can be done or how it can be done. There is no cheap and easy way to do it. We're pretty far down what I believe to be the wrong road, so there's no easy way to get back.

However, there are two simple, straightforward models that we can see in operation in other regions, other countries, for fixing it. The obvious one is the PIIFCAF model, where DFO's minister issues licences every year. The minister has the authority to simply say that over a fixed period of time—seven years in the PIIFCAF case—all those licences have to be in the hands of working fish harvesters. That sets in place a market process whereby licences and quotas will change hands. People who aren't working harvesters will have to find buyers at prices that buyers can afford, etc.

The second option is a different ownership or licence structure altogether. We can see this in Maine in the very successful lobster fishery or in the very successful small-boat inshore fishery in countries like France, in Europe, where the licences are not tradeable commodities. The fish harvesters don't own the licences. They have long-term use of them through either just granting procedures or leasing arrangements, etc.

Similar to a PIIFCAF kind of time period, we could, in British Columbia, go through a process whereby all licences return to the ownership of the Crown and then are made available to working harvesters on either a lease-to-own basis or a leasing basis at affordable lease rates. I can go into some detail about what that might look like financially.

There are, however, two caveats around either of these kinds of approaches to solving this problem. One is that neither option will work unless harvesters are able to buy licences and quotas at fair market value for a working fish-harvesting enterprise. At the moment, most licences and quotas, certainly in British Columbia, are not trading at fair market value from the perspective of having to pay for them and finance them as a working harvesting enterprise. So—

[The Chair, Liberal, Ken McDonald]

Thank you, Mr. Williams. We've gone over the allotted time, so we'll go to questions now. Hopefully, anything you didn't get to include will come out in the line of questioning.

We'll now 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, Mr. Williams.

Mr. Williams, you mentioned the high price of licences and quotas. What's causing the inflation? It seems like the inflation in the fishing licences is one of the issues behind what's happening in terms of people thinking that there's corporate concentration. Why are these licences being priced so high?

[Richard Williams]

I've been watching this for over 40 years. I see this a little differently than some of my friends in the fish-harvesting industry and so on. I believe that the biggest driver of licence and quota price increases is the value of the fish in the water. There is a rising global demand, and the opening of markets and the free trade agreements that we've seen over the last 20 or 30 years have created a whole new fishing economy, in which we now have fairly effective conservation regimes in most of our important commercial fisheries.

That means the supply of fish to the market is not going to grow dramatically, because we try not to threaten the sustainability of stocks. We have a fixed quantity of product, generally speaking. There are some ups and downs with different species, but we have a fixed quantity of seafood that goes to a market in which there is rising demand. There is significant growth in the number of consumers and in the willingness of consumers to pay for seafood becoming a high-quality food product and becoming, in many environments, a luxury food. We've all heard about the expanding middle class in China and all of these factors.

The fundamental is that the fish in the water is more and more valuable. That, in turn, has generated the interest of speculative investors to try to get control of an asset that's going to keep growing in value. When you take a long-term view.... We're going through a tough year right now, and people can say, “oh, we're in big trouble”, etc., but when you look at it over 20 or 30 years, it's a really good investment to own access to a fish quota or fish licence. Anybody would want to do that if they're a small investor.

The whole process of keeping licences and quotas in the hands of working harvesters faces a whole lot more challenges than it did 20 years ago, when people didn't see the fishery as a growth sector. It's a time in which I think we—

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

Thank you, Mr. Williams.

In this report from 2019, “West Coast Fisheries: Sharing Risks and Benefits”, it was identified that loan boards would help new entrants and smaller harvesters gain better access to the fishery. Given what you've just said, do you think that would really be a factor, if we had these loan boards? Would they be able to keep up with the inflation in these licence prices?

[Richard Williams]

The point I was trying to make is that we have growth in the fair market value of the enterprise, and then we have amplified or inflated growth because of speculative interest in gaining that access. If we were to eliminate or dramatically reduce the speculative investor—or the illegitimate investor, in these terms—then it makes sense for an investor, whether it's a bank or a licence board or whatever, to support a harvester who's qualified and who has every opportunity to run a successful business and to purchase that enterprise at fair market value, because in the medium to long term they'll be able to sustain the investment. Yes, there is a need.

The second caveat I was going to mention was.... First, we have to get to a situation where licences and quotas are changing hands at fair market value and, second, we need to have the financing mechanism available. In southwest Nova Scotia, for the last several years, the banks have been quite willing and able to do that, because the licence can be collateral to get the loan. The banks are providing that service. It seems to be going reasonably well, and others can comment on that, but I think that in a place like British Columbia, a specialized mechanism.... In a recent report we completed for ACOA, we recommended a serious look at Agriculture Canada's farm loan board, Farm Credit Canada, as a model that would work in the transition we are trying to make.

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

In terms of these financing boards, how many provinces have these now in Canada for the fishing industry?

[Richard Williams]

Nobody has specifically a fishing loan board. New Brunswick and Nova Scotia have loan boards where they've integrated fishing, aquaculture and forestry work, I believe. Newfoundland runs its loan support through its small business programs—I believe that's the case—and certainly P.E.I. does that. The provinces have tended to merge these different loan processes. They still play a relatively small part in the financing of fishing enterprises. In New Brunswick, the credit unions are playing a fairly significant part.

Where the fishery is successful, banks and other loan agencies are prepared to invest. In B.C., where you have a broken fishery in which most enterprises are not highly profitable, it's much more problematic. That's why I think a specialized agency or institution is going to be needed.

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

Do you mean a federal agency, similar to what we have in agriculture?