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Proceedings of the Standing Senate Committee on

Issue 6 - Evidence

OTTAWA, Tuesday, May 15, 2001

The Standing Senate Committee on Fisheries met this day at 7:10 p.m. to examine matters relating to the fishing industry.

Senator Gerald J. Comeau (Chairman) in the Chair.


The Chairman: Honourable senators, I call the meeting to order. It is a great pleasure to welcome to the committee tonight Mr. Peter Underwood, Deputy Minister, Department of Agriculture and Fisheries, Nova Scotia.

Welcome, Mr. Underwood. It is good to have you here. We look forward to your presentation. I know, you have been quite busy over the last several years doing some reorganization within the department. We hear things are going well. We appreciate your appearing before us tonight to give us Nova Scotia's thoughts on aquaculture.

Mr. Peter Underwood, Deputy Minister, Department of Agriculture and Fisheries, Nova Scotia: Thank you very much, Mr. Chairman. It is a real privilege for me to have the opportunity to address you this evening. It is a great pleasure to be in Ottawa, especially coming from four days of driving rain on the East Coast, to be greeted by the sun. It was inspiring.

Mr. Chairman, I thought it would be a good idea for me to give you a little flavour of where we are in aquaculture in Nova Scotia, where we see things going, and to talk about some of the issues that we are facing in the development of our industry. As I go through my presentation, you will see that it is unique in the country and in Atlantic Canada in particular.

If you will indulge me for 15 minutes or so, Mr. Chairman, I will try to paint a picture for you of our industry in beautiful Nova Scotia.

First, it is important to ask the questions: Why is aquaculture the right choice for a province like Nova Scotia? Why should we be pursuing the development of this industry? There are three main answers to those questions.

This is a rural-based business. In Nova Scotia, there are terrific opportunities in our metropolitan areas, where all kinds of things are happening in oil and gas development and information technology. That is all very important for the province. However, the real backbone of the economy of Nova Scotia is what we produce in our rural communities. The fishery is the most important export industry in the province. We are number one in fish in the country, and fish is number one in Nova Scotia in terms of export dollars. We may get overtaken by oil and gas at some point; however, clearly, for the natural resource sector, the fisheries are important.

This is a science-based industry. This is not low-tech stuff. There is a lot of important knowledge needed to make this business a success, and Nova Scotia has the capacity to provide it. We have research, infrastructure and the trained people to conduct this business. We believe that Nova Scotia can conduct it in a world-class way.

Obviously, the Fathers of Confederation were not thinking about aquaculture when they drafted the Constitution and divided up the powers. This is how we see the roles of government. The provincial government is the lead agency with respect to the granting of proprietary rights for leases and site allocation. It addresses the whole issue of fish health and the extension of services to the industry. It focuses on the development of the industry. We also have an important regulatory role to play through the use of licences, which is a major instrument by which we can provide governance and oversight of the industry.

The federal government has an important role to play in terms of research, giving advice on conflicts in interactions between aquaculture and the fishery, navigation and environmental assessments. They also have an important regulatory role to play.

We are working in a global context wherein aquaculture is increasingly important in supplying the world demand for fish protein. The wild supply will not be increasing. As a matter of fact, it has probably hit the maximum levels in most areas. If you read many of the international reports, you will know that it is probably being exceeded in many areas. The demand for the product is increasing. If we are to meet the demand for seafood protein, aquaculture is one of the major opportunities to provide it.

The next slide is one of which I am extremely proud. You hear an awful lot about New Brunswick. You would have heard from them tonight about how important their aquaculture is. It is worth $200 million per year, which is fantastic for New Brunswick. Nova Scotia is a different story. We do not have one particular area where we can concentrate a huge salmon industry. It is a diverse ecosystem and a diverse industry. There are a number of different species. However, we are proud of what we have been able to do over the last number of years.

When I started as Deputy Minister of Fisheries in 1994, we were doing about $4.7 million worth of business. We looked at this industry, saw that it had a future and set some targets. We set a target of $50 million for the year 2000. We have just received our final statistics, and we beat the target slightly. It is an impressive curve. We are routinely achieving double-digit growth in the farm-gate value of the industry since we set some targets for ourselves and worked to try to develop this industry. It should be done carefully and at a measured pace if it is to be sustainable. I think this slide reflects what we have been trying to achieve.

To give you a quick snapshot of the industry, we have 372 sites, 50 per cent of which we call "quality sites." Many are old oyster leases. There is quite a mix of sites. As I said, our strength is in our diversity. It is particularly important to note that we are the only province in maritime Canada with significant waters available for expansion. New Brunswick is starting to reach their limits for finned fish production. Prince Edward Island has been growing its mussel industry for a number of years.

In Nova Scotia we are searching for new sites. Companies are coming in from all over to look at the opportunities available.

We want to develop this industry to help with employment growth. Our finned fish production has increased by a factor of 7 since 1994; shellfish production has increased by a factor of 4; employment by a factor of 4. Total direct employment in the industry now is approximately 1,100 people, but it is important to note that the increase is not just in the quantity of jobs. The type of jobs is also changing, from part time to full time, so there is a shift in job quality as well.

From reading the paper and some of the submissions that have been made to your committee, you will know that there is some concern about the impact of aquaculture on the environment. That issue is front and centre for us, and it is fair to say that we do not have, in any one place, the huge critical mass in aquaculture to significantly impact on the environment. The finned fish issues are the same as in other areas. We have to address feed loss, feces, escapes and fish health.

In our opinion, the most significant effect of shellfish farming on the environment is the visual effect of the presence of the activity. We have been watching other jurisdictions and the problems they have faced. We intend to learn from those experiences. We want our industry to benefit from the experience in other areas that have perhaps moved more quickly in the development of their industries than we have in Nova Scotia.

Over the past year, things have changed significantly. We now have environmental assessments of aquaculture sites, and that is good. My presentation tonight is substantially different from the one I would have made if our first hearing date had not been cancelled last fall. Huge progress has been made in working with the federal government on environmental assessments and approvals. I will go into that later.

If the scope and costs of environmental assessments are not managed properly, they can seriously impede development, particularly of the smaller players in the Nova Scotia industry. The first ones to go through the process are estimating the cost at $70,000 per site for environmental assessment alone. In many of our smaller shellfish sites, the initial capitalization for the first year would only be $80,000. We think you must design the assessment process to meet the risks of the activity. There are many opportunities in environmental assessment legislation to tailor the assessment process to address the relative risks of the activities being assessed and the permits being issued.

Many scientists and critics of aquaculture would say that sites should not be approved until all the questions have been answered. They want a modelling of the bay and input/output modelling and answers to all questions on impact. I think a more prudent approach is to proceed slowly and monitor the impact as you go. If no significant environmental effects are noted, perhaps operations can increase. It is a combination of upfront assessment and trying to answer as many questions as you can. We think it is important to monitor the on-farm and off-farm footprint impacts over time in the real world, as opposed to trying to do all of the science up front through computer models.

The impacts of aquaculture on the communities where it takes place cannot be underestimated. The value of coastal real estate is rapidly increasing in our province. Recreational property owners and developers almost always oppose aquaculture development. I have never seen an area where property owners were proponents of development. Protection of the environment is the most commonly stated reason for opposition.

When I was deputy minister of Environment, I was responsible for siting landfills. These were not like the old dumps. These were the new generation of landfills. I am having more trouble siting aquaculture sites in some areas than I did siting landfills.

Back when I was with Environment, I thought aquaculture was a great way to measure the improvement of coastal water quality if investment were made in, say, a sewage treatment plant. Finally, we have a way to measure, in dollar terms, the benefit gained by investment in water quality. I turned out to be totally wrong on that issue. People do not view aquaculture as anything but a real environmental problem. We must address that.

The key to acceptance is employment and engaging the community in the assessment and monitoring process. Where a lot of upfront work was done by the applicants to involve the community, few problems emerged in getting community acceptance and project approval. However, in a regulatory environment that has so many points of approval, a lack of community support means a long slog.

I have seen a real shift in the attitude of the industry toward commitment to environment and community. They now view the reputation of their industry in environmental sustainability issues as one of their major challenges. The ability to deliver sites is one of the largest impediments to growth in this sector, as opposed to the barriers of a number of years ago - financing, technology and markets. We need to address the reasons for that impediment. The industry has come a long way, even in the last year, in recognizing that problem.

Now that I have responsibility for agriculture as well, I can see similarities between the two sectors. Five years ago, the agricultural people would have claimed they were the ultimate stewards of the land and that they did not need regulations to protect the environment. Now that agriculture community sees the biggest impediment to growth in acceptance of their activities due to the implications for the environment. I am starting to draw some interesting connections between the two, as I now have responsibility for both portfolios in Nova Scotia.

The industry agrees that environmental assessments are important, but they are really concerned about the costs and ensuring the requirements are based on the risks associated with the proposed activities.

I have seen a big improvement in the commitment of both levels of government to aquaculture. Obviously the federal government and the current minister have re-invigorated the whole aquaculture file with funding and human resources. Combining fisheries with agriculture in our own department will provide new opportunities. Skill sets on the agriculture side for farm and business management practices will now be available to the aquaculture community. That will be a benefit. We are certainly trying to do what we can to help the industry move forward. Many new R&D projects have been announced. For example, AquaNet has been approved for seven years.

Another hat that I wear is with the newly formed Council of Fisheries and Aquaculture Ministers. The council is structured with task groups which focus on issues of particular importance. One of those is aquaculture. I am the deputy minister overseeing that work for jurisdictions across the country.

In my 15 years in government, I have never seen greater commitment to federal-provincial cooperation in an area of blurred jurisdiction. It is quite heartening. I hope it continues.

The kinds of issues we are looking at are the siting process, harmonizing the federal-provincial relations, coming up with some service standards in terms of time frames for permit approvals and coordination of research and development. These are very important to cooperative federalism in an area where you have a mixture of jurisdictions. Without that, we are not giving the public the service they deserve.

In summary, the barriers to development lie in our ability to deliver sites. The complex approval, climate and regulatory requirements are really a subset of the first. The public perceives the industry as unsustainable, polluting and a destroyer of coastal areas. For the smaller players in the business, financing is still an issue for those who are starting out.

The opportunities for us are numerous. We are the only province in Maritime Canada with water available for expansion. Most of the players are expressing an interest in Nova Scotia. There will be a lot of synergies between the traditional farm industry and the new department.

I do not know if you visited a farm. I had never even heard of this one. It is a char farm outside Truro that uses water from an aquifer to grow Arctic char. They get constant cold water. I had never heard of this farm because it did not need any DFO approvals. There were no community problems because it was housed in a building on a farm and pumping the water from beneath that farm. These people are "Fed Exing" char to high-class restaurants in Boston. This is the sort of thing that really excites me. I would love to put it all on land someday so we would not have to worry about all this mixed jurisdiction stuff.

I think you visited a halibut farm that is right on target with its business plan. That will give us our next 15 or 20 per cent growth as we go forward. That one is exciting. We are world leaders in that area.

How can the federal government help Nova Scotia? We need timely and practical advice so we can deliver sites. We need the federal government to not only do the assessments, but to stand behind them and take a firm stand with communities that say this will destroy the environment, when actually the assessment work has shown that is not so and that steps can be taken to address environmental concerns.

The federal government needs to take a strong partnership role with the industry and the provinces on fish health issues. We can provide some of that, but there is a lot of research and work that needs to be done. We cannot do that alone.

Clearly, the federal government has to take a lead in the R&D effort. I believe it is doing that. There are many different places where R&D is being conducted. The biggest issue for us now is ensuring it is coordinated and focused for the industry.

The federal government should continue to support the Aquaculture Commissioner's efforts in regulatory reform. Mr. Bastien sits on our task group under the council of ministers. We have been working very closely with him.

We need support for the development efforts the province is making.

In conclusion, Mr. Chairman, I believe that Nova Scotia will be a world leader in alternative species development. We are already showing that. It is clear that the trend will be to larger farms. There will be more land-based activity when the development work is complete. I think that is positive. We are confident that growth in Nova Scotia will continue at approxi mately 15 to 20 per cent per year for the next five years.

The Chairman: Thank you very much. That was an excellent presentation. It will be very helpful to this committee. Your enthusiasm is certainly evident.

Senator Robichaud: At the very end, you mentioned a role for the federal government in supporting the development efforts of the province. Do you mean through ACOA, through special start-up programs, or start-up grants? How do you see that support coming to your province?

Mr. Underwood: Given the fact that one of the major impediments to the growth of the industry right now is our ability to gain community acceptance of the industry and deliver sites, we need to work closely with the federal government to ensure that our relative processes for leasing, in the case of the province, and for the environmental assessment work and Navigable Waters Protection Act oversight work in harmony and are efficient, fair, science-based and fact-based.

Ultimately, the decision, whether or not to grant a lease, is a political one. Our political leaders need good science and good information in order to make informed decisions. There will not always be full acceptance in a community, but you must have good information, a good monitoring program and a commitment to follow up and turn the thing off if you are wrong. That is from a governance perspective, when I talk about supporting the development efforts of the province.

I think that we need to have more integrated planning and more upfront work. We are starting to do that now. We are doing a pilot project on the eastern shore on integrated coastal management. That means that we will try to look at good opportunities for aquaculture outside of the context of a specific lease application. In other words, we will do some science and some descriptive oceanography and start to identify areas where different types of aquaculture would be feasible. Then we can start to work with the community to gain acceptance of that.

In retrospect, it would have been best back in the early 1980s to have gone out and mapped the whole province, done all the research, carved up the sites and then auctioned them to the industry. At $500,000 a pop, it would more than pay for any of the research.

Senator Buchanan: We should have done that.

Mr. Underwood: It was proposed, but at the time it was not seen as the way to go. We must try to emulate that proactive approach. That requires much cooperation. We are starting to see an eagerness from the federal government to engage in that kind of activity because of the shift in focus in the Oceans Act and the current approach. DFO is trying to catch up on its commitments under the Oceans Act, and this is one of the ways it can do it. It can start to look at planning with communities in a more proactive way.

We do not need grants and subsidies. We need research and support, particularly if we are going to be a leader in alternate species. We have the capacity in Nova Scotia to do that. We should harness that capacity through applied research for aquaculture development. Those are the kinds of things I am talking about.

I do not think we need huge subsidies to develop this industry. We have mature companies that want to come in and invest. We will have to continue to support companies by way of loans, but we are more than prepared to do that from the provincial perspective. We do not need the federal government involved in that.

The two areas of focus that are really important are research and governance.

Senator Robichaud: You say there are companies waiting to come in. Usually, when there are business opportunities, people are ready to come in with money.

In some New Brunswick communities, the activity in the traditional commercial fishery is not what it used to be. People looking for other ways to compensate for the economic downturn in their activities have problems setting up operations, getting the capital to do the proper research and then to get it, I should not say "off the ground," but into the water.

Mr. Underwood: My view is that it should not matter where someone is from. We are believers in free trade in Nova Scotia. We move fish in and out. Companies move in and out. The perfect example is Scotian Halibut. What a great partnership that is. You have Icelandic technology, local investors and local research and employment opportunities. It all comes together to produce a terrific business opportunity. There are huge opportu nities for local fishermen. A number of them have moved into aquaculture. It will not replace all of the losses in the groundfish fishery, but the situation is the same all over Atlantic Canada. There was a huge downturn in the groundfish fishery and a great deal of displacement of people.

However, the industry is robust now and there is plenty of work. Our export value continues to hit record levels. There is competition for workers in the two sectors. The opportunity is there, and we do not look at where a company is from. The communities do, and any company, no matter where it is from, that has a proposal must work with that community. Many will use local people to help get support within the community. There are a number of examples of New Brunswick companies coming in and using local aquaculturists, graduates of our aquaculture programs, to work with the community and gain acceptance of their project. You do not hear much about those projects. They have gone through the system nicely with no controversy at all.

Senator Robichaud: I was not suggesting that we should screen companies that want to do business. I am sorry if I did not make that clear. I just want to find opportunities for the local communities that are having problems in some cases. I know the situation has changed a little in New Brunswick, where the traditional commercial fishermen were reluctant to accept aquaculture in general. Is it the same in Nova Scotia?

Mr. Underwood: I understand your question now. That is exactly what we are trying to do on the eastern shore with our pilot project on coastal zone management. It is looking at and identifying the opportunities for aquaculture, and working with the community to gain access to the needed skill sets, whether it is training, financing or technical support, to move that industry forward. It is not unlike what we did with Scotian Halibut. We took some interested local people over to Iceland, and eventually the Scotian Halibut project was born of that. We are always trying to identify needs and opportunities in communities to see if aquaculture has a role to play.

Senator Forrestall: I, like every one else, am somewhat impressed with the potential. However, I am not carried away by it by any stretch of the imagination. You must live in an embattled environment all the time. If you do not, I will introduce you to the people of Saint Anne's Harbour, Saint Anne's Bay. Frankly, that is a community of relatively intelligent people adjacent to landowners, people who use the bay for recreational purposes and so forth.

I have been led to believe that there have been a number of studies. One, you will recall, was found two or three weeks ago reposing in the county office library and four or five other places. You could go in and look at that massive document, but you could not copy it or take it out or anything like that. All that did, of course, was aggravate a very delicate situation.

I am told by these people who sought my help - and I am most anxious to clear up some matters for them - that three or four scientists, one of them an associate professor at Dalhousie, looked at the St. Anns' Harbour problem and concluded that the proposed project was far too large for the existing water-exchange regime to keep clean. It would be regrettable if you were to go ahead with a project of this size, only to run up against what four scientists have concluded is going to be a problem. Are you familiar with this?

Mr. Underwood: I am familiar with the application and the file.

Senator Forrestall: Can you tell me what company it is? I do not even know which company made the application.

Mr. Underwood: I think it is called Five Aqua. It is a partnership between a group of fishermen in St. Anns' Bay and a company from Prince Edward Island. They already have one relatively small site.

Senator Forrestall: I understand they made a number of applications in various harbours and areas of Nova Scotia, and the government, for a variety of reasons, turned them down. They are now concentrating their efforts in St. Anns' Bay, but more particularly around the harbour area. Is that true? Is it the fourth or fifth spot?

Mr. Underwood: I am not sure. I know they had an application in Tatamagoushe Bay. That was the most controversial one. The minister did turn that one down.

Senator Forrestall: Do you recall offhand why it was turned down?

Mr. Underwood: In my recollection, it was mainly because of community opposition.

Senator Forrestall: Community opposition. Then the govern ment does pay attention to the wishes and desires of the abutting community?

Mr. Underwood: As I indicated in my presentation, the ultimate decision as to whether or not to issue a licence is a political one. The difference between St. Anns' and Tatamagoushe Bay is that, in the latter, the application was brought forward before the requirement for environmental assessment. We always did some due diligence with respect to the environment, but as a province we did not have the research capacity to do full assessments. We required subsequent monitor ing to ensure our projections with respect to environmental implications were correct, but the St. Anns' case is the first of the large shellfish applications that is actually going through the formal environmental assessment process.

I certainly cannot discuss the merits of this because it is still before the minister, but in the end, that assessment will be part of the record that goes forward to him as he determines whether to issue that lease. Along with that, of course, will be all of the information and the concerns brought forward, both by those that are for the project and those that are against it. There has been much correspondence on this particular application.

Senator Forrestall: I do not know about your correspondence, but if you want some, I can send it along to you. I can send you the phone calls too.

Mr. Underwood: We have a good file.

Senator Forrestall: I would like clarification on the issue of environmental studies. An environmental study was carried out and I gather that it was in compliance with the process required of an applicant. Is that correct?

Mr. Underwood: The applicants, under the direction of the federal Department of Fisheries and Oceans, conduct an assessment and answer the questions put to them by the department. It is my understanding that we are at the stage now where that assessment document has been completed and is now being reviewed by DFO. Once they have completed their review, they will issue their conclusions. I may not have the details, but I will know whether the project should or should not proceed. If it is to proceed, what are the environmental impacts? If there are any projected environmental impacts, what steps do the applicants have to take to mitigate those? These are the conditions under which the project would proceed.

Senator Forrestall: To keep it going in the right direction, would the work of those scientists I mentioned, and one or two others, have been taken note of by people who did the environmental study? I presume it is not being done by the applicants. They would have engaged professional scientists to do the study. Do you know of the impressive work of this group of marine biologists? Ms Milewski is Vice-President of the Conservation Council of New Brunswick. They all agreed about the capacity. Would their work have been taken into consideration?

Mr. Underwood: It is my understanding that the review and evaluation of that assessment is ongoing.

Senator Forrestall: I apologize. My understanding was that they had completed an environmental assessment and had submitted it. There was a loud clamour from people in that part of Nova Scotia to see that study. It had been completed, because it was put on public display in the libraries, which immediately made it available for copying. That did not last very long, because eventually, copies were made available to people. Is that generally correct?

Mr. Underwood: Yes, I would say that is generally correct, but there is a difference between the company completing the assessment and the assessment being reviewed and concluded upon by the regulatory authority that requested it. It is my understanding that that has not yet occurred.

The Chairman: To be sure, the St. Anns' site that you are discussing is a mussel farm, just to be accurate for the record.

Senator Meighen: Welcome. It is nice to have you here in person, rather than through the miracle of modern technology.

Mr. Underwood, you said in your presentation that aquaculture is a somewhat newer industry in Nova Scotia compared to some of your sister Atlantic provinces. You also said that you hoped to learn from their mistakes so that you can avoid them. That seems to me to be eminently reasonable.

The Conservation Council of New Brunswick appeared before us. I have a quote from that meeting, where Ms Milewski and Ms Harvey were witnesses. They said, "It seems that there is a problem with communication between the two levels of government." Presumably they meant New Brunswick and the federal government. "I think we can say that we are generally very unhappy with the way that the federal screening and the new provincial approval process has been happening. The aquaculture industry is equally upset about it."

It seems to me that you have some very basic problems in this industry. There is the site application problem, which is a serious one in New Brunswick. How do you propose to deal with it, or how are you dealing with it in Nova Scotia, as it pertains to the two jurisdictions, federal and provincial?

I have a similar question regarding environmental regulation. We have heard conflicting testimony about the state of the marine environment directly underneath the netcages. There are questions of escapees and disease. The former pertains particularly, I think, to Nova Scotia. There is the question of escapees that are non-indigenous or exotic species. There are fish farms in Nova Scotia where rainbow trout are being raised. Can you give me some comfort that these problems, which are indigenous to the industry - and I am not casting any blame - will be dealt with better than New Brunswick has dealt with them, according to testimony that we have heard?

Mr. Underwood: That is a long question with many pieces to it. I will try, because it is a fair question.

First, unlike the bay area of New Brunswick, we are not dealing with a remediation issue. We do not have a situation anywhere in Nova Scotia where the density of aquaculture has reached the point that serious questions about density and disease have been raised.

I believe that the issue can be addressed at the outset through good environmental assessments that contain the descriptive oceanographic work that allows you to make prudent decisions. Those decisions affect what and how much will be placed in certain areas so that the activity can be sustained.

Senator Meighen: Do you accept that there is a finite limit to what a given area can sustain?

Mr. Underwood: Absolutely. Before I became a deputy minister, I was a scientist. I understand that completely. However, I do not think that you can always calculate the figures by using models. Sometimes you have to make some projections based on good science, and then monitor it. It is called "in situ experimentation," whereby you monitor the activity, as you move forward, to assess the impacts and determine whether you have either too many fish for fish health issues or for environmental impact issues. In that way, you can manage it. I believe that if you progress slowly and monitor carefully, you can address that issue.

We take the issue of escapees very seriously.

We believe that the industry should do everything in its power to prevent escapees. We now have a program under our licence conditions making it mandatory to report escapees. We fully support, both provincially and nationally, the development of industry codes of practice that would include best practices to prevent escapement of fish.

There is a mechanism to address each of the issues that are raised. That is the way that you deal with environmental issues. If you do not address them, you get into a "not in my backyard" syndrome that will prevent activity simply because you cannot answer those questions. You cannot say that you are doing everything prudently and using the best practices to address those concerns. The industry must do that.

Senator Meighen: This is more of a comment than a question. Obviously the industry is interested in avoiding escapees, because those are dollar bills swimming away. We must figure out a way to improve the containment.

If my information is correct, the number of escapees is rising rather than diminishing, although more in New Brunswick than in Nova Scotia. Of course, there are also more fish being raised in New Brunswick, so I suppose the law of averages is operating here.

I want to ask you about the allocation of responsibility between provincial and federal authorities. Are you satisfied that each of you knows who is doing what to whom and how? Are you tripping over each other?

Mr. Underwood: As I said in my opening remarks, my answer to that question would have been much different six months ago. There is room for improvement. I think that there is always room for improvement in cooperative federalism.

As I also said in my opening remarks, in my experience, there appears to be an unprecedented willingness between the two orders of government to work this out. I am optimistic that that will happen.

It is a real challenge, because fish swim and water flows. Governments like tidy little boxes within which to operate. It is a real challenge for the psyche of bureaucracies and governments to think in a different way when it comes to establishing regimes of governance over things that flow and swim. We had the same problem in international areas.

Municipalities are best at licencing for aquaculture. They are good at finding out what is acceptable in the community and getting into the zoning exercise. Unfortunately, it is not a municipal responsibility.

The process is more akin to a zoning process. That is why we are starting to look at the pilot project off the Eastern Shore. We will look at a more community-based zoning activity that engages local people in a much more constructive way before applicants come forward with proposals. We are looking at a planning exercise in anticipation of an opportunity for development.

The Chairman: I am sure that Senator Adams will want to mention the question of Truro char. Coming from the Arctic, he may want to pursue that. We realize that Truro, Nova Scotia, is almost exactly halfway between the equator and the North Pole, but this is the first time that we have heard about growing char in that area.

Senator Adams: I would like to find out more about how it works. Are char being farmed down East?

Mr. Underwood: Yes, char do grow very well in captivity. However, as for any fish, the key is finding the optimal temperature. It happens that there is an aquifer in that particular area of Nova Scotia with plenty of water at just the right temperature, summer and winter. The water does not have to be heated; it does not have to be cooled. All they need to do is pump it.

The char are growing wonderfully. They are growing in tanks in buildings on what was a dairy farm.

Senator Adams: Does the water come from the sea?

Mr. Underwood: No, it is fresh water from an aquifer. It is a drilled well.

Senator Adams: We do not have that in the Arctic. We get summer frosts.

Senator Buchanan: Thank you. I should mention at the beginning that Peter Underwood started his illustrious career with the Department of Fisheries under a very able minister of Fisheries and a very able premier who led a responsible government. I was premier for 13 years. Mr. Underwood was with Fisheries for seven of those years. Now you know who that able premier was.

It is interesting to talk about aquaculture. I was the minister of Fisheries in 1968, 1969 and part of 1970. That is when the aquaculture really started.

I will tell you a story, if I could have a minute.

The Chairman: It is on the record.

Senator Buchanan: Gordon Tidman, who is now a Supreme Court judge, Gerry Ritzi, who is now retired in Truro, and I were appointed to the cabinet at the same time. Two weeks after we were appointed, we had lunch together. Mr. Ritzi said, "Well, I was just told that I am going on a nice trip to Seattle, Washington, and San Francisco, to promote Nova Scotia industry." They called them the "lobster trips."

Gordon Tidman said, "I am going to Atlanta, Georgia. Social services ministers have been invited down there to look at new methods in the Southern United States. Are you going any where?"

I said, "No, they have not mentioned anything to me." I was the minister of Fisheries and Public Works. When I returned to my office, there was a note for me to call the deputy minister of Fisheries at the time. He said, "Minister, may I come over to see you? I have a little trip in mind to see some new methods that I think you would enjoy."

I thought that it sounded great. I was thinking that Sweden had new methods of marketing. The deputy minister must want me to go to Sweden to look at new methods of packaging and marketing.

He came in and sat down. I said, "Brian, where are we going?"

He said, "We have some new oyster beds down on Eastern Shore. I think that it is time you went down and looked at them."

I travelled to the Eastern Shore. Mr. Underwood will recall the oyster beds down there. They were the first ones in Nova Scotia, I think.

Senator Meighen mentioned rainbow trout. The first rainbow trout farms were on the Eastern Shore also. I was minister of Fisheries when it opened with great fanfare and a huge dinner. However, it lasted, as I recall, only about seven or eight months. All the trout died of some disease.

You would not remember, Mr. Underwood; you were at Dalhousie at the time. The big concrete pens are still there. It was huge and costly.

One aspect of aquaculture in some parts of Nova Scotia - and Mr. Underwood will recall this too because he was in the department at the time - is that back in the mid to late 1980s, there were problems in the Prospect Bay area with the raising of salmon in pens. The problem was with the local fishermen, who were vehemently opposed to aquaculture and would go out at night, open the pens and let all the salmon escape. There was a young woman who was getting involved in aquaculture, but because of the local fishermen, she moved her spot two or three different times.

I was involved at the very beginning of the aquaculture business. It has thrived because of the expertise of people like Peter Underwood.

What was the total market value of the fishing industry in Nova Scotia in the last fiscal year?

Mr. Underwood: Do you mean the fishing industry or the aquaculture industry?

Senator Buchanan: The fishing industry.

Mr. Underwood: Export value is approximately $1.2 billion. Landed value would be $750 million.

Senator Buchanan: What is the value of the aquaculture industry?

Mr. Underwood: Farm gate would be $50.2 million.

Senator Buchanan: It is increasing every year, I understand.

Mr. Underwood: In 1999 it was $35 million. It has been increasing in double digits right through the period from 1994 on.

Senator Buchanan: Members of the committee will under stand and appreciate that the fishing industry of Nova Scotia, as Mr. Underwood said, is thriving. The market value of fish products is over $1 billion. You can compare that to 20 or 25 years ago, when it was at $100 million, $200 million. In fact, the total value of shellfish back in the early 1970s was approximately $200 million. We have come a long way.

I also wish to mention the St. Anns' Bay situation. There is an individual there who calls about aquaculture from time to time. I have spoken to your minister about it on behalf of the gentleman in Baddeck, whom Senator De Bané knows as well.

Senator De Bané: When I was minister of Fisheries, my meetings with our fishermen in Southwest Nova Scotia were memorable events.

Senator Buchanan: I remember them very well.

Senator Mahovlich: A few weeks ago, I asked a question about the tides in New Brunswick, which are the largest in the world. I thought that area would be ideal for aquaculture. Two days later, I read in the paper about the wild fisheries. The fishermen around St. Andrews were claiming that the wild Atlantic salmon had diminished and they could not figure out why. Would you happen to know anything about that? Have you looked into that? I know the people will blame aquaculture.

Mr. Underwood: They can see and touch aquaculture, and there are those that do blame aquaculture, but you need to look at the whole ecosystem in which the salmon exist. Factors to be considered are dams, land use practices, erosion of river water quality, acid rain precipitation and predation. There are a whole suite of potential issues; therefore, I will not pretend to be able to answer that question. The scientists are squabbling over it. It does bother me when they say the cause of the demise of the Atlantic salmon is aquaculture, because there is no way that that is the only factor. It may or may not be one of the contributing factors, but we have seen the salmon populations under stress, particularly in Western Nova Scotia. We know that is because of acid rain precipitation. The rivers can no longer sustain the populations. We have that problem because we are the exhaust pipe for the Northeastern United States.

Senator Mahovlich: Is that not improving?

Mr. Underwood: We have done a lot of work with the Americans. It is improving in terms of the rate of deposition, but we made the assumption that if we turned off the problem, it would fix itself. The environment does not always take the same route back. When you insult it, and then remove the insult, it does not automatically go back to its previous condition.

Senator Mahovlich: We have that problem in Northern Ontario, in the Muskokas. We were blaming Sudbury. They fixed it and we can eat the fish now because the mercury level is way down in those lakes. The fishing is much better there since Sudbury fixed its problem.

Mr. Underwood: Mercury can work its way through the system, but you get more acid in the soils, so it keeps going long after you turn off the source of the acid. That is what they are discovering now.

Senator Meighen: Mr. Underwood, I have never heard anyone say that the aquaculture industry is responsible for the decline of the Atlantic salmon. I am referring to the Bay of Fundy, particularly the inner Bay of Fundy. I have heard that Atlantic salmon are virtually gone from the inner Bay of Fundy rivers, that the pressure put on the few remaining fish by escapees, the transmission of disease, et cetera, and competition for the habitat and all the rest of it, is extremely dangerous.

Mr. Underwood: That kind of argument is a sensible one and it is a concern. I think the industry recognizes they must reduce escapees. I have heard on occasion from people who blame aquaculture.

Senator Meighen: Salmon declined in the Bay of Fundy long before aquaculture started.

Senator Buchanan: Is it not true that the Atlantic salmon is making a comeback now?

Mr. Underwood: No.

The Chairman: One of the concerns that has been brought to us is the conversion of under-utilized fish, that is, fish in the south seas, or elsewhere, to fish food. The conversion factor is something like 4 to 1. Many more of the scrub fish are needed to produce the feed. That argument was presented to us as a committee, and we would like to have your comments on whether it is an economical means of producing fish with the protein levels required by the market.

Mr. Underwood: I should have the numbers right on the tip of my tongue, but I do not.

The Chairman: We are looking for the general argument.

Mr. Underwood: First, the conversion rate for meat is much higher. I am in agriculture too, so I do not want to speak pejoratively about the agriculture industry. The key is that through research, and husbandry processes, you can constantly improve that conversion rate. That is what we must strive towards.

On the finned fish side, the rate is quite efficient. On the shellfish side, you do not have to feed them, and that is great.

The Chairman: I would like to return to the St. Anns' issue, where a mussel farm is being proposed. I am told that mussels are a bivalve and do not pollute. They supposedly clean up the water that they take in because of their filter system.

You mentioned that even a mussel farm would require an environmental assessment. Why, if mussels do not damage the environment? Is this a navigation situation or an unsightly site situation? I am trying to get a handle on this, because I do not see how mussels pollute.

Mr. Underwood: The technical answer to your question is that an environmental assessment is required because a Navigable Waters Act permit is required. That is the technical answer.

There are always environmental issues. Even if there is not massive fecal deposition or concerns about unutilized feed that might be associated with finned fish operations, whenever you put something into an ecosystem like that, questions should be answered. There are concerns, whether they relate to navigation and the use of the water, the implications for the migration of fish, or the deposition of fecal matter from the mussels. Those questions should be answered.

Whenever you do anything to the environment, you will have an impact. The degree of that impact is the question. In order to assess that, you must do an environmental assessment.

Senator De Bané: Mr. Underwood, how does Canada as a whole compare in aquaculture to other countries that started into this field before us? I am thinking especially of the Scandinavian countries. Are we at par with them?

Mr. Underwood: I do not have the exact numbers. Clearly, Norway and Chile have taken Atlantic Canadian technology and used it greatly to their advantage.

Senator De Bané: Norway has done that?

Mr. Underwood: Chile has done that as well. They are using our technology and producing much more than we are. I do not have those numbers.

We would be a small percentage of the global production. If you are looking at in the vicinity of 45 million tonnes of aquaculture product, we would not be more than a small fraction of that. We are about $400 million in total farm-gate value. I do not want to guess the numbers, but it is a single-digit percentage point of global production.

Senator De Bané: When we started in the aquaculture field in the 1980s, there were some major bankruptcies, particularly on the West Coast, for all sorts of reasons, including bacteria and what have you. Would you say that now our knowledge about how to do safe aquaculture is as good as countries like Norway or other Scandinavian countries?

Mr. Underwood: Yes, we are perhaps even out in front in a number of areas, particularly with some of the alternative species other than salmon, and with some of the shellfish work that we have done. We have the potential to be what the ministers have said they want the country to be, and that is a world leader in aquaculture. We do have the potential to do it right.

Senator De Bané: Do you have any concern about an oversupply having a depressing effect on prices?

Mr. Underwood: All of the aquaculture species seem to go through an evolution. They start out in a niche market, like salmon at $7 a pound; it is a new, niche product, and it commands a huge price. More and more people produce it and it evolves into a commodity. Then there are those in the commodity business who try to funnel their product into a niche market. It is an evolution. In my opinion, we must get on the front end of as many of those products as possible before they become commodities. The real benefit is in the first 10 years or so, when are you getting $9 a pound, as you are for halibut now. You do not need huge volumes. You make your money on quality and price.

Senator De Bané: One of the big advantages of aquaculture is that you can harvest to market. In some areas, they receive a fax from a customer that says they need so many pounds. It is only then that they kill the fish and deliver within a day or two. They kill to market and are really market-oriented. That is much better, in a sense.

Mr. Underwood: You are right, senator. It is not only being able to kill to the market, you can start getting into things like the live market. It is odd, but the most value you can add to a fish is to deliver it to the market with a pulse. We know that in the lobster fishery and have been doing it for years.

We are doing experiments now on the shipment of live fish in air freight containers to the Tokyo markets. The premium that you get for delivering a fish that is still flapping its tail is phenomenal. You can really only do that with aquaculture products.

That also allows you to get items onto the menu of restaurants that you normally would not be able to, such as halibut, which was always an incidental catch. You saw it occasionally in the fish market. If you are growing it, you can put it on the menu and deliver whatever size at whatever time you want. It really complements the wild fishery. I do not think it threatens it at all.

Senator De Bané: Is Japan active in aquaculture?

Mr. Underwood: I know they are. For thousands of years, Asia has been extremely active in aquaculture.

Senator Meighen: Their business is land-based, is it not?

Mr. Underwood: Much of it is pond-based invertebrates, like shrimp.

The Chairman: I cannot resist noting that Senator De Bané used to be the federal minister of Fisheries. That was probably at the time that you started, Mr. Underwood.

Mr. Underwood: It was just before.

The Chairman: Senator Robichaud used to be Secretary of State for Fisheries federally some years ago. We also have Senator Buchanan, who used to be a provincial Fisheries minister.

Senator De Bané: Those were blessed times.

The Chairman: I cannot resist that. You have been quite a draw here tonight, Mr. Underwood. You have drawn the big guns out. That is a good mark for you.

Senator Forrestall: I have never been a minister of Fisheries, but when these two were twinkles in their parents' eyes, I was building weirs.

I want to return to St. Anns' Bay. I was pleased with your answer to the Chair about the nature of the mussel. If mussels are as good as the chairman believes they are, we would have had them in Halifax harbour for a few thousand dollars 50 years ago, and we would not have the pollution that we have there now.

The Chairman: I cannot resist saying in passing: Never equate belief with the form of the question. I do not necessarily express my belief; I express questions.

Senator Forrestall: I was being facetious.

Do you have any idea when the federal review of the environmental assessment will be completed?

Mr. Underwood: I have heard no specific dates, but I assume it would not be longer than the next few months. It should not be any longer than that. We are talking about cooperating in expediting the review of assessments and the permitting process. We want a system that would take six months to one year from beginning to end. This one has been going on for awhile, so I would hope to hear back from them soon - and the sooner the better.

Senator Forrestall: When it is completed and you have it in hand, is it the intention of your department to take the review back to the St. Anns' Bay area for purposes of discussion at public meetings before any final decision is taken to award a lease?

Mr. Underwood: The legislation which governs the minister's responsibility for leasing would not require us to go back for another round of community consultations. The minister has the prerogative to do so, if he wishes.

Senator Forrestall: If the people of St. Anns' Bay are very serious about their opposition, and I can only conclude that they are for a variety of reasons, not all of which are environmental, it would be up to them to bring the usual forms of pressure to bear on the provincial government department in particular?

Mr. Underwood: The minister is kept well aware of all the correspondence and information that we receive. It all becomes part of the file that goes forward with staff recommendations.

Senator Forrestall: I can only duly report back.

The Chairman: We will be keeping an eye on it.

Senator Forrestall: Then you will not have to worry about me for a long time to come.

I have not been involved in the professional end of fisheries, but I was around when you came to work for the province. Along with the former premier, I always believed that it was the province's good fortune that you did. I remember you as being much too young for such an onerous job.

Mr. Underwood: Time has solved that problem.

Senator Forrestall: Thank you very much for appearing here. I would ask only that you take back to the minister the deep concern of these people. You can tell the minister that I will be telling the people of St. Anns' Bay that if they want to avoid the pleasures of aquaculture in the harbour, they had better mount a very visible and well-informed opposition to the granting of the licence. I presume that once it is granted, it is pretty difficult to revoke?

Mr. Underwood: It should not be at all, and is one of the responsibilities of governance. We build conditions into our licences. We do not grant them and then forget about them. One of our responsibilities is to use our licensing mechanism as an effective governance structure. We must stipulate that if the conditions of the licence are not met, the lease will be revoked. We can do that.

Senator Forrestall: I am pleased to hear that. You suggest that environmental assessments are a good thing. However, the scope and quality of assessments can seriously impede development of the smaller players in the Nova Scotia industry. The estimated cost of entry is $70,000 per site for EA alone and the total capitalization is running around $80,000. That is an inordinately disproportionate amount to spend on what might otherwise be a government responsibility, so that we ensure the small entrepreneur is not precluded from access to the fishery, as my colleague, Senator Robichaud, was suggesting. That is very important, and there is validity in your earlier comment that, had we looked at the province 20 years ago, we might now have a known and tested regime. We would know the capacity of these bays, inlets and harbours, and life might be easier today for applicants.

Senator Buchanan: Mr. Underwood, perhaps I am mistaken, but I understood that in rivers such as the Restigouche, the Miramichi, the Margaree and the East Saint Mary's, there was a bit of a comeback in the last couple of years. Are they not starting to come back?

Mr. Underwood: I do not have the numbers for the various rivers off the top of my head, but in certain areas there is some improvement in the returns, although it is still at very low levels. The inner Bay of Fundy stocks are in very serious shape.

Senator Buchanan: Is that partially due to the fact that they are netting less salmon off Greenland?

Mr. Underwood: You hear of so many different causes for the decline in the Atlantic salmon, and that is one of them. The Government of Canada has pursued internationally that issue of netting salmon as they go off on their ocean journey. I sit on the R&D advisory board for Environment Canada. There are some researchers there who seem to have determined that the cause of the demise of the Atlantic salmon is what they call "endocrine disrupters," which happens when fish are exposed to the effluents of pulp mills. It messes up their ability to mature and deal with life outside the rivers. Who knows? There must be a concerted effort to look at East Coast salmon stocks. The federal government is spending huge amounts of money to answer the questions on the West Coast, and we think they should do the same on the East Coast.

Senator Buchanan: What about the salmon aquaculture that was started in the late 1980s around Lingan and the power plants? The natives around Eskasoni were going to get something going in the waters coming out of the Lingan power plant. What happened with that?

Mr. Underwood: That became part of Eskasoni Fisheries, which became in turn part of Scotia Rainbow. They were using Lingan as one component of their growing process, and it seemed to work. For some period of time, the water is warm and the fish can grow over the winter. The Lingan operation, as I understand it, was part of the cycle of product through that facility. It is still being used, but not as originally designed.

Senator Buchanan: What is happening with the salmon aquaculture in Digby, next to the ferry terminals?

Mr. Underwood: Fish are growing very well there. Annapolis has not panned out as well because of the currents. Some sites are terrific, but in other areas, the tidal drift is so strong that they have not been able to engineer a cage that can work.

Senator Buchanan: I know that a few years ago, some storm churned up the pens and there were a lot of escapees.

I want to say, Mr. Chairman, that the fisheries industry in Nova Scotia has benefited from some excellent deputy ministers.

Senator Mahovlich: In those days, the Miramichi was the finest fishing river in the world. I went last year and there was nothing to catch. The pulp and paper mills were dumping effluent in that river. Has that now stopped? Has it been cleaned up?

Mr. Underwood: For almost a decade now, fairly aggressive regulations have governed the effluents from the pulp and paper mills.

Senator Mahovlich: They are still not working.

Mr. Underwood: The situation has drastically improved from that of 10 years ago. Whether that is still an implicating factor, I could not say.

The Chairman: Thank you, Mr. Underwood, for all the help we received from your department when we visited you last summer. It was a good learning experience. We met some people enthusiastic about their industry.

Thank you also for appearing as a witness. You have given us plenty of information to include in our report.

I ask committee members, are you agreeable that the material presented by Mr. Underwood this evening be filed as an exhibit with the committee?

Hon. Senators: Agreed.

The Chairman: Senators, our next meeting is May 29. We will hear from, among others, Yves Bastien, the Commissioner of Aquaculture, whose report is now available to senators if requested. He has made some comments on environmental screening.

Mr. Underwood: Mr. Bastien has also done a report analyzing all federal and provincial legislation with respect to aquaculture and making recommendations for some fine-tuning. It is a good piece of work containing much guidance for improving our systems. It is short and very readable: aquaculture in a nutshell.

The committee adjourned.

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