Proceedings of the Standing Senate Committee on
Fisheries and Oceans
Issue 4 - Evidence, March 8, 2005
OTTAWA, Tuesday, March 8, 2005
The Standing Senate Committee on Fisheries and Oceans met this day at 7:10 p.m. to examine and report on issues relating to the federal government's new and evolving policy framework for managing Canada's fisheries and oceans.
Senator Gerald J. Comeau (Chairman) in the Chair.
[Translation]
The Chairman: Welcome, everybody. Honourable senators, in October of 2004, the Senate gave this committee an order of reference to examine and report on issues relating to the federal government's new framework for managing fisheries and oceans.
[English]
Appearing before the committee this morning are representatives from the Area 23 Snow Crab Fisherman's Association, Mr. Gordon MacDonald, Managing Director, and Mr. Fred Kennedy, Consultant. The association requested an opportunity to review some of the issues facing the eastern Nova Scotia snow crab fishery, which we all know is extremely important. We look forward to your presentation, which will be followed by a series of questions and answers. Gentlemen, welcome on behalf of the committee. We look forward to an interesting evening. Please proceed.
Mr. Gordon MacDonald, Managing Director, Area 23 Snow Crab Fishermen's Association: Thank you, Mr. Chairman. My name is Gordon MacDonald, and I will provide the committee with a brief history. I am a fisherman and have fished snow crab since 1979 on my uncle's vessel, although we have since transferred the licence to me. When I first started, I was going to school. The fishery educated me to the point that I received a Bachelor of Science, with double honours in biology and chemistry, and a Master's of Science from the University of Waterloo.
My uncle, in his wisdom, decided to drag me back into the fishery because he thought that scientific understanding coupled with fishing understanding would have some value. Some of the understanding that I will bring you tonight is based on ``speaking both languages.''
On the front page of the document before you is a list of the crab fishing areas, CFAs. We are CFA 23 off eastern Nova Scotia. We may refer to CFAs 17 and 16 located in the estuary of the St. Lawrence River and CFA 12, which is the large snow crab fishery in the Gulf of St. Lawrence.
Like all fisheries, the eastern Nova Scotia snow crab fishery started in the late 1970s. Today, for all of eastern Nova Scotia, roughly speaking there are about 100 fishing enterprises, 300 captains and crew, and, since an explosion in the biomass, there are also 650 non-licensed core fishermen who share in the fishery. I will correct one typo in the presentation: The fishery operated competitively for 15 years, not 25 years, until 1994.
Although the fishery started and grew in the late 1970s and early 1980s, we drove the fishery into collapse around mid-1985. Even the scientists of the day thought the stock was gone. However, it rebounded in the early 1990s and, with the popularity of crab on the rise after the Alaskan fishery, the value had shot up significantly. In the early 1990s, there was a great deal of effort based on the value of the fishery that was prosecuting the fishery to such an extent that the fishermen of the day were concerned that we would drive it back to the mid-1980s collapse, and that we needed to do something proactive to prevent that. We petitioned the Department of Fisheries and Oceans, DFO, for individual quotas, which were granted in 1994, to limit the fishery harvests to a level that would allow sustained use. That was the beginning of the stewardship of the resource, which we will discuss later.
In the mid-1990s, of course, as soon as individual quotas were allocated, science was required to produce an estimate of the status of the resource, and the quotas that should be allocated. Prior to that, it had been a competitive fishery and after that, when science was using catch-per-unit-effort data, which is the amount of crab you catch per trap on a haul basis, they indicated that the stock was in decline. That contradicted what the fishermen of the day had thought about the fishery. The presentation to us was about a scientific tool — a trawl survey — whereby a boat performs a kind of biopsy of the ocean floor. Samples are taken and a crab count is done. They then use mathematical models to estimate the biomass. Roughly speaking, it was a little over $250,000 funded by the permanent fleet fishermen to improve the scientific assessment tools. When they brought the trawl survey over in 1997, they discovered that they had been underestimating the stock by about tenfold from the catch-per-unit-effort data. It was the first indication that the stock had grown to a significant level. However, there were problems with the trawl survey, in the original sense, which needed to be worked out over time. Area 12, which is where they came from in the Gulf of St. Lawrence, is a homogenous, muddy bottom. On the eastern Nova Scotia shelf, there are cliffs, valleys and mud holes. There is great discrepancy in the environment of these areas. It was, therefore, not until 2000 that scientists became confident enough in the data to allow the harvests to increase. We will speak to that a little more later.
The harvest exploded to such a level that DFO chose to introduce temporary, non-licensed participants — core licence holders who have to have a major fishing enterprise outside the snow crab fishery. It was the end of the Atlantic Groundfish Strategy, TAGS, program. A conservation strategy for lobsters was introduced in 1995, based on the Fisheries Resource Conservation Council, FRCC, of that year. The thought of the day was that there was a need throughout the fishery to redistribute the wealth, and the best way to do that was to provide small-share access. Management has continued the aggressive harvest levels for the last four years throughout the predicted declines in the season.
Page 4 of the presentation is a graphic representation that shows more clearly the beginning of the fishery, the collapse and the peak in 1994. That is the competitive slope. The dotted line after 1994 represents what would have continued had we remained a competitive fishery, as opposed to implementing the quotas. Since that time, all catches have been regulated by the Total Allowable Catch, TAC, allocation. By the year 2000, there was a built-up biomass because snow crab has a finite life cycle, living for about 15 to 17 years before it dies. It was important that we harvest this biomass before it became economically unviable. We had to explode the harvest level and the best way to do that was through this redistribution.
You can see in 2002 the increase in the light green is the Aboriginal inclusion under the Supreme Court Marshall decision. There were 13 licences provided to Aboriginal participants and we are here today representing all 37 of our fleet of which 16 are Aboriginal licences and 21 are traditional permanent licences.
The good news story with the snow crab fishery is that the resource has produced over $100 million annual boost to the economy of Cape Breton and eastern Nova Scotia. The bad news is that through the open access and the increase tenfold to share the boom, the abundance is now gone and the resource is perilously close to collapse. There is an overwhelming push to maintain this access and allocations at ever-increasing rates. This is supported by the misconception that this resource is endless.
What we see here in page 5 is the total biomass of the fishable stock, what we would catch. You can see it has grown to the year 2000. From 2000 to 2004, we are at a decreasing rate of roughly 10 kilotonnes per year. This science was presented to us last week. This has been done in a new form and we have just been able to see this. The graph underneath that, the relative fishing mortality, is the rate at which the fish are perishing, whether through natural mortality or harvest mortality, and that has been increasing at an exponential rate. The yellow-coloured graph that you see is an overlay of the abundance as it drops and the mortality level as it goes up at an exponential rate.
As you look at the total biomass as it is dropping, you remember the fleet expansion occurred in 2002. That was a 54 per cent fleet expansion. Now in 2004, we are faced with the potential increase. We have made a presentation to an independent panel on snow crab. They are considering taking the 650 temporary participants and giving them small- share access to the fishery permanently. We are looking at increasing access to this fishery at a time when the stock is headed for collapse.
Page 6, the traditional permanent fleet has been sharing this biomass at a rate of 60 per cent. The traditional fleet fishes only 40 per cent of the total TAC, and that is after last year's TAC reduction of 10 per cent. We have developed a financial model that indicates our cost structure, and what most of us can operate at a viable level is severely threatened at this point. Any new entrants and anyone building a vessel in the near future will to have trouble existing at the current levels.
This fishery takes place from 10 miles to 140 miles offshore with the bulk of the fishery occurring about 70 miles offshore. Seventy miles might not sound like much, but most of these boats only do about eight and a half or nine knots. You are out eight hours in the wide-open Atlantic Ocean before you even get to your gear. Weather concerns, Transport Canada stability concerns, and the rest have made it a different fishery today than it was in the past, and the financial considerations have grown extensively.
On page 7, there are numerous negative scientific indicators for snow crab. There is a downturn in the commercial biomass index. There is a serious lack of recruitment in the fishery. At the stage that we are at, this 10 kilotonne slope — you saw the point that is down at the bottom. Usually you have your harvesting amount, and you have recruitment into the fishery that buoys it and keeps it up. Right now, what the scientists are telling us is that the recruitment coming into the fishery is matched by the fishing mortality that is passing out on the other side. Basically, whatever we take out of that fishery is gone. We have no recruitment to support how we are going along. The recruitment in our area right now is at 22 per cent, and that is matched by the fishing mortality. Compare that to the Gulf of St. Lawrence where the fishing recruitment is at 80 per cent. It is a significant difference, and it is a negative indicator.
There has also been a collapse in the female population of snow crab. Females are smaller than the males, and they never reach commercial size. They are not harvested; there is no commercial value to them. They can escape through the traps that we have because they fit through the mesh. We tend not to trap them anyway. The trawl survey found a huge abundance of them in 1997 and 1998. They started decline in 1999 and by the year 2002 to 2003, our mature female population, the reproductive basis of our stock, had disappeared from the face of the map.
That is bad, and certainly we have a lot of negative indicators. However, there is a pulse that was seen two years ago first and then this past year, of recruitment; immature males and females that are coming into the population. The growth cycle is a minimum of three years, and science has estimated it will be five years, if the immature population actually makes it because we have seen larger failures in recruitment before this.
It is common for snow crab fisheries to experience dramatic increases and declines. If you look at page 8, this is one example but there are many in the other document that we provided you with. The stock shoots up 620 per cent, it drops 72 per cent, up 150 per cent, and down. It is a cyclical fishery and there is no good explanation about why it shoots up so high and drops down so low. In all of these other fisheries, area 12 in particular, you do not see the disappearance of the female crab and you do not see the loss of recruitment. There is also something else on the eastern Scotian Shelf that is a little different right now. Even though these are highly cyclical, there is still recruitment going in.
Mr. Chairman, we would like to table this submission from the Area 23 Snow Crab Fishermen's Association to Minister Regan's Independent Advisory Panel on Eastern Nova Scotia Snow Crab. It has a lot more information in it and a good chance for people to review.
When you look at access and allocation issues, DFO has put forward some really good documents in managing the fishery into the future. The Atlantic Fisheries Policy Review was a review and now it is a framework announced by DFO Minister Geoff Regan. It is an excellent document on how to manage the fishery into the future. There was an independent panel on access criterion that we also participated in and that is about how to allocate new resources or expanding resources, abundant resources. It is a tool instructing you on how to proceed, and it is also an excellent document. We have tied most of our information to the best fishery policies that exist today.
The decline in our fishery started in 2000. We expected to see a decline because there was a built-up biomass and the object was to make it decline because otherwise they would perish anyway. We needed to do that. Sharing in times of abundance we had no problem with, but when the abundance is gone the sharing was supposed to go as well. The problem is now that we are at the bottom end they are not talking about getting rid of the sharing; they are talking about making it permanent. That is a little different.
In the sharing recommended at this point, there is talk of bringing 650 participants into a fishery where, in the temporary fishery, less than 10 per cent of them fished. Ninety per cent of them do not fish; they collect a royalty right to the fishery.
In the permanent access, they would have, essentially, royalty shares or shares in the company. However many units there are would fish out of one vessel. The vessel would fish and these people would have shares of ownership of the resource without actually harvesting it.
It is interesting as you go forward in DFO policy, as they work toward this owner-operator fleet separation and the lack of corporate ownership of resources, they are actually creating a corporate mechanism of small shares' ownership of the resource permanently. The policy contradicts what they are doing right now.
Last year the TACs were cut by 10 per cent because the scientists came back and said there has been a relative reduction in biomass. Because they do not have a good way of analyzing exactly what the biomass level is, they compare year to year. From 2003 to 2004, they said there was a 10-per-cent loss in the relative biomass.
Our fleet, the permanent fleet, recommended a 20 per cent reduction — 10 per cent to match the relative reduction and 10 per cent to reduce the fishing effort. The reduction that was announced was only 10 per cent. As you saw in the graph before with the slide, that did virtually nothing to impede our 10 kilotonne loss over an annual basis.
This coming season, scientists recommended serious cuts: 50 to 70 per cent declines, as we calculate it, in the northern zones, which are areas 20 through 22; and 20 to 25 per cent — and I would suggest it would be 15 to 30 per cent — declines in the southern areas of area 23 and 24. The southern area tends to have the bulk of the resource, by the way. Roughly speaking, last year we harvested close to 8,000 metric tonnes and of that, the northern area harvested about 1,600 tonnes. Even though it sounds like a smaller decline, it is still a huge amount.
This trend is expected to continue. As I said before, with the natural mortality exceeding the recruitment, we are in trouble until the recruitment grows, and that is something only time can fix; all harvest levels will only deplete the stock. With the estimated biomass for 2005 to be at 27 kilotonnes and the removal estimated losses at 10 kilotonnes per year, in less than three years, there will be nothing if we continue on the path we are on today.
On page 10, in the late 1990s and early 2000s, we operated under a multi-year co-management agreement. Area 23, specifically, was the first of the crab fishing areas in eastern Nova Scotia to agree to a five-year management plan. We had a five-year management plan with the minister in 1998, and we have continually worked toward being stewards of our resource.
Minister Regan now is expecting to announce a new co-management agreement for the 2005 season, a long-term plan so that we can have some stability. The independent panel was appointed by the minister last fall because there was a lack of consensus on how to go forward. As I mentioned before, the temporary participants who have been in the fishery have no desire to recognize the scientific decline because that leads to exiting the fishery. There has been a push to maintain harvest levels to the point where, when we recommended a 20 per cent reduction last year, most other participants at the table recommended the harvest levels be maintained or increased regardless of the reduction in stock.
The Chairman: Is it the independent panel that recommended that the temporary fish shares become the corporate royalty?
Mr. MacDonald: We have not had the report from that panel yet, so we are unclear; but it is our understanding that this is likely to be the case. We are not even sure of the independence of the panel. The chairman of this panel is married to the marine policy director at regional DFO, so we are not sure that it is as independent as it was touted to be.
When we talk about the independent panel and access criteria, that panel was convened to determine in general how access criteria should be developed. This one is a specific panel that was supposed to be independent and directed specifically toward eastern Nova Scotia snow crab. Their recommendations have not been released yet, so we cannot quote what they are going to do. However, the potential is there; we sat through all the panel presentations and they were definitely leaning toward the fact that the stock is endless.
DFO region has suggested that the increase in permanent access be 30 to 40 per cent of our fishery. This is over and above the 2002 expansion. The fleet was expanded by 54 per cent in order to include Aboriginal participation; there was no benefit provided to the existing permanent fleet at that time for the expansion, and there was no complaint by the permanent fleet about the expansion. Certainly, there was the possibility that room might exist. However, expansion over and above that, knowing what we know, seems to be something that nobody would predict — even at levels of 30 or 40 per cent.
When the Marshall agreements were signed and the Aboriginal people were brought in, the snow crab licenses they were provided were essentially the carrot that brought them to the table. The concept that you provide these licences, knowing that the stock is in decline and that you are going to further compound the dilution by increasing the permanent access by another 30 to 40 per cent, seems to be bargaining in bad faith. That may be another meeting you will have some day.
The rumours are that the panel is favouring providing these 650 small-share essentially royalty holdings toward the fishery, and this has serious implications. The implications are outlined in our document; they are outlined in the independent panel on access criteria about why you should not do this. It is outlined in the concept of he who fishes the fish should derive the benefit from the fish.
The panel was picked and briefed by the same regional managers that have gotten us into this poor situation. We understand the concept that when the stock first blew up, there were reasons why sharing was a good idea, and sharing to everybody was a good idea. Sharing in times of abundance is something that we have never opposed. However, once the abundance is gone, those participants need to be gone as well. We need to protect the resource first and foremost — conservation is the most important aspect.
The independent panel on access criteria defines conservation as an active, as opposed to a passive, management goal. You need to ensure that you are protected. This type of decision is inconsistent with the independent panel and policy framework, and threatens owner-operators.
Too much capacity is another issue. When you get into capacity issues, it becomes very difficult to protect the fishery. We have 100 per cent dock-side monitoring, for instance; but a $6-an-hour employee watching tens of thousands of dollars pass under his nose is not a strong gate. We passed a much stronger gate to get into this building today than the other guys do landing their crab.
When somebody harvesting is only making 40 cents a pound for a product that was around $3 last year — although there has been a significant loss in the market value, we expect this year to be $2 — if he could land one pound under the table for $2, that is five times the value that he is getting paid for one that is landed on the table. Regardless of how you manage anything, you have to maintain incentives not to cheat. That is something that needs to be directed to the management, and it is talked about within the stewardship.
If you protect something and it grows, you need to receive the benefit from that. If it does not, then you need to be punished. That is where you get into the stewardship of the resource.
On the other side, if shareholders are sitting at home and watching their value decline because they are not harvesting as much, and they believe the resource is healthier than it has ever been, there is very little ownership of the decline. They feel it is a victimless crime: take in a few more crab when there are tons out there — what difference will that make?
We continue to support sharing in times of abundance but when the abundance is gone, the participants should leave. The Institute of Public Administration of Canada, IPAC, provides a directive such that decisions regarding access promote rather than compromise the economic viability of the existing participants in a particular fishery, as well as the potential viability of the new participants. You see more and more Transport Canada regulations and concerns about safety-at-sea, workmen's compensation and liability insurance driving your cost of operation up while the resources are going down in a highly cyclical resource. The price last year was over $3 but this year we are expecting only $2. That is a 33 per cent drop in revenue based on price only, without the other factors I just mentioned. That figure is then multiplied by the 30 per cent reduction from a TAC perspective. We need to maintain distribution of fishing effort. Science has told us that if you do not spread out the fishing effort, localized overharvesting will accelerate mortality within the crab fishing population. The best thing we can do to ensure it does not happen, is ensure distribution of the fishing effort. As costs increase, income decreases so we still need to find a way to maintain coverage throughout that area, which goes out 140 miles and is extremely wide and deep.
DFO has entered into co-management agreements with CFAs 12, 19 and 17 to provide protective thresholds. In all cases, these are healthy fisheries. That speaks to the fact that they have recruitment for females in their cycle, which allows for growth and continued prosperity within their cyclical nature. Area 12 has a $500,000 threshold per licence. That is important when you consider that Area 12 is more like the distances travelled by Area 23 fishing vessels. Areas 19 and 17 also have co-management agreements. Area 17 was just announced this year and has temporary sharing only after minimum viable thresholds are met in a healthy fishery. CFAs 19 and 17, in the estuary of the Gulf of St. Lawrence and just off the tip of Cape Breton Island, are relatively close to shore in comparison to CFA 23. The distance from shore has a significant consequence when it comes to operational viability. We need to develop a new formula that will recognize the current status of the 50 per cent increase. We cannot simply roll over, or turn, the Integrated Fisheries Management Plan, IFMP, because there has to be an adjustment based on the 2002 fleet increase of 54 per cent. At this stage, we are not sure that thresholds and levels are as critical because the stock is not healthy when the females and recruitment are down to their current levels. Science has told us to look for bottoms at a fraction of the high levels that will last for years. Making the traditional permanent fleet less viable by increasing the permanence by another 50 per cent is unacceptable. As you can imagine, increasing the permanent access at a time when the fishery is collapsing will have long-term negative effects. With regard to the stewardship, we started out as a competitive fishery. We implemented individual quotas because we were concerned about driving the fishery back. Then, DFO began to reduce the quotas because science said that the stock numbers were down. We coughed up more than $250,000 to expand the scientific understanding and knowledge invested in the fishery.
It was announced by government in the recent budget that they are looking for more fisheries to invest in their fishery. We think that these investments in conservation and the protection of the resource have done nothing but hurt the fisheries. As you develop something, you then have something that can be taken away or given away and ultimately ruined. Stewardship is not rewarded as one would expect it to be.
We made a copy of our submission for the minister's independent panel and it is available for each committee member. We are an example of the vision that is illustrated in the Atlantic Fisheries Policy Review framework. We are stewards of the resource and we continue to work with science as much as possible to promote sharing in times of abundance. However, we are here today to tell you that our stock is in serious trouble; hence we are in serious trouble. If they continue on their current path, the fishery will be destroyed — a fishery that has brought a significant benefit to a depressed community — simply in the name of sharing the wealth, which does not make any sense. On behalf of our 300 captains and crew, I thank senators for the opportunity to appear before this committee today.
It is thought that we would learn from the history of mistakes. We are following the same path that led to the destruction of the cod fishery by the same people who managed that, and blamed it on some environmental disaster, with no ownership of the fact that it may have resulted from the management of the industry. We do not want to see that happen again.
The Chairman: Thank you for an extremely serious presentation. You have given us much food for thought. It has been a while since we looked at this subject. It might be the first time that we have heard from representatives of your area. Senator Mercer, please begin the questions.
Senator Mercer: I am curious, Mr. MacDonald, about the absence of the females. Is this a phenomenon unique to CFA 23, or is it common to other areas?
Mr. MacDonald: The absence of females is unique to the eastern Scotian Shelf. Typically, in the southern gulf area, for instance, they are not harvested, and so the ratio is 10 females for every male. In the last science presentation, there were cases of 12 million females to one male, although I am not sure that the math was correct. Typically, we would see female population that would grow and die. There would be pulses because it is a cyclical fishery, and so another pulse would carry underneath. For some reason, there has been a failure of the pulses, and that has led to this loss. It has been seen in our fishery only to date.
Senator Mercer: Do I also understand that the recommendation from DFO in Ottawa can be overridden or changed by local DFO offices in respect of recommended quotas and size of the participants in the fishery?
Mr. MacDonald: The minister has the ultimate authority to make the decisions for the fishery, based on the information provided by a series of people that work for him. The minister is looking after many different areas and must depend on officials charged with looking at this on a professional level. Their job is to interpret the science and know what is happening. Many decisions are made at the regional level. Advice to the minister is deferred to that level. That is where the professional managers are to look after things. A regional specificity exists such that those professionals can disregard the Atlantic Fisheries Policy Review framework or the independent panel on access criteria and do what they want. Ultimately, they make the recommendation to the minister. However, we have seen some of these recommendations in the past and they are carefully crafted in a way that the minister is not always fully aware of the situation.
Senator St. Germain: Is there $100 million that comes out of Area 23?
Mr. MacDonald: That would be all of Cape Breton, and this would include the processing and trucking that goes on within the fishery.
Senator St. Germain: Your presentation is basically about Area 23, is that correct?
Mr. MacDonald: It is about eastern Nova Scotia in particular and Area 23 specifically.
Senator St. Germain: Of the $100 million, approximately what would the eastern Nova Scotia portion be?
Mr. MacDonald: The eastern Nova Scotia portion would be $50 million, and the southern part of that would make up the lion's share. When I say southern, I mean Area 23 and 24; that would make up 80 per cent. You are looking at $40 million between Area 23 and 24. You could say $20 million for Area 23 or a little bit better.
Senator St. Germain: If I hear you correctly, you are saying the rumour is 650 additional licences will be granted?
Mr. MacDonald: What they are talking about in licences, they are talking about small-share individual transferable quotas, ITQs. They will have to roster, so they will have to take —
Senator St. Germain: Is this over and above what exists now?
Mr. MacDonald: Yes. Whatever is allocated to the permanent fleet is equally divided among all 37 members. What they are talking about is allocating a permanent percentage share to temporary participants, which may work out to 5,000 pounds per unit. They will have to roster those on to a minimum level, 55,000 or 100,000 pounds. If there is 5,000 pounds per unit and you have to get to 100,000 pounds, 20 units would be put on to one vessel. They would allow only one vessel to go out, but the beneficial use of the resource would be transferred back to the shareholders, essentially. You are looking at a corporate ownership of the fishing vessel; the people out there harvesting the resource will be working for a limited wage.
Senator St. Germain: You say on behalf of 300 captains, is that the entire —
Mr. MacDonald: In eastern Nova Scotia, there are 37 permanent fishing licences.
Senator St. Germain: You are saying this is a cyclical scenario. You are a biologist: is there enough history or science available to really know what these actual cycles are of these snow crabs?
Mr. MacDonald: There is not enough to see where the cycle will be in our fishery. Right now this collapse can be managed right into the ground if it is left where it is. We can see a pulse coming through so we know there is something there if we can carry it by. We have world-class scientists in snow crab. Our science on the snow crab side exceeds any other fishery that I have ever seen. Dr. Mikio Moriyasu, Dr. Michel Biron, Dr. Bernard Saint-Marie from southern Quebec, and now Dr. Jae Choi: these people are absolutely incredible. We sit with a wealth of understanding and knowledge, and these people are all greatly concerned about the resource and have been for years.
Senator St. Germain: If the science is that reliable, will the fishery respond positively to a minister that comes in and does what is right. Regardless of who is minister of fisheries, it is one of the toughest jobs in the world; he is always fighting. Logically, the fishermen are fighting for their ability to create and generate wealth. Generally the minister of fisheries is trying to make certain that a reasonable level of wealth is generated, and that the stocks are maintained. With the science that you say is that good, is the industry prepared to cooperate with Minister Regan? I think Minister Regan's head and heart are in the right place, but he needs the cooperation of the industry. Is that cooperation there with these 300 captains?
Mr. MacDonald: With the permanent fleet, absolutely; with the temporary fleet, the participants that have shared in this resource, absolutely no cooperation whatsoever.
Senator St. Germain: Is he bound to give out these 650 licences?
Mr. MacDonald: No, he is not bound by any stretch of the imagination. He is open to make these decisions. He has a panel that has taken input from all the participants, but he is not bound. This panel also was due to submit its report prior to the scientific information that we are bringing to you, and also prior to the Fisheries Resource Conservation Council study which is based on proper management procedures for snow crab fisheries. Without all the best information available, the panel will make the representations, but ultimately the minister will decide what he decides. There is a huge amount of pressure by these groups. You have an 1100-pound elephant in the room which you cannot get rid of. It was brought in with a good concept that we needed to share, but they do not believe that the abundance has dropped down. The permanent fleets are fully willing to work with the minister.
Will the resource rebound? I guarantee, if we harvest it, it will not. Every crab I take out of the water is dead as far as the biomass is concerned.
Senator St. Germain: When you reduced the biomass and they put in a restriction, how low did it go, below what it is now?
Mr. MacDonald: The drop was still a 10-kilotonne drop from 2004 until the trawl survey. In the last year we still dropped by 10 kilotonnes, even though we reduced the TAC, the total harvestable catch, by 10 per cent. We did nothing to impede the drop, and our exploitation is still increasing at an exponential rate. That could be due to mortality and a loss of recruitment. That is why there is a different kind of concern here. There is this pulse. Will it respond positively? If we can carry through until that pulse comes in and we can still have reproductive potential in the stock coming through at the end, yes, there is quite a good possibility. That is what the scientists say. There are no guarantees, and even as good as the science is, it is not perfect. There are sources of uncertainty that are immense, but you have to realize and compare that to what sources of uncertainty are in other fishery science.
Senator St. Germain: Is the minister aware of this?
Mr. MacDonald: Yes, we are doing everything in our power to ensure that no decision is made without all the relevant information presented. This is why we are here today. We are also presenting this information to the DFO personnel, the people who ultimately vet the recommendations that go to the minister. We are doing our best to inform everybody. If we can try to present the information so that people are aware, hopefully we can go ahead with the decisions that follow the likes of the Atlantic Fisheries Policy Review framework and the independent panel on access criteria and make the right decisions, not ones where people do not know what is happening, the decision is made and it is too late.
Senator St. Germain: I hope we advise the minister that we have had this submission.
Mr. MacDonald: We support the minister; Minister Regan has been very good. The problem that we see is his advisers have not provided him with the proper information.
Senator St. Germain: I think the minister is excellent.
Mr. MacDonald: We support the minister; we are not here to say that the minister is not doing a good job.
The Chairman: I am glad you brought that up and I tend to agree with Senator St. Germain on this. The minister's decisions are only as good as the support he gets from his department.
Senator Robichaud: I do not think you will find any disagreement here when you say you want to ensure the minister moves forward using the precautionary approach.
I come from New Brunswick, where the crab fishery has been a lucrative operation for quite a number of years. I am in favour of sharing. We had a hard time getting the original fishermen to share in that resource in Area 12. In Area 12 you had fishermen that had grown very rich, and were assured to be rich for the rest of their lives, because they were practicing a very lucrative fishery. We wanted to share with the inshore, and we managed to obtain 15 per cent of the total allowable catch. I would have given them more than that, but that is very good.
Those fishermen were very rich people, in my book, and they did not want to share. However, from the figures I have heard in your answer to Senator St. Germain, I do not think this is the situation in Area 23. Is it?
Mr. MacDonald: No, it is completely different. One of the things that has happened to us is ultimately from the Area 12 snow crab fishery; we have been branded snow crab fishermen. If I was as rich as everybody claimed I was, I would not have as much problem as I do today. The problem that exists — and you will have to forgive me for a second — boils down to a story you heard when you were a little kid about the little red hen. She plants the wheat, sows the wheat, reaps the wheat, mills the wheat and bakes the bread. All of a sudden at the end of the day, everybody wants to eat the bread. There has to be some kind of return based on the investment. However, when it reaches the point where there is a real abundance out there, we need to find a way to share.
One of the things that we see about the sharing issue is that it is the money that is the problem, not the capacity to harvest. In the old style of management, what we have always done when it comes to sharing is to allocate more fishermen, more harvesters and increase the capacity. If it is the wealth that is the problem, and these people are very wealthy and must find significant tax shelters or whatever, we would suggest that you find a way to allow the harvesters to harvest the stock but tax them at a level above whatever you deem — share the money but allow the resource to be protected and grow. At least in Area 12, you still have a viable, healthy fishery. What you are talking about on our side is the likelihood of driving it into the ground because you wanted not to do what they did in Area 12. That is one of the problems we see.
We would like to share in times of abundance, and we have. In our submission, we have a graph of what the sharing is on page 19. I know I said for most people it is probably not that good, but we are in the green and it is pretty easy to see. The only reduction that comes is in 2002 because they expanded the fleet. Again, there was no compensation to the permanent fleet for that expansion, so their sharing levels historically have been exceptionally high. However, the abundance is gone. Now our resource is threatened by the harvesting and other events, and we need to be extremely precautionary at this point or there may be nothing left.
Senator Robichaud: I can follow you up to a point. You say you only share when there is abundance. What is the average take for a snow crab fisherman — the original 300 captains?
Mr. MacDonald: There are 37 in our particular area. For the average take, are you talking about poundage catch?
Senator Robichaud: Snow crab.
Mr. MacDonald: The allocated catch for us was 150,000 pounds last year.
Senator Robichaud: What would be the return on that?
Mr. MacDonald: At roughly $3 a pound for last year, it would have been $450,000.
Senator Robichaud: What would be the expenses for the crew, et cetera?
Mr. MacDonald: We have a financial model in the very back of our document that shows expenses and costs; you are looking at page 37, so it is outlined for you. We have done the financial analysis. However, even this financial analysis does not account for these Transport Canada regulations on fishing vessel safety regulations, stability, freeboard, load limit and associated seaworthiness, distance, trip limits, weather conditions and the rest of that stuff.
Our fishery takes place at a great distance from shore and the costs are significantly higher than you can imagine. The $500,000 vessel that we put into the operating model is really the smallest vessel that you would consider to be safe within that environment. We have done everything to pare our cost down to as conservative a level as possible. We have had it vetted by DFO region, and they have had no problem with our financial numbers.
Also, do not forget that last year was a good year, with the price being at $3. This year, it is $2; so the same fishery this year would only net $300,000 — a $150,000 loss just based on the economics. We are constantly subject to highs and lows, both in price at the shore and in the biology of the stock. To take a picture and say you have $450,000, would be a poor estimate of what it is like to live the cycle that we undergo.
Senator Robichaud: The projected revenue is $380,000, is it? That would be the average; you are going to have some bad years, so in good years you must be over that.
Mr. Fred Kennedy, Consultant, Area 23 Snow Crab Fisherman's Association: Some of these operating costs, as you might imagine, are a function of the quota you are given. For example, if you have a very small quota, you do not go to sea as often and you do not burn as much fuel. The reality is costs are really quota driven, so that depends on what the quota number is. We run those numbers through. This reflects a break-even point of about 152,000 pounds per boat.
By contrast, to add some feedback on your Area 12 stuff, those particular individuals — what they call the mid- shore captains — have very large boats; they have 65-foot boats that are $1 million and up boats. Their quota last year was, on average, 332,000 pounds, so they generate about $1 million.
If you have seen the material on page 4, the graph we showed you, this fishery on the eastern Nova Scotia side sort of pooped along at not doing much more than 50,000-pound quotas for decades. In Area 12, there have been many years when they generated $1 million dollars per year for decades; so there is quite the difference there.
We are a completely different group of people than Area 12 captains, I can tell you right now. We are in favour of sharing; but like the Area 12 captains, we have in common the need to continue into perpetuity. We want to have this fishery last for as long as it can possibly last, and we call that forever. By doing what is going to happen to us, it is not clear to us that this fishery will last much longer than three to five years.
Senator Robichaud: What you are saying to us also is that the period of time that you have kept records on the crab fishery in that area does not give you a base such as you would have in Area 12. There, they have come to recognize the cycle and then cut the TACs accordingly. It is quite constant in the cycle now, because they know all the factors that act on the quota. You do not have that same predictability in Area 23.
Mr. Kennedy: No, because the biology of the stock is so different from what goes on in the gulf. The gulf has an ability to regenerate itself. When we started this scientific graph information that is given to you in one of the pages of the booklet, you will see that we have what they call contour maps, and you will see the females. We had, I would suggest to you, hundreds of millions of females back in the 1990s. This year, we would have hundreds of thousands only. By contrast, in the gulf, they continue to have hundreds of millions of females in the water, so they can completely regenerate themselves. Even though there is a natural cycle of the snow crab, which will go up and down, they are able to sustain themselves. That 15 per cent sharing is not critical enough to destroy or even hurt the fishery. We made a recommendation to then Minister Robert Thibeault two seasons ago when we were attempting to enter into a new co-management agreement. As the permanent fleet, we were told by the minister that he would like to have somewhere between 10 and 20 per cent sharing. We came by our own calculations, which would have been fine-tuned and massaged a bit, to 17.8 per cent that we would be prepared to give up forever and always. The temporary players — these 600 and some odd — refused that out of hand. We were not opposed to sharing in that we recommended close to the highest percentage that the minister was looking for. He appropriated 15 points from Area 12 only. He would have gone to 10 points with them to reach a deal, and we knew that. We were hoping to reach a deal with DFO at 15 per cent. DFO Maritime Region promised us, on a handshake, that would be the deal, and they simply changed it at the 11th hour.
Mr. MacDonald: I would like to add a couple of points. The projected revenue in that formula is based on last year, which is higher than any other year I have had personally. We have had higher quota amounts of 163,000, which is the maximum. We never received a $3-price at that level. It was usually in the $2 to $2.25 range, so the gross revenue was significantly less. We based it on the year that we had available as we were trying to make this up, but it is not a five- year average.
In talking about the cycles and the length of time, it is important to understand that the Gulf of St. Lawrence is more like a closed system in that it is bordered by Cape Breton, Newfoundland, Quebec, New Brunswick and Prince Edward Island. It is a homogenous mud bottom that makes it an ideal habitat with a temperature that is fairly constant, between 1 degree Celsius and 2 degrees Celsius. Snow crab live at between 1 degree Celsius and 4 degrees Celsius. On the eastern Scotian Shelf, there is some prime and some poor habitat, and there are estuaries, cycles and food movement. It is a very open system subject to many different environmental factors that are not seen in the Gulf. There is a variety of different factors that also play a part.
Senator Hubley: This is a true education. I would like to return to page 2 again because I have two items for clarification. When you talk about 100 fishing enterprises, what is that exactly?
Mr. Kennedy: On page 1, we explained that the eastern Nova Scotia snow crab fishery is comprised of snow crab fishing areas 20, 21, 22, 23 and 24. We are Crab Fishing Area 23 only but we wanted to give you an order of magnitude for the fishery itself, and to advise you that the decisions being made are based on the entire fishery, not only on us. An enterprise is actually a captain, his boat and crew. A fishing vessel is called an enterprise, of which there are about 100 and each would have two crew members.
Senator Hubley: My next question is about the 650 non-licensed cores. Were they described as small-share ITQs?
Mr. Kennedy: Core fishermen are individual fishermen who would be eligible to share in our snow crab fishery. They would typically have a lobster licence, and they might have other odd species but, typically, they have lobster licences originally, which then qualifies them to share in the snow crab fishery.
Mr. MacDonald: The Department of Fisheries and Oceans went back and decided to restrict the number of fishing enterprises. DFO allocated core licences, which are major species licences, and limited the number of enterprises to these cores. Now, there can be five different species licences on one core, or there can be only one species. However, there is a limited number of core enterprises. When the sharing came about, they took the core licences from Halifax to the northern tip of Cape Breton Island, and everybody that had a core licence was eligible to participate.
Senator Hubley: The 650 will be coming on stream. Is that right?
Mr. MacDonald: They broke Area 24 into three different areas by county so now there are four areas: Richmond, Guysborough and Halifax are in two separate groups. In Area 23 where we are from, it is a little different. In Area 24, adjacency runs from the line between CFAs 23 and 24 all the way along the shore, and adjacency is defined by the shoreline that comes within the area. In Area 23, you will notice that the shoreline is very limited relative to the fishing area. Roughly speaking, we have slightly more quota in Area 23 than there is in Area 24. There was a tiered participation. Those core licence-holders who fish within the boundaries, or had their registration within the boundaries of Area 23, are called adjacent cores. From the line between Areas 22 and 23 north, those were deemed non-adjacent cores. Then, there was a group of what they call ``groundfish-dependent cores.'' In the year 2000, they separated a group that still had a fishing vessel that was groundfish dependent, and core licence holders who held only groundfish licences received a special benefit, even though it was six years after the closure of the groundfish fishery. There were tiered levels of access. We are not sure how that will be rationalized in the new plan but it works out to about 650 participants between the two areas. There are about 350 in Area 23 and 300 in Area 24.
Senator Hubley: You said that you were getting $3 per pound for snow crab, and this year that has dropped to $2 per pound.
Mr. MacDonald: It has been a nasty game with the crab processors. They seem to have come together to do things with the pricing. Sometimes there is competition and sometimes there is no competition. As we are with the science of the fishery, we have become significantly more versed than we would have been a decade ago. We are also more versed in the crab sale and purchase. We follow the market conditions, trends and current pricing for five- to eight-ounce sections. We were looking at that today and the price is down by about $1.20 from last year at this time. Each time, the exchange rate on the dollar changes, it has an effect because we are primarily an export market, mostly to the U.S. and Japan, which is good for our economy because we ship our product out. Again, when the dollar changes, it affects the fishery.
Senator Hubley: What is the variance in the price? We have looked at the graph that shows a boom and a bust — it is certainly up and down. Has the price been fairly steady? It does not seem to be affected by the availability of product.
Mr. MacDonald: Mr. Kennedy will speak to that in one moment. We have a graph that would provide you with the five-year history of the price fluctuations. Each time the season opens, the price drops and when it closes, the price goes back up. That is interesting because the crab are stored in freezers, they are not a live product. The price last year was better than it has been and exceeded the five-year average by about 50 cents. Last year was a good year in that it was better than it has been in the past. Mr. Kennedy will speak to some of the economics.
Mr. Kennedy: Price varies, it is a competitive thing. For some reason and we do not have an answer, the U.S. demand is now relatively soft. Our Canadian dollar is relatively strong, so there are those combinations. The difference between the price of the product being down and the dollar being up is about 27 per cent today. The price during season is actually less than what it is at this time of the year. We expect it to go down a little further. If we take the 27 to 30 per cent or a third down, and then apply that to what we were paid last year, a $3 price less a third, that is $2. We are very hopeful that $2 is not the price. The crab is going down and with supply and demand, there is less so we might get a little more for it. We know Newfoundland is down probably 7,000 to 8,000 tonnes. The only fishery in the Atlantic region now is in Area 12; they will actually have an increase of 6,000 tonnes this year. They will have a very good year; everyone else will lose. I suspect that we will lose easily 12,000 to 15,000 tonnes from the resource catches this year, between Newfoundland and the Cape Breton area.
Senator Mahovlich: Who set the price?
The Chairman: It is the marketplace, yes.
Senator De Bané: In the early 1980s, I was Minister of Fisheries. The biologists here told me this and the fisherman who fish as a livelihood, their own assessment is quite incompatible with what the biologists say. I asked a world-class biologist, ``What is your best advice?'' That biologist said, ``If I were in your shoes, I would take 50 per cent of each.''
I understood over time that that assessment of stocks in the water is not the same thing as when you have to assess things that you see. It is imprecise by definition because it is under water. What is the bottom line of your position? Should we prevent more entry in that fishery because the stocks at the moment are quite pressured, et cetera? Is that essentially the gist of your opinion?
Mr. MacDonald: Yes, at this point the stock has dropped. The abundance was built up by the underestimation. We started to harvest a crop and it has been cropped off. At a time when you need to be precautionary and look after what is left, compounded by these bizarre recruitment failures and female disappearance that should have provided some buoyancy and some levelling out, yes, you really need to step back and say we have to haul in our horns here and we cannot allow new participation at this time. Not to mention that we have no idea how the 2002 54 per cent expansion of the fleet will play out in the long term.
We have just expanded the fleet and we have an Aboriginal inclusion and a working relationship that exists in our fleet that does not exist in other fleets and other fisheries. It provides a significant benefit to their communities. In Millbrook, for instance, they operate 50 fishing licences. If the snow crab fishery was to collapse, they probably would be operating about 6. They use the revenue generated from one fishery to support another. In my own particular fishing enterprise, because the two fisheries between lobster and snow crab overlap, we have two vessels and two crews. We employ six other people. We have medical and dental benefits for these people. They are the pillars of our society. When I say that, they are the people who look after the community halls and churches in our rural community. Two harbours west of Louisbourg the population has dwindled. These are the people that are in the volunteer fire department. They will be laid off if we continue with this pattern to distribute wealth to harvesters who do not even harvest the resource. Yes, we need to back off. We need to see how the stock will play out, and allow the existing permanent fleet which now is Aboriginal and traditional, to see how we fare.
Mr. Kennedy: To add to that, we are in favour philosophically of sharing in times of abundance. We take that a little forward and say DFO has already created co-management agreements where there are sharing arrangements predicated on a threshold deal. We say here is what it costs to operate. We need a threshold based on what the costs of operations are for the traditional permanent fleet: people who invested in the business, spent 20-odd years, paid this quarter million dollars to find all this other crab and on and on. We say we will share. Let us create a new formula that is fair to everybody and when there are times when the biomass or the stocks are abundant enough then everyone will share. We need to have only this amount. Anything over that will go to these other individuals. We are happy to see that happen. When it comes down to protecting our own families, we say that it does not make any sense for DFO to be giving licences to other players who have had no investment ever in this fishery. They have been there four years; these other guys have been here now 25 to 30 years. It does not make sense.
Senator De Bané: What would be the one for the first entrants, and what would be the one after that base that can be shared with new entrants?
Mr. Kennedy: In the document that we submitted to the independent panel, we spell out what we would see as that threshold. Once we get to that particular point in time, we stop getting any more than that amount and the temporary people get the full extra chunk of it. It then goes up to — let us say it is something like 20 per cent. Once that particular amount has been reached, the temporary participants and the permanent fleet then together kick in and we share 50/50 on what goes forward from there.
Senator De Bané: Do you see that as a step that could lead one day to individual quotas as you have in the agricultural sector, where people own the quota that they can trade, in the long term?
Mr. Kennedy: That is more complicated than we are able to deal with here, but that is a decision that will be made by the minister of course. That particular topic has not been explored a great deal. We would like to have a right to a particular portion as you say, but we are a long way and lots of discussions between now and then to make any final decision on that.
Mr. MacDonald: In an ideal world, we would not see temporary sharing at all. What we would see is an expansion of a fishery to accommodate increases in capability. Should you have a continued ability for these participants to be viable over the long haul, then you would expand the fleet to match that. The problem that exists in this fishery is it seems right now to be boom or bust, and then it is exacerbated by the problems I mentioned before about recruitment and females. The premise that we move forward with in the new management regime is about stewardship of the resource. It is about creating an environment where the harvesters are willing to, and wanting to, protect the resource more than exploit it for whatever they can get today and forget tomorrow. We need to foster this conservation ethic, and this is destabilizing that.
By doing the positive things that we have been doing, and ultimately ending up where we are, we should have just continued to go ahead. Had we never implemented individual quotas, we would have been further ahead.
Consider the message when you try and talk about developing stewardship and other fisheries. This Atlantic Fishery Policy Review framework is about how we move ahead and get out of the mindset of the old and try to continue long- term fisheries management.
I understand the problem with the exacerbated wealth that has been discussed in Area 12, but I feel for those guys in Area 12. I have had meetings with Robert Haché from Area 12, and we have a lot of commonality between us. We just have a different approach. We think we can work with you guys. They believe anything that they give — they give an inch, you take a mile — there is no value in working with you, to the point where you have destabilized their working relationship with science. They are talking about hiring their own scientist, an ex-DFO scientist for snow crab that used to do the work. In order to have proper stock management, you have to have a triangle that has the fishermen, DFO management and science all working together and the resource is in the middle. As long as that working relationship is stable, and the fishermen are willing to invest in this and they believe they will maintain benefit from it, you can protect the resource.
The management options that are provided to us today talk about increasing enforcement and protection. In other words, we just have to catch the cheaters and everything will be fine. That is not going to solve the fishery. It will collapse and destroy itself before you find out where it has all gone. We have to develop a conservation ethic, and the conservation ethic comes from providing benefit to those that invest. That is what we have done, but it has not come back.
Senator De Bané: I would like to say to Mr. MacDonald that it is very refreshing to hear him say that. It is true that the only sensible approach is to think about not overfishing and causing a collapse of the stock. However, I remember when I would explain that we have to be on the safe side, and fishermen would tell me this is our problem. Let us fish and if ever there is a collapse, that is our problem; it is not yours. Nevertheless, I like your approach, which is the only logical one, to think long term to maintain a sustainable fishery.
Mr. MacDonald: Thank you.
Senator Johnson: The waterfront has pretty much been covered. I am from the Prairies, but I know a bit about fish — Newfoundland, cod and everything. I am just wondering, are there not others feeling the same way as you? Is there not general consensus on stewardship of the resource? I cannot manage, given public opinion these days and the environment and what has happened in the Atlantic, that there is not consensus among all of you to cooperate — or a growing consensus, anyway.
Mr. MacDonald: We do a lot of homework; again, with the science degree and the history that I have had with this fishery, I am able to translate some of the information back to our participants. We have forever tried to work with the Area 24 fleet, and have had an inability to communicate with them because, for whatever particular reason, there is always a hesitancy. Fisheries have always been very atomistic, very individual. Your information is your own, your benefit is your own, you not like to share very well and you do not trust the information that is provided to you otherwise.
The problem is the pressure that exists in the way fisheries management has treated this issue; this access is coming whether we like it or not, so you had better pony up and give up whatever you are going to give up and be prepared to give up generously or we are going to do it anyway.
We went through negotiations to try and develop the new sharing formula for this fishery, and Mr. Kennedy had mentioned it before. We started out negotiating with the temporary participants, and we said a bird in the hand is worth two in the bush. Permanent access, therefore, should be worth half of what temporary access is, because that is fleeting; it can disappear. The negotiations were going along fine, except DFO came to the first meeting on the sharing thing and offered them new permanent access at the level they were at. Immediately, we had no communication with them. They said we are going to give you 40 per cent and that is it; you have it forever and for always.
We talked to the minister of the day, who was Minister Robert Thibault, and he said he was not looking for anything like 40 per cent permanent access. He wanted between 10 and 20, similar to what they did in Area 12; they took 15. We negotiated with DFO, knowing it was between 10 and 20. I went back to the fleet and said we have to give up new permanent access, and they said no way, the stock is in decline, we are not giving up anything.
Listen, if the minister tells you that you are giving up between 10 and 20 per cent new permanent access, you had better get to the table. We offered 10, they countered with 20 and we agreed on 15; we shook. The night before the advisory meeting, they called up and said it cannot be 15, it has to be 20, and we are announcing it tomorrow. We went to the advisory table and offered the 15 that we had negotiated and they said it had to be 20 — that is fine.
The Area 24 advisory meeting was the next day. The Area 24 fishermen sat up all night and hashed over it. Then, in their advisory meeting the following day, they offered the 20 per cent that DFO had given to us. The DFO adjourned the meeting, made a telephone call, came back and said it had to be 30 per cent. The room erupted, basically. The permanent fleet was flabbergasted.
I took it back to my membership, and you cannot imagine what it was like in that room. They said you cannot give them anything, because if you give them anything it is just going to get worse. We sent an email to regional management telling them that. They said I guess we are back to where we started, so we will just do what we have to do. At that point, we went back to the negotiating table and we sat down and worked it out; that is where we came up with this 17.8 per cent. It was eight new permanent licences — a singular fleet of 45.
That is what I talked about before; a singular fleet as opposed to this temporary access because we have enough variables to deal with in our lives. Again, as you increase the costs, which we have not yet figured out, you are going to need more stock to support that. We offered the new permanent access at that level of a singular fleet of 45. The eventual result was a rollover, because when the submission had come up to the minister from the regional government, they failed to mention that we had supported the minister with new permanent access. They sent the email we had sent, which said we cannot give you anything or you will take everything.
It was Operation Pax Romana, we found out at some point in time — a Roman-instilled peace after a long period of chaos. They essentially drove everybody nuts. They offered the temporary fleet 40 per cent. They told us they had agreed to this and they kept changing it to the point where we were all crazy. Then they said we will fix it the way we want it and that is the way it will be.
We have had an awfully difficult time trying to figure out how to approach this issue. We agree it needs to be solved. We agree there is chaos. However, you have a grand number of temporary participants right now who think they were offered 40 per cent permanent access by DFO, and who do not recognize the stock is collapsing in areas that are otherwise economically depressed. Yes, they have major fishing licences and yes, the lobster fishery has gotten better. The conservation measures have taken place and their enterprises are going better than they have but they are getting used to this cheque coming in. It is like giving candy to a baby and trying to take it away. Once they get the taste, it is not that easy.
The issues are complex as to how you go forward in this kind of environment. The minister has some very difficult decisions ahead of him. We are trying to help him out.
Senator Johnson: Where else in the world is the snow crab fished?
Mr. MacDonald: It is fished in Alaska, the gulf, off Newfoundland, Japan and Greenland.
Senator Johnson: How do they manage the stewardship of this resource?
Senator Mahovlich: Do you get king crab?
Mr. MacDonald: No, we do not.
Senator Mahovlich: You get it only in Alaska.
Mr. MacDonald: Yes. There is a northern stone crab that is about the size of a king crab, but they have not found many of them. There are not enough for a commercial fishery. However, you should see it. It is a very spiny crab.
Senator Mahovlich: Is the crab that we have on the east coast mostly for commercial use?
Mr. MacDonald: Predominantly it is snow crab and it is commercial, yes. It is also called the queen crab. Size-wise you can imagine a king crab as being very big and the queen crab is smaller.
Senator Johnson: The snow crab we are talking about that is fished in these other countries, what do they do there? Are there any lessons you can learn from the way they manage their stock, or is it in the same state?
Mr. MacDonald: In Alaska I know that they have fished at a huge level and drove the stock down. It has never really recovered to the level that they are talking about. That was completely competitive.
Mr. Kennedy: The Alaskan snow crab fishery is closest to us. About 20 years ago they had harvest levels in the order of 380 million pounds. That fishery totally collapsed and it came back to about 168,000 pounds. Then, that has collapsed totally. It has been hugging 20 million to 30 million pounds ever since. It has gone. By comparison that looks like where we are. It has collapsed and there is no scientific explanation for it, and there is no indication that it will ever recover, but logic says that at some point Mother Nature is going to do that.
Mr. MacDonald: In the Icelandic fishery I know they use a method where they have a limited number of harvesters and they do the taxation, something like I suggested before. They take a significant amount of the costs out of it. When you talk about economic wealth and the generation of wealth, we have a tax system as well that does not really permit you to earn much money in the legal books without having to submit a lot to the Canadian Review Agency, CRA, without investing back into the community and development. If you can maintain a viable fishery that continues for a long period of time, and you are investing that money back into the communities or paying it to the tax man, these are all positive benefits for Canadians.
Senator Johnson: I know about the Icelandic fishery. How do they manage it? Is the way they manage their fishery workable here? They have managed their fisheries quite well over the last bit of time considering fisheries elsewhere.
Mr. MacDonald: Even in Canada typically we have done a decent job, but each one of the management sub zones, such as the eastern Nova Scotia Fundy region or the gulf region, are like little kingdoms within fisheries management. Each one is allowed to use their own judgment in how they manage and do their own resource management. What they do in Scotia Fundy, they do not have to do in the gulf. Even though this is a federally managed fishery, each one is allowed under regions specificity to do what they want. We are governed, therefore, by the Scotia Fundy management regime, if you will, and we do have to go outside our own country to find decent management strategies. We told you about the ones in our country but they are not in our region.
Senator Johnson: I wish you luck, and I am sure you will work it out.
The Chairman: We are getting late in the hour, so we are going to wrap up soon. I have a few questions in a few areas, for position sake.
My understanding is that you had 16 Aboriginals, 21 traditional, and 650 temporary. For the 16 Aboriginals, are you aware whether the Aboriginals are actually fishing these licences themselves, or is it done under royalty?
Mr. MacDonald: When the Aboriginal licences were first granted, we had two licences right after we implemented Individual Quotas, IQs, back in the mid-1990s. As soon as we implemented IQs under the Aboriginal Fisheries Strategy, AFS, program, they essentially took the fleet of 22 that was original and divided it by 24. They created two Aboriginal licences back then and the Millbrook Band bought one in, so we had three Aboriginal licences pre- Marshall. While the fishery started out, and even the Marshall fishery, they were originally harvested by Aboriginal boats using non-aboriginal fishermen as captains. Each one of the bands has gone through a learning process and is moving towards, and in some cases has completely moved towards, harvesting the resource on their own. They have had a learning curve to overcome and they are working towards being their own harvesters. It is, therefore, very refreshing.
The Chairman: In 1999, the female stock disappeared. The female is not targeted. Have you any idea whatsoever what caused the female to disappear?
Mr. MacDonald: We have nothing concrete that we can attribute. I can give you some thoughts afterwards, but no.
The Chairman: Has the Department of Fisheries and Oceans made any efforts or has it left that up to you as the fleet to determine? This is one of the concerns that I have had over a long period of time. We have had dwindling dollars earmarked for science, and I hate to hear the response from the Department of Fisheries Oceans saying that we do not know. We have something that could be done in perpetuity and the Department of Fisheries and Oceans does not know.
Mr. MacDonald: It is amazing the amount of reliance that the department puts on the scientific community for advice in something so crucial to our economy.
The Chairman: This is a birth right. This is in trust with the DFO. If the fleet is not doing the science or does not have the dollars for the science, they should be kicked out.
Mr. MacDonald: You are absolutely correct. One of the blessings that we have in the snow crab fishery is the economic value. We have reinvested that economic value back into the science. Our scientific community in the snow crab fishery has a lot of support from the industry. Thank goodness for that because the government has cut back significantly in all aspects when that is the backbone of the decision-making process, essentially. Just the female part, I want to answer that. They have a significant amount of investigation, but they have no real idea about why they disappeared although they are doing seismic experiments, for instance, in the gulf side of Cape Breton to try and evaluate it. I think they found some effect of seismic activity on the female population of snow crab. There was seismic activity off our shore in the period, but we had no understanding of whether or not that did anything. It may have had an effect, or it may not, as environment may have had an effect or may not have. However, they are doing a lot of work, and they have the capability to do that work because the industry has funded it. The industry has been able to fund it because the resources provided the availability to do that.
The Chairman: You are putting in the money; okay, that is one other thing.
Mr. Kennedy: Last year, we contributed $680,000 for the science.
The Chairman: The clerk's office sent me a site where I could have access to the DFO's Fisheries and Oceans Maritime Region Stock Status Report, dated 2000. It says there two major problems. It uses words such as, assume, extrapolated, estimates, cannot be explained totally, perhaps, assumptions, and probably unknown. The hairs on the back of my neck started to go up. They just do not know. Here we are with something that is so valuable that many countries would give their crown jewels for, and we are haphazardly saying that maybe we should do a study but we do not have the dollars.
Mr. MacDonald: You will find out very soon the lack of information that exists in the snow crab fishery in Newfoundland. They have no investigation or understanding of what is happening and when the collapse comes, there will be a lot of screaming. Your Fisheries Resource Conservation Council, FRCC, report may address that; it is an issue.
The Chairman: On another subject, the temporary fishermen — those 650-some shares — my understanding is that some of them are lobster fisher people?
Mr. MacDonald: In order to be a core fisherman you have to have a major fishing enterprise. Each one of these participants has a major fishing enterprise of some other fishery.
The Chairman: How did one get access to that little share of fish?
Mr. MacDonald: DFO deemed that they would distribute it.
The Chairman: To whom?
Mr. MacDonald: To core fishermen.
The Chairman: All of them?
Mr. MacDonald: All of them, so 650 is really divided between Area 23 and 24.
The Chairman: Every one of these fishermen —
Mr. MacDonald: There was a real cry on for a while to buy Southwest Nova's cores and bring them into our area because they would receive benefit. It drove core licence values up tenfold. They were $5,000 and $7,000, and they are $50,000 and $60,000 now.
The Chairman: Each one of these licences, groundfish and lobster, got a little piece of the pie?
Mr. MacDonald: Correct.
The Chairman: My understanding is some of these boats are actually quite small. Most of those boats, especially along the eastern area, would be rather small boats that could certainly not go the distances that are shown on this document.
Mr. MacDonald: No.
The Chairman: Most of them would probably have to fish very close to shore.
Mr. MacDonald: Yes.
The Chairman: That would place a huge amount of pressure on the stocks close to shore?
Mr. MacDonald: Absolutely, localized overharvesting and issues: They could not do that in any way, shape or form. They created a system whereby you had to put so many licences on a vessel, and these people had to become slipper skippers. They had to become royalty right holders by the way it was distributed. There is no way of changing that; you cannot have one without the other.
The Chairman: A slipper skipper is one who fishes from the comfort of their lazyboy chair while watching a rerun of Oprah.
Mr. MacDonald: With no effort whatsoever, which I find destabilizes the overall economy because when people receive a cheque for doing absolutely nothing, it destabilizes the whole community.
The Chairman: Is this not the modus operandi of the DFO? They tried to zap all fisheries into Individual Transferable Quotas, ITQs? If one is not possible they try to create a system so they can create an ITQ? It is not paying to go out and fish their little share of the snow crab. Rather than selling the fish, they sell the right to the fish, and eventually this creates a kind of corporate structure?
Mr. MacDonald: Yes, and our biggest fear is that these small share licences will be snapped up by a larger conglomerate outside the fishery, whether that is a processing sector who receives benefit by securing supply —
The Chairman: Or a dentist in Toronto.
Mr. MacDonald: — or a dentist in Toronto. It allows the accumulation which also destabilizes some of the marketing things we talked about before, as these are purchased. It started out a great idea. They said they do not want to create the Area 12 situation, exacerbated wealth in a small community. These people will make too much money. We started out with the history. We will not do as they did it over there, but they went a little overboard. They did not allow the fleet to develop to the potential that it needed so that when the stock came down we are still fully able to distribute our fishing effort.
The Chairman: Mr. MacDonald, you still fish, do you not?
Mr. MacDonald: Yes, I harvest every year.
The Chairman: As a fisherman, do you sometimes lie awake at night thinking that the very same group that is presiding over your snow crab fishery and makes the decisions and advises the minister, is the same group of people who presided over the cod quotas off Newfoundland? Does that not scare you sometimes?
Mr. MacDonald: It absolutely scares me. The reason why we are sitting here today is because, with the recognition of the science report as we saw it last week — and the independent panel that was convened which we do not find so independent and the resulting concept of what they can possibly do — it is hard enough dealing with the fluctuations in the marketplace whether the price goes up to $2 or down to $1.60 or up to $3.60 or wherever it ends up. It is another thing to deal with the resource that goes up and down in the level that it does. The concept that you have no way to win that game — if the price is high, we can give it all away; if it falls down, that is too bad. We can self-rationalize. We can distribute this crab as far and wide as possible and allow it to self-rationalize to the point where there are fewer licences in 2010 than there are today, because we gave it to everybody and let them rationalize back into one unit. That makes it acceptable.
The Chairman: I was reading a newspaper article from Halifax last week, where you were interviewed. You talked about the concentration of ownership that is evolving, which gives greater control to processors over price at wharf. It has been a most rewarding and interesting evening for us. We hope to see you again, and hope we are able to help you somewhat.
The committee adjourned.