Proceedings of the Standing Senate Committee on
Fisheries and Oceans
Issue 8 - Evidence, June 9, 2005
OTTAWA, Thursday, June 9, 2005
The Standing Senate Committee on Fisheries and Oceans met this day at 10:46 a.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.
[English]
The Chairman: I call the committee to order. Welcome, everyone.
Last October this committee was given an order of reference to examine and report on issues relating to the federal government's new and evolving policy framework for managing Canada's fisheries and oceans. The committee tabled an interim report on May 19.
We are pleased to have before us this morning representatives of the British Columbia Seafood Alliance, a non- profit organization established in 1999 to represent British Columbia's seafood industries. It is an umbrella group that brings together traditional capture fisheries, aquaculturalists and seafood marketers and exporters.
We welcome Ms. Christina Burridge, executive director of the alliance; Mr. Rob Morley, Vice-President, Human Resources and Corporate Development of the Canadian Fishing Company; Mr. Mike Featherstone, a commercial fisherman, President of the Pacific Urchin Harvesters Association and vice-president of the alliance; and Mr. Tom Kasmer of the Gulf Trollers Association. Mr. Kasmer is a commercial fisherman of salmon and albacore tuna and a director of the alliance.
More detailed biographical notes provided by the alliance were circulated to committee members, as well as their paper entitled ``What do we want from British Columbia's commercial fisheries? The case for reform.''
I read in your recent letter that you were surprised and dismayed by our May 19 report. You will have the opportunity this morning to set the record straight if we have strayed too far from where you believe we should be going.
Ms. Christina Burridge, Executive Director, British Columbia Seafood Alliance: Thank you very much, senators. It is a pleasure for us to be here. We appreciate the opportunity, especially on such short notice.
The British Columbia Seafood Alliance is an association of associations. The information you have is not quite current. We used to represent some aquaculture interests but no longer do. We are solely a commercial fisheries organization. We have 13 full members and three associate members. That means that virtually every organized harvest group in B.C. belongs to the alliance, and those organizations in turn represent all or most of the licence holders.
We are probably the most representative seafood organization in B.C. Of the associations that belong to the alliance, some represent quota fisheries and some do not. They have all striven over the years to organize themselves in such a way that they can deliver effective management of the resource as well as economic viability for the industry.
The 13 members of the alliance range from very small fisheries with a handful of licence holders, like Mr. Featherstone's, which is the urchin fishery, to very large ones like halibut, which has approximately 400 licences. Together we represent about 90 per cent of the value of commercially harvested fisheries in B.C.
The directors here today were in Ottawa for other meetings. Some of my other members would very much like to present a brief to you. They are planning to do that and will be in touch with you shortly, particularly the Deep Sea Trawlers Association, because they have a complex quota management system that they thought you would find interesting.
Seafood is a global business. It is probably the most globalized sector of the food business, and in B.C. we are really a pretty small participant. Overall, the seafood sector in B.C. is worth $1 billion in exports and a little more than $1 billion in wholesale value; 13,000 PYs from 30,000 jobs; $750-million contribution to GDP; $450 million in wages, and commercial fisheries out of that total amount represent about two thirds and aquaculture is the other third.
We are a high-cost, low-volume producer in B.C. compared to our competitors. Obviously the South Asians have low costs, and very often high volume as well. Our biggest competitor is the State of Alaska, and it has high costs, it is true, but it also has very high volumes, so generally we produce a tenth or less of what Alaska produces.
It really is a global business, for better or worse. You can go to a supermarket in Vancouver and buy a fillet of Japanese chum salmon that has been processed in China for less than you would pay for a fillet of B.C. salmon.
For better or worse, we have seen a number of trends. This is what I mean by globalization. We have seen the growth of aquaculture. It has grown more than 50 per cent over the last 10 years. We have seen technological change in every facet of the industry — harvesting, processing and transportation. We have seen a reduction in trade barriers, so that you can import and export almost anything around the world. We have seen economic integration and consolidation. Our customers are getting larger and more demanding. We have seen processing shift offshore in many cases. Our competitors in Alaska ship large volumes of salmon to China for processing, and it comes back into the North American market.
As our customers have grown larger they have become increasingly demanding in terms of what they expect. Consumers have become increasingly demanding in terms of what they expect. They expect stable supply, stable pricing, high quality, environmentally responsible, healthy products. If we are to supply those markets, we need effective management of fisheries. We need effective conservation.
In B.C. we have additional challenges because we have to settle treaties with First Nations, and the fisheries component of treaties will be one of the most difficult. Therefore, it is essential that we establish fair principles so that the fishery will generate wealth for whoever harvests it, because the other choice is a fishery that will dissipate wealth at a considerable expense to the taxpayer.
You said in your report that you would like to go to New Zealand to study the quota system there. We would invite you to B.C., because in B.C. the quota system works well. We have eight fisheries under a quota, and those fisheries have delivered significant improvements in conservation, economic viability and working conditions.
I have some people here who will talk to you a little more about that, but I would like to leave you with the thought that a well-managed fishery, supplying national and international customers, will be better for coastal communities in the long run than one that cannot survive without subsidies from the taxpayer.
Mr. Featherstone, who is from the Pacific Urchin Harvesters Association and so works in a quota fishery, will tell you a little about his experience, and then Mr. Morley and Mr. Kasmer will talk about the salmon experience.
Mr. Mike Featherstone, Pacific Urchin Harvesters Association, British Columbia Seafood Alliance: Thank you very much for the opportunity to appear today. As was mentioned, I am the President of the Pacific Urchin Harvesters Association. We represent all 110 licences in the fishery. We also work closely with the processors who are involved in the fishery.
Our principal goal is sustainability. After that, once the total allowable catch has been set, we try to make the most money possible from the resources. That is not only important for us but also good for all of Canada. Our third goal is to work on and cooperate in the development and education of coastal communities. I can give you a number of examples of how we do that.
I am also the president of another, small value-added fish plant in Maple Ridge, so I know the challenges involved in processing as well as harvesting in terms of the market-driven approach that we have taken and how we try to add value to the fishery.
I will give you a brief history of our quota system and how it developed. The red sea urchin fishery followed a typical evolution seen in many fisheries around the world, but particularly in B.C. I recommend the book Managing Fisheries. It is 10 case studies from B.C. It is an easy read and summarizes the quota fisheries well. It talks about 10 quota fisheries in B.C.
I should make it clear that I am not here to make recommendations for salmon fishermen or for people on the East Coast. Canada is a very diverse country. I do not like the cookie-cutter approach, and I think the typical management regimes in various regions should be developed by the people in those communities.
The red sea urchin fishery started as an open access fishery. Everyone was allowed to have a licence. Then it moved to a limited access fishery and criteria were developed. For example, between 1986 and 1989, you had to have landed 75,000 pounds; or, on the north coast, 5,000 pounds; or, if you were a native fisherman, undertaken any activity at all related to sea urchin fishing. If you had taken any training, if you had bought a boat or a compressor, or if you had even thought about it, you could apply for and get a red sea urchin licence. That is the way we set it up. They qualified under different criteria from everyone else.
Once it was limited, as is typical in almost all fisheries, it became more and more a race for quota. It was not ``quota'' at that time, but the total allowable catch. The fishery in 1992 had peaked at something like 27 million pounds. In 1993, the DFO stepped in and limited the number of pounds we could fish. It worked out to about a million pounds a month. We would start fishing at the beginning of every month, and two days later we would be finished. There was no continuity in jobs in the coastal communities. It was bad for the fishermen. If the weather was bad, people would be going out and killing themselves.
In 1994, unique in fisheries around the world, the fishermen said, ``Enough is enough.'' We went to Prince Rupert. We pulled all our boats out of the water, sat down and developed and implemented our own voluntary quota system without the participation of the government. The government did not want quota systems at that time; they were against them. We learned why later. In 1996, high-ranking DFO officials leaked some documents to me. You will be surprised to hear that the government would say something like this, but what they said was, ``We do not want these people to have a quota system because it would actually add value to this fishery. If it added value to this fishery, then we would not be able to buy the licences at a cheap price and redistribute them to native bands for treaty settlements.'' They mentioned windfall profits. Heavens, let us not have any windfall profits for fishermen. That would be a shame. Keep us all in our gumboots and dirty clothes, and we cannot make any money. I find that really offensive.
Given the press releases and the efforts we made, they gave us our quota system. That was implemented. Since then, we have seen a dramatic increase in the value of the fishery. We have seen safety improvements. As far as conservation is concerned, allowable catch in an area was a couple of hundred thousand pounds. In a weekend, we would land 400,000 pounds. Now, we have not exceeded our TAC since that quota system was implemented.
Besides that, we fund government research. You made a comment in one of your recommendations that the DFO should be funded for their mandate. I strongly agree. We fund a biologist, on-grounds monitoring and off-load validation. In the sea urchin fishery, for example, we pay $5,500 for each licence. Before the quota system we paid $50 to go fishing. There are great cost recoveries for the government. In geoducks, for example, we pay $40,000 for each fishing licence. There is a budget of over $2 million. We have four biologists working at the Pacific Biological Station and we have total, 100 per cent at-sea monitoring.
Obviously, we think that there are great benefits to the quota system. We are not saying it is the be-all and end-all for everyone, but certainly our experience has been very positive. If concerns are raised by other people they should be addressed on implementation. If you are worried about concentration of ownership, I do not think urbanization of licences has been an issue for us. We have mostly the same people participating in the fishery now as we did 25 years ago. There have been very few exchanges of licences. If you have a successful fishery, it will be a strong fishery. Most of the people still live on Vancouver Island.
In the Ecotrust report there was mention of one licence in Whistler. That was me. I lived in Whistler for 25 years. I lived there before quota systems. I was never home because I was always fishing, but I still live there now. That is where my family grew up and that is my community.
There were a number of salmon fishermen who lived in Whistler too, but as in many salmon fisheries, because of the change from strong stock to weak stock management, those people do not have jobs because there is not the fish to catch. It is not because DFO has decimated these coastal communities. It is very unfair to say that. Coastal communities in B.C. are built on logging, mining and fishing, and each coastal community is a different story. I could tell you almost every one of those stories. It is unfair to say DFO has caused the devastation of these coastal communities.
As for Parcival Copes' report, that is a paper from 1986. It is now 2005. Mr. Copes should update that and get some more information. Maybe he should come out and see how we manage the fishery. Quota busting is absolutely impossible in any of the B.C. fisheries. Every pound is off-load validated at the dock by an independent third-party monitor. As I said, our total allowable catch in some cases was exceeded by 1 per cent in one or two years in the geoduck fishery, but never in the red sea urchin fishery since the implementation of quotas. There has never been any report of anyone trying this quota busting. It is absolutely ludicrous, in my mind.
As far as high grading is concerned, we have 100 per cent at-sea monitoring. Not only do they make sure of where we are fishing and how we are fishing, but they also collect valuable biological information that is used in the management of the fishery. You cannot have conservation without the data and the information to make the proper decisions. All these things fall out of quota fishing.
The Chairman: Was that quotas in general, all quota fisheries, or are you referring to the red sea urchin fishery?
Mr. Featherstone: I am talking about in general, all the quota fisheries in B.C. In the halibut fishery, for example, they are moving towards 100 per cent at-sea monitoring. I believe the deep sea trawl fleet has 100 per cent at-sea monitoring. I believe herring has 100 per cent at-sea monitoring. I am not sure about all of them.
Generally, if you implement a quota system, you want strong enforcement and monitoring, and by and large it is paid for by the fishermen and is done by third party independents, but everyone works together. You cannot have the fox looking after the henhouse, and we accept that.
Mr. Tom Kasmer, Gulf Trollers Association, British Columbia Seafood Alliance: I am a salmon troller by trade. I happen to fish in what I think is one of the most beautiful areas on the B.C. coast, in the Gulf of Georgia and Johnson Strait, located between Vancouver Island and the mainland coast. Salmon trollers as a whole tend to roam and fish the entire B.C. coast. The salmon troll fleet is a small boat fleet. It has an average size coastal-wide of about 42 feet. We catch fish individually on hook and line gear, similar to recreational fishermen, except we have a few more hooks in the water at any one time.
Trollers also live in coastal communities spread along the length of the B.C. coast. We have trollers who live in the Queen Charlotte Islands, Prince Rupert, other communities on the mainland coast, many communities on Vancouver Island, and we even have a few salmon trollers who live in Vancouver.
I personally fish for salmon and albacore tuna. I do not fish in any quota fisheries and I do not have any holdings in any quota fisheries. Therefore I like to think of myself as someone who does not have a vested interest or an axe to grind on the issue. Having said that, I do think there are opportunities for IVQs to improve salmon management, as has been pointed out by Pearse and McRae in their report ``Treaties and Transition''.
The problem began in the last decade, because we have seen greatly reduced salmon catches in B.C., largely due to conservation constraints. As a result, many fisheries now have either a redundancy of effort or structural problems inherited from the past that make them economically unproductive. I will give you an example. I tend to be a concrete thinker so I find that examples help to illustrate the point. I will use the West Coast-Vancouver Island troll chinook fishery.
Here we have a fishery with 230 licence holders. They have an annual catch of about 150,000 chinook per year. This has a landed value to the fishermen of $4 million to $5 million, or approximately $20,000 per licence. Many fishermen do not participate in this fishery because they can quickly do the math and figure out that because of its structure it is not viable for them.
Part of the problem is that this fishery is structured over a number of months. There is a small winter fishery, followed by more sizable fisheries in March, April, May, September and October. Each would have target allocations of between 10,000 and 40,000 pieces, depending on the month.
The fishery is conducted in a derby style, which often leads, if it is productive, to only a few days fishing per month. That means that there is a fairly high risk to the participants due to adverse weather, mechanical breakdowns or just being in the wrong location. It is exacerbated by the fact that there are areas with an abundance of small fish. The fishers tend to concentrate on these areas because they can maximize their catch in a two- or three-day derby fishery. Unfortunately, that leads to poor value because you are landing much smaller fish than you otherwise could. You have poor quality, because fishermen are catching many more fish in a day than they would in other circumstances. In a short fishery like this, the fish tend to all be landed at the same time, at the end of a short opening. This has the effect of flooding the marketplace and depressing the price.
The fishermen have to show up in each of several months to be able to catch their share of the annual allocation, so they have to be there for two or three or four days, or maybe a week, each time to be able to catch their allocation. The net result is that there is very little real value to the licence holders, the fishers, the crew or the coastal communities in which we live. Here we have a fishery that is worth $4 million or $5 million on an annual basis that is producing virtually no results for any of the participants.
An IVQ fishery, if we had the opportunity to restructure this fishery, could provide both certainty of catch by giving a share of the allocation to each fisherman, and the flexibility of fishing patterns to hopefully produce some benefits. It would reduce the risk because fishermen would not be hooked if they ran into adverse weather, had a breakdown or were in the wrong location. They could go to areas where they tend to catch larger fish because there would not be the competitive nature. They could spend a longer time catching larger fish and increase the value of their catch. They would not have to overload their freezer systems or their ability to process the fish on days of high volume because they would not have to catch as many as they could. They could pace themselves because they would have enough time. This would result in a better quality product.
Also, it would produce, as it has in the halibut fishery that went down the same road, a steady supply of product to the marketplace, which would stabilize prices and tend to enhance and cultivate the market rather than depress it. On top of this, to make the fishery more viable, fishers could exchange quotas between themselves so they would not have to show up in each of several months to get their share. One fisher could take his in April, another could take his in May, and a third could take his entire quota in September, so they could distribute the effort in a way that is manageable for and beneficial to all.
As a result, we could have a fishery now with an increase in the total value, an increase in quality, a higher value product, and one that generates real financial benefits for the fishers and the crews, because the crews do not make much money if they fish only for a few days each month. The labour pool is not that deep, and retaining good crew is becoming an issue in the salmon fishery and the coastal communities we all live in.
What is the problem with this picture? Love it or hate it — I tend to love it — salmon are a cultural icon in B.C. There is no other fishery and no other species that generates the same sort of emotional and passionate response from British Columbians as the salmon fishery. People get hot about the subject. There are a number of factions you have probably heard from who are opposed to IVQs, either for ideological or political reasons. I will say that some of them even have vested interests that are threatened by greater security of access for the commercial fishery, or indeed the enhanced financial prospects for the commercial salmon fishery.
Over the past year, since the release of the Pearse-McRae report, we have certainly heard from all of them. This spring, there will be an IVQ troll demonstration fishery in the Queen Charlotte Islands. Over the winter, the area harvest committee held a number of contentious meetings where all the opponents had an opportunity to have their say. Licence holders now were given the opportunity to participate in the IVQ fishery or the traditional derby fishery. When it came to making that choice, 90 per cent of the licence holders opted to participate in the IVQ fishery.
These participants are, with few exceptions, fishing their own quotas. They are not doing it so that they can stay home and be armchair fishermen. Ours is a small boat fleet. We catch fish with hook and line gear. We do not have hundred-foot boats that can go out and catch the quotas of 20 or 30 boats at one time. We catch fish in a long and tedious process by hook and line gear, one at a time. Corporate concentration in most parts of the B.C. salmon fishery is not an issue. The big issue for us is the ability to participate in a financially viable fishery that can generate real benefits for all the participants, for the coastal communities and for B.C.
I am not trying to tell you that IVQs are a simple and easy panacea or the solution to all our problems because I do not think you would find that very credible. It is certainly not to say there cannot be problems with IVQ management, but it can be a good tool to transform the currently struggling salmon fishery into a healthy, vibrant one.
Mr. Rob Morley, Fisheries Council of Canada / Canadian Fishing Co., British Columbia Seafood Alliance: Thank you for the opportunity to appear before you today. I am the Vice-President of Human Resources and Corporate Development for Canadian Fishing Company. Canadian Fishing Company is the big corporate entity in the B.C. industry. We are the largest fishery and fish processing company in British Columbia.
The year 2006 will be our hundredth year of operation. We have been around for a long time and have seen a lot of changes in the industry. Certainly there have been many changes in both the fishing and fish processing ends of the business in the last decade, and there are fewer of us around today. I will get to that later.
In addition to being the largest company in British Columbia, we are also involved in the Alaskan salmon and herring fisheries. We are a major player there through a subsidiary we own, Alaska General Seafoods. We own and operate three processing plants in British Columbia, one in Vancouver and two in Prince Rupert. We own a fleet of vessels. We own a fleet of fish tendering vessels that collect fish from fishermen on the grounds and deliver them to the plants. We also own a fleet of about 30 large seine vessels that fish in the salmon and herring fisheries and, to a lesser extent, a couple of draggers in the troll fisheries. We also have another 30 or so large vessels in a joint venture arrangement, 50/50, with fishermen, and a like number of independently owned and operated seine vessels.
In addition to that, we are involved in gillnet fisheries for salmon and purchase fish from several hundred independent gillnet small boat fishermen.
We have about 1,400 employees in British Columbia. A thousand of those are at our shore plants in Prince Rupert. We are the largest private sector non-government-supported employer in Prince Rupert. Sixty-five per cent of those employees are First Nations people who come from Prince Rupert and surrounding communities.
I will briefly address a couple of points that have been put forward as concerns about changes in the B.C. fishery in terms of licensing structures and moving to more quota fisheries, and what that may or may not mean.
One issue that has been addressed by some of your previous witnesses and in your report is urbanization and corporate control of licences and what that has meant to coastal communities.
We are the largest owner of fishing licences in British Columbia, but we cannot operate them ourselves. We need to hire skippers and crew members to operate those vessels. On the vessels that we own, 80 per cent of the crew members are First Nations individuals who live in communities like Campbell River, Alert Bay and remote coastal communities. The people who are studying this and the records would list those as being Vancouver licences. Clearly, they are not. They are supporting communities throughout the coastal region. We need those crew members to run those boats and we need them to have viable jobs to continue to do that.
The issue has been raised that when you move to quota fisheries, there is additional concentration of licences and corporate control. If you look at the book that Mr. Featherstone has recommended and the studies that have been done, the experience in the quota fisheries in B.C. is exactly the opposite.
In the halibut fishery, for example, prior to the quota fishery, the major processing companies were heavily involved in buying fish from fishermen, freezing and selling it. Fishermen had limited options when they came to town. When they did not know how much fish they would catch and they all arrived at once on the dock in a short period of time, they needed someone to take that catch off their hands. If it was a large volume all at once, they were forced to deal with the biggest companies with the biggest capacity. Because it is a fresh product, subject to spoilage, they needed to get rid of it fast. The result is we as a company are no longer involved in buying halibut in British Columbia.
Now that halibut fishermen can make arrangements before they go out fishing because they can shop around and, in some cases, deal directly with customers, it provides many more opportunities for additional buyers to deal in small quantities and smaller operations. The actual experience is the opposite of what was feared. When quota fisheries were enacted in British Columbia, the power of the major corporations and the big companies declined. It has provided more power to fishermen to make their own marketing arrangements, extract a higher price and have access to more buyers.
We as a company still support the reforms that are being proposed for the salmon fisheries in B.C. It is a matter of economic viability and survivability of the salmon business. There have been huge changes in the business, and in our view, being involved in the business in Alaska and B.C., the B.C. industry needs to change or it cannot survive. Right now, shore workers and fishermen are not making enough income to stay in the business. You will start to see boats being tied up and plants being shut down. We need to find a way to reform this fishery to make it economically viable.
The strategy that we as a low-volume producer believe will work is targeting higher quality, higher-value niche markets and having a way to control our costs in order to survive. Otherwise, we will not be able to maintain the number of jobs we are supporting in the industry. We need those reforms to support jobs and there are strides to be made by moving to the kind of quota fishery recommended by Dr. Pearse and Dr. McRae.
The Chairman: Thank you. Your presentations were very helpful.
Senator Hubley: Thank you for the invitation to look at the system in British Columbia. That may be a possibility for us.
My first question is with regard to individual vessel quotas, IVQs. When you say that a quota is designated to a certain vessel, is it actually designated to a company or a fleet?
Mr. Kasmer: In most of the fisheries currently under quota management in B.C., the quotas are allocated to the licence, which is on the vessel. Nearly all fishing licences in B.C. have to be to fish from a vessel. They are allocated to the licence holder for that specific vessel.
Senator Hubley: We have heard of the ITQs. Some of the coastal communities in the Atlantic favour a community quota to ensure that their fishing sector will have a viable future and not lose the jobs that have supported the community as a result of a quota being taken by a company to another part of the region.
Can you comment on community quotas versus vessel quotas?
Mr. Kasmer: This is an opportunity for communities to encourage fishermen to acquire licences or to acquire quotas themselves on the open market. There is an open market for quotas, just as there is for any other commodity, product or real property in Canada. This would assist their fishermen and the community in ensuring that those quotas are fished from that community.
Having said that, I think coastal communities have benefited from the halibut fishery, for instance, because most of that fishery must take place in the location where the halibut are, and by and large, the fishermen in the small boat fleet are distributed along the coast of B.C. They fish out of Port Hardy, Port McNeil, Prince Rupert, Sandspit, Queen Charlotte City and other coastal communities in B.C. That is the case for a number of small communities on the west coast of Vancouver Island that were previously dependent on the salmon fishery. They have found that the fishery sector is thriving again, or at least rebuilding. They supply and service the fleets that operate out of those areas and land their product there.
There is a definite opportunity for communities to participate in this. Communities, municipalities, cities and municipal corporations have traditionally been involved or engaged in economic activities, attracting different industries to their areas and offering incentives for those industries to continue to operate there. They could play the same role in the salmon and other fisheries industries in B.C.
Mr. Morley: With regard to community quotas, the most contentious part of moving from a derby style fishery to a quota fishery is how to initially allocate the quotas. When a community wants a quota, they have to consider which fisherman's quota they will take away and force to go to that community for access to the fishery. That is a major political issue.
I agree with Mr. Kasmer that if a community would like to maintain an economic base, there is nothing to prevent it from getting into the business and buying quota. Whether senior governments want to provide them with funding to do that is a decision for those governments to make. As Ms. Burridge indicated, fishing is a world business and much business acumen is required to make a fishing operation work. Fishermen have developed that through their operations. Most municipal governments have no knowledge or experience in that business. Frankly, the model of governments running businesses seems to be crumbling around the world. I am not sure that is the direction in which they want to go, nor is it necessary, given that communities in British Columbia have been surviving through fisheries businesses.
People in British Columbia do not appreciate being told where they have to live in order to pursue their occupation. The history of communities in British Columbia is very short, unlike in Atlantic Canada. Very few of our communities are even 100 years old. Very few people were born and raised in those communities. Historically, people in British Columbia have moved to where the jobs are. We have experience with mining and forestry changes and world market changes. The view is that although fishing is a way of life, it is also a livelihood, and unless you can find someone who is willing to support that, it cannot exist.
We used to have canneries in about 300 small communities on the coast. There are now four major salmon canneries in British Columbia. If we had been forced to maintain a plant in every one of those communities, we would not have an industry, because it could not compete in the world markets to which we sell.
Senator Hubley: This committee has emphasized many times that a one-size-fits-all approach is probably not the answer. There is great diversity in the fisheries in Canada.
Senator Adams: Nunavut is a little different from B.C. It is still spring up there. The char are at the mouth of the lake ready to go down to the bay to spawn.
Ms. Burridge said that it is cheaper to buy salmon processed in China. Is that fish caught in B.C., shipped to China for processing and sent back? How does that system work?
Ms. Burridge: As I mentioned earlier, the seafood business is a global one. One of the biggest changes has been the increase in the processing industry in China and, to a lesser extent, Thailand, Vietnam and Korea. The fish is harvested in Europe and Alaska and a little in B.C. However, we have not yet gone down that road entirely. That fish is frozen and shipped to China, where it is reprocessed in state-of-the-art factories into value-added products that come back into the high-value markets of North America and Europe and are sold to large chains like Wal-Mart and Costco. It turns up in all kinds of value-added products, chilled and frozen, in supermarkets. That has transformed the business. It is a twice-frozen, ready-to-eat, convenient product at prices that are very attractive to consumers.
B.C. has some advantages because we are very close to that I5 corridor.
Our competitive advantage is being able to ship fresh product to the U.S. We are an export industry. Canadians eat less than one quarter of what we produce. Certainly we have to compete with products that are cheaper, sometimes more convenient and, because they can be branded, have a considerable degree of marketing support behind them. The business is changing and it is important that we in B.C. recognize what is happening. We have to consider our advantages, where the niche markets are, where we can make a difference, and do what we can to fit into those markets. The trouble is we cannot do that with the way in which salmon fishing is organized. We are producing a high- cost product that is often not of particularly good quality because we have huge gluts.
Senator Adams: Do you have 1,300 or 13,000 employees?
Ms. Burridge: We have about 30,000 jobs in the seafood business and 13,000 actual PYs.
Senator Adams: You are talking about onshore and at sea. What is the breakdown of those figures? Is most of the processing done at sea and, therefore, are most employees on the vessels? Mr. Morley said that about 80 per cent of your workers are native. I want to know where the majority are working and who they are. I expect they do the same thing in Nunavut to ensure that the community benefits from fishing. The ITQ happened 10 years ago and now the other company wants to remove our fish and not process it in the community. Of the 30,000, how many work on the vessels and how many onshore?
Ms. Burridge: Of those 30,000 jobs, about 8,375 are fishermen, amounting to 3,410 PYs, and the rest are plant workers; those figures include aquaculture.
Senator Adams: Mr. Featherstone, do you have about 110 licences?
Mr. Featherstone: Yes.
Senator Adams: Are the licences individually or company owned?
Mr. Featherstone: They are individually owned but many of us have incorporated for tax purposes. For example, I have three of them, but I had them when the quota system was in place. The corporation is registered in Vancouver, and the people working with me live in Comox, on Vancouver Island. There are many divers working for us because it is a dive fishery. Many of them live in and around the Comox-Campbell River area where some of the original diving began. We have small, specialized processing companies involved in our fishery, which is unique in the industry. One of the companies recently sold two of their licences to native bands. Once the quotas were established, the government bought licences from existing licence holders and redistributed them to native bands. The bands can choose to accept those licences. Originally, they bought 10 per cent and that has increased to about 12 per cent. The most recent sales were by one of the small processing companies to the native bands.
Senator Adams: I would like to know more about that.
Mr. Featherstone: Some people from Nunavut came to one of our processing plants because Nunavut has a clam similar to the Geoduck and to a Japanese clam. These people trained in Vancouver and came to the plant to see if we could work out a joint marketing venture such that they would harvest and ship the product. The distances and transportation problems were difficult to resolve so the project is not off the ground. However, they had some interesting stories about diving.
Senator Adams: About 10 people are licensed on Baffin Island. In the beginning the seafood agency did not have a machine to test the waters for the clams. This year, they will begin again. We have many clams off Baffin Island. I once asked DFO for how many years clams could be picked. I was told that it could go for as long as 100 years, which is good for the people in the community. I want to know a bit more about what happened because there was a similar situation on the East Coast. Natives and some fishing unions were fighting over quotas. DFO regulations were involved and more quotas were needed, so they bought up quotas that were then transferred to the natives. Is that happening now in B.C.?
Mr. Featherstone: Yes. That is what the industry advocates. In the case of one of the quota fisheries, which was 95 per cent native and called the spawn-on-kelp, whereby the herring spawn on kelp, they created new licences. They did not provide economic viability for the people by developing jobs. Because the market collapsed, the prices they are fishing for today are $2 below the production costs. In other words, everybody is losing money. There has been an oversupply to the market. After conservation, it is important to maintain these markets. If you are to redistribute any kind of economic opportunity through a licence, then you do not want to create new licences because it totally destroys the fabric and the economic viability of the fishery by creating an oversupply. That fishery was 95 per cent native and is a prime example of what not to do. It is a tragedy. With our fishery, the government has taken the approach of buying the licences and offering them to native groups. We took about five of our most productive fishing areas and set aside areas in the territories of a number of bands. One was Haida in the Queen Charlotte Islands. The Haida are very organized and care a great deal about their environment. We removed these set-aside areas from our total allowable catch and we use them as marine protection areas. At the time, the phrase had not been coined. We use the areas for study and research based on a joint plan developed among all the groups. We have an excellent working relationship and it works well for everybody.
Senator Adams: Mr. Morley, you mentioned either a policy or an agreement that you have with DFO by which the bands have about 80 per cent of the people working in the salmon fishery. I would like to find out a bit more about that. I have a little difficulty with some of the companies that want to hire native people but say they have to be trained in how to fish. All their lives they have been hunting and fishing, and then some department comes along and tells them they have to be trained how to catch a fish. When I go ice fishing, I can catch a fish and nobody has to train me. I sometimes have a little difficulty with government policies, especially for our people living in Nunavut.
Mr. Morley: There is no government policy that requires us to hire First Nations. We choose to do so because in fact, as you say, they are very good fishermen, so we want them, and they catch a lot of fish for us. In British Columbia, First Nations people have been part of the commercial industry since its inception and have played a major role in fishing as well as working in the plants. Overall in British Columbia, about 30 per cent of all fishing licences in the regular commercial fishery are owned by First Nations people. They have always played a big role, and we have had partnership arrangements with them. We recognize that First Nations communities will be getting access to more quotas. They are getting quotas through their own treaty process.
In fact, we have just finished our first five-year arrangement with the Nisga'a people under their treaty, which was the first modern one in British Columbia, to work in a partnership deal to buy and market their salmon. Last week we concluded our second five-year arrangement that we are embarking on with them to move forward. There are examples in British Columbia of very good arrangements within the industry, and in fact First Nations' involvement in the commercial fishery in British Columbia is one of the biggest untold success stories of integration into the world economy. We have some extremely successful First Nation fishermen. Probably the biggest individual salmon licence holder, not a company or a processing company, is a First Nations individual who owns about a dozen salmon seine licences, which are big-vessel licences.
Senator Adams: What is the total worth of your industry per year now?
Ms. Burridge: The seafood sector in British Columbia is worth about $1.1 billion and $769 million or so of that is from commercial fisheries. The total wage bill is about $450 million.
The Chairman: We will turn now to Senator Mahovlich, who is from Ontario. Even though his area of origin is not the biggest fishery area in the world, Senator Mahovlich has shown a keen and active interest in fishery issues.
Senator Mahovlich: You are right about the Aboriginals. When I go fishing I follow the Aboriginals, and I do very well.
You say you have four canneries left on the coast. Are they all prosperous now?
Mr. Morley: No, they are not, as a matter of fact.
Senator Mahovlich: So the future does not look good.
Mr. Morley: We own two of the canneries, one in Vancouver and one in Prince Rupert. With the reduced volumes, the canneries are not getting the throughput they need. Our cannery in Vancouver probably has the capacity to put up 300,000 or 400,000 cases of salmon per year. Within the last five years, we have not reached 50,000 in any given year, and the average has been more like 15,000. Our Prince Rupert cannery is the largest salmon cannery in the world. It has the capacity to produce half a million cases of salmon a year, and we are not operating at anywhere near that capacity. It is probably at 60 per cent of the capacity. A lot of the fish used in Prince Rupert comes from Alaska, so we import raw material and process it there; and that is what has been keeping it going.
All the canneries in British Columbia are suffering from the current management of fisheries, which has resulted in a short season. The number of days of operations has been reduced so that you are really down to an operating season of two or three weeks. It is insufficient to support that kind of investment. There are still good markets for canned salmon, but we also need to pursue the other high-value-added markets for fresh and frozen salmon and spread that out and do it in a better way. That is the secret to survival for fishermen and companies in B.C.
Senator Mahovlich: How many fishing corporations do you have out in B.C.?
Mr. Morley: I am not sure I fully understand the question. The number of companies involved in the processing business is probably 150 or so.
Senator Mahovlich: Many of those companies must go to China to process their fish. Many of your canneries are competing against China, right?
Mr. Morley: So far, the canned salmon is not being produced in China. There is some being produced in places like Thailand, using raw material from Alaska, and it is competing with us. On the canning side, Alaska is still our biggest competitor. Certainly on some of these other fresh or frozen value-added kinds of products, you are seeing more and more being done in China because of their high-quality plants and lower labour rates. Any product that requires a lot of labour is difficult in Canada, particularly in B.C., where we pay our workers in the unionized plants a very good wage, about $18 an hour, plus considerable benefit packages. It is difficult to compete on that basis with China.
Senator Mahovlich: I visited Prince Rupert a few years ago. There was a lady who gave us a talk. I just wondered, is octopus a sea urchin?
Mr. Featherstone: Octopus is actually a cephalopod, which is different from a sea urchin. A sea urchin is an echinoderm, which is related more to a starfish. They are called spiny-skinned animals. They are the ones with all the spines that look like a pin cushion. It is a Japanese delicacy.
Senator Mahovlich: I see. They were talking about farming octopus in Prince Rupert, and I wondered if they got that off the ground.
Mr. Featherstone: I have not heard whether that was successful or not. In fact, I had not even heard of the project. There is certainly lots of octopus. There is not really a directed octopus fishery in the north.
Senator Mahovlich: There is a demand for it. I love it in my salads.
Mr. Featherstone: It is great. You just have to beat it really well or something to soften it up. It is one of those underdeveloped species. There is no directed fishery on octopus, although some divers were catching them. It is interesting; when I was in university, we did some research. Octopuses live in underwater dens, which are very noticeable because there are all these shells outside them. If you take an octopus out of the den and come back in a few weeks, another octopus will have moved in. It is almost like a trapline. If you know all these places, you can go around and take the octopuses out. Some of them have a 20-foot span, so look out. It is pretty interesting.
The Chairman: Senator Cowan, from Nova Scotia, is a new member of our committee.
Senator Cowan: I want to explore the business of leasing licences and quotas and how widespread that is in the fishery in British Columbia. Does it vary from one fishery to another? Is it a problem? Is it a good thing? The related issue is the owner-operator acquiring the fish.
Mr. Morley: The only quota fisheries we are involved in are the herring fishery and, to a lesser extent, the groundfish trawl fishery. Leasing does happen in virtually all of the quota fisheries in British Columbia.
Senator Cowan: Is it more prevalent in some quota industries?
Mr. Morley: Yes, more in some than in others. It largely relates to the economic situation facing the fishery prior to its entry into a quota system and how world market conditions have changed since then. For example, in fisheries that had poor economic returns and fishermen were having trouble making a good living before quotas, following quotas there was the opportunity to accumulate more quota, fish for a longer period and make a real living at it. That happened in some of those fisheries and it provided an opportunity for people who were barely surviving to move into another sector. Others are able to extend their season, lease more quota and actually make a living at it. That certainly does happen.
The owner-operator question is interesting. I noted that in your interim report you made some recommendations about that. In British Columbia we have never had those kinds of restrictions. As I indicated, our company owns a significant number of licences and vessels. Many individual fishermen also own multiple licences. Moving to an owner- operator situation in British Columbia at this time would be incredibly complicated and expensive. The government will either have to expropriate a huge number of licences or it will have to spend $1.5 billion to $2 billion to buy out the existing multiple licence holders.
The licences are held by fishermen who live in coastal communities. Such a change could put them out of work because there is no guarantee that they will ultimately be running those vessels.
Mr. Featherstone: I do not have exact statistics, but I would say that in the geoduck fishery, which has 55 licences, there is no leasing. Those who fish the licences have done so for a number of years. In the red sea urchin business there is leasing. I would guess that 25 per cent of the licences may be leased. One man who owns three or four licences leases to the fish company, with the requirement that his sons fish those licences for the company. In that way, he gets his share without having to fight with his boys about it.
Some of the fish companies lease the licences and redistribute them to their fishermen in order to guarantee themselves a portion of the catch.
In terms of leasing, our market has been greatly affected this year by the illegal, unregulated fishing going on in Russia. Japan has been dumping huge amounts of sea urchin on the market, which is about 90 per cent of our market. The bottom fell out of the price for leases. It does not always escalate. It depends on how valuable the fishery is, and that is market driven. If a fisherman does not think he will make any money with a lease, he will not do that.
That being said, from the fisherman's perspective it can become an issue if lease prices escalate too much.
Senator Cowan: It is not a problem overall?
Mr. Featherstone: Overall I would say it is not, but I cannot speak for the other fisheries. The halibut fishery has grappled with this. The fishermen are still making a good living, but it is also a popular licence. The halibut association has recommended a split of at least 50/50 between the crew and the owner of a boat, which is common. In some cases, those percentages have not worked out and they are grappling with that.
Ms. Burridge: One example is the groundfish trawl sector. I know that they are planning to give you a presentation, and that is an issue they want to address. They have a very complex IVQ system. I believe there are 50 different species. That IVQ system was set up with the support of the union. The union has very specific objectives that it wants to achieve and the system must deliver those for crews. That has been through two reviews and has met with the full support of the union and the labour force. It is certainly possible to design a quota system that accommodates a range of interests.
Mr. Featherstone: They set aside 20 per cent of the total allowable catch for redistribution if a crew has a problem with the sharing arrangement. They have a fund from which they can compensate people if unfair arrangements have been made. They are pretty innovative.
Ms. Burridge: I do not think there have been complaints of any substance to date.
The Chairman: Ms. Burridge, you suggested that we visit British Columbia. Over the last several years, we have tried to do that three or four times. There has been no lack of willingness by this committee to go. One thing after another has arisen to prevent us. We have it on our schedule again for this year, and we intend to make it this time.
I have a question on DFO bias. In our 1998 report, we told DFO that there were concerns about its bias. For some reason, DFO has still demonstrated no interest in dealing with this problem. A good case in point is the appointment of Dr. Pearse as the lead investigator on the fishery. If Parzival Copes and Dr. Daniel MacInnes had been appointed as the lead researchers, I am sure you would have objected.
If DFO wishes to be seen as non-biased, it should initiate non-biased studies. I am not faulting Dr. Pearse at all. He is a world-renowned resource expert. He has given excellent papers on forestry and his experience in the fishing industry on the West Coast dates back to 1982. However, he does have a certain predisposition to favour privatization, although probably for good reason.
Parzival Copes and Dr. Daniel MacInnes have a completely different perspective and are also biased in their approach to problems. By commissioning Dr. Pearse, DFO sent a message.
As Marshall McLuhan once said, the medium is the message. The message that we have been trying to send to DFO over the years is that if you want to give everyone a fair shot, why not make it a fair consultation and not stack the deck against certain points of view. Are there any comments?
Mr. Morley: My initial comment is that it is interesting that you have been led to believe that DFO chose Dr. Pearse, because in fact it was a joint federal-provincial task force and Dr. Pearse was chosen by the provincial government. DFO and the federal government chose Dr. Donald McRae, and I think virtually everyone here, if they know of his experience and knowledge would see him as completely unbiased. I do not know Dr. MacInnes. I know Dr. Copes and Dr. Pearse. My own training was actually in resource economics when I attended university many years ago. I have read all the studies. Donald McRae is a law professor and has no axe to grind whatsoever in terms of fisheries and management, and he was DFO's choice. He went into the study with a completely open mind, looking at all the options and alternatives.
The Chairman: I will not let DFO off the hook that easily on this one. DFO, when it commissions a study, does have a say, as well as the province. DFO could have said, ``No, this will send the wrong message. We need to approach this a little more carefully.''
In your paper you refer to Laura Jones, who is quoted extensively. I think that is the book that you have there.
Mr. Featherstone: Actually, I brought it for your library researcher.
The Chairman: We will look at it. I do not fault you for using it, but Laura Jones is a strong proponent, like Dr. Pearce, of ITQs and privatization.
I would like to refer to comments she made to the Atlantic Institute of Market Studies, an institute similar to the Fraser Institute, and which favours privatization of the fishery. She said the Atlantic fisheries cannot last using the faulty management practices of the past and we have seen the results — fisheries wiped out and opportunities lost. She went on to say the two highest-profile fisheries in the country can be described in some ways as disastrous. The cod fishery on the East Coast has gotten a lot of attention, of course, across the country. Why is it that some fisheries in Canada are such a mess and others are what we would consider models for fisheries management?
The fishery to which she was referring, the East Coast cod fishery, was in fact at the time of disaster and collapse under an ITQ regime. You cannot have it both ways.
Mr. Featherstone: The point she makes, though, and I made it in my presentation, is that you need strong enforcement and monitoring, and good science, too.
The Chairman: That is fine, but she was linking it in her paper — and I have the paper here — the disaster of the East Coast cod fishery, to the fact that it was a derby-style, competitive fishery, and therefore we have to go to an ITQ fishery. Had she said, ``Look, the problem was a lack of enforcement, lack of DFO presence'' or whatever, that would have been fine, but to make your case for an ITQ based on faulty reasoning from the word go does not favour the arguments that she is trying to make. It makes people like us, who want to read a balanced report, question the very point that Laura Jones is trying to make. Then, when we read a paper from you saying Laura Jones is presenting 10 case studies on the West Coast to show how great ITQs are, it makes us question her methods in proposing that.
Ms. Burridge: Senator, we quote extensively from that book because it is one of the very few studies that look at a number of fisheries on the West Coast and analyze them in detail. There are ten fisheries there, two that have not worked well under IQs and eight that have. The important issue is not just an IQ system per se but an IQ system that actually works. That is what we really need to focus on. What is it that makes those eight fisheries work? If we move to an IQ system in salmon, believe me, it will not be a big, monolithic structure. It will be a complex one that has more in common, say, with the groundfish trawl fishery, where you have to balance different objectives. Clearly, you need efficient monitoring and enforcement. That is the lesson you learn from those other two fisheries, along with the fact that if you arbitrarily increase the number of licences without considering the effect on the marketplace, you can really screw up a fishery. That is the important point.
The Chairman: Over the years, the DFO has not hidden its preference for and promotion of ITQ systems, notwithstanding what you said earlier, Mr. Featherstone. It has in fact favoured the ITQ system and has sent its own officials to international think-tank presentations and symposiums on ITQs. It has actually promoted the concept. I sensed some time ago that there was a slight shift in the thinking of DFO, not away from ITQs necessarily, but to a more detailed look at how ITQ systems are designed.
I would like to refer you to a December 2000 paper by Warren Brown, a DFO analyst, David Balfour, Director General of Planning, and another individual who I think is on leave from the DFO so I will not name him. For the first time, they mentioned that socio-economic issues with a direct bearing on capital management will need to be understood. They are saying that such things as licence transferability has to be looked at, owner-operator requirements, rules on concentration, that is, limits on concentration, a look at corporate ownership, a look at regional fleet and sector shares, and the rules for any shifts in those shares.
That is quite an evolution in DFO's thinking, because what they were looking at up to that time was purely market driven. Whoever buys the shares owns the resource and does whatever the heck they feel like doing. It is now more a case of, ``Look, when we do these things, there are repercussions on communities.''
Would your association agree with the provisions I have just outlined, looking at issues such as corporate ownership and viewing them as items that should be discussed more profoundly, at least to give these socio-economic aspects a little more of an airing?
Ms. Burridge: We would say, senator, the people involved in a fishery have to design a system that works for that fishery, and that means that there will be a number of things they will want to take into account, many of which are on that list.
We do not see on the West Coast that DFO has imposed IQs on fisheries. Generally, it has happened because the fishery is in such a mess, either from a conservation or financial point of view, everyone has come to the conclusion that they have to do things differently. That is when you get the willingness to sit down and negotiate a new way of doing things.
The Chairman: We understand DFO's approach very well on the issue of having a mess and coming in and saying that the industry is imposing this on us. I think you will sense a bit of mistrust, at least on my part, of DFO's good intentions.
Mr. Featherstone: Obviously, and especially on implementation of a quota system, those things should be discussed. Perhaps you are right that in some cases they have not been fully aired.
They addressed that in the halibut fishery. The cap on a vessel means it can catch only 1 per cent of the total allowable catch. In some cases, that has been addressed.
We split the Geoduck catch equally among those in the fishery and there have been no such substantive changes. I did not come here to be so bold as to say that salmon fishermen should have a quota system, and I am not saying that this is the answer for everyone. Yes, it was sponsored by the Fraser Institute and she may have a bias, but I found her to be quite objective. She told the history of what happened in these fisheries. She interviewed many of the players, including me, to put the story of how it happened together. The stories are similar and the solutions are the same for these quota fisheries. At the British Columbia Seafood Alliance table, the crab fishery is highly successful and is not a quota fishery. It might cost $1 million to buy one licence. Another non-quota fishery is the spot prawn and it costs $800,000 to buy that licence. There are a number of good fisheries that still operate without quotas. I am not saying everyone should have a quota. Rather, I tried to bring my experience to this table.
The Chairman: It is much appreciated. I do not think this committee has tried to suggest that ITQs or IQs or EAs are not valuable tools in the minister's arsenal. I do not believe that the committee has ever suggested that. However, the committee has said over the years, since its 1998 report on the first ITQ study, we need to have confidence and trust in the direction that DFO takes on issues and policies and that DFO will take into consideration the effect that its decisions have on communities.
The United States, which is sometimes viewed as the ultimate right-wing business kind of country, has recognized that when it does move to ITQ systems, it needs to look at the effects on communities that have been historically dependent on the adjacent resources. That does not mean they should not have an ITQ system, but the effects of such a system must be determined in a meaningful way through consultation with the relevant communities and not through predetermined studies. The U.K., the U.S., and New Zealand, which went to a full ITQ system of private ownership, looked at the impact on local communities. This has not been done in Canada, Now, some communities, especially on the East Coast, are dying. These communities that had access to adjacent stocks are dying and the government is trying to develop diversification programs for them. This may not be the case on the West Coast. That remains to be seen.
Government subsidies and bailouts are still taking place because of the way in which some implementation has been done. This committee has been trying to grapple with this without necessarily saying that the ITQ, or privatization, system is bad.
Have you looked at the New Zealand model? Is it one that we should look at for Canada? Ms. Burridge, would this be the ultimate objective for the committee?
Ms. Burridge: Of course, we are interested in the New Zealand model, not least because it has played a significant role in the transfer of fishing rights to Aboriginals. How it works in that context is certainly illuminating and interesting. We believe that we need a made-in-B.C. solution devised by the people who use the resource. There are things that we can learn from other jurisdictions. I do not think anyone has any ambition to replicate what happened in New Zealand.
The Chairman: In your brief you suggested that there should be a 25-year evergreen access to the licences.
Ms. Burridge: Yes.
The Chairman: What does the word ``evergreen'' mean? I do not understand the use of the word.
Ms. Burridge: It means that as we settle treaties with First Nations, they receive a share of the resource on a more- or-less perpetual basis. The industry is looking for something that goes beyond the current one-year licence so that we have a level playing field. It means a licence that more or less automatically renews itself.
The Chairman: That happens every 25 years. Are you saying this would be similar to private property rather than a quasi-private property, as DFO suggests? It would belong to the fishermen and they could trade, sell or use it as collateral at the bank. Would this be Canada's direction?
Mr. Morley: Essentially, we have that now. DFO tries to maintain the fiction that it is a privilege issued annually by the minister. In no case has DFO refused to honour a transfer that has been arranged privately. You mentioned privatization several times in terms of moving to quotas. We already have privatization in the fishery with limited licensing systems. No one can decide arbitrarily to go fishing the next day in a given fishery because the number of licences is limited, and there is a market for them already. We are suggesting that if we regularize that market, record it through some system and provide long-term security of access, fishermen will have the option of obtaining financing against that collateral to engage in their businesses like any other business in our economy. Currently, many of them do not have that ability.
It makes it easier for wealthier people to dabble in fishing, if they so choose, and it forces fishermen, in many cases looking for financing, to come to companies in the fish business such as ours and remain tied to them. If they had access to the resource on a more long-term, secure basis through a licence or quota recognized as collateral by lending institutions, they would be far more independent and able to make long-term investments in their business to develop it. It would be much better.
The Chairman: Should we consider it an absolute private property once someone buys the licence? If so, would that not place the percentage of the TAC under provincial jurisdiction? Should DFO continue to maintain the fiction that it still is a privilege?
Mr. Morley: We have a complex economy about which I do not want to get into a discussion. There are other models in other resources, such as broadcasting and telecommunications, where there are federally issued licences with expiry dates.
In provincial situations there are things such as tree farm licences and harvesting permits are issued for a period of time. Whether you call that private property, or whatever you want to call it, it is a regularized system of access to a public resource that allows businesses to operate in the world economy.
The Chairman: Should a licence holder who owns a licence as a part of the quota, part of the TAC be allowed to sell to whomever he or she wishes, including foreign interests? I am ultimately asking whether there should be limits. Should we just let it go?
Mr. Morley: We do not really have limits now that I am aware of on the West Coast with respect to who can actually own a licence. Under our NAFTA agreement with the United States, we are to a certain extent limited in the kinds of changes we can make to those policies.
The Chairman: If one wished to sell to an American investor, could it be done under the NAFTA rules right now?
Mr. Morley: I am not sure.
Mr. Kasmer: Under the licensing policy, to own a fishing licence or to acquire a personal fishing licence in British Columbia — I not sure about the East Coast — one must be a landed immigrant or a Canadian citizen, or it must be a Canadian corporation. I do not think foreign ownership is possible at this time.
The Chairman: Do you know if that is being monitored?
Mr. Morley: A Canadian corporate entity does not say who the shareholders of that corporation are and what their nationality is.
The Chairman: I appreciate your candour in responding to my questions. We want to get some information on the record.
Senator Hubley: I thought your final question was very good. I want to come back to Mr. Kasmer. Of the eight species in the B.C. area, six have been very successful under the quota system and two have not. Is that correct?
Mr. Kasmer: I think Ms. Burridge would give you a better answer. This was an Alliance discussion paper.
Ms. Burridge: We are referring to the 10 species that are looked at in this book. Of the eight species that are successful, all but one of them are members of my association, and of the two that are not successful, one is abalone. Abalone is often brought up by some of the opponents of IQs as an example of why they do not work.
It did not work with abalone because there was no monitoring and enforcement. It was a fishery that was widely poached before and after IQs, and it has been shut down. It is a perfect example of the fact that if you do not set up the system correctly to begin with, you will not solve the problems plaguing it in the first place.
The other is the spawn-on-kelp fishery, which we alluded to earlier. It is 80 to 90 per cent First Nation. It has been an IQ fishery since the day it was set up. The problem there has been the expansion of the number of licences without any consultation or any regard to the marketplace. Spawn-on-kelp is one of those products that have a single market — Japan. The market has changed enormously since the days of the bubble economy in the late 1990s. It has simply proved that with expansion of production it is impossible to keep the prices at the same level.
The book is interesting because it shows where we failed in the B.C. context. There are clearly very important lessons there for setting up any kind of new system for salmon. With salmon, it is not so much a question of whether it will go to a quota fishery or not. We are talking about ways in which you can have a less competitive fishery so that you can have better monitoring, better enforcement, better market development, better new product development and a longer period of time to fish.
It might be helpful if Mr. Morley talked about the Barkley Sound experiment. We have had some small-scale experiments that have worked really well.
Mr. Morley: Mr. Kasmer talked about a demonstration project happening this year for the north coast trawl fishery off the Queen Charlotte Islands. For the last three years, we have had a pilot project going in Southern British Columbia in the Barkley Sound area for the sockeye fishery with the seine fleet. Over the years, the opportunities for the seine fleet in Southern B.C. have declined with the cutbacks on the Fraser River. Barkley Sound has a small but relatively consistent sockeye fishery that happens there every year. Under the allocation policy, the seiners are allocated a share of that, as are the gillnetters. Because the seine fleet has been about 160-odd boats in the last few years and it is a very restricted area, with a small allowable catch for seiners, the managers have said that they are not comfortable opening this fishery and having any number of boats show up, so they will not provide an opportunity for seine vessels because the catch might be exceeded.
As a result, the seine fleet operators sat down to devise a system that would work. Every week the department determines an allowable catch for that week and what the share is for the seine sector. We have said each of those 160 southern seine licences gets its 160th share of that catch. If the catch is 10,000 pieces of sockeye for the seine fleet that week, each licence gets 1/160th of the 10,000 pieces.
It is not practical to send a big boat out there to catch a 1/160th share. The fleet has organized itself on working group lines, where a number of them will get together based on which processing company they deliver to, and pool their shares so each vessel can get a catch of 2,000 to 3,000 fish and deliver it.
They count the fish on board. Each boat goes out with a number to which they are fishing. There are observers and they are monitored at the offload when they reach town. Every fish is counted. That fishery is now the most manageable fishery — easier to manage than the small boat gillnet fishery — in Barclay Sound. The manager is very happy with it.
Each working group has developed a different arrangement for sharing the catch. Some have said the boat that goes out and does the work will keep 50 per cent of the proceeds; the other 50 per cent will be shared with all the other boats in the working group for that week. Some of the other working groups want a more competitive approach and have a lottery within their group. They have 10 votes in the working group. They will have a lottery this week. If Joe wins, he gets to catch the fish and keep all the proceeds.
It is an experiment that has worked well. The fleet has decided that if it is to stay in the water and get access to the opportunities, it needs to find new ways of doing business. This is one that works.
As Ms. Burridge says, how one implements quotas in salmon will not be the same as with many other fisheries, because in many cases the TAC changes from week to week. One must be flexible in how one does it.
From our perspective on the West Coast, I do not think that DFO has a bias and is pushing IVQs. In fact, there are many managers in DFO who have been resistant to the change, who like the traditional approach and have said that it cannot be done with salmon. It is many of the people in the industry who have said we can do it. We will deliver a system that will work.
The group should leave you with the message that we do represent a majority of the organized groups. The groups here are all democratically constituted to represent a majority of the players in their sector. As Ms. Burridge said, we represent 80 per cent of the business. It is the people in those organizations who are pushing for quotas, often with opposition from DFO.
The Chairman: You just mentioned that it might be quite difficult to implement IVQs in salmon fishing. In fact Dr. Pearse concluded in 1982 that it would be not practical, and the senior managers of DFO over the years have basically said it cannot be done because of the fast closures, the way the salmon migrate and so on.
There are apparently some 4,650 species of salmon in B.C. To try to apportion or allocate out these 4,650 species would likely become a logistical nightmare. Mr. Kasmer, do you have some thoughts about how they might set this up?
Mr. Kasmer: Your comment is very germane. It will not be an easy or simple process. There may be that many individual species of salmon in British Columbia; however, there are common stock groupings that are used today by fisheries managers in different areas of the coast. It would probably be most appropriate to use the same combinations of stock grouping for IVQ purposes if it was determined that IVQs were a good tool to use.
I would like to comment on some of the concerns you raised about DFO. If you come out to the West Coast, you will certainly hear from a lot of fishermen who share a lot of skepticism about DFO's motives, their agenda and their ability to competently manage the fishery, particularly in an era of declining resources.
However, you will also meet a lot of fishermen who are eager to see some change in the fishery. We do not currently have a fishery in the salmon sector that is thriving, and we want to arrive at a different way of doing business in order to restore profitability. As you have pointed out, IVQs are not a simple or an easy panacea for the problems we have. Peter Pearse's report would look different from Parzival Copes' report, for instance. Though Mr. Copes was quite thoughtful in the recommendations he made several years ago, I think if he looked at the fishery today, he would probably come up with a different set of recommendations because the times certainly are different now.
That being said, I would hate to see IVQs accepted just because Peter Pearse says they are good idea, and I would hate to see them rejected because Peter Pearse says they are a good idea. I would hope IVQs would stand on their own merits. Given the complexity of the salmon fishery, they would need to be proven an appropriate tool for the set of circumstances in the specific fishery.
My association drafted a short discussion paper on the possibilities for IVQ management in the trawl fishery. We came up with five different examples of species in areas that we thought were candidates. The application of a quota system was completely different in each one, and that is just within a small part of the trawl fishery.
I believe IVQs have some application as a good tool in the B.C. fishery, but there certainly would not be a blanket, one-size-fits-all approach to it. It would have to be specifically and individually tailored to the particular fishery, and that would have to be done by the participants to design a fishery that works for them.
The Chairman: Any final comments?
Ms. Burridge: We would be very happy to have your committee visit us in B.C. We can certainly find many people for you to talk to. We very much appreciate the opportunity to come here and present our point of view. I know you indicated in your report that you had not talked to everyone, so I hope we have ensured that you have heard the views of the organized part of the industry.
If I had to leave one message, I would say of the eight main quota fisheries, every one is different. Every one has been put together by the participants. If we go to a reformed management system in salmon, that too will be very different, and it will be different within its parts, as Mr. Kasmer said, because of the nature of the areas, the different species and the different gear groups. It is a process that must be built from the ground up. It has to deliver conservation and economic benefits while providing products that people want to buy and will pay a fair price for.
Mr. Featherstone: We can all agree that the current situation is not working. For gosh sakes', let's do something and get that fishery back on track. That is one thing I think everybody can agree on.
The Chairman: Thank you. Indeed, we have not come to the end of our study on this by any means. We have not listened to all possible views yet. We are trying to provide a forum for people to give their ideas and their views on what the future should be and to share their concerns and ideas on the approach being used by the DFO.
Your presentation today has been extremely helpful to us. It has provided us with some more information to process. We look forward to visiting you in B.C. and to your suggestions as to whom else we might visit. In the meantime, if you think of other issues and suggestions we might have missed this morning, please do not hesitate to provide those to us. That would be helpful as we go through our process. Thank you again.
The committee adjourned.