Proceedings of the Standing Senate Committee on
Fisheries and Oceans
Issue 10 - Evidence - October 30, 2012
OTTAWA, Tuesday, October 30, 2012
The Standing Senate Committee on Fisheries and Oceans met this day at 5:20 p.m. to study the lobster fishery in Atlantic Canada and Quebec.
Senator Fabian Manning (Chair) in the chair.
[English]
The Chair: I am pleased to welcome everyone to this meeting of the Standing Senate Committee on Fisheries and Oceans. My name is Fabian Manning. I am a senator from Newfoundland and Labrador, and I am the chair of this committee.
Before I ask the witnesses to introduce themselves, I would like to invite the members of the committee to do that first so that everyone is aware of who is who around the table.
Senator MacDonald: Michael MacDonald from Nova Scotia.
Senator Unger: Betty Unger from Edmonton, Alberta.
Senator McInnis: Tom McInnis from Nova Scotia.
Senator Harb: Mac Harb from Ontario.
Senator Hubley: Elizabeth Hubley, Prince Edward Island.
Senator Poirier: Rose-May Poirier, New Brunswick.
The Chair: Other members of our committee who are running late may join us afterwards. I will take care of the introductions at that time.
The committee is continuing its study of the lobster fishery in Atlantic Canada and Quebec. We are delighted to be here today to hear from officials of the Department of Fisheries and Oceans about recent federal government initiatives related to the sustainability of the lobster fishery.
On behalf of the members of the committee, I welcome you both here. I will ask you to introduce yourselves and tell us what role you play in the Department of Fisheries and Oceans.
Adam Burns, Director, Resource Management — Atlantic, Ecosystems and Fisheries Management Sector, Fisheries and Oceans Canada: My name is Adam Burns and I am Director of Resource Management, Atlantic, in the Department of Fisheries and Oceans, in the Ecosystems and Fisheries Management Sector.
Nadia Bouffard, Director General, Fisheries and Aboriginal Policy, Program Policy Sector, Fisheries and Oceans Canada: My name is Nadia Bouffard. I am Director General for Fisheries and Aboriginal Policy across the country. Part of my role in lobster management is to look at what policy frameworks we have in place and to improve the management and sustainability of the fishery.
To distinguish Mr. Burns from myself, I do the policy work and he does the groundwork of implementing what we develop, so the operational side.
The Chair: Thank you. I understand you have some opening remarks to make. We would appreciate those. When you are finished we will open the floor to questions from senators and look forward to a discussion with you.
Mr. Burns: I will do the opening remarks on behalf of both of us and we can both answer your questions as you would like.
Atlantic lobster is Canada's most lucrative fishery. In 2007, lobster landings were valued at $560 million or 35 per cent of Atlantic Canada and Quebec commercial landings. There are almost 10,000 licensed lobster enterprises employing almost 30,000 harvesters. There are 41 lobster fishing areas across Quebec and Atlantic Canada, and the lobster fishing areas vary greatly in number of licence holders from a few harvesters to several hundred.
The 2009 global economic and financial crisis presented two key challenges for the lobster fishery in Quebec and Atlantic Canada. First, there was a lower demand from American and European food service markets for a product that is commonly perceived as a luxury item, resulting in a significant decline in lobster prices. In addition to that, buyers were having difficulty securing working capital to finance inventories and it thus slowed their purchase rate.
[Translation]
In response, the government announced a $65-million investment to help fishers in the Atlantic lobster industry adapt to the extraordinary market conditions created by the global recession. The investment consists of two components: a $15-million investment in the short-term transitional measures program; and a $50-million investment in the Atlantic lobster sustainability measures program.
[English]
The Short-Term Transitional Measures program was an initiative that assisted qualified low-income harvesters severely affected by the collapse in market demand for their products due to the global economic downturn of 2009. It was available only during that particularly difficult year, and eligible lobster-dependent fishers were compensated for a portion of their lost income caused by reduced landings. Assistance under this program was provided to eligible lobster licence holders in Quebec and Atlantic Canada or, in the case of Aboriginal communal licences, to the Aboriginal organization authorized to fish lobster. The maximum amount that any assistance recipient may have received was $5,000. During the course of the program, 1,705 applications were approved for a grant in an amount determined by their recorded lobster landings from 2008 and 2009. Combined, these grants totalled about $8.6 million.
[Translation]
There was over $5 million of unspent funding remaining at the end of the program, which was returned to the Consolidated Revenue Fund. The lower-than-expected uptake was the result of early expectations that prices would fall to about $3 per pound, and they did. However, harvesters mitigated this price drop by increasing their fishing effort and thereby increasing their lobster landings.
These increased landings resulted in higher revenues from lobster fishing than anticipated. Therefore, fewer than expected lobster licence holders qualified under the short-term transitional measures program.
[English]
The Atlantic Lobster Sustainability Measures program provides $50 million to help the industry improve its sustainability by enhancing conservation and self-adjustment measures being implemented from within the sector itself. The program provides this $50 million in funding to partially support industry in the development and implementation of sustainability plans for each lobster fishing area. Ecosystem and fishery characteristics vary across the 41 fishing areas and, as a result, there is no one single plan that is right for every area.
A flexible approach is required to design conservation and restructuring measures that are appropriate for the unique ecosystem and fishery circumstances within each area. This flexibility is attained through the Atlantic Lobster Sustainability Measures program by working with industry in each area.
Delivery of the program is based on a two-stage process. First, a lobster fishing area-wide sustainability plan is developed that balances the need for improved conservation with the economic realities faced by the lobster fisheries. Once the plan has been approved by the department, commercial harvester organizations within the lobster fishing area may then submit proposals to the department for partial funding of projects under the program, which may include self-restructuring. The lobster fishing area must secure additional funding from other sources.
[Translation]
The level of industry participation in the program has been substantial. A total of 17 sustainability plans covering one or multiple areas — from all Atlantic Provinces and Quebec — have been submitted to the department. In addition, 32 funding proposals have been approved, covering 34 of the 41 lobster fishing areas. Specific criteria outlining how much funding could be provided to each proposal have been set, with the maximum being 50 per cent funded.
[English]
To ensure all plans and proposals met the criteria more in line with the goals of the Atlantic Lobster Sustainability Measures program, they were assessed by departmental officials and then forwarded to an external application review board to provide the department with advice related to the proposal's feasibility and relevance and to ensure transparency, accountability and consistency in the assessment of proposals.
The review board consists of six members representing all areas of Atlantic Canada and Quebec. They are not DFO employees. The members were selected based on their expertise in science, eco-certification and harvesting.
Following review by departmental officials and the review board, plans and proposals are then approved by the deputy minister, with the concurrence of the minister. The department accepted plan submissions up until September 30, 2011. This cut-off date was established to allow for implementation of the various plans to be completed by the program end date of March 31, 2014.
To date, approximately 90 per cent of the Atlantic Lobster Sustainability Measures funds have gone to restructuring and rationalization, namely licence and trap retirements. By the end of the program, close to 600 licences will have been retired and over 200,000 traps will have been removed from the water.
The remaining Atlantic Lobster Sustainability Measures funding has been directed towards harvester organization governance and conservation and stewardship activities.
The Chair: I am not sure I caught everything you said. In relation to the buyout or the reduction of licences and traps, what was the goal? Did the department have a goal set in the beginning, or was it just in reaching the 600 licences that were taken out, the 200,000 traps? Was that close to your plan? Was there a plan or was it just open-ended?
Mr. Burns: The program was designed to be flexible and to work with each lobster fishing area in order to identify their needs. We had not established a goal specifically regarding the number of traps or licences we would want to retire through the program because we did not know how many lobster fishing areas, LFAs, would want to actually go down the road of retirement versus other measures like conservation and governance.
Ms. Bouffard: The ultimate goal of the program is to achieve improved sustainability in the lobster fishing areas. In some areas, lobster traps or licences were retired based on proposals submitted by the industry. In other areas, there were other proposals, and some of them combined both. It depended on the needs of the fishery and the proposals of the industry submitted to the department.
The Chair: I guess the purpose of the program is, as you said, to deal with sustainability. This may not be a totally fair question, but I will ask it anyway. In all the lobster areas, is the department satisfied in relation to the overall impact of the reduction? Are the 600 licences spread throughout the whole Atlantic region? Did certain places have more licences reduced than others? Have we created a balance or an imbalance by the reduction of licences?
Mr. Burns: I can give you the stats by DFO region as to how many traps were actually removed. We have those numbers. It was fairly well distributed across the board.
The Chair: Maybe you can submit those numbers afterwards instead of going through them now.
Mr. Burns: Sure. Absolutely.
The Chair: How many regions do you have?
Mr. Burns: There are four regions covered by the program.
The Chair: Explain the four regions, then.
Mr. Burns: Quebec, which is the province of Quebec. The total number of licences that will be retired by the end of the program is 29, plus additional reductions in the number of traps per licence in some lobster fishing areas. That means that in total 11,690 traps will be removed from the water in the province of Quebec.
For the gulf region, which is New Brunswick and Nova Scotia bordering on the Gulf of St. Lawrence — not the southern parts of those provinces — plus Prince Edward Island, this is the biggest uptake, wherein 280 licences were retired, plus additional trap reductions for a total of 100,460 traps out of the water.
In the Maritimes region, which is the southern part of New Brunswick and Nova Scotia, none of the LFAs put forward proposals to reduce the number of licences. They put forward other proposals related to governance and that sort of thing, so there were no reductions there.
In the Newfoundland and Labrador region, the estimate is that 282 licences will be retired by the end the program, plus additional trap reductions per remaining licence for a total of 90,566 traps out of the water in Newfoundland and Labrador.
Ms. Bouffard: As Mr. Burns pointed out in his opening remarks, all the lobster fishing areas have a different number of participants. Some are large areas with a couple of thousand fishermen; some are small. The Quebec ones, for instance, are very small, with a very small number separated by community. It is very different from one lobster fishing area to another. Looking at these numbers and getting a sense of the balance of it all is difficult because of that. Not all lobster fishing areas produce the same amount of lobster, so the need to reduce traps and fishermen or licences is different from one area to another.
The Chair: Thank you.
Senator Hubley: Welcome to you both this evening.
The Senate committee's 2009 report on lobster fisheries had three recommendations. The second recommendation was to the Minister of Fisheries and Oceans that he immediately enter into formal discussions with Atlantic fish harvester organizations and the provincial governments to develop a short-term assistance plan for the fishery.
Of the Short-Term Transitional Measures program for the lobster harvest, some $8.6 million was disbursed from a $15 million proposal. Can you explain why there was such a low uptake in that program?
Mr. Burns: The program was designed based on an assumption that lobster prices would drop in 2009 to around $3 per pound, and prices did in fact drop to $3 per pound, but what the program design had not considered was that harvesters themselves might respond to that decrease in various ways to mitigate the impacts on themselves, which the harvesters did.
Therefore, the overall value of the landings per harvester did not decrease as much as was anticipated in the original program design because they landed more, basically. As a result, their income in 2009 was significantly lower compared to 2008, as was anticipated. The payments under the program were based on a calculation of the difference between the landings in 2008 and 2009. In effect, lobster harvesters landed more than we anticipated they would land; therefore, the revenues from lobster were not as significantly decreased as had been anticipated when the program was designed. The program did not fully spend the money.
Senator Hubley: I think there was also a significantly lower number for fishers in Quebec. Do you have any explanation as to why? Would they have been able to increase their catches in that particular time?
Ms. Bouffard: Other than the explanation that Mr. Burns just provided, no.
Senator Hubley: Thank you. I would like you to comment on an area we will be getting into: In your opinion, is there a role for the federal government in terms of lobster market and price support? Do you see a better way of handling the marketing of our lobsters without having those swings from year to year, the insecurity of the prices and things of that nature? Do you see a better way?
Ms. Bouffard: There has been lot of discussion on this issue over the years. If the committee has a chance to speak to the Lobster Council of Canada during your process, I would highly recommend it. They are leading a process to look at these specific issues.
Price is often influenced by supply and demand as well as quality, so one is interlinked with the other. The issues and the solutions are not necessarily in the hands of one individual or one group of people. The Lobster Council of Canada is pulling together the industry in order to look at the value chain. Where are the issues with respect to quality? Where are the issues with respect to the influence of quality on price? Where are the potential solutions? I think that they are going down the right road in trying to find a collective solution to it rather than pointing to one or another as being the answer to those particular problems.
They have done some work that looks into handling, from taking the lobster out of the water, handling on the boat and at the wharf, to processing issues, right up to delivery and into the service sector or the retail sector. You can pinpoint issues all the way through to consumers' plates in terms of the quality of lobsters.
Whether any one of them can deliver on some solutions, including the department, remains to be seen. We will see what comes out of that process. There are various problems and various solutions. Identifying one solution will not resolve the whole problem.
The Chair: I wish to let everyone know that representatives from the Lobster Council of Canada will be here next Tuesday evening. They will be our next witnesses.
Senator Poirier: Thank you for being here. I have a couple of questions that I want to address.
First, when you mentioned the four regions a few minutes ago, I caught three but missed one. I caught Quebec and the gulf, which was New Brunswick and part of Nova Scotia and Prince Edward Island, and Newfoundland and Labrador. There is one I missed; you were probably going faster than I could write.
Mr. Burns: That would be the Maritimes region which covers the area of Nova Scotia and New Brunswick that does not border on the Gulf of St. Lawrence. There were no trap reductions or licence retirements in that region. There were investments. About $1 million was spent in that region, but it was directed toward harvester organization governance, primarily.
Senator Poirier: In that region, how many retired licences and how many traps?
Mr. Burns: None.
Senator Poirier: Okay. What zone number would that be?
Mr. Burns: There would be several zones.
Senator Poirier: In that area?
Mr. Burns: Yes. It would be zones 27 through 40.
Senator Poirier: Again, I was trying to take notes while listening to you when you were doing your introduction. You mentioned that each lobster fisherman on the program, the maximum they could get was $5,000. I know the program goes until March 2014. What percentage of our fishermen are taking advantage of that?
Mr. Burns: The $5,000 maximum was for the Short-Term Transitional Measures program, which was a single-year program, only in 2009. I believe there were 1,706 harvesters who applied and were eligible.
Senator Poirier: I know the past summer was hard on the lobster industry, specifically in my end of the province of New Brunswick. Is there anything in this program that has been able to help with the problems they faced this summer, specifically zone 25? Has the removal of the licences retired and traps that were in that area, as far as you are concerned, helped some of the issues that they were faced with this summer, or did that not even play any role there at all?
Mr. Burns: The LFA 25, New Brunswick, a proposal was submitted by the Maritime Fishermen's Union, MFU, for funding under this program. The funding proposal was back in 2011, so it would predate the events of this summer. There was a significant program, and I think 90 licences or so is what the plan is to retire for that area.
There was significant uptake for that area, but the proposal was submitted before the events of this summer.
Senator Poirier: In your opinion, do you feel that the major problem right now that we are facing in the gulf area, which is the area that I am more familiar with on my end, is the sustainability of the quantity of lobster? Would retiring licences help the problem? Are we facing bigger challenges, as we were talking about a while ago? I know it is not all under the responsibility of the federal government to control price, marketing, supply and demand; I understand that. However, in your opinion, do you find that that is the biggest challenge facing the lobster fishery right now, more than the sustainability of the product itself?
Ms. Bouffard: That is a tough question to put it all on a scale of what is more important.
I think the issues that occurred this summer were unique. Part of it is a resource jump that came because of water temperature, I understand. There were some issues with soft-shell lobsters, which occur generally as a result of fishing right after the lobster has moulted. There is a seasonal issue.
There are a number of lobsters available in gluts that generate problems with respect to quality. A combination of those two things worsens the situation, which impacted on the price.
This was also a problem in the U.S., in Maine. That also had an impact, and the price drop started with the water temperature and issues in the U.S. as well.
Is that worse than sustainability issues? I think it varies. As I said earlier, it varies from one lobster fishing area to another. In some LFAs there are sustainability issues. I think the lobster program has provided an opportunity to address many of those sustainability issues. Markets will look at all of this. They will look at what a Canadian lobster looks like, where it comes from and if it is sustainable. Some of the work of the sustainability program has helped to tell that story on the sustainability front. It can help to brand the Canadian product. There are some linkages in terms of the two sets of issues.
The problems that occurred this summer are not unique to LFA 25. There have been problems of gluts and quality and price issues for a number of years in lobster. I am weary of saying that those are the key issues now. They have been around for a long time. The industry, I think, is gelling at this point, through the council, in trying to find solutions to it. Looking at a collective solution rather than pointing the finger is pretty positive coming out of the industry.
Senator Poirier: With global warming and what we saw — how hot the water was actually causing a problem with the lobster this summer — I think this has been an ongoing issue over the last few years. With global warming it will probably continue over the next years to come. Are you a partner of the department at the table to look at that issue and how we can fix that or address that going forward? Is there a solution to it? Is it changing the dates of the fishing season?
Ms. Bouffard: I am the wrong person to ask those kinds of questions of because a lot of it has to do with science. I would not venture into trying to identify what the causes or the solutions are to climate change or to the water temperature issues.
Are we a partner around the table with the industry? Yes. There are processes that have been put in place now through the lobster council, but also through the department and with the provinces, especially coming out of this summer's issues, to try to find solutions together.
Mr. Burns: We are working directly with the Province of New Brunswick, with harvesters in Prince Edward Island and the provinces of Prince Edward Island and Nova Scotia as well in trying to come together with a way forward for LFA 25 in particular.
Senator Poirier: Thank you.
Mr. Burns: It occurred to me that I should be clear that the Atlantic Lobster Sustainability Measures program is ongoing, so the numbers I have given you are the targeted numbers that we anticipate. However, in some cases they have not all been realized, so they could vary slightly at the end of the program.
The Chair: Is that in place until March 31 next year?
Mr. Burns: March 31, 2014.
Senator Poirier: From that comment, I have one more comment.
Are you halfway through? Do you anticipate being able to retire the licences you anticipated? Is it on a voluntary basis?
Mr. Burns: It is.
Senator MacDonald: I want to go over that 90,000 trap reduction figure. That was over what time frame?
Mr. Burns: We anticipate that 90,000 traps will be retired from Newfoundland and Labrador. That is ongoing, so it has not all been realized at this time. The program began in Newfoundland. It has been ongoing since 2011.
Senator MacDonald: Are these reductions driven primarily from need to sustain the species, or is it done in regard to supply and demand, that is, creating markets?
Mr. Burns: As I said earlier, we did not establish a target for the number of licences or traps that would need to be reduced. In fact, it is not even a required element of the program. It is really a target that is established by the harvesters themselves, based on their view of the magnitude of retirements that are necessary in their area. In their view that could be to improve sustainability; it could be to improve the economic viability of their fleet. Either reason is an acceptable reason under the funding component of the program, so I cannot speak honestly to what drove the harvesters in Newfoundland and Labrador, or anywhere else, to make the decisions that they did regarding the number of licences or traps that were reduced.
Senator MacDonald: Why were there no reductions in the Maritimes region?
Mr. Burns: The lobster fishing areas in the Maritimes region tend to be very profitable. The harvesters tend to make a good living, so the focus they put on their proposals was around governance of their associations themselves. A requirement of the program is certainly to implement some sustainability measures as well. Again, I cannot speak to what led to their decision to not retire any licences.
Senator MacDonald: The retirement of licences appears to be left primarily to those involved in the industry. Would DFO not take a more activist role in that in certain areas if they saw there was a concern about the amount of lobster coming out?
Ms. Bouffard: Generally this is a voluntary program, where you submit your proposal and meet certain minimum criteria, which Mr. Burns went through, and the key one is to demonstrate that the measures you are proposing will improve the sustainability of the resource. Other than that, it is up to the harvesters to come up with a package that makes sense for that particular lobster area and obtain consensus among fishermen within the group that makes the proposal.
Senator MacDonald: I want to ask a question about price. The wharf price for lobster has not changed in 20 years. The price that the fishermen are paying for the lobster keeps going up.
Do we have any studies or data to compare the average price that the Atlantic lobster gets in New England as opposed to the average price it would get in Europe or in Asia?
Ms. Bouffard: I do not know. I will have to check if we have that. I suspect that the people you will interview next week from the council probably do.
Senator MacDonald: I will save most of my questions for them, then, I think.
Senator McInnis: I come from the eastern shore of Nova Scotia. When the groundfish fishery fell off, lobster really picked up. As a new member of the committee, this is not a surprise because you read in the media what the quantity of catch is in other parts of the province, but certainly along the eastern shore the catches are tremendous. Of course, the problems always are the price and the market.
I believe you provide a subsidy for the low-catch individuals under the program, which is great, and you have a buyout. Under the Atlantic Lobster Sustainability Measures program, I would like to know if some other measures have been taken up besides those two. It calls for conservation and stewardship, restructuring and rationalization of harvesting sector and harvester organization governance. What else has taken place? Apart from taking 200,000 traps out, which is no small quantum, what else has taken place with respect to conservation?
Mr. Burns: In terms of funding for conservation, the program did not really focus the funding element on conservation. The main measure that was implemented to increase conservation was an increase in carapace size in many areas. In order to have entry into the program, a lobster fishing area would have to first submit a sustainability plan. That plan could include a variety of measures, including reduction in ghost fishing. That is basically lost traps that continue to capture lobsters but are never harvested. There is also increasing carapace size. In most instances, lobster fishing areas did agree to increase the carapace size, which increases the reproductive rate in the lobster fishing area. That was really the main angle on conservation.
In terms of what other projects were funded under the program, they mostly did relate to funding for the establishment or the improvement of lobster harvester associations. That would be funding to develop things like bylaws and that sort of thing in order to improve the governance around the lobster fishing area association itself, which is an important tool in order to foster shared stewardship of the resource.
Senator McInnis: Under the short-term transition measures that were taken, what would be an example of transition — transition to what?
Mr. Burns: That program focused on providing a payment to harvesters based on reduced lobster landings between 2008 and 2009. Those payments were directly to lobster harvesters in order to assist them in that particularly challenging year.
Those were not payments to subsidize their activities or to fund any specific organizational activities or conservation measures; it was really a payment that was based on the reduced landings for that particularly difficult year. It was just the 2009 program; they are two separate programs.
Senator McInnis: I wondered because the word ``transition'' implies you are transitioning them into some other industry, but it is not that?
Mr. Burns: It was meant for them to be able to transition through the recession, I suppose.
The Chair: As with every sector of the fishery, there have been numerous challenges over the past number of years. We have touched upon a few here in relation to the lobster fishery today. In our study over the next number of months we will be looking at those challenges. What do you see as one of the major challenges facing the lobster fishery?
Ms. Bouffard: I coach them as two things: the structure of the industry, and part of what Mr. Burns was referring to, in terms of some of the projects that were proposed under the sustainability program, which dealt with a part of that problem. A lot of work still needs to be done in terms of the fracturedness of the industry.
It is one of the most valuable seafood industries. It has extraordinary potential and they are missing out on it because they are not structured properly to be able to make that pitch worldwide.
The Chair: Do you mean in marketing, or is it deeper than that?
Ms. Bouffard: I mean in everything. I mean in getting together and agreeing on what is needed to improve the sustainability of that fishery. Just pooling together and being able to achieve consensus in each of those LFAs has been a lot of work, and work that could have been easier if some of those LFAs had had the proper structures in place to be able to achieve consensus among each other to make improvements.
Some lobster fishing areas do not even have an association to represent them. This is an impediment for them to be able to make improvements, whether it is sustainability, marketing, price negotiations or quality improvements.
The Chair: I am trying to delve into what you are saying. Is there a need to consolidate some of the LFAs?
Ms. Bouffard: I think that would make the problem worse because you would have more people to have to achieve consensus. I am not suggesting reducing them, either; I am just suggesting they need some help.
The Chair: If you have an LFA that has no governance or no one there to oversee, that means someone from outside is overseeing it. Would that be correct? The rules and regulations or suggestions on how we operate that LFA must be coming from someone else if not from within.
Ms. Bouffard: It is coming from individuals in each of the organizations. It is very difficult to manage from a departmental perspective, but it is also difficult for them to get together and achieve consensus and pursue objectives, whatever they are.
Those that are most successful are those that are actually well organized as a lobster fishing area or as a group. I would point to that as being a key point.
The other one is, in my view, the quality- and price-related issues. If you talk to fishermen and the council next week, you will probably hear those two issues being the key ones to address.
The Chair: With the two programs you have been telling us about, two completely different programs, I think the first one may have started in 2009 and the second in 2011.
Mr. Burns: They both started in 2009.
The Chair: They were announced in 2009 but the feedback was in 2011. I realize the programs are ongoing until 2014. From your perspective on the changes that you have seen, are we heading in the right direction with the programs? Do we need to enhance those programs that are in place now? Do we need to change focus and find something else to put in place?
When you were talking about structure and region, I know you did not define goals, and I understand completely what you are saying there, but somewhere along the line someone will have to start defining goals because if we do not know what we are reaching for, how do we try to get there?
Since the implementation of these two programs, have we seen changes that are positive, or do we need to refine our programs or look at others?
Mr. Burns: We have seen a significant reduction in the fishing effort in a number of lobster fishing areas. There is a finite number of lobsters in the water, so the simple math indicates that that results in the potential for higher landings per remaining licence holder. Some indications that we have seen support that. In fact, a year or two ago there was some media coverage around some supportive statements by, I think, the Prince Edward Island Fishermen's Association, specifically LFA 25, pointing to the Atlantic Lobster Sustainability Measures program as having had a very positive impact in their area. The program continues to unfold. It continues to be implemented and licences continue to be retired.
Ms. Bouffard: There has been, at least in my 20 years in DFO, more attention on lobster in last few years than there has ever been in the history of the department or in government. Much outreach has been done. In addition to the programs that Mr. Burns has been talking about, we have been participants around the table of lobster harvesters to talk about the issues, talk about the creation of the lobster council, very much a group around the table of 40 representatives from the different lobster areas, processors, provinces, the federal government, recognizing that there is a need to gather around the table and look at the issues and find some solutions together.
Some funding has been provided through Agriculture Canada. I do not know the detail — it is not my stuff — but some of the funding came out of there in terms of markets and diversification, particularly at the time of crisis in 2009. Our markets were highly reliant on the U.S., so to diversify that, we looked at China as an opportunity. I was in Hong Kong not long ago and saw Canadian lobsters there more than I have ever seen. These are positive outcomes over a variety of things that have been done by the provinces, the federal government, DFO, Agriculture Canada and the industry as well, getting itself organized through the council and otherwise.
I am seeing positive results out of it all. Engagement with the industry at outreach in the last five years on the market demands, looking at telling your story on sustainability and eco-certification, has led to harvesters coming to the department under the sustainability program saying, ``Okay, how do we match these two deeds? You can help us on the sustainability front that can help us achieve an eco-certificate if we wanted to go down that road to demonstrate to markets around the world that our product is sustainable.''
There is a link to all of these initiatives taken by governments and by the industry.
The Chair: Under the Atlantic Lobster Sustainability Measures program, applications were received up until September 30 of 2011. Do you see any need to extend that? I know we are beyond it now, but was there any attempt following the deadline for people to apply who did not make the deadline to apply?
Mr. Burns: I am not aware of anyone who did not make the deadline. Our DFO regions worked very closely with harvester organizations. The proposals that were submitted were actually done in a very iterative way where the regional staff worked with the harvester organizations in order to ensure that the proposals that were being submitted met the criteria of the program, were in line with the program's objectives, and would be approved by the review board and so on. It was a very iterative process and I am not aware of any that would have missed the deadline.
The Chair: Were there any particular issues that arose that became impediments for people to apply? I know you touched on the fact of the difference in the prices of the two years and the price was better than expected and the catch was better than expected. Were there any impediments there that you believe would keep people from applying?
Mr. Burns: On the Short-Term Transitional Measures program, the uptake in that program was lower than originally anticipated. The price did go down as much as we anticipated, but harvesters mitigated that price reduction by having increased landings. In terms of the Atlantic Lobster Sustainability Measures program, which is the one that is ongoing that is paying for retirements, or assisting in retirements and that sort of thing, I am not aware of any obstacles. At the end of the day, it was a decision that the harvesters within an LFA would have to make if they would want to come forward with a sustainability plan that would be approved by the department that would advance the sustainability measures within their LFA. There was no specific direction that they would have to do one type of measure or another because every LFA is different in terms of carapace sizes and other measures in place.
As long as the LFA was willing to move the bar from where they were to a higher place, then they would be eligible for coming forward with a funding proposal and at that time could come forward with a request for funding in any of the areas I have discussed.
The Chair: Going back to a comment you made earlier in relation to the LFAs and the lack of organization within, that raises concern for me because if there is no organization in place, I am afraid they will not be part of the conversation.
Who would lead — the department or maybe the industry itself? Do you have any suggestions on how we proceed in getting these people included, not necessarily as individuals, but the LFA itself? We are trying to sustain the lobster fishery, and when you look at the map, you have all those LFAs where some have spokespersons, some do not; some have their issues brought to the table while others do not. I can understand why we are getting a fractured response to dealing with this.
Do you have any suggestions for how we as a committee could look at finding some way to make recommendations? At the end of the day, our report will be recommendations on how we as a committee feel the lobster fishery needs assistance in order to be sustained. Can you give us your opinion on that?
Ms. Bouffard: I would suggest you raise the question with the Lobster Council of Canada. A great reason for the creation of the Lobster Council — which frankly was a need expressed by the industry but was very much influenced by dialogue with the provinces and DFO. The structure of the industry, whether it is within an LFA or within the industry as a whole, has to be supported by the industry and, therefore, it has to be led by the industry.
Hence, I would recommend that you raise the question with the council and with other harvesters, if you are interviewing harvesters, to get their take on what would be the better approach.
Mr. Burns: It is important to note that LFAs that lack a formal governance structure for the harvesters themselves are not silent within the department in the sense that we have staff in every region who work with lobster fishing areas across their area in order to do all of the various management actions that are necessary in the lobster fishery. The difference between a lobster fishing area that has a solid organizational structure and one that does not is the one that does is much easier to reach consensus in. It is much easier to move the bar more quickly than probably what can be done in an LFA that lacks that structure.
The staff members continue to work in all of those lobster fishing areas, and regions hold advisory committees where harvesters are invited. The difference is an LFA that has an organization comes with pretty much a singular voice, whereas a lobster fishing area that does not have that organization would come with more of a fractured voice and with less of an identified direction that they would like to take.
Senator Unger: Thank you for your presentations. I have a very basic question, I think.
Can you tell me what eco-certification is, what is involved and how it connects to sustainability?
Ms. Bouffard: There is a precedent for this in the forestry industry, but essentially it is third-party organizations that assess a given fishery according to a standard that has been developed by this third-party organization. They determine whether the fishery passes the bar. They usually do some scoring and then issue a certificate. That certificate may or may not be associated to a logo or brand that is then used to be able to demonstrate that a fish product coming from that fishery meets the standard, has been tested, if you want, has been certified as sustainable and you can actually eat it with confidence that it comes from a sustainable fishery.
There are various organizations that do this kind of work around the world. A good segment of the Canadian industry has bought into an eco-certificate call from the Marine Stewardship Council, which is an organization from the U.K. that does this work. However, not everyone has bought into it. Not everyone needs a certificate; it depends on the market. It is really a market demand for it. Large retailers around the world in some parts of the world, if you want to sell products to them, have required that you have your fishery certified, have been issued a certificate and you can demonstrate this.
What it boils down to is that people will not take the word of the fishery that this comes from a sustainable fishery. They want some evidence of it, and the evidence comes from the certificate. If you go to a large retail food store and you buy a fish product that has a blue checkmark with a fish, that is the eco-label associated with the certificate issued by the Marine Stewardship Council, for instance.
There are no equivalents for aquaculture products yet, and there are other organizations that do the wild capture fisheries around the world.
Senator Unger: Should I not eat lobster unless it has been eco-certified?
Ms. Bouffard: DFO has not pronounced you shall or shall not, whether a product is certified or not or is sustainable or not. Our view is there are products out there from fisheries that are perfectly sustainable that have not been eco- certified, and that is the choice of the industry; it is not a government choice. It is really a market access, market demand issue.
Governments around the world have pulled together to establish guidelines as to what an acceptable eco- certification regime is, which the Food and Agriculture Organization has put together and adopted, I think back in 2006 or 2008. It can be provided to you. It is available on the FAO website.
The governments have pulled together and essentially identified certain criteria that need to be met in order to be an acceptable organization that issues these certificates. It should be a third-party, arm's-length kind of assessment process with standards that are based on internationally agreeable standards on sustainability. These kinds of requirements are all set out in the guidelines.
Senator Unger: Thank you.
Senator Raine: I apologize for being late. I hope that my question has not already been asked.
When you discussed the structure of the industry and the fact that some of the lobster fishing areas have good governance and some do not, do you think it is the role of DFO to put out a template and ask that all LFAs follow some kind of governance? If you said that the way forward is very complicated, then if everyone can be singing from the same song sheet, it might make it easier to come up with solutions that will work for everyone.
Ms. Bouffard: I am not sure it is DFO's role, and I am not sure a template would actually resolve the issue. I think consensus among the fishermen in a group is important. Maybe pose the question to the industry as to whether a template would work.
Mr. Burns: I think you would also find that the governance structure — there are many LFAs with governance structures working well. The governance structure in one LFA is not necessarily the same as in another LFA.
The other danger, whether it was DFO, the Lobster Council or someone else that came forward with a template to try to drive lobster fishing areas to a single form of governance, is that you would risk losing some of the good governance that already exists in some LFAs.
Senator Raine: Is there an ability to compare those that are working and come up with a common set of best practices? I mean, it seems to me if there are areas out there that do not have a good governance system in place, they would benefit from knowing what is working in other areas. Consensus is always very hard to achieve; you only need one person who does not want to go along with rest and suddenly you do not have consensus.
DFO is in the position of being able to look at different kinds of governance and have your two cents' worth about what is working and what is not, at least from the perspective of DFO.
Ms. Bouffard: I think it is more of a role for the industry to decide how it wants to structure itself. It has to be a bottom-up kind of process.
Senator Raine: Often the money comes from the top.
Ms. Bouffard: Some of the funding that has been provided through the lobster sustainability program will help them achieve those kinds of structures and maybe develop some templates that they could share with others through the different organizations that they have.
I do not know where the role for DFO is on it. I am not arguing; I just do not know where the role of the regulator is on structures of organizations.
The Chair: My concern is if you do not have an organization in an LFA, how you give birth to a —
Ms. Bouffard: We have meetings with them and they all express their views.
The Chair: The fishermen that I live around are not too fond of top-down approaches, so it is important that it comes from within. That is hopefully something we can address with the Lobster Council of Canada when they get here.
Senator McInnis: Following up with my colleague Senator Greene Raine, do you have a map showing the void areas without organization?
Ms. Bouffard: No.
Senator McInnis: Would 50 per cent be organized?
Mr. Burns: That would be a hard assessment to make because there would be a certain degree of organization in pretty much every LFA. It would be to a certain degree, I would think, the effectiveness and role that that organization plays within the LFA. Again, it goes back to what Ms. Bouffard was saying, and I am not entirely sure what the role of the regulator is on that. It is a very interesting question that I think leaves us scratching our heads a little.
Senator McInnis: Are they subsidized in any way, the organizations?
Ms. Bouffard: No.
Senator McInnis: Not on any of these programs?
Ms. Bouffard: No.
Senator McInnis: It strikes me that if you wanted to sequester or obtain information across the board it would be much easier to deal with a number of organizations than to have part of it represented and part of the population in the LFAs not represented. It strikes me you would want that. You do want to communicate with them.
Ms. Bouffard: Yes.
Senator McInnis: I take it that is not an issue.
Ms. Bouffard: We communicate with them. There are certain management approaches where we seek a certain percentage of consensus around the room. That is where things may or may not work if you have a good structure in place. The onus is put on the industry. It has to come from the industry.
I do not know whether the committee has an opportunity to do a comparison with other similar types of sectors like aquaculture, for instance. Is there any funding there dealing with structures? I do not know.
Senator McInnis: If you try to impose it, they will want money. There is no question about that.
Mr. Burns: The other point that could be made on this is that just because there is a highly effective harvester organization in place in a lobster fishing area, or for that matter in any kind of fishing area, does not mean there will not be a small or larger group of harvesters whose views are not represented by that organization. For the same reasons that it is difficult for a group to come to consensus, it is difficult for harvester organizations to achieve a consensus view on every item.
Having an effective harvester organization definitely helps with advancing the bar on various issues. There is no question about that, but it does not solve all of the problems. DFO's role is to work with industry to work to try to build as much consensus as possible and then to bring forward the views that are present, whether they are unanimous or differential, and present those to the ministers with options for a way forward on the management in those zones. That happens with or without what we could call a good governance structure.
Ms. Bouffard: I talked about structural issues within each lobster fishing area, but there is also structure in terms of the whole industry. Some of the issues we talked about earlier, whether it is the quality issues, the price issues, the branding and marketing, market-access issues, those are all things that, if it was to benefit the industry, it should be looked at as a whole as opposed to LFA by LFA. There you are talking about more of a pan-Atlantic and Quebec kind of approach more than an individual lobster fishing area.
The Chair: When I look at Newfoundland and Labrador, which I am more familiar with, it looks like 17 areas, perhaps a couple more. If we were looking at something in Newfoundland and Labrador, would the department deal with the FFAW? Instead of dealing with 17 areas, I guess the plan of attack would be for the department to deal with the FFAW?
Ms. Bouffard: The FFAW is a member of the Lobster Council of Canada, for instance, representing the 17 Newfoundland lobster fishing areas.
The Chair: Does this exist in every other province and Quebec also?
Mr. Burns: No. In an LFA, like lobster fishing area 25, you have the added intricacies of an LFA that borders on three provinces. In that particular area there is the PEIFA, which represents a large portion of the harvesters on Prince Edward Island. There are other groups that represent harvesters as well. On the New Brunswick side there is the MFU and there are harvesters in Nova Scotia as well, and there is not a singular body that represents them, per se.
The Chair: I hate to belabour this, but I think we have struck on something here that needs to be looked at, to follow up on your words earlier. It may have happened long before your time. The distinction or how the LFAs are put in place — they can always decide by the department — but you just touched on a topic or subject where you have an LFA that borders three provinces. We are talking about structure and governance. Who decides the areas? I guess it is from the department. Is there an option or a possibility that that area could be changed?
Ms. Bouffard: Let us make it clear that this is not unique to lobster. Although the LFA 25 is in a smaller zone, which makes it more prominent, it is not unique. Many of the fishery areas in the Gulf of St. Lawrence have at least two, if not three, provinces of fishermen involved.
I believe that the zones of fisheries, whether lobster or others, have a combination of factors that were considered in putting in place those lines in the water. They include the actual stock itself — the biology, if you want, of the stock — and the management practicalities of the fishery. Is there anything else that comes into play?
Mr. Burns: Those would be the primary ones. It is the result of what you have referenced, which is that the fishing areas that exist today are the result of not one decision but a series of decisions that have occurred over time that have either modified the lines in the water or established another one or removed one.
Senator Hubley: Could you give us an idea of what role the scientific research plays in the lobster industry but certainly in the decision-making practices? Do you have any information on that?
Mr. Burns: The management of all of our fisheries is science-based in nature. Our scientists do a variety of monitoring. They would report that information to the fisheries managers and on to the minister for advice as he makes decisions related to the fishery. This occurs in lobster as well.
I am not the right person to answer questions on the specific monitoring that occurs. It would be our DFO science sector. However, I can tell you that the information we are provided is used on a regular basis by fisheries managers to inform the options that are put forward to the minister.
Senator Hubley: Would you have information on whether the industry contributes in any way to that ongoing scientific research?
Mr. Burns: Do you mean financially?
Senator Hubley: Yes, financially.
Mr. Burns: I do not have that.
Ms. Bouffard: I do not know, but they certainly contribute to the other science process.
There is also work being done under NSERC. We use so many acronyms we forget what we stand for. There is a program there that has generated industry-supported data gathering, sampling, and that kind of work specifically in the lobster fishery. I am not sure who actually is leading the project, but we could probably get back to you with a name or any industry that you could call on if you have some questions on that.
Senator Hubley: I would like that.
Ms. Bouffard: Our science sector could probably answer some questions as well.
Senator Hubley: I was wondering how intense it was and who responds to the fact that we did have a warmer summer in the area. Those decisions, for the viability of the market, have to be made quickly. I wondered how intense the scientific research was around the lobster industry itself, and not necessarily that they looked at a lot of other things but the lobster industry itself.
I will leave that and perhaps you will get back with that name. I would appreciate that.
Part of the long-term sustainability of the fishery is ensuring successful new entrants to the fishery. Low prices, high costs and regulatory barriers make it difficult for new entrants to the fishery, who need to go out West to earn enough money to fish. That is happening in my province.
Has anything been done to assist new entrants? If so, have these measures been effective?
Ms. Bouffard: I believe the Province of Nova Scotia is looking specifically at measures. They might be a potential witness to respond.
Senator Hubley: Who in Nova Scotia would be looking at that? Would it be the provincial fisheries department?
Ms. Bouffard: Yes.
Senator Hubley: Thank you.
Ms. Bouffard: As far as DFO is concerned, my group in particular is tasked with looking at our various policies for eligibility and for fisheries and how we conduct the fisheries. The issue of new entrants is certainly something that we factor into our review. Those issues are raised on a fleet-by-fleet level to determine whether there are changes that could be brought in to facilitate the new entrants. Do we have decisions yet? No; we are not at that stage yet.
Senator Poirier: I have a follow-up question on Senator Hubley's question.
Unless I misunderstood, when you are talking about new entries, are you talking about new licences?
Ms. Bouffard: No.
Senator Poirier: What do you mean by a new entry?
Ms. Bouffard: I mean young people coming into the fishery. In response to the question, that is what I assumed the senator was talking about.
Senator Poirier: Is it a young person coming into the fishery?
Ms. Bouffard: Yes, to replace someone who is leaving.
Senator Poirier: Okay; I understood that. To go back here, then, why, if they are retiring and you are not at your goal yet of retiring all the licences that you want to retire and the number of traps, why are you not buying them out now instead of transferring the licence to someone else if you are not at your goal? One is saying something different from another.
Ms. Bouffard: I will let Mr. Burns give the details, but the goal of the program is not to retire licences. The goal of the program is sustainability. In some LFAs proposals have been made to retire licences; in other LFAs not. In this exchange I omitted to refer to some of the work we have done to allow for people to actually be able to buy someone's licence and take over from someone who wants to retire.
The department has done a lot of work with respect to identifying what we could do from a policy perspective to assist in accessing capital to be able to do that, whether it is buying a licence or buying a boat or both.
I have had conversations with banks across the country for the last number of years. We have put in place a procedure called a ``notice and acknowledgement process'' that is essentially, to put it simply, two forms. One form says that I have a loan with bank X for this licence, please register that in your licensing system. Through that form, I commit to telling you and telling the bank, so informing the bank when I want to seek a transfer of my licence to someone else — that is, I want to sell it.
That has allowed the department to be able to inform banks whenever licence transfer is being sought and the bank to have a dialogue with the licence holder about the loan and what the arrangements would be put in place in order to ensure that the bank follows the licence with the transfer.
There was a convenient court decision in 2008 called the Saulnier case, where the Supreme Court of Canada — and I am not here as a lawyer to testify on that — essentially identified that the licence could be used as a form of property in the context of defaults on loans and insolvency situations. That has actually opened the door to fishermen in purchasing licences and boats to put up their licence as collateral in support of their loans.
The department had to come up with an approach following that court decision, which is well spelled out on our website, where we indicate to trustees in bankruptcies and banks how to manage those situations, how to manage a transfer of the licence whenever there is an insolvency situation or a bankruptcy.
Those two things combined together, the notice of acknowledgement and our implementation of the Saulnier case have actually opened up some doors to be able to access capital a bit more easily than they might have had in the past.
Senator Poirier: I still do not feel I got the answer that I am looking for. At one point, if I remember right, we talked about the four different zones and you told me the harvesters made the decision on how many licences would be retired and how many traps were removed. If I also remember right, you have told me that we have until 2014 and we have not attained that yet.
I am having a hard time understanding, if this is what the harvesters feel that we need in order to get the sustainability that we need, then why are we selling licences?
Mr. Burns: It is not that we have not attained our goals. First, the number of traps and licences to be retired is a goal that was established by the harvesters themselves, not by the department.
Senator Poirier: That is right.
Mr. Burns: They are laid out over the course of the years of the program. Each year of the program we are attaining the goals that were established for that year. There are specific amounts of funding available in each year. It is not that LFA 25, for example, has the entire amount of their funding available to them today and is having a difficult time finding licences that they can retire with that money. It is that they have a certain amount for this year, a certain amount for next year and a certain amount for the year after that. That is because harvesters will essentially become ready to retire as the years go by.
In terms of your question related to new entrants, there are still new entrants coming into the lobster fishery at the same time as we are reducing the overall number of licences in a fishing area through the ALSM funding program. If I am a harvester and I want to retire, I have two options. One option is that I can go to the ALSM, to the harvester organizations running the ALSM program in my area, and tell them I am ready to retire. Depending on the harvest area, there are different processes that are followed. In some cases, there is what is called a reverse auction where there are various rounds. The harvesters say, ``I will retire for this amount of money,'' and a board determines who gets to retire based on that reverse auction process. In other instances there is a set amount that the board is willing to pay. It is based on the value of the licence. I would know that upfront.
Alternatively, if my son, daughter, cousin, nephew, friend or neighbour or someone in my community wanted to enter the fishery, instead of going through the ALSM program and permanently removing my licence from the fishery forevermore, I could instead reach a financial arrangement with that harvester that has nothing to do with the department — we do not need to know that — and then submit a form to the department that asks for my licence to be reissued to this new individual, at which point I would be retired, I would no longer have a licence, and whatever financial payment I would receive would be something between me and whoever got the licence from me.
Those two things are happening in lobster fishing areas with the LSM program and lobster fishing areas that do not have the LSM program running. In terms of why a certain goal was established by the harvesters, that was based on their own personal or collective assessment of what level of reduction in fishing area effort was necessary —
Ms. Bouffard: If any.
Mr. Burns: — if any, in their zone. The outcome of that reduction in effort would be the possibility of increased revenues per licence remaining because there would be fewer harvesters going into the water to take the finite amount of lobster that is available.
The Chair: Thank you very much. It has been enlightening. We learned a fair bit here this evening about how the lobster fishery is set up. Certainly, from the government's perspective, our committee has some concerns. We will be looking into that a bit more.
Thank you for your presentation here this evening. As always, we reserve the right to call you back if needed. You are our first witnesses to give testimony. We hope over the next couple of months to learn much more. If we need to have any clarification on anything, we hope to be able to call you back.
(The committee continued in camera.)