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POFO - Standing Committee

Fisheries and Oceans


Proceedings of the Standing Senate Committee on 
Fisheries and Oceans

Issue 11 - Evidence - November 27, 2012

OTTAWA, Tuesday, November 27, 2012

The Standing Senate Committee on Fisheries and Oceans met this day at 5:10 p.m. to study the lobster fishery in Atlantic Canada and Quebec.

Senator Fabian Manning (Chair) in the chair.


The Chair: I am pleased to welcome you all to this meeting of the Standing Senate Committee on Fisheries and Oceans.

My name is Fabian Manning, and I am a senator for Newfoundland and Labrador and the chair of this committee. Before I ask our witnesses to bring forward their opening remarks, I would like to invite the members of the committee to introduce themselves.

Senator Unger: I am Betty Unger from Edmonton, Alberta. I am looking forward to hearing your comments.


Senator Poirier: Good evening; my name is Rose-May Poirier. I am a senator from Saint-Louis-de-Kent New Brunswick.


Senator McInnis: Senator Tom McInnis from Nova Scotia, on the eastern shore.

Senator Raine: Senator Nancy Greene Raine from British Columbia.

Senator Oliver: Senator Don Oliver from the south shore of Nova Scotia.

Senator Watt: Senator Charlie Watt from Nunavik.

Senator Hubley: Elizabeth Hubley, Prince Edward Island.

Senator Harb: Mac Harb from Ontario.

Senator MacDonald: Senator Michael MacDonald from Nova Scotia.

The Chair: Thank you, senators.

Our committee is continuing its study of the lobster fishery in Atlantic Canada and Quebec. We are pleased to hear today from officials of the Atlantic Canada Opportunities Agency on a recent federal government issue related to the lobster fishery and any other issues that our committee would like to raise with the witnesses.

On behalf of the members of the committee, I thank you for your presence here today. I ask you to introduce yourselves, and I understand that you have opening remarks and a PowerPoint presentation to make. The floor is yours.

Daryell Nowlan, Acting Senior Vice-President, Atlantic Canada Opportunities Agency: Good evening, senators. Thank you very much for the invitation. It is a pleasure to be here. My name is Daryell Nowlan. I am the Senior Vice-President of the Atlantic Canada Opportunities Agency based in Moncton.


Wade AuCoin, Director General, Community Development, Atlantic Canada Opportunities Agency: Good evening, and thank you for this opportunity to tell you about what we have accomplished in the lobster industry. My name is Wade AuCoin and I am Director General of Community Development at ACOA head office.


The Chair: Thank you very much.

Mr. Nowlan: Again, thank you for inviting us here today. I thought I would start with opening remarks to give a bit context in terms of work that we have done in Atlantic Canada. I will then turn it over to Mr. AuCoin to give a bit more of the details of the initiatives around the Community Adjustment Fund specific to the lobster fishery.

For those of you who are not familiar with what we do at ACOA, it is an economic development agency to support the vitality and growth of our businesses and communities. We do that through three main business lines. The first is enterprise development, which is really about working with small- and medium-sized businesses, focusing on productivity and growth, innovation and commercialization and international business or exports. Our second main business line is community development, which is Mr. AuCoin's area of primary responsibility, working with communities and local not-for-profit organizations to create an environment where businesses and communities can grow.

Finally, the last line of business that we have is policy, advocacy and coordination. It is unique in terms of a function that a regional agency brings to the table in that we do economic analysis, but we also perform an advocacy role, ensuring that the perspective, thoughts and issues of Atlantic Canada are brought to the federal decision-making table, and a coordination role for federal departments in the region, particularly as it relates to economic development.

Really, we are about the economic growth of the region, through the development of small- and medium-size businesses. That is really our ultimate goal. In that vein, we recognize that the fisheries sector is a key pillar of the Atlantic economy. It is particularly the lobster fishery. Growing up in Prince Edward Island, every day I saw the importance of the lobster fishery to our local economy, as the senators from Atlantic Canada can attest.

As you heard from other witnesses, there are 10,000 lobster licences around Atlantic Canada, which employ approximately 30,000 people. We know that in 2011 the lobster landings were about $460 million, with exports totalling over $940 million. That is significant. Like most of the economy, however, it saw a bit of a downturn around 2008, like most sectors affected by the downturn in the United States. It spilled over into Canada and the world. We started to see falling lobster prices, and it was really starting to affect the outcomes in terms of the fishery.

In 2009, as part of the economic action plan, the Government of Canada announced a $10 million initiative to improve marketing, drive innovation and develop new products and technologies for the Eastern Canadian lobster fishery through what is called the Community Adjustment Fund. You will hear us refer to that as the CAF. It was specifically designed to help communities hardest hit by the economic downturn, primarily rural and remote communities.

For ACOA that meant that this $10 million fund for the Eastern Canadian lobster fishery was an $8 million fund for Atlantic Canada and $2 million for Quebec, delivered by Canada Economic Development for Quebec Regions. That is the sister the agency to ACOA, responsible for Quebec. We worked closely with the Department of Fisheries and Oceans, other federal departments and local stakeholders, including the fishers themselves, to design what this program would look like.

The goal of that was to make the most of the potential that existed in the lobster industry and help them recover from the downturn. We partner with folks like the Lobster Council of Canada, who you have already heard from, provincial governments and our network of regional offices that exist throughout Atlantic Canada.

In terms of developing projects, which Mr. AuCoin will talk about in a moment, we worked very closely with the Department of Fisheries and Oceans to ensure that when something came forward to us, it respected the guidelines and strategies developed by DFO for the lobster fishery to ensure that we were doing consistent things with overall objectives for the lobster fishery. Once they were okay with it from a strategic perspective, we would move those projects along to our minister for approval and implementation in Atlantic Canada. Mr. AuCoin will give more information on the specifics of the CAF lobster initiative.

Before we get into that, I would like to say that the work we do with the lobster fishery actually goes well beyond this specific initiative. Again, given the importance of lobster fishery in Atlantic Canada — and of the fishery in general — it has been something that we have worked on through all of ACOA's existence since the late 1980s. We have provided funding through various programs, and we will highlight that a bit today.

As the economy has adjusted, all of our programs have had to be nimble and to adapt to the kinds of changes we saw with the downturn in the recession of early 2008-09. From our point of view, the long-term sustainability and success of the lobster fishery is focused on productivity improvement, product development and R & D and innovation, while helping the industry adapt to the new reality that I know you have heard about from a lot of folks.

One of our main focuses is on international business developments and helping to find new markets for our lobsters in other places. As Mr. AuCoin will tell you, a lot of work has happened in China. Exports of Atlantic Canadian lobsters to China have increased exponentially. It has gone from something like $4 million a few years ago to close to $25 million in exports. Not that we can take all of the credit for that at ACOA, but we like to think that we have played a significant role in helping to open up those markets and in introducing our industry to some of those markets.

Through the support of all of our programs, including the recent CAF Lobster Initiative, we think that we have been a solid partner with the lobster fishery, a partnership that will continue. We are hoping that we will continue to see the kind of growth and changes that we have seen in the last couple of years as a result of our interventions and of a mind shift and a changed engagement from the lobster fishers themselves, which I am sure you have heard about from other witnesses.

With that in terms of context of where we are coming from at ACOA, I will turn it over to Mr. AuCoin to talk specifically about what we have done with the CAF Lobster Initiative.

Mr. AuCoin: My presentation will delve more deeply into the types of programs that we have generally for all industries, including the fisheries and more specifically leading to what we did under the Community Adjustment Fund Lobster Initiative.

I have been with ACOA for about 15 years. I had the opportunity to be involved in this initiative just about from when it got started. I must say, it was a real privilege for me to be part of this because we felt like we were making a difference for this industry. I too grew up in a small village in rural Cape Breton, the region of Cheticamp. Obviously, I realized the impact of the industry and saw some of the needs it was facing.

This presentation starts off with ACOA's main programs. Mr. Nowlan talked about the enterprise development area that we focus on. The key in that area is the Business Development Program, which provides support for activities such as business start-ups and expansion, and productivity improvements. For SMEs, we do repayable contributions for not-for-profit organizations; we do not do non-repayable contributions. We expend $100 million per year under the BDP. The average assistance is about $190,000; and 58 per cent of our funding in BDP goes to commercial projects while 42 per cent goes to non-commercial. For each program, I will provide an example of the types of things we have done that illustrate the support we have provided to the lobster industry. Obviously, there are many other examples.

The first one I will mention under the BDP is Nova Cold Consolidated Limited. Assistance from ACOA was about $400,000 of a total cost of $9 million to assist with the establishment of a modern cold chain logistical centre with the latest in cold storage and handling technology. Certainly you have heard various people talk about this kind of technology and its importance for the industry. This project was approved during the CAF Lobster Initiative phase in the Halifax regional municipalities, so it was not eligible for CAF. It was important enough to do anyway, so we did it under our regular program.

In the area of innovation, our main program is the Atlantic Innovation Fund. It provides support for R & D leading to commercialization of technology-based solutions. The main objectives of the AIF are to increase activity in and build capacity for innovation, research and development leading to technologies, products, processes and services that contribute to economic growth in Atlantic Canada. Since 2001, ACOA has announced close to $758 million in 301 projects. Here, too, is an example of a project that we funded under the AIF: Lotek Wireless Inc. in St. John's, Newfoundland. The total project cost was $4.4 million and ACOA assistance under the AIF was $2.8 million. This project was to assist the client in designing a small lightweight temperature and depth sensor data tag to help fisheries management researchers track various species and to understand their migratory patterns. You have had discussions around that aspect of the fishery as well.

I will switch slides and talk about international business development before talking about the ICF. International business development still fits under the enterprise or business development area. We have a suite of initiatives in that category that are aligned with Government of Canada priorities, such as the global commercial strategy to help us penetrate emerging markets in Brazil, China and India. We are taking a more integrated approach when it comes to trade by looking at not only export promotion but also investment solicitation, technology, commercialization and awareness. We have an agreement between the federal government and the four provincial governments called the International Business Development Agreement where for various sectors we have a common working group with representatives of the different governments and industry stakeholders. We identify priorities that we will fund to support international trade development with those sectors.

I have a couple of examples, but we have done quite a few more, such as the International Boston Seafood Show. Maybe some of you took part in some of those missions when we funded them. Two recent examples focus on lobster. One was a trade mission in Miami. It was not a whole lot of money, $40,000, to teach leading executive chefs in Miami how to introduce mussels and lobster to their menus in innovative ways. With the spillover effect in the local media, it got picked up in some magazines, which was great.

I also mention the China trade mission, which is a new project building from some of the things we did under the CAF Lobster Initiative with New Brunswick's Agriculture, Aquaculture and Fisheries department targeting 20 Atlantic Canadian seafood companies. Based on the success we had in the first projects under CAF Lobster Initiative, we are confident in saying that these companies will experience growth.

I will go back to the slide that I skipped for the community development component, which is my main area of responsibility. The key program is the Innovative Communities Fund, where we target specific sectors to help mainly rural areas. We have made investments of about $280 million in 803 projects since January 2006; and we have leveraged an additional $614 million from other funding partners. The example we chose to highlight here is a project we did with the Lobster Council of Canada to follow up on some of the things we did under CAFLI. This project focuses on the implementation of the marketing strategy that we funded under the CAFLI and that was referenced by both the representatives of the lobster council when they met with you and by Mr. Michael Gardner when he was here last week. The study he did is part of his company.

I will move on to CAFLI more specifically, but before that, I want to situate it. As Mr. Nowlan mentioned, under CAFLI we had to be consistent with our agency policy on the fisheries. That agency policy took form in the early 1990s when the groundfish collapsed, and we knew, as an agency of the federal government, that we could not do anything that would add additional pressure on the resource. Therefore, we shifted our focus more to productivity-enhancing initiatives to promote the long term viability of the industry. Mr. Nowlan mentioned them as well in terms of R & D, value-added, market development and those sorts of things, always with the view to not applying additional pressure on the stocks.

On slide 8, you will see a breakdown of our support overall for the various aspects of the fisheries income Atlantic Canada. One column shows it since inception and the other column shows over the past three years. This column excludes CAF and the community adjustment funding. This is mainly our regular programming that we have had over that period. ``Since inception'' means from 1987 to today. It is broken down between aquaculture, seafood processing and fishing, which are the three main categories that you will find in the industry classification system.

We also have a category called ``Other.'' A short footnote describes what it is. This funding was provided to various associations or groups that represent the fishing industry that are not classified under those three broad headings. It can represent studies or conferences or other such things we have funded.

Now, moving into CAF, as Mr. Nowlan mentioned, the Community Adjustment Fund was announced in January 2009 by the government in response to the economic downturn in 2008 and was part of the economic action plan. The focus of CAF was to create jobs and employment opportunities in communities affected by the global recession. It was a two-year program, so the timing was very tight around this program, with a sunset date of March 31, 2011. It was announced in January. By the time we went through cabinet and got all the Treasury Board approvals, some time had already lapsed. It put pressure on us and on industry stakeholders to come forward with proposals.

In Atlantic Canada, CAF was delivered by ACOA. CAF was a $1 billion program over those two years, and our allocation for two years was about $100 million.

Projects under CAF had to be incremental, start quickly and be completed by March 31, 2011. When we assessed the projects we received as applications, priority was given to those projects that would generate immediate employment, create the most near-term employment for federal dollar invested, leverage funds from provinces and build on existing collaborative agreements, and provide a legacy of longer-term economic and ecological benefits. This was an important part for the CAF Lobster Initiative. You will see that we funded a number of sustainability studies.

There is one little particularity I mentioned earlier: CAF was not available to the Halifax Regional Municipality. CAF had as one of its criteria that it was only for communities of 250,000 people or less. We wanted to focus on smaller communities that were more directly impacted by the effects of the economic downturn. That did not just apply to Atlantic Canada; rather, all across the country, communities of over 250,000 people were not eligible for CAF funding.

On May 22, 2009, the Government of Canada announced the Atlantic Canada Lobster Industry Initiative. As Mr. Nowlan mentioned, it was $10 million over two years for Atlantic Canada and Quebec. ACOA got $8 million and our sister agency CED-Q got $2 million.

In Atlantic Canada we delivered the $8 million under this initiative. We structured it such that for commercial projects we would use the Business Development Program, and for non-commercial projects we would use the Innovative Communities Fund, using more or less the same criteria that we use under our regular programs. Repayable support was provided to businesses. Assistance limits for repayable support is normally up to 50 per cent on capital costs and 75 per cent for other costs. For non-repayable contributions, we can go up to 80 per cent of eligible cost.

I know a couple of weeks ago Leonard Leblanc, President of the Lobster Council of Canada, mentioned an issue around stacking. Stacking refers to the total amount of funding that is available from government, not just from the federal government but from other government levels as well.

We are bound very strictly by Treasury Board rules to not exceed 100 per cent of the cost when we look at the full envelope of government funding. More precisely, when it comes to federal funding, we are not able to go over 90 per cent of costs without seeking our minister's approval. I can tell you that when it came to some of these projects under CAF Lobster, especially the sustainability projects, we used that ministerial exemption to go over 90 per cent because we knew many of these small groups did not have the cash to put up to be able to fund those projects. In many instances we actually used the flexibilities that we had in terms of stacking to ensure these projects could happen.

The types of projects that were eligible under CAF Lobster specifically included marketing campaigns, implementation of quality improvement measures, industry-wide market research and market strategies, innovation and development of new products and technologies, and strategic projects involving economic stimulus in the region. As I said earlier, all of these things really had to be consistent with ACOA's fish processing policy, which, when you read it, means that we need to consult with the Department of Fisheries and Oceans to ensure what we do is consistent with their management approach.

We have mentioned DFO quite a bit, but within the federal family, we also consult widely with Agriculture and Agri-Food Canada, especially when it comes to international business development projects, because within the federal family it is Agriculture and Agri-Food Canada that has the mandate for the promotion of food in general on the international market, but that includes seafood. In many instances, we had to find the right people in Agriculture and Agri-Food Canada to get their views on whether we were doing the right things.

Another thing I will point out when it comes to CAF and the CAF Lobster Initiative is that we at ACOA did not hire additional people to deliver these additional funds we had; we used existing resources. However, we did reallocate and reassign people within the agency to help us do that. When it came to CAFLI, we actually seconded somebody from our Prince Edward Island office to come to head office to help us coordinate this initiative. That proved of inestimable value to us because it was such a new initiative and it required such coordination.

To get to the nuts and bolts of the CAF Lobster Initiative, overall we approved 27 projects and expended about $7 million. When you take into account the total cost of these projects and the other funding sources, we are looking at a total investment of $11.6 million.

There is a little note there that explains a bit of a discrepancy. About two years ago, I was in P.E.I. for the announcement of the full suite of projects that we did. Minister Shea, Minister of Fisheries at the time, made that announcement. At that time, we announced 29 and the amount was $7.9 million. Those were the figures at that time, but as time rolled on and as that deadline of March 31, 2011, got closer and closer, there was one project we had to cancel because it would take far too long to continue. Another project that was with a commercial client we felt was much too important to discard, so we actually funded it under our regular Business Development Program.

Overall, we still ended up doing very close to $8 million, even if it is not captured precisely under the CAFLI envelope under that strict period of two years.

When we break it down into the four categories of projects that we funded, you will get a much better flavour of what we actually ended up doing. There are four basic types of categories: one for international business development, one for sustainability, one for one for innovation, and one for research. For international trade development, we did 10 projects there, with the ACOA amount of $2.7 million or thereabouts, the total cost being about $3.9 million.

I have outlined some examples of projects. One is the Lobster Academy, where we established a training institute. I think representatives of the Lobster Council of Canada mentioned some of this in their testimony a little while ago. We also funded the long-term strategy that was referred to earlier.

The last example there is the traceability pilot project that I think Stewart Lamont mentioned when he was here. I became very involved in this project. It is a very interesting project and one that I felt was very important — kind of groundbreaking and pioneering to be able to put in place a technology that would actually allow for lobster to be traced from the water to the end consumer.

However, it was a bit controversial and not everyone in the industry — not even provincial governments — agreed with the various aspects of this project. We had to convene a working group on a Sunday in the middle of the lobster season so that fishermen's groups could come and have their say. We reached a consensus at that table on that Sunday to proceed with this project. We have seen good uptake across the region, but I was glad to hear that someone like Mr. Lamont, who is a pretty reputable person in the industry, is using this system to market his product in international markets.

The next area we focused on was sustainability projects. We did about 10 of those. These sustainability projects were funded by ACOA with lobster fishing groups in various lobster fishing areas. They were going to be used by these representatives of the industry to then go to DFO and have access to their larger Lobster Sustainability Measures fund, which representatives of DFO explained to you, and then implement those plans with the restructuring options and activities that they had identified in each of those plans.

ACOA funded a good number of these plans. I think DFO said there were 17 in all and we funded about 10. Those are examples of some of the ones we did, but there were some pretty interesting ones with Aboriginal groups, for instance, in New Brunswick and P.E.I. One combined Aboriginal groups in New Brunswick and Quebec, in the northern part of New Brunswick.

We did a number of innovation projects, four in all, and two in P.E.I. One looked at product innovation and another one looked at process innovation, which actually led to some new processes being implemented by different companies in the industry. The example I chose to highlight is Aqualife North America. A lot of people in the industry felt this was a bit of a game-changing investment. We were working with a private sector firm to develop a new technology that would allow for live lobster to be shipped by boat to foreign markets, mainly the European market.

We have seen good uptake with this one, but probably a little slower than anticipated. However, there is a lot of testing and at least we are seeing some uptake on that one.

Last but not least, there were just three research projects, but the most significant one was with the FFAW/CAW, Fishermen's Resource Centre in Newfoundland and Labrador to support the research and data collection to verify the impact of conservation measures that have been implemented in the industry. The table on slide 17 provides an overview of what I described in the previous slides.

Under the CAF Lobster Initiative, one of the key things we looked at was dollars leveraged. With the $7 million we invested, we leveraged another $4.6 million. It was a little under our target for the overall CAF program, but considering the challenging situation the industry was in during those years, we felt that was a pretty good achievement for this initiative. We completed 27 projects and did one commercial one.

When we consider project specific results, I chose to highlight a few. One was the Flavorful Foods project that emanated from Cape Breton but involved an around-the-world boat tour with a delegation of people from Atlantic Canada who would go to different ports of call — I think there were five — and promote lobster wherever they went. Eighteen companies were part of this. We have seen estimated sales increases of $2.1 million in 2011 and a further $5.2 million in those two subsequent years.

There are two other projects that also had some interesting results. One was for Cape Bald Packers in New Brunswick, which assisted with the purchase of equipment in order to reduce water usage by the plant. Cape Bald Packers was interested in a processing facility that would reduce its freshwater consumption and also its effluent production. As a result of this project, the company was able to achieve that, and the town of Cap-Pelé in southeastern New Brunswick was able to reduce the planned expansion of its lagoon system by 15 per cent, reducing their project cost by $1 million to $1.5 million.

Last but not least, we funded a pretty significant project with the New Brunswick Department of Agriculture, Aquaculture and Fisheries to market lobster from New Brunswick and Prince Edward Island. The Government of Prince Edward Island was involved with this one as well, in the Chinese market. Two missions were held, one in 2009 and the other in 2010. Seven companies were involved and you see the results on the slide. Sales went from $240,000 in 2009 to $3 million in 2010. This supports that broader trend that Mr. Nowlan mentioned about the increase in sales to China. When you include Hong Kong, it reached about $40 million in 2011.

There were a number of lessons we learned from this initiative that we have shared within our agency and with other partners once we approached completion. I was in the policy area before moving into community development. I dealt with a number of adjustment initiatives, but I found that a lot of those initiatives were adjusting communities or people away from a certain industry. If there was a downturn in the forestry, you would try to get people to diversify into another type of economic activity. I always felt we should be doing just as much to diversify within the industry and that is why I felt so privileged to be part of this initiative. We were able to focus some diversification initiatives within the lobster industry, so I felt it was a good example of that type of diversification.

Another lesson that we learned is that this is a very challenging industry with all sorts of divisions and vested interests, as you have heard from many of your presenters so far. That meant a couple of things for us. We needed some dedicated staff, as I mentioned, and we pulled some in from our regional offices. However, it also meant that in some cases we were dealing with new groups who had not really dealt with ACOA in a regular way before. We needed to educate them and bring them along to the way that our programs functioned.

The processors were pretty familiar with our programming, but some of the community groups or local fisheries groups had not developed that kind of experience or rapport with us, so we felt we needed to spend a bit more time with them.

My observation as the coordinator of this initiative was that I felt the short time frame of this program forced industry players who were not in the habit of collaborating to roll up their sleeves and partner in ways that they probably should have always been doing, but never got around to doing. I always felt that if the program had been longer term or spread out over a longer period of time, the pressure to get those players working together probably would not have been there and we would not have seen as much collaboration as we did. In the end, it is our view that this initiative supported a good number of solid projects that we hope will contribute to the long-term viability of the lobster industry in Atlantic Canada.

The Chair: Thank you, Mr. AuCoin. We gave you have a bit more time than we usually do, but being around ACOA and having been involved as long as you have, the senators wanted to hear all the details. We certainly received many details, which I am sure has created some questions for you.

Senator Hubley: Welcome to you both. You have brought a great deal of information to us today. We will hopefully be using that over the next while as we look into the lobster industry.

The CAF Lobster Initiative is a great program. I think you have probably been the catalyst for a lot of things to begin as it pertains to our industry in the Atlantic region.

One of the projects was when the Lobster Academy Limited was formed. They were delivering a program at that facility in St. Andrews, New Brunswick, on traceability, sustainability, certification, demand pricing — a whole gamut of information. I would like to know who went to that, who attended, and I would also like to know if the funding was finished in March of 2011. Is that still viable and ongoing and is it now sustained through the industry and perhaps memberships?

Mr. AuCoin: Those are good questions. Perhaps I should have mentioned this in my presentation. My involvement was in coordinating the overall initiative. There were some projects that I got more directly involved in like the traceability one that I mentioned because it was pan-Atlantic in nature. By and large, the other 26 projects or so were emanated from the ground up, so the applications would come in to our regional offices and our regional office staff would work them up. We would review them as a group across the agency and recommend them or not to the minister for their approval.

The Lobster Academy was one that I was not directly involved in, but we were certainly well-informed as to its progress. The information that we have in terms of the results of the Lobster Academy program is the following. What was completed under the project is a 1200-square-foot executive-style training meeting room, containing a fully furnished test kitchen to be used for seafood preparation, demonstrations and training. That was the key focal point of that project. I guess the real innovative part is that it is a one-of-a-kind training program for lobster buyers from all corners of globe and is offered on a single campus through a classroom training environment.

The proponents developed programming or modules to promote new techniques for fishing, holding, processing and marketing lobster. It was not just how to cook lobster but it was really, from the boat up to the kitchen, all the techniques that are recommended to have a better quality product.

The project account manager tells us that six successful lobster buyer missions have been held at the academy since this project was initiated and that the largest event hosted buyers from all over the globe. We are seeing this sort of spillover into other aspects of the fisheries because it is located in the southwestern part of New Brunswick. Some of the experience that was drawn from this from the lobster industry was being used for the salmon industry and for other parts of the industry.

I do not know if it was Geoff Irvine or someone else from the Lobster Council of Canada who talked in their presentation about some of the situations that they have actually been involved in at the academy as well. There were a number of partners involved in this. I do not have the full list here, but I know there were private sector interests. The Government of New Brunswick was also involved and I believe the Huntsman institute was also involved as well to get this project going. This was one of our more complicated ones. This one came back various times at our review committee internally because we wanted to make sure that this was not a facility that was going to be benefiting only one company. We wanted it to be open and accessible to all companies in the lobster industry across Atlantic Canada. Again, based on what we are told and what we have been given in terms of results and reports, that is the kind of thing we are seeing.

Senator Hubley: Further to that, I am also interested in the Atlantic brand of lobster as being the best in the world. It is important that we have places that buyers can find out this for themselves, but how much sharing goes on between the industry from research and innovation? How long does it take for that to be part of a trade mission? Do you talk about traceability when you are speaking about lobsters on these trade missions? It seems to me that in this day and age, traceability and accountability are pretty high on what people are going to expect. I am wondering if you might comment on that.

Mr. Nowlan: I think it is an excellent point; it is a fair question around traceability. I have two answers that I want to make to your question. In terms of the Atlantic branding, that was a big part of the CAF lobster and marketing initiatives and trying to get into new export markets. We spoke specifically about the Chinese market and establishing that brand. In all food products these days the idea of traceability is paramount. When you are selling it to export markets, they are looking for that kind of thing. Definitely that is what we talk about.

Do you have anything to add about traceability?

Mr. AuCoin: Regarding this focus on the traceability part, there is yet to be a fully implemented, across-the-board traceability system for the lobster fishery in Atlantic Canada. I know that there have been discussions and as much information as can be shared from the pilot projects that we have done as part of the CAF Lobster Initiative in trade missions that we have supported, but it is not something that we can talk about with broad application for the industry.

However, just recently we supported a new project with the Lobster Council of Canada to continue the work to implement this ideal of a more comprehensive traceability approach that could apply to the overall lobster industry in Atlantic Canada. We know, with the good work that the Lobster Council has done so far, that they will be able to muster the required resources in the industry to keep things evolving for a good solid traceability project or system to be implemented.

We have had some good results from the traceability pilots, but I think it needs to be taken to the next level so that all aspects that are required under traceability can be fulfilled by this new system.

Senator MacDonald: I think I will concentrate on some of the marketing projects. I have a particular interest in that and how successful they are.

I am assuming there is a correlation between the money spent and the activity in China in the last couple of years and the increase in sales there. Can you break it down more? They are promoting both frozen and live lobster. How does that break down?

Mr. AuCoin: That is one of the dividing lines in the industry. We actually had to do a number of projects to deal with both aspects of the industry. The ones that I mentioned in my presentation that involved the Government of New Brunswick and P.E.I. obviously focused on frozen lobster. That is the main type of product that they deal with, and they focused on a certain segment of the Chinese market.

We did another substantial project with a group in Nova Scotia for live lobster that focused on a different segment of the Chinese market. It was the second tier city project, and it did not conflict with other private sector interests that were already involved in China.

We were able to complete the first phase of that project. That is one of projects in which we were looking at a second phase, but the two-year time frame under the CAF Lobster Initiative worked against us and did not allow us to continue with the second phase of that second tier city project in China for the live lobster from Nova Scotia.

In both instances, as I said when I mentioned some of the results for the frozen lobster projects that we did with New Brunswick and P.E.I., we certainly saw great results with good uptake and a lot of interest. It is one of the few projects for which the head of the Maritime Fishermen's Union meeting went out of his way to congratulate me, saying that these projects have made a real difference for companies in our area in opening the doors to penetrate markets such as China.

It is very a challenging place and we had to deal with all kinds of issues. Developing a brand in China that will not be replicated or stolen by other interests there is not easy. However, with the relationships and connections we developed and the activities we carried out in the marketplace, we feel we had a better impact than just randomly throwing product into the market.

Senator MacDonald: Where do you think the biggest market share will come from?

Mr. AuCoin: I wish I could tell you that, but it is really not possible for me to say. We wanted to be sure we had a balance with the two types into the Chinese market. Obviously technologies have improved. Some of the technology investments that we have made under the CAF Lobster Initiative are being looked at to get that live product into the Chinese market in better shape but, as Mao would say, it is still too early to say what the results will be.

Senator MacDonald: Do you have measurements for how successful the promotional campaigns in four Canadian cities and five international ports have been as well as the native one in Arizona?

Mr. AuCoin: I mentioned the ones for China that we did with New Brunswick and P.E.I. The Aboriginal one was mainly from P.E.I. They took part in a trade mission and some of our staff joined them during that mission.

We have not been given a precise account of any specific sales increases since then, but the client does tell us that they have made really good contacts that they think will lead to new opportunities in Las Vegas, I believe, and some other place in the southern part of the United States.

Senator MacDonald: What about domestic and international ports?

Mr. AuCoin: That was part of the Flavorful foods example I mentioned in my presentation. On one of the last slides we see that the 18 companies that took part saw sales increases of $2.1 million in 2011 and $5.2 million in 2012 and 2013.

I have a detailed account of all the activities they undertook in that project, and I can certainly share that with members of the committee.

The Chair: You can provide it to the committee clerk after and we can distribute it to all our members.

Senator MacDonald: We had Michael Gardner in from Gardner Pinfold two weeks ago, and he raised some concerns regarding the funding of trade missions by the federal government and competing with private sector interests. What is your take on that? If we did not go with trade missions, what would you suggest we do?

Mr. Nowlan: The trade missions are a partnership between us and the private sector. Our perspective is that it is not so much about competing with the private sector interest. We fund for the infrastructure around the trade mission. Private sector companies pay all their costs to get there. We provide infrastructure support, i.e., providing a facility or a facilitator to find a matchmaking service to match them up with buyers in the foreign market or to help them with booth space at a trade show or that kind of thing. It is a partnership between us and them. It is not us taking the place of the private sector, but rather supporting them. It is open to those that are ready, willing and able to go to those markets.

There is a bit of triage that happens. We want to make sure that the private sector partners we work with are ready. That is a big part of it. In the early days of trade missions with ACOA and other departments, companies were going to these places before they were market ready, and it was detrimental to their brand when they went without putting their best foot forward. We take them through the continuum to help them to be ready when they get there and then provide them with infrastructure support. However, it is really them leading the initiative in terms of paying their own way and being part of it.

Senator Raine: I imagine that your biggest competition when marketing live lobster in China is from New Zealand and Australia? From where else are live lobster sold in China?

Mr. AuCoin: That is a good question. I do not have a full market assessment, but based on all the reports I have seen, the primary sources identified as competition in the Chinese market are Australia and New Zealand.

Senator Raine: It strikes me that you are a long way from that market and that the markets in Europe, Brazil and Argentina are closer. With time being of the essence in live lobster, how will you determine whether it is worth it to be in that market?

Mr. Nowlan: That is one of the outcomes of this initiative. As we have mentioned, we have seen some success in the Chinese market, but as with all the sectors that we work with, we have to analyze to determine whether a location is the best place for us to be, and that is something we will be working on as well. You raise an excellent question that we ask all the time, be it about lobsters going to China or educational institutions going to India.

Mr. AuCoin: We do what we can to keep this as market driven as possible. We invested in these projects for China and we have seen some positive results. However, as a result of some exploratory missions in India, without prompting from us, the interest there was for Atlantic Canadian shellfish, both live and frozen. This has now been added on as a focus for some of the trade missions that we are going into India for because, again, we are just seeing that demand from the market in India for the lobster product from Atlantic Canada. Yes, we know it is a world away, but it is kind of forcing this transition with the new technologies to be able to access those huge markets.

Senator Raine: Are the marketing efforts also looking at the market in the tourism industry in the Caribbean where there are a lot of high-end resorts? They would seem to be a natural lobster-eating clientele.

Mr. Nowlan: I cannot say that is an area focused on at this point in time.

Mr. AuCoin: I cannot really speak to that. I mentioned the efforts in Miami that we focused on. I know we have trade missions that are focused on the Caribbean. I just cannot say to what extent fisheries or fish products are part of those missions.

Senator Raine: I was down in the Bahamas only once, and I got tired of eating rice and beans.

Senator Harb: To what extent do you contribute financially to the industries? To what extent do you cooperate or coordinate with the Department of Fisheries and Oceans?

Mr. AuCoin: Well, listen, for an initiative like CAFLI, we did not do anything without collaborating and consulting with the Department of Fisheries and Oceans. As I said, our fisheries policy is intrinsically linked to their own kind of management regime. We will not invest in the fisheries industry without consulting with DFO and getting their views on projects.

For this industry and for this initiative in particular, it is very close collaboration, but I would apply that even more broadly to other investments that we make in the fisheries. Our policy at ACOA dictates that we need to consult with the Department of Fisheries and Oceans before we make investment.

Mr. Nowlan: We consulted closely with them in the design of the program, generally, what we want to do, the parameters and how it will roll out. As we mentioned, it is on a project-by-project basis, and this is across all sectors. It is our standard practice to consult with the technical experts in whatever department it is, be it DFO or Ag Canada to make sure we are on the right page from a management perspective.

Senator Harb: In your presentation in the paragraph ``Lessons Learned,'' you did an excellent job in putting the story before us.

In ``Lessons Learned,'' you talk about the challenging nature of the industries, and you give an example, namely, a ``high level of fragmentation and mistrust amongst stakeholders'' — and you put that in brackets — ``required a significant level of coordination from ACOA officials as well as dedicated staff.'' To me, at least, being a consumer and not knowing much about the industry, this statement said it all. Is that true?

Mr. AuCoin: It was certainly a loaded bullet in that slide, yes. I have read most of the testimony that you have had so far on this study you are doing, and you have heard various aspects of those challenges and that mistrust permeates the industry between the harvesters and the processors, between the industry and government and between one province and another. I just sort of mentioned it in passing, but we introduced a new aspect of our review process for these CAF lobster projects that we do not normally have for these types of non-commercial projects. That was an internal review committee that was composed of people from head office and each of our regional offices, so that when projects were submitted, we were able to look at it not just for the economic benefits that it might have in one province but also for the potential competitive impacts it would have in another province or the negative kind of spinoffs that it could create in another aspect of the industry. In some cases, we had to bring people together, as I mentioned, for the traceability project, and get them in the same room and make them agree to a common approach that reconciled all the different interests.

That is not something that we normally do on a regular basis for the standard projects that we do, but given the complexities of this industry, we needed to do that, and it required that extra level of coordination and that extra person we needed to bring into head office to keep things moving and bringing in the right players so that we could address those concerns.

Senator Harb: Knowing what we know, there are issues and you have outlined them. There are approximately 20,000 people with licences, and it could be more or slightly less. Knowing all that, does there need to be some sort of leadership, someone to step in and say, ``Hold it, we have to put a stop to this and come up with a strategy''?

I look at products that are the envy of the world, such as Canadian maple syrup. Wherever you go, maple syrup is associated with Canada; and Angus beef, a great cut of meat. Well, what about Canadian lobsters? We should probably step back with it and say we have one of the best products in the world when it comes to this type of meat, but we probably have way too many players chasing very few lobsters. Let us have a chat. Is it possible, for example, for ACOA to step in and say, ``We do not need that many in this; we need to diversify and we want people to move into this type of industry, for example, shrimp, or other types of industry''? I know it is controversial and I know people will be screaming at you, but we need to talk about it and I think that is the committee's role.

Perhaps you can enlighten us and tell us who, in your opinion, would be the best entity to take a leadership role and get that discussion going?

Mr. Nowlan: That is a good question. The bottom line is for the federal role, in terms of managing the fisheries, it is the responsibility of the Department of Fisheries to manage that. Our role at ACOA is more about the value added in getting the products to market and how to deal with that.

Having said that, as Mr. AuCoin mentioned, a big part of the CAF Lobster Initiative was the sustainability plans done in various fisheries zones and areas. That is exactly what that was about — having the folks in those areas themselves in partnership with other players like the federal and provincial governments looking at the fishery and saying, ``What needs to be done in our area? What is happening in terms of the amount of fish and the amount of fishers we have? What is the long-term plan?'' Some of that is being implemented now in some of these areas, and when DFO introduced the policy of buying back some fishing licences, in some parts it was based on the analysis of what is happening in a particular zone around the fishery.

Mr. AuCoin: We have mentioned them a few times today, and I know you met with them a couple of weeks ago, but we cannot underestimate the value of the Lobster Council of Canada. I was involved in the fisheries from the ACOA perspective for many years, and I recall a decade ago this call to have an industry summit for the lobster industry that would have allowed stakeholders to deal with issues. Well, that did not materialize just because there were so many different interests. The fact that there is a lobster council in place and that it is doing such a good job so far, I think is great. It is an important vehicle to have that sort of dialogue in the industry on structural issues.

We at ACOA were there at some of the initial discussions when the Lobster Council was formed. As you have seen in our projects, we have certainly been supporting them lock, stock and barrel in a number of strategic projects.

We really feel, and you heard it from DFO as well, that those discussions need to happen from the bottom up or within the industry. I am not sure what the results of any kind of initiative from above to impose a new structure would be, but I think the more we can do to support that kind of dialogue happening within the industry, the better the results will be.

The Chair: Thank you, Senator Harb. As our witnesses have said, I think it needs to come from within. Hopefully we can facilitate some of that through your organization and others.

Senator Oliver: My question is from page 6 of your deck, and it is about the CAF — Community Adjustment Fund — for lobster and the 27 projects for $11.6 million. I know a bit about how it works because I personally have led several ACOA trade missions in various places, so I know what happens before, during and after, but I do have questions here.

The first is on page 6. You talk about the Miami trade mission and you say you spent $40,000. You said that did not seem like a lot of money to you — it is to me — to teach a group of chefs how to use mussels and lobsters in a non-traditional way on their menus. Thirty-five people attended a presentation that cost $40,000.

How do you go about evaluating the results of that? These are taxpayers' dollars — $40,000. What kind of follow-up do you do? How do you evaluate it? How do we know what the value for money was? What proof do you have that these chefs started buying a lot more lobsters and mussels and the 35 people who attended did something about it? Did marketing come from it? How do we know that the trip to Miami and the $40,000 involved in it was worth the money?

My second question is on the second paragraph, the China trade mission. Here it provided funding to the New Brunswick Department of Agriculture, Aquaculture and Fisheries. All of the Atlantic provinces have a fisheries department, and I want to know why the New Brunswick department was involved and not P.E.I., Nova Scotia or Newfoundland and Labrador. You are Atlantic Canada, not just New Brunswick Canada, and a lot of this seemed New Brunswick-centric. We have a lot of lobsters in Nova Scotia where I am from, and I would have thought some of those fishermen could have been included in this as well.

Mr. Nowlan: I will start with a bit of context around your first question about the executive chefs, and then I will leave it to Mr. AuCoin to speak to some of the details of those two projects.

Senator Oliver: I mainly want to know how you evaluate your success.

Mr. Nowlan: We can evaluate the success generally across these things in a number of ways, but the reason we take this approach — and it is across the food and beverage sector generally — we know that these executive leading chefs are the ones who set the trends. Therefore, food people like chefs in leading restaurants and hotels and places across the world follow what these leading executive chefs do through their blogs and social media. Research is telling us that is what sets the trend. That is the purpose in terms of why we do these kinds of things.

In terms of tracking success, do you have any results specifically on that project, Mr. AuCoin?

Mr. AuCoin: Yes. Tracking success on trade missions is usually done through a survey of participants in the actual activity. It involves follow-up surveys weeks or month after the actual activity where we phone up the clients and ask them — like I outlined for Flavorful Foods — what they can attribute to the actual event or activities in which they took part.

This Miami one is very recent. I do not even know if we have gone to the step of doing that survey yet. We do have some project results based on the activities that did occur. There was the chef demo activity that took place.

Senator Oliver: Do you do the evaluations internally, or do you have an arm's length agent do the study and the research?

Mr. AuCoin: It is actually two things. There is the more immediate one that happens and then there is the longer term one.

The immediate one is something we do to capture the annual results that we need to produce on these projects, and an ACOA employee will actually call the client for that. Those are things that we will report on in our departmental performance report.

There is the longer term aspect as well, in which all of our programs are evaluated as per the Treasury Board policy on grants and contributions evaluations. For many years, we would use an outside consultant to do those evaluations. As part of recent efforts to consolidate our procedures, we have now moved to using internal staff, many of whom are recognized certified professional evaluators within the federal government, to do that sort of evaluation over the longer term, looking at the actual impact of these things.

Some of the results I can point out for that specific project were that the chef demo activity did take place at a private location near Miami Beach. Over 500 invitations with circulated to leading executive chefs, restaurant owners and other buyers. Thirty-five of those people actually ended up there, but again, the promotional aspect reached a wider audience.

The educational and promotional materials on the Atlantic Canada seafood industry were distributed. There were 100 USB keys including lobster and mussels, 101 manuals, 100 lobster manuals and 50 mussel manuals. Two industry representatives had speaking opportunities in front of an audience of people from the industry. We had the Consul General of Canada act as the master of ceremonies, and the outreach was done to these 35 advanced culinary students and leading instructors. That is what I can tell you about the Miami project.

When it comes to the more recent China trade mission project, the way we normally proceed with projects is we will use one proponent. For an initiative like that and with the number of companies involved, we would require that proponent to do a pan-Atlantic call for interests to be part of that initiative. I do not have the specific details of that one in particular, so I do not know the breakdown of the location of those 20 participants in that trade mission. Again, that is a very recent project, but it is certainly something I can follow up with you on if you are interested.

Senator Raine: Was that then a follow-up to the CAF done by Nova Scotia? There are two here from Nova Scotia.

Mr. AuCoin: Yes, I mentioned that. There were some we did in Nova Scotia focusing on live lobster, but there was a significant one that actually involved the province of New Brunswick under the CAF Lobster Initiative. It also involved the province of P.E.I. because it focused on fresh, but this newer one is indeed a follow-up to the ones we did under CAFLI in 2009-10. We were seeing a level of interest in the marketplace for what New Brunswick and P.E.I. had to offer for frozen products.

Senator Poirier: Thank you for being here. It is actually the second night in a row that I have sat in different committees and have had people from my home province of New Brunswick here. It is always nice to have fellow New Brunswickers come and meet with us. Thank you for your presentation.

I have a couple of questions. A couple have already been asked and answered, so I will skip those. My first question is on the slides on pages 9 and 10.

You talked about the CAF Lobster Initiative, where a total of $10 million was provided to Atlantic Canada and Quebec, divided into $8 million for Atlantic Canada and $2 million for Quebec. Up above is the two-year program with a sunset date of March 31, 2011. The point above that says it was to help create jobs and employment opportunities in communities affected by the global recession.

Can you tell me how many jobs were created, if the jobs are still there today, and what types of jobs were created with this funding through the CAF program?

Mr. AuCoin: We did not track employment creation as a specific indicator under the Community Adjustment Fund. What we did is that at the time of receiving the application, projects that identified to us that had the greatest potential for job creation, those projects were the ones we gave the highest priority to. It was at the time of project assessment that we looked at job creation.

In the short period of time that we had, we knew it would be very difficult to have a standard kind of commonly accepted measure for job creation, so we focused instead on dollars leveraged and projects completed. We did not track employment creation. That was part of the directive we got from Treasury Board. The Department of Finance is the one that is responsible for producing an overall report on the cumulative economic impact of the economic action plan.

We at ACOA did not specifically measure jobs created as part of CAF or of the CAF Lobster Initiative. We just assessed them when they came in as project proposals.

Senator Poirier: I know you have not followed them, but do you know whether the projects were all short term, or are any of those projects ongoing today even though the funding from ACOA has ended?

Mr. AuCoin: That is another good question. There are a couple that come to mind. They all had to be short term and we had to follow the edict that they had to be completed by March 31.

We talked about the traceability project earlier on this evening. We know that project has continued in some form, even after the ACOA funding expired. It has been taken on by private sector interests. Some of the actual fishermen or fisher people who were using that technology have continued to use it. We heard Mr. Lamont say that he has been incorporating that in his marketing strategy. That, to me, is the clearest example of a really important project that has continued without sustained ACOA funding.

The trick now will be to see how a more comprehensive traceability system can be developed or implemented in the industry to meet all the various needs and requirements that come with traceability. That, to me, is the clearest one where things have continued without government funding.

Senator Poirier: I also notice in your innovation of lobster facilities that one of the recipients was Enterprise Kent, in my end of the country. Could you explain what their objective was and what the results were?

Mr. AuCoin: That was what we consider a lean manufacturing project, where we work with a group of companies to get them to assess their operations and find ways to become more efficient.

I can give you some high-level results on that specific project. For instance, there were water savings of 10 per cent; and in another case, increased production of 20 per cent; a 20 per cent reduction in material handling and the elimination of a forklift in another case; heightened supervisor awareness of productivity and its continuity in plant operations. This is sort of intangible stuff, but one of the results is that employees felt they were more engaged in offering solutions and suggestions for improved productivity. Improved cost control and cost monitoring, and overall savings were realized by the companies that took part. Seven companies were part of this initiative: Westmorland Fisheries, Shediac Lobster Shop, Village Bay Sea Products, Suncoast Seafood, Raymond O'Neill & Son, Baie Ste. Anne Fisherman's Co-op, and Pêcheries G.E.M.

Senator Poirier: My last question is about the trade missions. To take an example from Miami, since they do fish lobster in the United States, do we actually think they would export from Canada in Miami, or do you think they would buy the lobster from home? I was questioning that.

Also, along the same lines, how successful are the trade missions? Is there any way of evaluating whether they are successful? Is this the best place or is it the best bang for the buck? We have heard from other people who say that, in terms of exporting to China, do they look for the best price or do they look for the best quality of lobster? There is a difference there in terms of where you are buying your lobster.

In your trade missions, are those things looked at or promoted? What is the success of them? I am questioning why Miami.

Mr. Nowlan: As Mr. AuCoin mentioned, it is really market-driven. Your questions are all good ones, and those are the kinds of questions we look at before we support a trade mission to a particular market. In many cases, such as the one in Miami, it was around a broader food and beverage show, where there would be different products coming there from all over the world. The work we are doing would be part of that, to bring our products. It is not just about Miami; it is about other buyers who might be at that particular trade show from different places.

In terms of the evaluation, for the kinds of missions where we actually assist companies to go on them, such as the one about teaching executive chefs how to cook lobsters in different ways, that is more of an awareness building about the product and how to use the product. It is a little more difficult to evaluate from a tangible sales perspective.

When we go with companies to a particular trade mission, specific follow-up happens with each of those companies. At some point, several months later, one of our staff actually calls up every one of those companies and asks them: How did the trade show work for you? Did you make new contacts there? Did you make new sales? How many sales did you make there? Have you increased your exports? Have you had to expand or grow your workforce as a result of that? We ask those specific questions.

Both of the ones we just talked about today, in terms of China and Miami, are very recent, so those results do not exist yet. They have only happened in the last couple of months.

Senator Poirier: Of the ones you have done in the past, have they been successful overall?

Mr. Nowlan: Yes, very. A lot of work goes into picking what markets we will go into, to make sure there is a potential market there for us. They have been very successful. I do not have the statistics with me in terms of the results we have, but they have been very successful.

Senator McInnis: Thank you for coming all the way from Atlantic Canada. You spoke highly of the lobster council, and I do think that finally they seem to be bringing all the players together. You mentioned Stewart Lamont, who indeed is a great spokesperson for the council. When he was here, he said that one of the greatest dangers he sees to marketing the pristine Atlantic Canada lobster in China would be aquaculture.

We see on slide 8 that of the $420 million that ACOA invested in the fishing industry, $240.2 million was invested in aquaculture. My question is twofold. How do you evaluate the value of that investment? Do you do an analysis of the jobs that have been created, to what effect, and where do you get your information? Do you get it from fisheries and aquaculture in the provinces? Do you get it from Fisheries and Oceans? Do you analyze any of this?

I know you probably do not have the expertise to do that, but if Stewart Lamont and the lobster council come before us and make that statement, I think someone should be looking at the investment that is being made in aquaculture in Atlantic Canada. Could you just respond to that, please?

Mr. AuCoin: I guess we were expecting that question. Thank you for raising it. It is an important point in the industry. Our investments in aquaculture were made over a number of years, especially during the early part of the development of that industry when there were very few other programs available to that industry. We certainly saw that it represented a source of new economic growth for rural communities at a time when a lot traditional activities were disappearing.

We definitely considered the amount of wealth that was being created by this industry in those periods of time. Indeed, we considered the number of jobs that were spinning out of the industry, not just directly in the aquaculture activity itself but also in the processing and things like that. We considered all of that. Obviously, as I have mentioned many times, we would consult widely with departments of fisheries federally and provincially before making investments in the aquaculture industry.

One thing I wanted to point out is that over time our investments in aquaculture have evolved. I was involved in refocusing some of those investments at the agency. We made a deliberate effort to diversify within the industry by looking at alternative species, so investing in farmed cod or farmed halibut and developing the husbandry techniques for those species, diversifying the techniques used to farm various types of fish products. We have invested in land-based technologies, recirculation technologies as well and, last but not least, we have actually used some of our innovation investments to help develop more innovative ways of making the industry more sustainable.

Part of that is through new techniques for animal health, but I think the most innovative one — and it is being recognized around the world as just a really good practice in terms of aquaculture — is what we call multi-trophic aquaculture. I do not know if you have been exposed to this yet, but multi-trophic means the raising of several species in the same area. You are actually raising salmon and mussels and seaweed all in the same system where the by-products of one are used to raise the other. This produces better yields for the species being raised and, more importantly, less environmental degradation because the actual by-products are being used to fuel the growth of the other species.

That is the best approach that I can summarize for you in terms of our aquaculture investments over time. We have seen a lot of evolution in the industry. Mr. Gardner talked about the good model that has developed now in aquaculture where things have become rationalized and the industry is on a much better footing. We were involved in those efforts, too. We really need to take a balanced approach between these different aspects of the fisheries and the economic impact they bring to Atlantic Canada.

Senator McInnis: I know you were involved. Better than half of the money you invested went into aquaculture, there is no question about that. I do not mean to debate it tonight because that is not what we are here for. We are here to hear what you have done.

I would suggest to you that prior to other investments in the aquaculture industry you should associate yourself a little more with the communities that are involved. There are plenty of organizations that could educate you.

My second point, if I may, relates to the Community Adjustment Fund, and I will be parochial here. Having come from the eastern shore of Nova Scotia, I see this often with federal programs. You said if the population were greater than 250,000.

Mr. AuCoin: The program was only eligible to communities of less than 250,000.

Senator McInnis: What happens is — and this happens with many programs, some with you but others with the federal government — that the eastern shore will run for 150 kilometres. Halifax is here, and it comprises 400,000 individuals. All of these people down here with an unemployment rate of 15 to 20 per cent do not get any. There is none of that money available. That is a problem. It is a problem, as with other problems with ACOA, when the EI rate has to be X number of per cent, 10 per cent or more. However, if you lump in the small hamlets and populations along the eastern shore and you put it in with full employment Halifax-Dartmouth, then it skewers and disregards the high unemployment pockets along the entire eastern shore.

Mr. AuCoin: I can let you in on a little secret. I do not know if you have the full list of all the projects, but we did include the Eastern Shore Fisherman's Protective Association.

Senator McInnis: You said that earlier. Congratulations.

Mr. AuCoin: Under this project, because for us they were right on the border, it made no sense to exclude them. They had a legitimate case, an important plan that they had worked on that they would use to get other funding. We were not going to split hairs and exclude them just because they were on the border.

Senator McInnis: Since you are here, I want to say that ACOA does some good work. I am witness to that, as the past president of the Nova Scotia chamber. In rural areas you are to be commended. I do not mean to condemn you. I just want to alert you to some of this difficulty, particularly the aquaculture.

Mr. AuCoin: I can tell you that we have taken those concerns into account in recent years. The investments we make today in aquaculture, we realize, are in a different context than the ones that we were making 20 years ago.

The Chair: When we come to the end of our study on lobster, I am sure we may look at the possibility of doing a study on aquaculture. It is a great industry in many parts of Atlantic Canada. I know Newfoundland and Labrador has provided opportunities that would not otherwise be there for many small, rural communities. As with any industry, there are always challenges and concerns. It is something that we may have a look at and have talked about here before. We will keep our options open and look forward to Senator McInnis having a fair amount to say when that time arrives.

Senator McInnis: It is a great industry if done properly. It is not being done properly.

The Chair: That is why maybe it is time now, after so many years of investment by the federal government, to have a look at exactly that.

Senator Raine: I have a point of clarification. Was I to understand that anyone along the east coast gets counted as Halifax?

Mr. Nowlan: No, just the eastern shore of Nova Scotia.

Senator Raine: Well, that is a long area. The small towns are not Halifax.

Mr. AuCoin: Whatever is considered in the boundaries of the Halifax Regional Municipality. I think that is your point; the Regional Municipality is a large geographic area. It happens to have 250,000 people or more, so it was excluded under the CAF Lobster Initiative. However, it did include some parts of where Senator McInnis is from that were excluded under this program.

Senator Raine: It is a bit strange to have a regional district —

Mr. Nowlan: It is not the whole coast of Nova Scotia, but it is a significant part. You raise an interesting policy challenge around this kind of issue, where municipalities amalgamate to form a larger urban area. We talk about HRM. Down in East Chesicook and Porters Lake, folks who live there would never consider themselves urban.

Mr. AuCoin: As I mentioned at the beginning my presentation, just because they were not eligible for lobster funding under CAF, we looked at these projects, and if they made sense, we did some through our regular, traditional programs. We have to follow the rules of the programs that we have, but we have many programs. We have some flexibility there.

The Chair: It is important to remember that the rules are national rules, while we from Atlantic Canada look at things differently because of the many small communities that we have in our provinces. The rules are of national significance, so we need to maybe adjust things as we move east. ACOA has been doing that quite well.

Mr. AuCoin: There was a great deal of debate around that exclusion area. It went all the way to the top when it came to deciding what the cut-off point would be.

Senator Raine: I know that we are running out of time, but I have a couple of quick questions on the innovation and lobster facilities. It seems like a lot of money to spend to acquire technology to manufacture natural seafood stock from North Taste Flavourings. The other one was the money spent for the Seafood Processors Association of Prince Edward Island and Holland College to develop six new lobster products. What are they? That is more curiosity than anything else, so if it is hard for you to answer —

Mr. AuCoin: I have some information here on those projects. I do not know if I will be able to fully satisfy your appetite.

Senator Raine: I like lobster, so six new products is very appealing.

The Chair: Maybe it is a lot of information, Mr. AuCoin. You can certainly provide it afterwards.

Senator Raine: The natural seafood stock is not stock for cooking soup, is it? It is a type of —

Mr. AuCoin: It is the resource stock.

Senator Raine: That $3.6 million is a lot of money. I do not understand it; that is all.

The Chair: Senator Hubley?

Senator Hubley: The Culinary Institute of Canada is housed at Holland College, so I think that will start to make a lot of sense out of that.

Mr. AuCoin: There is a food technology centre in P.E.I. where a lot of these things are tested. Just on those two projects in P.E.I., some of those figures may have been adjusted over time, but the one that deals with the innovation related to new products was with the Seafood Processors Association of Prince Edward Island. They worked with the food technology centre and Holland College to develop these new products. They actually identified a potential 10 to 12 new products. The prototypes were tested and streamlined down to four strong projects. Chefs from the Culinary Institute worked with scientists from the food technology centre to further develop these four products, which were sampled through several channels. Product testing and consumer feedback have been very positive and the projects were well-received by the public. I do not have the details on what those four products were. I can provide those to you. As with anything in innovation, you never quite know where things will lead. This project was successful in the development of these four new products, and they are ready for commercial production. However, the conclusion of this project was that seafood processing facilities in P.E.I. were not yet structured to deliver these new products to the marketplace and have not used them yet. It does not mean that they will not ever use them, but, at this point in our cycle, those products have not been used yet. That is what I can tell you about that project.

Senator Raine: And the North Taste Flavourings one?

Mr. AuCoin: Again, that was one that actually had to do under our regular programming. It applied late. I think that you are referring to the press release from the original announcement.

Senator Raine: No. We have a list of different funding that you had in table 4.

Mr. AuCoin: It looks to me like the table that was used for the announcement two years ago. I wrote some of that. The North Taste project was for value added, using elements of lobster to produce items that could be added to other food products, and the example that the proponents used was pet food. You could provide the taste of lobster, using actual lobster extracts, in pet food, for example. That was a project that was proposed. It was viewed as a value-added technology. It was actually acquiring technology that existed in Iceland.

What happened with that project is that it was late getting approved in the time frame that we had under CAF, so it ended up being funded under our regular programs. That was one of the two projects that got removed from the 29, which became the 27.

The Chair: Thank you to our witnesses. It has been a very interesting evening. You provided us with some great information. We reserve the right to call you back if we need additional information or clarification of what you have presented to us this evening. It has been a very worthwhile exercise.

I echo the comments of Senator McInnis in saying that I am quite familiar with the workings of ACOA. I have been involved for almost 20 years in political life, and you do tremendous work, especially in the rural parts of our country and certainly in Atlantic Canada. I want to applaud you for your efforts. As always, there is sometimes negativity there, but you are a shining example of regional development, in my view. I encourage you to keep up the good work. Thank you very much.

(The committee continued in camera.)

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