Proceedings of the Standing Senate Committee on
Fisheries and Oceans
Issue 4 - Evidence - Morning meeting
NANAIMO, Wednesday, March 26, 2014
The Standing Senate Committee on Fisheries and Oceans met this day at 8:35 a.m. to study the regulation of aquaculture, current challenges and future prospects for the industry in Canada.
Senator Fabian Manning (Chair) in the chair.
[English]
The Chair: My name is Fabian Manning. I am a senator from Newfoundland and Labrador and I am Chair of the Fisheries and Oceans Committee for the Senate of Canada. I would just like to take the opportunity to welcome you all here this morning and say that we are delighted to be in this beautiful part of our country. We have had a couple days travelling around different parts of British Columbia. It has been a great experience for myself and my colleagues in the Senate.
We have a long day planned for today to hear from people involved in the aquaculture industry and we look forward to doing that. We began a study back several months ago and we are hoping to present every port to the Senate of Canada in June of 2015.
With that I would like to take the opportunity to ask the senators who are with me today to introduce themselves first, please.
Senator McInnis: Senator Tom McInnis from Nova Scotia.
Senator Hubley: Deputy Senator Elizabeth Hubley from Prince Edward Island.
Senator Lovelace Nicholas: Senator Sandra Lovelace Nicholas from New Brunswick.
Senator Stewart Olsen: Senator Carolyn Stewart Olsen from New Brunswick.
Senator Raine: Senator Nancy Greene Raine from B.C.
Senator Munson: Senator Jim Munson from Ontario with my heart in New Brunswick.
The Chair: Thank you, senators. I would certainly like to welcome our first panel and the process for those who may not be familiar with it, we are going to give an opportunity for five minutes of opening remarks to each of our panelists and then we'll open the floor for questions from our senators.
So if you would be so kind to introduce yourselves first and then whoever has decided to draw the short straw to go first, we will let you to do that.
Clare Backman, Public Affairs Director, Marine Harvest Canada: Sure. I'm glad to be here today. Thank you for the invitation. It's Clare Backman. I am with Marine Harvest Canada. I'm the public affairs director for Marine Harvest Canada and I have had experience with salmon, both in the wild and more recently in the farming sector.
Jeremy Dunn, Executive Director, BC Salmon Farmers Association: My name is Jeremy Dunn. I am Executive Director of the BC Salmon Farmers Association. Thank you for having us here today.
Stewart Hawthorn, Regional Director, Grieg Seafood British Columbia Ltd.: My name is Stewart Hawthorn. I'm the managing director of Grieg Seafood B.C., a salmon farming company here in British Columbia.
The Chair: Okay. So whoever would like to start.
Mr. Dunn: Thank you. I will take the lead today. Good morning and thank you for having myself and Clare Backman here today on behalf of the BC Salmon Farmers Association to share with you our thoughts on the regulation of aquaculture, current challenges and future prospects for the sector in British Columbia and in Canada.
Nationally, aquaculture is a $2.1 billion industry with more than 14,000 workers operating in every province in the Yukon. Here in B.C., the BC Salmon Farmers Association represents 37 organizations including producers, service and suppliers and sector supporters. We directly employ close to 2,000 people resulting in a total direct and indirect employment of 6,000. This is in addition to the more than 1,000 people employed in the farm shellfish sector. I know you will hear from them later today.
Our farming community is a big part of the B.C. economy and here on the coast it's crucial to the economic well- being of the communities we operate in. Our members are proud to be the largest private sector employer on northern Vancouver Island.
Salmon farmers have significant business and social partnerships with coastal First Nations and currently 20 per cent of our total work force is First Nations people.
Our members are committed to raising the world's best fish. We have shown a significant commitment to third- party certification. Our fish health and environmental management practices are recognized worldwide and the transparency of our information sharing and release has set a high standard for global farming.
Overall 50 per cent of the seafood sold in Canada and worldwide is now farmed and that number is growing steadily.
Salmon farming in B.C. and Canada is facing two key challenges, lack of growth and lack of global competitiveness. The two are inherently linked and stem from a regulatory system and policy framework that simply does not work in the best interest of Canadians.
The current regulatory regime and years of uncertainty has led to diminished investment, losses in the marketplace and stagnation in the development of new markets. Recent investments in global aquaculture are north of $500 million, yet less than 7 per cent of that has come to Canada.
After 13 years as a flat-lined industry, coupled with robust world growth, Canada's share of the world market has fallen by 40 per cent.
Aquaculture is the fastest growing food production system in the world, however, Canada is the only major farm seafood producing country without national legislation specifically designed to govern and enable its industry.
I will share with you a snapshot of our current regulatory reality. There are over 90 federal, provincial and territorial acts that impact aquaculture; 17 federal departments and agencies play some role in managing aquaculture. The main federal legislation governing fish in Canada is the Fisheries Act, a piece of legislation that dates back to Confederation and does not mention aquaculture by name.
Our sector is seeking the implementation of a modern legislative regulatory and policy framework, an aquaculture act for Canada that will define aquaculture in federal law and provide a unifying long-term framework that recognizes aquaculture's growing importance to Canada's economy.
Modernizing the legislative regulatory and policy framework will allow Canada and British Columbia to realize its full potential. The global demand for animal protein is on the rise and more than ever people are demanding healthy protein that is sustainably raised and traceable.
In B.C. we have shown we can grow nutritious fish that are healthy and can co-exist in the ecosystem. Nationally the total economic impact of aquaculture could grow to over $5.6 billion in the next 10 years. Here in B.C. fish farming could responsibly and sustainably grow by 10 per cent per year. Right now every fish that goes into the water is sold before its ready for harvest. We're exporting the vast majority of our fish to the U.S., and unlike many industries operating here in the Pacific Gateway, salmon farmers have just scratched the tip of the iceberg, that is, the Asian marketplace.
Salmon farmers currently contribute more than $800 million to the provincial economy. We could grow this to $1.4 billion by 20/20 resulting in a total of 8,000 jobs. By 2035 sustained growth could result in a $3.5 billion industry and 20,000 jobs. These jobs will continue to be in coastal communities in B.C. giving the youth of these communities hope there will be good-paying jobs for them in the future.
Growing our industry will allow salmon farmers to continue to work with First Nations on partnership agreements and offer employment to First Nations people in their hereditary communities like no other sector.
In closing, I think it is important to recognize where this sector has come from and the relatively short time it has taken to become one of the best salmon farming regions in the world. We look forward to working with our partners in government and to develop a salmon farming, grow the economy and employ coastal Canadians. Thank you for having me here today.
The Chair: Thank you, Mr. Dunn. Would someone else like to make any opening remarks?
Mr. Hawthorn: Yes. I have some opening remarks. I have provided this handout that has got some detail in it. I'm not going to read the whole thing. I'm just going to talk to the headlines of that.
My name is Stewart Hawthorn. I am the managing director of Grieg Seafood B.C. I've been involved in the fish farming sector for 25 years. When I was first at university I did my degree in marine biology. Towards the end of that time it was, ``What do I want to do with my working life?''
One of the key themes that I was hearing in university was fisheries are in crisis, the demand for seafood is increasing and we need to find alternatives and that was really why I got into aquaculture 25 years ago.
For me it has been a great choice. I really feel very proud of the fact that I'm involved in the farming sector that is creating alternative, helping to take some pressure off of wild fish stocks, helping to keep seafood affordable, and I think it's very important that part of the economy going forward.
As Jeremy said we are already farming 50 per cent of the seafood that's consumed in the world. So just like blueberries, just like apples, just like chickens, just like beef, we're not going out and catching those from the wild, we are farming them. And I really do believe in the next 30 years that we are going to see more and more farming of the oceans. I think that Canada with its massive coastline should be part of that exciting growing sector. It's about how we do it right, and that's something that I'm really pleased to be able to talk to you guys about today.
On the front page there you can just see the difference between what's happened in Norway and what's happened in Canada or in British Columbia.
In British Columbia in 2001 there were 62,000 tonnes of farm salmon being raised in this province. Last year there were 57,000 tonnes, a decline of 8 per cent.
In Norway which is an oil and gas based economy, a resource-based economy, they have recognized that they need other things going forward and they have really decided to get in behind aquaculture as a key growth part of their economy. They have gone from a massive 510,000 tonnes of salmon in 2001 to 1.3 million tonnes in 2012. So 158 per cent increase in production in that time.
If we had done the same here in B.C. we would be at 160,000 tonnes and we would have an economic contribution of $2.3 billion into the B.C. economy already.
Jeremy mentioned First Nations. They are a very important part of our farming sector and something that we are very proud to work with, the First Nations communities, helping to provide economic opportunities in their traditional territories.
Globally, there will be 3 billion new middle class citizens in the world by 2030. People in the middle class want to eat more protein, want to eat more animal protein and definitely want to be healthy. They know that seafood is a healthy choice.
That population growth is creating a massive pressure on wild capture fisheries and again, we need alternatives and that's why farming the oceans is part of the solution.
I would just like to mention the Cohen inquiry and I will go on and quote to you what I think is very important. When Cohen was investigating the Fraser River sockeye he said, data presented during this inquiry did not show that salmon farms were having a significant negative impact on Fraser River sockeye. So despite what you sometimes hear from people who are very passionate about the B.C. coast which is an important thing and applaud that, all of the work that was presented there which is a very thorough review of all of the science available at the time, none of that data showed any impact from my farming community sector. And that's something that I concur with, and we are going to be doing more work to demonstrate that going forward.
Grieg Seafood B.C., we are one of the four ocean farmers here in British Columbia. We were established in the year 2000. We've got a payroll of $7.2 million a year. Our average wage $61,000, almost $62,000 a year and the B.C. average wage is $46,500 year. We are high paying jobs. We are jobs that people can be proud to have and that's something that I think is very important.
So moving on to the last page of my notes here, I want to talk a little bit about, first of all, the opportunity; secondly, some of the challenges and barriers to British Columbia and Canada advantaging that opportunity and then, thirdly, to talk a little bit about some of the regulatory things that would help to move us forward.
Jeremy mentioned this, we are currently around 6,000 jobs, indirect and direct, about $800 million of economic activity. There is an opportunity in 15 years' time to be at 250,000 tonnes with three and a half billion dollars of economic activity, 20,000 jobs in rural communities. I think that is something that we should be part of, not just for the jobs but because we need more alternatives to make sure that we can keep seafood affordable going forward.
There are three key barriers that we see at Grieg Seafood. One is public perception. To some extent we have lost the battle or the conversation about why what we do is a good thing, and that is something we need to improve on and we are working very hard on that. But there is also a role for government to play in helping British Columbians and Canadians to understand that we do have a very robust renewable farming sector.
The second thing is uncertain, cumbersome and really a quite unresponsive regulatory regime, I will talk to that.
And the third is our relatively high cost of production compared to other farming sectors around the world and really that's a result of this lack of growth. We've been stagnating for the last 12 years and we've missed out on that growth so that means we have become less cost competitive.
So when I go to my board of directors — Grieg B.C. is listed in the Oslo stock exchange — or when I go and sit down with my farming counterparts who farm fish in Scotland and farm fish in Norway, they look at B.C. now and Canada as a niche producer. It is not an exciting area where they are saying, ``How can we invest to grow this farming sector?'' The reason for that is that exactly what Jeremy said, we are getting smaller relatively in the seafood world rather than pick up.
So the solutions that we see and rules for government and regulation, regulation is very, very robust here. The federal Department of Fisheries and Oceans does a very good job. They've got more than 70 staff dedicated making sure that we are doing it right. What we would like to see is them publishing some of that information and making it more available to the public in a timely manner, rather than it taking a long time. We would like to see them producing summary statement sector reports. We would like them to be issuing certificates of compliance. For right now when an inspector comes to our farms, and this has never happened by the way, but they would only ever write a letter to us if we failed. They would never write a letter to say, well done, you passed. And it would be great if we could get some certificates of compliance to show that we can show the public that we are doing a good job and that we do comply.
We would love to see DFO communicating to the public about the environmental monitoring and compliance activities that they undertake and DFO science, to be talking about the science that they have redone in the past and they are currently doing around our farming sector.
Another area is the security of tenure. We would like to see longer licenses. Right now we have got a one-year fisheries license. It takes us two years to grow our fish so, in theory, our licenses could be withdrawn when we still have got young fish in the water. We would like to see longer licenses.
We would like to see some clear and firm service standards. When we put in applications to make small or big changes to our fisheries licenses and to our tenures, it takes a very long time for those to be processed through the system and there is no certainty around how long that would take. We would like to see the DFO working with other federal agencies and also the province to define how long it will take so that we can have some business certainty so we can attract those investment dollars.
We would like to see some goals for the sector. We would like the farming sector together with the federal government, provincial leaders and communities set some production objectives, some growth objectives. Let's push ahead with certain targets for us. Let's set some benchmarks and move towards that going forward. We think an aquaculture act is an important part of doing that.
If we can achieve some or all of those things, I am very confident that I could go to my board of directors and let's see more of that $500 million of investment that's going into salmon aquaculture around the world, let's bring it to B.C. and let's be part of the solution. Thank you very much.
The Chair: Mr. Backman, do you have any opening remarks?
Mr. Backman: Not at this time.
The Chair: Okay. Thank you very much.
We are going to start with the deputy chair of our committee.
Senator Hubley: Thank you, Mr. Chair.
Thank you for being here. We're delighted to be here. Most of us are from the East Coast and that only tells you how happy we are to be in Nanaimo today.
Following up on the aquaculture act, it became, I think from my perspective, when we were visiting the different farms the aquaculture industry didn't fit comfortably either within the Department of Fisheries or the Department of Agriculture, even though it's farm fishing. It's kind of both of those industries rolled into one. We had, of course, spoken with the minister and it was her intention at that time to move ahead with incremental stages, and I think she is very aware of a lot of the issues you presented here today. I'm just wondering from an industry perspective what are some of the things that you might be able to do to move toward having an aquaculture act for your industry and perhaps helping that Department of Fisheries and Oceans to get to that place?
Mr. Backman: Thanks for that question, Senator Hubley. It is certainly a topical area, the concept of an aquaculture act, and I think that you have struck it square on, the fact that growing the fish in the pens in the ocean is, or on land for that matter, is an area that is obviously a form of agriculture, and it is not a good fit necessarily under the regulation in the Fisheries Act.
I think the nub of your question was what we can do to assist in that process. We are currently as a national organization under the Canadian Aquaculture Industry Alliance working hard on working with the DFO toward identifying those areas that an aquaculture act could address and providing, when asked, input and data to help support the framing of some context around what an act would cover and what the components of an act might look like.
At this point in time it is early days on that discussion but we're glad to have the interest brought forward for that discussion to occur. We feel that the aquaculture act would be at this point an umbrella that would address some of the inconsistencies. You mentioned the big one.
The other inconsistency that we have of course is the right of ownership, the private property aspect which is a little indistinct when it goes into a fishery. Yes, we in B.C. have a license for the facilities but the private property aspects are very important and need to be consistent in the jurisdictional piece, East Coast to West Coast. Currently on the East Coast there is provincial and federal jurisdiction. We on the West Coast now are primarily federally regulated but there is still provincial land jurisdiction. An aquaculture act could reference aspects of federal law which would allow consistent oversight. It could be written in a way that could be consistently interpreted both federally and provincially to give continuity to what is now a bit of a mishmash of regulatory oversight.
Senator Munson: Thank you for being here this morning. I'm new at this, so if these sound like naive questions you can let me know, but there is never a bad question, is there?
You talked about 90 provincial acts. Can you name a couple of those that could be taken out, that are handcuffing the aquaculture industry, that are really hampering what you're trying to do, that have put you in a spot where you are trailing New Zealand, Norway, Scotland, all those places.
And I will give you a chance to think of the other question: It is easy to blame government. It's easy to take government on to say too much regulation, too many of these things but people and bureaucrats, politicians put things into place because they like to see things in order. Does the industry itself here have to take some of its own responsibility for being where we are, behind most other countries in the world in terms of your industry?
Mr. Hawthorn: I wouldn't want to name specific parts that we think are cumbersome or are in the way. I think what is more important is about process of saying how do we get the government who interact with us to give us some certainty around the timeliness of making decisions.
We do not object to being regulated. We think regulation is a very important part of helping Canadians and British Columbians to understand that what we do is being done carefully and responsibly, but we do want some certainty. We want to understand, we want to know how long it is going to take to get a decision made so that we can then go back to the people who are investing their dollars and cents into our business and say, ``Yes, we will get a decision by this time so we can move forward.'' I think the process of having those discussions is important to say, ``How can we get some service standards to give us a timeline so we can make decisions?'' I think that's what is important for us going forward. Maybe Clare has some specifics.
Mr. Backman: As I mentioned before there are inconsistencies that currently exist with our industry being under the Fisheries Act, and without bringing too much attention to those issues, it's important to bring up an example or so, so that people understand. In order to grow our fish in the ocean we have to feed the animals. We have to feed them a very carefully prescribed feed that provides a healthy and nutritious diet for the fish and in turn provides the product that the consumer is looking for. So feed has to be provided on a daily basis.
If the animals need any care and attention, if there is any need for any medicines to be provided for animal welfare requirements, of course, and we will provide the required medicines to those animals.
In so doing it puts us into a situation where we could be seen as introducing a deleterious substance in both cases under the Fisheries Act. So that then brings up the need for regulation to address that apparent inconsistency.
So again, these are the kinds of things that we feel, yes, they can be developed, addressed incrementally as we go forward, but better addressed with an over-arching aquaculture act that defines what aquaculture is, and that is missing right now in federal regulation.
An aquaculture act would be of benefit as a starting point to create for Canadian public and Canadian industry in general a definition and some objectives about what Canada wants to see in terms of growth and opportunity for this industry.
Senator Munson: I don't think you answered the question in terms of your own responsibility that perhaps could be part of our discussion because listening to your testimony and being part of this committee for the last few days and seeing some of the tremendous work that is going on in Tofino and Campbell River and other spots, I don't think we're ever going to catch up if we're waiting. And things can be put into place. We have the example of New Zealand from yesterday and just amazing things are happening there in terms of with First Nations, settling those issues first and letting them be equal, if not major partners in the work. I just look at it and say that something else must have happened here besides government and the 90 acts and so on and so forth. So I think there has to be some kind of responsibility from within the industry itself.
Mr. Hawthorn: Yes. We are here today to talk about regulation, current challenges, future prospects so, of course, that's my focus today. But looking back 20 years ago we were a completely brand new farming sector in British Columbia. We have learned a lot in the last 20 years.
One of the things we haven't learned a lot about is how to be fantastic PR agencies. What we are is farmers and we are out there, I mean yesterday wasn't the nicest weather, we are out there in all sorts of weather, good and bad, farming fish, raising fish, learning about how to do that better. For sure we need to get better at telling our story so that we can be part of that. And the rule from my perspective, an important part of it that government can bring to that table is to help communicate what they do to regulate us to give British Columbians and Canadians confidence that when they come to visit our farms that, hey, you know what, these guys are actually fantastic. They do comply with the rules and regulations that are in place, because we do, and it would be great if we can get some of that. We provide lots of data. It would be great if that would be up on the website within a few days or weeks of it being provided rather than months. It would be great if we could get some summary information to help in that piece of it.
But, hey, we have got our responsibility, too, Senator Munson, and we are starting to get engaged with telling our story. Thank you.
Mr. Dunn: Just to follow-up for Senator Munson on what the industry can do, this industry has gone out and sought out third-party certifications on our farms to show that they are sustainable in the ecosystem and that goes back to Stewart's point about communication.
If we have a set process for applications, we have set timelines and we have licenses that last longer than the time that the fish need to be in the ocean, that signals to corporations to invest and this, as you saw in your tours, this is a capital intensive industry. Building hatcheries and farms is capital intensive. The industry does want to grow, and if the industry has a known process with known outcomes the industry will do that.
The Chair: Mr. Hawthorn?
Mr. Hawthorn: I worked in New Zealand for 15 years farming fish. I worked with New Zealand First Nations in that part of the world and I can tell you that the regulation we've got here is very strong. It requires a lot more reporting and gives me a lot1 of confidence that in being able to say to people, hey, we are doing a good job, and now it's about demonstrating that to get the confidence of the public. Thank you.
Senator Stewart Olsen: Welcome. I must say just from our touring in the last couple of days I have certainly learned a lot. Being from the East Coast we have an industry in New Brunswick, especially the second highest producers, but I think we can do a lot more. I think you are absolutely right, we have to make sure that everything is well looked after and that all aspects are thought about and I take your point on the regulations.
One thing that I noticed is that if you are starting up new, does your association provide help for new farmers who want to start up? Is there some way you educate people in start-up and how to go about it? Because I think the industry itself and the associations themselves could provide a lot of help to new businesses who are trying to come online but don't quite know if they're getting everything covered off.
Mr. Backman: I could comment to that if you like. I think that the technical side of how to do salmon farming now after 25 to 30 years is fairly well understood, so the companies that are involved currently are doing that kind of training internally with new staff coming in.
People who want to become new entrants into salmon farming also have the ability to learn through the course of their careers, to learn from other companies or to learn from courses of instruction at academic institutions, for example, about salmon farming and the basics to get involved with.
But the reality of salmon farming today, in order to have it carried out to the professional level and the environmental sustainable level that is required, it is a fairly expensive proposition to get involved with. So we tend to see fairly well-positioned and professional groups coming forward to enter the industry.
In Canada in general, in B.C. in particular, there was a rapid growth in the 1990s of companies that were interested in getting involved. The development of provincial regulation during the late 90s and in the early 2000s, necessary regulation, mind you, but regulation that wasn't in the Fisheries Act necessitated a lot of additional cost in order to accomplish growing fish within those regulations. That tended to define entrants and people that could stay within the industry as those that were capable of meeting the financial requirements of operating according to the modern regulation, a very necessary aspect of a modern aquaculture operation.
So I think that just coming back to full circle here about where entrants into salmon farming are looking right now. They are looking for the opportunity, they are looking for the signal that there is the ability not to get into just, say, one farm site in a particular area but they're looking to be able to have some certainty that they will be able to develop three, six, nine farm sites to form a nucleus that makes the business viable in the modern salmon farming industry.
Senator Stewart Olsen: I would just reiterate that I think if the association takes a very strong oversight view and produces and expects compliance from new producers and from all producers, that would go a long way toward your public relations battle; that you take a responsibility, your responsible farming industry and you move forward with some oversight, much like they do in doctors, nurses, all those people regulate, put some ideas into regulations as well. I think that would be very helpful. And also it would provide some kind of basis for the government to work more easily with you if there is like a one stop with some oversight on regulations.
Senator Raine: We appreciate that you are here and what you are doing. I would like to just ask you because you have experience in Norway and New Zealand and perhaps Scotland as well, if the three of you might comment on how the regulations in Canada, and we are sort of organized in terms of the regulatory regime between the different jurisdictions in Canada, how does is that different from and can you compare that to other countries.
I mean, if we had to take a model for really good strong regulation that would guarantee a sustainable aquaculture industry, which regime in the world in your opinion is the best? Not the easiest perhaps industry but the best for sustainability.
Mr. Hawthorn: I actually think that our regulatory regime here is very good and if not the best, then certainly among the best. It is a world-class regulatory system.
I think Canada lets itself down in terms of being attractive to investment because of the time it takes to get decisions made. It is an ongoing challenge for us to even make relatively minor amendments to a structures license. It can take months or sometimes even years.
If I was to compare that to my experience in New Zealand, once our aquaculture area was defined the company with the benefit of professional expertise could come in and say, ``Well, we have decided that that size of net isn't the best for the business, let's change it,'' and we could go on and change it and just report. Whereas here we have to go and redesign it all on paper first, then apply for permission to make those changes and then eventually by the time you get that through you have probably thought of something else you want to do anyway. So it would be nice if we could get to the point where we could move a bit quicker.
But in terms of environmental compliance making sure we are not damaging the environment, ensuring that our farm sites are in good locations, that are good from an environmental perspective, all those things are in place and it is a very robust system we have got here in Canada and one we can be proud of.
Senator Raine: So it sounds to me like there is a lack of trust somehow? Why would we as a government spend a lot of, it is costly for the government to do these regulatory changes as well but why would we set up a system that is so nit- picky if we trusted people who were operating there?
Mr. Backman: I think that it was mentioned already that our ability as an industry to speak on behalf of the regulation that we operate under and our level of compliance, it is not a voice that gets heard a lot. Other voices of concern maybe get heard more because of the potential for losing something in the wild, for example. So our ability to report back and balance those statements is somewhat limited. People listen more and remember more the bad news than they tend to remember the good news.
Let me go on to the good news for a second here because you asked our comparability across other jurisdictions. Marine Harvest has environmental sustainability folks in every operating area, Norway, Scotland, Ireland, Faros, Chile.
I have just come back from a meeting in Bergen, Norway where we compare our successes and we set ourselves performance indicators for improvement in the sustainability area, and I have to report that Canada is doing very well. We, at this point in time in this last meeting, we are providing more information about how they can do a better job on many cases based on the practices that we are doing here in Canada, a lot of it as a result of conforming to the Pacific aquaculture regulation.
Two quick examples. The requirement for net strength and the requirement for net construction taken to another level by companies operating in British Columbia has just about eliminated escapes in British Columbia. It is still plaguing other parts of the world in terms of how to control escapes. So Canada through regulation, through building and going beyond regulation is doing an even better job.
Another area is monitoring the ocean environment and monitoring the benthos, that is evidence of impact below the farm sites. Not every jurisdiction requires the farm to do that. Sometimes they have occasional input from a government organization. In Canada, especially on the West Coast we are developing huge data bases that demonstrate that our impact on the ocean floor is transitory, it is short-lived and is quite light, and that is standing us in good stead now as we move forward into evermore detailed levels of third-party certification that ask for that data. So in Canada, because we have been required to collect it as part of our regulatory compliance, we're able to turn around and supply that, whereas other jurisdictions are now having to start doing some of those sorts of things.
Senator Lovelace Nicholas: You mentioned that you have 15 businesses and partnerships with coastal First Nations, how many of these businesses are located on First Nations? You say you have 6,000 employees and only 20 per cent are First Nations, why is that? And the last question, is there any management positions for First Nations?
Mr. Backman: Marine Harvest on the West Coast here has protocol agreements with five different First Nations and 10 people groups and our level of employment varies, depending on the area and depending on the interest of the First Nation members to participate. In some areas it's a very high percentage of our work force, north of 60 per cent. It's 100 per cent in the processing plant in Klemtu, for example.
Other parts of the province are lesser. In Broughton it's about 15 per cent of our work force. It is not an area of human resources that we keep specific statistics on. We just notice that. We have an open policy and we extend our training, our technical and management training, to everyone who applies including First Nations individuals.
I can't bring to mind management positions right now but I know there are a couple of First Nations participating in our management track at this point in time so it is something they are taking opportunity.
There are other business aspects that First Nations have interest in, being involved with our business, not necessarily in the growing the fish side of things. For example, there are two very large and successful businesses associated with Marine Harvest. One is collecting the fish from the farm sites and bringing it into the processing plant. The harvesting boats is a First Nation business, and the second one is the freight that brings equipment to the farm sites. That's also operated with a First Nation partner as well. So there is quite a bit of integration.
I'm sure that Stewart could perhaps add a few points as well but it depends on what the individual First Nation chooses in terms of their agreement that we have with that band.
Mr. Hawthorn: Yes, and from Grieg's perspective it is a very similar picture. We do use water taxi services that are First Nations owned and operated. We use whale boats which transfer living fish as contractors that are First Nations owned and operated. We provide organic material, fish that have died, to a First Nation that is developing a fertilizer composting facility.
So we are certainly integrating in that perspective. And as Clare said, we work in the traditional territories of five First Nations, we have got formal agreements with three of those. We are in good relations and working on formalizing relationships with the other two nations that we're working with.
The model is very different. Different nations have got different needs and wishes. I believe that my job as one of the leaders of Grieg Seafood is to go in and listen to try and really hear what the needs and aspirations are and then to see what we can do to come up with a common approach going forward.
Senator McInnis: Thank you for coming. It's been an interesting couple of days for us, particularly a senator coming from Nova Scotia.
Less than 20 per cent of Canadians live in rural Canada and part of the reason for that is that there are not many jobs and when the economy suffers we also lose our institutions.
So I think aquaculture is important but it's important it be done correctly. And it appears that in the East we have more challenges in terms of getting aquaculture off the ground. I take it you are a part of the Canadian Aquaculture Association?
Mr. Dunn: Yes.
Senator McInnis: I commend them for their R&D review in 2013. I thought it was thought-provoking and I thought it was extremely candid and honest in terms of where aquaculture is and some of the challenges that you have.
Perhaps you could tell us, I will just ask a few questions and perhaps you could respond. Who makes up your membership? Who funds your organization? What kind of dollars do you put into research and development? I think that's important because, and perhaps you could tell us who participates in R&D with you? Is it the government, is it all three levels of government that participate.
I know that here in B.C. your fishery is operated by Fisheries and Oceans and void of provincial participation. Could you just elaborate on that and if I have time, Mr. Chairman, and perhaps it will come to the next round, I will get into some other areas.
Mr. Dunn: I will take the first two. Who makes up our membership? We have 37 members of the BC Salmon Farmers Association and those are producers, suppliers, service suppliers, full cradle to grave, of the salmon farming industry as well as some other. We have a Sable Fish member producing sable fish in Kyuquot and so our members are holistic in terms of the association. Our association is entirely self-funded by the membership and working together on a collaborative nature to promote the interests of salmon farming in B.C. and to cooperate at an industry level to make practices better. The level of sharing of information in this sector is incredible.
I was at a conference in Boston two weeks ago and I learned more about the sharing on a global level and, globally, the sharing in aquaculture outstrips any agricultural sector on the planet. So that's something we are very proud of.
And the strong are making those who aren't as research and development strong, making them stronger through sharing.
Mr. Backman: On the R&D side of the question and the funding there, it's a participatory model where the companies are involved with their independent corporate-based R&D, and where there is opportunity to receive funding from federal granting agencies, we do apply for that opportunity as well. As to the amount in terms of awards federally, although it's, you know, very appreciated, it is small compared to the amounts that the companies are putting into R&D corporately in order to address some of the fundamental issues about growing the fish.
I'm going to cycle back to the fact that under the current Fisheries Act regulation, most of the funding that comes forward is to look at environmental impacts, and rightly so; we have to turn an eye to understanding those implications and reducing them to the greatest degree possible. Very little funding is available for stock development, fish development, vaccine development and fish health, and that's the sort of thing that we feel could be under an aquaculture act as it would make provision for bringing attention to those sorts of funding opportunities that are missing from the plate right now to a large degree.
Mr. Hawthorn: And just to reiterate, we are not looking for a lot of government dollars; we are working on improving the health of our fish through vaccine developments, through improving our cooperation at the farm level between different farming organizations and companies to make sure that we're working together if we are in a shared area.
We are working on feed developments with our feed suppliers to make sure that we are producing and using feeds that are using less and less fish meal and fish oils so that we can make sure that we are net producers and we are net producers of fish net.
Looking at our wild and farmed interactions, we are very interested in continuing to demonstrate that there is no impact. Those are the sorts of areas we are working on.
Senator Munson: Just a different tact and thank you for your answers today. I just thought of it since I'm on the West Coast and there is always concern about the environment and ecological disasters, and it has happened in the past with Valdez and those kinds of things. Does the BC Salmon Farmers Association have a viewpoint on the Northern Gateway? Do you have conversations along this line about your concerns and worries particularly about catastrophe in your industry? Are there any plans that would be put into effect if something happened? I would just like to get your view on the environmental question and survival of your industry.
Mr. Dunn: I think Clare can speak more to some of the plans that are in place, which would be company-specific in terms of dealing with their fish, but as coastal people we are of the utmost concern for the environment on a daily basis.
Our members and employees in salmon farming probably spend more time on the water than most sectors and are very in tune with the environment and love living on the coast of British Columbia because they love the environment we're in.
We certainly do think about our co-existence with other sectors and obviously the health and cleanliness of the oceans is of the utmost importance to our business.
Mr. Backman: I think from a company perspective in terms of concern, if you will, all the farms are operating in the ocean environment now. The ocean environment is a busy environment. There is lots of vessel movement and, as we know, there are tankers of oil moving down the coast on a daily basis. So the potential that we look at for the risk of dealing with any kind of a water quality change or spill, that kind of material, is already on the radar for us. It's already something that we're prepared, at every farm site, to deal with. We have the booms to clean up any small self- generated spills.
I'm repeating myself now, but we are aware that vessel movement can result in spills and occasionally, from time to time, we have to deploy our booms to keep a surface spill away from our farms.
What I'm trying to say is at this point in time we don't foresee any major change to the existing situation that we have on the sites right now.
Senator Munson: I was just wondering is there anything we can learn, you talked about the Norway example and the oil rigs, I mean both industries are co-existing quite successfully.
Mr. Hawthorn: I think that's right. Grieg Seafood doesn't have a view one way or another on Northern Gateway. That is the discussion that is going on between British Columbians, Albertans, Canadians, coastal peoples, First Nations and the Government of Canada. As for our farming sector there is very strong regulation that demonstrates that we've got a good track record. I will leave it to that process to run its course and for a decision to be made.
What I can say though is a few week ago, a tug sank in the Tahsis Inlet on the West Coast of British Columbia and our people went to help to get that vessel out of the water and make it safe.
So having people, farmers who are committed to their stock and committed to that environment, and with resources they can help. It is something that is a good thing.
Mr. Backman: If I could just add to that really briefly if I may. In my 27 years of working on the coast what I have seen in terms of the number of people who are professional mariners in a general sense is that they are declining. Some of the First Nation people that come to us are asking us to provide opportunities for their young people to reacquaint themselves with the marine environment.
What I'm getting at here is the infrastructure that is currently operating on the marine environment in the central coast, north coast, has been going down over time. So the development and the interest in the Northern Gateway, it is also having a side effect of bringing more people onto the water. It has the potential of bringing more active mariners and newer investment in vessels and service equipment, which we would welcome.
Senator McInnis: I want to visit for a moment the Cohen commission because there has been some discussion this morning already about the potential of an aquaculture act separate and apart, standing on its own, which I incidentally think is a good idea and so does Justice Cohen in his report. He states that that probably is a good idea, but I want your comment on this and you will help me if you will.
As I understand the B.C. Supreme Court decision, they determined that aquaculture was a fishery and it was not farming and because of that, I think that may pose some difficulty in the plight of those that are looking for a stand- alone act. Could you comment on that?
Mr. Hawthorn: Clare is deeply involved in the process so he is probably in the best place to talk about that.
Mr. Backman: I think the way I would approach answering that question is go back and revisit the decision that brought aquaculture under federal regulation. At that point in time the question was constitutionally whether it was to be regulated under the province or under the federal government and the decision there was constitutionally it had to being regulated under the federal government, and the best place for it to be at that point in time was under the Fisheries and Oceans barring any act that it could be housed under.
So Fisheries and Oceans have taken that on and adapted the existing regulation in British Columbia, for example. I don't see the fact that they deem us as a fishery under the auspices of the act as being a necessary permanent barrier towards developing an aquaculture act which would, as I mentioned before, be an umbrella that would define things that are missing under the Fisheries Act.
I think it's important to realize the Fisheries Act is not going to go away. It's important that conservation of the wild fisheries be maintained at a high level so it's going to remain and anybody operating, including ourselves, in the oceans of Canada are going to be subject to the Fisheries Act but an aquaculture will bring attention to those aspects that the Fisheries Act is blind to.
Senator McInnis: Well, I concur. I certainly hope that we can find a way to have a stand-alone act and I think that would give the import to aquaculture in Canada both from an economic point of view and it will probably loosen up the strings of dollars that would go in terms of the development of the industry. And so I applaud you for going that route and I think it is something that we should, as a committee, seriously consider.
But Cohen also talked about the Fraser River sockeye salmon, and was mindful of the fact that there hasn't been sufficient data to make a determination. But he said that as a result of the uncertainty the commission applied the precautionary principle to net-pen aquaculture management, and called for a moratorium on all farmed salmon expansion in the Discovery Islands region of British Columbia while the data was being collected. After data had been gathered it recommended a test of minimal harm stating that, ``DFO cannot confidently say the risk of serious harm is minimal. It should prohibit all net-pen salmon farms from operating in the Discovery Islands.'' What say you about that? Is that a concern to you? Is it accurate?
Mr. Hawthorn: Well, so what we have already said is we support all of Cohen's recommendations, including that relate to salmon aquaculture.
What I go back to is what Cohen did say, and despite all of the rhetoric that you may or may not have heard over the years from people who, in my opinion, woefully spread misinformation, that all of the research that has been done up to this point doesn't show any significant harm or risks.
But you are right, he then went on to say, this is me paraphrasing, that this is such an iconic and important thing — wild salmon to coastal B.C. and, in fact, into the interior of B.C. because that is where the salmon go — that we have got to make sure we do everything we possibly can. And again we support that.
We as a farming association have been gathering information, through a series of workshops — I have got number 3 coming up in early May — to define what does risk mean, what research questions do we need to answer so that we can start to undertake some of that work. Some of it will be by us; some of it will be in partnership with the department; some of it will be with academic institutions going forward. But, hey, we have got to make sure that we can give British Columbians and Canadians absolute confidence that what we are doing is being done well and being done right. And I believe we are but we need to continue to keep looking and researching as we go forward.
Senator McInnis: Just a couple of other questions. Just to get this on the record because I think it is very important and it is part of the difficulty in the East — current and depth of water
We saw and visited some excellent sites over the last couple of days. One site, I think, was 400 feet deep and all kinds of current. That is not the case in many that had been approved, not many, but some that have been approved in Atlantic Canada. How important is current and depth to your operation? I mean would you approve one, for example, if it were 13 metres? You don't have the approval but would you agree with it?
Mr. Backman: The current regulation in British Columbia would prohibit us from even trying to find a site in that shallow of depth of water. You are quite right, adequate depth is important.
I will come at it first from the regulatory perspective and then from a company perspective and try to be brief. From a regulatory perspective our farm site cannot even have a shadow on the ocean floor that is shallower than 30 metres of depth. So you have to be in deeper water than that. But our equipment maintains that we look for depth at a minimum of 50 metres so we are talking closing in on 200 feet of depth at a minimum as a company when we go looking for an appropriate location, and that's to say nothing of all the other habitat aspects that we have to evaluate to make sure we are not having any negative impacts or potential negative impacts on valued ecosystem components as they are called.
Senator McInnis: That is interesting because that is another reason why there should be a national act that has concurrent jurisdiction with the provinces and the government, analogous to the Criminal Code because here we are out here and you have a regulation stating that you have to have certain depth. That is not the case in other provinces.
I quickly want to go to one other subject if I may. The Centre for Aquaculture Health gave us a real lesson into sea lice which is a problem which, as I understand it, can only be treated with SLICE which now apparently in New Brunswick in some of the farms do not even use it because it doesn't work; that it is now to the point that it doesn't have any effect on fish. If I could get your comment on that but the other is that they are looking at other things such as kooners and blue mussels.
How big a problem is it here? What do you use here to treat it and what are the results?
Mr. Hawthorn: Well sea lice management, just to be clear, isn't a risk to wild fish. It is a risk to our farm fish. It is actually very well managed here in British Columbia. Our key tool is really around site fallowing and area management so we have led the world really. In the three farming companies working in the Discovery Islands area, for example, have got an area agreement where it is an all-in all-out so having that gap is very important in terms of mitigating and preventing the risk of resistance or the efficacy of SLICE becoming less.
We are also fortunate in British Columbia to get a lot of rain. Sea lice don't like rain. They are true marine animals and so we get a natural benefit by farming here on the West Coast with the massive amounts of rainfall that we get.
Going forward, we think it makes sense to have more than one treatment option for a potential health concern for our fish and so we think it makes sense to have a regular regime that makes that possible and we would like to see some options.
We are, as a farming community, looking at hydrogen peroxide as a possible tool to be used in the future and that is being trialed now, and I think that's very important that we do that and I think that we should be doing that.
My parent company, Grieg Seafood in Norway, we use small Wrasse in our pens. They are to clean lice off of fish and have become very successful at doing that in one of our farming regions there and so basically these cleaner fish are kept in the nets.
What we have learned over the years is that we have to keep the nets really clean because the cleaner fish will eat anything, including stuff that's going on the net. So if we want them to clean the lice off the fish, we have to really clean nets.
So that's that research you were talking about earlier, Senator McInnis, where we have got to keep on looking at alternatives going forward, if we want to see our farming sector grow and I think that we can.
Senator McInnis: Is it done by regulation or is it just good practice by the individual companies?
Mr. Hawthorn: It is good practice by the farming companies and that's what we do and it's a very important part.
Senator McInnis: But it is not regulated.
Mr. Hawthorn: My understanding it is not.
Mr. Backman: It is only mandated, fallowing is required in order to get the condition of the sediments under the farm site back to a minimum level of impact, so if you have exceeded that then you will have to fallow for a period of time until the sediments return to what is considered to be a baseline condition before you can put fish back in. So it is captured in regulation that way here in British Columbia and we do accommodate that.
Most of us operate our farm sites at such a low level of impact that we could operate and put the fish back in with a very minimal fallow but we tend to, for fish health purposes, to take everything away and clean it and put in new nets and all that, so it takes two to three months before we put the fish back in again.
Senator McInnis: But because you have, you don't have to worry as much?
Mr. Backman: That is correct. That is part of the reason why there is a limited amount of effect on the bottom.
The Chair: A final comment because we have to move on to Senator Raine.
Mr. Hawthorn: Just going right back to your very first comment around the support that we, as a farming community, need in order for our sector to grow. In British Columbia we are not asking for government dollars. We do not want or need government dollars. Our shareholders are willing to invest. They just want some certainty. They want some time limits around decision-making and they want some certainty around tenure.
The Chair: Thank you.
Senator Raine will have the last question.
Senator Raine: When you mentioned in the beginning about the barriers to our industry, our farming, aquaculture farming reaching its potential, you mentioned the number one barrier being public perception. I would like you to comment, if possible, on how the public got so misinformed about the negative aspects of fish farming that, in my opinion, have been blown way out of proportion, and I have done a bit of research on some of the studies that came out early on that really accused farm fish of being bad for your health
I just wanted to ask you how do you deal with that as an industry? I mean, it seems to me that this is a big concern. We should be looking at things from a scientific basis and we are not. We're doing it from an emotional standpoint, and it is a big issue. I would like you to comment on that, please.
Mr. Dunn: Fear is a very powerful emotion. Fear coupled with uncertainty is very powerful for people and the ocean is an incredibly mysterious place to a lot of people including scientists, and that is why there is so much important research happening, and I believe that's pushing fear on to the population, without accurate information is really what is happening. It is our job as a sector working with government to report and to show our compliance and to show that we are meeting global standards and producing quality fish.
Senator Raine: I looked at the report in, I think, 2004 called the Hines report which seems to me that started a whole campaign against farmed fish and the impact was very serious if you look at what happened in the following years. How do you compete against misinformation?
Mr. Backman: It is a challenge once a report like that is out because that report is a point in time evaluation of contamination levels of a variety of environmental contaminants in a variety of fish species. The focus brought to bear on that report was to farm salmon, not necessarily the farm salmon in B.C. but farm salmon elsewhere.
The benefit that we have in growing fish, though, is that we can look at our raw materials that go into the fish. As has been mentioned by Stewart, we are actually reducing the amount of fish meal and fish oil that goes into the feed and it is in the fish oil and fish meal where the environmental contaminants occur.
So if we were to rerun that study today we would find that the levels that we report in the Hites report are very high compared to what the farm salmon is today. It is much lower. That's important for the consumer to realize. How do we get that message out, because it doesn't matter how many times we say that, someone in the reporting media, for example, can always go back to the Hites report, even though it is out of date now, and say ``But you said back here.'' This is the thing and that is the contrast that you are faced with every day.
It doesn't mean we don't stop talking about our improvements and it doesn't mean we don't stop put out websites with the facts, the current facts the way they are, but drawing peoples' attention to a good news story is often difficult because, as Jeremy said, fear is a very powerful emotion.
Senator Raine: Any kind of contaminants in fish are present in wild fish as well as farmed fish. Which has more contaminants?
Mr. Hawthorn: Well, contaminants is the fear. Just to be clear, the levels of anything, any contaminants in our fish are at miniscule levels. They do not cause any impacts to your health. The benefits of eating seafood are massive to your individual health, to your kids' health, to your grandkids' health. We should be eating more seafood. This is where it is so important that we get better at not just farming and being farmers but at communicating what we do.
I have talked about it before; I think that we don't need the government going out there telling our story. We do need them telling their piece of our story which is the good job that they do of regulating us and looking after making sure that we are following the rules and demonstrating that we are following the rules but we also need to play our part and we have got a responsibility there as well for sure.
And you know we are, because of that fear factor, because of wilful misinformation, in my opinion, spread by some groups, British Columbia and Canada has missed out. We have missed out on jobs. We have missed out on economic activity and we have missed out on seafood. We have missed out on healthy food choices for Canadians and for our customers around the world and that's something that we need to get better at so that we can play our part going forward.
The Chair: Thank you senators and our panelists for a great opportunity to hear from you. I have been around politics now for about 25 years in our three levels of government and very, very seldom have I had a group come before us and say, ``We do not want government dollars,'' so it is a bright light. We'll see where we go from there.
I'm going to ask our next panel of witnesses to introduce themselves. I understand you may have some opening remarks for us before we get into questions. The floor is yours.
Sean James Wilton, President and CEO, AgriMarine Holdings Inc.: Sean Wilton with AgriMarine. We are an aquaculture technology company and a small scale producer here in British Columbia.
Garry Ullstrom, CEO, Kuterra Limited Partnership: Garry Ullstrom from Kuterra Limited Partnership just up the highway here. We've just built a land-based close containment recirculating aquaculture system, thanks to the Government of Canada's assistance partly and welcome to all of you from B.C. who are from out East. I do have some opening remarks. Is now the time to make them?
The Chair: The floor is yours, Garry.
Mr. Ullstrom: Thank you very much. Four years the 'Namgis First Nation, the SOS Marine Conservation Foundation, and Tides Canada agreed to work together to assess the profitability of farming Atlantic salmon without any risks of negative impacts to wild salmon. With support from those organizations and Sustainable Development Technology Canada, DFO, AANDC and others, the Kuterra team is well on its way to achieving this goal.
Kuterra's fish farm will produce 375 metric tonnes or 825,000 pounds per year of premium Atlantic salmon in a land-based closed containment recirculating aquaculture system or a RAS system that is completely separated from the marine environment. The first fish have been in the facility for 13 months and they are now up to 8 kilograms in size and will be harvested weekly on a continuous basis starting in two weeks' time.
We set out to prove three things: 1. That it is technically and biologically possible to grow Atlantic salmon to harvest size, 3 to 5 kilograms, in roughly 12 months in a large commercial-scale land-based RAS facility. This has been achieved. 2. We wanted to prove that land-based RAS fish farms can be operated without negative impacts on the local or marine environment. This too has been achieved. 3. The third goal was to be profitable and, therefore, economically sustainable, even though ours is a small pilot facility. Due to strong demand for sustainably produced seafood, most of our fish have been presold at a premium price and therefore we are confident that we will achieve this goal as well.
We have now moved the goalposts and our new goal is to achieve an ROI of 15 to 20 per cent based on a conventional financing structure. Based on information to date from the pilot, we've modelled the addition of a second growout module, which indicates that the 15 to 20 per cent target may be attainable, subject to significant reductions in the capital cost being achieved.
Some preliminary findings or key things that we have identified so far are: 1. That land-based RAS facilities don't appear to use much electricity. 2. That RAS facilities need very little space. 3. That RAS facilities use tiny amounts of water compared to flow through hatcheries like the one 'Namgis operates under contract for DFO. 4. That fish welfare, based on fish survival, fish growth, and lack of disease outbreaks, appears to be extremely good within our facility. 5. We've learned that RAS systems grow a better quality fish than open net-pens. 6. That the fish may actually grow faster than we had expected.
Lastly, regrettably, we learned that the facility cost twice as much to build as we originally thought.
Our focus at this point is on reaching a steady state of operations and increasing our profitability. Looking ahead, in closing: 1. We need to create additional revenue streams to increase profitability. One of our competitive advantages is that land-based fish farms capture the waste from the fish. We need to figure out how to turn that waste into profits, for example, by converting the solid wastes from the fish into compost and by growing vegetables, ornamental plants, or fish feed with the liquid effluent. 2. After growing out three to four cohorts we need to evaluate potential designs and costs for building a second module. Building a second module will not only demonstrate that capital costs can be reduced, but profitability will improve significantly. 3. The single largest barrier to the widespread adoption of this technology is its high initial capital cost. From our pilot project experience we have identified a number of areas where capital costs can be reduced. Collaboration at this early innovation stage is key to accelerating the development of this technology, which we feel strongly will become more and more appealing as the open net-pen industry seeks solutions to the sustainability challenges it is facing.
Therefore it is critically important that government continue to provide incentives or assistance to build ideally at least one new facility every year for at least a five- to seven-year early innovation phase and that the knowledge that is gleaned be shared. We have regularly shared, and will continue to share, information about the results from the pilot with a broad range of stakeholders. Thank you.
The Chair: Thank you. Mr. Wilton?
Mr. Wilton: Yes, I have a few opening comments as well. I have been involved in closed containment aquaculture and sort of aquaculture innovation research for almost 20 years and mostly in the hatchery thing, but I have also built projects international for the UFDA, USEPA, Alaska Fish & Game, 11 major Chilean hatcheries, projects as part of the Jordan River water treaty demonstration facility in Israel, all around the world. And today I'm not going to actually speak to any of the particular technology work we are doing now in terms of our own closed containment work that we are installing in active farms now, but more echoing what was already said in the earlier session about the impacts on some of the challenges we face in regulation here in the industry that limit access to scale and, as a result, limit access to capital.
I am actively out there as a new entrant to the industry, although not as a person experienced in this but corporately where we are setting up and growing new farms. I am out on the international capital markets seeking investment to come into B.C. and I compete with global technology firms and other firms in other territories for access to capital.
So just thought I would go over a few points. We have already covered quite adequately what the scale of aquaculture is, its trends and how marine-based source proteins will be a significant part of the challenge to feed the 9 billion people coming up in 2050, but that drives aquaculture to really become a commodity business and as with all commodity businesses scale counts.
Canada is falling behind other significant salmon-producing nations in production, investment and R&D. I thought I would start with a comparison of two coasts, Norway and British Columbia — two equal coasts, one missed opportunity.
As a couple of points of trivia, the coastal length of B.C. is 25,725 kilometres, the coastal length of Norway is 25,148 kilometres. Almost identical. Our populations are also different by less than 500,000 people, less than 10 per cent difference between the two countries.
When you look at the growth comparison, though, the history of growth in the industry, Norway has been practically a straight upward trend line resulting in currently over 1.3 million tonnes of production trending strongly toward 2,000 metric tonnes of annual production by 2020.
Canada, not just British Columbia, on the other hand, stalled south of 160,000 tonnes and is actually trending backwards. In terms of barriers to growth, in global markets capital and opportunity flows towards areas of greater certainty. This is because lower certainty equals greater risk and less willingness to invest. Certainty of gaining and retaining tenure for aquaculture sites is perceived to be a larger risk in B.C. compared to other places. Length, cost and risk of gaining licenses here drives industry investment elsewhere.
Fewer sites finally equal smaller scale and higher costs, lowering competitiveness for the industry here compared to its global peers. In a smaller primary industry operating at lower margins as a result of these higher costs limits R&D and business development in the innovation technology sector, which is where it hits new technology companies and smaller new entrants, companies like our company.
There are two practical examples of this. We've recently acquired a farm that has been operating in B.C. for a number of years. It is a lake operation, an inland lake operation. It's not actually in the ocean, and it is attempting to be one of the more innovative operators in the province testing, recirculation aquaculture in its hatcheries. It currently heats its hatchery with recovered oils from its fish processing plant waste. It has a USDA certified organic fertilizer derived from fish products. It is trying to be very innovative but it has been over two years in process for a license amendment and actually doesn't seem to be changing much. It still doesn't have any clarity on when the amendment might actually ever be issued. That, of course, is causing concern for the investors that I have convinced to put money into the place.
Also, we had another site which was the only licensed farm site in what would be defined as an urban containment area. It was a marine site, but there was a lot of confusion about the ability to actually transfer license with clear process or clear timeline, so the investors in that case walked away and chose to just let the license go rather than reinvest significant capital in the community to build that site up which could have been a very good R&D site.
What this means in terms of opportunities and possible future steps from my perspective is that when we look at the world and go to the international investment forums, you can easily see where the scale of real investment is happening and, unfortunately, it is not here.
Norway can claim that aquaculture is its second largest export behind oil and gas. B.C. has the natural marine and human resource potential to make the same claim some day. Norway is spending corporately and in government annually on aquaculture in excess of $100 million in R&D, including over 10 million in optimized post smolt research in closed containment, an area that I am competing in.
My own former subsidiary in Norway now has more access to research dollars directly than we have as the parent here. Canada could boost its R&D support in aquaculture for new species work, best husbandry practices and new technologies. This doesn't have to come in the form of direct subsidies or actual cash outflows. It can just be a supportive framework for R&D.
Norway does a very good job of incenting companies to reinvest profits in R&D, internally corporately.
Canadian governments could almost offer more formal support for aquaculture growth in B.C. in many of the same points that were already raised by Stewart in the prior panel here. Most importantly, Canada and B.C. could pull together to offer certainty of timely and durable tenure to farm sites on the B.C. coast.
When I go to my investors and say I want to bring tens of millions of dollars of investment into British Columbia and I am going to build an economically sustainable business case here for growing an industry or being part of that industry, and I can't show them any clear pathway to growth; I can't show them with any certainty that I will be able to get new sites to grow the business or even to grow the site we already have; certainly it makes it a little more challenging to get the funding I am asking for.
People are willing to look at B.C. They recognize that we have a great asset in both the regulatory environment in terms of it being a well-defined product in terms of a good quality product, clean water, people who are knowledgeable in fisheries, and that is how we are able to attract $30 million so far this year in external investment into the province, but we need to do more. And greater certainty in being able to get opportunities to grow the business would be of great help. Thank you very much for the opportunity to speak.
The Chair: Thank you very much. Senator Hubley will have her first questions.
Senator Hubley: Thank you for joining us today. I am going to go back to AgriMarine and I think you opened, Mr. Wilton, by saying that you would not share with us some of the technologies today. Did I hear that correct?
Mr. Wilton: I just wasn't going to focus on that. We do floating closed containment as a company. We are looking at trying to address some of the issues that were addressed in Garry's speech which is that closed containment is not the be-all and end-all. A lot of people say that it should be different, we shouldn't do nets, we should do something else. It is highly improbable that you are going to see a massive scale change like that but in some ways, in some parts of the life cycle it can be useful, it can be useful for certain stages of life cycle or different species work or in specific locations where net cages can be challenged.
The issue, of course, is capital. Front side capital in closed containment is greater than that in nets, and you will never be able to erase that deficit.
What we are looking at with our floating closed containment is trying to gain sort of a paradol principle thing. Most of the benefit for the most efficient application of the smallest front side amount, which is a simplified version of a semi-opened floating closed containment. We can make very large closed containment vessels where we can control oxygen levels, we can control current flow rates. We have solid wall barrier to the outside and we can capture, not what I would call waste but recoverable nutrient for future subsequent use in fertilizer products.
Senator Hubley: It was interesting, because I think we found that the industry is certainly moving forward, albeit maybe not as quickly as you would like to see it, but there is a great deal of information that will sustain the industry. I'm wondering how you would feel about having an act to govern aquaculture, and then what would the stakeholders responsibility in sharing all of the knowledge that they have in creating the policies and the framework for that act?
Mr. Wilton: In my opinion that would be very helpful. For the last 20 years I have been involved in the industry but mostly as a technology supplier, either in the form of consulting services, products, design, build, turnkey recycle hatcheries, that sort of thing. But this is my first experience in actually being a farm operator, a new entrant. Of course, in the industry I had known of the challenges but you don't really know until you do. And so in the process of trying to get new sites, in the process of trying to amend licenses on an existing site, as a new entrant it is actually somewhat of a bewildering experience and it is certainly a process.
And having some greater definition in the form of a specific act with clear guidelines and unified standards across the country would be very, very helpful, particularly as someone coming in or trying to bring large scale investment in from other aquaculture sectors or other aquaculture investment funds. No other sector in agriculture looking to invest in, say, beef operations, which our parent investor has — it has the largest organic Angus herd in North America — if I told them we might be able to get you a farm in two years if we can prove that we can have permission to have a farm, that just never would exist. And then to say furthermore that there is no specific regulation stating whether this is wild bison roaming through the wilderness or a farm, it would also be very bewildering to them, and having to explain that in investment boardrooms is very difficult.
Senator Hubley: I think I will leave that for now, Mr. Chair, and I will come back perhaps in the second round.
The Chair: Thank you vice-chair. Senator Munson.
Senator Munson: Basically I just have two questions for the moment. You talked about supportive framework and new technologies. Could you be more specific about that? I mean, not looking for big money but what would a supporting framework look like?
Mr. Wilton: Well, for example, let's look at what we're competing with. So we have this floating closed containment solution. Accenture, which is a large consulting firm, did a recent study of potential technologies that might be used in salmon farming. It was commissioned by the World Wildlife Federation. It pointed to the probable applicability of floating closed containment for early stage ocean life cycle in the salmon farming industry, growing larger smolt in what I will call a post smolt in a floating closed containment. Well, Norway has taken this very seriously and they have created a structure where the industry participants can cooperate together in an open technology development, sharing platform with some amount of government support but most of the investment is actually coming from industry. There are some tax incentives for them but there is also another carrot in that if they are participants in this joint government industry trial to test different technologies that there will be a pathway to research and development new sites.
Now those have economic value because you will have more production to offset some of the costs of doing the R&D. In Norway, there's up to 45 new technology development licensing sites that have been made available as part of this process. It is a very well structured, quite well thought out plan to encourage industry, both in the technology providers who are proposing various forms of different types of floating closed containment and also in the primary producers who would at some time be expected to be the customers of those technology providers.
So there is an incentive for the people to put money up on the farm of the operators because they could get access to new sites to do the tests on which would could lead to increased production, and because of that level of support and incentive in the primary industry there is support and willingness to invest in a good industrial framework for the technology developers to make investment in tooling, R&D science, primary prototype construction because you know that there is a ready home for them to go to.
Senator Munson: Would this be similar to the pharmaceutical industry in R&D? I ask that because you talked about a sharing platform. Does a sharing platform actually exist in a competitive environment in aquaculture in British Columbia?
Mr. Wilton: Well it is quite different than pharmaceuticals. Pharmaceuticals is very patent driven. There's extremely long product development approval and registration life cycle in pharmaceuticals, and as a result there has been a lot of lobbying and granting of long patent life for pharmaceuticals and very strong patent enforcement. That is not really the same setup we are in. They are quite secretive in pharmaceuticals about their formulations.
In aquaculture I might come up with what I would consider to be a novel floating closed containment thing and I might file patents, but the reality is you could do something similar and it would be difficult to challenge it in court in Norway. So as a result you are better off to share knowledge and find ways to make your technology more applicable to industry, make it more efficient, make it have some beneficial purpose and get that information out so that you increase the uptake rate generally for all the participants and you grow the industry.
So my bigger win, rather than hiding all my secrets would be to get it out there, get the knowledge going, get it as useful as possible, help grow the industry so I would have more customers.
Senator Munson: So what is the attitude in Canada then in sharing that knowledge? You talked about supportive frameworks, are we doing it? We are obviously not spending enough money on it.
Mr. Wilton: We are spending substantially less money than other places but we are doing something; Garry's project is an example. There is a land base facility not five kilometres from here that's an example of that, Steve Atkinson's project and both those projects are very open.
Projects that are funded by either the DFO research project funding platform or SDTC generally have a public disclosure requirement, sharing of data and knowledge. So if you enter in those types of funded R&D you can expect to be required to share, at least substantially most of the findings. So there is a spirit of sharing in R&D in Canada.
It's just difficult to attract the level of industry R&D required when the industry itself doesn't have a clear pathway to growth.
Senator Munson: Just one other question to Mr. Ullstrom. Your point three, what do you mean by subject to significant reductions in capital cost achieved. I don't quite understand that with your new growout module and targets.
Mr. Ullstrom: If we can reduce the cost of a second module. Our first module cost about nine and a half million dollars to build. So we feel if we can reduce that to $6 million based on the revenue projections that we have, we feel we could attain a return on investment, an ROI of about 15 to 20 per cent. We would have to figure out how to reduce the capital costs from our existing nine and a half million down to six which is a substantial decrease in costs but we think it's attainable.
Senator Stewart Olsen: Welcome both of you. I have a few questions because I think a lot of what we're doing is very applicable, in New Brunswick especially, but the closed containment systems, floating and land-based, why would you choose one or the other?
Mr. Wilton: I can speak to that because I build both of them and have built quite a few land-based facilities, both for hatchery and production, growing of various species. Largely it's cost benefit driven. In a hatchery setting land-based RAS makes a lot of sense because you can have large enterprise impact by being able to have smolt, or the small fish, in multiple waves throughout the year. You can only achieve this through being in a very controlled setting, controlling temperature, controlling light, being able to bring different waves of small fish out to the production sites at various sizes at various times of the year. They have a very high value density.
The small little fish, if say 100 gram fish is worth a 1.50, well on a kilo basis, $15 a kilo, your meat fish is worth, say, a third that. Already you've got a case where you can turn over a lot of volume through a heated recycle hatchery and you have a very high specific value on that product so you can afford to apply more technology.
If you took it to the next level where you were going to go, say, 100 grams to 500 grams you would need a lot more volume and the cost to achieve that volume on land would be commensurately larger and you could achieve most of the benefits with oxygen control without needing heat. So you can make the case then for floating closed containment taking over a winning position in some parts of that value argument.
In some species land-based recycle makes sense all the way through and there are some people showing commercial success even at full scale with land-base production facilities.
I was just at a very, very large sturgeon facility in Abu Dhabi, that they spent $100 million on to produce 35 tonnes of caviar a year. They called it a food security issue. I'm not sure that needing to have ready access to caviar at all times really classifies as food security but it seemed important over there. And so in that case really the only option they would have, particularly with the endangered species regulatory framework around sturgeon, it has to be a closed cultured, and having it heated accelerates the production cycle there. There would be no option to do floating closed containment or open nets for that specific application. So in some applications land-base RAS is the only option.
Senator Stewart Olsen: Just following up on that, I am assuming the regulations for most of this have grown incrementally. We started off probably with nothing and then the regulations and more regulations. Is there a big difference between regulations for closed containment and open net?
Mr. Wilton: Not really. For the floating closed containment there is actually no real difference in terms of any lessening of site requirements or anything like that. There is an additional challenge in that if you wanted to invest the capital to deploy any form of floating closed containment you would have to go through the amendment process that Stewart was discussing which, of course, is quite a bit of a mystery as to when you might ever get an answer, which is difficult if you are going to be spend millions of dollars. So certainly no favours are granted and even if you are doing it on land, a lot of times you fall in between the cracks of legislation. For example, if you are doing a land-based hatchery and you wanted to put it up, well there is no real way to have a specific aquaculture exemption for what the effluent coming out of the tailpipe of a recirculating aquaculture farm is and so you are forced to go through sort of standard discharge regulations that were largely written around municipal waste guidelines, and no other primary farming industry really has to comply with a lot of that. But if you build a land-based farm on sort of an open fee simple land you would be faced with the challenge of, well, your phosphorus level might be too high coming out of it. It's not just a coastal problem, in Ontario and Quebec they have major problems with their inland fisheries with compliance with phosphorus regulations which were written around large flows and municipal sewage regulations.
So that is another area where it might be helpful to have a regulatory framework authored specifically for aquaculture.
Mr. Ullstrom: Senator, if I could respond to both questions and starting with your first question first which was why would you select one technology over the other. As Sean indicated, sometimes it would be based on site factors. I liken it a bit to the forest industry where a forester can decide to take one tree at a time in a very environmentally sensitive area versus a clear-cut and he has a suite of options. So the industry it looks like is increasing the number of options it has and then the applicability of each can be applied where most applicable.
There was an article last week about a French company that is choosing to build a recirculating RAS facility for $17 million, 800 tonnes a year in order to secure a supply of high quality or higher quality Atlantic salmon because it delivers a premium quality smoked Atlantic salmon to the market. It was finding that it just cannot get consistent quality from the open net-pen industry, which I think was mentioned earlier today. It's about reduced costs, mass production.
So another reason, for example, for selecting RAS over other technology would be because you want to hit that high quality niche market. We are actually producing and selling a different product than the open net-pen industry. We are not competing toe-to-toe with them in the marketplace.
And lastly, as a producer, for example our community, the 'Namgis First Nation is situated in one place. We are not going to go out and build a plant somewhere in Eastern Canada or down by Vancouver. Not likely. We will look for opportunities in our area for creating jobs for our people. And so when we look at the capital that we have available and how we can best utilize it, it may come down to just a way of expanding our business. One technology may allow us to expand our business whereas the other technology wouldn't.
But your second point on regulations, is there a difference between the regulations for open net-pen and land-based. I'm not familiar with open net-pens. I'm just learning about the land-based industry. Certainly when we started planning and designing our project DFO was just taking on the responsibility of managing aquaculture and so they were busy moving the chairs around and it was very difficult, it was a very uncertain time. We couldn't find out what was required. It became a real barrier to development frankly. So I just echo the comments that have been made here by Sean and others that we would greatly benefit from an aquaculture act in terms of providing clear direction for the industry. Certainty certainly does drive investment, no question.
Senator Lovelace Nicholas: This is a fairly new project and it is still in its early development stage. I apologize if I don't pronounce the 'Namgis First Nations correctly, but how receptive were the communities to this project?
Mr. Ullstrom: The community was split. The community has been fighting the open net-pen industry because of concerns to traditional clam beds and potential impacts on wild salmon for the past 20 years. So the idea of growing what is viewed by the community as an invasive non-native species to many was very difficult to swallow and to accept.
At the same time the leadership, particularly through Chief Bill Kramer, was very solutions oriented and said we recognize that we need to come up with a better alternative, preferably one that will create jobs and employment and better our community, while at the same time trying to minimize or reduce impacts on wild salmon. So it wasn't an easy decision to make but ultimately the community agreed with the leadership and agreed to proceed with the project.
Senator Lovelace Nicholas: So there are a lot of people that were against it in the first place. Are they working in this project?
Mr. Ullstrom: We have four staff in the facility. We had to go to Ireland to find an operations manager with the skills to set this up and help us run it. We have two non-native, non-aboriginals working as senior technicians who had previous experience working in these types of facilities and then we created a trainee position so that we could start bringing in local community members. We have a 'Namgis member who is working as a trainee and we are looking forward to creating a summer student position as well to give an opportunity to experience working in the facility and hopefully light a spark for them.
Senator Raine: This is very interesting. Mr. Ullstrom, when we talk about the need to get capital costs down, obviously your project is a pilot project that has been funded completely by donations or sort of grants from SOS, Marine Conservation Foundation, Tides Canada and then some money from Sustainable Development Technology Canada. Is there any private sector or own source revenue invested in the pilot project?
Mr. Ullstrom: Yes, the 'Namgis have invested directly $1 million plus $300,000 cash in terms of business development costs, plus they donated land worth approximately $450,000. And they have provided loan guarantees of two and a quarter million. So the 'Namgis are heavily invested in this project to the tune of roughly $5 million.
Earlier, I mentioned that costs doubled, and thankfully the community stepped forward at that critical time and said, ``We stand behind the project, we will make the loan guarantees, we will inject cash in order to bring lenders on board.''
Senator Raine: And the doubling of the initial cost, was that just poor design or a poor estimation of costs or were there unexpected capital requirements?
Mr. Ullstrom: All of the above. Well, really the main driver was that the final design was very different than the conceptual design. We spent about $250,000 in the detailed feasibility study coming up with quite a detailed design. But when we put it out to tender and then started doing the detailed design work with the aquaculture engineering and supply company we came to realize that we had to change the design. That then drove the costs accordingly.
Senator Raine: I note that you have included geothermal heating of the water for the facility. Did that add an additional cost as well?
Mr. Ullstrom: Yes, the heating system was a huge challenge. It took almost a year of many people around the world giving it some thought. We didn't know how much heat the fish or the bacteria in the bio-filter would produce. So there was that whole calculation that had to be done. And then trying to determine how best to design the heating system to minimize operating costs and balance that with capital costs. So, yes, it is an energy efficient system. We received some power smart recognition and funding for that but it was a big challenge.
In the future, now from what we have learned about the heat the fish and the bacteria produce we can narrow the design parameters of future modules. We had to overbuild this first module because we weren't sure how the fish or the water quality would result. So we can really narrow that down for future modules based on what we have learned.
Senator Raine: Mr. Wilton, you have got experience with closed containment aquaculture plants around the world. Is what has been done at Kuterra different, or why would they not have been able to go and get an existing design and do it right? I am a little bit at a loss here. It seems almost like you reinvented a wheel if that's true, or is there just different circumstances?
Mr. Wilton: No, it is not really quite like that. A lot of the technology at 'Namgis has been used and in fact it would look quite similar if you went to see the mechanical treatment training components at 'Namgis and then went to some of the other recycle hatcheries on Vancouver Island. It would look quite similar.
The challenge was that they were breaking new ground going through to the final production phase, and also it was a quasi-government project as opposed to just a pure commercial project. It's different when you build a barn to put on a farm and when you build a barn to put on a university research centre. The cost structures are different.
I have worked everywhere from the rural scaled chicken barns to defence construction — so as expensive as possible — and so there is a wide range where the same conceptual thing can be costed.
And 'Namgis was a demonstration facility so it had to be held to the highest standards of design and reliability for seismic issues, for geotechnical constraints, drainage considerations, impacts on receding waters. It was a lot of advanced things done in terms of the geothermal that haven't typically been put in the commercial scale facilities or the commercial enterprise facilities so a lot of the cost discrepancy came in that.
It is a new industry. Even in our closed containment stuff we are seeing costs going down because in early stages your costs can decline very quickly. First, they can escalate quite quickly when you don't really know what you're doing and you have to actually build it in real life, and then each successive iteration can go down quite radically. It tapers off to a point where you get down to production levels and then each incremental change is a very small improvement in costs. But at the first stage there can be quite a large variance in actual costs because it is a new territory and then over time you can knock pretty significant costs off generation to generation.
Senator McInnis: Last evening we were at Taste of B.C. closed containment salmon farm which is at the experimental stage and the fellow spoke highly of open pen as well. Are you a member of the B.C. Salmon Association or the farmers association?
Mr. Wilton: The company that we purchased is and has been. We're just in the process now of seeing where we fit. There is also the Freshwater Aquaculture Association of B.C., so we're looking at also being part of that.
Senator McInnis: What species is in your operation?
Mr. Wilton: It is the same as what was in Taste of B.C., oncorhynchus mykiss, which is steelhead.
Senator McInnis: Do you have insurance that covers you in case of breakdown?
Mr. Wilton: No. We are self-insured. We do have a course of construction insurance for the new projects we're building, business interruption insurance. That is sort of for more regular commercial enterprise but the cost of crop insurance in aquaculture is quite high. And in small scale operations that are done a bit differently, they assign a higher risk factor so the cost of insuring the crop would be a little prohibitive for us at this point. We have been quoted more acceptable rates once we get to a certain scale, but then it comes back to how do you get to that scale if you don't know if you can get more sites?
Senator McInnis: Unfortunately, they lost 12,000 fish in Nova Scotia land-based and they had two back-up generators. Anyway, let me just ask you this. If you are doing closed pen or you can explain this latter, solid wall ocean-based, it conjures up in my mind that you are doing it for a reason, it's either cost or it's to prevent disease, it is less risky. Quality was mentioned and that may be it but could you explain why you would go closed containment versus open pen?
Mr. Wilton: Yes, there are some advantages to closed containment. You can avoid the direct interaction with the surface water environment, meaning that you have a closed wall barrier to prevent certain things that may be occurring at the surface level of the water. For example, with the farm we have, we are investing in closed containment because in the summer the water temperature at the surface is 24 degrees. Well, that is barely survivable for the fish and they certainly don't feed well. They suffer an immense amount of stress because they want to go down to the very bottom of the containers which is the nets that are currently there and then come up sort of reluctantly to feed in water temperatures and at oxygen levels that are very uncomfortable for them. It puts quite a bit of stress on them and introduces a risk of higher mortality rates, poor growth, poor feed conversion.
By having a closed wall you can isolate from that surface temperature, pull cooler water from down below and have the water at a more appropriate temperature for proper husbandry of the fish, which manifests in better feed conversion rates, better growth rates and lower mortality, so it just makes business sense.
You can also accelerate the life cycle which can increase your enterprise cash flow turnover by having oxygen levels up at the level where they want to be, not where the surface warm water is, which is a key determinant on how much feed the fish will eat. They need the oxygen to feed. It's sort of like trying to heat a building with wide open windows. If you have a net you're trying to heat the whole place or cool the whole place. It doesn't work. If you have a closed vessel you can keep a bit of a grip on it.
Floating closed containment that is relatively open doesn't have the same level of temperature control that, say, 'Namgis does because they basically have no exchange. It's kind of like the difference of your bathtub to your hot tub. You can't have your hot tub sitting there at 100 degrees all the time because you basically don't change the water over and it doesn't cost you very much. If you are changing the water all the time and paying to do it, then you are going to be paying a lot.
When I first started proposing building recycled hatcheries to the major salmon farming companies and I had this kind of do-gooder kind of attitude, ``Oh, they will want to do it just because they save hundreds of millions of gallons of groundwater and because it's sort of a green thing to do,'' well, I sold zero. When I sat down with a calculator and figured out that it would pay for itself very rapidly just by the amount or propane that wouldn't be used if you didn't just heat it up and then throw that hot water away, all of a sudden everyone was buying them. So it has to meet sort of the double green, it has to be environmentally green but it also has to be economically sustainable green. So it really comes down to, you know, a bit of social license to operate, but it also should have a performance benefit.
Senator McInnis: So your operations have nothing to do with trying to rid yourself of sea lice or transfer of pathogens or anything like that?
Mr. Wilton: Well, we are in a lake currently, so we don't have the sea lice issue. But there is anecdotal evidence and have done various experiments. We did a land-based pump ashore facility with salmon. We have done different versions of floating closed containment. We had them in the marine setting but we don't know why — whether we were pulling below some depth where some critical portion of the life cycle of the lice is or whether it's the fine oxygen bubbles or the current — or what the causative effect was, but in every crop we did we had essentially zero lice, and controlled pens right around us had lice. So we know that there was a benefit and it's one of the benefits that's being explored as part of this post smolt work in Norway. But there is no true causative linking in terms of pure and good science for that yet.
Senator Raine: I'm finding it fascinating because obviously there is a continuum between hatcheries which can be circulating and then the open, sort of closed floating pens and open pen as well. So there are different stages where the fish might be optimally produced from an economic point of view and move through the different systems. Would that be an accurate assessment?
Mr. Wilton: Yes, that is pretty accurate and it would be up to the individual companies to decide where specific technologies make sense. If a certain place could clip a couple months of sea risk off their production cycle by having a larger smolt entered into the ocean, well that may make an awful lot of sense, because you could put more fish through an existing site licensing footprint or in terms of area impact, determine how much of a site would have to be licensed or how much coast would have to be licensed to produce a certain amount of fish. So it might make a lot of sense for those people where that case is true to apply the technologies, but it very much is a continuum of level of capital intensity that can be absorbed at the various life cycles too.
Senator Raine: What is the cost difference between doing a floating pen, closed wall pen and land-based?
Mr. Wilton: Well, that is a continuum too. Land-based, you can see where you would be — floating closed containment, I'm just comparing volumes would be roughly three times cheaper than doing the equivalent volume in a land-based thing because we wouldn't need a bio-filter. We don't need the same electrical system intensity. We don't need the same pumping lift. We're lifting water only six inches as opposed to 12 feet, in terms of hydraulic lift, and that is a whole other exercise. We are basically almost using low energy mixers as opposed to high intensity, high energy pumps.
But then going to the next level down and, say, compare floating closed containment to the cages, you can make an extremely large net cage for a very low amount of money. It really comes down to comparing other factors if you wanted to do a direct comparison, because you have to look at, well, can you make a closed containment system that would last longer than a net? Can you do higher densities in a closed containment than in a net? If it is just on a volume to volume basis, there is really no comparison.
Senator Raine: And the floating closed wall, I can't quite wrap my head around it. It is not just a solid box sitting in the water. It has different aspects where the sediments go to the bottom and get taken out. It is fairly complicated.
Mr. Wilton: It is actually fairly complicated. You would think just making a tub to sit in water would be all build in by now but it's most certainly a little more complex than that. There's a lot of science that goes into the movement of the water to make the mixing of the oxygen and the cleaning out of the solids optimized while not making the current so fast that the fish are getting thinner just running on a treadmill all day.
There is a lot of balancing of those factors. Plus, the marine environment is a very stern test for any structure, and a lot of marine architecture and construction aspects that go into this.
It's another area where Norway leads a little bit. They have defined standards for this. There is a Norwegian standard NS9415, in particular, which defines standards for installation of marine structures. It's very clear guidelines so that you can say that you're in compliance with the safety and quality of construction standards for application. We don't have an equivalent standard here.
But it is very complicated to comply with that standard which we are now doing. In terms of the design aspects there is a lot of moving parts, not so much moving parts in terms of mechanics but in terms of the design complexity.
Senator Raine: Just to follow on. When you think about floating closed wall facilities, can they be located closer to the market? Does that make sense? I mean why would they necessarily be located in British Columbia which is quite far from any of the markets?
Mr. Wilton: Well, deciding factors for floating closed containment are actually somewhat similar to a net cage in that you are capturing the ``settleable'' solids but not the fine dissolved solids. You still do need relatively good water turnover. There are some places where you could make an excellent case for their applicability in, say, the Ontario trout industry where they have big issues with phosphorus, rich solids sedimentation deposition issues. You could make a case for floating closed containment there.
If it is an access or proximity to market argument, that's where you see the arguments floating back to the recirculating aquaculture system, the land-based ones.
A very large salmon processer in Poland of the Norwegian salmon is building a land-based facility now to bring it close to proximity of processing labour. And so there's different factors will drive different decisions as to which technology will be employed. You will see some of these food security and regional food access arguments are being used to fund some of these projects in places like Saudi Arabia.
The B.C. company Octaform is building some pretty large farms over in Saudi Arabia and they have a plan to spend almost $10 billion to produce a million tonnes on land in Saudi Arabia. That is a bit of a lofty goal but that is what they published recently.
Senator Raine: Thank you very much. Fascinating.
Senator Munson: After listening to the other witnesses in the first hearing we had, the message I think we are getting is that we have got to stop this nit-picking. There is just so much regulation and the industry would like to, once the rules are set, run itself. We are hearing such wonderful stories of Scotland, Norway and New Zealand and things are going on which seem to be very, very exciting, yet we seem to be handcuffing ourselves in this country. The other part of the testimony earlier was about the fear factor and the words used were to the effect that fear is a very powerful emotion. So in terms of the bigger picture how do we ever catch up in your industry?
Mr. Wilton: I think it is somewhat improbable that we will catch up to Norway. They do have a significant head start and because of that certainty was able to do a much better job of accessing capital and consolidating the industry, so the industry has a very high, what we would call, consolidation ratio in terms of Norwegian ownership.
Even in Canada, Chile and Scotland it is not too difficult to figure out that it is mostly owned by Norway. So catching up is a challenge but we could grow very substantially in scale.
Just echoing what was said earlier, we are not seeking no regulation or even necessarily less. You know, I'm a professional engineer so I'm part of a self-regulated profession to some extent where there is a lot of internal regulation and whatnot, but it still complies with a lot of government regulations. The practice of engineering isn't just on its own doing its own thing. Neither does the industry of salmon farming really want to be that. It just really needs to have a good clear path. Not necessarily less regulation, I don't think anyone is proposing there will be less site monitoring or less criteria for proper husbandry practices or anything like that.
It is more a case of if I were able to identify a very good site that satisfied all the requirements for proper flushing and access to water and access to being able to be serviceable in protective conditions so it wouldn't just be smashed up in a storm and I wanted to propose to investors that I would spend X millions of dollars to go build a farm there, that that committed money would be able to be economically deployed in a reasonable amount of time. We would know that, hey, if we start this process and satisfy our Canadian environmental impact assessment requirements, all the other navigable waters act requirements, all the other component constituents and the stakeholder referral processes that would go out to host First Nations and anything like that, it could be done. They would all line up — the permit to operate, the social license to operate, the actual Fisheries and Oceans license — and come into place in a predictable timeframe. That predictability is key to getting investment.
Mr. Ullstrom: Yes. Step one is to win back the social license. You need only to look to the clean energy industry in this province. In the last year they paid $350,000 to the Pacific Salmon Foundation to review their operations and come back with a report on their sustainability. They went to an independently respected body.
We can look to the forest industry back in the 90's in this province, when people were going to jail because the industry, frankly, lost its social license, and the industry turned itself around. It took a guy called Tom Stevens to say, ``Hey, we're doing it wrong, come up with a new solution, a better way to address the public's concerns,'' and the industry, to its credit, turned it around.
So the industry has to find a way to to win back that social license. Looking to other models can be the starting point, and then we can get to a point where, yes, regulation is much less an important part of the whole system.
Senator Raine: When you say the industry needs to win back the social license, are you referring now to the total industry, all aspects, land-based, closed containment, the floating and open net farming?
Mr. Ullstrom: Yes, all aspects have to have social license and in our project we've spent extra money to ensure, number one, that we have a license from our community, who were our greatest critics to some extent at the start, as well as the broader public in British Columbia. So we've paid for an independent environmental monitor, who is overseen by the Pacific Salmon Foundation, to monitor our project from start to finish and provide regular reports on the project. That's just an example of how it's done.
The Chair: Thank you to our panelists and thank you to our senators. It has been another interesting discussion for sure. We are delighted that you took the time to appear before us today.
We are continuing our special study on the regulation of aquaculture, current challenges and future prospects for the industry and we are delighted to have our latest panel appear before us.
I am going to ask you to introduce yourselves and I understand that some of you may have some opening remarks you would like to make. We would like to keep our opening remarks as concise as possible so we can get some questions from our senators. We are here to learn and we look forward to hearing from you. So if you would introduce yourselves first and then whoever would like to go first with opening remarks, feel free to do so.
Roberta Stevenson, Executive Director, British Columbia Shellfish Growers Association: Roberta Stevenson with the B.C. Shellfish Growers Association.
Robert Saunders, CEO, Island Scallops Ltd.: Robert Saunders, CEO of Island Scallops Ltd.
Brian Hayden, President, Association for Responsible Shellfish Farming:
Brian Hayden from the Association for Responsible Shellfish Farming
Dianne Sanford, Member, Association for Responsible Shellfish Farming: Diane Sanford from the Sunshine Coast and I am with the Association for Responsible Shellfish Harvesting.
Shelley McKeachie, Member, Association for Responsible Shellfish Farming: Shelley McKeachie from Denman Island, the Association for Responsible Shellfish Farming
The Chair: Thank you. I understand, Roberta, you wanted to go first.
Ms. Stevenson: Sure, I would love to go first. Thank you. I submitted a handout to you all some time ago outlining who we are and where we come from and what we do. And I know you are probably all great fast readers so I am going to assume that you have read that and certainly not read it back to you. If you are like me you hate that. I do know, though, having met you all and looked at where you are all from and sort of seen you yesterday a little bit, that there's some facts that might help you in your understanding of British Columbia and why we are different from the Maritimes, and with all due respect to Nancy and B.C., I think most of you work in a different environment than we do. So I have given you a new handout today just highlighting some of the research that's done that will help you understand the differences.
So in that light let's just start out by saying, as you have heard probably many times, that in the rising global demand for food shellfish aquaculture production in B.C. has, unfortunately, flatlined over the last decade. It's down 1 per cent while the production in Atlantic Canada is up 30 per cent. So I bring that to your attention. There is a different sort of culture here in British Columbia than the Maritimes as I said.
We have a coastline that is 20 times larger than Prince Edward Island. B.C. has shellfish aquaculture, though, that is one-third that of Prince Edward Island. In fact, the increase in shellfish aquaculture production in Atlantic Canada in the last decade is almost as much as B.C.'s entire shellfish production.
So interesting as that is, another factoid in your handout is that B.C. has lower production of shellfish aquaculture than many competing jurisdictions in Canada but also in the Western United States.
Global demand for our products is increasing so quickly, there is a demand to feed a larger and wealthier population and to replace the declining consumption of wild fish. So why are we so different than the rest of the world, than the rest of Canada and certainly way different than the Maritimes?
Well, for one thing there are different rules for different provinces when it comes to shellfish aquaculture. My first handout that I sent to you prior to my talking here today outlines many of those differences and it certainly highlights the need for us to create a one fair playing field for all of Canada, helping us to replace the Fisheries Act which, as you know, is a Wildlife Act that was never intended for a food farming sector. That act dates back to Confederation when there was no such thing as shellfish farming.
We need help to create a clear policy framework for shellfish aquaculture that recognizes that we are farmers in every single sense from the purchase of our seed from hatcheries to the planting of our seed right through to the sale of those animals in processing plants. They are our private property; they are not a public resource. They are bought and sold by the farmer.
We are really looking for the senate to support the work being done by the Canadian Aquaculture Industry Alliance. There has been a lot of time and money invested in producing documents to help you all see your way through this maze, but suffice to say our farmers are really struggling here. We have a decline in production as I keep saying over and over. We are not expanding. We have had a moratorium on expansion in this province for about 10, 15 years now. There have been no new sites. In fact, our sites equal the size of the Vancouver runway when they are all put together. We are a very small industry with a lot of opportunity.
So we have lost the political will here in British Columbia due to many different factors. I heard the word social license come up many times here in this room. I want to say shellfish farming has been going on here in this region where you sit for over a hundred years now.
We do have social license, we can show that to you on surveys done through our coastal communities. Our First Nation communities who suffer 90 per cent unemployment rate in the rural coastal areas really need this opportunity. We feel that we have been held back through a mire of complicated regulations, and I know you hear that over and over and over again but, really, shellfish farming is not complicated. It's a simple exercise. The oysters, the hearty animal, the scallop not so much, but certainly we can do a lot better and we are here to ask you to please help us make our goals a reality and see the industry grow. Thank you.
The Chair: Thank you.
Mr. Saunders?
Mr. Saunders: Thank you for inviting me.
Island Scallops was incorporated in 1989 to commercialize about 10 years of research that was done by DFO at Nanaimo biological station by Dr. Neil Bourne and it was this technology that with the assistance from Western Economic, NRC, IRAP program and B.C. Science Council that we got started. It was about a million and a half dollars.
In 1991 we were hit by disease and I spent about eight years of my career trying to breed a disease resistant scallop, and we developed a unique, hybrid scallop. In the following decades we have grown and tried to produce 15 different species from geoducks, oysters, clams, mussels, abalone, spot prawns, sea urchins, sea cucumbers, rock scallops, black cod, halibut and recently wolf eels. All of these or most of these species have been with the assistance with DFO's researchers. So our relationship goes back over 20 years and I think that is the foundation of our company.
So what is the economic benefit for this money that was put in by Western Economic? I give a way of an example. We have orders this year for about 100 million single oyster seed. That is gross revenue to our company of about $1 million. In less than 18 months, that will generate $20 million.
In comparison, for geoducks we sell about the same amount but we only sell it into Washington state. If you look at the comparisons of what Washington state gets from that million dollars in seed, it is 60 to $85 million in revenue. B.C. is obviously losing out in this economic potential.
We sell less than $35,000 worth of geoduck seed into B.C. and people ask me why. For the last 10 years DFO has not had a policy. There are few licenses around, some of them the underwater harvesters, some private organizations but really it's a sad commentary.
Recently DFO has solicited comments on integrated geoduck management framework, and I don't expect that to take another 10 years but it is a hard guess. Wild harvest of geoducks is a competing problem but it has steadily declined in the last decade, and I believe that this fishery cannot sustain itself with the increase in predation.
I'm going to give you some examples of the roadblocks that I see. I have been in this business since 1975. In 1979 we applied for a clam farming tenure for manila clams, and I was told by the Fisheries manager that I could grow clams as long as I grew clams where they don't grow. This has been true for the rest of my almost 40 years of experience in B.C.
For every species we have looked at we have had difficulty in accessing brood stock from everything from abalone to geoducks to spot prawns, every species we have looked at. So we have had various long lengthy delays and it's not just our company. We work a lot with First Nations and I was asked to go up to Haida Gwaii and see if I could help them with scallop farming up there five years ago. We put real money, about $25,000 of our own money into application fees. As of today they still haven't got their aquaculture license. Do they think they're being unfairly treated? Absolutely.
There is a disconnect between DFO managers, DFO scientists in the industry, First Nations and non-government organizations. Little or no consultation now occurs between these groups. So there is miscommunication, misunderstanding at all levels amend that has led to stagnation in this industry.
Island Scallops has applied three times for access to information to try and determine why DFO managers have refused us. That gives you an idea of how difficult it is to get information.
You may have seen us in the press recently talking about ocean acidification. We are the canary in the coal mine. As far back as five years ago Washington state hatchery started to see very, very high levels of mortality. We were all unsure at that time what the problem was. It's now very, very clear what it is. It is ocean acidification. We see PH levels on a daily basis now below 7.2; 8.2 is what it should be.
Last year we lost about 10 million scallops of two-year classes. They were almost ready for harvest. And this occurred during exceptionally high levels of CO2. Nobody in the scientific community expected to see these levels climb so rapidly. Atmospheric concentrations are about 400 parts per million so the ocean is at least three times that on certain days.
Oyster and scallop larvae are particularly sensitive to that. You cannot grow those in hatcheries unless you buffer your seawater. There is absolutely no doubt about that. I have spent an awful a lot of money on sodium carbonate and calcium hydroxide.
Some marine fish species are also extremely sensitive to this and I have some anecdotal evidence. So we have a correlation between these very, very low PH, high CO2 and our mortality. And essentially this has led to a worldwide search for answers. And this mortality is now seen in China and Japan. I had a guy fly all the way over from Sweden to talk to me, invested $12 million on a pacific oyster hatchery and lost all his money. His PH was 7.6 and his CO2 level was over 700.
We have been and are working with DFO researchers for the last several years as well as graduate students from the University of British Columbia to try and better understand the root cause of this mortality. Can we modify our farming practices and can we build more robust strains. The answer is, yes, we can modify our farming practices. We pay a lot of attention to what the ocean is on the days we enter our young seed.
We now cannot grow our scallops for two years. It will all have to be out of the water by one year or otherwise we will lose our animals.
The process for applications for research requires collaborative agreements between industry, DFO scientists, and it has now become very onerous, time-consuming and it has really resulted in a complete lack of initiatives. For example, DFO will not sign agreements with the National Research Council and universities who conduct this type of research.
So in summary what am I here to try to recommend? Since 2011 the shellfish aquaculture advisory panel has met six times. There is also a new committee, the Shellfish Aquaculture Management Advisory Committee which has met once. Clearly these are too few and far between for reasonable a decision-making. These committees should at least meet quarterly and have deadlines for decisions. Inaction on policy is not a reason for delay.
Collaborative research with DFO scientists should again be encouraged without becoming embroiled with red tape from Ottawa. Collateral agreements are onerous and very difficult. I used to be able to pick up the phone, talk to scientists at DFO and get answers without the rigmarole.
In the past we had experimental development permits for the industry which have been successfully used in the past and I think it should be re-examined in developing new policy. DFO policy development with stakeholders has changed dramatically in the last several years and is due to delays, indecision, and legal roadblocks.
I believe there is a detachment between DFO scientists and DFO managers. DFO managers are not required to consult with DFO scientists and it's clear that the managers don't do this. DFO scientists must have some input on these committees.
With policy grounded in science I think the industry, First Nations, NGOs and DFO we can move forward. Thanks very much for your attention.
The Chair: Thank you, Mr. Saunders.
Dr. Hayden?
Mr. Hayden: On behalf of the Association for Responsible Shellfish Farming, I would like to thank the committee for the opportunity to address you.
I would like to start off by mentioning that in contrast to Roberta Stevenson's portrayal of shellfish industry as being flatlined for the last 10 or more years, our perspective is it has grown exponentially since the year 2000. It may have flatlined more recently but there was a major expansion and during that expansion under B.C. legislative policies, we feel that there were quite a few bad decisions and policies and priorities that were developed concerning aquaculture that have led to the degradation of British Columbia shorelines and marine environments. And these concerns fall into five basic categories.
First, is poor siting which includes not only the location but also the scale and the intensity of aquaculture operations. And these siting decisions have resulted in acrimonious conflicts between producers, coastal residents, recreationalists, tourists and boaters, Euro-Canadians and First Nations and other people. All of this could have been avoided.
In some regions 90 per cent of the shoreline has been taken over by shellfish operations, notably in Baynes Sound, and other business sectors have been adversely affected including fisheries, tourism and marinas.
We have passed out some photographs to illustrate some of these concerns for you and those concerns are illustrated in photos 1, 2, and 3.
Second, in addition to siting, there are problems with large amounts of marine debris and pollution that the industry has generated that foul beaches on a regular basis, in addition to other objectionable audible and visual effects and these pollution effects are illustrated in photographs 4, 5, 6 and 7. These are labeled so you can refer to them afterwards as well.
Third, in addition to the conflicts and the pollution that the industry has generated, there is also the issue of toxins in a number of forms, one is cadmium, one is the leachates that come from the large amounts of plastics that are sometimes used, as illustrated in photographs 8 and 9. And some of these issues have resulted in the banning of shellfish imports to China in recent years from the Northwest Coast, all the way from Oregon to Alaska.
Fourth, there are a number of adverse impacts on many of the environments and other species where shellfish operations occur and these adverse impacts can be subdivided into a number of sources. One of the main ones is the use of predator netting, witch create a lot of collateral damage to other species and habitats from the netting as well as high shellfish densities, liquefaction of the seabeds used for harvesting geoducks, use of Styrofoam and plastics, and those are illustrated in photographs 9 and 10 as well as some of the previous ones.
There have also been major issues concerning beach and stream modification, driving on beaches without consideration of impacts to some of the forage fish, like surf smelt and sea lance. Driving on the beaches is absolutely devastating to the forage fish which are essential. I mean they are the basis of the entire food chain of all the other higher levels of fish, salmon, etcetera. So the spawning areas for fish are particularly important, and this is illustrated in photographs 11 and 12.
Some of the operations have indulged in systematic attempts to eliminate competitor species, including crabs, sea stars, moon snails, ducks, etcetera, and that is illustrated in photograph 13.
There has been very little consideration and inaccurate information on the effects of some of the shellfish operations on eelgrass which is essential for fish reproduction of many species, and so a lot of eelgrass has been intentionally or collaterally eliminated.
And finally there has been a lot of over-stocking in enclosed bays like Gorge Harbour that has created anoxic environments from the very large amounts of fecal material that these shellfish operations produce, virtually tonnes of fecal material per raft per year.
Finally, one of our major concerns has been the virtual impossibility of obtaining compliance with existing regulations and conditions of leases and the clean-up of derelict farms. This is illustrated in photograph 14 and some of the previous photographs as well.
DFO enforcement and monitoring officers have been cut back to inoperable levels and we have got derelict leases that we have been trying to get cleaned up for years and there has been no action.
So some of the upcoming issues which are of importance to DFO and this committee include the applications for major geoduck shellfish operations, and as you will appreciate from the photographs here, these will have enormous impacts on the beaches, the intertidal zones throughout much of coastal B.C.
We have already lost a great deal of important intertidal and sub-tidal heritage and we stand to lose much more. This includes the herring spawning areas indicated by the last photograph here. This white area is all herring spawn, just to give you an idea of the magnitude. That's exactly where they're planning on putting some of the geoduck operations which will adversely affect the herring spawn in those areas.
I would like to draw the committee's attention to the fact that a series of recommendations has been made by a special committee of the B.C. legislature on sustainable aquaculture. I have appended those as a supporting document to the committee. Just to remind you, those are governmental recommendations and there's also an earlier recommendation from one of the other standing committees of the Commons. I can get into that if you like.
But our recommendations are basically that we need the establishment of limits on enclosed bays, limits on densities and extent of shellfish operations where they will impact environments and other species. We need rigid environmental screening for the effects on eelgrass and forage fish. We need the establishment of strong enforcement and clean-up provisions as recommended, which was stated as being absolutely essential by a previous standing committee on Fisheries and Oceans.
The Chair: Excuse me, Mr. Hayden, if you could get to the conclusion of your points so we can get to questions.
Mr. Hayden: This is the conclusion. We need prohibitions on the use of plastics, especially Styrofoam, on beach modifications, driving on beaches and prohibition on predator netting and we also need some establishment of setbacks from residential and recreational areas. Thank you.
The Chair: Thank you, Dr. Hayden.
Senator Hubley, please.
Senator Hubley: Thank you for joining us today. On the ocean acidification, I have asked some questions on the East Coast and they're not at all up to speed on it. I am wondering if you know what is contributing to that in this area and I'm sure it will eventually become an issue in our area as well but it did catch my attention.
Mr. Saunders: It's just not B.C. Richard Feeley publishes a lot on the Northern Pacific where he talks about aragonite. Well aragonite is your calcium carbonate form at PH 8, 8 per 1, it's a fairly complicated carbon cycle. Where it is coming from, I don't know, but it's clear we are on an upwelling coast, the deep water is higher in CO2 and it's also saltier. We've seen in Georgia Strait in the last five years, four years a much saltier water and a dramatic, I mean an incredibly dramatic increase in CO2. We first started to notice this in '09. We had two months of a drop in PH from 8.1 to 7.8. I was hearing through Washington state that they were saying as low as 7.6. I was shocked to tell you the truth. I didn't know, I mean, we have all been taught the ocean doesn't change. This is a nice stable environment.
The next year, instead of two months, we had pretty much those levels all year round. Within three years now we are three times atmospheric CO2. We can deal with that onshore because we can buffer the sea water and much to my surprise we don't know, I thought that our larger animals could withstand these fluctuations. So I can't answer your question. I don't know where it is coming from. I know the East Coast sea scallop industry out of New Jersey is finding similar levels and their sea scallop fishery, as you may know, has had a cutback of 30 per cent because the scallops aren't growing. It is correlation; it is not proof. I don't know what the particular reason is for this massive mortality in the field.
Senator Hubley: I have looked at these photos with interest, Mr. Hayden. What is the response to the shellfish industry?
Roberta, do you have a response to some of the comments that have been made?
Ms. Stevenson: Well, we respond by having people employed on a regular basis to do clean-up in the regions. We do a clean-up ourselves twice a year at an expense to the membership that I represent. Not all shellfish farmers choose to be members of our organization; however, we do pay for clean-up, as I said, on a regular basis. I myself drive a truck. If someone calls my office I will personally go clean up.
We make every effort to clean up to work with different yachting clubs and everything else. But make no mistake farming does leave an impact, it is true. Everything we do leaves some sort of footprint on the planet when we go to grow our food unless you're harvesting, I guess deer or something, I don't know. But we are working as hard as we can to mitigate those.
I left my presentation fairly short in hopes that we would get these kinds of questions. I know you are all astute, and I really welcome you bringing these things forward. I could go on and on and on but I will spare you. I know in the Maritimes you have experienced some of the same issues we have here with people moving to areas that were traditionally farming communities, fishing communities and then wishing that they weren't there and this is something worldwide.
Senator Hubley: I don't think I have ever seen some of the issues raised here, to be honest with you, and scale is certainly one of them. But on Prince Edward Island the industries do have to get along together and respect each other of course.
Ms. Stevenson: Yes.
Senator Hubley: That would not happen on P.E.I. because we only have farming, fishing and tourism, and it would impact on pretty well all three of those. So I think it is incumbent on the industry to find the solutions. That's sort of a factor that we all deal with, as you know, in all kinds of farming. But it's also something that I think we have to try to resolve and come up with solutions. I will just leave it at that.
Ms. Stevenson: Absolutely. We are not proud of the way that some people lose stuff. We have very high winds here, people will lose items in storms and they will go on to these beaches and, as I said, we make every effort to deal with it as best we can. And we can do better, we will do better and we work hard to do what we can. We have pretty severe marine environment here and it can be challenging.
Senator Hubley: Any further comment, Dr. Hayden?
Mr. Hayden: I guess we have two comments if that's possible. I have a very different perspective than Roberta does on the amount of effort that has gone into clean-up. I contacted Roberta about a derelict shellfish operation once. She passed the buck to the provincial government who did absolutely nothing. So we have, as you can see, major clean-up problems.
Shelley would like to say something.
Ms. McKeachie: In Baynes Sound area, if you look at photo 1 you will see that the density there is over 90 per cent of the coastline of Baynes Sound is under shellfish tenure, either intertidal or offshore rafts and this is one of the biggest issues.
As far as debris goes our local organization has been doing beach clean-ups for nine years annually. Our residents constantly are walking the beaches and collecting. We have collected in the last nine years of annual beach clean-ups between three and four tonnes of beach debris each year, over 90 per cent of which is of shellfish aquaculture origin, and you can see in photo 5 one of our annual beach clean-ups, AND there were three more truckloads.
Our response to industry doing their sporadic clean-ups is that this needs to be stopped at the source. This is the tip of the iceberg where debris is concerned. The Styrofoam photo, this is what floats a lot of the rafts. They are supposed to be wrapped in plastic but they break down over time. The rafts I have looked at are not wrapped in plastic, and I doubt that that is going to be a long-term solution. The Styrofoam breaks down in the marine environment into tiny pellets. Our beaches are covered in tiny pellets after a winter storm. These cannot be recaptured. They are ingested by animals who think they are food and fish.
So twofold, if I can bring one message to this committee today, it is that siting, intensity and harmful practices need to be addressed. This has been going on for 15 years in our area. The intensity is too much. There is a vast coastline in B.C. Over 50 per cent of the shellfish that is produced in B.C. is produced in Baynes Sound. What does that tell you about the intensity? Take a look at photo number 1 and that will tell you why these certain areas have conflicts. Thank you.
Senator Lovelace Nicholas: Mr. Saunders has mentioned the roadblocks in the industry, and you mentioned that members of the Skidegate First Nation, were facing delays in the approval processfor aquaculture licenses preventing them from succeeding in this area. As you all well know a lot of First Nations communities are economically challenged so why would they be refused a license?
Mr. Saunders: They weren't being refused. They got their aquaculture tenure from the province pretty quickly. They try and do it in 120 days. Skidegate Inlet, the timing was poor, I will say that on the government side, they switched from the province to the federal government, but there really is no excuse for this delay. This particular group has now lost financing because of this delay.
We have worked with seven First Nations on the Central Coast supplying them with seed and they have struggled now for 10 years without a lot of success.
The Cape Mudge We Wai Kai Nation on Quadra Island is probably the best success story. They have now been farming there for four years. Unfortunately they lost their crop this year as well. They lost about three million animals so we are working with them as well to try and get another shot at it.
Senator Lovelace Nicholas: So how did they lose their animals?
Mr. Saunders: It is strongly correlated with ocean acidification. I can't say that it is that, but everybody who has been growing scallops with us in the lower strait has experienced this in the last year.
Senator Lovelace Nicholas: Is there any chance of improvements?
Mr. Saunders: I'm certainly the guy who thinks the glass is half full, yes, I think there is. We went through one disease outbreak in 1991, as I said, spent eight years, the tools now available to us are much more sophisticated so I believe that we can breed an animal that will survive in these changing ocean conditions.
Senator McInnis: Thank you for coming. I wonder why the word ``responsible'' is in your organization's name. I think I now understand why. Yesterday we visited Deep Bay field station, the Vancouver Island University, and wonderful facility, very educational, great way to sell the industry. I looked out into the bay, and there was a map there, and I wondered, but yet when I questioned they said that there was herring being caught there, right in that bay, fishermen come in and they take it in abundance. They themselves have a farm there and if you are talking about custodian of class responsibility, I would think the university would be one. That's my first point.
The second point, it was said here earlier, you have to have a social license in order to be successful in the industry. I have often talked back home about the right of the private property holder and where licenses are provided given to companies to promote and develop in bays where inhabitants have been there for decades, if not centuries, and they have no right. The right of the private property holder is simply not there. It is a real problem.
In fact, that is one of the reasons I became the head or involved in an organization to help to try to cure that. Now all of these things that you are talking about are difficulties but they have to be resolved. I suggest to you, and I am not here to lecture or to speak, it is very difficult to have self-enforcement. It rarely is successful. You have to have it done by government or some agency of government and that is, I think, paramount to success.
What I hear here in the beginning of your conversation is that there is a total disconnect within DFO, not only enforcement, but several other aspects, and we heard this from other groups. I think that is the genesis of the difficulty here. There is a way to the future. It has to be environmentally sustainable and all of those things. And this organization that we attended yesterday seemed very responsible, employing a lot of people, well intended, but I suggest, and maybe you can comment on this though I don't know how you can, but in the sense that there just seems from what I'm hearing no consultation or no connect with Ottawa and DFO and that is the problem. Maybe it could be cured by a separate act. We talked about that earlier today. So with that you can comment if you like.
Ms. Sanford: I am from an area on the Sunshine Coast with over 100 kilometres of shoreline and in our area we have very little commercial tenure area. We have a major tourism economy. In the past we were the old fishing/mining/ forestry community, but we have evolved to the tourism industry, and I have been working with eelgrass and forage fish spawning areas for a good number of years.
What we're looking at is kilometres and kilometres of eelgrass beds growing just offshore, just sub-tidal, just below the low tide zone. This is a major carbon sink as eelgrass beds support many, many different kinds of sea life. They are a corridor, a shelter for our salmon. When they come out as smolts from the streams, they go to the eelgrass beds. They will shelter, they will feed there, they will adapt to the saltwater. So they are vitally important for our salmon species.
Then if you're looking at the forage fish spawning sites, those are the high intertidal zones, so those are just where peoples' yards end and the ocean begins and those zones are high impact when you drive vehicles on those areas of the beach. You compress, you kill embryos of some of those forage fish, two specifically that spawn in that area, and that's from the high/high tide zone to the low/high tide zone, and that area is crucial for surf smelt and sand lance.
Now, those two species comprise 65 per cent of the food source for our Chinook salmon and over 50 per cent of the food source for our coho salmon. So those zones are perhaps areas that we really have to think about conflict and we have to think about impact. That's where we need to have regulation, indeed. Our area has lost all of its conservation officers, and also the coordination between government agencies, industry and local community is crucial. Thank you.
Mr. Hayden: Can I just make an additional point?
The Chair: Go ahead.
Mr. Hayden: I appreciate your comments and, indeed, you know we have areas that have been residential for many, many generations, and expansion of the shellfish industry to a very large industrial scale has been very recent, only since 2000. In some areas it's like having a big gravel pit move right in front of your house. So there are these major conflicts that you cite in terms of private ownership of houses and residential areas and the industry. That is a very big conflict in some areas.
I would also just like to point out that up until just I think it was last year or maybe the year before the shellfish industry has basically been under the B.C. government's jurisdiction, and the transfer of this jurisdiction to DFO is fairly recent.
So I think we're a situation where DFO is getting its footing in establishing policies on shellfish farming and forage fish farming as well, and I think it is really critical at this time. You know, we are not trying to say that many of these problems were the result of DFO's lack of organization in the past or lack of communication, but now it's their responsibility and so it really is an opportunity for them to make the right decisions and rectify a lot of the poor decisions that were made in the past in our opinion. Thank you.
Ms. Stevenson: If you don't mind, I want to call attention to the area Mr. Hayden refers to where he lives. Prior to him moving there we had an employment rate of 300 people on the little island. If you can look at the stats I have given you made by an independent review company, page 1 outlines the actual employment with aquaculture as related to total employment within the regions, and I think those percentages are very telling because you will see that in actuality it is not large.
Mr. Hayden: Can I just mention something about that as well? While the employment figures may have gone down, I think that's largely as a result of mechanization. In the past 10 or 20 years on the part of the industry, the actual size of the operations has increased and, as a matter of fact, there has just been another 40-acre operation put into the Gorge or authorized, given a license in Gorge Harbour in the last year. So once again another expansion. A lot of times the industry likes to tout its concern about employment and how it's going to bring employment to the areas, but they're really not that concerned with employment. They're more concerned with profits and they try to reduce the number of employees as much as possible through mechanization.
Senator Stewart Olsen: I kind of hesitate to get involved. I am from New Brunswick and I live on the shore. We just had an oyster farm established, and it does bring employment to a very depressed area and we need that employment in our province. I know that we have actual regulations in place in our province as to what you can do on the beaches, and we can't drive vehicles on our beaches. I don't understand why you don't have a similar. I think industry could work with regulations that are in place. I would hesitate to ever say you can't put an industry in a place because my house is there if it is going to be a job for my neighbour.
So I am of a lot of minds here but I see that there is a real divergence of opinion. But these are matters that your municipalities and your regions should be settling. I don't see that it should be federal government or maybe not even provincial. I don't know because I don't know B.C. but I know our laws are provincial but enforced by the municipalities. We are very rural.
I don't see here a ton of things that couldn't be resolved. I think we'd resolve them in New Brunswick because employment to us is crucial and we don't have a lot of money and we welcome any new development.
So I don't know about your regulations but maybe you should be working with your province, your municipalities and working together. I know that sounds kind of superficial and maybe silly to your discussions, but you won't move ahead with employment for your people where you live if you maybe don't go another way.
Ms. McKeachie: I completely concur that employment is essential in our coastal communities, in particular, those that have been hit hard. I think the point needs to be made that, yes, indeed, these residents have been there for decades and decades and, yes, indeed shellfish has been harvested for many, many years. And the issue has been the industrialization of the production of shellfish, and in that process in the last 10 to 15 years the methods have rendered it in conflict with residents. While it was being done by the mom and pop operations in a nice low-key kind of a way there wasn't conflict. It sounds to me like in your province the regulations have addressed some of these issues.
So in other words, if I still had an oyster lease in front of me that was being done in a way that didn't invade and create a negative situation for me and my home, then there would be no conflict.
The other point I would like to make is that in many of these coastal areas tourism produces far greater revenue and far greater employment in the economy of this province and with some of these practices and intensity that are being allowed with aquaculture, this is negatively impacting tourism, and if it continues to grow and be done in the way it's being done then it is going to have an ever greater negative impact.
So I agree with you, the issues can be addressed. But in 15 years of having conversations and I was at the provincial special committee on aquaculture, I believe that was in 2001, they came out with great recommendations that would have solved a lot of these problems but none of them were implemented. Thank you.
Mr. Hayden: Can I just add two points?
The Chair: Dr. Hayden?
Mr. Hayden: One of the points is that there is good policy for finfish farms. There is a setback of one kilometre from residential and recreational areas and all we are really asking for is the same thing for shellfish. There is no setback for shellfish farming from these areas.
And the other point is jobs are important, yes, and if they were all local that would be great but in fact the wages that are usually paid for the shellfish operators, a lot of the local people in these areas are not interested in those jobs and they are given to outside workers who are brought in.
Mr. Saunders: Excuse me, I can't sit here and listen to these half-truths. My point here was let's have science tell us the truth. These are half-truths that you are hearing here today and I am not really going to sit here and listen to it any longer. These are NIMBYs and if you can't see that, it is very, very difficult to stand here and listen to the half-truths. I'm going to leave. Thanks for asking me to come here.
The Chair: Like I say, we are here to hear from all sides, that is our goal here so all sides are welcome. We are in the process of learning about the aquaculture industry and learning about the challenges faced and the opportunities that are there. And coming from the province of Newfoundland and Labrador we are always seeking employment opportunities but we have concerns with any industry that comes forward. But we are not going to sit here and take information from one side of the equation and not accept it from the other. That's not going to be our goal as a committee.
Ms. Stevenson: Can I respond then?
The Chair: Yes.
Ms. Stevenson: I have been grateful to travel to Newfoundland and watch you make your industry grow and prosper and take up for the losses that you suffered with the loss of the cod fishery. There is no reason in British Columbia we can't also bring our province to prosperity.
The farm that Mr. Hayden referred to that has recently gone into his area which he opposes is a First Nation local community farm and it does disturb me to see and I must say Rob said it well, NIMBYism to its maximum level, even opposing local First Nations opportunities for economic development, it disheartens me. I find it short-sighted. I think that we are ignoring the reality out there in our First Nation communities by suggesting that tourism can save our province.
I have worked in many First Nation communities and I can tell you tourism is not going to happen. Fishing is something that is dear to their hearts, not tourism, and we offer a fishing-like commodity here. You are out on the ocean, you are using your fish boat, you're out there getting wet in the ocean and close to nature. I think that it has good opportunity that way.
Far be it from us to suggest that everybody wants to come to British Columbia all year long when our weather is only good for about two weeks. Tourism can live parallel and we have proven that. We do festivals just like you do in Prince Edward Island and the like and we get huge turn-outs. People from all over the world comment on our products that they eat and enjoy, and we can all work together to make things better. I think that is what we need to walk away with, that learning to play in the same sandbox is critical here. It is not one or the other; it's learning to work together so that we can all have a good life.
The Chair: I echo those comments and I believe that some of the things that you are facing here, we as a community can't straighten out today. Like I say, we have to as a committee for the Senate of Canada accept and listen to all opinions, and hopefully at the end of the day we make recommendations to address some of those concerns that have been raised by industry and groups like yourselves.
Senator Raine: I certainly understand the conflicts between our presenters today. I just need a little bit more information because I'm not an expert on shellfish farming at all. What are the shellfish that are being harvested in photo 3 and also in photo 8?
Ms. McKeachie: These are photographs that are taken from the Puget Sound, Washington area. This is geoduck intertidal and the reason for these photographs being inserted here is that DFO has just come out with a draft geoduck integrated management plan which is going to open up vast areas of the Salish Sea and B.C. coastline to geoduck aquaculture. The largest green zone for the expansion of geoduck aquaculture is the intertidal, and this is what we fear because this is how it is produced.
They take the PVC pipes that you see in photo 3 and they install them into the substrate as you see in photo 8 and the geoduck seed is planted into those individual PVC pipes and then the whole expanse is netted over with predator netting, what is called predator netting and you hear and read various lengths of time that the netting is kept over top of those. And then in some areas, some not apparently, the netting just stays down, it doesn't get lifted in other areas, it gets lifted after I think around two to three years. And the cycle for a mature geoduck is, I have read, between seven and nine years before they're mature for harvest.
So this is here because this is what is being proposed as the next wave of expansion for the aquaculture industry.
Again, to just address NIMBYism, our organization has been around for 15 years. It formed because there were groups up and down this coast who were concerned about the industrialization and, yes, some of them were very concerned about their homes. This is an industry that operates to tides 24/7. People were being kept awake in their homes. The biggest investment of a family is their home. People have the right to quiet enjoyment of their home and this was creating a conflict.
So that is one of the issues but we also are extremely concerned about the environmental impacts. I think it illustrates quite nicely today how NIMBYism has been a way by which people have tried to dismiss our concerns. If that happens, we never get to the hard discussions to find ways to share this resource.
Again, I draw your attention to the first photo which shows the intensity, 50 per cent of that product for B.C. being produced in one area. This isn't sharing. Over 90 per cent of the coastline and that is something that could be simply addressed by a management policy.
Ms. Stevenson: In my career in writing business plans for remote communities, I would like to point out the fact that as things stand, it is not economically viable to have a farm far and away with today's fuel costs and everything else. Doing business in this region of Baynes Sound is primarily attractive, as you learned yesterday, because of its closeness to airports and processing and labour.
Secondly, I would like to say our coastline in British Columbia is not at all the same as that shown in the photo of Puget Sound, Washington state. We have a different coastline. It is not going to support the use of tubes like in the scare-mongering pictures, but I also want to point out when you look at pictures of aquaculture in China, now talk about big and horrific. They do things in a really big way in lots of places in the world. That is not British Columbia. We will not do farming in that way. But, on the other hand, I don't know about you guys, I love to buy my eggs from my local neighbour who has 10 chickens. It's lovely. But that is not sustainable in that it will not bring you a livelihood that will support a family.
We have to use mechanization to farm in a way that brings some sort of decent living to these people and believe me, they are not raking it in; it is hard, laborious work, and in these areas when they try to tell us not to use mechanization, our backs are not strong enough and we are not living long enough to not use some sort of mechanization to grow our product.
So thank you for allowing me to give you a comparable, and I hope that we can offer you some of the science that we have. Certainly DFO can show you the outline of our tenures to prove to you that we are not allowed to be anywhere near eelgrass. In British Columbia we do have Crown land right up to high water mark, that is the way it is here.
In Washington state they own those tidal flats fee outright property like private property. So it is not different here. We are not the United States, we are not China and we need to learn to all work together and grow food for the planet. Thank you.
The Chair: My role as chair sometimes is to be referee. I just want to ask the question if I could because it concerns me a little bit that we are given photos here when we are discussing the industry here that are not necessarily from here. Is there other photos that are not from Canada?
Ms. McKeachie: No, only the geoduck and those are the white PVC pipes that you see, and that is because we just had the green light and we have been told by DFO intertidal will be done via the same method.
The Chair: And photo 3, is that a Canadian photo?
Mr. Hayden: No.
Ms. McKeachie: No, any with the geoduck pipes are Washington. There are two of them, one showing the installation.
The Chair: Are any of the other photos here non-Canadian?
Ms. McKeachie: No, none of them is out-of-province. They are all on our coastline.
The Chair: Now, just as a suggestion to you in your case in the future if you would let people know that because, coming from Newfoundland and Labrador, I have witnessed the photos of the animal rights people of Newfoundlanders and Labradorians killing white coats last year, and they haven't been doing that since 1987.
Ms. McKeachie: We apologize for that. In the power presentation that we wanted to do today it is credited to Washington and we put this together in a big hurry because we only had two weeks' notice.
The Chair: Great to have it clarified.
Ms. McKeachie: Thank you.
Senator Raine: Do I understand from Roberta that you won't be allowed to do aquaculture development around eelgrass beds?
Ms. Stevenson: That's right. That is an unallowable practice that is policed by DFO. Also when you apply for a tenure, you have to prove to them with underwater cameras that you are not near eelgrass. Sometimes farms that have been in existence for 30 years, I know my own family farms have been in existence that long, and eelgrass will encroach onto the farm later on, but new farms are sited very carefully to avoid eelgrass.
We are also policed heavily to not harvest our animals, not bring up any of our trays during a period in which there is a herring fishery and we honour that and the fees and fines are substantial. Of course we value our herring fishery as well so we are all working together on that level.
Senator Raine: Is it illegal to drive on the beaches and in the intertidal zone?
Ms. Stevenson: The driving on the beaches is done in one area which they are referring to which is Denman Island. Driving on the beaches has been a practice there for many, many years and it has been looked at by DFO habitat people. It is only done in that one area.
The most of our coastline, all 47,000 kilometres of it is not drive ready. Our inlets are remote. Our bays are remote. To drive on a beach you need some pretty strong substrate. It is not a practice that's done in many places. It is done on Denman Island in a couple small areas and I know this brings big concern to this group and we listen to those concerns.
Senator Raine: I can see it is being done because in the pictures I see a truck, the modified beach. Is that allowed under current guidelines?
Ms. Stevenson: It is allowed by DFO at this time. It is a practice done, as I said, by those farmers for 50 years and if DFO decides it is not an appropriate practice, if they see there is a concern with the habitat by that practice they will disallow it. But as of now they still allow it.
Senator Raine: So that's a point where the regulation could be grandfathered perhaps.
Ms. Stevenson: Well DFO habitat science, I don't think bashing them too hard is fair. I mean they do put in a lot of effort into studying these issues and if they deem it's not safe and they tell us to stop we will. But so far the beaches are very productive and these beaches are productive, in part, because we are farming these shellfish which then spawn into the water column and travel far and wide. They don't just stay where they live. We can show you documents scientifically proving that we have created habitat, not taken away habitat.
Senator McInnis: Cost of production is important as is the environment and I believe we will see the day that we will have zoning. In the quiet of night we will determine where best to do these things. I would quickly like to have your comments on that because I think it is the only way. We do need aquaculture; I think everyone agrees with that, and so where best to do it. That's why I think it will come down. You cannot today in Atlantic Canada, and I rather suspect in British Columbia, develop large industry without some kind of zoning, some kind of approval process of where it's going to be. I think this is an important part of a resolution to some difficulties here.
The Chair: I will allow for quick responses if anybody would like to respond. We are running over time here now and we have to reconvene at 1:30.
Ms. Stevenson: I will respond by agreeing, we all do have to learn to live together, to work together, to grow food together and to make sure that people have dinner at night and employment in the day. It makes for a healthy community and I think that can be done. Thank you for that comment.
The Chair: Ms. Sanford?
Ms. Sanford: I do agree that we do need to come to a resolution. The intertidal zone is a very delicate and very precious resource that the province of British Columbia has, it is an important spawning zone that is basic to our food chain and that is very important to keep in mind.
Driving on beaches is an interesting thing. I was born in Vancouver, I have lived on the beaches in this area all of my life. Driving on beaches is always frowned upon so it is an interesting difference in perspective.
I guess the concern I have because my near and dear friendship with eelgrass over the years is the delicacy or the vulnerability of it to sediments. It is a carbon sink and it will settle sediments that come with the currents but with the impact of large quantities which could happen with the larger industrialization, that could kill off beds and that's a concern that I have. Thank you.
The Chair: Thank you all. It has been an interesting discussion for sure. As I said earlier, we are here to hear all sides and we intend to do that, not only here but throughout Canada. We will break now for lunch and reconvene around 1:30.
I would like to welcome Mr. Toby Gorman here in the audience, executive assistant to Member of Parliament James Lunney who has joined us here today also.
Thank you very much for your heated discussion, it was great to hear from you and we certainly look forward to following up.
(The committee adjourned.)