Proceedings of the Standing Senate Committee on
Fisheries and Oceans
Issue 14 - Evidence - November 20, 2014 - Evening Meeting
MONCTON, Thursday, November 20, 2014
The Standing Senate Committee on Fisheries and Oceans met this day at 6:30 p.m. to study the regulation of aquaculture, current challenges and future prospects for the industry in Canada.
Senator Fabian Manning (Chair) in the chair.
The Chair: I would like to take the opportunity to welcome our guests. My name is Fabian Manning. I am a senator from Newfoundland and Labrador. I chair the Standing Senate Committee on Fisheries and Oceans. We are travelling across the country and hearing from people involved in the aquaculture industry as we try to address the challenges and the opportunities in this industry. We are delighted that you have taken the time to join us here this evening.
Before we begin, I would like to ask our senators to introduce themselves, beginning with the senator on my right.
Senator Poirier: Good evening. Senator Poirier from New Brunswick.
Senator Stewart Olsen: Carolyn Stewart Olsen, New Brunswick.
Senator Meredith: Senator Meredith, Ontario.
Senator Lovelace Nicholas: Senator Lovelace from New Brunswick.
The Chair: I understand you have some opening remarks. We will hear from you and then we will have questions from senators. Please introduce yourselves for the record.
Dr. Steven Backman, Aquaculture Veterinarian, Skretting: My name is Steve Backman. I am a veterinarian employed by Skretting and I have been involved with the aquaculture industry since 1988. I hope to give you some of my perceptions of how the industry has developed over the years and what it needs to develop further.
Benjamin Forward, Head, Food, Fisheries and Aquaculture Department, New Brunswick Research & Productivity Council: My name is Benjamin Forward. I am the head of the Food, Fisheries and Aquaculture Department for the New Brunswick Research & Productivity Council. RPC is a contract research and development agency and analytical service provider to industry.
The Chair: The floor is yours.
Dr. Backman: Mr. Chairman and members of the committee, I am honoured to be here to speak to you. It is my first time speaking to such a prestigious group so I hope my protocols are correct.
I have entitled my opening remarks ''Aquaculture in Canada, what is holding us back.'' As I see it, the aquaculture industry in Canada is really standing on the pot of gold at the end of the rainbow. Canada as a country seems to be looking across the horizon to the other end of the rainbow, looking for that pot of gold, when really all we have to do at the moment is to put our dip net into the water and start harvesting some of that gold.
I am following along on the slides that I think you may have copies of. To give you an idea of where aquaculture is today, it is a global industry. To speak about any one particular aspect of aquaculture individually is fairly complex. To try to take that and make it into a general statement really does not do it justice because aquaculture varies from shellfish, from sea plants. It can range from large, corporate farms producing anywhere from 500 to 1 million fish per site, to a very small family operation with 2,000 or 3,000 fish per site. Each one has its own set of circumstances and operating conditions.
As a company, we make diets for over 50 species of feeds. I will touch on that a little later, perhaps with a question, because most of those diets we probably cannot sell in Canada.
The next slide shows a prediction on population growth on the planet. I originally got that slide from Dr. Ted Leighton in the late 1980s. The slide was actually created back in the 1960s and was a forward looking projection on population growth. I have also highlighted on that. I have added a few more points to show where we are. If we look at the population in 2003 at 6.3 billion, you can see that it actually falls right on the predicted curve from the 1960s forecast. In 2012, we had our seven billionth baby born, and that also sits very squarely on this graph. This graph forecasts a global population of between 9 and 12 billion people by 2050. That is a huge growth in terms of our human population. It has very far reaching consequences for us.
The next slide shows briefly some of the types of aquaculture by category that takes place around the world. If you look at the third coloured bar down from the top, it is a light blue colour, that really represents salmon production globally. So the bulk of aquaculture production is actually not salmon. It mostly is non fed species such as mussels, shellfish, plants. In terms of the fed species, a lot of it is land based and pond based small operations in developing countries and China.
The question that we are really faced with is how do we feed 9 billion people by 2050 in a sustainable way? That question was posed in another way by the FAO in the statement, ''We will need more food in the coming decades than we have produced in total for the last 10,000 years.'' That is a huge requirement for food and protein going forward. If we put that in terms of our fish protein, that is an additional 50 million tonnes of seafood that the planet will require by 2030. That is a huge amount, considering that our fisheries plateaued probably a few years ago and have slightly declined, and are fairly consistent at about 90 million tonnes per year. Aquaculture production of seafood probably matches that or is slightly ahead of that, so between 90 million and 100 million tonnes. You can see that's a huge increase in our current production just to meet the demand by 2030.
To give you an agricultural context, if we look at the same population growth requirements, you will see huge requirements for cereal grains, oil, crops and meat protein. If we consider that aquaculture feeds require these grains in order to produce our feeds to feed our fish, the requirement for this additional plant protein really is going to affect our ability to produce fish feeds going forward in the future.
My grandfather was a commercial fisherman out of Lunenburg. The belief in his time was that there would always be fish in the sea and you could never harvest out the sea. Well, we have realized that that is not the case. As I said before, the wild catch or capture fishery has really plateaued at about 90 million tonnes, and it will not go up. Our only option to replace or to meet that demand of an additional 50 million tonnes is through aquaculture production.
Aquaculture production is one of our most efficient forms of livestock production. It allows more flexible use of ingredients and it also has a very low carbon footprint, because much of the effort to raise fish is actually provided by solar and lunar energy. That is what moves the water through the cage systems.
Skretting is a global feed company. We have approximately 3,400 employees globally. We produce about 2 million tonnes of aquaculture feeds globally. We have production facilities in about 18 countries. We do feed more than 60 species of fish. We have a global R&D centre based in Stavanger, Norway. Its annual budget is somewhere in the neighbourhood of about $15 million Canadian for fish feed research. We also have satellite plants in Asia and Mozzecane, Italy.
Our Aquaculture Research Centre is made up of researchers from around the globe. We have about 20 nationalities and about 40 of the staff there have advanced university degrees. Our specialization is mainly in fish nutrition, but we also look at fish health technology and feed production technology.
You will probably notice that fish feed production is one of the most advanced and complicated systems for producing agricultural feeds. It is much more sophisticated than what has been traditionally done with feed compounding and a lot of science and engineering is involved to produce those pellets in order to create those real efficiency processes.
Three important innovations have come out of ARC. One is MicroBalance. This is allowing us the ability to use ingredients other than straight fishmeal for carnivorous diets. It is very important in order to use MicroBalance that we have access to feed ingredients. One of the big stumbling blocks for us in Canada is the CFIA's feed regulations and access to new feed ingredients.
Protec is the range of products which use what we call active nutrition or functional nutrients. These products aren't available in Canada simply because there is not a regulatory system that facilitates their approval. CFIA states basically ''regulations are for nutrients.'' So if they are not specifically providing nutrition for the fish, they don't fall under their regulations. If they have an effect, they get it moved over to a Veterinary Drugs Directorate and treat it as a drug. Veterinary Drugs Directorate says that unless you have a certain level of efficacy, they will not entertain an application. Functional ingredients provide some basis of efficacy, but they are not to the level of drugs. So they are sitting in a no-man's land between two institutions. These products are available to farmers in most other countries except Canada.
Optiline Premium is a new product. It is a high energy diet for salmon. It is highly efficient. It improves growth and it improves feed efficiency. It has only recently been available in Canada, but it has been available to competing industries around the world for about three to four years.
In terms of aquaculture regulation in Canada, this slide shows a list of the acts and regulations. I think it covers most of them which have a jurisdictional role in aquaculture management or aquaculture regulation. Unfortunately, many of these departments have conflicting regulations which cause problems. It also means that there is such a huge amount of regulation. A farmer almost has to have his own legal staff just to stay within the regulatory framework and not violate something at some point.
For us as feed manufacturers, there are really three acts. If you notice, the Fisheries Act, the CFIA's Act and the Feeds Act largely predate the development of aquaculture. Almost all of these regulations are trying to fit a round aquaculture peg into a square hole. Really, there is not the expertise in many of these departments to properly assess or regulate these industries.
Where do we move going forward? We need from CFIA's point of view to focus on food safety. A lot of the CFIA regulations are based on traditional agriculture mills and they really do not have application. Their regulations tend to be very restrictive in terms of feed registration. It can take up to a year to register a new feed. Most of the time, CFA does not have the expertise to actually comment or review the application. It tends to sit for a long time or they ask the proponent to provide the scientific basis for the diet, and they charge extra for reviewing all that extra information.
There needs to be recognition of certification programs. Our feed mills are HACCP certified by FDA, they are ISO certified and they are Best Aquaculture Practice certified, but yet none of that carries any weight with CFIA in terms of their inspection schedule or their requirements. We need consistent application of the regulations across the jurisdictions. Often different areas of the country using the same act and the same regulations will apply them differently. There are often interdepartmental conflicts where one department says ''You should do it this way'' and the other one says ''No, you should do it this way.'' Then you are caught in a no-man's land between the two of them.
In the Feeds Act, there is Schedule 4 and Schedule 5. These list the approved feed ingredients. These are largely based on agriculture. If we want to expand our use of alternate ingredients to fish protein, we have to register the feed ingredient. That can take a long period of time. It is actually disruptive to companies wanting to pursue those, because the manufacturer of the ingredient has to register it. We, as the feed manufacturer, can't buy them until they register it. If the market isn't sufficient in Canada, then they are not going to waste their time and money to register those feeds or those feed ingredients. It can be something simple. We are looking at lots of moluscan meals. We are looking at alternate products which normally would go into landfill but can be actually processed to make suitable fish feeds, but because they are not on the schedule 5 feed ingredient list they are not available to us to be used unless they are registered. It really limits our ability to replace fishmeal in our diets.
Access to functional ingredients: As I mentioned before, functional ingredients fall into a no-man's land of feed ingredients between the two major regulatory bodies; CFIA and Veterinary Drugs Directorate. So the industry would like access to things like anti-settlement feed ingredients. These are feed ingredients which impart a flavour to the mucous in the fish. They have no drug effect, but they make the sea lice think they are on the wrong species of fish. We've just registered one in Canada which is no longer now used anywhere else in the world because they've moved onto the next generation. So we are a full generation behind on those ingredients.
We have ingredients that will facilitate fish when they are exposed to higher temperatures which are resulting from global warming. There are hatcheries in Canada which reach low 20s to mid-20s now in the summertime because of the water temperatures, and there are functional diets which are going to help protect the fish from those high water temperatures. Again, they are not available in Canada because there is not a sufficient regulatory process to deal with it.
There is a huge demand in the market for organic and non-synthetic ingredients. Currently, there are no approved sources of pigment that can be used in salmon diets. A number of them are available, but the process takes a long time. Other countries are using these compounds but they are not available to us.
Again, back to the alternate protein and oil sources. Things like algae become a very interesting product for the future. Algae provide a good source of omega 3 fatty acids, which everybody wants in their diets. Unfortunately, until they become approved feed ingredients, they are not accessible to us.
Moving forward, as Canadians we need to encourage investment in the aquaculture sector and we need to sort of take the brakes off it. We need to reduce the regulatory costs. A very small amount of growth in the industry can send a really strong message to the investment community. It would only take an increase of about 10 per cent a year over the next five years for our plant in St. Andrews to almost double its production. When we go to our parent and say ''We want to invest in our plant,'' they base that on how long our plant is operating, what efficiency it's operating at and what the potential upside is on the market. If we can't show a really positive outlook then that investment money goes to one of the other 18 countries that we are operating in.
Last year our St. Andrews plant was shut down completely for five months because of the lack of biomass in the water. That is roughly about 30 employees laid off for five months. That's money that wasn't going into the community. We lost three of those employees to jobs out West because they wanted to work. We would like them to work, but we need to have the volume to put through the plant to make that work. We need the industry to grow to do that.
One of the ways to do that is investing in infrastructure. I think I will leave most of that to my colleagues who are actually on the production side of the business.
Rail systems are something that really reduces our carbon footprint and reduces our costs for bringing in raw materials. Our only method of bringing in raw materials right now to our plant is by truck. Trucking is getting expensive and it is also inefficient. Rail service to our area or improved rail service would be a huge benefit for our cost structure going forward.
We need to invest in research. Mr. Forward is going to talk a lot more about research and development. My experience in the past is that often the funding agencies fund projects to fail rather than to succeed. You will submit a grant application and say ''We need this much money to make this project work.'' You will have the project accepted and it will come in with two thirds of the budget. The budget in that two thirds is allocated to a breakdown of products. If one area of the project costs more and the other costs less, you can't move the money back and forth. It becomes very inefficient and it almost becomes more of an effort to apply for the money than the actual money is worth.
The last thing is we need to facilitate diversity in the industry. Salmon is a great part of the industry and it needs to grow, but there are other areas on our coastline that are far more suitable to things like shellfish, to things like other finfish species. To facilitate that, it takes a long time to develop a new species, understand how that species works, how that species needs to be cared for. It is not a short term project. Almost all of the funding is less than five years. Many of these new species developments can take five to ten years and really need to be supported.
With that, thank you very much. I will pass it over to Ben.
The Chair: Thank you, Dr. Backman.
Mr. Forward?
Mr. Forward: Thank you very much for allowing me to come and speak this evening. It is a great honour for me to be here in your company. I am going to speak a little bit about research and development with particular focus on the aquaculture industry, touch upon some specific areas and upon things we experience as researchers working in this area.
When you look at any industry, one can easily identify a number of critical ingredients that would be considered necessary for its success. To thrive, develop and be competitive in a global marketplace, research and development or R&D activities are one such critical ingredient and form a key support pillar for an industry's continued success and its sustainability. On a broad scale, R&D activities can assist industry to be more competitive, to overcome challenges as well as to develop new products and services. R&D can also assist government in development of policies and regulations that are science based and respect the needs of a growing industry as well as the environment.
Within the Canadian aquaculture industry, R&D has been an essential ingredient to its success from the very beginning; something that I think is unique to this industry. Canada has developed a significant capacity of world class R&D capability that can be found at a variety of institutions and garage workshops across this country. The R&D community within the aquaculture sector is represented by a colourful collection of dedicated individuals who are engaged with industry.
Creative and passionate. We have an addiction to solving problems and an unwavering desire to help. This community is well respected internationally and can punch well above its weight class when it comes to innovative solutions. The New Brunswick Research & Productivity Council, or RPC, is where I work. It is a member of this community and has played a significant role in the development of the industry here in New Brunswick and in Atlantic Canada. We are a non-profit New Brunswick Crown corporation whose mandate includes ''The provision of innovate technical solutions to challenges facing businesses and industries.''
RPC as a whole serves over 1,000 unique clients annually, both here in New Brunswick and over 30 countries worldwide. RPC's focus on market driven research and development and analytical services has led to the development of numerous capacities that have supported the development of the aquaculture sector. Indeed, the RPC Food, Fisheries and Aquaculture Department came into being some 35 years ago due to the needs of a then fledgling New Brunswick industry to bring forth R&D capability and apply it to some very difficult challenges.
To give you a sense of the types of R&D activities that have been important to this sector, I would like to give you just a few examples in which my organization has been involved over the years. Here I am going to focus a little bit on key contributions with respect to Fish Health. The first is the identification of the infectious salmon anemia virus as a causative agent of a devastating disease which began to plague the industry in the late 1990s and early 2000s. Once identified, diagnostic tool development ensued and allowed for the monitoring of this virus to control its spread and avoid costly economic losses. Subsequent work then focused on the development and implementation of strain typing tools and disease challenge models to help us identify and characterize the virulence of the different viral strains we found out in the environment. This is a critical development which allowed regulators and farmers to make informed decisions regarding the health of their fish.
Another example is efficacy testing of disinfectants against a variety of fish pathogens. This helped to validate the use of these critical tools in controlling the spread of diseases and dealing with outbreaks. We also developed a vaccine for bacterial kidney disease, which is now commercialized by Novartis Animal Health as Renogen. This vaccine has helped to provide a key Fish Health tool to protect fish from acquiring a disease that can result in significant economic losses to farmers.
There is the use of genomic technologies to understand the immune response of fish to pathogens and vaccination with the view to the discovery of biomarkers that can be used to design more efficacious vaccines, as well as identify disease resistant families of fish.
Another example is the identification of potential local cleaner fish species has initiated programs that seek to provide alternatives to existing sea lice treatment methodologies.
The development of probiotic bacteria for use in hatchery culture of marine finfish and shellfish has delivered a solution to alleviate a critical bottleneck in the production cycle while providing an alternative to more costly and less sustainable alternatives.
These examples represent just a sampling of the types of R&D efforts in which we have been involved. Other teams from the R&D community have also contributed key results, whose outcomes continue to improve and define the industry.
The establishment of the Bay Management System to help control the spread of disease, the Decision Support System for sea lice management, sequencing of the salmon genome, the development of more efficient feeds and feeding systems, the development of integrated multi-trophic aquaculture; these are but a fraction of the R&D activity that will continue to shape industry's future.
It's important to note that these types of R&D activities have been successful due to the collaborative nature in which this community is engaged with the various partners that include industry, universities, community colleges, research facilities, federal and provincial governments. Numerous research funding programs, both provincial and federal, have all aided in funding various R&D projects of key importance to industry. The provision of such funding is vital to the continued growth and development of the industry and to nourish a capacity for research that can meet future and yet unknown challenges.
Programs which work on an industry timescale and have a low administrative burden have been among the most successful in meeting demands. The pace of industry and the fact that we are working with biological organisms whose life cycles do not follow a fiscal period, make the need for flexibility in such programming a necessity. Long term options are also necessary to discover and develop things such as new therapeutants, which could take 10 years to develop and accomplish.
Personally, I grew up in Charlotte Country at a time when the traditional fishery was on the wane and aquaculture was just beginning. My high school years were spent in St. George at Fundy High School. My undergraduate degree was a Bachelor of Science with Honours in Biology from the University of New Brunswick. I later travelled to British Columbia and obtained a PhD in biochemistry from the University of Victoria. Like the salmon, I eventually migrated back home and feel very fortunate to find a career that utilizes my training while keeping me close to family and friends. I also see many of my old friends working in jobs that are directly or indirectly supported by the aquaculture industry. Some are now carpenters, electricians and other business operators who provide key support services to various aquaculture operations. Other friends more directly involved are hatchery technicians, scuba divers and those who oversee entire saltwater operations. Aquaculture has provided for many people in our coastal communities a promising future in which to raise a family.
While some say the future is uncertain, there is one thing I think we can all count on. That is that the demand for one of the healthiest, most efficiently grown and essential, yes, essential food groups on the planet will not diminish but only grow in the future as our global population increases. With aquaculture now supplying over 50 per cent of the world's seafood, it will be a key industry in meeting this future need.
In summary, for the Canadian industry to grow and take its rightful place among nations working to meet the global demand for nutritious food in the coming century, R&D will continue to be a vital activity; underpinning our ability to overcome the challenges we will no doubt face in doing so.
Thank you.
The Chair: Thank you.
Our first questioner is Senator Lovelace Nicholas.
Senator Lovelace Nicholas: Dr. Backman, you were talking about aquaculture regulation in Canada, about the Feeds Regulation Act. If the feeds are not acceptable in Canada, can you sell them to other countries?
Dr. Backman: Yes, we do, in fact, but they are manufactured at our plants in those other countries. Our plant in Canada basically makes food for Canada. We have some export to the U.S. We can use those ingredients to sell to our customers in the U.S. but we cannot use them to sell in Canada.
Senator Lovelace Nicholas: Thank you.
Senator Stewart Olsen: Thank you for your presentations. They are both very informative. I am just wondering if you have an opinion, and no one will hold you to it, but why do you think Canada is so far behind in moving forward on aquaculture?
Dr. Backman: It is a very complex question, and I am not sure I can answer it quickly.
Senator Stewart Olsen: Then don't.
Dr. Backman: In summary, there is a regulatory component. There is the research component, although Canada tends to lead the way in terms of aquaculture research. If you look at the way Canada has progressed, the aquaculture industry really has done in a few decades what the agriculture industry took a couple of centuries to do. It comes down to investment, site availability and giving investors the confidence to invest in an operation in Canada. The site application process is very complex. You can invest a large amount of money up front and then find at the end that you have no site. If you have no site, you have no company.
Mr. Forward: In my mind, you just have to look at the complexity of the number of different acts that regulate this industry. Steve mentioned some of the conflicting opinions and advice that you get from different regulators regarding the same issue. I think that is a major stumbling block, probably the key. Getting lost in regulatory framework is going to slow anything down. That is one of the keys. If I had to distill it to one thing, I would just say the complexity, and you saw Steve's list of all the different acts that regulate or impose upon aquaculture.
Senator Stewart Olsen: Thank you. We ask such questions to aid in the formulation of our report. Your input is valuable and lends different observations to what we have been hearing, so thank you.
Senator Poirier: Thank you both for being here.
Dr. Backman, at the end of your presentation you talked about the modern feed regulatory system and about organic certification. I know in so many other foods; whether it be vegetables, poultry or beef, the trend seems to be that more and more people are looking for something that is organic. Do you see that trend happening in the aquaculture? Is there a demand for it and how close are we? Are we there? Do we have organic certification? Do the companies have it? Is there feed that we can buy now? Is it available in Canada? Is it a demand that is becoming more prevalent in the world?
Dr. Backman: I would say there are some available organic fish feeds in Canada. It really hasn't taken off to the degree that public perception would think it should or does, largely because many of the ingredients that are available in Canada cannot be certified organic. For instance, canola is a GMO product. The availability of organic, raw materials is very hard to come by in Canada.
The second stumbling block for organics is that as food becomes more and more critical in supply, people become much more interested in having food on the table than having it organic. For the last 30 years, the cost of food in our family budget had dropped. In the past few years, that trend has reversed and will continue to reverse. Somebody will forecast it. Our family grocery budget will double over the next 20 to 30 years. As disposable income becomes less, the more expensive organic type products will start to fall off the market. I do not really see a long-term viability for those kinds of products as food becomes more scarce.
Senator Poirier: Do you know why organic is so much more expensive?
Dr. Backman: Largely I think it is because the urbanization of our country. People have much more disposable income, they are much more educated about their food, they are much more aware. The internet provides a great deal of information. It's become something that is on their radar for the time being. In long terms, I think access to food will be become a much more important issue.
Senator Poirier: What I meant was why is organic food becoming so much more expensive? At some places it is nearly double the price; whether it be vegetables, meat or whatever.
Dr. Backman: I think it is intrinsically that it costs more to produce organic foods. As a manufacturer, in order to do an organic run we have to empty out all of our bins. We have to clean all the bins to make sure there is no cross contamination with nonorganic raw materials. We have to dedicate special runs and that requires a lot of labour. That labour cost gets reflected into the feed cost.
Senator Poirier: Okay, thank you.
Senator Meredith: Thank you, panellists.
We have heard from witnesses who have come forward here. Dr. Backman, you spoke about the reduction of the carbon footprint. My question to you is about fish health and potential diseases with respect to the fish feed. Others who have come here have talked about what the fish are eating, the pollutants going into the water and so forth and raised the comparison between wild and contained. Give me your perspective on what you are doing as a fish food production company to remove or dispel those myths that are out there.
Dr. Backman: I like your choice of wording, ''myths'' because they largely are myths. There is no doubt that aquaculture operations impact the bottom. You are putting organic material into the water and the fish are excreting some of it. The footprint is very limited to under the actual cage site. An impact measured on the bottom does not necessarily mean an impact on the ecosystem. When you look at it from an ecosystem point of view, there is very little impact to an aguacultural operation versus a traditional land based operation. In fact, if you look at highway development there is much more habitat destruction in producing 20 or 30 miles of four-lane highway than you will ever see from an aquaculture operation.
The feed conversion ratios in aquaculture have been dropping and feed efficiency has been increasing. In terms of comparing protein conversion, salmon has a 1.1 to 1.2 FCR, a chicken 1.5, a pig 1.9 to 2 and a bovine between 3.5 to 5.1. It is far less. You are putting much less organic matter into the environment to get the same quantity of protein out.
Senator Meredith: So you are saying then that your products are completely 100 per cent safe, that they are not creating any adverse effect on the environment at all?
Dr. Backman: I have actually dived under a lot of cages and I haven't seen much of an impact.
Senator Meredith: You haven't lost your hair or anything like that then?
Dr. Backman: No, and I eat salmon every Monday night.
Senator Meredith: My last question is regarding the regulations. You have listed about 14 statutes that govern the aquaculture industry. There are those who have come before us and are purporting an aquaculture act by itself that would then comprise pieces of the existing statutes so that they can have a standalone statute from site selection to zones to feed and so forth. What are your views on that?
Dr. Backman: I think that is an excellent direction to head in because what investors need and what farmers need is real clarity. What are the responsibilities? What can they expect? A standalone aquaculture act would provide that, just as the traditional farming industry has a standalone Agriculture Act that lays out the rules and regulations for them. Distinct clarity is what the aquaculture needs. With this protein deficit that is facing us, Canada is really sitting here saying ''We have two roads to take. We can either export our knowledge and our money and import our food or we can export our food and import money and jobs.'' It really comes down to that for me.
Senator Meredith: Mr. Forward, do you have any comments on that?
Mr. Forward: I would agree with everything that Steve has said. I think that having a standalone act is an absolutely critical path for the industry to take and for forging further growth in the industry. Having that clarity will encourage investors, it will encourage other companies to grow and expand. I think it is an absolute essential.
Senator Meredith: Mr. Forward, you have come back to your province. There is the challenge of attracting young people to this industry. What is it going to take, given the fact that we need to get 50 million tonnes? How are we going to get there? Again, we heard today about the challenges some of our witnesses face because they do not have a pool of employees to choose from. Individuals leaving the industry are not wanting to work for certain wages. What, in your opinion, is it going to take if we are going to really develop and move this industry forward in Canada, attracting those types of investors who want to come here and set up a plant but are concerned knowing that they may face a shortage of labour? What are your thoughts on that?
Mr. Forward: First, educating our young people. I think that message becomes stronger when industry has the message that it is going to be easier to invest and develop and expand. Once the word gets around that the industry is beginning to grow again and that there is a demand for jobs, young people become interested and look around. They look and see what jobs are available. They talk to one another. They talk to counsellors in their schools and people on the street to see where the jobs are. When they are in high school formulating what they are going to do for their future; are they going to go on and pursue higher education and what form is that going to take? If the industry is growing and developing, that message will get to them. They will look toward aquaculture and invest in their education in an aquaculture field and become our future leaders in this industry.
Senator Meredith: Thank you.
The Chair: Thank you to our witnesses. We have received many presentations today. They are all different and deal with different aspects of the industry. I certainly believe that your commitment to ensuring that this industry prospers is well evident here this evening. Thank you for your time.
Our study is ongoing and will continue until mid-2015 at least. If you see anything in the future that would be beneficial to us in presenting our report and that you think we should be made aware of, we ask that you forward it to us. Feel free to forward it to us at any time.
I would like to welcome our next panel of witnesses. We are certainly delighted that you have taken the time to join us here this evening. We have had a couple of great days here in the area. Today has been long, but informative. We thank you for taking the time to join us this evening as we continue our study into the aquaculture industry in Canada.
Before we give you the floor, would you be so kind as to introduce yourselves, starting with my fellow Newfoundlander over there.
Betty House, Research and Development Coordinator, Atlantic Canada Fish Farmers Association: Good evening, and thank you for allowing me to speak. My name is Betty House and I am the Research and Development Coordinator for the Atlantic Canada Fish Farmers Association and a member of the Atlantic Canada Aquaculture Industry Research and Development Network.
Michael Szemerda, Vice-President, Saltwater Division, Cooke Aquaculture Inc.: Good evening. I am Michael Szemerda, Vice-President, Saltwater Division for Cooke Aquaculture operating here in Atlantic Canada and with operations worldwide. My responsibilities are all the salt water operations in North America. Thank you very much for the opportunity to come and speak.
Debbie Plouffe, Vice-President, Research, Centre for Aquaculture Technologies Canada: My name is Debbie Plouffe. I am the Vice-President of Research for the Centre for Aquaculture Technologies Canada. We are located on the east coast of Prince Edward Island.
The Chair: I understand that you have some opening remarks. I am not sure who is going to go first, but I am going to leave that to you.
Mr. Szemerda: Ladies first.
The Chair: You have eliminated yourself.
The floor is yours.
Ms. Plouffe: Mine is short, and I have a short package of slides. Hopefully everybody has a copy of those.
I am just going to talk, and hopefully that will go along with the slides.
I want to thank you all for inviting me here today to speak to you. I was telling these fellows that I have gone through a lot of the transcripts to read what other people have talked about. I really do not want to reproduce a lot of that, so I tried to come up with something different to say.
I want to introduce our company and talk about the importance of applied aquaculture research to the growth of the industry in Canada. The first few slides in the package are meant not only to highlight the role of aquaculture in global food security, which I am sure you have heard many times, but also to draw the comparisons to the importance of the application of technology to commercial agriculture.
The 1960s and 1970s are known as the Green Revolution. We believe that aquaculture is also at a stage in which we can take advantage of what has been learned from other sectors of agriculture and apply it to our own industry. Some refer to this next stage of growth as the Blue Revolution.
Technology can be used to help address concerns of producers and consumers or the general public. I have listed a few examples of that on slide number four; addressing sustainability, food security and public health issues, helping to increase food production, tolerance to environmental changes and reduce labour and costs associated with production, which in turn increases the margins for producers. It can help to contribute to environmental protection, targeted use of fish health and nutrition products, reduction of the environmental footprint that some feel is associated with aquaculture production.
In addition, we are also looking forward to climate change and changes to our planet over the next generations. We need the ability to respond quickly to tomorrow's global changes, including reduced product development time and more predictability in products compared to more traditional farming or aquaculture applications.
Our company, the Centre for Aquaculture Technologies, is a private aquaculture research company. We were established in 2012 with the focus on use of advanced technologies to improve aquaculture productivity. Foreign investment has provided the funds to set up teams of researchers with laboratories in both San Diego, California, and Prince Edward Island, Canada. Combined, our research staff have decades of experience in finfish and shellfish research.
The mission of the Centre for Aquaculture Technologies is to facilitate development of bio-technologies that make aquaculture more productive and more sustainable. The technologies that we are interested in are sourced from our own in-house R&D teams. We also license technologies from others that we believe to have application in aquaculture and we participate in collaborative research and development programs with other private sector companies, academic groups and government researchers as well. We feel that this is sort of an important growth indicator for aquaculture and that there is this new class of companies that are starting to form that are specializing in research related to aquaculture.
There are two main points that I wanted to make today. The first one is the importance of science-based regulation in the growth of the aquaculture industry in Canada. Our decisions that we make with regard to regulation need to be based on clear science policy and that needs to be communicated well to the public. This policy can be applied to several different research and development goals including introduction of new species and diversification of the industry. In Canada right now we are fairly salmon-centric, but there are a number of other species that are being developed for aquaculture. There is potentially some risk associated with that and I think that scares a lot of people. Good science-based research will help us answer or discover what the true risks are associated with that type of introduction.
Improved genetics, whether we are using traditional selective breeding techniques, as we have used in the past in industrial agriculture, or whether we are using genetic engineering. New feeds and feed ingredients are high on the lists of producers. As well, new fish health options, therapeutics and biologics are important for producers, and we believe that the addition to expanding technology can increase productivity of our existing resources and infrastructure. We have heard a lot about how we need additional sites, but we feel that the application of technology and additional research will help us take better advantage of the resources that we have available right now.
In order to do the research that is necessary, CATC is investing about $6 million in a new research facility — there is a picture of that in your slides — that we are planning to locate in rural P.E.I., bringing about upwards of 15 new highly-skilled jobs to that area. The facility will consist of both wet and dry laboratory space and will focus on fish health and nutrition as well as genetics and breeding. The facility will be operated in a regulatory compliant manner to enable generation of data suitable for supportive licensing and other regulatory approvals. This project is supported by our local government, our province and the federal government as well, and is expected to be open in the summer of 2015. We are looking forward to working with stakeholders, private industry and publically-funded organizations and institutions to generate new tools for the aquaculture toolbox.
The second point that I wanted to make is that research priorities must be driven by the industry. You have probably heard a lot of requests, people want money for capital and they also want money for doing additional research. In order to realize a good return on those investments that we are making into R&D and to ensure adoption by the industry, we feel that those research priorities must be driven by the industry. Unless that criteria is met, there is little chance that the technology is going to be adopted by the industry. For example, funding should be available not only for discovery work but also for commercialization and application. The technology really needs to get transferred to the companies. Companies like ours and others like it need the space to develop and create jobs serving the aquaculture and aquaculture support industries.
We also think it is fairly crucial that companies should make direct investments in research projects that will address their needs and they should be encouraged to work together if necessary. It is a complicated question, especially for small producers that are in the red at the moment. How do they invest in research when they are having trouble meeting their production?
One idea is check-off programs or levies that can be put toward funding research. I think that will lead to development of more long-term strategies and programs. In addition, and I heard Ben talk about this earlier, it is really important that whatever funding programs are available they must be tailored to the life cycles of our animals. The generation time of a salmon is four years and many funding programs are less than that, so it is really hard to get any attraction with our research with such short-term funding programs.
That is all for me. Thank you.
Ms. House: Thank you for inviting me to speak this evening.
Atlantic Canada's salmon farmers depend on new technology and science-based research to grow their fish and are committed to building the most responsible and innovative aquaculture industry in the world. Research and development coordinators, RDCs, like myself, that make up the Atlantic Canada Aquaculture Industry Research and Development Network, or ACAIRDN, foster linkages between the provinces by coordinating research and development issues for the direct benefit of our industry. ACAIRDN exists to provide a voice for the research in the Atlantic Canada aquaculture industry, the industry in the Atlantic Provinces consolidating and becoming more connected through similar challenges and opportunities. Collaboration throughout the region allows us to optimize our financial and human resources which is critical as research for funding becomes harder and harder to access.
From discussions between RDCs and industry, potential research projects, workshops and/or technology transformation strategies are developed and funding applications submitted to support the identified needs and priorities, and these priorities change over time.
My submission includes a list of past and current R&D projects and activities in which we have been involved. I am not going to go through the list. The list is there for you, but I wanted to draw your attention to the variety of research projects in which we have been involved and, in the case of projects like vaccine models for ISA, well boat technology and SLICE elimination, to the overall importance of these projects to the regional and Canadian aquaculture industry.
One of the ACFFA's key focus areas is the development of a comprehensive research program that advances responsible fish health management, developmental research and innovation and new technology. In recent years, we have seen a shift in governmental research and funding toward a narrow focus on regulatory research. We have also seen a significant reduction in the federal research capacity and we are concerned that the research facilities in St. Andrews Biological Station are underutilized.
Budget cut-backs at the federal and provincial levels make it difficult for industry to leverage funding and expertise for collaborative research. Funding programs available often take too long to approve projects, leading to industry missing the necessary biological window, loss of student researchers and/or the ability to complete the work in the time frame designated. Some funding can only be leveraged by using researchers within any given institution but that institution does not often have the research capacity or personnel to complete the work.
The ACFFA is working in collaboration with other industry colleagues for the development of a minor use, minor species program in support of research and registrations for fish health medicines in Canada. We grow a relatively small number of fish and less than 3 per cent of salmon feed will ever contain an antibiotic. This certainly qualifies us as a minor use and a minor species.
It is important that veterinarians have options available to protect their fish if the need arises, and a MUMS program will help attract pharmaceutical companies to register their products in Canada.
The ACFFA has focused significant resources on gaining support for a science-based integrated pest management plan for sea lice in the Bay of Fundy since reliance on any single management option or method of control simply does not work.
An IPMP framework for sea lice exists but access to a variety of treatment and management options for Canada is limited. For an effective IPMP, regulatory approvals for varied treatment options and timely authorizations to evaluate efficacy of potential products is required. Canadian fish farmers do not have access to feed formulations that are available in other jurisdictions despite the fact that salmon being fed these alternative ingredients are allowed to be imported.
Infectious Salmon Anaemia is a serious threat to the health of our fish, so rigorous testing and monitoring is an integral part of farm management. Two pan-Atlantic workshops have been co-hosted by the ACFFA and NAIA, the Newfoundland association, which brought industry, provincial regulators, provincial veterinarians and federal regulators, including CFIA, together to review lessons learned during the 2012-13 ISA incidents and to discuss how to improve early detection, rapid response and continuously planning to support the development of a pan-Atlantic ISA management and control program.
We know how to manage ISA but the ability to have a rapid response plan is critical, and additional industry infrastructure and approved disposal facilities in all provinces is essential for an effective program.
Atlantic salmon farmers work with biologists, oceanographers, private and government veterinarians and regulators to identify and address other fish health concerns such as bacterial kidney disease and ulcer disease that continue to challenge the industry. Vaccine development must be supported as well as diagnostic tools and efforts to obtain access to functional and clinical feeds that are available globally but are not available in Canada.
The ACFFA participates on the New Brunswick and Nova Scotia Aquaculture Environment Coordinating Committees. Because of the similarities between New Brunswick and Nova Scotia, a harmonized regulatory approach in the region would enable greater collaboration on R&D.
The ACFFA and Sweeney International, through the Aquaculture Collaborative Research and Development Program are supporting a two-year project intended to inform any new standards of practise for environmental monitoring.
The ACFFA and members work collaboratively with a range of stakeholders to enhance our environmental stewardship. Some ongoing conservation based projects include the lobster survey work being conducted by Benson Aquaculture and Sweeney Marine Corp. and the collaboration between Cooke Aquaculture and the Atlantic Salmon Federation on enhancement of wild salmon populations in the Magaguadavic River.
In 2014 ACFFA was able to facilitate collaboration between Cooke Aquaculture, Fundy National Park, Fort Folly First Nation, the Huntsman Marine Centre and the New Brunswick Department of Agriculture, Aquaculture and Fisheries that will see a new inner Bay of Fundy salmon recovery project continue for the next five years.
Wild salmon smolt will be caught in the spring, moved to a quarantine facility at the Huntsman for fish health testing, and placed at marine farms until the fall of the following year. The salmon will then be released back into their home river to spawn.
This recovery method could become a factor in helping wild salmon stocks in the Bay of Fundy and elsewhere and potentially have an impact on the recovery of a species that would not be possible without this collaboration.
In conclusion, salmon farming is a science-based sector. Therefore, ACFFA and ACAIRDN will continue to advocate for collaborative research that is focused on industry-identified knowledge gaps. We urge the Senate committee to support a recommendation for dedicated federal funding that will support the further development of our sector.
Thank you.
Mr. Szemerda: Good evening to everyone. Thank you for giving me this opportunity to meet with you today.
My name is Michael Szemerda. I am here as a member of the Cooke Aquaculture management team. This presentation was developed in collaboration with the following members of our science team. Dr. Keng Pee Ang is our Vice-President of Research, Feed and Nutrition and is responsible for our R&D program or trying to keep track of all of them because they are substantial. He sends his regrets for not being here in person because of prior commitment. Dr. Jake Elliott is the Vice-President of Fresh Water and Technical Operations and oversees our hatchery and breeding programs. Dr. Leighanne Hawkins is our corporate veterinarian and leads our in-house team of veterinarians and our fish health technicians. We are also fortunate to have Alan Donkin as our feed specialist and nutritionist, and Mitchel Dickie as our fresh water technical operations manager. These individuals are supported at many levels by a professional management team and 2,600 employees worldwide.
As the VP of Salt Water Operations, I am responsible for all of our North American farming operations and am directly involved in many of our research projects and development projects. I also provide technical support on a number of external organizations that have developed standards for aquaculture, including an organic standard for Canada.
In presentations made by our VP Communications last May in Halifax, you were provided with an overview of our company and its growth from one farm of 5,000 fish 28 years ago to the global player that we are today, with operations in Canada, the U.S., Chili, Spain and Scotland. In spite of our expanded global reach, we continue to invest at home in Atlantic Canada.
Our success as an Atlantic Canadian family based company is the result of vision, strategic planning, a professional management team and a dedicated workforce. It is also largely due to ongoing investment in R&D and innovation.
Scientific research and development has always been core to our business. We have been at the leading edge of innovation throughout our company's history. Our corporate budget for research and development is now more than $1 million annually. In addition to the substantial investment, we are also making continuous improvements in technology and innovation.
There isn't time today to cover all the work and every project so I will just leave you with an overview of our R&D program, its main objectives, our collaborators and some examples of our current projects.
Our current focus in science and research is on three main areas: fish health, production efficiency and our in-house selective breeding program. Some of these projects are completely in-house while others have been developed with external partners and some with funding support.
Our fish health program covers a wide range of issues but sea lice management is a major priority for today's R&D. One thing I will mention is that if you do a literary search of research programs on protein production, I think seafood is about 10 per cent of the total protein production worldwide and if you do a literary search of all the research programs that come up, it is very biased toward terrestrial. The research programs are not proportional to the production. So it has been lagging behind, but as you will hear, there are many projects going on. So I think that even though it is a worldwide proportion, I think that locally, we certainly put the time and the money into these projects.
So our fish health program covers a wide range of issues but sea lice management is a major priority for today's R&D. This includes significant investment into green non-chemical technologies. Our cunner fish program is similar to the Norwegian wrasse program which explores the use of cleaner fish or fish that can eat sea lice from salmon. We cannot use the wrasse, although we asked knowing the answer, which is that it is not a native species. The cunner is native to our area so we have been working on a lab and field trial since 2010. We are also building a broodstock program at the Huntsman Marine Science Centre so that we do not have to rely on wild cunner in the future.
The 2010 tank trials confirmed that the cunner loves to eat sea lice. In 2011, we conducted sea cage trials with varying levels of cunner in with salmon. In 2012, we expanded those trials to one-third of the farms in New Brunswick. Lab trials by Dr. Les Burridge at SABS showed that the cunners were unaffected by treatments with hydrogen peroxide or Salmosan. In fact, we found we had very low mortality in the cunner population and the survivors of those trials are now broodstock at the Huntsman Marine Centre. A similar program has been started in St. John's, Newfoundland in collaboration with the Ocean Science Centre, Memorial University.
We are also developing a lumpfish breeding program similar to a program in Norway that is showing some success. So there are some pictures of some of the cunners and lumpfish at Huntsman.
One of the most important areas for research is in the area of equipment and feed. Through our feed division, Northeast Nutrition Inc., we conducted a number of laboratory field trials on feed. This work was discussed in greater detail by Tom Taylor who represented NNI, Northeast Nutrition, on a panel in Halifax, Nova Scotia last May.
Through GMG, our equipment manufacturing and service division, we are collaborating with Professor David Fredriksson at the US Naval Academy in Maryland on cage design. He has a unique combination of research experience associated with engineering in the field of marine aquaculture. His efforts include development of numerical and physical model techniques with field measurements for fish containment systems including salmon farms.
We are also conducting field trials on new net washing technology that allows us to use robots to wash nets on site and avoid using anti-foulants. We are investing in stronger net material with steel thread that will help prevent predator damage.
Our trademark offspring traceability program is a cornerstone of our in-house family-based selective breeding program. This allows us to trace our products through the value chain back to the egg. The program has benefited from funding from ACOA's AIF program.
You will see a list of projects going on at the Biological Station as well as who is part of those and some of the funding agencies, and I will not go into detail on all of them. Basically, there are a couple of pages there with our work with DFO in St. John's, Newfoundland, MUN Science Centre in Newfoundland, the DFO Centre in St. Andrews Biological Station and numerous others. There is the Genome project, Genome Canada looking at the genome application partnership program for salmon and chips; Genome Canada for the LSAR, applying genomes to the marine production stage of salmon aquaculture; the NSERC project with the Laval University, Dalhousie University, the utilization of salmon by-products for human medicine; the NSERC strategic grants which is using the genomes to better diversify our breeding program; the NSERC Cooke Industrial Research Chair in Sustainable Aquaculture which was named, I think it was early in the spring this year, and we are happy to have Dr. Jon Grant from Dalhousie so named to that research chair. That has really helped us to pick up the pace in our research and development but also employ a lot more of the highly-qualified personnel that we have in Atlantic Canada to research. We have Sea Run Holding Company that we are part owner in doing research on applications of salmon by-products in human medicine including pain mitigation, hemostasis and spinal cord injury research. We also have some funding there from the US National Institute of Health.
I sit on the board of the CIMTAN, the Canadian Integrated Multi-Trophic Aquaculture Network, and we have been working with integrated multi-trophic aquaculture for the last 10 years or so. We have other areas of research, environmental system performance and species interactions, system design and engineering — these are some of the projects that are within the CIMTAN — economics analysis, financial modelling for IMTA, and the network is in the sixth year of the project. They are also, again, with DFO and other agencies.
The previous seven slides outline a series of collaborative projects and key science and research collaborators. In each case the partnership involves funding and in-kind support from Cooke Aquaculture and funding from the agency or program.
The NSERC Industrial Research Chair in Sustainable Aquaculture program with Dr. Jon Grant is a significant investment by Cooke into the future of science-based industry. Dr. Grant has already presented to the Senate committee as part of a panel last May in Halifax so I will not go into too much detail there.
I would like to make a few comments on the genomics research.
This should not be confused with the research into GMO salmon or the production of genetically modified fish. We are using genomes as a tool in our selective breeding program. The purpose of the recently announced salmon and chips project is to accelerate the rate of genetic improvement for important functional traits in our farmed Atlantic salmon using modern animal breeding techniques. The goal is to improve our global competitiveness. Functional traits include improved egg quality and survival, growth rate, yield, texture, pigmentation, maturity, disease resistance to ISA, sea lice and BKD.
You will have received a presentation from Dr. Thierry Chopin on the Integrated Multi-Trophic Aquaculture Program earlier today. We also appreciate your visit to the IMTA Farm in the Bay of Fundy earlier this week and that is why we have listed this program but will not take time to offer further detail on it.
The following slides outline many of the funding agencies and collaborators we are working with. So I will just run quickly down: the University of Guelph, Laval University, Memorial University, University of PEI, Atlantic Veterinary College, Dalhousie University, University of New Brunswick, University of Maine, University of Victoria, University of British Columbia, Simon Fraser University and Vancouver Island University. I noticed that we have missed a couple.
We also have federal government funding agencies. So DFO Nanaimo, B.C., we have DFO St. John's, Newfoundland, DFO St. Andrews, USDA in Franklin, Maine, we have provincial governments so the DAF, we have Newfoundland DFA and Nova Scotia DFA. Funding agencies also include ACOA, ACDRP, IMAP, NSERC, CIHR, the National Research Council and PARR which is part of DFO and GRDI.
Finally, I want to make mention of another program in which we are the industry partner. It is not directly related to production or to our business, but it touches an area that is of vital importance to the owners of our company and to many of us as well. I am referring to the Salmon Conservation Program. We are obviously partners on salmon conservation. We have the expertise and the experience to assist with wild salmon conservation. Cooke Aquaculture has spent close to $250,000 in the last 10 years as partner of the Magaguadavic River Salmon Recovery Program. We contribute facilities and personnel in one of our hatcheries on the Magaguadavic River for raising river fish so that they can be released at various stages. Our salmon biologists, some with previous experience with the Atlantic Salmon Federation, tell us that years of indiscriminate stocking of millions of hatchery raised salmon into the river system means that there is likely no pure wild stock left.
We are now partnering in the Inner Bay of Fundy Recovery Program by growing salmon from the inner Bay of Fundy rivers in one of our sea cages on Grand Manan so that they can be released as adult salmons back into the rivers. This is an exciting partnership with Parks Canada, DFO, First Nations that has already shown some promise. We are eager to find additional conservation partnerships in Nova Scotia and in Maine.
I hope this gives you a clearer picture of the tremendous scope of our investment in scientific research and development and of our commitment to a science-based salmon farming sector.
If I could leave you with one recommendation, we need our federal government to maintain and increase funding for science, research and development. It is so fundamental to the success and the future of Canada's aquaculture sector.
Thank you very much.
The Chair: I thank all of you. Those were great presentations and certainly they constitute a side of this industry that needs to be seriously looked at in regard to science, research and development.
Our first questions will be from Senator Meredith.
Senator Meredith: Thank you so much for your presentations. They were very informative.
A million dollar question: We heard earlier prior to our break from Ms. Milewski with respect to the industry and how those who invest in aquaculture are making a 52 per cent return on their investment, and all of you in your presentations are looking at funding. My question is how is it that a greater portion of the returns are not going back into R&D? I know that you have listed several partners here. I know, Ms. House, you have mentioned in your presentation funding not being there. Ms. Plouffe, you also mentioned it and that your research facility has made investments in terms of going forward but it also depends upon others investing.
Do you not feel that the industry should be putting greater emphasis on its research and reinvesting a greater portion of those returns? Again, I do not want to negate the fact that governments have a responsibility in that there are opportunities to create jobs and to grow this industry. I think all of us have that end goal in mind, but what about the onus on the industry itself?
The Chair: Just a point of clarification. When the lady spoke of 52 per cent, she was referencing farms that are in the water versus the ones on land. That is how I took it.
Senator Meredith: That is correct, yes.
The Chair: I am not agreeing or disagreeing. I am just repeating what she said. I just wanted to make sure you were clear just in case you did not hear the comments that she made.
Mr. Szemerda: I honestly don't know where she got those numbers either and I will not comment on that other than to say that obviously, as an Atlantic Canadian company and a privately held one, we do not make our financials public, but I will say that in the 28 years that Kelly Cove Salmon/Cooke Aquaculture has been operating, we have been able to stay in the black and that includes the years in the late nineties, early 2000s when we were challenged with ISA and the early 1990s when we were challenged with sea lice the first time around.
This industry is not for the faint of heart and there are many challenges as you move forward. I will say that there has been a lot of consolidation in the industry in Atlantic Canada and the reason for that is that the margins are not that big. One of the strategies our company has certainly played in over the years is to become vertically integrated, meaning we control our destiny from broodstock program all the way to the product on the plate, and that has allowed us to weather the storm, so to say, when global prices take a drop, there is higher competition coming from other areas or if something happens even closer to us at home. For example, last year, obviously we had some challenges with ISA in Nova Scotia and in Newfoundland. Without that vertically integrated aspect of the company it would have been a challenge to stay where we are.
We take seriously R&D. We put a lot of direct funds back into projects. I know I read down the list of collaborators, the universities as well as DFO and other agencies. We put a lot of money into those and also a lot of in-kind, a lot of time that doesn't necessarily get listed. It is generally our sites that are being used for the research projects or our fish that they are doing the projects with. So if you add it all up, it is well over the $2.5 million a year and probably more. It's certainly not insignificant and it is not something that we take for granted. It's something that we heavily invest in, we take serious. We put our money back into the research and development because we believe that it is beneficial, not only for us but for all Canadians as far as moving ahead in the aquaculture sector in this country.
Ms. Plouffe: I guess what I would have to say is that Cooke Aquaculture is the model for what it should look like. They are a big producer and none of our West Coast companies are here to defend themselves, but they do invest a lot of money in R&D. They are very forward-thinking and innovative in how they think about production.
So that is the model for what it should look like. I live in P.E.I. We have a number of small shellfish growers. They are all small, independent kingdoms growing mussels and oysters that are barely making money. Maybe Betty can comment a little bit on this point. I do not know how we would get those guys to invest in their own industry. Right now, P.E.I. enjoys a large market share in terms of production of blue mussels, for example, but there are other countries that are coming along behind them and they are already investing in breeding programs. These are things that are not happening in P.E.I. right now. The growers there cannot afford to make that investment. I think we have to be careful that, while we need the federal money to kick-start that kind of project, you start right from the beginning, like Cooke did, start investing a little bit, as much as you can, so that going forward you do not end up dependent on government money for your R&D. That is where our company is sort of becoming affected. You see a lot of companies that are dependent on government support and government money, and our company is ending up competing with our own government to offer services, which is not the way that we would prefer it to be, myself as a taxpayer and a business operator. Maybe Betty can comment a little bit on that for the smaller fish.
Ms. House: I really cannot speak too much to the shellfish industry as I am not directly involved here in New Brunswick, although from my other ACAIRDN partners, I can talk about the many small shellfish producers. Again, we have talked about the funding programs, some of which we have lost, like IMAP, and some of which have, as ACRDP has, basically taken out of their program any production-related research. So we have kind of lost that option. For smaller operators, even for smaller finfish operators, it is great when you are big enough, you are vertically integrated and you have the expertise in-house. Small operators do not have that. They are mom and pop operations. They need to be able to access DFO researchers and other expertise, and the only way to get those experts to the table to help you with your problem is through federal funding sources usually; sometimes provincial funding sources can help as well. The Province of New Brunswick, especially, has been well behind us on a lot of these projects that I have mentioned, but federal funding is something the industry cannot do without.
Senator Meredith: You talk about collaborators, Michael, and you are one of the four largest players here in Canada, Marine Harvest being the other and there are a couple of others.
You mentioned, Ms. Plouffe, this with respect to the smaller farms. I know that you are focusing on salmon, but what about collaboration with those industries as you grow your industries and branch out? Yesterday we toured scallop producers in Gaspé and we have toured the plants of other shell producers. What are your thoughts on collaboration with that type of producer going forward?
Mr. Szemerda: Well, obviously, salmon is our bread and butter and that is our main business, but we have done research projects on numerous different species in order to move that forward in Canada. We have done trout, arctic char, cod, haddock, blue mussels, kelps and we have applied for more. We have applied for sea cucumbers, sea worms, sea scallops, but each one of those, as everybody has mentioned, on the research and development side, takes some time to develop. To be quite honest, it takes a long time to get through the regulatory process. It took us eight years from the time we put a mussel on a farm in a research project to get approval to sell one, because of the regulatory process that we had to go through. We have spent over five or six years trying to get an application to put sea scallop on a farm. Once we have that permission, I think we are always open to collaboration with other smaller growers.
You mentioned the scallop growers in the Gaspé, and we have some in Passamaquoddy. For us to try to reinvent the wheel makes really no sense. It makes more sense to collaborate with a smaller grower that has expertise, and if we can get the licence and then further that knowledge base of how to improve those systems, then they benefit and we benefit. So we are always open to collaborate with smaller growers, other species, and we are just looking to broaden the acceptability and the opportunities for aquaculture in Canada.
Senator Meredith: Thank you.
Senator Stewart Olsen: I am wondering how you see the future unfolding. We have been told by several witnesses that there is not much room for the expansion of finfish in New Brunswick. Would Cooke look into closed containment? Are you looking at expanding your business or just keeping the status quo? You don't have to share secrets. You can speak hypothetically.
Mr. Szemerda: Right now, we are not farming to the potential that we could in New Brunswick. A lot of that has to do with our access to products that we were talking about, with treatment opportunities, with functional feeds. I just touched on some of the research and development we have in sea lice projects and we are continuing with other major ones in green technologies in order to tackle sea lice.
We are still not up to our potential in New Brunswick. There are still some opportunities to grow on the finfish side. There is also opportunity to expand once again if the market dictates that it is sustainable. When I say ''sustainable,'' I mean sustainable in every way, that is, economically, socially and environmentally.
Other species may come into play. Certainly there has been halibut, haddock, cod and there may be another species right around the corner. So we always have our eyes open, and we will continue to look for opportunities in order to do that.
I think the value is somewhere right around 90 million to 100 million tonnes of aquaculture products worldwide. Almost half of that is plant-based. So there is a lot of opportunity, but it is going to take more time and research and development projects to develop markets and see where the markets are.
There are opportunities in New Brunswick. They need the right timing; they need the right push to get them going. That is where I see New Brunswick going, optimize what they have, continue to be a sustainable industry in finfish and salmon, diversify in species when the timing is right, diversify into plant-based and more depositional products like sea cucumbers, filter feeding animals like scallops, products that are valuable and can be marketed. I am just speaking about the south coast of New Brunswick because that is what I know best, but there are opportunities in the north as well.
Senator Stewart Olsen: Thank you.
Senator Lovelace Nicholas: Betty, you mentioned other fish health activities and you addressed other fish health concerns such as bacterial kidney disease and ulcer disease. How does a fish get kidney disease? Is it something new or was it always there?
Ms. House: It is a bacterial disease and we have been dealing with that since —
Mr. Szemerda: For 28 years.
Ms. House: Yes, 28 years. It has been around since the beginning, but a lot of the problem is again the diagnostic tools. It is a curious little critter and Dr. Forward could tell you more about it, but it is very hard to get a diagnostic tool that, as in human health, does not give you a false positive or a false negative. So we are still developing proper diagnostic tools to assess our fish, and then there has also been a problem with access to antibiotics or something to treat the fish that have this disease.
Senator Lovelace Nicholas: Is it because of a lack of funding?
Ms. House: That is a big question. I would say that is what it comes down to. I mean if you talk to a lot of pharmaceutical companies they are not even putting money into human antibiotics and drugs anymore. They are putting money into Viagra and things that bring a lot of money back, but they are not investing in the real important things. So for fish it is even further down the priority list.
Senator Lovelace Nicholas: Sorry to hear that, but thank you.
Ms. House: Yes, no problem.
The Chair: Thank you to our panelists this evening for taking the time to be with us. We have received a lot of information here today, and whether our report is ready in June of next year remains to be seen. Certainly we want to thank you for the opportunity to visit your facilities the other day and also for taking the time this evening to come and explain and present to us information that will certainly form part of our study.
I will conclude by saying if in the next three, four, five months as we continue with our study, something comes across your desk at your place of business that you think would be beneficial to us in preparing our report, feel free to contact the committee and pass it on. Do not be limited by your appearance here today.
I would now like to welcome our final witness for today. We are delighted to have Mr. Randy Angus with us this evening.
Mr. Angus, I understand you have some opening remarks. The floor is yours, sir.
Randy Angus, Director, Integrated Resource Management, Mi'kmaq Confederacy of Prince Edward Island: Thank you and good evening. My name is Randy Angus and I work with the Mi'kmaq Confederacy of Prince Edward Island.
The Mi'kmaq Confederacy of Prince Edward Island is a common forum for the two P.E.I. First Nations to address outstanding issues related to Aboriginal and treaty rights. It is a tribal council and provincial territorial organization governed by a board of directors with membership from the band councils of Abegweit and Lennox Island First Nations. It provides a common forum for the two First Nations and is the unified voice for the advancement of treaty and Aboriginal rights.
Aboriginal groups have unique rights and title regarding coastal resources and lands. Section 35 of the Constitution Act, 1982, affirms the existence of Aboriginal rights and treaty rights in Canada. Aboriginal rights are rights which stem from past practices and occupation of certain territory and/or use of its resources. Aboriginal title, which is territorial in nature, has now been recognized when sufficient occupation is demonstrated, particularly with respect to the nature of the land and the manner in which it is commonly used.
The Mi'kmaq of Prince Edward Island claim Aboriginal title to the lands and waters of Prince Edward Island and adjacent areas of the offshore, and maintain that they did not give up their land rights through treaty, voluntary cessation or otherwise.
I am the Director of Integrated Resource Management for the Mi'kmaq Confederacy of Prince Edward Island. My job title was created very specifically based on the Mi'kmaq understanding, garnered over thousands of years, that everything is linked or integrated to each other. Physical processes, biological processes, chemical processes are all interrelated and integrated to make our world around us. In other words, every action that we undertake has an impact on some part of our environment. Aquaculture development is one of my mandates. Aquaculture leads to sustainable use of resources and to employment.
Sustainable aquaculture development has the potential to restore coastal First Nations to thriving, self-sustaining communities through increased employment, revenue and control over their ancestral territories. We have well positioned communities adjacent to waterways.
Our two Aboriginal communities in Prince Edward Island are expressing interest to learn more and get involved in new opportunities in the aquaculture sector. In response to this increased interest the Department of Fisheries and Oceans, in partnership with Aboriginal Affairs and Northern Development, have implemented the Aboriginal Aquaculture in Canada Initiative. One of our communities has accessed funding through this program and we hope it continues so both bands can benefit from this.
Lack of capital is a real issue. For most aquaculture enterprises it takes a minimum of three years before operations see a positive cash flow. In the interim, debt must be serviced and salaries and other operating expenses paid. In most if not all cases band funding of the enterprise would be exhausted in the process of developing the aquaculture site beyond the experimental stage.
An aquaculture investment by the Government of Canada would greatly benefit First Nation communities through employment, capacity development, food security and allow profits to be put back where they are most needed, in the communities.
Land based aquaculture opportunities, specifically recirculating aquaculture systems, which are known as RAS, for Atlantic salmon are seen as a positive, environmentally sustainable opportunity for Prince Edward Island First Nations.
There is a concern that the current government is reducing regulatory impact and is downloading reporting requirements to the industry. Proposed regulatory changes to regulations functionally exempt aquaculture operations from the general provisions under subsection 36(3) of the Fisheries Act which prohibits the deposit of deleterious substances into water frequented by fish. They will allow the deposit of pesticides and drugs into the aquatic environment as long as they are authorized for use under the Pest Control Products Act or the Food and Drugs Act.
The basic premise of the proposed changes to the Fisheries Act is that registration under legislation managed by Health Canada is adequate to ensure aquatic environmental protection.
This premise is not supportable for a number of reasons. Although registration under the Pest Control Products Act involves an aquatic risk determination, that risk assessment is done by an agency that does not have a singular environmental protection mandate such as DFO has under the Fisheries Act.
Our concerns are that the real reason for these regulations is to allow the industry access to a wider array of more powerful pesticides and drugs which would be challenged by the current Fisheries Act provisions based on an understanding of their high environmental risk. This puts the environment at risk and protection of the environment is paramount to the Prince Edward Island First Nations. We will strenuously object to any attempts to degrade it.
Finally, in Prince Edward Island we potentially will have to deal with the reconciliation of provincial and federal jurisdictions. The management of aquaculture in Prince Edward Island is unique among the provinces. In 1928 an agreement was signed between the Dominion of Canada and Prince Edward Island granting the federal government responsibility for aquaculture leasing in Prince Edward Island. The Governments of Canada and Prince Edward Island reaffirmed this agreement in a 1987 agreement for commercial aquaculture development. Based on these agreements DFO has adopted management measures designed specifically for the Prince Edward Island aquaculture sector and maintains their jurisdiction over aquaculture leasing.
The Fisheries Act in Prince Edward Island gives the minister the authority to make regulations in relation to aquaculture including the training of aquaculturists, demonstrating aquaculture techniques and operations, and undertaking development projects for the improvement of aquaculture landing sites and licenses processing facilities.
In conclusion, we have many challenges ahead, but we feel the future prospects are positive and we look forward to joining this rapidly expanding industry.
Thank you.
The Chairman: Thank you, Mr. Angus.
Senator Poirier: Thank you for your presentation.
On the first page of your presentation you mentioned that one of the First Nation communities in Prince Edward Island had received funding and you were hoping the other one would be receiving it, if I remember correctly. The one that did receive the funding, are they doing aquaculture now? At what stage of the aquaculture development are they? How long have they been doing it? Are they successful? Just give me a little background on that.
Mr. ANGUS: The band is Abegweit First Nation. They have an aquaculture facility now that is constructed. It was completed March 31 of last year. It is a unique project. It is raising Atlantic salmon and speckled trout for enhancement purposes in Prince Edward Island, but it is defined as aquaculture. I see from the news you were in Prince Edward Island. We could have invited you down to see it. It is about 25 minutes out of Charlottetown. They are currently raising 120,000 Atlantic salmon and I think this year around 80,000 speckled trout. They are to be released back into streams to enhance the streams after they have been cleaned. It is Abegweit's attempt to bolster the numbers of Atlantic salmon and speckled trout in P.E.I. so that they can resume their food, social and ceremonial fisheries which had been curtailed because of the low numbers of Atlantic salmon.
The band received funding to help construct that facility. They put in their own funds as well. They are attempting right now to get additional funds to convert their facility from what is a called a flow-through system where the water comes in, goes through the tanks past the fish and out to the drain, to a recirculation system which takes the water, runs it past the fish, comes out of the ground past the fish, up through the filters which filter out the organics, ammonia and nitrates and things like that and back through the fish. It is more environmentally friendly. It is the green way of growing fish. It is a lot more efficient and it produces a better fish.
Senator Poirier: Does the facility belong to the band?
Mr. Angus: Yes, and it is on reserve.
Senator Poirier: How many employees do they have at this point?
Mr. Angus: There are three full-time employees, but part of the entire plan was to rotate other community members through so they get capacity building life skills and also have opportunities to work in the aquaculture industry. We are working with the other band, Lennox Island, to extend the capacity of Abegweit and take the smaller fish they are producing and grow them to larger fish for market opportunities.
Senator Poirier: Is this closed containment?
Mr. Angus: Right now it is flow-through, which is not closed containment. Recirculating aquaculture is closed containment. That is what they want to move to.
Senator Poirier: Okay.
Senator Lovelace Nicholas: Welcome.
You mentioned in your presentation that both bands could benefit but the lack of capital is a real issue. Have they tried partnering up with existing companies off the reserve?
Mr. Angus: Yes, but the partners are not aquaculturists. We have partnered with Cavendish Farms which is an agricultural organization interested in the work we are doing. Our work is specific and it's a different niche in aquaculture, if you will. It is working on enhancement, putting fish back into the environment. It would be considered very small compared to other aquaculture industries that are producing what we call meat fish, which are fish for the market. So it is very difficult. DFO used to have nine enhancement hatcheries in Atlantic Canada. They divested them in 1992. They divested all of them except for one, and so the Miramichi hatchery is the only government hatchery that is involved in enhancement.
Senator Lovelace Nicholas: Do you know how many First Nation farms there are in Atlantic Canada?
Mr. Angus: I am not an expert, but Millbrook First Nation in Truro has a closed recirculating aquaculture system. They grow Arctic char. Chapel Island in Cape Breton are raising rainbow trout for an Ontario firm. I am not aware of any other actual fixed facility in Atlantic Canada.
Senator Lovelace Nicholas: Which do you think is more feasible: land-based or water-based farms?
Mr. Angus: The science is changing. I just came back from a conference in British Columbia called Innovative Aquaculture a week and a half ago. It was on recirculating aquaculture systems. I have been working in aquaculture for 39 years, but recirculation for about 20 years, and I was blown away by the technology changes that are making land-based aquaculture not only completely feasible but more cost efficient than open ocean. It does not have the impact that open sea cages have in terms of environmental fouling. It does not come with the fact that the people who have sea cages are not paying for the water use, public property use they are using for their own commercial gain. But they have the science of the recirculation down to where they can produce a fish larger and faster and better than sea cages and more economical. So I think that is going to change the industry.
Senator Lovelace Nicholas: Thank you.
The Chair: Interesting information.
Senator Meredith: Thank you, Mr. Angus. I have a follow-up to my colleague's question. We had this discussion earlier with respect to contained versus flow-through verus open cage. We heard from witnesses about the cost factor; space to grow certain species was a challenge. You have just returned with that information. What kind of comparative in terms of dollars and investment are we talking if a First Nation band was to go into a closed contained system? What kind of investment would they be looking at?
Mr. Angus: You want to look at a First Nation band on the west coast of Vancouver Island called Kuterra. It is the Namgis First Nation. They are producing 500 metric tonnes of salmon. I took from this conference that it will cost $10 per kilogram of fish produced. That is your initial investment. So if you are doing a 500 metric tonne facility it should cost you $5 million. Kuterra came in at $8.6 million. That is the real number.
They have done an economic analysis, but the group that is presenting it; I will not say it is biased but they have their own interests. It is Tides Canada, Atlantic Salmon Federation, Fresh Water Institute. They want to see sea cages taken out of the ocean and replaced with land-based aquaculture. Their economists have presented their numbers and so they can be challenged by other economists. As to the initial statements about difficulties and challenges, two weeks ago I would have agreed with them. It seems every time we revisit it more information comes to light and we are seeing it get closer and closer. I think we are really close. I am a biologist. They swim the fish at 4.1 body lengths per second. They use 16:9 hour photo period. They know exactly how much plant protein and animal protein to put in the feeds. They are working out the science of it, and I am quite convinced that it will come to be.
Senator Meredith: So we have heard that it take about 18 months to 20 to 36 months in terms of a cycle.
Mr. Angus: What they are saying that in 400 days now they can take a fish from 100 grams to 4 kilograms. They have repeated this at the Fresh Water Institute at Kuterra. There is another place called Cedar Falls on the West Coast, and I think there are eight or nine other international companies that are following that cycle now that the science is good.
Senator Meredith: With respect to the two First Nations that you represent, how large are the bands? You indicated that you need an investment to get the second band engaged in the aquaculture industry. So my first question is how large are the bands? How many from the band would you employ? How are you engaging young people or your membership in the aquaculture industry? We understand as well that there is a shortage of labour here in the Maritimes and that Cooke Aquaculture or Marine Harvest need about 50 employees and so on. In terms of training, and in terms of collaboration on-reserve, there is opportunity for young persons to be engaged in off-reserve activities.
Mr. Angus: To start with your first question, we are very small bands. Lennox Island would be about 800 people total, about 500 living on reserve. Abegweit is about 320 people, about 220 living on reserve. It is complicated by the fact there are three reserves within Abegweit First Nation.
In terms of opportunity for youth employment, you have to look at First Nations in terms of their unique situation. In Prince Edward Island where I live most of our youth are going out West. We are losing a lot of youth and people who are employable. We are actually seeing in towns the unofficial mayor, who owns the gas station and stuff like that, going out West to take jobs. I know in the town of Montague the fellow who owns the bakery left to go out West to take a job.
Senator Meredith: Who is running his house? Who is in his house? Maybe we can get some people from Ontario.
Mr. Angus: His kids have already moved, but his wife is staying.
We just had the owner of a very successful restaurant pick up and move out West. There is more opportunity. But with First Nations you really do not have that option. You are forced by the Indian Act and by social circumstances and housing to live on-reserve. So you have to bring the employment opportunities to the reserves and that is something that could be parachuted in very nicely. It ties in with the culture. It ties in with the experience. Because it is on-reserve it could be taught quite easily, and it teaches an incredible skill set. When you have a closed re-circulation system you are dealing with temperatures, physics, biology, chemistry. There are a lot of different opportunities there for youth to pick out what they are interested in. So we are working with our employment people because we see that as a really good opportunity.
Transportation is an issue even on reserve because of the high levels of unemployment — 65, 70 per cent — people don't have money to buy vehicles and so they cannot leave reserve to get jobs.
So there is a whole variety of reasons why we are looking at having these systems on-reserve.
Senator Meredith: Thank you.
The Chair: Mr. Angus, thank you for your presentation here this evening and for taking the time to give us some insight into the First Nations side of things. As I have said to previous panelists, if there is anything that you may think of after you leave here tonight, or even in the next number of days or weeks, feel free to forward it to our committee.
I would like to thank senators for their efforts and their attention to detail during this long day. It has been a very productive day indeed.
I would like to thank all the people who helped us get through this day. It has been a group effort to ensure that we had a successful day here in New Brunswick. Thank you very much.
(The committee adjourned.)