Proceedings of the Standing Senate Committee on
Fisheries

Issue 11 - Evidence

The Standing Senate Committee on Fisheries met this day at 5:45 p.m. to examine matters relating to the fishing industry.

Senator Gerald J. Comeau (Chairman) in the Chair.

[English]

The Chairman: We are continuing tonight with our examination of matters relating to the fishing industry and, in particular, aquaculture. With us tonight is Mr. Jerry Ward, Assistant Deputy Minister of the department. Mr. Ward is a 1978 graduate of Memorial University School of Business. He was employed in senior management positions in the private sector until 1997. From 1980 to 1997, he was employed with one of Newfoundland's most diversified seafood processing companies. From 1987 to 1997, he was employed with Connor Brothers in New Brunswick in various positions, first as New Brunswick sales manager and then as vice-president of the fresh and frozen division. In 1991, he became president of Connor Brothers Inc., in Boston, Massachusetts, a major subsidiary of The Connors Group of Companies, where he was responsible for overall management of an international seafood procurement and marketing company. In 1997, he joined the public sector and was appointed Assistant Deputy Minister with the Department of Fisheries and Aquaculture for the province of Newfoundland and Labrador.

Mr. Ward, I would like to begin by thanking you for the time you spent with us when the research arm of this committee went to Newfoundland some months ago. You did a tremendous job on our behalf and we very much appreciate it. We came back much more knowledgeable about the aquaculture industry in your province and were quite impressed with what we saw.

You have, as I understand it, a PowerPoint presentation, following which we will proceed with questions and answers. Please proceed.

Mr. Jerry Ward, Assistant Deputy Minister, Department of Fisheries and Aquaculture, Government of Newfoundland and Labrador: On behalf of the Department of Fisheries and Aquaculture for the great province of Newfoundland and Labrador and the Honourable Minister John Efford, I wish to thank you for the opportunity to speak specifically on aquaculture as it relates to our province. We have prepared a PowerPoint presentation for you, so I will not spend much time on the written presentation you have before you. It can be read in your spare time.

We are pleased to hear that you had an enjoyable time when you visited our operations in Newfoundland. Unfortunately, several members of your committee could not make it, but we had a good time nevertheless.

I will give you an outline and then we can move to questions and answers.

I want to talk about aquaculture in Newfoundland and Labrador, dealing specifically with the aquaculture development strategy for the province. Over an eight- to ten-month period, we have developed a detailed strategic plan for Newfoundland and Labrador as it relates to aquaculture. I would also like to spend a few minutes on the federal aquaculture development strategy and the federal program for sustainable aquaculture. I will deal with the issues and points of view held by the province concerning these programs. I would then like to go into the issues and our concerns, followed by a conclusion.

Aquaculture in the province got started in the 1970s with mussel production and moved into the 1980s with salmon and steelhead. Aquaculture is clearly located in the rural communities in Newfoundland and Labrador. More than 95 per cent of the jobs are in geographically isolated and economically depressed communities, where aquaculture is welcome and is making great strides.

With regard to what it means to the province itself in dollars and cents, the overall fishery in Newfoundland last year had an export value of $1 billion. That is a record level. Aquaculture itself is relatively new for us, but it is an important industry when we look at the rural communities that benefit from it. Peek employment was 471. If you look at the multiplier effect, it is substantially more. The export value is about $18 million and there were 202 licensed sites. More important, one might ask the following question: How many of that number were actual commercial sites? We had 55 commercial shellfish sites and finfish sites. Finfish are basically steelhead trout and Atlantic salmon. About 80 per cent of the overall production will be salmon products; the other 20 per cent represent the shellfish sector, which is primarily blue mussels. As indicated here, within the salmon section some 80 per cent will be steelhead and 20 per cent will be Atlantic salmon.

Let us take a few seconds to look at this chart in particular. If we made a mistake, it would have been trying to cover too many species -- that is, trying to do too much with too little resources, both financial and human resources. These are the species that we have been working on since the 1980s. Substantial money has gone into research and development. We have focused our species down to four. That is based on the environmental conditions with which we are faced and the knowledge we have with these species. They would certainly be steelhead, commonly referred to as trout, blue mussels, Atlantic salmon, and cod grow-out. Cod grow-out is an interesting concept, and I will elaborate on that later.

Let us look at the statistics. We have seen a movement here, despite the fact that we have been in the aquaculture since the late 1970s and the early 1980s. The activity started in 1995. We have increased from 1,029 metric tonnes to 4,283 tonnes in 1999. That is a 316 per cent increase in overall activity in the province. In terms of dollars and cents, it may not be substantial in relation to B.C., New Brunswick or Prince Edward Island, but none of these provinces has had the increases that we have experienced year after year.

With regard to finfish, you may say that we had an increase of 400 tonnes in 1995 to 2,500 tonnes in 1999, and then levelled off. There are some good reasons for that. One of major issues that we have had to contend with is that -- and, this is true for the aquaculture industry in Canada too -- it is important that you have the right strains of fish. If you are in the poultry business, for example, you must have the right stock to have chickens ready for market in six weeks. There is no difference in the aquaculture industry. We used inferior species of fish for 15 years and, consequently lost millions of dollars. Only in 1999 did we get permission from DFO to import strains of fish that were already being used elsewhere in Canada and around the world.

With regard to shellfish, the production is primarily blue mussels around the northeast and south coasts of Newfoundland. This production has grown from less than 400 tonnes in 1995 to 1,700 tonnes in 1999, which represents a 320 per cent increase. Last year, our mussel production increased by roughly 73 per cent. Those are substantial increases. We expect to continue that momentum, provided the conditions are in place to allow the industry to move forward.

Turning to the subject of steelhead, Newfoundland is the major producer of steelhead in North America. There is now access to new stocks and improved performance. There are new markets in Japan, production is increasing and there is great potential for growth. We had approximately 2,500 tonnes of production last year. If you look at that in comparison to New Brunswick, where major salmon aquaculture takes place, we have 10 times the amount of water and we are doing one-tenth the amount of salmonid production.

We have no great illusions that we will be doing the numbers they are in New Brunswick, but the potential is there to move the industry forward to at least 10,000 tonnes, and substantially more than that, subject to private investment.

Access to the best stocks of Atlantic salmon should improve competitiveness. We still have a way to go with Atlantic salmon. We are not using the best strains and thus we cannot be competitive.

There are 20,000 kilometres of coastline in Newfoundland and Labrador. To date we have licensed only 2,500 hectares for mussels throughout the province. There is good reason for that. We would like to walk before we run, and with the increase of production we feel we can reach our goals. However, even without increasing hectares, we should be able to produce 7,000 to 7,500 tonnes with 2,500 hectares of water. That is a substantially minimal amount if you look at the entire island.

Atlantic cod production is increasing. We take cod from the wild, from a cod trap, move them into another trap where they grow for the remainder of the year. Nowhere else in the world does supply swim into cod traps, move to one side and prepare to be fed. From June to November, their weight will double. Their market value is traditionally based on summer prices when the markets are better. The economic output of taking one pound of cod in June and feeding it for 100 days is five times the amount a fishermen would sell it for in June. You do not have to be a genius to figure out the opportunity.

Progress is slow, but in the last three years we have made a concentrated effort provincially and the DFO has been supportive. The first year we did 10 tonnes, then 30 tonnes, and this year we will do 300 to 400 tonnes of finished product. Again, those are substantial numbers from a percentage perspective. There is much opportunity for inshore fisherpersons, which was what this program was developed for from the beginning.

In 1999, the Newfoundland aquaculture industry decided, in conjunction with the federal government and the Newfoundland government, that it was time to review the future direction of the provincial industry. We could not continue, after 20 years of producing less than $10 million in output and trying to do everything with the limited funding. We put together a group of both federal and provincial government agencies, led by the industry, to recommend a strategy of future growth.

In July, 2000, the provincial government accepted that strategy by the stakeholders. The province is in the process of putting in place an implementation schedule that would clearly define who should do what and what resources are required. It will be something that is measurable and accountable.

On the federal level, the system fell down where the Federal Aquaculture Development Strategy was concerned. The Federal Aquaculture Development Strategy was developed in 1994-95, but it sat on desks and gathered dust. I question whether 5 per cent of the industry or people involved even read the document. It just sat there.

From the two national round tables, we learned nothing new. We came to the exact conclusions and recommendations that were put forward in 1994 and 1995. During that time, nothing happened. Despite the lack of willingness and the enthusiasm from senior federal bureaucrats, who were clearly not pushing aquaculture, the industry in Canada moved from $7 million in 1984 to close to $600 million last year. That tremendous growth is certainly expected to continue.

That is enough on the national strategy. I am sure you have heard it many times. Before I address the objectives, I wish to give the Newfoundland and Labrador perspective on the Federal Aquaculture Development Strategy as well as to sustainable aquaculture development that has been recently announced.

This Federal Aquaculture Development Strategy is a good way to provide financial and human resources. The province's position on the federal aquaculture strategy is that the strategy must be a standing item on future meetings of the Atlantic Canadian Fisheries Ministers, ACFM, and the Canadian Council of Fisheries and Aquaculture Ministers, CCFAM. This has been accomplished. Minister Dhaliwal is to be complimented for this. At the last two meetings, this subject has been in the forefront of discussions and some good work is being done.

The provincial aquaculture ministers must receive a clear message from the federal Minister of Fisheries and Oceans that aquaculture is a legitimate user. Prior to Minister Dhaliwal, there were few ministers who clearly stated that aquaculture is a legitimate user of the waters.

Time lines and action plans must be developed and implemented by both the commissioner's office and DFO for the delivery of the strategy. This is where the last strategy failed.

Since 1998, we have seen the creation of the Office of the Commissioner for Aquaculture Development. That is a good move, one that is long overdue. It took six years to implement. These reports just sat on the shelves. There was not one person in Ottawa at DFO dedicated to aquaculture development in Canada, yet we went from $7 million to $600 million. The credit must go to the industry and the farms on both the East and West Coasts.

If government is serious about moving forward -- and they appear to be, and here I cite the creation of the Office of the Commissioner for Aquaculture Development -- then we will concentrate on areas of legislation and regulations. In fairness, that is overdue.

It will simplify some things, but let us not get so bureaucratic that in three years' time we are still waiting for results. DFO created the position of director general several years ago; I think it was called aquaculture policy. Today it is called the Program for Sustainable Aquaculture. Again, this measure was long overdue. We are seeing the fruits of some of the problems that we had. The only suggestion we make, and strongly recommend, is that we move forward and get the job done. The time for talking is over. Let us get on with it. Adequate financial and human resources must be made available to implement strategy.

With regard to the federal Program for Sustainable Aquaculture, on August 8, 2000, Minister Dhaliwal announced $75 million for a five-year program for sustainable aquaculture development in Canada. The program consists of three elements. The first element is $32.5 million for science, and research and development, and, of that, $20 million was allocated specifically toward an aquaculture collaborative research and development program. That is really the only major area within the $75 million that is allocated for direct benefit to the industry.

The second part of the program is $20 million for a human health program. This money will be used to enhance the Canadian Shellfish Sanitation Program, to strengthen measures to ensure safety and quality of fish. This money will also allow DFO, Environment Canada, and the Canadian Food Inspection Agency to increase activities in the areas of water testing, shellfish toxins, monitoring and so on.

The third major item under that program was for an improved management and regulatory framework, at $22.5 million. The majority of this funding will be used to increase the staffing of DFO in Ottawa with the establishment of the office of sustainable aquaculture.

It is the view of the industry that this funding, without the $75 million, should have been part of the core budget of DFO and the other departments and agencies. So we have $75 million, and that is not a lot of money for all of Canada over five years. I suspect that a tremendous amount of that money will go to set up the office of the commissioner and the office of sustainable development. I do not have a problem with that, but it leaves the industry short of the money it should be using to develop the industry.

Very simply, the announcement of dedicated financial resources to support development of the aquaculture industry in Canada is clearly a positive step. Specific details on the implementation of these programs have yet to be provided. The Department of Fisheries and Aquaculture will consult with DFO to determine the specifics. Our concern -- and I think it has been addressed -- is that the $20 million under the collaborative program must be dealt with by the industry itself. It must decide how it wants this money to be spent, specifically within various regions in the country. The needs of New Brunswick are different from those of British Columbia, and certainly different from those of Newfoundland and Prince Edward Island. It must be regionalized.

With the exception of the $20 million collaborative research program, the bulk of the funding over the five-year period will go toward core funding for staffing of DFO, Environment Canada and the Canadian Coast Guard.

Let us now look quickly at the strategic objectives from our provincial plan. To update the 1994-95 strategic action plan, a thorough situational analysis of the aquaculture sector, the committee hired an outside consultant, at considerable expense, to do a complete "SWOT" analysis, to look at the strengths, the weaknesses, the opportunities and threats from local, provincial and international perspectives. The analysis included which species to pursue and which to discard, a detailed action plan for pursuing the recommended opportunities, including costing some program parameters, and identification of realistic and measurable goals. No plan is worth the paper it is written on if there is no implementation plan and no accountability.

I will turn now to what I call industry concerns. They are really recommendations, and they have been accepted by the Province of Newfoundland and Labrador and the industry. The first is to develop a success story and focus on limited commercial species. We were doing 13 species and trying to make a success of it. It does not work. We have scaled back to concentrate on four: salmon, steelhead, mussels and cod.

The biggest problem for the Newfoundland industry is lack of confidence in the industry. We have not been able to attract the investment that we have seen in other jurisdictions, from both the private and public sectors. An industry-wide comprehensive cost-reduction strategy is being put in place, as is long-term market development. Another recommendation relates to dealing with the debt loads and limited equity. Again, one of the problems we face is that not one chartered bank in this great country was prepared to take a chance whatsoever, not even a 10 per cent chance, on putting private capital into the aquaculture industry. It is indeed sad for that to happen.

Another area of concern relates to sourcing strategic investment to provide private capital necessary to develop the industry. Our department, in conjunction with the industry, has put together a strategy to source outside investment. If we look at Bay d'Espoir, we have today two major sources of investment in the process of going into Bay d'Espoir, which will move that industry forward considerably. It is private-sector dollars from outside Newfoundland and Labrador. It is long overdue, but we have created a climate that is more attractive to investors.

The next concern relates to reducing the regulatory environment and reducing conflict. The regulatory environment in the aquaculture industry is mind-boggling. Five years ago, if an individual applied for a site licence, that individual had to go through 22 departments and/or agencies, federal and provincial. After all the work we have done in five years, we have it down to only 15. Let's get serious. We have what is supposed to be one-stop shopping, but we still have to shop it out to 15 sub-agencies. We must get serious about this business.

The next recommendation is as follows: increase human resource development to strengthen business skills. The next is to increase extension services, such as veterinarians and technicians. And finally, one cannot overestimate the importance of a strong industry association.

The next subject I wish to talk about is national issues facing aquaculture. Canada must support the promotion of the industry and encourage aquaculture development. The federal government must provide a balanced approach to develop the industry and not focus solely on environment issues. No one underestimates the importance of the environment. If you look at what we did in the province prior to 1997, with a $10 million total output from the industry, and since 1997 we have spent more than $3 million in cost-share agreements with the federal government. We did a carrying capacity study to look at how far we could go without having a degrading effect on the environment. We spent $2 million doing that. In 1999 we put in place the first bloodwater treatment plant in North America. We put in place Norwegian technology to simply take the blood from the fish as they were processed so the blood would not go back out into the harbour and into the estuary.

Last fall we put incinerators on all farm sites. Any fish that was dead would immediately be put into the incinerator, to cut down on the risk of disease. We put in place what is called an ROV, which is "remote operated vehicle," to look at the cages, to look at the moorings, to make sure they are secure and in good condition. We put in place codes of containment to make sure farmers are following rules. When I say "we", I mean the industry, because these were developed by the industry and we supported them. These are major moves from our perspective.

The industry is still worth only $18 million. I like to think that we have put in place in the province something on which we can build and work to grow the industry and to protect the environment. There is no question but that everyone has the right to use the water in Newfoundland and Labrador. We have the traditional fishermen, cabin owners and recreational boaters. Everyone must be looked after.

The first item under industry competitiveness is access to competitive broodstocks. I could tell you horror stories of what should not have happened. I will flip over to another slide and come back to this one.

In March, 1999, after 15 years, we received the right to bring in new strains of fish. In terms of steelhead salmon we can bring in what is known as "diploid all female" from anywhere in the world. It is simply amazing what we are seeing in relation to using what is called triploid strains. They have never been used on an economic basis anywhere in the world; yet, we were forced to use them for 15 years.

This chart you are looking at now tells it all. This is comparing the two strains of fish, the triploid versus the diploid that we are using now. This shows mortality rates for the triploid, which are worse when you look at it through its life cycle. In prior years they were averaging 16 per cent, from the time they were put in the water in May, until October. This year, to date it is less than 3 per cent. I visited a site on the south coast yesterday with the minister. There are farms down there achieving less than 1 per cent mortality. It is all strain-related.

Feed conversion ratios are simply the amount of feed you put into a fish to get saleable weight at the end. For the triploids, it is 1.6, while the feed conversion ratios for the diploids are 1.2. Three years ago, feed conversion ratios on the triploids were 2.5. Our best weight, again comparing just in one season, was 3.5 pounds. On the new strain we are using, it is 4.8 pounds. Time to market with the old strain was 18 months. The time to market now is 8 to 12 months. This is not rocket science information. It is available to anyone to look at.

In terms of health, with respect to triploids -- and, again, I can only speak from the experience we have had in the province -- we had regular outbreaks and annual treatments. There is no question that a lot of these diseases are inherent in the water in the wild. On the new diploid strains we have put in, there has been no outbreak this year of any disease, and there has been absolutely zero treatment. That is progress. Yet it took 15 years and millions of dollars in losses before we could get that message home. To give credit where it is due, in 1999 DFO worked with us to develop to the point where we could get the new strains brought into the province.

With respect to industry competitiveness, areas of concern include the following: need for national research and development initiatives on industry competitiveness; marketing support; reduce regulatory burden. We have no choice both provincially and federally. We must get serious about our business. Canada must become a low-cost producer.

The area of environmental issues includes treating aquaculture as an equitable resource user. I indicated earlier some of the things we have done as a province to ensure that we have a good environment and that we do not abuse the system. The industry has made significant strides. We are not the bad guys, yet we tend to hide and say that we are afraid to address the issues. If there is an issue with environmental groups, or any other, then we should address that issue. We should deal with it on a factual basis, not on fear mongering. We have done too much of it.

Also under the topic of environmental issues, escapees have been reduced. Disease and therapeutant use has been declining. Pollution has been reduced. The industry is leading the way and deserves credit for the improvements made and for those that are underway.

Concerning regulatory burden, we need to reduce, not increase, the regulatory burden. Certainly, with the latest amount of money going into the $75 million fund, we are not interested in more regulatory burdens. We want to reduce them. The provinces have a role to play in this regard.

There must be equity with other resource users. DFO seeks to increase regulation policies in the name of conservation based on theory, not fact. I am not knocking DFO because I think the attitude has changed. I have always believed that attitudes must change from the top. Clearly, that has happened. We now have a federal Minister of Fisheries who has clearly stated his position on aquaculture. All provinces, not just ours, can see a change in the attitude of senior bureaucrats in Ottawa. Historically, it was clear that they were not supportive of moving forward on aquaculture. They simply did not want to address some of the issues that had to be addressed. That has changed. We will see in a year or so just how much they have changed. We have seen plans for the creation of the office of sustainable aquaculture and the creation of the Office of the Commissioner for Aquaculture Development. Let us not get too bureaucratic. Let us get down to grassroots and make things happen.

Navigation regulations are antiquated. That is a bold statement, but I can certainly support it. What other industry is required to permit traffic through their place of business? We have hundreds and thousands of small bays and tickles, which is what we call them in Newfoundland, where there is just room to put down a salmon or mussel farm. Under the regulations today, despite the fact that there has never been a boat there for 100 years, no one uses it, there has to be a 40-metre channel around the circumference. If that entrance is only 100 metres or 200 metres wide, you must have a 40-metre channel down through the centre. We agree there have to be regulations, where they are required. Let us use common sense. That is all it comes down to. We must make sure safety is a priority. The industry and the farmers support it. Do not change rules and regulations midstream. Be consistent in the enforcement. It must be that way.

Much of the success that we have experienced in the province has come about in the last five years. We had a cost-sharing agreement with $20 million to spend over five years. That has been very widely used. The charts I showed you earlier clearly indicate that from 1995 to the present there has been a 316 per cent increase in aquaculture production. There is no question that one of the major reasons for that has been because of the aquaculture component of the economic renewal agreement. That agreement ends on March 31, 2001. It was clearly divided up into financial and marketing segments. The biggest problem we have is that we do not go out and tell the people what we are trying to do. Instead, we go ahead, put something in place and then expect the general public to accept it. Ninety-nine times out of 100 if we went to them and explained the situation and addressed their issues, we could resolve some of the conflicts. Those are some of the things we have tried to accomplish. We put forward 40 recommendations to alleviate and to mediate some of the problems that we were encountering.

Communications, advocacy and education was allotted $1.1 million. Applied research was granted $8 million, while extensive services accounted for $6.2 million.

Of the $75 million federal aquaculture program, 26 per cent is spent on industry issues -- the collaborative research program that I mentioned earlier for $20 million. That is the only direct benefit to the industry. Sixteen per cent goes to environmental issues, most targeted to DFO science based on the belief that aquaculture is a danger to wild stocks and habitat. Thirty per cent goes to DFO regulations and management. I must say that, over all, we need less, not more, regulation. There is no question that DFO, from an aquaculture perspective, was understaffed. For example, there was not one veterinarian on DFO staff to deal with aquaculture issues. There was not one person specifically designated to aquaculture development in Newfoundland and Labrador prior to the program we are currently working on. It is no different in the other provinces.

Of the $75 million, 26 per cent goes to food safety and inspection. Aquaculture produces the highest quality, safest seafood. Why do we need more inspection from a health perspective of finished product? The Canadian Food Inspection Agency is designed to do that. All plants have different programs. As well, in addition to it being checked in the plants in Newfoundland, it is checked regularly by the Food and Drug Administration in the United States. There has not been one instance of unsafe aquaculture product going onto the market. We have a very safe food supply.

In conclusion, aquaculture is a viable, sustainable, and environmentally sound industry for Canada. It is no different from any other industry. We have risk management. Is it any different from producing cars or any other type of operation?

Support for development and expansion is needed and must continue. It must be focused and measurable, and someone must be accountable.

The industry is disadvantaged by having the federal agency responsible for its development focused on increased regulation and not supporting expansion and competitiveness.

The future can be positive with a more open and positive approach based on development. In the province of Newfoundland and Labrador aquaculture is only an $18 million industry today, but it has grown 316 per cent in the last five years. Our overall fishing industry contributes $1 billion in exports. It has tremendous potential. It will move forward and it is a great opportunity to provide jobs, mainly to younger workers, in rural communities that are geographically isolated. From our perspective, there are opportunities and we are very anxious to move forward.

The Chairman: Your presentation was most impressive and I congratulate you for it.

I was pleased to hear that Minister Dhaliwal is standing by his commitment to the future of the aquaculture industry.

Senator Watt: I found your presentation to be very educational. We probably all support your proposal for the future. Your area and mine are not far apart. Have you any knowledge of what is happening to the Atlantic salmon? On the Ungava side, we have three major rivers that normally produce Atlantic salmon. Over the last number of years, the stock has been significantly declining. No one knows where it is going. I asked some witnesses we heard from British Columbia what is happening to the stock, but they did not give me a satisfactory answer. I suppose they do not know.

Mr. Ward: I can only say that we all know that the Atlantic salmon stock has been declining. If you are asking whether aquaculture is causing that decline, I can state unequivocally that there is absolutely no evidence or proof to substantiate that it is.

Senator Watt: As the stock is declining, we must work quickly to sustain and improve it.

Mr. Ward: In the 1980s, when wild salmon stocks were starting to decline, the introduction of farm salmon was positive for the salmon fishery because it took stress off the wild Atlantic salmon by making it available through aquaculture.

Senator Watt: Scientific research is required on this matter. We only know that the stock is declining on both the Labrador and the Quebec side.

Is the steelhead salmon the same species that we on the Quebec side call estuary salmon?

Mr. Ward: There are a number of terminologies used to describe what we call steelhead salmon. Some people call them rainbow trout. A steelhead is simply a rainbow that has adapted to salt water conditions. They are a member of the salmonid family.

Senator Watt: Do you have stock similar to what we on the Ungava a side call the estuary salmon? They are a little shorter than Atlantic salmon and they are stocky.The head of the steelhead salmon seems to be very similar to what we call the estuary salmon. They have a small head.

Newfoundlanders collectively are doing excellent work. We should try to emulate this elsewhere. Your climate is, in some ways, similar to ours. How do you overcome the problem of ice in the bay in the wintertime?

Mr. Ward: I will give you a geography lesson about our great province. Our salmon production will only be commercially grown in one small geographic area of Newfoundland, in a place called Bay d'Espoir. Everywhere else, the water is too cold. There is a specific range in which they can operate. If the temperatures drops to below minus 1, these fish will die. Basically, their blood turns to crystals and they die. The only area we can grow salmon products is off the south coast, and that is because of the substantially warmer water temperatures.

There is a huge hydroelectric project, and we utilize the warm water from the plant for our hatchery operation. That works extremely well. Then we have a significant amount of fresh water runoff. That 20 kilometre fjord has a fresh water lens and a salt water lens and the water is much warmer. However, it does freeze because of the high concentration of fresh water. From the point of view of salmon or steelhead, all it does is provide a blanket and the water is even warmer. When we have a very cold winter, it is often advantageous because it gives us a natural cover.

Clearly that is the only area in which we can grow.

Senator Watt: Can you not do that kind of aquaculture off the Labrador coast?

Mr. Ward: Clearly on the steelhead salmon side, we will never be able to produce stock in Labrador or the majority of other areas of Newfoundland because the temperatures are too extreme. The fish cannot cope with the climatic changes.

From the perspective of blue mussels, we have 20,000 kilometres of coastline. We also have the irritant of the ice that comes down from Labrador that you tend to make up in your area. That causes us problems. Despite that, we can sink our lines and so on. We have good growing conditions for mussels, in particular, on the south coast. Within a reasonable period of time, probably within five to six years, we will challenge P.E.I. with regard to mussel production. If we continue with the 40 to 50 per cent increase in production per year, we will get there.

Senator Watt: You mentioned that it is difficult to obtain private-sector capital investment in those projects; is that changing now?

Mr. Ward: I will deal with the salmon side, first, as it is very capital intensive. For a 500- or 600-tonne farm, one needs a working capital of $2 million or $3 million. There are not many people who can do that.

That is where New Brunswick is successful, because they have the companies to finance the industry. There has been a problem with financing in Newfoundland. However, that is changing because we can now utilize improved strains of steelhead, in particular. It is still an issue, because we should be able to utilize steelhead as elsewhere in Canada.

Steelhead was introduced to Newfoundland in 1895. The Newfoundland Fish and Game Association brought it in from a number of different provinces. Some Europeans looked at it as well. From 1895 onward, we had a problem utilizing these strains.

Senator Watt: You also referred to potential over-regulation by the Department of Fisheries and Oceans. Are you implying that when the funds become available to Newfoundland from the federal government there is too much regulation attached?

Mr. Ward: We have a tendency to over-regulate. We must ensure that we protect the environment and have safety issues in place. The concern in the industry is that we do not take 10 years to do the research and development and then say we should do this or that. What we are talking about is risk management and utilizing strains that have been used elsewhere to build our business. DFO must step up its manpower. There is no question about that. It is badly needed.

I will make a clarification. In 1988, there was a memorandum of understanding signed between the provinces and Ottawa on the management of aquaculture. Speaking from a Newfoundland perspective, we are responsible for licensing and processing. DFO has also been involved in regard to introduction of transfers. That had not been done for 15 years. That has changed and it is now a more cooperative effort. We are working together now. I believe they have seen the light. Let us hope so.

The Chairman: Mr. Ward, you mentioned the subject of coastal zone planning. While we were in St. Andrews, New Brunswick, this subject came up, as well. There may be an advantage to the fact that you were able to get into coastal zone planning prior to the industry developing to the point where it is today. In New Brunswick, this planning was not done, and that has caused them some problems. They are now trying to look at the impact of these farms on their ecosystems.

Since you came late into the game, or you did not expand quite as quickly as they did, that provided you the opportunity to do this planning, which will serve you well in Newfoundland, judging from what we have seen in New Brunswick. That should be positive for you. This will probably come up as we continue to look at the issues. I congratulate you on this initiative.

Senator Perrault: Mr. Ward, you spoke about the necessity to have quality stock to build a viable aquaculture industry. Could you provide more information on that subject? Why is it that after learning of the necessity for quality stock there are still operations using strains that are apparently not to the highest standard.

Mr. Ward: There are geographic differences that must be taken into consideration, specifically with regard to Newfoundland and Labrador. We still have inferior stocks of salmon and steelhead. We can certainly bring in the all-female diploid of steelhead, but we cannot use both sexes, the standard diploids, in particular.

We can still bring in salmon from anywhere in the Northwest Atlantic, but we still cannot use the European strains and some of the other ones.

Senator Perrault: Can you use any Scottish strains?

Mr. Ward: No, senator, we can bring nothing into Newfoundland and Labrador except those strains that originate in the Northwest Atlantic.

Senator Perrault: That would mean nothing from Norway; is that correct?

Mr. Ward: That is correct.

Senator Perrault: Is there a possibility that this could be changed, or would there be an advantage to that?

Mr. Ward: There could be a tremendous advantage to having that changed. As you look at the results I showed you earlier with relation to the female diploids we brought in, it is straightforward and verifiable. Anyone can check the numbers.

Senator Perrault: Would you recommend that we change standards?

Mr. Ward: If you want to be competitive in any industry, you must have the best stock available. Today we do not have that in Newfoundland and Labrador. Other jurisdictions have better strains and are having more success.

Senator Perrault: Would you rate that as your priority, to improve the strain and make sure the best stock is used?

Mr. Ward: Absolutely.

Senator Perrault: Could you put a price tag on that?

Mr. Ward: The cost specifically is in getting the regulations changed through the introduction transfers policy, through DFO and other agencies, to allow us to do that. I would like to elaborate on this.

What it comes down to, as I indicated earlier, is risk management. What have we done? I can only speak about Newfoundland and Labrador on this issue. In order to get the approval to bring in the new strains of fish in 1999 we put forward a plan. We developed a code of containment, which is certainly superior to anything in the world. As a matter of fact, the plan has been utilized by other jurisdictions today.

Senator Perrault: Therefore, that plan is a proven success, is it?

Mr. Ward: Yes. We have put in place the code of containment. We put in place codes of practice, which relates to the conduct of the farmers, things they must do to ensure they are up to spec. We put in place recapture technology, to ensure that we could recapture these fish should it be necessary. To cement this together, we put in place regional management plans. In Bay d'Espoir, where we do all of our salmonids, we have a management plan, which specifies clearly the cage that must be used and the strength of the netting. The net must be tested to ensure there is still strength in it. We brought in equipment for that. We put in place remotely operated vehicles to ensure that the anchoring is correct, again, to ensure that everything is protected. This is controlled by the management plan, on which the industry signed off. It is their plan, and we helped them to develop that plan. It is clearly a unified effort. DFO was a major part of that as well. This is being enforced by the province. We have certainly taken that step specifically. We said that we would put the plan in place to allow us to bring in these better strains of fish, and we will enforce regulations through our department. We have done that.

Senator Perrault: Often you will see restaurants in British Columbia advertising that they offer "genuine wild salmon." This is an implication that somehow aquaculture salmon are not up to standard or they have some deleterious effects. What would be your comment about that?

Mr. Ward: I am glad you asked. It comes down to the fact that wild salmon is becoming somewhat of an exotic species today. If you go back to 1980s, when wild salmon was king and aquaculture was in its early days, the general opinion was that people would never eat farmed salmon, that wild salmon was considered to be so much better. I would probably order wild salmon if it were on the menu, because it is something different. There is very little difference between the two. I can assure you, though, that when you buy farmed salmon you are getting extremely good quality fish.

Senator Perrault: Some adventuresome Atlantic salmon on the West Coast escaped by the thousands about a month ago. There is an attempt to find out where they went.

Senator Robichaud: I enjoyed your presentation, Mr. Ward. There is much information and you seem like you know what you are talking about.

What is the reaction of the traditional fishermen? In New Brunswick, on the East Coast, there was a negative reaction to aquaculture by those people who did not believe the people involved in aquaculture were real fishers. There evolved a situation where one type of fisher did not like the other. What is the reaction in Newfoundland?

Mr. Ward: There are two answers to that question. We must separate the salmonid from the shellfish sector. We never had a problem with the salmonids because we never had a traditional, historic wild fishery in Bay d'Espoir because of the fresh water of course. Therefore, we were not competing for space with the traditional fishermen. From their perspective, we were not interfering with their traditional trap berths and so on. That has not been an issue. In fact, some of the growers are fishermen who have been displaced through the cod moratorium. That part is working extremely well.

Senator Robichaud: How many would be traditional fishermen going through to aquaculture?

Mr. Ward: It would definitely be a minority. Getting to the second part of the question, with regard to shellfish, that fishery is located along the northeast coast, where the vast majority of the fishery is located in Newfoundland and Labrador. It has not been a major problem. Yes, we have had to mediate some concerns and issues; however, by and large, most fishermen in these communities realize that with the collapse of the groundfish industry there is an opportunity to create 5, 10, 15 jobs for each community. That has been happening along the northeast coast. Some of these certainly are traditional fishery, but they would still be in the minority. With the necessity to create jobs, and the spinoffs that accompany these jobs, it is an issue. I believe we have a very good relationship with the traditional fishery.

Senator Robichaud: I asked that question because there must be a change of attitude on the part of traditional fishermen to accept that there is some great potential in aquaculture. I say that because in New Brunswick we are into enhancement, and we would be at the point now where certain areas should be set aside for grow-out and some for spec collection. Some of the traditional scallop fishermen are resisting because it would involve taking some grounds out of their regular fisheries. DFO is quite sensitive to that, and you understand that DFO has always been saying -- and the attitude you were saying has changed lately -- that they were preoccupied with the wild fishery rather than aquaculture. They were and still are quite sensitive to that.

Mr. Ward: In terms of shellfish, which is really the issue in traditional fishing areas, there has been a far amount of mediation out front to address some of these issues. We have many mussel farms located in some of these coves and small harbours, but we also have, in quite a number, worked out arrangements whereby the traditional fishermen set their herring nets to get bait for their lobster traps right in between the ropes, and it has been working very well. They set their lobster traps around the circumference. That works extremely well. They are starting to learn to live together. Much of this is being addressed up front today and not through the back door. If matters are dealt with up front, many issued can be solved.

Senator Robichaud: You mentioned the "cod grow-out." I understand that there is a great deal of potential in that. The traditional fishermen cannot go into it because they just cannot afford to start up. Is it mostly companies that start up that kind of operation?

Mr. Ward: That is a question I can answer directly.

Senator Robichaud: I thought your other answers were quite direct.

Mr. Ward: The cod grow-out program was designed specifically for traditional cod trap fishermen who were displaced during the moratorium. That is the only group that would get that.

Senator Robichaud: For that operation, facilities would be required.

Mr. Ward: As a condition of licence, the fish must be processed at a registered processing facility, of which there are 121 in Newfoundland and Labrador. The fishers cannot process the fish themselves. They must go through a traditional fishing company and it must be sold through that particular company.

Senator Robichaud: Is that an extra regulation that prevents them their own free operation and selling where they want?

Mr. Ward: Our objective from the province's perspective is to provide employment in economically depressed areas. It makes good sense from the cod farmers' position to process the fish and provide much-needed employment. We are working on that issue. The province stipulates, and there is a regulation, that unprocessed fish cannot be shipped out of province.

Senator Robichaud: That could be challenged, but I have no problem with that.

Mr. Ward: It could be challenged, but we clearly have it in legislation, senator.

Senator Robichaud: You mentioned regulations, and I know there are many. Just last year, where I live, I wanted to take a few cubic metres out of the river, dig it up, to put in a landing slip. I began the process of getting a permit about 16 months ago. DFO came, Environment came, federal and provincial agencies, and eventually I received approval. Then I sent in an application to Natural Resources. The matter went back to Environment, back to DFO, and they came back to see me, and it went back to them. I finally received the permit. However, the permit had conditions I had to meet, that I had to go back to DFO, had to go back to Environment, had to go back to Natural Resources and get a whole lot of permits and letters from people along the river and my neighbours.

This was a minor operation. I would have thought that anyone could have looked at it and made the decision that there was no threat to the environment and that therefore we could proceed, in the same way I am sure they could have with an aquaculture operation. I can understand how frustrated people must be when they are waiting for a permit to start something. How can we simplify this process? How long will it take to reduce the red tape?

Mr. Ward: That is something we can sometimes be accused of. Whether it is provincial or federal government, there is sometimes a lack of common sense on these issues.

We have done something a little different. We have put in place what is called one-stop shopping. I assure you there is room for improvement, and we are working on it. An individual who wants an aquaculture licence is required to submit an application to the provincial Department of Fisheries and Aquaculture, and then within a specific time period we go to all the agencies to get a response. We can improve on that, and we are trying to, but, yes, it is a frustrating experience for most growers to move forward. I would say we are better than most or all jurisdictions, in my view, in Canada with regard to issuing licences and permits faster. There is a lot more we can do to improve that as well.

Senator Robichaud: I am not saying I did not receive cooperation from all the people I talked to in the different departments, but they all had a certain responsibility. One was conditional on another one, so it made for a very long process. They were all doing their job.

Mr. Ward: This is exactly what I was talking about earlier. There should be plateaus for certain sizes of farms if you are going that route. Why is it necessary to go to 15 different departments and agencies, provincially and federally, for a permit for what I would consider perhaps a hobby farm? A fisher should not have to do it. The agency controlling the aquaculture operation should have the authority to issue licences, subject to any information the agency might receive. A fisher should not have to go through all these steps. We should put the terms and conditions in place as to what is necessary, and based on that a fisher will be granted a licence. That is where it must go.

Senator Robichaud: However, that is easier said than done.

Mr. Ward: Yes. We will take it one step at a time. It took us 15 years to get the right strains of fish in Newfoundland, but I assure you that 99 per cent of the work was done within the last two years. We have to create uncomfortable situations from time to time. I do not think it would ever have been done, had we stopped pushing for it and being very vocal.

Senator Robichaud: I appreciate what you are doing. This is why we turn to aquaculture, to see if we might help to simplify the process and bring some attention to it. For a long time, as you were saying, no one wanted to deal with aquaculture; it was somebody else's supposed responsibility, so nothing got done.

Mr. Ward: That is one of the reasons why the Office of the Commissioner for Aquaculture Development was developed, to look at the legislative review and the regulations and to put a common-sense approach into this area. I question whether there is any common sense in this industry sometimes.

Senator Mahovlich: I see that aquaculture increased from 1995 to 1999, 2,500 metric tonnes, and you say there is less pollution? Pollution has been reduced from 1995 with all that tonnage?

Mr. Ward: Let me give you a common-sense answer. I will use as an example the finfish industry in the Bay d'Espoir. In that period it has gone from 1,029 tonnes to 2,478 in that geographic area.

Senator Mahovlich: That is much intensified.

Mr. Ward: Bear with me. We have 10 times the space as in New Brunswick. We grow 10 per cent of what they do, so in theory, based on the water that is there, we are doing 1/100th of what we should be doing to be comparable to the same area. I should clarify that before moving forward we put in place a carrying capacity study to address the issue you raise.

Believe it or not, we do have environmentalists in Newfoundland, and rightly so. My children are very much environmentalists. I spend a tremendous amount of time on my boat as well, and I enjoy it.

We looked at carrying capacity, particularly in Bay d'Espoir. Two million dollars was put in place. The salmon industry was doing $4 million. At that time, with the sites that we have in place, without causing any degradation to the environment, and that is a big area. It was identified that the carrying capacity was 9,500 tonnes in one area and 2,500 in another. That is a total of 12,000 tonnes. Our total production today is still under 2,500 tonnes.

There is no increase in pollution in that geographic area because of the conditions that have been put in place by the province and the industry to guard against pollution. We make sure that the garbage bags are cleaned up, the nets are cleaned, and things are not lying around to create a problem.

Senator Mahovlich: Do you move your nets around?

Mr. Ward: Again, I sound like I am blowing our horn a lot here, but I must state facts. In Newfoundland we have summer sites and winter sites. In fact, if you are a farmer fallowing your field, we do exactly the same thing. Fish cannot go in our overwintering site until October 15 and they have to be out not later than May 15; the reverse is true for the summer sites. Every site we have is fallowed every year, which means double the sites, and that is good because, although we do not have the production they have elsewhere, we have considerable space to expand our industry without causing any downgrading of the environment. Such a downgrading is the last thing that we want. We will ensure that our environment is not degraded.

Senator Mahovlich: I would like to go back to the subject of cod farming. How do cod compare to steelhead, in terms of farming? Are they productive?

Mr. Ward: Cod grow out is sort of an intermediary stage. We grow them for three months, in which they would double their weight, and so on. For example, if you bring in fish in the month of May, its economic value is five times more when you sell it. That is what it has been for our three-year projects. The key issue is that fish would have sold in June. The cod market is not that great in the summer months. A lot of people like to eat chicken, beef, and so on. We will excuse them for that, but the markets are quite often depressed. What can you do with fresh fish in the summer? You have to freeze it. The going price at that time is 65 cents to 75 cents for large fish. The average return for that same fish with its head on and in gutted form was $1.45 Canadian in December. That was the price three years in a row. If that is not economic value, then I do not know what is.

There are problems. As production increases, we will have to address some of the typical aquaculture issues. We are also looking at what I would call pure cod aquaculture, right from the egg stage to the hatchery, to complement the grow-out. What happens when you cannot get your fish in the wild? The fact is that we do not have enough fish in the wild for the thousands of Newfoundland fishermen. I assure you that there are a number of fisherpersons looking at this today. We have 60-plus sites issued today. We have, I believe, 16 or 17 sites that are farming this year. Things are going reasonably well.

Senator Robichaud: What do you feed the cod? Could you feed them seal? It would be the revenge of the cod, would it not?

Mr. Ward: Yes, it would. We feed capelin, herring and mackerel to cod. Let us not kid ourselves, if we get into large volumes we would have to go to a formulated feed. Today, we are simply feeding them herring and capelin.

Senator Robichaud: Is any research being done to use as part of the diet some seal?

Mr. Ward: There certainly has not been any work done to date. However, I will relay that on to the minister.

Senator Cook: I am interested why we can only get stock from the northwest Atlantic. Why is there not a level playing field for us?

Mr. Ward: That is a good question. It comes down to the North Atlantic Salmon Conservation Organization. That organization was set up by wild salmon fishery participants to try to protect and to increase the stock of wild salmon, which is a good thing. There was a tremendous amount of pressure, and so on. I have some definite views on NASCO. For example, I cannot remember when there was a participant or an active grower in the aquaculture industry serving on the board of NASCO, which was set up to protect the interests of the wild salmon industry. It is quite straight and quite simple. They are not protecting the interests of the aquaculture industry.

Senator Cook: Is it not unfair when we cannot have access to the same strains of stock as Nova Scotia or New Brunswick?

Senator Robichaud: You have the same as New Brunswick. You cannot bring those in from New Brunswick.

Senator Cook: You can bring them in from Norway, can you not?

Senator Robichaud: No, but the State of Maine can.

Senator Cook: Who in Canada is exempt from it? Is B.C. exempt? Can B.C. bring in Norwegian stock?

Senator Robichaud: No.

Mr. Ward: A number of strains have been used throughout North America over a period of time, yes. It would be unfair for me to say which jurisdiction would have what particular strain. I do not know what it is between Maine and New Brunswick. There are seven miles of water there. All I can tell you is that they have good performing strains of fish in B.C., and some good performing strains of fish in New Brunswick. The best growing fish in B.C. is Atlantic salmon, and it is doing very well.

The Chairman: As I understand it -- and I asked this question of Mr. Bastien when he was before us -- British Columbia can bring in those fish from Norway; however, on the East Coast of Canada it is not allowed. I am not sure of the reason. Perhaps it is because the Atlantic salmon is not native to British Columbia. I do not know.

Mr. Ward: That might have been the case initially, that is correct. Atlantic salmon was not indigenous to the West Coast.

The Chairman: This may be why they are allowed to bring in the Norwegian strain into British Columbia. You are absolutely correct, the salmon farms in Maine are about seven kilometres away from the ones in New Brunswick. In Maine, they are allowed to bring in this foreign stock.

Senator Perrault: Has that problem ever been placed before this committee?

Mr. Ward: That issue has been addressed many times. NASCO in particular is trying to pressure the State of Maine not to utilize these European strains. Maine is fighting it all the way and has every intention to continue fighting.

Senator Cook: It does not seem reasonable to me.

I read in The Evening Telegram on either Thursday or Friday something about two of the research chairs at Memorial being dedicated to aquaculture. That is a fair chunk of funding.

Mr. Ward: Yes. I am not exactly sure of the amount, but there is a fair amount of funding going into funding that chair, yes.

Senator Cook: It is dedicated to aquaculture, is it?

Mr. Ward: No. It is dedicated to fisheries.

Senator Cook: I thought it was just aquaculture. I must get it off the Internet. It is an interesting article. There are two chairs.

The Chairman: I wish to return to the points raised by Senator Watt regarding the financial aspects. We wanted to devote some time to this subject in our current study. With that in mind, I asked the Clerk of the Committee to try to find people who we might be able to brief this committee on the area of financing. Frankly, she has not had much success. The people to whom we have talked, namely, the banks, are being evasive and are saying, "It is not our role. You will have to talk to someone else." We have had comments such as "It is outside the box," whatever that means. It is probably some jargon that the banks use to say, "If it does not fit in the box that says aquaculture, then do not talk to us." We have also heard that you have to have deep pockets or the banks are not interested, or that the rate of return is too long.

Basically, we have not had tremendous success in the financing of aquaculture operations. It is a concern of mine that we do not have much to place on the record. The fact that we have not been able to get much in the way of interest to appear before the committee on this subject may speak volumes. I might want to pursue this with you, then.

What should we do to add information on the question of financing to our study?

Mr. Ward: The industry does not have the ability to raise the capital required from the traditional charter banks in this country. It seems to us that banks are no longer risk takers, that they like to make their money on margins and administration fees.

Two years ago, I met with the provincial bankers' association to discuss with them the possibility of in some way limiting their risk and exposure to only 50 or 75 per cent. They were not interested in entertaining even a 10 per cent risk. That is the difficulty which the aquaculture industry faces.

In some jurisdictions, there are some good corporate citizens with sound financial backgrounds and the ability to draw upon resources to grow their businesses. It has been very difficult for us because most of our people are fisher persons who do not have $100,000.

Some think that starting a mussel farm is very simple, that you need only drop a few lines in the water and that you need not even feed the stock. It is not that simple. The investment required to start a mussel farm which will produce 500,000 pounds of mussels is $500,000. The investment required to start a salmon farm which will produce 500,000 tonnes of salmon is $2 million. If you had to provide even 20 per cent of the financing, that would be $100,000. These people simply do not have that amount of money, and that has always been the problem. The industry is under-financed.

The Chairman: The banks are federally chartered corporations. Do they not have a mandate to look at all aspects of the economy, or are they allowed to ignore aquaculture if they like?

Mr. Ward: That is basically how it works.

The Chairman: Those are the same banks that come to us every couple of years wanting to get into insurance and various other areas. Many of these fish farms are in rural coastal communities that need attention.

Mr. Ward: As a province, we were prepared to underwrite some of the risk, but we did not even get to first base.

What exists within the federal government to support the aquaculture industry? There is an organization called the Farm Credit Corporation which is a Crown agency. The federal government should have some control over where they put their money.

Senator Robichaud: They put money in New Brunswick.

Mr. Ward: I am very much aware of the situation in New Brunswick. I worked in the industry there for a number of years. For the first few years, the Farm Credit Corporation had nothing to do with the industry. They simply did not come into the industry until they felt that they would not be taking a risk by doing so. Yes, in the last 10 years they have put in between $30 and $40 million into New Brunswick, as they should, because they are getting paid back.

In Newfoundland and Labrador, the Farm Credit Corporation is not involved in any aquaculture operation. They believe that it is too much of a risk for them. We were told that too and to see them when we have a profitable industry.

I will ask a question of this group and I assume it will be relayed further. What is the mandate of the Farm Credit Corporation? They are not prepared to put any money into the aquaculture industry in our province unless there is no risk, yet we have a positive balance sheet for two years. There is something wrong with that.

The Chairman: What is their risk? There is no risk in this.

Senator Robichaud: If there were no risk, they would be into it.

The Chairman: Are they not mandated to get involved in this because the banks do not want to get involved in it? Is that not what the Farm Credit Corporation is about?

Mr. Ward: I have had many discussions with the Farm Credit Corporation in the last three years. They are not mandated to take risk. They are mandated to make a profit. This is a Crown corporation that is in place to foster development and growth of the aquaculture and agriculture industries in particular. They say that their mandate is very clear, and that is to make a profit.

The Chairman: That is terrible.

Senator Mahovlich: Where do you get your funds if you cannot go to a bank or to the Farm Credit Corporation?

Mr. Ward: That has been the problem in our province. The government has put a fair amount of money into the industry through research and development to keep it going, but we cannot afford to do that any longer. We put $9.3 million into aquaculture in Bay d'Espoir. We are writing it off. In the initial days there was a lot of research and development, but they had to commercialize and move forward. As a government, we have to ensure that the rules are fair for everyone and that the field is even. We cannot continue to give outright grants. For an industry to be viable, it must make a profit. If you get a good kick at the can and in a number of years it is not moving forward, you make the decision to move on to another species.

That is exactly what we have done in Newfoundland. We are not dealing with 13 species any more; we are dealing with four. By and large, the industry is totally in agreement with that.

Senator Watt: With regard to the capital requirement to get projects off the ground, the Government of Newfoundland has been investing its money into scientific research. The people do not have the amount of money necessary to get those projects off the ground on their own. Since the Newfoundland government has already invested in the scientific research, is there a possibility of the Newfoundland government working out a pay-back scheme with individuals in the private sector buying it from the government and repaying it over time?

Mr. Ward: That is not currently the case. In my statement earlier I should have said that there has been a considerable amount of government money going into the industry, and that includes federal as well as provincial money. The federal government has been very reasonable from a research and development perspective.

It got so bad in the mussel sector that we had to do what you are talking about. Two years ago, we put together an aquaculture working capital fund. It was put in place specifically to deal with mussels, and mussels only. There was $5 million to be spent over a number of years. That was put in as bridge financing through the Atlantic Canada Opportunities Agency. The formulation would be that they would put 50 per cent into the fund. Without ACOA, with regard to aquaculture in Newfoundland, we would have nothing. They have had cold feet lately because they want to see returns as well, but they have, by and large, been supportive of the industry in Newfoundland. I congratulate them for it. However, they are a little tight these days.

In any case, with ACOA and DFO we put in place an aquaculture working capital fund. The purpose was to put $13 million into development of the mussel industry in our province. A total of 50 per cent would have come from ACOA, 30 per cent would have come from the aquaculture working capital fund, and 20 per cent was to come from the private sector or the proponent. That was the bridge financing that we put in place. We had no choice. There is a limit to what you can do in that regard.

Senator Watt: Under the industry support programs 1996 to the year 2000, you applied R&D in the amount of $8 million. Is the Government of Newfoundland able to apply for R&D reimbursement from the federal government?

Mr. Ward: That was $20 million cost-shared. It was 80 per cent federal and 20 per cent provincial dollars.

Senator Watt: Is that R&D not being tapped at all?

Mr. Ward: Those funds were channelled into pure R&D research. We looked at feed conversion ratios, better food for these fish, food stock development and those types of things.

Senator Watt: Normally, if the private sector spends it money for scientific research it is reimbursed from the federal government for the R&D. Are you saying that the decision was made to combine the cost-sharing programs between the two governments and use that as a risk factor?

Mr. Ward: That is correct. This money was non-repayable. The entire $20 million was all grant money. That is why much of it went into research and development specifically.

The Chairman: I wish to note that you mentioned that ACOA was instrumental in helping aquaculture growth in Newfoundland.

I understand that recently the House of Commons Fisheries Committee did a tour of Atlantic Canada. Did they by any chance go to Newfoundland, where they might have been able to hear those comments about ACOA?

Mr. Ward: I could not answer that. Not to my knowledge.

The Chairman: Did they not go to Newfoundland?

Mr. Ward: I cannot remember there being a meeting.

The Chairman: This is a message you might want to try to get across to the House of Commons Fisheries Committee because I know the Official Opposition in the House of Commons wants to kill off ACOA. I would imagine that you would want to bring this to the committee's attention.

Mr. Ward: ACOA was certainly a partner with the industry and the provincial government in developing the provincial aquaculture strategy. ACOA was an equal partner in that process. They, like us, felt that there was direction needed. Clearly there needed to be focus with regard to species. They are focusing their efforts on the species that we think can be commercially and economically viable. They have put considerable dollars into the industry, but the purse strings have become tighter.

The Chairman: I understand that, because they are being pushed by the Official Opposition to cut those purse strings. That is understandable. I imagine the government is responding to what the Official Opposition is saying. I am pleased that you brought these comments forward.

Mr. Ward: My final statement on ACOA is that, without them, we would not have the industry that we have today.

The Chairman: That is a very powerful statement. I am glad to have that placed on the record.

Senator Robichaud: Would you choose an agency such as ACOA to develop aquaculture in Atlantic Canada and in Newfoundland?

Mr. Ward: The right vehicle for delivering acquaculture programs in the province would be a provincial program. If there are cost-shared agreements and funds made available for aquaculture development, then they should be directed towards the province under certain terms and conditions, and the province should develop that particular sector. It would make better use of the available monies.

Senator Robichaud: I am not sure I understand what you are saying.

Mr. Ward: Whether in New Brunswick or Newfoundland, through the Western Diversification Fund or whatever, the problem is that there are simply too many people involved in the decision making.

Senator Robichaud: Why would the provinces not lend their support to ACOA?

Mr. Ward: The provinces are more capable of making regional decisions than ACOA. We have the experience and I am sure, having worked in New Brunswick for a number of years, the provinces know the aquaculture industry so much better than any department within the federal government. It simply does not add up.

If they had the experience and if they had the right network in place to do that, it might be a different issue. However, as I indicated earlier, since 1994 there has been no effort, from a political perspective, to develop aquaculture anywhere in this country.

Had the provinces not led the charge, we would not have an aquaculture industry in Canada today. If the federal minister is serious about the development of aquaculture in the country, then I am sure he will follow through on some of the positive comments that he has made over the last year.

Senator Robichaud: I can see your point. However, you can also see that the federal government wants its rightful place when it makes a contribution to developing aquaculture through ACOA. ACOA, as you have said, has played a major role up to now. I do not know why you want it to butt out.

Mr. Ward: ACOA, from my perspective, is a lending institution. There has no other source of financing. I congratulate them for it. However, the experience, the history and the know-how with regard to aquaculture development is clearly with the provinces throughout this country.

The Chairman: We have gone way over the time we thought we would. That is an indication of the interest that you solicited amongst the members here tonight.

I wish to thank you on behalf of the committee for an excellent presentation.

I would like to correct a comment that I made a few minutes ago where I noted that the Fisheries Committee from the House of Commons had been travelling to the East Coast. My understanding now is that they have not yet travelled to the East Coast. I recall that last fall we had delayed one of our trips because it may have coincided with theirs. They are running very late in their trip to the East Coast to consider aquaculture.

Mr. Ward: I assure you, if they had been to Newfoundland with the issues that we have at present, we would have known about it and you would have known about it.

The Chairman: I wish to ask committee members to stay on for a few minutes to deal with some housekeeping items.

Our clerk is in the process of transferring the exhibits. May I have a motion to have them included as part of our proceedings?

Senator Perrault: I so move.

The Chairman: Is it agreed?

Hon. Senators: Agreed.

The Chairman: Carried. Do we want the presentation of Mr. Ward to be included as a part of our exhibit as well?

Senator Perrault: I would so move.

Hon. Senators: Agreed.

The Chairman: Carried.

I require a motion for the budget for legislation. Your chair asked for emergency funding for Bill S-21, the lighthouse bill. Emergency funding was approved. Now we need to advise the Internal Economy Committee how we will spend that money. The budget has been distributed. Are there any questions on the $4,500 budget as distributed?

[Translation]

Senator Robichaud: Are you talking about meals served prior to the meetings?

[English]

The Chairman: This budget is for Bill S-21 alone.

[Translation]

Ms Barbara Reynolds, Clerk of the Committee: Surely there will be some bills, but I would imagine that we will have Bill S-21.

The Chairman: We are not expecting to receive any other pieces of legislation in the near future.

Senator Robichaud: We will probably not have time to look at this particular bill in any case.

Ms Reynolds: As a rule, we have a bill every five years.

The Chairman: That is correct.

Senator Robichaud: Fine, then in that case, I do not have a problem.

The Chairman: Senator Cook has moved the motion, which has been seconded by Senator Mahovlich.

Ms Reynolds: That is all.

[English]

The Chairman: Is it agreed?

Hon. Senators: Agreed.

The Chairman: Carried.

The next meeting will be on October 24 when we will hear from the Canadian Council for Responsible Fishing. A small group of senators will then go to northern Quebec -- Senators Watt, Adams, Robichaud and myself -- on October 17 and 18 unless other events intervene.

The committee adjourned.