Proceedings of the Standing Senate Committee on
Fisheries and Oceans
Issue 2 - Evidence, June 1, 2006
OTTAWA, Thursday, June 1, 2006
The Standing Senate Committee on Fisheries and Oceans met this day at 10:52 a.m. to examine and report on issues relating to the federal government's new and evolving policy framework for managing Canada's fisheries and oceans.
Senator Bill Rompkey (Chairman) in the chair.
[English]
The Chairman: I wish to welcome senators, witnesses, members of the public and those who will be watching on television across the country.
In general, we are studying the emerging fisheries policy question in Canada. Today in particular we want to turn our attention to the snow crab fishery on the Atlantic coast. We have invited witnesses to help us understand the problems there and to offer possible solutions.
I want to welcome our guests this morning. We have with us Mr. Jean Guy d'Entremont, Chair of the Fisheries Resource Conservation Council; Mr. Brian Adams, President of Area 19 of the Snow Crab Fishermen's Association; Mr. Robert Haché, spokesperson for a number of different groups in the Gaspé and in the gulf; and Mr. John Boland, a staff representative with the Fish, Food and Allied Workers Union in my home province of Newfoundland and Labrador.
I would ask each of our witnesses to make a presentation, and then we will open up the floor for questioning. We want an open and free exchange that will help us establish the real facts, conditions and possible solutions.
[Translation]
Jean Guy d'Entremont, Chairman, Fisheries Resource Conservation Council: Thank you, Mr. Chairman. I would like to thank the committee for this opportunity to appear at this meeting and, once again, to report on the Council's work in protecting fisheries resources. Thank you very much for inviting us.
[English]
Thank you for allowing us to provide you with information on our work.
The Fisheries Resource Conservation Council, FRCC, released its Strategic Conservation Framework for Atlantic Snow Crab in June 2005. I will present a brief overview of this report today. The results from the report have already been presented and explained to the industry and to DFO. There is overall consensus from DFO and the industry today on the key direction of the report.
Snow crab was a one-time mandate for us. The recommendations requested action by the department and industry. We are currently tasked with the review of the 1995 framework on lobster.
The crab framework is a long-term strategic document. We recommended what should be done in the fishery, and we allowed industry and DFO to determine how to do it. This is a strategic report dealing with a long-term framework. The council did not expect immediate implementation in all areas.
I will now address the resource situation. The crab fishery is a relatively new fishery. It has only been 40 years since they have been fishing snow crab commercially. Generally, the situation we found was a bit worse in Newfoundland and Labrador. There are differences from one area to the next. The degree of knowledge differs from fleet to fleet and area to area. We found that many of the new entrants were not as knowledgeable of the detrimental effects some of the fishing practices had on the resource.
When the FRCC looked at conservation, we also looked at sustainability. We felt that sustainability of the fishery was not just looking at conservation of the resource, but it also had other implications. It had social impacts, economic impacts and institutional impacts as well.
When we wrote the report, there were basically three separate chapters. One of them was science, and then there is harvesting and management. I will speak a bit about the science.
The southern Gulf area and eastern Nova Scotia enjoy having a trawl survey. This trawl survey is dedicated to snow crab and allows for a determination of the biomass of snow crab. Unfortunately, in other areas in Atlantic Canada, there is no such thing, and pot surveys or trap surveys are conducted. It is very difficult for them to determine the biomass levels. All the snow crab fisheries in Atlantic Canada are quota-based. Unfortunately, many areas do not have this survey because of the bottom and the terrain.
We also found that there is a need for a science council to be established that would bring together scientists and fishermen from different areas of Atlantic Canada to exchange knowledge and experiences. We held a three-day workshop in Moncton and invited 35 grassroots fishermen from all across Atlantic Canada. We noticed that a lot can be learned within Canada amongst the regions if they speak to each other or if there is dialogue. There was a lack of that, so we recommended in our report the need for a science council.
Under harvesting issues, we found that fishing of soft-shell crab is a serious threat. If improperly handled, most of the soft-shell crab are returned to sea, and if they are either too small or too soft, they will die. This is a waste of the resource waste. We found that the fishing practices in some of the regions only made the situation worse. This was highlighted in the report. We know that changes are taking place.
The council felt that increasing capacity in some areas was not in balance with the resource availability, particularly in Newfoundland and Labrador. In 1980, there were 70 licences for fishermen fishing snow crab. In 1992 there were 750, and in 2004 over 3,400 licences.
Under the heading of management, many fishermen told us during our consultation process and through briefs and discussions that there was too much political interference in the fishery. That was something that came out at almost every meeting. As well, fishermen need to play a greater role in the decision making process. One of the key recommendations of the report was to establish an independent access and allocation panel.
We recommended a change in the Fisheries Act. One of these is the sanctions policy. Fishermen were asking for stiffer penalties and greater fines for people who break the law on purpose. They know what they are doing. They are cheating and breaking the law. Fishermen have been asking for stiffer fines, and DFO has been continuously telling us that a change is needed in the Fisheries Act to bring in a sanctions policy. Many of the management issues and changes that need to take place require this change in the Fisheries Act.
Our general observation at the end of over a year's work and lots of deliberations and consultations was that sustainability in the snow crab fishery is attainable. Immediate actions have to be taken in some areas, and longer term changes have to take place as well, but it is attainable.
Since the release of the report, we have found that many of the problems related to the snow crab fishery are economic factors that affect the fishermen and the fisheries. No one is immune from the high fuel cost these days or the low exchange rate and low prices for crab and high bait costs. Those factors are all making the industry try to catch as many fish as they can to make ends meet. This is a bit of a threat because there is a huge change in price, which I am sure the gentlemen around the table here will talk to you about later. It is causing a strain on the system.
The recommendations made by the council in the report are long term. We do not expect everything to take place today, but we are aware that many have already taken place this past year. The seasons have opened earlier. Once closed for soft-shell crab, they remain closed. Those are all recommendations from the report.
After 20 consultations and numerous briefs, as well as a three-day workshop where we invited these 35 people, the council is confident that the snow crab resource is better off now because they have a road map with which to work. DFO and industry both have a good idea of where things are going, and we have a much better understanding of snow crab than we had a few years ago.
With that, thank you very much.
John Boland, Staff Representative, Fish, Food and Allied Workers Union: God morning. I would like to talk about two separate items. First, I wish to report on the state of the industry in Newfoundland today, and then I will deal with the state of the resource.
The current problems we have in Newfoundland today are more of an economic nature rather than real issues with the resource. After the cod moratorium in 1992, fishers retooled their vessels or bought new vessels to the tune of hundreds of millions of dollars to fish farther offshore. The positive thing was that this retooling allowed for billions of dollars worth of product to be harvested in Newfoundland. People did not die; they changed.
Today's challenges in Newfoundland are largely foreign exchange and currencies both in Canada and the U.S., the price of fuel and competing supplies from other countries. An example of the devastation is that total fish exports from our province this year are most likely to be $400 million less than they were two years ago. That is a lot of money. Snow crab, as we speak today, sells at the wharf in Newfoundland for 92 cents per pound. At the same market price in 2002, fishermen back then would have received $1.64.
Without question, the Canadian dollar is one of the single biggest factors that has dramatically affected our industry and other industries in this country, which speaks loudly. I must tell the Governor of the Bank of Canada that we cannot become any more efficient. We do not of the option of catching more fish, and we cannot shut off our engines and row out. There is not much we can do as an industry to mitigate. Others may, but certainly not the fishing industry. I am speaking of outright devastation by the dollar alone.
Another factor is the unprecedented outward migration from rural Newfoundland. To illustrate, within the last three weeks 37 people have left the community of St. Bride's on the south coast of Newfoundland, and that is a community of about 400 people. Some will say those people represent 9 per cent or so of the population in the town. Guess what? They account for probably 75 per cent of the able-bodied people who live there. That is just one small example of what is happening.
Fishers also have to come to grips with the high cost of fuel, which, since 2002, has more than tripled. That is certainly something that we must live with. Since we went to the IQ fisheries back in the mid-1990s, we have seen an unprecedented number of resource fees and taxes. We have to pay an IQ fee that is based on a time when we were getting paid $2 or $2.50, when in fact we now have a 92 cent crab.
The Chairman: What fee?
Mr. Boland: It is an IQ fee, which is an access fee or a tax by the Government of Canada. You have to pay observer fees and dockside monitoring fees, and the total in our province in a year is about $1 million. There are a number of other fees, all of which means that before you start fishing in Newfoundland you have to go into a DFO counter and write a cheque for about $10,000 before one fish comes out of the water.
These are economic problems, not resource-driven. There has always been a notion among resource managers, particularly here in Ottawa, that what we now have is a demand for people to have more of the resource. We had better put that notion to rest right now because I do not know anyone in Newfoundland who thinks the answer to this dilemma is to demand more fish, more resource and more quota that is not there. No one sees that as an option. I hear that notion tossed around by bureaucrats, particularly here in Ottawa. That does not exist in Newfoundland today because it is not the answer.
With respect to the resource, some of our fleets have proposed a fleet rationalization program. This would involve a system whereby those in a given fleet would have the opportunity collectively to buy out an individual who wanted to exit the fishery and the remainder would share his quota. There are some economics in a 92-cent crab, but given all the overhead at our present quota levels, it really is hard to make ends meet. Given the fact that you cannot increase your quotas and there are people who would like to leave, it would make sense to have a system whereby those in the fleet would buy out others in the fleet.
Two things must happen before this would proceed. The Minister of Fisheries and Oceans must take the necessary steps to enforce the owner-operator and fleet separation policies in the less-than-65-foot fleet sector in Newfoundland. The spirit and intent of that policy was that processors should process and fishers should fish. Unfortunately, through a system of trust agreements in the last 10 years or so, this has been seriously undermined and in some cases processors are now controlling fishing enterprises.
The self-rationalization program in Newfoundland can be done. I think it will require some start-up funding by both the federal and provincial governments. I am not convinced at the end of the day with our proposal that it need cost the taxpayers of this country or of Newfoundland one cent. I do not think people will expect the taxpayer to be on the hook to downsize the industry, but a reasonable proposal exists on paper; it can be done. It may require the government to put in an initial pot of money on which people can draw, but at the end of the day the taxpayer will not be out any money.
The Chairman: Is there such a proposal now?
Mr. Boland: Yes, there is, Mr. Chairman.
The Chairman: Do you have anything with you?
Mr. Boland: No, I have not, but we do have the principles to do it. The first step in getting to the second step, implementing that program, is that we need something done with the owner-operator fleet separation program to start that process.
The greatest threat to the resource in Canada today, believe it or not, has nothing to do with conservation. There is a culture that believes that if we only had a few processors or a handful of fish, the system would be easier to manage and conservation would be prime. Where we sit today, someone would have to pay a great deal of money to get access to the resource. At the end, someone has to take the risk. Someone has to go to sea on a fishing vessel and do the work. The only way those who have paid a lot of money to buy the resource in the beginning can repay their loans is to pay less to the people who actually go on the vessels, do the work and take the risk. I can tell you what that leads to. If I am on a vessel far from shore, away from the person who owns it, I will ignore conservation. I will cheat and do everything I can because right now my pay is very little and the only way I can increase it is to take shortcuts. That is the end result. It does not make it easier; it makes it worse.
Without a proper rationalization program in Newfoundland, as the economic situation get worse, some owners will sell off their vessels, will sit on a piece of paper and try to barter and sell access to that resource to those who still fish, still take the risks, those who actually have to go on the water. The end result is that the people who fish for a living and do the work will end up having less money.
Today in this country hundreds of millions of dollars are taken out of this industry by people who do not own fishing vessels and do not go on the water. As a society, we have taken a public resource and given someone a piece of paper, which simply turns into an income trust. It yields them money forever without any investment. We need to get away from that system.
The state of the resource in Newfoundland as it exists today is a bit of a mixed bag in some areas. In our crab areas, quotas have been stable. In areas where we had problems in 2005, the resource has now bounced back, and some areas remain unchanged.
I would like to deal with one popular misconception. Let us get down to the real biology of the snow crab resource. There is a danger among society and among some people to compare to it to finfish. First, we do not harvest female crab — they are too small. We deal with it in a pot fishery, which is not very disruptive and does not generally result in any environmental damage. It does not tear up the bottom. It is a passive fishery. If all fisheries in Canada and the world were conducted with the same system, the worldwide fisheries would be much better for it.
Let us look at the biology of the resource. Generally, they tell us in Newfoundland that crab, from sea to harvest, take roughly eight or nine years to mature. They cannot really age crab; they give us an estimation. Guess what? There are no 20- or 25-year-old crab because from the time they are old enough to harvest at eight or nine years, we have four or five years to harvest them or they die anyway. We are not trying to manage the resource on a biological basis, but setting our IQs and our taxes is based more on a commercial harvest. The end result is that if the IQs are set too high and too much is taken out of the pot fishery, we will have less next year and the year after.
With regard to biological extinction or problems with the resource, that is something that will be totally beyond our control.
It has not been all doom and gloom in Newfoundland. One of the keys to at least some economic stability is setting the IQ levels at a proper level so that the harvest can be spread out.
I would like to deal with something that Mr. d'Entremont said, namely, that those new entrants to the fishery do not necessarily have the expertise or knowledge in conservation. Let me put that to rest. My experience in Newfoundland has been that most of the 70 or 80 people who have had access to this fishery for the last 25 or 30 years do not go on water. They are home and someone else goes out to sea. They really do not know what is going on with the vessel. Let us be frank about it. The Bonavista Bay fishery, conducted by small boat fishermen, is an example of good conservation practices. They fish from small vessels and use good culling practices; undersized crab are put back into the water immediately. The owner of the vessel is there. He knows if he overfishes this year that the government will not send him a cheque. He is the one that will have to go to Alberta.
The catch rates have been unprecedented in the history of that bay this year because of the steps that the 220 fishermen have taken. The evidence is there. They have fished at a reasonable IQ level.
This year there are about 80 square miles that fishermen have declared a sanctuary for crab where no one is allowed to fish crab. There is no dragging; you are not allowed to fish turbot or anything else. Many steps have been taken.
In addition, this year they were able to increase their individual quotas. However, in order to get their increase they must have their total quota harvested by the end of June. This is to avoid the soft-shell crab. They think outside the box. There are different approaches to the problem.
All is not lost in Newfoundland. We have post-season surveys, crab surveys. Many positive things are happening.
Over the history of this resource we find that it be at a higher level some years than others. The bottom line is that this year we will still have in excess of 90 million pounds. The real problem is the economics of the dollar and the fuel.
That is a thumbnail sketch of where we are at the moment. People in the industry do not see a lot of hope in the next little while that the exchange rate or the cost of fuel will get much better. We do have a problem that will happen soon. I think it will be a tough time. It may not be resource related. There is a way it can be fixed and it is not that complicated.
Brian Adams, President, Area 19 Snow Crab Fishermen's Association: I appreciate being invited here this morning.
Our brief is a watered down version of what has been taking place over the years. We are a very small zone on the southwest coast of Cape Breton Island in the southern gulf. There is a map indicating that in the brief. Again, we fish in a very small box.
The crab fishery in this area began in the late sixties and early seventies with a small number of vessels. For many years the vessels fished a set total amount. Through time the fishers wanted and needed a more active part in managing the fishery in our zone and the Area 19 association was born.
Following the negotiations in 1994 between the association and DFO, the co-management agreement was developed. The agreement consisted of an intricate fisheries management plan, IFMP, and a joint work plan, JPA. It was the first of its kind in Canada and lasted from 1996 to 2001. The fishery was now an ITQ, or individual transferable quota.
At the time the fishery consisted of 111 licence holders and 73 temporary participants. To elaborate a bit on the ``temporary'' number, from year to year, all based on science and the biomass that was there, there was a sharing mechanism for the temporary fishers. Those temporary fishers were lobster fishermen in the five ports that we happen to represent in our community. It amounted to a total of 73 at that time and still is today. Eventually, they will become permanent licence holders, which I will get into later.
After a successful five years, a new agreement much like the first was negotiated from 2001 to 2010. In 2006, to allow the 73 temporary fishers to become permanent, the agreement was opened in mid-term and is in the final stages of being finished up and will be in effect until 2013. Our agreement is in Ottawa undergoing the final stages of preparation and will be signed soon. With the 73 temporary fishers, we will have 184 permanent licence holders.
In terms of some of the accomplishments that we have seen, the agreement has been used as a model for other fisheries in Canada and around the world. In the early 1990s the fishery moved to a top-entrance-only trap to reduce the capture of small soft and female crab. The association works closely with the local DFO to monitor soft-shell crab throughout the season and to circulate this information to our fishers.
The point we are trying to make here is that through co-management we can do those things within our zone without it affecting the outside zones. The top-entrance trap was of major benefit to us and to the whole crab fishery. It reduced the handling of the soft-shell crab and the material left on the bottom but did not eliminate it.
We have funded, and continue to do so, various science projects that are undertaken to study the stock. We have continuous concerns about our zone. With information from the science department we continue to closely monitor the health of our stock.
There is a concern about the level of effort directly outside our zone over the last number of years. To elaborate, we need more dialogue with the adjacent zones and with the department concerning how we can manage that area. The Area 19 season opens two months after other seasons. This is an ongoing problem. Crab do not respect lines. If fishing is taking place on the line of another boundary, only one thing can happen: There will be a reduction in crab from one zone to the other. I do not mean to infringe on other types of fisheries because they are only fishing in their own areas. However, if fishing is taking place close to a zone that has not been fished at that time, it will have a reduction when our season opens.
There should be more attention paid to the information that fishermen bring to DFO relative to the industry, as they are the ones who have firsthand experience.
We continue to be concerned about the effects of seismic and oil and gas exploration in and around our zone. As my colleague from Newfoundland said, marketing of the product in a manner fair and just to all is vital to the survival of this industry.
One of the major hurdles today is marketing to get proper value for our product. With expenses going up and the value of fish going down, it is detrimental to the whole industry. The problem is not as much a decrease in stock as it is the economics of the situation.
We will continue to be proactive and work closely with DFO scientists and managers to develop ways to harvest the stock in a safe and reasonable manner, keeping conservation in the forefront. An example of this is developing trap designs that would leave more soft-shell crab on the ocean floor, minimizing damage and promoting safe handling and discarding practices at sea.
As Mr. d'Entremont mentioned concerning the report, we have to be very proactive in that regard. Our science is among the best in the world. However, the report indicates that we are killing nearly all of the crab we are discarding. I am not sure that is a fact, but we should be proactive about finding out whether we are. We will attempt to run a program this year to find out how much of the material that we are handling is being damaged.
In the meantime, we should be very conscious of how we handle that material. Simply throwing crab over as you are steaming along to the next pot is wrong. We must be very careful in our handling of the product we are throwing over. We must not waste it. We will need that product to harvest tomorrow.
The key to the long-term viability of any industry is management. When all parties have a joint vested interest in the industry and are in general agreement on how best to manage, co-management can be very effective and can help keep the industry strong for generations to come.
In summary, Area 19 has always been proactive in terms of managing our fishery and our strong commitment to the co-management agreement has proven to be very successful for us.
I thank you for this opportunity to speak to you today about our experience and firsthand knowledge in managing our fishery.
Robert Haché, Spokesperson, Association des crabiers de la Baie; Association des crabiers acadiens; Association des crabiers gaspésiens; and Crabiers du nord-est: Mr. Chairman, members of the committee, thank you for inviting me here today.
I represent the Association des crabiers de la Baie; the Association des crabiers acadiens; the Association des crabiers gaspésiens; and the Crabiers du nord-est from the southern Gulf of St. Lawrence, the area encompassed between the Gaspé coast, New Brunswick, Prince Edward Island, Cape Breton and the Magdeleine Islands. We are north of Area 19.
[Translation]
If I may be permitted, I will continue with my presentation in French.
As I mentioned, I represent a majority of crab fishers of area 12 in the Southern Gulf of St. Lawrence.
I would like to point out that I have with me today a number of leaders of fishing associations. First, from New Brunswick, Jean-Gilles Chiasson, of the Association des crabiers acadiens, as well as Robert F. Haché and Peter Noël, of les Crabiers du Nord-Est; from Quebec, Marc Couture of the Association des crabiers gaspésiens and Daniel Desbois, of the Association des crabiers de la Baie.
Let me first of all give you an overview of the history of this fishery in the Southern Gulf of St. Lawrence.
Snow crab fishing in area 12 began in the mid 60s. The mid-shore fishermen who began this type of fishing had just suffered the financial consequences of two major crises, the first collapse of the cod fishery, followed by the collapse of the Gulf redfish fishery. Given these difficult experiences, they would later most vigorously oppose the attempts to arbitrarily increase the number of licences and traps in their new fishery.
In the following 35 years and up until 2003, fishing capacity in area 12 was limited to a maximum of 130 mid-shore licenses and 30 coastal licences, for a total of about 800 commercial fishers relying on this resource, a number which includes obviously crew members.
This fishing fleet comprises family businesses with roots in the coastal communities of Northern New Brunswick, the Gaspé and Prince Edward Island. For years now, the economy of these regions has been very closely linked with this fishery, which provides jobs for close to 4,000 people at sea and on land.
After modest and difficult beginnings, the crab industry in the Southern Gulf underwent substantial expansion. Landings increased steadily, reaching a peak of over 30,000 tons in 1982. By 1988, however, catches fell dramatically to just a few thousand tons and collapsed in 1989.
In 1990, facing a major crisis and with no new resources to turn to, fishers, scientists and managers from the Department of Fisheries and Oceans set about rebuilding the crab stock in Area 12. They adopted vigorous conservation measures based on strict control of fishing capacity, a capacity that would be determined by the establishment of an overall crab quota system, with fixed allocations for each fisher. These measures quickly restored the resource and stabilized the fishery.
These measures to protect the stock and the fishery are still used today, except for those relating to the effective control of capacity and harvesting effort. I shall return to this later on.
By 1994, the crabbers took over from DFO in funding scientific research activities by taking over a research program for which federal funding had just ended. This is the famous experimental trawl survey program which Mr. D'Entremont mentioned earlier in this meeting.
These partnerships with DFO continued until 2002. During this period, Area 12 crabbers invested over 10 million dollars in the scientific research, conservation and crab stock management activities conducted by Fisheries and Oceans Canada.
Furthermore, in the interest of conservation, from 1995 to 1999, crab fishers supported significant reductions in the annual quota, which dropped from 20,000 tons in 1995 to 12,600 in 1999.
This model of public-private cooperation came to an abrupt end in 2003 when DFO added a significant number of new players in Area 12 because it considered it necessary to provide new access in order to ``reduce the harvesting of lobster and ground fish'' in the Southern Gulf of St. Lawrence.
From one day to the next, the Department awarded about 700 new crab licenses to fishers who had previously harvested other species. The number of boats increased from 160 to 393, an increase of close to 300 percent. Crab traps increased from 18,560 to 38,163, an increase of over 100 percent.
Thirty-three associations representing lobster and cod fishers were given a seat at the Area 12 management table, reducing the representation of crab fishers' associations on this committee to 20 percent of its previous level.
As an aside, I would like to comment on what Mr. Boland said earlier, regarding the pioneers of crab fishing in Newfoundland, those 90 fishers who today stay at home and get others to go out and harvest their crab for them. This is really not the case in Area 12. The 130 traditional fishers are still fishing and active on their boat. They are here today. Those who started the fishery are still there or their sons are still there.
So this is a true fishery, when we talk about owner-operators, in the Southern Gulf. This is a meaningful example. At the same time, I take this opportunity to support what Mr. Boland said when he said we need to reinforce the owner-operator policy in order to ensure that any rationalization will not allow fishers to sit on quotas they will sell in exchange of royalties to other fishers. This is not a solution. As the saying goes, the Department should not rob Peter to pay Paul.
So, in 2003, the historical share of each crab fisher negotiated in 1990 was permanently decreased by 30 percent. This historical share was intended to guarantee the long term viability of fishers' businesses and encourage them to maintain rigorous conservation practises in their professional activities.
Finally, the transfer of these crab quotas to non crab fishers also had a significant impact on the duration of seasonal jobs in the factories supplied by crabbers. The factories that were unable to recover the quotas transferred to others saw their employment periods reduced by an average of three weeks in 2004. This is a big impact when one considers that the crab season lasts only eight to nine weeks. This is the source of all the destabilization that is such a concern and that worries fishers also.
In April 1999, the Auditor General of Canada concluded in his report on managing the Atlantic shellfish fishery as follows, and I quote:
We noted significant weaknesses in the Department's management practises designed to achieve its objectives for the Atlantic shellfish fishery. Our audit found decisions that contradict the Department's Fishery of the Future strategy, which formed the basis of our criteria for this audit.
In addition, the Department is pursing social objectives that it has not articulated to Parliament, and economic objectives for which it has not identified expected results. There is an urgent need for the Department to clarify these objectives and to develop and implement the strategies to achieve overall sustainability of the Atlantic shellfish fisheries.
In response, the Department undertook in February 2001 a major review of its Atlantic fisheries policy. This review formed the basis for the new Policy Framework of the Management of Fisheries on Canada's Atlantic coast — this report is not the same as that of the FRCC. It is a different report which the Department released in 2004. Still to be completed is Phase II of the review, which will involve ``putting this framework into action'' and will be guided ``by the vision, objectives and principles put forward in this new framework.''
The policy framework was unanimously endorsed by the industry and provincial governments. It highlights what must be done to bring about the changes needed for the sustainability of the Atlantic stocks and fisheries. Naturally, we expected the Department to work to quickly implement the sensible guidelines contained in this policy framework. However, this was not the case and the Department is still contributing to the conflicts and uncertainty regarding access and maintaining its paternalistic approach to resource users.
Consider the following example. In March 2005 and again in March 2006, DFO announced that it was extending until 2009 the fishing overcapacity established for Area 12 in 2003 — the overcapacity I talked about at the beginning. It did not consult Area 12 crabbers whatsoever before arriving at this unilateral decision. Moreover, DFO supported this decision regarding the new policy framework, seeing it as the ``next logical step.''
But when one reads these directives on this matter of access to resources, it is quickly apparent that the policy framework does not encourage anyone to use a healthy fishery to make up for the weaknesses of other fisheries. On the contrary, the directives state that:
... in exceptional circumstances, the minister will consider providing new or additional access to a fishery that undergoes a substantial increase in resource abundance and/or landed value.
But the price of crab has been in freefall for two years and the Department knows full well that the stock in Area 12 will drop dramatically until 2009. I make an aside here to explain further the behaviour of the crab stock. It is a stock that is renewed by impulsion, which naturally goes through cycles of abundance followed by down phases that are just as dramatic. For example, over a period of ten to fifteen years, a stock may reach, if it is not fished, a biomass of 60,000 tons and, ten years later, a biomass of only 30,000 tons. Therefore, the whole issue of the crab fishing capacity must take into account this fundamental feature.
The policy framework includes various other sensible guidelines for resolving overfishing problems in Atlantic fisheries. I would like to draw your attention to some of these guidelines, the first of which is: implementing ``a decision-making process that is fair, transparent and responsible as a first step in stabilizing access and the distribution of fish resources'' of Atlantic Canada.
This was also dealt with by the Fisheries Resource Conservation Council when it raised the perennial issue of political interference and recommended that access and licensing issues be resolved in a more detached or impartial fashion.
The second guideline deals with the development of mechanisms ``incorporating clear and enforceable entrance and exit rules for new entrants, such as the last-in last- out rule and entrance and exit thresholds.'' This is the best way the industry found to try to maintain an acceptable and viable balance in the management of fish stocks where a group of fishers are the main harvesters.
When we find ourselves in a situation where the value of the catch of a species increases greatly or where the biomass is on an upswing, there will be rules that allow adding people who will benefit from this fishery. The framework sets out this approach, which is wise, rather than doing what has been done for years, forever, which is taking advantage of a moment where there is a large biomass to add new people to a fishery, who will then become bankrupt five or ten years later because there is nothing left in the water.
Thirdly, there needs to be a ``clear definition of levels of resource surplus or decline that constitute a substantial change in resource abundance or landing values'' of the various fish resources of Canada. This means finding criteria or thresholds that will allow managers to better manage those situations.
Fourthly, the development of ``specific policies to define the Department's role and to take measures to expand commercial license holders' participation in decision-making.'' Fishers have always complained about this. The Department and its managers — and they recognize this in their own documents — have shown a paternalistic attitude towards fishers.
Finally, ``fisheries management decision-making processes must be, and must be seen to be, subject to clear and consistent rules and procedures.''
A few months ago, we made the following two submissions to the Department, asking it to accelerate implementation of Phase II of the policy framework, which appears to us to be extremely urgent and important in the context of our Atlantic fisheries. I quote the two recommendations:
That disputes over the balance between harvesting capacity and the available resource cannot be resolved in isolation and in the absence of appropriate policies, requirements, criteria and measures; those aspects are to be developed during the second phase of the strategic framework for the management of fisheries on Canada's Atlantic coast;
That the Department proceed without delay with implementation of Phase II.
The document was adopted in March 2004. We are now in May 2006 and Phase II of the policy framework, in cooperation with representatives of the industry and, obviously, the provinces, has not yet started.
The minister has still not replied to our request and this is why we submit it for your consideration at this meeting. I look forward to your questions.
[English]
Senator Cowan: I read the report and was struck by the mortality rates that were referred to, the handling on the vessels, the drop rate, et cetera. Is that a factor of the design of the vessels? Each of you have spoken about this being other fisheries from other sectors coming into the crab fishery. Did they bring those vessels from those other fisheries, vessels that were perhaps designed for another type of fishery and modified in some way for the crab fishery? Has that contributed to this mortality rate, and would vessels that were designed specifically for this fishery cut the mortality rate significantly?
Mr. d'Entremont: The mortality rate is not similar across Atlantic Canada. The report talks about a study done by Memorial University which says if you drop crab two feet — and these are not soft-shell crab but hard crab — and if you keep them in the air without storing them or you do not place them in water immediately, there is a high mortality rate.
In the southern Gulf, fishers experience low catches, like Mr. Haché explained. The fishery quickly went to handling one trap at a time and releasing the crab immediately, and they have been able to fish using what I call responsibly good practices. That way, the crab are released and there is not as much of a problem with mortality. Even in the case of the soft-shell crabs, many would survive.
There are other areas where many of these new entrants, I believe, were lobster fishermen, and lobsters are hardy — when you release them, they survive. Many people involved in the consultations were amazed when we explained the mortality rates of keeping crab in the air or dropping them. Some people were hauling fleets of gear — perhaps 50 traps at a time. A crab would come onboard the boat and be dropped from a height of eight feet high into the fish hole, left for many minutes, even hours, before being separated and released back to the ocean. Many of those were dead or dying crab. Unfortunately, the vessels were groundfish vessels that were not geared to handle one trap at a time. Some of them have set up tables on their vessels that, even in fleets, as the traps come onboard, they are handled immediately so that the crab are released and there is a lot less mortality.
To answer your question, in the gulf, they learned a lesson. When things got bad, they got better at it and understood the value. However, in other areas, there was a quick change from groundfish fishing to crab fishing using the same vessel, and the proper changes to vessel design were not put in place in time. However, that is changing now.
Senator Cowan: I was struck by the rapid increase in the number of licences. Mr. Haché spoke — and I may have missed something in the translation — about the fact that because of a downturn in lobster fishery, suddenly there was a vast number of people in the crab fishery, which was an established fishery at that point, and it had a disruptive effect. Then, when one looks at the numbers in Newfoundland and Labrador, there are a huge number of fishers. I am wondering how that was managed. If it was managed, who got in and what criteria were established to get in? In addition, who decided how the zones would be set up?
Mr. Boland: We are starting to head down a dangerous road, particularly in Newfoundland. After the groundfish moratorium, traditionally crab was fished in the bays of Newfoundland. Upon the collapse of the groundfish fishery, people started to move offshore. We even fish outside 200 miles right now. As a result, when you equate the boom in the amount of quota, it is related to the amount of territory now fished.
In Newfoundland, I have also experienced — which it is not always the case — poor handling practices. In fact, in some cases, the worst offenders were some of the original 70 people who pioneered the fishery. First, they had bigger vessels, and, second, from the deck they would cull their crab in the hole. Conservation-minded people no longer do that.
On small vessels, you do not have a lot of deck space; the boat is not big enough. Therefore, when the crab come in, you have to pick them right away and put them back in the water. It does not matter whether you are conservation- minded or not. You do not have the work space, so you do it.
When education programs and workshops on crab handling practices were going from community to community, the people most likely to show up were the new guys in the industry. The old guys stayed home because they knew it all, and the guy who actually owns the vessel does not even go to sea. He has a designated captain and crew aboard. He does not come, and if he did come what difference would it make? He does not go to sea.
Again, the study is clear. It is an education process, but certainly, in Newfoundland, I would not limit it to those who have the most experience, because the other thing I find is there is an attitude. If there are only 70 of us and we have 100 million pounds to catch, why bother? There is plenty of crab, anyway, so there is more opportunity to waste.
The current problem in Newfoundland is the exchange rate more than the market. Take the 95 million pounds harvested in Newfoundland this year at the 2002 exchange rate and we would not have a problem. Those are the facts.
Is somebody suggesting that the way to do this in Newfoundland is to let 70 people have $100 million worth of stuff themselves and let the rest vanish? That is not necessarily the answer, either.
We would conclude that in Newfoundland, at the low levels we have now, there should be fewer of us. We feel there is a system whereby we can achieve that result ourselves without putting the taxpayer on the hook to deal with the downward cycles. That is where we want to get to.
Senator Adams: We have the same problem in Nunavut as you do. We have 26 communities. Except for one community in-shore on the mainland, the remaining 25 are close to the sea.
Since we settled the land claim in 1993, we have an agreement with respect to harvesting in the future for the people of Nunavut. Since then, DFO set up some policies in Nunavut — from Davis Strait, Division 0A up to Division 0B — with regard to turbot. Division 0B deals mostly with turbot and some shrimp. One community set quotas for harvesting crab.
Since we settled the land claim, we have, like some other provinces, up to a 12-mile limit. The local people wanted to fish for shellfish other than clams. Some members of the community have consumed something that I have never heard of before. It is like a lobster but does not have claws. There are other ones called cucumbers. I do not know if anyone knows about cucumbers. There are lots of them up there locally.
The Chairman: I had a greenhouse once!
Senator Adams: There are a few other things as well.
Before we do that, DFO has to do a study about what type of mammals live around the community. For example, there are seals and walrus, and people eat them. There are also lots of whales and fish.
My concern is with them establishing quotas that are up to 4,000 metric tonnes. Now we have an extra 2,500 tonnes this year and 1,500 tonnes for Division 0B. Between the turbot and the shrimp, there is approximately 2,500 tonnes. Our community has no access to that.
The land claims agreement established the Nunavut Wildlife Management Board, which works with DFO, and they only gave one licence to the whole territory of Nunavut.
It is the same thing for the shrimp. People from Europe are coming up there to catch them, yet there are people in the community who have to apply for licences to meet their quotas. They have no access because they have no equipment.
People like you want to get into the business. You say that you only have 70 licences. We have 26 communities, and we have only one licence to fish for turbot and for shrimp. That is how government policy has affected our people. Like you, our local people want to fish, but they have no access to the resource. How your organization is set up is something we could look at. We should work together. Perhaps the government would give us a different policy then.
How can we look after that for the future of the people who live in Nunavut? Around the islands north of Hudson's Bay one will find more coastal waters than around Newfoundland and Labrador, Nova Scotia, B.C. and the Yukon put together. Since the land claim, we own 60 per cent of the waters in the Nunavut area, yet DFO has not even contributed $1 toward research for the people in the community.
The Chairman: I do not know which witness will begin to answer that question, but it is one concerning the management of the area and the resources.
Mr. Boland: Believe it or not, there are people from Newfoundland who go fishing in Division 0B, which goes to something I touched on earlier. Your problem is that all of the resources off that shore right now are owned and controlled by someone else.
Senator Adams: Yes.
Mr. Boland: In some cases, these absentee landlords really do not have any more investments. At one particular time they got these pieces of paper and managed to hang onto them forever.
I know some people who leave Newfoundland and go off to fish for three months, but in order to get access to lobster, they have to go into someone's office and fork over thousands of dollars on a public resource. This is one of the biggest problems we face. We have resisted it in Newfoundland, without a doubt, and we will continue to resist it.
I do not know if people have heard about it here, but last year our provincial government wanted to introduce production quotas for crab. It ended up being one of the biggest rackets in our history where even the house of assembly was blockaded for days on end.
If you look at the situation worldwide, this past year Alaska introduced an ITQ system and a production quota system, and it has been devastating. The lowest prices have been paid to fishers in Alaska since back in the 1980s. The communities themselves have been devastated.
Someone had a notion that rather than take out paper or licences, they took out the number of vessels, which does not make any sense.
That is one of the things we keep harping on in Newfoundland. First, we need to do something with the fleet separation policy. Those who actually own the vessel, the people who actually go onboard the vessel, do the work and take the risks are the people who should get the benefit.
The Chairman: I am trying to understand. We are talking about individual transferable quotas. That is the topic.
Mr. Boland: People call it licence stacking or transferable quotas. Call it what you want.
The Chairman: Is it the same in Nunavut as it is off Newfoundland? Are we talking about the same problem?
Mr. Boland: Part of the problem in Nunavut, and this relates to why the Territories cannot get access, is because somewhere in history someone might have received a piece of paper from DFO and acquired an allocation off of Nunavut, but they are no longer investing and no longer fishing. They just are sitting on that piece of paper. If the senator from Nunavut really wants to go fishing, he must buy quota from someone.
The Chairman: Where are these people located?
Mr. Boland: All over the place.
The Chairman: All over what place?
Mr. Boland: Canada.
Senator Watt: Are you also talking about international people?
Mr. Boland: Yes. One of the fundamental problems is that there is no strategy. Once you receive a piece of paper in the industry, you have it. If you stop fishing and investing in the fishery, you control the resource. If you have the quota, that is the problem. That is why these people in Nunavut cannot go out and get a bank loan.
If you have a vessel in Nunavut, you do not have a quota to fish because someone else holds the right to make a profit off of a public resource without any more investment or wealth creation wealth in this country other than for themselves.
Until someone starts dealing with some of those issues, nothing will change. It has happened in Iceland, in New Zealand and to some degree in British Columbia. In Newfoundland, thank you very much, we will fight to the bitter end so as not to head down the road of individual transferable quotas.
Senator Adams: Mr. Boland, you are correct. At the time we settled the land claim, we thought that the Minister of Fisheries would send Nunavut quotas and give everybody access to them.
Every year in February, organizations such as the Baffin Fisheries Coalition and the Nunavut Wildlife Management Board, along with the minister, are asked questions by the locals with respect to Divisions 0A and 0B. Presently we have 10 communities, and five of them have access to the quotas. They asked for extra but could not get it. However, the BFC goes to the Nunavut Wildlife Management Board and then calls Europe to tell them that they have their quotas. Then they ask when the Europeans will be ready to come back and catch the quotas. The BFC sells quotas to foreigners, and those foreigners come up and catch that quota. I am not sure how much it is.
I heard that it is supposed to be a 500 tonne quota for shrimp. All we want is for at least some of those quotas to stay within the community where there are right now. The royalties also do not go to the community.
The Chairman: You heard from the minister about this. The minister realizes that there is a problem there, and he made a commitment to us that he would try to deal with this. He understood the problem.
Mr. Haché, do you have the same problem in Gaspé as in Nunavut and perhaps elsewhere.
Mr. Haché: There is definitely a difference between the southern gulf crab industry and the Newfoundland crab industry. That is obvious. In the southern gulf, the industry has been very active for about 40 years. It has the same people fishing there all the time. They fished on a competitive quota up until the collapse in 1989 and established individual quotas as a means of restoring the resource.
In the same vein that Mr. Boland mentioned, we would like to rationalize, but we want to be sure that if we rationalize, the people who get the quotas will be able to fish and that the quotas will not be given to someone else to fish or to sell as a royalty. The reality is different.
In general terms, the concept of access is always the same. It is always a question of trying to deal with a situation where you have a finite resource with usually a great number of people wanting access to it. We have to find a way to manage that situation such that we end up with a self-reliant fishery, a fishery that pays for itself and can pay for science and so on, while at the same time allowing for the active involvement of as many people as possible in coastal communities.
The Chairman: What about in Nova Scotia, in Cape Breton?
Mr. Adams: What we have now in Area 19 seems to be working relatively well. However, the many arrows that are coming at us from the marketing end and issues that are totally out of our control, such as the Canadian dollar, are making it more and more difficult. We are growing more gray hair sitting around asking how we will survive.
The Chairman: What about the issue of absentee ownership and someone else owning the quota?
Mr. Adams: I heard around the table that some like the ITQ system and some do not. In Area 19, we adopted that as a tool to manage the fishery and the quota. I will not go into the real detail. You would have to look at our agreement. The quota or share that the individual gets each year is tied to the traps. The number of traps in the water controls everything, along with what science tells us how much of the resource will be available for the next year. Initially, we had 1,480 traps in the water. The temporary fishers are looking for access. We agreed to take them in and we added traps. The total is now 1,699.
Senator Cohen: This is the 73, the additions?
Mr. Adams: Yes, that is the 73. Senator Cowan said it is hard to understand why there is so much access to snow crab. When it comes to snow crab, it is open season as far as looking for access and getting it. That is my personal opinion. It has been that way for years. When it comes to other fisheries, I guess if the mindset is there that you will not get it, then you are not as apt to beat on the door so hard.
That was not a bad thing. I personally was one of the people who got into snow crab in the early 1980s. There is a level of not enough people to harvest the snow crab when the stock is high, and that is the nature of the industry. That is what we are trying to cope with in Area 19. It is a rollercoaster when it comes to the crab fishery. You heard us say that we have our big years, our up years and our down years, which is the nature of the business. It is difficult to manage a fishery on the up years because it looks great and you will add a lot of excess, which happened, but what do you do with all that excess during the down years? You have to manage the fishery for the down years. This individual trap ITQ for Area 19 is working well for us.
The Chairman: Good.
Senator Watt: I would like to get back to the point you raised about the inactive aspect of a licence or a quota, namely, the fact that someone is sitting on those papers but they are not active. Do you have any idea how many of those might be out there?
Mr. Boland: No. It is hard to quantify the numbers. In Newfoundland, without a proper fleet reduction and without the fleet separation policy being fixed, the danger is that there will be more and more. If someone wants to leave the industry, they should be able to leave the industry, and they should be able to leave the industry in a viable way.
Senator Watt: And pass it on.
Mr. Boland: Yes. The problem with ITQs — and we have plenty of examples worldwide — is that today we start out with 50 vessels. We can reduce them to 25 with a downturn in the industry, but if we still have 50 shares and there are only 25 vessels on the water, now we have 25 people selling their resource, and not on a permanent basis. Some are just leased. It really does not do anything for anyone. That is the road we do not want to go down.
In Newfoundland, we thought a sensible way to rationalize it was on the basis of a collective. If a fleet wants to buy me out and I leave, then they get the spoils when I leave. That makes a little more sense on a collective basis. The real danger is that more and more people will tie up vessels and want to have crews but will still hold that piece of paper. That is what happened in Alaska this year. They went from 240 vessels to down to 80 on the water. However, they have the same number of pieces of paper. Unless we can get our minds around taking out actual enterprises and numbers, then the people who generally do the work on the vessels and take the risk will end up being paid less. That has conservation effects on the resource and, quite frankly, it is not a good way of doing business.
Today, when there are downturns in the Newfoundland crab industry because quotas are down, I do not hear anyone blaming either the Government of Canada or DFO for it. If you set your quotas too high, then you pay the price yourself when the resource is on a downswing. It is a fact that crab is not very kind to you when you overfish it — not on a biological basis, but on a commercial basis. It will take you down. If you have to decrease your quota in snow crab, a cut much less than 30 per cent does not do anything. In some areas, if you do not take the proper steps, the crab will do it, which is even more unkind.
There is a proper way for this situation to be managed. It is very important for us to have an exit strategy in the fishery. It does not exist in DFO circles. If you or I could ever be lucky enough to get a piece of paper that gives you a quota, you never have to leave the fishery. You never have to go on the water or own a vessel. You can hold on to it forever. Someone else, who takes the risk and does the work, will be paying you.
The Chairman: Yet it is a common resource.
Senator Watt: It could be understood to be held more like insurance, if you chose to activate it down the road.
Mr. Boland: Absolutely.
Senator Watt: That is not acceptable.
Mr. Boland: That is the problem in Nunavut today. The other problem is geography, where they live. It would be better if they were closer to the nation's capital or St. John's. However, when you are spread out in the North, you are a voice in the wilderness. You are too far away to protest and make noise; therefore, you are ignored, which is shameful.
The Chairman: I can assure you that Senator Adams is bringing the case to Ottawa. He questioned the minister at length the other night and he is raising important questions today. I want to establish that he is not alone. This is not a problem that he experiences by himself. This is a problem that is more widespread than just in Nunavut and something with which we must come to grips.
As I said before, the minister understands the problem and has committed in principle to doing something about it. We will follow up on how that might be done.
Senator Hubley: It is great to get on-the-ground information when we are dealing with fisheries.
Without exception, you have identified the problems, but you have also identified many of the solutions, which may vary from district to district. We understand there are differences. However, you have been able to tell us what should and could be done. How difficult is getting that information to a point in the system where it will be acted upon?
I have some follow-up questions dealing with the amount of funding that goes into the scientific information that is required and the research that is being done on your behalf. Is the history of the industry now considered part of that scientific information? Is the story of the fisheries in Canada considered to be a past lesson learned? Finally, do you have a sense that your concerns are being heard and taken into consideration by the Department of Fisheries and Oceans or a fishing organization that is controlling the fishery in your area?
Mr. d'Entremont: I will respond broadly. Given the Atlantic Fisheries Policy Framework that the minister has signed off on — and Mr. Haché mentioned this in his discussion — and also the fact that many people in the industry support our conservation framework, and if the changes to the proposed Fisheries Act do come into play, the tools are there to achieve the desired results. I think the tools will be in place so that if there is a will from industry and there is a will from DFO — and the minister sent us a letter supporting our framework — then it will and can happen. However, it will not happen unless DFO and industry work together to achieve it.
The Chairman: We have heard about possible changes to the Fisheries Act. That is something we will be looking into later on. Can you tell us what you have heard?
Mr. d'Entremont: I am not a lawyer so I cannot get into the details, but it is our understanding that fishermen will not have a true say in the fishery until the minister relinquishes some of his decision making power, passing it on to the industry. For that to happen, the act must be changed.
Also, with regard to administrative sanctions, there is a double jeopardy issue with fining someone and then sanctioning that person. That does not work; it has to go through the courts. This is a way to avoid the court system and have quick, swift, harsh fines so that the penalty matches the crime. Those are only a few examples.
As Mr. Adams mentioned earlier, the act must be changed so that co-management agreements have real teeth, which will force not only his side to act but also the department to act. I am not a lawyer, but this is what we have been told by the department.
The Chairman: I would like to explore this matter further.
Mr. Adams: Earlier, I think I heard you ask how things work in different areas or is the message getting through. I can speak from where I stand or where I see it. Yes, co-management puts you at the table and your voice is heard in that group. It is working well for us. It does not cure all the problems, but we are working with the science, with DFO, with the system, and we are much better off for it. I think the industry will be better for it in the future.
Mr. Boland: On the state of science, I will put it simply. We have an expression in Newfoundland in the fishing industry: DFO science is shrinking itself to excellence. In fact, there are more people presently operating cameras in this room today than there are people from the science department in Newfoundland who work full time on snow crab, and these people are trying to make an assessment on 100 million pounds of crab — no blame to them. The bottom line is this: You cannot take $450 million out of the department and expect it to perform.
Further to that, I understand the groundfish assessment on 2J3KL is not completed because one of the vessels cannot move. It has mechanical problems. I think that states it well. Need I say more?
[Translation]
Senator Corbin: I have a few questions of clarification. When Mr. Haché referred to the auditor general's report of six years ago which led to improvements in attitude and to policy changes, he quoted the following passage on page 6 of the report:
In addition, the Department is pursuing social objectives that it has not articulated to Parliament, and economic objectives for which it has not identified expected results.
This is bureaucratic lingo. What is your understanding of this part of the Auditor General's report and could you explain it to me in clear language?
Mr. Haché: I included this sentence because it was part of the conclusion of the report. I do not understand it fully, but I understand the second part where mention is made of ``economic objectives for which it has not identified expected results.'' This is my understanding: for example, if we want a financially self-reliant industry, we must establish economic and financial thresholds such that the economic objectives of self-reliance of fleets can be reached. Those exercises have not yet been undertaken by Fisheries and Oceans. It has been done on an ad-hoc basis for some fleets, but there has been no such exercise to my knowledge.
As for the social objectives that have not been articulated to Parliament, I do not know what this means. At least we know that the Fisheries Act clearly states that the department, when making decisions, can take into account social and economic objectives. There is no doubt that this is part of the issue.
Senator Corbin: For example, a useful social objective was to open the crab fishery to cod and redfish fishers whose stocks collapsed. The social objective was to provide them at least a livelihood.
Mr. Haché: Exactly, and I do not think the industry objects to this, it is very aware. However, through wanting to help too much, in the long run the resource gets hurt. One must always be careful, it is always the same problem. When I talk about ``balancing the capacity and the resource,'' there are two aspects to capacity. There is the capacity to have an economically self-reliant industry, but also an industry that can meet social needs.
Senator Corbin: And ultimately, there is a risk of causing a collapse of prices, which we want to avoid.
Mr. Haché: Yes, and those are all important aspects that need to be considered. What the auditor general seemed to raise here is that the department did not refine these things as much as it should.
Senator Corbin: What would happen if we suddenly excluded traditional snow crab fishers? What would be your reaction in the context of social objectives that aim at providing a livelihood to the greatest number of people possible?
Mr. Haché: We must distinguish between the ground fish fleet and the lobster fleet. The department has better defined the needs of the ground fish fleet which was affected by the cod moratorium and their loss of revenue was obvious.
As for the lobster fishers in the Southern Gulf, the loss of income has been much less clearly established. But we would object just as much to the arbitrary withdrawal of licenses as we do to the arbitrary addition of licenses. The logic applies both ways.
Senator Corbin: You mean that now that things have been done —
Mr. Haché: No, what I mean is to put into place a system for evaluating thresholds that allows meeting those needs while taking into account first the resource, next the viability of the industry and, finally, the possibility to assist and provide for a wider participation.
We must define policies and criteria that are not obvious and this has not yet been done. The exercise is to take place in Phase II of the policy framework. We want this exercise to take place as soon as possible, in order to resolve these questions in an objective manner so that in the future rules will be clear for all.
Senator Corbin: You would go so far as to say that we must respect first and foremost the accrued rights of the pioneers of this fishery?
Mr. Haché: Essentially, yes. We must guarantee the economic self-sufficiency of the fishery. We must avoid pushing fishers into a situation where they have no other choice than to catch as much fish as possible in order to pay their bills.
Without wanting to be too negative, I would say that the Department was slow to learn the lessons of the ground fish debacle in 1992. At the time, Mr. Cashin had clearly said that we needed to stop. Mr. Crosbie and Mr. Tobin, for their part, said: Who is speaking for the fish?
We should also ask who is speaking for the industry, because we need an economically self-sufficient industry. Nothing prevents other things from happening, but you need certain priorities. We must give priority to those things which, in the long run, will contribute to an abundant resource. Snow crab is the best example of recovery of a resource in the Southern Gulf.
This resource collapsed in 1990 and, without any financial support from anyone, people adopted new management measures and cooperated with the Department. Within a few years, this has become a healthy resource, so much that people bought back plants that investors had abandoned, and this is when they realized that we need to provide a quality product.
Obviously, the price increased in 1995 because the product delivered to Japan was of better quality and also because the fishers had seen the whole chain of production. This evolution was in the opposite direction to what happens usually. It is vertical integration in reverse, where the fisher bought the plant rather than the plant buying the fisher.
Those are the main aspects one needs to understand in terms of access and long term viability of the fisheries.
[English]
Senator Cowan: There has been some discussion about the effect of exchange rates and the market. Can you tell me about the market for snow crab, the ultimate market, and about the marketing of snow crab? Are co-ops buying this crab? Is Clearwater Seafoods buying it all? Ultimately, where does it end up?
Mr. Boland: In the case of Newfoundland, it is generally the independent processors. One of the problems in our province is that we do not have a collective marketing strategy. I do not think there is any doubt about that.
Some of the companies operating in Newfoundland also control a number of plants in the Maritimes as well.
In terms of pricing in the U.S. this year, crab sections from Newfoundland have generally been selling at $2.70 or $2.80 compared to two years ago at an all time high of $4.30, a price which was unsustainable. You will always get these peaks and valleys in the industry.
Earlier I mentioned that Alaska introduced a completely different system into their fishery, and normally the bulk of their production goes to Japan. This year when the processors were guaranteed 90 per cent of their plant production, they did not need to compete on wharves. They ended up contracting into their own domestic markets for low prices.
It is a combination of things. We are undoubtedly on the lower end of the market right now in the U.S.
Senator Cowan: You mention Japan and the U.S. Are those the two major markets for snow crab?
Mr. Boland: Primarily, at least for product from Newfoundland. The U.S. represents the bulk. Japan usually pays the best price but does not take the same volume.
I think the outlook for the market in a year or two is to head the other way. It is certainly at a price now where it will not be consumer resistant. If you give them good quality there is good value and greater demand.
Around this time in 2002 it cost $1.57 to buy an American dollar. Today it would not cost much more than $1.12 or $1.14, which speaks volumes. Multiply that across a product selling for $2.80 or $2.90 and you can immediately see the result. The result in Newfoundland would be another 72 cents at the dock.
Structural problems plague our industry. Some relate to coordinated marketing and some to the way we land the product.
Having said that, we will go through some change whether we want to or not. That is part of the problem. If we allow it to happen without intervening and taking the right steps, we will end up with a much bigger mess. There are currently a number of people who would like to leave the industry in Newfoundland. They would like a mechanism to get out, but that does not exist. I do not think the taxpayer of Canada will provide it. The only other obvious way is for the industry collectively to find a way to do it itself. We would like those who want to exit to be able to do so with dignity, to be able to leave with some money to enable them to carry on. We would like those who remain behind, who operate the vessels and do the work, to get the quotas.
Unfortunately, in Newfoundland people in the processing sector are now actually buying the quotas and controlling them under what they call trust agreements. You still need someone to fish and to operate a vessel. The processors will put the vessel out to sea and the people who pay for it are those who work as crews. They get paid much less. That is a poor system. It is not where we want to go.
With a bit of proper planning, it can be done. It needs to be done and should be done. Some within the department do not want to do anything. They would rather let it go. There are many examples, both in Canada and in other places in the world, of things that we would rather not have happen in Newfoundland.
Mr. Adams: With regard to the gulf, as Mr. Boland mentioned, the majority of the plants that we have been selling to have been bought out by the folks in Newfoundland. Our main market before that happened was the Japanese market, which meant that we got better prices. When those plants went under new ownership, they targeted the U.S. because, for whatever reason, the U.S. was not as fussy about quality of product. Even though the Japanese considered our product worthwhile to buy, we ended up going into the U.S. market. We ended up on the short end of the stick.
Senator Cowan: I know what crab looks like when it comes out of the water. Does a uniform product come out of a processing plant regardless of whether it is locally, Japanese or American owned?
Mr. Adams: The Japanese come right to the plant. They have a person on the assembly line. They want quality, the best of the best.
Senator Cowan: What do they get? Is it canned; is it frozen?
Mr. Adams: No, it is whole. That is a good question. We followed the market ourselves and went to Japan in 1998. There is an old saying that the Japanese eat with their eyes. When we were there, crabs were selling for upwards of $50 each. However, there was one crab in the showcase that was auctioned for $250. I could not see any difference in its colour. They look at colour and texture. Of course they want quality meat, but it has much to do with what the shell looks like. They want no barnacles on it. They like it white and clean. As my colleague said earlier, crab only live so long and before they die they turn mossy, just as we get grey and lose our hair.
The Chairman: Let us not go there.
Mr. Haché: The large majority of crab is sold in the United States, with some sold in Japan. There was a change in the market in the 1990s. Japan was taking a lot of crab at the beginning of the 1990s. Now it goes to the U.S. where it is sold by sections. The claws are removed and it is cooked and frozen. That is what is put on the market.
There is whole crab, but there is very little diversification in terms of what is sold. In northern New Brunswick we have a plant that is owned by the Japanese and they do many things there. They do what they call ``wallet'' crab — whole crab sell for a huge price. For the Japanese, appearance counts more than anything else.
The Chairman: We will be talking to department officials next. I would like us to reflect on the areas of questioning that we should be dealing with. Three important items are the science council, sanctions such as stiffer fines, and changes to the Fisheries Act. I would like you to comment on this so that we have an idea of priorities for questioning the department. As well, we should deal with trust agreements and the problem that Senator Adams identified, that is, absentee owners in the fishery.
Of that mix, it seems to me that the issue of absentee ownership is important in some areas but not necessarily all. Downloading of department responsibility is another issue. Science is a serious issue that we must raise as well.
I would like us all to reflect on that for a minute because we need to know what we will ask the department officials when we meet with them.
Mr. Haché: An important thing that needs to be done is the second phase of the framework that I mentioned in my remarks. This framework is important. It deals not only with access. I and my colleagues would encourage this committee to encourage the department to go ahead with the second phase, because it will allow industry and the department to answer some very important questions concerning access and co-management.
All the other points that you mentioned, Mr. Chairman, are valuable.
In terms of absentee ownership and an exit strategy, we must distinguish between the IQ and ITQ programs and absentee ownership. There are IQ programs in which there is no absentee ownership whatsoever, and those programs work extremely well as long as they are based on an economic threshold where a fisherman has enough quota to have a prosperous or profitable business. That is a very good approach and we strongly encourage it.
The Chairman: ITQs by themselves, then, are not necessarily a problem in principle.
Mr. Haché: No. IQs are very good now. ITQs are very good also as a rationalization mechanism because what it allows is someone to sell his quota to someone else and get out of the fishery without any cost to the taxpayer. Then, that guy who bought the quota must be protected by the law of fisheries or by the minister so that he keeps this share that he bought, at least for 20 years or 25 years, so that he can have a profitable business.
Aside from the idea of absentee ownership, we have seen another problem with ITQ programs. In the 1990s, for instance, there were too many shrimp fishers in the gulf, so they got into an ITQ program. There are fishers in northern New Brunswick who bought quota at a fairly big price, and five years after that the department decided to share with other people freely, which killed the purpose, Mr. Chairman.
We have to be very careful. You have the absentee ownership question that could relate either to quota or licences. You can have a competitive fishery where you have a guy who owns a licence and maybe he is not fishing. Therefore, we have to make a distinction in terms of absentee ownership and not link that directly to a sound management approach in certain fisheries. IQs do not fit everything, but we have to be careful with that.
The main concept is to develop a fishery where an owner-operator or family operated business has enough quota to produce wealth and protect the resource for the future. Owner-operator is the way to go, but in the sense that I have just described.
The Chairman: Mr. Boland, you are writing to Sears Catalogue and you have a wish list for Christmas. What is at the top of the list?
Mr. Boland: In the case of Newfoundland, first, it would be to just shore up the fleet separation issue and the concept of the owner-operator. It is actually stated in the principles of the Fisheries Act and the policy. If it is there and you are not going to make sure the spirit of it is there, why have it there? We cannot call it a horse by a different name.
There is a need in the Newfoundland industry, at least on the harvesting side, to have a rationalization program. I believe there is a role for government to play in that respect as well. At the same time, we cannot really enter into that program without having the fleet separation policy fixed as well.
Again, there is confusion over IQs and ITQs. I suppose, in a roundabout way, that is really what I am saying. With regard to ITQs, of course, if I leave, then my quota goes to everyone else in the fleet. I am gone; hence, they should be a bit better off. The problem in this country right now is I do not know why anyone would want to sell their quota. Ask the department. If I have a quota right now and I have access on a piece of paper, I can hold it forever. There is no requirement to operate a vessel that I own or actually go to sea. Ask the department when they appear before this committee; it just does not happen.
That is the problem the senator from Nunavut has got to deal with. At the end of the day, someone may put your communities into the mix, but the other guys will stay there. That is the problem. Maybe it is not simplistic to fix the problem, but this is the direction in which we need to go.
We need more money put back into science and more for proper resources. I suppose some will say that no matter how much you spend it will never be enough and there will always be a need for more. Well, some problems are not always fixed by money, but I believe that in the given instance we have gone too far the other way and there are not enough resources to do the job that is required.
Mr. d'Entremont summed it up when he talked about a simple amendment to the Fisheries Act dealing with sanctions. One of the most frustrating things in the fishing industry is that Canada will put a man on Mars before that will ever happen in Ottawa. Those of us who live in Newfoundland know how things work. I mean, Senator Rompkey could not go home and explain to the people of his community why that would be so difficult to do. It is only just a few words on a piece of paper, is it not, Senator Rompkey? People would never grasp the concept why that could not be done. Well, it has not been done and it is relatively simple.
Again, I believe that this is important, but it illustrates the point of why it is so big and it is so hard to move things.
Mr. d'Entremont: As far as my wish list goes, I think the FRCC would say that the science council would have to be composed of fishermen and scientists working together and having discussions at least once a year. It would be a venue to speak on all the different issues: practices, the science, assessments. In many cases the southern gulf, which I keep coming back to, was hit in the late 1980s with a crisis and they have learned a lot on what should be done to protect their fishery and a lot of it is lessons learned. As was mentioned earlier, we do not have to reinvent the wheel in many of these areas, we just need discussion.
First, that would be very useful. Many people to whom we have talked during our consultations did not realize that crab was so easy to kill and the mortality rate is so high. A lot of that is education and this would help.
Changes to the Fisheries Act would certainly need to happen for the common themes of sanctions and co- management. Industry is begging for sanctions and co-management. They want tougher policing. They want stricter rules and they want a say. That needs to push through.
Concerning the rationalization plans, however or whatever plan is used, you need to be able to balance the capacity with the available resource. The fishing industry has to put fish on the marketplace at a price and quality compared to the rest of the world. They have very little control over the price of fuel, the exchange rate and all those things. That is a very fluid environment and has to be kept in check and taken into account.
Mr. Adams: I will echo what my colleagues have said. At the top of my wish list is that science somehow seems to be getting their funding at least, but at the department end it is becoming less and less. When we get into co-management, we have to pick up the slack and that leaves us in a dark corner when we get into the marketing end of it. Our dollars get depleted as well. We have to look hard at that and keep that level of funding coming for science.
We have been fairly silent on the issue of oil and gas. The reason I raise it at this point is that we are trying to save every last crab for the future. In Area 19 in particular, we have learned a great lesson the last four years. There is a will to do some oil and gas business in our zone, and we bucked it. The best that we could do at the time was some science work along with the seismic work, and the news is not coming out very good. I do not know if you people in this area are aware, but that is the best they have right now. They need more education.
The owner-operator issue must also be dealt with, but I am not sure at what level. I have fishermen in our association opposed to any changes because they have family trust agreements on a one-on-one basis if a brother or uncle helped them out or the bank. I would look at that situation and be very careful so as not to paint everyone with the same brush.
There are questions about the panel that was recommended regarding the FRCC, the panel on access to licensing. We have some real concerns. Again, it requires more discussion before we finalize that proposal. For example, changes to the Fisheries Act are very important. It will give co-management more teeth. The previous minister, Mr. Regan, said he did not want to have all that responsibility; he wanted to hand that over. I hope the minister of the day is of the same mind.
I will finish the marketing issue. That is the key point. If the processing plants in the whole industry could come together, it would be extremely helpful. We had a discussion in Newfoundland on that very important issue last week. One cannot live without the other and there must be something done in that regard.
The Chairman: I want to thank the senators for their questions. We have had a useful discussion. In particular, I wish to thank our witnesses for coming here today. You have identified areas that we can and will pursue. We are hoping that fairly soon — perhaps sometime early this summer — we will issue a report out, at least a brief one. We hope you will find favour with it.
The committee adjourned.