THE STANDING SENATE COMMITTEE ON FISHERIES AND OCEANS
EVIDENCE
OTTAWA, Thursday, May 7, 2026
The Standing Senate Committee on Fisheries and Oceans met this day at 8:37 a.m. [ET] to examine and report on the independence of commercial inshore fisheries in Atlantic Canada and Quebec, and the policies and legislative tools used by the Government of Canada to preserve it, such as the Owner-Operator Policy.
Senator Fabian Manning (Chair) in the chair.
[English]
The Chair: Honourable senators, good morning. My name is Fabian Manning. I’m a senator from Newfoundland and Labrador, and I have the pleasure of chairing this committee.
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Before we begin, I would like to take a few moments to allow the members of the committee to introduce themselves.
Senator C. Deacon: Colin Deacon, Nova Scotia.
Senator M. Deacon: Marty Deacon, Ontario. Welcome.
Senator Ravalia: Good morning and welcome. I’m Mohamed-Iqbal Ravalia from Newfoundland and Labrador. Minister, I would just like to acknowledge your public service to our country and the province. It is very much appreciated. Thank you for being here.
Senator Cuzner: Rodger Cuzner. I’m a senator from Nova Scotia.
Senator Boudreau: Victor Boudreau from New Brunswick. Welcome.
Senator Busson: Welcome. My name is Bev Busson. I’m from British Columbia.
The Chair: On November 18, 2025, the Standing Senate Committee on Fisheries and Oceans was authorized to examine and report on the independence of commercial inshore fisheries in Atlantic Canada and Quebec, and the policies and legislative tools used by the Government of Canada to preserve it, such as the Owner-Operator Policy.
Today, under this mandate, the committee will be hearing from the following: The Honourable Gerry Byrne, former Minister of Fisheries for Newfoundland and Labrador and a former parliamentarian here in Ottawa; Mr. Boyd Lavers and Mr. Christopher Gould, co-chairs of the 4R Mobile Gear Harvesters Association.
On behalf of committee members, thank you for being here today and joining us. I understand you will be providing some opening remarks, and I’m sure that, after that, our senators will have some questions. Mr. Byrne, the floor is yours.
The Honourable Gerry Byrne, P.C., Former Minister of Fisheries (Newfoundland and Labrador) and Former Parliamentarian, as an individual: Thank you, honourable chair. If I may briefly segue by saying up front how important this committee and its work are. This is the vehicle where fish harvesters and the fishing industry get their voices expressed, not only to Parliament, but to decision makers. As a former parliamentarian and member of the House Standing Committee on Fisheries and Oceans and being active in that role, I understood that then.
I have never understood so clearly as I do today what role this committee plays in shaping public policy, understanding and insights into the industry and giving the ability for those who may otherwise be voiceless an opportunity to express their voice.
Honourable senators, the question that is obviously before you, as it is before all of us today in 2026, is this: Why exactly are we back here again trying to guarantee an independent inshore fishery?
Financial relationships — debt relationships — between inshore harvesters and processors are the norm, not an anomaly. It is an expensive proposition to buy a licence, to buy a boat and to replace an engine. While chartered banks have stepped up and seem to be more interested in lending to inshore harvesters these days, that money is still stiff money. A bank loan is filled with contractual obligations that are precise, unforgiving and anything but patient. The payment terms are the payment terms. It is rarely patient debt. Have a fire onboard or blow an engine? That’s the fisherman’s problem, not the bank’s.
Processor loans, however, are made out to be more patient. Processors can respond to a fisherman’s bad luck with a repayment holiday, and they seem to be able to adjust terms and conditions with a phone call. Also, with a processor loan, it often also comes with other services included: important things that cost money, like ice for the vessel, a line of credit for fuel and making arrangements for repairs, and even help with finding crew or paying observer fees. Banks don’t do that. But all of this generosity comes at a price. Nothing is free, and the fisherman is never really aware of exactly what that price is.
That is part of the work around. No other company is going to supply ice to your enterprise or cover a line of credit for your fuel if they don’t hold the paper on your enterprise. The independent harvester, who then sells his catch to another processor, doesn’t get his ice brought to him at the wharf anymore or any of these other services. Sometimes a processor loan is just the way to get financing from someone who provides one-stop shopping while offering what I call “Sea Miles” — not AIR MILES — in the process. It’s the extras.
For this reason, processors remain the lender of choice for many harvesters. In my province of Newfoundland and Labrador, based on my knowledge of the industry and its players, I suspect that the size of the entire loan portfolio by processors to inshore enterprises is of the magnitude of $120 to $150 million in outstanding debt. Across Atlantic Canada, I suspect it is of the magnitude of $350 million to $450 million in outstanding debt. That is my sincere belief.
The problem is that those “Sea Miles” points are often the most expensive part of the deal and bring the harvester into the trap of dependency and control. It is my view that, within our commercial inshore fisheries, controlling agreements are not always the secret paper outlining the consequences of default or giving the lender the right to decide whom the licence can be sold to or one that creates a requirement that all fish must go exclusively to the lender. The processor will often tell a harvester, if you don’t sell me your crab, I’m not going to buy your shrimp. Controlling agreements are not always that secret piece of paper.
There is also one other cost to this fight against controlling agreements that the committee has potentially not heard before that I would like to raise: that cost comes from a loss of flexible supports to independent fish harvesters caused by sealing up the licence and allocation transfer rules to prevent it from happening.
When DFO creates a pathway to transfer a licence or an allocation, some believe this is where the scoundrel lurks. This is the opening for the processor to create a controlling agreement. Preventing or frustrating legitimate licence and quota transfers from independent core fishermen to independent core fishermen simply creates a world where independent fish harvesters lose access to legitimate enterprise management tools to help their enterprise and their community thrive.
Allowing and even promoting regulated, audited licence transfers and allocation transfers, such as through individual transferable quotas, or ITQs, has been shown to allow responsible capacity self-rationalization within a fleet while creating greater incomes and more independence for inshore harvesters. To prevent your enemy from gaining any comfort, you choose to destroy your own house. That does not support coastal communities and it certainly does not support an independent inshore fishery.
Thank you, Mr. Chair.
The Chair: Thank you, Mr. Byrne. Mr. Lavers, you have the floor.
Boyd Lavers, Co-Chair, 4R Mobile Gear Harvesters Association: Good morning, senators. I want to thank you for the opportunity to appear before you today for this important study. This is the first time anyone from our fleet has ever appeared before a parliamentary committee that we’re aware of, and we are truly grateful for this opportunity.
My name is Boyd Lavers, and beside me is Christopher Gould. The focus for the 4R Mobile Gear Association’s presentation is to speak to the practical side of how owner-operator can be preserved while still allowing the regulated movement of licenses and quota amongst independent core fishermen within the fishing industry.
Owner-operator is about keeping the wealth of our fisheries within the communities adjacent to where they occur. It is about preventing fishing licences and allocations from being transferred, directly or indirectly, to the control of corporations outside of the harvester’s inshore community.
Much of the rules that are in place assume that all licence and quota transfers are fertile ground for bad operators who are looking to find a backdoor deal to control the inshore fishery. It’s the playground of people out to destroy the independence of the inshore fleet, but no one should lose sight of the fact that being able to have enterprise-to-enterprise partnerships and arrangements with members of your own fleet and with fellow inshore harvesters around you is necessary in the 21st century fishery.
Location-wise, being able to transfer a licence or a quota amongst independent core inshore fish harvesters is a positive way to make sure the fleet operates efficiently and independently for years to come.
We want to talk to you about that today. The owner-operator policy says that a true independent core fisherman is one who owns his own enterprise, owns his own boat, owns his own licence and personally goes fishing to use that boat: his own license, his own quota and no one else but him. That applies to me, and it applies to Christopher sitting next to me, who lives a couple of communities away.
But we all recognize, including DFO, that transferring licences, quota or even vessel registration is at times necessary. When stocks go down or the fishery is not producing as much revenue as it once did, these kinds of transfers can be the difference between staying afloat or bankruptcy. Going bankrupt doesn’t improve your independence; it destroys it. So let’s take a quick look at where that hard and fast rule of owner-operator is not so hard and fast.
Buddy-up is a DFO-endorsed policy tool that allows two independent core harvesters to partner with each other to fish their respective quotas. Only one vessel is needed, whereas it used to be two. Two quotas are fished on the same boat, leaving one fisherman able to fish his quota using someone else’s boat. That might seem contrary to the owner-operator definition, but it makes good sense. It lowers costs, it allows more money to stay in the communities and it doesn’t cause any conservation concerns. It allows both harvesters to ride out the storm in the industry by cooperating with each other. It shows the owner-operator policy is flexible.
Talks are now under way for a buddy-up of two buddy-ups, making a four-enterprise buddy-up arrangement, so it can’t be all that bad.
We would like the committee to review the brief of the proposal we submitted to DFO on individual transferable quotas, or ITQs, for our fleet. We would be very happy to take your questions on this so you can see how allowing flexibility for inshore enterprises to work and support fellow inshore enterprises only serves the purpose of protecting independence. A viable, stable enterprise is an independent enterprise. A bankrupt enterprise is one that becomes open to deals with the devil. Thank you.
The Chair: Thank you, Mr. Lavers. Thank you, Mr. Byrne.
Just for senators, the brief that Mr. Lavers referenced has been received and it’s gone to Translation. As soon as it comes back from Translation, we’ll have it distributed to the committee members. We can’t send it out in “Newfanese” only; it has to be translated here.
Senator Busson: Thank you very much for being here. I’ve already learned some things that I hadn’t heard before.
I would like to ask Mr. Byrne a question first, if I could, please. You talked about the benefits of a processor loan in the work that it takes to make the fishing owner-operator regime work on the East Coast. Then you spoke about controlling agreements. From someone who left the East Coast when I was about 20 years old, could you explain the difference? You say that a processing loan is a very good thing, but a controlling agreement is a very bad thing. They are opposites if I got that right.
Could you explain the practical differences between the two? I know, conceptually, you can read what one does and what the other does, but could you tell me in practice what the difference is between a processor loan and a controlling agreement?
Mr. Byrne: Thank you, Mr. Chair, and thank you, honourable senator.
To clarify, processor loans are not a great thing. They can be a useful tool if both parties conduct themselves with responsibility. Not always does that occur. The preference, to my mind, would be that a regulated charter bank or regulated financing be put in place, available to fish harvesters, as opposed to a market requirement or a practical requirement to get the money from the processor. I think that would be the far better solution.
Is there money in the fishery from processors? Absolutely, there is. If the Department of Fisheries and Oceans, Industry Canada or the administrators of financial transactions were to make that money suddenly illegal or unavailable, you would have a $450-million hole that would have to be filled by somebody immediately. That’s a problem.
The loans are here within the industry today, and that’s a fact. I advocate that it would be a provincial-territorial jurisdictional responsibility to regulate those loans in the same way that payday loans are regulated because it’s within that financial sphere and jurisdiction. Who regulates that space? It is the provinces. That space is currently unregulated. The way that provinces regulate payday loans, in my opinion, should be applied for processing loans in the industry. That’s not something that this Parliament can do.
But let’s be clear about something: It does come from somewhere. Bank money is tough money. Processor money is flexible; it’s a little more lenient, at least on its face. As you get down the road, that relationship starts to change. Those convenience items, those “Sea Miles” that I referred to, which are really important and valuable, are part of the big hook.
The other thing too, senator, through you, Chair, is this: It is a reality that a processor holds paper against an enterprise. If that enterprise tries to sell their product to another processor who does not hold paper, oh, boy, you have got a different set of issues then because that ain’t gonna happen. The processor who holds that paper will make sure that doesn’t happen. That’s where it evolves into a controlling agreement, not necessarily in structured, contractual terms and black-letter language, but, in practical terms, it becomes a controlling agreement.
Senator Busson: If I might ask for a bit more clarification, I understand that controlling agreements are technically illegal for that reason. Is that correct?
Mr. Byrne: That is correct. Of course, when we say that something is illegal, there are established bases of the requirement and the interpretation of the circumstance that would lead to a finding of prima facie default, contravention or non-adherence to the law.
There cannot be that sort of thing on paper, written into a term of a contract in black-letter language. It can’t say, “If I give you this $500,000; you have to do this, this, this and this, other than pay me back.” What’s not written into that contract is, “You’re going to sell me your product. You will do this and do that and do this.” That, senator, is not auditable. There is no investigator. That’s why you’re constantly hearing these things, like, “DFO isn’t doing enough to audit this.”
There are certain things — and I have to speak truth to this — that you just cannot audit, and they do occur.
Senator Busson: Thank you very much.
Senator Cuzner: I’m not sure if I know what question I want to ask, but let me say, Gerry, I really appreciate your comments off the top about the role and the work of this committee. I want to echo the comments made by Senator Ravalia. I was just so surprised. He was so eloquent and gracious in his comments to you, so I’ll tell him that I roasted him on that, too.
Two comments stood out in your presentation that I hadn’t heard yet. The one about going bankrupt not improving your independence is a great line, and I think that’s sort of the thread that runs through this study.
And the “Sea Miles” — because, for years, the fishery, when there wasn’t a whole lot of money in it, had the different fish brokers, and it was a fairly honourable business. Everybody looked after their own harbours and their own wharves and their own communities.
My father-in-law, Cliff Hopkins, was in it. He ran a plant in Cow Head and still has some guys fishing in Cow Head. It was all done on a handshake; your word was good, and that sort of thing. It’s just gotten complicated. Over the years, it has become more complex. We’re trying to figure out how best to approach it. We don’t want to set up all processors as the bad guys. They’re just trying to run a business, and they want to guarantee some access to the resource. So they are not all bad guys. But if the rules aren’t in place, people will come in and take advantage of those situations. That is a longer preamble than Senator Deacon usually has.
Mr. Lavers, could you expand on the buddy-up and the efficiencies? Are you saying there is a double buddy-up now and that there are efficiencies in that?
Mr. Lavers: Yes. We actually asked for a multiple buddy-up, as we call it. We have an issue in our fleet here now because most of our fleet is aging. Our average age is somewhere between 65 years of age and 80. With the downturn in the shrimp, things became really financially harsh for some people.
We were hoping for a buyback program, actually, to get some of the people out of our fleet, and that did not come true. So we were looking for other options, and they came up with a buddy‑up system, which allows, for example, Christopher and I to buddy up on one boat. In the situation we’re in right now, we don’t have enough boats for everyone to get a buddy-up. Our boats are being turned down by Certified Seafood International, or CSI. Boats are in disrepair, and they had to do something to get our shrimp out of the water to help the economy. So they gave us a buddy-up. The problem is that we have 34 harvesters, and we are down to roughly 14 vessels at this time.
Senator Cuzner: That contradicts the following principle: You’re a core fisher if you own the boat, the licence and access to the quota. So you don’t own a boat any longer. It contravenes that.
Mr. Lavers: Yes, the deal goes against what we consider an owner-operator policy, but it came to a situation where we didn’t have any other options, and this was one of the only options we could come up with. But right now, we’re in a situation where one buddy-up won’t even cover the harvesters in order to get the shrimp out of the water so we’re looking at options for multiple buddy-ups.
I want to clarify that this is not what we want. We were once a mighty fleet with beautiful, mighty, powerful and expensive vessels. This is the result of the downturn in the shrimp fishery and quota cuts. People invested heavily into the shrimp quota only to have it taken away, and we are looking for options right now to survive in the short term until hopefully something turns around. Like I said, our fleet is well up in age and would take a buyback, but the problem is that I’m not able to walk into the bank and borrow a million dollars to buy 30,000 pounds of shrimp from somebody. It’s just not feasible.
Senator Cuzner: A number of folks who have appeared floated the idea of a separate envelope of money that core fishermen could borrow against public money that they could borrow as repayable loans to access quotas. Do you have a view on that?
Mr. Byrne: I definitely do have a view. It is valuable and is part of the tool, but it should not be considered the best or exclusive tool. I say that from this point of view: Newfoundland and Labrador has a new program called the Harvester Enterprise Licence Program, or HELP. Nova Scotia, New Brunswick, Quebec and P.E.I. all have programs. Everyone has a public sector financing instrument to assist harvesters and enterprises in obtaining bank loans, but it’s still a bank loan. It still comes with those kinds of black-letter language associated with the contract.
That is sometimes the problem in that those loans are not necessarily as convenient in some instances. They’ll call your loan when they want to, and so I strongly believe that the full mix of instruments, including not walking and closing the doors on things like enterprise to enterprise or core independent harvester to core independent harvester — those avenues should never be closed.
I want to just conclude with this point. In 1978, Roméo Leblanc introduced fleet separation. In 1979, he introduced a bona fide fisherman definition. In 1989, Tom Siddon introduced owner-operator. Then, in 2007, Minister Hearn, followed by Minister Shea, introduced the Policy for Preserving the Independence of the Inshore Fleet in Canada’s Atlantic Fisheries. Then, in 2019, we had amendments to the Fisheries Act, entrenching owner-operator. We are still in 2026, talking about an issue that should presumably have been solved in 1979.
My caution to decision makers and potentially for incorporation into your report is that this is a 50-year evolution that has not been solved. When you have a problem for which you are struggling to come to a solution, there is sometimes an overreach where you say, “No matter what happens, we have to solve this problem.” The analogy or maxim that I sometimes use is to get rid of rats from your house, you burn down your house. Well, guess what? The rats stick around, but you have no house.
If you start deploying restrictions on enterprise-to-enterprise transactions, such as boat transfers, quota transfers and licence transfers, to enable the fleet themselves to solve their own problems internally, if you start to clamp down on that, you are burning down the house to get rid of the rats, and it’s going to leave you with less independence, not more. It’s going to leave you with no house, and the rats will still be around. That’s really why we are making a plea for consideration of the larger picture. Sometimes the problem is solvable within the fleet.
Senator Cuzner: When you had the reins at the Atlantic Canada Opportunities Agency, or ACOA, and sat as minister of ACOA, you had great success when ACOA moved away from grants to businesses, but there was low interest or no interest for the first two or three years and then with a reasonable repayment schedule. Do you see something like that complementing those programs that each of the provinces has?
Mr. Byrne: Absolutely. It is a valuable tool. Those programs should not be housed within a department. It’s a political arrangement if it’s housed within the department under the purview. It should be housed within an agency exterior to the political operation. So it’s a rules-based approach. However, it’s a financial institution or an agency whose purpose is to supply short-term capital and lines of credit to harvesters and be able to be flexible enough to meet existing circumstances as they evolve. Public financing is very valuable. We do it in the aircraft industry, the auto industry and the farming industry. Why don’t we do it in the fishing industry?
Senator C. Deacon: This is one of the best meetings in terms of giving hope. We’ve been pretty depressed after a lot of the meetings that we’ve had, to be honest, and I want to thank you, witnesses, for injecting some really solid ideas and guidance with guardrails. The guardrails I would like, and I appreciated the guardrails on what we would recommend to make sure the markets can work.
I’ve never seen so clearly the farm credit corporation model as being a good one because the banks are still absolutely involved with farmers. There are all these other financing arrangements that exist. The model makes even more sense in this, and I honestly did not have any appreciation, Mr. Lavers, of the buddy-up approach until this morning. I may have missed it, but I just hadn’t heard that. It absolutely makes so much sense as a tool, but one of the tools that I have heard is that there really need to be opportunities for quota buyback as one of the tools in the tool box. That’s what I’m hearing.
Can you explain to me what restrictions should be on a buddy‑up program? What came to mind when you were speaking is that in P.E.I. there is a bit of a kerfuffle about a person being elected to the provincial parliament and being appointed a minister and he was a fisher. He wanted a way to have his licence still fished while he was serving, and it did create discord that got to us in Nova Scotia and even more broadly.
I’m wondering about the restrictions on that buddy-up program so it isn’t abused. There is a situation where he can’t have boots on the boat, so that would not qualify as a buddy-up because he couldn’t have been on his buddy’s boat because he has another job now.
Everyone is not a senator; being in politics is a temporary position. They have to go for re-election regularly. They may not be around.
What sorts of restrictions should there be? I open this up to all of you on this buddy-up program? How should it be so that we don’t take it too far in terms of restrictions but ensure that we have a reasonable amount of flexibility on that?
Mr. Lavers: Thank you. The buddy-up is a tool that we are using right now. I explained the situation that our fleet is in. It was a great tool. It did help, but it’s to the point where it’s not quite sufficient for what we’re trying to do.
That’s why we’re asking for individual transferable quota, or ITQ. For two years, we’ve been asking for individual transferable quota. Most major fisheries around the world operate under ITQ. The Maritime provinces, Quebec and New Brunswick are operating under ITQ. So we feel it is a better tool for our fleet under the current circumstances. It’s just simpler, and it gives a lot of flexibility. In our opinion, it doesn’t go against the owner-operator policy.
If you look at a definition of owner-operator policy, the owner-operator is not a boat. We always assume that it will be a boat, but the definition we’re finding out with owner-operator policy is that you’re the owner and the operator of a licence, not a vessel. Ideally, as we said earlier, a vessel would be the perfect definition.
With Christopher and me, for example, what we have to clearly understand is that a licence and an allocation are two totally different things. For me to own and operate that licence means I have control of that licence; I’m not being controlled by a company, and no one is telling me what to do with it. The allocation on that licence is what I would be transferring. For example, if I transfer my allocation to Christopher, this allocation is considered Christopher’s allocation, not mine anymore. Once it goes on Christopher’s licence, Christopher is the owner-operator of his licence and of that allocation. When he goes to catch it, he is the owner-operator of that boat or vessel. I am still the owner-operator of my licence even though I’m not using a vessel.
We feel it doesn’t go against the owner-operator policy. We feel it is a much better solution for the buddy-up at this time in our fleet. This is being used by Quebec, New Brunswick, Nova Scotia and P.E.I., and we don’t see it going against the owner-operator policy. If it does, it’s going against the owner-operator policy for every other fleet.
We feel the fishery would be easier to manage under ITQ. It is a better fit for us at this time, and that is what we’re asking for to be able to get clearer on the buddy-up system.
What you have to understand, like I said earlier, is that we were once a very mighty fleet. We are asking for ITQ under a pilot or temporary program until such time that we do get a buy out or we make our businesses financially viable enough that we can go into a bank or to a loan board program or something put in place to be able to buy out the people who want to get out of the fishery. We’re relatively young. Actually, Chistopher is the youngest in the fleet and I’m considered young. I’ll put it that way.
We’re not asking for anything that anyone else doesn’t already have. We’re just asking to try to be flexible on the rules and regulations to make our businesses viable so that we can buy out the ones that want to go and we can keep processors and companies from buying up our inshore licenses. That’s all we’re asking. Thank you.
Senator C. Deacon: Mr. Byrne, I saw you potentially had some thoughts on this as well.
Mr. Byrne: Thank you, senator. I do. It’s the test of the pure. It’s the purity of the ideal of owner-operator. Ideally, in its purest form, the independent core enterprise owner is assigned a licence, gets an allocation and personally fishes on the vessel. That is in its purest form — its perfect form — an independent owner-operator.
No fisheries organization that has ever appeared before this committee wants that purity. It is supporting buddying up. It is actually supporting it. What is buddying up? It is someone who does not own the boat that is being fished on somebody else’s boat, fishing it. So it is inherently built into our system, our regime of management, that purity leads to fault.
With that said, the greatest threat to the independent owner-operator, in my opinion, is financial instability. That’s when the predator can move in. That’s because when an enterprise — a fish harvester — is financially stable, then they don’t need the influence and the injection of funds from someone else because the injection of funds is the conduit for the controlling agreement in its evolutionary way.
With that said, putting in place the mechanisms to avoid that necessary financing is really valuable, which is what we just spoke of. We gave testimony about the value of a rules-based, public-sector financing scheme. It is also about management tools within a fleet, things like buddying up. They’re not here to argue, I believe, against buddying up, but it should not be done with exclusivity to all other mechanisms.
The history of the individual transferable quota program in the Gulf of St. Lawrence, in all of Eastern Canada, started in 1983 with this fleet right here. The 4R mobile gear fleet of Western Newfoundland. This is a fact. In 1983, the 4R mobile gear fleet was approached by the Department of Fisheries and Oceans at a period of time when, after the Department of Fisheries and Oceans added 39 additional new licences to their fleet, all of a sudden, for some strange reason — we can’t figure out why — the revenues of the entire fleet started to go down. It went from 169 boats to 107 or something like that. I may have to correct my math.
But DFO came to our fleet, saying, “Do you know what would be a good pilot to improve your economics? Individual transferable quotas.”
ITQs do have the appearance in some people’s minds, in the purists’ minds, of being nefarious instruments that allow bad things to occur. The opposite is true, in my opinion, when the entire process is regulated.
DFO can audit an ITQ when it’s actually done boat to boat, within a fleet, fisherman to fisherman. That is a very substantial tool for self-rationalization. It allows for both the transferer and those to whom it’s transferred to gain a benefit. The money stays in the community. The fleet stays vibrant, and, again, bankruptcy is not a way to improve independence.
Senator C. Deacon: Just to provide clarity, there is also a strong vested interest on the part of both fisheries not to screw around with that and to have an audited problem because that puts them both at risk.
Mr. Byrne: That is true, not only from a financial point of view, but there is also a benefit from a conservation point of view. The owner of that quota would like to ensure that that quota is high. They will be the first advocates for conservation. That’s one of the benefits of an ITQ program.
Now, with that said, senator and chair, this is a really interesting point. If somebody were to say this will never happen in Newfoundland and Labrador, they should know that, in 2012-13, the northeast coast crab fleet had an ITQ. They called it “quota flipping” because someone didn’t want to use the acronym ITQ, but it was an ITQ. They had a crab quota where, when prices went down, they needed a way to manage their fleets more effectively. On the northeast coast of Newfoundland, we had an ITQ on crab. We didn’t just call it an ITQ. Guess what? Quack-quack.
The Chair: Before we go to Senator Boudreau, can we get back to Mr. Lavers for a moment? If I understood you correctly, you said that the ITQs are available in all the other provinces but not available for the 4R fleet, and you’ve been requesting it. Has there been any response from the Department of Fisheries and Oceans? What is happening with that request?
Mr. Lavers: Yes, we have been requesting it. We’ve been actually working on this for two years. Christopher and I were at a meeting in Quebec City regarding shrimp. We were there because the other provinces were putting forward proposals to make their ITQs more flexible. At one point, they were probably only able to transfer 80% of their quota. At that meeting, they were actually proposing the ability to transfer 100% of the quota and to transfer between provinces.
I spoke up and asked the question, am I really hearing what I’m hearing? We’re here now asking for ITQ for two years, and you actually have ITQ, and you are making it more flexible?
They called on Martin Henri, the head of licensing in Newfoundland and Labrador. He spoke at that time and said that that was the first time he had heard of our fleet asking for ITQ.
I was quite disturbed, to say the least. Our fleet had voted 95% for it, and after two years of pushing for ITQ, the head of licensing in Newfoundland is saying he did not hear tell of this? I was quite frustrated and quite angry. That tells me that we have a major disconnect between DFO and harvesters in our area. I’d just like to make you aware that that’s why DFO created outreach meetings with harvesters, in person, because there was a disconnect. I notice that those outreach meetings now seem to be dwindling away. I guess things are quieting down.
That’s where we are. I really feel there is a major disconnect. We need to be hearing more or dealing more directly with DFO.
I’d also like to bring to your attention that Quebec and New Brunswick are fishing in areas off our harbours and ports, side by side with us, on a daily basis. We are operating under different rules and regulations. I find it very unfair.
To say that we should not be able to have ITQ in Area 8 shrimp because there is no ITQ in the Newfoundland fishery is false. The offshore operates under ITQ. The Barry Group runs seiners; they operate under ITQ. If you talk to them today, Mr. Barry will tell you, himself, that, without ITQ, they would not be able to operate those vessels.
I just wanted to bring it forward. It is already in Newfoundland. It’s already being used by multiple fleet sectors. It’s only fair that we get it.
Christopher Gould, Co-Chair, 4R Mobile Gear Harvesters Association: I’m actually on the Inshore Council of the union, the FFAW. When Martin Henri said that to the meeting, I was there as well. We were both up there. I was really caught off guard that he didn’t hear it for a lot of reasons but for the bigger reason that I twice presented a proposal to the Inshore Council about ITQs. First, it was about a general ITQ for our fleet, and he said, well, they didn’t support it and to come back with something, to call it different, et cetera. So we changed it to what we called “the Gulf shrimp-sharing plan,” which only included Area 8. We didn’t use Area 6 because, in Area 6, there are other shareholders in Newfoundland. The shareholders in Area 8 already have ITQ. I presented that, and that also got shot down. That was in two different Inshore Council meetings.
Mr. Lavers: By one vote.
Mr. Gould: Yes, it got shot down by one vote the first time.
So the fact that, after talking about this and presenting two different proposals — the first one was a general one and the second one was adjusted to the changes that they told me to present — it got shot down twice. Then the fact that we went there months later, and Martin Henri said, “Oh, well, I never heard of this,” something didn’t seem right. Why is our request not getting to DFO? Why isn’t it getting to the people who matter? Why is it not even being talked about? It’s being brushed under the rug, so to speak.
Mr. Lavers: I’d just like to speak on one other thing. You’re talking about the owner-operator policy. I would just like to inform everybody that rules and regulations are causing a lot of problems with controlling agreements. Now, this is a little different.
We are the only fleet in Newfoundland and Labrador and the Maritime provinces — I’m not 100% certain, but they are able to have fixed gear and auto trawl, as well as crab. The 4R Mobile Gear fleet doesn’t have that option. We are the only ones in Newfoundland and Labrador, 100%, that cannot have this, and we’ve been asking for this.
We put forward a proposal last fall that went, as far as we know, nowhere. We haven’t heard anything back about it. We were removed from being able to have whole crab quotas years ago. We’re not sure what year it was. The Mobile Gear fleet wasn’t allowed to hold crab licences.
Do you know what happened to those crab quotas? The companies came in and gave financing to anyone they could find to hold those crab quotas. They gave them money to buy the quotas, to put it in their names and to fish it. When the crab got scarce and people gave up fishing them, the company actually came into Port Saunders with two reeferfuls of brand new crab pots to offer the fishermen so they didn’t have to buy their own crab pots to go fish these quotas.
The rules and regulations that were put in place to keep us independent harvesters from being able to buy these quotas and hold them actually pushed those licences into the hands of the processors.
I would just like to make the point here today that sometimes we really have to look at the rules and regulations and really think: Are the decisions that we are making in regard to who can hold these licences and utilize them the right decisions? Sometimes what looks good today doesn’t work or look good tomorrow. I would really like to make that point, since we’re talking about the owner-operator policy. Thank you.
Senator Boudreau: Thank you to the witnesses for this very important testimony here this morning. There has been a lot of really good information.
I have one question for Mr. Byrne and one question for Mr. Lavers. Mr. Byrne, you make a lot of good arguments about processors’ loans being more flexible than bank loans, and I hear what you are saying. For a lot of independent fishers, they need that flexibility to be able to make ends meet, but as Mr. Lavers said at the very beginning of his presentation, owner-operator is about keeping the wealth in the community.
What I’m seeing in New Brunswick, and it may not be the case in other provinces — we had a chance to chat about this quickly before the meeting began — is more and more processors — if the processors are also local entrepreneurs, what you’re suggesting could make sense because the profits at the end of the year and the wealth stay in those communities. What we are seeing in New Brunswick is that many of these processing plants are being bought up by interests outside of New Brunswick.
The benefit is not staying in the community any longer, and that, to me, is concerning because then it directly goes against the owner-operator policy, in my opinion, or the spirit of the policy.
We have heard a lot about something like Farm Credit Canada being able to step in and be that hybrid between processors’ loans and controlling agreements and what we’re able to see with the banks. An agency like the FCC could have a little more flexibility built into it than a regular charter bank would have.
For me, that’s the big issue. A lot of our plants are being bought up by outside interests. When they were all locally owned and operated, it was a different situation, but that’s not the case anymore. I would like to hear your thoughts on that, please.
Mr. Byrne: Thank you, senator. This is a quintessential element of the conversation, which is the hand-in-glove relationship between the federal regulatory authority and the provincial regulatory authority. Processing being the provincial and the harvesting; the licensing of the fishery itself, being the feds. It must be a hand-in-glove relationship for it to work.
I will recite to you something I did as Minister of Fisheries for Newfoundland and Labrador. I created a regulatory authority under what I called the 10-point plan, which put a regulatory prohibition on existing crab processing licence holders from getting more crab-processing licences. I put a regulatory prohibition on the purchase of existing crab licences by existing crab-processing licence holders. I put in place an ability for harvesters to get, without review by an authority, if a group of crab harvesters had access to up to 4.5 million pounds of crab in their allocation — which in Newfoundland and Labrador is not an insignificant but a reasonable amount — they would immediately, without further review, be granted a crab‑processing licence so that the crab processing stayed in their community.
Put your money where your mouth is, and this is not an issue for this table, per se, but it could be noted in the report that it is a hand-in-glove relationship. It is so important. In the Gulf of St. Lawrence, I would reckon 30% to 35% of the industry now is no longer in the hands of inshore harvesters or processors; it’s in the hands of others.
With that said, I will also quickly arrive at a point. Senator Ravalia, in a meeting with the federal minister, raised a question about the whole relationship of how DFO organizes itself within the Eastern Canada region. DFO has a Quebec region, a gulf region, a Maritime region and a Newfoundland region. The Gulf of St. Lawrence is an inland sea. It is shared by DFO Quebec, DFO Gulf, DFO Maritime and DFO Newfoundland and Labrador.
One of the points that Mr. Lavers brought forward was that Quebec inshore shrimp vessels, licences, have a specific opportunity for individual transferable quotas. New Brunswick has the same. P.E.I. has the same; it’s just that the fleet is smaller there. The Quebec region allows ITQs and recognizes it as a valuable management tool for the inshore. The Gulf region recognizes it as a valuable management tool for the inshore and the Maritime region. Newfoundland and Labrador will not allow the vessels that fish side by side to those fleets under identical circumstances to have access to that tool.
That contradicts a reasonable administration principle. This is why that question is so important, and there needs to be harmonization. One set of rules, one-size standards fitting all doesn’t work, but you need to take the best practices and apply them where it is seen to be effective. I also argue that, in this particular instance, there may be an ideology that may be creeping in to prevent Newfoundland harvesters from getting access to what all other harvesters get.
There may be an ideology. An ideology is the worst way to run an enterprise.
Senator Boudreau: Thank you for that.
Mr. Lavers, I have a question for you. First of all, this whole study started by comparing Pacific coast fisheries to the Atlantic coast fisheries to understand the differences between the two coasts, but now we’re realizing that, even within one coast, there are differences and the same rules aren’t being applied to all provinces or to all species. I fail to understand the reasoning behind that. It seems to me all Atlantic coast fisheries should be treated in the same way.
If other provinces can use this buddying up approach, then I see no reason why Newfoundland shouldn’t either. My question isn’t against your idea. I think it’s a good idea and a good suggestion to help make ends meet for independent fishers.
However, we’ve talked a lot about these controlling agreements. In this buddying up approach, is there a way to make sure that if two harvesters are getting together on one of these buddying up agreements, neither one is in a controlling agreement? If one or the other is in a controlling agreement, then are we just compounding the problem of controlling agreements because we’re putting even more quota into the hands of the people controlling those agreements? The same would apply to other provinces that are using this same approach as well. Is there a way to ensure that neither harvester is in a controlling agreement before allowing a buddying up approach?
Mr. Lavers: I’m not quite sure how to answer that question because nobody’s supposed to be in a controlling agreement to begin with.
I’m not sure. That has been an ongoing issue in trying to identify controlling agreements. We did have a controlling agreement come forward. I’m sure everybody is aware of the Jimmy Lee Foss case. Even after all the information was put forward on that, the man still lost his licence and had to declare bankruptcy. So I’m not exactly sure how to answer that question.
I want to make it clear that we are in a buddy-up now. The 4R shrimp league do have a buddy-up, and we are trying to get away from that process. Even though it was a good tool to help us, we are actually asking for ITQ, just like everybody else. That would alleviate some of the confusion and just make things simpler.
One thing I would like to explain is how I feel about ITQ. It would help against controlling agreements. It just makes things simpler. It gives you easier access to quotas. For example, in my case, I bought a quota. I invested quite heavily in the fishery. I estimate that I invested anywhere from $5 million to $6 million into the fishery since I started. We lost our quota. Our fleet was demolished. Our shrimp stocks were demolished, and we were left in a bad situation.
When the mackerel was open, the quotas were good and the shrimp was good, so I had no issue making payments. When the end of the season comes, and you have 30,000 pounds of shrimp to catch, the mackerel is closed and the bank starts calling, you really do have some tough winters. I’m speaking from experience.
I ended up having to sell a boat, which was one of the pride of the fleet that I worked day and night at, as I could afford to do it. I made the boat fishable. I spent three years sleeping with insulation falling down on my head in my sleeping bag, and when I finally got her where I wanted her, I had to sell her and start over again with an old boat that needed a lot of work. But anyway, we’re fishermen. We will do what we gotta do. There are a lot of good times. Sometimes it’s not easy.
By having an ITQ for our fisheries, it gives people the flexibility to be able to get access to quota to make our businesses viable, and I would like to explain why I feel that way.
I spent $5 million or $6 million in quotas that I lost, but I didn’t lose the payment off of it. I was stuck with the payment after the quota was gone, so I couldn’t make the payments. ITQ would give me the option to get quota from somebody else, who is a fellow harvester, by the way. They are not a company or a corporation. They are most likely a friend and fellow harvester. That way, if the quota is caught and taken, I’m not left holding the payments on a quota that I don’t have anymore.
I invested quite heavily one year — probably in the vicinity of a million bucks — to buy quota in the fall, and before I got fishing next spring, I lost 63% of that quota. But I didn’t lose 63% of the payment. Of course, when you get down and out, you know where you have to turn. The banks are phoning. You can’t ask them for more money, and you can’t pay them back what they gave you, so you turn to companies.
I can pick up the phone right now, in this room, call a company and ask for $500,000. I bet it would be in my account this afternoon. No questions asked. No financial statements for the last few years. No waiting for the bank to come back to see if I’m going to be approved or not. It’s just a simple phone call.
When I go fishing, my pay is 25%. That’s 25% of whatever I catch. So if I don’t catch anything, I don’t have to pay anything. They’re not going to be calling me looking for money. It’s simple. It’s easy, and as far as I’m concerned, it’s probably most of the problem that we have in our fishery. That’s because, once I accept that money, you know what I got: Even though I’m not in a controlling agreement, I don’t have the option to sell to another company for a higher price. I’m told where to land. I’m told what to do.
My recommendation would be that if the government could come up with some kind of program, not necessarily making it as simple as it is with the processors — just a phone call — but making it a little simpler to get the money and pay it back on a percentage basis while you’re fishing, with flexibility, so that if you lose your quota, you’re not on a set payment, set rate, I think it would really help with controlling agreements. Some flexibility in rules and regulations would go a long way, as I stated earlier, in the crab scenario by not letting certain fleets hold crab or trawl, which also pushes things into the hands of the companies.
ITQ, where you can deal with your fellow harvester to get access to more quota, would make my business more viable so that I don’t have to go to a company or be put in a situation of a controlling agreement. This is something that you really should look at.
Other than that, that’s all I have to say right now. Thank you.
The Chair: It’s a great discussion. This is one committee where, as chair, I don’t cut people off because the conversation that we’re having this morning is what we’re here for.
However, powers higher than I am tell me that I have to finish at 10:00 because another committee comes into this room then. It’s 9:49 now, so I’m not sure if we’ll get to all of you. We will have to finish before 10:00, so I would advise senators and our witnesses that our time is getting constrained here. It’s too bad. We could go on for a couple of hours here, but we don’t have a choice.
Senator M. Deacon: Thank you all for being here. Frankly, this is compelling and open-ended testimony. So I don’t want to change or flick the switch on momentum and the things you are talking about.
Christopher, I want to assure you that your Food and Allied Workers Union, or FFAW, president or chair was here in March, and we listened to her testimony and her concerns. The representation in her recommendations was strong. I want to acknowledge that.
Frankly, stepping back is really difficult to do because your examples in this past testimony have been really quite specific, but before we leave this meeting, I would like to say this: We have this world where running the fisheries is federal and the processing companies are provincial jurisdiction. You talked about regulations being a challenge. Is there anything from your world that could be done to improve and strengthen the collaboration between federal and provincial work as they are related to what we’re talking about today? Tell us what could be better. Go ahead, please, Mr. Byrne.
Mr. Byrne: This is the power of this committee. We have heard this morning something that has never been articulated before, which is clear and present. It is a jointly administered industry, and while we speak of loans to the industry by non‑banking interests, it is provinces that have that jurisdictional space.
I say this rhetorically: Was there ever a position brought forward that suggested that maybe provinces should step into this space? That’s not an actual ongoing conversation, but it’s as clear as anyone can see. Just as provinces regulate payday loans and other non-banking instruments, this would be a good space.
Even though it’s not within your sphere of jurisdiction, having that discussed openly and honestly is the power of this committee. Quite frankly — I’ll say it again — this conversation this morning would not happen on the House of Commons Standing Committee on Fisheries and Oceans anymore. That member knows that because this is the best avenue to actually get a real non-partisan conversation — as it used to be in the House — about the real issues of the fishery. This is why we were so delighted to be invited here. With that said, processor loans are here until they are not needed. So guess what? They are here to stay for a while.
A loan has an element of a controlling aspect to it, but the difference here is that it meets the test. In fairness to DFO, what test can any investigator or auditor ever impose that will always be able to catch every nuance when it’s not recorded in black-letter language? Mr. Lavers pointed to the reality of a phone call and an expectation. What auditor could ever pick that up?
We spoke this morning about how provinces should work hand-in-glove with the federal authority and with fishermen’s organizations to ensure that the processing sector also has a “buy local, build local” component and an “own local” component. That makes perfect sense. I did it as fisheries minister in Newfoundland and Labrador. I don’t know where that rule stands anymore because I think there’s been an administrative change there, and I hear it’s no longer solid as it used to be, but that’s another matter.
With that said, this is a very important conversation. There is a desire to act. Whenever you have an intractable problem that has been ongoing for years, the motivation is to do something: “We gotta do something.” Sometimes, when you do something just because you gotta do something, it leads to a very bad result.
Clamping down on the very people, the very enterprises and the very lifeblood of our inshore fishery, and trying to prevent those loopholes or those avenues where nefarious actors can move into in those moments when harvesters are vulnerable or when there’s a transfer, and shutting all that interaction between harvesters down to be able to prevent the rats from getting in, is when you actually make people more vulnerable and less independent. That’s the caution that I would ask the committee to consider within the context of your report.
If something is working well within harvesting communities and has been shown to be valuable, why is this “orphan fleet” that is surrounded by Quebec, the Gulf, Nova Scotia, the Maritimes, Newfoundland and Labrador — the 4R fleet that I call the “orphan fleet” — get the worst of Newfoundland, the Maritimes and Quebec but does not get access to ITQs, whereas everybody else gets them? Yet, it still has all the rules imposed upon it? That, Senator Ravalia, was one of the issues that you really started to probe in your questioning of the federal minister.
Senator Busson: Just to clarify, we talked a lot about these processing plants, and we have heard from other witnesses that sometimes they are community operated and sometimes they aren’t. I’m getting the impression that, in the environment that you operate in, these processing plants are owned by “others,” not your communities. Is that correct? Can you spend a little time telling us who owns these plants in your area? How does that work?
Mr. Lavers: Most of the processing plants in our area are family-owned operations — individuals, basically. Now there is one in Labrador, the Labrador Fishermen’s Union Shrimp Co. Ltd., and the harvesters basically own that, and the Fogo Island co-op is another one.
The Labrador Fishermen’s Union Shrimp Co. Ltd. is a great company. They do well for their fishermen. I really believe they are a good company, but most of them are family owned and operated in our area. Thank you.
Senator Busson: Thank you very much.
Senator C. Deacon: If you have any follow-up thoughts, we have heard about co-ops working on the West Coast in one or two spots. We know they exist on the East Coast in certain spots.
Foreign corporate ownership of our processing plants is a growing concern. The idea of cooperative ownership of those between fishers has a lot of sense to it as a plan. Perhaps you have advice for us in terms of how we might make a recommendation around that or how we might build some elements into that, which will achieve what we need as one part of the solution. Clearly, you’ve been saying that in the fishery yesterday’s solutions are today’s problems, and we must be careful not to create more of tomorrow’s problems. So thank you.
The Chair: If you could answer that, Mr. Byrne, we would appreciate it. We just don’t have time for an answer at the present time.
I want to thank our witnesses for great testimony. It has been a great opportunity to share your concerns with the committee. Thank you for taking the time to travel here to do it in person also because it means a whole lot more when we can interact in the way that we did this morning.
I want to thank our senators for their questions. If there’s anything that you believe that you may not have had the opportunity to express to us this morning, feel free to send it to the clerk. I wish you all the best in the fishing season.
(The committee adjourned.)