:
Thank you, Mr. Chair. I don't think it will take me any longer than 10 minutes, anyway.
On behalf of the Southern Kings and Queens Fishermen's Association, we would like to thank you for the opportunity to meet with your committee and share a number of our concerns. We would like to extend a warm welcome to you and hope your visit to P.E.I. is both pleasant and productive.
Before we begin to outline a few of our issues, I would like to take this opportunity to correct some of the incorrect notions of fishermen and their industry.
When the normal person hears that one is a lobster fisherman, they immediately think of a fisherman who has lots of money, a big house, a four-wheel drive, and is living the high life. Nothing could be further from the truth. We had a few seasons in which we were fortunate to earn a decent living. In the past 15 years in our area, the bottom has dropped out of the fishery, and there are few alternatives to make a living.
Let me give you a few examples of how our costs have increased and how our income has shrunk to dangerously low levels, a few examples of costs, say, 10 years ago and today.
Item one is bait. Ten years ago it was 15¢ a pound; today it's 75¢ to 90¢ a pound. We use approximately 1,500 pounds a week. Multiply it by nine. Labour was $400 a week 10 years ago and it's $800 to $1,200 a week now, average 10 to 12 weeks. Fuel 10 years ago was 20¢ to 25¢ a litre; now it's 70¢ to $1.40 per litre. We use 200 to 400 litres per day.
Insurance rates 10 years ago were $400 a year; today they are $3,500. For docking fees most of us paid nothing 10 years ago; today it's $700 to $1,000. Maintenance 10 years ago was $2,000; today, it's $5,000 to $7,000. A new propeller 10 years ago would cost $500; today it's $1,500 to $2,000. You could build a trap 10 years ago for $20; it's $60 now.
Our lobster prices have been shrinking. In 2005-06, we received $5.50 a pound for canners and about $6 a pound for markets. In 2008, we received $4.25 a pound for canners and $4.50 for markets, with no rebates. In 2009, we have heard of prices of less than $3 a pound for canners and maybe $3.50 for markets. If Nova Scotia has a good season in April, this will shrink to even lower levels.
What is the reason we are covering these items? Quite simply, fishermen are not living the high life a lot of people think they are. We have exhausted most of our credit limits and are on the verge of collapse. If we do not receive some assistance this season, we'll see quite a few of our colleagues go bankrupt. That's the position we find ourselves in.
I'd now like to take you to unemployment insurance. We want you and the members of this committee to know that we appreciate the government's vision in allowing our members to draw down unemployment insurance benefits. Without this assistance, we would not have been able to survive as long as we have. We are grateful for this program, for without it we would not be able to continue on in our fishery.
There is one problem we will be facing that has not come up before. With the reduced prices for lobsters, the possibility of having fewer buyers and the problem of not being able to sell our entire catch each day, a large number of our fishermen may be facing the problem of not qualifying for EI benefits this year. Combine this with the lower lobster prices and the increasing harvesting costs, and we will be faced with the possibility of not qualifying for these benefits. If this happens, we will have an even more critical situation on our hands.
We have a suggestion on this topic for you to consider. Seeing that a very real outcome is that a number of our fishermen will not qualify and also given the reduced income from lobster, we would like you to consider recommending to your colleagues in Parliament the concept that they pass policies or regulations that will allow fishermen to qualify for EI benefits based on their earnings or income earned in 2008. This would be applied to the years 2009, 2010 and 2011.
This would allow the fishermen to have a financial safety net in place, and they could concentrate on working with the government on improving the long-term stability of the fishery. We are willing to discuss this further if you wish.
Regarding rationalization of the fishery, first, what is rationalization? To us, it is putting programs in place that would reduce the number of fishermen in the industry while allowing those who are willing to exit to do so with some funding.
We are fully aware of the negative feelings generated when fishermen suggest licence buybacks or some type of financial assistance. When we look at the automotive industry, we hear the term “billions” being mentioned. In agriculture, the list of subsidies and assistance has been more than generous. Are we complaining about these expenditures? No. We are proposing some consideration for fishermen and their plight. We are not asking for assistance for nothing. We have prepared a document, “Planning for the Future”, which is attached to this document.
In short, the fishermen in our lobster fishing area have offered to reduce the number of traps from 300 to 250 in the spirit of being partners with the federal government. This would mean 65 fewer lobster licences in our district. We would reduce our trap numbers if the government would buy out an equal number of traps. To do this, we think the cost would be 65 licences times $200,000 each. This single action would reduce the trap fishing effort by one-third of the total fleet in our area.
We understand that the Prime Minister has a $3 billion fund to assist in such stabilization programs. We're asking for $13 million of that $3 billion. It's a very small investment to save our industry, and not only that, but our organization has offered to operate the program to reduce the costs to the government. We would like to explore this proposal.
Regarding wharves and infrastructure, we will not dwell on this topic other than to say we really need some upgrading to our wharf and infrastructure facilities. In some of our ports, we don't have adequate fresh water. Electrical circuits are deteriorating. The wharf structures are decayed and falling in. We need dredging as well. We do not have any washroom facilities.
We met with your committee last fall and put forward a number of proposals. We would recommend that Fisheries and Oceans work with each port authority and plan a list of needs and rationales for their use. As money is made available, it would target the most urgent needs in the area. We would be willing to further discuss this issue.
We have two final items that we would like to put forward for your consideration. The first is to have our lobster products certified as being sourced from a highly managed fishery in an environmentally sensitive manner. Many consumers are demanding this type of certification before they will purchase a lobster product. We need the assistance of both levels of government to make sure our industry is a world leader in having their products certified.
Our final item deals with the needs and resources of our conservation and protection efforts by DFO and the industry. We feel that more resources have to be funnelled to the field activities of the fisheries officer division.
In addition, we would like to suggest that the Department of Fisheries and Oceans instigate a program of having reserve fisheries officers who could be trained and employed as required. Is this a new idea? No. The RCMP has such programs, and the Canadian Coast Guard has a whole regiment of people trained and ready to be employed in a time of need. Why couldn't Fisheries and Oceans follow a similar plan?
In summary, we want to again thank you for the opportunity to share our concerns with your committee and to lay before you some of our critical concerns. We would be willing to discuss these topics, or other questions you may wish to pose.
Thank you, on behalf of the fishermen from the Southern Kings and Queens Fishermen's Association.
:
Thank you very much, Mr. Chair. It's a pleasure to be here with the committee this morning.
I understand totally where you're coming from on the issues relating to the lobster fishery and the fishery in general. Our fishery back home in Newfoundland will start tomorrow, and the crab and shrimp fisheries are going to be in very similar circumstances this year. It's going to be a challenging year for all fishermen, whether it's lobster, crab, or shrimp.
There are a couple of questions that I'd like to pose--one that you didn't bring up but we'll get into, and the other one you did touch on.
Earlier today we talked about pounds for lobsters. Some of the processor companies have these pounds, and it was suggested that there should be a community-type pound for fishermen. I'd like you to elaborate a little on that. How useful would that particular initiative be for fishermen?
The second thing you brought up is EI. We haven't had a chance to have a good discussion on the EI fund. That's going to be on the back end of this year's fishery, which will be just as important. You alluded to spreading it out to 2011. Maybe we could get into a bit more detail on that. I'd like to hear your thoughts.
In the recent budget it was announced that there would be an extra five weeks of EI. That doesn't apply on P.E.I; it's not going to help anybody here. We need to look at the EI system and how it can help us. I hope this will give you a window of opportunity for us to hear more detail on that.
:
Thank you very much, Mr. Chair., and welcome, boys.
You're on the ground. You know what's going on around the sea. You have a good understanding. There are always things going on that you have to be careful of, and it is not the fault of any particular government. I just want to say that. But all governments have to be careful of what takes place in the deals that are made.
I just want to bring this up to the committee, and I am sure you understand. It's the Doha Round of the WTO. In my opinion, we have to be very, very careful here, and I would like any of you to expand on it.
In the Doha Round, if anything were definitely not acceptable, it was a red light issue. If it was discussable, it was a yellow. If it was passable, it was green.
In the Doha Round, EI, the capital gains tax exemption, the small craft harbours repair program, and even the gas tax card that you have were all red light issues. That means that if that deal were signed and the rules were followed, you would lose those programs.
Would you like to comment on that?
Lawrence, you bring up an excellent point, as usual. You hit the nail right on the head. The fishermen in the Southern Kings and Queens Fishermen's Association are very concerned with this issue. You've raised this a number of times, and we commend you on that.
The government, whether Liberal, Conservative, or whatever, should work as a team to protect the communities and the fishermen--whether they're from Newfoundland, P.E.I., Nova Scotia, New Brunswick, Quebec, or British Columbia--to make sure these programs are not counted as subsidies, and they should make every effort to protect the community network.
What's happening is that the community-type networks are breaking down. They're getting weaker and weaker, forcing fishermen against their will to seek other types of employment: move to the west, move away, get out of fishing, or find other employment to subsidize fishing. They have no other choice. So your point is very important: for all levels of government to work collectively to ensure those safety net programs are maintained.
I think you should keep in mind one point, and that is that we thought the lobster fishery last year was in bad shape because we had lost 25% in the price. Our fuel prices and our other costs have risen astronomically. This year we're going to lose probably another 25%, bringing it down to about 50% of the normal price, and maybe even lower, depending how they do in Nova Scotia. So our fishermen here may be facing a double crisis: first, the crisis whereby they may not be able to make a reasonable living at all; and second, they may not qualify for EI, which gives them a second slap. This will lead to a much higher incidence of bankruptcy and make the communities weaker than they are now.
So we would ask your committee to work with the government. I know this is difficult when you're in Parliament, but if you could somehow set aside your political beliefs and differences with all the other parties and work as a team to achieve those goals, I know the fishermen in eastern Canada would certainly appreciate your efforts.
:
I have just one brief comment. I think Lawrence has brought up a very appropriate topic.
If you look at the various programs that the fishermen are considering for buybacks and lobster buybacks, I'd like you to take particular notice, if you would, that as far as I can recall, with none of the programs are we asking, “Give it to me free. I don't want to pay anything. I don't want to be part of it; just load my basket up with money.” Nobody is saying that.
The Southern Kings and Queens and the other organizations working under the PEIFA are saying we will put something forward. In the Southern Kings and Queens, what they have offered to do is to give up 50 traps. That is close to 20% of their fishing capability. That would equal 65 licences, and they're asking for matching funds from the federal government.
So in actual fact, the fishermen, in essence, are paying for half the program and they're asking the federal government to pay for the other half. I think that's an important change from buybacks that we had in the past, when governments footed the whole bill.
:
Thank you very much, Mr. Chair.
I will try to be as efficient as Lawrence. In fact, I will time myself mentally and make sure that I ask my questions before my time is up. I wish to congratulate Lawrence for his work in the area, as well as in committee. He was in the room earlier, when I said this, but is now sitting next to me.
This committee is made up of representatives from the four political parties. I have been a member of this committee for the last five years, and served as MP for the last nine years, if you also consider the time I was serving as an assistant. I can tell you that the level of teamwork here is great, something that cannot be found elsewhere, unfortunately. We may have political disagreements, but this isn't a problem. However, when we address crucial subjects such as the future of fisheries, we are all unanimous, regardless of whether we are discussing small craft harbours, the lobster industry, or the industry at large. Our group works very well together, in a spirit of collegiality. In fact, we are even capable of partying together.
The first question I wish to ask you concerns employment insurance. I represent the riding of Gaspésie—Îles-de-la-Madeleine, and what drove me to enter federal politics was the unemployment insurance issue. I continue to talk about unemployment insurance because by using the term “employment insurance”, there's a whole aspect of the reality which is forgotten, the aspect of seasonal unemployment. Seasonal unemployment affects many of our communities. When people are unable to receive employment insurance, they must leave their hometowns, which they love very much. I know that members of the committee agree with me, but I do wish to add that money used for unemployment insurance goes back to the community. It is invested. People who receive unemployment insurance benefits spend money in convenience stores, supermarkets, and elsewhere. This is why, to my mind, this money is being very well invested. While waiting for full employment, be it in the wind energy sector, or other sectors, I believe that it is imperative to maintain unemployment insurance.
I, for one, must work on the famous seal issue, but as Lawrence pointed out, we also have to address other international issues such as subsidies that are considered prohibited subsidies by countries such as New Zealand, in particular, or even the United States. These countries always end up losing sight of common sense. To say that these funds, used to refurbish harbours or administer an employment support program are prohibited subsidies does not make any sense. The government must support communities such as ours, namely through the provision of such programs.
I'd like to better understand your suggestion. I know that there have been questions on unemployment insurance. As I understand it, the argument is the following: given the fact that 2008 income is considered as income for 2009, 2010 and 2011, it would be possible to allow people to become eligible, seeing as they would not be in 2009, 2010, 2011 because they would be earning less. Is this correct?
:
There's one other aspect to the EI program. It would not only provide a financial base for our fishers to be able to continue on in the fishery itself, but you mentioned a very important factor, and that is how you keep communities together, how you build the fabric of the community. The EI program is part of that. It's not the total amount, but it is part of that. I'm very pleased to hear that you take it to heart and make it an issue whereby the fishermen in your communities would benefit from your efforts.
There is one other thing about EI. If the government had made a decision to allow the 2008 standards to remain in place and automatically roll them over for 2009, 2010, and 2011, this allows the fishermen another opportunity. It allows the fishermen to concentrate on surviving the crisis in the fishery itself. They would be able to work with processors to look at quality. They would be able to look at various other types of programs.
One thing I believe this gentleman from Newfoundland said, talking about pounds...I believe you had mentioned that earlier. Well, that is, by the way, a very significant point. We can keep lobsters here, for example, in the spring season in the month of May without a lot of problems. When it goes into June, the storing of lobsters becomes a huge problem; therefore we suffer many losses. My background is in marine biology, and I was a fisheries manager with the Department of Fisheries and Oceans for 33 years. Those types of problems you're talking about—the storage, handling, and quality of lobster—are paramount if you're going to put out any type of product.
I have one final thing. My friend here from the Magdalen Islands mentioned that they work on the seal hunt and the promotion of the seal hunt, etc. We have a similar situation in lobsters, in that lobsters are continually coming under the watchful eye of many of these wildlife groups, and they want them to come from a well-managed, sustainable type of fishery and they want them treated well, etc. It's another issue we will be facing in the next few years. So what we would like to do is work with both levels of government to face that issue and overcome that as being a problem. We want to turn that into an advantage in the fishery.
:
Yes, Peter. Thank you for your questions.
I'd like to go back to the buyout, the FRCC report.
I read the 1995 and 2007 reports several times. I don't share the same opinion as the FRCC in the 2007 report, whereby they think it should be a self-rationalization program, because they didn't see the positive aspects of it.
I'd like to have them reflect back to between 1975 and 1978. The Province of Prince Edward Island, under the comprehensive development plan, and the federal government bought out 186 licences on P.E.I. I don't think you would find a fisherman in this room or in Prince Edward Island who would say that was a bad move. It was a very positive move. It had a very positive effect. It allowed a few people to go out. They got some money for their outfit and they were able to find other employment and carry on.
The problem I see with the FRCC is that they should be putting themselves in the place of the fishermen and trying to imagine the problems our fishermen today face, the real financial crisis they're in. I think you'll find that a buyout program—and in this particular case, one that is cost-shared, if you will, between the fishermen and the government—has many positive features.
Welcome to our guests. I appreciate your testimony. It's great to be here today in Mr. MacAulay's riding. You certainly draw a crowd, Lawrence. It's great to see everybody. Small rural communities, that's what this is all about.
I have just a couple of things. I am glad Mr. MacAulay brought up the WTO, because based on discussions I've had, this Doha Round has been going on since 2001, so there's a reason we're in 2009 and we still haven't got agreement. It's for a lot of those reasons we talked about: the importance of our small craft harbours program, as well as the importance of the EI system too, clear across the country. I think what we're going to see is that...certainly I don't believe any different from our minister, who would not be supporting any type of agreement where those things would be in jeopardy. So I think we can put our minds at ease a little bit on some of that.
I have a question on the conservation and protection, Bobby, that you were bringing up. The FRCC report of 2007, in section 7.2, talks a lot about some of the self-policing and some of the issues around management of the stock. When we were on the Magdalen Islands, we had a discussion about this. Some of the testimony we heard is that there is a role for government to play in this, but they also said the fishers are cooperating, that there are efforts to combat poaching—they have 1-800 numbers, and they're actually going into the schools to teach their young kids about the importance of the industry and the mechanisms.
One of the lines in the report said it was suggested to the FRCC that some harvesters set as many as 50% more traps than the allowed limit. So in addition to your suggestions about reserve fisheries officers and that type of thing, in line with the comprehensive approach, what kinds of other things would you suggest the industry could play a part in, if government and industry came together to help police this? What types of things would you suggest you could do?
:
On the buyout aspect of it, we always stated that we buy out the aging fishermen first. There's a large percentage. I don't know if it's 50% or not, but it's over 50% now and there's a very large percentage ready to get out of the fisheries, though.
They would have first crack at the buyout, and then you wouldn't have to replace them into the workforce, which is one of our main concerns, and we never really did anything for the young people. I know there's been stuff done through the association, but our association personally just thought the young fellows would go as they would. It's an open market, but there has to be training and stuff. The first time I sailed a boat was when I bought mine 28 years ago.
But I think the main concern right now is, getting back to the FRCC report, how taking fleets out of the water could not be good for our fishery. I just can't understand how somebody could sit there and make that statement. It is the best thing that could ever be done, and it has been proven in the past. We as fishermen all know that.
On the buyout, we want to buy out the elderly fishermen first, so they wouldn't be taking somebody else's job when they left the fishery, and I think we have the numbers to do that. We are looking at 60-plus that we'd be buying out.
I'd like to thank Mr. Bungay for joining us this afternoon.
Order, please, ladies and gentlemen. Mr. MacAulay, you may want to take your meeting outside so that we can begin ours.
Hon. Lawrence MacAulay: You don't want me to get any votes.
The Chair: You've got enough votes, Lawrence.
Mr. Bungay, once again I'd like to thank you for joining us this afternoon. I appreciate your coming on short notice. Basically we'll give you 10 minutes to make a presentation, and then the members will have an opportunity to ask you questions. Those questions will be timed questions, and the responses will be timed. If you hear beeping throughout the meeting--you've probably heard it already--that's the time indication.
Mr. Bungay, I'll let you proceed. Thank you.
:
First of all, Mr. Chairman, let me apologize on behalf of Mr. Sullivan, who was supposed to make this presentation today. Unfortunately, the weather was not cooperative.
Good evening, members of the committee. My name is Linus Bungay, and I am the operations manager for Ocean Choice International on Prince Edward Island. May I say for the record that Ocean Choice management is very pleased the committee is taking an interest in learning about and helping to solve some of the systemic problems and issues affecting the lobster industry of Atlantic Canada and Prince Edward Island, in particular.
Many of these issues have plagued us for some time. They have become much more difficult because of the global economic crisis, because the seafood industry now operates on a global basis. My company has its head offices in St. John's, Newfoundland. Ocean Choice International came to Prince Edward Island five years ago when we bought the assets of Polar Foods from the government of the province. Since then we have invested over $11 million in technology and other improvements to our facility in Souris at the eastern end of the province.
We have not asked for, nor have we received, any government funding for our initial purchase or in the improvements we have made. We are now the largest processor of lobster on Prince Edward Island and the second largest private employer in the province. Our annual payroll to staff and production workers averages about $8 million to $9 million a year. Our operation is unionized.The United Food and Commercial Workers represent our workers. Our production workers are covered by a contract, receiving health benefits and vacation pay.
We buy lobster from more than 300 fishermen sailing from P.E.l. harbours. As well, we buy lobster from fishermen in Newfoundland and Labrador, Nova Scotia, New Brunswick, and Maine, all told, about 10 to 13 million pounds depending on the year.
We put more lobster products on the international market each year than any other processor in Atlantic Canada. We market our own product, with sales offices in Asia, Europe, and North America. Our processing season extends from May to February. We market our products to more than 20 countries around the world, with our most important market in the United States. When you add in our local expenditures for supplies and the rentals and living expenses paid by over 200 imported workers from other provinces and foreign countries, you get some idea of the economic contribution we make to the town of Souris, to eastern P.E.l., and to the provincial economy.
Lobster processors are truly the middle men in the production and marketing chain that begins with fishermen landing their catch on the wharf and ends with sales of lobster products around the globe. The current market for lobster products can best be described as unstable and extremely price sensitive. The lobster processor is caught between those global market realities and increasing production costs, a dwindling labour supply, and the need for fair returns to fishers. Overriding those pressures is the need to preserve and maintain a sustainable resource. We are sailing into stormy seas. To quote one independent seafood industry analyst, "The seafood industry is about to see much more fallout from the credit crunch.” To use a word that is coming into use in discussing the global economic upheaval, this will be a reset year for the lobster industry in Atlantic Canada.
Traditionally the lobster fisherman has hauled his 300 traps six days of the week during his season. He catches as many legal size lobsters as he can and sells them on the wharf of his home harbour for as much as he can get for his catch to one or another of the buyers representing various companies. There are issues about consistent high quality on the shore that must be sorted out. We believe there should be more quality consistency and that a better grading system should be installed. The fisherman's work is done after the product is landed. The work of the processor then begins.
Bear in mind that about 75% of the lobsters landed on P.E.l. are canner size, weighing up to one pound. There is no other buyer for these animals other than the processors. They are too small for the live market in the restaurant trade. The industry has always operated on an assumption that every fisherman will have an immediate market for all his catch. That notion is based on the presumption that processors will buy every fish they can and process what they cannot immediately sell for inventory. That inventory, in turn, is financed by lines of credit used to pay for the raw product. It is what is known in other industries as bridge financing.
You are all familiar with what has happened to credit with banks and other sources. Credit is harder to get and in many cases is simply not available if it is to be used to finance inventory.
John Sackton writes in his daily online Seafood News that “...there has been a tremendous de-leveraging of bank and insurance company exposure to credit risk”. He is talking here about the recent reluctance of banks and insurers to accept receivables as collateral against risk. It puts enormous pressure on processors to make quick sales, as companies try to bring in enough cash dollars to cover expenses. It also puts downward pressure on the amount of lobster being bought by processors, as well as the prices being paid by them for their raw product.
Our industry needs to be viable, so it can bring more technical innovation to the industry. At Ocean Choice, we have invested in high-pressure processing technology. It subjects lobster to pressure, which separates claw and knuckle meat from the hard shell without breaking up the meat. There are companies with the expertise required to develop machinery that can go one step further with pressure technology, to break and shake meat from the claw in a single operation. Development of this innovation would cost hundreds of thousands of dollars for the prototype. That is a huge investment for a single processing company to make and bear the full cost. Those who followed would get the benefit of such an expenditure.
Human resources is another key issue: the dwindling population in rural areas, creating a scarcity of older workers, and the reluctance of many better-educated young people to replace older workers retiring from the industry. We bring in more than 200 workers each year from Newfoundland and Labrador and from the other Atlantic provinces and foreign workers from Russia, China, and this year from Thailand as well. And we will still have difficulty getting all the workers we need.
The industry needs investment in research and development to come up with new products to meet changing consumer demands and to assist in using all parts of the lobster. We appreciate the investment governments are making in marketing Atlantic Canadian lobster. It is a start, but it is not the answer to our systemic problems.
Lobster has always been portrayed as a luxury, a discretionary food, and has been priced accordingly. That discretionary market has suffered severe impacts, especially in the United States, where lobster has been taken off many restaurant menus and where restaurant chains are closing outlets or advertising complete meals under $10.
In reality, there are several niche markets, not just one. We need to be able to serve them all with our value-added products, from McDonald's to up-scale restaurants to take-home gourmet meals from the supermarket. There is a huge market for a lobster dinner priced under $10—if anybody can figure out how to prepare one and still make a profit.
We need a sustainable resource to make a sustainable industry that will provide a living for fishermen and their families and the production workers in our facility and preserve a shoreline society with thriving communities. We believe it can be done and that we can have a profitable, prosperous industry.
To achieve that, we need to rethink the industry. We must improve quality. We must be consistent with our quality standards. We need more innovation, more research, and more research and development. We must look into the viability of longer seasons with fewer fishermen making a better living fishing more traps. We should strive for an industry requiring fewer workers who make better pay. A sustainable industry must also be a profitable industry. We have too many under-financed companies now.
These are some of the matters that Ocean Choice, as one processor, has taken under consideration. I'm prepared to answer any questions that you might have.
Thank you, Mr. Bungay, for being with us today and helping us to understand a little more about this issue.
Let me start, and if we have some extra time, my colleagues may have some questions as well.
Let me begin with one or two points of clarification. I'm the Parliamentary Secretary to the Minister of Fisheries and Oceans, and she would probably want me to clarify that the decision regarding funding for the Canadian Centre for Fisheries Innovation was not made by the Department of Fisheries and Oceans; it was made by ACOA. I'm not sure of their reasons for thinking the program no longer meets their criteria, but it wasn't our decision.
I also want to say on her behalf that she takes this lobster issue very seriously. She is concerned about what's happening not just here in P.E.I., but throughout Atlantic Canada. It's one of her most important files.
You said in your comments that your volume has dwindled—I think that is the word you used—and you mentioned 50%; then you commented that you don't know what you're going to buy from year to year. I'm not sure I understand why it has dwindled. Is it just because it's unavailable to buy, or what?
:
I'm glad you asked about value-added. It's truly a topic we could talk about for a long time.
I mentioned high-pressure processing in my report. That's probably the newest technology that exists in the lobster business.
Going back to Mr. Byrne's question about CCFI, one of the things we've been very successful at doing, with the support of CCFI and the vet college and the culinary institute here, is building markets for value-added high-pressure products. We compete with the live trade. We believe that our product, under high-pressure processing, whether of a whole lobster or the extracted meat, can compete very well with the live trade. That's the kind of support we would get from CCFI, to prove the science behind the technology and basically make scientific statements that our product is able to compete. So there is a value-added aspect.
Then there are the meats. I just attended a week of visits to England and France, where our product was put under the test by French chefs, who are very high-value customers. They said that the high-pressure lobster meat is probably the best lobster they've ever worked with. So there are a lot of value-added options.
We also mentioned the value-added option of taking the other lobster parts and making more of them. We've had many discussions at our factory; we think there are processes that can bring the value up. We believe we will do that over the next year to two years.
We've had many discussions concerning shell products with different companies in P.E.I. with regard to doing something with the shell. At present, what we do with it is give it, basically, to the farmers to put on their fields.
:
Thank you very much, everyone.
We have with us today, from Prince County Fishermen's Association, Mr. Danny Arsenault. The president, Shelton Barlow, has not been able to join him today, so Mr. Jenkins is going to join Mr. Arsenault.
Mr. Arsenault, you have probably heard already that we give 10 minutes for presentations, and then members of each of the parties have time allotted to them to ask questions. You will hear a little beep or noise throughout, and it usually indicates that the time has expired. If you hear that, don't be too alarmed. As I said earlier, I generally cut the members off, but not so much the witnesses.
In any event, Mr. Arsenault and Mr. Jenkins, if you would, please proceed at this time.
:
Good afternoon, everyone.
Before I start, I would like to give you a little history of area 25. In the late seventies—I heard someone talk about it earlier—there was a buyout of licences. Quite a few were bought up in our area. In the eighties we started seeing a good rise in the fishing. In the mid-eighties, area 25 was enjoying high catch rates. By 1989, for daily catches in the first week of the season we were put on a quota of 1,100 pounds per day at our co-op. They just couldn't handle the amount that was coming in.
In 1990, DFO put a size increase on the industry for area 25—the only area, and it was the first time it had ever been done. We weren't even consulted. It was just a week before the season that we were called to a meeting and told that our size was being increased.
This kept on for five or six years. We kept having an increase every year—again, as I said, the only area that had. During this time, each year our catches were dropping.
In our southern part of area 25, down in the strait—we all know the problems we have there—the catches were dropping off drastically. Then we ended up with a twofold problem, because as the catches were dropping in the south, we were being hit with size increases, and every year we were losing, dropping on our catches.
People were selling out in the south, and someone was buying the gears and bringing them north. In one year, we had as many as 13 gears move to the north. This went on for quite a few years.
In the late eighties we had 17 fishers. Just to give you an idea about where I'm talking about, we're mostly right up at the very north end of the district along the area 24 line. We have 250 to 252 fishermen in area 25. Today there are about 210 in the top third of the zone. This is where all the gears are. It has created a lot of problems.
With the three harbours at the north end we have seen increases, as I said, from 17 in one area to 53 there now. The next harbour up, which would be Skinners Pond, has an increase; I think 10 or 12 have moved into that area.
Pressure on the stock is very severe, and DFO stood by and allowed all this concentration into one area to happen. We kept asking for something to be done, but they turned a blind eye to it. Now we constantly hear from them that they want us to reduce our effort. Each year they put new measures on us. This year we were given a new 10-year plan, which according to our fishermen would probably put us right out of business.
We are fishing a different, smaller.... We have a window lobster. Everybody else is at 115 to 129 grams. We are at 114 grams, and everything above that we throw away, of the female lobsters—we put them all back. Still that isn't enough. They are asking us to cut traps and to reduce our seasons. We are having a hard time to make a living as it is.
This is why we stated that we were not in favour of doing anything with this 10-point plan. We had New Brunswick fishermen agree with us to go with the same thing. We're not interested in doing any of these things until we have a buyout and reduce the number of fishermen.
Everything is talked about on the basis of effort. You can't have any better effort of reduction than to take 100% of a fisherman out of the fishery. He's gone out of the fishery. All these measures they are taking are band-aids.
We believe that in area 25 we have two big problems. In the south, the catches continue to really drop off. We believe there are environmental problems. Studies have been going on in the last two years. We still don't have an answer as to what the problem is, but the stocks are disappearing—and not only lobster: every stock in the strait is disappearing.
What this has done, as I said earlier, is bring all the gears to the north. Now we have a problem in the north, where we have too many fishers taking too few fish. It must be a really good stock, because it would be gone by now if it weren't, because of the way it has been fished with the increases.
We would like to see some licences bought out here to help those who remain to be successful once again and be paying taxes and contributing more to the economy.
Area 25 had a buyout going a couple of years ago, made possible by crab quota. We bought out nine licences and we shelved two for a year. This program received praise all across the country, and we believe we could successfully run it again if we were given funds. The only area, I guess, that had a successful buyout was ours. Pretty well every penny that was put into it was used to buy licences, with a small bit for administration. We believe it's our only way to ever fix our industry: to buy out some. A third of the licences have to go.
Before we started this buyout, we were concerned about the gears moving to different areas. We went after DFO and were successful in getting, finally, a port freeze put in place, because we felt that if we buy eight or ten gears out of an area and somebody brings in eight or ten more, we haven't accomplished much. It's something we have brought up with DFO before.
And I think it's something that has to be looked at in areas. You can't have effort going all into one part of a zone; that's bound to cause problems. If we ever have it balanced out again, it has to be looked at to make sure the problem never comes back.
That's about all I have to say on this right now.
As far as protection is concerned, we'd certainly like to have more protection. We've seen in the last year or two a little bit more funding, and we could certainly use more, because everything helps. Our fishermen today are just hanging on, and if DFO makes any more cuts to us, we're all going to be out of business. We can't survive it. We see removing some licences as our only hope, and they have to go immediately.
Thank you.
:
Thank you, Mr. Chairman.
Just to complement what Danny has said, what you have heard are the words of a hard-working, honest fisherman who makes his living from the front of the boat—not from an office, not from investments; he does it by hard work and through an honest day's labour. He and his colleagues are all in the same sort of situation in their area.
I would like to commend their organization, along with our colleagues here, Francis Morrissey and Craig Avery, in that these people a number of years ago had a warden program, which was a protection program under which the fishermen worked in cooperation with the federal government. It worked well. Now, because of various issues in the 1990s, when we had large recessions and all the tightening of the belts, if you will, and the chipping away of budgets, and we had to pay down the debt, and all those sorts of things, which are necessary, these people lost their program and haven't had an opportunity to regain it. In fact, Danny's colleagues in the Western Gulf Fishermen's Association even make financial contributions to the department to maintain some extra warden protection in their area.
So I'd like to commend them. I was with the department at the time. I worked in fisheries management for a good many years, worked on the native programs, development, licensing, and various other types of things. It was these types of ideas, generated by fishermen—good, honest, solid ideas—and brought up not out of a concept of trying to take money from the government, but of working cooperatively with them to resolve a problem.... I commend them on their efforts over the years.
As to their lobster buyback program, I think they've done an excellent job. I've looked at their program in quite some depth, and I'd like to see your committee support not only their efforts but the efforts of all the various locals on P.E.I. to reduce the number of fishermen. I think everybody wins when we do that, and having the fishermen be part of the solution is going to make resolving the problem that much easier.
I commend Danny on his dedication and his work in the fishery as well.
:
Thank you very much, Danny and Jim. I'm pleased to have you here.
Danny, you mentioned retirement. Something I have promoted somewhat and intend to continue to promote is a retirement package.
Also, before we get into that, I'd like you to talk a bit about their request to reduce and to take other measures. From what I understand, you're barely surviving in the fishery. Governments are great to ask you to do things, sometimes without fully understanding the impact on somebody that, as Jim said, stands at the front of the boat and really does the work and has to pay the bills. I'd like you to elaborate a bit on just exactly what they are asking you to do and how it's impossible to do it, and with that, how important the retirement program would be through the federal government.
You told me there were seven or nine retired and two shelved. Do you agree that they should be shelved? I understand a licence that's shelved is something you can take off the shelf. What I've been promoting is to make sure there is nothing on the shelf anywhere and to make sure that when they're gone, they are gone. Because if you don't do that—I think you have indicated in your statement too—if it's giving people help to buy the boats then they just shift and put the pressure on the area...if there is good fishing, everybody goes to that area. Unless you take licences out of the system, you cannot reduce the effort.
Would that be a fair evaluation?
:
Well, you raise an excellent question: what do you do if you have a wharf full of lobsters and nowhere to get rid of them? It is a fundamental question, and one that very well may be faced by the fishermen this spring.
I would suggest there are two things that you in government could really have a positive influence on. One is the effort that's going on by CCFI and by the provincial governments and what not--in other words, to market an Atlantic Canada lobster, promote it, try to find new markets, new products, these sorts of things. These take time and they take effort and money and investment, but that is one part you should be looking at.
I think another thing the government should be looking at, whether it's working with their provincial colleagues or whatever vehicle they wish to use, is securing some interim funding for the processors in order for them to be able to purchase lobsters. We heard earlier that they have a supply. I don't know the quantity of inventory in hand. They were bought at higher prices, $4 or $5 a pound. Therefore they're very expensive inventory for our processors to handle.
We heard of the collapse of the Icelandic and other banking systems. Banks have become extremely sensitive to the processing sector in lending money. We can see that processors today are tightening up their lines of credit with their clients, with their fishermen and what not. It's not as easy for them to lend money for new motors or new gear and various other activities as it was a few years ago.
So I think that between the provincial and federal governments there should be an effort to have some type of financial assistance, whether it's an interest buydown, which would be positive, or a loan of a certain percentage of their money for inventory, let's say, a 70% return of their inventory. They have to have some incentive to maintain the product and sell it, but at the same time, if they could just buy one week and not buy the second week, we're into the same sort of situation.
We look at our forefathers in the government. Many years ago we had the Fisheries Prices Support Board. Now, I know Lawrence has mentioned the World Trade Organization and about the various trade agreements that we have and the problems that ensue, but at the same time, the vision was there that during low times the Fisheries Prices Support Board could support the industry. If we could have something like that, so that our processors are not forced to dump product on the market at low prices and depress the market even further, I think it would be helpful to them.
I'm not trying to put myself forward as a marketing expert, because I'm going to tell you I certainly am not. If you want to talk to marketing experts, you go into that field and talk to the processors. Those people are the people who handle that side of things. But having looked at it this winter—I had an opportunity to do a bit of work on this—what I found was quite startling. If we do not have some mechanism to start the buying process off and to recover money relatively quickly, the fishermen are going to soon find that there's no place to sell a lobster—and you, Peter, have brought up a very poignant point—and it's going to immediately kill the industry if we can't get them off the wharves.
So my recommendation would be those two things: one is to help on inventory management and costs, and as well, to look at some banking and maybe interest buydown, those types of things, to assist the industry in keeping it churning and turning over.