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May 2, 1996
(Fisheries and Aquaculture)


The following is being distributed at the request of the Newfoundland Aquaculture Industry Association:

ACOA key player in development of aquaculture industry

Marc Kielly, executive director of the Newfoundland Aquaculture Industry Association, responded today to the recent Senate Banking Committee report which suggested that ACOA should be abolished because the agency's funding programs are a duplication of financing available through the Business Development Bank of Canada (BDBC), the Farm Credit Corporation (FCC) and the chartered banks. According to Mr. Kielly: "The reality is that without ACOA's continued financial assistance the future of the aquaculture industry in this province would be in jeopardy."

One of the most serious problems affecting the development of the aquaculture industry is the difficulty in obtaining financing to support the operations from the start up stage to the point where you have a commercially harvested product. Depending on the species cultured it can take up to three years before the grower will have a harvestable crop. This places a real strain on cash flow needs. To overcome this problem growers need access to "patient money" under flexible repayment terms to support them through this growing stage and to finance subsequent expansion of their operations.

The reality in Newfoundland is that the current lending programs of the chartered banks the BDBC and the FCC are not accessible to the vast majority of aquaculture farmers in this province. The main reason is that the aquaculture industry is still at a development stage and farm operators do not have the required track record of earnings to obtain financing from traditional lenders. Basically the chartered banks, the BDBC or the FCC require at least three years of profitable earnings before they will extend financing. Herein lies the problem. Industry is not yet at this level but, more importantly it is critical that individuals have access to financial assistance programs to get to this stage. This is where ACOA's programming is so important to the development of the aquaculture industry.

In 1995, over 70 commercially licensed aquaculture farms in the province produced an estimated 1,280 tonnes of steelhead trout, salmon, mussels, scallops and arctic charr valued at more than $5 million. Over 300 jobs have been created in the industry to this point. The industry is now entering a growth phase where production is expected to rise dramatically over the next two to three years and well into the future. It is projected by the year 2000 the industry will be worth more than $60 million in sales and will create approximately 1,500 direct jobs in many rural and coastal communities where limited opportunities exist. Many additional new employment opportunities will also be created in the supply and service sector.

ACOA will provide financial support to the aquaculture industry in ways that the chartered banks and the BDBC and FCC will not. For example many of the aquaculturists do not have sufficient assets to pledge as collateral for loans. Unlike traditional lenders, ACOA can provide loans that do not require security and are interest free. These loans have been accessed by many aquaculturists and have provided the catalyst to develop the aquaculture industry in Newfoundland.

"Before the Senate Banking Committee moves forward with its recommendations to abolish ACOA they should take the time to consult with representatives in the aquaculture industry to get the whole story. They will find that ACOA is an important player in the economic development of the aquaculture industry in Newfoundland."

Contact:

  • Marc Kielly, Executive Director
    Newfoundland Aquaculture Industry Association
    21 Mews Place
    P.O. Box 23176
    St. John's, Newfoundland
    A1B 4J9
    Telephone: (709) 754-2854
1996 05 02 11:10 a.m. /md

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