June 18, 1996
(Fisheries and Aquaculture)

Pilot project on capelin production quotas announced

The Department of Fisheries and Aquaculture has begun a pilot project to evaluate one of several options for realignment of fish processing capacity, Minister John Efford announced today.

The project involves assigning capelin production quotas to processors this year.

"This is a pilot project that applies only to the 1996 capelin season. It is a test case to help government determine the merits of applying company production quotas in a more general way," Mr. Efford said.

The minister said company production quotas is an option being considered by the Fishing Industry Renewal Board, which has been authorized to make recommendations to government on realignment of fish processing capacity in the province. Mr. Efford said he accepted the board's recommendation to do a pilot project with capelin after consultations with industry organizations had been held.

He noted that there is a broad base of support for the concept of production quotas, but there are differences of views among industry participants on how the concept could best be implemented.

"The only way to determine how it works or doesn't work is to do a pilot project," he said.

Mr. Efford emphasized that the project will be monitored closely, and "will be thoroughly evaluated before there is further consultation with industry and the public as to whether company production quotas are desirable in a more general way for the long-term."

"All concerns and problems identified during the pilot project will be addressed before a final decision is made as to whether to apply production quotas generally for the long term," he said.

At a news conference today, the minister outlined details of the pilot project:

PURPOSE OF PROJECT:

• This came about as the result of a recommendation of the Fishing
  Industry Renewal Board, which is about to begin public
  consultations on options for processing capacity realignment.

  The board and government agree that a pilot project on company
  production quotas for the capelin fishery this year is a good way
  to evaluate the merits of company production quotas in a more
  general way.

WHO WILL PARTICIPATE:

• Eighty-eight companies have been assigned production quotas for
  capelin. All are expected to process capelin this year.

  The project applies to all plants that are licensed to process
  capelin and that have freezing capacity.

  Companies having licences to process only male capelin are not
  eligible. Neither are government-owned plants that are not leased.

  In the case of plants that are issued quotas but do not use them,
  the unused quotas will be re-allocated among participants.

  A company that is assigned a quota but choses not to use it this
  year will still be permitted to participate in the 1997 capelin
  fishery.

ALLOCATION OF QUOTAS:

• A minimum allocation of 250 tonnes is being issued for each
  eligible processing plant, except for just a few companies that do
  not have an established history in freezing capelin, in which case
  an allocation of 125 tonnes is given.

  Other company quotas are based on each company's historical share
  of the province's capelin production records for the 1986-93
  period. The average level of production for that period is then
  pro-rate against the 1996 total allowable catch of 40,000 tonnes to
  determine what amount, if any, each company will receive above 250
  tonnes.

  The total company quota for each zone will be specified as a
  condition of licence on a sea-run basis. (The zones are 2J, 3K, 3L,
  3Ps, 4R3Pn.) In the event that a company purchases hand-picked
  capelin, the conversion factor used by Fisheries and Oceans shall
  be used to determine the sea-run equivalent. For example, 100
  tonnes of hand-picked female capelin would be roughly the
  equivalent of 210 tonnes of sea-run capelin.

TRANSFERS:

• Temporary transfers of quotas will be permitted in 1996. For the
  purpose of this project, transfers fall into two categories, each
  of which is related to zones 2J, 3K, 3L, 3Ps and 4R3Pn:
  1. (1) Temporary transfers between companies within the same zones
     will be automatically permitted upon request to the Department
     of Fisheries and Aquaculture.

     (2) Transfers between zones will be permitted upon request to the
     department, provided that the recipient zone's historical
     share of production is less than its share of fishing quotas.

MONITORING:

• Each participating company will be required to fax reports to the
  Department of Fisheries and Aquaculture on a daily basis. These
  reports must provide details of daily purchases and production
  quantities, as has been the practice in previous years.

  Companies are required to have an independent monitor (such as an
  accounting firm) in each plant, at the company's own expense.
  Arrangements for this must be approved by the Department of
  Fisheries and Aquaculture. The monitors will be expected to verify
  the companies' production by signing the daily production report
  that is sent to the department.

OTHER:

• Purchases in excess of the total company quota for each zone will
  not be permitted unless the quantity is offset by sales to another
  licence holder.

  Any company that exceeds its total zone quota will be subject to
  penalties, which may include seizure of product and cancellation of
  its capelin licence.

Contact: Josephine Cheeseman, (709) 729-3733

96 06 18                                               11:15 a.m.