Commissioner to Review Fish Processing Policy

Minister of Fisheries and Aquaculture, Yvonne Jones today announced Mr. Eric Dunne as the Commissioner to Review Fish Processing Policy in Newfoundland and Labrador. "Mr. Dunne has the professional experience in the fishing industry to be able to provide the people of the province with a comprehensive report," said Minister Jones. "Mr. Dunne, through his 35 years of experience both federally and provincially, has completed reviews of fisheries management including groundfish, crab and shrimp. He has completed assessments of licensing and allocations in the Newfoundland Inshore and has worked as a consultant to the fishing sector. As the Commissioner he will be required to complete the review by December 2003 to ensure recommendations can be implemented for the 2004 fishing season."

In June of 2003, the provincial government committed to a review of fish processing policy, including the issuance of licences, regional balance, industry stability, and maximizing the value of our resources. This process will also be linked to the current call for federal and provincial joint management of the fishery and the federal government will be invited to participate in the policy review.

Minister Jones stated, "There has been substantial structural adjustment in the harvesting and processing sectors and the dynamics within the industry continue to require governments to adjust policies to changing conditions. Over the past six months in particular, the province�s fishing industry has had one crisis after another. With the closure of the northern and Gulf cod fisheries and the quota cuts in the crab fishery, processors, harvesters and plant workers are facing more uncertainty than ever before. This government has conducted studies in the recent past to help our industry move forward. As Commissioner, Mr. Dunne will draw upon other work that has been completed including the Special Panel on Corporate Concentration, the Report of the Inshore Shrimp Panel and the White Paper on Joint Management."

"The impacts of cod closures in 2J3KL and 3Pn4RS have had varying impacts throughout the different regions of the province. Those most dependent on cod from these areas are experiencing the greatest impact," said the minister. "For harvesters, it is those with few other harvest opportunities and who tend to reside in adjacent areas. Processing workers also tend to be impacted in adjacent areas; however, the movement of fish by trucks results in impacts being experienced throughout all areas of the province. For processing plants, the removal of cod from their operations has resulted in a direct loss of jobs, a reduction in the duration of employment and an overall loss of income for plant workers due to both lower employment income and transfer income such as EI benefits. Harvesters are experiencing similar impacts. As with plant workers, the extent of the impact will vary, for some harvesters their future in the fishery is jeopardized while others will manage to stay within the fishery but with reduced incomes.

In addition to the closure of the northern and Gulf cod fisheries, over the past four months, Minister Jones has met with processors, plant workers (union and non-union) and harvesters to help resolve conflicts in the crab and shrimp fisheries.

"The processors, FFAW and plant workers have all come forward with alternative approaches to addressing many of the problems in the fishery," said Minister Jones. "Seldom do they agree on a particular approach so it is significant than an independent Commissioner will work with all stakeholders to determine the best policies for everyone."

The Commissioner is required to have substantial consultations with stakeholders and a consensus building approach will be used to determine the direction required for proper management of the fish processing sector and the long term stability of the industry.

Media contact: Cynthia Layden-Barron, Communications, (709) 729-3733.

On June 6, 2003, the Minister of Fisheries and Aquaculture announced that a Commissioner would be appointed to review the province�s processing policy. The review is in response to the dramatic changes that have occurred in the industry and to determine what changes are required in the province�s policies.

The review will cover all provincial policy including the issuance of licences, regional balance, industry stability, and maximizing the value of our resources. The review will also take into consideration the dramatic changes that have occurred in relation to resource availability and species processed. The Commissioner will review all aspects of provincial policy including the regulatory and legislative framework such as the Fish Inspection Act and associated regulations. This process will also be linked to the current call for joint management of the province�s fishery. The Commissioner will undertake work to develop a complementary policy framework.

The changes in the industry that have occurred since 1992 have been dramatic and far reaching. There has been substantial structural adjustment in the harvesting and processing sectors and the dynamics within the industry continue to require governments to adjust policies to changing conditions.

In 1997 the province introduced a processing policy framework designed to promote multi-species plants that contribute to strong communities and regions. Changes within the industry that have occurred since that time, combined with the new directions the industry is taking requires the province to revisit its processing policy.

The key objectives of the 1997 policy were:

• to promote industry stability, competitiveness and viability;
• to facilitate a regional balance between resource availability and industry capacity on a regional basis;
• to enhance the maximum operating period possible for processing plants;
• to enhance the quality of fish products; and,
• to maximize the economic benefits associated with their production.

One of the assumptions implicit in the 1997 policy was that groundfish stocks would recover in the short to medium term. The recent closures of the Northern and Gulf cod stocks clearly have signaled that this will not be the case. The current policy designated plants based on their historical groundfish processing activity. Groundfish landings, however, have declined from a 1977-1991 average of 560,000 tonnes to current levels of about 70,000 tonnes.

Current provincial policies were designed for a post-groundfish era, but need to take into consideration the changing circumstances that have resulted in the industry moving to an industry focused on shellfish. There have been changes in the harvesting sector and the market place that need to be addressed.

Some fisheries have moved from competitive quota fisheries to an assignment of property rights through an individual quota system with the result that some harvesters now have more control of how and when they fish and to whom they sell their product.

Instability has characterized operations of both the processing and harvesting sectors over the past couple of years. This instability threatens the long-term future of rural Newfoundland and Labrador. The investments that have been made in the industry have been entirely private sector driven and funded. It would appear that in the current environment this capital is at risk.

The Department�s processing policy also focused on key areas such as quality and industry stability. The province�s quality assurance program has had some success; however, as with any program, there is room for improvement.

The province�s processing policy was intended to provide stability for communities. As part of this, a limited entry licensing system has been pursued. The number of active primary licenses has declined from 196 in 1996 to 102 in 2003. While the limited entry system has had some success, the economic realities of rural Newfoundland and Labrador continues to place considerable pressure for the issuance of new licenses.

The stresses and problems we see in our fishery are not unique to Newfoundland and Labrador. Within Canada, the provinces of Nova Scotia, New Brunswick, and British Columbia are facing serious industry problems. The fisheries in the EU and other areas overseas are also in serious trouble. Alaska, a jurisdiction with similar fisheries as Newfoundland and Labrador are implementing new systems for their harvesting and processing sectors with a goal of bringing greater stability to their communities.

The industry must respond to current demographic challenges. The workforce in Newfoundland and Labrador is aging. This requires that the industry have a long-term strategy to deal with this issue. As well, the low income levels found in the processing sector will likely make it difficult for plant operators to attract labour in the future and solutions to this issue must be found.

Scope of Work

In completing its work, the Commissioner shall:

1. Assess the need for policy changes that are required as a result of the long-term closure of groundfish stocks. This includes, but is not limited to, a review of the province�s core and non-core license policy and the consideration for strategic plants.

2  Assess the provinces� quality assurance program and indicate what changes may be required.

3. The processing sector has recommended implementation of a production quota system for plants. The Commissioner will review proposals for plant production quotas and assess whether production quotas will contribute to an equitable distribution of the wealth generated by the common property fisheries resources. This review should also examine the implications of production quotas to other industry stakeholders, including harvester and processing workers and include a review of the current individual quota system for harvesters and its impact on relationships with processing companies.

4. Specific to the crab sector:

• Review and make recommendations relating to work content in the plants;
• Carry out a comparison of prices and related conditions for crab in Newfoundland and Labrador, Nova Scotia and New Brunswick;
• Complete an analysis of crab section exports with a view to determining the destination of exports, the extent to which exported sections are reprocessed and into what product forms, and recommend a system for the tracking of product exports; and,
• Review industry performance in respect of product packing specifications and make recommendations to ensure maintenance of proper quality standards.

5. Review the demographics of the province�s fish processing labour force and recommend measures to maintain and improve its viability.

6. Review and recommend policies related to the criteria for the issuance of new licences, including but not limited to: limited entry licensing, capacity or resources thresholds, regional balance definitions, criteria for the transfer of licenses, rationalization, and associated mechanisms to bring greater stability to the industry.

7. Review and recommend any necessary revisions to the regulatory framework associated with the province�s processing policy.

8. Outline the policies that would be required for the incorporation of processing licensing into a new Joint Management Board.

The processing policy review will be completed by mid December 2003, with the goal of introducing changes for the 2004 fishing season. The policy review will involve consultations with industry stakeholders including harvesters, processing companies, plant workers, communities and the federal government.

The Commissioner must draw upon other work that has been completed including the Special Panel on Corporate Concentration, the report of the Inshore Shrimp Panel, and the White Paper on Joint Management, and the Task Force on Fish/Crab Price Settlement Mechanisms.

The government has also tried to bring about stability in the industry through an open and transparent collective bargaining process. The Final Offer Selection process is currently under review, the results of which should be incorporated in the work of the Commissioner.

The policy review will be completed with consideration to the results of the Atlantic Fisheries Policy Review (AFPR) initiative being undertaken by the Department of Fisheries and Oceans.

2003 07 30                                     1:20 p.m.