Fisheries and Aquaculture
Innovation, Trade and Rural Development
November 1, 2007
Changes to Fisheries Loan Guarantee Program
Allow Harvesters to Access More Capital
The Provincial Government has made
changes the Fisheries Loan Guarantee Program that will provide
harvesters access to additional capital for their fishing enterprises.
These are necessary changes that were identified as part of the Fishing
Industry Renewal (FIR) consultation process, in order to keep pace with
inflation and, new vessel design and enhancement. A key change includes
an increase in the maximum loan guarantee limit from $1.3 million to $2
million.
"In April when we announced the new Fishing Industry
Renewal Strategy, we said that a key component of the strategy would be
an enhanced provincial Fisheries Loan Guarantee Program," said the
Honourable Tom Rideout, Minister of Fisheries and Aquaculture. "Our
government has delivered on that commitment in order to provide
harvesters with options and flexibility in pursuing their business
activities."
The Fisheries Loan Guarantee Program provides a
provincial guarantee on loans from participating commercial banks to
harvesters for the purpose of construction, purchase or upgrade of
vessels and the purchase of new equipment.
"The maximum loan guarantee limit under this program
was last increased in the early 1990s," said Minister Rideout. "During
the past 15 years, new vessel construction costs have increased
significantly. As well, the recent change in federal policy on the
maximum length of vessels from 64�11" to 89�11" will result in higher
construction costs."
Furthermore, during the Fishing Industry Renewal
consultation process, harvesters strongly supported the strengthening of
the federal policy on separation of those who own processing plants from
those who own vessels. Many fishing enterprises currently have debt
financed through seafood processing businesses. This in effect gives the
processor the first right of refusal for any species the harvester lands
and was not an ideal situation for ensuring competition within the
industry.
Loans previously obtained by harvesters from fish
processors for new vessel construction upgrades or new equipment will
now be eligible for refinancing through bank loans under the program to
a maximum of 85 per cent of the appraised value of the assets.
"As the minister responsible for administering the
Fisheries Loan Guarantee Program, I�m pleased that the concerns of the
fishing community have been addressed and I am confident that this will
benefit the entire province," said the Honourable Trevor Taylor,
Minister of Innovation, Trade and Rural Development. "The Provincial
Government is committed to creating an environment that encourages the
development of a successful fishing industry and addressing challenges
faced by harvesters."
In addition to the changes announced today, there
could be further enhancements to the Fisheries Guaranteed Loan Program
to provide for the financing of enterprise combining and the use of
licences as security for financing that fall within the jurisdiction of
the Federal Government.
The new loan guarantee program is just one aspect of
the Provincial Government�s Fishing Industry Renewal Strategy. As part
of this strategy, a comprehensive suite of programs has been designed to
bring fundamental change in the province�s fishery. The strategy
includes programs and initiatives to address enhanced marketing,
research and development, occupational health and safety and the
implementation of fish auctions. To address the challenges in the
industry, the Provincial Government�s total renewal undertaking is an
estimated $140 million. Included in this, the enhanced Fisheries Loan
Guarantee Program could require an additional $100 million in loan
guarantees from the province.
"Addressing the issues in the fishery continues to be
a priority for the Provincial Government," said Minister Rideout. "Our
government will continue to work with all stakeholders to effectively
address the issues of the industry. This is vitally important to the
future of rural Newfoundland and Labrador."
-30-
Media contacts:
Lori Lee Oates
Director of Communications
Department of Fisheries and Aquaculture
709-729-3733, 690-8403
oatesll@gov.nl.ca |
Scott Barfoot
Director of Communications
Department of Innovation, Trade and Rural Development
709-729-4570, 690-6290
ScottBarfoot@gov.nl.ca |
2007 11 01
2:10 p.m. |