Fisheries and Aquaculture
October 27, 2008

Revised Seafood Processing Framework Announced

In delivering on its commitment under the Fishing Industry Renewal Strategy, the Provincial Government today announced that the province will now operate under a revised seafood processing policy framework. The revised framework includes more rigorous policies in relation to the issuance of new processing licences, tighter policy guidelines for the transfer of licences and opportunities for the combining of the existing value-added (snap-and-eat) crab licences. The new policy is effective immediately.

"This policy framework is designed to help address the overcapacity in the seafood processing sector," said the Honourable Trevor Taylor, acting Minister of Fisheries and Aquaculture. "With this revised framework the Fish Processing Licensing Board will have more clear guidelines in reviewing licence applications. This will provide for a more transparent process overall. It will also provide more viable processing plants for harvesters and more secure employment for plant workers."

The revised policy framework makes it clear for the board that no new licences will be issued unless existing resource thresholds are met province-wide. As well, under the revised framework licences cannot be transferred on a species-by-species basis. In order for a transfer to take place, there must be a closure of an existing plant and all the various species licences can then be transferred to another facility. The revised framework also allows for the combining of six restricted value-added (snap-and-eat) crab licences into full crab licences, should the processors involved desire to do so.

"With the implementation of the recommendations in the Dunne Report of 2003, a large number of inactive and marginally active licences were eliminated," said Minister Taylor. "However, an ever-changing external environment is continually creating more challenges for our province�s fishery and we must continue to adjust our policy framework to remain competitive in the modern global environment � particularly in a time of such global economic turmoil. These changes will strengthen the existing framework and promote further adjustment in the industry over the mid to long-term."

Under the Fishing Industry Renewal Strategy, the Provincial Government announced that it would strengthen the processing policy framework to include more rigorous policies related to the issuance of new licences, a more restrictive transfer policy on cancellation of licences and a clear policy on the limited circumstances under which the province will consider responding when a plant closes.

"I am confident that this revised regulatory regime positions the province to benefit from a more stable fish processing sector," said Minister Taylor. "This framework provides a reasonable investment climate, more secure and long-term employment, and an industry that will be better equipped to extract maximum value from global markets for processing workers and harvesters."

- 30 -

Media contact:

Lori Lee Oates
Director of Communications
Department of Fisheries and Aquaculture
709-729-3733, 690-8403
oatesll@gov.nl.ca

 

BACKGROUNDER
Changes to the Seafood Processing Policy Framework

Resource Thresholds
A resource threshold is a measure of the average amount of raw material that should be available per plant to ensure viability and sustainable operations. Resource thresholds are only set for major species including shrimp, snow crab, groundfish and pelagics.
They are set taking into account the amount of capacity and capital investment in the industry, periods of work for employees, global competitiveness and, input and advice received from industry.

At present, resource thresholds are one of several criteria used to guide board deliberations and final decisions. These thresholds have not been binding. Under the revised policy, no new licences for snow crab, shrimp, groundfish or pelagics will be issued unless resource thresholds have been achieved. Whereas previously resource thresholds have not been an overriding consideration, under the revised policy framework they will take priority over other criteria for these species. Existing resource threshold targets and review levels will be continued. As a result, the number of licences for these species can decrease but not increase until resource thresholds are met.

Transfer of Licences
Under the current policy, licence transfers have been allowed for individual species or whole licences. Under the revised policy, transfers of snow crab, shrimp, groundfish and pelagics will not be permitted unless resource thresholds have been achieved or the transfer will result in a plant closure and therefore a reduction of the overall number of licences. The transfer of licences for species not under resource thresholds may be considered based on established criteria, including business plan viability and regional balance.

This change in policy will prevent an increase in processing capacity for shrimp, snow crab, groundfish or pelagics. It caps the number of licences at the current level unless resource thresholds are met.

There will be a new combining and transfer policy for value-added (snap-and-eat) crab licences. These licences were created in response to a legal dispute, under the previous administration. At present, they are restricted to one million pounds annually. The revised policy will allow for consolidation of these licences.

Under the revised policy combining can occur if two value-added crab licences are being combined and this results in a plant closure. As well, three value-added licences can be combined into one. If three licences are being combined, no plant closure is required. Such consolidations will have the impact of eliminating this category of licences and putting all processors on a level playing field.

Regional Balance
Regional balance is the principle of trying to match landings with processing capacity. To date, interpretation of the principle has been subjective. Previously, bringing regional balance to the province�s processing capacity has been used as a rationale for adding new licences.

Regional balance will continue to be a consideration after resource thresholds have been met. In the meantime, regional balance will continue to be a principle focus for licence transfer applications or new licence applications for those species which are not subject to resource thresholds.

Cancellation of Inactive Species Licences
At present, minimum production volume is needed to maintain species licences. Ten tonnes of product is needed in one of two years for groundfish, pelagics, snow crab, shrimp. Lesser amounts are required for other species.

Licences will continue to be permanently canceled after two consecutive years of inactivity. Under the revised policy framework, higher production requirements will have to be met for certain species:

Shrimp � 500 tonnes
Snow Crab � 100 tonnes (50 tonnes in Labrador)
Groundfish � 20 tonnes
Pelagics � 20 tonnes

The policy will continue to be more flexible for other species.

The department will review and revise minimum production requirements from time to time to reflect the changing nature of the processing sector.

The new minimum production requirements will be effective for licences issued beginning April 1, 2011.

Change in Shareholders
At present there is a legislative requirement that companies advise the minister of a change in shareholders and the minister then decides whether this will affect their processing licences. Under the revised policy there will be increased disclosure requirements on companies as part of licence renewal procedures. The policy clearly defines "change of de facto control" or controlling interest situations and requires that all such situations be advertised as an application for a change in ownership and directed to the board for review. A shareholder who has more than 50 per cent of the outstanding common shares of the company is considered to have "de facto control" of the company�s operations. Our policy will be that if control shifts from one person to another person who is not a family member, there must be a publicly advertised application to the board for the change in ownership.

Exemptions are provided for in-family share transfers. Shareholder changes that will affect controlling interests in a company, other than a transfer within a family, will be treated in the same manner as other changes of ownership.

This will improve transparency related to corporate control of the seafood processing sector and provide opportunities for stakeholders and the public to have input into the process. This increased level of scrutiny will allow government, industry and the public to more closely monitor changes in corporate ownership.

In Province Retail
This policy relates to 15 small processing plants and restricts them to retail sales within the province. The revised policy will allow all species to be purchased and processed, while maintaining in-province retail restrictions. Species licence restrictions on in-province retail processing will be removed. There will be improved opportunities for harvesters seeking small landed volumes and increased flexibility for processors. This policy change will not impact capacity.

Licensing Board
The Fish Processing Licensing Board was implemented in 2005 to make recommendations to the minister on whether or not to award or transfer seafood processing licences. The fish processing licensing policy framework recommended in the Dunne Report was implemented.

There will not be any changes to the role of the licensing board. However, the department will work with the board to obtain advertisements from applicants in order to improve the timeliness of these being published on our departmental web site. This will make the process even more open and transparent.

2008 10 27                                                  2:15 p.m
 


SearchHomeBack to GovernmentContact Us


All material copyright the Government of Newfoundland and Labrador. No unauthorized copying or redeployment permitted. The Government assumes no responsibility for the accuracy of any material deployed on an unauthorized server.
Disclaimer/Copyright/Privacy Statement