June 1, 1998
(Fisheries and Aquaculture)

The following statement was issued today by John Efford, Minister of Fisheries and Aquaculture. It was also read in the House of Assembly:

Aquaculture working capital fund for shellfish sector

As the province's minister of aquaculture, it gives me great pleasure today to inform the House about a new federal-provincial $5 million Aquaculture Working Capital Fund. Along with my colleague, Honourable Beaton Tulk, and the federal Secretary of State for Fisheries and Oceans, I participated this morning in announcing this new fund for the farmed shellfish sector.

A source of working capital is vital to the survival of our shellfish aquaculture industry. Lack of such capital would be a major impediment to the full commercialization of shellfish species. For most aquaculture enterprises, it takes a minimum of three years before operations see a positive cash flow. In the interim, debt must be serviced, and salaries and other operating expenses paid. In most - if not all - cases, personal funding of the producers is exhausted in the process of developing the aquaculture site beyond the experimental stage.

Many producers have reached the stage where they can begin full commercialization, but only if they have the necessary operating capital to do so. Despite numerous representations by the provincial government and industry itself, commercial banks and other similar financial institutions are not willing to provide working capital loans for aquaculture operations. They do not deem fish inventory to be acceptable security for loans.

The Department of Fisheries and Aquaculture estimates that $5 million in working capital support will be required to fully commercialize the shellfish industry. I am happy to inform the House that the new Aquaculture Working Capital Fund we announced this morning is providing that $5 million. It is funded by a contribution of $3 million from the Canada-Newfoundland Agreement on Economic Renewal, and $2 million from the Canada-Newfoundland Strategic Regional Diversification Agreement. This $5 million will lever an additional $10 million of investment in the industry.

Until today, shellfish growers have faced serious funding challenges. With this new fund, we predict that the total production of cultured blue mussels will reach 1,600 tonnes this year, and will continue to have strong growth over the next several years.

This is a strategic investment in a growth industry. It is an investment in rural Newfoundland and Labrador. It ensures that our shellfish sector will reach its commercial potential to become a viable player in a rapidly growing and internationally competitive industry. I must emphasize that only those companies who have demonstrated their investment in the industry and whose business plans show they have the capability of moving forward with shellfish commercialization will be considered for assistance under the new fund.

I must note that today's announcement was made at Aquaculture Association of Canada's Annual Conference and Trade Show being held here in St. John's. This important forum is co-hosted by the Aquaculture Association of Canada, with more than 300 delegates from across the country are registered for this important forum. A related event to take place later today is the official opening of a $1.2 million aquaculture training facility at the Fisheries and Marine Institute of Memorial University. Also funded in part by the Agreement on Economic Renewal, this facility is a good example of government, industry and educational institutions working together to advance aquaculture in the province.

Government is committed to the commercial development of our aquaculture industry. We know where the markets are and we know what it takes to break into these markets. Our ongoing research and development efforts and the new operating capital fund have laid the groundwork for achieving that goal.

1998 06 01               2:30 p.m.