FOPO Committee Report

GOVERNMENT OF CANADA RESPONSE TO THE FIRST REPORT OF THE STANDING COMMITTEE ON FISHERIES AND OCEANS:

REPORT ON THE SNOW CRAB INDUSTRY IN THE ATLANTIC PROVINCES AND IN QUEBEC

Introduction

The Government of Canada would like to thank the Standing Committee on Fisheries and Oceans for its First Report:  Report on the Snow Crab Industry in the Atlantic Provinces and in Quebec.  The Government has thoroughly reviewed, and given careful consideration to the Report and the Committee’s recommendations contained therein.

The Government is aware of the importance of the snow crab industry in the Atlantic Provinces and Quebec and is committed to creating the conditions for an economically prosperous snow crab fishery.  As noted in the Report, the Committee’s recommendations translate into tools and ideas to improve the management of the snow crab fishery and to more adequately prepare snow crab dependent communities for the inevitable fluctuations in the snow crab populations.  The Government strives for continuous improvement in fisheries management and will continue to work with industry stakeholders in fisheries management decision-making processes.

The Government is committed to creating a regulatory environment and management regime that encourages economic prosperity and ecological sustainability in the fishing industry.  A modern fisheries management framework will enable the industry to position itself for success in the competitive global market.  Steps have already been taken by the Government to introduce policy measures to promote business-oriented approaches and make the fishing sector more attractive for private investment.  The Government will continue work to provide an operating environment characterized by stability, predictability, and transparency which will enable sound business practices and investment decisions.  This will help to create the conditions where rules and regulatory practices are clear and consistently applied.

Once again, the Government wishes to thank the Committee for its Report.  The Government of Canada will continue to work toward promoting the best interests of a long-term, viable fishery that is both ecologically and economically sound for future generations to enjoy.

Responses to Committee Recommendations

Recommendation 1

That the Department of Fisheries and Oceans immediately put into place a plan, based on scientific evidence, to mitigate the impact of the rapidly growing population of grey seals on the snow crab resource in the Gulf of St. Lawrence, including the targeted removal of grey seals.

Response:

The Government partially supports this recommendation.  In 2010, the Zonal Advisory Process (a peer-reviewed scientific advisory body) determined that predation by grey seals is the greatest contributor to the increased natural mortality of large cod in the southern Gulf of St. Lawrence.  Based on this scientific advice, a targeted removal of grey seals from the southern Gulf of St. Lawrence would be justified to promote recovery of groundfish populations.  Fisheries and Oceans Canada is considering measures to manage the grey seal population, based on scientific evidence, insofar that these measures would help to promote cod recovery.  However, at this time, there is no scientific evidence to demonstrate that grey seals are impacting the snow crab population in the southern Gulf.

Recommendation 2

That all of Fisheries and Oceans Canada’s future fisheries management decisions be based on the precautionary approach when a formal decision-making framework exists, and that in the absence of such a framework, decisions be based on the elementary principle of precaution.

Response:

The Government supports this recommendation.  As part of its fisheries management renewal, Fisheries and Oceans Canada is incorporating the precautionary principle to resource management.  The snow crab resource is managed under the guidance of Fisheries and Oceans Canada’s Precautionary Approach Framework.  This Framework requires that a harvest strategy be incorporated into respective fisheries management plans to keep the removal rate moderate when the stock status is healthy, to promote rebuilding when stock status is low, and to ensure a low risk of serious or irreversible harm to the stock.  Applying the Precautionary Approach is widely accepted as an essential component of a sustainably harvested fishery, which is used in eco-certification processes that have been established to meet increasing consumer demand for sustainable seafood products. 

Full implementation of the Precautionary Approach in the snow crab fishery is underway.  It is being carried out in a phased-in and progressive manner over a number of years based on regional priorities established by Fisheries and Oceans Canada in consultation with fishery groups and other fishery interests.  However, all current decision-making with respect to harvest levels and other management measures related to the snow crab resource employs precautionary principles.  Fisheries and Oceans Canada considers the engagement of stakeholders in the development of harvest control rules as an imperative step in the implementation of the Precautionary Approach.  

Recommendation 3

That the Minister of Fisheries and Oceans strike a task force consisting of independent experts to conduct an objective review of the snow crab stock assessment process and the management of the fishery in the southern Gulf of St. Lawrence. The task force should report publicly and to the Minister within a year of its formation.

Response:

The Government partially supports this recommendation but does not concur with the creation of an independent task force as this would duplicate efforts underway.  To address issues of concern around scientific methodology and the stock assessment process, in November 2011, Fisheries and Oceans Canada held a special science peer review meeting with a group of departmental and non-departmental experts, both domestic and international, to assess the scientific methodology underpinning crab stock assessments in the southern Gulf of St. Lawrence.  This review had an independent chair and international experts, as well as snow crab and non-snow crab experts from Fisheries and Oceans Canada.  The review endorsed the basic design of the stock assessment and produced some changes for accuracy that will be introduced over the next year.

With regards to fisheries management, in the southern Gulf snow crab fishery, a consultative process takes place annually with regular stakeholder participation to review stock assessment outcomes and fishery management.  This consultative process will be particularly important in the near term to support the implementation of the Precautionary Approach.  Of note, Fisheries and Oceans Canada, in consultation with stakeholders and external expertise, has developed peer-reviewed reference points as part of the overall Precautionary Approach Framework.  This consultative exercise will continue through the development and implementation of harvest control rules.

Recommendation 4

That Fisheries and Oceans Canada continue discussions with the Area 19 Snow Crab Fishermen’s Association to develop an updated co-management plan that recognizes the investments made by the Area 19 Snow Crab fisherman in the belief that the terms of the original co-management plan would be adhered to until its expiration in 2013.  An updated co-management plan should also respect the principles of the Area 19 Snow Crab Integrated Fisheries Management Plan for 2005-2013 and the Precautionary Approach Decision-making Framework that was introduced in 2010.

Response:

The Government supports this recommendation.  Fisheries and Oceans Canada will endeavour to meet with Area 19 representatives to update the co-management plan to adhere to the terms of the original plan where possible.  An updated co-management plan will also reflect the Precautionary Approach Framework that was introduced in 2010, the adoption of a southern Gulf-wide ecosystem-based integrated fisheries management plan, and the principles of the Area 19 Snow Crab Integrated Fisheries Management Plan for 2005-2013 as appropriate.

Recommendation 5

That Fisheries and Oceans Canada review its fisheries management decision-making processes and timelines to ensure that (a) all fleets have meaningful input in the advice prepared for the Minister, (b) the processes are more transparent, and (c) the final decision is made and communicated to all parties involved, including the processing sector, at least 30 days before the fishing season is set to begin.

Response:

The Government supports this recommendation.  Fisheries and Oceans Canada takes seriously its obligation to ensure fisheries management decision-making is inclusive and transparent.  The snow crab fishing industry is involved in both departmental science and management processes.  Fisheries and Oceans Canada is willing to discuss crab management issues with stakeholders at any time during the management cycle and takes into consideration stakeholder input in advice prepared for the Minister.

Fisheries and Oceans Canada is taking steps to solidify and build upon measures to increase the transparency of fisheries management decision-making.  The Department is working to ensure transparency throughout the decision-making process, from decision inputs and guides, to decision outputs and feedback.  Work in this area is reflective of the Department’s continuing commitment to integrating the views of stakeholders into decision-making and earning the trust of Canadians.

Fisheries and Oceans Canada is also moving towards multi-year science advice and management planning.  Stabilized shares, agreement on science methodology and reference points, and predictable harvest control rules once established will provide fish harvesters with predictability and stability, minimize regulatory burden, and allow them to pursue long-term business planning, sustainable fishing practices and, where necessary, fleet rationalization.  Multi-year planning will therefore also increase the efficiency with which decisions are made and improve the amount of time in advance of a fishing season that decisions are announced.

Fisheries and Oceans Canada is committed to making decisions and communicating them to stakeholders in a timely manner.  The speed of the decision-making process is dependent upon several variables, including the time needed to collect scientific data and when these surveys can be launched (i.e. time of year, ice conditions).  Further, the data collected must be analyzed and peer-reviewed before it can be finalized.  Nevertheless, Fisheries and Oceans Canada will endeavor to deliver quota decisions 30 days prior to the opening of the fishery.

Recommendation 6

That Fisheries and Oceans Canada initiate discussions with all snow crab fleets on the principles and mechanisms to be used for adjusting allocations throughout the abundance cycle of the resource to ensure the long-term viability of all fleets.

Response:

The Government supports this recommendation in the context of industry self-adjustment.  In transforming to an operating environment characterized by stability, predictability and transparency and to set the conditions whereby the fishing industry can make informed business decisions for the long-term, Fisheries and Oceans Canada recognizes that fleet viability is enhanced when allocations are stable and operators are given the freedom to self-adjust to meet changing market and environmental conditions.  The expedition of the decision-making process through stabilized shares, agreement on science methodology and reference points, and predictable harvest control rules once established, will improve the ability of snow crab fleets to move to a market-based mechanism and self-adjust as needed.  In the near future, Fisheries and Oceans Canada will engage stakeholders, including snow crab harvesters and Aboriginal groups to identify tools and policies that will be required to achieve this goal.

Recommendation 7

That Fisheries and Oceans Canada review its current approach to resolving disputes between fleets or licence holders, identify successful models for resource allocation agreements among stakeholders, and determine whether these models can be applied to the management of snow crab.

Response:

The Government supports this recommendation.  Fisheries and Oceans Canada is transforming fisheries management in a way that would see industry assume a greater role in self-management.  This approach will lead to greater stability and predictability for industry, and allow for better business planning and decision-making with a focus on longer-term sustainability and value generation. 

Fisheries and Oceans Canada will explore other resource allocation models and their feasibility in the Canadian context. 

Recommendation 8

That the Government of Canada table in the House of Commons, a bill to renew the Fisheries Act that would: (a) provide guiding principles and fisheries objectives for long-term sustainable fishery harvests and a viable fishing industry, (b) provide criteria and establish processes on which access and allocation decisions would be made, and (c) require transparency in all decisions made by the Minister of Fisheries and Oceans under the Act.

Response:

The Government supports this recommendation in principle.  The renewal of legislation is desirable, but is only one vehicle by which progressive changes can be achieved.  Through the modernization of fisheries management, Fisheries and Oceans Canada is taking strides to implement the principles which will lead to economically prosperous and ecologically sustainable fisheries.  By way of context, two recent attempts have been made to renew the Fisheries Act in the past.  Bill C-45 was introduced in 2006 and died on the order paper with the prorogation of Parliament in September 2007.  Bill C-32 was introduced in November 2007, and died on the order paper with the dissolution of Parliament in September 2008.

Recommendation 9

That the Government of Canada, in collaboration with the governments of the Atlantic Provinces and Quebec, support an industry-led rationalization plan for the snow crab fishery (publicly funded where appropriate) that must take into account regional needs and requirements.

Response:

The Government partially supports this recommendation.  Fisheries and Oceans Canada is of the view that fleet rationalization in the snow crab industry should be industry-led.  This will help to remedy issues of over-capacity in the fishery and help to better position the industry in a globally competitive market.  A rationalization plan developed and implemented by industry will best account for regional needs and requirements.

Sufficient access to capital is a necessary precondition for rationalization; however, this remains a challenge for many operators.  Fisheries and Oceans Canada continues to work with the financial community to increase access to capital and has implemented measures to improve the industry’s attractiveness to investors.  Moreover, Fisheries and Oceans Canada has made policy changes to support industry self-adjustment; recent policy examples include the fishing enterprise combining measure, the licence stacking measure, and the buddy-up measure (a temporary merging of operational activities in order to reduce costs).  Fisheries and Oceans Canada continues to promote industry-led rationalization and remains open to exploring new tools and policies to create conditions for a sustainable and competitive industry. 

Provincial Governments can play a role in rationalization and Fisheries and Oceans Canada will work with them where opportunities exist and as appropriate.  The Government does not support the notion of publicly funded rationalization programs using federal government funds.

Recommendation 10

That the Government of Canada, in collaboration with the governments of the Atlantic Provinces and Quebec, taking into account any rationalization plan for the snow crab fishery, develop a strategic plan for the intergenerational transfer in the fishing industry. Among other things, the plan could discuss: (a) loan programs for new fishermen, (b) independent financing and the use of licences as collateral, and (c) new rules that would allow fishermen to better manage investments in their enterprises.

Response:

The Government supports this recommendation and underscores the importance of policies to facilitate self-adjustment and to attract private investment.  Fisheries and Oceans Canada has already put in place a number of these key policies.  

Fisheries and Oceans Canada has developed and implemented several measures that support intergenerational transfers in the snow crab and other fisheries.  For example, to foster a more attractive investment environment and facilitate access to loans, the Department introduced a Notice and Acknowledgement System that allows financial institutions to stay apprised of activity on the licences of debtors.  This measure affords financial institutions time to deal with clients and their outstanding debt obligations before licence or quota transfers take place, adding an element of assurance to loans.   

The Supreme Court of Canada’s decision in Saulnier further builds upon the assurance provided by the Notice and Acknowledgement System.  In response to the Saulnier decision, Fisheries and Oceans Canada has developed a process for recognizing the rights trustees in bankruptcy and secured creditors may have in licences to fish issued by the Minister.  Fisheries and Oceans Canada has and continues to work with the fishing industry and lenders to ensure that its response to the Saulnier decision is well understood.

Fisheries and Oceans Canada has also taken steps to enable fishers to better manage investments in their enterprises.  One notable example is the Issuing Licences to Companies Policy, which came into effect in April 2011, and allows inshore fishers to transfer licences to their wholly-owned companies.  A number of benefits associated with this policy have been identified including: a favorable corporate tax rate; the ability to pay down debt; a stronger structure for seeking capital from private financial institutions; limited liability; and a mechanism for succession planning and intergenerational transfers.

Looking forward, further improvements can be made to the current regulatory and policy environment to make the snow crab fishery more attractive to investors.  To this end, Fisheries and Oceans Canada is working towards untangling and streamlining the complex web of rules that govern licensing in an effort to remove roadblocks to economic prosperity while leaving in place regulations that protect the sustainability of the resource. 

Recommendation 11

That the Government of Canada, in partnership with the governments of the Atlantic provinces and Quebec and industry representatives, encourage the promotion of snow crab domestically and abroad, through the creation of an Atlantic-wide multi-stakeholder marketing research and advertising council and/or through an already existing body serving a similar purpose.

Response:

The Government supports this recommendation.  The Government of Canada’s responsibilities for fisheries management and the promotion of the seafood industry are shared between Fisheries and Oceans Canada, which manages fisheries and aquaculture production, and Agriculture and Agri-Food Canada, which has the mandate for the international market development of fish and seafood.

Agriculture and Agri-Food Canada delivers on its fish and seafood mandate through various services and support, including the Seafood Value Chain Roundtable, an industry-led forum which works collaboratively to increase the competitiveness of the sector and export market growth.  The Seafood Value Chain Roundtable is co-chaired by industry, Agriculture and Agri-Food Canada and Fisheries and Oceans Canada, and includes representation from each component of the fish and seafood value chain (harvester, processor, exporter, food service, retail, associations), and other federal and provincial governments and agencies.  The snow crab industry is represented at the Seafood Value Chain Roundtable.

Agriculture and Agri-Food Canada also provides other services and support for marketing which the snow crab industry can use to position itself in domestic and international markets.  These include: the provision of sector expertise; trade commissioners; trade missions and shows; the European Seafood Exhibition; the Canada Brand Program; and support for international marketing strategies through the AgriMarketing Program.

The AgriMarketing Program provides funding to Canadian producer, processor and exporter associations (generally at a 50-50 cost sharing ratio) to develop and implement strategies and undertake activities such as international market development, export promotion, brand building and industry-to-industry trade advocacy.  Eligible recipients include national industry associations, alliances and technical marketing support organizations.  This program ends on March 31, 2013.  If the snow crab industry is organized on a national basis and has a long-term international strategy in place, it could be eligible for AgriMarketing Program support. Agriculture and Agri-Food Canada is also currently exploring options to continue supporting industry efforts to generate exports opportunities through market development programs.  These programs would be available to the Canadian fish and seafood sector including snow crab.

Fisheries and Oceans Canada supports industry stakeholders through advocacy at trade shows, summits and conferences and high-level bilateral engagement, including Ministerial engagement.  The objective is to improve market access through communication with decision makers and opinion leaders.