The fishery that doesn’t float

Michael Clugston May 3 1982

The fishery that doesn’t float

Michael Clugston May 3 1982

The fishery that doesn’t float


Michael Clugston

The same story echoes through hundreds of small fishing communities at the edge of the Atlantic provinces. “Right now, things are pretty desperate. The only thing that pulled us through last year was a halfdecent lobster season in the fall,” says Joe Richman, a 34-year-old fisherman from Little Harbor, a hamlet tucked away in one of the innumerable narrow bays of southern Nova Scotia’s Shelburne County. Nine years a fisherman, Richman has managed to pay off his open 10-m boat, which makes him luckier than most. “You hear about guys selling the works and fishermen who, if they don’t meet their payments this month, will have their boats repossessed. A lot of people, 1 feel, are not going to make it.”

In a country where prairie drought is front-page news at harvest time, and where the ravages of forest fires cause widespread hand-wringing, the troubles of the Atlantic fishery have drawn scant attention. But behind the clichés of wooden boats and sou’westers lies an industry of critical financial importance—the direct employer of some

80,000 people in the region. At the best of times, the industry falters. Its costs are high, its revenues low, and it is in such close step with the American economy that a dip in the U.S. can send it toppling.

Last winter brought the third resounding thump in 15 years, and this time there is more at stake than ever before. As costs and interest rates spiralled, three-quarters of New Brunswick’s fishermen were unable to meet their boat payments. Says Omer Chouinard, a spokesman for the Maritime Fisherman’s Union, based on New Brunswick’s Gulf of St. Lawrence coast: “All the fishermen are broke.” In Newfoundland, a belt of unusually cold water blocked the groundfish from coming to shore, where the inshore fishery normally employs about 15,000 full-time fishermen, and average incomes plummeted below $4,000. Financially strapped processing plants in St. Anthony, Nfld., Georgetown, P.E.I., and other centres—often the only source of income for thousands of people—are not likely to open. “If 1982 is as bad as 1981—and the signs are certainly pointing that way—then I think a good proportion of the industry would fail,”

says Ken Campbell, president of the Fisheries Council of Canada, the fish processors’ organization. “I guess you’d have to call that catastrophic.”

In the past, the federal government has bandaged up the industry with money. But those days are over. When the wreckage of the 1981 fishing season became obvious last fall, Prime Minister Pierre Trudeau dispatched his number-1, free-ranging troubleshooter, Michael Kirby, to find out once and for all what ailed the industry. Well over 100 studies and reports have already sought out its fatal flaws and suggested remedies, only to be ignored. But since Kirby will follow up on his task force by becoming the next deputy minister of the federal department of fisheries, he may have a chance to change the basic structure of the industry.

It won’t be easy. For one thing, the business is uniquely fractious. Governments, fishermen and companies fight among themselves with depths of contempt and mistrust rooted in generations-old grievances as well as in current squabbles. It is also uniquely complicated by regulations and administrative structures. The federal department’s budget of $425 million equals

roughly a third of the total exports of the fishery. If the regulatory system were streamlined, said the Economic Council of Canada in a report last December, the wealth from the coastal fishery could be increased fourfold.

In its technology and scope, the fishery ranges from the medieval to the space age. The estuaries of New Brunswick are dotted with weirs whose designs have not changed for centuries, in locations jealously guarded by the same families for generations, with the same names: Star of Hope or Aggravation. There, fish are trapped in the maze of poles and nets and harvested by people who simply cart them off across muddy flats at low tide.

The buyer is often a small family processing plant that stays open for only a few weeks in the summer. At the opposite extreme is the dynamic fleet of herring seiners that will slip out of Yarmouth, N.S., in the evening-armed with electronic scanners that detect the fish— to return the next morning with a harvest calculated to fill a specific order. They may sell to one of the Big Four vertically integrated companies that own more than 90 per cent of the offshore fleet and land half the region’s catch.

The Big Four are to the East Coast fishery what Inco is to Canadian nickel, yet they too are caught in the cost-price squeeze. Not even the might Nickerson and Sons of North Sydney, N.S., has been spared. Only five years have passed since owner-brothers Jerry and Harold Nickerson became overnight paragons of enterprises by purchasing the controlling interest in National Sea Products Ltd., one of the country’s largest food processors. But National Sea lost at least $2.3 million on its fishing

operations in 1981. And last winter Nickerson mortgaged its 29 deep-sea trawlers to borrow working capital—on top of debts already mounting to more than $100 million. In Newfoundland, the Lake Group Ltd., which has teetered on the edge of collapse for years, was saved at the last minute by a $5-million government handout last winter.

The size and dominance of these companies make their financial health a matter of general concern in the region—and sometimes cause for panic. In Grand Bank, Nfld., the 100-member Concerned Citizens’ Committee descended on the harbor one rainy night last November, intent on physically preventing their town’s fishing trawl-

ers from being sailed away by the bankrupt owners, the Lake Group. Although that was a false alarm and the Lake Group has been resurrected, thousands of Atlantic Canadians still worry about the future of the Big Four. “The problem is that they are the biggest and the ugliest people in the valley,” says Allan Billard, executive director of the Eastern Fishermen’s Federation, which represents 10,000 inshore fishermen. “Nickerson is only one of several hundred companies, but if he goes down, with him go North Sydney, Lunenburg, Shippegan, Grindstone and other towns.”

The companies would be flattered to be called “ugly.” After all, they are used to far more pungent epithets in this sour-tempered industry, where the main battle line is drawn between the offshore and the inshore. The big companies own the offshore fleet—about 160 trawlers capable of carrying as much as 300,000 tonnes of fish. They stay at sea for as long as two weeks, scraping the bottom with prodigious nets. The inshore boats are no more than 20 m long and return to their small villages after each day’s fishing a kilometre or two at sea, where they tend lobster pots, gill nets, cod traps and other family-owned operations. Each sector thinks the other is getting too much fish.

Under attack from both sides is federal Fisheries Minister Roméo LeBlanc, although he has clearly sided with the inshore. One LeBlanc measure permitted the small operators to sell fish directly over the side to foreign ships, denying the big companies the freezertrawlers they want to keep in step with foreign producers. Another barred the offshore from the Gulf of St. Lawrence, making it an inshore preserve. There have been published reports that the processors have asked the prime minister to fire LeBlanc, so strong is their antipathy toward him. Much of Michael Kirby’s success will rest on whether or not his “final solution” will be acceptable to both sides.

When “hang-ashores” (as Newfoundlanders call people who do not fish) picture the fishery, they usually conjure up visions of such glamor species as lobster, salmon and scallop. But the heart of the business and its biggest moneymaker are the lowly cod, haddock, and flatfish, generally known as groundfish, since they pass their days at the sea bottom. Almost three-quarters of Newfoundland’s fishery comes from these lugubrious-looking species. Although groundfish account for less than half the catch in Nova Scotia and even less in new Brunswick and P.E.I., they still provide more than half the income for the entire fishery. And so it is principally the groundfish sector (and the dis-

astrous herring fishery as well) that the Kirby task force will probe.

“It always seems to be the groundfish that leads the industry up and down,” says Art May, the assistant federal deputy minister of fisheries who has gone to work for the task force. “Why? That’s the $64-million question. If we knew why it happened we should be able to prevent it from happening.”

“It” began early in 1981 when the offshore fleets landed heavy catches of groundfish. They were unable to sell much to the Boston market, where, in the recession, the demand for fish at $4.40 a kilo withered with poultry and pork available at a fraction of that price. Prices dropped catastrophically, and tonnes of groundfish, especially, were unloaded at even lower distress prices. Traditional European markets had largely withered because of unfavorable exchange rates and tariff and non-tariff barriers, so the fish companies watched their cash flows strangle and inventories bottleneck. National Sea Products’ working capital shrunk from $20.8 million to $500,000 between January, 1980, and October, 1981. By August, the companies began to close their fish plants and tie up their trawlers, and the next two months saw thousands of workers and fishermen laid off. Although business remains relatively healthy in P.E.I. and parts of New Brunswick (thanks to a variety of fish and an abundance of lobster), the outlook is grim. Says Joe Casey, a fishplant owner in Digby, N.S.: “You have to handle the whole Bay of Fundy full of fish to make a profit.”

Tom and Gene Wilson, brothers from Grand Manan Island, N.B., were caught up by the collapse in the herring market. They had paid more than $400,000 in 1979 for a seiner that would start them in the new food-herring business. But Atlantic herring had been selling to Europe simply because the European stocks had been overfished to the brink of eradication. In the past two years the European fish have returned to the market—and the prices paid to Canadian fishermen dropped by 40 per cènt. Says Tom: “We’ll try to hang on, I guess, but at those prices we just won’t be able to make it.”

This gloom has gathered just four years after the federal government set out on a forceful campaign to create the “Age of the Fishery.” Vast fleets of foreign trawlers were shunted off the Grand Banks when Canada claimed its 200-mile limit in 1977. Then, Canadian catches were strictly limited by quotas calculated—correctly, as it turned out— to bring the ravaged stocks back to plenitude. When Canada quickly came to lead the world in fish exports, a pervasive euphoria set in. “Fish could do for us what oil has done for Alberta,”

proclaimed Frank Moores, then premier of Newfoundland. Shares of National Sea Products jumped from $4.33 to $21 in 1978, and speculation ran to the day when fish could rival wheat as an export.

It was the reckless expansion of the late ’70s that created many of today’s problems. In Newfoundland, the number of full-time fishermen climbed to around 17,000 despite the warnings in a massive 1978 study that said the inshore could support no more than 8,500 fishermen. Throughout the region, the number of fish plants increased almost threefold between 1976 and 1981. Meanwhile, the number of workers doubled, and the fleet jumped from 29,000 to 34,000. The overhead was mounting relentlessly, as costs for fuel, petroleum-based netting, and wages continued their steep rise. Even though fishing gear became more efficient, and trawler catch rates went up, the costs were outstripping the income. Since the fishery borrowed heavily just to carry on normal business, it was already vulnerable to high interest rates. The way was open for all the calamities of 1981.

Since Canadians ranked a lowly 25th in the world as fish eaters,the fortunes of the business would have to come from exports. But the U.S. market grew softer still, and a “hard” currency reduced exports to Europe. “These economic shocks might be tolerated for a year or two by a healthy industry,” wrote Peter Nicholson, a former Nickerson executive who has joined Kirby’s task force, in Policy Options magazine last winter. “But the consequences have been catastrophic for much of the East Coast groundfish fishery .... Without fundamental change the industry will not recover.”

“Structural change” has become the buzz word in the fishery, the mandate of the Kirby group. Most people agree that the fishery is schizophrenic, being run as a sort of social welfare policy by government, but as private enterprise by the companies. In 1974, LeBlanc declared, “I intend to return the fishery to the fishermen,” and threw his weight in with the inshore operators, against the offshore. But the policy became a massive issuance of fishing licences, as government made the fishery an employer of last resort in an area of chronic high unemployment. Overall income became badly diluted, and even fishermen’s representatives say the gates were opened too wide. Explains Richard Cashin, president of the Newfoundland Fisher-

men, Food and Allied Workers: “Unless [government is] prepared to open the public trough indefinitely [it] must recognize that there is a limit to the number of people that can be employed.” The offshore companies have been so infuriated by LeBlanc’s increased quotas to the inshore, that they have been known to tie up their boats in protest. Their costs have, in fact, escalated drastically as their boats are forced to work in increasingly distant waters, when nearshore grounds are allotted to small operators. “Somebody has to make a clear choice,” says Bill Wells, president of the Fisheries Association of Newfoundland and Labrador Ltd. “If it’s going to be this social fishery, then there’s only one answer: come with money. Or

if you say it’s going to have to pay its own way, then you’re going to have to buy out a lot of fishermen, a lot of plants, reduce, change your methods of operation.” Kirby’s solution is sure to lie somewhere between those two extremes, since one would be too expensive socially, the other economically.

The inshore fishermen land their catch in an enormous glut during the summer, and the big processing companies try to stretch the sales fairly evenly over the year—giving them heavy carrying charges. But this wins little sympathy from inshore spokesmen. “You can’t harvest blueberries in the summer, because there are no blueberries there,” says Billard. “Similarly, you can’t expect to get codfish in November, because the cod aren’t there. You’ll always have blips in the landings, and the processors should be able to accommodate them, the way it’s done when agri-

cultural harvests come in all at once.” The instant a season opens, the fishermen rush to fill their boats and to sell their catch, intent more on volume than on quality. The competitive pressures drive fishermen to buy bigger, faster, more expensive boats. Ultimately that does not increase their catches, since everyone else does the same—but it does increase their costs. The federal government has introduced new quotas this year that will guarantee a fisherman a certain minimum amount of fish, removing some of the urgency. But it still hasn’t forced the industry to “fish to markets.” “It’s the only industry I’ve ever heard of where you just catch it and wonder what in the hell you’re going to do with it after you’ve caught it,” maintains Bill Morrow, president of National Sea. “I’m against the idea that we have to catch every fish that goes past a fisherman’s front door.”

As the task force travels around the region, hearing the opinions of dozens of groups in the industry, Kirby’s list of problems and grievances can only stretch. And for their part, Atlantic Canadians can only hope that by the time his report reaches cabinet this summer, there will be enough of the fishing industry left to rebuild.

But whatever the cure— fewer boats, unified marketing, or all manner of structural changes—it will be useSless if nobody wants to buy Canadian fish, with its reputation for spotty quality. Substandard shiploads, of Canadian herring and groundfish turned much of both the Japanese and European markets against the Atlantic Canadian product. Although not all Canadian fish is of inferior quality, it’s hardly surprising that some watery, blood-marked or torn fillets emerge from a system in which many fish are still unloaded with the traditional pitchforks that puncture the flesh. What’s more, fish can sit on docks in the hot sun when the summer glut backs up the fish plants, or be squashed at the bottom of the enormous trawls on the Grand Banks and then left to sit in the hold for a week before processing. “The industry has been based on moving huge volumes of low-quality fish,” says Joe Richman, who last month helped organize a fishermen’s association to push for quality-improvement regulations. “If we don’t start producing better-quality fish, probably none of us will survive.”

David Folster

Kennedy Wells