Newfound Resources Limited

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P. o. Box 13695
St John's, NL
Canada A1 B 4G1
Telephone: (709) 579-7676
Facsimile: (709) 579-7668
E-Mail: [email protected]
Mar. 01,2012
Ernst & Young LLP
100 Queen St,Suite 1600
KIP 1K1,Canada
Dear Sirs:
RE: External Review of Northern Shrimp
Thank you for the opportunity to participate in the two recent Northern Shrimp Review sessions . Please
fmd listed below our brief summary points on these sessions and our position as it relates to the
Minister's request to you for advise on " whether policies , methodologies and principles on applying
TAC reductions amongst fleets and special allocation holders were respected and appropriately applied to
the 2010 and 2011 decision making process for Northern Shrimp"
1. By way ofbackgfOund., NRL was the firstpmticipantto lose codcq,uota when ROmern cod stocks.began
in the early 90's. While there was no stated UFO policy at that time, DFO respected the
historical rights ofthe traditional sector(s). The total elimination of our groundfish quotas was devastating
to our company but the traditional participants were respected and remained , albeit for only a short
to decline
2. The expansion of the northern shrimp industry in 1997 occurred at a time when the groundfish collapse
was still fresh on everyone's mind. I personally recall the extensive and exhaustive consultations involved
in addressing not only quota levels and increased access but also the many debates on developing a
mechanism to address eventual declines since it was pessimistically and broadly assumed that what goes
up,must come down. The February 23rd,2012 submission from our industry association,CAPP,presents
a detailed listing of numerous Ministerial statements,DFO Backgrounders, IFMP references and other
historical facts that accurately describe the attention given to the anticipation of TAC reductions and the
resulting clearly stated policy that entrants would lose quota in the reverse order that it was received. It is
disingenuous in the extreme for anyone who participated in those various working groups, public
meetings and other consultations in 199617 to position that the policy was unclear. In actual
fact , several non-offshore participants at the Review meetings - including aboriginal groups and the
largest onshore processor - acknowledged that LIFO was indeed clear from the beginning .
3. The reasons for abandoning LIFO , as presented to the Review Panel,are either blindly contrary to the
mounds of evidence or are based on the notion that one group of CanadianslNL'ers are somehow
more worthy than others to fish shrimp. Conveniently forgotten in adjacency debates, for example, is the
fact that most offshore licences and SA's are held by Newfoundland and Labrador entities. In addition,the
offshore fishery employs 600 full time workers , mostly from NL and 600 person years from the
traditional harvesters are comparable or exceed the employment years from the relatively new small boat
sector. These offshore workers - both unionized and non-unionized - deserve the same respect from their
representatives and Provincial Government as their inshore counterparts and this recognition was sadly
absent during this Review process.
Opponents of LIFO seem oblivious to the fact that quota reductions must come from somewhere. We
appreciate the fact that quota reduction bring economic hardship but it is irresponsible to simply disregard
NewfouDd Resources Limited
the legitimate claims of other stakeholders. It is not sufficient to simply state what one opposes in the
context of quota reductions without stating specifically what one is for - i.e. where will quota reductions
come from and how will such decisions be made. Allocations to the offshore fleet have been minimal
1996 (10/90 in SFA 6; 20/80 in SFA 7 ). In actual fact, from 1996 to 2009 the combined TAC in
6/7 has increased by 99,665 mt of which only lO,906 mt (641 mt per licence ) was allocated to the
offshore. There is also some mythical notion that the offshore has still managed to acquire windfall quotas
in the northern regions. In
1996 NRL's licence
which excludes the quota today categorized
7 - will be 2209 mt !!
2211 mt of quota (37,600117). Our 2012 licence as paper fish in SFA 1 and assuming LIFO reduction in SFA
These facts are presented not as a guide to quota reductions since the IFMP plan is
clear in that regard but rather to demonstrate that objections to LIFO are baseless at every level.
The idea of a new sharing formula was floated during the Review by LIFO opponents. The concept was
vague presumably because supporters would not want to forego receiving
80- 90%
of subsequent stock
recoveries. In any event, the IFMP already includes a clear sharing formula and the vast majority of the
participants accept that this formula was agreed and is better than the common state prevalent in many
other quota reduction debates - acrimony and strife. The Northern Shrimp Fishery is one of the best
managed fisheries in the world and the traditional offshore participants have invested hundreds of
millions of dollars for large vessels that require a year round business to survive. These vessels are getting
old and will need to be replaced soon at prices exceeding
million per vessel. Investors and fmancial
institutions have based past support on a clear IFMP and replacement vessels will be impossible to
acquire ifDFO casts aside the IFMP . The idea of a full time business employing full time workers should
be a goal of any fishery and the implied notion that capital intensive offshore vessels can survive by
operating part time with seasonal workers is a destructive position that would prove disastrous to the
o£fskore fiskery andthe special,allocationJlolderswfio DenefitHom,otisaore pamneFsmfls .
6. Regarding special allocation holders, it was clear from some comments at the first Review meeting that
of SA's was seen as a partial solution. The IFMP, nor any of the previous news releases or
Backgrounders, does not prioritize new entrants (other than via LIFO) and in 2000 Minister Dhaliwal
actually stated that" LIFO would be applied to these (new) allocations, as it will be applied to all other
temporary access to this fishery". SA's must be treated exactly the same as all other new entrants when
TACs decline.
7. Finally, I would like to point to DFO's recent major initiative to " develop a suite of policies and tools
aimed at modernizing fisheries management to ensure Canada's fisheries are more sustainable,
come "
modernization). An extract from that paper reads "Only in exceptional cases, such as in response to legal
obligations and
stemming from
Department become involved in adjusting already established sharing arrangements." In the case of
Northern Shrimp, the IFMP addressed quota declines at the time when the quota increases were awarded.
There have been
3 quota reductions since that decision was made and the IFMP!LIFO
was followed in all
cases. Participants in the northern shrimp industry should continue to respect the IFMP and DFO must
continue to follow the IFMP if the industry is indeed to
competitive in the long term.
Thank you for the opportunity to present our views.
Brian McNamara
remain sustainable, prosperous and globally