State of the BC Seafood Industry Report David Egan BC Seafood Summit 2001

Transcription

1 State of the BC Seafood Industry Report David Egan BC Seafood Summit 2001 May 29, 2001 Vancouver BC

2 Introduction This report has been prepared by PricewaterhouseCoopers as a background paper for the BC Seafood Summit The profile was developed from published sources and from consultations with BC Seafood Alliance members. Special assistance was provided by staff of BC Fisheries and BC STATS in its preparation. The report profiles the recent economic performance of the commercial fisheries and aquaculture sectors of British Columbia. It focuses on significant changes during the last decade and describes opportunities and challenges. The analysis includes processing but excludes the Aboriginal food fishery and the recreational fisheries. By way of context, world fisheries production and trends are also described. All production and wholesale value figures for 2000 are preliminary. Summary Highlights The BC seafood industry is one of the largest industries in British Columbia, ranking behind other primary sectors such as forestry, mining and agriculture. Historically one of the backbones of the economy, it remains an important economic contributor to coastal areas and communities. The BC seafood industry has emerged from a difficult restructuring period a more competitive industry. While they no longer dominate, the salmon and herring fisheries are still vital to the industry s processing and harvesting infrastructure. Throughout the 1990s, groundfish and shellfish harvests and aquaculture increased in significance. In 2000, seafood was the province s number one food export with an export value of $903 million, an increase of 6% from 1999 when total exports of seafood were valued at $850 million. Over 90% of the value of all BC seafood production is exported, making the industry an important generator of foreign exchange. The wholesale value of BC seafood production remained fairly stable for the last five years, hovering around the $1 billion mark. In 2000, wholesale value was $987 million. During the past decade, a number of factors have led to higher average unit values, including more responsiveness to markets and achievement of greater efficiencies. A number of sustainability initiatives have also been introduced. State of the BC Seafood Industry Report 2000 PricewaterhouseCoopers 1

3 World Fisheries Production & Trends World fisheries production has been increasing at a rapid rate. World fisheries production in 1998 the most recent year for which data are available was 117 million tonnes, up 15% from Commercial fisheries contributed 86.3 million tonnes or 74% of the 1998 total. Aquaculture contributed 30.9 million tonnes or 26% of the 1998 total. While commercial catches declined 4% over the period, aquaculture production increased by 151%. Three quarters of the world fisheries production is for food. An important trend has been toward greater consumption of fresh/chilled products. Improvements in seafood storage and transportation and rising incomes are resulting in increased international trade of these products. Seafood exports were 39 million tonnes in 1998 valued at US$51 billion. The largest exporters are Thailand and Norway. These two countries export about 15% of the world total. Canada in contrast exports about 3% of the world total. Japan and the US are the largest importers, consuming over 40% of all imports. The number of people employed worldwide in fisheries and aquaculture has more than doubled since Subsidies continue to be a factor in undermining the sustainable use of the wild fish resources in many parts of the world. Overcapitalization of many fisheries has resulted in significant restructuring of fishing fleets in several areas of the word, including for example the European Union. Most of the future increases in fish production are expected to come from the expanding aquaculture sector. The contribution from capture fisheries will depend on the effectiveness of fisheries management. During the 1990s, incidental catches or by-catches emerged as a major issue in the management of global fisheries throughout the world. BC Industry Profile Fisheries represent one of the largest primary industries in British Columbia, ranking behind other primary sectors such as forestry, mining and agriculture. It remains an important economic contributor to coastal areas and communities. No longer dominated by the salmon and herring fisheries, the industry is a far cry from what it looked like even a decade ago. Many more species of finfish, shellfish and plants are now harvested commercially, and aquaculture has emerged as a significant segment. Even with a significant decline in overall volumes of commercial catch in BC, the overall value of seafood production has remained relatively stable. The past decade has illustrated how vulnerable the fishery can be to the physical environment. Global warming is having a fundamental impact on fish populations. Weather patterns like El Nino also affected fishing patterns in certain years. During the past decade, the BC seafood industry experienced a dramatic decline in the salmon fishery that led to a fleet restructuring. The decline was from poor economic viability and poor salmon returns. By the end of the decade the size of the salmon fleet had been trimmed by about half. Processing was also rationalized. Fundamental shifts in the marketplace for salmon also occurred. The development of salmon farming as a significant worldwide industry has resulted in the BC salmon fishery becoming a smaller factor in world markets. B.C. Fisheries Production (thousands of tonnes) Source: B.C. Fisheries and Fisheries & Oceans Canada World Fisheries Production (millions of tonnes) Source: FAO 4 State of the BC Seafood Industry Report 2000

4 BC Seafood Wholesale Values The wholesale value of BC seafood has remained fairly stable over the past five years. It was $987 million in 2000, down 2% from 1999 levels. The wholesale values include imported raw fish that are processed in BC and re-exported. The value of production peaked in 1994 and has hovered around the billion dollar mark since. While salmon fisheries declined throughout the 1990s, groundfish and shellfish harvests and aquaculture increased in significance. Total harvests in 2000 were 200,000 tonnes. The most significant gain in terms of value was by the farmed salmon industry, from $170 million in 1990 to $309 million in Farmed salmon is now the largest segment in terms of value. Its share of the total wholesale value in 2000 was 31%, up from 8% in Total wild landings of salmon declined by over 80% during the decade. Wholesale and export values for BC wild salmon products also declined proportionately. Commercial salmon s share of wholesale value declined from 55% in 1990 to 19% in Landings of sockeye, the most highly valued of the salmon fisheries, declined the most. Recent signs are for an improvement in salmon productivity, however. Along with salmon, the roe herring fishery is the most traditional of the fisheries, accounting for about 15% of wholesale seafood in BC. Virtually all of the roe is exported to Japan. Herring spawn-on-kelp volumes also increased during the decade, as did production from the food and bait fishery. Shellfish production, both wild and farmed, increased in share value from 7% to 16% during the decade. Species harvested include clams, crabs, geoduck clams, oysters, sea cucumbers, shrimp and prawns, and sea urchin. The groundfish fishery increased its share of wholesale value from 14% to 19% during the decade. The groundfish fishery includes hake, rockfish, sole, sablefish, turbot, dogfish, ling cod, pollock and halibut. The largest increase in BC fish landings during the 1990s was from hake, the result of a large biomass and a developing market for surimi. The year 2000 proved to be an anomaly, as a sudden drop in hake catches occurred. Hake was originally developed as a joint venture fishery involving foreign fleets. Onshore processing that began on the west coast of Vancouver Island in the 1990s was encouraged by government policy. The halibut fishery gained in economic importance during the past decade. Its wholesale value increased from $28 million, or 3% of the total in 1990, to $65 million, 7% of the total in Sablefish and halibut are the most highly valued of the groundfish species on a per unit basis. Sablefish is highly prized in Japan and most of the harvests are exported to this country. Rockfish, especially in live form, has also become a very valuable species. Major Specie Groups Share of Wholesale Value Source: B.C. Fisheries Wholesale Value of B.C. Seafood by Major Specie Groups ($ millions) Source: B.C. Fisheries

5 Exports BC seafood products are in high demand in world markets. Total exports were $903 million in 2000, up 6% from This total represents approximately 1% of world exports. During the 1990s, the vast majority of the value of BC seafood production was exported. While quantities exported are down by over 10% since 1990, average prices rose by over 25%. As wild salmon exports fell, shellfish exports doubled in share value. Groundfish exports increased 75%. Halibut increased to 7% of total exports. Significant shifts in export market destinations occurred during the past decade. These reflect the shift in species composition and changing market patterns. Exports to the US increased from 27% to 58%. About 85% of the farmed salmon and over 90% of wild halibut is sold in fresh form and exported to the US. Shellfish exports to the US also increased, mostly from crab exports. Exports to Japan declined from 45% to 26%, reflective of the drop in wild salmon production, increased competition from farmed Chilean coho, and a weaker Japanese economy. In contrast, exports to China increased to 8%. Sales to China were mostly geoduck clams exports to Hong Kong. Exports to the European Union declined from 21% to 5%. Domestic Consumption The BC seafood industry contributes to Canadians high quality of life. Canadians, British Columbians included, are eating more seafood and BC seafood products are among the most popular with them. Reasons for this popularity relate to the health benefits of seafood and improvements in quality. In Canada, per capita consumption of seafood is almost 10 kilograms, still well below that of red meat and poultry. BC supplies less than 10% of the total seafood consumed in Canada. The decline of wild salmon on the west coast and cod on the east coast has meant a greater reliance on imports, especially shrimp. Employment Employment in the industry declined during the past decade. Total employment fell by over 20% and the number of commercial fishers has declined by close to half. Signs are that the employment situation in wild fisheries has stabilized, however. While there are fewer jobs, they are of longer duration and involve more value-added processing. Employment is often difficult to gauge in the industry because of the seasonal nature of fishing and processing. The industry employs an estimated 15,000 people in full or part-time positions coastwide. There are over 9,000 licenced harvesters. Over 4,000 jobs are in valueadded processing at the over 200 licensed processing plants in the province. The processing job total is down significantly from 7,500 in the mid 1980s. Direct jobs involved in primary aquaculture production are now close to 2,000. The 1990s: A Decade of Change The economics and structure of the BC seafood industry has changed significantly in the 1990s. This section highlights some of the key changes. Salmon Fishery Restructuring By the end of the decade, and after the completion of several rounds of a salmon vessel licence reduction program, the number of BC commercial salmon fishing licences issued by the Department of Fisheries and Oceans had declined by about half. A new management scheme was also introduced for wild salmon requiring a salmon licence for each area. Multiple licences (stacking) are permitted. This also had the effect of reducing the fleet size. The fleet is therefore well positioned to respond to changes in salmon abundance with a smaller, more manageable and more economically sustainable fleet. B.C. Seafood Exports Source: Statistics Canada Per Capita Consumption of Fish in Canada Edible Weight (kg) Source: Statistics Canada, Food Consumption in Canada 4 State of the BC Seafood Industry Report 2000 PricewaterhouseCoopers

6 Processing Industry Restructuring The decline in wild salmon also had an impact on the processing sector. In 1990 there were several major processors of salmon. By 2000 the largest and oldest fish processing company, BC Packers Ltd., had wound down operations, closing its Richmond plant and selling the majority of its remaining assets to the Canadian Fishing Company (Canfisco). Prior to that the operations of the Prince Rupert Fishermen s Coop had also been amalgamated with those of JS McMillan Fisheries. After some restructuring, JS McMillan Fisheries switched its emphasis to groundfish, and Seafood Products of Port Hardy closed down. The Seafood Products plant in Port Hardy has been reopened as a smaller custom processing plant and no longer includes any canning operations. Ocean Fisheries is still a significant processor of salmon and herring, but with a greater emphasis on groundfish and imported products. Significant shifts in the location of processing jobs occurred in the 1990s. Processing jobs in the North Coast and the Lower Mainland declined. Raw material sourcing of salmon, herring and halibut from Alaska has helped stabilize some of the employment base in the Prince Rupert area. While the total number of fish processing plants declined on Vancouver Island, total employment increased due to aquaculture. New processing plants dedicated to processing farmed salmon have developed. In addition, smaller processing operations for other species and value-added products have been created. IVQ Fisheries Individual Vessel Quota (IVQ) management schemes are being used around the world to deal with fisheries that have experienced common property problems such as overcapitalization in harvest capacity. Catches are divided between harvesters based on a pre-season allocation of fish to each vessel or operator. The herring spawn-on-kelp fishery was the first fishery to be organized under an individual quota system. Since 1989, eight other commercial fisheries (geoduck clams, red and green urchins, sea cucumbers, halibut, sablefish, groundfish trawl and roe herring) have adopted some form of individual vessel quota management. The flexibility of the timing of the harvests resulting in higher average landed prices is very apparent with these fisheries, particularly geoduck clams, halibut and sablefish. These fisheries are now providing economic rewards well beyond those possible under older fisheries management schemes. The shift from derby-type fisheries to IVQ management has also provided an effective and verifiable means for managing the catch according to sustainable fisheries practices. Expansion of Aquaculture During the period, the salmon farming industry expanded output from 27,300 tonnes to 43,900 tonnes. The value of this production now exceeds the value of wild salmon by a considerable margin. With the exception of the relocation sites and the pilot project sites that are part of the Salmon Aquaculture Policy, no new tenures have been granted since Farmed salmon represent the province s most significant food export group. In addition, farmed Atlantic salmon from BC are the most significant fish export from Canada, a position previously occupied by either Atlantic cod or BC wild salmon. Production is regionally diversified around Vancouver Island, with Campbell River emerging as a regional supply centre for the industry. The US is the fastest growing market for farmed salmon. The BC farmed salmon industry, with no access to new sites, is hard pressed to maintain its relative market share in this market. It competes principally with Chile in the US market, and saw its share of the US import market decline from 32% in 1999 to 25% in During the last decade, the shellfish farming industry s production was relatively stable. Oyster production showed some increases, while clam production increased steadily during the past five years. In contrast, efforts with scallop culture have been less successful due to hatchery bottlenecks. Total production of cultured shellfish was approximately 7,200 tonnes in The wholesale value of the production was $20 million. Oyster production made up over 80% of the quantity and 59% of the value of the production. Through the BC government s ongoing Shellfish Development Initiative, several new areas for shellfish culture are being opened up. U.S. Imports of Farmed Salmon Market Share by Value Source: USDC, Seafood Market Analyst State of the BC Seafood Industry Report 2000 PricewaterhouseCoopers 5

7 Value-added Processing During the past decade, the BC seafood industry demonstrated that it was able to do more with less. Higher average unit values were created through a combination of factors, including greater responsiveness to markets. BC Fisheries estimate that close to 60% of the wholesale value of BC fish products (excluding farmed salmon) can be attributed to value-added processing. Greater emphasis is also being placed on both preserving freshness and quality with live, fresh and frozen products. For example, while Geoduck product is validated dockside, it is quickly graded and shipped to its destination. Sablefish is frozen on board to effectively freeze freshness in. Green sea urchins are shipped whole and live to Japan in specialized containers. A significant trend in the salmon farming industry has been with value-added production. About 30 % of the production in 2000 was converted to some value-added form, mostly fillets. Processing capacity in shellfish culture has also increased and become more specialized. There has been a major shift toward oysters on the half shell raised in suspension culture systems during the past five years. Opportunities & Challenges The BC seafood industry has emerged from a difficult adjustment period as a more competitive industry. Its new strength comes from being more diverse and better managed. In addition, the trimmed down salmon fleet is poised to take advantage of an improvement in salmon returns. While the seafood industry has considerable scope for market development, innovation is needed in product development, new fisheries and sustainability initiatives. As significant as the opportunities are, the industry still faces many challenges. Indeed, this decade promises as much change as the last. A key difference, however, is that as the industry moves forward it perhaps has a better opportunity to be more strategic and unified than in the past. Improved Regulatory & Business Climate An improved regulatory and business climate for the BC seafood industry would be aided by an overarching industrial strategy for ocean industries and better planning. What is also necessary is the establishment of licensing, permitting and resource allocation policies that encourage investment, provide certainty of rights and reduce user conflicts. The aquaculture industry needs detailed and in-depth integration of substantive federal/provincial regulatory processes. Harmonization of federal/provincial activities and electronic reporting can also reduce regulatory red tape. First Nations Participation Since its inception, First Nations have had an important involvement in the commercial salmon industry. Various types of commercial licences totalling more than 1,000 are specifically allocated to First Nations. First Nations participation in some fisheries such as salmon and herring spawn-on-kelp is also high. Several new fisheries and aquaculture present new opportunities for First Nations. Many First Nations are becoming involved in shellfish aquaculture. At least five First Nations are also now involved in aspects of salmon farming. The economic development potential for First Nations will include harvesting, aquaculture and processing. Treaties also have the potential to profoundly impact management. The challenge is to have 6 State of the BC Seafood Industry Report 2000 PricewaterhouseCoopers

8 First Nations share equitably in the wealth created from a sustainable and profitable industry. Communication of BC Seafood Quality, Safety & Sustainability Three important themes are influencing consumers perceptions of (and demand for) seafood. These are the awareness of the health benefits of seafood, the concern for its safety and the awareness of the marine environment. From a consumer standpoint, BC seafood is considered among the safest in the world. The responsibility for fish inspection is now with the Canadian Food Inspection Agency (CFIA), formed in The focus of the food inspection programs is to verify that food traded commercially meets strict federal standards for safety, quality, handling and labelling. CFIA also certifies that exported food meets foreign country requirements where there are reciprocal inspection/ certification agreements with other countries. CFIA introduced a Quality Management Program (QMP) in 1997 for all federally registered fish processing plants. QMPs have been developed and implemented for commercial fisheries and aquaculture. A trend has been toward eco-labelling of seafood. In the fall of 2000, Alaska became the first US fishery to be certified as sustainable by the Marine Stewardship Council (MCS), a program originally begun by the World Wildlife Fund. The eco-label certifies that fish have not been over-fished or harvested in ways that harm the ocean ecosystem. The BC seafood industry is responding to this initiative by starting the process for having the BC salmon fishery certified by MSC. A significant challenge for the BC seafood industry is how best to communicate the industry s quality, safety and sustainability. Conflicts Between Commercial Fisheries & Aquaculture Salmon farming has been a controversial industry in BC since it underwent expansion in the 1980s. The industry has made great strides in establishing its legitimacy. Completion of the Salmon Aquaculture Policy Framework should put this subsector in a position for further expansion. Many other species have culture potential, some of which are commercially harvested. The challenge will be to enable the greatest benefit to be obtained from the use of coastal space, without undermining the rights of existing fishers, and to manage the resources in an environmentally sustainable fashion. Trade Barriers Both tariff and non-tariff trade barriers are likely to continue to affect the BC seafood industry. Close cooperation between industry and government will be necessary on trade issues. Recently, the BC industry has gained access to the Australian market for salmon and the Japanese market for oysters. It remains effectively shut out of the significant US market for cold smoked salmon. Other Challenges Demands of the marketplace and environmental issues have led to some interesting innovation in products and practices during the past decade. The BC industry is challenged to continue this trend. As well, it needs to attract investment and skilled workers in harvesting, aquaculture and processing, and to improve worker safety. State of the BC Seafood Industry Report 2000 PricewaterhouseCoopers 7

9 About the BC Seafood Alliance The BC Seafood Alliance is an umbrella group representing the majority of BC s seafood industries. The Alliance was formed in 1999 to improve the public awareness of the seafood industry in BC and the business climate for investors. It promotes a safe, environmentally sustainable and economically viable seafood industry in BC. Member Associations include: BC Salmon Farmers Association Canadian Sablefish Association Deep Sea Trawlers Association Fisheries Council of Canada Pacific Halibut Management Association Pacific Prawn Fishermen s Association Pacific Sea Cucumber Harvesters Association Pacific Salmon Harvesters Society Pacific Urchin Harvesters Association Spawn-on-kelp Operations Association Underwater Harvesters Association Associate Non-voting Members BC Salmon Marketing Council Canadian Groundfish Research and Conservation Society Pacific Coast Fisherman s Mutual Marine Insurance The BC Seafood Alliance acknowledges the generous support of the following organizations in sponsoring the B.C. Seafood Summit 2001: B.C. Ministry of Agriculture, Food and Fisheries Federal Office of the Commissioner for Aquaculture Development Fisheries and Oceans Canada Fisheries Renewal B.C. 8 State of the BC Seafood Industry Report 2000 PricewaterhouseCoopers

10 Your worlds Our people 2001 PricewaterhouseCoopers. PricewaterhouseCoopers refers to the Canadian and U.S. firms of PricewaterhouseCoopers LLP and other members of the worldwide PricewaterhouseCoopers organization.