Alternative Management Models - Progress Report

---

NORTHUMBERLAND STRAIT INITIATIVE

---

ALTERNATIVE MANAGEMENT MODELS
WORKING GROUP

---

PROGRESS REPORT

May 2007

1. INTRODUCTION

A Fisheries Forum to examine the economic issues for fishers in the Northumberland Strait was held in Charlottetown, Prince Edward Island on July 31, 2006. The Forum was hosted by the Province of Prince Edward Island and the Provincial Ministers of Fisheries for Prince Edward Island, New Brunswick, and Nova Scotia were in attendance. The Federal Fisheries and Oceans Minister also attended the event.

The objectives of the Fisheries Forum were as follows:

• To identify solutions to the key economic challenges facing the commercial fishers of the Northumberland Strait in 2006 and beyond; and

• To identify and initiate a course of strategic and policy measures, including actions for industry renewal that would result in an economically and ecologically sustainable fishery in the future.

Following the Fisheries Forum, a Deputy Minister’s Steering Committee was established to focus efforts in three key areas: (i) habitat and resource protection, (ii) alternative management models, and (iii) economic diversification.

The purpose of this report is to provide the Deputy Minister’s Steering Committee with a progress report on the work carried out by the Alternative Management Models Working Group. The Concept Note prepared by the industry sub-committee also contains elements relevant to the Economic Diversification Working Group proceedings.

2. CONTEXT

The management of the commercial fisheries of the Northumberland Strait, and the protection of their vital habitat, is the responsibility of Fisheries and Oceans Canada – Gulf Region. The work of the Department is guided by a strategic vision for the fishery and for fishers, and includes important and ongoing efforts that are aimed at revamping the policy and legislative frameworks that will be relied upon to manage the Strait’s fishery of the future. The management of the fishery occurs within a framework of engagement and shared stewardship between DFO, the Maritime Provinces, industry, aboriginal communities, and other stakeholders.

The design of an improved management blueprint will necessitate the close collaboration of all parties with an interest and stake in the economic and social well being of coastal communities and families.

The Working Group on Alternative Management Measures was established in recognition that:

• the fishery resources of the Strait are sustainable if properly managed; however, resource declines in some fisheries and in some areas pose a growing threat to the short and medium-term economic viability of a number of fishing enterprises;

• there is growing recognition among governments and some fishing industry participants that new fisheries management measures are required, and changes introduced that better reflect the dynamics at play involving fishery resource levels, the viability of the current number of fishing enterprises, and the rules and policies which govern how fishing is carried out; and

• First Nations and off-reserve aboriginal communities enjoy important rights of access for food, social, ceremonial, and moderate livelihood purposes.

3. MEMBERS OF THE WORKING GROUP

The list of members of the Working Group is attached as Appendix “A”

4. WORKING GROUP MANDATE

The Working Group on Alternative Management Models was mandated to examine practical and affordable alternatives for the management of key commercial fisheries occurring within the prescribed area of the Northumberland Strait (see Appendix B) such that the short, medium and long-term economic viability of fishers and the sustainability of fisheries are achieved. Work plans were drafted to address the following nine activities:

1. Explore adequacy of existing fisheries management/conservation measures;
2. Fisher self-rationalization proposals (licence combining, transferable traps);
3. Community-based management models as a basis for fisheries sustainability;
4. Licensing policy and administrative procedures;
5. Concept of territorial user rights (and possible IQs);
6. Permanent retirement of lobster and scallop licences within the area of interest;
7. Resource allocations as utilized for licence retirement purposes;
8. Explore capacity building opportunities for fisher organizations; and
9. Explore the use of incentives in the implementation of new measures.

5. PROPOSED WORK PLAN, PRIORITIES AND STATUS

(a) ACTIVITIES 1, 4, AND 9

The nine areas of interest, as outlined in the Terms of Reference, formed the basis for the proposed work plan. In reviewing these areas of interest, the following activities were viewed as “enablers” in achieving the desired results. Rather than undertaking a comprehensive review of each of these elements, it was proposed and accepted that the Working Group would consider each of them in the review of the remaining activities:

• Activity No 1 – Explore Adequacy of Existing Fisheries
                              Management/Conservation Measures
• Activity No. 4 – Licensing Policy and Administrative Procedures
• Activity No. 9 – Incentives to Support/Implement Alternative Measures

For each of the remaining activities, current management measures, licensing policies and administrative guidelines will be reviewed in terms of identifying barriers to the implementation of alternate measures and/or identifying potential changes that may be required. As well, incentives would be identified for each specific alternate measure proposed for implementation.

It was also agreed that Activity No. 7 (Resource allocations as utilized for licence retirement purposes) be removed as a stand alone activity recognizing its linkage with Activity No. 6 on licence retirement. Activity 6 was expanded to include temporary retirement of licences as well as permanent retirement.

Any alternative measures recommended by the Working Group will be channeled through the existing advisory committee structure for implementation.

(b) ACTIVITY NO. 2 – SELF-RATIONALIZATION PROPOSALS

One of the goals of the commercial fisheries licensing policy is to achieve a balance between harvesting capacity and resource availability. Although departmental policies designed to limit both entry to the fisheries and harvesting capacity have had some success in achieving this balance, several fleets are still too large, threatening their longterm economic viability and the sustainability of the fisheries they exploit.

Self-reliant commercial fishers need to be able to adjust to fluctuations in resource abundance as well as in markets. It may be appropriate to consider adjustments to the licensing policy to allow fishers to acquire additional effort/gear/quota while maintaining the owner/operator principles by requiring the gear to be fished personally by the licence holder.

Suggested activities include:

• review current individual transferable trap models;
• review “pooling” / combining licence options;
• consider the issuance of licence to an “entity”/community of fishers; and
• consider a rotational concept – by fisher or by fishery.

PRIORITY: None

STATUS: At the request of working group members, this activity has been set aside until such time as the Licence Retirement question has been addressed.

(c) ACTIVITY NO. 3: COMMUNITY-BASED MANAGEMENT MODELS

In the Gulf Region, we predominantly have coastal community-based activities; however, management structures are based along either regional, provincial or ecosystem models. The concept that “communities of fishers” might be a better model to base the development of management measures has been explored and is in fact a current concept supported by the MFU in Eastern New Brunswick (ENB) through their communities of interest initiative. Other jurisdictions or areas in the Gulf Region, such as Area 19 Snow Crab and LFA 26A Lobster in Gulf Nova Scotia, have moved to a more communitybased approach.

Community-based models will require the identification of smaller, homogenous, likeminded “communities of fishers”, or fishers within a group of ports, that have similar objectives and are willing to consider the broader long-term objectives of the community rather than their own individual short term needs. This type of model may require subdividing existing fishing areas to allow such groups to develop their own unique brand of Integrated Fisheries Management Plans.

Suggested activities include:

• analyze existing initiatives for strengths/weaknesses/best practices;
• define/identify potential communities;
• develop a process for determining objectives for community-based models with global objective of “sustainable communities”; and
• develop and implement a lobster community-based pilot project.

PRIORITY: Second priority in conjunction with Capacity Building.

STATUS: A detailed work plan needs to be developed for this activity.

(d) ACTIVITY NO. 5 – TERRITORIAL USER RIGHTS

In almost all fisheries in the CORE fleet sector, fishers fish on a competitive basis. Alternate models may include providing exclusive territory for species (such as lobster) where fishing grounds could be identified on a licence for one or a group of fishers, or providing specific allocations of a species to a licence holder (for example dividing a fleet sector’s tuna quota into a number of pounds per licence holder).

Should there be interest to establish a quota basis for species currently fished competitively, such as lobster, the potential exists to have individual quotas by species. Alternatively under the current competitive model, individual caps or limits could be established.

Suggested activities include:

• explore existing practices within the region;
• conduct a literature review; and
• develop a model for pilot project.

PRIORITY: Low - The Working Group members indicated an interest in learning more about this topic but do not consider it a priority at this time.

STATUS: Further discussions on the work plan will be required. Activity is on hold for time being.

(e) ACTIVITY NO. 6 - PERMANENT & TEMPORARY RETIREMENT OF LOBSTER, ROCK CRAB AND SCALLOP LICENCES WITHIN THE AREA OF INTEREST (INCLUDES USE OF RESOURCE ALLOCATIONS-ACTIVITY 7)

A key problem in the target area is that there are too many fishers for the current resource levels. The objective of a licence retirement program would be to allow fishers to exit the fishery, either permanently or temporarily, thereby providing relief to the stocks or increasing the economic viability for those who remain. The key challenge in this approach is where to find the monetary resources to finance such a retirement program, whether funding comes from federal government, provincial governments or from the industry themselves.

In addition to permanent retirement from the fishery, the development of a retirement program would need to include the capacity for a fisher to exit temporarily without restricting his ability to return. In both cases, program criteria would need to take into consideration the future of the community where reductions may be significant as well as to be able to respond to a potential rebound should the current situation turn around and a significant increase in the resource occurs.

Suggested activities include:

• prepare a concept paper including basic elements of program, anticipated results, and potential funding requirements;
• review past and existing retirement programs for strengths, weaknesses and best practices;
• identify possible sources of funding including federal government, provincial governments, and industry, either directly or through allocations; and
• develop a comprehensive retirement program.

PRIORITY: Throughout the process, industry representatives voiced a strong and consistent message that licence retirement, preferably government-funded, was their top priority.

STATUS: Work associated with this activity resulted in the development of a document entitled “Concept Note for Northumberland Strait and Surrounding Area – Inshore Fishery Renewal and Development Program”. A copy of the Concept Note is available on the Northumberland Strait Initiative website.

(f) ACTIVITY NO. 8: CAPACITY BUILDING FOR FISHER ORGANIZATIONS

Sharing responsibility and decision-making power over fisheries management with resource users will require a comprehensive and dedicated effort by all governments and the industry. Changes are required to enable resource users to take on new roles and responsibilities in managing their fisheries. Financial resources, if available, could be used by legitimate organizations to improve their capacity to lobby and inform their members, ensure the maintenance and rigor of accountability processes and ensure organizations maintain their ability to operate in a democratic manner.

Suggested activities include:

• develop criteria for defining the types of organizations that can legitimately participate in fisheries management processes;
• explore options to collaborate with other federal departments, provincial governments, academia and resource users to develop a strategy for co-management/capacity building;
• review existing provincial legislation, identify strengths and weaknesses, and if required, develop new legislation in support of fisher organizations (include mandatory payment of fees);
• explore options/develop guidelines for reimbursement/ compensation of volunteers (time and expenses); and
• DFO should consider industry requirements when requesting program funding.

PRIORITY: The Working Group considered this activity a second priority. The Concept Note includes some elements on Capacity-building; however, a detailed work plan needs to be developed to fully address this activity.

STATUS: Industry representatives gave clear indication that capacity building of fishers and fisher associations is essential to continued participation in fisheries management initiatives, and in particular co-management. Most associations are experiencing significant difficulties participating in the various committees, covering the related expenses, and communicating information to their membership in addition to their regularly-assigned tasks. In recognition of the problem, the Co-chairs agreed to bring the issue to the attention of the Steering Committee and to seek direction on moving forward on this issue.

6. FISHERY RENEWAL AND DEVELOPMENT PROGRAM

At the request of the Alternative Management Models Working Group, an industry subcommittee was formed to develop a concept note on the proposed elements to be included in a licence retirement/rationalization program. The following provides summary information extracted from the concept note entitled: “NORTHUMBERLAND STRAIT AND SURROUNDING AREA INSHORE FISHERY RENEWAL AND DEVELOPMENT PROGRAM”. A copy of the entire document is available on the Northumberland Strait Initiative website.

(a) CONTEXT

The proposed concept note aims to respond proactively to the question:

Will industry and government be the drivers of a preventive renewal process or the victims of a worst-case scenario (similar to the magnitude of the Cod industry crisis) that would translate into an economically unsustainable lobster industry in the medium term?

The importance of the lobster fishery of the Northumberland Strait and surrounding areas for coastal communities of New Brunswick, Nova Scotia and Prince Edward Island is well known. In addition, many rural coastal communities depend greatly on fishery resources for their core economic activity. It is clear that fishing revenues are at an alarming level in some areas and costs are rising dramatically.

Many discussions have aimed at explaining the phenomenon that is occurring in the Northumberland Strait ecosystem. Scientists and fish harvesters seem to have arrived at the consensus that there are grave concerns for lobster recruitment in the Strait and that the sustainability of the resource could be jeopardized in the not-so-distant future if the status quo remains. Some suggested possible problem areas are:

• effort increase on resource;
• climate changes;
• external land influences and environmental damage; and
• marine eco-system changes.

Many agree that no one aspect is responsible for the decline in resources and in species recruitment.

Existing or new programs implemented by governments and industry have served some purpose to curb the effects on the resource decline and on the viability of inshore fish harvesters, but it is now clear that the extent of the problem and external factors have rendered the available means insufficient (i.e. state of the resource, snow crab prices, etc.). A great deal of energies has been invested by industry stakeholders to create structures and in some cases to implement multi-facet plans to act proactively for the long term sustainability of the resource and for inshore fish harvester viability.

(b) PROPOSED SOLUTION

The proposed solution aims to achieve a sustainable, economically-viable and internationallycompetitive inshore fishery for the benefit of those communities of the Northumberland Strait of New Brunswick, Prince Edward Island and Nova Scotia and for surrounding areas.

The proposed program objectives include:

• The overall long term viability of inshore fish harvester enterprises through immediate action;
• Provide attractive incomes for existing and new potential industry participants;
• Provide for better adaptability of the inshore fleet to changing resource and market conditions;
• Provide for economic diversification and skill diversification opportunities for the inshore fleet and in turn for coastal communities;
• Improve conservation and sustainability of the resource and the overall state of health of marine ecosystems with diminished efforts on the lobster resource;
• Create non-harvesting industry stability for skilled workers (with improved resource sustainability);
• Provide for a crucial fundamental step in preparation for a potential implementation of the “Ocean to Plate” concept: economic viability in the aim for a more comprehensive and integrated fishery management and also better collaboration between industry sectors; and
• Provide for a quality product in a more competitive environment.

(c) PROPOSED PROGRAM COMPONENTS

The Northumberland Strait and Surrounding Areas Inshore Fishery Renewal and Development Program proposes the following components to achieve desired outcomes:

1. Rationalization – Permanent Effort Reduction component
2. Economic and skills diversification component
3. Market exploration, expansion and information seeking component.
4. Organizational capacity component

1. Rationalization - Permanent effort reduction (licence retirement) component

Effort reduction is believed by industry and many stakeholders as crucial to having real impact towards the renewal of the Northumberland Strait and surrounding areas’ lobster industry; a licence retirement program is seen as the only option to achieve the results with the necessary immediacy.

There has rarely been such a consensus amongst industry participants in the Atlantic Provinces as there is now on the need for an immediate licence retirement program. It is suggested that such a program should aim for the permanent retirement of approximately 20% of existing core lobster fish harvesting fleet. Industry agrees that a licence retirement program must be accompanied by other measures to have the desired impact.

The following highlights were agreed upon by industry and are proposed for the program:

• Industry preference for a federally-funded licence retirement program, but other alternatives would include industry contributions in various forms as explained below under Proposed Budget Requirements and Funding Options;
• the immediate reduction of the number of licences for LFA 25, LFA 26A, LFA 23 and LFA 26B by a maximum of 20%; this would involve a total of approximately 451 retired lobster licences. Thus, 20% of the lobster fleet from each province involved would be retired as a result of the program and other micro-divisions would be determined by respective organizations;
• licence retirement program would be implemented in a three-year process;
• a co-management program between governments and industry, administered under same basic criteria and system;
• the program would include all core licences of a fishing enterprise but coastal licenses could be retained;
• the program would include only commercial licences (communal commercial licences would be excluded);
• the program would not include boats or equipment; and
• the program would be based on voluntary participation.

Proposed Budget Requirements for Section 1 and Funding Options

Item	Details	Option 1: 100% Govt- financed at 20% of licenses (in ‘000s of $)			Option 2: 50% governments / 50% industry (in ‘000s of $)
-	-	2008	2009	2010	2008	2009	2010
Government contribution	2255 licenses x 150,000$x 20% and 238 licenses x 150,000$ x 10%	23,740	23,740	23,740	11,870	11,870	11,870
Industry financial contribution		0	0	0	11,870	11,870	11,870
Other industry contributions		-	-	-	-	-	-
TOTAL per year		23,740	23,740	23,740	23,740	23,740	23,740
TOTAL - governments		71,220			35,610
TOTAL - industry		0			35,610
GRAND TOTAL		71,220,000			71,220,000

• Funding Option 1: Industry recommends a program based solely on federal /provincial funding to retire 20% of licences.

• Funding Option 2: This option consists of having governments contribute 50% of the cost of the program and have remaining fish harvesters invest 50% of the costs for the program; the fish harvester investment would consist of a repayable loan stretched over a period of 30 years. Some industry counterparts believe that remaining fish harvesters could repay the loan through important increase in licensing fee, while others believe it should be repaid with net revenues generated from a permanent allocation of snow crab for 30 years.

It is to be noted that there were talks of self-rationalization by governments in recent forums and at various meetings of the Alternative Management Models Working Group. Industry has, as of this date, ruled out this option because it feels governments have a responsibility in the management of a sustainable resource and self-rationalization would negate this fact.

2. Economic and skills diversification component

As mentioned in other sections of the concept note, it is thought that the Northumberland Strait situation cannot be reversed with only a licence retirement program. In the course of the Economic Diversification Working Group meetings, three important themes were determined to be consistent with industry perspective in order to address the problems in the Northumberland Strait and surrounding areas.

1. Initiatives/projects offering jobs related to the fishery, entrepreneurial opportunities or skill diversification all of which should offer revenues to temporarily compensate for current viability deficiencies because of poor fish landings – for some projects, fish harvesters could be expected to surrender (bank) licences temporarily for one full season (immediate). Possible projects include: mapping, monitoring (diving), habitat reconstruction (HADD projects), other species research (herring, scallop dragging), habitat research, water quality/pollution research, environmental awareness, larvae movement research, species movement research, sediment analysis research, ghost trap recuperation, and protection co-monitoring.

2. Enhancement and aquaculture projects development or project creation (immediate and medium term). Suggested projects include: lobster seeding, lobster seeding monitoring and scallop and other species (mussels, oysters) enhancement and aquaculture.

3. Eco-tourism initiatives (long-term) such as: Create and promote “Fishery Route”, provide for specific aboriginal peoples involvement, work as interpretation agent on tourism sites on “Fishery Route”, recreational fishery quota, and recreational fishery regulations to provide access for tourism activities, and

4. Market intelligence, existing market and new market development (long-term) – see next section.

3. Market exploration, expansion and information intelligence component

General exchanges in the Economic Diversification Working Group on the issues of market changes and market potential revealed that while more immediate problems in the Strait area take precedence over markets, much can be done to improve market intelligence, sector relations, market research, exploration and expansion for inshore fishing products. It is believed that these actions should be for the benefit of not only Northumberland Strait fleets, but for the Atlantic Provinces inshore fishing fleets as a whole.

Ideas discussed include:

• International delegations (mix of inshore and other, processors and government representation) to gather information and seek new/expand existing markets while improving relationships between individuals representing the various groups;

• Fish harvester and representing organization exchanges between the various fishing regions of Canada (East – West, North – South);

• Participation of the inshore at the Canadian Centre for Fisheries Innovation Lobster Summit for harvesters to access more market intelligence and better understand market challenges (Seafood Value Chain Roundtable Initiative); and

• Entertain ideas for activities of the “Ocean to Plate” concept that include product and regional marketing, eco-labelling.

Proposed Budget Requirements for Sections 2 and 3

	Project	Cost (‘000s)
		Yr 1	Yr 2	Yr 3
Short-term initiatives	Banking of licenses pilot program (financial assistance in exchange for): Fishery Related Training program (Transport Canada) New or adjacent skills Training program Small Aquaculture businesses (scallops) Environment research and habitat restoration support work (DFO activities or other) Entrepreneurial opportunities (skills or start up)	3,125	0	0
	Community Economic Development Project Related to Fisheries Harvesting Sector: Herring quality projects Fishery coop development New species / market development Lobster enhancement facilities (see next section for costing)	2,493	0	0
Lobster and scallop enhancement	Facilities (Hatchery) development for each province	1,800	0	0
	Operating budgets for 3 startup years (for each facility)	450	450	450
	Sharing of Technology Consortium (cost for technology transfer) and logistics	200	50	50
	Offshore aquaculture (scallops, etc.)	450	450	450
Eco- tourism	Eco-tourism development (attached to Enhancement Hatcheries) for each province	200	200	200
	Development of a “Seafood route” and tourism marketing program/strategy for three provinces	200	200	200
	Development of Eco-tourism Project	600	600	600
Market intelligence, exploration and development	National and International Market Exploration, Expansion and Intelligence Delegations	100 210	100 210	100 210
	East to West Fish Harvester exchange program	50	50	50
	“Ocean to plate” activities Concept Development and cost recovery for impact to industry Eastern Canada Seafood marketing program	150	150	150
	SUBTOTAL	10,028	2,460	2,460
	TOTAL                                                                                     14,948

Additional details on these projects may be found in the Economic Diversification March 2007 Progress Report.

4. Organizational capacity (through co-management agreements) component

Discussions were held during the Alternative Management Models Working Group meetings on the capacity of organizations to effectively participate in co-management agreements. It is believed that if industry is to take on shared management responsibility delegated from the DFO or other institutions, the fishing organizations should be able to collect administration fees to enable the fulfillment of these responsibilities. All co-management agreements should therefore include a fee to reflect the need for new or use of existing staff and equipment required to achieve project objectives. The budget proposed in this document relates to co-management costs for this program only.

Proposed Budget Requirements for Section 4

Item	Details	Cost (in ‘000s)
-	-	2008	2009	2010
Co-management costs (administration fee) of program for industry	2255 * 250$ / year (LFAs 25, 26A and 23) 238 (LFA 26B) * 100$/year (based on co-management involvement	563 24	563 24	563 24
TOTAL		1,761,000

7. NEXT STEPS

The industry had identified two key elements that were important to moving forward on the working group initiatives - a clear policy statement on owner/operator and a decision on a licence retirement program.

On April 12, 2007, the Minister of Fisheries and Oceans announced measures to preserve the independence of inshore fleets in Atlantic Canada’s fisheries aimed at strengthening the owner/operator and fleet separation policies. These measures include a comprehensive approach to assist fishers to retain control of their enterprises. In most cases they eliminate "controlling trust agreements" and seek to enhance fisher’s ability to access financing from traditional lending institutions, such as banks.

With regard to the licence retirement program, the Working Group may wish to consider hiring a consultant to further build on the various elements of the Concept Note, with a focus on identifying possible funding options.

Working Group meetings will continue with the intent of furthering discussions on the various work plan elements; the next meeting is planned for late June 2007. The release of the FRCC report on lobster, scheduled for release sometime in June 2007, may provide an impetus for addressing some of the mandated activities of the Working Group.

This Progress Report provides an update on the activities that have taken place to date. The Northumberland Strait Steering Committee members are invited to offer any comments or suggestions for moving forward, as deemed appropriate.

APPENDIX « A »

ALTERNATIVE MANAGEMENT MODELS WORKINGGROUP MEMBERS

Allain, R.J. (Bob)	DFO – Co-chair
Allen, Wallace	GNS Fishermen’s Coalition
Angus, Randy	Mi’kmaq Confederacy of PEI
Brun, Christian	MFU / UPM
Cormier, Paul	NB MAPA
Drake, Ken	PEIFA – LFA 24 observer
Frenette, Ed	PEI Fishermen’s Assoc.
Hainer, Tim	Maritime Aboriginal Aquatic Resources Secretariat
Heighton, Ron	Northumberland Fishermen`s Association
LaBillois, Barry	Maritime Aboriginal Aquatic Resources Secretariat (MAARS)
Logan, Paul	North Nova Seafoods – NS Seafood Processors
MacInnis, Trevor	LFA 26B observer
Comeau, Rejean	MFU President Local 1 - – LFA 23 observer
MacIvor, Darryl	MFU – Observer LFA 26A
MacMillan, Robert	PEI AFA
MacRae, Mark	PEIFA – LFA 25
Malloy, Jeff	PEI Seafood Processors Assoc
Martin, André	MFU
Reardon, Clary	NSFA
Poirier, Jean-Eudes	MFU – Local 2 observer
Smith, Janet	DFO
Sock, Leon	Elsipogtog First Nation
Wallace, Kay	GNS Bonafide Fishermen’s Assoc.

APPENDIX « B »