'I don't think anything shady is going on,' seafood industry analyst says

A U.S.-based seafood industry analyst says there's nothing wrong with the Newfoundland and Labrador government giving companies waivers to export unprocessed fish.

Newfoundland and Labrador is the only province in Canada with minimum processing requirements.

John Sackton, the editor and publisher of seafoodnews.com, told the St. John's Morning Show the price for cod has been so low that the only way a processor can make money is to deliver perfect quality fish.

"I think the important question is, what are you trying to accomplish with the minimum processing requirements, and is that really helping the processing sector?" he said.

Sackton said a lot of the groundfish that's landed has not made the cut.

He said sending frozen fish to be processed in places like China is a way to cover costs.

"I don't think anything shady is going on. I think that when [you're] processing fish, you're getting all this raw material in, and the key thing you're thinking about is, 'Is the quality of the raw material sufficient to hit the markets that I have to hit?' If it's not, you have to look for alternatives," he said.

"To me, the ideal situation is not to exempt the minimum processor requirements — but the ideal situation also is to land 100 per cent high-quality fish. So, I really think you have to link the two together."

A CBC Investigates report found that companies have been asking for, and getting, more exemptions from the province's minimum processing requirements.

Most of the exemptions have been for cod and yellowtail flounder.

Exemptions for yellowtail flounder

Sackton said there have been many exemptions "in the name of processing" when it comes to yellowtail.

"[Ocean Choice International] is harvesting this small yellowtail and it really produces a very small fillet, like a 1.5 ounce filet, and the idea of doing that effectively in Newfoundland is very, very difficult," he said.

"The plants in Newfoundland can handle the larger fish, but it's very hard for them to handle small fish. And also there's a market in Asia for these small fish in the whole form. So there's certain markets where it actually strengthens the processing industry to gain these exemptions."

Shipping to China

Sackton said it's a complicated issue, and that the easiest thing would be for fish to be frozen and shipped to China.

"A lot of areas in the world where there were important inshore fisheries have kind of trended in that direction," he said.

"But for any country, or state, or province like Newfoundland, or Alaska, or Norway that has a high value on their inshore fishery, you have to do things that support processing in that location. And so, for that reason, I think efforts to support the processing sector and prevent everything from going offshore, are very important."

Sackton said cod caught off the province's shores last year created a unique situation. 

"In order to produce cod in Newfoundland and Labrador for ... the world market, it has to be a very high quality fish — a loin product; it has to be really perfect — in order to compete with Norway or Pacific cod from Alaska and so forth. But some of the cod that's landed, didn't meet that quality standard. So in that case, the primary processor who produces it wouldn't buy it. So what are you going to do with it?" he said.

"In an ideal world, you'd want the harvesters to land far and away the greatest percentage at that highest quality level. But when that doesn't happen, it really creates a problem for processors."

Sackton said the future of the province's processing industry is in producing high-value, high-quality items, and not the low-quality cod that was produced years ago.