Nova Scotia lobster buyers seek compromise with Ottawa on company licences

Next month, the season opens in Canada's biggest lobster fishery but even before the first trap hits the water, there's big news in southwestern Nova Scotia.

It is a proposal from a coalition of prominent lobster dealers who want the federal government to grant them the authority to give loans to fishermen like a bank or any other financial institution.

"They could put out the money, they would hold the mortgage and then they would have a business arrangement with [the] person owning the licence where they would, I assume, buy the product," said Robert Thibault, spokesperson for the newly formed Western Nova Scotia Lobster Dealers Coalition.

"If the owner or captain wanted to get out of the arrangement, they would pay off the debt and move on as they do with the banks," said Thibault, a former federal fisheries minister in Jean Chretien's Liberal government.

Speaking from a lobster pound at Meteghan wharf, he said southwest Nova Scotia could be a test case.

The proposal comes as the Trudeau government cracks down on "controlling agreements," which inshore fisheries groups claim are rife in southwestern Nova Scotia's lucrative lobster fishery.

DFO considers controlling agreements an end run around its policies that local fishermen control inshore licences and the benefit from them.

The department's position was bolstered in May 2017 when it won a Federal Court of Canada case, upholding the right of the fisheries minister to strip Labrador fisherman Kirby Elson of a snow crab licence because he refused to scrap a controlling agreement with two fish processors.

That case is under appeal.

How the secret deals work

A fisherman holds the inshore licence — as required by DFO — but in name only.

In many cases, the boat is supplied by a company that also reaps the profits generated from the catch. That arrangement involves a written, secret controlling agreement between the fisherman and company.

In Elson's controlling agreement, the processors controlled his licence even in the event of his death.

Message to Ottawa: 'We are ready to talk'

Part of Thibault's job is to negotiate with Ottawa about the ban on controlling agreements.

"I think it's important if that's not what we want to happen, that we find a legal way, an above-board way for the buyers and the fishermen to get into contractual agreement," said Thibault.

That could be a tough sell.

This summer, Fisheries Minister Dominic LeBlanc promised to enshrine in law the policies that prohibit controlling agreements.

And the department continues to investigate and crack down on licences that it deems suspicious.

Nevertheless, the coalition is determined to find some common ground.

"The signal we are sending to them is we are ready to talk," said Thibault.

"We have to find resolutions. We have to recognize how important it is for this industry down here to have security of supply — reasonable security of supply," he said.

"A way they can enter into contractual agreements that permits them to make the investments. There is no other industry that would not have that."

Who is in the coalition

BMC is one of nine businesses in the coalition. All of the buyers are well known dealers in the area.

The coalition's principles are Reg LeBlanc, Wedgeport Lobster; Shawn Everett, Nautical Seafoods; Joel German, Deveau Fisheries; Dickie Malone, Woods Harbour Lobster Co. Ltd.; Corey Mood, James L. Mood Fisheries; Robert Newell, Strictly Lobster; Cedric Robichaud, BMC Seafoods; Peter Swimm, Simply Fresh Seafoods; and Terry Zinc of Xsealant Seafood.

What happens to existing controlling agreements?

Thibault doesn't like to use the phrase "controlling agreement," preferring the term "instrument" instead.

He said the buyers group does not have a position on what happens to existing controlling agreements.

"The differing instruments that have been used in the past that may have to be changed or wound down. According to the minister, that is in the hands of the minister and industry and that can all be discussed and negotiated," he said.

"We haven't taken a position on that point. What we are interested in as the coalition is to look at security of supply and the way you can do it."

An industry awash in money

Buyers have long lent money to fishermen to get them into the fishery, but the cost of getting in has changed dramatically with bigger boats landing more lobster, worth more money.

In 2015-2016, landings in Lobster Fishing Area 34, from Shelburne to Digby, were estimated at 28,467 tonnes, worth $417 million.

"The prices [of entry] have got so high — the licences, the capital required to get in — that there was a necessity to find some of instrument to protect the person lending the money, so those instruments came out."

Other fish to fry

The coalition is not focused exclusively on controlling agreements.

It would like to see financial thresholds and volumes established before a company would be allowed to export out of province.

Thibault said that would elevate the industry's standards.

He did not draw a direct link to the situation in St. Marys Bay this summer where dealers are suspected of buying from an allegedly illegal First Nations lobster fishery.

"I don't know that that is related, but it is illustrative. If you have an industry with criteria that requires you to have a certain level of performance, a certain level of commitment to operate, you will not want to risk that to do some shady deals," he said.

"You'll want to protect your $10-million, $20-million investment, your customers internationally who depend on your reputation and your sense of ethical values."

DFO response

CBC News forwarded a synopsis of the dealers' coalition proposal to DFO for comment.

DFO said it planned to provide a response to CBC's inquiry, but in the meantime, sent the following statement: "DFO remains committed to working with industry to ensure the benefits derived from fishing licence continue to flow both to the harvesters that hold them as well as to their coastal communities through DFO's licensing policies."

The coalition revealed its existence as a lobby group in a news release last week. The Independent Fish Harvesters Federation, which represents some inshore fishermen in the region said it's too early to comment on the coalition's proposals.