Liberals risk loss of support in N.L.
In its annual report, Clearwater Seafoods warns shareholders that its international operations are subject to economic and political risk. The domestic operations were obviously not considered precarious — after all, what could go wrong when you have a friend in the prime minister?
A year ago, Justin Trudeau was pictured in Hangzhou, China, with Alibaba Group founder Jack Ma, waving around a Clearwater lobster that had recently been made available for sale on Ma’s e-commerce site T-Mall.
But politics is a fickle mistress. Promoting a growing Canadian seafood producer in Asia was a top priority when the cameras were rolling in China, but those ties have been severed now that Clearwater is an impediment to a project even closer to the prime minister’s heart: Indigenous reconciliation. DECISION TO ‘ENHANCE ACCESS’ TO SURF CLAM FISHERY DRAWS IRE OF LOCAL MAYOR
Last Thursday, the Department of Fisheries put out an innocuouslooking press release that said it will use 25 per cent of the existing total allowable catch of Arctic surf clams to issue a new licence that will be open to expressions of interest from “Indigenous entities” from the four Atlantic provinces and Quebec.
Fisheries minister Dominic LeBlanc said that by “enhancing access” to the surf clam fishery for Indigenous groups, “we are taking a powerful step toward reconciliation.”
But one group’s “enhanced access” is another’s lost business.
Clearwater has, to this point, controlled all the quota available, meaning that its clam business — providing those brilliant red tongues that look so appealing in sushi — is about to shrink by a quarter.
The company is keeping its own counsel — it would say only that it was reviewing the decision — but Rex Matthews, the mayor of Grand Bank, N.L., where Clearwater has a processing plant, did not mince his words.
In a letter to LeBlanc, he said he had received the news “with a sense of shock, disbelief, disappointment and discouragement.”
His town is “reeling and flabbergasted” that the government would take nearly 10,000 tonnes of allowable catch from a quota that has been granted to Clearwater for years, he said.
“This decision by your department has shattered the dreams of those employees who will see harvesting vessels tied up early in the year and their plant closed for at least four to five months of the year. These employees will now be forced onto the payroll of the federal government through the EI system, whereas before they were productive, contributing and proud members of society.”
The mayor goes a little far when he accuses the government of “expropriating” Clearwater’s quota. It is, after all, a public resource and quota does not confer property rights to the fishery or the fish.
But Clearwater deserves credit for developing the Arctic surf clam fishery into a $92-million market through continuous investment.
Clearwater successfully harvested its full quota in 2016 for the first time because it added a new $70-million factory-at-sea vessel to its existing fleet of three. Further, it is in the process of building a new $70-million harvesting vessel as replacement for one of the older ships.
You don’t make those kinds of investments if you think you are about to lose the right to fish.
LeBlanc said in an interview in St. John’s Tuesday that discussions to open up the market have been going on for over a year.
“It’s not a surprise,” he said — which will apparently come as news to the mayor of Grand Bank.
Earlier this summer, the government decided not to increase the current quota, a move that would have allowed new entrants and one that, ironically, Clearwater opposed.
LeBlanc said that his hope is that at some point, the data will show the stock is healthy enough to increase the quota. He said the government hasn’t taken existing quota from anyone yet — it has simply called for proposals from Indigenous groups to see whether any are prepared to come forward, potentially in partnership with an experienced offshore operator, to profit from the clam fishery. “We want to see if commercially and operationally, it’s viable. It’s an expensive undertaking to go 120 miles offshore with a large vessel,” said LeBlanc.
Quite who might be prepared to invest $70-million or so in a new clam-fishing vessel is not clear. Calls to Membertou First Nation in Sydney, N.S., one of the likely applicants, were not returned. One potential partner, Louisbourg Seafoods of Nova Scotia, said it would not partner in a venture where it would not be the majority shareholder.
Given it already has the capacity, it seems entirely possible that Clearwater could yet end up as a minority shareholder in the fourth license.
But it seems a ham-fisted way to manage a resource.
LeBlanc said that without his government intervening the status quo would exist in perpetuity. “To say that, if we ultimately take a decision to share quota of a public resource with another group of people, it will have a significant economic disruption in Grand Bank is irresponsible.”
LeBlanc might well be nervous about reaction to the decision in Grand Bank. It sits in the Bonavista-BurinTrinity riding that will shortly be embroiled in a byelection, following the news that longtime MP Judy Foote is stepping down.
There are already concerns in Newfoundland about the direction of Liberal policy, partly over worries that the changes proposed to the National Energy Board and environmental assessments could stall oil and gas exploration and development on The Rock.
Mayor Matthews will not be alone in feeling that Newfoundlanders are pawns in a game being played in Ottawa. “Once again, we are caught up in a political climate over which we have no say or control,” his letter said.
The dispute underscores two consistent shortcomings of this Liberal government — a lack of sensitivity toward the private sector, and a willingness to put the interests of one favoured group ahead of another.
The lesson for business is this: when your going concern relies on the caprices of politicians, don’t invest $140 million until you know which way they are going.