By Blaine Hislop
The seafood industry is an important one for Atlantic Canada, as well as for British Columbia. The “value of landings” numbers quoted in this article will generally refer to 2010 data, while commercial and export numbers will generally refer to 2008 data, the latest year for which such data are available.
The total value of commercial fish landings and aquaculture production in Atlantic Canada is estimated at $1.7 billion. For British Columbia it is estimated at $800 million. Added to that is the cost of processing and transportation, which would at least double the value of the fish caught and raised. As a rough estimate, the total value of the fisheries industry in Atlantic Canada is approximately $3.5 billion.
The two provinces for which the fisheries are particularly important are Newfoundland and Prince Edward Island. For each of those two provinces, the value of commercial landings and aquaculture production is about 3.5 per cent of provincial GDP. When one adds about an equal value for processing and transportation, the fisheries are responsible for about 7 per cent of GDP in each of those provinces – these are very significant numbers for provinces with small economies and, in many cases, a lack of alternative economic opportunities. It is estimated that more than 60,000 people in Atlantic Canada directly depend on the fisheries for their economic well-being. When we consider that fisheries workers support numerous workers in other industries, such as retail, energy, transportation, healthcare, and other industries, it is clear that the fisheries play a very important role in the lives of Atlantic Canadians.
However, by international standards, Canada is almost an insignificant player in this industry. In terms of volumes of commercial landings, Canada ranks far behind top global producers such as China, Peru and Indonesia, and accounts for less than 1 per cent of global landings of about 90 million tonnes annually. In terms of aquaculture production, Canada barely ranks. China alone accounts for almost two-thirds of total global annual aquaculture production of about 75 million tonnes, while Canada produces only about 160,000 tonnes annually.
On the other hand, Canada consumes only about 15 per cent of the seafood it produces, and 85 per cent of production is exported. By contrast, large international producers such as China consume most of their product domestically, leaving relatively little for export. As a result, Canada is responsible for a disproportionally large share of seafood export markets. With exports of almost $3.9 billion in 2008, Canada ranked eighth in the world, while China ranked first with exports totalling $11.5 billion.
The most valuable Canadian exports in 2008 were lobster, farmed salmon, snow crab and shrimp, the combined value of which represented about 60 per cent of the total value of Canadian seafood exports. Canada’s lobster exports, in all forms, accounted for 51 per cent of world exports, whereas Canada’s crab exports, in all forms, accounted for 39 per cent of world exports. Canada’s largest export market for seafood in 2008 was the U.S., which accounted for almost two-thirds of all Canadian seafood exports.
To round things out, Canada is also a significant importer of seafood. In 2008, Canada imported $2.2 billion of lobster, wild salmon, tuna, shrimp and other species. Major exporters to Canada, in order of size, were the U.S., Thailand, China, Chile and Vietnam.
Challenges and opportunities
The Atlantic seafood industry faces increasing international competition, and growing transportation costs associated with high fuel expenses. For the industry as a whole, the key challenge will be meeting international demand at a time when countries such as China are offering quality seafood at lower prices. An efficient transportation infrastructure, together with the use of shipping innovations to lower mortality rates of live seafood, are essential to maintain the region’s reputation for high-quality seafood that consumers in distant markets are willing to pay premium prices for.
Atlantic Canadian seafood is primarily transported to its major American markets through overland transportation, and to markets in Europe and Japan by air and ocean. The European Union and Japan are important markets, importing more than $400 million and $300 million worth of Canadian fish and seafood products, respectively. China, Hong Kong, and Iceland are growing foreign destinations for Canadian seafood, too: in 2010, more than $418 million in fish and seafood was destined for these markets – up from $326 million in 2009. However, with international competition growing, Atlantic Canada faces challenges delivering fresh product to those markets in a timely manner, and at competitive prices.
Paul Rose, Agri-Culture and Agri-Food Canada’s Senior Market and Trade Officer for Newfoundland and Labrador, estimates that there are around 250 to 300 companies in Atlantic Canada exporting seafood products. Reefer trucks and vessels, equipped to handle reefer containers, are vital for the seafood industry in this province: Mr. Rose states that Russia and China account for about two-thirds of Newfoundland’s seafood exports, and are particularly eager buyers of snow crab and shrimp, which are very popular there. If those markets were to disappear, Atlantic Canada would find itself losing out on several hundred million dollars of lost seafood sales.
Mr. Rose states that the major challenger to the Newfoundland and Labrador seafood industry is China because of its low labour costs. In fact, he notes that production and processing costs are so low in China that Atlantic Canadian crab producers process crab in China before shipping it to markets in Japan.
In the case of Nova Scotia, its share of the value of Canadian seafood products exported to the U.S. has declined slowly but steadily during the past two decades to about 65 to 70 per cent by the early 2000s. The decline was driven by the appreciating Canadian dollar (affecting the general seafood trade) and increasing pressure on prices resulting from oversupply in key markets. Nova Scotia firms are now more diversified in the markets they serve, but still face the same pressure as always: getting perishable seafood to overseas customers in prime condition. For Nova Scotia, this means that climate-controlled cargo container units with special insulation are an absolute must.
This is especially key when it comes to lobster, because lobster is the most valuable seafood export the province has to offer. In 2010, at the height of the global recession, Nova Scotia’s lobster exports stood at 23,514 tonnes, valued at $329.5 million – or more than 40 per cent of the province’s total 2008 industry value of $843 million. Effective overland transportation is critical, because lobsters shipped overland to New England go to market live. They are packed in lined cardboard or Styrofoam boxes with cooling gel packs to keep their gills moist; they can live in this state for 48 hours – which means they need to be delivered within that time period.
Transportation of live lobsters to distant markets is a major challenge. Airfreight is used, but the cost is high, and many lobsters do not survive the trip. Reaching markets in North America can be accomplished by trucking lobsters from Atlantic Canada to New York, Boston, Montreal or Toronto, from which lobsters can be airfreighted to destinations elsewhere in the U.S. and Europe. From a cost point of view, road transportation all the way would clearly be preferred. However, lobster tanks cannot be dragged onto a truck; the tanks are simply too heavy and every turn causes water being splashed about. Antigonish, N.S.- based BioNovations Inc. has developed a water-spray based system (see sidebar on page 15) that makes it possible for anyone in the lobster industry to hold live lobsters for long periods of time, or to transport them by road anywhere in North America.
Scallops are another large part of Nova Scotia’s seafood industry. Like all shellfish, scallops are heavy and prohibitively expensive to transport by air. Aqualife North America Inc. of Halifax has developed an ocean-going solution (see sidebar on page 16) that makes it possible for live lobsters, and other shellfish, to be shipped to European destinations via container vessel, thus reducing the cost of transportation by about 50 per cent. The container itself features 20 self-sustaining tanks that act like an aquarium and make sure that the seafood stays fresh and healthy on the long voyage overseas. Aqualife will prepare shellfish for such overseas trips at the company’s new Aquaport in Avonport – a storage facility that purifies water so that aquatic toxins do not find their way into a new overseas environment. The expectation is that the new ocean-shipping option will create significant growth in Nova Scotia’s aqua-culture sector, especially for oysters, scallops, mussels and clams, for which no practical overseas transportation solutions existed previously.
Several new processing plants opened for business to process snow crab in Cape Breton after the initial burst of landings in 2000. Unfortunately, landings have declined since 2005, raising the possibility that the industry may be declining. According to one study, downturns are part of a larger cyclical trend that is expected to continue for a few more years. The reasons are not entirely clear, but appear to be linked to gradual depletion of the crab stock. Fortunately, revised 2011 data from Fisheries and Oceans Canada indicate that landings of crab and queen crab inched upwards in 2008 and 2009 from 2007 levels, giving hope to those who are active in the industry in Nova Scotia that brighter days may be ahead.
There are about a dozen snow crab processing plants in Nova Scotia, which employ hundreds. For local snow crab harvesters and processors, the down cycle is made even worse because of the growth of China’s processing industry, which can process imported crab for re-export to Japan at competitive prices. Most commonly, snow crab from Nova Scotia destined for China – and various other markets around the world – is butchered, cleaned, cooked in fresh water, and frozen in a salt brine solution. In this frozen state, snow crab is ready for shipment anywhere around the globe, by air or by boat. As for specific exports to Japan, a 2006 report by the Department of Fisheries and Oceans reported that snow crab is “supplied live, whole frozen, in gas and brine frozen sections, or as crabmeat for the sushi market, with Canadian exports to Japan predominated in frozen section form.”
Cutting transportation costs is an important factor to reduce costs, but processing and labour costs are also important factors. Crab, like shrimp, are typically cooked and frozen in Nova Scotia, and shipped in their shells. Often, commercial customers will purchase the processed crab from processors and then ship frozen crab sections to China for meat extraction for re-export to Japan.
Direct shipments to Japan, whether by boat or, less commonly, by air, is still very important to Nova Scotia processors. Japanese and U.S. markets are essential to the survival of those in the Nova Scotia crab trade. Even if Chinese processors can potentially undercut Canadian processors, the Japanese market is still too lucrative to cede willingly.
As is the case in Nova Scotia, lobster is the most valuable seafood product exported from New Brunswick. Similarly, the high cost of air transportation represents the same obstacle to New Brunswick-based exporters as it does to other Atlantic seafood exporters. Developments currently underway at BioNovations Inc. and Aqualife North America Inc. will ultimately make it more efficient and far less costly to ship lobsters and other live shellfish to markets anywhere in North America and around the globe.
Another important harvest for New Brunswick is salmon. More than 75 per cent of New Brunswick’s farmed salmon, produced in fish farms in the Bay of Fundy and Miramichi River, is exported to the United States. New Brunswick’s salmon farming industry consists of eight locally owned companies, five processing plants, and twelve hatcheries.
Snow crab production is located in the Southern Gulf of St. Lawrence. Snow crab is shipped frozen in boxes and transported to markets in the U.S.by truck. There used to be a large market in Japan, but access to that market has been reduced because buyers in Japan can now buy frozen snow crab from Russian sources at substantially lower prices. As of the end of 2007, there were 22 snow crab harvesting plants in New Brunswick, but only 12 were in operation.
Commercial fishing in Newfoundland is highly concentrated around shrimp and crab. Crab shipped by truck or by boat is most commonly shipped in sealed boxes filled either with gel packs or with dry ice.
The U.S. is by far the largest export market for Newfoundland snow crab, in the form of frozen sections, destined for both retail and food service markets. As for non-U.S. markets, some crab is shipped in frozen sections with meat extraction usually taking place in plants in China or other countries in Southeast Asia. The Japanese market, now dwarfed by markets in China and the U.S., does occasionally prefer to be supplied with live crab, but frozen sections predominate. The snow crab industry is often buffeted by price volatility and by the fact that mid-priced restaurants and lower-priced Asian and seafood buffets often look for the least expensive substitute.
Another vital seafood product is shrimp. As with other seafood, there are significant challenges preserving quality in the cycle from harvest to grocery shelf, as shrimp quality is negatively impacted by transportation over extended distances, irrespective of the method of holding or stowage. Shrimp harvesting in Newfoundland during the summer months is especially dangerous because of the deterioration issues that come with having fish products out in the open air during a humid, hot time of the year and, for that reason, icing must be diligent and begun immediately upon harvesting. Overland transportation of shrimp causes significant physical damage, but the rate of deterioration and the levels of physical damage are not significantly affected by the method of stowage as long as temperature controls are in place and good handling practices maintained. The general sense in the Newfoundland fishing community is that boxed shrimp keeps better and is less damaged than bagged shrimp. The inshore shrimp fleet has moved towards the boxed method for a number of years now.
The third most important seafood item in Newfoundland that also relies heavily on rigorous sanitation practices and holding methods is clam. If shipped to market live, clams must be held and shipped in refrigerated units. They will not survive if held or shipped in ice, in water or in airtight containers. Harvested clams are brought to depuration stations and held in tanks containing clean seawater for at least 1.5 days so that natural filtering activity can expel intestinal contents. This encourages separation of fecal matter from the bivalves, prevents recontamination and purges the shellfish of the salmonella typhi bacterium that causes typhoid. Clams are packed in net bags and transported live by refrigerated trucks, which maintain their temperature at 3 to 10 degrees Celsius. They have a shelf life of only a few days, so they must get to market as soon as possible. With only a marine ferry and truck transportation to rely on, this is clearly a challenge.
Prince Edward Island
Lobster is by far P.E.I.’s most important seafood export. Due to the high cost of air transportation, only a small proportion of P.E.I.’s lobster is transported by air. Eastern Canadian and Northeastern U.S. markets are generally served by truck shipments. P.E.I.’s seafood industry must grapple with escalating costs, weak price levels, fish stocks being in apparent decline and the uneven application of conservation efforts in the waters around the island. To combat these challenges, The P.E.I. Seafood Processors Association receives government funding for the development of innovation in processing techniques to help lower production costs. The Atlantic Veterinary College Lobster Science Centre receives funding to study how to maximize the benefits of shipping live lobster through an ocean-freight container system.
Most of the lobsters caught in the waters off of Atlantic Canada are large enough to be sold into the live market; larger lobsters are usually sold into the fresh/live market, where they can attain premium prices. Smaller lobsters are cooked and frozen whole in “popsicle packs”, or shelled for meat. Lobsters originating in P.E.I. are packed in lined cardboard or Styrofoam boxes with gel packs used as a coolant. Frozen whole cooked lobster is a local specialty in P.E.I., as it is in Nova Scotia: lobsters are cooked, graded and packed in laminated pouches with brine, and then sealed and blast frozen (10 per case). This product is sometimes referred to as a “popsicle pack.”
Mussels are P.E.I.’s second-most important commercial seafood harvest. Cultured P.E.I. mussels are grown from suspended lines in plankton- and nutrient-rich waters in the bays surrounding the island. Upon reaching maturity (which may take up to three years, depending on nutrient levels in the water), they are harvested, processed, and packed (live) in mesh bags in iced containers for shipping to market. In recent years, some processors have adopted packing live mussels in what is known as Modified Atmosphere Packaging (MAP) – a process using a special oxygen/carbon dioxide mix to extend the shelf life of live mussels.
Oyster is P.E.I.’s third-most important seafood export. Oysters are carefully cleaned, individually inspected and carefully hand-packed. Live oysters are packed in wooden or cardboard containers for shipping. Oysters are highly perishable and must be shipped frozen, with dry ice acting as a coolant. Freshly shucked oysters will have a shelf life of only five to seven days.
What the future holds for the Maritimes fishing sector
The major challenge facing Atlantic Canada’s fisheries will be to find new ways of keeping transportation costs down. China, Russia and Japan have become big players in seafood exports, and China, in particular, has a significant cost advantage. The best, and perhaps only way that Atlantic Canada can remain ahead of its competitors is to continue to emphasize the maintenance of sound harvesting, processing and transportation protocols to guarantee consistent high-quality product. The introduction of new transportation methods will help lower costs to enable the Atlantic seafood industry compete more effectively with lower-cost international competitors. Lastly, with rising incomes in many parts of Asia, Canada appears to be well-positioned to benefit from its quality reputation that more affluent consumers are willing to pay for.
BioNovations Inc. of Antigonish is one of two Nova Scotia-based enterprises that are changing the way lobsters and other shellfish are being kept alive for future consumption, and shipped to market. BioNovations has developed, and has been marketing a live seafood holding system for over five years. The system was designed for use by lobster pounds, wholesalers, hotels, and restaurants, and consists of holding tanks of various capacities, trays, filtration devices, pumps, and the temperature controls. The President and driving force behind the company is Joe Boudreau, who has been a lobster fisherman for several decades.
The idea behind BioNovations’ holding tanks is that lobsters can be kept alive for up to six months under the right environmental conditions, allowing those active in the sale of lobsters to purchase lobsters when prices are low, and to sell them when prices are higher.
BioNovations also built a prototype long distance transportation system, which consisted of a converted 53-foot van trailer in which modified BioNovations equipment had been installed. The live lobster transportation system uses trays on which lobsters are stored, and the lobsters are sprayed continuously with water, rather than keeping the lobsters immersed in water. Over a period of several years, it was demonstrated conclusively that the customary mortality rate associated with road transportation could be cut dramatically, and that customers anywhere in North America could have access to fresh lobster without incurring the high cost of airfreight.
The company is presently developing a unified transportation system, using conventional ocean shipping containers, to ship up to 25,000 pounds of live lobsters or other shellfish anywhere in North America by truck or by boat, or to any destination in Europe by boat. Boudreau also has plans to explore the possibility of using the company’s technology for shipping flowers and agricultural products more efficiently and more economically by boat.
Aqualife introduces new system to ship live shellfish
Aqualife North America Inc., a joint venture between Danish Aqualife A/S and Halifax-based Cleantech Technologies Inc., utilizing technologies owned jointly by Aqualife A/S and A.P. Moller-Maersk Group, has initiated commercial shipments of live lobsters from its Aqualife Aquaport processing and holding facility at Avenport (near Halifax) to a similar facility in the Netherlands. Shipping services are provided by partner Maersk Line on scheduled service from Halifax to Rotterdam.
During the past seven years Aqualife A/S and Maersk have been developing the technology aimed at keeping live shellfish alive for 20 days in climate-controlled environments, which would allow them to survive the 10-12 days it would take to ship them from Atlantic Canada to Europe via ocean carrier. Up to the time of Aqualife’s first commercial shipments, all commercial shipments of live shellfish to overseas destinations were performed through airfreight.
The Aqualife system consists of purging holding waters of all algae, proteins and toxins prior to shipment, and lowering the temperature of the water in the holding tanks to a level where the lobsters are turned into a state of virtual hibernation, thus slowing down their metabolism. Lobsters transit to their destination in special-purpose tanks that are housed in a specially-modified shipping container which is equipped with the necessary systems to control the lobsters’ environment.
Aqualife is very strong on protecting the environment, and the successful substitution of low carbon intensity shipping methods, such as ocean shipping, for high carbon intensity shipping methods, such as air freight, rank high on its list of priorities. Currently, approximately 15,000 tonnes of lobster are flown from North America to Europe annually (including about 3,500 tonnes from Canada). When the value of the shellfish being shipped is high, and the weight within reason, as is the case with lobster, the industry is able to absorb the cost of transportation. However, when other species are involved that are heavier and/or less valuable, the high cost of airfreight makes it impossible to consider shipping by air as a viable option.
Aqualife North America CEO Gordon Neal expects to revolutionize the Atlantic shellfish industry by enabling the live transportation of other categories of shellfish to Europe and other parts of the world. In addition to the two Aquaports in Nova Scotia and in the Netherlands, Aqualife intends to build many more as it builds on its success not only in capturing market share from air cargo operators, but in expanding the overall size of Atlantic Canada’s export markets for shellfish, and to help create much greater industry value by transforming lower revenues from shipping frozen products to higher revenues from shipping live products.