Corporate Concentration and how it has caused a crisis in our fishery:
Corporate Concentration refers to the extent to which a small number of enterprises account for a large proportion of economic activity such as total sales, assets or employment. Less corporate concentration in the fishery and more processing licenses in the hands of different companies will create competition and attract investment in the industry in Newfoundland and Labrador. Corporate concentration in the fishery is nothing new, but many may not realize why this fight is so important for the province and its coastal communities.
We are calling on harvesters to join us in lobbying new government to acknowledge that long-term sustainability in the fishing sector needs less corporate concentration, more processing licenses in the hands of different companies, and more outside competition. For years, FFAW has been vocal about a corporate monopoly that is hurting rural Newfoundland and Labrador and robbed the fishery of the flexibly and innovation that it needs. It is time for a provincial government to commit to our recommendation to enact regulations that mirror the purpose of the new federal Owner-Operator and Fleet Separation regulations.
While Owner-Operator and Fleet Separation policies were created by the federal government, the policies biggest impacts are felt by the province. Both policies are established to ensure that those who live closest to the resource are the primary beneficiaries of the resource. The policies are directed specifically at processing companies, as fleet separation explicitly prohibits processing companies from acquiring fishing licenses and establishing vertical integration of the inshore fishery.
Understanding Controlling Agreements
A Controlling Agreement is any agreement that allows one party to control the benefit and/or disposition of a fishing license held in the name of a fish harvester. Over the past 20 years, controlling agreements have become the biggest threat to the inshore fishery. Processing companies have established arrangements with harvesters, whereby the processor pays for the fishing license that is placed in the name of the harvester. The harvester acquires no control over the license, as that rests entirely with the processor.
Corporate concentration has led to processing capacity, market development and rural economic development taking a back seat to the profits of a few corporate executives. Controlling agreements put in place by large processing companies threaten the viability of rural Newfoundland and Labrador, and often take advantage of fish harvesters who would not otherwise have the means to acquire a license.
For the past twenty-five years, processing companies have been engaged in an ongoing effort to undermine or circumvent owner-operator and fleet separation. This has been done through a variety of legal instruments, all of which have the same effect of vesting the controlling interest of an inshore fishing license to the name of the processing company. Processing companies are able to establish these restrictive agreements in part because they are not subject to federal jurisdiction. The companies are not required to make a sworn statement, which carries the weight of law, attesting that they do not have harvesters in controlling agreements. Other tools for enforcement, such as strict auditing rules for processing companies, should also be considered.
Harvesters, however, have no jurisdictional shelter. Most harvesters are passive actors in a controlling agreement – it provides them with the opportunity to fish and earn some income – but they are not the driving force behind the agreement, nor are they the one in control. Despite this secondary role in the agreement, harvesters are the primary target of DFO. It is the harvester that gets placed before the licensing review board and whose future to earn a living from the sea is placed into doubt.
The most distressing aspect of controlling agreements is how pervasive they remain in our fishery. Processing companies control a greater share of the inshore fishery with every year that passes and they are not held to account. The impact has been terrible for the fishery – the price of licenses is incredibly inflated, creating significant barriers for new entrants. These new entrants are the future of our fishery and rural NL. The pervasiveness of controlling agreements is setting up an environment whereby the next generation of harvesters will not see the benefits of owner-operator and processing companies will control the plants and the quota in the ocean.
Compounding this problem is that controlling agreements will exist in perpetuity because the company will not die and thus will never have to relinquish control. A controlling agreement essentially removes a license from the inshore fleet, moving it to a hidden asset of the company.
Fish harvesters around the province must fight back in solidarity against actions taken by companies in an attempt to dictate the terms of the inshore fishery. Our next provincial government must step up and take action to create competition and attract investment by enacting legislation that mirrors the purpose of the new federal Owner-Operator and Fleet Separation regulations. Processing companies are the driving force behind controlling agreements and continue to undermine the sustainability of industry, our resources, and coastal communities.