, but don’t provide community benefits from the productive resource
Transcript of "Jordan Nikoloyuk"
Contents1. About this project2. The lobster fishery in Atlantic Canada3. Problem definition4. Identifying problem causes5. Potential solutions6. Our current initiatives
About this project Work stream that accompanies Valuing our Fisherieswork ‘Social Finance for Sustainable Fishing Communities’April 2013 workshop Now looking for feedback onproposed steps forward andsuggestions
Atlantic Canada’s Lobster Fishery Backbone of coastal economies Limited entry fishery 38 LFAs Trap limits and short seasons 10,000 licenses $550 million landed / year Supreme Court Saulnier v. Royal Bank of Canada 2008‘Fishing license is property’
Owner-Operator and FleetSeparation Policies Have protected and maintain the inshore fishery as aneconomic driver License holders must fish Processors cannot own fishing licenses Essential policies, but: Limited role for producer coops No incorporate financial partnerships
Identifying THE Problem Fishing licenses are leaving communities Fishermen retire New entrants don’t buy licenses Licenses get consolidated by corporate interests Not based in geographic communities Business based on reducing number of harvesters throughcapital-intensive production Larger volume operations creates ‘efficiencies’ that allow moreoffshore processing, low-value export
Example: Grand Manan Population of 2,500 with 130active lobster licenses Approximately 1.5 hours by ferry In 2012 temporarily wonprotection of residencyrequirements Currently ~5 licenses at risk
Why is this a problem?1) License costs do not reflect enterprise revenues2) Upfront cost is prohibitive to individuals3) Corporate interests are willing to pay more forlicenses
Problem Drivers (1/3)1) License costs do not reflect enterprise revenuesa) Inflated by government ‘buybacks’b) Retirement needs not built into current business plansc) Uncertainty in fishingi. Price fluctuationsii. Regulatory environmentiii. Uncertainty about catch rates
Problem Drivers (2/3)2) Upfront cost is prohibitive to individualsa) No formal way to ‘graduate’ ownership of a licenseb) Loans made with personal guarantees Fisheries Loan Boards offer loans for ~20 years @ 6% Very low default rate Limited funding available and difficult to access
Problem Drivers (3/3)3) Corporate interests over-value licensesa) High premium on supply control and predictabilityb) Longer time horizonsc) Management leverage from well-organized interestgroups
What kind of solutions?1. License banks2. Loan funds3. Policy changes4. Distribution system changes
1. License Banks Cooperative ownership that pools licences and quota that isleased back to members at "fair“ ratesOpportunities Community investment in productive resource Allows long time horizons and better access to capitalChallenges Determining ‘fair’ rates Securing licenses at fair cost Matching with owner-operator principles Most existing examples are annual rotating lease structures
2. Loan Funds Fund to facilitate new entrants as patient capital to assist infinding other fundingOpportunities Can offer business planning / mentoring and strengthen fishingassociations Can support good types of ‘trust agreements’ Could be funded through community platforms like CEDIFsChallenges Matching with owner-operator principles Fisheries risk factors are enormous Will not address fundamental issue of license cost
3. Policy Changes To allow formal graduated license ownership To allow fishing associations to ‘own’ licenses inlicense banksChallengeAvoiding making the situation worse by dilutingowner-operator protections
4. Distribution Model Development Developing a ‘Seafood Hub’ to redirect products awayfrom commodity markets Partners: Small and medium processors Farmers markets, local retailers and restaurants ‘Regional’ wholesalers Regional markets provideprice premiums and reduceduncertainty
Next Steps1) Building Financial Model with Common GoodSolutions Financial questions – what should a license costs? Retirement costs, revenue expectations, financing options2) Seeking community partners to design details of asmall license bank (~6 licenses) Potential to fund through a Nova Scotia CEDIF3) Value chain work to improve regional distribution –September 2013 ‘launch’
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