Contents
1.
2.
3.
4.

5.
6.

About this project
The lobster fishery in Atlantic Canada
Problem definition
Identifying prob...
About this project
 Work stream that accompanies Valuing our Fisheries

work
 ‘Social Finance for Sustainable Fishing Co...
Atlantic Canada’s Lobster Fishery







Backbone of coastal economies
Limited entry fishery
38 LFAs
Trap limits and...
Owner-Operator and Fleet
Separation Policies
 Have protected and maintain the inshore fishery as an

economic driver
 Li...
Identifying THE Problem
 Fishing licenses are leaving communities
 Fishermen retire
 New entrants don’t buy licenses
 ...
Example: Grand Manan
 Population of 2,500 with 130

active lobster licenses
 Approximately 1.5 hours by ferry
 In 2012 ...
Some current license prices
 LFA 31 (Eastern NS)
 LFA 32 (Eastern NS)
 LFA 33 (Shelburne)
 LFA 34 (SW Nova)

 LFA 36 ...
Why is this a problem?
1) License costs do not reflect enterprise revenues
2) Upfront cost is prohibitive to individuals
3...
Problem Drivers (1/3)
1) License costs do not reflect enterprise revenues
a) Inflated by government ‘buybacks’
b) Retireme...
Problem Drivers (2/3)
2) Upfront cost is prohibitive to individuals
a) No formal way to ‘graduate’ ownership of a license
...
Problem Drivers (3/3)
3) Corporate interests over-value licenses
a) High premium on supply control and predictability
b) L...
What kind of solutions?
1.

License banks

2. Loan funds
3. Policy changes

4. Distribution system changes
1. License Banks
 Cooperative ownership that pools licences and quota that is

leased back to members at "fair“ rates

Op...
2. Loan Funds
 Fund to facilitate new entrants as patient capital to assist in

finding other funding

Opportunities
 Ca...
3. Policy Changes
 To allow formal graduated license ownership
 To allow fishing associations to ‘own’ licenses in

lice...
4. Distribution Model Development
 Developing a ‘Seafood Hub’ to redirect products away

from commodity markets
 Partner...
Next Steps
1) Building Financial Model with Common Good

Solutions
Financial questions – what should a license costs?


...
Financing for Community Fisheries
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Financing for Community Fisheries

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  • , but don’t provide community benefits from the productive resource
  • Financing for Community Fisheries

    1. 1. Contents 1. 2. 3. 4. 5. 6. About this project The lobster fishery in Atlantic Canada Problem definition Identifying problem causes Potential solutions Our current initiatives
    2. 2. About this project  Work stream that accompanies Valuing our Fisheries work  ‘Social Finance for Sustainable Fishing Communities’ April 2013 workshop  Now looking for feedback on proposed steps forward and suggestions
    3. 3. 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’
    4. 4. Owner-Operator and Fleet Separation Policies  Have protected and maintain the inshore fishery as an economic driver  License holders must fish  Processors cannot own fishing licenses  Essential policies, but:  Limited role for producer coops  No incorporate financial partnerships
    5. 5. 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 through capital-intensive production Larger volume operations creates ‘efficiencies’ that allow more offshore processing, low-value export
    6. 6. Example: Grand Manan  Population of 2,500 with 130 active lobster licenses  Approximately 1.5 hours by ferry  In 2012 temporarily won protection of residency requirements  Currently ~5 licenses at risk
    7. 7. Some current license prices  LFA 31 (Eastern NS)  LFA 32 (Eastern NS)  LFA 33 (Shelburne)  LFA 34 (SW Nova)  LFA 36 (Fundy Bay)  LFA 36 (Fundy Bay ) $ 525,000 $ 540,000 $ 300,000 $ 475,000 $ 495,000 $ 450,000
    8. 8. Why is this a problem? 1) License costs do not reflect enterprise revenues 2) Upfront cost is prohibitive to individuals 3) Corporate interests are willing to pay more for licenses
    9. 9. Problem Drivers (1/3) 1) License costs do not reflect enterprise revenues a) Inflated by government ‘buybacks’ b) Retirement needs not built into current business plans c) Uncertainty in fishing i. ii. iii. Price fluctuations Regulatory environment Uncertainty about catch rates
    10. 10. Problem Drivers (2/3) 2) Upfront cost is prohibitive to individuals a) No formal way to ‘graduate’ ownership of a license b) 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
    11. 11. Problem Drivers (3/3) 3) Corporate interests over-value licenses a) High premium on supply control and predictability b) Longer time horizons c) Management leverage from well-organized interest groups
    12. 12. What kind of solutions? 1. License banks 2. Loan funds 3. Policy changes 4. Distribution system changes
    13. 13. 1. License Banks  Cooperative ownership that pools licences and quota that is leased back to members at "fair“ rates Opportunities  Community investment in productive resource  Allows long time horizons and better access to capital Challenges  Determining ‘fair’ rates  Securing licenses at fair cost  Matching with owner-operator principles  Most existing examples are annual rotating lease structures
    14. 14. 2. Loan Funds  Fund to facilitate new entrants as patient capital to assist in finding other funding Opportunities  Can offer business planning / mentoring and strengthen fishing associations  Can support good types of ‘trust agreements’  Could be funded through community platforms like CEDIFs Challenges  Matching with owner-operator principles  Fisheries risk factors are enormous  Will not address fundamental issue of license cost
    15. 15. 3. Policy Changes  To allow formal graduated license ownership  To allow fishing associations to ‘own’ licenses in license banks Challenge Avoiding making the situation worse by diluting owner-operator protections
    16. 16. 4. Distribution Model Development  Developing a ‘Seafood Hub’ to redirect products away from commodity markets  Partners:  Small and medium processors  Farmers markets, local retailers and restaurants  ‘Regional’ wholesalers  Regional markets provide price premiums and reduced uncertainty
    17. 17. Next Steps 1) Building Financial Model with Common Good Solutions Financial questions – what should a license costs?   Retirement costs, revenue expectations, financing options 2) Seeking community partners to design details of a small license bank (~6 licenses)  Potential to fund through a Nova Scotia CEDIF 3) Value chain work to improve regional distribution – September 2013 ‘launch’
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