« November 2007 Table of Contents
International Sourcing: Eastern Canada
Suppliers adapt by shifting focus from volume to value
By Nicholas Gill
November 01, 2007
Canada, America's northern neighbor, is blessed with the
world's longest coastline, stretching 151,485 miles. It may
come as no surprise then that Canada is one of the world's top
seafood exporters, with the eastern seaboard accounting for
almost 80 percent of the volume.
Exports from Canada's Atlantic firms have amplified
considerably, growing from $6.8 billion in 1992 to more than
$20 billion in 2006. More than 80 percent of the region's
exports are sold to the U.S. market, the majority heading to
New England. With the demand for seafood growing in the United
States and Europe, Eastern Canada's seafood industry is in a
good position for restructuring and expansion in areas it has
Newfoundland and Nova Scotia, along with British Columbia on
the Pacific side, are the country's three leading
seafood-producing provinces. The Eastern seaboard produces 78
percent of all seafood by volume and 84 percent in value. Nova
Scotia leads the Atlantic provinces in terms of seafood
production, with exports around $1 billion annually, followed
by Newfoundland, Prince Edward Island, New Brunswick and
Nova Scotia's industry is divided into more than 200 small
to medium-size processors, whereas Newfoundland is dominated by
a few large producers.
"Being smaller, we have learned to be more flexible," says
Estelle Bryant, senior planning and development officer with
the Nova Scotia Department of Agriculture, Fisheries and
Along with the pressure of China's rise to dominance, "We
have had to get processing costs under control," says Bryant.
"The smaller producers have adapted to the changing U.S. dollar
and are discovering new markets that weren't there before,"
adds Bryant. "Prices have managed to stay relatively stable
across the board and have seen expansion in areas such as
salmon and mussels."
Nova Scotia has been a big part of Canada's Ocean to Plate
movement, in which the seafood industry works toward a
"sustainable, economically viable and internationally
Supply and conservation
Overfishing in the North Atlantic in the 1970s and '80s
severely reduced the populations of cod, halibut, haddock,
flounder and other species. Now, after a decade of moratoriums
and strict harvest limits, Eastern Canada is experiencing a
resurgence in the biomass for most species.
David Jermain, GM of primary management and ingredient sales
at Fishery Products International, the largest seafood
processor in Newfoundland, says the region's seafood supplies
are now under control.
"Yellowtail flounder has made a comeback. It's back up to
the supply it was in the late '80s, although it is still
tightly controlled," says Jermain. "In Newfoundland we have had
two moratoriums on cod fishing, but it's reciprocal. The
decrease in cod leads to an increase in snow crab."
Measures to protect mature female lobsters and other
adjustments have helped maintain a stable lobster supply in the
region. The lobster fishery has been very consistent and
certain areas on the Atlantic Coast have seen increases.
December harvests, normally low due to the forbidding cold
winter, have increased as have harvests in southwest Nova
Scotia and other smaller fisheries. Many claim this is due to
warmer water temperatures, although this ha s yet to be
Eastern Canada's seafood supplies have gone through seismic
shifts in the past two decades; so has the value. Supply and
currency issues have led the region's seafood industry to
reevaluate its products. Low-value species that were once the
embodiment of Canada's seafood exports, such as herring and
cod, are being replaced by higher-value species like farmed
salmon, lobster, snow crab and hake.
Herring is still the largest fishery in terms of volume, but
the numbers are not nearly what they were a decade ago and
production has dropped below 450 million pounds since 2005.
Nova Scotia, like most of the Maritimes, has been
experimenting with offering a wider variety of products, many
of which are new to the region. Haddock fishing, which was
unheard of in the region five years ago, is now common.
Canada exported 1.46 million pounds of fresh haddock to the
United States in 2006, according to the National Marine
Fisheries Service. The hake fishery has grown significantly,
from 100 million pounds in 2000 to 220 million pounds in
Seafood prices have been stagnant since 2001 and dropped
slightly in the past two years. Therefore, Atlantic Canada has
shifted its attention to more valuable species like
American lobster has been the region's No. 1 seafood export
for several years and is sold across the U.S. market. Roughly
110 million pounds are harvested annually and value hovers
around $600 million each year. Seventy percent of the harvest
is sold live, while 30 percent is frozen or processed.
Michael Tourkistas, president of East Coast Seafood and
Paturel International of Lynn, Mass., and Shediac, New
Brunswick, says that aggressive planning is being taken to help
expand the worldwide lobster market.
"We can increase volume by getting into more value-added
products," says Tourkistas. "A lot has to do with supply. If
supply picks up, the demand is there."
East Coast recently began selling pasteurized lobster meat,
which can extend the shelf life for up to 12 months. The
company is focusing on products with shorter shelf life but
higher quality. The product is best fresh with a seven-day
shelf life, but the company would like to increase it to 15 to
30 days, adds Tourkistas.
Snow crab is the second most valuable species landed in
Canada, while coldwater shrimp is third. Prince Edward Island
leads with the largest shellfish production at 46 million
pounds in 2005, valued at $30 million.
Nova Scotia is the leading
prov ince in terms of value,
with $647 million in harvests in 2005, followed by Newfoundland
and Labrador with $494 million.
A shift to high-value species
Aside from growing lobster exports, Eastern Canada is also
relying on coldwater shrimp production, which has grown more
than 300 percent since 1990.
"At one point we were harvesting cod and groundfish. That
has collapsed. Two species have mushroomed in its place:
coldwater shrimp and snow crab," says Patrick McGuinness,
president of the Fisheries Council of Canada. Canada is now the
world's No. 1 supplier of both species.
Canada's seafood industry produces two main types of shrimp:
shell-on and cooked and peeled. The cooked and peeled product
has been selling well in Europe. The market for shell-on
coldwater shrimp has expanded into the Russian and Chinese
markets in recent years, but its introduction has been
difficult in the face of massive quantities of farmed shrimp
already on the world market.
The strength of the Canadian dollar compared to the weak
U.S. dollar tremendously affects production and is perhaps the
single-biggest factor controlling the overall health of Eastern
Canada's seafood industry (see Top Story, page 24).
The major reason the Canadian dollar is strengthening is the
natural resources in the Western half of the country, while the
eastern part of the country depends on trading and exports to
the United States. One side of the country is driving the
economy, but it negatively affects the Eastern side.
"No question the exchange rate has a substantial impact. The
increase from about 65 cents to 85 cents was shocking. Reality
set in," says McGuinness. The further increases the region has
been more prepared for, he says.
Consolidation is expected as Eastern Canada's seafood
industry adapts to shifting resources industry wide. Government
policies are a bit outdated and work against consolidation by
favoring independent fishermen, but McGuinness foresees changes
in many of them that will help facilitate it. Summits in the
Atlantic provinces, including one on lobster in Halifax last
month, are supporting consolidation.
"The challenge is bringing buyers, processors and harvesters
together to develop strategies on sustainability, profitability
and affordability," says McGuinness.
"The whole process has been an awakening for the industry
and hopefully an awakening for the politicians," adds
Nicholas Gill is an author, writer and photographer based in
Columbus, Ohio, and Lima, Peru