Profile and Potential of the BC Shellfish Aquaculture Industry 2002

Transcription

1 Profile and Potential of the BC Shellfish Aquaculture Industry 2002 Prepared by Kingzett Professional Services Ltd. For the Vancouver Island Economic Developers Association Marine Frontiers Project June 2002

2 Profile and Potential of the BC Shellfish Aquaculture Industry 2002 Prepared by Ruth Salmon and Brian Kingzett Kingzett Professional Services Ltd. 225 Vancouver Avenue, Nanaimo B.C. V9S 4E9 For the Vancouver Island Economic Developers Association New Marine Frontiers Project c/o: Blair Salter, Daystar Marketing 66 Diefenbaker Wynd, Delta, BC, V4M 3X3 June 2002 Acknowledgements This document was prepared by Ruth Salmon and Brian Kingzett of Kingzett Professional Services Ltd.(KPS). For this project, KPS was contracted by the Vancouver Island Economic Developers Association (VIEDA) to conduct a literature review of existing documents to develop a comprehensive profile of the current shellfish aquaculture industry in BC. The goal of this profile is to provide a clear picture of what the industry looks like today, how it is structured, what the potential is for future growth, as well as what barriers are currently impacting expansion and competitiveness. The authors would like to thank Blair Salter and the members of VIEDA for their support of this project. We would also like to acknowledge the research assistance of Debbie Paltzat and Christopher Ashurst from KPS and the exceptional assistance of Barron Carswell (BC Ministry of Agriculture Food and Fisheries) for provision of industry data. Kingzett Professional Services Ltd. Page ii

3 Profile and Potential of the BC Shellfish Aquaculture Industry Executive Summary The shellfish farming industry in British Columbia is at a critical stage in its development. The industry is entering a period of unique opportunity with the coalescence of several key factors influencing future development. The opportunity exists in BC for the aquaculture industry to supply the growing demand and contribute to the provincial economy in a significant way. While the industry is viewed as one with great potential, it is still very small in terms of volume and farmgate value. Global Picture Globally, seafood industries are shifting from traditional wild capture fisheries for seafood products, to the commercial cultivation of farmed species. Aquaculture is recognized as the only means by which increasing world demand for seafood will be met in the future. To meet the ever-increasing demand for seafood, aquaculture has expanded very rapidly and is now the fastest growing food-producing industry in the world. The contribution of aquaculture to world food supply of aquatic products has been increasing over the past 15 years, growing from 12 to 28 percent of total production between 1984 and FAO (2000) estimates that by 2030, over half of the fish consumed by the world s people will be produced by aquaculture. When marine plants are excluded, approximately 86% of the marine contribution to total finfish and shellfish production originates from filter-feeding molluscs such as oysters, mussels, scallops, and cockles. The most harvested species in recent years has been the Pacific oyster (Crassostrea gigas), which grossed 3.4 million metric tonnes in BC Production British Columbia s contribution to global production of farmed shellfish is miniscule at best in global terms. British Columbia ranks as the 12 th largest single producer of Pacific oysters but only produces 0.12% of value. In 2000, British Columbia accounted for 5.0% of North American landed oyster culture value according to FAO. The three main species of shellfish cultured in British Columbia are Pacific oysters, Manila clams, and Japanese (Pacific) weathervane scallops. Additionally, in British Columbia efforts are underway to commercialize culture of the Blue mussel, the Mediterranean mussel, the Native geoduck clam, and the Northern abalone. The European flat oyster (Ostrea edulis) is also grown in small amounts. Virtually the entire commercial harvest of BC oysters is farmed while commercial culture of clams is steadily increasing with farmed production of Manila clams averaging 25% of all clam production (including wild fishery) during the 1990s. The wholesale value of the industry in 2000 was approximately CAN$20 million. The wholesale value rose from $4.6 million to $17.9 million (290%), increasing faster than farmgate values (166%) during the last decade. Kingzett Professional Services Ltd. Page i

4 The oyster-growing industry in British Columbia has been revolutionized over the past twenty years. Since off-bottom methods of growing oysters have been developed, more and more production is moving from beaches to deep-water. Clam farming is a relatively new venture in British Columbia, and the scallop industry is still in its infancy as growers overcome a variety of production hurdles. From the beginnings of the shellfish aquaculture industry through to the 1970s, the industry generally operated as family or 'lifestyle' businesses, often under-utilizing the existing land-base and employing a ranching philosophy, relying on inconsistent collection of seed stocks in the wild. From the late 1970s through to the present, a number of factors have led to significant growth in the industry. Currently, there are 482 licensed shellfish tenures occupying 2114 hectares in British Columbia. With the exception of one farm in the Queen Charlotte Islands and one south of Prince Rupert, all tenures are located within the Strait of Georgia or around Vancouver Island. Average tenure size throughout the province is 4.39 hectares. Approximately 35% of all tenures are less than 2 hectares in size, while less than 10% of the tenures are more than 10 hectares and only 5 tenures are greater than 30 hectares. Baynes Sound is the most important shellfish growing area totaling 29% of the tenure area and 52% of shellfish farmgate value. Workforce Shellfish aquaculture provides well-paying, permanent, year round employment in rural and coastal areas where jobs are scarce and the percentage of displaced resource workers are high. Currently, direct jobs that can be attributed to the BC shellfish aquaculture industry. Workers under the age of thirty hold approximately 50% of those jobs. From a percentage point, this industry spends more on wages than other sectors, such as terrestrial agriculture and fishing. Economic Contribution The output and GDP multipliers for shellfish farming are higher than in agriculture and related services, including fishing and the food and beverage industry. Two thirds of an indirect job is created for every direct job in the aquaculture industry. Therefore, approximately 600 jobs are estimated in supply and service industries. Spin off employment is located in rural coastal communities, rather than the larger urban centers. Markets World demand for shellfish and other seafood is steadily increasing, and per capita consumption of shellfish is increasing in US and Canada. Fifteen percent of the US population consumes about 85% of all oysters sold in the US and the average US oyster consumer is male, between the ages of 18-49, living in costal areas and earning $60K plus in income. The older segment of the Kingzett Professional Services Ltd. Page ii

5 population is the primary purchaser of shucked oysters. Securing younger consumers will require product diversification, innovative packaging and positioning, and a focus on development of ready to eat products. Issues around product safety and sustainability will continue to grow in importance and become important selling tools. Approximately 80% of BC s shellfish aquaculture products are exported with the primary export markets being the US and the Pacific Rim. In the recent past, BC s supply has been far less than its demand, however the industry is now in a major transition period. Provincial and North American production of oysters has increased, creating soft markets and making it apparent that traditional market channels need to be expanded and new channels developed. However, many new markets require a much larger volume on a regular basis than BC can supply. Major competitors in domestic markets are from Eastern Canada, the western US, China, and New Zealand. Prices for shellfish have increased over the past 20 years. These factors should continue to keep cultured shellfish prices at high levels during the next decade. Traditionally, there has been a shortage of shucked oyster farm production a trend that has recently shifted. Lack of aggressively pursuing market growth and processors unwilling to process the available shucker production are contributing to soft demand for farmgate production at present. Processors feel that additional markets do exist for shucked product but time for development is needed. An untapped domestic & US market all point to significant market opportunities for this industry. US buyers & consumers view quality of Canadian products positively and there is also a large Asian market (Japan, China, Hong Kong) representing huge potential for oysters, clams, and geoducks. Industry Potential Global aquaculture production by the year 2050 is estimated to be about million mt. Canadian aquaculture production may grow by 15% per year to 511,000 metric tonnes with a value of $3.1 billion by Coopers and Lybrand estimate that the BC shellfish industry will reach $100 million in 10 years, and the shellfish volume harvested from the Clayoquot Sound area alone is expected to triple within the next two years. A recent CAIA industry survey suggested that shellfish production on both coasts would increase by 20% per year over the next five years. Constraints to Industry Growth The aquaculture industry in BC has been unable to achieve its anticipated potential. The following constraints are described as to their effects on restricting industry growth: Restrictive Regulations & Policies Lack of Legislative Underpinnings Kingzett Professional Services Ltd. Page iii

6 Access to Sites Environment & Public Perceptions New Species Development Profitability/Efficiency Lack of Government Support/Vision Industry Leadership Common Vision/Cooperative Approach Local Government/Zoning Issues Processing/Marketing Value Added/New Product Development Quality Assurance Investment & Financing Training What s Needed The following factors are discussed with their importance in assisting the shellfish culture industry achieve its potential. Increased Competitiveness = increased supply + improved efficiency Increased Certainty = Streamlined regulatory framework & legislative support Environmental Sustainability = o Research and development o Industry Code of Practice o Improved Public Perception & Support Diversified Product Line = Culture of New Species + Higher Value Added Products Provincial & Federal Government Vision & Support Cooperative Industry Approach Moving forward with one voice Extending Right to Farm to all Crown Land below high water mark Restructuring of Industry Players = more processors, new investment Generic Marketing Program for BC Shellfish Quality Assurance Program for BC Shellfish Attract New Investment by Promoting Benefits & Addressing Major Constraints New Zealand, a Case Study for B.C. New Zealand provides an excellent case study for comparison with British Columbia. The timing and early story of the development of the industry is very similar to that of the British Columbia shellfish industry, and the area occupied by the industry and number of farms remains similar to BC. In 1988, tonnage was remarkably similar between the two countries. New Zealand exports totaled 5800 tonnes worth CAN$ 17 million in comparison to 3700 tonnes in British Columbia Kingzett Professional Services Ltd. Page iv

7 worth CAN$ 4 million. By 2000, mussel exports had risen to CAN$ 124 million. This represents a growth of over 708% for the 12-year period compared to an increase of 495% in value for Canada. At present Greenshell mussels in a variety of product forms are currently exported to some 55 countries worldwide. New Zealand supplies over 90% of the frozen mussel product consumed in the USA. The factors which allowed the New Zealand industry to realize potential include: Industry has gotten together, worked toward a common goal and moves forward as one Single production and harvesting technique Capitalized production technique & increased mechanization Effective Generic Marketing campaign Greenlip mussels synonymous with New Zealand High value added lots of products Leaders in product quality and safety Leaders in Environmental Management Systems 50 in 5 A Possible Vision for the BC Shellfish Culture Industry The Coopers and Lybrand vision for the industry has not been completely successful as the focus has been solely on the allocation of new sites. The vision in this document takes a new approach to the problem. By looking at the New Zealand model, we can see that allocation of new ground is not the only solution to growth. This vision examines the current structural make-up of the industry, and the related health that such a structure implies. Similarly, it suggests that by increasing the productivity, efficiency, and profitability of the industry a natural restructuring can be made without having to double the available land-base. This vision if achieved would lead to a healthier industry structure with a wholesale value of $50 million in five years time. To arrive at this estimate the following assumptions were made: Growth rate is projected at 18% per year. Given estimated growth from a recent CAIA industry survey at 20% per year, this is achievable. There is an approximate increase by 20% in tenure base to 2500 ha total this can be assumed given planning processes currently underway. Productivity is doubled across the industry to approximately $20,000 per hectare (wholesale value). For example this is the wholesale revenue generated from 2 oyster rafts (deep-water), or 6,000 lbs of Manila clams or 7500 dozen oysters (beach culture) per hectare. There is only a minor increase in the total number of companies, although some consolidation or restructuring may be anticipated given natural market forces. This 5-year plan is realistic, if the industry players (government, research institutions, industry organizations, community organizations) support initiatives to increase productivity: Allocation of new sites will no longer be the focus. In turn, while still an important goal to pursue, the critical need for regulatory & legislative reform will be reduced. Kingzett Professional Services Ltd. Page v

8 New capital will be required to expand upon the existing infrastructure Training will be required to further enhance the existing skill level of farmers Quality Assurance & farm safety programs will need to be initiated to ensure BC product is of consistent quality & safety Effort will need to be made to diversify species cultured and support new product development A generic marketing program that essentially brands BC oysters will be critical to raise the awareness of BC s shellfish products but most important of all, The players in the industry need to support this vision and work collectively to make it happen Next Steps Given that the vision has been articulated and the constraints to industry development described, it is important to consider what would be the appropriate next steps in the process. These steps are put forward as a recommendation for consideration and discussion: 1. Develop a framework for discussion & participate in the June 25/26 workshop titled: How do we Build a World-Class Shellfish Aquaculture Industry in B.C.? 2. Undertake an in depth SWOT (Strengths, Weaknesses, Opportunities & Threats) analysis of the industry, that would serve to do the following: Confirm and develop an updated medium and long-term projection of the most likely industry size. This size would be based on information through interviews of exact industry capacity and plans. Develop an action plan to favorable influence the determining factors and maximize industry development Possible Role For VIEDA The Vancouver Island Economic Developers Association (VIEDA) New Marine Frontier Project is focused mainly on attracting investment to the Vancouver Island region. However, there may be additional activities and initiatives that this committee could pursue that would assist in strengthening the viability, profitability, and sustainability of the shellfish aquaculture industry: Community Advocacy: Securing the support of local communities where shellfish is farmed and processed will be critical for the future growth of the industry. Dispelling myths around the questions of environmental sustainability & stewardship would do a lot to advance the industry on a local level. Kingzett Professional Services Ltd. Page vi

9 Leadership: Support/link with other organizations, institutions, and provincial government ministries who are working to develop a clear vision and action plan for the industry (i.e. CSR, BCSGA, BCMAFF Sustainable Economic Development Branch) Assist in providing leadership for a fragmented industry. By uniting the key stakeholders around a common vision ( 50 in 5 ), VIEDA could play an influential role in the future growth and competitiveness of the industry. Take a leadership role in choosing and solving one of the industry constraints (i.e. generic marketing) Attract outside investment through targeted marketing packages or programs and supporting regional projects. Promote the local community benefits of expanding the industry by looking at the increased jobs directly on the farms & processing facilities as well as associated jobs in supply and service industries Prepared by Ruth Salmon and Brian Kingzett Kingzett Professional Services Ltd. 225 Vancouver Avenue, Nanaimo B.C. V9S 4E9 June 2002 Kingzett Professional Services Ltd. Page vii

10 Table of Contents Executive Summary... i Table of Contents... viii List of Figures and Tables... ix Introduction... 1 Aquaculture from a Global Perspective... 2 Introduction...2 Global Aquaculture Trends...3 What and Where...5 Global Molluscan Shellfish Culture...8 Production Overview of the BC Shellfish Culture Industry Species Under Culture...13 Culture Techniques...14 Production Trends Within the BC Industry...17 Locations of Tenures and Production Current State of Production Values...21 Current Production Trends Between Areas...23 Structural Overview of the BC Shellfish Culture Industry Workforce...26 Economic Contribution and Impact...26 Industry Structure...27 Marketing of Cultured BC Shellfish...28 Potential of the BC Shellfish Culture Industry Global Growth Predictions...34 Canadian Growth Projections...35 BC s Potential...36 Status of the Shellfish Development Initiative (SDI)...38 Constraints to Industry Growth What s Needed to Address Constraints...48 New Zealand, a Case Study for BC in 5 A Possible Vision for the BC Shellfish Culture Industry Current Situation...60 Projected Vision...61 What is required to see it happen?...63 Next Steps Possible Role For VIEDA...64 References Kingzett Professional Services Ltd. Page viii

11 List of Figures and Tables FIGURES Figure 1. The contribution of capture fisheries and aquaculture to the total aquatic food supply and the total world fisheries landings in Figure 2. The proportion of total aquaculture production accounted for by species groups... 5 Figure 3. The top ten aquaculture species by value for Figure 4. The top ten aquaculture producing countries in 1988 and Figure 5. Global oyster culture Figure 6. World oyster culture value breakdown by region in Figure 7. The top ten producing countries of Pacific oysters in Figure 8. The top ten producing countries of Manila clams in Figure 9. The top ten producing countries of Mussels in Figure 10. The top ten producing countries of Scallops in Figure 11. The top ten producing countries of Abalone in Figure 12. North American production of cultured oysters Figure 13. Tenure locations within the Strait of Georgia and around Vancouver Island Figure 14. Breakdown of tenure area by region Figure 15. Breakdown of tenure sizes within the aquaculture industry in Figure 16. The total value of shellfish culture production in BC Figure 17. The farmgate and wholesale values of BC farmed shellfish Figure 18. Breakdown of reported farmgate value for all farmed shellfish area by region Figure 19. Breakdown of reported farmgate value for shucked oysters (gallons) by region Figure 20. Breakdown of reported farmgate value for all single oysters (dozens) by region Figure 21. Breakdown of reported farmgate value per hectare by region Figure 22. Current estimate of breakdown of BC Shellfish culture industry company structure Figure 23. Projected estimate of breakdown of BC Shellfish Culture industry company structure in TABLES Table 1. The top 15 aquaculture producing countries in (tonnage, annual rate of growth and value $USD)... 7 Table 2. Summary of tenures and farmgate production by geographic area Table 3. Projections of the OCAD National Aquaculture Think Tank August 2001 (OCAD 2001) Table 4. Summary comparison of BC and New Zealand Industries Table 5. Current estimate of breakdown of BC Shellfish culture industry company structure Table 6. Projected estimate of breakdown of BC Shellfish Culture industry company structure in Kingzett Professional Services Ltd. Page ix

12 Profile and Potential of the BC Shellfish Aquaculture Industry 2002 BC s shellfish farming industry is at a critical stage in its development. Introduction Shellfish aquaculture has emerged over recent decades as an important industry for coastal communities in British Columbia, and holds tremendous potential for growth. Given the decrease in the harvest of wild fisheries in recent years, more attention is being focused by governments, industry, and communities on the growth of shellfish aquaculture as a vehicle for sustainable economic development. While the potential for this industry is strong and well documented, there are a number of issues and constraints that have prevented it from achieving it s growth projections. The shellfish industry in BC is at a critical stage in its development. We are entering a period of unique opportunity with the coalescence of several key factors influencing future development. While the industry is viewed as one with great potential, it is still very small in terms of volume and farmgate value. A literature review of existing documents has been undertaken to develop a comprehensive profile of the current shellfish aquaculture industry in BC. This profile is intended to provide the client, the Vancouver Island Economic Developers Association (VIEDA), New Marine Frontiers Project, with a clear picture of what the industry looks like today, how it is structured, what the potential is for future growth, as well as what barriers are currently impacting expansion and competitiveness. At the conclusion, a vision for the BC shellfish farming industry is presented along with recommendations for initiatives that would serve to move the industry ahead and ultimately, create wealth for coastal communities in British Columbia. This activity has involved using all existing sources of currently available statistical data, information and literature (qualitative and quantitative) to compile an industry synopsis document. Kingzett Professional Services Ltd. Page 1

13 Aquaculture from a Global Perspective INTRODUCTION Aquaculture is recognized as the only means by which increasing world demand for seafood will be met in the future. By definition, aquaculture is the: Culture of aquatic organisms, including fish, molluscs crustaceans and aquatic plants. Culture implies some form of intervention in the rearing process to enhance production such as regular stocking, feeding, protection from predators, etc. Culture also implies individual or corporate ownership of the stock being cultivated. 1 Globally, seafood industries are shifting from traditional wild capture fisheries for seafood products, to the commercial cultivation of farmed species. Aquaculture is recognized as the only means by which increasing world demand for seafood will be met in the future. Aquaculture comprises diverse systems of farming aquatic animals and plants in fresh and marine waters. A wide variety of animal and plant species are produced through aquaculture including: finfish, shrimp, prawns, and crabs; oysters and mussels; as well as seaweeds and other aquatic plants. Culture practices are conducted in a range of aquatic environments (freshwater, brackish, and marine) and temperatures (cold, temperate, and warm). However, aquaculture is a sector that is predominantly rural and in the face of increasingly threatened wild fish stocks, it contributes significantly to providing food security. Aquaculture plays a key role in providing food fish to the world s population and enables employment and income generation, which in turn helps alleviate poverty and assists rural livelihoods in general. Aquaculture is characterized not only by its very diverse array of cultured products, but also by a wide range of management practices. At one extreme are those of large scale industry, which are typically capital intensive and market driven and have high primary resource inputs. At the other end of the spectrum are the rural, low-input practices involving local communities. There are many intermediate management practices where one or two species are cultured in rural areas and the majority of the product is sold to urban and export markets. The world per capita fish consumption has been growing since the 1960s. The world per capita fish consumption has been growing since the 1960s. Consumption has varied among continents and countries within each continent and, on average, has always been higher in richer than in poorer countries. Although aquaculture originated at least two millennia ago, it was only since the latter part of the 20 th Century that it began to make a significant contribution to overall human food supplies, and it is now seen as an important sector for the supply of animal protein 3. The increase in the importance of aquatic food is a reflection of the increase in world fishery production. Kingzett Professional Services Ltd. Page 2

14 GLOBAL AQUACULTURE TRENDS Aquaculture is now the fastest growing food-producing industry in the world. The total value of aquaculture production reached USD$ 52.5 billion in Starting from an insignificant total production, inland and marine aquaculture production grew by about 15 percent per year between 1950 and 1969 and by about 8 percent per year during the 1970s and 1980s, and it has increased further to 10 percent per year since To meet the ever-increasing demand for fish, aquaculture has expanded very rapidly and is now the fastest growing foodproducing industry in the world 4. Since 1988, almost all of the increased availability of food fish has been due to aquaculture and it is generally accepted on a global scale that capture fisheries have reached the maximum sustainable yields. Aquaculture currently accounts for about one third, or 40 million metric tonnes (mt), of the annual world fisheries production of 120 million mt. The contribution of aquaculture to world food supply of aquatic products has been increasing over the past 15 years, growing from 12 to 28 percent of total production between 1984 and Total aquaculture production increased from 10 million mt of fish in 1984 to 30.9 million mt in In 1998, total world production of finfish, crustaceans, (e.g. shrimp, prawns, crabs), and molluscs, (e.g. clams, oysters, mussels), from capture fisheries and aquaculture reached million mt 6. The total value of aquaculture production reached USD$ 52.5 billion in The total food fish supply has been growing at a rate of 3.6 percent per annum since 1961, while the world s population has been expanding at 1.8 percent per annum. The proteins derived from fish, crustaceans, and molluscs account for between 13.8 and 16.5 percent of the animal protein intake of the human population according to the Food and Agriculture Organization (FAO) of the United Nations (1997). Aquatic products will be in greater short supply as the domestic and international demand for both high and low valued species increases due to rising populations 7. Many studies forecast that per capita fish intake will continue to increase worldwide over the next three decades, and that most of this increase will result from economic prosperity. The potential of aquaculture to meet the challenges of food security and to generate employment, and foreign exchange is demonstrated by the rapid expansion of this sector, which provides an acceptable supplement to wild fish and plants. Further growth of aquaculture in the food sector is anticipated as awareness of the positive effects that fish consumption has on health and well being increases, especially in developing countries. Kingzett Professional Services Ltd. Page 3

15 By 2030, over half of the fish consumed by the world s people will be produced by aquaculture. FAO (2000) estimates that by 2030, over half of the fish consumed by the world s people will be produced by aquaculture, and a growth rate of 11% per year has aquaculture on a pace to surpass beef production by The global expansion of aquaculture continues to outpace growth in capture fisheries sector. Figure 1. The contribution of capture fisheries and aquaculture to the total aquatic food supply and the total world fisheries landings in Source: FAO Kingzett Professional Services Ltd. Page 4

16 WHAT AND WHERE Half of all aquaculture production is finfish, a quarter is aquatic plants and the remaining quarter is made up of crustaceans (e.g. shrimp, prawns, crabs) and molluscs such as clams, oysters and mussels. Overall, these species represent a relatively small portion of the total aquaculture production (Fig. 2). Figure 2. The proportion of total aquaculture production accounted for by species groups 2. All of the species of the top ten over the last decade represent organisms low in the food chain (i.e. they are either filter-feeders, plants or finfish which are considered herbivores and omnivores). In 1988, the ten species that were produced in the highest quantity included five finfish, three aquatic plants, and two molluscs, where the top four species exceeded 1 million mt. By 1997, five finfish, three molluscs, and two aquatic plant species made up the top ten. The top ten species produced by value are shown in Figure 3. Kingzett Professional Services Ltd. Page 5

17 Figure 3. The top ten aquaculture species by value for World Cultured Aquatic Production Source FAO Value (Billion US$) $4.5 $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 Giant Tiger Prawn Pacific Cupped Oyster Silver Carp Kelp Common Carp Grass Carp Atlantic Salmon Yesso (Japanese) Scalop Top Ten Species Source FAO Manila Clam Bighead Carp In 1997, China, Japan, and North Korea were the top producing countries together accounting for more than half of the total aquaculture production by weight (Fig. 4). While China produced 17.9 million mt of food fish through aquaculture, the whole rest of the world only produced 8.9 million mt. China s contribution to Asian and global production in 1997 was 74 and 67 percent, respectively. Top Ten Aquculture Producing Countries in 1988 and 1997 Figure 4. The top ten aquaculture producing countries in 1988 and China Japan N. Korea S. Korea India Philippines Indonesia United States Taiwan Spain Thailand Bangladesh Viet Nam Amount Produced (Million mt) Kingzett Professional Services Ltd. Page 6

18 Of the low-income food deficit countries (LIFDCs), China and other Asian countries dominate, because they have been much more active in promoting aquaculture, particularly for subsistence. While Asia, America, and Europe have seen an expansion in aquaculture production, Africa has been slow to develop its potential. Unlike Asia, Africa has little tradition in aquaculture and has been affected by a number of external problems, which have prevented proper management and development despite investment. Nevertheless, aquaculture production in Africa has risen from 37,000 tonnes in 1984 to 189,000 tonnes in 1998, the majority of which are freshwater carp and tilapia. Of the ten top producers of food fish through aquaculture, Japan has the highest per-capita consumption in the group. The FAO (2000) reported that Asia is the center of world fish consumption (accounting for two-thirds of the total at the end of the 1990s) and what happens there will determine global developments. FAO is projecting economic growth in Asia over the next decade sufficient to stimulate both demand and production in that part of the world. Table 1. The top 15 aquaculture producing countries in (Tonnage,Annual Percent Rate of growth and Value USD$) Source FAO China mmt (68.6% ) APR +16.2/+12.7% $ 25.4 billion 2. India 2.02 mmt APR +11.2/+9.0% $ 2.22 billion 3. Japan 1.29 mmt APR +0.5/-3.7% $ 4.13 billion 4. Philippines 0.95 mmt APR +5.5/-0.3% $ 0.64 billion 5. Indonesia 0.81 mmt APR +7.2/+4.7% $ 2.15 billion 6. Korea, REP 0.80 mmt APR +1.2/-23.5% $ 0.77 billion 7. Bangladesh 0.58 mmt APR +12.7/+13.9% $ 1.49 billion 8. Thailand 0.57 mmt APR +13.0/+3.1 $ 1.81 billion 9. Viet Nam 0.54 mmt APR +12.3/+5.7 $ 1.36 billion 10. Korea 0.48 mmt APR -2.9/-1.6% $ 0.30 billion 11. US A 0.44 mmt APR +2.4/+1.5% $ 0.78 billion 12. Norway 0.41 mmt APR +23.6/+11.3% $ 1.1 billion 13. Chile 0.36 mmt APR +33.3/-3.6% $ 1.0 billion 14. Spain 0.31 mmt APR +1.8/+31.1% $ 0.28 billion 15. France 0.27 mmt APR +2.7/-4.7% $ 0.61 billion Kingzett Professional Services Ltd. Page 7

19 GLOBAL MOLLUSCAN SHELLFISH CULTURE Fifty-eight species of molluscs are cultured globally. The Pacific oyster was the number one aquaculture species in four out of the five years to Approximately 86 percent of the contribution to total aquaculture and shellfish production originates from filter-feeding molluscs such as oysters, mussels, scallops, and cockles. Fifty-eight species of molluscs are cultured globally, and the total production is about 8.6 million mt. However, the production exceeded 50,000 mt (in 1997) for ten species only (two oysters, five mussels, two clams and cockles, and one scallop species) 8. The most valuable and fastest expanding species are being grown in North and South America, Europe, and Asia. Asia leads global mollusc culture, its contribution growing steadily from about 76 percent in 1988 to nearly 90 percent in The culture of predominantly high value shellfish such as the Japanese scallop and the Pacific oyster more than doubled the world share in terms of value. The most harvested species in recent years has been the Pacific oyster (Crassostrea gigas), which grossed 3.4 million metric tonnes in The Pacific oyster was the number one aquaculture species in four out of the five years to Manila clams are also important making up 18% and 24% of the total mollusc weight and value whereas only five percent of the world mollusc production is mussels. More than 9 out of every 10 oysters consumed are now products of aquaculture and four out of every five mussels and three out of four scallops are cultured 9. Figure 5. Global oyster culture (Source: FAO FishStat 2002) 4000 World production of cultured oysters Million $USD Landed Value Africa South America North America Europe Oceania Asia (not China) China Kingzett Professional Services Ltd. Page 8

20 China dominates the culture of oysters with a value of USD$ 2.6 billion in Of the remaining USD$ 892 million of production 59% is still with Asia as shown in the breakdown by region (Figure 6). Figure 6. World oyster culture value breakdown by region in (Source: FAO FishStat 2002) South America 1% World Oyster Culture Value Breakdown 2000 Total Value = USD$ 892 Million Not Including China = USD$2.6 Billion Asia (not China) 59% North America 9% Africa 0% Oceania 4% Europe 27% RELATIONSHIP OF B.C. CULTURE TO WORLD PRODUCTION British Columbia s contribution to global production of farmed shellfish is miniscule at best in global terms. The top ten producing countries for Pacific oysters, Manila clams, Mussels, Scallops and Abalone are shown in Figures Values in the following figures are for standardized farmgate landings in USD$ calculated by FAO in the 2000 review of Global Fisheries and Aquaculture FishStat database. British Columbia ranks as the 12 th largest single producer of Pacific oysters but only produces 0.12% of production value for this species. BC is the 6 th largest producer of Manila clams with only 0.14% of world value, and 9 th largest producer of cultured scallops with only 0.01% of value. BC does not yet rank at all for production of cultured mussels although eastern Canada is ranked 8 th in the world. Neither does BC rank in cultured Abalone production. Kingzett Professional Services Ltd. Page 9

21 Figure 7. The top ten producing countries of Pacific oysters in (Source: FAO FishStat 2002) China Japan France Korea, Taiwan USA France Australia Ireland Chile Others Cultured Pacific Oysters Million USD$ Figure 8. The top ten producing countries of Manila clams in (Source: FAO FishStat 2002) China Italy Korea Rep Spain USA Canada West Taiwan Ireland United Kingdom Others Cultured Manila Clams Million USD$ Figure 9. The top ten producing countries of Mussels in (Source: FAO FishStat 2002) China Spain France Netherlands New Zealand Italy United Kingdom Canada East Chile Germany Others Cultured Mussels Million USD$ Kingzett Professional Services Ltd. Page 10

22 Figure 10. The top ten producing countries of Scallops in (Source: FAO FishStat 2002) China Japan Chile United Kingdom Peru Korea, Republic of Russian Federation Ireland Canada West Canada East Others Cultured Scallops Million USD$ Figure 11. The top ten producing countries of Abalone in Cultured Abalone 2000 South Africa Taiwan Chile Iceland Mexico Channel Korea, Rep United States Australia Others Million USD$ Kingzett Professional Services Ltd. Page 11

23 RELATIONSHIP OF BRITISH COLUMBIA SHELLFISH CULTURE TO NORTH AMERICAN PRODUCTION In 2000 British Columbia accounted for 5.0% of North American landed oyster culture value according to FAO. In 2000 British Columbia, accounted for 5.0% of North American landed oyster culture value according to FAO. The North American oyster culture industry is dominated by the US Atlantic oyster culture industry (58% in 2000), which has been highly variable during the period shown on the following figure. The US Pacific coast accounted for approximately 29% of the industry value in 2000 and has been more stable during the last decade. The value of oysters from Atlantic Canada was reported by FAO as approximately 7.6% of North American value in 2000, although this value may be over-represented (Fig. 12). North American production of cultured oysters Figure 12. North American production of cultured oysters (Source:FAO FishStat 2002) Million $USD Landed Value USA - Atlantic USA - Pacific Canada - Pacific Canada - Atlantic Kingzett Professional Services Ltd. Page 12

24 Production Overview of the BC Shellfish Culture Industry SPECIES UNDER CULTURE Shellfish growers rely primarily on hatchery-produced seed for the culture of all three species. The three main species of shellfish cultured in British Columbia are Pacific oysters, Manila clams and Japanese (Pacific) weathervane scallops. All three are non-indigenous species introduced intentionally or unintentionally from Japan. The Pacific oyster (Crassostrea gigas) was first introduced into the Pacific Northwest about 1900 and introductions continued up until the Second World War. This species is barely established in British Columbia, breeding with regularity in only three small areas as the waters of British Columbia are generally cooler than the species natural breeding range. The Manila clam (Tapes philippinarium) was accidentally introduced into British Colombia in the mid-1930s with oyster seed from Japan and it is now well established. It was the subject of a large boom and bust wild fishery, which is managed by area restrictions and limited-entry participation. The Japanese weathervane scallop, (Patinopecten yessoensis) marketed as the "Pacific scallop" was introduced from Japan by a joint program of the Department of Fisheries and Oceans and the British Columbia provincial government during the 1980s. Imported broodstock were held in quarantine and bred. Successive generations of offspring were used to initiate a scallop culture industry in the province. Shellfish growers rely primarily on hatchery-produced seed for the culture of all three species. Clam growers also use strategies to enhance the number and increase the survival of clam larvae, which settle out on culture beds. Of note is that most of the oyster and clam seed used in British Columbia is imported from the United States. Additionally, in British Columbia efforts are underway to commercialize culture of the Blue mussel (Mytilus edulis), the Mediterranean mussel (M. galloprovincialis) and the Native geoduck clam (Panope generosa) and the Northern abalone (Haliotis Kamtschatkana). The European flat oyster (Ostrea edulis) is also grown in British Columbia in small amounts. Kingzett Professional Services Ltd. Page 13

25 CULTURE TECHNIQUES Pacific Oyster Culture Oysters are generally marketed as shuckers and/or in-shell. In British Columbia, oysters are generally marketed as shuckers and/or in-shell. Shuckers are oysters produced for meats, which are removed from the shell shucked in federally-inspected processing plants and sold by the volume (typically quarts or gallons). Shucking oysters are usually between 10 and 15 cm (4 to 6 inches) in length and usually shuck out at 100 to 120 meats per US gallon. Growers are paid according to meat yield, and usually receive between $15 and $17 per US gallon. Current production is approximately 128,000 gallons per year. In-shell oysters are produced for the single or half-shell market. They are a higher value product that is sold by the dozen in a variety of size grades ranging from 5 cm (2 inches) to greater than 15 cm (6 inches). Farmgate prices range from approximately $1.75 to more than $6.00 per dozen. A recent development is that a proportion of the oyster production is being flash-frozen as meats, whole oysters or TVO (top valve off). Current production of single oysters is approaching 2 million dozen per year. BC shellfish growers utilize a diverse number of methodologies and methods used for culturing oysters. Techniques vary depending on the site, the type of product, and the method preferred by the grower. Seed is typically acquired as microscopic larvae and is set, a process by which a free-swimming juvenile undergoes metamorphosis into a sessile juvenile. This process known as remote setting is performed either on site or at a central site, onto substrates called cultch (usually old oyster shells which are known as mother shell ). Alternatively, juvenile oyster seed is acquired as individual singles and nursed in floating upwellers FLUPSY s to a size of approximately 2.5 cm (1 inch), prior to transferring to final grow-out techniques. Some growers specialize in remote setting or nursery operations that sell juveniles to other farms. Alternately, a minority of growers still collect seed in the wild by transporting cultch into BCMAFF reserves held for this purpose in Pendrell Sound (St. of Georgia), Pipestem Inlet (Barkley Sound) or Nesook Inlet in Nootka Sound. Wild oysters are known to breed with some regularity in these areas and the larvae can be caught on the growers cultch for later transplant back to their own farms. However, there is a large amount of uncertainty associated with this practice and hatchery seed has largely replaced wild seed collection. Kingzett Professional Services Ltd. Page 14

26 Much of the development of the industry, however, is coming from deep-water or off-bottom culture where oysters remain fully submerged during growout. The oldest and simplest grow-out method is to spread oyster seed on the beach and wait for them to grow to a marketable size. Grow-out times for beach product range from 2 years to more than 5 years. Much of the development of the industry, however, is coming from deep-water or off-bottom culture where oysters remain fully submerged during grow-out. Grow-out time is usually halved with this method and cm (4-6 inches) oysters, large enough for shucking product, can be produced in 2 growing seasons in most areas. Oysters are never grown-out on the subtidal bottom in deep water. The most common grow-out techniques involve either the insertion of mother shell (old oyster shell) into specially made 2-strand poly rope this is known as String Culture or the attachment of oysters to artificial cultch, specially made corrugated PVC tubes (known as French pipes or "tube" culture). In both these methods, individual strings or tubes are hung vertically from longlines or rafts for 2- year grow-out to a size of cm. On some farms, single oysters are contained in specially designed plastic culture trays and grown for 1 to 2 years before being sold directly or placed into the intertidal zone to harden the shellstock. There are currently three brands of plastic oyster trays and one wire mesh tray, which have been developed and produced by BC farmers being used in British Columbia. Three brands of plastic oyster trays and one wire mesh tray, which have been developed and produced by BC farmers. The oyster-growing industry in British Columbia has been revolutionized over the past twenty years. Whatever the method, farmers working deep-water leases often use longlines or rafts to suspend the oysters being cultured. Longlines involve suspending a rope horizontally in the ocean from a series of floats from which culture equipment is suspended. Anchors at either end of the longline or grids of multiple longlines keep the longlines taut and in place within the tenure boundaries. Rafts (typically 8 m 2 ) are constructed from wood with wrapped Styrofoam flotation and allow for much higher density of culture per unit area. The oyster-growing industry in British Columbia has been revolutionized over the past twenty years. Since off-bottom methods of growing oysters have been developed, more and more production is moving from beaches to deep water. Many beaches with suitable substrate material where oysters have been grown are now being converted to clam culture or clams are co-cultured with oysters. The development of off-bottom growing methods for oysters has pushed productivity and technology to new levels. Where once oyster growing was more like ranching, it is now becoming more like traditional farming and agri-business. Kingzett Professional Services Ltd. Page 15

27 Extensive methods of culture are being replaced by intensive ones and mechanization is now beginning to push productivity. becoming more like traditional farming and agri-business. Extensive methods of culture are being replaced by intensive ones and mechanization is now beginning to push productivity to levels higher than ever before. Manila clams The licensing of clam farming did not become official until Clam farming is a relatively new venture in British Columbia. As market demand and value of manila clams increased in the mid 1980s, oyster growers in the province became increasingly interested in culturing manila clams commercially. Techniques had been worked out in Washington State, and by the mid 1980s the Washington clam culture industry had become well established. The first permitted clam farms in BC were established on existing shellfish culture leases in The licensing of clam farming did not become official until 1991 when the provincial government and the Department of Fisheries and Oceans signed the Canada-British Columbia Letter of Understanding to promote "the development of a viable clam culture industry in BC." Clam farming is not unlike other types of farming. Clam farmers plant seed, tend grow-out plots, protect their stock from predators and poachers and harvest mature crops, just like land-based farmers. Typically hatchery-produced clam "seed" is purchased from nurseries in British Columbia, Washington or California. The seed is spread directly onto firm, low- sloping, mud-gravel growout beaches. To protect the significant investment in seed from scoter ducks, flounders and crabs all of which consider young clams as prize food - panels of lightweight plastic net are laid down and secured across grow-out plots. Mature clams are harvested after 2 to 3 years of grow-out. Scallop Culture The scallop industry is still in its infancy in British Columbia. The scallop industry is still in its infancy in British Columbia as growers overcome a variety of production hurdles. It is anticipated, however, that production could increase dramatically in the very near future. Production is hatchery-based and there is currently one hatchery in the province producing scallop juveniles. The species is fast growing and marketable product can be produced within 2 years of the completion of the hatchery phase. Local scallop producers primarily use Japanese techniques including specially constructed lantern or pearl nets and a technique called ear-hanging for grow-out where the scallops are individually attached to a rope with plastic pins. Kingzett Professional Services Ltd. Page 16

28 Development of New Species At least nine other species being cultured experimentally or at early stages of commercial production. Although the major species cultured in BC are still Pacific oysters and Manila clams, there are at least nine other species being cultured experimentally or at early stages of commercial production. There are many other potential species for aquaculture, not surprisingly, considering the vast species diversity of invertebrates and the strong markets for them. Some of the new species for culture (e.g. mussels, scallops, urchins, and abalone) are cold-water species and have the potential of expanding the geographical range of aquaculture beyond the traditional oyster growing areas of southern BC. Currently, the industry is beginning to farm Blue and Mediterranean mussels with first major harvest beginning in 2001 (data not yet available) and Geoduck for which crops have not yet reached maturity. Five groups are initiating experimental culture of Abalone in conjunction with DFO. PRODUCTION TRENDS WITHIN THE BC INDUSTRY From the beginnings of the shellfish aquaculture industry through to the 1970s, the industry generally operated as family or 'lifestyle' businesses, often under-utilizing the existing land-base and employing a ranching philosophy, relying on inconsistent collection of seed stocks in the wild. From the late 1970s through to the present, a number of factors have led to significant growth in the industry. These have included: production improvements through research, technology transfer, and developments such as inexpensive and consistent hatchery seed stocks, mechanization, new suspended culture technologies, etc.; a shift in the structure of the industry to younger companies with production and business oriented approaches to aquaculture; a shift in regulatory and agency focus to recognize the importance of and the potential of aquaculture in the agri-food and seafood sectors; global air freight services opening up strong international export markets for world class cultured products; and, Kingzett Professional Services Ltd. Page 17

29 diversification of the industry into new species and higher value product forms. In general, a shift in production techniques is occurring and can be anticipated in the near future as oyster growers continue to increase the development of deep-water culture techniques. Without the increase of new ground for intertidal culture, the amount of intertidal area being used for oyster culture may decrease as more areas are converted to clam culture. This decrease in area may not be reflected in overall intertidal production as growers continue to intensify production on existing tenures not used for clams. The majority of production increases in oyster production can be expected to occur from the development of deep-water culture areas, which allow much more intensive levels of production and increased growth rates. As well, deep-water production may be more readily mechanized and more advanced production techniques are available. As improving husbandry techniques may rely on a combination of intertidal and deep-water culture, the use and availability of intertidal culture areas will continue and increase in importance. LOCATIONS OF TENURES AND PRODUCTION 2001 Currently, there are 482 licensed shellfish tenures occupying 2114 hectares in British Columbia, not including a 375 ha experimental subtidal scallop culture tenure south of Denman Island in the Strait of Georgia. With the exception of one farm in the Queen Charlotte Islands and one south of Prince Rupert, all tenures are located within the Strait of Georgia or around Vancouver Island. The breakdown of tenures by geographic region is shown in Figures 13 and 14. Kingzett Professional Services Ltd. Page 18

30 Figure 13. Tenure locations within the Strait of Georgia and around Vancouver Island. Area (ha) by Coastal Region Figure 14. Breakdown of tenure area by region West Coast VI 16% North Coast 1% Quadra Cortes 11% South East VI 12% Baynes Sound 29% Sunshine Coast 13% Okeover/Malaspina 18% Average tenure size throughout the province is 4.39 hectares. Approximately 35% of all tenures are less than 2 hectares in size, while less than 10% of the tenures are more than 10 hectares. Average tenure size throughout the province is 4.39 hectares, with the smallest average being in the Quadra Cortes region (2.46 ha) and the largest average on the Sunshine Coast (5.99 ha). A breakdown of tenure sizes within the industry for 1998 for 384 tenures is shown in Figure 14. Approximately 35% of all tenures are less than 2 hectares in size, while less than 10% of the tenures are more than 10 hectares and only 5 tenures are greater than 30 hectares (Table 2). Note that this analysis excludes the 375 hectare subtidal experimental scallop tenure which is not in production. Kingzett Professional Services Ltd. Page 19

31 Table 2. Summary of tenures and farmgate production by geographic area Number of Tenures Area (ha) Average Tenure Size Report Farmgate Value (all) North Coast $ - Quadra Cortes $ 1,840,667 Baynes Sound $ 8,072,635 Okeover/ Malaspina $ 1,623,066 Sunshine Coast $ 332,036 South East VI $ 2,234,391 West Coast VI $ 1,311,127 Total $ 15,413,922 This analysis has important implications for the industry as the BCSGA has previously submitted to the BC Government in negotiations around tenure allocation and pricing that the minimum viable single farm size is 10 hectares 11. Figure 15. Breakdown of tenure sizes within the aquaculture industry in Number Frequency of Tenure Sizes 1998 < Hectares Kingzett Professional Services Ltd. Page 20

32 CURRENT STATE OF PRODUCTION VALUES The BC shellfish aquaculture industry is concentrated primarily on the production of Pacific oysters and Manila clams. Virtually all of the commercial harvest of BC oysters is farmed while commercial culture of clams is steadily increasing. During the 1990s, farmed production of Manila clams averaged 25% of all clam production (including wild fishery). The wholesale value of the industry in 2000 was approximately $20 million. (Fig. 16). During the 1990s, the harvest of BC farmed shellfish grew considerably. Shellfish aquaculture production stood at 4600 tonnes in 1990 and was 6700 tonnes at the end of the decade, a rise of 46% over nine years. Figure 16. The total value of shellfish culture production in BC B.C. Shellfish Culture Production ($ Millions) Year Pacific Oysters Manila Clams Japanese Scallops The production of BC farmed oysters averaged 4900 tonnes during the 1990s and reached 5.8 thousand tonnes in Oyster production was 28% higher at the end of the decade than in Preliminary estimates for 2001 indicate that current production is at 1.8 million dozen single oysters per year and 128,000 gallons of shucked oyster meats with a combined farmgate value of just over Kingzett Professional Services Ltd. Page 21

33 shucked oyster meats with a combined farmgate value of just over CAN$ 7 million 12. This pales in comparison to the estimated CAN$ 5 billion and CAN$ 2.3 billion value of global production of Pacific oysters and Manila clams respectively. Commercial production of farmed clams in 1990 was just 39 tonnes. This value increased to 900 tonnes by 1999 and accounted for 13% of farmed shellfish production in that year by weight, but made up almost 40% of farmgate value. Over this period, farmed clams accounted for an increasingly large share of the farmgate and wholesale value of the industry as commercial production of clams increased. The increase in the products share of the total value of production also reflects the higher value received for farmed clams. During the last decade, values of farmed shellfish also grew sharply, in dollar terms; farmgate value was CAN$ 3.8 million at the beginning of the decade and had reached CAN$ 10.0 million by 1999 (Fig. 17). The wholesale value rose from CAN$ 4.6 million to CAN$ 17.9 million 13 (290%), increasing faster than farmgate values (166%) during the last decade. In 1990, the wholesale value of BC farmed shellfish was just 21% above farmgate receipts, by the end of the decade; however, wholesale value was 179% of aquaculture farmgate sales. Figure 17. The farmgate and wholesale values of BC farmed shellfish Source: BC Ministry of Finance and Corp. relations 2001 Compared to wild shellfish species (e.g. geoduck), BC s farmed shellfish is a considerably lower priced product. During the 1990s, the landed price of farmed shellfish averaged $1.25/kg, which was less than the 3.98/kg received for wild species. Nevertheless the farmgate price for BC cultured shellfish increased by 82% over the decade with farmed clams receiving considerably higher prices than oysters (1999 Clams = $4.22/kg average vs. Oysters = 1.03/kg Kingzett Professional Services Ltd. Page 22

34 than oysters (1999 Clams = $4.22/kg average vs. Oysters = 1.03/kg average). Export prices for oysters in 1999 were 3.9 times farmgate price whereas clam exports ($6.05) averaged 2.2 times the farmgate price. CURRENT PRODUCTION TRENDS BETWEEN AREAS Production data reported by shellfish growers to BCMAFF for 2001 illustrate a variety of trends and differences between the various growing areas. Production data used in this analysis is preliminary and is collected from annual aquaculture statistical reports filed by shellfish growers. Data may be missing and the accuracy of data collected is not well verified. However, general trends may be ascertained from the data. Baynes Sound is the most important shellfish growing area. Baynes Sound is the most important shellfish growing area totaling 29% of the tenure area, 52% of shellfish farmgate value and producing 21% of shucked oysters and 58% of all single oysters in 2001 (Fig. 18). The high farmgate value may also be attributed to the large amount of Manila clams that are grown in Baynes Sound. The Okeover / Malaspina area contains the next largest tenure area 16% but produces only 11% of farmgate value, mainly oysters including 19% of shucked oyster production and 17% of total single oysters. The Sunshine Coast contains about 13% of tenure area over 45 tenures, but produces only 2% of shellfish farmgate value including 2% of single oysters and 1% of shucked oysters in 2001 (Figs. 19, 20). The growing regions around Quadra and Cortes Island include 93 tenures and 228 hectares producing 12% of total farm value, 19% of shucked oysters and 15% of single oysters. Similarly, 46 farms on the south coast of Vancouver Island (249 ha) reported 12% of farmgate value including 11% of shucking oysters, but only 2% of single oysters. Eighty-two tenures are located on the west coast of Vancouver Island extending from Sooke Inlet to Kyuquot Sound, encompassing only 329 ha or 16% of total area. This region is important to shuck oyster production producing 29% of shucked oysters but only 6% of single oysters. Kingzett Professional Services Ltd. Page 23

35 Farmgate Value all species by Coastal Region Figure 18. Breakdown of reported farmgate value for all farmed shellfish area by region 2001 AASR reported data. West Coast VI 9% Quadra Cortes 12% North Coast 0% Baynes Sound 52% South East VI 14% Sunshine Coast 2% Okeover/Malaspina 11% Farmgate Production Gallons Shucked Oysters by Coastal Region Figure 19. Breakdown of reported farmgate value for shucked oysters (gallons) by region. West Coast VI 29% North Coast 0% Quadra Cortes 19% 2001 AASR reported data South East VI 11% Sunshine Coast 1% Okeover/Malaspina 19% Baynes Sound 21% Figure 20. Breakdown of reported farmgate value for all single oysters (dozens) by region 2001 AASR reported data. North Coast 0% West Coast VI 6% South East VI 2% Sunshine Coast 2% Okeover/Malaspina 17% Quadra Cortes 15% Farmgate Production Dozens Single Oysters by Coastal Region Baynes Sound 58% Kingzett Professional Services Ltd. Page 24

36 Production efficiency varies according to region as well. Averaged production per hectare is highest in Baynes Sound at an average of $12,934/ha/year farmgate in This is most likely related to the proportion of higher value single oysters and clams produced in this region. Established areas such as the south east coast of Vancouver Island and Quadra / Cortes have the next highest levels of area efficiency at $8,969 and $8,051 per hectare. Both the Okeover Malaspina region and the west coast of Vancouver Island operate at lower levels of efficiency at approximately $4,000/ha. For the west coast of Vancouver Island this may be partially related to the higher production of lower value shucking oysters. The lowest efficiency of production reported during 2001 was on the Sunshine coast at $1,231 per hectare, which also contains the largest average tenure size. Figure 21. Breakdown of reported farmgate value per hectare by region 2001 AASR reported data. (Source BCMAFF) West Coast VI South East VI Sunshine Coast Okeover/Malaspina Baynes Sound Quadra Cortes North Coast Reported Farmgate Value per Hectare by Region 2001 $- $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 Farmgate value / ha Kingzett Professional Services Ltd. Page 25

37 Structural Overview of the BC Shellfish Culture Industry WORKFORCE Shellfish aquaculture provides well-paying, permanent, year round employment in rural and coastal areas where jobs are scarce and the percentage of displaced resource workers are high. Given that the skill sets, lifestyle and location are compatible with the fishing industry, it is clearly a realistic opportunity for displaced fishers, including first nations. It is estimated that there are currently direct jobs that can be attributed to the BC shellfish aquaculture industry. While automation and improved technology has been increasing in the industry (e.g. hydraulic lifts for harvest and product handling), most shellfish culture is still highly labour intensive. It is estimated that there are currently direct jobs that can be attributed to the BC shellfish aquaculture industry, and workers under the age of thirty hold approximately 50% of those jobs 14. Compared to other industries, a higher percentage of each dollar made in shellfish farming goes to jobs. From a percentage basis, this industry spends more on wages than other sectors such as terrestrial agriculture and fishing. According to Praxis Research & Consulting Inc. 15, new occupations are being created in the aquaculture industry due to technological change, development of new species, and production of value added products. The BC shellfish aquaculture industry has evolved to date with little in the way of formal training programs. ECONOMIC CONTRIBUTION AND IMPACT Estimates of the contribution of the BC shellfish sector to the provincial economy were identified by Coopers and Lybrand (1997) 16. A provincial economic multiplier for shellfish farming was estimated through expenditure data obtained through a survey of producers and processors. The output and GDP multipliers for shellfish farming were found to be higher than in agriculture and related services, including fishing and the food and beverage industry. Cormier and Tillapaugh (1998) 17, estimated spin-off employment generated by the aquaculture industry. The authors suggest that Kingzett Professional Services Ltd. Page 26

38 2/3 of an indirect job is created for every direct job in the aquaculture industry. 2/3 of an indirect job is created for every direct job in the aquaculture industry. The nature of the shellfish farming industry is such that this spin off employment is located in rural coastal communities, rather than the larger urban centers. As stated, the current projection for direct employment in the BC shellfish aquaculture industry is approximately Given the employment multiplier, developed by Cormier and Tillapaugh (1998) one might hypothesize that there could be 600 indirect jobs in BC related to shellfish aquaculture. Shellfish aquaculture clearly has a significant impact on related supply and service industries in coastal British Columbia. Shellfish operations use construction and transportation services, boat repair and maintenance services, business, financial management, and consulting services, as well as a variety of technical services such as laboratories. Aside from service, the industry purchases large numbers of other goods and equipment. As the industry increases its technology, increased sales and development of specific equipment and technologies can also be expected. Industry Structure The great majority of shellfish operators are still small companies, many of which are family owned. While it is anticipated that the industry is poised for a structural reorganization to take place (increased level of foreign ownership & presence of multinational companies), the great majority of shellfish operators are still small companies, many of which are family owned. Processing In a recent shellfish market survey conducted by Ecotrust Canada (2002) 18, it was determined that there are a total of 31 seafood processors currently licensed to process and ship BC shellfish. On Vancouver Island, 4 or 5 (of a total of 10) companies process the vast majority of the farmed production. These 10 companies process primarily oysters (shuckers and single oysters) as well as clams. One company, Fanny Bay Oysters handles more than 50% of the Island s current oyster shucking activity, and only two companies process the majority of culture clams and oysters. There is also an indication that some of the larger growers are now integrating their operations with processing. Kingzett Professional Services Ltd. Page 27

39 MARKETING OF BC CULTURED SHELLFISH Consumption Trends Over the past 10 years, shellfish consumption has accounted for the majority of the increase in per capita consumption of seafood in Canada. World demand for shellfish and other seafood is steadily increasing at a time when all traditional wild harvest fisheries are on the decline. One of the reasons that there is such a strong economic potential of shellfish aquaculture in BC is because of the growing market demand for shellfish products. Per capita consumption of all seafood products around the world has been increasing over the last two decades. However, over the past 10 years, shellfish consumption has accounted for the majority of the increase in per capita consumption of seafood in Canada. Figure 23. Per capita fish consumption in Canada by type. (Source: Statistics Canada) Per Capita Fish Consumption edible weight Kilograms Year Sea fish, Fresh and Frozen Shellfish, Total Sea fish, Processed Freshwater Fish The US and Canada are not the only regions experiencing a general trend of increased seafood consumption. Dietary habits are changing worldwide, especially in developed European countries. Markets have become more flexible and new products and species have found market niches. Increased value added fish and shellfish products are anticipated to increase in the catering Kingzett Professional Services Ltd. Page 28

40 and retail markets, thus making it easier for consumers to prepare 19. While seafood consumption has increased globally, Canadian per capita consumption is still only about half that of the American consumption. However, in both countries, consumption is generally highest in urban centers and the consumption of fresh oysters is highest in the foodservice sector. Zimet and Smith (2000) 20 conducted a survey of oyster consumption & purchasing habits. They found that: 15% of the US population consumes about 85% of all oysters sold The average oyster consumer is male, between the ages of 18-49, lives in a coastal area and earns $60K plus in income The market for oysters on the half-shell has expanded recently in the US and imports of oysters have climbed steadily since 1990 (Coopers and Lybrand, 1997). In 1999, the overall top ten list of best selling seafood species in the US, as reported by Seafood Business magazine, shows oysters in the number eight spot. Demographically, it is the older segment of the population that is the primary purchaser of shucked oysters. While consumption of half-shell oysters is currently heaviest in the year old group, it is anticipated that securing younger consumers will require product diversification, innovative packaging and positioning, and a focus on development of ready to eat products (Ecotrust Canada, 2002). Other consumer trends noted in the recent shellfish market survey conducted by Ecotrust Canada (2002): Clams, scallops, and mussels appear to remain on a growth curve in the marketplace. Issues around product safety and sustainability will continue to grow in importance and become important selling tools. Flow of product across borders will probably become more difficult, with increased regulations around food supply safety given the heightened global concern around terrorism. Kingzett Professional Services Ltd. Page 29

41 New technology that kills bacteria and extends shelflife will continue to emerge and provide a competitive edge in the marketplace. Current Market Environment & Flow of Product Approximately 80% of BC s shellfish aquaculture products are exported with the primary export markets being the US and the Pacific Rim. The shellfish aquaculture industry export oriented. Approximately 80% of BC s shellfish aquaculture products are exported with the primary export markets being the US and the Pacific Rim. Export statistics are available for BC farmed oysters, but not separately for farmed clams. In 2000, the value of oyster and clam exports both registered double-digit increases. Oyster exports rose 14 percent to $8.2 million, and clam exports rose by 17 percent to $6.6 million. Oyster exports have risen for three consecutive years, increasing 39 percent during this period. The majority of exports go either to Canada or Asian countries, specifically to Japan and Korea 21. Over the last two years, the consumption of seafood products in Japan has been strongly influenced by their economic crisis. The crisis and the subsequent low value of the yen led to a decline in imports and consumption in In 1999, the Japanese economy started to recover, but not as quickly as originally forecast because Japanese people were not spending as freely as they had done before the crisis. Food items that consumers consider to be expensive have had difficulty in regaining their pre-crisis market shares. The United States economy has been particularly strong, and consumption of shellfish continues to increase. On the other hand, the United States economy has been particularly strong, and consumption of shellfish continues to increase. Virtually all BC clam exports go to the US. In fact, Canada is the largest exporter of fresh and frozen clams to the US. The majority of the production from the US and Canada is directed at fresh and frozen markets. Fresh clams and oysters are consumed primarily in the restaurant trade. In the recent past, BC s supply has been only a fraction of demand its and processors have been able to sell all they could source. However, industry is now in a major transition period. Provincial and North American production of oysters has increased, creating soft markets and making it apparent that traditional market channels need to be expanded and new channels developed. However, while all information sources indicate that potential new markets do exist for BC shellfish, many of those opportunities Kingzett Professional Services Ltd. Page 30

42 In the recent past, BC s supply has been only a fraction of demand and processors have been able many of those opportunities require a much larger critical mass in order to successfully supply on a consistent, year round basis. markets do exist for BC shellfish, many of those opportunities require a much larger critical mass in order to successfully supply on a consistent, year round basis. There are a number of levels between the processor and the final consumer. These include value-added processors, brokers, distributors, wholesalers, and retailers, all engaged in servicing different target markets. Except on a small scale, neither growers nor processors are supplying either the retail or food service sectors directly but instead, rely on established distributors and wholesalers to manage this function. The shellfish wholesalers specialize in specific market segments such as upscale restaurants and grocery stores, mainstream grocery and ethnic. The markets in BC and the US are basically the same, with similar channels for flow of product and similar trends in the marketplace. Markets for other species such as mussels and geoducks are reported as strong (Ecotrust Canada, 2002). BC s Shuck Oyster Situation Traditionally, there has been a chronic shortage of shucked oyster farm production on Vancouver Island, with processing and market capacity outpacing farm production. This trend has shifted for three reasons 1) a current soft market due to increased production in BC and the rest of North America 2) lack of aggressively pursuing market growth and 3) processors unwilling to process the available shuck production on Vancouver Island. Traditionally, there has been a chronic shortage of shucked oyster farm production and this trend has shifted. According to the shellfish market survey conducted by Ecotrust Canada (2002), there are no plans for increased processing capacity for shucked oysters on the West Coast of Vancouver Island (VI). This has created a serious complication for growers given the fact that the West Coast of VI produces 30% of all BC s shucked production, many growers do not currently have a buyer for their harvestable product. It is very clear that many of the existing processing plants are reluctant to step up processing without securing new markets first. According to Ecotrust Canada, many processors that were interviewed felt that additional markets do exist for shucked product but that time would be needed to develop these markets. Dormant or under utilized fish processing plants on the West Coast are currently being assessed for potential startup or refitting as a shellfish approved processing facility. However, whether an Kingzett Professional Services Ltd. Page 31

43 as a shellfish approved processing facility. However, whether an adjustment in facilities will happen fast enough is questionable. Domestic Competition The principal competition to the BC shellfish industry in the domestic market for fresh and frozen products originates from Eastern Canada, the western US, China, and New Zealand (Renwick and Associates, 1996) 22. Price The principal competition to the BC shellfish industry in the domestic market originates from Eastern Canada, the western US, China and New Zealand. Rising incomes, population growth, a growing demand for seafood and limited supplies were major reasons explaining significant increases in prices during the past 20 years. These factors should continue to keep cultured shellfish prices at high levels during the next decade (Coopers and Lybrand, 1997). Market Potential An untapped domestic and US market all point to further significant market opportunities for this industry. Clearly, aquaculture as a whole plays a key role in providing seafood to the world s population, and its role will need to grow in the future or supplies will be inadequate to sustain current percapita consumption rates 23. While the majority of BC s product is exported to the US, the US potential is still untapped. In 1995, BC only supplied approximately 5% of US oyster supplies and 3% of US clam supplies. (Coopers and Lybrand, 1997). Buyers and consumers in the US regard Canadian products with generally high quality perceptions and a willingness to expand imports. There is also a large Asian market (Japan, China, Hong Kong) representing huge potential for the BC industry including oysters as well as clams and geoducks. The opportunity for direct sales to wholesalers, food service and retail customers is real and expanding. However, according to Ecotrust Canada, order volumes are often extremely large and well beyond the capacity of individual processors. In addition to this constraint, these markets require intensive and sustained effort to secure and retain. Hong Kong s recent imposition of the 2 ppm cadmium level has also significantly affected this market. Kingzett Professional Services Ltd. Page 32

44 Purchasing Factors There are two main decision factors considered by shellfish wholesalers before selecting an oyster supplier to purchase from: consistency of product availability and quality. Half shell oysters from BC have an excellent reputation in the western US market (Renwick and Associates, 1996). British Columbia is perceived as an area producing high quality products due to its clean cold water. Through extensive interviews, Renwick and Associates (1996) also determined that there are two main decision factors considered by shellfish wholesalers before selecting an oyster supplier to purchase from: consistency of product availability and quality. In addition to quality and availability, the use of a creative and innovative story to tell about the oyster and oyster growing area was viewed very positively by wholesalers and in fact, impacted their purchasing decisions. Kingzett Professional Services Ltd. Page 33

45 Potential of the BC Shellfish Culture Industry GLOBAL GROWTH PREDICTIONS The aquaculture industry is the fastest growing food sector and BC is positioned to reap the benefits of this dynamic and expanding sector. Globally, the aquaculture industry is the fastest growing food sector and BC is positioned to reap the benefits of this dynamic and expanding sector. A Department of Fisheries and Oceans background paper (1999) 25 contains the following projections of world demand for seafood and global aquaculture production: The United Nations Food and Agriculture Organization (FAO) projects world demand for fish and seafood will grow steadily from under 101 million tonnes in 1993 to 120 million tonnes by According to FAO, world aquaculture production was projected to reach 35 million tonnes by the year 2000, an increase of 21% over 1995 levels (this is considered by FAO to be a conservative estimate). At this volume of production aquaculture would contribute the equivalent of almost 30% of global fisheries production and more than 45% of its value. This projection of rapid growth concurs with other projections including those made by fisheries and aquaculture specialists at the International Conference on Sustainable Contribution of Fisheries to Food Security, held in Kyoto, Japan in The assembled experts estimated future aquaculture production levels by the year Two growth scenarios were developed (low and high growth). Under their high growth scenario, aquaculture production would reach 55 million mt by the year Under their extreme low growth scenario, production would still reach 37 million mt. Given the favourable long-term demand outlook and actions being taken by Governments around the world to foster continued aquaculture development and remove some of the constraints to sustainable growth, actual production in the year 2010 will likely be closer to the high end of the scenario. To date, every estimate of future global aquaculture growth has proven to be too conservative. For a longer term scenario, production by the year 2050 was estimated by the Kyoto conference to be about million mt. Kingzett Professional Services Ltd. Page 34

46 CANADIAN GROWTH PROJECTIONS When Brian Tobin was the Minister of Fisheries and Oceans, he summed up the benefits of Canadian aquaculture with the following statement: Aquaculture is technology based, and is highly tuned to changing consumer trends. And by matching the capabilities of science and technology, with the advantages of our own pristine environment and the wealth of our natural resources, this industry is one of the most promising new industries in Canada today 26. In 1995 Canada ranked 27 th in the world, accounting for only 0.2% of global aquaculture production. A Department of Fisheries and Oceans background paper (1999) shows that Canada is a small player on the world stage. In 1995 Canada ranked 27 th in the world, accounting for only 0.2% of global aquaculture production. The report also notes that Canada has not kept pace with the growth in world aquaculture production. However, production and value in the Canadian aquaculture industry have grown rapidly and growth rates appear to be increasing (i.e., 11% per year from 1991 to 2000 and 14% per year from 1996 to 2000). Not only will production and value grow for existing farmed species, but new species will begin to contribute significantly. According to the Department of Fisheries and Oceans 1999 backgrounder document on the industry, the comparatively small size of the aquaculture industry in Canada is not commensurate with it s potential, given that Canada has an abundance of natural resources ideally suited to the sector. In addition, Canadians have acquired internationally recognized technical and management expertise in the sector, and have developed state-of-the-art facilities for the production of high quality cultured seafood. If Canada can translate its significant advantages into industry growth, it has the potential to be a world leader in aquaculture. Canada s geographical setting is also advantageous as we have easy access to the vast Pacific Rim and North American fish and seafood markets. If Canada can translate its significant advantages into industry growth, it has the potential to be a world leader in aquaculture. Production projections made by industry experts at the Office of the Commissioner for Aquaculture Development (OCAD), 2001 Think Tank indicates that Canadian aquaculture production may grow by 15% per year to 511,000 mt with a value of $3.1 billion by This projected growth rate is about 1% higher than the actual rate of change in production over the period. Kingzett Professional Services Ltd. Page 35

47 BC S POTENTIAL The following key attributes provide a strong framework for the BC shellfish farming industry to expand and prosper: Vast bio-physical potential Large pristine coastline = clean water = high quality Environmental sustainability Available workforce, existing technology Access to export markets Provincial Shellfish Projections The shellfish industry in British Columbia has the potential to generate $100 million annually, growing from the 1995 level of $10.9 million. The BC shellfish farming industry has the potential to become as large or larger than the Washington State shellfish farming industry. Key findings of the Coopers and Lybrand (1998) report indicate that: The shellfish industry in British Columbia has the potential to generate $100 million annually, growing from the 1995 level of $10.9 million. This growth would provide an additional 1000 jobs. In order to realize this growth, a doubling of aquatic land allocated to shellfish growing would be required (from 1750 to 3500 hectares). A large share of the benefits will accrue to coastal communities now facing job losses in other resource sectors. The culture of new shellfish species such as scallops, abalone, sea urchins, and sea cucumbers hold further promise for economic expansion. Coopers and Lybrand (1998) made the following conclusions on the industry s potential: On the basis of market trends, productivity increases, and the estimates of capable lands, the shellfish farming industry could contribute substantially to the provincial economy and the balance of trade with seafood. The BC shellfish farming industry has the potential to become as large or larger than the Washington State shellfish farming industry. Kingzett Professional Services Ltd. Page 36

48 CAIA Industry Survey, 2002 Shellfish production on both coasts would increase significantly, possibly by 20% per year over the next five years. A recent aquaculture industry survey, conducted by Praxis Research & Consulting Inc.(2002) for the Canadian Aquaculture Industry Alliance indicated that future production and value depended on the regulatory regime that will be in place over the next five years, and that accurate projections could not be made unless the specifics of this regime were known. However, some of the industry members that were interviewed estimated that shellfish production on both coasts would increase significantly, possibly by 20% per year over the next five years. OCAD Think Tank In August of 2001 the Office of the Commissioner for Aquaculture Development hosted a Think Tank attended by Canadian industry leaders in Merrickville Ontario. The following forecast was made by the group and included information about both finfish and shellfish production and value. Table 3. Projections of the OCAD National Aquaculture Think Tank August (Source: OCAD 2001) 24 Culture Species: Tonnage Value Tonnage Value ($ million) x 1000mt ($ million) x 1000mt Salmonids 84.9 $ $2,100 Other Finfish 0.5 $5 50 $300 Mussels 17.3 $23 69 $93 Oysters 9.3 $14 36 $57 Clams 0.9 $4 4 $16 Other Shellfish 0.1 $0 2 $4 Subtotal 113 $ $2,570 Value-Add $500 Supplies & Service $3,100 TOTAL $6,170 The table shows that production of established species of finfish and shellfish was projected to grow by about 300% except for clams that were projected to increase by almost 350%. Production of shellfish species other than those produced commercially in 2000 also was projected to grow rapidly but only reaching a value of $ 4 million by Kingzett Professional Services Ltd. Page 37

49 The Canadian aquaculture industry will likely grow from $700 million to at least $3.1 billion in it was agreed that very conservative forecasts indicate that the Canadian aquaculture industry will likely grow from $ 700 million to at least $ 3.1 billion in Regional Projections for Growth: (OCAD, August 2001, p. 2) The shellfish volume harvested from the Clayoquot Sound area alone is expected to triple within the next two years. According to Ecotrust Canada (2002), the shellfish volume harvested from the Clayoquot Sound area alone is expected to triple within the next two years and a local industry of $2,000,000 per year in just this one portion of the West Coast of Vancouver Island is very attainable within the next 3-5 years. STATUS OF THE SHELLFISH DEVELOPMENT INITIATIVE (SDI) As a result of the Coopers and Lybrand (1997) report, the Shellfish Development Initiative (SDI) was announced in November This important provincial initiative directly followed the recommendations set out in the Coopers and Lybrand report. The SDI set as its goal to double the amount of foreshore Crown land to be made available for shellfish aquaculture, providing an additional 2000 hectares to the present land under tenure. In relation to this proposal, coastal First Nations were identified as specific target groups to benefit from the initiative. The Province s plan to expand land for shellfish aquaculture included a commitment to enter into agreements with aboriginal communities to reserve sites within their traditional territories for their exclusive future use. These sites are set-aside for ten years, during which time the First Nations can make an application for tenure. Shellfish growers have expressed a great deal of concern at the delays that are occurring with regards to the SDI. In particular, new environmental regulations (CEAA) are now triggered with all new structures or works. The time to complete federal review of an application has increased to months, rather than days or weeks. At the same time that growers are frustrated with the expansion and new tenure process, there is a parallel groundswell of negative public opinion about the industry and the SDI from upland owners. Community landowners are organizing themselves to fight any further expansion of the industry. These groups (such as the Alliance for Responsible Shellfish Farming and Friends of Cortes Island) site the following as their main concerns: Kingzett Professional Services Ltd. Page 38

50 Island) site the following as their main concerns: potential environmental effects of intensive shellfish culture aesthetic considerations and potential changes in waterfront property values Constraints to Industry Growth While it is true that BC has considerable opportunities in shellfish aquaculture, it is equally true that we have been unable to capitalize sufficiently on these opportunities. While many of the required elements are in place, we have been unable to pull them together in a cohesive manner that will enable this sector to achieve its full potential. There are several obstacles that have limited the potential contribution the shellfish farming industry could make to the creation of wealth in BC s coastal communities. While efforts have been made to address these issues, a number still remain unresolved. The following is a review of constraints as identified by a number of key industry documents: Restrictive Regulations & Policies There is a consensus among aquaculture associations in Canada that government's regulatory role vastly out-weighs and in fact, even obstructs potential industry development. Every industry document written over the past ten years places regulatory constraints as one of the key constraining factors impacting the growth of the Canadian aquaculture industry. A Statistics Canada survey of aquaculture producers showed the key external constraints identified by producers. The top two constraints identified were inappropriate provincial (65% of producers) and federal (60% of producers) regulations and policies. The top two constraints identified were inappropriate provincial and federal regulations and policies. In the 1995, Cabinet endorsed the Federal Aquaculture Development Strategy (FADS) 27, invigorating the federal government s commitment to aquaculture development. In FADS, two key constraints for industry growth and development were identified as the most notable limitations on the potential of the industry. These were global competition and policy and regulatory constraints. Kingzett Professional Services Ltd. Page 39

51 More recently, site application decisions have been constrained by uncertainty and delay through application of the Canadian Environmental Assessment Act (CEAA). The timeframe to complete the federal review (often several months) is much longer than for comparable provincial approvals. The industry is now at the point on the business cycle where Canada will not be able to successfully compete in the global marketplace unless costs are reduced through an improved regulatory environment, leadership in technology and management practices, and diversification of product lines (e.g. new species, new products). The estimate for completion of a CEAA review for a new shellfish aquaculture site is somewhere between $5,000 - $20,000. There has also been very little progress on developing class-screening procedures for CEAA reviews of shellfish aquaculture sites. It is anticipated that once developed, class-screening procedures would streamline the process and significantly reduce the costs of a CEAA review. DFO has recently launched a new Policy Framework that is the Department s response to FADS. While the new DFO Policy Framework for Aquaculture states it will foster vibrant and sustainable aquaculture development, the Pacific Region of DFO will be tasked with implementation of the framework. The Pacific Region has traditionally been opposed to aquaculture development. Due to some of these historical issues, it is anticipated that rather than facilitate the federal policy, the Pacific Region may introduce delays, personal biases and complexities in the process. Supporting economically and environmentally sustainable aquaculture development has proven to be a real policy challenge for governments in other areas around the world. While a successful regulatory regime must provide the necessary framework for environmental protection and human health and safety, it must not be so restrictive as to impede cost-effective business operations. The Legislative and Regulatory Review of Aquaculture in Canada (OCAD, 2001) 28 points out that inadequate legislation and regulations have serious consequences for the Canadian aquaculture industry: Lack of Legislative Underpinnings The Canadian aquaculture industry is currently operating with policies and regulations that were, for the most part, designed for the wild fisheries. A series of industry reports and research documents support this perspective. For example: Kingzett Professional Services Ltd. Page 40

52 The OCAD, March 2001 report points out a legal vacuum in relation to the industry. The interpretation of how current legal measures apply to aquaculture is complicated and uncertain. Aquaculture was not a significant activity when the Constitution and the present legislation and regulations for fisheries were developed and the legislative regime was not drafted with aquaculture activities in mind. Further, there is little case law that deals with how the existing legislative regime applies to aquaculture activities. This means that the interpretation of how current legal measures apply to aquaculture is complicated and uncertain. (OCAD, March 2001, p.28) The OCAD report also notes that there is no definition of aquaculture in Canadian law. This deficiency has serious implications for the interpretation of the Fisheries Act with respect to aquaculture. The absence of a definition for aquaculture under the existing Fisheries Act causes confusion as to when various provisions of the Fisheries Act relating to fisheries do and do not apply to specific aquaculture activities. (OCAD, March 2001, p.37) It is anticipated that problems arising from inadequate legislation and regulations will remain with the industry in the foreseeable future. Legislation and regulations in the aquaculture industry are inadequate and serious competitive problems could result from this inadequacy. Unfortunately, most of the documentation on this issue shows that the fundamental legal and regulatory changes required to adequately serve and support aquaculture may not occur in the short and medium term. For the immediate future the industry may have to rely on policy changes, and improved harmonization of policies by the various levels of government, to address the constraints on development. It is anticipated that problems arising from inadequate legislation and regulations will remain with the industry in the foreseeable future. Access to Sites All marine aquaculture activities occur on tenured Crown land. For years, access to the land base has been recognized as the single most important factor limiting growth and competitiveness of the shellfish culture industry. In the recent Think Tank sponsored by the Office of the Commissioner for Aquaculture Development, regulations related to site access were seen as the most significant external driver Kingzett Professional Services Ltd. Page 41

53 site access were seen as the most significant external driver affecting growth and development of the industry. The workshop reached a consensus that enabling policy and regulatory frameworks must be developed in order to streamline the process to acquire new sites. Environmental factors represent significant limitations on the expansion of the shellfish aquaculture industry. Environmental, site access,and regulatory issues are primary constraints on the growth and expansion of the aquaculture industry. Environment & Public Perceptions Shellfish farming practices are coming under greater public scrutiny as the public and environmentalists become more sensitive to food production methods and their environmental sustainability. As a result, increased opposition from community and NGO organizations has made recent consultation with communities over site applications and expansions very difficult. As a result, environmental factors represent significant limitations on the expansion of the shellfish aquaculture industry. Environmental and community groups opposed to the expansion of aquaculture are well organized in BC. They perceive any industry development as a threat to local social and ecological systems and base their opposition on the premise that not enough sufficient scientific information has been collected on the environmental impacts of shellfish culture. However, in many cases, the underlying issues often have more to do more with siting criteria and a Not In My Back Yard (NIMBY) attitude. In a recent report completed by Praxis Research & Consulting Inc. titled Situational Analysis of the Aquaculture Industry of Canada, industry respondents identified factors that will influence the growth and development of the aquaculture industry over the next five years. The interviews provide compelling evidence that environmental, site access, and regulatory issues are primary constraints on the growth and expansion of the aquaculture industry. Interviews indicated that the aquaculture industry in British Columbia has been most affected by environmental concerns due to the strong environmental lobby movement that exists in the province. Interviewees stated that the environmental movement has targeted aquaculture and created a difficult socio-political environment for the industry. Environmental issues were also addressed by the participants in the OCAD Think Tank, 2001 as impacting the international competitiveness of the industry. It was agreed by the workshop participants that immediate action to improve communications and Kingzett Professional Services Ltd. Page 42

54 coordination on environmental issues between various levels of government was recommended. A discussion document prepared by G.C. Vernon and Associates (1999) 29, also identified environmental factors as presenting significant limitations on the expansion of the aquaculture industry. The concern by citizens and environmental groups about the potential detrimental impact of aquaculture operations on the environment is a major impediment to expansion of the industry. (Vernon and Doucette, 1999, p.43) The report notes that sustainability is an overriding strategic issue and challenge for the industry and that aquaculture planning must account for environmental impacts on a broad scale. The continued success of shellfish aquaculture in BC will depend to a large extent on the diversity of the species approved for cultivation. New Species Development As discussed, the shellfish aquaculture industry in BC relies primarily on the cultivation of the Pacific oyster and Manila clam. Virtually all of the commercial harvest of BC oysters is farmed, while cultivated clams averaged 25% of total BC clam production during the last decade. Additionally, there is small-scale scallop and mussel aquaculture. Seafood buyers are demanding a wide range of seafood and would often prefer to buy a variety of products from one supplier, however, BC does not have a diversified product line. The continued success of shellfish aquaculture in BC will depend to a large extent on the diversity of the species approved for cultivation. Research is in progress in BC on the feasibility of cultivating several new high-value species: Abalone Geoduck clams Giant Rock scallops Sea cucumber Sea urchins Spot prawns There is considerable interest in having the necessary research carried out to allow new species to be approved for cultivation, as these are products with potentially much higher profit margins than Kingzett Professional Services Ltd. Page 43

55 Access to broodstock and seedstock has been very difficult, creating a major impediment to the development of new species. these are products with potentially much higher profit margins than oysters and clams. In particular, high-end species such as geoduck and abalone are particularly important for communities in more remote locations on the north coast as their value can absorb the higher transportation costs involved in bringing them to market. However the value of these species must be balanced against the increased risk and costs of brining these species into commercial production. DFO has sole statutory authority under the Fisheries Act for the allocation of wild fish in tidal waters, with the exception of oysters. As a result, DFO regulates access to wild stock for the purposes of broodstock or seedstock. Culture of newly developed aquaculture species requires access to broodstock and seed on a limited basis. Broodstock or seed collection from wild stock requires a Collection Permit from DFO issued under the federal Fisheries Act. However, at this time, DFO lacks a formal policy on access to and movement of wild stock. As a result, access to broodstock and seedstock has been very difficult, creating a major impediment to the development of new species. To a large degree, regulatory issues have prevented culturing of high value added shellfish products in British Columbia. Lack of government vision and support OCAD has indicated that the federal government lacks a development mandate for aquaculture and that this deficiency: The structure of the province s Shellfish Development Initiative (SDI) may not be conducive to attract the kind of significant investment that is really required to advance the industry. impedes the government s ability to assist development of the sector in a similar fashion that it provides support to other food sectors. As a result, the aquaculture sector is at a disadvantage in comparison with these sectors in Canada. Moreover, within the global aquaculture sector, the competitiveness of Canadian producers trails that of its principal competitors While the current provincial government is in support of shellfish aquaculture, there is still a sense that the lack of a clear provincial aquaculture vision statement has hampered industry s growth. If the government would publicly clarify their position on the industry and assist in supporting the Right to Farm legislation with municipal and regional government s, then industry s future security would be strengthened. The structure of the province s Shellfish Development Initiative (SDI) may not be conducive to attract the kind of significant investment that is really required to advance the industry. To date, Kingzett Professional Services Ltd. Page 44

56 investment that is really required to advance the industry. To date, the focus has been on allocation of small parcels of land based on community driven criteria and community based planning committees. Due to this approach, the SDI process tends to favor local community applications rather than new outside companies. Any significant investment from outside companies would require larger tenure sites, or a series of smaller sites to warrant the investment. Zoning There is still inconsistency in the approach to shellfish aquaculture by some local governments. There has been no progress on extending the application of the Right to Farm provisions of the Local Government Act to all Crown land below the high water mark. The position of some local governments continues to be resistant to aquaculture. The fundamental policy of the Right to Farm Act, which replaces the former Agriculture Protection Act, is that farmers, have a right to farm in BC's important farming areas provided they use "normal farm practices" and follow other appropriate and required legislation listed in the act (Waste Management Act, Pesticide Control Act, Health Act). Since it s creation, the Act has been extended to include finfish and shellfish aquaculturists. The Right to Farm Act: protects farmers who use normal farm practices creates a new process to resolve complaints about farm practices supports local governments to include farming in their local community planning The position of some local governments continues to be resistant to aquaculture. To date, some Regional Districts have stalled development of shellfish aquaculture through application of restrictive zoning bylaws. Some local governments (i.e. Alberni/Clayoquot) want to make zoning changes to only allow aquaculture proposals on a site-by-site basis. If successful, shellfish aquaculture applications will need to go through a public re-zoning process. Reliance on the public hearing process can often result in failure. Kingzett Professional Services Ltd. Page 45

57 Processing/Marketing/Quality Assurance Export market penetration represents a significant challenge to an industry made up of mostly small producers. The BC shellfish aquaculture industry is at a cross roads it must access new markets for future growth, but in order to do this, continuity of supply is critical to suppliers and to the downstream levels of the distribution system. The assurance of adequate and consistent supply of product must be met to be a credible player in the marketplace. BC currently lacks any program or strategy to promote farmed shellfish (particularly oysters) within either local or export markets. The importance of developing strong BC brand recognition was emphasized in the Ecotrust Canada (2002) shellfish market survey: Developing localized brand recognition will be essential to securing long term success. Without it, the product becomes just another oyster, subject to all of the price constraints that come with traditional commodity markets. In addition to the marketing constraints discussed above, shifts in BC s shellfish processing capabilities (i.e. a reduced number of plants handling oyster shuck production) have left some BC shellfish businesses uncertain as to their marketing options. The potential of increased clam production in Washington State and increased hard clam production in Florida may also impact demand and therefore, price of BC product. One of the most pressing issues identified by growers trying to get up and running is the lack of available funding. Investment & Financing One of the most pressing issues identified by growers trying to get up and running is the lack of available funding. The shellfish industry in BC has been largely financed privately, usually through private equity. In support of this, Coopers and Lybrand (1997) ranked security of financing high as one of the limiting factors to growth of the industry. In large part, the difficulty in raising equity capital via traditional methods is due to the lack of tenure security. In fact, only recently have existing operators been able to borrow against the value of their tenure holdings. All information sources confirm that the primary impact resulting from short tenure terms and the lack of tenure security is to significantly reduce a shellfish farmer s ability to arrange Kingzett Professional Services Ltd. Page 46

58 significantly reduce a shellfish farmer s ability to arrange financing. Few financial institutions are prepared to lend funds based on a short tenure term and because the farmers have no security on the tenure, the tenure cannot be used as collateral for loans. In addition, lenders are often concerned that tenures could be cancelled during the term, or not renewed at the end, making it difficult to maintain financing over a long period. Environmental Integrity & Water Quality The shellfish industry is dependant upon the quality of coastal waters in which farming occurs. Without a clean environment, the shellfish industry cannot survive. Water pollution from sewage and effluent processes poses a significant and increasing threat to the industry. Over 4,000 ha of highly suitable intertidal growing area could be reclaimed for shellfish culture if adequate sewage treatment was provided. The main threats to marine water quality in British Columbia come from sewage, pulp mills, vessel discharges, forestry activities, and non-point pollution. Shellfish farmers increasingly have to face not only the challenge of developing the necessary technologies to farm successfully, but they also need to ensure their activities are sustainable and do not have adverse effects on the environment. Environmental sustainability and integrity is also critical for the markets, as consumers are becoming more aware of these issues and demanding that the food they buy was produced in a positive environmental environment. Training It is estimated that the demand for labor will increase in the future. Indicators, such as demographic trends and rural population decline will limit the supply of labor in the future. According to the results of the research conducted by Praxis Research and Consulting Inc. (2002), future labor shortages are anticipated. In addition to a strong future supply of labor, appropriate human resource training is also essential. As this industry matures and develops, the key skill requirements in both production and processing will naturally evolve as well. As stated by one of the interviewees in the Situational Analysis Report, Skill development and technological change are happening more quickly in the industry than capacities in these areas are being developed in institutions. Kingzett Professional Services Ltd. Page 47

59 WHAT S NEEDED TO ADDRESS CONSTRAINTS Increased Supply While export opportunities do exist for BC shellfish products, BC s small scale of production has limited the ability of the industry to supply export markets consistently. Lack of continuity presents the distribution sector with the need to seek alternative suppliers in order to meet customer orders. The BC industry needs to increase its overall production, creating more product and greater market power as a supplier. Increased investment will of course be required to create a larger critical mass. The BC industry needs to increase its overall production, creating more product and greater market power as a supplier. Increased investment will of course be required to create that larger critical mass. However, the solution to the problem is not simply expanded production alone. The BC industry must become more competitive in the marketplace, with efficiencies gained at the production, processing, transportation, and marketing levels. As the industry moves toward the objective of increased profitability and efficiency, it is critical that at every level, it builds partnerships & linkages with others in the shellfish industry and as a result, moves forward with a common vision. Increased Cost Competitiveness & Efficiency The BC industry must become more competitive in the marketplace, with efficiencies gained at the production, processing, transportation, and marketing levels. This industry must be competitive in order to succeed and grow. As the industry is currently highly labour intensive, all efforts and investments, which improve production efficiency of the land base, will also improve competitiveness. Significant production increases will not occur unless there is an improvement to the basic infrastructure of shellfish farms to permit more intensive cultivation and greater efficiency. Climate of Certainty - Regulatory & Legislative The OCAD March 2001 report sets out legislative options that could be pursued to address regulatory uncertainty. These options range from enactment of a new and comprehensive federal aquaculture act, to comprehensive revisions to existing legislation (the Fisheries Act, the Fisheries Development Act and the Oceans Act) to transferring administrative functions to provinces and territories. The report recommends that first, a working definition of aquaculture be adopted. As for specific actions that should be Kingzett Professional Services Ltd. Page 48

60 of aquaculture be adopted. As for specific actions that should be taken, it was determined that the province should request and/or assist DFO develop class screening procedures for CEAA. Marketing Rather than encouraging new start-ups alone, the province must begin to take a market driven approach to business development i.e. serious consideration must be given to the processing and marketing part of the equation. To follow the production driven model of industry development will be to repeat the mistakes of many agri-business sectors such as farmed salmon. Cooperative Approach It is anticipated that formation of cooperatives, whether formal or informal, is a trend that may be very helpful as the industry moves to increased efficiency and productivity. For example, until BC reaches a much larger scale of production, a collaborative approach to marketing is necessary. There could also be another benefit of taking a cooperative approach to meeting the demands of the marketplace. In the absence of a wide-scale program to address product quality & consistency, a cooperative approach to growing product that meets the demands of a specific market may also help to improve the consistency and uniformity of BC s oyster production. Distribution Channels The potential of the US and Asian market has been proven, however, there is a need for BC to be more strategic and aggressive in accessing new distribution channels. Identifying distribution relationships based on trust and mutual benefit is essential. However, prior to identifying options and opportunities for establishing new distribution channels, additional research is recommended. Grow for Market Not only does the industry need to access new markets, but it also needs to grow product to suit the need of the particular market (i.e. what growing methods match the market?) This means a working partnership between grower, processor & distributor needs to be established. The days of shellfish farmers growing what they Kingzett Professional Services Ltd. Page 49

61 established. The days of shellfish farmers growing what they wanted and then looking for a buyer once the product becomes harvestable is over. Oyster Standards As previously stated, BC needs to ensure consistent quality and supply. Given there are a variety of grow out techniques and handling styles, product quality varies. Improving quality management on the farm and developing oyster-grading standards will be very important as the industry strives to be competitive. Marketing and Promotion Because supply has traditionally been the major issue in BC, industry marketing and promotion efforts have not been a priority. Due to technological innovations and intensification, as well as some access to new tenures, production is anticipated to increase. If a concerted marketing effort is not initiated, there is a strong likelihood that the market price for shellfish will be impacted by this growth. With this growth in production as well as increasing global competition, marketing needs to become a critical industry issue. Regional branding and identification will be key to positioning in the marketplace. Market openings definitely exist for the right marketing campaign and product line. For oysters, developing brand recognition is critical to long term marketing success. For oysters, developing brand recognition (both a BC awareness and individual farm awareness) is critical to long term marketing success. Without this, the product competes in the traditional commodity market, rather than higher value niche markets. To compete effectively in these niche markets for fresh oysters, distributors and restaurateurs are demanding more information about the growing areas, growing methods and flavor profiles of the oysters they carry. There is a mystique about fresh oysters that can clearly be capitalized on. This industry requires both a coordinated program of marketing research to identify potential new markets as well as targeted generic marketing initiatives to increase consumer demand for BC farmed shellfish products. Kingzett Professional Services Ltd. Page 50

62 Processing Capacity Currently, BC requires increased processing services for shucked product. However, according to Ecotrust Canada (2002), this may not mean additional capacity is required, but rather a better utilization of existing facilities. Quality Assurance The industry needs to continue to seek consensus on the development of a quality assurance program that addresses oyster product standards and characteristics. New product offer processors the opportunity of expanded market penetration and more continuous supply to markets. Successful marketing of shellfish aquaculture products depends on consumer confidence in product safety and consistency in quality. As previously stated, there is a need to facilitate the improved quality, consistency, and marketability of BC shellfish product. Physical quality does not begin at the processing plant, but begins prior to harvest and is further affected by both harvest and handling by the producer. The processor cannot improve the quality of the shellstock received but can only reduce further contamination or degradation. The producer or harvester is the first critical step in the quality assurance chain. Without formal quality control and verification procedures at this level there is potential for increased risk of shellfish quality. Extending tenants of QMP-R programs to the primary production level will significantly strengthen the assurance of product quality. It is recommended that development of an industry driven, farm based quality assurance program should be explored. In addition, the industry needs to continue to seek consensus on the development of a quality assurance program that addresses oyster product standards and characteristics. With this kind of agreement and subsequent reference guide, growers, processors and customers would have a common reference when discussing quality expectations of BC oysters. Innovation - Value Added/New Product Development New product development, product diversification, and new market penetration are tied closely to cost competitiveness in the global marketplace. New product development (even simple ideas such as frozen, vacuum packed clams or mussels) offer processors the opportunity of expanded market penetration and more continuous supply to markets. The development of a diversified product line is a key competitive advantage in the distribution sector. Kingzett Professional Services Ltd. Page 51

63 competitive advantage in the distribution sector. In their marketing report, Renwick and Associates (1996) listed four requirements to achieving success in the area of new product development and value-added: Management dedication to new product development Marketing expertise Investment capital for product development expenses, trade trials, packaging and product launches Critical volume threshold to ensure supply continuity Cormier and Tillapaugh (1998) carefully analyzed seafood markets and concluded that international competition will require more conveniently packaged, value-added products in the future. They put forward that industry must develop and market these products to grow and prosper. New Species Development The potential of enhanced airfreight services on Vancouver Island could result in improved access to world markets. In the recent study by Ecotrust Canada (2002), strategies articulated by processors for improving the processing/marketing issue include the diversification of the shellfish species offered processors indicated that this would satisfy those customers who want to buy a range of seafood and prefer to buy from one supplier. There is considerable interest in having the necessary research carried out to allow new species to be approved for cultivation, as these are products with potentially much higher profit margins than oysters and clams. Transportation The potential of enhanced airfreight services on Vancouver Island could result in improved access to world markets. However, once again, the limiting issue here will be sufficient product volume. Direct routes to major world centers will only be negotiated if the volume of total product makes it viable. Not only will this service potentially reduce freight costs, but the speed at which product will arrive at it s destination will greatly improve product quality and freshness. Growers and processors need to examine other freight efficiencies by pooling shipments of supplies and raw and processed products with other industry participants. As the freight cost component in Kingzett Professional Services Ltd. Page 52

64 with other industry participants. As the freight cost component in the industry is high (particularly due to a reliance on the BC ferry system), joint venture initiatives would be advantageous. Processing closer to current and expanding culture areas in BC will also offer freight efficiencies. Industry Leadership Common Vision/Cooperative Approach A strong and sustainable industry association, such as the BC Shellfish Growers Association (BCSGA), is critical at this time. Addressing the issues that are constraining industry s growth and development as well as providing the necessary assistance to government to help them achieve their industry growth objectives are key roles for the association. In addition to a strong industry association, a strong intergovernmental and private sector partnership will also be necessary to move the industry ahead. New Zealand attributes the success and the growth of their shellfish farming industry to the ability of their industry association to pull all growers together and move forward with one voice. New Zealand attributes the success and the growth of their shellfish farming industry (from $ million over 10 years) to the ability of their industry association to pull all growers together and move forward with one voice, particularly in areas such as generic marketing. A similar situation can be seen in Florida, where the clam culture industry was built through a successful industry association/government partnership relationship. It was identified by Ecotrust Canada (2002) in their marketing survey, that small farms must work collaboratively to ensure adequate supply to plants and distributors. Local Government/Zoning Issues If the province extended the application of the Right to Farm provisions of the Local Government Act to all Crown land below the high water mark, there would be strong opposition by many local governments. However, this kind of support would give security and stability to an otherwise insecure and fragile industry. Research and Development Emerging industries, such as shellfish aquaculture, require focused research and development support if they are to continually improve international competitiveness and enhance environmental sustainability. At present, the capacity of B.C. institutions to do the needed research over the next decade and further into the future Kingzett Professional Services Ltd. Page 53

65 Emerging industries, such as shellfish aquaculture, require focused research and development support if they are to continually improve international competitiveness and enhance environmental sustainability. is very limited and is insufficient to support sustainable industry growth. However, The BCSGA and Malaspina University-College (MUC) have received funding to create the Centre for Shellfish Research (CSR). Based in Nanaimo, the CSR will serve the entire BC coast, to support and respond to the research needs of a growing and diversifying shellfish aquaculture industry. It is anticipated that the CSR will attract research funding and personnel to enable work on both large and small projects that will assist the industry attain its potential. This will involve doing technical and scientific research on topics related to industry competitiveness, technology and innovation as well as environmental sustainability. Training In this growing and maturing industry, workers will require new and improved skills in a variety of areas including processing, packaging, food safety and quality management to facilitate industry development. In addition to developing and expanding a solid base of skilled workers, improving career opportunities within the industry and is also critical. Given that labour shortages are projected, a plan for recruitment of young people in the industry will also be necessary. As the Canadian Aquaculture Industry Alliance is currently developing a human resources strategic plan for the industry, it is recommended that a close liaison be maintained with this initiative. Kingzett Professional Services Ltd. Page 54

66 Attracting Investment Capital Strengthening the security and profitability of existing tenures is required to provide investment confidence to the industry. Strengthening the security and profitability of existing tenures is required to provide investment confidence to the industry. The opportunity for investment in the industry will either help existing farms become more profitable or will provide new entrants into the industry both of which will create jobs in coastal communities and help diversify and grow the BC shellfish aquaculture industry. Attracting investment dollars into the shellfish culture industry may take the form of: Developing informational materials about the industry that may be used to promote the industry on a generic and individual (corporate basis) to lending and capital investment groups. Working directly with traditional lenders (ie major banks) to inform them about the industry and strengthen investment confidence around the industry. Working directly with traditional lenders to assist in securing financing or other programs, which reduce the real or perceived risk to lenders. Working directly with non-traditional lenders such as community development agencies (such as community futures) to assist in lending directly to shellfish aquaculture or assisting with traditional lenders. Attracting non-traditional equity investment to the industry or specific projects such as fund-based programs, private investors or investment groups. This may be particularly appropriate in targeting sustainable development or ethical growth funds, where the conservation based economy aspects of the industry may be highlighted. Facilitating specific development projects involving specific new or existing farm(s) or companies and investment groups Facilitating specific projects in secondary or processing sectors which will create regional support or value added. Working directly to secure or finance developing shellfish aquaculture operations. Kingzett Professional Services Ltd. Page 55

67 New Zealand, a Case Study for BC. New Zealand provides an excellent case study for comparison with British Columbia. Many aspects about the initial beginnings of the industry are the same, as well geographically and biophysically the environment is similar to British Columbia. The sociopolitical and cultural environment is also similar; both jurisdictions have relatively small populations, strong fisheries sectors, an unpolluted coastline and depend on export markets. While other species such as oysters, clams and abalone are farmed in New Zealand the majority of production has always been on the Greenlip mussel (Perna canaliculus) which is marketed under the registered name Greenshell mussel 30. The timing and early story of the development of the industry is very similar to that of the British Columbia shellfish industry. Decades of hand-picking and some years of dredging produced signs of depletion in the early 1960s, which led towards cultivation as a means of ensuring continued supply. Initial attempts to cultivate mussels utilized European raft techniques. In 1972 the New Zealand Fishing Industry Board initiated a research and development program in the Marlborough Sounds. This program brought about the establishment of the Japanese longline method of cultivation and found answers to the essential matter of regular and reliable supply of seed (spat) mussels for on-growing. Since that time mussel farmers have made improvements to the longline technique, transfer of spat, growing strategies and harvesting methods. Gear, equipment and vessels, once copied or borrowed from other uses, are now designed and manufactured in New Zealand expressly for the mussel farming industry. As the industry has grown, the vessels used for mussel farming have changed from small launches or fishing vessels, similar to those used currently in BC, to large self-contained harvesting units that employ a crew of three and up to six depending on size. The larger vessels can harvest in excess of one hundred tonnes of washed, separated, ready-for-processing mussels in a day. Marine biologists and technicians have provided essential research that has led to improved productivity and greater environmental understanding. Processors have developed state-of-the-art processing plants operating under strictly monitored hygiene and quality control regimes. New Zealand has become a world leader in generic marketing, environmental practices, and quality assurance. Of note is that the industry supports itself through direct payment Kingzett Professional Services Ltd. Page 56