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Report of the Interlocutor on the Transformation of the Freshwater Fish Marketing Corporation to the Minister of Fisheries, Oceans and the Canadian Coast Guard

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Dear Minister Jordan,

I would like to thank you for the opportunity to submit this report. On September 4, 2019, I was tasked to establish a committee of representatives from the freshwater fishing industry in Manitoba, Saskatchewan, and the Northwest Territories and to assess industry willingness and capacity to sustain and co-operate under a harvester-led model for the Freshwater Fish Marketing Corporation. Attached is the report with my findings. Through my meetings with fish harvesters and with the committee of harvester representatives that I established, I have found that there is willingness and capacity to pursue negotiation of transferring the Freshwater Fish Marketing Corporation to a harvester-led entity.

These findings were based on over 30 meetings I had with fishing communities and representatives across Manitoba, Saskatchewan, and the Northwest Territories, and on the numerous meetings that I held with an interim committee of leaders from these communities and associations. While the body itself has no formal authority to negotiate for the transfer of the Freshwater Fish Marketing Corporation on behalf of fish harvesters, committee members have engaged with their communities and have confidence that their communities will support a mandate to enter into discussions with Fisheries and Oceans Canada on the terms and conditions of that transfer.

The members of this interim committee are willing to move quickly in a series of processes: first, to achieve formal expressions of support from fishing organizations in their communities; second, to conduct more formal analyses of the Freshwater Fish Marketing Corporation’s operational and financial position; and third, to engage in negotiations with Fisheries and Oceans Canada for the Corporation’s transfer. While the Ministerial Advisory Panel on the Transformation of the Freshwater Fish Marketing Corporation’s 2019 report recommended a three-year transformation process, the members of the interim committee have indicated a desire to meet the above three objectives within one year.

To enable the interim committee to fulfill this task, I recommend that administrative and technical advisory services are required. Fisheries and Oceans Canada could achieve this either though transfer of funds to the interim committee or by directly engaging a contracted firm.

I would like to thank Fisheries and Oceans Canada for providing me with the administrative and logistical support needed to carry out my engagement with fish harvesters and my meetings with the interim committee, as well as the Freshwater Fish Marketing Corporation’s Chairperson and senior management for their advice and support. I would like to note the helpfulness and co-operation of the government officials I met with at the Department of Indigenous Services Canada, Western Economic Diversification, and the Canadian Northern Economic Development Agency, as well as those in various departments of the governments of the Northwest Territories, Alberta, Saskatchewan, and Manitoba. I would like to acknowledge the help of all of the First Nations band councils, as well as the Indigenous organizations who we met with in understanding the importance of the freshwater fishery to Indigenous commercial harvesters who sell to the Corporation.

Finally, the members of the Interim Committee of Inland Fish Harvesters have demonstrated a capacity for leadership. They will be a crucial part of the Freshwater Fish Marketing Corporation’s future, as they have been of its past. I wish them the very best in the future of this project.

Sincerely,

Kevin G. Anderson,
Interlocutor on the Transformation of the Freshwater Fish Marketing Corporation

Mandate and introduction

I was appointed on September 4, 2019 to lead the next steps in the transformation process of the Freshwater Fish Marketing Corporation (FFMC) by Minister of Fisheries, Oceans, and the Canadian Coast Guard Jonathan Wilkinson. I was provided with the support of a small secretariat by Fisheries and Oceans Canada (DFO).

Since 2017, DFO has engaged in a process to identify whether and how to change the governance and accountability mechanisms surrounding the FFMC, including whether the Corporation should remain a federal Crown corporation. This work included identifying other potential owners of the Corporation. When I was appointed Interlocutor, DFO advised me that the preferred outcome, should it be deemed feasible, was to transfer ownership and governance responsibility to the freshwater fish harvesters which the corporation has served since its inception.

My mandate included two parts. First, I was to establish a delegate committee of representatives from the fishing industry to improve communications, information sharing, and decision-making between harvesters and the FFMC. Given the varying degrees of organization amongst inland fish harvesters, I established an Interim Committee of harvesters with leaders representing communities across Manitoba, Saskatchewan and the Northwest Territories. This Interim Committee advised on the structure and other aspects of the creation of the harvester delegate committee.

Second, I was to advise the Minister of Fisheries and Oceans on industry willingness and capacity to sustain and co-operate under a harvester-led governance and ownership model based on engagement with fish harvesters, Indigenous groups, and other partners. To do so, I travelled throughout Manitoba, Saskatchewan and the Northwest Territories to meet directly with harvesters, as well as Indigenous leaders and other stakeholders in the freshwater fishery. Once I had established the Interim Committee, I engaged its members to review the FFMC’s operations, and to consider opportunities and potential partners in establishing a harvester-led co-operative.

Through this process, Interim Committee members have demonstrated that they are willing to lead their part of a viable transformation of the FFMC into a harvester-led co-operative. Moreover, they have the capacity to do so, provided they have the requisite assurance of the federal government’s commitment to prioritizing a process in which fish harvesters are at the negotiating table, and that they are able to access sufficient administrative and technical advisory support.

In this report, I will provide a brief background on the FFMC and on the process so far to transform its governance and ownership. Then, I will describe the activities I have undertaken under my mandate, as well as my engagement findings, both from my initial engagement and with the Interim Committee. I will also provide considerations on the next phase of transformation and recommend next steps for DFO in moving forward.

Background

FFMC operations

The FFMC markets wild-caught freshwater fish in Manitoba, Saskatchewan, and the Northwest Territories to retail and foodservice suppliers in Canada and internationally. The Corporation buys whole, gutted and headless fish from harvesters through several contracted fish buying agents, or, in some places, directly from harvesters at receiving sheds. The FFMC then freights the fish to its large Winnipeg processing plant and headquarters. From there, FFMC processes the fish into a number of products, and stores those until they are ready for sale. The FFMC develops and maintains relationships with several large and medium-scale buyers, the vast majority of which operate outside of Canada, and of those, primarily in the United States. Annually, when the FFMC has realized its revenues and costs from these activities, it uses the profits either to make improvements to its equipment and operations, or to pay dividends to harvesters based on the amount and profitability of fish they supplied in that year. Aside from taxes, reinvestment into capital and operations, or harvester dividends, no profits are taken out of the Corporation. It operates on a self-sustaining basis, which means that it does not receive parliamentary appropriations to fund its operations.

FFMC governance, ownership and accountability

The FFMC is a Federal Crown corporation. It is enabled by the Freshwater Fish Marketing Act and agreements between the federal government and provincial and territorial governments. The federal Governor in Council appoints its Chairperson and President, while the federal Minister of Fisheries, Oceans and the Canadian Coast Guard appoints its directors, with the approval of the Governor in Council. The Corporation reports to Parliament on its activities, and compliance with federal Access to Information and Privacy laws, and provides written responses to Order Paper Questions submitted by parliamentarians. During its annual planning cycle, the FFMC submits its corporate plan to the federal Treasury Board for approval, this corporate plan includes a borrowing plan, which, when approved by Treasury Board, forms the basis for the federal Minister of Finance’s approval to allow the Corporation to borrow against federal credit to operate. The FFMC uses this approval to engage in lending agreements and accounts with a commercial bank, and makes its principal and interest payments using revenues from sales. The FFMC engages with fish harvesters through its field office staff and senior management, and holds annual public meetings, which fish harvesters may attend.

FFMC’s operating agreements

The Freshwater Fish Marketing Act established the FFMC in 1969. Through agreement between the federal government and the governments of Ontario, Manitoba, Saskatchewan, Alberta and the Northwest Territories, the FFMC has enjoyed sole rights to sell fish internationally and inter-provincially that was harvested in the agreement regions. In the past decade, however, the governments of Manitoba, Saskatchewan, and Ontario have stopped participating in the agreement, which has allowed competing international and interprovincial fish marketers to operate in their original agreement regions. The Government of Alberta closed its commercial fishery. The Government of the Northwest Territories is the only jurisdiction that has retained its participation in the FFMC’s monopoly with an open commercial fishery. However, operating as a provincially licensed fish buyer and processor, FFMC remains the primary marketer for fish harvested in Manitoba and Saskatchewan.

FFMC transformation

Based on engagement conducted in 2017, the Minister of Fisheries, Oceans and the Canadian Coast Guard established a Ministerial Advisory Panel on the Transformation of the FFMC. The Panel explored new governance and ownership models that could support collaboration and cooperation amongst fish harvesters and involve them in decision-making. As part of its review, the Panel assessed opportunities for new partnership arrangements with organizations that could play a role in these new models for the FFMC, and recommended an implementation approach to identifying and pursuing the appropriate model. The implementation approach is designed to improve governance and communication within the industry, support a consensus building process to come to ground on a new business model for the FFMC, and enable opportunities for enhanced industry organization and capacity building in the inland fishery. This was the process in which I was asked to participate.

Activities based on my mandate

1. Engage

From fall 2019 through winter 2020, I held over 30 meetings with representatives from Manitoba, Saskatchewan, Alberta, and Northwest Territories governments, Indigenous groups and over 200 fish harvesters throughout FFMC’s operating region, to gain an understanding of the issues and challenges facing the inland fisheries, and to introduce myself and explain my role to harvesters and other stakeholders. More specifically, my objectives were to:

Through my engagement, I found that, while harvesters in Manitoba, Saskatchewan, and the Northwest Territories are organized to varying degrees across the region through a combination of local fishing co-operatives, associations, or community councils, forums for broader industry communication were limited, with few opportunities for broad coordination or discussion amongst harvesters or their representatives across regions.

2. Establish an Interim Committee of Inland Fish Harvesters

Given the varying degrees of industry organization, it was practical to convene an Interim Committee of fish harvesters, rather than to pursue a full delegation process. I used the engagement process to identify a number of harvesters from across FFMC’s operating region who were strong candidates to assist me in carrying out my mandate. Many of these representatives are leaders amongst well-organized co-operatives and communities, and are actively engaged in building consensus and decision-making amongst their organizations. Others, from less organizationally represented harvesting communities, were identified and engaged based on their leadership and community standing, as well as their ability to signal the broad interests of the fishing sector. To confirm my analysis and verify my confidence in the Interim Committee to deliberate effectively and in good faith, I consulted provincial officials and other government stakeholders with strong working relationships in the freshwater fishing industry. I approached candidates early in 2020 to invite them to participate as members of the Interim Committee. The identified candidates accepted my invitation.

3. Convene the Interim Committee of Inland Fish Harvesters

Through Interim Committee meetings, I observed member interactions and lines of inquiry to determine both if they could come together to address their willingness to participate in a harvester-led entity, and if there was interest in sustaining and co-operating under such a model. I also engaged the group’s members to develop a strategy to form a permanent committee of representatives, including mechanisms for governance and appointment of subsequent members, in order to maintain continuity of the committee’s role as a new entity through the transformation process.

The Interim Committee met for the first time in Winnipeg, Manitoba on March 10 and 11, 2020 and continued to meet via teleconference from March through August 2020. Through these meetings and conference calls, the Interim Committee and I received presentations on:

The Interim Committee also received a presentation from the Assembly of Manitoba Chiefs on that organization’s proposal for an Indigenous freshwater fish marketing limited partnership. Further discussion of these presentations is included below.

Findings from engagement

Findings from engagement with harvesters and communities

During my engagement, I found that many of the views expressed by harvesters were consistent with those heard by DFO in 2017 and the Ministerial Advisory Panel for FFMC Transformation in 2018-19. However, I did not want to duplicate the engagement work previously completed by the Department or the Ministerial Advisory Panel on FFMC Transformation. My focus was to build relationships with harvesters to gain trust in and respect for the process.

In general, harvesters were willing to explore the possibility of a harvester-led entity, expressing a sense of ownership over the FFMC, and many showed interest in increased involvement in FFMC decision-making. Low-volume harvesters, particularly in northern Manitoba and Saskatchewan, recognize that they rely on the FFMC’s ongoing processing and marketing services. They are concerned that they will not have sufficient access to buyers without FFMC support. Those in more developed and central areas have begun to organize on fisheries management issues at a regional level.

Many harvesters felt that the DFO transformation process should be an opportunity to build upon the current FFMC collaboratively, rather than seek alternative buyers for their fish. Harvesters noted that those who choose to deal with alternative buyers fared worse than those who remain with FFMC, either because they were paid less for their fish, or because their contracts fell through and the fishers had difficulty recovering.

Harvesters shared a wide range of other concerns: some were about the FFMC; others, fisheries management. I took these opportunities to learn about the fisheries structures in the inland provinces and the organization of the supply chain. I engaged directly with many harvesters on these issues, leveraging my knowledge of Canada’s coastal fisheries to probe harvester views on areas of concern and opportunity.

Finally, harvesters in the Northwest Territories advised me that they want to be able to sell their catch independently beyond the Territory. The territorial government is working to support harvesters with the implementation of the Strategy to Revitalize the Great Slave Lake Commercial Fishery.

Findings from engagement with Indigenous organizations

During my engagement, I met with several local and regional Indigenous groups and organizations, including the Assembly of First Nations Inland Fisheries Working Group, Assembly of Manitoba Chiefs, Manitoba Metis Federation, Southeast Regional Development Council Corporation, Manitoba Keewatinowi Okimakanak, Metis Nation – Saskatchewan, Prince Albert Grand Council, West Point First Nations, Yellowknife Dene First Nation, and K’atl’odeeche First Nation. While these groups represented various communities and a wide range of socio-economic circumstances, there were common themes in their messaging. First Nations groups were concerned with maintaining and respecting Section 35 fishing rights, as well as the economic and social opportunities provided to their communities through commercial fishing, and expressed concern over the challenges to a sustainable commercial fishery both resulting from climate change as well as fish prices. These groups also raised the challenges to the inland fishery related to climate change.

Findings from Interim Committee meetings

The Interim Committee has held several in-person and teleconference meetings since it was established. These meetings provided Interim Committee members opportunities to investigate and discuss FFMC’s operating environment and its corporate strategy, and to hear several presentations on alternative operating models, best practices in corporate governance and marketing, and opportunities for partnership. During its first meeting in Winnipeg, the Interim Committee discussed its mandate, as well as preliminary observations on FFMC operations and transformation. Due to travel and meeting restrictions related to the COVID-19 pandemic, the remainder of my meetings with the Interim Committee occurred by teleconference. The Interim Committee continues to meet together, both with my attendance and without, to maintain the integrity of the relationships established through its operation, and in anticipation of future discussions.

Part of the Interim Committee’s work was to consider alternative corporate governance structures, and potential partners in FFMC operations. The Interim Committee heard a presentation from Labrador Fishermen’s Union Shrimp Company Limited on its history and operating model as a potential alternative to FFMC’s current Crown corporation status. While the company’s operating structure and its focus on infrastructure development intrigued Interim Committee members, their initial observations were that the inland industry’s current priorities did not align well with that structure. The Interim Committee also met with the Assembly of Manitoba Chiefs who presented their proposal to obtain the FFMC and transform it into a 100% Indigenous-led enterprise. It was felt amongst Interim Committee members that the proposal lacked sufficient information. These presentations, and the discussions that followed, allowed the Interim Committee to identify industry priorities in the design of a harvester-led entity.

The Interim Committee was able to identify several lines of inquiry to explore based on the opportunities discovered from some presentations. Co-operatives First, a not-for-profit business development organization working in the four western provinces gave a presentation on Co-operative principles and development. Committee members noted several benefits of the model, including transparency and a say for harvesters in decisions and marketing returns. The Committee also received a presentation by Indigenous Services Canada on the opportunities available to support freshwater fish harvesters in Manitoba and Saskatchewan through the Indigenous Inland Commercial Fisheries Initiative, including business development support and community inventory and stock analysis.

Finally, the Interim Committee heard from Federated Co-operatives Limited (FCL). During the meeting, harvesters discussed with the presenters both the opportunities for potential marketing partnerships, as well as the federated co-operative governance structure used by FCL. Harvesters were interested in the potential to collaborate with a Canadian retailer and get a new marketing stream.

Considerations

I have determined that the Interim Committee is interested in moving forward with further industry organization and due diligence. Based on its deliberations, the Interim Committee outlined its four requests to consider in continuing with a harvester-led transformation process:

  1. Assurance of continued commitment by the federal government to pursue working and negotiating with the Interim Committee to establish a harvester-led co-operative, rather than pursue alternative parties to take over the FFMC
  2. Access to support to establish a permanent form of the Interim Committee and improve communication between the committee and harvester groups
  3. Establishment of a due diligence process to allow the Interim Committee to more effectively determine the capacity requirements and conditions of harvesters’ assumption of FFMC ownership and control
  4. Access to resources to secure external technical expertise to assist them in evaluating those requirements

While some Interim Committee members are elected representatives of their communities, and others communicate regularly with their communities on its work, the Interim Committee itself is not an elected or delegated body at present. Interim Committee members are considering the establishment of an ongoing body to continue their work, potentially in the form of a regional industry organization, and possibly as a not-for-profit corporation. Support for these activities is available through existing programs administered by DFO and other federal organizations, including Western Economic Diversification Canada, Indigenous Services Canada, the Canadian Northern Economic Development Agency, and the Indigenous Inland Commercial Fisheries Initiative Working Group.

Currently, the Interim Committee is in favour of a project-based approach to industry organization around transforming the FFMC, where letters of support from harvester co-operatives and associations are collected, with tailored outreach and engagement to less organizationally represented harvesters. Alternatively, leadership and management could be appointed via direct voting, which would require significant effort and resources to engage fish harvesters and harvester communities. As a third option, harvester organizations could appoint delegates on behalf of their members to a representative body inheriting the Interim Committee’s mandate. The last two options would likely generate difficulty in achieving the same level of representation for less organizationally represented harvesters.

Finally, the Interim Committee has identified a number of questions for investigation through a due diligence and negotiation process. These questions primarily concern maintaining FFMC’s ability to purchase fish during and immediately after its transition period, and to position the Corporation for success after harvesters would obtain ownership. These include the following:

Recommendation

The Interim Committee has the willingness and capacity to sustain and co-operate under a harvester-led governance and ownership model for the FFMC. I recommend that DFO undertake the following steps to pursue transition to a harvester-led entity.

1. Announce commitment to working with the Interim Committee to pursue transformation to a harvester-led entity.

I recommend that senior DFO officials meet with the Interim Committee to address the four conditions it has set out for moving forward with transition. This meeting could be followed by a news release that acknowledges the Interim Committee’s successful work so far, and endorses its efforts to lead due diligence on FFMC transformation. This would signal a strong commitment by the federal government to working with the Interim Committee and allow it to generate further buy-in to the project.

2. Provide interim support for organizing industry and due diligence

I recommend that DFO assist the Interim Committee in securing external administrative and technical advisory support services. For example, DFO could use the federal departmental procurement process to seek and secure such services. Alternatively, DFO could provide a transfer payment to the Interim Committee to allow them to secure these services themselves.

The Interim Committee will need administrative services to establish a broader industry engagement and feedback mechanism for negotiation. Initially, this could be comprised of communiqués and direct meetings with harvesters and representatives of regional industry organizations. Moreover, the Interim Committee will require analytical and negotiation support beyond what is appropriate for the federal government to provide.

As transformation progresses, the Interim Committee will need to act independently of DFO. The Interim Committee’s ability to formalize its role more explicitly to negotiate on behalf of freshwater fish harvesters is a prerequisite to transformation to a harvester-led entity. Establishing a representative non-government organization would allow the Interim Committee to partner more freely with other government departments and agencies, and stakeholder groups, and to access funds to support transition activities.

3. Due diligence and negotiation process

The Interim Committee has expressed a desire to move quickly toward a negotiated agreement with DFO on transfer of the FFMC, along with the required level of industry coordination on their part. As noted above, much of this work will rely on a commitment and provision of resources. To provide a timeline for the negotiation process, I recommend that DFO provide a sunset date for its support for the Interim Committee’s activities. I would suggest that this date be one year from the date that this support is available. Within that year, the Interim Committee would be expected to provide documentation of more formal industry endorsement of a negotiation process, complete due diligence, and successfully negotiate terms and conditions for the FFMC’s transfer.

I recommend that DFO collaborate with the Interim Committee to identify operating partners, including financial institutions and other actors adjacent to fish harvesting, including seafood sector not-for-profit organizations, and potential marketing partners or retailers. Provision of an effective business plan should be a condition of transfer.

While the Interim Committee has identified that a co-operative structure is likely the most appropriate organization for a harvester-led FFMC, its members will need to further consider the details and discuss before determining the details. Industry is expected to determine the final structure, but should be expected to furnish an account of these details to DFO through due diligence and negotiation as well.

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