Investments in shrimp industry require large, steady supplies

As a long time participant at various operational and policy levels and one time large vessel owner in the northern shrimp fishery, I would like to comment on the editorial, “Private Investment needed in Arctic Fishery.” (Nunatsiaq News, June 27, 2003).

Throughout the development of the northern shrimp fishery since its inception in 1978, most people would agree that private investment in the fishery has and will continue to be the most appropriate mechanism for the development of this fishery. To date, the vessels in the offshore shrimp fishery are all through private investment.

Makivik Corporation was one of the first Inuit investors in the northern shrimp fishery and was instrumental with its own vessel, the MV Lummaq, in the identification of shrimp resources in Ungava Bay, Hudson Strait and in many other northern areas between the years 1979 and 1983.

Torngat Fish Producers Co-op in Labrador was awarded one of the original shrimp licenses in Labrador, as well as Labrador Fisherman’s Union Shrimp Company, and later Pikulujak Fisheries Limited, a joint venture, of which the Labrador Inuit Development Corporation owns 50 per cent.

Qikiqtaaluk Corporation and Unaaq Fisheries were entrants into the fishery when quotas were increased in the late 1980s at the same time as Pikulujak.

Revenues generated from the shrimp fishery have been instrumental in the development of other fish-related enterprises in Nunavik and in Labrador. It should be recognized that all of the investments in plants and vessels in Labrador by these companies have been through their ability to use the revenues generated from the shrimp fishery to create these other economic and fishery opportunities.

In the 2003 northern shrimp management plan issued by Robert Thibault, the minister of Fisheries and Oceans, the increase was 34,260 tons to a total allowable catch of 152,102 tonnes; this is a substantial increase from the 87,000 tonnes quoted in the article.

This does not include shrimp fished in the gulf of St. Lawrence or for any shrimp in Greenland (80,000 tons) or from Norway, Denmark, Russia, etc.

Because of the increased abundance of shrimp throughout the world, prices have declined over the last five years. The rates quoted widely at recent meetings were as low as $2,200 per ton. This is a far cry from the $4,000-$4,500 quoted, in fact the average in 1995 was $3,850 per ton. It was also noted in the same report that the ROI for those vessel owners was far less than the industry norm, and far less than the same investment in the market – these are also considerations.

Some Inuit companies have entered into ownership structures and some have not. However, it has been the membership of the majority of these widely-held companies or co-operatives, that have stated that employment opportunities for Inuit or others is often as important as the revenues generated through whatever types of revenue-sharing agreement they have.

The revenues are essentially a sharing of the total revenues generated from the operations of the vessels and it has been expressed by many of these same companies that they are able to reinvest this capital into other fishing ventures, which include vessel ownership and processing facility ownership.

Ownership opportunities exist throughout the industry. Offers have probably been suggested by the companies you have quoted to the interested Inuit companies, and perhaps by many other vessel owners throughout the North Atlantic.

Investment in the fishery is capital intensive, with prices for a new vessel of the size suggested being between $27 million and $34 million. It takes a great deal of shrimp to pay for that level of investment.

Access to shrimp resources over a 12-month period is also essential, especially when you only have access to your adjacent waters for a limited period in the year.

All current license holders in the offshore northern shrimp fishery have access to resources in the South as well as the North, and through membership in the Northern Coalition, QC, Unaaq, Makivik, Torngat LIDC, and LFUSC share in a special allocation of 6,120 tons of shrimp resources in southern Labrador.

Neil Greig
Kuujjuaq