Prepared for
PROVINCE OF BRITISH COLUMBIA
ENVIRONMENTAL ASSESSMENT OFFICE
by
MARVIN SHAFFER & ASSOCIATES LTD.
With the Assistance of:
Pierce Lefebvre Consulting
Will McKay & Co. Ltd.
Gary Holman
February 11, 1997
EXECUTIVE SUMMARY
Industry Characteristics
Impacts of Farmed Salmon Production and Sales
Impacts on Wild Salmon Prices
Impacts due to Biophysical Effects
Impacts on Study Area Communities
Impacts on First Nation Communities
EXECUTIVE SUMMARY 1.0 INTRODUCTION 2.0 CURRENT SALMON FARMING ACTIVITY IN B.C. AND RECENT TRENDS 2.1 Number of Farming Companies and Grow-Out Sites 2.2 Vertical Integration 2.3 Production 2.4 Product Form, Market Destination, and Market Share 2.5 Competitive Strengths and Weaknesses of B.C. Farmed Salmon Industry 2.6 Financial Performance 2.7 Role of Government 3.0 ECONOMIC IMPACTS 3.1 Impacts from Farmed Salmon Production and Sales 3.1.1 Direct Employment Impacts 3.1.2 Indirect Employment Impacts 3.1.3 Government Revenue Impacts 3.2 Impacts of Farmed Salmon on Wild Salmon Markets 3.3 Impacts from Biophysical Effects on Marine Resources 3.3.1 Wild Salmon Resources 3.3.2 Other Fisheries Resources and Marine Mammals 3.3.3 Marine Recreation and Tourism Resources 3.3.4 Upland Property 3.3.5 Other Resource Impacts 4.0 SOCIAL IMPACTS 4.1 Impacts on Study Area Communities 4.1.1 Socio-Economic Profile 4.1.2 Salmon Farming Operations in the Study Area 4.1.3 Local Suppliers 4.1.4 Relative Importance of the Salmon Farming Sector 4.2 Impacts on Aboriginal Communities 4.2.1 Socio-Economic Profile 4.2.2 Impacts on Salmon Farming on Resource Use 4.2.3 Participation in the Industry 4.2.4 Participation in the Regulatory Review Process
1.0 INTRODUCTION
In July, 1995, the Environmental Assessment Office (EAO) was requested to conduct a comprehensive review of the environmental risks associated with salmon farming and to evaluate the adequacy of current methods and processes to prevent or reduce adverse effects. In November of that year the terms of reference were amended to explicitly recognize socio-economic considerations in the overall review. The amended terms of reference were then released by the EAO for public comment.
Based on the amended terms of reference and public comments, the EAO concluded that social and economic analyses at a broad level were required to provide appropriate context for the review of existing operations and impacts, and for the assessment of any recommendations. As a result, the EAO commissioned this study with the following objectives:
The study was required to consider social and economic impacts in the Broughton Archipelago, but also the impacts of salmon farming on the province as a whole.
An outline of the proposed scope for the socio-economic study was presented to the Review Committee at its October, 1996 meeting in Campbell River. Basically it was proposed that the study address:
The scope of the study was generally accepted, but both at the Campbell River presentation and in follow-up communications, Review Committee members provided numerous comments and suggestions.
A number of comments emphasized the need to consider the nature of the benefits of salmon farming, including:
Others emphasized the need to consider the full range of costs and risks associated with salmon farming, including:
Some cited the need to look at factors affecting the size and distribution of benefits and costs, including:
Aboriginal representatives raised a wide range of issues with respect to the effect of salmon farming on their communities. They emphasized the need to consider:
While not able to address every issue in detail, the study team recognized the validity of all of these comments. There are both positive and negative social and economic issues that must be considered. The overriding goal of this study has been to bring information to bear on all of these issues in order to provide some perspective to the nature, magnitude and significance of the positive and negative social and economic effects.
The data sources the study team has relied upon to do this include existing studies, surveys undertaken for this review and extensive consultation with persons involved with salmon farming, affected marine resources and affected communities. Existing studies and persons contacted for this review are identified in Appendix A. Surveys and interviews specifically undertaken and relied upon extensively for this review include:
The surveys conducted on behalf of the BCSFA were initiated primarily to provide data MSA requested for this review. MSA worked closely with the BCSFA consultants to design the questionnaires and had access to the raw data results. Additional interviews by MSA were undertaken to independently check the reasonableness of the results.
2.0 CURRENT SALMON FARMING ACTIVITY IN B.C. AND RECENT TRENDS
2.1 Number of Farming Companies and Grow-Out Sites
Salmon farming in British Columbia began in the late 1970s, with the Pacific Biological Station in Nanaimo conducting research on the farming of Pacific salmon. In 1980, 157 tonnes of salmon were produced from approximately four sites. Salmon farming expanded rapidly in the 1980s. By 1988 there were some one hundred companies operating 118 active salmon grow-out sites, with production of 6,590 tonnes.
Between 1989 and 1991, 26 salmon farming companies went into receivership, representing over 25% of the industry. There were also consolidations of smaller firms. Price Waterhouse noted the following factors contributing to the business failures:
The industry consolidated further through the early 1990s, resulting in fewer firms, larger scale operations and a greater number of sites controlled by each firm. By 1993, there were only seventeen farming companies in the industry; by 1996, there were only sixteen different farming companies. The average number of active sites per company is now estimated at 4.94, more than double the average 2.27 sites per company in 1991 and more than quadruple the average 1.16 sites per company reported in 1988 (see Table 1).
TABLE 1
Number of Farming Companies and Grow-Out Sites
1988 1991 1993 1996 Number of Salmon Farming 101 n.a. 17 16** Companies Number of Active Grow-Outs 118 n.a. 88* 79*** Average Number of Sites per 1.16 2.27 5.18* 4.94 Company
n.a. - not available.
*May include some fallow sites.
**Includes 13 companies that belong to the BCSFA and 3 non-BCSFA companies. This is less than the number of companies that the Ministry of Agriculture and Fisheries lists as holding licenses, but the Ministry list includes inactive companies and companies who have sold their licenses to others.
***Includes 74 active sites of the 13 BCSFA member companies and 5 active sites for the 3 non-BCSFA companies. The total of 79 is less than reported elsewhere (e.g., by Ellis & Associates in Net Loss, October, 1996) but this estimate excludes non-active and fallow sites.
Sources: Price Waterhouse (1993); ARA (1994); Coopers & Lybrand (1997); and data from 3 non-BCSFA companies.
While the number of companies has changed by only one over the past three years, their average size has significantly increased. As shown in Table 2, there were fewer small companies (producing less than 1000 tonnes) and a greater number of large companies (producing over 2000 tonnes) in 1996 than reported in 1993.
TABLE 2
Distribution of Companies by Level of Production
(% of total number companies)
Production Level 1993 1996
Less than 500 tonnes 35.3 25.0
500 - 999 tonnes 23.5 18.7
1000 - 1999 tonnes 17.6 18.7
larger than 2000 tonnes 23.5 37.5
TOTAL: 100.0* 100.0
*Does not add due to rounding.
Source: ARA (1994); Coopers & Lybrand (1997); and data from 3 non-BCSFA companies.
The six largest salmon farming companies now account for over 70% of British Columbia's total farmed production. Most of these companies are large multi-nationals, with farming operations in other countries, as described below.
In addition to the greater concentration of activity by multi-site, multi-national farms, there has been a marked shift in the location of farms in British Columbia. Most noticeably there has been a trend away from the Sunshine Coast to other areas (see Table 3). The Sunshine coast has proven to be less environmentally suitable for grow-out operations than other areas.
TABLE 3
Distribution of Active Grow-Out Sites
by Regional District
(% of total number of active sites)
1993 1996*
Alberni-Clayoquot 17 23
Comox-Strathcona 25 35
Mount Waddington 28 27
Nanaimo, Cowichan, Capital 0 10
Sunshine Coast & Powell River 30 5
TOTAL: 100.0 100.0
*Based on the site distribution of BCSFA member companies included in the Coopers Lybrand survey, and the non BCSFA farms.
Source: ARA (1994); Coopers & Lybrand (1997); and data from 3 non-BCSFA companies..
2.2 Vertical Integration
Salmon farming involves the following activities:
There is considerable vertical integration among the salmon farming companies. As shown in Table 4, of the 13 grow-out companies responding to the recent Coopers & Lybrand survey, all were involved in some of the other levels of activity; a number were involved in most.
TABLE 4
Salmon Farming Company Activities
Hatchery Grow-Out Marine Processing Selling
Transport
Agri-Marine
Blue Tornado Enterprises
Creative Salmon
Heritage Salmon (BC Packers)
Liard Aquaculture
Nor Am Aquaculture
Omega Salmon Group
Pacific Aqua Salmon Farmers
Pacific National Group
Paradise Bay Seafarms
Stolt Sea Farm
Sunderland
Target Marine Products
Source: Coopers & Lybrand (1997).
The activities that the salmon farms do not undertake for themselves are contracted to other firms. The major salmon farming contractors to the B.C. industry and the services they provide are shown in Table 5. All of the firms listed in Table 5 were included in the recent Coopers & Lybrand survey of the industry.
TABLE 5
Contractors to Salmon Farming Companies
Hatchery Grow-Out Marine Processing Selling
Transport
Alpha Processing Ltd.
Brown's Bay Packing Co. Ltd.
Cansalm
Long Beach Fisheries
Saltstream Engineering
Sea Agra Seafood Brokerage
Sea Spring Salmon Farms Ltd.
Seafinn Marine Services Ltd.
Transmar Shipping Ltd.
Walcan Seafood
West Coast Fishculture
Source: Coopers & Lybrand (1997).
2.3 Production
British Columbia farmed salmon production has increased sharply over the past ten years. Production levels are now in excess of 25,000 tonnes. This compares to some 13,500 tonnes in 1990 and less than 1,000 tonnes in the mid-1980s. (see Figure 1)
Figure 1
B.C. Farmed Salmon Production
1985-1996*
*The 1996 estimate includes production from 3 non-BCSFA farms plus the BCSFA farm total in the Coopers & Lybrand survey. The chinook total for 1996 includes small amounts of coho production, as the Pacific salmon split was not available for that year.
Source: Kenney (1996); Coopers & Lybrand (1997); and data from 3 non-BCSFA companies.
Figure 1 illustrates not only the increase in total production, but also the marked shift in the species mix. Initially, B.C. producers attempted to grow coho and chinook, but that proved difficult because of high mortality rates and low rearing densities. B.C. farmers began experimenting with raising Atlantic salmon in the mid 1980s and found it to be more economic. According to industry representatives, B.C. farms are successfully rearing Pacific salmon, but production of Atlantics is generally preferred and increasing rapidly. Indeed, as shown in Table 6, Pacific salmon production fell about 26% between 1993 and 1996, while Atlantic salmon production grew by over 50%.
TABLE 6
B.C. Farmed Salmon Production by Species
(tonnes)
1993 1996* % Change
Pacific 11,435 8,450 -26.1
Atlantic 11,300 17,050 +50.9
TOTAL: 22,735 25,500 +12.2
*The 1996 estimate includes production for 3 non BCSFA farms plus the BCSFA farm total in the Coopers & Lybrand survey.
Source: Kenney (1996); Coopers & Lybrand (1997); and data from 3 non-BCSFA companies..
2.4 Product Form, Market Destination, and Market Share
Traditionally the bulk of B.C. farmed salmon has been marketed fresh, head-on. Very little is intentionally frozen. In 1991, an estimated 95% of total production was sold fresh, head-on; the balance head-off or filleted. Recently, however, there has been a shift to value-added products, primarily fillets, in both fresh and frozen forms. Apparently this shift is attributable to a demand for more consumer friendly, table ready seafood products by US buyers.
In 1995, an estimated 15% of B.C. farmed salmon production, by weight, was processed into value-added products and marketed into the US. While this represents an increase in value-added processing for B.C. growers since 1991, it still is much less than the proportion of Chilean production, a major source of competition to B.C., that is valued-added. In 1995 an estimated 40% of Chilean farmed salmon exports were sold in value-added forms.
British Columbia producers are attempting to respond to the shift in buyers' preference for consumer-ready products by placing more emphasis on secondary processing. However, because filleting is a very labour-intensive activity, they are constrained by the high labour costs in this province, which makes it difficult to compete with Chilean producers in value-added product forms. Some B.C. companies attempt to reduce their processing costs by sending their salmon to Washington State for filleting, where labour costs are lower than in B.C.
The British Columbia farming industry relies heavily on export markets for its sales. In 1995, almost 84% of B.C.'s farmed salmon production was exported, primarily to the U.S. and to a much lesser extent Japan and other Asian countries. The Canadian domestic market accounted for 16% of total B.C. sales.
As shown in Table 7, the Pacific Northwest and California account for the majority of the U.S. sales. California is the largest single market destination for B.C. farmed production. Similarly, British Columbia accounts for the majority of domestic market sales. Almost 11% of B.C. farmed production was sold within the province.
TABLE 7
Geographic Market Destination of BC Farmed Salmon Sales
1992 and 1995
% of Total Production
1992 1995 % Change
CANADA
B.C. 5.8 10.9
Other Provinces 9.5 5.6
Subtotal: 15.3 16.5 +1.2
UNITED STATES
Pacific Northwest 18.5 19.4
California 25.6 31.7
Central/Mountain 18.3 15.5
Atlantic 13.7 2.0
Subtotal: 76.1 68.6 -7.5
JAPAN, OTHER ASIAN 8.6 14.9 +6.3
TOTAL: 100.00 100.00
1992 B.C. Production = 17,500 tonnes
1995 B.C. Production = 23,822 tonnes
Source: Kenney, (1996).
While the U.S. remains the largest market for B.C. farmed salmon, it has become increasingly competitive. Both Chile and Norway have increased their sales into the U.S. market, eroding B.C.'s share most notably in central and eastern markets. B.C. producers have looked increasingly to Japan and, to a lesser extent, to China and Korea to offset the increased competition and loss of market share in the U.S. Even in those markets, however, B.C. producers are facing strong competition. Chile in particular has been more successful than Canadian producers in establishing itself in the large Japanese seafood market. For example, while B.C. farmed salmon exports to Japan grew by 1,000 tonnes between 1993 and 1995, Chilean exports to Japan grew by 23,000 tonnes.
Overall, British Columbia's share of world farmed salmon production has been declining since the early 1990s. Table 8 shows farmed production by country for 1988 and 1995. While B.C.'s production increased significantly, the 17,000 tonne increase in B.C. is relatively minor compared to the 170,000 tonne increase in Norway, 123,000 tonne increase in Chile, and 47,000 tonne increase in the U.K. over that period. By 1995 B.C.'s market share had fallen to 4.3%. As shown in Table 9, this is B.C.'s lowest market share over the entire 1988-95 period -- almost 40% less than British Columbia's peak market share of 6.8% in 1991.
TABLE 8
World Production of Farmed Salmon
1988 and 1995
1988 Production 1995 Production
'000 Tonnes % Share '000 Tonnes % Share
Norway 80.3 57.5 251.0 45.5
Chile 3.1 2.2 126.3 22.9
United Kingdom 17.6 12.6 65.0 11.8
British Columbia 6.6 4.7 23.8 4.3
Ireland 4.2 3.0 16.0 2.9
Eastern Canada 3.3 2.4 14.7 2.7
United States 2.0 1.4 14.7 2.7
Japan 14.1 10.1 14.1 2.5
Faro Islands 3.4 2.4 12.4 2.2
Other Countries 5.1 3.7 13.9 2.5
TOTAL: 139.7 100.0 551.9 100.0
Source: Price Waterhouse (1993); Kenney (1996).
TABLE 9
B.C.'s Share of World Market Production
of Farmed Salmon 1988 to 1996
B.C. Production World Production
tonnes % tonnes
1988 6,590 4.7 139,680
1989 11,883 5.7 209,700
1990 13,512 4.7 286,550
1991 21,318 6.8 311,475
1992 17,506 5.7 306,822
1993 22,735 6.1 370,966
1994 20,389 4.6 448,417
1995 23,822 4.3 551,911
Source: Price Waterhouse (1993) and Kenney (1996).
2.5 Competitive Strengths and Weaknesses of B.C. Farmed Salmon Industry
The B.C. salmon farming industry has several strengths and weaknesses that bear on its competitiveness with other producing regions.
The major strengths of the B.C. industry are its location, excellent growing conditions and technical expertise. Because of its proximity to the large and growing U.S. market, particularly the U.S. westcoast, the B.C. industry faces lower transportation costs than its principal competitors. The B.C. industry also has transportation advantages in serving the emerging Asian markets. The increasingly efficient air links between Vancouver and Asian Pacific Rim countries has resulted in B.C. being several hours closer in travel time, giving B.C. producers some advantages in terms of delivering fresh product with longer shelf life to this market.
B.C. has excellent growing conditions for both Atlantic and chinook salmon, with an abundance of potential sites. There is, consequently, the potential for increasing production capacity well beyond current levels without having to move to higher cost locations.
Finally, the B.C. industry has the technical expertise, skilled labour force and sales capacity to enable it to compete effectively with other suppliers.
The principal weaknesses of the B.C. industry are factors contributing to higher costs. Labour and feed costs are considerably higher than in Chile, B.C.'s principal competitor in the U.S. and Japanese markets. While B.C has invested in more mechanized processes to offset the labour cost disadvantage, a differential in feed cost still remains. Feed is the single largest cost factor in grow-out operations.
Also, while B.C. has achieved some economies of scale in recent years,, it has not done so to the same extent as its major competitors, where output levels are much higher. This has adversely affected grow-out, processing, marketing and administrative costs relative to the large producing countries.
2.6 Financial Performance
The salmon farming industry performed poorly in the late 1980s and early 90s due to relatively high costs and falling salmon prices. This led to widespread business failures and consolidation of smaller firms.
With the increased scale and concentration of activity since the early 1990s, financial performance has steadily improved. As shown in Table 10, salmon farming gross income (profits before depreciation, interest and taxes) increased from $15.7 million in 1993 to over $30 million in 1995 and 1996. There was a slight decline between 1995 and 1996, due primarily to lower world prices.
TABLE 10
Financial Performance of the B.C. Salmon Farming Industry
($ Million)
1993 1995 1996
TOTAL FARMED SALMON REVENUES: 168.9 167.2
Selling Expenses: (6.1) (6.1)
TOTAL REVENUES NET OF SELLING EXPENSE:
162.8 161.1
Operating Costs (Net of Other Revenues): (120.0) (120.5)
GROSS MARGIN: 42.8 40.6
General and Administrative Expenses: (10.7) (9.3)
INCOME (before depreciation, interest and 15.7 32.1 31.3
taxes):
Source: ARA (1994); Coopers & Lybrand (1997).
The increased profitability in recent years has been due to lower operating costs and more efficient operations. A major factor in this regard has been a shift to more mechanized operations and consequent improvement in labour productivity. In 1993, the average fixed capital investment per unit of production was $1,178/tonne. That had increased to $1,835/tonne by 1995, and to $2,081/tonne by 1996. Labour requirements per unit of production have correspondingly decreased, particularly for grow-out operations, with a reduction of over 15% over the past three years.
Other factors contributing to lower costs include a reduction in smolt costs. In the early 1990s there was a shortage of smolts, causing upward pressure on prices. With expanded hatchery capacity, smolt prices have come down. The economies of scale that the industry has achieved have also contributed to lower costs. Administrative costs in particular have fallen in recent years. Finally, the shift to Atlantics, with their higher yields and growing density, has served to reduce costs and increase profitability.
In addition to the reduction in costs, there has been a shift to higher valued products. These generate more revenues for the industry but they also give rise to additional costs. The net effect on profitability is not yet clear.
2.7 Role of Government
The provincial and federal government has generally supported the growth of the salmon farming industry. In the early years of its development, there was direct support (grants and loan programs) to salmon farming companies as well as extensive government-funded research and development.
In recent years, government support has been much reduced. There are no direct grants or loan programs available to the salmon farming industry. The only government support that salmon farmers directly benefit from is investments through the Venture Capital Corporation -- an entity that provides tax credits to investors. Such investments totalled $2.5 million in 1996 yielding tax credit benefits of some $750,000. No investments through this corporation are expected in 1997.
Indirectly, government still supports the industry through research and development, promotion, financial contributions to industry associations, and unrecovered regulatory costs. As shown in Table 11, these were estimated to total $3.65 million in 1996, or roughly 2% of the value of B.C. farmed salmon sales. This compares to an estimated average level of support of 8% of farm revenues in other agricultural industries in B.C. It is also considerably below, in both percentage and absolute dollar terms, the level of support directly and indirectly provided to the commercial salmon fishing sector through, for example, the salmonid enhancement program, fisheries regulation and management, small craft harbours and other services or contributions.
TABLE 11
Indirect Government Support to the
B.C. Salmon Farming Industry
1996
($ millions)
Federal Government
Fisheries & Oceans
Salmon Farming Research Development and 2.5
Promotion
Permit & License Revenue (.06)
Provincial Government
Ministry of Agriculture Food & Fish
Aquaculture and Commercial Fisheries Branch 1.16
Partners in Progress .06
License Revenues (marine sites only) (.03)
Ministry of Environment Lands & Parks
BC Lands .1
Waste Management .23
Permit and License Revenues (.31)
TOTAL: 3.65
Source: Expenditures based on estimates from DFO, Ministry of Agriculture Food & Fish; and Ministry of Environment Lands & Parks; revenues based on Coopers & Lybrand (1997).
While the indirect financial support for salmon farming has contributed to the growth of the industry, a number of regulatory policies have had the opposite effect. The moratorium that the B.C. government has imposed on new leases has restricted the growth of the industry, led to higher than optimal densities at existing sites and less than optimal fallowing of sites. Uncertainty over future regulations and coastal planning processes has also adversely affected investment and growth of the industry.
3.0 ECONOMIC IMPACTS
Salmon farming activity can have both positive and negative economic effects. The positive impacts derive from farmed salmon production and the employment and income that generates. Negative impacts can occur as a result of the effect that farmed salmon sales have on market prices for wild salmon and as a result of the biophysical effects that farming salmon has on marine resources and the various activities - commercial and sport fishing, subsistence economies, recreation and tourism, upland property use, boating - that depend on them. The nature, extent and significance of the positive and negative impacts resulting from current salmon farming operations are discussed below.
3.1 Impacts from Farmed Salmon Production and Sales
The production and sale of B.C. farmed salmon generated an estimated $167.2 million in revenues in 1996. As noted earlier, these generated a gross income (profit before depreciation, interest and incomes taxes) of $31.3 million. The balance of the revenues paid for operating, sales and administration costs, as shown in Table 12. The operating, sales and administration costs include expenditures for labour and a wide range of goods and services, giving rise to the direct and indirect income and employment impacts, as discussed below.
TABLE 12
1996 Farmed Salmon Revenues and
Income/Expenditure Breakdown*
($ million)
TOTAL FARMED SALMON REVENUES: 167.2
Operating Expenses:
Hatchery 19.7
Grow-out 85.6
Harvesting 6.6
Processing 17.1
Shipping 2.6
Less Other Revenues: (11.1)
Net Operating Expense: 120.5
Other Expenses:
Sales 6.1
Administration 9.3
Total Other: 15.4
_______
TOTAL EXPENSES: 135.9
INCOME 31.3
(Before Depreciation, Interest & Income
Taxes)
Source: Coopers & Lybrand (1997).
3.1.1 Direct Employment Impact
For purposes of this study, direct employment impacts refer to the number of person years of employment (i.e. number of jobs adjusted to full time equivalent) in the salmon farming company operations and in the hatchery, grow-out, harvesting, marine transport and sales activity of contractors to the salmon farming companies. Direct impacts exclude employment in companies supplying goods (e.g., feed and equipment) or services not involving the handling of live fish (e.g., freight).
In Table 13, the direct employment impacts from salmon farming, defined in this manner, are shown for 1993 and 1996. Total direct employment is estimated at 1,142 person years in 1996, a slight increase from 1993. Employment in grow-out operations has actually fallen, but this has been offset by growth in processing and transport jobs. Overall, employment per unit of production has fallen, reflecting the increasingly mechanized nature of the operations.
Most of the jobs in the salmon farming industry are full time because of the year-round nature of the operations. However, there are some part-time and casual jobs. As a result there are more people working in the industry than the number of person years of employment suggest. Based on the Coopers & Lybrand survey, there are 16% more jobs than person years of employment directly generated by the industry.
TABLE 13
Salmon Farming Direct Employment
(person years)
1993 1996* Hatchery 126 124 Grow-Out Sites 522 496 Processing 266 332** Transport 63 78 Selling and Administrative 96 87 Other 25 Total Direct Employment 1,073 1,142 PYs per tonne of fish .047 .045 produced
*The 1996 estimate includes employment of three non-BCSFA firms as well as the BCSFA firms and contractors included in the Coopers & Lybrand survey.
**Excludes employment at the recently completed Engelwood plant in Port McNeill which began operating in December 1996 and employs about 40 people.
Source: ARA (1994); Coopers & Lybrand (1997); and data from 3 non-BCSFA companies..
Tables 14 and 15 show the distribution of employment by location of employee residence. As shown in the Tables, much of the employment is concentrated in Campbell River and Comox/Courtenay areas. Indeed about 50% of the total direct employment is for workers who reside in the Comox-Strathcona regional district. There has been a shift away from employment in the Sunshine Coast and Powell River area, reflecting the shift in the location of production that has taken place in recent years.
TABLE 14
Direct Employment by Community
(person years)
1993 1996*
Campbell River 278 425
Comox/Courtenay 62 115
Tofino 66 98
Port Hardy 47 84
Port Alberni 80 64
Ucluelet 24 56
Powell River 85 37
Port McNeill 17 28**
Nanaimo 25 16
Sechelt 87 14
Other Non-urban 215 132
Greater Vancouver and Victoria 87 73
Total Direct PYs: 1,073 1,142
*The 1996 estimate includes employment of three non-BCSFA firms as well as the BCSFA firms and contractors included in the Coopers & Lybrand survey.
**Excludes employment at the recently completed Engelwood plant in Port McNeill which began operating in December 1996 and employs about 40 people.
Source: ARA (1994); Coopers & Lybrand (1997); and data from 3 non-BCSFA companies).
TABLE 15
Direct Employment by Regional District
(person years)
1993 1996*
Alberni-Clayoquot 192 226
Comox-Strathcona 446 582
Mount Waddington 85 130**
Nanaimo, Cowichan & Capital 36 82
Sunshine Coast & Powell River 231 68
Greater Vancouver Regional
District and Other British 83 54
Columbia
Total: 1,073 1,142
*The 1996 estimate includes employment of three non-BCSFA firms as well as the BCSFA firms and contractors included in the Coopers & Lybrand survey.
**Excludes employment at the recently completed Engelwood plant in Port McNeill which began operating in December 1996 and employs about 40 people.
Source: ARA (1994); Coopers & Lybrand (1997); and data from 3 non-BCSFA companies..
The employees are generally hired from the local areas. In most aspects of the industry, turnover rates are low and job satisfaction high. The major companies report very stable work forces, particularly for more senior positions. Turnover for entry level positions, however, is much higher. Turnover is highest at remote grow-out sites, because of the long shifts at those operations.
Wages for farming industry workers vary by position. Farm and hatchery workers generally earn between $9 and $15 per hour; processing employees between $9 and $12 per hour; supervisory workers between $12 and $20 per hour; managerial workers between $15 and $20 per hour and senior management in excess of $20 per hour. In Table 16, the total wages and benefits earned by those directly employed in the industry are shown. They totalled $33.8 million in 1993 and $36.4 million in 1996. The average earnings per employee were between $31,000 and $32,000 in both years, roughly equal to the average earnings across all industries in British Columbia
TABLE 16
Wages and Salaries from Direct Employment
1993 1996 Total Wages and Benefits 33.8 36.6* (millions) Per PY of Employment 31,500 32,000
*Includes estimated wages and benefits for the 3 non-BCSFA firms as well as the BCSFA firms and contractors in the Coopers & Lybrand study.
Source: ARA (1994); Coopers & Lybrand (1997); and data from 3 non-BCSFA companies..
3.1.2 Indirect Employment Impacts
In addition to the direct employment, the salmon farming industry generated employment in other industries as result of the goods and services it purchases.
Feed is the single largest industry purchase, accounting for almost 40% of total production expenditures in 1996 There are three large feed suppliers in the Lower Mainland:
Two of these suppliers rely heavily on salmon farming purchases as a source of revenue; for the other suppliers, salmon farming purchases are a minor revenue source. Ewos and Moore-Clark control approximately 90% of the fish feed industry.
The industry also relies heavily on marine transport, with significant purchases of marine towing and barging services, marine supply, boats, engines and related services. Suppliers of marine transport services to the salmon farming industry include:
For five of these suppliers, purchases by salmon farmers represents between 10% and 25% of revenues. For the marine towing and transportation companies, the percentage is higher, between 45% and 100%.
Major suppliers to the processing plants include containers and box manufacturers. According to industry representatives, a large processing company can require as many as one truckload of Styrofoam boxes for each two shifts of processing. One of the producers of containers, Aqua-Pak Styro Containers (Aqua-Pak) from Vancouver, started in 1986 as a result of the salmon farming sector.
Aqua-Pak in Vancouver and Noboco Products (Noboco) in Campbell River produce Styrofoam boxes for the aquaculture sector. Together the companies employ 48 full-time employees. Noboco remains 100% linked to the aquaculture sector but Aqua-Pak has now diversified into many other packaging products. Among other products, Aqua-Pak now supplies packaging materials for shipping sea urchins, geoducks and wild mushrooms to Japan and other countries. Aqua-Pak and Noboco in turn have a large number of suppliers. For example, Bulldog Bag, a sheet plastic manufacturer, supplies bags to Aqua-Pak and Noboco, and also to the feed manufacturers for packaging feed.
Capital expenditures by the salmon farming industry totalled $16.4 million in 1996, an increase of over 30% from 1995. As shown in Table 17, nets, cages and equipment accounted for the majority of the capital expenditures. Major net manufacturers include:
Equipment suppliers include McTavish Welding which produces automatic feeding machines. Other suppliers include PRA manufacturing, a manufacturer of fish pumps and Sea R. Power, a manufacturer of marine equipment supplies.
TABLE 17
B.C. Salmon Farming Industry Capital Expenditures
in 1995 and 1996
('000s)
1995 1996
Nets 2,534 3,347
Cages 2,844 3,750
Barges 888 1,173
Boat 826 1,091
Trucks 58 77
Equipment 2,823 3,729
Buildings 1,232 1,627
Other 1,195 1,579
Total: 12,400 16,373
Source: Coopers & Lybrand (1997).
Coopers & Lybrand and the Columbia Pacific Group conducted a survey of twenty-four key suppliers to the salmon farming industry, including the firms listed above. Each supplier provided data on employment and the percentage of revenues derived from salmon farming. Based on that information, the amount of employment dependent on the salmon farming industry was estimated.
In Table 18, employment estimates for key suppliers is shown, broken down by residence of employee, along with the direct impacts. As shown in the table, key supplier employment dependent on the salmon farming industry is estimated to total 275 person years. Over half of this employment is located in the GVRD; one-quarter is located in the Comox-Strathcona regional district.
TABLE 18
Direct and Key Supplier Employment
by Regional District, 1996
(person years)
Direct Key TOTAL
Suppliers**
Alberni-Clayoquot 226 6 232
Comox-Strathcona 582 70 652
Mount Waddington* 130 5 135
Nanaimo, Cowichan & Capital 82 18 100
Sunshine Coast & Powell River 68 25 93
Greater Vancouver Regional 54 151 205
District and Other British
Columbia
TOTAL: 1,142 275 1,417
*The direct employment data exclude the Engelwood Packing plant in Port McNeill which opened in December, 1996.
**Includes only the suppliers that responded to the survey. Generally, these tend to be suppliers that heavily depend on the salmon farming sector. Others that are not linked directly to the salmon farming such as suppliers of fuel, general supplies, etc. were not included in the survey. Employment at key suppliers excludes contractors such as contract processing plants, contract marine transport, hatchery and smolt production. These are considered part of the direct employment.
The key supplier employment shown in Table 18 does not include all of the indirect effects. It does not include the employment generated by other suppliers to the salmon farming industry, nor does it include the employment generated in industries directly and indirectly providing goods and services to the supplier industries. Based on an input-output analysis of the operating and capital expenditures of the salmon farming industry, it is estimated that the total employment directly and indirectly generated in B.C. by the industry in 1996 was 2,237 person years, 820 more person years than shown in Table 18. The respending of the income earned by these people is estimated to induce a further 767 person years of employment.
3.1.3 Government Revenue Impacts
In Table 19, the government revenues from the corporate taxes and license fees paid by the salmon farming industry are shown. The table does not include the taxes paid by salmon farming industry employees nor the unemployment insurance or other savings due to the employment created by the industry.
TABLE 19
Corporate Taxes and Other Payments
($ millions)
1993 1996
Corporate Income Taxes - 2.29
Property Taxes 0.2 0.24
Capital Taxes 0.2 0.35
Business Licenses not included .03
Provincial Sales and Other Taxes not included .65
Other Taxes not included .02
Federal Aquaculture Permits and in provincial .06
Licenses
Provincial Aquaculture Permits and .04 .34
Licenses
Total: .08 3.97
Source: ARA (1994); Coopers & Lybrand (1997).
As shown in the table, taxes and fees paid by the industry are relatively small. In 1993, the taxes and fees totalled less than $1 million. In 1996 that increased to $4.0 million, the increase in large part due to the payment of some corporate income taxes in that year. No corporate income taxes were paid in 1993 because of the carrying forward of previous losses.
3.2 Impacts of Farmed Salmon Sales on Wild Salmon Markets
British Columbia's wild salmon production has been declining in recent years. Average annual production of wild salmon in B.C. was some 69,000 tonnes over the 1991-95 period, as compared to over 88,000 tonnes in the previous 1986-1990 period. In Table 20, B.C. wild salmon production is shown by year from 1991-1995. The table shows the marked decline in recent years, particularly for coho and chinook, the two wild salmon species that compete in the market place most directly with farmed salmon.
TABLE 20
B.C. Salmon Production by Species
1991-1995
(tonnes)
1991 1992 1993 1994 1995
Sockeye 25,200 20,600 42,529 30,810 9,989
Pink 35,100 14,700 16,046 3,383 18,392
Chum 10,200 17,500 17,274 20,247 8,736
Chinook 5,100 5,300 4,817 3,574 1,240
Coho 10,100 7,300 4,316 7,712 4,039
Total: 85,700 65,400 84,982 65,726 42,396
Source: Kenney (1996).
Despite the reduction in B.C. supply, and growth in consumer demand, prices for B.C. wild salmon have fallen sharply over the past ten years. Table 21 shows fresh and frozen wild salmon prices from 1985 to 1996. Prices in 1996 for all species except sockeye are 30% to almost 50% below what they were in 1985. The real decline in prices, taking the general rate of inflation into account, would be even more pronounced.
TABLE 21
Wild Salmon Prices
($/kg)
Chinook Sockeye Coho Pink Chum
Fresh Frozen Fresh Frozen Fresh Frozen Fresh Frozen Fresh Frozen
1985 7.89 9.78 6.87 7.52 5.79 6.84 2.73 3.11 3.14 3.93
1986 6.46 7.87 8.11 8.63 5.74 6.68 2.74 3.13 2.72 3.77
1987 9.00 9.58 9.05 10.40 7.32 8.52 3.79 4.26 4.70 5.35
1988 9.42 12.56 11.87 14.27 6.87 10.63 3.76 5.52 5.18 6.01
1989 6.04 7.65 7.62 9.04 4.36 5.40 2.70 3.14 3.39 3.78
1990 6.22 7.15 6.64 8.07 4.27 6.11 2.82 2.85 3.41 3.75
1991 5.70 7.63 6.33 7.28 4.10 5.76 2.19 2.44 3.92 3.30
1992 5.70 7.94 8.22 8.20 4.51 5.79 2.21 2.49 2.84 3.44
1996 5.18 6.83 7.16 7.72 4.30 5.18 1.54 2.20 1.76 2.20
Source: BC Ministry of Agriculture, Fisheries & Food for 1985-92; industry sources for 1996.
It is world market conditions that govern the prices B.C. producers receive for their salmon. In both domestic and export markets, B.C.'s prices must be competitive with alternative sources of supply. It is because of that dependence of world market conditions, and what has happened on the world markets, that B.C. prices have fallen.
Firstly, as shown in Table 22, despite the decline in B.C. wild salmon production, world wild salmon production has significantly increased. B.C. is the smallest of the four world producers of wild salmon. The U.S. is the largest producer, followed by Japan and Russia. Much of the U.S. and Japanese production is enhanced -- ocean ranched salmon from government funded and operated hatcheries. These supplies and production from Russia have increased, more than offsetting the decline in B.C. production over the past ten years.
TABLE 22
World Production of Wild Salmon
(tonnes)
Annual % Annual Average %
Average 1991-1995
1986-1990
United States 303,520 43.6 388,715 46.2
Japan 193,679 27.4 211,533 25.1
Russia 119,935 17.0 172,321 20.5
British Columbia 88,580 12.6 68,841 8.2
Total: 705,714 100.0 841,410 100.0
Source: Kenney (1996)
In addition to the increase in world wild salmon production, there has been the large increase in farmed salmon production. In 1995, world production of farmed salmon was 552,000 tonnes, as compared to 286,000 tonnes in 1990 and less than 140,000 tonnes in 1988. That large increase -- over 400,000 tonnes in the last seven years -- has significantly affected all salmon prices, particularly fresh and frozen forms.
Wild coho and chinook directly compete with farmed salmon. According to distributors active in the Canadian domestic and western US markets, up to about three years ago, wild coho and chinook were preferred over farmed fish. Thus sales and prices of farmed salmon tended to fall during the summer and fall months. With the continuing decline in wild coho and chinook supply from BC and the US, however, as well as improvements in the overall quality and size consistency of fresh farmed salmon from producers in all countries, there has been a substantial shift in buyer preferences. Farmed fish now command prices equal to or greater than fresh wild coho and chinook even during the peak wild salmon harvesting season. The year round availability of fresh farmed salmon has also reduced the demand for frozen wild coho and chinook, as many users have shifted from purchasing inventories of frozen wild salmon for processing during the off-season, to buying fresh farmed salmon on an as-required, just-in-time basis. These shifts in buyer preferences have caused wild coho and chinook prices to decline even though total supply of these species has also fallen.
Sockeye is a high valued species which traditionally was sold in canned form both domestically and in the U.K. and Australian markets. However, a large share of sockeye has been sold frozen in Japan. Farmed salmon, particularly farmed coho from Chile, has been displacing B.C. sockeye sales into this market, diverting sockeye to smoked and other markets. Overall, the erosion of the Japanese market has had some adverse effect on price.
Chum and pink are low-valued species, largely canned, but also sold in fresh and frozen forms. Prices for these species have also fallen as fresh and frozen wild markets are eroded by increasing quantities of farmed salmon. The year round supply of fresh farmed fish diminishes the demand for and price of frozen salmon. This in turn increases the proportion of wild salmon sold fresh, depressing the in-season price. For example, the smoker market in Europe for frozen chums has largely been displaced by Norwegian farmed salmon. This has significantly affected fresh and frozen chum prices.
In sum, the sharp increase in farmed salmon production, combined with the increase in world wild salmon production, underlie the decline in B.C. wild salmon prices. However, it is important to distinguish between the effect of world farmed salmon production and farmed salmon production in B.C. B.C. farmed salmon production accounts for less than 5% of the world total -- less than 2% of the total world farmed and wild production combined. By itself, B.C. farmed production is having a relatively minor effect. Put differently, if B.C. farm production were to disappear, there would only be a minor impact on prices, and even that would be short-lived as other farming nations increased their supply to take advantage of the vacated B.C. markets.
B.C. farmed salmon does have some positive impact on the wild commercial industry in the processing sector. While most farmed salmon is processed (gutted) in facilities exclusively serving nearby farms, some primary and secondary value-added processing is undertaken by custom processors who serve both the farmed and wild fishery.
One custom processor in Richmond reported that farmed salmon processing activities accounted for between 15% and 20% of total sales in 1996, a substantial increase over previous years. This processor stated that activities related to farmed salmon help to maintain business activity during the traditionally slow winter and spring months when wild salmon is not available, making this business more profitable and stable as a result. Again, however, because of the relatively small amount of such processing, the impact is relatively small.
3.3 Impacts from Biophysical Effects on Marine Resources
The marine resources of British Columbia support a wide range of uses and economic activity. The commercial fishing industry generated $780 million in revenues in 1995. The sports fishing industry generated some $360 million in revenues; other marine tourism $75 million. Fisheries and other marine resources are critically important to coastal First Nation subsistence economies in providing food (salmon, groundfish, herring and herring roe, shellfish, marine mammals) and supporting their traditional culture and community activity. Marine resources are particularly important in more remote First Nation communities because of the high transport cost of store bought goods.
Any biophysical effects of salmon farming on fisheries, tourism or other resources (e.g., upland property, archaeological resources, navigation) can consequently have significant economic and social impact. The extent to which this has occurred or can be expected as a result of the current level and nature of salmon farming activities is outlined below. The assessments are based on the more detailed findings of the Technical Advisory Team (TAT) on biophysical effects (see References) and on survey or other information on resource use.
3.3.1 Wild Salmon Resources
The major potential impacts of salmon farming on wild salmon resources relate to the introduction and transfer of disease, competition and colonization in the wild of escaped farmed fish, and genetic weakening due to interactions between wild and escaped farmed fish.
With respect to disease, the TAT has concluded that there is a very low probability of exotic disease affecting indigenous wild stocks due to the importation of Atlantic salmon eggs, given current policies and practices (e.g., disinfecting, quarantining, testing of eggs). If there were an outbreak of disease, the greatest impacts would most likely be on the farmed industry itself. However, wild stocks could also be threatened, particularly if they were stressed by other factors.
There may be a greater probability of indigenous diseases being transferred from farmed to wild stocks, though the evidence is mixed and the consequence not likely as severe as an exotic disease. The potentially affected wild populations have more experience with and resistance to indigenous diseases.
With respect to colonization, competition, and genetic effects due to escapes of farmed fish, the TAT has concluded there is some possibility of escaped farmed Atlantic salmon establishing themselves by spawning in the wild, particularly if the number of escapees grows over time with increased farmed production. It is further possible that the Atlantics could displace some wild stocks, if the wild stocks were stressed or for other reasons not as competitive as the Atlantics, though this could in most cases likely be mitigated through targeted harvesting of the Atlantics. There is a greater possibility of farmed Pacific salmon (chinook, coho) displacing weaker, wild stocks.
The TAT has concluded that there is little possibility of escaped Atlantics breeding with wild Pacific stocks, but escaped farmed coho and chinook could, adversely affecting the genetic diversity of wild coho and chinook stocks, with possible reproductive or other long term effects.
However, whatever displacement of, or genetic impacts on wild coho and chinook stock that may occur as a result of salmon farming, they are likely to be minor compared to that already caused by the salmon enhancement program (SEP).
If any of these biophysical effects were to occur, particularly effects with potentially widespread consequence such as exotic disease, the economic impacts could be very large. Commercial and sports fishing and aboriginal subsistence economies would all be affected. There would be costs of foregoing catch, to allow wild stocks to rebuild, and/or costs of enhancement to rebuild runs. To date, however, no such effects have been identified in British Columbia from current salmon farming practices, and the probability of significant effects in the future is very low. The most likely impact is continued escape and harvest of farmed fish and possibly even some colonization in the wild, but this is not likely to have any significant economic consequences in terms of reduced quantity or value of catches. It is more of a social and possible ecological concern of those who are offended by the inadvertent introduction of Atlantics in Pacific River systems.
3.3.2 Other Fishery Resources and Marine Mammals
Impacts of salmon farming on other fisheries resources are more localized than the potential impacts on salmon, and more dependent on the specific characteristics of each individual salmon farming site.
There are local concerns about the impact of farms on the productivity and quality of nearby shellfish beds. There is little evidence or understanding to date of why nearby shellfish beds should be less productive, though increased turbidity and tidal effects may be responsible. This may also be responsible for the fouling of shellfish beds reported by some aboriginal communities. In addition to the impacts on nearby shellfish beds, there are likely to be losses of fish resources underneath farms due to the build-up of sediments (specifically, geoducks and sea urchins). There are, on the other hand, shellfish cultivation opportunities afforded by salmon farms which could be considered, but that would require regulatory change.
Uptake by shellfish and other resident fish of antibiotics and metals (copper, zinc) is of concern, particularly to aboriginal communities who are so dependent on shellfish and other marine resources for their diet. The uptake is of greatest concern for shellfish because of their biomagnification of contaminants. Antibiotic uptake renders shellfish near farms unsafe for human consumption for up to 30 days. It may also be responsible for the tainting of shellfish reported by aboriginal communities. Lack of public notice about the timing of antibiotic treatments exacerbates the effects. Local residents are left uncertain about the safety of shellfish consumption throughout the year.
There are concerns about the effect of night lighting on herring and other fisheries resource attracted to the farms. The TAT has concluded, however, that there is no technical evidence of night lighting causing significant impacts on resident or migrating stocks. There is some evidence of localized effects on larval fish.
Finally, there is some interference with prawn longline and other fishing due to the farms. Fishers can be prevented from accessing traditional fishing areas or mooring in attractive locations. Also, debris from old farms can foul nets and eliminate attractive anchorages. This can occur particularly when farms go out of business, without proper clean up, as has happened in a number of instances in the Sechelt area.
These impacts are clearly of concern and of great significance to the individuals and communities affected. For First Nation communities in particular, the impacts are of great significance because of their dependence on fishery resources for their diet and culture and because of pollution, increased commercial harvesting and other factors already depleting their resource base.
In terms of the extent of the impacts of salmon farming itself, however, it is important to recognize that the percentage of the fishery resources that are affected is quite small. GIS resource mapping in the Broughton study area, for example, suggest that fish farms potentially affect less then 5% of the available resources (see Table 23).
TABLE 23
Broughton Area GIS Mapping Results
Potentially Affected Area Resource Total
(Based on Preliminary Assessment)
Clams 8 farms within 125 metres of a 151 clam areas
clam bed
Crab 4 farms within crab areas 8,850 ha. of crab areas
Herring 1 farm within a herring area 284 lineal kms.
Prawns 10 farms within prawn areas 48,600 ha. of prawn area
Source: C. Berris Associates.
The GIS results must be viewed as rough, because local resources are not always known and the quality of the sites are not fully differentiated. Also, impacts may be more extensive than assumed in the analysis (e.g., beyond 125 m. for clam areas). Further, the percentage of resources affected in the vicinity of particular communities can be much higher.
Nonetheless, from a broader regional and certainly coast-wide perspective, it is clear that the percentage of the total resources that are affected is low and, in areas where these resources have generally been underutilized (e.g. the Broughton), the main impact has probably been to divert harvesting activity to other areas. This can impose some costs and can be problematic for some communities (e.g., in First Nation communities where alternative sites may be the traditional harvesting area for other families or bands). However, there does not appear to be evidence to date of any significant reduction in harvest levels, income or employment from these biophysical effects of salmon farming. This could, of course, change as pressures on the resource increase and diversion to other areas is no longer possible, or if the extent of the biophysical effects were to increase because of an increased number and/or inappropriate siting of farms.
The variety of measures such as acoustic deterrent devices (ADDs) and guns used by salmon farms to prevent marine mammals from preying on salmon and damaging nets has raised significant concerns about the impacts on these animals. There is evidence to suggest that ADDs can alter normal migration routes of whales and porpoises and may also cause hearing damage to marine mammals. However, while ADDs may affect marine mammal migration patterns, there is no evidence to date that they have affected the size of marine mammal populations. Even the shooting of seals and sea lions has not significantly affected total populations which are estimated to be growing rapidly on the west coast. With respect to economic impacts, the main impacts of fish farming on marine mammals to date have been possible displacement of or interference with wildlife viewing opportunities in certain areas (see 3.3.3 below). The killing of marine mammals could have more serious consequences in that it could harm British Columbia's "Super Natural" image and even provoke trade sanctions by animal rights groups.
3.3.3 Marine Recreation and Tourism Resources
Marine recreation and tourism activities include sports fishing, boating (power and sail), wildlife viewing, kayaking and scuba diving. The marine tourism industry (excluding sport fishing) was estimated to have generated $75 million in revenues in 1994, with potential growth of some 10% per year to the end of the decade.
GIS and Coastal Resources Interest Study (CRIS) data for the Broughton indicate that the potential impacts of salmon farms on recreation values such as anchorages can be somewhat more significant as a proportion of the total resource value than for fisheries resources. For example, 11 farms in the Broughton are located within or across from anchorages, representing about 8% of the total number of anchorages. CRIS data indicates about 20% of critically important and important recreation sites in the Broughton are affected by farms. Berris notes that it is impossible to kayak through the Broughton without seeing a farm. On the other hand, the proportion of sport fishing areas affected by farms is still very low (see Table 24).
TABLE 24
Broughton Area GIS and CRIS Mapping Results
for Recreation Resources*
Potentially Affected Areas Resource Total
(Based on Preliminary Assessment)
Anchorages 5 farms with anchorages 134 anchorages
6 farms across from anchorages
Scuba Diving 9 farms in or near scuba diving no measure possible
Areas areas
Sport Salmon 3 farms within sport salmon areas 35,500 ha.
Sport 3 farms within sport groundfish 4,300 ha
Groundfish areas
Kayaking 10 farms along kayaking routes 400 km.
Routes
Kayak Camp 2 farms next to stopping/staging 36 camp sites
Sites sites
Recreation 14 farms affecting critical 66 critical recreation
Areas recreation areas areas - 36 camp sites
(CRIS data) 4 farms affecting important 21 important areas
recreation areas
*All mapping data based on LUCO's GIS data except for "Recreation Areas" which is from CRIS
Source: C. Berris Associates
To better understand the nature and significance of the impacts of fish farms on marine recreation and tourism, a survey of commercial operators in the Broughton Archipelago was undertaken in conjunction with the Ministry of Tourism, Business and Culture. There are over 60 to 80 marine tourism operators, including lodges and resources, marine charters, air charters, kayak touring and marinas in the Broughton. For this review, 50 operators were contacted and 29 completed survey questionnaires. The 29 operators reported employing of 218 persons, mostly on a seasonal basis. The estimated full time equivalent person years of employment, including owner and operators, was 106. Some 31% of the workers live in the Broughton area. The operators reported having almost 30,000 clients in 1996, more than double the number five years ago. The growth in activity over the 1991 to 1996 period has averaged some 17% per year.
With respect to the effects of salmon farming, 15% of the operators stated that fish farms had only positive effects, 65% stated that fish farms had only negative effects and 20% stated that fish farms had both positive and negative effects. Positive impacts that were cited include: points of interest, safe havens, and educational tour opportunities. Negative impacts that were cited included: visual detraction, adverse impacts on fish and wildlife, blocked access to tourism resources (e.g. anchorages), reduced wilderness experience, pollution, odor and noise.
Because different marine tourism activities rely on different environmental attributes, the extent to which these positive or negative impacts affect tourism will vary. Activities dependent on a pristine and abundant wildlife, such as kayaking, scuba diving, and whale watching, particularly activities which also require access to sheltered bays anchorages, are most negatively affected. Activities such as power boating and sport fishing are much less negatively affected -- and, in some cases, positively affected.
Overall, the operator survey indicates that commercial marine tourism activity as a whole, and related income and employment, has grown substantially despite the negative impacts of fish farms. Discussions with recreation representatives indicate that non-commercial recreation and tourism (e.g., boating and kayaking) have also grown rapidly in the Broughton. The main reason for this appears to be that operators and recreationists have been able to find other routes, anchorages and fishing areas within and outside the Broughton to minimize the impacts of farms, without altering their base of operations.
Some operators feel that the tourism component of their business has actually declined or that their businesses could have grown more rapidly without farms,. Kayakers also prefer fewer or no farms, and believe that kayaking activity in areas such as the Broughton and Clayoquot Sound has been reduced by the presence of farms. However, even though marine recreation and tourism might have grown more rapidly in such areas without fish farms, it is likely that the impact up to now has been more to divert some activity to other regions. In other words, it is unlikely that overall provincial marine recreation and tourism activity has been affected.
The impacts on marine recreation and tourism could become more evident in certain regions by an increased number and inappropriate siting or operating practices of farms, or provincially if B.C.'s "super natural" reputation is affected. However, it is also important to recognize that growth potential in recreation and tourism use may ultimately be limited, even with no increase in the number of farms, as popular destinations such as the Broughton Archipelago and Clayoquot Sound become increasingly crowded. This would be particularly true if use levels began to disturb wildlife such as whales, which are a key attraction in both of these areas.
3.3.4 Upland Property
The noise, smell and visual effects of farms, as well as the debris that can wash ashore or which is associated with land-based buildings, can significantly affect the aesthetic and economic value of upland property use -- particularly residential or recreational use.
Farms are supposed to be sited to avoid impacts on upland property, but there are instances where such impacts occur. Impacts are most significant where farms are located in small bays or inlets near residential areas or recreational properties, such as Sooke basin, Cypress Sound in Clayoquot Sound and previous farms on the Sunshine Coast. The Comox-Strathcona Regional District has also reportedly received a number of complaints from upland owners. Another example is the farm located at Carrie Bay near the Gilford Village Indian Reserve in the Broughton, not only with impacts as noted above, but adding "insult to injury" to First Nations who feel they bear a disproportionate share of the impacts of farms, without offsetting benefits.
No estimates are available on the diminution of property values due to salmon farms. The overall total would likely be small because of the remoteness of the sites and the intent to avoid conflicting upland property use. However, as with other site-specific impacts, while not significant on a provincial scale, they are very significant to the individuals or communities affected.
3.3.5 Other Resource Impacts
Other resource and marine activity that can be affected by salmon farms include archaeological resources and navigation and safety. Impacts on archaeological resources, particularly due to onshore buildings and activity, are of concern, but are not well documented because of the absence of site surveys prior to licensing. Access and quality of viewing can be negatively affected.
Navigation and safety can be affected both negatively and positively. Examples have been provided in the Local Information Report and to the Review Committee about farms extending beyond their boundaries and the use of night lights posing hazards to navigation. Others have indicated that farms can provide safe havens for boaters. Generally, however, all of these impacts are limited because of the remote location of the sites.
4.0 SOCIAL IMPACTS
For this review, the social impacts of salmon farming are assessed in terms of the nature, extent and significance of its effects on different communities. First, the effects of salmon farming on the three major communities within the Broughton Archipelago study area (Port McNeill, Alert Bay and Sointula) are discussed. This is followed by a discussion of the specific effects of salmon farming on First Nations communities.
4.1 Impacts on Study Area Communities
Data sources for the assessment of the social impacts on the major communities within the study area include:
4.1.1 Socio-Economic Profile
In Table 25, 1991 census and 1996 population estimates are shown for the study area and other Mount Waddington district communities. The population within the study area communities is quite small -- estimated at 4,825 in 1996. However, it is estimated to have grown by almost 10% over the past five years.
TABLE 25
Study Area and Mount Waddington District Population
1991 1996* % Increase
Alert Bay 647 697 7.7
Port McNeill 2,717 3,014 10.9
Rural Broughton Area** 1,039 1,114 7.2
Sub-total: 4,403 4,825 9.6
Port Hardy 5,230 5,470 4.6
Port Alice 1,411 1,626 15.2
First Nations reserves+ 1,750 1,900 8.6
Rural - other++ 1,506 1,620 7.6
Mount Waddington District 14,300 15,441 7.8
*Estimate
**Includes Sub-Division A which covers the Mainland areas, and a group of islands in the Queen Charlotte Strait (the largest of which is Malcolm Island, where the village of Sointula is located).
+Some of the First Nations reserves are based in the Broughton Archipelago area.
++Includes Sub-Division B of the Mount Waddington District which covers the Vancouver Island portion of the District, and includes the small communities of Woss Lake, Holberg, Hyde Creek, and Coal Harbour.
Source: BC Stats, Ministry of Finance and Corporate Relations.
Port McNeill, Alert Bay and Sointula are the three largest communities within the Broughton Archipelago -- they are briefly profiled below.
Port McNeill:-The town of Port McNeill began as a Pioneer Timber's Logging Camp which was floated from Malcolm Island in 1937. To this day, the forest industry continues to dominate the economy of Port McNeill.
The major forest products operations in Port McNeill and smaller surrounding communities include the logging divisions of:
Other employers in the forest sector include half a dozen small sawmills and wood products processing plants; log harvesting and log hauling contractors; tree planting and silviculture contractors; and forestry consulting firms.
Alert Bay:- Alert Bay is situated on Cormorant Island approximately 10 Km offshore from Port McNeill. The village of Alert Bay has had a long history of settlement, starting with the development of a salmon saltery in 1870. Alert Bay developed around the fishing industry, the administration of education for First Nations and the coastal transportation and communication industry. Alert Bay's role as a coastal administration centre diminished with the completion of the Island Highway to Port Hardy in the early 1970s. Commercial fishing is the dominant economic activity in the village of Alert Bay. The tourism sector has been gaining in importance.
Sointula:- The community of Sointula is located on the south shore of Malcolm Island. It is accessible by ferry to Port McNeill and Alert Bay. The commercial fishing sector dominates the local economy of Malcolm Island.
The following table summarizes employment by sector for the communities of Port McNeill, Alert Bay and the rural areas in the Broughton Archipelago, which includes Sointula. The employment statistics are for 1991 and the aquaculture sector is considered part of fishing and trapping.
TABLE 26
Study Area Community Employment
by Sector, 1991
Alert Bay Port Mount Total - Broughton
McNeill Waddington - Archipelago
Sub A
Number %
Forestry 635 84 719 33.3
Fishing and Trapping 41 43 137 220 10.2
Agriculture 11 11 .5
Tourism 46 170 27 243 11.3
Public Sector 152 237 52 441 20.4
Other Basic* 83 28 23 134 6.2
Non-Basic** 48 287 57 392 18.1
Total: 370 1,410 380 2,160 100.0
*The Ministry of Finance and Corporate Relations defines basic sector employment as being created by the components of the economy that result in the flow of outside dollars into the area. This may originate from industrial sources such as the aquaculture sector or non-industrial sources such as investment income, pensions, and government transfer payments. Other Basic includes the transportation, construction and mining sectors.
**Non-Basic includes services not included above (e.g. retail, insurance, finance, etc.).
Source: BC Stats.
The employment data are somewhat dated (based on the 1991 census) and do not reflect the declines in both forestry or fishing that have taken place in recent years. Nevertheless, they do clearly indicate the primary importance of the forest sector, particularly in Port McNeill. They also clearly show the importance of fishing in Alert Bay and Sointula, and the very significant role of tourism throughout the region. Tourism is in fact, the second largest private sector source of employment.
Marine recreation and tourism activity has grown substantially in recent years (reportedly more quickly than other components of the tourism sector), evidenced by the increasing number of commercial whale watching, kayaking and sport fishing lodges in the area. The recent designation of part of the Broughton as a protected area and increasingly crowded conditions in other popular recreation areas such as Desolation Sound, have reinforced these growth trends. Telegraph Cove, and to a lesser extent Port McNeill and Port Hardy are the major supply centres and basis for marine recreation in the Broughton. A 60 room accommodation complex is under construction and a whale watching research centre and golf course are under consideration in Telegraph Cove.
4.1.2 Salmon Farming Operations in the Study Area
Salmon farming companies operating in the Broughton Archipelago area include:
These companies employ 207 people in the Broughton Archipelago area operations. As shown in Table 27, an estimated 21% (44) of these workers reside in the Broughton Archipelago study area communities. The balance live in Port Hardy, Campbell River and the Comox/Courtenay area.
TABLE 27
Employment in the Aquaculture Sector in the Broughton Archipelago
by Place of Residence of Employees
Total % Residing in the Place of Residence of
Broughton those not Residing in the
Archipelago* Broughton area
Operating Labour 121 11% Port Hardy, Campbell
River &
Hatchery workers 22 11% Comox/Courtenay
Processing Labour 39 59% Port Hardy
Mechanics 4 25% Campbell River & other
Transportation** 2 100%
Administration*** 19 10% Campbell River
Port Hardy, Campbell
Total: 207 21% River & Comox/Courtenay
*Includes Port McNeill, Sointula, Alert Bay and other smaller communities in the Broughton area.
**Some of the boat crews and skippers are included in the operating labour.
***These administration jobs include only those that depend on the activities of the Broughton Archipelago. Two of the administrative positions are in Port McNeill, the balance are in Campbell River.
Source: Based on a 1996 survey by the MSA Consultants of Stolt Sea Farms, B.C. Packers and Englewood Packing.
The majority of the local employment is in processing and is due to the opening of the Englewood Packing Plant. The plant attracted a lot of local interest. Mr. Dave Pashley, the plant manager, indicated that more than 100 local people applied for jobs when the plant opened. Approximately three quarters of the individuals now working at the plant were already established in the North Island area. Those coming from outside the area include:
There is a high proportion of women working in the salmon farming industry. According to Dave Pashley of Englewood Packing, most of the processing workers are women. One company representative indicated that at the grow-out sites and hatcheries, approximately half of the managers are women. Another indicated that women accounted for approximately 30% of the staff and operating labour.
The survey data show that there are 8 individuals of Aboriginal descent working at the farms in the Broughton Archipelago and the processing plant in Port McNeill. This represents approximately 4% of the total salmon farming labour force in the Broughton Archipelago.
4.1.3 Local Suppliers
There are no major dedicated aquaculture industry suppliers based in the Broughton Archipelago (except for Englewood Packing, the processing plant in Port McNeill). The farms in the Broughton Archipelago and Englewood Packing purchase items such as nets, cages, boats, boat engines, containers, boxes, rope and transport services from Campbell River and other B.C. locations.
The major businesses in Port McNeill and Alert Bay that benefit from the salmon farming sector also supply other industries such as the commercial fishing sector as well as the resident population in the area. The following items are generally purchased from suppliers in Port McNeill:
Suppliers identified in Alert Bay include:
One individual in the area commented that with two large salmon farming companies having their regional offices in Campbell River, fewer businesses from Alert Bay and Port McNeill are supplying the industry. That same individual indicated that his company previously provided services to one of the local farms when it was locally managed. Englewood Packing, the new processing plant in Port McNeill is viewed by community representatives as potentially opening opportunities for local businesses to supply the industry. The construction of the plant itself had a significant impact on local business.
4.1.4 Relative Importance of the Salmon Farming Sector
Based on the foregoing, it would appear that salmon farming has directly generated some 44 jobs in the Broughton area; the indirect (supplier) impacts are relatively small. These 44 jobs represent approximately 2% of total employment in the area, as compared to 33% for the forest sector, 11% for tourism and 10% for fishing and trapping.
The local impact is concentrated almost entirely in Port McNeill and is relatively small, much smaller than the impacts on larger centres outside the study area such as Port Hardy or Campbell River. However, the jobs are very significant to individuals who got them and have helped, because of predominately local hiring, to offset declines in other sectors. Further, there is some growth potential, particularly with the new processing plant.
No significant negative impacts of salmon farms have been identified to date on commercial fishing or marine tourism. Impacts on fishing are due to other factors and any impacts of salmon farming on tourism have not dampened its rate of growth. Nevertheless, these are very important sectors to the communities in the area, and the communities would be significantly affected by any negative effects. The risk or uncertainty of this no doubt is of concern to many residents in the area, particularly residents in Sointula and Alert Bay who do not benefit from salmon farming, and who depend so heavily on commercial fishing.
4.2 Impacts on Aboriginal Communities
4.2.1 Socio-Economic Profile
First Nations' population in northern Vancouver Island is estimated at approximately 2,000 living on-reserve. Another 2,000 Band members live off-reserve in communities elsewhere on Vancouver Island (e.g., Campbell River) and the mainland (e.g. Vancouver). There are eleven First Nations whose territories lie largely or exclusively within northern Vancouver Island area, including six Bands with the Kwakiutl District Council (KDC) and five Bands with the Musgamagw-Tsawataineuk Tribal Council.
First Nations' population in the Broughton is roughly 1,200, comprising about one-quarter of the total population in the area. Most of the First Nations with populated reserves in the Broughton are affiliated with the Musgamagw-Tsawataineuk Tribal Council: the Namgis (by far the largest Band located near Alert Bay on Cormorant Island), Tlowitsis-Mumtagila (Alert Bay); Kwicksutaineuk (Gilford Island), and Tsawawataineuk (Kingcome Inlet). The Tanakteuk in Alert Bay is the only Band under the Kwakiutl District Council with members living on reserve in the Broughton, although several of the other Bands under the KDC have reserves and traditional villages in the area.
First Nations population in the area has been increasing steadily, in absolute terms and as a proportion of total population, over the past decade due to natural increases and Band members returning from urban areas. These trends are expected to continue.
Commercial fisheries activities constitute the most important source of employment for First Nations people in the Broughton including commercial fishing (almost 50 vessels employing up to 150 in Alert Bay alone), fish processing and shellfish harvesting. The fisheries resources of the Broughton are also central to the diet, culture and spiritual well-being of First Nations people. Other main sources of livelihood include: public administration (including Band Council, Fisheries Commission, education, health), logging and forestry silviculture, fisheries enhancement and training projects and trapping.
Although quantitative estimates are not readily available, the unemployment rate in First Nations communities is known to be several times higher than for the population as a whole. The decline in the fisheries due to stock depletion and habitat destruction, the loss of boats, and declines in forestry primarily due to unsustainable timber harvesting will exacerbate the unemployment problem in First Nations communities. Current economic development initiatives are in forestry (e.g., woodlot, Timber Sale Licenses, silviculture/watershed restoration and training proposals), fisheries (e.g., enhancement projects) and tourism (e.g., sport fishing resort).
4.2.2 Impacts of Salmon Farming on Resource Use
First Nations depend heavily on marine resources both for commercial activity (in particular, commercial fishing) and for their subsistence economy. In a study for the Kwakiutl Territorial Fisheries Commission, Weinstein and Morrell (1994) estimated the subsistence catch of the Comox Quatsino Bands between September 1992 and August 1993 of about 12,000 pieces of salmon, 600-700 pieces of groundfish, 4,200 pounds of herring and herring-roe, 14,400 pounds of shellfish and some consumption of marine mammals. The subsistence activity is not simply a source of food. "...subsistence is an integrative activity. It connects individual activity with family and group welfare, and these in turn with direct experience of the state of resource animal populations and environmental quality. Resource harvesting is the connector between environment, communities, human history and individual and family life." All Kwakiutl communities have high degrees of kin linkages and joint work group structures that are involved in food harvesting and distribution (e.g., through potlatches).
Clams are a central item in the Kwakiutl diet and they are normally served at potlatches and other ceremonial occasions. Fort Rupert and Gilford Island are the only communities near enough to clam beds to allow harvesting without boats. Clams are generally less accessible than historically. Clam beds near Comox, Cape Mudge, Campbell River, Fort Rupert, Quatsino and Port Hardy have all been polluted by sewage outfalls or industrial effluent (Island Copper Mine, Elk Falls pulp mill). Although needs in more remote communities are generally being met, those without access to boats are having more difficulty.
Salmon farms are reported by First Nations to have impacted clam resources, exacerbating pollution and other threats to these resources. While clam consumption is reportedly still increasing, the salmon farms are forcing some communities to seek out alternative sources, and are increasing the difficulty and cost of access to this important resource.
Other resources have not been affected to the same extent, but the risks are of concern to First Nation communities. They are added threats to their traditional way of life and principal source of employment.
4.2.3 Participation in the Industry
For the most part, First Nation participation in the employment or business opportunities afforded by salmon farming has been very limited. An estimated 8 persons from First Nations are employed in Broughton Area operations (some 4% of the total number of jobs). An estimated 50 to 60 persons from First Nations are employed in salmon farming related activity throughout the province (some 5% of the total number of jobs). Most of these jobs are in processing or hatchery-related work.
There is currently no First Nations' business participation in any active farms, though one joint venture hatchery operation has been reported. Other First Nation investments in salmon farming have failed (e.g., the Sunshine Coast and Kitimat areas) or promises of joint ventures have been withdrawn (e.g., Beaver Cove). Generally, the capital-intensive nature of salmon farming and extensive vertical integration in the industry has not been conducive to successful First Nations involvement.
4.2.4 Participation in the Regulatory Review Process
Salmon farms are often located in areas where First Nations live or which are important in terms of traditional use or spiritual significance. The impacts of salmon farms are also most likely to affect First Nations communities disproportionately to others because of their dependence on marine resources. Nonetheless, First Nations have not had, in their view, effective or sufficient involvement in the regulatory review process for farm siting.
Farms have been located in traditional areas over the objections of First Nations groups. Farms have been approved or have operated in apparent conflict with guidelines.
The Kwakiutl Territorial Fisheries Commission (KTFC) has documented a number of resource conflicts and regulatory compliance problems with farms in their territories, including 3 sites operating too close to shellfish beds, 2 sites near salmon rearing areas, 2 farms off lease areas, inadequate cleanup of debris (e.g., nets, feed bags, rope, chain, etc.) at 6 sites. Their submission states that there are at least 10 farms located directly in CRIS "red zones" (i.e., areas identified as no opportunity for farming by stakeholders because of conflicts with salmon migration routes, shellfish beds, stream mouths, recreation sites, etc.) First Nations also argue that their participation in referral/regulatory process for amendments to farm permits (e.g., for expansion, different species, drugs and chemicals used to promote growth and prevent disease) is even less adequate.
Overall, the impact of salmon farming on First Nations communities has been negative, with some adverse impacts on resources, insufficient regulatory control and insufficient offsetting employment benefit.
REFERENCES
Alan Fitzgibbon & Associates, Kingcome Timber Supply Area Socio-Economic Analysis, prepared for the Economics and Trade Branch, British Columbia Ministry of Forests, Victoria, July 1995.
Catherine R. Berris, Salmon Aquaculture Review Key Issue E: Siting of Salmon Farms, January, 1997.
Coopers & Lybrand, Economic Impacts of the British Columbia Salmon Farming Industry, prepared for the B.C. Salmon Farmers Association, 1997.
David W. Ellis & Associates, Net Loss. The Salmon Netcage Industry in British Columbia, A report to the David Suzuki Foundation, October 1996.
Ecostat Research Ltd. (Brenda Burd), Salmon Aquaculture Review Key Issue C: Waste Discharges, January 1997.
George Iwama, John Ford and Linda Nichol, Salmon Aquaculture Review Key Issue D: Aquatic Mammals and Other Species, January 1997.
Kenney, E. Alan, The Current Status and Future Outlook of Global Salmon Markets: Implications for Canadian Salmon Farmers, Seafood and Marine Products Sector, Agriculture Canada, Ottawa, 1996.
Kwakiutl Territorial Fisheries Commission, Submission to the Salmon Aquaculture Review, 1996.
Natural Resources Consultants Inc. (Lee Alverson), Salmon Aquaculture Review Key Issue A: Escaped Salmon Environmental and Ecological Concerns, January 1997.
Price Waterhouse, Long Term Production Outlook for the Canadian Aquaculture Industry, Department of Fisheries and Oceans, Ottawa, March 1993.
Price Waterhouse, The Financial Structure and Performance of the Salmon Farming Industry in Canada, Economic and Commercial Analysis, Department of Fisheries and Oceans Canada, Ottawa, Report No. 94, March 1991.
The ARA Consulting Group Inc., The British Columbia Farmed Salmon Industry - Regional Economic Impacts, prepared for the B.C. Salmon Farmers Association, Agriculture and Agri-Food Canada and the B.C. Ministry of Agriculture, Fisheries and Food, Victoria, 1994.
Weinstein and Morrell, Need is Not a Number, prepared for the Kwakiutl Territorial Fisheries Commission, 1994.
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Updated: 6/19/97