The provincial government today rejected groundfish proposals submitted by Ocean Choice International (OCI) regarding redfish and yellowtail quotas.
Fisheries Minister Darin King said that after an extensive evaluation and review, government was not satisfied that the redfish and yellowtail proposals presented by OCI would provide the maximum possible benefit for the province.
“This decision is based on consideration for what is in the best interest of the people of this province,” King said. “Government wanted to secure a long-term commitment on former Fishery Products International quotas. These quotas are currently held between the province and OCI, through the Quota Holdco agreement established in 2007. We also sought enhanced benefits in relation to Fortune, and adequate support for displaced workers at Marystown and Port Union.”
A news release nots that on Jan. 25, the provincial government met with officials from OCI and outlined its position in relation to the proposals. The company showed no flexibility at that time and the company was given time to reconsider but has not come forth with a revised proposal to date.
“We recognize that this is a difficult situation for OCI,” King said. “Their predecessors, Fishery Products International, faced similar challenges and had comparable financial results. The economic circumstances for yellowtail and redfish remain challenging, particularly with the appreciation of the Canadian dollar and high fuel costs.”
OCI’s financial circumstances for groundfish operations have been independently verified by the financial consulting firm Deloitte. The market outlook for redfish and flatfish has also been independently verified by the McDowell Group, a research-based consulting firm. The McDowell Group report can be found at http://www.fishaq.gov.nl.ca/publications/nl_flounder_and_redfish_report.pdf.
The provincial government requested 10 million pounds of flatfish to be processed in Fortune which is marginal compared to the overall global harvest of 750,000 tonnes. Government’s analysis shows that the overall groundfish operation will achieve positive, albeit modest earnings before interest, taxes, depreciation, and amortization.
Secondly, OCI indicated the desire to have the landing obligations associated with the company’s licence extinguished when the Quota Holdco agreement is due for renewal in approximately five years. While the provincial government is willing to consider multi-year exemptions, it believes that under the current circumstances it is possible that quotas would be lost to the province entirely and the resource could be landed elsewhere without any value to the people of Newfoundland and