The beginning of a new year seems to be a good time to think about what the future will bring.
Little did we think at the beginning of 2016 that now, just a year later, Donald Trump would be President of the United States, Britain would vote to leave the European Union, or the very existence of the EU would be under threat just as Canada is about to finalize a free-trade agreement with it. Life seems to be full of surprises.
But should they really be surprises? Over Christmas, I read a book that traced the roots of these seemingly unlikely events back several generations.
Essentially, it demonstrated that a longstanding underlying current of anger among disadvantaged minorities in western developed countries — notably the United States and the countries of Western Europe — became much more widespread and focused through a series of events over several decades but especially the financial crisis of 2008 and the Great Recession that followed.
Brexit and the election of Donald Trump were protest votes that gave vent to the anger but they had deeper roots. Similar protest votes now seem possible in other countries during 2017.
Some people were aware of these things and could see the possibilities, but the vast majority of us did not see them.
In the wake of Brexit and Trump, the world appears to be in a period of transition from one set of values and beliefs to another. Nevertheless, it remains to be seen whether the new approach will lead to better outcomes for the protesters who voted for them.
Which brings me to the capture fishery in Atlantic Canada.
If the world is in a transition period, so is the fishing industry. Although we often think of it in very local terms, we are really part of a global industry. We may not be able to predict the future but I think we can identify the main forces that will shape it. In doing so, maybe we will have fewer surprises.
Possibly the most influential force shaping the industry’s future is market opportunities. Globally, population has been growing rapidly, from 2.5 billion in 1950 to 7.5 billion today. That trend is expected to continue, providing another 2.5 billion mouths to feed by 2050.
If current expectations prove to be valid, we will have quadrupled the world’s population in 100 years, something that would not have been thought possible even 50 years ago.
However, the growth is mainly in developing countries, while the developed western countries — the main markets for all exports of fish products, including ours — are seeing their populations stagnate, age, and even shrink. In addition, the developing countries are growing their economies, allowing people to eat and live better, creating demand for more expensive, better quality products. A decade ago, who would have expected China to be importing the quantities of lobsters they import today?
Increasing market demand has attracted more supply and more competition for our exports of fish products.
A significant part of the economic development in developing countries has been due to expansion of capture fishing and aquaculture. Indeed, aquaculture now provides roughly 50 per cent of the fish for human consumption and that will increase even more in the future, because capture fishing has pretty much reached its full capacity to supply.
The expansion was at least partly due to the trend toward free trade, which gave the developing countries better access to markets in the United States, the European Union, and Japan, the very markets we have depended on for hundreds of years. Low-cost developing countries now account for about two-thirds of global exports of fish products, most of which end up in those markets.
However, in the new era of Brexit and Trump, the trend toward freer trade may be coming to an end and may even reverse.
How that will play out remains to be seen. But it is a very real concern for Canada, because our industry exports over 80 per cent of its output and we need favourable access to markets in other countries.
Another market-related concern is that food distribution has been consolidating in the United States, Europe and Japan, our main markets. These countries have not been seeing much growth in population, so food wholesalers, supermarkets and restaurant operators have been merging their operations to combine their volumes, increase bargaining power, and improve efficiencies. In some cases, they are also becoming more specialized, focusing on narrow niches in the market or supply chain where they can gain competitive advantages. As a consequence, there are fewer but larger customers for us to sell to and their demands for volume and price are difficult for our small, fragmented and high-cost industry to meet.
Although demand for fish products has been growing and will continue to grow, our ability to supply has been diminishing. From 2004 to 2014, Canadian landings of captured fish decreased by 26 per cent and our output from aquaculture was essentially flat.
Climate change is affecting both sectors. In the capture fishery, the abundance of some resources is diminishing, while others are increasing. Expansion of aquaculture has mainly been limited by a regulatory framework that makes it very difficult.
The collapse of the Northern cod stock off northeastern Newfoundland and Labrador 25 years ago led directly to the creation of the Marine Stewardship Council and an increasing focus on the need to ensure captured fisheries are sustainable. That has affected all fisheries globally, because it is becoming increasingly difficult to sell fish products in the most attractive markets, unless they are certified as coming from sustainable sources, a trend that seems likely to continue.
Apart from the changes in markets and resources, we also have to recognize that we live in an era of rapid technological change.
Our houses, cars, computers, telephones and televisions are all very different today from what they were when the moratorium was imposed on fishing Northern cod in 1992. Technology is changing nearly every aspect of our lives and the pace of change is increasing. That is something we cannot ignore in the fishery.
But how can we make the new technologies work for us when our resource base is shrinking and changing? Using them to improve efficiency will come at the expense of jobs. But some may help us to increase our output value.
All of the forces described above that are shaping our industry’s future originate outside Atlantic Canada.
A very powerful local force is labour-force demographics. Quite simply, the people who currently work in our fishing and fish processing sectors are mainly members of the baby boom generation, who are aging, gradually moving into retirement, or even dying before they have a chance to retire. In another five to 10 years, many of those people will no longer be part of the industry. But there are fewer people in the generations that follow and even fewer who can be attracted to work in an uncertain, seasonal industry that pays low wages and depends on Employment Insurance for much of the year. New technologies may help the industry replace some of the people leaving but it will still need to find ways to attract new recruits.
Although we may not know how fast or how far they will go, the overall trends described above are pretty much certain to shape the industry of the future. But then there are also wild cards — currency exchange rates and energy costs. These factors typically fluctuate, so one or the other may be on an uptrend at one time and a downtrend at another, helping us or hurting us in the process.
They can be very difficult to predict in the short term, let alone the long term. Currently, we are benefiting from increased market prices, favourable exchange rates and low energy costs, helping to offset the decreases in landings, but we have no idea how long this situation will last.
So, what does all this add up to? It is difficult to say. As Neils Bohr, a physicist who won the Nobel Prize, once said, “Prediction is difficult, especially about the future.” Even when trends seem clear, there is always the potential for surprise, as we saw in 2016.
Nevertheless, it does seem fair to say that the capture fishery in Atlantic Canada is now in a transition phase.
In recent decades, we have been making a transition from protected national/regional markets and supply chains to free trade and global supply chains. Brexit and Trump threaten to change that, so they now represent another wild card.
On the supply side, we have been making a transition from capture fishing to aquaculture. Quite simply, capture fishing cannot keep up to the increasing demand for fish products, so wild-caught fish will become supplements to aquaculture production. But they will also have to meet the new expectations aquaculture has created in markets for consistency in supply, quality, size and price.
Here in Atlantic Canada, climate change is having major effects on our resource base. It has already led to substantial increases in lobster catches and seems to be increasing the abundance of some groundfish species, while decreasing abundance of shrimp and crab. But we shouldn’t forget that climate change is an ongoing process, not just a one-time phenomenon. We don’t know how it might affect things as it continues and maybe even accelerates in the future. That creates even more uncertainty in an industry that has more than its share of uncertainty already.
As I said above, overall catches of captured fish in Canada decreased by 26 per cent from 2004 to 2014. Continuing effects from climate change seem likely to cause further decreases in catches over the next few years.
Even if groundfish continue to increase in abundance and present new opportunities, they are lower-valued species than the shellfish we have been dependent on for the past 25 years, so it will take a lot more volume to replace the value lost from shellfish landings. That means we have to make a transition from catching more fish to maximizing the output value we get per fish.
Our industry has employed a labour-intensive business model. That is no longer sustainable when we compete with developing countries that pay much lower wages and our labour force is shrinking significantly every year.
Like it or not, to stay in business, we will increasingly have to turn to technology to complete tasks needed for both fishing and fish processing. In turn, that means our industry will make a transition from being labour-intensive to being more capital-intensive — if we can provide the returns on investment needed to attract the capital to invest.
In the process of making that transition, we will have to make another one. Instead of seeing the industry as a vehicle for creating more jobs, we will have to create better jobs, if we want to attract the people we need in the future.
Overall, the industry has a lot of potential. But it also has a lot of risk.
Its future can likely be represented by three key words — opportunity, uncertainty and challenge. That future will largely be driven by forces outside of Atlantic Canada and outside our control. But our future also depends very much on how we react to those forces. Will we ignore them, allow them to determine our fate, or use them to create a better, more prosperous industry?
Regardless of the external factors that will influence the future of the fishery in Atlantic Canada, the key force that will determine its future will be us.
As Richard Branson, the founder of the Virgin business empire has said, “It is up to all of us to shape the world we live in.” And as the famous line from the Mission: Impossible series goes, “That is your mission, should you choose to accept it.”