Fish Farm Companies Make Taxpayer Money from Diseased Fish - Updated Nov 25, 2013

The article by me was first published by the Common Sense Canadian a week ago. It was responded to by Grant Wartkentin who works for Mainstream. His response is on their website. I stand by what I have said, and do not agree with his assessment of what the fish-site post says about Mainstream losing money when they had disease. As the supply of fish went down, prices rose in the US, but in BC fish farms, their sales to the USA will go down because their parent company, Cermaq Mainstream and the other Norwegian firms had a 26% tariff rescinded to the US market, and now the parent companies of BC fish farms will be out-competing their own corporations in BC.

Please note that Wartkentin did not object to my estimate that Mainstream received $35 Million of taxpayer dollars from the CFIA for their slaughtered, diseased fish. This leads me to suspect that they received even more than my $35 M estimate.

Fish Farms Get Rich on Our Money

You might think the multi-billion dollar fish farm industry was a licence to print money. You’d be almost right, but not for the reason you might think. Marine Harvest, Cermaq Mainstream and Grieg Seafood comprise 90% of BC’s farmed salmon industry and Marine Harvest operates in 22 countries. What you don’t know is that taxpayers, meaning you and me, pay big money to them when their fish get diseases and have to be slaughtered.

Once the Canadian Food Inspection Agency detects a reportable disease, it issues a slaughter order and the fish are destroyed. Then the CFIA sends a very large cheque to the fish farm. This taxpayer cheque compensates them for disposable items like infected nets, cost of transport and offloading, cost of sequestering diseased carcasses in perpetuity, and disinfecting all other items that came in contact with the fish, including the boat that transported them. In addition to all this, the commonly accepted extra payment for each fish is up to $30. This figure really comprises an average payment because of all the other costs mentioned.

You’d think they would have insurance for losses, but my conversations with a marine insurer tells me they have difficulty getting insurance because they lose so many ‘crops’ to – wait for it – disease. So why are we, the Canadian taxpayers, paying these foreign, multi-billion dollar corporations?

Fish farms like to say their fish get diseases from wild salmon because the latter don’t get sick, as if that’s a justification for cash. Not so. A recent PHD dissertation from Norway showed that the problem with farmed fish is that they are stressed (1) – the cages are overcrowded. This results in high output of the stress hormone cortisol and that weakens immune systems in farmed fish, thus they get disease. They actually change benign viruses into infectious killers.

How much product is lost to disease? One third to one half of all aquaculture products in the world are lost to disease every year, some $35 - $49 Billion (2). I started a Freedom of Information request to the CFIA and DFO to find out just how much we taxpayers in Canada pay to these billion dollar foreign corporations. I have been waiting 10 months now with no answer, so, let me give you a reasonable estimate.  

Overall, my expectation is that the cross-Canada disease total will come in at several hundred million taxpayer dollars over the past decade for BC, NS, NB and recently NL. Here in BC, Cermaq Mainstream’s Dixon Point and Millar Channel 2012 IHN slaughters would have paid them, in my estimate, about $35 Million of our cash. That’s so much money that it moved this boom/bust business into positive earnings before interest and taxes (i.e., EBIT), when it lost money the year before – and only made money this year because of having  disease.(3). They’ve had a decade of problems before (4).

See thefishsite.com, November 8, 2013:

Mainstream Canada reported an EBIT pre fair value and non-recurring items of NOK 43 million, an improvement from a loss of NOK 26 million the previous year, even though volumes sold declined from 5,600 tons to 4,400 tons. EBIT per kilo was 9.6 NOK. Good prices in the North American market and the IHN outbreak last year are the main factors behind the improved result. (5).

So Mainstream lost money when they didn’t have disease and made money when they did have disease – because you and I paid them. And they shipped far less fish, oh and a third farm, Bawden Point (8), posted a weak positive for IHN – but they were quickly harvested and sent to humans to eat. This should not be the case. Do complain, as I did, to Gail Shea, Minister of DFO, Min@dfo-mpo.gc.ca.

On another aquaculture front, you may be even more unhappy to know Shea announced $400 Million in gifts to the aquaculture sector in Canada last week(6).  That’s a lot of dead, diseased fish. I have asked her for $400 million be given to the commercial, sport and processing sectors in BC that provide 600% more in contribution to gross provincial product than fish farms. I’ll let you know.

And fish farms in BC have been losing money. Mainstream lost money in 2012(4). Marine Harvest has lost money in the last few years, too, largely due to Kudoa a fungal disease that cost them $12,000,000 in 2012 – and just prior, in 2011, things were so bad they laid off 60 employees – right before Christmas. Nice guys.

Kudoa results in myoliquifaction that makes farmed fish into mush. Would you buy salmon you had to put in a container with a spoon? Oh and then there is Grieg. They got IHN too, last year, in their Cullodon site in Sechelt. Fortunately we did not have to pay for that as well. Grieg is also the company that had to pay a fine of $100,000 for drowning 65 - 75 sea lions in their Skuna Bay nets in 2010 - they tarted up that site to sell to the unsuspecting in the USA as environmentally-sustainable, organic farmed salmon. Where is PETA when you need them?

Grieg has also been losing money (7):

“In Canada, the company cut losses, with a negative ebit [sic] before fair value adjustment of the biomass of NOK 2.71/kg, compared to a loss of NOK 8.22/kg in the same quarter of 2012.”

And the kicker? Cermaq is owned 59.2% by the government and thus the people of Norway. Why do we give another government our money for their killing our fish in our ocean rather than raising their fish on land in closed containers? This does not make sense.

Ask Shea for BC’s $400 million. We can spend it on habitat restoration, something DFO has been sadly remiss about in BC for decades. This year’s total DFO habitat projects for BC is a measly $900,000, only 2.6% of our own money Ottawa sent to diseased fish farms in BC.

dcreid@catchsalmonbc.com

 References:

11. Koestan Gadan PHd: http://www.sciencedaily.com/releases/2013/01/130102083557.htm.

22.   Kibenge document of fish farm diseases: http://www.oie.int/eng/A_aquatic/Docs/Presentations/1.11Kibenge.ppt.

33.  See: http://www.thefishsite.com/fishnews/21731/strong-salmon-market-drives-earnings-improvement-for-cermaq#sthash.x4EVcGXu.dpuf

44.    Cermaq’s other disease problems in Clayoquot Sound in the last decade: http://www.farmedanddangerous.org/solutions/industry-reform/about-the-industry/

55.    Mainstream did a write down of Dixon Bay for $4.5 Mil for biomass insurance purposes. Millar Channel is the other farm slaughtered.

66.    See The Fish Site - http://www.thefishsite.com/fishnews/21654/federal-400-million-fund-to-enhance-canadas-fishing-industry.

77.    Grieg: http://www.undercurrentnews.com/2013/11/01/grieg-plans-norway-growth-in-2014-as-weak-results-in-canada-continue/.

88.    Bawden Point: http://www.timescolonist.com/news/local/fish-farm-quarantined-after-virus-discovered-1.4434.

99.    And Cermaq/Mainstream lost money in Finnmark to disease, too: “The PD [pancreatic disease] outbreak in July had a negative EBIT impact of NOK 25 million for the Finnmark operation - See more at: 

Key Document - Land-Based Closed-Containment Fish Farm Science 2013, Updated Nov 3, 2013

International Summit on Farming Fish in Land-Based Closed-Containment Systems.

140 participants from 14 countries met in West Virginia in September, 2013 to share expertise on growing fish on land with recirculating aquaculture systems (RAS) for the sake of the sustainable fish production and food security. 

This is the Tides Canada weblink for the 50 plus presentations:  http://tidescanada.org/salmon/aquaculture-innovation-workshops-and-reports/.

This is a major collection of current science on closed containment from around the world and I suggest you go take a look at some of the presentations. This is a wonderful collection of papers, and is a credit to both Tides Canada for assembling all this work in one place on the web, and to the Save Our Salmon group for being involved.

This is the SOS link: http://hosted.verticalresponse.com/636112/842c3263a6/281374055/0f24f2d8f3/.

It is clear that fish farms will have no choice but to move to closed containment RAS systems that eliminate the problems caused by in-ocean net-pens, such as spilling raw sewage into pristine oceans, diseases, parasites, chemicals, escaped fish, genetic issues with wild fish, passing disease and parasites to wild salmon and killing them. The latter is a big issue in the Pacific Ocean as 10 species of wild salmonids, and other species, are threatened, from California to Korea. 

The NGO Save Our Salmon sent Chief Bill Cranmer, SOS President Eric Hobson and Dr. Andrew Wright who presented on the ‘Namgis Closed Containment Project in order to help catalyze a shift to this more sustainable technology. The farm is located on land beside the Nimpkish River, Vancouver Island, BC. and aims to grow Atlantic salmon to market size and reap the benefit as a brand distinct from the open net-pen product that now sells for considerably less as most consumers in the western world now avoid buying it for the environmental damage it causes.

Three issues that the fish farm giants suggest why they don't want to use RAS on land are: cost of electricity used, carbon footprint and capitalization. Presentations show that heat pumps reduce the power of electricity used by a factor of ten for on-land systems. They also show that when the raw sewage spillage is taken into account that net-pen in-ocean operations have a carbon footprint ten times that of on-land systems. As for capitalization, the Standing Committee on Closed Containment, of the federal Canadian government, recommends programs for making capital available. 

But until the government legislates fish farms out of the ocean, they will not move. This is an issue like airbags in cars. Car manufacturers said it couldn't be done for competitive cost pressure reasons. The government legislated airbags into cars and now every car in the world has airbags. As soon as BC removes site licences, the farms will be out of the water in 60 days.

As fish farms are a net negative to the BC economy, if they move back to Norway, BC still comes out far ahead in Gross Provincial Product and revenue from the sport, commercial and processing sectors in BC. In an upcoming post, I will detail the numbers. Some are staggering, for example, my first estimate of the cost of raw sewage spilling into our pristine ocean, a cost that the citizens of BC bear, exceeds $11 Billion, with the industry revenue size of only $469 Million, and the very small GPP contribution of only $61.9 Million, and only 1700 jobs (this is a BC Stats econometric, multiplier number, and I accept it as accurate. But I have collected the actual job numbers in this very small industry and it was only 840, after Marine Harvest let 60 staff go just before Christmas in 2011. Marine Harvest in particular has a Kudoa, myoliquifaction problem, and lost $12 Million of its stock in 2012. In 2013, MH Norway notes only 400 Canadian employees in their published numbers).