2004 Costs and Earnings Survey, Atlantic Region

1 Atlantic Fishing Industry Overview ^{Footnote 1}

1.1 Commercial Landings

In 2004, Atlantic Canada's commercial fleets landed 919,560 metric tons (MT) of various seafisheries, valued at $1.9 billion (Figure 1.1). These landings represented more than 80% of Canada 's commercial seafisheries (82% of total landed quantity and 85% of total landed value).

Some of the country's most important 2004 wild fisheries landings were Atlantic Canada harvests.
Overall, the Atlantic fishing industry earned most of its 2004 fishing revenues from four species: snow crab ($613 million), lobster ($589 million), shrimp ($248 million) and scallop ($119 million). Lobster was the most important fishery in the Maritimes and Gulf regions in 2004 whereas it was primarily snow crab in the Newfoundland and Labrador and Quebec regions.

Other fisheries among the top five in each of the Atlantic regions included herring (Maritimes and Gulf), clams/quahaug (Quebec and Newfoundland and Labrador), oyster (Gulf), Greenland turbot (Quebec) and cod (Newfoundland and Labrador).
The Maritimes region accounted for $697 million or 37% of the total value of Atlantic Canada's commercial seafisheries landings, followed by Newfoundland and Labrador ($627 million) ^{Footnote 2} Landings in the Gulf and Quebec regions contributed an additional $378 million and $199 million, respectively, to the value of the Atlantic fish harvesting industry during the year (Figure 1.2).
Eighty percent of the total value of Atlantic Canada's 2004 landings came from catches by commercial vessels under 65 ft. However the share of landings by vessels under 65 ft varied widely depending on the regional fishery.

Figure 1.1: Quantity and Value of Commercial Landings, Canada , 2004

Source: Fisheries and Oceans Canada , Economic Analysis and Statistics

Figure 1.2 : Value of Commercial Landings, Atlantic Canada , 2004¹(million $)

Note:
1. Includes inshore and offshore commercial seafisheries landings.
Source: Fisheries and Oceans Canada , Economic Analysis and Statistics

1.2 Contribution to the Economy

Gross Domestic Product and Employment ^{Footnote 3}

The national level, the total gross domestic product (GDP) of Canada's primary fish harvesting industry was approximately $982 million in 2004, less than 1% of the country's overall GDP for that year. ^{Footnote 4}

Atlantic Canada's commercial fisheries represented $838 million of Canada's fish harvesting industry's 2004 GDP total. ^{Footnote 5} The industry's economic contribution is relatively more important at the regional and community levels. This is particularly evident in coastal communities that are dependent on the industry to support the local economies and to generate employment. For example, there were 11,635 core fishers in Atlantic Canada in 2004.
The fishing industry also stimulates employment through the economic activities of fish processing industries. In 2004, Atlantic Canada's seafood product preparation and packaging industry, ^{Footnote 6} provided jobs to over 29,000 direct and indirect employees. ^{Footnote 7}
The wild harvesting and processing sectors combined, contribute approximately 2.5% to the GDP of Atlantic provinces and Maritime Quebec.

International Trade ^{Footnote 8}

The country's total domestic exports of fish and fish products were valued at $4.5 billion during 2004. ^{Footnote 9} Three-quarters of this amount originated from the Atlantic regions ($3.3 billion). In terms of value, the seafood sector was the second largest exporting industry in Atlantic Canada, after refined petroleum products.

In comparison, Atlantic Canada's imports of fish and fish products added up to $712 million in 2004. Hence, the Atlantic region posted an overall trade surplus of $2.6 billion that year. ^{Footnote 10} This was slightly higher than Canada 's overall trade surplus for fish and fish products in the same year ($2.4 billion).

2 Introduction

2.1 Concepts, Terms and Definitions

The explanation of terms and definitions used in this report are found in Text Box 2.1.

2.2 Scope and Structure of the Report

The Atlantic Costs and Earnings (C&E) survey was conducted in the following four DFO regions: Newfoundland and Labrador , Quebec , Gulf and Maritimes (Table 2.1). The surveyed fleets were determined somewhat independently in each region and the criteria for defining a fleet were based on the particular characteristics of a region's fisheries. This report contains a summary of results across regions. In addition, some regions will be preparing more detailed reports on their own fleets.

Information on fishing effort and financial status (operating and maintenance expenses and other types of revenues and expenses) was collected through personal interviews with respondents. Section 6 provides the details on survey methodology and data quality.

Sections 3 to 5 present highlights of the results from the survey by fleet. Each of these sections gives a fleet overview, fleet profile of operating and maintenance expenses related to fishing activities and the fleet's financial performance profile.

The statistical tables in Annex A are consolidated by fleet type and by region where publishable data are available. All statistical tables pertaining to expenses, revenues and other financial information are based on the average reported values across statistical units. ^{Footnote 11}

3 Crab Fleet

3.1 Overview

There were 113,875 MT of crab landings in the Atlantic Region in 2004 valued at $621 million. Snow crab represented over 90% of the total landed quantity and 99% of the total value for that year.

About half of total Atlantic crab quantities were landed in the Newfoundland and Labrador region (NL). ^{Footnote 12} An additional 24% and 15% were landed in Gulf and Quebec regions, while the Maritimes region had a relatively smaller proportion of total crab landings (10%). Survey results are presented here for the crab fleets based in NL, Gulf and Quebec regions.

Commercial fishing for snow crab in the East Coast began in the mid-1960s, following the discovery of major stocks in the Gulf of St. Lawrence. ^{Footnote 13} Harvesting in the waters off Newfoundland and Labrador soon followed, and by the late 1970s, snow crab was an important limited-entry fishery in Atlantic Region. With the collapse of the groundfish fishery in the 1990s, snow crab harvests more than doubled in just a few years. In 2004, snow crab represented 32% of the total value of Canada 's Atlantic commercial fishery

In support of the management plan for the fishery, there are currently 31 crab fishing areas (CFAs) in Atlantic Canada. The survey results for the Gulf and Quebec snow crab fleets cover the CFAs 19, 12A, 14 and 15. ^{Footnote 14} The NL survey did not target specific CFAs, but rather, it covered all active crab fishing enterprises in 2004. ^{Footnote 15} For all three regions, the survey results primarily pertain to snow crab, given the predominance of that species in the commercial harvest.

3.2 Newfoundland and Labrador Region

3.2.1 Fishing Revenues and Fishing Effort

The NL crab fleet results are presented by vessel length category. There were 600 active crab fishing enterprises making up the NL region's < 25 ft vessel length category (Table 3.1). On average, enterprises in this fleet earned $32,339 from their fishing operations in 2004. In comparison, the average fishing revenues of the 25-34 ft crab fleet were $52,911. Over half of the NL crabbers fell into the 25-34 ft vessel length category.

The larger vessels (35-64 ft) were further sub-divided into two categories. The first was made up of 279 crab and shrimp enterprises, i.e., crabbers that also obtained a sizeable portion of their revenues from shrimp. Average fishing revenues in this sub-category were $539,564.

The second was composed of 651 crab fishing enterprises and their average fishing revenues were $227,109 in 2004. All surveyed crab fleets earned 72% or more of their fishing revenues from crab landings, except for the 35-64 ft crab and shrimp fleet (60% from crab) (Table 3.1).

The NL crab fleets spent between 65 days (35-64 ft crab fleet) and 84 days (35-64 ft crab and shrimp fleet) at sea throughout the fishing season. Most of their landings were from the following areas: Southern Labrador-Eastern New­found­land (NAFO Divisions 2J, 3K and 3L), Northern Gulf of St. Lawrence (NAFO Division 4R and 3Pn) and St. Pierre Bank (NAFO Division 3Ps).

The < 25 ft and the 25-34 ft vessel length categories reported an average crew size of 2 and 3, respectively, whereas the two 35-64 ft fleets had between 5 and 6 average crew members including skipper.

3.2.2 Operating and Maintenance Expenses

The average total cost of vessel operations for both the smaller crab fleets (< 25 ft and 25-34 ft crabbers) was under $40,000 in 2004 (Table A.1). For the larger vessels (35-64 ft), the operating and maintenance expenses were $161,105 (crab fleet) and $357,095 (crab and shrimp fleet).

Given the differences in fleet characteristics (number of vessels owned, vessel age and composition, etc.), it was not surprising that there were significant differences in the expense levels among the four crab fleets surveyed. In all the fleets, however, the top five expense categories represented a combined share of 85% or more of total operating and maintenance expenses (Table A.1).

Labour and fuel expenses were consistently the top two expense categories of the NL crab fleets. The expense share of nets and gear and bait purchases were 15% in the < 25 ft crab fleet and 11% in the 25-34 ft crab fleet. These same expense items were not as significant (under 10%) in the two 35-64 ft crab fleets.

Vessel insurance was a relatively important expense for the larger vessel categories. On average, enterprises in the 35-64 ft crab and shrimp fleet spent over $21,000 to insure their vessels in 2004. Most enterprises in this fleet owned two vessels, with the main vessel averaging 57 ft. The 35-64 ft crab fleet spent, on average, $6,683 to cover vessel insurance. The average length of primary vessels in this fleet was 43 ft.

The NL crab fleets allocated between 3% and 5% of total operating and maintenance expenses on service, licence fees, and other government payments. ^{Footnote 16}

3.2.3 Financial Performance

Crab fleets in the two smaller vessel length categories retained under $20,000 in gross operating incomes (Table A.2). The shares of gross operating incomes in both fleets were 40% ( < 25 ft ) and 33% (25-34 ft) of total fishing revenues in 2004.

The 35-64 ft crab and shrimp fleet had an average gross operating income of $182,469 during the year (34% of total fishing revenues) whereas the 35-64 ft crab fleet retained less than 30% of its total fishing revenues, with gross operating income of $66,004.

Depreciation estimates ranged from just over $3,000 (< 25 ft) to $54,791 (35-64 ft crab and shrimp). The net operating income in each fleet ranged from 20% to 30% of total fishing revenues. Interest expense estimates for all the NL crab fleets were not high enough to result in a big difference between net operating income and net income before taxes (Table A.2).

3.3 Gulf and Quebec Regions

3.3.1 Fishing Revenues and Fishing Effort

Crab Fishing Area (CFA) 19 is located off the western coast of Cape Breton. It is found in an area that was also known as 'the gully' ^{Footnote 17} and usually, snow crab fishing in this area is conducted between mid-July and mid-September. The Gulf region's CFA 19 fleet had 102 permanent fishing enterprises in 2004 and the fleet reported average fishing revenues of $346,686. ^{Footnote 18} Approximately eighty four cents out of every dollar earned in fishing revenues by the fleet were from snow crab landings (Table 3.2).

The Gulf CFA 19 fleet spent approximately 78 days at sea during the fishing season. The vessels had an average of 4 crew members, including captain/ skipper. The fleet's average snow crab landings were 44,663 kilograms valued at $289,072.

In the Quebec region, the C&E results for three snow crab management areas, in the Northern Gulf of St. Lawrence , are presented: CFAs 12A, 14 and 15. Depending on the area, the 2004 fishing season opened in March (CFA 12A), April (CFA 14) and May (CFA 14). ^{Footnote 19}

The average fishing revenues of the Quebec CFA 12A and CFA 14 snow crab fleets were comparable in 2004: $141,128 for CFA 12A and $151,446 for CFA 14 snow crab fishers.

The CFA 15 fleet, on average, caught 36,013 kilograms of snow crab that accounted for almost all of its fishing revenues. The average price per kilogram of crab was under $6.00 for the three Quebec crab fleets, whereas the Gulf CFA 19 fleet received a higher price of $6.47 (Table 3.2).

Unlike the Gulf snow crabbers in CFA 19, a smaller number of enterprises comprised the Quebec crab fleets and these fleets spent much less time at sea (between 16 and 37 days) during the fishing season. The difference could be explained, in part, by the more diversified fishing efforts of the Gulf CFA 19 fleet, i.e., more time spent fishing for other species.

3.3.2 Operating and Maintenance Expenses

Labour was the most important expense category in all the Gulf and Quebec snow crab fleets profiled in this report. Each of the other operating and maintenance expense categories accounted for 10% or less of the feet's total vessel operations costs. However, as expected, the expense levels varied widely among the fleet.

The average total cost of vessel operations in the Gulf CFA 19 fleet was $95,396 (Table A.3), and over half of the amount was spent on labour costs ($53,459). In the Quebec region, the total cost of vessel operations was comparable for the CFA 12A and CFA 14 fleets ($83,045 and $73,034). In these fleets, labour cost accounted for at least half of total operating and maintenance expenses.

The C&E results showed a different cost levels for CFA 15 snow crabbers, whose average total cost, $154,543, was at least 60% more than the three other Gulf and Quebec CFAs. This was primarily due to the fleet's average labour expenses of $112,154 (72% of the total). According to survey data, the CFA 15 fleet also had other significant labour costs related to employment insurance and Commission de la santé et de la sécurité du travail (CSST) payments.

In all the Gulf and Quebec snow crab fleets profiled in this report, each of the operating and maintenance expense categories accounted for 10% or less of the fleet's total vessel operations cost, although the actual amounts varied widely among the four fleets.

Amounts spent on bait ranged from less than $2,000 (Quebec CFA 12A) to almost $10,000 (Gulf CFA 19). Expenses on nets and gear and the costs of vessel repairs and maintenance during 2004 were relatively higher for Quebec snow crab fleets (CFAs 12A, 14 and 15). Vessel insurance fees were between 2% and 6% of total cost in all fleets.

Fishing licence fees were just under $1,400 on average for the Quebec CFA 14 fleet but exceeded $4,000 in other fleets (CFAs 19 and 15). Dockside monitoring charges were around $2,000 in the different CFAs.

Adding up all the service fees and government payments, the Gulf and Quebec crab fleets spent between 5% and 9% of their total operating and maintenance expenses on service, licence fees, and other government payments. ^{Footnote 20}

3.3.3 Financial Performance

In 2004, the Gulf CFA 19 fleet had an average gross operating income of $251,290 (or 72% of total fishing revenues). Among the Quebec region snow crab fleets, the CFA 14 and CFA 15 fleets posted similar gross operating incomes of just over $78,000 while CFA 12A snow crabbers retained 41% of their fishing revenues ($58,083) after deducting the cost of fishing operations (Table A.4).

Economic depreciation estimates were relatively close among the Quebec fleets, ranging from $10,729 to $12,849), whereas the Gulf CFA 19 fleet estimate exceeded $15,000. Average interest payments in 2004 ranged from $2,946 (CFA 14) and $6,989 (CFA 19). After deducting the cost of operations, depreciation and interest expense, the resulting net income before taxes shows that the Quebec snow fleets in CFAs 12A, 14 and 15 kept between 30% and 43% of their fishing revenues whereas the Gulf CFA 19 fleet retained about two-thirds of its earnings from fishing operations (Table A.4).

4 Lobster Fleet

4.1 Overview

Lobsters (homarus americanus) are found in coastal waters from southern Labrador to Maryland, with the major fisheries in the Gulf of St. Lawrence and the Gulf of Maine. Though lobsters are most common in coastal waters, they are also found in warm deep water areas of the Gulf of Maine and along the outer edge of the continental shelf from near Sable Island to off North Carolina. ^{Footnote 21}

Lobsters make seasonal migrations, moving to shallow waters in summer and deeper waters in winter. Hence, lobster landings peak twice a year, once in the period from April to June when the spring season opens and then in December after the winter fishery opens in southwestern Nova Scotia .

A major conservation management program was initiated in Atlantic Canada in light of the 1995 review of the Atlantic lobster fishery by the Fisheries Resource Conservation Council. ^{Footnote 22} The waters of Atlantic Canada are currently divided into 41 lobster fishing areas (LFAs), each with its own season, varying in length from eight weeks to eight months (Table 4.1). ^{Footnote 23}

Canada 's Atlantic region landed a total of 47,375 MT of lobster in 2004, valued at $589 million. Of the total lobster catches, 25,357 MT (53%) were in the Maritimes region, followed by Gulf (16,271 MT or 34%), Quebec (3,838 MT) and NL (1,910 MT). ^{Footnote 24}

The C&E results are presented for the Gulf, Quebec and Maritimes regions. These regions surveyed the lobster specialists, defined as those lobster enterprises and/or vessels with a lobster licence, with minimum fishing revenues of $10,000 in 2004 and which obtained 75% or more of their fishing revenues from lobster landings. Survey results are further broken down by LFA in the three regions, where publishable data were obtained.

4.2 Gulf , Quebec and Maritimes Regions

4.2.1 Fishing Revenues and Fishing Effort

The Atlantic lobster fleet's fishing revenues varied widely, depending on the LFA (Table 4.2). In 2004, six lobster fleets earned over $100,000, on average, from their fishing operations - lobster fleets in Southwest Nova Scotia (LFA 34), Bay of Fundy (LFAs 35-38) ^{Footnote 25}, Anticosti Island (LFA 17), Magdalen Islands (LFA 22) ^{Footnote 26}, and Southern Gulf of St. Lawrence (LFA 24). The average reported fishing revenues of lobster fleets in all other surveyed areas were much lower, between $45,000 and $72,000.

The majority of surveyed lobster fleets obtained more than 70% of their revenues from lobster landings (Table 4.2). The only exceptions were the Gaspé Peninsula lobster fleets in LFAs 20B5-B8 (69%) and LFA 21 (52%). The value of mackerel, herring and rock crab landings also represented a significant share of fishing revenues for these fleets.

Most of the surveyed fleets in the Gulf, Quebec and Maritimes regions spent between 50 to 70 days at sea during the 2004 fishing season. The reported average number of days at sea was longer (over 90 days) for the Quebec lobster fleet in the Gaspé Peninsula (LFAs 20 and 21 ^{Footnote 27}) and for the Maritimes lobster fleet in the Bay of Fundy (LFAs 35-38).

Lobster fleets in the three regions had an average of two to three crew members in 2004, including captain and/or skipper.

4.2.2 Operating and Maintenance Expenses

In many lobster fleets, the average total cost of vessel operations in 2004 was under $50,000 (Table A.5). Among the more lucrative areas (LFAs 17, 22, 24, 34, 35-38), ^{Footnote 28} total operating and maintenance expenses ranged from $52,760 (LFA 22 Specialized) to $146,992 (LFA 34).

The combined shares of the top six expense categories were at least 80% of operating and maintenance expenses among the surveyed fleets in 2004. These categories included labour costs, fuel, oil and grease expenses, bait purchases, vehicle expenses for fishing, vessel repairs and maintenance, and nets and gear expenses (Table A.5).

With few exceptions, the Atlantic lobster fleets in the three regions reported average labour expenses below $50,000, and with most of the fleets having labour expenses between $10,000 and $20,000. Labour expenses were between 30% and 40% of total operating expenses in most fleets. Two of the Maritimes fleets (LFA 34 and LFA 35-38) had notably higher labour costs of $89,674 and $55,313, respectively.

Fuel expenses were under $5,000 in most lobster fleets and represented 16% or less of total operating expenses. The highest average fuel expenses were reported by Quebec lobster fishers in Anticosti Island (LFA 17) and Maritimes region's Southwest Nova Scotia (LFA 34) lobster fleets, where the average fuel expenses were $10,354 (LFA 17) and $9,041 (LFA 34). Between 9% and 15% of the Atlantic lobster fleet's total operating expense were spent on bait purchases. Most of the fleets spent just as much, if not more, on bait as they did on fuel in 2004.

Other notable expenses that were directly related to fishing effort included the costs of nets and gear, ice and salt and food. The amounts spent on purchases and/or repairs of nets and gear, for example, generally made up close to 10% of total operating and maintenance expenses in 2004.

Vessel repairs and maintenance expenses were the highest for the LFA 17 Anticosti Island lobster fleet (averaging over $9,000), followed by the lobster fleet in Southwest Nova Scotia 's LFA 34 ($5,510). Vessel insurance costs were also the highest in these two areas in 2004 ($4,126 and $3,157, respectively).

Vehicle expenses related to fishing represented between 4% and 11% of total operating expenses of surveyed fleets during the year. The average fishing-related vehicle expenses in 2004 were as low as $2,008 for the LFA 21 fleet in the Gaspé Peninsula to as high as $6,343 spent by the Bay of Fundy lobster fleet in LFAs 35-38.

The Gulf, Quebec and Maritimes lobster fleets spent about 4% of total operating and maintenance expenses on service, licence fees, and other government payments. ^{Footnote 29} The average dollar amounts ranged from $810 (LFA 20B1-B4) to $4,189 (LFA 34).

4.2.3 Financial Performance

In 2004, the majority of surveyed lobster fleets in the Atlantic Region posted gross operating incomes of less than $40,000 (Tables 4.3 and A.6).

In the Quebec region, the Magdalen Islands lobster fleet (LFA 22 Diversified and LFA 22 Specialized) had the highest average gross operating income in 2004.

In the Maritimes region, lobster enterprises in Southwest Nova Scotia (LFA 34), reported the highest average gross operating income of $98,487. Encompassing 21,000 km, LFA 34 is considered the most lucrative lobster fishing area in the region and posts the highest landings of any LFA in Canada . ^{Footnote 30}

The Maritimes' LFA 35-38 Bay of Fundy lobster fleets also earned significant gross operating income that year ($67,459). Looking at the other Maritimes lobster fleets in Eastern Cape Breton as well as Eastern and South Shore Nova Scotia (LFAs 27, 28-32, 33), their gross operating incomes were comparable to those generally realized by lobster fleets in Quebec and Gulf regions.

Estimates of economic depreciation of capital assets were less than $10,000 in all fleets except three: Anticosti Island (LFA 17) and Magdalen Islands (LFA 22) in Quebec and Southwest Nova Scotia (LFA 34) in the Maritimes (Table A.6). Average interest payments were under $1,000 for some fleets (LFAs 21, 27, 28-32) while in others, these payments were more than $5,000 (LFA 34).

In 2004, all surveyed lobster fleets in the three Atlantic regions were left with less than half of their earnings from fishing operations after taking into account the depreciation and interest payments. The LFA 24 lobster fleet in the Southern Gulf of St. Lawrence posted the highest net income share of total fishing revenues (47%), whereas the adjacent LFA 23 lobster fishers had the lowest share (14%).

5 Other Regional Fleets

5.1 Newfoundland and Labrador Shrimp Fleet

5.1.1 Overview

Atlantic Canada's commercial fleets landed 176,053 MT of shrimp in 2004, with a total value of $248 million. Of the total Atlantic shrimp landings, 88,326 MT were landed by vessels 65 ft and over ($153 million).

Nearly one third (54,812 MT) of the shrimp catches in the Atlantic region were from NAFO Division 3K. Significant quantities of shrimp were also landed in NAFO Divisions 2J and 4S. ^{Footnote 31}

The Newfoundland and Labrador region accounted for 68% (120,400 MT) of the total quantity of shrimp landings, followed by the Maritimes (15%), Quebec (13%) and Gulf (4%) regions. ^{Footnote 32}

After crab, shrimp is the next most important species for the Newfoundland and Labrador commercial fleets. In 2004, shrimp landings contributed $168 million in fishing revenues.

The shrimp fleet survey results presented in this section cover the costs and earnings profile of NL's active 35-64 ft shrimp enterprises in NAFO Division 4R. Other NL enterprises with significant shrimp and crab landings were profiled in Section 3.2 (35-64 ft crab and shrimp vessel length category).

5.1.2 Fishing Revenues and Fishing Effort

On average, an enterprise in the NL 35-64 ft shrimp fleet earned $340,141 in total fishing revenues in 2004. Shrimp landings represented 85% of this total (Table 5.1). The fleet landed an average quantity of 287,906 kg of shrimp, valued at $286,651 during the period.

Shrimp enterprises spent approximately 73 days at sea and 56 days were spent fishing. Similar to the NL 35-64 ft crab fleet's average crew size, this fleet also had a 5-person-crew average.

5.1.3 Operating and Maintenance Expenses

The average cost of the NL shrimp fleet operations reached $247,297 in 2004 and half of this amount ($122,458) was attributed to labour costs (Table A.7).

Other key expense categories which collectively account for 30% of operating and maintenance expenses were fuel, oil and grease ($47,552), vessel insurance ($15,121) and nets and gear ($11,322).

Enterprises in this fleet paid about $4,600 in licence fees for the fishing season. Dockside monitoring and at-sea-observer charges added $5,334 and $1,256, respectively, to the total cost of operations. Total service fees and government payments were $13,771 or 6% of the operating and maintenance expenses (Table A.7).

5.1.4 Financial Performance

After deducting the total cost of fishing operations, the NL 35-64 ft shrimp fleet's average gross operating income amounted to $92,844 or 27% of its 2004 fishing revenues (Table A.8).

Depreciation expense was estimated at $35,583 per enterprise and average interest payments were $6,345 in 2004.

At $50,916, the fleet's average net income before taxes represented 15% of the total fishing revenues for the fishing season (Table A.8).

5.2 Newfoundland and Labrador 'Other' Fleet

5.2.1 Overview

Since the NL survey covered all active fishing enterprises, the NL 'Other' fleet includes the important contribution of fishing enterprises involved in fisheries other than the crab and shrimp.

Following the approach used in the NL crab fleet, the survey results for the NL 'Other' fleet are further broken down and presented by vessel length category. The NL survey covered active core fishing enterprises. ^{Footnote 33}

5.2.2 Fishing Revenues and Fishing Effort

In 2004, the NL 'Other' fleet had 110 active fishing enterprises in the < 25 ft vessel category (Table 5.2). Average fishing revenues from various fisheries were $26,766. The fleet spent an average of 95 days at sea and caught approximately 11,784 kilograms of various species during the fishing season. Most vessels in this fleet had average crew size of 2 including captain/skipper.

In the 25-34 ft vessel length category, there were 258 active fishing enterprises whose earnings from fishing operations were just under $35,000 per enterprise in 2004 (Table 5.2). The majority of enterprises in this vessel category spent 81 days at sea and had a total of 22,589 kilograms of landings throughout the season. Like the < 25 ft category, this fleet also had an average of 2 crew members including captain/skipper.

Forty four active fishing enterprises made up the larger vessel category (35-64 ft vessels) in 2004. Their reported average fishing revenues and average crew size were comparable to those of the NL crab fleet's 35-64 ft vessel length category ($292,112 in fishing revenues and average crew size of 5, Table 5.2).

According to the surveyed vessels in the fleet, irrespective of vessel size, their landings were primarily from the Northern Gulf of St. Lawrence (mostly from NAFO Division 4R but also some from 3Pn) and St. Pierre Bank (NAFO Division 3Ps).

The reported number of fisheries in which vessels of the NL 'Other' fleet were involved in during 2004 indicates the wide array of species caught. Enterprises in both the small and large vessel categories were involved in 4 or 5 fisheries whereas the middle-sized vessels (25-35 ft) participated in even more fisheries during that year (6 to 7 fisheries).

Lobster and cod were the primary fisheries for the small and medium-sized vessels. To a lesser extent, species such as herring, lumpfish and capelin were also common among the species caught by these vessels.

The 35-64 ft vessel landings were a mixture from different fisheries and there was no clear pattern in the survey responses that allowed the identification of prominent species. Examples of species caught were sea scallops, herring, lobster, mackerel and groundfish (turbot, greysole, halibut, cod and lumpfish).

5.2.3 Operating and Maintenance Expenses

The average operating and maintenance costs of vessel operations for the small and medium-sized fleets were under $25,000 in 2004 (Table A.9). In these two vessel length categories, the top three expense categories were (1) labour, (2) fuel, oil and grease and (3) nets and gear. Each of the remaining expense categories were less than 5% of total operating and maintenance expenses.

Similar survey results were obtained for the 35-64 ft vessel category, where three-fifths of fishing operations costs were labour costs, averaging over $100,000 in 2004 (Table A.9). This was followed by expenses on fuel, oil and grease ($23,813). The other expense categories were nets and gear ($8,332) and vessel insurance ($8,309).

In terms of service fees, licence fees and other government payments, there did not seem to be a significant difference in average expenses among the three vessel length categories. For example, licence fees paid by fishers owning the small vessels (< 25 ft) were $372 during 2004 whereas the large vessels (35-64 ft) paid, on average, $501 that year (Table A.9).

5.2.4 Financial Performance

The gross operating incomes of the NL 'Other' fleet's two smaller vessel length categories were under $12,000 in 2004 (Table A.10). The 35-64 ft vessels, on the other hand, retained an average gross operating income of $123,404. Depreciation estimates were approximately $2,263 for the < 25 ft vessel category and $4,858 for the middle-sized vessel category (25-34 ft). The estimates were over $20,000 for the larger vessels (Table A.10).

The 25-34 ft vessel category ($5,470 or 16% of fishing revenues) realized a lower level of net income before taxes compared with the small vessel category (< 25 ft) whose resulting net income before taxes was over $7,000 (27% of fishing revenues) during the period. In the 35-64 ft vessel length category, the net income before taxes averaged $97,383 (33% of fishing revenues) in 2004.

5.3 Gulf Rock Crab Fleet

5.3.1 Overview

In 2004, there were 5,116 MT of rock crab landed in the Gulf region. Their total value reached $3.3 million.

There are two types of fishery management regimes in the Southern Gulf of St. Lawrence rock crab fishery: by-catch fishery and directed fishery. ^{Footnote 34} During the 1960s, rock crab fishery in the Gulf was initiated as a by-catch of the lobster fishery. The by-catch includes rock crab landed for sale and rock crab crushed and used as lobster bait. The by-catch fishery is comprised of licensed lobster fishers who are required to observe a daily rock crab by-catch limit, by area, during the fishing season. The directed fishery began in the mid-1970s as a directed exploratory fishery. At present, this is managed on the basis of a limited number of licences, trap limits and season.

The five rock crab fishing areas in the Gulf Region are identical to the lobster fishing areas, namely LFAs 23, 24, 25, 26A and 26B. These areas are currently used for management purposes.

As defined in the survey, the Gulf rock crab fleet is comprised of lobster fishers with rock crab landings from LFAs 23, 25 and 26A that were valued at $15,000 (minimum) or that represented 25% of that lobster fisher's total value of landings.

5.3.2 Fishing Revenues and Fishing Effort

The fleet's fishing revenues from all fisheries were $68,206 in 2004 and the average earnings from rock crab were $18,964 or 28% the total (Table 5.3).

The fishers in this fleet spent 92 days at sea, on average, and landed an estimated 25,766 kilograms of rock crab throughout the fishing season. The fleet generally had 2 crew members, including captain/skipper.

5.3.3 Operating and Maintenance Expenses

The fleet had total operating and maintenance expenses of $45,750 in 2004 (Table A.11). Together, six expense categories represented 86% of this total - labour, fuel, bait, vessel repairs, nets and gear, and vehicles used for fishing activities.

The estimated labour cost was $17,490, followed by expenses on fuel ($6,304), bait ($5,926), vessel repairs ($3,362), and nets and gear ($3,199) and vehicles used for fishing activities ($2,857). All remaining expense categories each accounted for less than 5% of the total vessel operations cost (Table A.11).

5.3.4 Financial Performance

The rock crab fleet's average gross operating income ($22,456) was about one-third of its fishing revenues (Table A.12). Economic depreciation and interest payments were $7,545 and $3,279 in 2004. Finally, the net income before taxes was $11,632 or 17% of total fishing revenues (Table A.12).

5.4 Gulf Inshore Herring Fleet

5.4.1 Overview

Herring is one of the major species for commercial fishers in the Southern Gulf of St. Lawrence . Harvesting is done by the inshore fleet (gillnetters) and the purse seine fleet.

The herring fishery has two spawning components: spring spawn and fall spawn herring. The markets for herring caught in these two distinct components differ considerably. For example, the spring herring caught by the inshore fleet are sold primarily for bait and to the smoked herring (the so-called 'bloater') markets, whereas the fall inshore landings are mainly for the roe market. ^{Footnote 35}

Most of Gulf region's herring landings originate from the inshore herring fishery. In 2004, the 37,930 MT of inshore herring catches contributed close to $7 million in revenues for Gulf fishers.

The vast majority of Gulf's inshore herring licence holders fish for lobster as their main fishery but also fish for other species like herring to supplement their fishing income. Therefore, as in the case of the rock crab fleet, fishers in the inshore herring fleet are primarily lobster fishers.

The inshore herring fleet is made up of lobster fishers with herring landings from zones 16B, 16CE, 16F and 16G that were valued at $15,000 (minimum) or that represented 25% of that lobster enteprise's total value of landings.

5.4.2 Fishing Revenues and Fishing Effort

The inshore herring fleet's fishing revenues from all fisheries were $60,422 in 2004 and the average earnings from inshore herring landings were $17,333 or 29% of total revenues from all fisheries (Table 5.4).

The enterprises in this fleet spent an average of 83 days at sea and landed an estimated 71,910 kilograms of herring throughout the fishing season. Vessels in this fleet generally had 3 crew, including captain/skipper.

5.4.3 Operating and Maintenance Expenses

The fleet had average total operating and maintenance expenses of $42,063 in 2004 (Table A.13). Much like the Gulf rock crab fleet, six expense categories accounted for most of this total. The estimated labour cost was close to 40% of total operating expenses ($16,393), followed by expenses on fuel ($5,858), bait ($4,476), vessel repairs ($3,326), vehicles used for fishing activities ($3,381) and nets and gear ($2,621). All the remaining expense categories each accounted for 3% or less of the total vessel operations cost.

5.4.4 Financial Performance

The average gross operating income of the inshore herring fleet was $18,359 or 30% of its fishing revenues (Table A.14). Economic depreciation and interest payments were $6,827 and $2,691 in 2004. The resulting net income before taxes of the fleet was $8,841 or 15% of total fishing revenues.

5.5 Gulf Tuna Fleet

5.5.1 Overview

The tuna fishery in the Southern Gulf of St. Lawrence occurs off the northeast coast of PEI , between PEI , Cape Breton and the Magdalen Islands . The fishing season runs from July through October. ^{Footnote 36}

In 2004, commercial tuna landings in the Gulf Region were estimated at 238 MT and their total value was $4.1 million.

Following the methodology used for defining the Gulf region's rock crab and inshore herring fleets, lobster enterprises with tuna landings that were valued at $15,000 (minimum) or that represented 25% of that lobster enterprise's total value of landings comprise the Gulf tuna fleet.

5.5.2 Fishing Revenues and Fishing Effort

The fleet's average earnings from tuna landings were $20,426 or 18% of the total fishing revenues from all fisheries which were $111,691 in 2004 (Table 5.5). Enterprises in this Gulf fleet spent an average of 81 days at sea and landed an estimated 6,638 kilograms of tuna during the season. The vessels generally had 2 crew members, including captain/skipper.

5.5.3 Operating and Maintenance Expenses

The fleet had average total operating and maintenance expenses of $55,379 in 2004 (Table A.15).

Labour was close to 40% of total operating expenses ($22,118), followed by expenses on fuel ($6,285), nets and gear ($4,885), bait ($4,632), vehicles used for fishing activities ($4,426) and vessel repairs ($3,630). Together, these categories made up 83% of total operating and maintenance expenses.

As was observed in the Gulf inshore herring fleet, all other remaining expense categories each accounted for 4% or less of the total vessel operations cost.

5.5.4 Financial Performance

he fleet's average gross operating income was $56,312, half of its fishing revenues (Table A.16). Economic depreciation and interest payments were $10,084 and $4,550 in 2004. The resulting net income before taxes of the fleet was 37% of total fishing revenues ($41,678).

5.6 Maritimes Bay of Fundy Scallop Fleet

5.6.1 Overview

Sea scallops are found in the northwest Atlantic Ocean from Virginia north to Labrador , where they are concentrated in "beds," many of which support valuable commercial fisheries. The larger scallop beds are located offshore and in the Bay of Fundy . ^{Footnote 37} The scallop fishery in Canada is managed through limited entry, gear size limits, seasonal closures, minimum shell height, meat count and individual meat weight restrictions. Quotas were introduced in this fishery in 1997.

The Atlantic Region landed 82,486 MT of sea scallops in 2004 and over 90% of these landings were in the Maritimes region. The Bay of Fundy area is fished by the Full Bay and Mid-Bay licensed fleets. There are also a number of Upper Bay licensed fleets that are restricted to the upper reaches of the bay.

Full Bay licensed vessels are between 45 ft and 65 ft, and are allowed to fish the entire Bay. This fleet accounts for a significant portion of the Maritimes region's inshore scallop fishery (close to 80%).

Survey results for the Bay of Fundy scallop fleet cover the "scallop specialists." This fleet is made up of vessels with a Full Bay of Fundy scallop licence and fishing revenues of at least $10,000, 75% of which were from scallop landings. The Maritimes scallop specialists had total landings of 15,336 MT in 2004, valued at $25 million.

5.6.2 Fishing Revenues and Fishing Effort

On average, members of this fleet earned $408,881 from scallop operations in 2004. The average scallop landings for that year were 283,569 kilograms (Table 5.6).

Vessels/enterprises in this Maritimes fleet spent approximately 160 days at sea. The range of reported days at sea, however, varied widely among the enterprises that made up the fleet.

On average, scallop vessels had a crew size of 4. This was slightly higher than the average crew size of other Maritimes fleets in the survey, such as the lobster and mixed fishery fleets.

5.6.3 Operating and Maintenance Expenses

Of the $301,778 average total operating and maintenance expenses, $163,976 or 54% were payments to the hired skipper, crew and other labour costs (Table A.17).

Fuel costs represented 10% of total operating and maintenance expenses ($31,084) while the cost of vessel repairs and maintenance accounted for another 8% of the total ($25,618).

Other than the amounts spent on purchase and repair of nets and gear ($14,764) and fishing licence fees ($13,654), the rest of the expense categories each made up less than 5% of the total expenses related to fishing operations.

5.6.4 Financial Performance

The average gross operating income of the Bay of Fundy scallop fleet was $107,103 or 26% of its fishing revenues (Table A.18). Economic depreciation and interest payments were $21,437 and $3,591 in 2004. The resulting net income before taxes of the fleet was 20% of its total fishing revenues ($82,075).

5.7 Maritimes Mixed Fishery Fleet

5.7.1 Overview

In the Maritimes Region, the mixed fishery fleet is a catch-all category used to develop the costs and earnings profile of vessels that do not fall under any of the region's 'specialist' fleets. The mixed fishery fleet captures the diversified nature of the Maritimes fishery, where vessels tend to be multi-licensed, often fishing more than one fishery and in some cases, with no dominant fishery comprising the landings.

The Maritimes survey covered three mixed fishery fleets that were grouped based on vessel size: < 45 ft, 45-64 ft and greater than 65 ft. These three mixed fishery fleets had total landings of 60,660 MT in 2004. Their fishing revenues reached $96 million, representing approximately 14% of the value of total Maritimes landings for that year. However, only the survey results for the < 45 ft mixed fishery fleet are presented in this report. ^{Footnote 38} Landing a total of 23,448 MT of various species, this fleet earned $61 million in fishing revenues in 2004.

5.7.2 Fishing Revenues and Fishing Effort

On average, the < 45 ft mixed fishery fleet earned $166,184 from its fishing operations in 2004. The average landings were 55,727 kilograms, consisting of different species (Table 5.7).

Most vessels in the fleet spent a total of 116 days at sea in 2004, 110 days of which were spent fishing for various species such as lobster, groundfish, herring and crab. Their landings also included other species like swordfish, mackerel, sea scallops, sea urchin and hagfish/slime eel. Including captain or skipper, the fleet's average crew size of 3 members was comparable with some of the Maritimes region's lobster fleets.

5.7.3 Operating and Maintenance Expenses

Average labour expenses were $46,587 or 44% of the fleet's total operating expenses (Table A.19). The additional amount of $10,383 was spent on bait purchases, while fuel, oil and grease costs averaged $9,008 in 2004. Lease of quotas was another one of the major expense items ($7,149) in the < 45 ft mixed fishery fleet. This contrasts with survey results from other Atlantic region fleets where expenses on the lease of quotas were either zero or negligible.

Expense categories covering vessel repairs and maintenance and nets and gear repair/purchases each accounted for 6% of total operating and maintenance expenses in 2004 ($5,943 and $5,803, respectively). The cost to maintain and operate vehicles used in fishing made up 5% ($5,428) of the total operating and maintenance expenses (Table A.19).

5.7.4 Financial Performance

The average gross operating income of the <45 ft mixed fishery fleet was $61,130 or 37% of its fishing revenues (Table A.20). Economic depreciation and interest payments were $10,755 and $2,626 in 2004. The resulting net income before taxes of the fleet ($47,749) was approximately one-third of its total fishing revenues.

6 Methodology and Data Quality

The following information should be used to ensure an understanding of the underlying methodology of the survey and some key aspects of the data quality.

The section aims to illustrate the strengths and limitations of the data and how they can be effectively used and analysed. This may be of particular importance when making comparisons with data from other surveys and sources of information or when drawing conclusions regarding changes over time.

6.1 Survey Design

The reference period for this survey cycle was the 2004 fishing season. The survey content and questionnaire was developed in coordination with Newfoundland and Labrador , Gulf, Maritimes , Quebec and Pacific regions. In early 2005, the regional Policy and Economics branches launched the survey and coordinated the survey operations throughout their respective regions.

The 2004 Costs and Earnings Survey was a voluntary survey that covered vessels under 65 ft. The questionnaire (Annex B) asked respondents to provide the following information:

• number of registered vessels owned
• vessel characteristics;
• vessel acquisition costs;
• cost information on major alterations, additions or improvements which were used for depreciation purposes;
• summary of fishing effort;
• operating and maintenance expenses by vessel owned and by expense category;
• other revenues (lease of quotas, alternative uses of fishing vessels, government transfers); and
• long-term debt position associated with fishing operations.

6.2 Survey Sample

In each Atlantic region, the sample design was based on two main survey frames: the licence database and the catch and effort database. These databases contain information on licences, vessel registrations, and quantity and value of landings by vessel and by fishery. Text Box 6.1 describes how the sample selection was conducted in each region. Text Box 6.2 shows a complete list of the regional fleets identified at the beginning of the survey. Regional C&E reports and survey documentation provide more detailed explanation on sample selection and methodology used to conduct the survey.

6.3 Data Collection and Processing

The C&E survey in every region was conducted via personal interviews with respondents. Primary data collection activities were carried out from Spring to Fall 2005.

The regions allocated a considerable amount of their resources towards contacting and following-up with respondents in order to improve survey participation among the various fleets. Efforts to increase survey response and to enhance the quality of the reported data continued until December 2005. Depending on the region, the processing and entry of questionnaire data were coordinated either through DFO Headquarters or the regions.

6.4 Survey Response Rates

After the initial round of interviews and contacts with potential respondents, there was a need for some regions had to narrow down the list of surveyed fleets and to exclude those that specifically indicated their non-participation in the survey. This was to be expected given the voluntary nature of the survey.

Table 6.2 contains a summary of the survey population, sample sizes and response rates and by fleet in each region. The survey response rates are based on the ratio of the number of fully and partially-completed questionnaires to the final sample size. ^{Footnote 39} The final response rates by fleet and the quality of reported data in each fleet were the major criteria used to decide whether or not the results were publishable.

6.5 Data Quality

Many factors affect the reliability of the data produced in a survey. For example, respondents may have made errors in interpreting questions, the answers may have been incorrectly entered on the questionnaires, or errors may have been introduced during the data capture or tabulation process.

During the data collection phase, efforts were made to reduce the occurrence of non-sampling errors ^{Footnote 40} in the survey. These efforts included a complete verification of the reported data, validity and consistency edits and various follow-up efforts with respondents.

Data validation was also carried out using information from other available data sources. For example, reported data on the quantity and value of landings were cross-checked against the administrative data found in the regional catch and effort databases. In some of the regional fleets, there were also costs and earnings data available from previous regional surveys and case studies.

6.6 Data Limitations

Despite all efforts to improve data accuracy, the survey results have limitations. Understanding these limitations will help the reader make informed decisions before conducting further research and analysis using the estimates in this report.

6.6.1 Average Reported Values

The estimates presented in the statistical tables were based on average reported values by fleet and by fishing area/vessel length category for the core sections of the survey, in particular, the sections that cover fishing revenues and expenses.

The tables are not meant to provide population totals (revenues and expenses) for the surveyed fleets. The original survey objective was to publish population estimates of revenues and expenses for each regional fleet, whereby a data user could find out, for instance, what the total fishing revenues of Atlantic Canada's snow crab fleets were in 2004.

However, due to non-participation in certain fleets, as mentioned in Section 6.4, however, adjustments and/or changes had to be made to the regional C&E fleets in terms of the sample size; identification of fishers (within the sample strata) to be interviewed; or both. For these reasons, the statistical tables in the report present only the average or arithmetic mean^{Footnote 41} of the values reported by fishers in each of the regional fleets who participated in the survey.

For example, Table A.1 shows an average labour expense of $9,864 for the < 25 ft NL crab fleet. There were 50 respondents in the < 25 ft NL crab fleet who provided an estimate of their labour expense in 2004. The $9,864 is simply the average of all the reported labour expense values given by the 50 respondents.

6.6.2 Depreciation

The survey asked for details on the depreciation claimed by the fishing enterprise for the 2004 tax year. ^{Footnote 42} Some respondents were able to provide the total amount claimed for depreciation in 2004, but not a breakdown of depreciation claimed for various items (vessels, nets/gear, electronic equipment, vessels, on-shore facilities and other fishing equipment). More commonly, however, in general, respondents were not able to provide a response to this question.

An alternative way to estimate depreciation employs the definition for economic depreciation as described in Text Box 2.1. Following this definition, depreciation estimates were obtained by using the following information gathered from the survey: vessel characteristics and vessel acquisition costs, cost of major alterations, additions or improvements made to vessels.

The depreciation estimates presented in Annex A include vessel depreciation and major alterations, additions or improvements to vessels (hull and components), ^{Footnote 43} depreciation of vehicles used for fishing and depreciation of on-shore facilities. Table 6.1 lists the amortization periods used in the calculation.

6.6.3 Other Revenues, Long-term Debt and Cash flow

It is not possible to incorporate a complete Atlantic Region analysis of non-fishing revenues (revenues from the lease of quotas and revenues from alternative uses of fishing vessels such as charter, tour operations, etc.), government transfers (fishers employment insurance, workers compensation, disaster relief, etc.)long-term debt and cash flow in this report, due to missing information or non-response in certain regional fleets. However, some of the regional C&E reports may have publishable information, depending on the fleet.

6.6.4 Data Comparability

In certain cases, there may be differences between estimates derived from the survey data and data from other sources. These require evaluation on a case by case basis in order to better understand the potential source(s) of the inconsistencies such as differences in the criteria used in defining the survey units, conceptual framework and variables used to calculate the estimates.

6.7 Future Survey Considerations

Survey response was a key issue in all the regional C&E surveys. The data limitations described in the previous section were magnified by the high level of non-response to certain sections in the survey questionnaire and/or the overall non-participation by some regional fleets.

Efforts to obtain the cooperation of commercial fleets at the beginning of the survey process will definitely help to improve the response rates and overall quality of survey data. However, this will remain a challenge, as is usually the case in most voluntary surveys.

Other considerations for future C&E surveys include:

• continued improvement of the survey frame or the list of enterprises and /or in each regional fleet;
• questionnaire testing through focus groups to further develop the survey content;
• additional training of survey interviewers;
• providing a shorter version of the survey questionnaire when conducting the follow-up interviews; and
• conducting research on possible alternative data sources such as tax data.

7 References

Canada Revenue Agency, Fishing Income 2004 Guide, http://www.cra.gc.ca, accessed November 2005.

Northwest Atlantic Fisheries Organization, Annex III to the NAFO Convention - Scientific and Statistical Subareas, Divisions and Subdivisions, http://www.nafo.ca/, accessed March 17, 2006.

Statistics Canada, Financial Performance Indicators for Canadian Business, 2003, Catalogue no. 61-224-XCB, Ottawa .

Statistics Canada, 1993, Survey Sampling: A Non-Mathematical Guide-Second Edition, Catalogue No. 12-602E, Ottawa.