markedly different in New England and in 

 Canada. Price leadership (by annual nego- 

 tiation in the saltfish industry), buyer 

 concentration, absence of fresh -fish market 

 leverage , vertical integration, are all 

 significant differences characterizing the 

 Canadian market. The American vessel owner, 

 faced with stable ex-vessel prices over the 

 long-term and production records, which 

 show a decline over the last several dec- 

 ades, and lacking processing possibilities, 

 has been hurt. The Canadian vessel owner 

 has had an expanding catch to offset lower 

 prices over the long-term. Moreover, by 

 combining fishing with fillet processing, 

 lower prices have meant a lovrer labor share 

 and, consequently, lower costs of procuring 

 the raw fish for the processing plants. 

 This sitaation gives the Canadian processor 

 an opportunity to compete successfully in 

 the United States market despite transpor- 

 tation and tariff costs. 



Despite the apparently one-sided 

 bargaining position, the Royal Commission 

 on Price Spreads found that the profits of 

 vertically integrated processing firms were 

 not excessive , or were the salaries paid 

 their key employees excessive. This find- 

 ing supported the industry's contention 

 that it is difficult to attract new capital 

 investment in the industiy. Despite appar- 

 ently substantial price control, profits 

 have not been high because of the number of 

 old plants in operation and competition in 

 the United States market for frozen fillets 

 from northwestern European countries . 



One other important conclusion that 

 emerges, however, is that the New England 

 ex-vessel price in fresh fish ports, nota- 

 bly Boston, is very dependent on fresh 

 fish demand. To the extent that supplies 

 and the number of vessels operating are 

 adjusted to this demand, profitable vessel 

 operations ensue. As a corollary, this 

 adjustment creates difficulties for New 

 England processors. High prices caused by 

 fresh fish demand either force them to 

 cease operations or to work at a high cost 

 disadvantage with Canadian competitors. Un- 

 less New England landings increase substan- 

 tially -and this is not foreseen In the 



relatively near future-this competitive 

 dilemma between sales to the fresh and 

 frozen market will remain and will be 

 mitigated only by an expanding fresh fish 

 demand occasioned by population growth in 

 the Northeastern United States , 



Governme nt al Aid to the Fisheries 



There is a common conception among 

 New England vessel owners that their Cana- 

 dian competitors have unfair advantages 

 resulting from allegedly substantial sub- 

 sidization schemes on the part of the 

 Dominion and Provincial Governments. In- 

 deed it is no wonder that such a view is 

 held, for the Federal Government alone 

 programmed about $1.9 million for direct 

 subsidies to the fishing industry in the 

 fiscal year 1957-58 and budgeted another 

 $9^ million for research and market, serv- 

 ices . 6U / In addition the Newfoundland 

 government had liberal subsidy .provisions 

 for construction and repair of vessels. 



There are, of course, Canadian sub- 

 sidies directed at smaller vessel operators, 

 some of whom do represent a source of com- 

 petitive groundfish supplies. Yet, with 

 the possible exception of some rather 

 generous Provincial loans made to establish 

 large processing "plants, there has been no 

 direct subsidy aid to operators of the 

 Canadian large-trawler fleet; and the 

 landings of these large trawlers are the 

 main source of competition for the New 

 England groundfish catch. 



In addition, in February of 1958, the 

 Province of Newfoundland enacted "The Fish- 

 ing and Coasting Vessels Rebuilding and 

 Repairs (Bounties) Act" to give subsidies 

 for the reconstruction and/or repair of 

 wooden vessels over 15 years old. Re- 

 building bounties range from $100 a ton on 

 small vessels to $250 a ton on vessels 

 from 100-)400 tons, or 50 percent of the 

 cost, whichever is' smaller. On a 200 ton 

 vessel this could amount to $50,000, a 

 considerable sum. Repair subsidies are 

 $100 a ton or 25 percent of cost, which- 

 ever is less, on vessels under 100 tons; 

 on vessels from 100-iiOO tons, the bounty 



61^/ Hearings before the Subcommittee on Fisheries and Wildlife Conservation of the 

 Committee on Merchant Marine and Fisheries. House of Representatives, 86th Congress. 

 April 28, 29, 30, June h and 11, 1959, p. 169. Assistance to Depressed Segments 

 of the Fishing Industries . 



33 



