OTHER INDUSTRIAL DEVELOPMENT POLICIES 165 



These include packing and collecting services, boat and 

 gear storage, repair facilities, credit and capital financing, 

 and commitments to purchase all fish delivered. This 

 practice is particularly important in the salmon fishery', 

 but it appears to have been declining in recent years as 

 fishermen have become more independent and prices 

 have become increasingly influential in determining the 

 distribution offish. 



Product markets Fish processors on the Pacific coast 

 have little influence over the prices they receive for their 

 products. They produce only 13 percent of the world's 

 catch of Pacific salmon, of which roughly 70 percent is 

 exported, some 44 percent to Japan in the form of frozen 

 salmon. But this accounts for only 1 1 percent of Japanese 

 frozen salmon imports and a considerably smaller share 

 of the total Japanese consumption. The market share of 

 Canadian producers in other export markets such as Bri- 

 tian and Europe is also low. Thus — 



Canada's (B.C.) position in supply and mar- 

 ket is by no means dominant - it must react to 

 resource and economic realities related to the 

 harvests in other countries.-' 



Sales in the domestic market are very sensitive to retail 

 prices. Salmon and most of the other fish produced on 

 the Pacific coast are luxury foods, which are not a major 

 component in the diet of most Canadians; so price 

 increa.ses will induce them to shift to meal, poultry and 

 other substitutes. 



All this implies that producers have little market 

 power. Moreover, they are highl\ vulnerable to external 

 economic circumstances such as supplies from elsewhere, 

 changing exchange rates and world economic conditions. 



Products other than salmon have narrower markets. 

 Herring roe is sold almost exclusively in Japan, where a 

 volatile market has created highly unstable conditions in 

 the Canadian roe-herring industry. In this market as well, 

 Canadian suppliers have little influence on price. 



Groundfish, other than halibut, are of much lower 

 value and hence are not sold in distant markets. Some 60 

 to 70 percent of the groundfish produced on the Pacific 

 coast is sold in Canada, the rest almost entirely exported 

 to adjacent markets in the United States. Tlie minor 

 products serve a variety of specialized markets. Geoducks 

 are sold almost entirely in Japan, as are most abalone; 

 mussels are sold mainly in Europe, while shrimps, 

 prawns, crab and other shellfish are sold mostly in Can- 

 ada. 



Some participants at the Commission's hearings 

 expressed anxiety about possible intervention by the gov- 

 ernment in marketing fish products, apparently resulting 

 from governmental controls on the Atlantic coast. I see 

 no useful purpose to be served by direct governmental 



involvement in marketing fish on this coast, and in view 

 of the concern about this matter I specifically recom- 

 mend — 



6. The government should not become directly involved 

 in marketing fish products produced on the Pacific 

 coast. 



Regulation of Fish Bu>ing and Processing 



Under the Canadian constitution, the federal govern- 

 ment has authority to license fish buying or processing 

 only at sea. For this purpose the Department issues pro- 

 cessor "P" licences: but so far only one has been issued. 



Shore-based fish buyers and processors are licensed by 

 the Province of British Columbia under its own Fisheries 

 Act. Licences are issued annually and fees are based on 

 the nature and size of the facility. A separate licence is 

 required for each facility operated. 



The province places no limit on the number of buyers 

 and processors licensed: 



An "open" licensing system will provide for a 

 climate in which competition for raw product 

 can flourish, in which new entrants to the 

 industry can reduce corporate concentration 

 and generally provide for economic eflncien- 

 cies which will allow the industry to respond 

 to changing market demands." 



However, some participants in this Commission's public 

 hearings pressed for restrictions on buyers and proces- 

 sors. Some have argued that the influx of additional 

 buyers in the late 1970s, especially of cash buyers, has 

 disrupted fish markets by driving up landed prices, and 

 one participant urged the government to — 



. . . investigate the advantages of tying com- 

 mercial buyers' licenses to processors as this 

 would prevent the growth of a new "middle- 

 man" level of fish traders which provide no 

 benefit to the fishing industry.-' 



That is, only processors would be eligible to buy fish. It 

 has also been suggested that an unrestricted entry policy 

 for the processing sector leads to excess capacity. 



In Chapter 7 I explained the need for government pol- 

 icy to regulate entry to common-property fisheries in 

 order to prevent their economic benefits from being dissi- 

 pated through wasteful fleet expansion. But there is no 

 corresponding need to limit entry to the fish buying and 

 processing industry because there is no common prop- 

 erty problem: these operators deal with fish after they 

 have been landed and so have become the property of 

 fishermen. In this respect, these sectors are no diflerent 

 from any other manufacturing industry, so government 

 does not need to treat them differently. Competition 



