Canada’s next fish crisis

The world wants Canada’s seafood. That’s nothing new; not long after John Cabot relayed the incredible abundance of fish on the Grand Banks back in the late 1400s, Canada zoomed up to a top ranking on the global fishing map. Sadly, overfishing depleted stocks, and more than once has thrown the industry into full-blown crisis. Even so, Canada is still very much a global seafood powerhouse. And with global growth on the rise, demand for Canadian seafood is hot. So, can we meet this demand, or are we heading smack into yet another crisis?

Our last crisis was ugly. It was clear for a number of years that something was wrong, but everyone hoped that it was just another anomaly and that things would right themselves. Well, they didn’t – and in 1992, a devastating moratorium was imposed on Northern Cod and other species. Biological studies then revealed how bad things really were, and strict management plans were put in place. In the years since, stocks have been climbing back, although slowly. The industry has responded by diversifying into other species and also investing heavily in aquaculture. Sounds good – but is it enough to insulate us from further crises?

So far, so good. Traditional customers have not been a huge draw on supply. Growth has been tepid in the new millennium, averaging just 1.4 per cent growth annually. After accounting for inflation, sales are actually in net decline over the past 17 years. But maybe this hints at a relevance crisis – depleted stocks have turned the market away from Canada and toward others.

Not so fast. Our industry is actually going through a significant transformation that’s one of Canada’s most exciting export stories. Global demand is being revolutionized by the rise of the emerging market middle class – and its increasing need for protein. Wealthier emerging market consumers are eating more, including meat and seafood. According to the UN Food and Agriculture Organization, this growth isn’t going away anytime soon, and it is increasing emerging economies’ net dependence on the world’s key food suppliers.

This story isn’t future wishful thinking; Canada’s fishing industry is in the thick of the story. Here, China is the big driver. It has recently sped past Japan to grab second place for exports of Canadian fish products. That’s normally hard to do, but not for China – its appetite for Canadian products is rising by 13 per cent annually. At this scorching pace, China is on track to become our top client in just over 12 years.

China doesn’t have a lock on fast growth, though. Over the same timeframe, exports to Vietnam are up 40 per cent annually, vaulting its rank from 24^th to 5^th place. South Korea is also a hot market, rivalling China’s annual growth. Indonesia is an up-and-comer too; it currently accounts for just 1 per cent of Canadian fish exports, but is rising steadily at a 44 per cent annual pace. Give China and these other hot-growing markets just 10 years and collectively they will surpass our sales to the US market.

This is a pretty powerful story. It’s hard to believe that any Canadian export could contemplate China being top customer, given current US dominance; and that other markets could also quickly climb the ranks. But the current data are undeniable, and the future needs of fast-growing nations are well known. From this vantage point, it seems that the only crisis we may encounter is somehow not being able to meet the demands of these nations. A number of things could stand in the way: if we fail to manage our fish stocks sustainably, we won’t have the supply. If we prove unreliable, that would be just as bad. If we don’t leverage the opportunity to create proper trading relationships, others will. Finally, if somehow our quality suffers, then a key part of our value proposition would be lost. Thankfully we have all these things going for us at present, so it seems we just have to keep our game up to our high standards.

If there’s a crisis ahead in Canada’s fishery, it’s a failure to recognize the dynamics of long-term global growth. Fortunately, it’s already embedded in current numbers: they are the best guide of what’s needed in the future. It’s great news for those in Canada’s fishing business. But it’s no mere fish tale - for many others, this is the leading edge of what’s coming your way, too. Prepare now!