The B.C. salmon farming industry has demonstrated its potential to generate significant wealth in remote coastal communities. From modest production levels fifteen years ago worth less than $1 million, the industry exceeded the landed value of the traditional wild capture fishery in 1995, generating 4165 million in sales and more than 2,400 full-time jobs. B.C. farmed salmon is now the province's leading agricultural export crop. The industry is situated around Vancouver Island, where the industry provides year-round employment on its salmon farms, processing plants and supply and service sector companies.

The northern coast of B.C. holds tremendous potential for salmon farming development. The natural protection offered by the network of well-flushed channels and deep inlets of the north coast will allow for an abundance of biophysically suitable sites to support the industry. In addition, the colder water of northern B.C. provides ideal water temperatures for salmon farming.

The world community has accepted salmon farming as a sustainable environmentally sound commercial activity. Today, farmed salmon represents more than 40% of world salmon supply by weight and 67% by value. By 2000, salmon farming will supply over 50% of the world salmon supply and 75% by value. With growing markets for farmed salmon in the United States, Japan and southeast Asia, Prince Rupert is ideally positioned to become an active hub for farmed salmon production and export.

This briefing paper will provide an overview of the potential impacts of the development of the industry on the north coast of B.C. In addition, the critical factors for the successful development of the industry in this remote part of the coast are defined.

Sustainable Economic Development

• Conservative projections indicate that the industry could produce over 40,000 tonnes of farmed salmon annually on the north coast. This would generate revenues in excess of $300 million on an operating area of just 1.4 km2 - an area just one-third that of Stanley Park. By way of comparison, B.C.'s forest industry utilizes more than 19,000 km2 of water tenure for log storage.

• The industry would spend about $220 million annually on supplies and services. Studies have shown that over 90% of the industry's purchases are made in local communities.

• Coastal native bands have expressed an interest in salmon farming as a means of providing sustainable economic development activities in their home communities. The industry is presently exploring the potential for joint ventures, technology transfer and other partnership agreements.

• Investment capital required to expand the industry into the northern coast region would be in the order of $300 million. Resulting exports would generate over $200 million in foreign exchange annually.

• The Commission on Resources and Environment (CORE) Vancouver Land Use Plan expressed broad support for "promoting economic diversity through better utilization of food production opportunities, including aquaculture."

• Salmon farming jobs are full-time and year-round. The industry currently generates over 2,400 person-years of employment. Wages and benefits average $27,000 per annum. In 1993, the industry's total compensation was in excess of $62 million.

• Conservative estimates for the north coast indicate that based on an operating area of 1.4 km2, the industry would generate a total of 4,800 person-years. Wages and benefits would total over $144 million. Given that the north coast's total 1991 population was 50,300, salmon farming would represent a sizable infusion of wealth into the north coast's economy.

• Natives presently comprise more than 6% of the industry's total workforce. If the industry is developed in the north coast, it is anticipated that native involvement in the industry's labour force will increase significantly.
• The skills and expertise possessed by commercial fishermen and shoreworkers are complementary to those required by aquaculture workers. A significant proportion of the commercial fishery workers likely to be displaced in the coming years in the north coast region could be retrained for salmon farming employment.

• The Northwest Maritime Institute in Prince Rupert could coordinate the necessary training programs for employment in the salmon farming industry. Its partnership projects with a wide range of universities, native groups, and government organizations have demonstrated its capability to perform this critical function.

Sustaining the Environment

• An expanded salmon farming industry will provide for better husbandry and improved environmental stewardship.

• Providing employment transition opportunities for displaced commercial fishers and shore workers will benefit the conservation efforts by easing the pressure on wild salmon stocks.

• Salmon farming infrastructure and expertise can play a key role in designing and implementing wild salmon enhancement programs to rebuild endangered stocks. Industry can produce smolts for a fraction of the government's cost of production.

• The International Council for the Exploration of the Seas (ICES), as well as the Canadian federal government, has recognized that "aquaculture, when properly managed, is an environmentally sound commercial activity."

• Salmon farming is no longer a cottage industry. B.C. producers are highly professional, technically sound and financially stable companies, whose businesses are based on scientific discipline and advanced aquaculture technology and practices.

Critical Success Factors

The remoteness of the north coast region presents inherent challenges in establishing the infrastructure required for ensuring the industry will be able to compete effectively in its global markets. Initial attempts to develop the industry in the mid-1980s in the north coast region provided insights into how best to successfully establish an economically viable industry around Prince Rupert. The four most critical issues for establishment of the salmon farming industry are:

1. Access to new sites in the region;
2. Involvement of key stakeholders;
3. Access to essential transportation linkages, and;
4. A skilled workforce.

Access to New Sites in the Region
The Provincial Government presently has a moratorium on the development of any new salmon farming sites pending an Environmental Assessment process the industry is currently undergoing. The Environmental Assessment process is expected to be completed by March 31, 1997. The present moratorium will have to be lifted and the existing process for site application streamlined for timely tenure approvals.

The Province's commitment to approve a large number of sites in the north coast region is a prerequisite for any salmon farming development. A piecemeal approach to development will ensure failure due to the high cost of operating remote, individual salmon farms. Investors will need to have the fullest confidence that there will be enough sites granted, in order

1. to justify the high infrastructure investment costs for salmon farms
2. to attract essential industry supply and service companies (i.e. feed companies, netting companies, fish health expertise, marine transport, etc.)
3. to attain the economies of scale necessary to have a competitive cost of production
4. to attract a skilled work force.
In addition, the present 10-year term for water tenure leases will need to be lengthened to 20-25 year in order to provide adequate planning horizons, security of investment and opportunities to improve husbandry and environmental stewardship.

The use of economies of scale in all aspects of production will be critically important for the industry to successfully develop in the north coast. The cost of production in the north coast region will be higher than on the south coast due to the remoteness of the sites and the resulting increased transportation costs. While Prince Rupert will be the transportation hub for the industry, the salmon farming sites themselves will be located some distance from Prince Rupert. In order for economies of scale to be established, there will have to be a large number of sites strategically located near one another to optimize the number of employees, feed transport and storage, maintenance areas, processing, etc. The B.C. industry's experience to date has shown that the clustering of sites for any given company will be essential to ensure that the north coast industry will be competitive in the global marketplace.

Involvement of Key Stakeholders
The active involvement of key stakeholders in the planning and development of the industry will be critical to the success of the industry. Key stakeholders include

• Industry
• Federal government
• Provincial government
• Regional district and local governments
• First Nations
• Wild salmon fishery
• Recreational salmon fishery
• Tourism
In order to initiate the development of the industry on the north coast, there will need to be broad-based support from all stakeholders. In particular, First Nations involvement in joint ventures with salmon farming companies will probably be necessary given that nearly all the potential areas for development are in contested land claim areas. The Environmental Assessment process now underway will define the consultative and approval processes that will be required for future approval of salmon farms in B.C. A complex and costly approval process will discourage the industry's development.

Transportation Infrastructure
Transportation infrastructure will also be an essential prerequisite in order for the industry to expand into the north coast. Farmed salmon is marketed primarily as a fresh product and is therefore highly time-sensitive in its transportation requirements. Presently, 69% of production is exported to the U.S., with almost a third of all production sold in California. Another 13% is exported to Japan and a further 2% is exported to southeast Asia. Given that Prince Rupert is an hour closer to Japan than any other point in North or South America by air cargo, the establishment of wide-body air cargo to this key market as well as to the U.S. would provide a significant incentive for the development of salmon farming on the north coast.

It is probable that exports of frozen salmon will increase in the future, particularly to Japan and southeast Asia. Prince Rupert would therefore require a refrigerated container service in order to allow the ocean shipment of frozen salmon to these markets.

Industry supplies would be shipped to Prince Rupert via rail, truck or barge. The single most critical supply would be fish feed. Feed comprises over 40% of the industry's cost of production. The cost-benefit of building a new feed mill in Prince Rupert versus barging it up from Vancouver will depend directly on the number of sites issued. A threshold feed production level of about 20,000 tonnes (i.e. 10,000 dressed tonnes of salmon production) would be necessary for the establishment of one or possibly two feed mills in Prince Rupert. Prince Rupert's access to ocean and rail transportation would assist feed companies in getting their raw material to their mills. Fish feed's two major ingredients are fish meal and fish oil. Fish meal is sourced from South America via ocean cargo containers while fish oil is sourced from the southeastern U.S. via rail transport. In addition, the presence of grain terminals in Prince Rupert to source essential feed additives is another competitive advantage.

The shipment costs for all supplies into Prince Rupert as well as for finished product out will have a major impact on the north coast region's cost of production and its competitiveness in global markets. It will be critically important that all cargo rates be competitive with those of the industry's international competitors. High transportation costs will be a significant barrier to the industry's development in the region. Government can assist by approving enough salmon farm sites to generate the production necessary to allow the transportation sector to provide the most competitive rates possible.

Skilled Labour
If the industry is allowed to develop to its potential (40,000 tonnes), it would generate 4,800 person-years of employment on the north coast. An industry of 40,000 tonnes would necessitate the design and implementation of training programs for employment in the industry. While the skills possessed by commercial fishermen and shoreworkers are complementary to those required by aquaculture workers, some retraining and upgrading of skills will be required in order to maximize work potential in the salmon farming industry.

The Northwest Maritime Institute in Prince Rupert could coordinate the necessary training programs for employment in the industry. Its partnership projects with a wide range of universities, native groups, and government organizations have demonstrated its capability to perform this critical function. While more specialized degree-granting programs can be offered at the University of Northern B.C. or the three universities on the south coast, local training programs for farm workers and technicians will need to be established for entry-level positions in the industry.

The present depressed state of the job market in the coastal communities of British Columbia has its roots in the primary resource exploitation that provided employment through this century. In the past, employment, which was largely seasonal, was centred in salmon fishing, canning and logging, saw milling and pulp. These industries provided relatively unskilled employment. They had little or no commitment to research and development, innovation or market diversification. The need for conservation of the resources on which they have depended has resulted in severe downturns in their raw material supply. Their traditional markets have also been eroded by new products from other countries, arising from technological advancements.

The result of these unstoppable shifts has been the decline, consolidation and disappearance of traditional resource harvesting jobs. One primary example of this is seen in the cumulative impacts of salmon farming on the wild salmon industry: in the last ten years, salmon farming has expanded to occupy the dominant position in world salmon markets; world production of farmed fish now exceeds the value of the wild catch; world salmon prices have dropped, owing to the abundant supplies. In 1997, Norwegian farmed salmon production alone exceeded the total catch of salmon in Alaska. In contrast to the wild industry, salmon farming is profitable, provides year-round skilled employment, has an increasing added value content, invests in R & D and is diversifying into the cultivation of other species.

It follows from recognition of these causes and impacts of these shifts, that in the future, successful job creation cannot be based on primary resource harvesting. New jobs within a more diversified economy will have a higher knowledge content, they will require local entrepreneurs to innovate, adapt and use state of the art technology. They will also require a much deeper understanding of marine ecosystems and of the impacts of human activities on these ecosystems.

The NWMI, the Coastal Community Network and other initiatives are community-based responses to these cumulative economic changes. They represent grassroots efforts to develop new job opportunities and move forward with economic diversification.

A series of reports in recent years have documented the range of economic opportunities and the high areas in the marine economy of British Columbia. The include The SPARK Oceans Report 1993, The NWMI Business Plan 1995, The Proceedings of Coastal Community Conference Reports 1993-1997, The Way Ahead - COFRI 1996, etc. (see bibliography.) Many promising areas of marine-related economic diversification and job creation have been identified in these reports. All these areas involve added value uses of natural resources, or are dependent on non-consumptive use of the environment. They are all relatively knowledge-intensive and their development requires specialized services in research, technology transfer and training. The most promising short-term opportunities for the coastal communities include seafood industry diversification, under-utilized species development, marine waste utilization, marine tourism development and related activities, fish and shellfish aquaculture and enhancement and related service sector activities. Longer term opportunities in biotechnology and offshore resource development have also been identified. All these opportunities have a strong knowledge/technology/science content. They also require a more sophisticated understanding of the marine environment to provide a knowledge base for conservation and management of coastal regions.

The job creation in new economic activities that have been identified for the North Coast are summarized below. These figures are based on the actual jobs that have been created through these economic activities elsewhere in B.C., or in other coastal jurisdictions. Projections are scaled to reflect sustainable levels of resource harvesting, known raw material available and existing markets.

New Fishery Development
Under-utilized and non-utilized stocks of marine fish and shellfish have been identifed on the North Coast. These include mud shark, arrowtooth flounder, grenadier, tanner crab and several species of clam. Studies have been carried out on these stocks, harvesting levels, added value processing and market potential. Further work is needed to underpin any future harvesting activities and to ensure that they comply to principles of sustainable harvesting. In the projections below it is assumed that for every job in harvesting, three shore-based jobs are created in processing and distribution.

Resource	Harvesting	Processing	Service	Sub-total
Arrowtooth flounder	30	90	10	130
Mud shark	20	60	5	85
Additional groundfish	30	90	10	130
Tanner crab	20	60	5	85
Other under-utilized species	30	90	10	130
Shellfish harvesting	50	150	13	213
Total regional job creation potential				773
(seasonal and full-time equivalent (FTE) employment jobs)

Aquaculture Projects
Aquaculture is well established on the South Coast and world-wide there has been major growth in the aquaculture sector in the last decade. Salmon farming, other new finfish species, clams, scallops, sea urchin, abalone and seeweeds are known to be suitable for rearing in B.C. and have good market potential. What is required is field-based research and development to resolve the various problems associated with the rearing, feeding, breeding and processing of these species.

Resource	Farming	Processing	Service	Sub-total
Salmon farming (1)	2000	1500	1200	4800
Shellfish cultivation	100	100	10	210
New finfish species	(longer term opportunities not quantified*)
Seaweed	50	50	10	110
Total regional job creation potential (FTE)				circa 5000

* scale of these opportunities will be equivalent to present employment in salmon farming (+/- 2000)
Figures submitted by the B.C. Salmon Farmers Association, to the B.C. Environmental Assessment 1995.

Tourism and Related Cultural and Recreational Activities
Tourism has been the fastest growing sector of employment in coastal regions of B.C. However, much of the employment has been very seasonal. Future trends will be to increase the season length and to foster jobs that provide year-round employment. The anticipated growth rate in tourism-related employment could be very high. Recent assessments of the Alberta and B.C. potential for ecotourism (nature, adventure, culture) indicates a very strong market demand by urban North American customers. If the B.C. North Coast achieved only a 5% market share of this estimated present demand, additional earnings could be in excess of $200 million. At an estimated cost of $50,000 per FTE job in this sector, this translates into about 4000 FTE jobs. Employment will be very project specific. The following job estimate projections are made on the assumption of the provision of North Coast programs in business management, accounting, catering, guiding and other skills requiring the tourism industry.

Activity	Sub-total
New North Coast ecotourism	448
Associated hotel/catering jobs	50
Associated transportation	30
Total regional job creation potential (FTE)	+500

The above areas represent the most realizable short-term job opportunities linked to the North Coast environment and its natural regional advantages. There are, however, other development opportunities relevant to the region. These fall into other investment categories that are well recognized as growth areas for employment elsewhere in Canada and internationally. These include the service industries, information technology, telecommunications and health care.

There are also longer term opportunities related to the energy sector, in particular, the opportunities for exploration and development of offshore hydrocarbon resources that are known to exist in Hecate Strait. The economic benefits of such long-term and large-scale projects can be seen at present in Newfoundland and Nova Scotia. The potential for development of these resources has been recognized by the North Coast Oil and Gas Task Force.

The job growth potential from identified North Coast opportunities in fisheries, aquaculture, and in ecotourism (nature, adventure, cultural tourism) and related service sectors is high. New diversified fisheries opportunities have the potential to create about 700 jobs. The potential for job creation in aquaculture and enhancement-related activities is about 5000 jobs. Within the tourism sector, ecotourism projects alone have the capacity to provide in excess of 500 new jobs on the North Coast.

The realization of this potential will require the development of local capacity to carry out and assist in a wide range of research and development work, the management of pilot projects and the provision of relevant education and training targeted to these opportunities. In addition, all the above activities require the development of an improved knowledge base about the impacts of these activities on the marine environment. The NWMI, in consultation with the Coastal Community Network, COFRI and the Fisheries Centre at UBC has put forward proposals to address these opportunities.

Ecotourism - Nature/Adventure/Culture, Alberta and B.C. Market Demand Assessment, 1995.

Economic Development and Jobs for the Pacific Northwest, The North Coast Oil and Gas Task Force, Prince Rupet, 1997.

Fishing for Answers, Coastal Communities and the B.C. Salmon Fishery, 24 pp., B.C. Job Protection Commission, 1996.

Net Gain: The Salmon Farming Industry in B.C., 62 pp., B.C. Salmon Farmers Association, 1997.

Northwest Transportation Corridor Task Force, Final Report to the Minister, 80 pp., 1997.

Ocean Opportunities for the West Coast of Canada, 129 pp., SPARK Oceans Committee, Science Council of B.C., 1993.

Prince Rupert - Vision 2010: Background Report, Ministry of Employment and Investment, 25 pp., 1996.

B.C. Economic and Statistical Review, Ministry of Finance and Corporate Relations, 194/1995.