I posed a question last week in the House of Commons about why ACOA would approve a $1-million loan to a company that creates fish plant jobs in China?
Turns out ACOA wasn’t alone in handing money to Ocean Choice International (OCI) to develop new technology to process yellowtail flounder – the very same species the company now wants to ship to Asia.
The Newfoundland and Labrador government also kicked in cash.
I submitted three questions to the Atlantic Canada Opportunities Agency last week regarding OCI.
The questions and official responses are found below:
1) How much was drawn on the loan to OCI?
In June 2010, in response to a project proposal from OCI, ACOA announced a provisionally repayable loan of $1,000,000 towards the application of water-jet cutting technology to process yellowtail flounder at the company’s plant in Marystown. A total of $750,000 was disbursed by ACOA. The total cost of this project was $2.5 million, with OCI contributing $1.24 million, and the provincial government provided $260,000.
2) An audit reflected a $3.6-million loss, so why did ACOA provide assistance?
The company, ACOA, and the provincial government all funded this project, which aimed to increase yields from individual fish, fully utilize OCI’s yellowtail quota, increase profits and maintain employment at the Marystown plant. ACOA’s evaluation of the project included consultation with the federal Department of Fisheries and Oceans and the provincial Department of Fisheries and Aquaculture, with both departments endorsing the trial application of water jet cutting technology at the plant.
3) Why support a company shipping business to China?
Labour costs associated with processing small yellowtail flounder are significant, and Newfoundland and Labrador government regulations state all yellowtail harvested under 380 grams is exempt from local processing and can be shipped whole to China. Water jet cutting technology is very common in the chicken processing industry, and it was hoped that applying this precision cutting method would enable Marystown to more efficiently process yellowtail, big or small. The trial introduction of this technology was expected to improve yields and productivity. It was also intended to introduce new product categories to the market to address the long-term viability of the plant and provide employment, but also greatly reduce or nullify the China processing option. However the process of trying to apply the water jet technology proved to be very complex, and has not produced the desired outcomes.
The water jet-cutting technology remains at the Marystown fish plant. OCI has since proposed nearly doubling its workforce at its Fortune plant to process 25 per cent of its yellowtail quota, in exchange for being allowed to ship the other 75 per cent of the quota to market without being processed.