Northwest Co-operative Fisheries Ltd.
The Co-operative Secretariat
New Economy Development Group
Northwest Co-operative Fisheries Limited
- A Growth Plan to Benefit Local Members and Communities -
Northwest Co-operative Fisheries Limited (NWCFL) is a commercial fishing co-op that serves seven First Nation communities in Northwest Manitoba. The co-op's 143 members fish in over 48 lakes across the region, bringing in an average harvest of 300,000 kilograms per year. Members deliver their catch to the co-op fish plant, which packs and ships the fish for market, and processes the fish roe. The co-op also operates a store that sells fishing gear and other supplies, and it provides bunkhouse accommodations for plant workers, pilots and drivers delivering fish to the plant. It is now proceeding with significant plans for expansion and growth.
Since its incorporation in 1993, NWCFL has faced and surmounted many challenges—including restrictions in the fresh-fish regulatory framework, and the reluctance of mainstream banks to support its growth. Despite limited resources, the co-operative has achieved considerable success in its 13-year history. Specifically, NWCFL influenced the regional fish processing policy to allow limited processing activities, which helped increase annual income for fisher-members. It upgraded its facilities to keep pace with evolving regulations, and in 2005 it developed a business plan for further product expansion, and obtained loans to finance the first phase of the plan. Though significant barriers remain, NWCFL remains focused on developing the full potential of its fishery for the benefit of local people and communities.
The co-operative plans to move into the more lucrative processing and finished products markets that in the future may be exported directly to customers around the world. For now, it will increase the value of its members' catch by shipping out processed fish products, which cost less to transport and bring a higher rate of return, while creating local jobs. NWCFL plans to triple its product base in 2006, and more than quadruple it by 2008. The three-year plan will require $840,000 for new processing equipment and facility expansion, and is expected to create up to 30 seasonal jobs (June to October). In the long term, it is hoped that the increased product base will facilitate commercial ice fishing through the winter, extending the total season up to 8 months.
As of Spring 2006, the co-operative still faced the challenge of finding capital to finance its growth. With an average member income that is still quite low ($6,204 over the 3-month season), there is limited capacity for member investment, and heavy reliance on outside sources of financing. However, this co-operative is deeply committed to the long-term development of its regional fishery, and to maximizing benefits for its fisher-members. So it is now pursuing a wide range of potential financiers who might share its vision and support its expansion plans.
This detailed case study traces the history and development of the co-operative—including the many challenges it has faced, the lessons learned, and the best practices that have allowed it to succeed and move forward with a bold plan for the future.
Table of Contents
- Update: August 2007
- 1 Introduction
- 2 Background
- 3 Start-up to Present Day
- 4 Initial Challenges & Growth
- 5 Challenges, Success, Lessons Learned & Best Practices
- 6 Conclusions
- 7 Bibliography
Update: August 2007
A number of significant events have transpired since the case study was completed in March 2006. Here are some of the most notable:
- In the summer of 2007, NWCFL secured an operating loan of $140,000 from the Assiniboine Credit Union to finance the necessary upgrades and expansion of the refrigeration and storage system to meet current environmental requirements and support the expanded capacity requirements of the processing operation.
- The Co-operative has also secured an operating line of credit from Assiniboine Credit Union to support the cash flow management requirements of this highly seasonal business.
- On July 4, 2007 Manitoba Agriculture, Food and Rural Initiatives Minister Rosanne Wowchuk announced the sale of the Leaf Rapids Fish Processing facility to Northwest Co-operative Fisheries Ltd.. The facility had been owned by the province of Manitoba through the Co-operative Loans and Loans Guarantee Board. It had been rented to the Northwest Co-operative Fisheries Ltd. since 1994.
- Over $500,000 has been invested in capital improvements and equipment at the Leaf Rapids facility during the summer of 2007. These improvements were made possible through financial assistance from : Manitoba Hydro, Community Futures Development Corporation (CFDC), Indian Affairs (INAC), Northern Producers Recovery Program Emergency Measures Organization (EMO), Nelson River Logging Ltd. (an Aboriginal owned company), and others.
- During 2007, NWCFL was engaged in a comprehensive quality management training program involving 9 new employees from the local area. The employees were fully trained in the HACCP fish processing quality practices that are at the core of the new fish processing initiative that NWCFL is pursuing. They will be employed in full scale processing operations when the fall fishing season opens in mid August 2007. With the new equipment and trained staff, the Co-operative is now in a position to offer an impressive range of fresh and frozen fish products to the local market and the Freshwater Fish Marketing Corporation.
- NWCFL reached a tentative agreement to supply fish on a weekly basis to the Manitoba Hydro construction camp at the Wuskwatim Transmission Project.
- The Co-operative commenced contract processing operations with the Freshwater Fish Marketing Corporation under Option B of the FFMC Regional Processing Policy. This is the first step towards full scale processing operations at the Leaf Rapids Plant.
1.1 Purpose of the Project
This case study on the Northwest Co-operative Fisheries Ltd (NWCFL) is one of seven independent case studies commissioned by the Co-operatives Secretariat at Agriculture and Agri-Food Canada.
The seven co-operatives included in this series of studies are geographically representative of Canada and focused in six priority areas: 1) adding value to agriculture; 2) improving access to health and homecare; 3) supporting economic development in rural, remote and northern communities; 4) developing aboriginal communities; 5) integrating immigrants into Canadian communities; and, 6) encouraging community solutions to environmental challenges. Located in Northwest Manitoba (see Map 1), NWCFL satisfies two of the six priority areas identified for the case studies by the Co-operatives Secretariat: supporting economic development in rural, remote and northern communities, as well as developing Aboriginal communities.
The purpose for undertaking this series of case studies is to examine and understand particular co-operative business practices and responses to specific challenges and opportunities. The mandate and activities of co-operatives across Canada clearly places them in the forefront of an approach that emphasizes both social and economic objectives. An examination of co-operative business practices and their challenges is illustrative to persons interested in using the co-operative model to promote their interests. Collectively and individually, these case studies will provide direction upon which to build and innovate within the co-operative movement. This series of case studies has been developed in cooperation with the Co operative Development Initiative Steering Committee, established by the Co operatives Secretariat and composed of individuals with backgrounds in co operative development, business and community economic development, and a variety of sector expertise.
The co-operatives for this series of case studies were selected through discussions with the Co-operatives Secretariat and their Steering Committee. Representative co operatives with valuable experiences were chosen from different regions of the country that might be of interest to the co-operative community across the country.
To complete this case study, documents were reviewed on NWCFL as well as the surrounding context, provided both by NWCFL and obtained externally. Interviews were also carried out with key informants in order to review the establishment and evolution of the co-operative and to solicit their ideas on the future challenges and opportunities. Interviews were conducted with the current General Manager of NWCFL, as well as the President and Vice-President/Secretary Treasurer of the Co-op. A draft of the report was provided to the co-operative to review and comment on before the case study was completed.
2.1 Descriptive Profile of NWCFL
Officially incorporated in 1993 under Manitoba's Cooperatives Act, NWCFL operates primarily as a fish packing plant for 143 registered fisher-members from seven First Nation communities; six located in Northwest Manitoba and one (Kinoosao) on the Saskatchewan side of the Manitoba-Saskatchewan border. The location of these communities in is shown in Map 1. The names of the communities and First Nations are listed in Table 1 below.
|Brochet||Barren Lands First Nation||Manitoba|
|Granville Lake||Pickerel Narrows First Nation||Manitoba|
|Kinoosao||Thomas Clarke Reserve 204#
(Peter Ballantyne Cree Nation)
|Lynn Lake||Marcel Colomb First Nation||Manitoba|
|Nelson House||Nisichawayasihk First Nation||Manitoba|
|Pukatawagan||Mathias Colomb Cree Nation||Manitoba|
|South Indian Lake||O-Pipon-Na-Piwin Cree Nation||Manitoba|
NWCFL members fish in 48 freshwater lakes across the region, collectively harvesting more than 300,000 of the one million kilograms caught in the region annually. The open water season begins in June and runs until mid October, though at present fishing only occurs in June, September and October. The regional harvest is packed in four fresh fish packing stations, three of which (located at Nelson House, South Indian Lake and Kinoosao) are managed by local Fishing Associations, while fourth plant at Leaf Rapids is managed by NWCFL. The Leaf Rapids plant packs nearly 30% of the total regional harvest each year, receiving fish from all seven communities including those with their own packing stations as they sometimes close earlier in the season than the Leaf Rapids plant.Footnote 1
In accordance with the federal Freshwater Fish Marketing Act, the harvest is sold to the Freshwater Fish Marketing Corporation (FFMC)Footnote 2 to process and market, though in recent years the Co-op has begun to realize plans to process roe and other finished products in-house. In addition, NWCFL operates a store in Leaf Rapids that provides fishing gear and other supplies at bulk rates, as well as a bunk house offering overnight lodging and food for NWCFL plant workers, pilots and drivers delivering fish to the plant.Footnote 3
The aim of NWCFL is to increase returns to fisher-members and develop the regional fishing industry. Since the price of fish is determined by the sale prices achieved by the FFMC for all freshwater fishers under the Freshwater Fish Marketing Act,Footnote 4 NWCFL has focussed on other ways to maximize benefits for fisher-members such as packing fish within the region, which decreases transportation costs thereby increasing the quantity of the commercially viable catch. As noted previously, NWCFL is also expanding into processing and other value-added products in order to increase fisher-member dividends and, with the greater diversity of production and employment spin-offs, helps to stabilize the regional fishing industry.
2.2 Regional Context
NWCFL member communities are dispersed across Northwest Manitoba, including one community on the Saskatchewan border (Kinasoo), over a region of approximately 56,000 km2.
The region sits right on the border between two of Canada's largest terrestrial eco-zones: the Boreal Shield and the (Western) Taiga Shield. Underlying both eco-zones is the Canadian Shield, the bedrock heart of the North American continent. The climates of the two eco-zones are also similar, characterized by long cold winters and short summers. The primary difference between the two eco-zones is their vegetation. The Boreal Shield, which is 80% forested, consists of closed stands of conifers, mostly white and black spruce, balsam fir, and tamarack. The Taiga Shield transitions from this coniferous boreal forest to the arctic tundra, including open forests and wetlands, as well as the shrub lands and meadows typical of the arctic. Both regions are spotted with countless thousands of lakes, both large and small, containing a significant proportion of the country's freshwater.Footnote 5
Archaeological data collected by the Manitoba Museum has found evidence of the First Nation ancestors inhabiting the region more than 7,000 years ago. Traditional Cree lifestyle included net fishing in the summer and winter in the many small lakes scattered across the region.Footnote 6
Given the low population density, many of the lakes and rivers are rarely if ever fished. Commercial fishing quotas are established by Manitoba's Conservation Department, based on the regeneration potential of the fish population in the individual lakes as determined by the Department. As the regional fishing industry has developed, NWCFL fisher-members have advocated for opening new lakes to commercial fishing while ensuring the long-term sustainability of the fish populations.Footnote 7
As a result of the flooding related to the Manitoba Hydro developments in the 1970s, fish populations in lakes connected to the river basins declined, though levels have since rebounded. The smaller "inland lakes" were not directly affected. The types of fish caught in the region include walleye/pickerel/ dore, sauger/Canadian pike, whitefish, northern pike, mullet (white), lake trout, carp and lake perch (yellow), illustrated in order from top to bottom in the "Fish Market" graphic.Footnote 8
One of the most important characteristics of the member-communities is their geographic isolation, from each other as well as from Leaf Rapids, the site of the Co-operative's largest packing and processing plant. Leaf Rapids itself is 1000 km North of Winnipeg on the Provincial Road # 391 to Thompson and the Provincial Trunk Highway (PTH) # 6 on to Winnipeg. Member-communities range from approximately 50 to 150 km from Leaf Rapids.
As displayed in Table 2, only four of the communities, Nelson House, Lynn Lake, Kinasoo and South Indian Lake, have access to highway # 391, connecting to Leaf Rapids year round. The accessibility of the other communities varies significantly with the season: Putatawagan has access to Leaf Rapids by winter road, intermittent CN rail service,Footnote 9 and water (barge/ small vessel) in the summer; Brochet has access by winter road, water in the summer or air; while Granville Lake has access by water in the summer or by air.
|Community||# 391||Winter Road||Rail||Water||Air|
|South Indian L.||Yes||Yes|
Equally important is the accessibility of harvest areas (lakes), which may be located several dozen kilometres outside of the community and are often only accessible by air.Footnote 10
In 2001 13.6% (or 150,045 people) of Manitoba's population identified as Aboriginal, the highest proportion of all the provinces in the country, followed closely by Saskatchewan at 13.5% (or 130,185).Footnote 11 In both provinces these figures represent an increase from the previous census of 1996, by 16.6% for Manitoba and 17.0% for Saskatchewan. In contrast, the overall population of Manitoba grew by only 0.3% in the same period, while Saskatchewan's fell by 1.4%. As well, roughly 1/3 of the Manitobans counted as Aboriginal identified as Métis.Footnote 12
All of the member-communities are First Nations, and fisher-members are mostly Cree or Métis, though NWCFL membership requirements are related to community affiliation rather than Aboriginal status,Footnote 13 thus some of the fisher-members are non-Aboriginal.
Standards of Living
As in the rest of the country, the standards of living of Aboriginal people in Manitoba are lower than Canadian averages. For example:Footnote 14
- Life expectancy is eight years shorter for Aboriginal men and seven years shorter for Aboriginal women.
- High school completion rates, though catching up with the rest of the population, are still far lower, particularly for those living on reserves.
- Manitoba has the lowest rate of school attendance for Aboriginal youth among all the provinces as well as the largest gap between Aboriginals and non-Aboriginals in any province except for Québec.
- Manitoba also has the highest provincial rate of Aboriginal youth not attending school or employed, at 38%.
- A little over half the Aboriginal population participates in the labour market, with an unemployment rate of 25%, 3.25 times higher than for the non-Aboriginal population.
- The median annual income for Métis is 67% of the provincial average, and for on-reserve First Nations it is 37%.
- Government social transfers are the major source of income for 38% of First Nations and 20% of Métis, compared with 5% of non-Aboriginals in Manitoba, though it is noted that social assistance rates are highest on Southern Manitoban reserves and for First Nation women in Winnipeg.
Statistical Profile of Member-Communities
Table 3 gives a statistical profile of the NWCFL member-communities, reflecting many of the trends identified above.
|Community||Manitoba (total)||Brochet* Footnote 15||Granville LakeFootnote *||N. Sask.
|Lynn Lake||Nelson HouseFootnote *||PukatawaganFootnote *||South Indian LakeFootnote *|
|Land Area (km2)||551,937.8||38.33||2.33||266,937.2||910.23||20.52||16.74||10.65|
|Population** Footnote 16||1,119,583||287/914 Footnote **||69||1,546||699/316 Footnote **||1,710||1,464||808|
|Pop. change 1996-2001||+0.5%||+18.6%||-10.4%||-11.8%||-32.7%||-2.8%||+21.9%||-8.9%|
|Median Total Income||$20,469||$8,960||N/A||$15,435||$18,400||$10,144||$10,464||$6,672|
The seven member-communities are small, ranging from 1,700 to less than 100 people. In all the communities except Brochet and Pukatawagan the population dropped from 1996-2001. The median total income is lower than Manitoba's, ranging from 89.9% to 36.5% of the provincial average, though it is notably lower where figures pertained only to reserves. Similarly, employment rates range from 27.8% (South Indian Lake) to 51.0% (Lynn Lake), and unemployment rates range from 15.0% to 34.1%.
Chart 1 illustrates employment in member-communities by type of occupation. The most common type of occupation in NWCFL member-communities is "sales and service", which includes the tourist and hospitality industry. "Trades, transport and equipment operators and related" occupations come in a close second, followed by "social science, education, government service and religion". "Business, finance and administration", "management" and "health" are the next most common types of occupations. "Primary industry" related occupations are lowest, though in smaller communities such as Brochet and Granville Lake, these industries provide 50% to 100% of the employment.Footnote 17
2.3 The Co-operative Model in Rural and Remote Aboriginal Communities
The co-operative model is well suited to rural and remote Aboriginal communities. Aboriginal people have more frequently utilized the co-operative model than the general population, where co-ops are 9% less common on a per capita basis. In contrast, the average Canadian is 38% more likely to own a business than an Aboriginal person.Footnote 18 Involvement in the fishing industry in particular is common among Aboriginal co-ops, ranking second in terms of volume of all Aboriginal co-op sectors with a value of $5.5 million across the country.Footnote 19 Indeed, the first Aboriginal co-op in Canada was a Saskatchewan-based commercial fishing co-operative founded in 1945. As pointed out by a number academics, the tendency towards co-operative models in Aboriginal communities is related to the suitability of the model to rural and remote communities, as well as to the specific goals and issues of present day Aboriginal communities.
Gibson (2005) was of the opinion that co-operatives may provide needed services in rural and remote communities where regular businesses fail. It is well known that these areas, which include a vast majority of reserves, face decreasing access to goods and services as their populations decline and economic activity is concentrated in urban centres. Since the co-operative model is intended to meet the needs of its members, it is more likely to continue to meet local service needs in rural and remote communities despite declining populations.Footnote 20
Ketilson et al (1992) further argue that co-operatives are essentially a form of community economic development, as "the process of developing and sustaining a co-operative organization involves the processes of developing and promoting community spirit, identity and social organization."Footnote 21 Co-operatives are founded on community-based, democratic principals that embed member participation, as outlined in Box 1. They build local capacity by creating jobs and providing services within the community, which can also help to circulate money locally, minimizing economic leakage. The focus on the good of the whole community often means that co-operatives encourage the involvement of marginalized segments of the population such as youth.Footnote 22 From this perspective, the co-operative model is seen as complimentary to Aboriginal culture and values. Gibson, Kobluk, and Guold (2005), assert that co-operatives are "synergistic to Aboriginal values of controlling social and economic destinies".Footnote 23
Box 1: Seven Principals of Co-operatives
- Voluntary and open membership
- Democratic member control
- Member economic participation
- Autonomous and independence
- Education, training and information
- Co-operation among co-operatives
- Concern for community
Canadian Co-operative Association (2003)
Hammond-Ketilson and MacPherson support the increased use of co-operatives in Aboriginal communities, citing a number of congruent aims. First, co-operatives offer a way to adapt the business sector to local needs and capacities which might be particularly important for Aboriginal communities looking to have a greater control over their future development. Second, Aboriginal leaders are increasingly given wider responsibilities than their average Canadian counterparts, while the depth and range of issues faced in many Aboriginal communities is overwhelming. It is argued that an approach such as the co-operative model, with its capacity to simultaneously meet multiple needs and its intrinsic accountability, may help facilitate resolution to seemingly chronic issues. Lastly, co-operatives have the potential to ensure that Aboriginal communities can maintain ownership of resources while facilitating economic and social development.
In conclusion the higher frequency of co-operatives in remote and rural Aboriginal communities, such as the NWCFL member-communities, is seen as a proactive response to challenging circumstances, and one that should be further encouraged for the development of Aboriginal peoples.
3 Start-up to Present Day
3.1 Founding of NWCFL
Roots of the Co-operative
Though not officially incorporated as a co-operative until 1993, NWCFL has its roots a quarter of a century earlier, when the province of Manitoba built a fish packing plant for the fishermen of Northern Manitoba.Footnote 24 Several related events were significant in this timing.
First of all, the late 1960s and early 1970s was an important period in the political development of Aboriginal organizations. In 1969, the federal government released the White Paper on Indian Policy calling for an end to the collective rights of Aboriginal people.Footnote 25 Highly unpopular, the paper motivated Aboriginals to organize in protest. The Manitoba Indian Brotherhood was one of the first groups to release a policy response to the White Paper, which advocated for a transition from paternalism to community self-sufficiency in the relationship between government and Aboriginal people.Footnote 26
Second, Manitoba Hydro had recently started working on several large hydroelectric projects that involved extensive flooding of surrounding areas and waterways. The flooding had multiple adverse affects on the lands, economies, lifestyles and health of First Nations in particular regions of Northern Manitoba, including South Indian Lake, which was flooded in 1974. In addition to engulfing previously occupied lands to build reservoirs, requiring communities such as South Indian Lake to re-locate, the flooding and ongoing water level fluctuations stirred up sediments in the Lake basin, including sometimes poisonous substances such as mercury. In some cases the mercury levels were so high that fish from those lakes were deemed hazardous for human consumption.Footnote 27
Given these circumstances, the province approached fishermen around South Indian Lake to mitigate tensions by building a much-needed fish packing plant in the region. The plant was built in Leaf Rapids, which is not a First Nation community, but is strategically located on the shores of the Churchill River, central to many First Nation communities, and connected to Thompson and Southern Manitoba via all-season provincial highways. The town itself was only just being built in the early 1970s to accommodate the workers of the newly developed Ruttan Lake Copper and Zinc Mine located 23 km away.
The plant was well equipped to receive and pack fish, including a conveyer belt into the plant from the lakeside as well as coolers and ice machines to chill and store the fish. From the beginning, six of the seven NWCFL member-communities sent fish to the Leaf Rapids plant, including Brochet, Granville Lake, Kinoosao, Lynn Lake, Pukatawagan, and South Indian Lake. The original plan was for the South Indian Lake Co-operative to manage the plant, however after a short time the province took control. As explained by first hand observers, the province handed over management of the plant to the South Indian Lake Co-op without any strategy to develop the Co-op's capacity to manage such a large facility, and it soon became obvious their pre-existing management capacity was inadequate.
About 1973, management of the plant was handed over to the FFMC, who ran the plant as a receiving depot for the next twenty years. The six original member-communities continued to send fish to Leaf Rapids and soon Nelson House also used the packing station, sowing the seeds for organization amongst the seven First Nation communities that would eventually form NWCFL.
In 1993, fishers in the seven First Nation communities organized into a Co-operative in order to take back management of the packing plant. Their aim was to increase returns by pooling resources and ultimately moving into processing in order to increase the value-added production in the region. The timing was important because soon after notifying the province of their plans to incorporate as NWCFL, FFMC announced plans to purchase the Leaf Rapids plant which would have prohibited the newly formed Co-operative from taking over management. As a result, five of the most active fishers in the seven communities formed a temporary Board to run the Co-op for long enough to convince the province not to sell the plant to FFMC, after which they disbanded in order to reform a Board with equal representation from all seven communities.Footnote 28
3.2 Profile of the Present-Day Co-operative
Chart 2 shows the organizational structure of NWCFL. As illustrated, the Co-operative is governed by a Board of Directors including five Directors, one President and one Vice-President/ Secretary Treasurer, each representing one of the seven member-communities. Board members are chosen from the fisher-members of the local fishing associations in each of the seven communities. Volunteering their time, Board members generally hold their positions for as long as they are able to commit, an approach that has ensured continuity over the years, so that, for example, certain members have sat on the Board since the Co-operative's founding.Footnote 29
The Board meets once per year to provide direction to the General Manager, ensure the activities of the Co-op are within its aims, solicit new sources of credit and plan for the next year. The President and Vice-President/ Secretary Treasurer are in contact with the General Manager more frequently to approve major transactions, hiring of staff, as well as soliciting credit on an ongoing basis from the communities and urban centres (including Winnipeg).Footnote 30
The General Manager reports directly to the Board of Directors, oversees the operations of the Co-operative and manages the staff. As the only person employed throughout the year, the General Manager is responsible for preparing the Co-operative for the next season by, for example, reporting to the Board, preparing proposals for potential lenders (as directed by the Board), overseeing any construction or equipment upgrading, and hiring staff for the next season.
The NWCFL staff at the Leaf Rapids plant, whose numbers fluctuate from six to twelve throughout the season and from year to year, include roe processors, packers and graders. There are also two to three staff at the store, which supplies commercial gas and oil for the fishing boats, gear such as nets, gloves, knives, and boots, as well as basic groceries, all at bulk rates. The aim of the store is to provide the fisher-members with supplies at reduced costs rather than simply turn a profit. Members are able to purchase supplies on credit that is deducted from their harvest returns.
Several people are hired to provide administrative support for NWCFL during the fishing season, including an accountant who is contracted on a casual basis. NWCFL also provides administrative support for the South Indian Lake Fishing Association for which it charges a small fee.
NWCFL also operates a bunkhouse and kitchen that provides lodging and food for the non-member drivers and pilots delivering fish to the plant. A small fee is charged for these services. The bunkhouse can accommodate up to ten guests including staff, who can be plant workers as well as the bunkhouse and kitchen staff.
Returns for Fisher-Members
Fisher payment arrangements for FFMC are similar to those in other producer marketing associations such as the Canadian Wheat Board. Fishers are paid a set price per pound (individually set for each type of fish) upon delivering their catch to the packing stations or Leaf Rapids plant, and at the end of the season, FFMC pays out a second amount that is equal to the difference between the initial price paid and the market price achieved by the Corporation that year, in other words the profits achieved by FFMC, minus a processing and marketing fee. This second amount is proportional to total the catch brought in by each fisher, much like a dividend. In this way, FFMC assumes some of the risk of a poor year in the fish market, though in years where low market prices erase the FFMC's profit NWCFL has ended up absorbing the deficits of fisher-members that were depending on the second payment to make ends meet.
NWCFL fisher-members deliver their catch to the Co-operative, which packs the fish for sale to FFMC, allowing the NWFCL to receive a small mark-up (the agency packing fee) from the prices earned by fishers delivering raw harvest to FFMC packing stations (as the Leaf Rapids plant was prior to NWCFL's incorporation in 1993). NWFCL intends to provide another dividend payment to fisher-members from the Co-operative's overall profits in the season; however, with the upgrades and other investments as well as several particularly difficult years, the Co-operative has been unable to provide this dividend on a regular basis.
The average annual income of individual fisher-members from 1999-2004 was $6,204 over the three month season (June, September and October). The total income of fisher-members over the five year period $3.8 million. One of the primary goals of NWCFL is to increase this final dividend by expanding their product base into more areas.Footnote 31
NWCFL's current revenue streams include sales of fish and roe, store sales and administration fees (from South Indian Lake Fishing Association). The Co-operative's expenses include salaries and contract fees, equipment repair and maintenance costs, capital expenditures, insurance, rent and utilities. From 1999 to 2004, NWCFL's gross average annual income was approximately $950,000, though when expenses were subtracted Co-operative was behind about $45,000 to $50,000 per year. These losses were related specific management and market difficulties over the past decade. In recent years, NWCFL has managed to turn its operations around so that projections for 2006 foresee either a small loss ($2,000) or even a modest profit.Footnote 32
This sustained loss is one of the major motivations for the planned development of NWCFL, particularly its move into the roe-processing sector. It is expected that the planned product-base expansions and marketing will better stabilize NWCFL by spreading risk, improving economies of scale and reducing wastage, thereby ensuring steady positive returns over the long term.Footnote 33
4 Initial Challenges & Growth
4.1 Initial Challenges
The initial challenges for NWCFL were mostly related to the increased risk of loss assumed by the Co-operative. Losses largely stemmed from environmental factors that affected the quantities of fish received by the plant each year. Fluctuating water levels and unpredictable weather made both the size of catch as well as its transportation to Leaf Rapids difficult to predetermine. In many cases, the problem was a matter of economies of scale - fisher-members had to catch a critical number of fish in order to break even on transportation costs. In the most isolated communities such as Brochet, which depends on chartered flights to transport their fish to Leaf Rapids, the problem was compounded by the aircraft's cargo limits, so that fisher-members had to find a delicate balance between a harvest that was too large or too small in order to break even.Footnote 34
Though these factors existed even when the Leaf Rapids plant was an agency of FFMC, the Co-operative has been less able to bear these risks with its small operations and narrow product base. Aware of the problem from the beginning, the Co-operative immediately set to expand the product base into roe processing. A proposal was developed in 1999-2000 that would have allowed the Co-operative to market processed roe under the "Freshwater" brand for a fee. However, the negotiations for this arrangement with FFMC fell through, as did efforts to open a roe processing plant in The Pas.
Meanwhile the ongoing operations and upgrading required to run the Co-operative proved more difficult that had been anticipated. Already burdened by all the planning activities, NWCFL was unable to develop an approved Quality Management Program to keep up with the Canadian Food Inspection Agency's regulation changes. As a result the Co-operative temporarily ceasing roe processing activities.Footnote 35
In 2005 NWCFL implemented $34,600 in business improvement measures for the physical plant and operations, including designing a QMP and completing registration responsibilities. The physical plant improvements were conducted to meet Fish Inspection Regulation Requirements for roe processing. At the same time a new General Manager possessing inspection and management experience with FFMC as well as the Department of Fisheries and Oceans (DFO) was hired. The new General Manager has specific experience training plant managers and employees in quality assurance programs for fish and fish product processing plants.Footnote 36
The same year owners of the Leaf Rapids plant building, Leaf Rapids Town Properties, lost interest in maintaining the property, offering to sell NWCFL the building for a $1. NWCFL was able to successfully convince provincial officials to recommend the Co-operative take ownership of the plant. With the application for the take-over approved, NWCFL is on-track to own the plant by the spring of 2006.Footnote 37
Around this time the FFMC developed a new Regional Fish Processing Policy that specifically reflected the marketing arrangements sought by NWCFL in its original business proposal developed in 1999-2000.Footnote 38 This recognition of the needs of NWCFL and other regional processors has been interpreted as a success by the Co-operative, though at present the plan is to pursue a simpler arrangement where FFMC pays NWCFL a fee for custom processing services.Footnote 39
Proposal for Expansion
In December 2005, NWCFL completed a business proposal in order to secure a loan of $30,000 from the Northwest Manitoba Community Futures Development Corporation (Northwest CFDC). The loan is intended to recover part of the costs associated with the physical and operational upgrades, and is in addition to the $38,000 already owed to Northwest CFDC.Footnote 40 The business proposal also includes a five-year product base expansion and marketing plan, from 2005-2009, set out in Table 4 below.
|(Activity/Service/Product?) *||Beginning Year *|
|Fish Packing||Current (2005)|
|Roe Processing||Current (2005)|
|Pickerel Cheek Processing||2006|
|Further Roe Processing||2006|
|Custom Roe Processing||2006|
|Fresh Packing For Direct Export||2006|
|Whole Product Processing||2007|
|Machine & Custom Filleting||2008|
|Smoked Product Processing||2008|
Adapted from "NWCFL. Product Base Expansion and Marketing Plan: 2005-2009"
NWCFL plans to triple its product base in the upcoming season (2006), and more than quadruple it by 2008. In general, the expansion will move the Co-operative into the more lucrative processing and finished products markets that in the future may be exported directly to customers around the world.
The business plan projects the creation of up to 30 seasonal jobs (June to October) as a result of the expansion, with hourly wages ranging from $9 to $12. Given the demographics of the region, 95% of the positions are expected to go to Aboriginal people.Footnote 41
In the long term, it is hoped that the increased product base will facilitate commercial ice fishing through the winter, extending the total season up to 8 months. This expansion is particularly supported by communities such as Brochet, where access to winter roads would significantly increase the quantity of commercially viable catch as transportation fees by truck are substantially lower than the barge/ small vessel or charter aircraft fees.
By 2009, fish yields in the region are expected to increase 5-15% from their present levels of about 1 million kg as the value-added processing activities increase the quantity of the commercially viable catch, new lakes are opened to harvesting and the season is extended. Though fish populations are expected to remain constant, the present harvesting levels in general under-utilize the resource both within the lakes that are currently being fished and in the potentially harvestable lakes in Northwest Manitoba. Already in 2007 fishing quotas have increased by 50,000 kg as new lakes were opened for harvesting.Footnote 42
In order to accommodate the product expansion, approximately $840,000 worth of equipment purchases and construction to upgrade plant facilities is planned for 2006-2009. In the first year, the plant's physical capabilities will be upgraded to comply with refrigerant and freezing requirements, the disposal system will be improved, and the building expanded to accommodate increased roe and pickerel cheek processing. Further building expansions are set for 2007, and in 2008 new equipment will be purchased for trout smoking activities.Footnote 43
The Board of Directors has also arranged a strategic planning workshop to be held in 2006. The main aims of the workshop are to:
- Formalize timelines and implementation schedules for the Product Base Expansion Plans;
- Design a logo for branding purposes;
- Articulate website requirements and expectations; and,
- Identify other fish products or industries for future growth and expansion (e.g., fish hatcheries, the production of fish oils for use in health food capsules).
The workshop also intends to identify the capacity needs of the Northwest Manitoba fishing industry in order to help define a training or professional development program for the region, as well as developing a fish plant tour package for adventure tourists visiting the region, to be included in Northwest CFDC's regional tourism strategy.Footnote 44
Long-term Plans for Growth
NWCFL has not yet developed a formal plan for its long-term growth, though it is known that the Co-operative would like to substantially increase its production and operations in the future. Key stakeholders mentioned plans such as:
- Expand the store and bunkhouse/kitchen in Leaf Rapids to sell regular gas for trucks, and take-out food for fisher-members. There is also the possibility of opening a separate entity that could sell food on cost-recovery basis for the bunkhouse.
- Sell finished products directly to local markets, with a long term goal of finding niche markets for their own products and brands.
- Formalize the organizational structure of the Co-operative, including defining key roles, holding an annual meeting for fisher-members and the Board of Directors to discuss new and ongoing initiatives, and introducing a formal electoral process and terms of office for the Board.
The low average income of the fisher-members means that the Co-operative must look to external creditors to finance the planned expansions as well as the long-term plans for growth. As mentioned earlier, NWCFL has obtained a loan from Northwest CFDC to cover some of the expansions already undertaken. A recent attempt to obtain another loan from Manitoba's Community Economic Development Fund (CEDF), which already provides loans for individual fishers to pay for equipment, was turned down. Hoping to wipe out deficit from previous years, the Co-operative is actively seeking other creditors or investors for the immediate and long term. Other potential investors include Manitoba Hydro, which has a mandate to support economic development in the region, particularly where it could be related to the impact of the flooding. NWCFL also plans to approach mainstream banks, though it is recognized that the Co-operative will need to further establish itself before banks will be willing to lend money.Footnote 45
5 Challenges, Success, Lessons Learned & Best Practices
With the initial upgrading completed, product expansion into roe processing begun, and business proposal completed, NWCFL has overcome several daunting hurdles that only recently threatened its closure. Nevertheless, significant challenges remain, which are outlined in the following list:
- Weather and other environmental factors affecting the size of quotas and catches delivered from year to year
- Isolation of member-communities, which:
- Increases transportation costs for fisher-members in delivering their harvest to be packed or processed
- Increases the cost and complexity of communication and organization among fisher-members, the Board of Directors, and staff
- Static or declining unprocessed fish prices mean the Co-operative must expand production to achieve economies of scale and diversity in order to increase fisher-member returns and stabilize the regional fishing industry in the long term
- However, restrictions in the Fresh Water Fish Marketing Act have so far limited the Co-operative's ability to process and market finished products
- Difficulties in finding funding for expansion of production when:
- Low average income of fisher-members means Co-operative must find external sources of funding (lack of local sources of capital); and,
- Reluctance of mainstream creditors to lend money to an Aboriginal fishing co-operative in Northwest Manitoba
- Limited management and organizational capacity or experience within the Co-operative due to inability to finance increased staff or training courses
Despite setbacks and ongoing challenges, NWCFL has achieved significant success in continuing and expanding operations since the South Indian Lake Fishing Association first formed a Co-operative to manage the Leaf Rapids plant in 1970. Key successes since achieved include:
- Increasing employment in the region (fisher-members and NWCFL staff)
- Increasing the commercial viability of fishing in Northwest Manitoba by packing fish within the region
- Influencing the regional fish processing policy to adopt changes accommodating the needs of the Co-operative
- Increasing the value-added by moving into roe processing, resulting in increased employment and fisher-member dividends
- Providing a resource-based lifestyle to keep people, particularly youth, in the communities
- Contributing to the self-sufficiency and development of Aboriginal, rural and remote communities in Northwest Manitoba
- Ensuring the sustainability of the fishing industry for future generations by working with the Province of Manitoba to develop quotas that allow for fish regeneration
In reviewing these successes, it is important to remember the difficult climate in which the Co-operative operates, characterized by isolation, poor infrastructure and high unemployment rates. As a member-driven association of commercial fishers, NWCFL has overcome significant challenges to contribute to the development of the regional fishing industry. Plans for the growth of the Co-operative are likely to continue to improve benefits to fisher-members and others in Northwest Manitoba.
5.3 Lessons Learned
"Lessons Learned" are the external factors that were most important to contributing to the success or failure of the Co-operative. The Lessons Learned from NWCFL were:
- Environmental Factors: As a producer co-operative, environmental factors created considerable instability in the sector that was difficult for NWCFL to absorb on its own with such a narrow product base.
- Production Expansion: Diversifying production and increasing the quantity of the harvest is the only long term solution to the instability in the fishing sector by helping the Co-operative to achieve economies of scale and the added-value of processing and marketing.
- Management Capacity and Experience in Sector: Management capacity and experience in the sector were essential in determining whether the Co-operative stayed afloat despite significant challenges created by external factors.
- Commitment, Hard Work and Patience of Members: The commitment, hard work and patience of fisher-members and the Board of Directors through seemingly insurmountable challenges paid off so that the Co-operative was able to survive and even grow when circumstances finally worked in its favour.
- Sources of Credit: As a newly expanding producer co-op located in a remote region of Canada with primarily Aboriginal members, NWCFL was able to obtain credit from government programs geared towards community development rather than mainstream banks.
5.4 Best Practices
"Best Practices" are the internal practices or policies that the Co-operative found most helpful or successful over the years. The Best Practices of NWCFL were:
- Partnership with Regulators: Working with FFMC since 1993, the Co-operative has influenced changes in the regional fish processing policy to accommodate its processing and marketing needs.
- Abiding by Rules and Regulations: Thoroughly understanding and abiding by the rules and regulations of the industry, including keeping up with any changes, helped the Co-operative to move into new areas of production as required to ensure their long-term stability.
- Planning for Growth: Developing a well-researched and articulated plan for growth helped to convince creditors, the FFMC and others (such as the province and previous owners of the Leaf Rapids plant) to support the activities of the Co-operative even when the initial response was one of reluctance.
- Management Capacity: The experience and expertise of the General Manager proved instrumental to ensuring the Co-operative kept up with regulatory changes, adopted an achievable plan for growth, and has continued work towards erasing outstanding debts.
- Communication and Accountability: Open and transparent communication as well as clear lines of accountability between the management and Board has been particularly important given the physical separation of the member-communities, the limited time of Board members (who are volunteers) and the importance of the decisions being made at these early stages of the Co-operative's development.
NWCFL is a commercial fishing co-operative of seven First Nation member-communities. Located in Northwest Manitoba, NWCFL's 143 registered members fish in over 48 lakes across the region, bringing in an average harvest of 300,000 kilograms per year. The roots of the Co-operative date back to 1970, when major hydro development projects caused massive flooding in the region that influenced the province to build a fish packing plant in Leaf Rapids to support regional fishers. The plant was run as an agency of FFMC from the mid 1970s to 1993, when NWCFL was incorporated and took over management of the plant.
Over the past decade NWCFL has struggled to keep afloat in a difficult business environment. The key to stabilizing the regional fishing sector was to expand production, which has proved difficult with the Co-operative's limited resources, restrictions in the regulatory framework, and the reluctance of mainstream banks to support NWCFL. Nevertheless, the Co-operative has achieved considerable success in developing the regional fishing industry and increasing returns for fisher-members. Most significantly, NWCFL influenced the regional fish processing policy to allow limited processing activities, upgraded facilities to abide with evolving regulations, developed a business proposal for further product expansion and obtained loans to finance the first part of this expansion.
Though significant barriers remain, NWCFL's plans for expansion are now more secure than ever before. The Co-operative has worked hard to create the current opportunities for growth and is well established to ensure benefits are maximized for the fisher-members and the regional industry in the long term.
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