NovaEel’s attempts to collaborate with First Nations were encouraged by DFO in alignment with reconciliation efforts. However DFO excluded the company

DFO's Actions Jeopardize Canadian Eel Aquaculture While Favoring China

CANADA
Tuesday, January 21, 2025, 02:00 (GMT + 9)

An ambitious aquaculture initiative aimed at developing eel farming in Atlantic Canada has been derailed by Fisheries and Oceans Canada (DFO),  reports Aaron Beswick for the Chronicle Herald.

The NovaEel project, a collaboration between researchers, commercial elver licence holders, and First Nations, sought to grow elvers (juvenile American eels) to adulthood locally rather than exporting them to China. Despite over a decade of research, millions of dollars in investment, and potential tenfold profits for stakeholders, the project has been upended by DFO’s decision to reallocate elver quotas.

Eel-farming collaborators: Dr. Yu Ri Park, postdoc in the Centre for Water Resources Studies, Faculty of Engineering; Dr. Neil Ross, research director for NovaEel; Dr. James Fawcett, professor in Pharmacology and Surgery; Dr. Alejandro Cohen, scientific director, Proteomics & Mass Spectrometry Core Facility, Dalhousie Medical School. Photo: Dalhousie University

A Lost Opportunity

NovaEel, supported by grants from the Canadian and U.S. governments, developed a feminization drug in partnership with Dalhousie University to accelerate eel growth. This drug, based on 17b estradiol (commonly used in North American agriculture), would enable local aquaculture to compete with China, where lax regulations and illegal practices dominate.

The business model relied on commitments from commercial licence holders to provide 360 kilograms of elvers annually for seven years, amounting to a $14-million interest-free loan to NovaEel. The plan promised a significant boost to the $400-million North American eel market, aligning economic growth with sustainable practices and First Nations partnerships.

Quota Reallocation Crisis

In late 2024, DFO announced a redistribution of 75-90% of elver quotas, allocating 50% to First Nations, 26.73% to employees of existing licence holders, and smaller portions to adult eel fishermen relinquishing their licences. This redistribution left commercial licence holders with insufficient quotas to support NovaEel, effectively undermining the project’s viability.

NovaEel Inc. CEO Paul Smith examines female eels being raised at Dalhousie’s Aquatron through an NSERC-funded industry-academic partnership. Photo: Dalhousie University

Paul Smith, president of NovaEel, described the move as a devastating blow, stating, “The only winner here is China.” Currently, all elvers caught in Atlantic Canada are exported to Chinese aquaculture facilities, which dominate the global market using methods that would be illegal in North America.

Broken Promises and Unanswered Appeals

NovaEel’s attempts to collaborate with First Nations were encouraged by DFO in alignment with reconciliation efforts. However, while NovaEel secured support from Wolastoqey First Nation chiefs in 2019, DFO excluded the company from quota discussions, instead forming separate agreements with First Nations. Repeated letters to Fisheries Minister Diane Lebouthillier and her predecessors went unanswered.

Smith criticized DFO for neglecting years of investment and research, lamenting the missed opportunity to establish a sustainable, high-value industry in Canada.

Global Context and Challenges

The global eel market is highly competitive. Chinese aquaculture facilities have traditionally relied on juvenile Japanese and European eels, but export bans in those regions shifted demand to American elvers. NovaEel’s feminization technology, if approved by 2027, could have provided a viable North American alternative to Chinese dominance.

Dalhousie Masters of Engineering student Jessica Bennett was working on a N.S. Department of Fisheries & Aquaculture-funded study for NovaEel; she first began working with the company as a technician following her BSc. Photo: Dalhousie University

DFO’s decision comes amid broader challenges for Canadian fisheries, including concerns about sustainability, poaching, and compliance with environmental regulations. Without a domestic aquaculture industry, Canada remains dependent on foreign markets and vulnerable to economic and ecological risks.

DFO’s Defense

DFO maintains that its reallocation process included consultations with stakeholders and was guided by reconciliation goals. However, the department stated that NovaEel is not a licence holder and, therefore, not directly involved in the fishery’s management. In response to criticism, DFO clarified that it does not influence to whom licence holders sell their catch, leaving NovaEel to negotiate directly with new quota holders.

Uncertain Future

NovaEel’s plans to seek regulatory approval for its drug in Canada and the U.S. by April 2025 now face uncertainty. Without guaranteed access to elvers, the project risks collapse, jeopardizing a decade of work and millions in investments.

Mitchell Feigenbaum, a NovaEel investor, expressed his frustration: “We’re trying to do it legally, humanely, reasonably, in North America... Now the Canadian government is stealing [quotas] from us and trying to shut us down.”

As elver season approaches, the repercussions of DFO’s policy shift remain unclear, but one thing is certain: Canada’s hopes for a domestic eel aquaculture industry hang by a thread, while China solidifies its control over the global market.

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