A government-led plan to buy the profitable U.S. marketing division of Fishery Products International is being abandoned, Newfoundland and Labrador's premier says.

Premier Danny Williams had been pushing the idea since he organized a summit on the province's troubled fishery last month.

Premier Danny Williams says there is not enough support in the fishing industry for a home-grown marketing co-operative. (CBC)
Premier Danny Williams says there is not enough support in the fishing industry for a home-grown marketing co-operative. (CBC)

On Tuesday, Williams said there was not enough support in the industry to pursue the plan.

"It appears that that is not going to happen, so we'll put that option aside and we'll move on forward," he told reporters.

Williams had hoped to solve longstanding marketing problems by forming a co-operative to represent the province's seafood industry.

The co-op would have bought Ocean Cuisine, the U.S.-based subsidiary of troubled FPI, which has been aiming for concessions with its unionized workforce.

Williams said while there's a consensus that marketing is a problem, there has been no agreement within the fishing industry on what to do about it.

Meanwhile, the current season is shaping to be disastrous for the Atlantic fishery.

The high Canadian dollar has pummelled margins in the export-dependent business, and processors like FPI say they are being squeezed by cheap and massive processing power in China.

While regional processor Daley Brothers has closed plants in Newfoundland and Nova Scotia, St. John's-based FPI has said it cannot continue doing business under current conditions.

It has appealed for conciliation after negotiations — in which FPI is demanding concessions from its unionized workforce — broke off last month.

FPI has also been in talks with Newfoundland businessmen Bill Barry and Ches Penney to sell its local assets.

Williams said Tuesday that Penney's proposal is the best he has seen so far, but added that he wants assurances FPI will protect its marketing division.

FPI is a former Crown corporation that was privatized in 1987. Although it is now a publicly traded company, it is still accountable to the Newfoundland and Labrador legislature.

Last month, Williams's government pushed through amendments to the FPI Act, which already sets limits on how much of the company any party may own. That move forced the company to recruit more residents of the province to the board.

FPI's key shareholder, John Risley, has described those changes as a waste of the company's time and money.

Meanwhile, FPI says it is dropping the Ocean Cuisine brand in the U.S. market. The company said its products there will instead be sold under the FPI USA label.