CRAB CRUNCH
Increased quotas in Gulf of St. Lawrence might affect prices in Newfoundland
Halfway around the world there’s an uneasiness that may land this year’s Newfoundland snow crab industry in troubled waters.
Halfway around the world there’s an uneasiness that may land this year’s Newfoundland snow crab industry in troubled waters.
While the announced increase in price between the province’s harvesters and processors this year appears to have somewhat offset concerns about a drastic drop in Newfoundland snow crab quotas, key Japanese buyers remain uncertain about paying a high price through the season.
The minimum price per pound for snow crab this year for harvesters was set at $4.39 — the highest price ever in this province — by the Standing Fish Price Setting Panel, which chose the harvesters’ proposed price over the processors’ offer of $4.10.
John Sackton, a longtime North American seafood market analyst and president and publisher of Seafood news. com, said Japanese buyers find themselves in an uneasy situation. He said their normal buying process — in which the buyers like to work on a single established price — has been disrupted.
“In past years, normally, one or two companies would make contracts — and from the Newfoundland packers’ point of view they would try to get the highest price possible and from the Japanese traders’ point of view they would resist that, but they would agree on a price and then once a couple of the major players said ‘yes, we’ll agree on this price,’ then everybody else would fall in line,” Sackton said. “And then that price generally remained in effect, and didn’t change much.”
That normal buying process, however, has since fallen overboard — first in 2016 with the loss of the Quinlan Brothers plant in Bay de Verde due to fire, and again this year with the drastic reduction in Newfoundland snow crab quotas and a huge increase in Southern Gulf of St. Lawrence snow crab quotas.
Sackton noted that after the Quinlan plant was lost, Japanese buyers who had contracts with the plant had to scramble to find a new supply of snow crab and were willing to pay higher prices.
“It was like a game of musical chairs,” Sackton said. “The Japanese who had bought into their contracts with that plant all of a sudden had to go elsewhere, so that disrupted everybody. Instead of having an agreed price, it became, ‘let’s see what the highest price is that they will take,’ so that pushed the prices up.
The initial contracts last year (with processors) started somewhere around $5.65 (per pound) and by the end of the period of Japanese purchasing they were buying it at as much as $6.50.”
This year, Sackton said, the Japanese buyers are feeling a different pressure with the lower production and cutbacks in the supply of snow crab in Newfoundland, and the higher expected production in the gulf region.
Processors in the gulf region usually sell to U.S. buyers, while Newfoundland usually sells to both Japanese and U.S. buyers. However, with the increased gulf quotas, there’s more snow crab available for Japanese buyers to go after at possible lower prices, which, in turn, could drive Newfoundland snow crab prices down.
“That is really colouring the situation and makes it very difficult in Newfoundland. In Newfoundland you have a reduction and the harvesters are expecting that because they are landing less crab, it should be worth more at the dock and should be a corresponding increase in harvester prices,” Sackton said. “But in the gulf you have almost the opposite. The volume of landing crab is so large it is potentially going to affect the market and give buyers an alternative at lower prices.”
The Department of Fisheries and Oceans cut the total allowable catch (TAC) for snow crab in Newfoundland waters this year by 22 per cent to about 35,419 tonnes. In the gulf, the TAC rose to 43,822 tonnes from 21,758 tonnes in 2016 — the first time it ever rose above Newfoundland TAC levels.
Sackton said he’s never seen a year in which the gulf produced more snow crab than Newfoundland.
He said while Japanese buyers may pay the high price for Newfoundland snow crab for the first couple of weeks when Newfoundland harvesters are the only ones landing crab, things could change when the gulf fishery starts.