American consumers still soft on snow crab
Households cutting back on indulgence items, says seafood analyst
While snow crab harvesters in Atlantic Canada continue to collect record-high prices for their catches — holding at $7.60 per pound for Newfoundland and Labrador catches this week — the 2022 season has been complicated.
That makes it difficult to predict how the markets for Canadian snow crab will hold up.
This season is very different from last year, said Les Hodges, a seafood marketing consultant in Washington.
He told Saltwire Network, “(in 2021) processors couldn’t pack crab fast enough. The price went up every week. It was almost impossible for importers and marketers to lose money.”
This year, he said, consumers are contending with higher inflation and gas prices that have doubled from last year. Food costs have increased 10 per cent, with the average cost of dining out up by 6.9 per cent.
And the COVID-19 stimulus payments have gone away.
“It is clear that consumers are worried and being more cautious in their purchase decisions,” Hodges said.
They are cutting back on indulgence items and impulse buys such as crab and focusing more on staples, Hodges wrote in his latest newsletter.
There was optimism in the Atlantic snow crab industry at the start of the season on news of a U.S. ban on import of crab from Russia, one of many international measures taken against Russian products in protest of its invasion of Ukraine.
While U.S. imports of Russian king crab and snow crab are winding down, President Joe Biden’s executive order did not apply to any purchases contracted before March 11.
Crab ordered by U.S. buyers before that date can be delivered until June 23.
A ban on Russian crab in the U.S. and European Union has another ripple effect on crab markets.
Hodges says if the Russians continue to harvest their crab quotas, it will put another 50 million pounds of king crab and snow crab on the world market.
The Russians have turned to Asia to sell that crab, offering the shellfish to markets there at discount prices, according to international media reports.
Reuters reported in April that “data from the Noryangjin Fisheries Wholesale Market, one of South Korea’s largest seafood markets, showed live Russian snow crabs prices fell to 23,000 won (US$18.80) per kilogram (2.2 pounds) at the end of March from 50,000 won (US$40.80) in mid-february.”
Canada doesn’t export a lot of crab to Korea, but it does sell to the Chinese market. Last year, China imported $35-million worth of snow crab.
Still, the U.S. remains the largest market, with snow crab imports at about $369 million last season.
This year, American importers have also turned to South America to replace the gap left by reduced king crab quotas in Alaska and the eventual loss of Russian crab.
Hodges, quoted in Undercurrent News in May, said imports of Lithodes santolla (king crab) from Argentina and Chile increased by 285 per cent and 491 per cent, respectively, in the first four months of 2022.
Undercurrent News reported Wednesday, May 11, that snow crab prices have declined by 30 per cent in the U.S. market over the past four months.
In Newfoundland and Labrador, the price for crab is set by a government-appointed price-setting panel, through a final offer selection.
In that process, the Fish, Food and Allied Workers (FFAW) union, representing fish harvesters, and the Association of Seafood Producers (ASP) each make an offer, and the price-setting panel chooses one.
That price remains in place unless either the FFAW or the ASP ask for a price reconsideration during the season.
So far, neither has asked the panel to re-examine the price of $7.60 set in April.
There is no formal pricesetting mechanism in Nova Scotia. Individual harvesters bargain with buyers and the price is settled at the wharf.
Earlier in the season, some harvesters from the Gulf area were being paid up to $8.25 per pound for crab that was landed directly at the processor’s wharf.
“(In 2021) processors couldn’t pack crab fast enough. The price went up every week. It was almost impossible for importers and marketers to lose money.” Les Hodges Seafood marketing consultant