Snow crab prices plummet in NL
Fish harvesters wake up to 20 per cent cut on pricing panel decision
It wasn’t the news fish harvesters in Newfoundland wanted to hear.
They’ll get less for their snow crab after today, as the result of a decision by the province’s fish price setting panel.
After reviewing a request from the Association of Seafood Producers (ASP) and arguments by the Fish Food and Allied Workers (FFAW), the panel went with the processors’ pitch of $6.15 per pound.
That’s down nearly 20 per cent from the $7.60 per pound price that was set for the start of the season on April 1.
The FFAW had suggested a new price of $6.55.
In a post on social media this afternoon, the union said it was “deeply frustrated” by this decision.
“Despite volatility in the market, we do not believe there was sufficient evidence to support the ASP position,” the FFAW said. “We must investigate a new approach for pricing that allows for fair pricing, with more transparent information available, striking a proper balance between assuming market risks and market growth.”
In its written decision, the price setting panel considered market reports from Urner Barry and Seafood Data Search (John Sackton).
In a report dated May 13, John Sackton of Seafood Data Search noted, “there is very little demand for snow crab, as inventories remain from last year at all levels in the supply chain.
One of the factors in the price decline has been leftover inventory from last year in the U.S. market, and lack of interest from Japanese buyers so far this year.
According to Sackton, the Japanese may get high volumes of low priced snow crab from Russia this year, and therefore will be under no pressure to establish contracts in NL.
“To date, there appears to be little Japanese activity in the province.”
He said it’s likely the market will continue to drop and bottom out somewhere between $9.00 US and $10.00 US.
According to the Urner Barry, snow crab market prices have been dropping steadily for eight weeks.
THE NEGOTIATIONS
The ASP said the price decline outlined by the market reports has created a “dire situation” for processors.
The price of $7.60 at the start of this season was premised on a market price of approximately $12 US.
However, of May 12, the U.S. market was paying only $10.50.
The Association also noted its members have processed about 45 million pounds of snow crab so far and paid out $342 million for raw material costs alone.
Right now, according to the ASP, they are holding most of that processed product in inventory, and, if prices continue to fall processors will face financial loss.
Based on market reports that suggest the price might bottom out at $9-$10 US, and considering the current exchange rate — $1.29 Canadian for $1 US — the ASP calculated a market value of $12.25 Canadian, with 50 percent for harvesters for a $6.15 per pound offer.
The FFAW conceded there has been a change in the market, but alleged the ASP was overplaying the situation.
They also noted retail prices are relatively stable and the foodservice (restaurant) market seems to be strong.
For its calculations, the FFAW used a $10 US value as the basis, and 80 percent share of the market price for harvesters, to suggest a price offer of $6.55 per pound.
ELSEWHERE
In Nova Scotia, fish harvesters also saw a drop in snow crab prices a couple of weeks ago.
They are now getting $8.25 a pound for snow crab, according to Gordon Beaton, local president with the Maritime Fishermen’s Union.
While the general practice for fishing crews throughout Atlantic Canada is to store crab in pans in ice below decks, Beaton said some Nova Scotia longliners have installed Recirculating Seawater (RSW) tanks, where crab stay alive in seawater for the journey from fishing ground to port.
“It’s used mainly by the 55-65 footers,” he said, “but the systems are getting more compact and more boats are starting to use them.”
In Nova Scotia and other Maritime provinces, the owners of the fishing boats also pay the deductions for Employment Insurance and the fees for Workplace Health and Safety.
In Newfoundland and Labrador, the processing companies cover those costs for the fishing boats and crew.
Under the price setting mechanism in Newfoundland and Labrador, each side can make one application for a price review.
Therefore, the FFAW can ask the board for a review of the price before the end of this season. It said it would if markets turn out to be better than the pricing panel suggested.