Canada's fishermen, processors concerned about snow crab price-drop

The snow crab market in Newfoundland and Labrador, Canada, is in turmoil as landings are well ahead of previous years and processors say they are “compelled to respond” to the market uncertainty.

The Association of Seafood Producers, a nonprofit representing seafood producers in Newfoundland and Labrador, Canada,  said the snow crab market is “not functioning in a normal manner,” and that U.S. and Japanese buyers have been “reluctant to place orders.”

“There are real market challenges all through this process for my members,” ASP Executive Director Derek Butler said. “The market simply is not operating as usual.” 

The 2022 snow crab season was already expected to be different than seasons past, thanks to a significantly higher quota. The Department of Fisheries and Oceans Canada, which opened the season on 4 April, set a total allowable catch (TAC) for the Newfoundland and Labrador snow crab season of 50,460 MT – roughly 25 million more pounds of snow crab than the year before – and about 60 million pounds more than was available three years ago.

Initially, fishermen and processors in the province thought with the higher quotas, the season would be a good one for crabbers and processors alike. But that did not prevent them from engaging in a multi-week fight over what crab harvesters would be paid. The price for crab in the province is set by three members of its Standing Fish Price-Setting Panel, and this year, the Fish Food and Allied Workers Union (FFAW) – representing crab fishers – and the ASP were divided on the price.

The FFAW was pushing for CAD 9.05 per pound (USD 7.15, EUR 6.72), while the ASP was asking for CAD 7.60 (USD 6.00, EUR 5.64). Both were basing the price on the previous year’s prices, which increased in late April 2021 from CAD 5.73 (USD 4.53, EUR 4.25) to CAD 7.60 in a mid-season adjustment based on an “exceptionally strong” market, the price-setting panel said at the time.

Ultimately, the panel decided to start at CAD 7.60 this year – with the FFAW pushing for more. However, that price was revised downward in mid-May to CAD 6.22 (USD 4.91, EUR 4.62).

The price-setting panel said at its hearing both the union and the ASP agreed demand had declined significantly since the panel set its initial price in early April. The panel also said multiple reports are pointing to lower prices – the initial CAD 7.60 price was based on a market of USD 12.00 (EUR 11.27) per pound, but the current price at the time of the panel’s decision, it said, was USD 10.50 (EUR 9.86) and “continuing to fall.”

The ASP cited an excess supply of crab with “60 percent” of the quota already caught. Combined with the higher overall quota, there is now significantly more crab available to the market than at the same time as last year, it said.

But even the new lower price is causing problems for processors, the ASP said. Companies in the province “will be limiting their production,” according to the association, as an oversupply of crab and reluctant buyers “have slowed their crab purchases week after week in the hopes of finding the bottom of the market.”

“Producers can not continue normal production in this uncertain environment. Some members will be taking corporate decisions to limit production over the balance of the season,” Butler said. “There is a clear necessity to support the market and stabilize pricing by limiting supply.”  

The ASP told SeafoodSource on 1 June the situation remains unstable. According to Saltwire, some processors are planning to continue processing snow crab but don’t expect to make any profit on the products. 

But the FFAW is pushing back against ASP's position, saying isn’t being transparent enough about its decision making.

“Despite the very limited details provided, ASP’s release yesterday evening referenced a slowdown in production which has the potential to be catastrophic, with a significant amount of quota remaining for the 2022 season,” the FFAW said. “Harvesters were critical of ASP’s intentions and believe these companies must be required to be more transparent regarding information on product yields and markets.”

FFAW President Keith Sullivan told SeafoodSource the union is keeping in regular contact with its members around the province to monitor the situation. The current state of the market came as a surprise for most of them, Sullivan said, as the prices for snow crab were expected to be higher this year given their limited availability internationally due to a population crash in Alaska and the Russian seafood bans implemented by the U.S., Canada, and Europe.

“I think everybody was kind of surprised with the slow sales," he said. “I don’t think people expected this, and perhaps the Russia situation was confusing for the market in some ways."

Sullivan also questioned whether the ASP was being truthful in its suggestion there is limited cold-storage capacity available in the Canadian Maritimes, despite the industry receiving millions of dollars from the Canadian Seafood Stabilization Fund. The fund was established in 2020 to provide CAD 62.5 million (USD 49.4 million, EUR 46.4 million) to the seafood sector in Canada, to be distributed to applicants who could show they would use it for a number of purposes – including adding storage capacity for unsold product. Approximately CAD 10 million (USD  7.9 million, EUR 7.4 million) was released to projects in March 2021, with another CAD 9.6 million (USD 7.5 million, EUR 7.1 million) going to projects in British Columbia.

The FFAW’s criticism also ties into an ongoing debate about competition in the processing sector. The union is calling for new crab-processing licenses to increase the amount of competition in Newfoundland and Labrador. The FFAW praised a decision by Newfoundland and Labrador Minister of Fisheries Derrick Bragg on 24 March to issue new licenses in St. Mary’s Bay – but also said the limited 2.5-million-pound cap on the license does little to add competition to the industry.

“It’s a hard fact that crab-processing plants in our province do not have the capacity to meet current supply. In addition to the dangerous and unfair trip limits and scheduling forcing harvesters to tie on for weeks, plant workers are being worked to the bone,”  Sullivan said in a release.

The FFAW called on Bragg to“improve transparency and competition in the seafood-processing industry, with Sullivan claiming the lack of action to approve new licenses has shown a “blatant refusal to address the severe shortage of corporate competition in the industry.”

“Bragg has shown time and time again he is not the minister of fisheries but the minister of fish-processing companies. By blocking all attempts to improve fairness in the processing industry, Bragg is blocking the people of Newfoundland and Labrador from getting the maximum economic benefit from our resources,” Sullivan said.

Sullivan told SeafoodSource the current market complications have exacerbated already-strained conditions in the local snow crab fishery. Sullivan said he's relieved the difficulties have at least come at a time as the fishery begins to slow down, and that despite the market difficulties, the snow crab resource itself looks good. 

“I think maybe it puts the exclamation point on it a little bit more, but I think it's been evident for some time that we need more competition in [the] province," he said. “It’s at a point in the season where we would expect production to slow anyway. The resource is looking good, and catches in Newfoundland at least have been good.”

Sullivan said FFAW is in contact with Bragg regarding the ASP’s recent announcement, and that it will “continue to monitor the situation closely” as the snow crab season comes to a conclusion.

Photo courtesy of Meagan Careen