The Merriam-Webster Dictionary defines irony as “the use of words to express something other than and especially the opposite of the literal meaning.”
On February 16 of this year, just two days after Valentine’s Day, the Fish, Food and Allied Workers Union (FFAW) and the Association of Seafood Producers (ASP) held a surprising, joint press conference to announce their mutual cooperation for the upcoming 2023 snow crab season.
Newly-minted FFAW President Greg Pretty and Secretary-Treasurer Jason Spingle, alongside the brand-new ASP Executive Director Jeff Loder and Chair Paul Grant, sat down to discuss their plan of cooperation for this season.
“There’s one thing that we are both prioritizing as we gear up for the 2023 fishery and that is ensuring that this extremely important crab fishery runs smoothly as possible for all involved stakeholders. That’s why our organizations are here together today announcing a commitment to work together, addressing the challenges like pricing, scheduling, trip limits before the crab fishery actually gets underway,” Pretty remarked.
Ship ahead more than two months and nothing could be further from the truth. Rather ironic wouldn’t you say?
As of The Navigator’s press deadline, the FFAW and ASP were locked in a battle of wills over the price of snow crab.
While the snow crab fishery in Newfoundland and Labrador is technically open, harvesters have yet to go after their increased quota as they disagree with the decision made by the province’s Standing Fish Price-Setting Panel. In early April, the Panel accepted the final offer put forward by ASP of $2.20/pound. However, FFAW insists that harvesters cannot fish at that price without going bankrupt. FFAW had put forward a price of $3.10 per pound. And there has been a fishing stalemate ever since with no resolution in sight. This a far cry from last year when the Price Setting Panel again sided with the Association of Seafood Producers’ offer. But this time it was for $7.60/pound, a rollover of the 2021 price. The FFAW-Unifor had requested a price of $9.05/pound.
So, once again this year, the Price-Setting Panel finds itself on the hotseat for siding with the processors on the 2023 price for snow crab. But how did it come to its price decision?
In its pricing decision report, the panel said there was consensus between the two negotiating parties in that 2022 saw a substantial decline in the snow crab market and that the market this year is volatile.
However, that’s as far as the consensus went.
“The FFAW was optimistic that prices will improve in 2023, noting that Atlantic Canada is in a position to supply 90 per cent of the U.S. snow crab market, that prices will increase when this season’s crab comes on the market and that there are signs in the marketplace that returns to casino and cruise ship travel in particular will increase snow crab sales as the season progresses,” the Panel wrote.
The processors had a far different view.
“The ASP is of the view that there are risks in the market, that the market has shown continued decline, and that the market has not yet hit the bottom. They flag significant holdings of 2022 season crab throughout Canadian, U.S. and Japanese cold storage. The U.S. market, in particular, is continuing to show reduced demand at continually reducing prices. Quotas have increased, contributing to the highly saturated market. The price of crab has experienced the largest price decline ever. From a high of $16.80 in late 2021, the price has reached $5.75 USD on March 31, 2023. ASP expressed concern that given the high volumes of unsold 2022 crab in inventory, high volume in cold storage, inflationary pressures, turmoil in the U.S. banking industry, increased costs of borrowing, the price of crab could continue to drop and has shown no signs of stabilizing as yet.”
The Panel noted that while the market price of crab may have been similar in 2016, the market conditions that existed in 2016 were not the same as current market conditions. More specifically, the Panel noted that inflation, interest rates, quotas, market share and the amount of supply currently in storage are significant factors to be considered in determining the fair market value for the minimum price of snow crab this season.
As in previous years, the legislation under which the Panel operates stated it must choose one price or the other — there is never any middle ground.
“The Panel recognizes that the “correct” price may be somewhere between the two positions, but the parties have not negotiated this price, and the Panel is left with having to choose one position or the other. The Panel also recognizes there is much uncertainty ahead. There are some “bright spots” highlighted by the research that, if they materialize, may change this outlook. Predictions are difficult to make. We can only consider the market as it currently exists, and that the evidence provided to us with respect to how the market is currently behaving and will likely behave this season.”
And with that, the ASP offer of $2.20/pound was chosen for 2023.
Not surprisingly, the Panel vote on price was not unanimous.
Panel member and former FFAW president Earle McCurdy was the lone dissenting voice.
“Whatever the terminology that is used, I submit that the job of the Panel is to determine a reasonable price in relation to market and other relevant circumstances that may present themselves. As recently as last May, ASP was using the term “harvester share” in supporting their (successful) presentation to the Panel. In support of their final offer, the FFAW cited the handshake agreement between the parties in 2016 on a $3/pound minimum wharf price at a time when market prices were very similar to where they are today. The ASP chief spokesperson said what happened in 2016 is not relevant unless all factors are identical. It would be unusual for all factors to be identical in any two different years, but it seems reasonable to me to use the relative wharf price to market price relationship in a prior year for at least some guidance as to what an appropriate price range would be in the current year.”
So, as of the writing of this editorial, N.L. harvesters are still refusing to fish crab for $2.20/pound, while their colleagues in Nova Scotia, New Brunswick and Prince Edward Island have been on the water for several weeks — selling their snow crab for between $2.25–$2.50/pound.
To say the N.L. situation is volatile would be an understatement and where it goes from here is anyone’s guess.
