FFAW surrendered price reconsideration to end snow crab tie-up at huge cost to inshore fleet

When the $2.20/lb snow crab price was first set in early April, the price-setting panel stressed it was not the "correct" price (which was wild), and reminded both sides they could request a price "reconsideration" once the fishery was underway and markets changed. Fair enough, but then in May the FFAW surrendered the union's right to reconsideration as part of the deal to end the tie-up.

What the f--k was that about?

As of Wednesday, Aug. 23rd, 93% of the province's 2023 snow crab quota of (113 million of 121 million-pound quota) has been harvested with a landed value of $255 million, a dramatic drop from $757 million last year.

The union didn't surrender price reconsideration altogether, so much as tied it to a threshold price of $6.01 US on the Urner Barry seafood index for snow crab from this province. (Before then, a threshold has never been used for reconsideration.)

In other words, price reconsideration automatically kicks in when the Urner Barry price hits $6.01 — which it has yet to do this season. This week's Urner Barry price is $5.75 US.

That said, since the tie-up ended the crab price to the inshore fleet has risen 40¢ and currently sits at $2.60/lb. (As part of the crab deal, certain Urner Barry market increases automatically trigger an increase to the fleet.)

First off, the inshore fleet has a 35% market share this year based on the prices paid to the inshore fleet versus the Urner Barry prices (converted to Canadian).

In 2022, the market share — based on an average $6.15/lb price to the inshore fleet, and average Urner Barry price of $10.38 US ($12.91 Cdn) — worked out to 48% market share.

That makes for a 13% drop in market share between this year and 2022.

Second, there's an argument the snow crab price to the inshore may have reached at least $3/lb (or possibly as high as $3.25/lb) as early as June had price reconsideration not been taken off the table.

A June request for snow crab reconsideration would have taken into account a slight rise in April exports (which were provided to SEA-NL by the provincial government), combined with a slow and steady rise in the Urner Barry price.

At $3/lb processors would still make big margins.

Those margins are calculated by subtracting the cost of the raw material — which is calculated by dividing the price to harvesters by the 68% yield — .from the export price.

But the end of June only about 60 million pounds of snow — half the province's 2023 quota of 121-million pounds — had been taken.

With a $3/lb price reached through reconsideration that could have meant the better part of $50 million to the inshore fleet.

Earle McCurdy, who serves on the price-setting panel, disagreed with the initial $2.20/lb panel price, saying it "shifted the entire burden (and then some) of the difficult market circumstances onto the shoulders of fishing enterprises."

He was dead on the money.

Ryan Cleary,

Executive Director-SEA-NL

Seaward Enterprises Association of Newfoundland and Labrador (SEA-NL) is a professional, non-profit organization that serves as the distinct voice for licensed, independent owner-operator inshore fish harvesters. Visit sea-nl.ca to join.