Twenty five years ago this January a provincial government-appointed Task Force investigated how the price of fish was negotiated for the inshore fleet — recommending two separate but parallel pilot projects be carried out right away. One pilot project was the final-offer selection system — which went ahead immediately, and was soon made permanent. The other was an electronic auction system, which wasn't launched for almost a decade.
A voluntary electronic auction pilot project eventually got off the ground, but the reason for it seemed to be just to say it was done. (The auction was "not a success," according to the final report, because of a lack of interest by processors.)
But then why would processors want to drive up the price they pay for fish?
In fact, the "rejection" of the electronic auction system was highlighted last year in The Big Reset, the report of Premier Andrew Furey's economic recovery team.
Keep in mind the chair of the 1998 Task Force on fish/crab price settlement mechanisms was the well-respected David Vardy (Chair of the Public Utilities Board at the time), who also also served on Furey's 2021 economic recovery team.
Vardy knew what he was talking about.
That’s why SEA-NL recommended on Sept. 12th to the latest review of the collective bargaining model for setting fish prices that an electronic auction pilot project be launched in time for the 2023 season.
Because it wasn't done right in the first place.
The Fishing Industry Collective Bargaining Act was amended to allow for an auction system for the sale of fish, but a sunset clause was also included so that the possibility of an auction expired in 2006.
Interesting to note there was no sunset clause with the amendments that allowed for final-offer selection, which also banned strikes and lockouts.
Good news for processors for sure.
The Big Reset stated the collective bargaining structure in the fishery industry — with harvesters represented by one bargaining agent (FFAW-Unifor), and processors represented by one association (Association of Seafood Producers) — is “anti-competitive by nature.”
In fact, Section 4 of the federal Competition Act outlines that the legislation doesn’t apply to contracts between fishermen and fish processors.
How convenient.
Auctions and other free-market systems are common elsewhere in the world — just not here in Newfoundland and Labrador.
Meantime, Norway has a fish action. This is the news from today: Frozen H&G (head on/gutted) cod prices rise on Norwegian auction: China, UK main export markets
Iceland has an auction, too. Daily auctions and a fishery that doesn't throw anything back
Twenty five years ago enterprise owners warned the Vardy Task Force of "increasing control" exerted by processors over inshore boats.
Fishermen were concerned that processors were attempting to secure stability of supply by means that took away from their independence "as risk-bearing entrepreneurs."
They did that by financing vessels, and providing working capital to enterprise owners — to the tune, estimated at the time, of $20 million. (Banks were reluctant to loan money to fishermen, and government's Fisheries Loan Board had been eliminated.)
"In other cases, processors have de facto ownership of vessels by virtue of the funds advanced from processors to harvesters. This is seen as a covert effort to achieve vertical integration, in defiance of the fleet separation policy of the Federal Government."
Again, the above paragraph was written in 1998, but is just as true today as SEA-NL pointed out in August 2021: “We can go around communities in NL and say, ‘That’s a company boat, and that’s a company boat’"
Indeed, the province announced the very next month a review of foreign ownership and control in the processing sector.
KEY FEATURE OF AUCTION SYSTEM
The price of fish arrived at through the broken final-offer selection model is the minimum price paid, based on average quality.
Under final-offer selection, a government-appointed panel steps in when the union and processors/buyers fail to reach a deal on the price to be paid to the inshore fleet for a particular species.
Legislation dictates the panel must choose one price or the other, with its final decision “binding” on both sides.
The key feature of an auction system, as pointed out in the Vardy report, is that it will achieve the highest possible price for fish by allowing for the full interplay of market forces.
On top of that, an auction system would address the high level of control processors have over some enterprise owners in that the catch would be sold to the highest bidder — "not the financier of the option."
But Vardy's reasoning was that final offer selection had to go hand-in-hand with an electronic auction.
Again, that didn't happen.
TODAY'S REVIEW OF FISH PRICING NOT THOROUGH
Other than the initial announcement in July of a review of the collective bargaining model for fish pricing, there's hardly been a word said about it publicly.
The review requested submissions, and carried out interviews (the chair of the review has said the list will be included in his final report), but there were no public meetings, and little media attention (as pointed out in SEA-NL's submission).
The FFAW-Unifor's primary responsibility is to negotiate the price of fish, but the union hasn't say a word about the review publicly.
That's ridiculous.
The collective bargaining model collapsed this past season with panel-set prices that failed to kick-start fisheries (east coast capelin), and severely delayed others (sea cucumber/northern shrimp).
In the case of snow crab, at least one processor attempted to pay less than the “binding” price by charging owner-operators for services like trucking that in precious years were covered by the negotiated price.
The minister said that incident was being investigated, only that wasn't the case.
The current review of the collective bargaining model for fish pricing — which is being conducted by lawyer David Conway, former chair of the labour relations board (SEA-NL also raised an objection about his participation) — is expected to be completed this month.
That's quick — two months from start to finish.
Expectations aren't exactly high.
WHY SECRECY WITH CURRENT REVIEW?
My only conclusion for the secrecy/speed of the current review is to maintain the status quota with many enterprise owners under the thumb of processors, and to keep the price of fish as low as possible.
We need as free a market system for fish pricing as possible, and I can't see local processors allowing that to happen.
It may take civil unrest to get there.
Ryan Cleary,
Executive Director, SEA-NL
Seaward Enterprises Association of Newfoundland and Labrador (SEA-NL) is a professional, non-profit organization serving as the distinct voice for licensed, independent owner-operator inshore fish harvesters. You can read more about SEA-NL, and join us here.