Newfoundland snow crab standoff places provincial economy at crossroads

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Although the Atlantic snow crab fishery opened four weeks ago, fishing boats and processing plants in Newfoundland and Labrador are empty.

The province’s crab harvesters have chosen not to fish to protest against the $2.20-a-pound crab price set by the province’s independent price-setting panel – a collapse from prices as high as $7.60 last spring. A month later, the province’s harvesters and producers have yet to find a solution. Most recently, the harvesters’ union rejected an offer from producers on Friday evening.

As a result, thousands of workers in the snow crab supply chain are without work, leaving not only Newfoundland’s most lucrative fishery in limbo, but also much of the rural economy.

“That’s what they’re set up to do. Rural communities have always relied heavily on the seafood industry,” said Tom Cooper, a business professor at Memorial University who researches the province’s fishing industry and the disruptions within it.

The provincial government said more than 16,000 Newfoundlanders are employed in the fishery – with many businesses such as restaurants and distributors relying on the catch.

Although not everyone in the fishery works with snow crab, Newfoundland seafood associations say they employ workers from “over 400 communities.” Prof. Cooper said that amounts to essentially “every community in the province.”

Snow crab, a luxury for restaurants and grocery stores around the world, is the most valuable fishery product in the province. In 2022, it accounted for about 61 per cent of the total annual fishery value and 2.3 per cent of the provincial GDP. Both numbers are slated to fall with the low prices and absence of catch.

According to the Department of Fisheries and Oceans, Canada is the world’s largest supplier of snow crab. Newfoundland lands more than half of the country’s catch.

Newfoundland’s crab fishery runs through what is known as a fleet separation setup, meaning producers that process the crab and harvesters that catch it are independent of one another. Producers, after buying crab from fishers at the provincially set price, must try to sell the crab for their own profit – which depends on market prices.

After soaring during the COVID-19 pandemic, crab demand has collapsed over the past year. Inflation and rising interest rates lead consumers to spend disposable income elsewhere, instead of on the premium seafood. In the valuable United States market, the final price has fallen more than US$10 a pound to reflect that. And stockpiles of crab still remain from last season.

Retailers, who are major buyers of crab, heavily influence the market price. For harvesters and producers, the “retailer doesn’t give a damn about what your cost paid is,” said seafood market analyst and researcher John Sackton.

Despite the conditions, harvesters in the other Atlantic provinces have fished through the season. Unlike the Fish, Food and Allied Workers, fishers who have decided to collectively hold out, those in other provinces are making individual choices about whether to fish at the low price.

Greg Pretty, president of the FFAW which represents approximately 10,000 harvesters in Newfoundland, has criticized the provincial government for refusing to help reach a resolution. He has also called for federal help as harvesters’ unemployment benefits from the off-season run dry.

In an April 13 statement, Mr. Pretty said the low set price – combined with the rising costs of fuel, bait and other supplies – would doom harvesters to fishing at a loss.

“The choice was made to go bankrupt at the wharf unless some movement can be made,” Mr. Pretty said. Along with losing income by not fishing, many harvesters risk missing debt payments on their boats and other equipment.

Mr. Pretty did not respond to multiple requests for comment.

Tensions between the FFAW and the trade association representing the fish producers continued rising as the crisis approached the four-week mark last week. In Newfoundland, producers and harvesters can appeal to the price-setting board if each side doesn’t feel the price is fair. However, the Association of Seafood Producers has chosen not to argue for a higher price, stating the market value of crab is too low to cover its own rising costs. The FFAW was upset by the stance, and has stated several times that the $2.20-a-pound price won’t work for harvesters.

In an interview, ASP executive director Jeff Loder said setting a higher price in Newfoundland than the low global prices would force the province’s processing facilities to incur a loss. They, too, face rising costs for their supplies.

“It’s not ideal, but it’s the same for harvesters. It’s not going to be the best year ever,” he said. “If we continue to fight over what at this point I think are less important things, we’re going to lose sight of the big picture.”

With the FFAW and Newfoundland government already at odds, provincial Fisheries Minister Derrick Bragg sent a letter to the FFAW to hold a secret ballot vote, in order to gauge how many harvesters are willing to fish at the current price. Mr. Pretty has rejected the suggestion, saying it undermines the union leadership.

Mr. Pretty said in a statement he views this crisis as “on par” with the collapse of the province’s cod fishery in 1992 – among the largest economic devastations in Canadian history.

Mr. Bragg echoed that concern in a media scrum last Thursday. “Since the [cod] moratorium in 1992, this is the most issues we’ve had in our fishery.”