“They’re going to stop buying crab. They’re not going to buy crab if they’re losing money. The processors always have the upper hand,” Jason Sullivan, a fisherman from Bay Bulls, Newfoundland and Labrador, told The Independent back in mid-May, just before going crab fishing. 

As it turns out, those words foreshadowed a May 30 press release from the Association of Seafood Producers, which represents most processors in the province, that reads: “Snow crab producers compelled to respond to 2022 market challenges” and “full picture will become apparent in the coming days.” 

“It’s the exact opposite happening this year as to what happened to fishermen last year,” says Sullivan—who is also the president of SEA-NL, an association for licensed, independent owner-operator inshore fish harvesters in Newfoundland and Labrador. 

Last year, the snow crab fishery—the province’s most lucrative fishery—saw tremendous growth with a nearly 175 percent increase in the landed value of crab in 2021 as compared to 2020. But Sullivan says fishermen didn’t reap as much of that reward as they should have because of how fish pricing is carried out in this province.

“We lost a fortune because the market continued to rise, but we were stuck at a lower price. There was no fairness in that,” he added. “The union asked for a second reconsideration, but the processors didn’t want it because it worked in their favour that they didn’t need to switch the price.”

In Newfoundland and Labrador, two bodies—the Fish Food & Allied Workers (FFAW) union, which represents fish harvesters (the sellers), and the Association of Seafood Processors, representing processors (the buyers)—negotiate minimum prices for seafood. The Standing Fish Price Setting Panel, which operates under the province’s Fishing Industry Collective Bargaining Act, sets fish prices according to a planned schedule of hearings when negotiating parties reach a stalemate.

“What happens is they don’t agree. The two sides come in with a price, then the government has this panel that will then select either one price or the other,” Sullivan explained. “That’s where it gets tricky. There’s no in the middle.”

This year, ASP requested an initial price for crab of $7.60 per pound (a price point lower than what the market was paying at the time), while the union requested $9.05 per pound (a price higher than what the market was paying). After reviewing evidence from both parties, the panel then set the snow crab price at $7.60/lb, which is where the price hovered for the first five weeks of the season. But snow crab pricing operates on a currency provision, whereby the minimum price changes either up or down by 7 cents for every 2.5 cent shift in the baseline US-CAD exchange rate. These changes are applied at the beginning of the following week, so fishermen know the minimum price before landing their catch.

As of this week, the price has dropped to $6.15/lb. Now, with ASP’s announcement, Jason Sullivan is worried about what that will mean—especially for fishers who have yet to land their crab quota for the season. 

“Nobody wants to be feeling like this, like the industry could shut down at any moment or lose $2 a pound overnight,” said Sullivan, again speaking about the crab season back in the middle of May.

“Anytime rural Newfoundland and Labrador stands to lose $300 million from its communities, it should be considered a crisis,” Sullivan told The Independent at the end of the month. If processors follow through and stop buying snow crab, he adds, then that would spell “colossal devastation” for crab fishermen tantamount to what fishermen experienced with the 1992 cod moratorium.

“There are real market challenges all through this process for my members,” said Derek Butler, Executive Director of ASP, in yesterday’s press release. (Butler did not respond to The Independent’s requests for comment on fish pricing.) “Producers can not [sic] continue normal production in this uncertain environment,” said Butler, referring to a declining market for snow crab at a time when NL fish harvesters have landed upwards of 60 percent of their crab quota already this season.

This year’s crab season also saw a 30 percent quota increase—in March, Fisheries and Oceans Canada, DFO, increased the province’s 2022 snow crab fishery from 38,186 tonnes in 2021 to 50,470 tonnes this year. 

“In many other jurisdictions, competition for the product or market forces is what dictates the price. But here in the province now, there’s a lot of corporate concentration, and that competition doesn’t exist, unfortunately,” Keith Sullivan, president of FFAW, told The Independent. 

To put it in perspective, three of the largest seafood processors in the province (Royal Greenland, Barry Group Inc. and Ocean Choice International L.P.) own the majority of processor licences for snow crab—48 percent, with 12 of the 25 registered processing sites. Snow crab is also the most valuable seafood product exported from the province, with exports in 2020 of 18,946 tonnes valued at $425 million. That amounts to half the province’s total export value ($881 million in 2020, which is the last year for which the province has reported this data in its annual seafood report).

A processing footprint of that scale is potentially problematic because it favours a buyer’s market, as The Independent previously reported. To garner the best landed value for catch—or price per fish, which is essentially, the fisher’s wage—on the wharf requires processing companies to compete with one another to pay top dollar for the goods fishers are offering. But the current collective bargaining process locks in a price.

In theory, that approach should offer fish harvesters some stability. In practice, when the market rises, fishers don’t see those additional earnings—and now as appears to be playing out with crab, when the market falls, processors can reduce or stop buying the goods altogether. 

It’s a lose-lose situation for fishers, says Keith Sullivan. That’s why FFAW has been pushing for amendments to the province’s bargaining act—which passed in the House of Assembly on February 23, 2006—to include a second reconsideration as well as greater information sharing and transparency from processors. 

Another option is building in a stabilization formula, says SEA-NL’s Jason Sullivan. In such a model, at the end of the season, companies would pool sales information and contribute a proportion of increased sales back to the fishermen, so that during good years, everyone shares in the higher than anticipated profits.

Meanwhile, Keith Sullivan says fish harvesters have their hands tied as they are prohibited from shopping their seafood around for better prices or conditions.

“There are agreements among buyers in the province not to compete,” says Sullivan. “That’s problematic and getting worse these last number of years with more consolidation, concentration, and less competition. There’s not officially a rule against it. And most times—in a normal place where there’s normal competition—you can go down the road and get your gasoline somewhere else, but right now, harvesters practically cannot do that.” 

There’s also legislation that bans out-of-province processing companies from buying NL seafood. The problem for fish harvesters goes beyond cutting off their ability to shop around their catch for the best price; it even puts limits on when they can land their catch.

“The plant has no right to say when a fisherman can or cannot fish. That is set by the DFO. It is entirely up to the fisher. So that’s something else that’s going on. If you start selling to one processor, you cannot sell to another one,” Jasmine Paul, a fisher from Placentia Bay, told The Independent. She says processors sometimes throw their weight around at the expense of everyday fishermen.

But Paul has another sales tactic parked on the edge of the highway outside of a Clarenville gas station. 

Passersby with a hankering for a feed of lobster heading into the May long-weekend are in luck when they spot the Paul family’s roadside lobster stand, where the word “Lobster” is fittingly painted in bold red text on a plywood sign. Live lobsters with their claws banded stay damp and cool, covered in kelp in a crate that’s set inside a vat lined with ice.

At $10/lb, the Pauls can secure a better price selling direct-to-consumer than they would selling to a processor at this week’s minimum shore price ($8/lb, which is the lowest price point so far in the season—down from its highest point at $9.77/lb). Like snow crab, the price of lobster is reassessed weekly based on the US-CAD exchange rate. 

While fishers can and sometimes do offer direct-to-consumer sales at the wharf or roadside stands, there are practical reasons why processor sales out-compete direct-to-consumer sales in this province. Consumers often want a processed product (e.g., a cod fillet versus a head-on, gutted codfish; and in the case of crab and lobster, fish harvesters may only sell live product). The fishing wharf is also a workplace, which operates heavy machinery like forklifts, which is not a welcoming space for would-be consumers. 

“We don’t have the population for one, or the culture,” adds Jason Sullivan. “The thing about Newfoundlanders is people will pay ten times more for chicken than fish because you always got fish for free. Everyone has a friend, they could always walk out of the wharf, and get the fish.”

From an employment insurance perspective, it’s also in the interest of fish harvesters to sell to processors—who handle volumes well beyond what everyday consumers can bear, adds Paul. 

But rather than trying to beat processors at their own game (selling quantity), some fishermen have changed the game entirely (selling quality). Where this is particularly present is handline cod fishing. Fishermen catching handline-caught cod (one fish, one hook at a time) are averaging a sales price that’s twice as much per pound as the fishermen catching gillnet-caught cod (many fish, multiple nets at a time). It’s a difference of $1.50 versus 76 to 77 cents per pound, respectively. The sales are direct-to-consumer, which could mean the everyday consumer—or, in the case of Fogo Island Fish, is a water-to-table business delivering handline-caught cod directly to premium restaurants, mostly in Toronto and Ottawa.

“I think there should be more opportunities there and more stories like that,” says Keith Sullivan of the Fogo Island Fish model. “I think that’s an area for growth, but selling direct-to-consumer really depends on having a significant population close to you. Right now, partially because of the way our processing licensing is, you have the big companies dealing with commodities, large volumes, and when it comes to that more unique marketing angles or value-added approaches, there’s very little interest in that.”

Source: Government of Newfoundland and Labrador. Standing Fish Price Setting Panel – Pricing decisions, 2011 to present (https://www.gov.nl.ca/fishpanel/pricingdecisions/index.html)

Notes: 
i. Cod prices since 2014 have relied on a consistent grading system, where grade A represents the highest quality. The price range per grade represents spring/summer versus fall pricing. 
ii. Crab prices include a lower price for legal size less than 4” carapace and a higher price for 4” carapace and greater
iii. Lobster prices represent the lowest and highest minimum shore price of the season, as determined using an established price to market formula and schedule, with weekly prices based on the average of Thursday-Tuesday Urner Barry prices without deduction.

Seasplainer is The Independent’s monthly fisheries and oceans explainer series by journalist Jenn Thornhill Verma. Canada is a country of coastlines—the longest on the planet. The magnitude of that coastline is only overshadowed by the knowledge of those who call these coastlines home. Seasplainer travels to the boots and boats in harbours of the Northwest Atlantic to relay the best-available evidence on fisheries and oceans in Canada. Our explainer series covers a range of topics relevant to fisheries management, marine biodiversity, ocean climate, environment, natural resources, and more. Each issue is reviewed by those with on-the-ground, bench or policy strengths and expertise. This issue was reviewed by: Jasmine Paul, Jason Sullivan and Keith Sullivan.

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Jenn Thornhill Verma is a journalist and landscape painter from Newfoundland and Labrador now living in Ottawa. In 2019, she published her first book, Cod Collapse: The Rise and Fall of Newfoundland's Saltwater Cowboys, with Nimbus Publishing. She has a MFA (creative nonfiction, University of King's College) and a MSc (medicine, Memorial University of Newfoundland). In 2020, she became a fellow of the Royal Canadian Geographical Society, and wrote and co-produced the animated short-film, Last Fish, First Boat. Her work has featured in national publications such as The Globe and Mail, Reader's Digest, Canadian Geographic, The Narwhal, Explore, and Maisonneuve and regional outlets such as The Independent, CBC, Saltscapes and Downhome.