A face-off between the trade group representing processing companies in the province and the union representing fishermen and factory workers in Newfoundland and Labrador has ended with arbitrators siding with the union’s offer on pricing for the season’s snow crab.
In a 14 May decision, the Newfoundland and Labrador Standing Fish Price Setting Panel selected the Fish Food and Allied Workers Union (FFAW-Unifor) offer of CAD 3.50 (USD 2.50, EUR 2.29) per pound over the Association of Seafood Producers (ASP) offer of CAD 3.00 (USD 2.15, EUR 1.96), reversing a previous decision that had gone in favor of the ASP. Under its rules, the panel must decide between one of the two offers – it cannot split the difference.
“The decision is quite challenging given the uncertainty and risk to both sides. Considering the more recent market data and stability, and on the balance of probabilities, it is now reasonable to anticipate a market outcome that would support the final offer of the FFAW,” the panel wrote in its decision.
After a delay due to the coronavirus, snow crab harvesting in Newfoundland and Labrador began on 11 May, under “significant uncertainty” regarding the pricing situation due to unprecedented market conditions caused by the COVID-19 pandemic, according to the panel. In its initial pricing decision on 4 May, the three panelists tasked with choosing between the FFAW-Unifor and ASP offers expressed dismay at the lack of clarity in the market.
“There is considerable economic disruption in the U.S.A. and Japan from COVID-19 and any significant economic downturn will have an impact on the buying of a high-end product like crab. Likewise, any future waves of COVID-19 or disruption to the resumption of their economies would prolong or deepen the economic downturn. In Japan, they are dealing with the economic fallout of COVID-19 which includes a significant economic blow from the cancellation of the 2020 Olympics,” they wrote. “The question for the panel is whether the retail market can absorb the crab supply and at what price? What will happen to prices when all fisheries come on stream and competition ramps up?”
After selecting the ASP’s offer, the panel acknowledged the FFAW-Unifor was likely to request a reconsideration in the following weeks, and following a review of newly-available market data, it sided with the harvesters 10 days later.
“While market prices have dropped by approximately 26 percent year-over-year, there is nothing to suggest that market prices will further decline to a level that justifies the initial panel decision,” the panel wrote. “[FFAW-Unifor] contend[s] that current market returns in Canadian dollars are higher than those in 2016, when there was an agreement by the parties on CAD 3.00 per pound. Market returns are currently at a level closer to the 2017 panel decision of CAD 4.39 [USD 3.14, EUR 2.88] per pound and, even with a further decline, would justify their current offer before the panel.”
The AP contends a CAD 3.50 price is “not reflective of market strengthening but is reflective of low landings to-date,” it said. A lower price would have enabled them and wholesalers to offer promotional offers on crab to encourage uptake in the market, which may be necessary as the coronavirus continues to harm markets worldwide, tamping down demand.
“The COVID-19 situation in the U.S. is not improving and the economic fallout will be extremely challenging,” the ASP said in its presentation.
Tensions between the ASP and the harvesters’ union have run high as the processors sought to bring in crab landed elsewhere in Canada into their Newfoundland processing plants. FFAW-Unifor members blocked the road leading into Ocean Choice International’s Triton facility, preventing two truckloads of crab from entering. That action resulted in the company successfully seeking an injunction against the blockade. The ASP said photos of the protest showed harvesters not practicing social distancing, even as the workers union protested conditions inside crab processing facilities it said did not properly account for safety measures necessary to prevent the spread of COVID-19.
The new price set by the arbitration panel will not apply retroactively to crab already landed. The ASP may seek a second reconsideration in the next few weeks “if market developments warrant it,” according to the panel. That seems likely, it added.
“The uncertainty in this year’s fishery has not gone away and no one can predict what will happen,” it said. “Pricing in the face of this uncertainty while addressing the fair sharing of risks between processors and harvesters was, and is, a key consideration for the panel. This is quite challenging when prices set by the panel must endure the full market cycle for Newfoundland crab in this pandemic year.”
Photo courtesy of Mary Anne Love/Shutterstock
