Canadian Atlantic coast seafood processors are confident they’ll survive this year’s crash in lobster and crab prices that recently forced a Quebec-based company into bankruptcy protection.
Prices plummeted earlier this year after reaching record export levels in 2021, putting stress on an industry that has faced multiple challenges, including the recent destruction of fishing grounds and fishing gear caused by tropical storm Fiona and ongoing labor shortages stemming from the COVID-19 pandemic.
Nat Richard, Executive Director of the New Brunswick, Canada-based Lobster Processors Association, said prices have dropped by over 30 percent for claw and knuckle lobster meat and four- to five-ounce tails since May 2022.
“It has probably been a decade since we’ve seen a market correction of this magnitude,” Richard said. “It remains to be seen how long that will last.”
The crash in prices forced Quebec, Canada-based LA Renaissance des Îles to seek bankruptcy protection earlier in September. According to Radio Canada, the company’s debt exceeds CAD 25.7 million (USD 18.7 million, EUR 19.1 million), with over 360 creditors on its books.
Richard pointed to a carryover of inventory from previous years, the Russian invasion of Ukraine, and a volatile U.S. market as contributors to the price drop. He said effects from an embargo placed on Russian crab following that country’s invasion of Ukraine were slow to kick in, all while Russian crab continued to enter the Japanese market.
“People at the start of the year thought Russian crab wouldn’t be going to the market, but Russian crab did make it and in some cases at a discount,” he said. “It has backed up a lot of Canadian exports that were destined for those markets.”
Richard said U.S. market volatility has hit the industry considerably, but he said he expects most processors to make it through the market correction.
“We are seeing significant reductions of volumes going to that market,” he said. “Some will be bearing significant losses, but I don’t believe we are going to see widespread numbers of plants that aren’t going to make it.
“We have pushed the market to its limit. It will be years until we see a market as vigorous as it was last year. It’s a massive adjustment.”
Despite the hardship facing the industry, Richard said he’s seeing signs prices may slowly be heading upward once again.That sentiment is shared by Nova Scotia-based Fisher King Seafoods CEO Tor Conklin, who told SeafoodSource markets bottomed out a month ago, but that prices for crab clusters and lobster meat and tails moving upwards.
"All of these markets that crashed by 50 percent in the first six to seven months of 2022 are now rebounding and moving sharply upwards,” Conklin said. “Are we going to hit the recent historic highs of 2022? I doubt it, but at least prices are moving back towards pre-epidemic levels. With the current shift in exchange rates and market improvements, most processors will weather the recent economic storm."
Photo courtesy of Georgethefourth/Shutterstock
