Earle McCurdy Panel  Dissent – 2024 Crab Decision

• I respectfully dissent from the majority decision for 2024 crab pricing.

• In doing so, I would like to highlight the very difficult position in which the Panel has been placed. The 11^th hour amendments to the Fishing Industry Collective Bargaining Act regulations placed the Panel in a straitjacket in that it was compelled to use final offer selection from price formula offers submitted by the parties, despite the strong likelihood it would be confronted with two complex submissions based on entirely different approaches to a price-to-market formula, which is exactly what turned out to be the case. The Panel would have potentially been in a much better position to be of service to the industry in finding an acceptable basis for all concerned for the 2024 fishery, if it had been given the authority to apply interest arbitration to the price formula as well as to conditions of sale (i.e. had not been bound to accept one of the submissions in its entirety.) Unfortunately, the Panel’s hands were tied in this regard.

• The Fish-Price-Setting Strategic Review Team compiled an extensive report (the Blackwood Report) aimed at assisting the parties in implementing a price-to-market formula that would tie raw material prices to prices received by NL crab in the market. The report used an 18-year history of pricing for 5-8 ounce crab sections, as reported over the years by the market analysis firm Urner Barry.

• The FFAW submission had an identical price-to-market table to the Blackwood Report table, but it modified the implementation of this table in material ways, as outlined in the majority report.

• Even though the ASP submission dismissed the FFAW submission as “antithetical to the Blackwood Report”, the ASP submission bears no resemblance whatsoever to the Blackwood recommendations. When pressed by the Panel as to the basis of their price table, the ASP representative said it was based on what ASP felt was “fair and reasonable”, a subjective consideration if there ever was one. ASP presented no evidence to link their price table to the historic relationship between market and raw material prices.

• The ASP submission proposes not one formula, but two. They propose that the raw material price be the lesser of the application of the two formulae at any particular point in the market. They did not explain why it was necessary to have two formulae instead of one, or why it should be the lower raw material price of the two that should apply. Nor did they provide adequate justification for a starting price of $2.60, significantly below the Blackwood price at the same market interval.

• Finally, the ASP submission deviates quite dramatically from the Blackwood Report in the sharing of market return as the market price increases. The Blackwood Report, as well as both submissions before the Panel, provides for an increased harvester share as the market price increases. But the devil is in the detail. The Blackwood Report and the FFAW submission both recommend the harvester share increase until the market return reaches $12.00 CDN, at which point the harvester percentage share would be frozen. ASP recommends the harvester percentage share be frozen after the market return hits $8.00. As a consequence, the gap between the ASP and the Blackwood tables widens at every market price point beyond $8.00, to the point that at a market return of $12.00 CDN., the ASP offer proposes a wharf price of $4.44, compared to $5.33 under Blackwood.

• I acknowledge that there were shortcomings with both submissions. This is why the lack of flexibility that was afforded the Panel is so problematic, as those shortcomings could have been addressed by the Panel and a reasonable balance struck if the Panel were not tied to final offer selection on the price submissions. On balance, the gap between the Blackwood table and the ASP table, the dramatic difference in the point at which the harvester share of the market return would be frozen, the lack of clarity around ASP’s two-formula offer, and the failure of ASP to present evidence linking their offer to the historic relationship between market returns and raw material prices prevent me from supporting the majority decision.

• In light of the foregoing I respectfully dissent from the majority report.

Letter of dessent from panel member Earle McCurdy dated April 1, 2024.