Lobster Market Update
April 22, 2020
This is a brief update on the lobster fishery. The information contained in the update of April 16th still applies and that update can be found HERE. We encourage lobster harvesters to read that update.
The Lobster Season
The lobster season is not cancelled and rumours to the contrary are not true.
It regrettable that misinformation and rumours about the fishery are being consistently spread on social media, such as Facebook. These rumours agitate and cause division, creating stress not only to harvesters, but also to spouses and children at a time when stress and anxiety is already high.
Contrary to the existing rumour, the lobster negotiating committee is meeting with lobster buyers on a regular basis. The buyers have put forth a lobster price proposal for this year, which the committee found to be completely unacceptable.
FFAW is in daily contact with lobster harvesters throughout the province and any decisions on the lobster fishery will be done with harvester input. While the challenges facing the lobster fishery are clear, harvesters have expressed a desire to go fishing if it is safe to do so. Your Union is focused on both the safety component of the fishery and the price/market component.
Proposal from SPONL
The Seafood Producers of Newfoundland and Labrador (SPONL) represents lobster buyers in collective bargaining. The Lobster Price formula, based on prices from the Urner Barry index, has been in place for close to a decade. The formula has been incredibly important to the increased value of the lobster fishery, with harvesters now receiving a much greater share. Overall, the formula has provided tens of millions of dollars of new revenue to harvesters.
For the most part, SPONL has supported the formula, as most years the formula is rolled over or small changes are made. This year, in the midst of the greatest global crisis since the Second World War, SPONL is proposing moving off of Urner Barry and adopting a receipts-based price system. They also want to eliminate the current minimum price of $3.25 that is provided for in the collective agreement. It is likely no coincidence that this proposal was forwarded to FFAW immediately after a meeting of SPONL members and Ocean Choice International and Royal Greenland/Quin-Sea, both ASP members.
The proposal was delivered yesterday morning and the lobster negotiating committee met to discuss that evening. It was unanimously agreed that both proposals – eliminating the minimum price and moving away from Urner Barry – would be rejected. The committee was adamant that there be no changes to the lobster price formula in 2020. The committee’s reasons are as follows:
- The Urner Barry formula works. It is understood by harvesters and cannot be manipulated by NL buyers. To move away from Urner Barry now would be reckless. A receipt-based system would require all major lobster buyers to disclose several years’ worth of sales information so that a new formula could be proposed and tested. This would take months. SPONL has provided nothing and wants to get a new formula in place in a week or two. The last time SPONL proposed this, it was an attempt for buyers to get lobster at greatly reduced prices. We think it is no different this time.
- The minimum price provides a firm price floor for everyone involved. This prevents prices from spiralling lower and out of control, which hurts the harvester more than the buyer and only serves to devalue the lobster fishery. To understand the value of a minimum price, just consider what has happened in the oil industry in the last few days. There are no minimum price protections in oil and in the past few weeks trading has become an ongoing attempt to move product at any value. This week that value became less than zero, suggesting that the product had no current value. It will take years for the oil sector to rebound from this drastic devaluing. The same cannot happen with lobster.
With respect to the market conditions, there is little change from last week’s market report. We hope to provide a further market update next week when some additional information is made available.