July 21, 2021 – Negotiations for the minimum price for squid took place this week between FFAW-Unifor and ASP.
Last night, July 20th, the parties reached an agreement on price for $0.66 per pound for all squid. The remainder of the squid schedule remains unchanged.
As this is a price decrease of $0.11 from 2020, some further clarification is warranted.
In 2020, harvesters landed 7.7 million pounds of squid. There is no exact figure on the squid bait needs for our fisheries given the decreases in snow crab quotas in the past decade, however, our current bait needs are between 5 to 5.5 million pounds. Given the volume of squid landings last year, we exported more squid in 2020 than at any point since the 1990s.
This year there is a very good sign of squid. While we cannot predict how the squid fishery will unfold, it is quite possible that our squid landings will increase again this year. Landings of 9 million pounds or more is not unexpected.
As we have been landing more there is a greater interaction between NL squid and the international squid market. Right now, that market is not good. This is the price table for the major squid index in China since January 2020:
It is clear that the market has decreased.
Japan is our biggest market by a significant margin. In 2020, the export price to Japan for squid from all countries was $2.58 CAD; in 2021 it is $2.10. This is a 19% price decrease.
South Korea is our third biggest market. In 2020, the export price to South Korea for squid from all countries was $2.09 CAD; in 2021 it is $1.47. This is a 30% price decrease.
Our other two main markets – Spain and Greece – are also experiencing price declines for squid. In terms of price per pound for NL squid, these two countries have always been behind Japan and Korea.
The unfortunate aspect of the squid fishery is that the relative importance of the bait market declines as more squid is landed. In the past, we have established a two-tier system whereby the price for the first few thousand tons would be higher as that would serve the bait market. After that point, the price would drop since the remaining squid would be used for the market.
These deals were put in place when there was little expectation of high landings. In 2019, when landings increased, the parties were informed by DFO that it does not closely monitor squid landings and, therefore, it would be very difficult to know when the bait threshold was reached and when the reduced market price would apply.
Of note, in 2020, when there was plenty of NL bait available, prevailing pprices for bait declined from $2.10 per pound to $1.75. The bait price was unchanged in 2021. In the absence of an agreement from the processors, it is impossible for FFAW to insist on a 2022 bait price, and the Panel could not enforce such a request. There should be no upward change in bait prices next year (and decreases possible) if squid is landed in abundance this year. Processors know that bait price increases are only going to trigger increases in minimum prices.
FFAW-Unifor is not happy with the price decrease, but are realistic when assessing the markets.