Price outlook diverges for Canada's top 2 seafoods

Canada's lobster industry is poised to claw its way out of a down year, say analysts, while unsold snow crab stuck in cold storage remains an anchor dragging on the bottom line.

Concern and uncertainty remain the watchwords for Canadian snow crab processors attending North America's biggest seafood trade show in Boston this week.

"Last year was a very tough year, probably the toughest year our company's ever faced in the snow crab sector," says Allan MacLean, senior operations manager at Louisbourg Seafoods, a snow crab processor in Cape Breton.

Snow crab sales sank and prices plunged 60 per cent in 2022, thanks in part to U.S. consumers who stayed away from luxury seafood as they were battered by inflation.

The result is a glut of expensive frozen snow crab in storage.

"Prices were high at the beginning of the year to buy and then as the year went by, the market slowly deteriorated and it was extremely difficult to move crab and continues to be difficult," MacLean said in an Interview at the North American seafood Expo.

Veteran industry analyst John Sackton of Seafood Datasearch says 2022 inventory carryover will continue to depress prices for snow crab.

Canada's most valuable seafood

In 2021 the landed value topped $1 billion, making it Canada's second most valuable seafood.

"A lot of cold storage companies won't even take more snow crab because they say it doesn't turn over fast enough and they make their money on the in and out, not on holding product," he says.

That's going to put pressure on fishermen when the snow crab season opens in Atlantic Canada later this spring.

"The business can't support high prices this year," says MacLean. "I think we're going to see a very low-risk approach this year. We have to work with the harvesting sector here to make it through for the first few months and see where that brings us," he says.

Lobster volumes up

Lobster also took a hit last year, with prices down 30 per cent. The value of Canadian live lobster exports dropped as well, but volumes actually ticked up slightly.

Kelly Zhuang of World Link Food Distributors in Nova Scotia says 800 tonnes of live lobster is flown to China from Halifax and Moncton per week. And more charters are expected.

"In 2022 actually Chinese sales, from Canada export data, it increased 15 per cent. So we think it will keep increasing," Zhuang said in Boston.

While Canadian export value was down, it was still three times higher than U.S. lobster exports in 2022.

Sackton blames the trade war with China initiated by former U.S. president Donald Trump. Canada and the U.S. initially had equal market share in China, he said, but now the U.S. is down by 25 per cent.

"We had a president, unfortunately, who tried to screw China by putting on tariffs and the effects of that have not gone away.

"A lot of lobster buyers in China are still biased against American lobster and they prefer the Canadian lobster because they didn't have the same trade disruptions."

Lobster prospects positive

With both the spring snow crab and lobster season set to open in Atlantic Canada, Sackton believes the prospects for lobster are positive, because producers limited production meaning there's "no real inventory."

"As a result, there's customers who are eager to buy as you start the season in May and that's a very different situation than snow crab."

One person happy to be in the big time seafood business is Chief Terry Paul of Membertou who led a First Nations purchase of diversified shellfish giant Clearwater Seafoods first announced in 2020.

Its portfolio of products — especially scallops — allowed it to weather the snow crab downturn.

"I'm just very fortunate and very, very happy that we went into this transformational transaction and here we are in Boston and making good inroads into more, more markets. So we're doing very well," Paul told CBC News.

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