Minister Calls on FFAW and ASP to Resolve Crab Dispute

The Honourable Clyde Jackman, Minister of Fisheries and Aquaculture, is calling on the Fish, Food and Allied Workers (FFAW) and Association of Seafood Producers (ASP) to resolve the ongoing price dispute in the province's crab fishery. In an effort to resolve the dispute, the Provincial Government brought the parties together for the first time on March 30. Prior to this date, the harvesting and processing sectors had not met to discuss the price of crab, even though the crab fishery was scheduled to start April 1.

"It is fair to say that both parties have been unwilling or unable to deal with the challenges during the period leading up to the 2010 crab fishery," said Minister Jackman. "This is a very serious situation. The crab fishery is the province's most valuable fishery. Upwards of 20,000 people are depending on it to start so that they can be employed during 2010. This presents a significant risk to communities that depend on the fishing industry."

"The FFAW drew a line in the sand in the fall of 2009 by insisting they would only accept a price of $1.50 for crab. These statements from the FFAW were made in the absence of any relevant market or exchange rate information. ASP refused to engage in negotiations during the winter of 2010. This forced the Standing Fish Price Setting Panel to establish a price for April 1, with no realistic offers from either party.

"Setting a price and starting the fishery are decisions that have to be made by the industry," said Minister Jackman. "No government can force harvesters to fish or fish processors to buy."

On April 17 the parties put forward a proposal for the Provincial Government to provide financing as a means of getting the crab fishery started this year.
The proposal requested a loan guarantee that has been determined to be approximately $100 million.

"The expectation is that the province's taxpayers will subsidize any deficiencies if crab market returns can not provide for a price of $1.35," said Minister Jackman. "It has been established that this could cost the taxpayers of the province approximately $10 to $20 million. This proposal in no way represented a long-term plan and was only a band aid solution."

The likelihood that similar requests would subsequently be submitted for other fisheries in 2010 could see a total subsidies requirement of $50 million or more from the province's taxpayers. Providing subsidies to the fishing industry raises serious issues for international trade law and bilateral agreements.

"Our government is in possession of an external legal opinion from an expert in international trade," said Minister Jackman. "The opinion states that there is a serious risk of trade action if subsidies are provided to the fishing industry. A wide-ranging trade action based on subsidies could potentially jeopardize the future of the province's fishing industry. That is not a risk our government is prepared to take."

On April 20, Minister Jackman suggested to the FFAW and ASP that they explore an arrangement in which raw material prices vary based on audited market returns. Such a model exists in the Alaskan crab fishery. This could be a possible means of resolving the current price impasse. This open and transparent approach has been demonstrated to work in this province's lumproe and offshore shrimp fisheries, in addition to the Alaskan crab fishery. ASP presented a proposal along these lines on April 21.

"I think the Alaskan model holds potential for our crab fishery," said Minister Jackman. "Unfortunately, while the parties advised me that they believe the model has merit, the FFAW is unable to accept it in 2010 because it would not return a price of $1.35. The FFAW wants the Provincial Government to ensure this price is maintained throughout 2010, irrespective of market or currency changes.

"The progressive approach to price setting embodied in the Alaskan model requires collaboration and a negotiated arrangement between harvesters and processors," said Minister Jackman. "Our government will only consider financial contributions to bring about long-term restructuring and improved marketing, aimed at stabilizing the fishing industry. The province needs a fishing industry that can provide good incomes for participants for many years to come."

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Media contact:
Lori Lee Oates
Director of Communications
Department of Fisheries and Aquaculture
709-729-3733, 690-8403
oatesll@gov.nl.ca 

2010 04 2                                                     5:40 p.m.