U.S. inflation is sinking Canadian lobster and snow crab prices

The price of Canada's two most valuable seafoods is crashing this year as consumers recoil from the impact of rising inflation.

The price of snow crab has plummeted in 2022 between 60 and 65 per cent while lobster prices have fallen about 35 per cent.

Trade data presented this week in Halifax by veteran U.S. analyst John Sackton, president of Seafood Datasearch Market Consulting, shows demand for the shellfish has collapsed in the key United States retail market.

"It's like a tide in the Bay of Fundy. Everything has run out and we're seeing that the … performance of lobster and crab is the worst of all the items in the supermarket," Sackton told CBC News during a break at the annual Nova Scotia Department of Fisheries and Aquaculture Minister's Conference.

U.S. consumers hit by inflation give up pricey seafood

Demand that had built up during the pandemic for all types of frozen and fresh seafood powered the Nova Scotia industry to a record-breaking year in 2021 with revenues reaching $2.5 billion — led by the two shellfish.

Other Atlantic provinces also experienced a boom.

But high prices for frozen snow crab and frozen lobster, along with a modest increase in the price of live lobster last year, are melting in 2022.

"And the reason is that consumers backed away from the high prices at the same time that they began to be buffeted by these other problems of high gasoline prices, inflation and concern about lack of economic support," Sackton said.

"What are they giving up? They're giving up snow crab, lobster, frozen seafood and this is what is really driving that change in market price and market value."

The winners

Many other seafoods have been spared the slump suffered by lobster and snow crab.

Sackton points to scallops, farmed Atlantic salmon, oysters, mussels, cold water shrimp, halibut and frozen groundfish.

"Those parts of the seafood economy are not participating in this market crash and the headline number that's caused by the collapse of lobster and snow crab," he told the conference. "That shouldn't obscure the fact that scallop producers in Nova Scotia are having an excellent year, with more sales to Europe and the U.S. It shouldn't obscure the fact that the oyster markets are booming."

Back to earth on lobster

The processed side of the lobster business has borne the brunt, according to Geoff Irvine of the Lobster Council of Canada.

He said diversifying markets, a premium product that is consistently available and eco-certification should help the business weather any recession.

"2021 was a fantastic year. It was an anomaly. It wasn't following the trajectory we had been on," said Irvine. "So we're coming back a little bit to earth."

What it means at the wharf in a fishing province

Wharf prices paid to lobster fishermen hit a record-high $17 per pound in Canada's biggest lobster fishery in southwest Nova Scotia at the beginning of the year. Those prices retreated sharply during the summer in the Gulf of St. Lawrence, where fishermen were getting $5.50 a pound.

The Canadian industry has never converted to metric in reckoning weights.

The industry will have a close eye on prices when the southwestern Nova Scotia lobster fishery opens again this later fall.

"There's certainly going to be an expectation it's going to come down when that season opens," said Sackton.

In Shelburne County, one-third of jobs are in seafood

An economic impact assessment of the seafood industry in Nova Scotia released Wednesday shows the stakes in a fishing province.

Peter Norsworthy of Pisces Consulting compiled the direct seafood employment in coastal counties using census data.

One county stands out in southwestern Nova Scotia.

"The best example would probably be Shelburne County, where 35 per cent of the people that are working are directly employed in the seafood industry, whether that's in aquaculture, harvesting or processing," said Norsworthy. "And you could add additional spinoffs. You know, 50 per cent of the people that are employed in Shelburne County are directly and indirectly related to the industry."

Next door in Yarmouth and Digby counties, he said about one in five jobs are directly in seafood.

The industry directly employs more than 10 per cent of the residents in Guysborough and Victoria counties, according to the study, and seven to 10 per cent of residents in Queens, Inverness and Richmond counties.

Norsworthy, a seafood industry veteran, predicted prices will settle to pre-COVID levels and gradually build back.

"But how deep and how long a possible recession will dictate how long that recovery takes," he says.