SEAFOOD.COM NEWS – By Jack MacAndrew – Charlottetown, PEI, Oct 16, 2009 – ‘Absolutely devastating ….’ came the answer to a question about the impact on the Eastern Canadian seafood industry because of near parity of the Canadian dollar against American currency, currently at $1.03 US, and moving inexorably towards total parity of $1.00 Canadian for $1.00 U.S. And the same company officer’s follow – up comment was implicit with dire circumstances to come for those who harvest the sea, ‘If I can’t sell it, I’m not going to buy it’, he said.
There is one aspect of the current dollar situation that everyone in the industry agrees with: that this is a devastating blow to an industry reeling from the recession still evident in the United States and Canada.
For processors caught between grousing fishermen wanting more for their lobster, and American brokers and other customers trying to stand pat with low prices at which they can move product, it’s a matter of watching margins disappear.
One mussel company in Prince Edward Island selling 50 per cent of its output into the USA, has watched its margin shrink from 15 percent of selling price, to 3 per cent or less. That means profit has disappeared.
‘We’re basically trading mussels for dollars,’ a mussel farmer told Seafood News. ‘There’s very little or no profit. Sales are good, but we’re barely returning enough to pay the power bill. This situation is causing tremendous hardship. It is a daily concern for me.’
‘It’s like running a [discount] promotion campaign and not knowing when it will be over.
And there’s another tricky bit as well. More and more customers are stretching their payment to sixty days, adding the threat of bankruptcies to the processors’ worries.
Denny Morrow is Executive Director of the Nova Scotia Seafood Processors. He’s concerned over what might happen to lobster fishermen ready to begin seasons in the Bay of Fundy and along the Nova Scotian and New Brunswick shores over the next couple of months. Sixty per cent of that lobster crosses the border and into the Boston and New York market, and ‘… there’s still high unemployment in those markets,’ he says.
‘There’s a feeling we may be at par before the New Year,’ he says. ‘Everybody now has an eye on what the prices will be when Southwest Nova opens at the end of November.’
Monty Snow, of Ferguson Sales, says the current situation is leading to ‘…a total re-alignment of harvesting. It hurts fishermen if we can’t market the product. We used to live of the differential in the dollar. We can’t do that anymore.’
‘We can’t put prices up in the short term to recoup our margins,’ says another sales manager. ‘and we can’t raise them in the long term either. What we are doing now is managing risk, and trying to keep costs to a minimum.’
John Sackton, Editor And Publisher
Seafood.com News 1-781-861-1441
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