Huge price drop for Dungeness crab is a tough deal for Washington state crabbers

SEATTLE — When you hear about a “market correction,” here it is in a dramatic display: a plunge of two-thirds or more in the price of Washington Dungeness crab.

There are plenty of reasons why.

One is that you, the consumer, are willing to pay only so much for what one industry insider says “is probably looked at like a luxury item.” Well, time to party on, consumers.

“They’re really loving it. They’re super happy that they can get an awesome product,” says Michael Fodness, meat and seafood director for the six-store, locally owned Town & Country Markets.

Those stores are charging $5.99 to $7.98 per pound for Dungeness, but the higher price is for “premium 2-ups,” meaning each crab weighs at least 2 pounds, with a higher meat-to-shell ratio.

For the Dungeness crab fishers — a number of them small operators — it’s tough days.

They’re getting $2 a pound, maybe $2.25 a pound wholesale for the crabs. In last winter’s boom times they were getting $5.50 a pound from processors.

“I haven’t seen this low a price in over a decade. It’d probably be cheaper not to fish. But we can’t not fish, if that makes sense. We have to keep making our payments or we’ll end up in a loss,” says Jennifer Custer, who does the bookkeeping while her husband, Chuck Custer, runs their 46-foot fishing boat, the Miss Kathleen, out of Westport.

They employ two full-time deckhands. “We have people and families counting on us,” she says.

Jennifer is 57, Chuck is 59. They live in Ocosta, an unincorporated community in Grays Harbor County. To earn extra income, Jennifer is a real estate agent. Chuck also fishes for albacore tuna and halibut.

She says of the Dungeness crab market, “I don’t know how they determine the price.”

In interviews with people in the industry, there is not one specific reason given for the dramatic price shift.

Larry Thevik, president of the Washington Dungeness crab Fishermen’s Association, talks about Adam Smith’s famous reference to the “invisible hand.”

It might be unusual to have a crab guy talk about the 18th century man considered the father of modern economics, but there it is.

According to the finance site Investopedia.com, the invisible hand “is a metaphor for the unseen forces that move the free market economy. Through individual self-interest and freedom of production and consumption, the best interest of society, as a whole, are fulfilled.”

Just what forces are we talking about?

“It was a perfect storm that COVID created, between losing the restaurant markets for almost two years, the inflation rate that has increased way more than anybody predicted, and a lot of inventory left over from last year,” says Lori Steele, executive director of the West Coast Seafood Processors Association in Astoria, Oregon, that represents the major companies. The leftover inventory was flash-frozen crab that can be stored about a year, she says.

The crabbers benefited from COVID-19 because of the $4 trillion in spending that Congress passed and was spent in 2020 and 2021 to respond to the pandemic and its economic effects

Speaking about 2021, " ... coming into the holidays, people were spending money and buying a lot of crab, so the demand for King, snow and Dungeness crab was literally off the charts ... along with a lot of other shellfish on the upper end on the scale of cost,” said Dan Obradovich, the Dungeness crab manager for Pacific Seafood, one of the major processors, based in Clackamas, Oregon.

In an interview last November with the industry publication SeafoodSource.com, he went on: “Demand seemed pretty insatiable, especially running into the holidays, which is always one of the biggest consumption periods for crab.”

And then?

The COVID money ended, “the invasion of Ukraine happened in February 2022, oil prices shot up, and the economy came to a grinding halt,” Obradovich said. “And it just felt like the anchor went out of the boat and demand slowed to a crawl.”

But there was something else affecting prices, Obradovich said in the November interview. (Pacific Seafood said that Obradovich was on the road and unavailable for comment.)

“But I think that the biggest thing is inflation has really created a psychological change in people’s purchasing patterns,” Obradovich said in the interview. “Crab is probably looked at like a luxury item and people are telling themselves right now that they’ve got to watch their pocketbooks.

“Even though there’s a certain amount of people with enough income that the price probably doesn’t really matter, they are still hearing every day on TV how bad inflation is and they don’t want to be the ones spending lots of money on what’s perceived as a luxury item.”

Welcome to the world of commodities. Up, down and all around.

There are some 200 Dungeness crab commercial crab fishers licensed in Washington. Although found in commercial quantities from central California to the Aleutian Islands, it is with this state that they are associated. Their name comes from the unincorporated community of Dungeness north of Sequim, where the first commercial fishery for the crab began in 1848.

It was a record year for the Dungeness fishery in 2022, says Thevik — the crabbers got more than $88 million from processors.

“This year, at a comparable volume, catch would be worth less than $40 million, perhaps $35 million,” Thevik says. “The last 10 years average value is roughly $43 million.”

Meanwhile, says Jennifer Custer, “Our fuel price is up from an average price per gallon of $1.91 in 2020 to an average today of $4.49. Up 135%. Bait is up 35%. Our crab pots alone are up 50% just in the last two years because metal prices went up.”

Please, buy that crab at the $5.99 a pound price, she says. “The more that they buy, even at $5.99, the more demand there is and then processors will buy more crab. We need volume.”

At the Crab Pot Seattle restaurant on Pier 57, Nick Novello, director of culinary operations, is a happy chef.

He talks about the cash deals — meaning paid by the next day — he could get for cleaned half crabs.

“It’s going to be a good summer,” he says.

At least for some, that Adam Smith invisible hand is working out.