1a adj. — Newfoundland, rare
tainted or spoiled food.
Type: 2. Preservation — The term smatchy is used to describe food, usually pickled or salted (see the 1990 quotation), that is "tainted, spoiled, [or] improperly cured" (see DNE, s.v. "smatchy"). Smatchy is a preservation from British English, deriving from the dialect noun smatch, which is defined as "a flavour, taste, twang [that is] generally of an unpleasant taste" (see EDD, s.v. "smatch"). Thus, EDD notes the development of the adjective smatchy, described as "having contracted a bad flavour" (see EDD, s.v. "smatch"). Note that the noun smatch is documented as an assimilation of the term "smack" (see EDD, s.v. "smatch"), which is defined as a peculiar or distinctive taste or flavour (see OED-3, s.v. "smack" (n)(1a)). The term is most likely outdated, since the writer of the 2007 quotation claims that the word "has totally gone out of our local lexicon". Moreover, as seen in the 2012 quotation, the young woman is unaware of the meaning of smatchy, a term listed as an example of "antiquated" maritime terminology. Accordingly, the internet chart (see Chart 1) suggests that smatchy is a low frequency item that is exclusive to Canada.
A second meaning of 'bad taste or smell' has been suggested (linguist Sandra Clark, MUN, Dec. 2013), but we were unable to find written quotations for that meaning with our resources.
See also DNE, s.v. "smatchy".
1b adj. — Newfoundland
a bad taste or smell.
Type: 2. Preservation — The term smatchy can also describe a bad taste or smell (suggested by Clarke in December of 2013). This term probably derives from meaning 1a, as spoiled or tainted food arguably possesses these traits. Thus, it is likely that smatchy was semantically generalized to describe anything with a bad taste or smell, beyond the semantic domain of food.
See also: fousty
Images:

Chart 1: Internet Domain Search, 26 May 2014