Lobster prices tied to worldwide markets

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There are plenty of places along the Maine coast where anyone can walk down to the end of a rustic pier and buy fresh or freshly cooked lobster while taking in a view of the water.

But that’s not how most of the lobster that is caught in Maine is sold and consumed.

According to state and industry officials, approximately two-thirds of the 72.6 million pounds of lobster caught in Maine last year was shipped to Canada for processing.

With a total value of $297 million, that would mean $198 million worth of Maine lobster went to Canadian seafood processing companies in 2006. That does not include lobster that is shipped south out of state or to Europe, either for processing or to be sold in restaurants and food markets.

So as hundreds of Maine lobstermen, in harbors ranging from Cutler to Casco Bay, have tied up their boats this week to protest the price they’re getting for their catch, the goal has not been just to get tourists and local lobster shacks to pay more for lobster. They say it is an attempt to send a message – to large-scale dealers and processors further along the global supply line – that the price they’re being offered is not enough to cover their operating expenses over the long term.

Some fishermen believe the low price – as low as $3.50 per pound in some areas – is a result of collusion among some of the bigger distribution and processing companies. They say that consumer prices have stayed relatively stable but the boat price, or what they get for their catch, recently has gone down more sharply, leading many to believe that the boat price is being kept artificially low.

Boat prices spiked to around $10 this past spring, but that was because nobody was catching much of anything.

Boat prices are irrelevant if you have little or nothing to sell, said Clive Farrin, president of Downeast Lobstermen’s Association. “As soon as there’s a hint of things improving, the price goes down.”

The catch rate has improved since spring, but it is still relatively slow. There’s not enough volume to make up for the low price, according to fishermen.

Industry officials say many processors aren’t ordering as much lobster this year as they have in the past, which could indicate that processors already have a healthy supply of frozen lobster in storage.

Fishermen and others have said this week they have heard that Canadian companies plan soon to reduce the amount of Maine lobster they buy, possibly as a counter-response to this week’s tie-ups.

“The Canadian processors are not buying,” food industry consultant Kristen Millar said Thursday. Until recently, Millar was executive director of the Maine Lobster Promotion Council.

Millar said the distribution system for moving lobster out of Maine is inefficient and often results in the lobster passing through many sets of hands before it reaches the consumer. The level of competition among dealers is high, she said, and both consumers and processors sometimes opt for other, less expensive types of seafood that are becoming increasingly available worldwide.

“You’ve got options” in the marketplace, Millar said, “and they are cheap ones.”

Calls placed this week to several Canadian seafood processing industry officials were not returned.

Dealers say they also are being squeezed in the middle, both between fishermen and processors and between the low prices and high costs.

Bill Atwood, president of Atwood Lobster Co. in Spruce Head, said Thursday that he makes about 50 cents on every pound of lobster that passes through his distribution facility.

Another dealer who did not want to be identified said he earns only about 20 cents per pound for the lobster he ships.

“If I was getting 50 cents [profit] per pound, I’d be doing cartwheels,” the other dealer said.

Atwood said more and more lobster is caught in Maine every year. The value of the total catch in 2006 may have declined to $297 million from $315 million in 2005, but the 72.6 million pounds that were landed in Maine last year is the most ever officially recorded by the state.

“The [supply] is high,” said Atwood, who estimated his company will ship 1 million pounds out of state this month. “The catches are bigger and stronger in volume than they ever have been.”

At the same time, some fishermen estimate their landings so far this year may be off as much as 30 percent.

The relatively small number of Maine processors cannot handle the volume of lobster caught in Maine, Atwood said, which is why between 20 and 25 tractor-trailer loads of lobster cross the border from Maine into Canada every day.

Canadian processing companies are becoming bigger players in the world seafood market, according to Atwood. Frozen lobster tails, the processors’ primary money-maker, can be made from different kinds of lobster caught in the Bahamas and Australia, he said, and the processors can concentrate on other seafood products that have lower cost margins, such as crab or shrimp.

“It’s going to fluctuate with the world market,” Atwood said. “When [processors] shut the [facility] doors, there’s no way I can buy the lobster [from fishermen].”

Atwood said he has heard from his Canadian buyers that processors still think $3.50 per pound is high. Some have said they may concentrate on other species and cut back on buying Maine lobster.

“That’s what they’ve indicated,” Atwood said. “If [the price] goes down a quarter, they might send a truck.”

But Bob Bayer, executive director of the Lobster Institute at the University of Maine, downplayed the notion that Maine lobstermen may be the victim of indifference from the Canadian companies. He said annual increases in lobster landings in Maine over the past decade coincide with the Canadian processing facilities opening for business.

“They came around just in time,” Bayer said. “Without the processors, the price would be a lot lower.”

Though many Maine fishermen suspect there may be price-fixing among lobster buyers somewhere down the line, it is lobstermen who have gotten in trouble for trying to control the market in the past.

In the mid-1950s, in the early years of the Maine Lobstermen’s Association, fishermen decided to tie up their boats in response to what they said was price-fixing by dealers. When the tie-ups continued, with fishermen demanding a specific price, the federal government stepped in. Prosecutors claimed the organized effort violated the Sherman Antitrust Act and filed charges against MLA.

The government won the case, but there wasn’t much fallout for MLA. Since then, the organization has taken an interest in cost concerns for fishermen and about the importance of being able to earn a living wage, but it has been careful to stay out of any perceived attempts to negotiate a price.

For that reason, a spokesman with MLA declined Friday to comment about this week’s tie-ups.

Jack Merrill, a fisherman from Little Cranberry Island, said Thursday that the economic model that lobstermen work under is an anachronism in the modern global fishing industry.

Unlike other fisheries, commercial lobstering in Maine consists of approximately 7,000 licensed independent owner-operators who fish and maintain their own gear, buy their own bait and fuel, and often pay an assistant to help them haul traps.

And, according to Merrill, it is the only industry he can think of where the buyer sets the price for the product.

“The small, independent businessman is up against it,” he said. “Everything seems to be set up for the bigger guy.”

Changes in the lobster market, he said, reflect broader changes in society where large national chains are coming into smaller towns and squeezing out local stores that have existed for decades. Maine lobstermen, he said, stand out in an increasingly corporate, global economy.

“It’s a changing world,” Merrill said, “and we really don’t belong in it.”