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January 3, 2012

Lobsters on Holiday

by Philip Conkling

Like most of us, I suspect, I used to think of this as the time of year when we eagerly open the mailbox to get Christmas cards with family pictures from college classmates and far-flung relatives to remind us of the ineluctable Passage of Time. But now our December mailboxes have primarily become conduits for catalog advertising for things we have no real desire to buy. This month, I received two impressively produced lobster catalogs, which got me to thinking about the economics behind marketing holiday lobsters.

To understand why you might have received a lobster catalog when you can buy better lobsters at any number of local venues, it helps to know something about how lobster markets have changed in recent years. During the past two decades, American lobsters became especially popular among Europeans for Christmas Eve and New Year’s meals, and this market improved the economic prospects for thousands and thousands of Maine lobstermen. But it was not always thus. Few people appreciate that the opening of the European lobster market to fishermen on this side of the Atlantic is not only relatively recent, but was effected almost solely by a small but important change in air freight technology.

Until airfreight crates were redesigned in the 1990s, shipping lobsters on ice to distant markets ended up killing great quantities of these valuable crustaceans as the ice melted around them in pools of fresh water. This had the unfortunate side effect of killing a lot of entrepreneurs along with them.  But with the prospect of reasonable “shrinkage” (the industry’s term for losses during shipping) from the improved crate design that separated melting ice from the lobsters, dealers could buy lobsters in the fall and sell them without having to run the risk of losing them to the high risk overseas market or storing them in pounds during the winter.

The opening of the European lobster market was also facilitated by the beginning of what became a stupendous increase in the abundance of lobsters harvested from Maine waters. For the 40 years between the late 1940s and the late 1980s, the annual harvest of lobsters in Maine did not vary plus or minus 10 percent from 20 million pounds in any year. This enviable record of a sustainable harvest, rare in the marine world, was accomplished by common sense conversation practices developed by lobstermen themselves. Maine lobstermen not only began returning egg-bearing females to the sea, but they also initiated the practice of cutting a “V-notch” in her tail that would mark her as a successful breeder and last through two or three additional molts. Maine lobstermen also do not harvest oversized lobsters, which produce a disproportionately high number of eggs and recruits and also successfully advocated for escape vents in traps that reduced the number of smaller lobsters that too often became bait for larger lobsters. Crunch, crunch; yum, yum.

Beginning in about 1990, Maine lobster landings began to increase, such that by 2010 Maine landings had quintupled to almost 100 million pounds. If you can answer the question of why there are so many lobsters harvested today when the number of Maine lobstermen and traps are stable or declining, you could probably get elected governor. But the more pressing matter for dealers and for lobstermen was where to sell all these tens of millions of pounds of additional supply to keep prices from plummeting?

The obvious answer was Japan. You might recall the reining fear of the 1990s when the Japanese were going to own everything. (Now we fear the Chinese.) The initial efforts to open lobster markets in Japan were stymied by the fact that the time lags and temperature changes for shipping live lobsters from Maine and Canada, even with the redesigned crates, resulted in unacceptable losses. Some entrepreneurs developed a scheme of having planes land in Hawaii, dumping lobsters back in cold salt water to revive them, before repacking them for Tokyo, but this was clearly clumsy and expensive.

What happened next in the market was another stroke of luck for Maine lobstermen. Americans decided that vacations aboard cruise ships, featuring round-the-clock, all-you-can-eat buffets were even more fun than Disney World. Cruise lines began buying vast quantities of processed lobster meat, which helped prop up prices. Restaurant chains like Red Lobster and Outback Steak House bought up additional vast quantities, mostly from subsidized Canadian processors where an increasing number of Maine lobsters went. But no one really cared because everybody was making money hand over fist. Then in 2007 and 2008, the market fell apart. Prices collapsed during the financial crisis and have not yet recovered.

So that brings us back to the lobster catalogs in the mailbox. You—or anyone you want to reward—can get two live, hard shell, one-pound Maine lobsters with lemon and butter delivered to your door overnight for about $95 from a catalog. Or, if you prefer, two 12 to 14 ounce frozen tails for about $130. Hardly bargains in Maine, but a possible gift for that hard-to-please person on your list if you are someone perhaps not of the 99 percent.

Even though I was not tempted to send Maine lobsters to anyone as a Christmas present, what caught my eye in one of the catalogs was the offer of frozen lobster tails from around the world that had been singled out as one of Oprah’s “favorite things.” In addition to lobster tails from Maine, you could order frozen tails from South Africa, West Australia, North Australia, New Zealand, Brazil and even Tristan da Cunha, one of the most remote islands in the world. In general, a pair of tails from any of these other places will set you back less than a pair of Maine tails. But one thing I can guarantee, none of them can hold a candle to the taste of one of our lobsters. I just wish we were better at marketing Maine’s most iconic product.

Philip Conlking is president of the Island Institute based in Rockland, Maine.

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