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November 1, 2008
Article

Lobster industry in crisis as prices collapse

by Sandra Dinsmore

"There's no market because there's no money because everybody's scared," said Butch Cressey, Manager of East Boothbay's Little River Lobster, summing up in ten words the plummeting lobster boat price as well as the American and world economy.

"The market started to tumble about a week ago," recalled Port Clyde Lobster manager John Petersdorf on October 10. "[Boat prices] just started falling out of sight." At 10 a.m. of October 10, Petersdorf's boat price, the price paid to fishermen for the lobster they trap, dropped from an already shocking low of $2.60 per lb. to an even lower $2.25 per lb. Petersdorf said Downeast Maine co-ops and dealers were paying the same amount and added, "Even there, the wharves that make commissions are not making their quote-unquote full commission. Everybody's sharing in the pain a little bit."

By Sunday, October 12, the Vinalhaven Co-op dropped to $2 per lb., followed by other Vinalhaven dealers, making that the lowest price on the coast. (That Sunday, most dealers and buying stations had stopped buying.) This was followed by a drop by a Downeast dealer to $1.75 per lb., a couple of days later, although he later paid back that quarter per lb. and brought his price back up to the prevailing low of $2 per lb. Several other co-ops also dropped below $2 per lb.

The week of October 6 New Harbor first dropped from $3 to $2.20 per lb. On Oct. 11 it went to $1.90 per lb. where it sat through October 15, then rose to $1.95 per lb. "Isn't that awful!" exclaimed Dock Manager Steve Hope of that nickel rise. The Friendship Co-op (not the Heritage one) hit a low of $1.75 per lb. for a single day during that period.

As this price meltdown got worse and worse, co-ops, fisheries groups and fishermen's wives began holding meetings to make plans for surviving this mess. To give a sense of the difficulty of trying to survive on a boat price of $2 per lb., fisherman Leroy Bridges, at a Stonington meeting that evening, told about losing two pairs of traps earlier that day. He said he went home and figured that at the going rate, he would have to sell 140 lbs. of lobster to replace those two traps.

Prices hadn't been this low since the November following the 9/11 terrorist attacks when the lowest price had been $1.75 per lb. But this year problems were exacerbated by Hurricane Kyle, which, while not damaging houses, roiled the waters, got the lobsters moving and doubled some catches Downeast. Many lobstermen count on money from autumn fishing to tide them over until spring, and on the wholesale and retail side of the market, Columbus Day signals the time many restaurants close. The live market lost the last weeks of tourist and leaf-peeper business.

Petersdorf said he thought the problem went back to the Canadian processing sector of the lobster market then stopped to explain, "The market needs to be able to tell the dealer what the price is so the dealer can tell the co-op what it can pay. In this case," he said, "the market did tell the dealer. It's nobody's fault."

But some fishermen were sure this mess was a fraud perpetrated by Canadian processors to cheat fishermen. This time it was not that age-old story fishermen tell of dealers forever cheating fishermen, but a breakdown triggered by the bankruptcy of banks that had made lines of credit available to Canadian processors, who could no longer get money to buy Maine shedders. Others differed a bit with Petersdorf, saying that Canadian processors are not the market for Maine lobster, but rather, it is cruise lines and restaurant chains that buy them. While Canadian processors may buy many, even most of Maine's shedders, they are not the ultimate consumers of those soft shelled lobsters. The consumers are people on cruises and in restaurants who eat fresh and processed lobster.

The processed lobster market is largely made up of soft shell lobster. After the lobster sheds, the product lobstermen trap, usually in July and August, has a soft shell, which makes it hard to ship very far without a fair amount dying. It's a fragile product, far different than hard shell lobster, which, though delicate, when handled and packed carefully can be shipped around the world.

Most dealers sell their shedders to processors, who cook them immediately then either freeze them in the shell or remove the tail, body, leg, and claw meat from the shell and freeze it that way. Such processed meat is marketed as "tails," and "meat." There is the lobster tail market and the lobster meat market. Then there's leg meat and minced meat. And "minced" meat, processed by machine, has become an important contributor to the lobster market.

Canada celebrated its Thanksgiving on the Monday after Columbus Day weekend and U.S. banks and post offices were also closed. This led a number of dealers to tell their fishermen not to fish until Monday or Tuesday so they wouldn't be overwhelmed with product they couldn't move.

But by Monday, October 13, few buyers had not dropped to $2/lb. Some dealers consistently pay a certain amount over the co-op price in their area and continued to do that. Dealers lost thousands and thousands of dollars.

Most co-ops and dealers were still open for business and selling. However, all summer some fishermen had gone from the dealers to whom they'd previously sold to smack boats, that, with little to no overhead, could pay more than co-ops or dealers with year-round facilities and staffs.

Some of the smack boats and smaller dealers stopped buying, as the boat price kept dropping, leaving some fishermen without an outlet for their lobster.

At special board meetings, both the Stonington and Vinalhaven co-ops decided not to accept any fishermen wanting to return to the co-op. The boards decided it was only fair to stick with their members during this stressful period.

Petersdorf said he'd heard people ask why the retail sector-supermarkets and restaurants-hadn't helped the other parts of the market, but Petersdorf said that this "market tumble" happened so fast that they hadn't had time to, for instance, run specials.

Communities held special events to help lobstermen. In addition to a Stonington one-day sale, Damariscotta planned various activities, based on live lobster from the area.

Damariscotta Hardware bought 700 lbs. of lobster to give a coupon for two free lobsters to the first 200 customers who bought $30 worth of merchandise on  November 1 between 6 to 9 a.m. Hardware president Robert Gardiner said he hoped people would buy more lobster from the co-ops selling in his parking lot that day. According to Ernest Card, of Lincoln County Press, local restaurants also planned to offer special lobster dishes at greatly reduced rates. And in Rockland, Heidi Stevens, co-owner of By George Jewelers, organized a lobster raffle. She signed up 33 Rockland businesses who would each buy at least 10 lobsters and raffle the lobsters off on Oct. 25.

Community efforts notwithstanding, everyone involved in the lobster industry was under enormous tension: fishermen, dealers, co-op managers, wives, children, and partners. A Massachusetts dealer, the father of three teenagers, said it was hard to explain to his kids why he looked so worried when he came home at night.

Suzy Shepard, hairdresser and wife of Stonington lobsterman Mike and mother of lobsterman Patrick Shepard, said the least she can do to help is to have an inviting house to come home to with the smell of good food cooking, a pie or something else for her men to look forward to. The bill payer in the family, she knows where the money has to go. People in the industry are under so much stress now, everyone is pulling together to try and help each other and keep spirits up.

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