ELLSWORTH, Maine — August 8, 2012 — As protests in New Brunswick over Maine lobster imports have flared up and shipments across the border into Canada have slowed to a crawl, the commotion has injected new urgency into a persistent question in Maine: How can the state increase Maine’s processing capacity and keep more of the market value of Maine’s $334 million commercial lobster fishery?
A sizeable portion of lobster caught in Maine’s waters — some have said it’s as high as two-thirds at some points during the year — is shipped to Canada where Canadian firms cook and freeze the meat, packing it as lobster tails and other products. According to the Telegraph-Journal newspaper of Saint John, N.B., 80 percent of the $400 million worth of lobster products processed each year in the province is shipped to the United States.
Maine lobstermen this year have had to contend with the lowest prices they’ve been offered in decades due to a glut of soft-shelled lobsters. Such lobsters aren’t well suited for shipping live, which has been the traditional market for the the state’s lobster industry, and so generally have to be processed into cooked meat and frozen tails in order to meet market demand.
On Tuesday, Gov. Paul LePage issued a press release saying that, to help address the broader issue of relying on Canadian processors and to add more value to Maine’s catch, there should be more processing capacity in Maine. Canada has two dozen lobster processors, he said, while Maine has only three: Cozy Harbor Seafood of Portland, Linda Bean’s Perfect Maine in Rockland, and Shucks Maine Lobster in Richmond.
“That’s why my administration has been exploring ways to implement smart strategies that drive energy costs down and provide incentives to build more processing plants in the state,” LePage said. “The lobster industry is a critical component of our Maine heritage and economy. It deserves our attention.”
But John Norton, president and CEO of Cozy Harbor Seafood in Portland, said Wednesday that though he would love to reduce his energy bill, there are other costs he faces that are more onerous — costs that are not nearly as formidable for his Canadian competitors.
Norton said his firm spends about $350,000 a year on wastewater disposal costs and another $250,000 to $300,000 on health care expenses, which he expects will increase when elements of President Obama’s new health care plan go into effect in 2014. Canada has nationalized health care, he said, and their processors are allowed to release water byproduct from their processing operations back into the ocean.
“We do have expensive energy costs, but that’s not what determines how competitive our processing sector is,” Norton said. Wastewater and health care costs “far outstrip the energy cost issue,” he added.
There are other ways that Canadian processors have a competitive advantage over those in Maine and other states, according to Norton. The provincial government in New Brunswick subsidizes capital equipment costs, which can run up to $1 million dollars or more just for a high-end piece of equipment and another couple of million for a building to put it in. In Quebec, he added, processors get operating subsidies for their labor costs and for the amount of lobster they handle.
“That’s part of the equation,” Norton said of the competitive advantage enjoyed by Canadian processors. “To my knowledge, it’s not so much the federal government as it is the provincial governments.”
Canadians also have nonsubsidy related advantages, he said. They have a longer processing season, with different parts of the maritime provinces fishing at different times of the year. They also are permitted to process lobsters that are larger and smaller than the size limits in Maine, even though a new law adopted last year in Maine allows processors here to process large lobsters that show up in shipments from Canada. However, that law is set to sunset in 2013, Norton added.
Norton said his company employs 225 people on a seasonally fluctuating basis and likely will process eight million pounds of lobster this year. He said he would be happy to expand his firm, but that it doesn’t make sense to expand processing without also expanding the market of customers for lobster products.
He said there may not be much processing in Maine but he thinks the U.S. and Canada combined have too much processing capacity, spread out over an annual basis, for what the global lobster market can consistently support.
“If you don’t focus on marketing, more processors in Maine is just going to force the price down,” Norton said. “If you want to increase the price [fishermen are paid], then you have to increase the price people are willing to pay for the product, and that means expanding the market.”
A case in point, Norton said, is what happened to Live Lobster in the past year. Live Lobster, a lobster distribution firm based in Chelsea, Mass., last year opened its first processing facility in the Gouldsboro village of Prospect Harbor, in a former sardine cannery that it purchased from Bumble Bee Foods. The company also has buying stations in Phippsburg, Rockland, Spruce Head and Stonington.
Live Lobster, which operated in Maine as Lobster Web LLC, has been idle since March, since its checking accounts were frozen. The company is being sued by its bank and by a former company official for more than $3.5 million.
Read the full story in the Bangor Daily News