Economic Impact

July 17, 2012 — ROCKPORT — Tumbling lobster prices have spurred a rush on the normally pricey seafood, from popular Boston waterfront spots like James Hook & Co. to weathered fish shacks to some grocery stores.

“We’ve been selling out every day,” said Brian Sansoucie, a supermarket manager on the North Shore. “Customers are thrilled, and we just can’t keep enough of them.”

At Yankee Lobster Co. in Boston, where lobster was going for $5.99 a pound, sales over the weekend were up by half, while markets reported unusually brisk business.

Nelson Rodriguez, 49, from Jamaica Plain, regularly buys 20 pounds of lobster for family cookouts and said he is getting used to dining in style.

“It’s pretty great,” he said. “I’m saving about $40 each time. A lot better than at the restaurant.”

Lobster has long enjoyed a gourmet image, a deep-sea delicacy that requires deep pockets. But this summer, as lobster prices have plunged in a saturated market, the succulent treat has increasingly become a bargain.

At The Gloucester House Restaurant, Lenny Linquata said the market upheaval has flipped the seafood hierarchy, making lobsters among his cheapest seafood. As a result, a lobster roll that would have cost $35 is now $25, he said. Hot boiled lobster that would often run close to $30 is going for $15.95.

In Massachusetts, fishermen are selling lobster for less than $3 a pound, down by more than one-third over last summer. In Maine, the price this week has fallen to around $2 a pound, about half of what fishermen need to break even.

“It’s a real hardship,” said Robert Bayer, who directs the Lobster Institute at the University of Maine. “Some of these guys aren’t even going out.”

The price drop was brought on by an early arrival of soft-shell lobsters, which typically do not arrive in force until July. This year, fishermen were harvesting them in May and in abundance.

 

Read the full story in the Boston Globe

 

 

July 17, 2012 — PORTLAND, Maine — A lobster promotion group is launching a campaign that will include promotions at retailers, restaurants and other places in Maine and New England.

The Maine Lobster Promotion Council says its Lobster Lover Campaign will kick off in August and include contests and giveaways.

Executive Director Dane Somers said with such an abundance of lobster on the market, the campaign is designed to encourage consumers to eat more lobster.

A glut of lobsters this spring and summer has driven down prices for consumers. Lobstermen have been hurt by low prices they’ve been getting for their catch, prompting many of them to stop fishing until prices go back up.

 

Read the full story by the Associated Press in the Bangor Daily News

 

 

July 16, 2012 — They can't talk about the historically high supply of their product.

They can't talk about the historically low prices they are getting for their catch. They can't talk about whether they have agreed to keep their boats tied up until things improve — because talking about it might imply that it's a concerted effort and a concerted effort would be a violation of federal anti-trust laws.

David Cousens of South Thomaston, president of the Maine Lobstermen's Association, often acts as a spokesman for the industry. He's usually chatty. Reached by telephone this week, Cousens said "no comment," before a question could even be asked. Then he hung up.

Several other members of the lobstermen's association also declined to talk. Some indicated that they have been advised by an attorney to keep quiet.

The problem can be explained by simple economics. A glut of lobsters — soft-shell lobsters, to be precise — has driven down the price that wholesalers are willing to pay lobstermen for their catch.

To help bring demand for their product back, lobstermen have stopped bringing new product to market. They are staying home.

"It just doesn't make sense to go out," said Tim Brunell, a lobsterman based in Pine Point and one of the few who agreed to talk.

Brunell said he's concerned less about the glut of lobsters and more about what he sees as price-gouging by dealers.

"I just can't see how there isn't some kind of price-fixing going on," he said. "We're hurting here."

Dealers, however, say they aren't going to pay more than the catch is worth and that the price is driven by the market, not a secret conspiracy.

The more lobstermen stay off the water, the quicker the prices will rebound, but lobstermen are notoriously independent, so Brunell is not sure if that will happen.

Maine Department of Marine Resources Commissioner Patrick Keliher released a statement recently warning against any criminal behavior.

"We have heard that fishermen are seeking to impose a de facto shutdown of the fishery and coercing others into complying by threatening to cut off their gear," Keliher said in his release. "Any such actions will be met with targeted and swift enforcement."

The situation was similar in the mid-1950s, when lobstermen were targeted in a price-fixing investigation. Maine Lobstermen's Association and its president were found guilty and given suspended fines for violating the Sherman Antitrust Act prohibits collusion in efforts to control market prices.

Some want the state to intervene so lobstermen aren't put in such a tenuous position.

In the long term, Keliher hopes to foster better dialogue among dealers and harvesters and also do a better job marketing Maine lobsters to the world, he said. The state's Lobster Advisory Council has been meeting regularly to talk about ways to increase demand, but nothing has been decided.

In the short term, Keliher said, there's nothing Marine Resources can do.

"My authority is to conserve the resource, not to impact markets," he said.

Staying home

Harbor watchers up and down the coast have reported fewer lobster boats going out in the past several days.

But if there is a shutdown, it's a quiet shutdown.

"We gotta be quiet," said Willis Spear, a lobsterman from Yarmouth. "The government is looking for scapegoats. This is definitely serious."

And frustrating. Lobsterman Scott Jordan posted this message recently on the Maine Lobstermen's Association Facebook page: "Instead of shoving our product down the throat of consumers, we need an effective trap limit that will decrease supply, increase price, decrease demand for the bait resource, increase trap yield and consequently productivity, conserve both the lobster and bait resource, and pacify whale-huggers by putting whales less at risk for entanglement."

There's nothing illegal about lobstermen tying up their boats. They are under no obligation to fish five days a week. It would be illegal only if they all conspired to stay off the water or to set a market price.

When they did that in the 1950s, it led to a consent decree, still in effect, in which lobstermen agreed not to discuss or participate in efforts to control prices.

In a competitive environment and a relatively short catching season, some cannot afford to stay ashore.

Brunell said he doesn't understand why the state cannot impose a moratorium. Other fishing industries are regulated. But the Maine lobster industry, which accounts for 80 percent of all domestic lobsters, has always had a wild west quality, with fishing territories determined by the lobstermen, in many cases passed down from generation to generation.

"In these difficult economic times, we are obviously very concerned for lobstermen in the state. This season's experience only underscores the need for the state of Maine to take a hard look at how lobsters harvested in Maine move from the dock to consumers," Patrice McCarron, executive director of the lobstermen's association, said in a statement late Thursday.

Not a surprise

The lobster glut didn't sneak up on anyone. In 1987, less than 20 million pounds of lobster were hauled. That number has generally increased ever since. In 2011, a record 104 million pounds of lobster were pulled in.

Low prices didn't arrive overnight, either. Although prices paid to fishermen peaked in value at $4.63 per pound in 2005, that has dropped considerably. Three years ago, lobstermen bemoaned the low price they were getting for their catch — less than $3 per pound. Now, it's less than $2 per pound in some cases, but that could rise if supplies decline or more valuable hardshells come onto the market.

This year's catch is all about timing, said Robin Alden, a fisheries expert and former Marine Resources commissioner.

"I've never seen it like this before," she said. "It's a perfect storm."

Lobsters can only be caught once. The glut of soft-shells in Maine waters came much earlier than normal, driven largely by environmental factors, such as warmer ocean water. Those soft-shells could turn into hard-shell lobsters by later this season and if the crustaceans are harvested then, they will be more valuable to harvesters. So, there is an incentive to stay off the water.

Still, about 70 percent of all lobsters caught off Maine are soft-shell.

They typically have less meat per pound, but the meat is tender and easier to get at. Only 15 percent of caught lobsters end up in boiling water and then on consumers' plates. The rest is processed, usually in Canada. But Canada has had it's own historically high harvest. They don't need any more product.

'Ride it out'

Spear said he's discouraged to see a once highly sought-after commodity like lobster become "nearly worthless." Many lobstermen, like Brunell, blame buyers and retailers.

Lee Kressbach, who runs Maine Lobster Direct and buys regularly from lobstermen, said many have been angry with him for not paying a higher price. Kressbach said his reply has been simple: "Bring me better lobsters."

Alden said there are years of mistrust between lobstermen and dealers, but dealers have the upper hand. Lobstermen have a perishable product that they need to sell. Their bargaining position is weak.

 

Read the full story in the Portland Press Herald

 

 

July 16, 2012 — Some Fishermen Keep Boats in Port; Outside Maine, No Drop for Consumers

"I've never seen them tie up [their boats] as a group like this before," said Randy Johnson, manager of the Winter Harbor Lobster Co-op. The 30 vessels in his co-operative have remained in port for a week straight.

"I'm looking at all their boats as we speak," he said Friday when reached at the co-op, which sits across the bay from Bar Harbor "They all have a cut-off point [in price] where they can and can't fish," he said. "It's an impossible situation."

Lobster prices at the dock have fallen to as low as $1.25 a pound in some areas-roughly 70% below normal and a nearly 30-year-low for this time of year. Jerry DiColo joins Lunch Break to explain why. Photo: Matthew Healey for The Wall Street Journal.

Harbors up and down the coast of Maine are filled with idle fishing boats, as lobster haulers decide that pulling in their lobster pots has become a fruitless pursuit.

Prices at the dock have fallen to as low as $1.25 a pound in some areas—roughly 70% below normal and a nearly 30-year-low for this time of year, according to fishermen, researchers and officials. The reason: an unseasonably warm winter created a supply glut throughout the Atlantic lobster fishery.

Those prices have officials and lobstermen concerned about the fate of one of the state's most vital industries. "For some people it will be disaster, they are going to go bankrupt," said Bob Bayer, director of the Lobster Institute at the University of Maine.

Retail lobster prices in Maine have started to fall along with the glut, and Mr. Bayer said that some fishermen have begun selling lobsters out of their trucks for as low as $4 a pound. But consumers elsewhere in the U.S. aren't likely to see bargains. The Maine lobsters that currently are in season can't be shipped long distances due to their soft shells, and retailers have other fixed costs that limit big price drops.

"There could be a small effect, but I wouldn't expect much," Mr. Bayer said.

Lobsters are a $300-million-a-year industry in Maine, according to Halifax, Canada, consulting firm Gardner Pinfold. Along with Canada, Maine's thousands of independent lobstermen supply the vast majority of the world's clawed lobsters, which have seen a population boom over the past three decades due to rising water temperatures and overfishing of cod and haddock, their main predators.

Profit margins are low even in good years, but this summer the problem has intensified. The wholesalers that buy directly from lobstermen are paying less than it costs for many boats to turn a profit.

 

Read the full story in the Wall Street Journal

 

 

July 15, 2012 — YORK, Maine — A glut of lobsters has dropped prices so low some Maine fishermen want a shutdown of the industry, prompting the commissioner of the Department of Marine Resources this week to issue warnings against lobster wars and antitrust violations.

The department has no authority to close the lobster fishery for economic reasons, Commissioner Patrick Keliher said in a released statement.

"We have heard that fishermen are seeking to impose a de facto shutdown of the fishery and coercing others into complying by threatening to cut off their gear," Keliher said. "The state will not tolerate any trap molestation, and any such actions will be met with targeted and swift enforcement or other appropriate action."

Further, any action by lobstermen to force a shutdown could be deemed in violation of federal antitrust laws, he said.

Keliher on Friday said he knew of no instances in which lines have been cut.

York lobstermen interviewed said they knew of no cut lines nor threats to traps for anyone continuing to fish. Most were still lobstering, though one fishermen interviewed on Thursday said it wasn't worth it.

"I'm not getting enough to cover (expenses)," said Mike Caramihalis aboard the Kelsey C, tied up at Town Dock No. 1. "I'm not going out after today for a few days."

Lobsterman Zach Donnell, who works out of the John Hancock Wharf, said, "You can make a little bit of money, not a lot. It's just barely enough to cover expenses."

"Definitely, the volume is way up," added his father, Jeff Donnell, who docks the Cindy L at Sewall's Bridge, where daughter Lindsey Donnell sells lobsters off the boat starting at $3.30 per pound.

"Usually the Fourth of July, we're fighting for lobsters," she said.

Not this year.

A warmer-than-normal Atlantic Ocean is blamed or credited with the early lobster season.

This year, lobsters began moving into shallow waters to shed their hard shells at least a month ahead of schedule, according to those interviewed. Because hard-shell lobsters have more meat and are easier to ship, they fetch higher prices.

"It's a water temperature issue," Keliher said on Friday. "It has nothing to do with the health of the resource. The lobster resource is healthy."

What is currently being caught is 90 percent soft, or new-shell lobsters, according to Jeff Donnell.

 

Read the full story here 

July 12, 2012 — Nearly a year after his Cape Ann Seafood Exchange began doing business under the lingering cloud of a mysterious lawsuit filed against the Ciullas for allegedly cheating fishermen — a suit that fell apart for lack of a lawyer prepared to take the case — Kristensen appears to be beating the odds and holding his own.

”We’re not going anywhere.” says Kristian Kristensen. Almost a year ago, he purchased the assets of the port of Gloucester’s original seafood auction business after the taint of price skimming delivered the coup de grace to a family that had gone deep into debt fighting off years of federal fisheries law enforcement harassment.

Soon after Kristensen took over the operation of the business on Harbor Loop, a tenant on the Ciullas’ property, he changed the name to the Cape Ann Seafood Exchange and introducing a new computer software system that gave real time, reliable figures on prices — a sticking point for the old regime.

But New England’s dominant auction business, established in New Bedford by the Canastra brothers, Richie and Raymond, had also opened an outlet in Gloucester with great fanfare at Fisherman’s Wharf. That facility, on property owned and renovated by Vito Giacalone, is operated by his three sons for the Canastras.

But Kristensen is a practitioner in the lost art of understatement, possibly due to his Danish upbringing, so the words are best read as a calculated projection rather than a boast.

And nearly a year after his Cape Ann Seafood Exchange began doing business under the lingering cloud of a mysterious lawsuit filed against the Ciullas for allegedly cheating fishermen — a suit that fell apart for lack of a lawyer prepared to take the case — Kristensen appears to be beating the odds and holding his own.

Because BASE, the Canastras’ three-headed monster with New Bedford, Boston and Gloucester’s auction outlets, reports to the National Marine Fisheries Service their daily sales in volume and prices as coming from a single source, an apples to apples comparison to Kristensen’s business is impossible to make.

But rough calculations based on the daily landings reports, augmented with interviews with active buyers and sellers and grudging confirmation from the ever cautious and low-key Kristensen, suggests a rough balance has been struck between his Cape Ann Seafood Exchange, or CASE, and the Canastra-Giacalone force’s BASE or Buyer and Seller’s Exchange.

CASE, reporting sales only in Gloucester and BASE, aggregating prices from auctions in all three of its ports for market cod throughout March, the most recent month for which NMFS has published figures, are roughly equal. On some days, CASE prices were a tad higher, and on others BASE got its boats a few cents more.

For what it’s worth, Kristensen’s auction sold a little over 500,000 pounds of fish for its boats in March, while BASE, aggregating Gloucester, Boston and New Bedford’s operations, sold just over 1.5 million pounds of fish during the same month.

For BASE’s advantage of scale — which includes a major slice of the scallop market, the product that ensures that more money is spent on New Bedford seafood than any other ports — Kristensen is not without advantages of his own.

Prior to acquiring the auction business from the Ciullas last August, Kristensen, as a tenant, owned and led Zeus Packing Co., which purchased, processed and shipped for export high volumes of low value skate wings and dogfish, as well as high value monkfish tails.

 

Read the full story in the Gloucester Times

 

 

July 11, 2012 — ELLSWORTH, Maine — Not since the 1970s has the price Maine fishermen have been paid for their lobster been so low.

After having earned more than $4 per pound per year for four years running in the mid-2000s, lobstermen in Maine this week are being offered less than $2 per pound for their catch.

But the time warp has not affected the price of diesel fuel, which powers most lobster boats, or the costs fishermen face when they buy gear and bait, pay a sternman, or make a boat payment.

According to AAA, the price of diesel fuel in Maine this past week has been close to $3.80 per gallon. That’s about 10 times what diesel fuel cost at the pump in the mid-1970s, according to the federal Energy Information Administration.

A glut of landed lobsters is to blame for the extremely low price and, given their expenses, many fishermen have been talking openly of not going out.
If it costs more money to catch lobsters than they can make by selling them, they reason, what’s the point? How can they make a living that way?

“We had a parking lot meeting Monday night,” Warren Polk, manager of the lobstermen’s cooperative in the Gouldsboro village of Corea, said Wednesday. “We had a vote.”

Polk said the co-op members decided then to continue fishing, but may reconsider their vote. The price co-op members were being offered for their catch Wednesday was $1.50 per pound, he said.

“I think things are going to change today,” Polk said, referring to the decision concerning whether to continue fishing.

Other fishermen up and down the coast are considering the same thing.
Industry sources who do not want to be identified say that other cooperatives or groups of fishermen already have taken a few days off from hauling traps, refusing to work for a price they say they cannot live on. How widespread the tie-ups are was not clear around midday Wednesday.

The greater the number of lobstermen who stay ashore, some have openly observed, the greater the likelihood that prices will rebound in a timely fashion.

This observation has touched upon a sensitive nerve within the industry, however, that stems from a 1957 lawsuit that the Maine Lobstermen’s Association lost to the federal Department of Justice. The lobster association, the largest commercial fishermen’s organization in the state, was sued for  trying to fix the price of lobster by limiting demand with a strike. It has been operating under a consent decree since it lost the case.

In a stern public statement issued Monday, Maine Department of Marine Resources Commissioner Patrick Keliher warned lobstermen against pressuring others not to go fishing.

 

Read the full story in the Bangor Daily News

 

 

July 8, 2012 – Hard-shell lobsters are currently selling between $3.50 and $3.75 a pound in the Hub, but that’s not buttering up state lobstermen forced to deal with an oversupply of soft-shell crustaceans and sudden price drops from Canadian processors.

“It’s probably the most valuable single species resource in coastal water today, but these guys need $4 a pound to make ends meet,” said Bill Adler, executive director of the Massachusetts Lobstermen’s Association. Lobstermen “are bringing in a lot of lobsters and not getting much for it.”

Lobster prices, as of last week, were $3.75 for hard shells and $3 for soft shells and culls — one-claw critters — on the Cape; and between $3.50 and $3.75 a pound on the North and South shores, respectively, Adler said.

The meaty delicacy sold in Boston at a boat price of close to $5 a pound this time last year, Adler said.

“Catches have been very good. However, a lot of what they are bringing in is this new shell, soft-shell lobster. Now this has been about four-to-six weeks earlier than expected,” Adler said, adding that because of their soft shells, they must be eaten more quickly after they’re caught. Adler said the new-shell lobsters arrived before tourists this summer — creating a glut.

Soft-shell lobsters have recently molted, or shed their old shells, so they can begin growing new, larger shells. Young lobsters can molt five times a year, while older crustaceans usually shed their shells annually.

Read the full story at the Boston Herald.

 

 

July 5, 2012 – Lobstermen up and down the coast are staying on-shore, effectively grounded by prices so low it has become uneconomical to haul traps.

“Personally, I haven’t gone out for a couple of days. I don’t like the price — I don’t want to give them away,” said Richard Alley, a lobsterman based out of Addison. “We can’t say we’re striking or anything; that’s against the law. I’m just taking a few days off and enjoying the sun.”

A glut of lobsters and an unseasonably early shedding season for the crustaceans has caused a problem for lobstermen, though it has been a boon for consumers. Retailers have been selling small, soft-shell lobsters for as little as $3.79 a pound in the Portland area.

Back up the pipeline a bit, lobstermen have been getting as little as $2.60 a pound for their catch from dealers. Alley said at that price, he’s just barely covering his expenses. And a few days ago, a dealer called the co-op Alley belongs to and tried to push the price down even further, to $1.75 a pound.

“I think they’re playing a game with us, but that’s just my opinion,” said Alley, adding that the last time he saw prices so low for his catch was when he first started lobstering in 1966.

Read the full story at the Bangor Daily News.

 

 

June 27, 2012 — On June 27, the Center for American Progress held an event to launch an initiative to "better define and quantify the value of our Blue Economy." The video of the event is now available on their website.

Welcoming remarks:
Michael Conathan, Director of Ocean Policy, Center for American Progress

Featured speakers:
Jane Lubchenco, Undersecretary of Commerce for Oceans and Atmosphere
Miranda Ballentine, Director of Sustainability, Wal-Mart
Jim Moriarty, CEO, Surfrider Foundation

Moderated by:
Eric Roston, Sustainability Editor, Bloomberg News

 

Watch the video at the Center for American Progress