SEAFOODNEWS.COM — September 22, 2014 — It appears that both Maine and Canada are taking steps to boost the competitiveness of their lobster industries.
However, a race to increase processing capacity carries risks if the recent trend of surging landings in both countries does not continue.
Currently there are about 15 companies producing lobster meat and tails in Maine, along with some new plants in Massachusetts as well.
In Canada, where the plants are larger and more established, there are about 25 plants in the Maritime provinces, excluding Quebec.
Historically, these Canadian plants have relied on buying Maine lobster in the summer because Maine had little capacity for processing itself, and the lobster were primarily sold to summer tourists. So having a market for excess landings helped support the price on both sides of the border.
However, in the past few years this situation has changed. First, there has been huge growth in Maine landings, with two years being over 120 million lbs., making the industry much closer to Canada in total landings.
Secondly, changes in Maine laws have now made it possible to handle lobster parts, and support a processing industry.
As part of this effort, Maine got MSC certification for its lobster products. A second effort is a state bond initiative to provide guaranteed loans for lobster processors. The $7 million initiative is part of a $50 million Maine bond package that will go to the voters in November. Other items include small business aid, a biometric research inititiative, upgrades to water systems, and support for biotechnology.
Meanwhile, in Canada, several years of discussions led by the Lobster Council of Canada resulted in a committment to fund a marketing levy in three provinces of 1 cent a lb., to be paid equally by harvesters and processors. The Canadian thrust is that increased marketing of lobsters will help raise demand, and eventually the harvester price.
But in fisheries, supply generally trumps all. And this year, the lobsters are definitely in short supply. Anecdotally Maine landings are down, and as we detail in our accompanying artilce, exports to Canada are down as well, imports are up, and we are seeing five year high prices for tails and meat.
In a short supply situation, plants will be agressively bidding for lobsters to keep up with their minimum capacity requirements. This is defnitely a recipe for higher shore prices – but unless the market follows though and supports the idea that a smaller quantity of processed tails and meat is worth the higher price, someone is going to get squeezed.
The entry of China as a major buyer is another wildcard, as China is mostly focusing on live lobster, again raising the bar for those who want to purchase lobsters for processing.
In this environment, both the Maine and Canadian insdustries have more to gain from working together, as opposed to starting a lobster marketing war where each country tries to convnice customers that only lobsters on their side of the border are worth buying.
This story originally appeared on SeafoodNews.com, a subscription site. It has been reprinted with permission.