Lobster price plummet prompts talk of industry shutdown

A young lobster fisherman scrubs his boat late Wednesday afternoon, July 11, 2012, in Stonington, Maine, while it floats among other lobster boats tied up to their moorings. &quotMost of the fleet seemed like it was in [the harbor]," Stonington Town Manager Kathleen Billings-Pezaris said Wednesday.
Bill Trotter | BDN
A young lobster fisherman scrubs his boat late Wednesday afternoon, July 11, 2012, in Stonington, Maine, while it floats among other lobster boats tied up to their moorings. "Most of the fleet seemed like it was in [the harbor]," Stonington Town Manager Kathleen Billings-Pezaris said Wednesday. Buy Photo
By Bill Trotter, BDN Staff
Posted July 11, 2012, at 2:50 p.m.

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.

“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 wrote. “The state will not tolerate any trap molestation, and any such actions will be met with targeted and swift enforcement or other appropriate action. Harvesters should also be aware that such actions may be in violation of federal antitrust laws.”

Keliher said some lobster industry officials have asked DMR to shut the fishery down until the price goes back up. The department does not have the power to shut down the fishery for economic reasons, he wrote in the release.

Keliher added he and Gov. Paul LePage are committed to trying to prevent such future wild price fluctuations with “appropriate marketing and management strategies.”

This is not the first time in recent memory that low prices have prompted talk of an organized tie-up, or refusal to fish. In 2009, when prices stayed low in the wake of the economic crash in the fall of 2008, some fishermen promoted the idea of staying on shore en masse, but the idea didn’t catch on.

Pete Daley, vice president of Garbo Lobster in Hancock, said Wednesday that the rush of soft-shell landings in Maine in May and June, earlier in the year than normal, has contributed to the price plummet. Normally, soft-shelled lobsters are caught in Maine in June and July and shipped to processors in Canada, which are larger and can handle higher volumes of lobster than their Maine counterparts.

But Canadian fishermen landed high volumes of hard-shelled lobsters late in the spring, he added, which squeezed out extra capacity the large Canadian processors may have had for absorbing the soft-shells from Maine. Hard-shell lobsters survive shipping at much higher rates than soft-shell lobsters do and command a higher price on the consumer market, he said.

“All these lobsters converged on the market at the same time,” Daley said. “[Canadian processors] were running at full capacity. There was really no place to go with them.”

Processors and distributors in Maine have tried to absorb the glut of soft-shell lobsters coming ashore, he said, by processing what they can and stocking their pounds to capacity.

“We had quite a crisis on our hands,” he said. “[Processors and distributors] have suffered tremendous losses because of a product that can’t live.”

Daley says things are starting to turn around, however. The cheap price of lobster has generated interest from consumers, Canadian processors are starting to accept higher volumes of soft-shells from Maine, and the shells are starting to harden.

If Maine fishermen were going to slow down their catch rate, he said, they should have done so a few weeks ago.

“The quality is starting to get better,” Daley said. “If they continue fishing, you’re going to see that demand strengthen. It would be very short-sighted, in my opinion, to stop the flow because it will prolong the agony.”

U.S. Rep. Chellie Pingree issued a statement Tuesday about the price predicament, saying that she intends to work with federal, state and industry officials to find possible solutions.

“The Maine lobster industry is not only an essential part of our economy, it’s part of the life and culture of coastal Maine communities, and we need to do everything we can to protect it,” Pingree said.

It was not clear whether there was an organized tie-up Wednesday in Stonington, but according to a local municipal official, some lobstermen there have elected to stay ashore.

Kathleen Billing-Pezaris, Stonington’s town manager, said Wednesday that when she arrived at work around 8:30 that morning, she definitely saw more boats still tied to their moorings than she usually sees at that time of day.

“Most of the fleet seemed like it was in [the harbor],” Billings-Pezaris said. “It was really noticeable today.”

The town manager said the drop in price has the potential to have a dramatic effect on Stonington, which has only 1,100 residents but where $46 million of lobster was landed in 2011. She said more needs to be done to diversify the industry in Maine so it can adjust to sudden changes in the market.

“You feel pretty powerless in the whole situation,” she said. “I hope this straightens out soon.”

The busy lobster fishing season in Maine, which produces 80 percent of the lobster caught each year in the United States, generally runs from late spring through late fall. There are approximately 5,000 licensed commercial fishermen in Maine, though not all of those licensees are believed to be active in the fishery.

Despite the inconsistent price that lobstermen have earned for their catch in recent years, landings have consistently and significantly increased since 1990, when Maine lobstermen caught 28 million pounds of the crustacean and were paid $61.6 million overall for their efforts.

Last year, for the first time, Maine lobstermen hauled in more than 100 million pounds of lobster, which resulted in the statewide fleet earning $334 million in revenue.

Follow BDN reporter Bill Trotter on Twitter at @billtrotter.

http://bangordailynews.com/2012/07/11/business/lobster-price-plummet-prompts-talk-of-industry-shutdown/ printed on September 18, 2014