Maine lobstermen figured out how to make more money off their catches

Posted March 24, 2017, at 2:08 p.m.

LAMOINE, Maine — A lobstermen-only fishing organization has purchased a local lobster wholesale business, extending the reach of its members further down the distribution chain and giving them a greater share of the profit off their catch.

The Maine Lobstering Union, formed in 2013 in the wake of a sharp drop in prices paid to lobstermen by dealers, is buying Seal Point Lobster Co., a wholesale lobster distribution firm owned by the Pettegrow family. The Pettegrows also own the Trenton Bridge Lobster Pound restaurant, which is not part of the sale.

A representative for the group declined to disclose the sale price, but according to media reports the MLU is paying $4 million for the business.

Joel Pitcher, an organizer with the International Association of Machinists and Aerospace Workers, said the purchase of the wholesale business is in keeping with the mission of the lobstering group, which is to promote and protect the financial interests of lobstermen. Maine Lobstering Union Local 207 is a chartered chapter of IAM.

“It’s about putting lobstermen in a better position in the value stream on the shore side of the industry that they’ve never had access to,” Pitcher said recently.

The sale came about, Pitcher said, after Warren Pettegrow, who oversees the family businesses, started talked to MLU officials about ways that fishermen could secure a greater stake in the industry’s distribution chain. Attempts Thursday and Friday to contact Warren Pettegrow were unsuccessful.

Traditionally, Maine lobstermen have worked predominantly as independent owner/operators and have had to accept whatever price they are offered for their catch by dealers and distributors. Some of Maine’s 5,600 licensed commercial lobstermen belong to cooperatives, which allow them to pool their resources together and to hire employees to sell their lobster on their behalf, but still they are at the mercy of whatever price dealers and distributors offer to pay the co-op.

The arrangement has long rankled fishermen who say they should be able to set the price of what they sell and they should see more of the profits enjoyed by distributors and retailers. This includes high-end restaurants that sell lobster dishes in the $30 range — far more than the $2 to $4 per pound average that fishermen historically have been paid for their catch.

There have been attempts by lobstermen to join forces to try to set a minimum price that they will accept, but such efforts have been met with fierce disapproval by federal antitrust regulators who say it amounts to price fixing and is illegal.

The Maine Lobstermen’s Association, which with 1,200 members is the largest lobstermen’s industry group in the state, had to adhere to a consent decree for 56 years, from 1958 to 2014, after the Department of Justice won an antitrust lawsuit against the association in 1957. Though the consent decree has been lifted, the Sherman Antitrust Act prevents MLA and all other trade organizations from trying to set a minimum price in any market.

Maine Lobstering Union, founded at a time when many lobstermen said they could not make a profit off the low prices being offered by dealers, aggressively has sought to disrupt the traditional flow of profits so that lobstermen have more clout and retain a greater share of the industry’s revenues. The organization has vowed to never accept dealers, distributors or retailers as members, even on an associate or non-voting basis, to make sure it always is committed to the fishermen’s interests.

Maine Lobstering Union doesn’t function as a traditional union — its members are self-employed, as opposed to having a collective bargaining agreement with a non-member employer — but it is legally allowed to negotiate prices on behalf of its members because of the Fishermen’s Collective Marketing Act of 1934, according to Lincolnville lawyer Kim Tucker, who is the group’s attorney. The law applies to groups that accept only fishermen as members, she said, and allows them to vertically integrate their operations in order maximize the revenue generated by their catch.

“The Maine Lobstering Union was organized as a fishing cooperative. Think of Sunkist orange juice,” Tucker said,referring to a nonprofit cooperative composed entirely of citrus growers in California and Arizona.

Pitcher said that, by being chartered with the 800,000-member-plus nationwide Machinists’ union, lobstermen in the Maine Lobstering Union benefit from their parent organization’s negotiating expertise and buying power. Any members of IAM who want to buy lobsters for their own consumption are going to make sure they buy them from their union brothers and sisters in Maine, the number of which he said is more than 500 and is “exponentially growing.”

The union spokesman said Seal Point Lobster Co. currently operates from the Jonesport area to Vinalhaven, but that the union plans to expand its reach statewide so it can buy lobster along the entire coast, from members and non-members alike. MLU’s membership will directly profit from the wholesale businesses operations, much in the way members of a co-op are paid a dividend at the end of each year of the co-op’s annual sales, he said.

Pitcher said the union will not expand Seal Point too quickly — it wants to grow at a sustainable rate — but that the group will continue to explore opportunities to integrate further into the distribution chain on behalf of the fishermen who exclusively make up its membership.

“It’s going to be a huge success,” Pitcher said.

 

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