Trying to predict the outcome of Maine’s 2009 lobster season is something akin to predicting the stock market’s profitable performance, however, as the old timers say, “Watch the market and you’ll know how lobsters are moving.” That’s a heck of a start! Despite the uncertainty, there are a number of indicators we can look toward in an attempt to determine what lies ahead. The variables are numerous, including more than enough “ifs”, although providing the “mix” along with recent developments is a beginning point.
As always in the Maine lobster industry, what happens in Canada impacts our future, therefore information on Canadian inventories, both frozen and live, as well as how their spring catch is shaping up, the supply & demand factor, are essential ingredients in the forecast.
World production and markets, also remain factors in the 2009 equation. The lobster producing counties, such as Australia, Nicaragua, Ireland, South Africa, etc., are all players in the lobster fishing business, affecting markets in which the Maine lobster must compete.
And of course, consumer sentiment remains a huge obstacle in 2009. The Economy will, in all probability, be the singularly most important, deciding factor upon how Maine’s 2009 Season unfolds. If retailers, wholesalers and restaurants maintain the high-margin strategies they’ve previously employed, there won’t be a 2009 Season. Consumers simply don’t have the extra money to pay three or four times boat price and then some.
And finally, I’ll finish off with speculative conclusions: What can we, as Maine fishermen, expect to hear from our buyers and bait dealers? How are we going to turn a profit in a down-sided economy, let alone make ends meet? These thoughts incorporate the “ifs” of our Industry.
Canada’s Economic Predicament:
As of the beginning of March, Lobster pounds in Canada held 3 million pounds of live product. Maine pounds remained stocked at 2 million pounds. The high-end, 1 ½ lb, tubed lobster where sold-out in February, as a result of higher than expected Valentine’s Day sales. A CBC.ca report (March 19th) indicated PEI processors still retained $30 million in frozen tail inventory, requesting government subsidization. Processing plant employees voiced concern, questioning if, their spring jobs would be available. Ocean Choice, Ltd is considering alternate employment options should the lobster processing plants remain idle.
A Canadian Sales & Marketing campaign is currently taking shape, in which $500,000 has been allocated toward an effort to alleviate the inventory backlogs and promote Canadian product. Their goals include marketing lobster from the angle of a non luxury, inexpensive, omega 3 packed food source; increasing Canadian Branding, specifically in order to differentiate it from the Maine lobster brand; exploring new markets in the Pacific Rim & Asian countries and developing new products for the mass market.
In December, Nova Scotia lobster giant, Clearwater Seafood, Ltd, renegotiated a $50 million dollar refinancing package, restricting the incurrence of additional debt, agreeing to limited expansion efforts and to the non-payment of shareholder dividends. Clearly, the Company has been negatively impacted by a world economic downturn.
We’re also on the doorstep of spring fishing in Canada. Captains have voiced their concerns in regard to price, stating, “We can’t fish for less than $4.50 per pound.” There is some indication from news reports, many boats will forego setting out rather than fish on flimsy and/or negligible margins. They may have to, if their buyers remain backed-up with last year’s product and unable to add to current inventory levels. Watching the Canadian fishing effort in the next couple/few months will spell it out for the Maine lobstermen.
World Markets:
In an e-mail from the managers of an Australian commercial fishing website, crayzone.com.au/, it was indicated processors are complaining of product being backed up and extreme difficultly finding markets. The rock lobster boat price, normally in the vicinity of $20-$30 dollars per pound has fallen to a season low of $9 per pound, placing all Captains in financial jeopardy. The exact processing inventories are unavailable.
A recent article regarding Nicaragua’s spiny lobster, suggests $20 million dollars in frozen tails, destined for US markets, are currently being held in freezers. Another 1 million pounds of lobster & shrimp were unmarketable due to economic conditions. Processors, in desperation, were looking toward Russian and Iranian markets to unload their inventory backlogs.
Ireland’s lobster industry is in the setting out phase, however, according to a February issue of The Irish Skipper, an old and established commercial fishing magazine, “…lobster prices are very poor and fishermen are disillusioned and angry. Not only are long term holding facilities being put in place here, (but) also in the UK and throughout Europe, which are believed to be behind the poor prices currently being received. Also, new technical and scientific advancements in lobster rearing, has meant that lobster farming is now feasible.”
Across the globe lobster fishermen are facing increased financial pressure and declining prices. France remains the only country importing above average product, via Canadian companies.
The Down-Sided Economy:
The Economy will make us or break us this year. As usual, we depend upon Maine’s summer tourism industry to absorb millions of pounds of lobster through restaurants, festivals and summer “lobster feeds”, but this year is anyone’s guess. News articles indicate bookings are holding their own, although it’s a year of uncertainty, maintaining a “wait and see” attitude.
In 2009 we simply cannot depend upon Canada as a primary market to continue “flipping” 18-20 million pounds of our shedders. The capacity is not there! The market is not there! The money is not there! Leaving Maine dealers who have been dependent upon the Canadian Processing market at an extreme disadvantage, as well as the boats fishing from those wharfs.
What’s To Be Expected?
Price! Forget it! Judging from the world’s lobster fishery, we will not see a sustainable boat price this year. We all need income after last year’s poor fall, but to think we can set out 800 traps, haul 300 a day, take a break on Thursday and begin again Friday, is utterly irrational. The market just won’t be there! Nor will it be! Niche companies like Bill Atwood, Pete McAleney, the Looks and Linda Bean’s new Port Clyde efforts, those who have developed long lasting accounts and are focused on the future, will suffer, but prevail. We might squeak by during the height of the tourist season, but watch out during fall fishing.
Many dealers will fall by the wayside in 2009, unable to find solid & profitable markets for their product. Cash flow and payment will be high on their list. This will drive boat prices downward, creating an excess supply in a world supply chain filled to the brim. I believe it’s possible we may ultimately see “allocated & allowable” fishing days, perhaps 3 days a week, in order to curtail a “glut”. Buyers will simply stop buying in an effort to reduce production.
Bait? The same as last year, as NMFS limits remain imposed upon Area 1A. However, if fishing effort is reduced, quotas will be left unmet and quite possibly the seiners will fish less hard, leaving the TAC open throughout the year. Anybody’s guess? Cheap bait will be welcomed, if we can use it.
It’s somewhat disconcerting to see Canada spending a half million dollars in an attempt, among other things, to take on the Maine Lobster Brand. They are the economic world super power when it comes to lobster, last year selling 43,500 tons, bringing in $910 million dollars. The possibility exists, they are repositioning themselves for the future market, due to the impending changes we face here in Maine, specifically trap reductions and the Moseley Group’s April report, aimed at saving our industry. Their strategic moves are certainly worth keeping an eye on.
Accompanying the low price, it’s my belief you’ll see more “lobster vs. bologna” promotions (another Canadian idea) in supermarkets, restaurants and by way of roadside vendors. The news media will be our greatest public relations asset, keeping the public abreast of the Industry’s sinking situation and promoting lobster.
In conclusion, I wish I wasn’t writing this article, because I’m right in the thick of it too. I need to finish up painting the buoys, look around for a 100 or so traps, but I’ve got to tell ya, “I’m not sure it isn’t throwing good money after bad?” This year! Let’s hope the Crystal Ball Lied! Good Luck to you!