Canadian Lobster Prices Mirror Maine’s
by Brenda Tredwell
Michael McGeoghegan, President of Prince Edward Island Fishermen’s Association describing the 2011 lobster fishing season said, “They (lobsters) weren’t there. Here, you’ve got to get 15,000 pounds to make a living - that’s the tipping point, right there. We’re in survival mode. We’re businessmen, we need to make money.”
“In P.E.I., we have three lobster fishing areas - 25, 24 and 26A. In those zones, it’s similar, but it’s different. Every Province is set up a little differently. Here, we have a two-month season May and June. In the fall, we have a two-month fishery. P.E.I lobstermen earn their yearly income during those seasons. And its a small window to make it in”, said McGeoghegan.
“We’re all going to take a look at this industry, Canada and the US together, and figure out how to bring the value back to the fishing communities. The way the market is operating or is manipulated - I say it’s manipulated - we need to be talking,” said McGeoghegan. Low prices, and poor catches forced McGeoghegan out. During a federal buyout he sold his lobster license.
Canadian and US lobster prices evolve out of the ‘blue sheet’ based on guidelines from the Urner Barry index, which suggests Boston daily market values. The index, established in 1857 in New York, was designed to advise commission merchants and agricultural and livestock traders on market fluctuations in food-based commodities.
Several Canadian processors have challenged the traditional methods for determining price and proposed a new formula for setting a ballpark price.
In April 2012, the Seafood Processors of Newfoundland and Labrador (SPONL) representing 25 provincial processors, refused to buy lobsters from Canadian lobstermen. The 2011 price was $3.65/lb. but processors claimed they took a huge hit at that price.
Canada’s Fish, Food and Allied Worker’s Union argued that price should be based on the Boston market standard. SPONL wanted t use their own ‘price to market’ formula. Unable to negotiate, the Standing Fish Pricing Panel, was called in to mediate and the fishermen won.
The processors are powerful. The Clearwater processing corporation is MSC certified in Area 41, an offshore (LFA) with year round fishing. The quota is set at 720 metric tons. Clearwater is allocated 100% of the TAC because Clearwater owns all 8 licenses in the area.
Canada’s LFA’s are set up on a system of timed landings, that ensure a supply to processors. When lobstering in the Maritimes closes on June 30 processors shut down for 2 weeks, performing maintenance on machines, etc. Buying from the US starts around mid-July.
This system allows Canada and the US to work together and it has functioned until early shedders appeared coast wide. Unseasonal shedder landings in Canada ( November 2011) was the first indication of trouble. Landings increased in some US and Canadian ports by 30% - 40%. Dealers also reported high mortalities due to quality. With simultaneous gluts occurring fishermen and dealers wonder whether processors can absorb the abundance.
Ashton Spinney of LFA 34 recalled similar tensions in Nova Scotia. In a telephone interview, he said, “In April and early May, there were threats to keep people off the water. It was during the best week of our fishery. The lobstermen wanted $ 5.00/lb., only they were already getting that. They wanted to force dealers to keep the price at $ 5.00 through the Spring. It got bad at meetings.”
Spinney continued, “ I don’t think our large dealers and processors are in it to add value to product. They’re in it to buy low, sell high. Our fishery cannot support the industry with such low prices. Nova Scotia has 400 plus licensed buyers within the province. In addition, those buyers have 600 men under them, men who pick up the product have to have buyers licenses under them.
It suppresses the price.
Another problem with a lot of soft-shell lobster is some dealers back a transport down and load them off the boats. They buy the whole load at $ 3.00 lb., un-sorted. Lobstermen wanted to close the season early there were so many shedders.
We say we should do a separation, a sorting, aboard the boat, but some dealers don’t want it. If they’re buying a crate run, selling to processors, they make a 50 cent commission per pound. Maine, in the Spring, was getting the same prices as we were, only in Maine they got 25 cents to 60 cents a pound over that.”
Regarding global marketing strategy, Spinney said, “For every person we get buying lobster, there’s that much more demand. Our Federal government has not carried out its promises in developing the marketing.” Spinney wants “to sit around the table” with US and Canadian lobstermen to develop strategies that benefit both lobster industries as a whole.
“The processors weren’t prepared for this (unusually high) molt,” concluded Spinney. “Everybody’s squirming right now.”