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Cold (Storage) War
Canadian firms currently import 70% of the U.S. lobster catch annually. Most of this goes to St. Lawrence Gulf-based processing plants, augmenting the supply of raw materials from Canada’s lobster fisheries. According to the report Benchmarking Study on Canadian Lobster by Gardner Pinfold Consulting Economists of Halifax, “this output makes up a substantial share of the processed product flow to the U.S.” American-landed lobster is processed in Canada, then re- exported to the U.S. as a value-added product. In exchange, lobstermen from the U.S. gain guaranteed export market. “Lobster distribution is a high-volume, low-margin business dominated by just a handful of U.S. Companies,” says Michael Gardner. Gardner charted price progression for live and processed lobster. There are 5 processing plants in Maine – in Canada’s St. Lawrence Gulf, there are 50. The market is more diversified. Canada’s aggressive buying of US lobster began in 1992 when U.S. landings significantly increased, driving the live market price down. In 1994, Canada’s lobster exports to the U.S. were valued at $120.6 million, and from 1992-2005 the U.S. lobster export value grew by 245%, hitting $345 million in 2005, due to Canadian and European demand. In 1994, the U.S. catch value reached 9 digits despite a drop in catch volume largely due to exchange with Canada. Supply and demand conditions in the U.S. drive the price of lobster in Canada. The Canadian report states that “The U.S. is by far (Canada’s) dominant export market, accounting for 80% of total exports by value.” Canadian export lobster was valued at C$989.3 Million in 2005. This Case Is Closed On May 21, 1990, Case No. 43/Lobster Dispute “Canada Vs. The United States” was closed, and it was determined that the U.S. ban on live import lobsters not of legal U.S. size did not violate the General Agreement on Tariff and Trade. Other findings determined “there is a problem because the territories of the lobster cross two National borders” so it would benefit both sides if there were U.S. and Canadian conformity regarding legal size. In Maine, 35% of legal sized v-notched (female) lobster are tossed back, and 70% of berried females caught bear a v-notch. Maine passed laws protecting berried females in 1872. Between 2005-6, U.S. Customs seized the cargoes of several Canadian trucks heading into Maine carrying what patrol referred to as “a relatively high proportion of lobsters violating U.S. minimum size restrictions”. Canada set a smaller minimum legal size in several fisheries in the Gulf of St. Lawrence and allows the catching of larger legal females — if they are non-bearing when hauled — in Licensed Fishing Areas (LFA’s) outside the Gulf. As live shipment is prohibited by U.S. law, processing allows Canada to trade with the U.S. under provisions set forth in Case No. 43. As a former negotiator for the trucker’s union said, “Without both sides walking away from the table feeling like they got something they wanted, you don’t reach an understanding.” He didn’t use the word “agreement....” Despite conflicts, the Canadian and U.S. lobster markets are tightly linked. Canada&Mac226;s sophisticated holding facilities have a capacity sufficiently large enough to allow its industry to re-time supply so as to maximize revenues. Canada has heavily investment in massive capacity storage. While lobstermen will be the first to tell you large scale distributors and processors are able to control price, which is the key to profit, it’s a double-edged sword. New herring TAC cuts, spawning area closures and an anticipated bait shortage had set up a panic market of sorts. Demand for tails was high, supply was low. Buyers from Canada bought lobster from Maine and the Maritimes at a peak price and didn&Mac226;t move body meat inventory as quickly as they&Mac226;d anticipated. They sold at a loss and $8.00 lb. hardshell lobster sat in inventory in Canada. In the 1950’s, Boston and New York were the big players. Atlantech Companies of Prince Edward Island manufactures “turn-key” facilities for long-term (6 month) live lobster storage with capacity for 180,000 lbs. Lobsters are suspended in a semi-hibernation state in cold storage so they can be in France for Christmas.. Clearwater Seafoods of Cape Breton, NS. receives 100,000 lbs. of native and U.S. caught lobster daily at their inland plant in Arichat. Their trucks carry 30,000 lbs. of iced lobster to UPS’s Worldport, a 550 acre site in Louisville, Kentucky, with a storage capacity of 50,000 lbs. of live lobster. Lobsters spend a two weeks laying-over, submerged in 34 degree water after the 27 hour truck ride. Lobsters are sorted, packed, then flown all over the world. Maine’s lobstermen say they do not want to be sharecroppers for a handful of large scale entities and be expected to absorb high running costs. The survival of small waterfront dealers and Co-ops requires a strong market — which Canada offers — buying 70% of the U.S. lobster catch. As the exchange value of the Canadian dollar rises, Maine will likely benefit. As things stand, the working concept within the entire New England ground fish industry is that “We’ve got about three years to decide whether fishermen go fishing, or corporate America does.” According to industry leaders, lobstermen need to fully understand their market and know what it will bear in terms of price. Communication between harvesting and distribution sectors is considered necessary in order to prevent further erosion of trust within the industry. “Canada is not the enemy,” was the word from a downeast dealer who’s site has been in operation for over 100 years. “Right now, the only option is to ride things out.” |
