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Lobster Task Force Seeks Funding
by Laurie Schreiber
The task force recently sent their strategic plan, developed with the help of consultants and input from hundreds of people in the lobster industry—harvesters, processors and dealers—to Governor John Baldacci. Overall, the plan recommends investing $10 million annually, and $2.2 million for now, to establish a new marketing and research institute and develop and market the Maine brand in a way that differentiates Maine lobsters from those harvested elsewhere. The plan points out that the Canadian lobster industry has committed $75 million in marketing and other program support to their product, and individual provinces have also committed resources. “The challenges are real, and the competition is strong,” the task force said. There appears to be a great deal of support for the concept of increased marketing, but little support for raising any level of revenue from the industry at this time. The original report from the task force’s consultants, The Moseley Group, suggested an assessment of 5 cents to 10 cents per pound of harvest to help fund marketing. An intensive outreach effort is in the works to talk to industry members about what is being proposed, the beneficial impact it could have in the marketplace and how it might be funded. “It’s a very new concept,” said Maine Lobstermen’s Association Executive Director Patrice McCarron, “I think we need to a lot of education with all sectors of the industry about what we might accomplish and how to fund it.” Anecdotally, the industry seems to favor the concept, she said. “What I hear from people is that it seems to make sense,” she said. “They see it’s effective in other industries. But how we do it, and how we pay for it, is not clear.” With little to no money to expect from the federal and state governments, and the industry in dire economic straits, new investment in a major marketing initiative is a huge question mark. “I think it’s not likely, given the shape the state budget is in, that they would be able to find any money to directly support the industry,” said Maine Lobster Promotion Council Executive Director Dane Somers. “Which is unfortunate, because it’s an investment that has shown proven returns.” By contrast, the Canadian government’s investment in their lobster industry has created something of an uneven playing field when it comes to competition in the marketplace. “It’s likely that we’ll get that discussion going with the federal government,” Somers said. The task force document said that Maine must take bold action that sets the stage “for a fundamental shift in the way Maine handles its most precious brand in order to sustain the culture of the fishing communities, businesses and the many fishermen, families and communities that rely on this industry for their livelihoods.” Maine’s lobster industry is currently “reeling from the effects of a steep decline in prices across the industry, which was triggered last fall when the global economy went into a tailspin,” the task force plan states. “Our Canadian neighbors are experiencing similar struggles, so we’re not alone in grappling with solutions to the industry’s future prospects. Prices still show no sign of recovery. As a result of the collapse of lobster prices, more than $40 million disappeared from Maine’s coastal economy during 2008, with the majority of that loss occurring in the last quarter alone. The situation continues to be dire for all of Maine’s 5,800 lobstermen and more than 1,500 dealers, distributors and processing businesses that depend on Maine’s $300 million iconic industry which contributed $1 billion to the Maine economy.”
“The harvester sector is capitalized at a level that is difficult to sustain during periods of low lobster prices,” task force members wrote. “There is no magic bullet. However, we believe this strategic plan provides a valuable roadmap outlining the investments and changes the lobster industry and the state of Maine should make in order to increase profitability and sustainability among the industry’s many participants.” The plan contains both short- and long-term recommendations, but centers on the establishment of a new public-private lobster marketing entity, with funding at $10 million annually that focuses on broad industry marketing and research priorities. “Currently, the success of the Maine lobster industry is hindered by fragmentation amongst the various sectors,” the task force said. “The existing marketing arm of the Maine lobster industry has been chronically underfunded and its governance structures is ineffective due to the strong rivalries within the industry.“ The new entity would consolidate the efforts of existing fragmented support organizations, provide a unified business plan for the industry as a whole, and develop an investment strategy to encourage innovation and ensure the lobster brand is able to compete in the world marketplace. “Investments should be geared toward the establishment of a new marketing institute; protecting, developing and nurturing the Maine lobster brand; research and development aimed at product innovation and differentiation; and the development of new infrastructure in transportation and holding,” the task force wrote. “This strategy must leverage commitments from Maine lobster harvesters, dealers and processors, the state of Maine and the federal government.” The task force heard from many who raised the issue of investment in increased Maine-based processing, to stem the sales of more than 50 percent of the harvest to Canadian processing plants, thereby keeping jobs in Maine and preventing Maine lobsters from becoming “product of Canada.” But both Maine and Canadian plants have considerable idle capacity at the moment, the task force said. The task force recommended several interim actions. These included developing a strategy to differentiate the Maine lobster brand from other lobster products. This can be done, they said, by emphasizing the industry’s sustainable fishing practices; its rich heritage; and the product’s superior taste, sweet meat, succulent texture, and soft shells. “Until consumers are able to differentiate Maine lobster and ask for it by name,” the task force wrote, “progress in penetrating new markets could be undermined by competing lobster products.” Profitability might also be improved through harvester reforms such as implementing best practices for product handling, trap limits, shifting lobster supply to gain market advantage, establishment of a pilot co-op program, and contract pricing, the task force said. And Maine must immediately engage in penetrating new markets in East Coast metropolitan areas. The task force recommended implementing a pilot marketing campaign, at $2.2 million, this fall, with the lobster industry and state and federal partners making a significant investment. They recommended that the Department of Marine Resources should convene working groups on tasks such as assisting with the development of legislation to create a new marketing and research entity; assisting with the development of the Maine lobster brand for implementation during the 2010 harvest season; and investigating potential harvester reforms. Any investment in marketing is well worth the money, said the MLPC’s Somers. “The Maine lobster industry is the last viable commercial fishing industry,” he said. “And the irony is, these should be good times because we’ve done such a good job with the resource and the catch is great.” A new marketing entity will likely build on the MLPC’s work. “I don’t think we need to reinvent the wheel,” Somers said. “The promotion council has been very successful in positioning the brand. Maine lobster has high consumer awareness, and that’s a huge plus.” Most other seafood products—haddock and scallops, for example—are handled as commodities and not identified with a particular region. Major issues to tackle are consistent, year-round supply and consistent pricing, he said. The MLPC did a test project last July with a major retail chain in Maine, New Hampshire, Vermont, Massachusetts, and New York. Promotional advertising—and education of the retailers themselves—resulted in an average increase in Maine lobster sales by 400 percent for the chain. For some individual stores, sales increased by 800 to 900 percent. “If the stores don’t know there will be increased demand for lobster on the weekends and holidays, they won’t buy enough lobster,” he said. “So by making it a major feature, they plan on it and order more.” The MLPC is now working with a sizeable chain of about 80 steakhouse restaurants on the second phase of a promotion to have Maine lobster on the chain’s menus this November and December. “We wanted to do something with a sizeable chain outside of New England in the off-season, to see what the increase would be,” he said. The first phase occurred on a smaller scale this past summer, and proved a success, he said. The chain sold 60,000 pounds of lobsters and appreciated the opportunity to vary their menu. Some individual lobster fishermen are creating their own opportunities through direct marketing, using the internet for exposure. There can be unintended consequences to this approach, said Somers. If lobstermen undercut local retailers, the retailers might drop their price, which translates to lower pay to harvesters, the majority of whom sell to dealers. But the direct-marketing phenomenon can have positive effects, too, he said. An increasing number of fishermen are promoting the product through the stories they tell about heritage and the lessons they offer about the harvesting and conservation process. For example, lobstermen are able to say that every single lobster that comes up has been individually inspected by a licensed fisherman, and that two to three times more than those on the market have been put back into the ocean for conservation purposes. All this leads to a “value-added” product that is seen as worth the price by customers, said Somers. “You can’t get any fresher than a live lobster,” he said. “And that’s not cheap.” In general, Somers said, there is plenty of opportunity for more market penetration. New England and New York, where most Maine live lobsters end up, comprise only 10 percent of the U.S. population. “So if we can get market penetration into the other 90 percent of the U.S., that’s a great market opportunity. And that’s just the U.S.” Somers addes: “Now that we’re recognizing that we do have a tremendous opportunity to stimulate additional demand, we need to figure out how to have a consistent supply and consistent pricing. When things are as hard as they are right now, it’s difficult to think about this in a positive way. But when we go out to the marketplace, we hear, ‘Oh, my god, my customers love Maine lobsters.’ We’re getting positive feedback, which is very encouraging. The long and short of it is that we’re selling every single lobster we harvest. Other industries have closed down, but we haven’t closed anything down. So if we can get through this—and it’s a very distressing period—people still love Maine lobster and the marketplace still shows good demand for Maine lobster.” In the meantime, the task force continues to do some outreach work with the industry to figure out what may or may not be possible this legislative session. The DMR has determined that it will not bring a bill forward to implement the creation of a new marketing and research institute, but will likely submit a bill that will enable processors to diversify their product, as suggested in the Moseley report. |
