Senator Dennis Damon (L.) at the emergency meeting in Augusta. "This is the most dramtic price collapse in the 100-year history of the lobster fishery," said Senator Damon. Photo ©: Brenda Tredwell

“Prices have fallen below the level needed to maintain the economic viability of the Maine lobster industry, caused by reduced demand and the lack of short term business credit that are part of the global economic crisis,” Baldacci said. “Maine’s hard-working lobster families and businesses have been jolted by the world economic situation. While most of these issues are beyond our control, there are a few things that can be done to help, and it’s critical that we take actions now to avert further harm to this vital industry.”

Among immediate steps to alleviate the current financial situation of the industry, Baldacci directed the Department of Economic and Community Development, Department of Marine Resources, and the Finance Authority of Maine to meet with financial institutions and agencies to expedite measures to help families in tough financial straits.

The crisis involves thousands of families along the coast. Fall is prime lobster fishing time; nearly 80 percent of total landings occur from September through November. It’s the time of year when fishermen put away much of their earnings to make it through the lean winter months.

The Maine Lobster Promotion Council has been working hard to improve the situation. MLPC executive director Dane Somers said there’s been a slight recovery in the boat price over the past week. “We’ve talked with hundreds of people over the past week about getting together to support the industry,” Somers said.

MLPC has received commitments from the Hannaford and Shaw’s supermarket chains to aggressively promote Maine lobster in their stores in Maine and into Massachusetts and New Hampshire. MLPC is discussing a similar move with WalMart. Weathervane Seafood restaurants, with locations in Maine, New Hampshire and Massachusetts, committed to extensive advertising and promotion, and hundreds of other Maine restaurants and inns have said they would help, he said.

“I think that people honestly understand that the Maine lobster industry is a vital part of the state’s economy,” Somers said. “And everyone is pitching in. Some of them a little out of the ordinary – but the energy is there.”

In Augusta, University of Southern Maine economist Charles Colgan said that, although the nation has faced recessions in recent decades, notably 1990-1991 and the early 2000s, this one is different because it is led by consumers.

Consumers have been cutting back on purchases for over a year, Colgan said. Income levels are no longer able to cover existing debt, so retail and consumption are declining, he said. Consumer confidence is diminished by the spike in oil and fuel prices, and by the global economic crisis, he said.

Lobster is an item that people cut out first, Colgan said and others agreed, that restricting lobster supply would not help the situation; rather, it would be better to stimulate demand to move lobster throughout the market.

Shutting the lobster fishery down would be bad because the industry would lose customers, said dealer Peter McAleney. He said the industry would not want to see lobster replaced by another seafood due to any cut-off in supply.

In any case, any shutdown would have to come from the industry. The state has emergency powers to cut back fishing due to resource conditions, but not due to market conditions, DMR Commission- er George Lapointe said.

Several agencies were on hand to discuss how they could help fishing families deal with the immediate financial situation. Charlie Emmons, a senior loan officer with the Finance Authority of Maine, said FAME helps through loan programs at a lower interest rate. However, due to poor economic conditions, much of the available $7 million has already been used, he said. Other FAME initiatives include its loan program to help lobstermen purchase sinking rope; and an insurance program for new bank loans.

Michael Jones, vice president of commercial loans with Camden National Bank, said many people will need to restructure their existing loans, and said that banks will be looking to FAME, the Small Business Administration and other agencies to provide flexibility and guarantees.

Victoria Burpee, with the Eastern Maine Development Corporation, said EMDC can offer counseling services to help small businesses work with banks, and can advocate for federal assistance.

Many at the Augusta meeting said that Maine should wean itself away from its dependence on Canadian processors; and Maine should have more of its own processing facilities.

The steep price drop goes hand in hand with the global economic crisis, and is more specifically blamed on tumult in the Canadian processing industry. Photo ©: Brenda Tredwell

MLPC’s Somers agreed. In fact, he said, the promotion council has been considering new marketing strategies for about a year now, which includes finding ways to appeal more to the high-end live-market segment and shipping less to the Canadian processors, which take a lot of volume but don’t yield much in profit.

“In October, about 70 percent of Maine lobsters go to storage, either pounds or processing,” he said. “It’s like a farmer who harvests corn. It all comes in over a short period of time, and he can’t get people to eat all of that corn all of a sudden. It’s important for the lobster industry to deal with the high supply in September, October and November, after the tourist season ends and before the Christmas season begins.”

But Canada’s current woes leave Maine’s supply with nowhere to go, and the slim margin of profit disappears entirely.

The task force will make a comprehensive review of Maine’s lobster industry and recommend to the governor and Legislature no later than April 15, 2009, specific strategies to help maintain the viability of the lobster industry in Maine.

“The lobster industry–including the fishermen, dealers, processors and associated businesses–is absolutely crucial to Maine’s economy and heritage,” said Baldacci. “We must make a thorough review of the industry in light of the current global economic, financial and energy challenges in order to ensure its long-term sustainability.”

Task Force Targets
Among the targets of the task force is identifying opportunities for expanding and diversifying both live and processed markets for Maine lobster, identifying improvements and expansions of the infrastructure in Maine, including processing capacity and state-of-the-art technology that maximizes the quality of lobster landed in Maine, and provides flexibility of product movement; identifying opportunities for increasing the range of value added lobster products; identifying possible changes to the structure of the lobster industry in terms of volume, quantity and timing of product landed; identifying Best Management Practices for industry members (harvesters and dealers) to increase product quality and profitability; identifying methodologies of protecting and promoting the Maine lobster brand in the global marketplace, including analysis of the value of Marine Stewardship Council certification, product substitution and food safety; and identifying alternative business models.

The task force will work with an independent contractor with expertise in the food industry, specifically in national and international markets and in market strategy, design, operations and implementation and technology development. The task for will consult with the lobster industry in its review of the preliminary recommendations.

The comments of the Task Force will be used by the contractor to inform the development of a comprehensive plan for a marketing strategy for Maine lobster. The marketing strategy will present a blueprint for implementation, including time frames, cost associated with various activities and expected outcomes.