The Bonus and the Myth
of the Boat Price
by Sandra Dinsmore
The bonus affects the independent dealer because to keep his fishermen selling their catches to him all season, the dealer promises to pay them an amount roughly equal to what the co-op in his area pays its members daily, weekly, monthly, and/or yearly. © Photo by Sam Murfitt
Because co-ops cannot show a profit, the Maine fishermen’s bonus starts with eastern and midcoast Maine co-op managers figuring out their co-op’s yearly profit and from that its patronage dividend per lb. The co-op’s board of directors then votes to distribute the dividend to each active co-op member, usually early the following year.
The bonus affects the independent dealer because to keep his fishermen selling their catches to him all season, the dealer promises to pay them an amount roughly equal to what the co-op in his area pays its members daily, weekly, monthly, and/or yearly. Beal’s Island poundkeeper Albert Carver pointed out, “Every independent wharf in Maine has to match that dividend.”
Not all wharves can, not all dealers can; but to not match the co-op’s dividend risks losing fishermen who sell to those wharves.
The fishermen may receive part of their bonus up front and they may wonder how much more they will receive after the co-op makes its end-of-year payment They wait and hope well into the new year. As Cutler fisherman John Drouin put it: “ Why is my money withheld from me until the end of the season? Why isn’t the bonus just $.25/lb., or why isn’t it $1.00/lb.? What’s the reasoning behind it all?”
Drouin answered his own question by saying, “Most wharves pay [the bonus] so fishermen will sell there for the entire season and not sell elsewhere where [they] may get $.25 per lb. more on any given day.” When he started fishing in 1979, Drouin said the bonus was $.15/lb. He recalled that from time to time it moved up to $.25/lb. then to $.40/lb., and then it stayed at $.45/lb. for a number of years. “In the last five or six years”, Drouin noted, “it went to $.60, then $.65, and then this past year to $.70/lb.”
In late February-early March 2014 the Beal’s-Jonesport Co-op boat price started with a base of $6/lb. plus a dividend of 80 cents/lb. according to longtime Beal’s-Jonesport, or B-J Co-op manager Steve Peabody. But as Carver explained, “You’ve got the fishermen who sell to a wharf and you’ve got dealers like myself who buy from the wharf. The fishermen are getting $6.80/lb. The wharves are getting 25 cents/lb. for the services they provide. That makes lobsters $7.05/lb. when I buy them.” When Carver goes to sell the lobsters, he adds in his profit of 20 cents/lb., bringing the price up to $7.25/lb.
“What happens in my world,” Carver said, “when we report a boat price without mentioning the bonus—when I make a call to sell a lobster to somebody in Boston, and they say, ‘What do you need to get for lobsters?’ And I say ‘$7.25,’ they say, ‘What are you talking about? Are you crazy? The price is only $6.’” “That $6 thing is so mythical. And it’s not even relevant,” complained Carver. “Everywhere you see a published lobster price, it’s always the boat price, and the bonus is always missing.” Carver said, “It’s a deterrent to the marketing of lobsters.” Jonesport dealer Sid Look agrees.
The bonus has been missing from the base boat price partly because only co-ops and independent dealers from downeast Maine to the midcoast pay it to their fishermen. As retired lobster dealer Bill Atwood explained, “The bonus varies depending on the company or the different co-ops.” From Portland south the bonus money becomes part of the boat price. In other words, from Portland south, the boat price becomes more valuable and usually ends up equaling eastern and midcoast Maine’s boat price including the bonus.
The place where this all started, the Beal’s-Jonesport Co-op, opened in September 1970. Shortly thereafter, members Guy Carver Jr., who died as this story was being written, and Earlon Beal, began buying co-op lobster for their Long Point Lobster Pound.
At that time Carver Jr.’s son Dwight, then in high school, recalled his father and uncle kicking back about $.10/lb. above the co-op’s then going rate of $2/lb. as “an appreciation to the co-op.” Prior to that, he said there had been no dividend beyond maybe a nickel/lb. Although he protested his father and uncle didn’t start the bonus and that their purchases were minimal in the beginning, Dwight admitted that each lb. of lobster Long Point bought from the co-op contributed to its profit and thus to the bonus.
In the eighties there was a four-year stretch when Carver Jr. and Beal bought 20 to 25 percent of the co-op’s catch. That, Dwight Carver said, “Increased the price between the wharf and the dealer.” This added to its yearly profit, which was dispersed to members as a year-end patronage dividend.
To keep their fishermen from defecting to buyers offering more money per lb., area dealers started matching that co-op dividend. These price increases signaled the beginning of the now Brobdingnagian bonus.
Not only does today’s bonus vary from about 50 cents to a dollar or more per lb., though some feel there may be different prices paid to fishermen who have outstanding production. But this is mostly conjecture, as proof is hard to come by.
Dealers pay most of the bonus regularly all season. Downeast lobster buyer Toni Lilienthal gave as an example, “If you paid your boats 65 cents/lb. up front, then to match the Stonington co-op’s dividend of 79.5 cents, [you’d] have to come up with another 14.5 cents/lb. at the end of the season.”
She insisted that the wharf owners, “Have to live up to that promise, and the only way they can live up to [it]”, she said, “When the lobsters are going out, [dealers] have to make sure they have covered that [money per lb. they promised the fishermen] so they can make a profit.”
“It’s the bonus that keeps the fisherman selling to a wharf, not rope or bait,” said Deer Isle fisherman Leroy Bridges. He also explained the importance of receiving the bonus in good time saying, “Fishermen and farmers have to pay 100 percent of what they owe for income tax by March first.”
Bridges also made clear the significance of that year-end bonus, stating that it is one hundred percent profit. “There are no expenses that come out of that,” he said. “That’s one hundred percent ours. It’s not like a percentage of that is going to disappear to anything other than taxes. It’s extremely important, the year-end bonus.” Bridges’s friend, Vinalhaven co-op fisherman Walter Day added that the co-op’s profit its members receive is worded as a patronage dividend because, he said, “If it was worded as a bonus, taxes are higher on a bonus than on a patronage dividend.
But dividend or bonus, Bridges couldn’t say whether he was going to get this year’s remaining 14.5 cents/lb. or not. Last year the fishermen where Bridges sells received the bonus around March 9th. “This year,” Bridges said, “We don’t have any idea. We don’t even know if [the owners] are going to pay one.” He said fishermen have no control over the bonus.
Nor do they have control over the price paid for their product, a great frustration. Albert Carver says the lobster price starts with the pier or wharf owner. “He tries to make a quarter, 20 cents to a quarter/lb. If the buyer is making a quarter, he’s doing real good; if he’s making 20 cents, he’s okay. It doesn’t start in the boat”. According to lobster buyers, Carver said, “The wharf price—what the guy who runs a wharf pays—includes the bonus.”
“It never has started in the boat,” agreed Bridges. But because the bonus is an eastern and mid-coast Maine thing, the Portland and Southern Maine boat prices are usually 50 cents/lb. higher than downeast. “It is complicated,” Bridges said. “There is no easy answer. The so-called Maine bonus is so complex because some will receive the bonus upon selling their lobsters. It [the bonus] is attached right to it. Others will receive it at the end or the beginning of the next month. Some will only receive it, like the co-op, as a year-end bonus, so it’s a hard thing to nail down.”
It’s confusing. In addition to predicting that no one will ever get a handle on the bonus because it is so complicated, Lilienthal mentioned hearing a fisherman say it’s high time dealers pay all the promised bonus money up front. Certainly Drouin and others agree.
“The fishermen are getting scared,” Lilienthal said. “The way this is going, it’s getting so out of control. If I keep your money—70-75 cents/lb. for the whole year—how do you know I’m going to be in business at the end of the year to pay that bonus? That’s quite a hunk. If you catch 100,000 lbs., and I’m keeping 85 cents a lb., that’s $85,000.
“Sometimes you don’t have it in your pocket, depending on what’s happened that year,” Lilienthal observed. “The co-ops create what bonuses are to be paid and this year, say, an independent Stonington area dealer who paid 70-75 cent/lb. throughout the year for catches of 2 to 3 million lbs. now owes his fishermen 9 1/2 cents/lb. to match what the co-op paid its members. It’s a lot of money at a bad time of year,” she said, “so you better have that money put away.”
Not all dealers do and not all dealers could match Stonington’s 79.5 cents per lb. or Jonesport’s 80 cents per lb. for 2013. Lilienthal gave as an example, “A co-op such as the Winter Harbor Co-op, that has invested in, say, a tank system.” She explained that such a business, “Cannot afford an 80-cent/lb. bonus at the end of the year because of the expenses incurred from its investment.”
And Lilienthal pointed out that a dealer’s expenses are so much more than a co-op’s. “[Buyers] have to go in and pick up their lobsters, so they pay for the transportation.” She explained, “If I buy at a downeast dock, my truck has to bring [my lobsters] to Portland, and then if I have a loss, say, deads or short weight or something, that’s my loss. At a co-op they have no losses. [The lobsters] are picked up, and they’re theirs. The loss, if any, is to the person who buys them.” Lilienthal reported that all a co-op does is take the lobsters in from the fishermen, put them in a crate and then on a truck. It’s the dealers who have the expenses and who take the losses while trying, but not always managing to match the co-op’s dividend for their fishermen.
It makes you wonder how something as simple as Guy Carver Jr. and Earlon Beal’s ten-cents a lb. kickback turned into this complex maze of money called the bonus.