Lobstermen’s Town Meeting Does Markets, Shrinkage and Boat Price
by Mike Crowe
Spiros Tourkakis, East Coast Lobster. Tourkakis is a lobster dealer in the U.S. and Canada. His company started a lobster processing plant in the former Stinson’s sardine cannery in Prospect Harbor, Maine. About the price of lobster he said, “It’s not so much that we don’t pay for good quality, but that we have been over paying for the low quality by paying the same price for all.” Fishermen’s Voice photo
March 21 New England and Canadian lobstermen met in Portland Maine to discuss key issues in their industry. Topping the list of topics were market development, product handling, sustainability and an unscheduled discussion of the boat price of lobster. About 100 of the most active U.S. and Canadian lobstermen, marine scientists, top lobster dealers and New England marine resource managers considered the present and pondered the future of one of New England’s largest fisheries.
Unlike a legislative body that may set down policy and laws, the Town Meeting is a group of informed specialists, many volunteering their time, who put their heads together for the good of the industry. Some, like lobster fishermen and lobster dealers in fact have a long history of being at odds with each other, but they come together at this annual meeting.
The Town Meeting puts together topics for discussion that are related to each other in important ways. This year lobster handling was a topic of discussion. How a lobster is handled from the time it is lifted off the sea floor until it is selected at a restaurant to be cooked live for a customer can effect boat price.
Lobster is handled a lot as it moves along the supply chain. Anne Tsiklis has worked with the industry demonstrating better lobster handling methods on Maine wharfs in an attempt to bring home the importance of proper lobster handling. Tslikis’ presentation at the Town Meeting included video footage of lobster being sorted by a buyer. The video illustrated just how many lobster can arrive dead at a dealer’s business. Tslikis said she has worked to bring the sectors of the industry together. Not from just the boat price perspective, but the buyer’s who are a part of this process.
Shrinkage varies according to how much of a shipment is early soft shell lobster. The presentation argued that more careful handling throughout the system, from hauling to the end consumer can reduce shrinkage and it’s effect in lowering boat price. Dealers anticipate and deduct a percentage of shrinkage from the price they pay.
Laurence Cooke, a lobsterman from Grand Manan, Canada said, “I’m not going put my time into better handling practices until I know it will result in higher boat prices.” A large percentage of Maine and Canadian lobster goes to processors. About 20% goes to the live market. But dead lobster goes in the trash. That expense travels back to the boat. Shrinkage is a problem. Tslikis said, “The financial costs are high. Part of what is paid to lobstermen is a reflection of this shrinkage from poor handling practices.”
Developing new markets for lobster was discussed as a means of raising the price. One dealer on the panel said that the world can easily consume all of the 125 million pounds that comes out of Maine waters every year and the slightly higher volume that Canadians also catch. However, developing the markets that can absorb the growing landings is the “known unknown”. As to what marketing plan would be in place and what would happen if it just didn’t work, Sarah Cotnoir, Maine DMR said, “the Commissioner has said that any marketing plan that doesn’t work will be gone in five years.”
Asian markets have the greatest potential. Both China and India have large and growing middle income populations. China however, is for the most part a live lobster market. The prospects for developing new lobster products and the influence of changing eating habits both in the United States and China offer the possibility for new and very large markets. However, European markets remain depressed by a lagging economic recovery there.
The image of lobster as a food product was considered an important part of price point improvement. Maine Lobstermen’s Association Executive Director, Patrice McCarron said there are marketing efforts underway to raise the image of lobster. One in particular is the description used for 80% of the landings. While there is a wide range within this category from very soft and fragile to nearly hard shell they are all often referred to as soft shell or shedders. The image therefore, said McCarron, is that it is an inferior product. She suggested the term “new lobster.”
“Lobster glut” was singled out as a term that diminished image value. Lobster abundance, suggested Sarah Cotnoir, Maine DMR, upgraded the image of the early season landings. Most agreed more marketing was needed. How to pay for it was another question. The DMR can forward marketing plans to the legislature, but some means of paying for the effort, a surcharge, etc., would need to be developed and approved, said Cotnior
The issue of sustainability focused on the effects of climate change on landings, potential health risks to the lobster resource and the difficulty in predicting effort by the DMR without an accurate figure on latent license use.
DMR scientist Dr. Rick Wahle said lobster recruitment, the number of young lobster in the resource, has been down and although markets have been rising, sustainability assessments need to be grounded in good science. “In the last 10 years there has been a revolution in data. We need to take regular check ups on the resource. I think we consider ourselves more in the drivers seat (with the resource) than we really are,” Wahle said. Lower recruitment is an indicator of future landings.
A Canadian lobsterman said that lobstermen have traditionally fished lobster for volume and not price. He suggested they might make more money by catching fewer lobster. He said fished 300 traps. “If the market demand is there the price will rise. Things would be better if fishermen fished for price”, he said.
Jim Acheson. “We really need better economic information. One guy says we don’t need to fish more than 300 traps and another guy says he can’t survive on less than 800 traps. There is real economic information out there. For example, the price of bait has gone up 500% in the last ten years.” Fishermen’s Voice photo
That brought up a discussion of trap limits, which fishermen consider a bitter variant of deciding to fish less. Rocky Alley, a Jonesport, Maine offshore lobstermen said there was no way he could make a living with less than 800 traps.
Jim Acheson, School of Marine Science, University of Maine, Orono is an economist and author of the Lobster Gangs of Maine, sat on a panel. He said, “We really need better economic information. One fishermen says we don’t need to fish more than 300 traps and another one says he can’t survive on less than 800 traps. There is real economic information out there. For example, the price of bait has gone up 500% in the last ten years. That’s a fact and there are others that have measurable economic consequences.”
In the middle of a discussion of market development another subject that always comes up did and it came up in it’s usual “things are hitting the fan” way. That was the boat price for lobster. A lobsterman in the audience asked a panel of lobster dealers what they had done lately for the boat price. A Canadian lobstermen charged dealers in various ways with intentionally driving down the boat price. Panel member Charles Anastsia, president of Orion Seafoods of U.S. and Canada said, “We need to find a way to talk about this without distorting information.”
The question sounds simple, but may be one of the most complex questions and problems for lobstermen and dealers. Spiros Tourkakis, Vice President of East Coast Lobster, one of the largest lobster dealers in the U.S. and Canada, later responded, “I have not found a mechanism to reward poor quality. It’s not so much that we don’t pay for good quality, but that we have been over paying for the low quality by paying the same price for all.”
Anastasia added, “In 2012 fishermen threw an additional 110 million pounds of lobster at dealers. What we did was buy, handle and sell - by managing to find a place for a 42% increase in landings - and pay you for them.” A simple answer, but it embodies the complex realities facing market makers for a highly perishable food product whose landings have soared in recent years. The lower quality end has been expanding faster than the rate of demand has been increasing. Anastasia said, “Processing has done a good job. Price is up because of the processing sector, not the live sector. Processing sets the the low price and live sets the the top price. But this will never be seen.”
The outcome of Town Meetings has not been a solution to the boat price, but the realization by some that the problem may be more complicated than it appears. Keith Flett, Open Ocean Trading Company said, “Looking through a broader lens, I think getting us all together to actually do something” would be productive.
Laurence Cooke mentioned the need for greater trust between the fishermen and the dealers. One thing that would help, he said, would be to agree on what makes a hard shell, a hard shell. Stewart Lamont said grading is not rocket science and recommended a project to get it to function on a large scale. Another fishermen suggested using computer analysis somehow on all lobster to measure meat content, shell hardness, etc., to rate each lobster and thereby take the bias out of the evaluation process.
Spiros Tourkakis said he started in the lobster business in 1982. He said he has been doing it 16 hours a day, seven days a week ever since. “We can sustain what we have globally. A billion pounds can be sold. We all have the same thing in common, the only difference is the price. If we can settle the difference on the price, we can achieve more things together.” He said, “ from 2012 forward fishermen’s expenses have been going up and price has not. Fishermen by bringing in more lobster are the first point in falling prices. Gluts bring down the price and when there are several gluts at once, there can be a 42% increase in landings. The only way to move this increased volume is through price points.”
Lobster marketing is moving forward with the Maine Lobster Marketing Collaborative. Quarterly meetings to consider topics like lobster prices, what benefits might come from higher prices, and what actions might lead to higher prices were planned. Adding as much transparency as possible throughout the supply chain and greater communication between all those in the supply chain was seen as a means of unifying and strengthening the industry.