High catches erased by low lobster prices

Unusually good catches -- up perhaps 30% -- are being wiped out by unusually low prices -- down by a dollar or more per pound -- for lobster fishermen in southwest New Brunswick, following the start of the season on November 8. Fishermen are fearing that the dependence on larger catches every year to make up for the downturn in prices and higher fuel and bait costs will lead to a crash when the harvest eventually levels out or drops off.
"It's turned into a volume fishery," says Laurence Cook of Seal Cove, Grand Manan, who is chairman of the Lobster Sector of the Grand Manan Fishermen's Association. Most fishermen are looking for a dollar figure that will allow them to live comfortably and are fishing as hard as they can for "as long as they can." If the price doesn't come back up after Christmas, fishermen won't be able to afford to keep fishing. "Right now we're living on the fat we stored," with the money fishermen put in the bank in previous years, he says.
Stuart McKay, manager of Paturel International's operations on Deer Island, says catches "are way ahead of last year," perhaps 30% to 40% higher, although he notes it's too early in the season to confirm the numbers. Fishermen around Deer Island have been bringing in catches of 3,000 to 4,000 pounds or more, and those numbers have stayed up through the first week. Jeff Ingalls of Five Reasons Fisheries on Grand Manan reports that catches around Grand Manan are up at least 25% all around the island.
The other good point for fishermen has been the weather this fall. "It's been good weather for the boys to get the gear out and not bad to work in," McKay observes.
The price, though, has dropped a dollar or more per pound from last year. McKay says dealers are struggling to pay $3.25 a pound in some areas. "Due to the price competition, it's hard [for dealers] to get $4 out of the product."
Cook says the price paid to fishermen around Grand Manan is between $3 and $3.15 a pound. He believes the price is down partly because of the recession but also because production has been high in the Maritimes and Maine this summer and the canneries have the stock they need. He notes that a significant percentage of Canadian lobsters is sold in Europe, and with the European economy down, "our prices are no stronger than the American price."
The Lobster Council of Canada believes a recent change in Maine law, which allows processors in the state to process Canadian lobsters that are larger than the maximum size that Maine fishermen are allowed to land, may boost the price that lobster fishermen in New Brunswick receive for large lobsters they sell into Maine. The council also believes the change may improve the market, if Maine expands its processing capacity.
McKay, though, doubts that the law change will affect Canadian processors. "There are not a lot of processors in Maine," he notes. Also, the market for larger frozen lobsters is limited, with large buyers like Outback Steakhouse and the Darden family of restaurants, which includes Red Lobster, preferring the 4 or 5 ounce tails that come from perhaps a 1 1/4 pound lobster.
The exchange rate for Canadian and U.S. dollars has been close to par for a number of months, McKay notes, so it's been a tough season, since Paturel sells a significant amount into the U.S. market. Paturel sells about 80% of its frozen product in North America, with about 80% of its live product shipped outside of the U.S. and Canada. Five Reasons Fisheries ships most of its product into the U.S., so the drop in the worth of the U.S. dollar compared to the Canadian dollar is hurting that company, too. "The exchange rate had helped the price up here for a lot of years," Ingalls notes.
Along with the income to fishermen, the opening of the season boosts the number of workers at processing plants. Paturel presently has 130 to 140 workers at its plant in Northern Harbour, Deer Island, with the number of Filipino workers having nearly doubled, from 30 last year to 59 presently. Foreign workers have to be in Canada for 12 months before they can apply for permanent resident status, and a number of them have now submitted their applications. Some are now living in a couple of houses in Lord's Cove, and the Filipinos have been making more friends in the community, McKay notes.

Heading towards a tipping point
Although fishermen in southwest Nova Scotia, prior to the season opening there on November 28, were considering the possibility of not fishing or splitting the season, to protest the low prices, Laurence Cook says such actions had not been considered on Grand Manan. He notes that, for fishermen who are under the age of 45, they have spent a great deal of money on licenses and boats and they need to make the money to pay on their loans. "The banks are saying you owe your next balloon payment, so it's not a possibility for some people not to fish."
While fishermen used to be able to make a living with catches of 400 or 500 pounds, landings of that size "would be a loser" now, Cook says. Except for last year, when the price started at around $4.25, for four years the price has been down, having tumbled in 2008. "With the price down where it is, you're just hanging on," he says, noting that safety issues will develop, as fishermen cannot afford to maintain their boats and equipment. "People are just trying to get by."
As for why catches continue to increase, Cook believes that the lack of groundfish, which are a predator of lobsters in their early phases before they settle to bottom, is a significant reason. He believes that the Department of Fisheries and Oceans is mistaken in believing that catches are up because fishermen built larger boats and traps. Cook says more effort was put in the fishery because there were more lobsters. "No one was catching 10,000 pounds of lobsters years ago," he says. "The resource came up in spite of the fishery." He points out that "man is not the biggest predator of lobsters."
He says fishermen fear that the area they fish will yield lower catches, making the fishery not viable in only their area. If landings drop everywhere, then the price will rise.
Cook says that if annual landings per boat fall back to the 50-year average, which is in the 20,000-pound range, the fishery would not be viable now, since fishermen are paying much higher prices for bait and fuel. "Some boats had 20,000 pounds last week," he notes.
"A lot depends on costs we can't control," he says, pointing to fuel and bait prices. A fisherman's fuel bill can be $30,000 for the season, Cook says, noting that boats "burn more in an hour than a truck does in a week." As for bait, while a seiner may get paid $180 a tonne for herring, the lobster fishermen are paying $500 a tonne. Concerning the jump in price, Cook believes, "There's a lot of gouging."
"It doesn't make sense that every year can be the best year ever," he says of the landings. "There will be a tipping point where it doesn't make sense any more." If that happens, he believes there will be a restructuring of the industry so that there are fewer middlemen. "The lobster goes through too many hands," he says, noting that, while a fisherman may be getting $3 a pound, that lobster is being sold in Halifax for $10 a pound. "There are 10 people into that lobster when the consumer buys it," he says, but "no one bears more of the cost of the lobster than the fisherman. But we're getting one-third or less of what the consumer is paying. It's ridiculous."