The island summer sets slowly in the mind, especially when late lasting Indian summer days linger well into October. Who, then, can resist the remembrance of the inestimably powerful number of glancing views through haloed fog on a wave-cut shoreline refracted from the deck of a passing ferry boat, mail boat, lobster boat, sloop, ketch or kayak — a million eyes or more that registered a hundred or thousand glances during ten or a hundred days indelibly singed in a hundred billion neurons firing the minds of passing Maine coast visitors.
But precious few of these visitors who marveled at the grace of a keening gull or fish-freighted fish hawk or watched the seemingly lazy circle of a lobster boat retrieving sizzling warp through a hauler sheave stop to wonder what makes the grace and circle of island life here work. Or not.
Along the working coast, the summer’s disquiet began early when lobsters failed to crawl inshore, as is their habit, by the Fourth of July to shed old shells and harden into new ones. To be sure, the shed has been late before, but it makes even older lobsterman uneasy. What’s going on, we wonder silently to ourselves or not so silently gunwale to gunwale? While it is true that water temperatures on the bottom of Maine’s bays remained unusually cold well into July, which might also explain the absence of a spring spurt in early lobster landings, the combination of a down spring and a late shed could make a grown man groan.
But lobstermen always complain, savants say — nothing new here. But there are new pressures — the price of herring bait has also spiked, due in part to what economists might call the “rationalization” of the herring industry. Huge new mid-water trawlers are catching an increasing number of herring far out at sea, breaking up the schools before they head inshore to spawn. This is good for the export market, but bad for the herring bait market scattered along the remote outposts of the Maine coast — the islands are outport communities where a few dozen lobstermen do not have the buying power to bargain on price and where without bait, there are no lobsters to land at all.
Then at the end of this summer, the price of oil settled above $80 a barrel for the first time in history, without even the threat of a hurricane along the Gulf Coast. Lobstermen are now paying upwards of $2.85 a gallon for diesel fuel where just a few years ago the cost hovered around $2.00 per gallon. Rising expenses are a fact of life in many businesses, but another trend in the lobster business has been gathering momentum in recent years and now threatens the economic underpinnings of individual fishermen in a more profound way than anything in recent memory.
For most of the past 15 years, we have published story after story about the seemingly gravity-defying economics of the lobster business. Average annual landings (supply) have approximately tripled since the late 1980s and the average price per pound that dealers pay lobstermen has also steadily increased from the $2.25 range to the $3.80 range over the last couple of years, defying our conventional understanding of supply and demand.
The happy results lobstermen experienced throughout of the 1990s and into the first four years of this millennium plateaued in 2004 when Maine lobster landings decreased. A handful of creditable lobster biologists, Bob Steneck, Lew Incze and Rick Wahle among them, had predicted this after finding evidence of a drop in larval lobster numbers in the late 1990s. Since it takes a larval lobster on average seven years in Maine waters to reach harvestable size, the biologists predicted that lobstermen might begin seeing a decline in the early to mid-2000s. The larval lobster index has since increased again in recent years, but these baby lobsters will not recruit into the fishery for seven years. In other words, biologists expect lobster abundance to increase again, just not overnight. Veteran lobstermen have always said that lobstering is a cyclical fishery. So the timing of the downturn is particularly unfortunate, but still in the nature of things.
As important as all of these pressures are on the lobster business — and hence on the fundamental economics of island and other working waterfront communities — there is an even more pressing development that most of us have missed. For decades Maine excelled in the marketing and distribution of fresh lobsters to the farthest edges of the world through innovative lobster shipping techniques. This is why the price of lobsters kept increasing with increasing supply in the past 15 years. But we did not pay attention to the important effect of the development of pre-packaged convenience foods that also began to affect the lobster business. Fresh lobsters, however much fun they may be to eat on a beach or with bibs at an outdoor restaurant on the coast, are less and less attractive to consumers in restaurants and at home. Packaged lobster meat has become a huge part of the market while Maine continues to market fresh lobsters. Something like seventy percent of Maine lobsters are now sold to Canadian lobster pounds that supply Canadian processors with product when demand for live lobsters falls following the summer lobster fest. The Canadians control the market.
On top of this, Canadians used to be at a real disadvantage in buying Maine lobsters because the American dollar was strong relative to the Canadian dollar. They had to be very efficient to compete. But as the American dollar has declined in value relative to the Canadian dollar, Canadian pounds can now set the price for Maine lobsters. In other words, Canadian pounds and processors can afford to control the market by paying more for lobsters when they have to and still make money on the twenty-five percent increase in exchange rate.
There is really only one way out of the incredible squeeze Maine lobstermen find themselves in — figure out new strategies for adding value to their product. Whether this means breaking into the highly competitive market for processed lobster meat that the Canadians already dominate or capturing more value through improved distribution strategies remains to be seen. But if the squeeze continues, the picture for small island and coastal towns will not be pretty. q
Philip Conkling is president of the Island Institute.