No sooner had the public become used to eating lobster because of the extraordinarily low price this past fall than it lost that gustatory pleasure when the price snapped up like a rubber band.
In mid-January the price of lobster in the US and Canada doubled-went up $3- in 10 days. One day in that period, the price changed three times.
Some fishermen think dealers and poundkeepers cheat them and have “since time immemorial,” to quote one, as a matter of course, and nothing will disabuse them of this notion. But fishermen and dealers from both sides of the border, this time, were sure someone-and by that they meant one of the big dealers or perhaps one of the big Canadian processors-must have been manipulating the price. There could be no other reason for the price to jump so high so fast.
Spruce Head lobster dealer and processor William Atwood, of William Atwood Lobster Co., said, “One possible explanation that sticks out is the product was not worth the ‘inflated price’ on the shore several weeks prior to the unprecedented drop.” He went on to say, “Just a 25-cent markup to give the wholesalers, the marketing section of the industry a profit margin, for a change, might have given dealers an opportunity to move these lobster out of inventory to chain stores and processors, as in the past. But instead,” he said, “a fictitious buying price was forced onto the shore that was not a true representation of market conditions.” He went on to charge, “A price set by organizations that suggest prices and market conditions weekly, but who do not market lobster products, has changed the whole system of buying lobsters.
“No one wins by someone forcing the price,” Atwood stated, explaining that when a wholesaler raises the price for selling for a single occasion, it seems to communicate and spread that higher price along the whole coast. “This newly developed process has, over the past two to three years, weakened the entire marketing sector of the lobster industry in Maine by raising the boat price when demand is not there,” he said. “Maybe someone is price fixing.”
Atwood was not the only one to think the boat price may have been artificially fixed, but he was the only dealer who dared to go on record as saying so.
Rumors flew. Abundant rumors. People floated theory after theory. One dealer said, “Don’t get me wrong: I’d love to get [so and so] out of the business, but is what he’s doing manipulating the price or just good business?” In the end, most realistic, rational professionals said they didn’t think anybody had done anything illegal.
How did this huge price jump happen? It started back when the price dropped unusually, abysmally low in October when fishermen put too much lobster on the market for the market to absorb because the usual absorbers, Canadian processors who cook and freeze lobster into tails and meat for the cruise line and Red Lobster-type trade, couldn’t absorb the product because they didn’t have orders. The public was hanging on to what money it had in its wallet, and without orders the processors couldn’t get their usual lines of credit needed to buy all that lobster.
Word got out about the plight of the lobsterman, which ended up providing worldwide advertising, both free and paid for, which led to supermarket chain sales and other sales. Europe, also the recipient of that free advertising, took a lot of lobster over the holidays. There, the New Year’s market was as big or bigger than the Christmas market. (Italy and other Catholic countries have a tradition of serving lobster for Christmas Eve as well as at holiday parties.)
By January the combination of Mother Nature, the sales from the free advertising, and all the specials had taken care of surplus lobster held in inventories. Colder and stormier than usual winter weather set in, which kept boats on their moorings in Canada and the United States. Landings dropped. As Downeast Maine poundkeeper Sid Look has said many times over the years, “When snow hits, lobsters stop crawling. It’s like snapping your fingers.” What he means is that as fishermen and dealers know, the water temperature has to reach 42 degrees Fahrenheit on the ocean bottom and 46 degrees at the surface before a lobster will come out of its version of hibernation and crawl into traps. At lower temperatures, lobster does not trap. Temperature, as well as cold, stormy fishing weather keep winter catches minimal and inventories low. As inventories emptied out and people sought to fill their usual winter orders, prices rose.
“It was pure capitalism at work,” declared Peter McAleney of Portland’s New Meadows Seafood. “Supply and demand.”
But others insisted the price had been fixed. One such complainant said, “If the price had gone up 50 cents a week in December and boosted it up to $6 by January it would have been okay, but three dollars in 10 days is not good with the economy the way it is. It will take a lot longer to get the price back to normal.” The dealer said, “Stabilization is the word.”