Maine’s lobster cooperatives: a history

First published in the MLA newsletter, September, 2009.

Lobster co-ops, owned and operated by the fishermen, are now common along the coast. It wasn’t always this way.

A century ago fishing co-ops were unheard of. It wasn’t until the late 1940s and 1950s that lobstermen, at odds with dealers over low prices for the catch and high prices for bait, started to organize.

“There was a suspicion, probably well-founded, that the lobstermen were being badly treated by the dealers,” said University of Maine Professor Jim Acheson, author of The Lobster Gangs of Maine (1988). Acheson explained that before co-ops, a few big dealers could swap information on prices, enabling them to pay a lower price than if a truly competitive market existed.

To break the stranglehold of the dealers, lobstermen formed co-ops. Pemaquid Harbor, Boothbay, and Stonington boasted the first three lobster co-ops in Maine. James Brackett of New Harbor helped form the Pemaquid Harbor Cooperative in 1947, reportedly the first fishermen’s co-op in the country. At 92, Brackett is retired from fishing but still has his boat. He lives across the street from the Pemaquid Co-op— a busy place that is going strong.

Brackett remembers what it was like during those days: “Low price was at 25 cents per pound. Fishermen were charged full price for bait and supplies—no discount!” He says the low prices inspired him and a few other fishermen in the area to form the Pemaquid Harbor Cooperative. In 2008, the Pemaquid Co-op received Waterfront Access Pilot Program (WWAPP) funds to make infrastructure improvements, to initiate marketing and branding techniques, and to forever preserve the shore property for commercial fishermen.

Lobster co-op members share the costs and the profits. Co-op managers work to pass along the best price to co-op members. Additionally, members can purchase supplies in bulk. Another benefit of co-op membership is waterfront access. “Waterfront access is very expensive,” said Acheson. “Co-ops allows people to use the dock.”

Co-ops continue to face challenges, especially starting out. Clayton Howard, a Damariscotta lawyer, has been a pivotal force in the creation of co-ops for the last forty years. He has helped fishermen with the legal and financial aspects of 15 to 20 co-ops from Pine Point east to Bucks Harbor.

“The biggest problem is that [co-ops] don’t start out with a lot of capital because the fishermen members don’t have a lot of spare money,” Howard explained.

Co-ops also can face the challenge of inexperience and conflict between members. “Meetings can be contentious,” said Acheson.

Co-ops have had to compete against buyer-fishermen loyalty. In addition, belonging to a co-op has costs such as attending long meetings and forgoing any incentives or special prices offered by private dealers.

“One thing that the private dealers could do that I don’t think the co-ops could do was loan money to individual fishermen,” said Acheson. “If you accepted the loan, you had to bring your lobster there.”

This system worked fine, said Howard, until lobstermen believed they were receiving an unfair price. “You ended up owing to the company store in a way,” he said. To help fishermen have access to savings and credit, he formed the Fishermen’s Credit Union (which has since merged into the Midcoast Credit Union in Bath).

At first, lobstermen were afraid they would lose access to bait if they joined co-ops. Howard says he and others helped work a deal where lobstermen had first priority to alewife streams. Alewives were also in demand for other uses such as fish meal or pearl essence (a decorative material manufactured from the fish scales). Having first priority gave fishermen access to bait.

Despite the difficulties, by 1960, the three original co-ops remained and two new ones had formed. The co-op movement flourished in the 1970s and today there are about 20 co-ops in Maine.

In the mid-1970s, Howard formed the Maine Association of Cooperatives (MAC) to serve as a statewide marketing agency. MAC was owned by 10 individual co-ops. In three years’ time, they were shipping live lobster all over the world. MAC also had a lobster processing business in Spruce Head and helped manage the alewife stream harvest.

In the end, MAC went out of business when the capital requirements to purchase, process, and ship lobster became unmanageable. “It was just too difficult to do without a large capital investment,” said Howard. The final blow came when a plane carrying a load of MAC lobsters lost an engine and had to be rerouted to another airline and then another country where officials there condemned the lobster—conveniently declaring that the lobster had to be consumed right there. MAC took the airlines to court and eventually recovered losses but by then it was too late. “It’s unfortunate,” said Howard. “It was on the way to having a successful program.”

Though MAC went by the wayside, Howard sees positive developments in individual co-ops. He is encouraged that co-ops have been able to improve their infrastructure through WWAPP funding. He thinks successful co-ops need to have a capable manager and assistants, a strong board of directors, members with equal shares and votes, and a way for founding members to recover their equity while allowing younger members to build equity.

Howard thinks it is important to have both private dealers and co-ops. “I don’t see any drawbacks or impediments for the co-ops continuing to grow,” he said.

Acheson thinks co-ops have helped lobstermen in the long run. “Having lobster co-ops means you have a manager who is engaged in the lobster market. They are able to get the best price.” Co-ops have helped even non-members by making lobster pricing and the market structure more transparent. Acheson said that because co-ops were more open than private dealers with reporting prices, all lobstermen were able to judge what they were getting paid against the price the co-ops were paying. In that way, co-ops served as benchmarks and helped remove some of the secrecy and uncertainty surrounding prices.