Processors see growth in numbers, prepare for season

First published in the MLA Newsletter, May, 2011.

So what does the upcoming season look like to Maine’s lobster processors? Given last year’s remarkable harvest, will 2011 keep up?

“Well, it’s been a challenging start to the year,” said John Petersdorf, vice-president of Linda Bean’s Maine Lobster in Port Clyde. “It’s a lot slower than it was last spring.” He noted that demand from Canada seems less than in previous years, in part because dealers kept many lobsters in pounds over the winter.

“There’s a fair amount of inventory from last season in Canada right now,” explained John Norton, president of Cozy Harbor Seafood in Portland. “Inventory carried over usually puts a drag on the market.” But, Norton continued, it is still too early to forecast what the upcoming season will bring.

The recent expansion in the number of seafood processors in the state might compensate for diminished Canadian demand. From Live Lobster Inc. in Gouldsboro to Linda Bean’s Maine Lobster in Port Clyde, Maine’s processing world appears to be expanding. And that may translate into increased prices to Maine lobstermen.
Shucks Maine Lobster in Richmond sells processed Maine lobster meat without cooking. The product is favored by gourmet chefs because of its raw state. John Hathaway, president of the company, thinks that the traditional live lobster is fading fast from the modern marketplace. “The trends are simply that ‘live is dead,’” he said. “Lobster lovers want convenience. They want great food. They want to celebrate. They don’t want to put a live animal in a pot of boiling water and they don’t want a mess in their kitchens.”

Petersdorf sees value-added opportunities for Maine lobster increasing. The company introduced several new products to great acclaim at the Boston International Seafood Show in March, including lobster parmesan cream sauce and pasta lobster traps. “We are continuously brainstorming new products,” he said. “Really, there’s nothing keeping us back.” The company broke into the national limelight in November, 2010, when 750 Walmart stores picked up Bean’s line of frozen, pre-scored lobster claws. Bean operates a facility in Rockland to process lobster.

Calendar Island Maine Lobster of Portland also is promoting the notion that lobster is more than an animal in a pot. “Lobster right now is still in a commodity sales structure,” said John Jordan, company president. “We have been selling something that is not differentiated from the other 93 million pounds of lobster.” His company also emphasizes the convenience of their products, which include a new lobster pizza and lobster cakes. “If you look at the global market, you can see that we [Maine lobster] aren’t very big. But we have a great product and we need to get it out,” he added.

East Coast Seafood Inc., a Peabody, Massachusetts company with a processing facility on Deer Island, New Brunswick, sells Maine and Canadian lobster throughout the world. Spiros Tourkakis, company vice-president, believes in promoting lobster as a species, not by country of origin. “We want to promote the product as lobster, to make it part of everyday life of the world’s consumers. And we want it to be a year-round product,” he said. He notes that approximately 250 million pounds of lobster were landed in Canada and the United States in 2010. “There’s a market for what we land, one way or the other. It could be used as fertilizer but we want to get more middle-class people to eat it,” he explained. According to Tourkakis, by 2015 two-thirds of the world’s population will fall within the range of the middle class. “We want lobster to be an every day thought to those consumers,” he said, “and the way to do that is to put lobster in as many foreign markets as possible.”

Hathaway thinks that those consumers have already discovered these new forms of lobster. “If the Boston Seafood Show is any indication, then there are certainly new markets emerging for Maine lobster and a huge appetite for value-added Maine lobster,” he said. “A lot of Maine lobster this year will be going to Asia rather than Canada. And a lot of that lobster will have been processed here in Maine before it leaves the state.”

Norton, however, cautions that developing value-added products from lobster won’t necessarily translate into better prices for lobstermen. “How much lobster is actually used in those products,” he wondered. “You don’t need much for a lobster pizza or a lobster pot pie. They may create new consumers for lobster but won’t have much impact at the shore level. It will take many years to bear fruit [for the lobstermen].”
Kyle Murdock, a 21-year-old entrepreneur from a Monhegan Island lobstering family, wants to get in on that demand. He plans to open a new seafood processing company on the old Great Eastern Mussel property on the St. George River in Tenants Harbor. “We are progressing right along,” said Murdock. “We just have to get the finances wrapped up.”

Murdock plans to begin renovating the existing buildings in mid-May. His company, called Sea Hag Holding LLC, will produce raw and cooked meat as well as brine and flash-frozen lobster products. “We’ll be doing scored claws and other lobster products for the food service markets,” Murdock said. “The business is focused on supporting fishermen and local communities. We’re looking for other things to process in the plant in order to provide year-round jobs.”

Down the coast in York, Tom Adams is also getting ready to jump into the world of lobster processing. York selectmen approved a $200,000 Community Development Block Grant application for Adam’s company, Maine Coast Shellfish. Adams is planning to buy specialized processing equipment to install in the 12,000-square-foot plant he has renovated in York.

“The major barrier to entry into processing really is the equipment,” Adams explained. “Particularly if you are a small business.” Maine Coast Shellfish currently cooks and flash freezes lobster for commercial clients and sells live lobsters. With the new equipment, Adams will expand into value-added products to take advantage of processor-grade lobster throughout the year. “My goal is to process a certain percentage of lobster and sell the rest as live product,” Adams said. “I’ve got about $150,000 in equipment right now and I’ll need another $300,000 worth to do things like frozen, scored claws.”

With a goal of processing 5,000 pounds of lobster per day, Adams knows that his company will be a minor player in Maine’s processing world. His primary goal is to make use of all the lobster that he buys from local lobstermen and to do so year-round. “This will give me the ability to deal with processor lobster whenever I get it,” he said. “Plus it’s important from a branding perspective that these products go on the shelf as a product of Maine and the United States, not Canada.”

Norton thinks that the new processors popping up in Maine might do well because they are largely small companies. He cited a number of financial issues that large Maine companies must contend with that Canadian processors do not. “For example, we pay a quarter of a million dollars each year for our sewer and wastewater discharge; Canadian processors do not. And it’s another quarter of a million dollars for health insurance which the Canadians don’t pay either,” he said. “Processors there start processing full bore at the first of May and go until the end of January. They get an extra twelve weeks of full plant capacity which spreads their overhead costs out more. That’s why most new production coming on line in Maine is small.”

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