From the Dock: Different view on Maine processing

First published in the MLA Newsletter, December, 2011.

Recently you featured an article by John Sackton on the lobster processing industry and its recent resurgence in Maine. Mr. Sackton has many years of experience reporting on the seafood industry, and I am sure that he sees many of the intricacies to the industry on the international scale that I am incapable of seeing; however, I also believe that, having lived in the lobster industry my entire life, and having recently started a lobster processing company here in Maine, that I may see some of the more local factors which he has overlooked.

Mr. Sackton is correct that lobster processing takes a huge amount of capital to perform at the volumes required to remain profitable, not to mention the capital required to start a new facility. Certainly, the vast majority of Maine lobsters are harvested when their shells are soft and the most value from them can only be acquired through processing. This leaves two solutions, in my mind, either to close our seasons like the Canadians do and to fish only in the spring and fall, or to increase our lobster processing capacity to be able to get this value from our lobsters here at home. Because our summer tourism is responsible for the majority of our live market, and because we continue to have record harvests, I would say that the second option is our only logical choice.

I think this point is best illustrated if we follow an average lobster from the time it is sold at a wharf here in Maine to the time it reaches a Canadian processor. First the dealer sells his lobsters, or at least the bulk he is left with after selling to other small customers, to one of the several trucking outfits who bring the lobsters to lobster pounds and other distributors in Canada, who in turn hold them for the live market or sell them to processors. This is at least three levels of distribution, each of them businesses that need to make a profit besides covering their own expenses, before the lobster reaches the processors. Here in Maine, a well located processor will be able to buy some lobsters direct from the boats, others he will be able to buy in bulk from the local dealers. This reduces trucking costs as well as the markups that Canadian processors must pay. These savings can all be passed down to the boat price.

Mr. Sackton also claims that the only way to raise the boat price is to create new markets. In many ways, he is correct. From the point of view of the boat and the dealer, however, more processors means more markets for their lobsters. Also, if we can learn a lesson from the Alaska Seafood Marketing Institute (ASMI), which is a joint marketing venture between the state government and the private seafood companies of Alaska, it is that the capital focused by processors can be used to establish new markets far better than the capital distributed through the five-thousand individual small-businesses represented by the state’s lobstering fleet.

The increase of lobster processing in the state of Maine is hardly the entire solution to the problem, but it is a large part of the solution and one that will have both immediate as well as long term effects; not just for the value of our lobster catch, but for the state economy as a whole. These are the reasons that I have chosen to start my company and to start it right here in mid-coast Maine.

Thanks for reading,

Kyle Murdock

President and CEO

Sea Hag Seafood, Inc.