Lobster processors take stock of 2013 season

First published in Landings, February, 2013.

Last year, Maine lobstermen landed approximately 123 million pounds of lobster, stunning themselves, lobster dealers and seafood processors alike. In 2011, they landed 104 million pounds. While no one is prepared to predict this year’s landings with any certainty, many suspect that the season will be similar to 2011 and 2012. As the state Department of Marine Resources searches for ways to better manage the harvest in order to improve the price paid to lobstermen, Maine’s major seafood processors are taking their own steps to cope with what might be another banner year for lobster landings.

Picking claw and knuckle meat at the Paturel plant in Deer Island, New Brunswick. Photo by Annie Tselikis.
Picking claw and knuckle meat at the Paturel plant in Deer Island, New Brunswick. Photo by Annie Tselikis.

John Norton is president of Cozy Harbor Seafood in Portland. The company sells frozen Maine shrimp and lobster, as well as fresh lobster, scallops and a variety of fish. When asked what he expected to see in terms of lobster landings this year, Norton chose his words carefully. “One year is never the same as another year because the weather, or the supply, or the market conditions are different,” he said. “It wouldn’t be out of whack to think there will more lobster landed this year but you really can’t depend on it.”

Last year, the company was able to handle the great surge of soft-shell lobsters that were landed in the spring, but just barely, Norton said. “We put extra shifts on, added more people. We were ready for it. Our knees were buckling at times but we didn’t go down,” he explained. Much of the processed lobster was put into cold storage, Norton added, but that also posed problems. “Frozen product can store longer. It’s one of the attributes of the frozen sector of the industry to even out the natural peaks and valleys of demand. But it’s expensive to hold it,” he said. “No one wants to do that for very long because the costs go higher and higher and higher.”

John Hathaway, president of Shucks Maine Lobster in Richmond, thinks that the lobster abundance might offer new possibilities for processors. “The record catches present a challenge, but they also offer us a tremendous opportunity to maximize the economic value of the annual catch,” he said in an e-mail.

Shucks Maine has made a concerted effort to expand markets for its array of raw, frozen lobster products. It has staged an international lobster chef world series contest, holding preliminary competitions across the globe before hosting the final cook-off here in Maine last August. At the International Boston Seafood Show and other seafood expositions, the company brought chefs to demonstrate creative ways to serve Shucks lobster products. “We can create more demand by opening new markets with innovative, convenient value-added Maine lobster products,” Hathaway said. “It’s what today’s consumer wants.”

Because so much of the lobster landed in the state, regardless of the year, is a soft-shell lobster which does not ship well, Hathaway argues that more processing needs to be done here in the state. “In Maine, our challenge is that we can’t ship the majority of our lobsters so we need to be adding value and innovation right here,” he said. “Maine Lobster is the strongest brand in the world. It certainly is beloved in the United States. People here want to buy American, they love Maine, and they love lobster. They just need to be able to get it where they live in way that is less expensive than FedEx.”

Calendar Islands Maine Lobster manufactures lobster into a variety of ready-to-eat products, such as lobster quiche and puff pastry, as well as split tails and meat. John Jordan, company president, found that last year’s early shed and heavy landings provided the company with an opportunity to develop new markets. He’s not sure what will happen if lobster prices go up this year. “The reality is that with oversupply, the price drops and you get new businesses,” Jordan said. “But will they stay?”

Jordan, who lobsters himself, realizes that this year is likely to be as prolific a season as last year and the year before. Finding new ways to cope with that abundance is just part of the company’s business model. “We are leaning more and more on the value-added products,” he explained. “There’s a more consistent value attached to those products than to live lobsters. Pricing live lobsters is so erratic.” Like Cozy Harbor, Calendar Islands can store frozen product, such as lobster tails, when the market is oversaturated. The cost of storage also is an issue. “So you don’t want to hang on to it,” Jordan said. “But it’s good to have for our value-added products and ingredients.”

The effect of an early lobster shed and over supply will vary depending on whether a business is working in the live market or with processed lobster, Norton continued. Those companies who market live lobsters generally buy from Canadian lobstermen in the spring, when most Maine lobstermen are not fishing. Last year, those dealers had contracts set up with Canadian brokers and were taken by surprise by the early landings in Maine. “This year they will be trying to line up Maine lobster to sell to their clients,” Norton predicted.

Processors, on the other hand, are in something of a bind if lobster landings surge early in the year with a concomitant drop in prices. “Buyers stop buying when the price drops, like in the stock market. They won’t buy on the way down, not until they think the market has stabilized,” Norton said. So if a huge amount of lobster comes onto the docks and the price goes down, processors are going to have to be ready to hold on to it. And being ready means having money.

“You have to have the financial capacity to absorb it, to store it and wait,” Norton said. Those dealing in live lobsters, by contrast, often must sell lobsters quickly in order to make back their money and buy again, he added.

Despite lamentations about the price, all those millions of pounds of lobster harvested last year did eventually end up somewhere. “This past year the industry created a lot of new customers. The market absorbed a lot more pounds of lobster than in the past. Either people are eating lobster more often or new people became lobster users. I think both things happened,” Norton said. “There’s a bigger market available to us in 2013 than before.”

Hathaway also is cautiously optimistic. “We want to add innovation and value to Maine lobster right here in Maine and help the Maine lobster industry be economically sustainable to the same degree that it is environmentally sustainable,” he said.

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