More Maine lobster processing, more value

First published in Landings, April, 2013.

If you want to process lobsters, you’d better have a permit. Actually, quite a few permits. To get started, you must purchase a wholesale seafood with lobster permit. Then you can add a lobster meat permit and a lobster processor-tails only permit. If you want to produce a full line of processed lobster products, including claws in the shell, you also need to purchase a lobster processor license. On top of that, the federal Food and Drug Administration (FDA) mandates HACCP (Hazard Analysis and Critical Control Points) certification. And then, of course, you might need a discharge permit under the Clean Water Act if you send any wastewater into a stream or the ocean. Even with the time and money all these permits require, Maine is a seeing a modest increase in the number of lobster processors operating in the state. This increase is good news for those who want to keep the value of Maine’s signature crustacean within state boundaries.

It takes a lot of effort, but Maine companies are slowly increasing lobster processing, adding value to Maine’s signature seafood. Photo by Annie Tselikis.
It takes a lot of effort, but Maine companies are slowly increasing lobster processing, adding value to Maine’s signature seafood. Photo by Annie Tselikis.

In 2010, just five companies in Maine had a lobster processor license, according to Sarah Cotnoir of the Department of Marine Resources. By 2012, that number had jumped to 16. The number of companies holding a lobster processor-tails only permit grew from six in 2010 to ten in 2012. This growth came after the Maine Legislature passed a law in 2010 allowing the processing of lobster parts, such as knuckles, claws and split tails. Companies that have a wholesale seafood with lobster permit, such as Hannaford Supermarkets or your local fish market, numbered 364 in 2012, a figure that has remained steady during the past three years.

These permits don’t come cheap, according to Chad Dorr, president of Dorr Lobster in Milbridge. A wholesale seafood with lobster license costs $443. His lobster processor-tails only permit is $159; the lobster processor permit costs $500; and a permit to transport lobster out of state runs $312. “Yes, if you look at all a dealer has to pay [to be properly permitted], it is a lot,” Dorr said.

Although his processing plant is small, Dorr must follow the same requirements as larger companies do. He must create a federally-approved HACCP plan for his facility and follow it to the letter. HACCP certification has been used by the FDA since themmid-1990s to ensure that seafood and other food products are reliably safe for human consumption. Not only must Dorr have a HACCP plan approved by the FDA, he must also have one person on staff who is trained in HACCP procedures. That person in turn must take an FDA-approved HACCP training course. “The course runs about $300 to $500,” said Dorr. Dorr understands the value of having a HACCP plan designed to prevent any safety problems occurring during processing. “But I’m small,” he noted. “The return is small too.”

So why bother with processing in the first place? Dorr, after all, sells picked meat primarily to local restaurants and a selection of lobster products through the company Web site. “The reason we process is to compensate for loss,” he explained. “Let’s say I get a hundred pounds a week of lobsters I know aren’t healthy enough to make it on a truck. I can’t afford to lose that.”

NUMBER OF LOBSTER PROCESSORS IN MAINEJohn Ready, co-founder with his brother Brendan of Ready Seafood in Portland, acknowledges that it takes a lot of time and a “tremendous” number of permits to get a processing business off the ground. “You can look at all that and bitch and moan or just do it. It’s the cost of doing business. There are a lot of regulations in place. You deal with it.” To his mind making a go of it as a processor calls for much more than permits.

“You have to have a strategic plan, discipline and direction. You can’t do all constant complaint that Canadian processors enjoy certain federal and provincial subsidies for their businesses. “You build a business model to be as efficient as you possibly can be with the resources you have,” he said. “Lots of times when there’s free money [given out by government agencies] being efficient goes out the window.”

Albert Carver, president of Carver’s Shellfish on Beals Island, sees more difficulties for smaller businesses getting into the processing business than in years past. A seafood processor for 37 years, Carver ticks off the obstacles that a new company must face. “You have to have the capital for the plant and the infra-structure. The infrastructure includes the sewer, and the water and electricity. You need freezing units, not just some cooler. And then the regulations keep changing. You’ve got to keep up with that,” he said.

definitions of lobster permitsBut more processing is definitely needed in Maine. Gaining every last cent from a landed lobster is critical to getting more money to lobstermen, Carver argued. “We can’t just put it on a truck and send it somewhere else. Then [that lobster] supports someone else’s community, or state or, in our case, country,” he said. Carver wants to see more processors opening their doors all along the coast to help support local communities. “The place up in Prospect Harbor [the soon-to-reopen plant now owned by Garbo Lobster and/East Coast Seafood] is fine but we need small ones as well in places like Stonington. Maine grows on small family businesses,” he said emphatically.

His company was one of the first to process lobster back in the 1960s. Now, according to Carver, he’s ready to get into the game again. “We still hold all the licenses. Even though it’s harder to get into it [processing lobster] now, we know we have to do it. It allows you to do more with the product,” he explained.

John Ready is preparing his company for another season of heavy landings. He thinks that the route to success for Maine’s lobster industry lies not in simply jumping through the hoops necessary to start additional processing plants but in something even more complex: unity. “Years ago everyone [in the lobster industry] hated one another,” he said. “Now, you can’t do that. We compete, sure, but it’s an industry. We must be professional and work together. Fishermen, dealers, buyers, shippers, processors. We have to act together to increase brand awareness or we will be no better off than last year.”

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