Guest Column: Canadian Lobster Sector Remains Optimistic

Nova Scotia lobster boats at the wharf. Image courtesy of The Chronicle Herald.

In late January, the Lobster Institute hosted the annual Canada/US Lobster Town Meeting, held for the first time during the winter in Moncton, New Brunswick. Coming off a big 2019 in the lobster sector, the meeting was extraordinarily successful, attended by harvesters, processors, live shippers, and government folks from Maine and the Maritimes and covering many key issues facing the lobster sector in North America. There were only whispers of a potential virus coming out of China. By the middle of the next week, as orders started being cancelled and national media began calling, we knew that 2020 would be a far different year.
The Canadian seafood sector historically has been resilient when unforeseen circumstances hit the worldwide protein market. As a sector we have learned lessons, adjusted and mostly survived through the panic after 9/11, Mad Cow, H1N1, SARS and market downturns due to increased supply and the recession of 2007/2008.
COVID 19 has been by far the most challenging and while we remain firmly in the grips of the pandemic with much hard work to do worldwide, some early lessons have been learned that are helping the Canadian lobster industry through the crisis and prepare us for the future.
Planning is vital and ultimately the market is always right. On February 13 we held the first of our now weekly calls of the Lobster Council of Canada COVID 19 working group. With the lobster market collapsing and spring fishing and processing season approaching, we had a responsibility to provide clear and unbiased market information to all in the value chain as well as to act as a convenor to allow for regular and open sharing as harvesters and plants attempted to make the best decisions possible to benefit their business.
Through the spring we worked closely with provincial and federal governments and the industry to develop the “Canadian Lobster Model.” This model uses historical export data, landings volumes and predicted market recovery percentages to extrapolate the amount of “stranded lobster,” lobster without a home, that could be available should we carry out the fishery and production as usual this year.
Harvester groups and the shore-side sector used this information to adjust their season’s timing and plan their buying and processing; government agencies used the data to help support financial aid programs like the Canadian Seafood Stabilization Fund for the shore-side sector ($62.5 million) and the Fish Harvester Benefit and Fish Harvester Grant Programs ($470 million) for the harvesting sector.
Ultimately our market recovery estimates proved to be somewhat pessimistic as the market (albeit at a much-reduced price level) improved in Asia and North America faster than we expected, with many factors impacting landed volume including bad weather, season delays, daily limits and lower shore prices. Retail sales of live lobster and lobster tails in North America have been better than expected. Sales of live lobster and whole, in-shell products in Asia were the first to bounce back and give the industry some hope.
As one of our members said, “Mrs. Price” is always the best salesperson. There is no doubt that the modelling exercise was important for the entire sector as it tried to make business decisions in a chaotic and uncertain situation.
Market diversity (processed/live, North America/Europe/Asia, foodservice/retail/e-commerce) is vital. As the pandemic spread across the world at different speeds, markets have recovered in a similar fashion. We started to see a return to demand for live lobster in China and South Korea in April (cargo charter companies saved the day due to commercial airlines shutting down) with North American retail demand driving sales for tails and live lobster for Mother’s and Father’s Day in May and June.
Lobster is a celebration food and consumers worldwide, confined to their homes, found ways to enjoy Canadian lobster, in all forms, despite their circumstances. Canadians also helped by buying significant volumes through the spring via retail and direct sales throughout the five eastern provinces. The pandemic has also made us once again realize how fortunate we are that we have an export sector that is split approximately 50/50 in terms of processed and live lobster sales.Processor labor challenges impact everyone. The lobster processing sector has been negatively impacted by labor challenges in recent years and the pandemic put this issue front and center. Fear of importing the virus to small rural towns from foreign countries via temporary foreign workers caused the government of New Brunswick to initially ban any new foreign workers just weeks before the May processing and harvesting season began the (policy was overturned a month later). Ultimately this worker shortage, along with an uncertain market, caused the major processing plants to begin the season operating at 30-50 % of their capacity. This in turn impacted the amount of lobster they could buy which meant the imposition of daily boat limits for a period of one to two weeks in many Lobster Fishing Areas. Given that shoreside labor issues impact everyone, a long-term policy solution for temporary foreign workers remains a top priority.
Government and industry co-operation and collaboration is vital. While there remains some frustration with the rollout of more information around the Fish Harvester Benefits and some decisions about foreign workers, we have been generally pleased with the outreach and engagement by all levels of government.
From the early days of the pandemic in March and through the spring the entire lobster value chain was engaged on an almost daily basis through calls and Zoom meetings with federal and provincial government officials covering all aspects of the pandemic response including labor, PPE and plant/harvesting measures, marketing and promotion, distribution, season adjustments and many other issues involving harvesting and shoreside operations.
For a sector that is highly government-regulated, this type of collaboration is vital, and we will continue to build on the relationships developed during this time of crisis.
The ongoing COVID 19 pandemic has dramatically impacted the entire lobster value chain. Shore and market prices have adjusted to a lower level than harvesters and exporters experienced in recent years, which will cause hardship for all. While there is much work to do we know that working and planning together, continuing to develop a diversified lobster market, solving our labor challenges and investing in marketing and promotion will help the Canadian lobster sector through this challenge and make us stronger as an industry going forward.

Geoff Irvine is the executive director of the Lobster Council of Canada.

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