Colby College Research Reveals Economic Impact of Lobster Dealers in Maine

A lot of lobster, nearly 111 million pounds in 2017, travels from Maine’s wharves out into the world and a large number of companies are involved in that movement. To find out the economic value those companies bring to the state, the Maine Lobster Dealers’ Association (MLDA) partnered with Colby College professor of economics Michael Donihue on a study funded through the Lobster Research, Education and Development (RED) fund made possible through the sale of Maine’s lobster license plates. Donihue’s research estimated that Maine’s lobster dealers generate $1 billion in value in the state per year. The definition of a lobster dealer, according to Annie Tselikis, executive director of the MLDA, is a company that moves lobster into the supply chain. What that company actually does could be anything from aggregating the lobsters in a holding facility to processing the lobster into a value-added product. “It is everything from the dock to the consumer. It’s all intertwined,” Tselikis said. “The lobster changes hands multiple times. It gets differentiated to sell into the market.” The goal of this study, explained Donihue, was to estimate the economic importance of that distribution chain in Maine. To do so, he gathered 2016 financial and employment data from 21 lobster dealer companies throughout the state. Using that data, he then looked at the direct and induced economic effects of the companyies’ expenditures. Induced effects reflect the fact that a dollar spent on wages is multiplied in terms of its economic impact as each worker spends earnings on things like groceries, gas, utilities, etc. That spending in turn affects the revenue stream of the grocer, gas station owner, and utility company. An indirect effect comes from spending on new equipment, maintenance, and supplies — business-to-business purchases. Donihue also gathered data on the companies’ output and number of jobs. “We measured employment and training costs, utilities, operating expenses, contracted services, and other expenses,” Donihue explained. Based on those 21 companies, Donihue was able to extrapolate a total value of Maine’s lobster dealers to be $1 billion annually, comprising approximately 4,000 jobs in the state (www.colby.edu/lobsters2dollars or at www.youtube.com/watch?v=LSBK72HiW_U&t=411s). Questions from the audience focused on how lobstermen could be better paid for high-quality lobsters. “You need to know where your lobsters are going,” responded Brendan Ready, co-owner of Ready Brothers Seafood in Portland. “Are they being processed or sold live? The demand for each differs by the time of year.” He argued that more money will come to lobstermen if they push for their lobsters to be sold to companies that want a highe- quality product. “It should be a collaboration between the harvesters and dealers to reward your efforts. Always ask ‘Where’s it going?’” he said. The 2017 Canadian-European Union Trade Agreement (CETA) has made dealers nervous. In September CETA removed the 8% tariff on live Canadian lobsters shipped to Europe and will remove tariffs on processed and frozen lobsters in five years. “It’s a problem,” said Scout Wuerthner, general manager at Inland Lobster. “We process 35% of the lobsters we buy and sell those processed lobsters mostly to Europe.” Asian demand is strong but primarily for live lobsters in the 1¼- to 1½-pound range, Ready added. The upcoming season will indicate just how CETA is affecting Maine lobster dealers.