Cooperatives a Long-standing Practice in Maine Lobster Industry

The coast of Maine is dotted with fishing cooperatives. They may be in small harbors with just ten or twenty members, or larger businesses with 80-plus fishermen involved. Each business is run by its members, for its members, yet each approaches the task slightly differently. This month Landings begins a series that examines how Maine’s fishing cooperatives operate and how they are coping with a constantly shifting economic and environmental landscape. Business cooperatives (co-ops) are not a new concept in Maine. They have existed among farmers for many generations. Agricultural co-ops were created to handle, process, and market the farmers’ products, such as potatoes, sell farm supplies, and provide credit and other financial services. Among fishermen, however, the notion of combining together as a business group was slow to take hold. Fishermen thought of themselves simply as owner-operators of a boat. They caught their fish or lobsters, sold them to the local wharf, bought bait and ice from the wharf owner, and didn’t give a thought to what then happened to their catch. The wharf owner often was the one who provided financial help at the beginning of the fishing season, when cash was scarce, or could loan money for a new boat or gear at a time when banks were hesitant to do so. If the harbor was small and isolated, fishermen had little choice as to where to sell. They were the sharecroppers of the sea. It wasn’t until after the close of World War II that lobstermen in particular began to organize themselves into co-ops, in part to release themselves from the control of private wharf owners. Much like today, lobstermen suspected that wharf owners and dealers were in concert with each other to keep prices paid at the wharf down while the lobstermen continued to pay market prices for bait and fuel, as University of Maine Professor Jim Acheson noted in his 1988 book The Lobster Gangs of Maine. The primary law related to fishery cooperatives is the Fishermen’s Collective Marketing Act (FCMA) of 1934. The intent of FCMA is to allow fishermen to jointly harvest, market, and price their product without being in violation of antitrust laws. A cooperative is limited to harvesters, but processing may occur once the cooperative is formed. The first fishermen to organize themselves as a co-op were based in the Pemaquid Harbor area. In 1947 a small group of local fishermen each purchased a share in the co-op and elected officers to oversee the brand-new business. They used their own capital to purchase bait and other supplies and contracted locally to sell their lobsters and clams. Over time co-op members agreed to purchase additional land, add a dock, a company store, and a restaurant. Their risk paid off: the Pemaquid Lobster Co-op continues to this day. Fishermen in other ports, such as Stonington and Boothbay Harbor, also banded together early as co-ops but it wasn’t until the 1970s that the state saw a surge in new fishermen’s co-ops. Fishermen from Bucks Harbor to Pine Point recognized the economic advantages that they would gain by acting as a group rather than as individual fishermen, such as cheaper and steady bait and discounted fuel and gear prices. But more importantly, they also began to recognize that as a group the co-op gave them more clout when it came to negotiating price with larger seafood buyers. Damariscotta lawyer Clayton Howard helped organize many of these co-ops during the 1970s and 1980s. Howard quickly recognized that as separate businesses, each co-op was limited in its effect on the price paid to members. So in the mid-1970s he helped create the Maine Association of Cooperatives or “Big Mac.” “Big Mac” was a cooperative of ten fishermen’s co-ops. Each of the ten co-ops owned a $10,000 share in the business. Big Mac purchased up to 95% of each co-op’s catch then marketed and sold the product. It also contracted with the town of Damariscotta Mills for all of its alewife catch each spring, an important benefit to Big Mac members. The cooperative bought Maine Coast Seafood in Spruce Head from the Lewis family and hired a general manager. Howard started talking to lobster buyers in Boston, alerting them that the landings from ten lobster cooperatives were available for a decent price. The lobsters would be brought from the ten co-ops to Spruce Head, graded, and then shipped to companies in Boston and New York, netting Big Mac members a nickel or a dime more per pound. That in turn raised the price paid at the dock for the other co-ops since the managers at those businesses could point to the price Big Mac was getting in their own negotiations. Unfortunately, Big Mac was never fully capitalized to survive in the global market. Even though it did several million dollars of business annually, it never had a financial cushion to fall back on if things went wrong, as they inevitably did. Eventually it went into bankruptcy; the Spruce Head property was sold to Anthony’s Pier 1 in Boston and each co-op received its investment back in full. Regardless, the cooperative business model for fishermen hasn’t slowed down. Lobstermen understand that by banding together, they gain efficiency and financial benefits. What worked in decades past can work as well today. In 2002, 13 lobstermen on Westport Island organized themselves as a co-op and bought waterfront property, which included a travel-lift, for their new business, the North End Lobster Cooperative. The Maine Lobstering Union formed as a cooperative in 2013 and bought Trenton Bridge Lobster in 2017. In 2016 the newest lobstermen’s co-op, the Tenants Harbor Fisherman’s Cooperative, joined its elder siblings, selling its lobsters exclusively to Luke’s Lobster and renting space to the company for a restaurant.