Posted by Gilmour Poincaree on December 10, 2008

Published: Tuesday, December 09, 2008

by Janet Whitman – Financial Post


NEW YORK – Add the lobster industry to the list of those bashed and battered by the global economic meltdown.

The price fishermen are fetching for a fresh catch has tanked to a nearly two-decade low as consumers lose their appetite for extravagance.

Wholesalers here have knocked about US$3 a pound off their prices, but fancy restaurants and high-end hotels around the city aren’t biting.

“There’s something about the psyche of consumers that says it’s a luxury item,” said Ian MacGregor, a New York wholesaler who typically sells a million pounds of lobster a year to New York’s top restaurants and hotels. “We’re selling one-claw lobster for as little as US$4.50-a-pound.

“We haven’t seen prices that low forever,” said Mr. MacGregor. “But the restaurant industry doesn’t seem to be reacting.”

The situation is becoming desperate for Maine and Nova Scotia fishermen, who are barely breaking even after paying for diesel and bait.

At the season’s open last week on Nova Scotia’s South Shore, fishermen staged a spontaneous two-day strike, putting up a road blockade and refusing to pull traps, to protest the weak prices. They soon voted to go back to work, however, after agreeing that a little money was better than none at all.

With the global economy crumbling, the “shore” price fishermen are getting for a pound of lobster has fallen to $3.25, down from $5 a year ago and $7 before Christmas last year. Fisherman are worried the price might dip below $3 a pound, nearing the low of $2 in 1990 that led to strikes.

“I would say this is the most difficult situation I’ve seen, no question about it,” said Ashton Spinney, a fisherman in Argyle, N. S., who bought his first licence to fish lobster in 1957. “The lobster fishery is the economic engine that drives the economy here in south western Nova Scotia. None of these difficulties are of its own doing. It’s going to need serious help.”

One big reason fishermen are finding themselves in much deeper water this time around is because the business is a lot more expensive than it was a couple of decades ago.

As lobster prices soared over the past decade, many fishermen in Maine and Nova Scotia upgraded their boats, with some spending $450,000 or more on new vessels.

With the price of acquiring a lobster licence costing around as much in recent years, some fishermen could be in danger of bankruptcy.

To cope with the downturn, Nova Scotia fishermen are pushing for politicians to extend employment insurance benefits and to force banks to come up with longer payback periods for boat loans.

“No bank is interested in owning a bunch of lobster boats,” said Denny Morrow, executive director of the Nova Scotia Fish Packers Association on Yarmouth, N. S.

“Everybody in the industry is hunkering down. It’s going to be a tough time for a year or two. [But] we’ve gone through business cycles before and there’s always a brighter day ahead.”

As the economy is struggling, demand — and prices -are likely to remain weak, he added.

“Lobster is a special-occasion food. It’s not something people eat on Wednesdays or twice a week.”

One positive to come out of the lower prices is that some consumers who might not have thought of purchasing lobster in the past are considering it now.

Dan Zawacki, who started a mail-order lobster business 21 years ago in Chicago, believes his sales are holding up because customers who might be reluctant to spend hundreds on an expensive meal out with wine feel they can afford the luxury of a less expensive lobster dinner delivered direct.

He introduced a half-price “Lobster Bailout” promotion to stimulate demand last month after the U. S. government approved a US$700-billion bailout for Wall Street.

“I had a customer call me the other day and say it’s one of those affordable luxuries,” said Mr. Zawacki.

“He told me he might not go out and spend $3,000 on a flat-screen TV, but he does like to have a nice dinner around the holidays.”

In New York, Mr. MacGregor has seen a similar jump in consumer demand from customers at his retail location, the Lobster Place, in Manhattan’s Chelsea Market, as prices come down. “But the vast majority of lobster we sell is still to restaurants and hotels,” he added.

That means that until the economy starts to turn around and customers at restaurants, hotels and cruise ships start demanding lobster again, the price is likely to remain cheap.


The sinking tale of a marine crustacean’s prices:

– $3.25 per pound, the current price of off-the-boat lobster in Nova Scotia.

– $5 per pound, the price this time last year.

– $7 per pound, the price by last Christmas.

– $4-$5 the price many Nova Scotia lobstermen need to break even.

– $2 per pound, the price 18 years ago, which led to a strike by Nova Scotia lobstermen.




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