Harpswell Docks with Lobster fishermen

The impact of the global economic recession on the Maine lobster industry is no secret.

The lack of consumer demand for all luxury items, Maine lobster being the closest to our hearts, has made for devastating financial times for thousands of Maine lobstermen and for many others. These difficulties may not end soon. Therefore, it’s more important than ever for our political and industrial leaders to step forward, to work together and to lead. This economic crisis has served as a wake-up call to all who care deeply about the economic sustainability of Maine and especially our fishing communities. Times like this call for leadership and action. Times like this call for optimism and the recognition of opportunity that change can bring.

Robin Williams in Dead Poets’ Society called it “fini origine pendent” — the end depends upon the beginning. This is the new beginning for the Maine lobster industry. If politicians, lenders, and industry leaders work together, our state, our fishing communities, and our economy will be strong for the generations that follow.

Politically, Governor Baldacci is to be commended for his continued commitment to the Maine lobster industry. He showed his commitment to keeping the fishery sustainable by appointing his Working Group for Sustainable Maine Lobster last February. Maine lobster is now in “full assessment” to gain Marine Stewardship Council (MSC) certification for sustainability — a major step toward differentiating Maine lobster in the world marketplace. As well, he immediately took action when lobster prices crashed this fall and formed his Task Force on the Economic Sustainability of Maine Lobster to find long-term solutions to today’s price issues. His decisions to act were immediate and showed great leadership.

The Legislature will need to follow suit in the upcoming session. There is no doubt they will. Marine Resources Committee Chairman Dennis Damon has long been a strong advocate for the lobster industry. Likewise, committee member Sen. Nancy Sullivan, representing my hometown of Kennebunkport, has long supported the fishermen at Cape Porpoise Pier. Speaker Hannah Pingree and House chair, Rep. Leila Percy, will continue to show leadership on lobster-related issues. One only has to look back to the defeat of the “dragger bill” as proof of their understanding and commitment to Maine lobster.

Fishermen, dealers, and processors will also have to be willing to participate and work together to find workable solutions. Fishermen must come to understand that the “industry” does not stop at the wharf — it doesn’t stop until that Maine lobster gets to the consumer’s plate. In return, dealers, processors, and distributors must come to understand why Maine lobster is more than just seafood. Over 6,000 hardworking individual fishermen risk their lives and their wallets every day. No other fishery in the world compares. In no other fishery do so many individuals take so many precautions to keep their product sustainable. V-notching, trap fishing, throwing back lobsters that are too small or too large, all prove that these fishermen are proud of what they do now and are committed to making sure their children will share the same opportunities. Their dedication, their emotion, and their pride, all tell the story of Maine lobster and create the best brand in the world for the dealers, the processors, and the distributors. What a gift.

Many solutions will come forth in the next few months on how to save the Maine lobster industry and how to keep it sustainable in the future. Indeed, DECD Commissioner John Richardson has jumpstarted the process by hosting over 100 lobster industry representatives on October 15, 2008. His Report to the Governor was a strong beginning in identifying the issues that need to be addressed by the Governor’s Task Force.

Much good information is already available in the major study on the Maine lobster industry undertaken when former Executive Director Kristen Bailey was at the MLPC. This study outlines many of the issues that had not previously been articulated or even understood before then. For instance, the Maine Lobster brand is the most identifiable brand of any food in the United States. When someone asks, lobster? 65 percent of people invariably say, Maine. That’s a powerful brand.

However, up to 70 percent of Maine lobster is sent to Canada each year. Once it crosses the border, that brand identity is lost to the consumer. Bailey’s program to tag Maine lobsters with Certified Maine Lobster bracelets was a good solution. In fact, this designation is at the centerpiece of the commissioner’s report. We must differentiate. We have the world’s best brand, and we have to stop giving it away.

Further, the study showed that only 11 percent of consumers are deemed “traditionalists,” meaning they want their lobster in a shell. That leaves a lot of people who want it other ways — in value-added products, for instance. This in itself is a wake-up call for the industry.

Lobster prices are a function of supply and demand. It’s simple economics. If we can create more demand by offering consumers what they want, we can garner higher prices for the fishermen. The supply is fairly constant. We can do so by finding the true market segments for Maine lobster and by understanding where money can be made and where it can’t be made, in the worldwide marketplace. There are many smart marketing people in Maine who can figure this out pretty quickly.

Our Maine lobster industry, however, has been in need of repair long before the current global financial conditions came to pass.

While the annual catch of Maine lobster is fairly constant, it is a very seasonal business. Our competitors to the north have been working and investing for years on ways to overcome this problem. They have made huge investments in tubing operations that keep live lobsters fresh for months at a time. They have seasonal landing restrictions and large processing plants that allow them the opportunity to be the primary buyers of our soft-shell lobsters — at prices they dictate.

This must change.

While I have full confidence that the Governor’s Task Force will take a serious and thorough approach to the long-term solutions needed to keep the Maine lobster industry sustainable, I urge that our political and industrial leaders take immediate steps to offer short-term solutions to solve the “Canadian processor” issue described above. If we don’t, the Canadian processors will continue to gain market share at Maine lobster’s expense — and more rapidly so under current conditions.

More than 50 large Canadian processors are stocked full with value-added inventory. While their excess inventory may have lost some value this fall, it was not close to the financial damage suffered by Maine lobster fishermen, whose biggest customer, Canadian processors, pulled almost totally out of the Maine market, leaving our fishermen and dealers at times almost begging for buyers, as long-standing purchasing agreements were abandoned.

Now the Canadians are doing everything necessary to sell their inventory in preparation for the coming Canadian lobster season this spring. As demand rises and supply dwindles, their losses will be minimized. Most importantly, though, their customers worldwide will be assured that Canadian product will be available every day. That’s stability in the marketplace, and that is what big customers want.

In Maine, it’s a different story. We have two major processors and two smaller processes. We have innovative people running those businesses. In Portland, Cozy Harbor and Portland Shellfish continue to offer new products on the world market. Look’s Gourmet in Cutler and our own Shucks Maine Lobster in Richmond continue to offer value-added products that the 89 percent of “non-traditionalists” consumers are looking for — products that offer quality, value, and convenience.

This is what the consumer is looking for — products that offer quality, value, and convenience, especially when it comes to Maine lobster. Think about it: walk into Whole Foods and buy lettuce or fruit. Bags and bags of cut lettuce leaves of all sorts are on the shelf. Nowhere will you find a head of iceberg lettuce. There are rows and rows of sliced fresh fruit in containers. Today, no one wants to peel a pineapple. Walk in and try to buy a live chicken. Times change. The Maine lobster industry hasn’t. There are lessons to be learned in Whole Foods.

But my guess is that these four processors (and Maine dealers as well) have far less inventory than they need to meet their potential market needs in the next six months. If so, they will be forced to buy expensive Canadian product, or wait until the Maine season begins in July. When the Maine landings do come, the Maine processors will not be equipped to handle the load. Once again, the majority of Maine lobster will be sold to Canadian processors — who will dictate the price.

This cycle needs to end if Maine lobster is to prosper or even survive. Politicians and industry leaders need to start working together now. And they need to invite Maine lenders to the table. They need to invite FAME as well.

Once together, these leaders can forge the single most important solution outlined in Commissioner Richardson’s report: Create “short-term lending options” that make capital available to dealers, processors, and value-added manufacturers. What’s needed right now is capital to buy Maine lobster from Maine lobstermen so they can keep fishing, and capital for dealers to build holding facilities, and capital for processors and value-added manufacturers to buy equipment to expand output of frozen Maine lobster products. Once accomplished, Maine lobster will stay in Maine until it comes time to deliver Maine lobster to the consumer — without taking a detour to Canada — at any time of the year to any part of the globe. At that point, we will achieve an economically sustainable Maine lobster industry.

This can be done without bailouts or taxpayer money. Maine lenders have capital to lend. As the commissioner states, this can be done “by increasing the percentages of inventory eligible for financing to support Maine lobster processing capacity, particularly during peak season when inventory costs are high. Currently, banks will only finance up to 50 to 60 percent of inventory.” He’s absolutely right. Maine dealers, processors, and manufacturers know how to make products that consumers want. They know how to sell them. In peak season, they hate watching trailer trucks of Maine lobster being hauled to Canada as much as anyone does. They understand that it is the death knell.

However, in this risky economic climate, Maine lenders claim they need guarantees or credit enhancements to alleviate excessive risk. So be it.

The commissioner also correctly points out that the solution is to “explore flexible lending guidelines. FAME has the greatest flexibility underwriting loan amendment terms and condition guidelines.” FAME, given proper mission changes and authority from this Legislature, can be a quick and solid solution to today’s Maine lobster problem. If the Legislature acts quickly and responsibly, it can create a FAME solution that will immediately open up much-needed capital on this side of the wharf — a solution that will keep fishermen fishing, that will keep Maine lobster in Maine, and will keep Maine lobster lovers eating Maine lobster all year around all over the globe.

We need to act quickly before the next season is upon us. The long-term solutions will come in due time. If we work together, we can forge new opportunities immediately. This is just the beginning. But, remember, the end depends upon the beginning.

The author owns Shucks Maine Lobster, and is the chairman of the Governor’s Working Group on Sustainable Maine Lobster.

Johnny@ShucksMaine.com