In one area of the Northumberland Strait, landings were up and that bodes well for the fall season. However, low prices remained a constant for the 1,100 licensed fishermen, making the season especially difficult in light of high fuel and bait costs.
The spring fishery ended in early July and final figures for the season have not been calculated. However, Ed Frenette, executive director for the PEI Fisherman’s Association, said the low prices could mean a loss of up to $24 million to the PEI economy, just on the shore price of lobster. “While landings were up in the spring, earnings were down due to the much lower price,” said Frenette. On landings of 25,000 pounds, a fisherman would be out some $37,000 from 2007, based upon lower price and increased bait, fuel and labor costs.
Frenette cites the 25 per cent drop in prices as the major factor that affected the spring lobster fishery. “We can only speculate as to the reasons for that,” he said, reporting that processors indicated the market was soft, perhaps due to the downturn in the U.S. economy where 75 to 80 percent of the island’s lobster goes.
Frenette pointed out that over the past few years there has been corporate concentration in the industry, and that today, three major companies control the production of lobster in the Gulf of St. Lawrence: the Barry Group in Newfoundland, Ocean Choice in Souris, PEI; and O’Ryan’s Seafood, the major broker for the former two larger operations.
“O’Ryan controls the financial end of other small processing companies in New Brunswick, so in a sense, they control at the marketing end…the wholesale end,” said Frenette. He said these three companies can add pressure on the shore price, and notes, “This seems to have happened.”
A few years ago, together with the Maritime Fisherman’s Union, the PEIFA obtained enough evidence to complain to the Competition Bureau in Ottawa. The chances of doing this again are not good, says Frenette, due to the very stringent guidelines put on that evidence. “It’s just become impossible to obtain.”
The fall fishery is due to open Aug 9, and the latest news from the fishing community is that the PEI Fisherman’s Association’s PEIFA board of directors will hold a brainstorming session later this summer or early fall. Ron Cassie, the association’s president, has indicated, “Everything will be on the table.”
Cassie says dwindling prices and higher fuel costs are causing some fishermen to consider selling their gear. “More and more of them are getting older and looking at leaving the business [before things get worse],” said Cassie.
With the scarcity of herring for bait, costs were way up and some of this bait had to be bought off-island.
Frenette agrees the cost of bait is hurting the bottom line. “Bait is extraordinarily expensive and pelagic species in the Gulf [of St. Lawrence] are not as plentiful as they used to be.”
When PEI Fisheries Minister Allan Campbell opened the gate to more licenses to buyers at the wharf, there was only one taker and Frenette says most buyers would not have been prepared to come over this year. “It will probably make a difference next year,” he said.
In an effort to ease some of the burden down the road, the PEI Department of Fisheries, Aquaculture and Rural Development contracted John Sackton, editor and publisher of Boston Seafoodnews.com, to do a market analysis of the lobster industry. Frenette says Sackton is known as the “premier” fisheries analyst to the industry.
The results of this report were not encouraging to PEI fishermen, blaming a sluggish U.S. economy and the strong Canadian dollar.
The dramatic increase in the Canadian dollar over the past year has resulted in exporters receiving 15 per cent less (for lobster) than they did last year. With the weakening of the U.S. economy, lobster products are more difficult to sell. Sackton’s report indicates if attempts to raise the price of lobster were made, it could lead to dramatically lower sales.
Frenette is ready to recognize Sackton’s report, but says he doesn’t believe the fisheries expert had the time or resources to do a thorough study.
“The Industry is looking for a close examination of the relationship between large corporate groups like Icelandic Bank, which finances both the Barry Group and Ocean Choice, as well as major brokers going into the U.S.,” said Frenette. “We are looking for information on the profit spreads at each level of processing and marketing.”