Recent media coverage of the lobster industry focusing on the low “boat price” paid to fishermen for lobsters only serves to continue to keep prices down because the general public does not understand the costs associated with getting lobsters to market and unrealistic expectations are set. This perception of inexpensive product detracts from Maine’s attempt to brand Maine lobsters as exceptional.
Fishermen generally do not sell their catch to the public for good reasons, a successful lobsterman is too busy fishing to spend half of his day trying to sell his catch to the public. Selling to the public also means that a lobsterman will have to find a market for the lobsters that are not going to be able to be retailed. A serious lobsterman spends every day possible fishing and has one entity to whom he sells his catch. This lobsterman certainly does have expenses to cover. What many news stories have neglected to mention are the costs associated with getting those lobsters to market.
“Boat price” is not the same statewide and the lowest reported prices are from co-ops who pay a bonus to their fishermen at the end of the year equal to about 60 cents per pound, thereby making daily boat price seem lower than the fisherman’s actual price. Boat price from dealers in the Portland area who do not pay bonuses now range from $2.75 to $3 per pound.
For every hundred pounds of lobsters that a dealer buys from a fisherman today, at least 30 percent of them will be of such a low quality that they must be processed immediately or they will die. These lobsters are currently sold to processors for $2.85 per pound. The remaining lobsters could be sold to a retailer, restaurant or another dealer for $3.75 to $4.15 per pound after they are graded into sizes. Freight cost to send these lobsters to destinations in Boston or New York is 12 cents per pound. The dealer who turns these lobsters over must pay rent, electric bills, payroll and vehicle fees and license fees. They must also send reports to the state detailing each fisherman’s catch statistics. Dealers routinely net 1 to 2 percent of gross sales.
Once processed, 100 pounds of lobsters becomes 20 to 25 pounds of lobster tails and 8 to 10 pounds of cooked claw and knuckle meat. Processors currently wholesale this meat for $13 per pound and the tails for $15 per pound. Processing plants in Maine, depending on the size of the plant, employ between 60 to 150 people. These plants pay insurance, electric and mortgages. Processing facilities are subject to stringent state and federal regulations and their facilities cost over a million dollars to construct. They have only 100 days or so in which to process because their product must maintain a consistent market price or else it will not compete against farmed proteins, like shrimp, in a world marketplace. Processors also routinely net 1 to 2 percent of gross sales.
A retail fish market will usually buy some lobsters from fishermen and some from dealers, thus currently paying up to $4.15 per pound. A retail market that is open 7 days a week with 20 employees who are paid an average of $10 per hour will have a payroll bill of $10,000 per week and a power bill of over $1,000 per month. Telephones, insurance, rent and many other overhead items must be paid. Turning lobsters over for 10 cents per pound is simply not possible if they want to be in business next year.
Additionally, restaurants and retailers in Maine have only about 100 days in which to make all of the money that they will make from lobsters for the year. When tourist season ends, the majority of these restaurants and retails close for the winter, survive at break-even levels or operate at a loss in order to retain key customers or employees.
The summer season is the only thing that makes the whole year profitable. Current retail prices of $4.99 to $6.99 are only logical for anyone who needs to stay in business. If you own a restaurant and have to pay for the other items on the plate and perhaps a very expensive rent in fashionable district of town, you charge what you have to in order to make it worthwhile. If it doesn’t sell, you take it off the menu.
Media coverage of the lowest of all boat prices in Maine causes unrealistic expectations on the part of many consumers. Dealers, retailers and restaurant owners are struggling to make a living and working every day, as are lobstermen. Just like lobstermen, they can ask any price that they want for their product, but market conditions determine whether or not that product will sell. In the end, consumers worldwide determine what they will and won’t pay for lobsters and they buy them or they don’t. Dealers, retailers or processors do not ultimately determine boat price, consumers do.
-Vincent Clough is the plant manager for Shucks Maine Lobster.