Lobster fisheries: Economic struggle on the high seas

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I went lobster fishing off West Pubnico with a young buddy last week. At one point, he indicated a boat ahead and said, "See that guy. He's not making any money. He's got a 750-horsepower engine." It turns out that not making any money, and the many things that might prevent you from doing so -- like a costly engine, or a couple of lost lobster pots at $100 each - is pretty well the only topic on the lobster grounds these days. This is a big deal for the economy of the Maritimes. Lobster is a billion-dollar-plus export industry, but it's especially the case for Western Nova Scotia where nearly half the Atlantic catch comes from.

There's plenty of lobster. That's not the problem. It's that since the recession hit and the dollar went up, lobster prices have been under $4 a pound, and even under $3 in some cases, and the question is: How long can the bulk of the industry hold on at those prices?

My friend bought a boat and licence four years ago for $550,000 and he thought he had a great deal. That was half of the typical $1-million price of a few years before, and his business plan said he'd be fine even if lobster prices dropped to a rock-bottom $5 a pound and stayed there. Nobody suspected $3.50. He's managed to make his loan board payments -- saved mainly by the fact that catches have been good -- but is keeping very little money for himself and worrying about some big expenses coming up typical of lobster fishing.

But he also considers himself lucky. He thinks he's in the middle of the pack, with half the fishermen worse off than he is -- behind on payments and heading for the shoals unless the tide changes quickly.

The plunge in prices of a year and a half ago triggered a response. There's been a marketing thrust into the U.S., Canada, China, Europe and beyond. There's been a big presence at international food shows, seafood chefs sent off to do the TV cooking shows and so on. A big study by the consulting firm Gardner Pinfold, due late this summer, is being done on what to do next. And the players -- Ottawa, the provinces and the industry - have come together to create the Lobster Council of Canada to direct the effort. But its director, Jeff Irvine, warns that "the challenge isn't strictly marketing."

This is a reference to what everybody in the industry knows, especially in Western Nova Scotia: The industry is a zoo. Fishermen, notoriously independent, have no organization. They blame buyers for manipulating prices, who in turn compete among themselves in a cut-throat game. All is mistrust, rumour and suspicion, resulting in supply and demand being improperly matched, continuing problems with quality control, and an industry that's too divided to organize itself properly to sell to the world.

On the fishermen's side, the closest to a spokesman for them is Ashton Spinney, chairman of Lobster Fishing Area 34, which accounts for about a third of Atlantic Canada's landings. He's a fisherman himself, and has been going to meetings in Ottawa, the U.S. and elsewhere for years at his own expense. He says he understands the buyers have "their own issues" and "everybody has to make money," but recites a litany of "fear tactics" and manipulations over the years that led to fishermen's mistrust and that leads him to believe "there's not much of an attitude of doing much to help" beyond the fishing grounds. Rather, "it seems like an attitude of taking advantage."

But "whether prices are $3 or $8, fishermen think local dealers are the problem," says Denny Morrow, head of the Nova Scotia Fish Packers Association, which represents some of the buyers. Many dealers -- there are 400 main buyers in Nova Scotia, plus 600 more temporary or "designated" ones -- are small operators who had their credit pinched by the banks during the recession and are themselves in trouble, he says. "As long as the perception is that the dealers are making too much money, we're not going to solve anything."

Nevertheless, what the both of them, and pretty well everybody else I talked to agrees on totally is that trust has to be built among the parties, and that the way to do it is to have some clear, objective third-party information on prices and supply. An "online real-time inventory system" so "fishermen don't feel lied to and ripped off," especially around that Christmas market, says Morrow.

If that happened, adds Spinney, and prices were established as fair by an independent auditor, "I think fishermen would adjust their landings if they felt their best interests were being looked after." Both are waiting for that Gardner Pinfold study to outline the next step in that regard too.

One thing for sure, concludes Spinney: "We can't survive on $4 a pound, unless we catch an astronomical amount."

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