Maine’s history with lobster
Maine, or Atlantic, lobster is a species of clawed crustaceans from the family Nephropidae indigenous to the Atlantic coast of North America. Among lobsters, Homarus americanus is the largest and is regularly served whole to consumers. Canada and the US are the top producers of this breed, and they led international lobster production with 90,875 and 66,537 tonnes, respectively, in 2015.
The only other lobster commonly harvested commercially is the rock, or spiny, lobster, a cousin to the Atlantic lobster and a member of the Palinuridae family. Unlike Atlantic lobsters, they are much smaller and do not have claws. Therefore, the tail is generally processed and frozen before it is sold to consumers. Australia produces the most rock lobster, catching 35,532 tonnes in their 2014-15 season. There are other types ranging from the Caribbean breed to the rose-colored, South African variety, but the sweet Australian type is most known globally.
While New England has always been famous for lobster, the industry accounted for just 33 percent of Maine’s total commercial fish catch value in 1993. Lobster’s share rose to 57 percent by 1999 and recently topped out at 80 percent in 2015.
The harvest of Maine lobster first picked up in the 1930s when traveling buyers, who purchased the arthropods to bring back to high demand Boston and New York City markets, were replaced by local ones. These buyers served as the only middlemen between lobstermen and the public before the supply chain grew complex.
Now, the chain squeezes in three intermediate layers before the consumer. This contributes to a pricey end product. Lobstermen deliver their undifferentiated catch to dealers, who sort the lobsters by quality before selling them to distributors or processors. Frozen, live, and prepared lobster is then sold to retailers and restaurants, where the markup is largest. Atlantic lobster is separated from other types, because of the consumer’s ability to see it live, cooked, and on a plate served completely whole. To some extent, this justifies restaurant and retail markup of Atlantic lobster as opposed to rock lobster tails.
Industry elements align
Following the 2009 season, lobster populations started to grow. The lobster share of total Maine landings (everything caught at sea) increased from 36,822 tonnes in 2009 to 43,656 tonnes in 2010. Three consecutive years of record-breaking landings followed, capped by a 57,949 tonnes catch in 2013.
Landings stabilized the past three seasons. Low prices that threatened Maine’s most prosperous fishery began to rise. Live lobster, freight on board (FOB) prices generally peak twice per year in New England. One peak occurs in September as summer demand crests. Last year, the price reached approximately $8.50 per pound, compared to around $4.00 per pound at the start of September 2013. With high prices and record supply in place, Maine’s lobster industry saw the value of landings jump from $237 million to $533 million between 2009 and 2016.
Landings and prices soared, but demand kept up. The US had rediscovered a love for lobster at the rock bottom prices stretching from 2009 to 2013, so consumption rose by 40 percent between 2009 and 2015. Some of the growing American demand can also be attributed to strong marketing campaigns and the introduction of more affordable formats.
The Maine Lobster Marketing Collaborative—composed of harvesters, dealers, and processors—launched in 2013 to promote live and processed Maine lobster. Live lobster is preferred, but the meat from a lobster with a shell that’s too soft must be processed and sold at a lower price. Processed products commonly lose their fresh, native appeal. Striving to keep Maine’s name on its products, Calendar Islands Maine Lobster Company began to brand these more affordable, prepared products in retail. Similarly, casual restaurants like Luke’s Lobster and Burger & Lobster have helped present an experience truer to the crustacean’s roots. Their lobster rolls and burgers attempt to capture the joy of eating the shellfish on a picnic table at a Maine lobster shack, rather than on a white tablecloth in Manhattan. Live lobster continues to be the primary value driver of the industry, but processed lobster goods present an opportunity for market expansion.
Exports shift from Europe to Asia
Europe was the main importer of US live lobster until 1994 when Canada became, and remained, the primary customer. In 2016, Asia replaced Europe as the second-leading, led by a newfound Chinese demand coupled with declining European imports. In 2010, the top 3 European importers—France, Italy, and Spain—imported approximately 19 percent of the US lobster catch. By 2015, their import volume dropped about 20 percent. Simultaneously, US production rose, cutting their imports of US landings to just 11 percent.
Asian, specifically Chinese, demand arrived just in time to fill the void created by Europe. China increased imports of US lobster from 77.9 tonnes in 2009 to 6,286 tonnes in 2016. In the final four months of 2016, exports of non-frozen lobster to China alone totaled over $50 million. Lobster demand in Hong Kong, South Korea, and Vietnam have all increased, combining for close to $90 million in export value in 2016.
These Asian nations are rapidly developing middle classes, who are now demanding more protein in their diets. The food deficit, a measure of development, for the Chinese and Vietnamese populations has steadily declined since the early 1990s. Southeast Asian countries’ demand should continue to rise and soak up more of US lobster exports. There is an opportunity to introduce varied lobster products to these nations, who do not have the preconceived, lavish view of lobster common in the US.
Threats loom off US coast
US lobster exports to Europe, which totaled over $150 million in 2016, could be threatened by a new trade deal. With the Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU near completion, almost all commerce between the entities will become untaxed. Live, frozen, and prepared Canadian lobster pays tariff rates at 8, 16, and 20 percent, respectively, in the EU. All of these tariffs will be eliminated with CETA. While US exports to Europe may keep declining, the lost volume could clearly be reassigned to China.
Maine should concern itself more with the potential renegotiation of the North American Free Trade Agreement (NAFTA). Despite an occasional battle of words, Canada and the US largely exist symbiotically in the market. The Maine lobster season runs from July until early winter, while the Canadian season spans April to June with another spurt in December. Each country imports large quantities from the other during their offseasons. Even when Canada and the United States increased production by 55 and 45 percent respectively from 2009 to 2015, the US still exported 45 percent of their catch to Canada and imported 62 percent of their neighbor’s haul in 2015. If NAFTA were to tax lobster, this interaction would decrease.
Instead of focusing on European market share lost to CETA, Maine lobstermen should double down on marketing efforts domestically and to a growing Asian consumer base.
Maine may lose something even more valuable to Canada over time—cold waters. In 1990, Rhode Island, New York, and Connecticut produced over 6,000 tonnes of lobster, or 21 percent of the US catch. As temperature in the Long Island Sound and coastal waters around the states warmed, lobster production fell to just 1,050 tonnes in 2015. Lobster can withstand temperatures up to 68°F (20°C), otherwise they will face issues with their immune systems and an increased chance for shell diseases. The Gulf of Maine during mid-August averages 62-63°F. It is projected to warm 2°F by the end of the century under a low-emission scenario and 4°F under a high emission scenario. Even if water temperatures do not hit the critical value, a warmer gulf will weaken lobsters’ shells and decrease their likelihood to be sold live.
The Maine fisheries also face another, less well-understood challenge. The population of young lobster is plummeting due to a disconnect in maturation, according to a recent University of Maine study. Stage one larvae populations are rising, but postlarvae populations are falling, which could lead to a future dive in population. Researchers hypothesize this could be due to a decline in the zooplankton population, a key food for lobster larvae. It’s not clear whether this is due to a changing climate, chemical contamination, or a another unknown cause.
Everything has come together for Maine lobster. Formerly depressed prices surged to new heights, landings reached historic peaks, and new and old consumers reignited global demand. However, Mainers should keep in mind the lessons learned after the downfall of Atlantic cod. After a record landing in 1991 with 9,607 tonnes, warming waters and overfishing saw the industry crash to under a thousand tonnes per season by 2005. This past year, Maine’s Atlantic cod landing was 75 tonnes.
It’s a story eerily similar to lobster as it faces a bleak forecast for oceanic conditions and a projected decrease in supply. Softer shells complicate live transport, and will force dealers to sell more to processors rather than distributors. These biological and climatological issues may not lead to a permanent change. But they at least indicate a short term relative increase in the supply of softer-shell lobster. Some of the highly profitable live volume could be degraded to lobster rolls or other prepared products.
Better marketing could help the industry to navigate the rough waters ahead. A shift to grocery store shelves and casual restaurants, coupled with skillful promotion to the new Asian consumer base, look like the way forward. Luke’s Lobster’s successful expansion into Japan with six brick-and-mortar locations exemplifies this potential. A range of income levels enjoy the shellfish in a variety of affordable settings. And while this isn’t the highbrow atmosphere lobster is used to, it probably needs to become reacquainted with its humble origins.