Global credit freeze chills fall fishery; price sinks to level not seen since '80s
Always, the big worry in Maine is that some lurking biological disaster will collapse the lobster industry. Then the fall 2008 bank panic and stock market declines sent lobster prices spiraling downward.
Prices in the $2 per pound range caught fishermen by surprise after a summer season of already low prices and high fuel costs, and no one was sure when it would end.
"It is super-critical for the lobster industry because it happened at absolutely the worst time of the year... We will land 12 to 14 million pounds in the month of October, and about 70 percent typically goes into one form of storage or another," says Dane Somers, executive director of the Maine Lobster Promotion Council.
"We didn't know the Canadians [processors] had borrowed a lot from the Icelandic banks," says Peter McAleney at New Meadows Lobster Co. in Portland, Maine. "Iceland's banks had their meltdown... The cruise ship lines, Florida and Vegas markets for lobster tail were already down."
In mid-October, the retail price was $3.99 a pound, McAleney says. "The guys have got six good weeks to work, but nobody's buying the damned things."
As credit markets froze, so did the lobster business. Maine dealers and Canadian processors had to stop buying when lenders re-evaluated their credit lines, Somers says. While the Dow Jones average gyrated, by the weekend of Oct. 11 lobstermen in Stonington saw prices fall to $2.25 a pound — at least $1.50 below recent years, and roughly equivalent to 1980 levels, Maine newspapers noted.
"It certainly wasn't sustainable. It was panic pricing," Somers says. The council launched an emergency autumn advertising campaign, authorizing up to $40,000 for the Million Maine Lobster March radio and print campaign. It urged consumers to take advantage of low prices — and help move a huge glut of lobsters out of the live pounds.
"We've never done an advertising campaign at this time of the year," Somers says.
"The situation was so powerful," says Robin Alden, executive director of the Penobscot East Resource Center, a Stonington, Maine-based fishing community group. It organized an Oct. 12 lobster bake on the Stonington pier that sold 4,441 pounds of lobsters at $3.50, about a $1 markup.
The lobsters were all paid for, and about 350 customers raised a little money to help fishermen meet fuel costs, but "it was not really organized as a benefit," Alden says. "It was a signal that the non-fishing portion of the community supports the fishermen."
"We can't eat our way out of this problem," Alden adds. "You have to ask yourself, is this a one-time event? Or are we seeing a fundamental change?"
"This has really exposed our vulnerability as an industry," says Patrice McCarron, executive director of the Maine Lobstermen's Association. "There was a lot of concern, before this, of the need for strategic planning."
That planning explores the possibility of getting Marine Stewardship Council sustainability certification for Maine lobster. Certification "could be a strategic piece, but we're not clear on what all the costs will be," McCarron says. "The critical piece the lobster industry needs is a cost-benefit analysis, looking at what it's done for other fisheries," and that will emerge in 2009.
The mass market had been softening for months from a slowing economy and plentiful supply. A brief spring 2007 pop that took prices past $10 a pound had long since settled down around $4, and the industry was again helped by retailers and restaurants using bargain lobsters to bring customers through their doors, Somers says. Before the financial storm hit, Maine and other lobster states were on their way to "a really good year in terms of the harvest," Somers says.
Higher bait and fuel costs made profit margins very slim, even as "landings all up and down the East Coast were good this summer," Somers says. "The offshore fishery was very successful." Mid-Atlantic supermarkets in mid-summer offered sales on jumbo lobsters from the deep places.
Fuel prices dropped with the world economic outlook, but lobster prices that hovered around $2.25 to $2.40 in mid-October would not be sustainable beyond the autumn season. "We do have the ability to make some money at this volume," McCarron says. "At other times of the year, people would lose money leaving the dock."
"Fishermen realize it's a global problem, not just a Maine problem," McAleney says. "The promotion did work, but it only worked for Maine people... I don't think it's going to clear up for six to eight months." — Kirk Moore
North Pacific Geoduck
Stocks, quota look good, question is how many clams market can absorb
Strong ex-vessel prices and the largest harvest quota in the history of the geoduck dive fishery since its inception in the late 1980s gave the 2008-09 season an optimistic start.
Better yet, the number of participating divers was slightly lower during the first few weeks of the season, helping to keep the harvest rate down, and stabilizing demand in Asian markets.
"Early participation is down," says Phil Doherty, executive director of the Southeast Alaska Regional Dive Fisheries Association, in Ketchikan. "But it is anticipated that more divers will be in the water for future openings."
Doherty adds that as of mid-October 55 divers had delivered product. However, that number would increase to around 65 by the end of the month.
Even with more divers, the geoduck guideline harvest level of 868,700 pounds should provide more than enough clams to go around. But it could prove detrimental if too much product enters the market distribution pipeline too fast.
In previous years, the GHL has fluctuated from 470,000 pounds in 2004-05 to 400,000 pounds in 2005-06, 690,000 pounds in 2006-07 and 590,500 pounds in 2007-08. Each year, divers exceeded the GHLs. The 2007-08 harvest totaled 595,366 pounds while 2006-07's reached 730,000 pounds. Harvesters tallied 460,000 pounds in 2005-06 and notched 533,516 pounds in 2004-05.
What's up with the high harvests?
Reconnaissance dives in new, undeveloped areas revealed an abundance of geoducks, says Justin Breese, assistant area shellfish management biologist with the Alaska Department of Fish and Game, in Ketchikan. Meanwhile, harvest data compiled from mandatory diver log books in established areas gives the department a more accurate picture of the exploitable biomass. The new twists in testing translate to healthy stocks and increased GHLs, according to Breese.
"We get a better idea of where biomass is in an area," Breese says. "It's enabled us to raise the GHL and also raised our confidence in what's out there."
At the same time, testing the beds for acceptable paralytic shellfish poison levels prior to opening the fishery has led to increased volumes going into live markets. A few years ago, divers would harvest their clams first and contain them in totes while they sent samples from Southeast to facilities in Palmer, Alaska, for testing.
By the time the results came back from the lab, many or most of the clams had died and had to be processed. Live geoducks garner ex-vessel prices upward of $4 per pound. But clams that must undergo processing often bring in less than $1 per pound. In October, Doherty reports, divers with top-quality live product were seeing prices around $5 per pound.
A driving factor in keeping those prices up involves the simultaneous harvest of sea cucumbers and a fishery schedule that has divers in the water only one day per week for geoducks. Breese says divers target sea cucumbers on Mondays and Tuesdays and dive for geoducks on Thursdays.
The geoduck and sea cucumber seasons run in concert from Oct. 1 to Sept. 30 of the following year, but divers usually dig up the GHLs for both species by the end of winter. Divers typically reach the GHLs for the cukes by Thanksgiving.
In years past, the industry has opened geoduck diving to two days per week after Thanksgiving. The increased diving time put excess geoducks into the markets, and the markets adjust.
The 2007-08 harvest of 595,366 pounds saw an average ex-vessel price of $3.12 per pound while the 2006-07 haul of 730,000 pounds registered ex-vessel prices of around $3.68 per pound. In 2005-06, when divers delivered around 460,000 pounds, they received an average of $4.09 per pound. In 2004-05, the harvest of 700,000 pounds averaged $3.10 per pound.
The amount of geoducks that Canadian and Washington divers put into the market can affect dock prices, too. As the calendar rolled toward November, divers were discussing whether to hold the harvest schedule to one day per week after Thanksgiving — when all of the 1.2 million pound GHL for cukes would likely be taken — in efforts to control the product flow of geoducks to market.
Diving two days per week puts roughly 70,000 to 80,000 pounds of geoducks into the market pipeline, Breese says. Harvesting one day per week whittles the flow to usually less than 50,000 pounds per week — a volume that fortifies the demand in Asia.
"The markets seem to be able to absorb up to 50,000 pounds per week," Breese says. "Any more than that, and they begin to soften." — Charlie Ess
Gulf/South Atlantic Snapper
Small allocation leaves too many fish in the water for fleet in IFQ fishery
At the end of the second year of individual fishing quotas, Gulf of Mexico red snapper fishermen face a conundrum.
There aren't enough fish on paper, which spawns the regulations they must work under. And there are too many in the water, where they have to try to continue to make a living after they've caught their individual allocations.
"I've got five boats; here it is Oct. 15, and I'm basically out of red snapper," says Panama City, Fla., and Leeville, La., fisherman Russell Underwood.
The way the IFQ is supposed to work, fishermen who fish out their individual quotas would be able to buy or lease additional shares from fishermen who wanted out of the business or otherwise were unable to fill their quotas.
But that was during the planning stages in 2005 and 2006, when the commercial red snapper allocation was 4.65 million pounds and the total allowable catch was 9.12 million. That was reckoning without a court decision proclaiming that a federal red snapper rebuilding schedule was unlikely to meet its targets. That was before Florida and Texas further muddied the management waters by declining to make state recreational regulations compatible with federal time and area closures, displacing effort into state waters and leading to recreational overharvest.
Consequently, commercial red snapper fishermen are now stuck with a sector allocation of 2.55 million pounds, and recreational fishermen have 2.45 million pounds.
It's common for fishermen, even highliners with large numbers of shares, to be unable to find shares to buy or lease after they have caught their own.
"There's no fish to lease," Underwood says.
Not surprisingly, ex-vessel prices were very high in mid-October.
"Right now $4.50-$5, the most money we've ever got in our lives," Underwood says. "The price has been good for the fisherman."
That is the way IFQs are supposed to work, with at least theoretical year-round availability ending the boom-bust derby cycle and allowing snapper to reach its fair market position.
In Florida, average annual red snapper ex-vessel values have been increasing steadily.
Average price for 2008 is $3.46 per pound, according to preliminary, partial-year numbers from the Florida Fish and Wildlife Research Institute. The final number may well be higher when the high prices Underwood reported from late in the year are factored in.
But high prices aren't worth much if you can't go fishing. With 2 1/2 months to go in 2008, many fishermen, such as Underwood and Greg Abrams, also of Panama City, must target other species.
Abrams harvested most of his quota by early September. Like Underwood, he couldn't find anyone who would turn shares loose.
"We caught our allocation up," Abrams says. "I've sent letters out. B-liners, that's about all we're catching now."
With half a dozen or so vessels each and their crews to maintain, Underwood and Abrams can't stop fishing, and therein lies the problem.
"With the small allocation... we're talking about bycatch problems," Underwood says.
If fishermen can't harvest any more red snapper, they hunt for B-liners (vermilion snapper) and other reef fish. But vermilion snapper and red snapper share habitat, and it's hard to catch B-liners without catching red snapper.
"In the western gulf, it's hard to go fish for B-liners," he says.
According to reports from fishermen, there are now large numbers of red snapper in the eastern Gulf, as well, where they are creating similar bycatch problems for grouper vessels.
The problem is the small quotas, Underwood says.
"Bottom line is, what you got right now is, you've got too small a quota," he says.
As the fishermen see it, stock assessments and management still lag far behind the reality they observe on the water.
"What we need is another red snapper assessment," Underwood says. "The resource is there. The 2.55 million pounds is too low a quota for the commercial sector and [2.45 million pounds is] too low for the recreational. I've never seen this many snapper in my 30 years of fishing in the western gulf."
Abrams, who owns Greg Abrams Seafood and recently opened a new 10,000-square-foot fish house, doesn't see IFQs as an improvement.
"I'm against IFQs," he says. "There won't be any fish houses left."
Underwood believes the fishery is recovered now and it's time to cut the fishermen some slack.
"The resource is there," he says. "We just need a fair quota to be able to make a decent living. We've all sacrificed to bring these fish back." — Hoyt Childers
Pacific Petrale Sole
Fleet may pay as processors struggle to sell pricey flatfish in tough times
Counting on a petrale sole season is a gamble, plain and simple.
Fishermen don't know when the fish will show up. Processors don't know how much fish will come across the dock, but they can usually bet on ready sales of the flatfish that's usually in demand.
But not this year.
Economic woes that have hit financial markets also are trickling down to seafood — especially a luxury item like petrale sole.
In non-metropolitan markets, it may retail for $6.95 a pound, on par with other luxury seafood items like Dungeness crab. And like crab, the price may drop when production is high, to around $4.50 a pound.
"It can be low," says Scott Adams, production manager at Hallmark Fisheries' Charleston, Ore., plant.
Metropolitan areas are different. San Francisco, in particular, where petrale and sand dabs are iconic items on restaurant menus and at seafood counters, may see petrale going for upward of $15 a pound, Adams says.
But this year, even in San Francisco, buyers are putting on the brakes.
"People won't buy a lot because of the instability of the market. Normally, the guys who buy a truckload will buy only a couple cases," Adams says. Buyers, he explains, figure the price may drop soon, within a week or so.
"It goes out in bits and pieces," Adams says.
That leads to havoc for processors trying to sell product. Petrale often can be paired with other items — crab or shrimp, for example — to offer buyers a comprehensive seafood package. Even that's not a panacea.
"Sometimes it loses value," Adams says.
If buyers aren't interested in purchasing petrale, processors must either freeze it or sell it fresh at a greatly reduced price so they can move it. Either way, the result could be lower prices to fishermen.
So far, petrale ex-vessel prices have been some of the highest for flatfish, at around $1.30 a pound in some cases. If the fish move north from the central California area to Oregon, their traditional spawning grounds, fishermen will likely begin targeting petrale in earnest come January and February. And that likely will bring a price drop, to around 90 cents or $1 a pound but possibly as low as 70 cents.
"Petrale sells well — unless there's too much. You have to find the magic point," Adams says. "There aren't people lining up to buy truckloads."
Fishermen probably won't target petrale in December, even though some of the fish may show up before January. Many of the boats will shift over to crab instead, and the plants also are busy running Dungeness through the processing line instead of running fish through the fillet line.
Different trip limits, set by the Pacific Fishery Management Council and approved by NMFS, also may force fishermen to adjust their fishing habits.
NMFS allowed an increase of 45,000 pounds of petrale for the two-month period of November and December 2008, up from 30,000 pounds trawlers were allowed in earlier months. At the same time, fishermen could catch 10,000 pounds of petrale as part of an overall groundfish complex for the same two months. They could choose either to fish a groundfish complex that may not fetch as much money or target petrale specifically — but they may not catch as much of the petrale that haven't schooled up to spawn yet.
"It's a pretty good deal for the fishermen," Adams says. "What these guys [regulators] are trying to bet on is these fish won't show up where these guys are fishing."
Last year the fish arrived in Oregon in November. A couple of boats were able to target petrale, haul in a load before the Dungeness season and get a good price. Processors were able to capitalize on the unanticipated flood of sole, too.
"The season was good. It's just a matter of whether those fish will show up in the ocean at that point in time," Adams says. "It's just a big game, really."
Fishermen and processors also are wary of a longer-term, relatively unstable and highly controversial management situation that will affect the whole West Coast trawl industry: individual transferable quotas.
The plan has been in the works for years and the Pacific council was set to make its final recommendation to NMFS at its November 2008 meeting. Plan details would have to be finalized with NMFS and likely take more than a year for review before implementation in 2011, the next biennial fishery management cycle. — Susan Chambers
National Fisherman Live: 10/7/14
In this episode, National Fisherman Publisher Jerry Fraser talks about the 1929 dragger Vandal.
National Fisherman Live: 9/23/14
In this episode:
'Injection' plan to save fall run salmon
Proposed fishing rule to protect seabirds
Council, White House talk monument expansion
Louisiana shrimpers hurt by price drop
Maine and New Hampshire fish numbers down
NOAA and its fellow Natural Resource Damage Assessment trustees in the Deepwater Horizon oil spill have announced the signing of a formal Record of Decision to implement a gulf restoration plan. The 44 projects, totaling an estimated $627 million, will restore barrier islands, shorelines, dunes, underwater grasses and oyster beds.
The Golden Gate Salmon Association will host its 4th Annual Marin County Dinner at Marin Catholic High School, 675 Sir Francis Drake Blvd., Kentfield on Friday, Oct 10, with doors opening at 5:30 p.m.