Food In Canada

Maritime lobster industry “dysfunctional:” report

An independent panel released its review of the Maritime lobster industry and offers recommendations on how to improve and modernize it

Product Description

Amherst, N.S. – The Maritime Lobster Panel released its report on the industry last month, and made recommendations on how to recover value that’s being lost.

The Maritime Fisheries Ministers appointed an independent panel to examine factors affecting lobster prices.

The panel began its work last July and met with about 100 organizations representing fishermen, buyers, shippers, processors, brokers and First Nations throughout the Maritimes, Newfoundland, Quebec and the state of Maine.

The panel also received almost 30 submissions from organizations, companies and individuals.

Key areas of report

The report addresses five key areas.

It looks at why there was a sudden drop in price in the spring of 2013 and examines the various cost and revenue components of harvesters, buyers and processors in the Maritimes.

The report also provides strategic advice on marketing initiatives and on a course of action to stabilize and then increase prices paid to harvesters.

And finally, the report identifies options for a formal system where the industry would know the price that will be paid to harvesters in advance of landings.

Lobster in Atlantic Canada is a billion dollar industry with 90 per cent of Canadian lobster landed in Nova Scotia, New Brunswick and P.E.I., says the report. It employs thousands of Maritimers and is the life-blood of hundreds of coastal communities.

The panel addressed these questions:

• an explanation for the 2013 price drop;
• an analysis of the factors affecting lobster prices;
• the challenges in determining viability thresholds;
• the ability of various industry sectors to negatively impact wharf price;
• advice on marketing Canadian lobster;
• options for a formal system for establishing prices pre-season; and
• advice to stabilize and then increase the price paid to fishermen while taking into consideration the other players in the industry.

The panel says that what it heard from industry was that it’s been struggling instead of cooperating, fishing for quantity instead of value, fighting over pennies and losing dollars and asking others to solve its problems.

Studies, reports and individuals, says the panel, said that significant loss was occurring as a result of the way the industry interrelated across sectors and with governments, the way the fishery is being operated and how the industry is structured.

One well-known economist talked about the industry being structured to “underperform,” another spoke in terms such as “dysfunctional.”

Still others talked about the spiralling downward of prices as competitors struggled to outbid one another. In one case, says the panel, someone said the quantity of lobster lost to the Maine and Canadian lobster industry in recent years could be greater than the entire production of Australian rock lobster (essentially, the world’s third largest lobster producer).

These concerns are not new, adds the panel. Industry experts were writing about them even 10 years ago.

Recommendations

The panel came up with 33 recommendations and proposed creating three major initiatives that should be developed in 2014 so they can be implemented at the start of 2015.

The initiatives the industry needs to develop are as follows:

• establish an Independent Maritime Lobster Market Intelligence Institute.
• that industry and governments come together to develop and implement a Comprehensive Generic Marketing and Promotion Campaign for Canadian lobster.
• within the Maritime Provinces, the panel recommends developing and implementing a price-setting mechanism for determining price pre-season provided that such a mechanism is based in legislation, is not mandatory, but once engaged by a particular fleet or group, the price negotiated becomes the minimum legal price that can be paid to that fleet or group.

To finance these initiatives, the panel suggests using an industry levy and setting up a process to collect the Industry Levy to support the above three recommendations for structural change.

This levy should be one cent to be paid by fishermen for each pound landed, and an additional one cent per pound landed, paid by onshore sectors.

The panel says these four recommendations form a Value Recovery Strategy.

The panel believes this strategy is the key to achieving the final objective presented by the Maritime Ministers of Fisheries, which was to provide advice to stabilize and then increase the price paid to fishermen while taking into consideration the other players in the industry.