The great lobster crash
- January 23, 2009 8:43 AM |
- By Kevin Yarr
by Kevin Yarr, CBCNews.ca
One of the scary things about recessions is how they have a tendency to spiral downward. For an illustration of this, consider P.E.I.'s lobster industry.
Lobster are worth $250 million a year to the P.E.I. economy, by far the biggest part of the fishery, which is one of the big four industries on the Island: fisheries, agriculture (potatoes), tourism (Anne of Green Gables) and aerospace (yes, aerospace).
While people tend to think of sticking live crustaceans in boiling water when they think of lobster, a huge part of the industry is processing and freezing it. In peak season, 7,500 people work in the Island's lobster industry on the water and in processing plants.
Like many businesses, lobster processors have a cash flow issue, in their case made worse by the seasonal nature of the business. They have to put up a big load of cash at the beginning of the season to buy the lobster from the fishermen, and then to run the plants. Money comes back in dribs and drabs as throughout the year as they sell the frozen lobster.
But this year those dribs and drabs turned into a trickle. As the markets crashed and consumer confidence went with it, luxury products are taking a big hit. A delicacy like lobster definitely qualifies as a luxury product.
So lobster processors on P.E.I. are now finding themselves sitting on $25 million worth of frozen lobster as the spring lobster fishery approaches. If you're a banker, carefully doling out funds in a market where credit is tight, opening up a line of credit for a business already chock full of a product nobody seems to want so it can buy more is not looking like a good option.
The processor's trouble is the fisherman's trouble. Prices for lobster on the wharf have dropped so low many fishermen are wondering whether they can break even if they drop traps this year.
So people stop buying because they are worried about their jobs and financial future, threatening the jobs and financial future of thousands. Multiply this same formula over an untold number of industries.
What food are you cutting back on to save money?
About the Authors
- Elizabeth Bridge is a producer with CBC's Digital Archives project. She got her start in the kitchen baking brownies and making fudge but is still trying to get pastry right.
- Andrea Chiu
is an associate producer at CBC Radio Digital. Though she loves to eat, cook and discuss food,
don't ask her to bake. It never turns out well. She tweets as @TOfoodie on Twitter and organizes food and wine events in Toronto called FoodieMeet.
- Amber Hildebrandt
works for CBCNews.ca in Toronto. Growing up on a farm in Manitoba, she acquired an insatiable appetite, but it was during a stint in Japan that she developed her discerning tastebuds and foodie ways.
- Tara Kimura
is a multimedia producer for CBCNews.ca.
- Andree Lau
is a CBC web reporter in Calgary. Her journalism career includes seven years as a CBC-TV reporter. Her own blog called "are you gonna eat that?" chronicles her eating adventures (including sampling snake and camel hoof tendon).
- Jessica Wong
is a CBCNews.ca writer who loves to eat and cook, as well as discuss, read and watch programming about food, sometimes all at once.
- Kevin Yarr
, CBCNews.ca's writer in Prince Edward Island, wrote about food and beer for national and regional magazines before joining the CBC. He acquired a desire for new tastes on his first trip to Europe, and an appreciation of eating locally and in season when he finally settled down on P.E.I.
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Comments (11)
You can hardly find Lobster in B.C. at the best of times. Every time I am in Calgary or Winnipeg, Red Lobster is the main feature of the visit.
No Red Lobsters in B.C.!
Someone enterprising might try a franchise here!
I will probably buy more fresh lobster because the price has come down. It is delicious!!!
I recently read in an international fishing magazine that Australia is having their best lobster marketing/price year ever. They have moved to marketing to asia to all the fish hungry people. I think we need to market to a larger world and pass the low price the fishermen get on to the consumer. Lobster was @$35. a kilo in whistler BC a shock to our helper was knew the price we got at the wharf here in nova scotia.
Someone is making money because the price at the store has not changed. It's still $9.99 - $10.99 per pound.
Thank heavens for the lobsters, they must be overjoyed about the recession..
i have to say, i haven't ever really thought of buying frozen lobster. how sad for these workers.
i am trying to eat less meat in general, both myself and when cooking for my family, to save some money and to be healthier.
still, reading this post makes me think perhaps we should still try to make some room for 'indulgences' like lobster once in awhile (if one can afford it), even during these tougher times. maybe something like lobster mac and cheese would only take a little bit to go a long way (and lobster soup stock with the shells?)
While people think that consumers pinching pennies is going to cause our economy to spiral downward (which it will), that is not the only problem. With an overheated economy the last few years prices were artificially high, which contributed just as much to the crisis the lobster fisherman (and other similar industries) are in. They had to pay incredibly high prices for things and now are unable to recoup their losses. The smart thing for consumers to do is spend wisely. Support local, sustainable businesses first.
Hi,
This recession has really been hurting the whole world. Out here where I live, Columbia River area, it is the "Dungenes Crab" fishery that is in almost the same fix.
Last year we had a storm of over 120 mph. that caused many of the boats to lose much of their Fishing gear and now, the Markets are drying up as the cost of doing business keeps going up and processors are having dificulty getting financing. Dungenes Crab is also a luxury item here and abroad. The fishermen are at their wits end of what to do next and the rest of the fishing industry does not have a very bright future either, wheather it be Salmon or Tuna. The freezers are mostly full from last year because nobody's buying either here or abroad. Banks won't lend and in some cases cant lend on such a shaky market.
I only hope that some way there will be a ray of hope in this terrible mess our Global economy is in for all that are involved in this very dangerous industry.
I see this first hand as I am in the Boat repair Business and I see it every day. My heart goes out to all involved in the fishing industry and their familys. I have been involved with this business for over 50 years, and have never seen anything this bad ever.
This "lobster crash" / global recession is what we all deserve to get. Everyone ask yourself this question... when doing what the companies want you to do, like shop, and waste hard earned money on things we dont need. Does anyone ever care where the product was made? or sold? or researched? No...what we have here is a shift in global stance of those making profit and those dependant. For 50 years we have been the profiteers and supplying the world with top quality products. Now when we shop we look at one thing, the price...and we all know where the lowest prices come from, inevitably turning us into the dependant. I truly believe that we will soon be the next 3rd world and Asia will be the "leaders" in everything. lol remember the laughter when Toyata started to import.....
Recession is the best thing that could happen to the human race, it means we have stopped expanding and this is an ample time to start focusing on sustainability. We will adapt trust me.
Its time to save the world people, before its to late!
Where do you buy these cheaper frozen lobsters? Certainly can't find them for cheap here in Ottawa. CBC radio had a program on this morning saying that Lobster is the price of Bologny ... hmmm ... where can we buy this?
Best,
Ian