Lobster business fishes for a lifeline

MARSHFIELD, Mass. -- Gregg Dexter hauls a 50-pound wire lobster trap out of the frigid, muddy waters of Cape Cod Bay, one of 800 traps he has to fetch as he stores his gear for the winter.

He's ending his season three weeks early because the catch is declining, bringing a dismal season to a close. Because of a gloomy economy, the price of lobsters sank from October through Christmas, the peak fishing period.

In the 15 years Dexter, 40, has been in the business, things have never been worse. The "boat price" that lobstermen get fell to $2.25 a pound this season, the lowest they've been in 20 years — at the same time that the costs of fuel, bait and insurance are going up.

'A celebration food'

Now, lobster prices are back up to as much as $5.40, but too late for Dexter and the more than 6,700 lobstermen along the New England coast.

They are pulling their traps out of the water. Canadian lobstermen are still fishing, but their catch has been down because recent bad weather has kept them tied to the dock.

That means the supply is tighter, pushing prices up.

"There's a little more shortage in January than we're used to seeing," says distributor Neil Zarella, president of Boston Lobster Co.

Dexter, measuring and tagging lobsters in his boat, Happy Days, says, "It doesn't do a thing for me. The season is over."

It's been a volatile season that saw the lobster industry become another casualty of the global recession.

As consumers tightened their spending, demand for lobsters dropped. The credit squeeze hurt processing companies in Canada, which supply lobsters to restaurants, hotels and supermarkets worldwide. That led to a glut of the 10-legged crustaceans and a drop in prices.

"It all comes down to economics," says Bob Bayer of the Lobster Institute at the University of Maine. "People are not eating out. Lobster is a celebration food, and people are not celebrating as much."

"It's been a laser point of attention showing how the world economy can impact local people," says George Lapointe, commissioner of the Maine Department of Marine Resources.

To help struggling lobstermen, Maine, which lands more lobster than any other state — 64 million pounds in 2007 — set up a program in October that helps banks restructure business loans for those falling behind on payments. So far, applications for seven of Maine's 5,800 lobstermen have been approved and 14 are being processed.

Civic groups and others in coastal communities, trying to drum up business for the lobstermen, sold lobsters for as little as $3 each on docks, in markets and out of the back of pickups. Car dealerships, hardware stores and other businesses gave them away in promotions, says Patrice McCarron of the Maine Lobstermen's Association.

The industry produced 75 million pounds of American lobster, known as Maine lobster, in 2007, the most recent year for which figures are available. Most of it comes from the North Atlantic, New Jersey to Maine. The catch was worth $349 million.

The low prices have been a boon to diners. At Mount Vernon at the Wharf restaurant outside Boston, known for its twin-lobster special, business was up this fall, when the eatery offered two 1.25-pound lobsters for $11.99.

"At the height of it, we were selling 1,000 lobsters a day," owner Brett Henry says.

Overflowing with lobsters

As the cost of lobster rose after Christmas, the restaurant bumped the price to $16.99. Still a deal, say locals Val and Martha Chepeleff.

"But if it goes up to $18, we might have to stop," says Val Chepeleff, 56. "We've had two months of lobsters almost twice a week."

In Massachusetts, which produced 11 million pounds of lobster in 2007, second to Maine, fishermen say the dismal 2008 season will further shrink the state's roll of 900 licensed lobstermen.

Bernie Feeney, president of the Massachusetts' Lobstermen's Association, has fished Boston Harbor for 30 years. In the mid-1980s, 78 lobstermen worked the harbor. Today, there are 25.

"There are no new young fellas coming into this business," he says. "It just doesn't make business sense to make the investment necessary to start off in this business that doesn't return."

Feeney says he was losing $2,500 a week when lobsters were $2.50 a pound.

"It meant the end of the season for me," says Feeney, 60. "You couldn't make any money."

Dexter says even though he caught 27,000 pounds of lobster in 2008, 5,500 more pounds than the year before, he made $16,000 less.

"The bottom-end lobsterman won't be able to make a living anymore," he says. "Without a turnaround, there are going to be people that drop out of this business."