GloucesterTimes.com, Gloucester, MA

June 28, 2008

Lobstermen gripe about low 'boat price'

By Peter K. Prybot

"The numbers tell it all," said local lobsterman Michael Polisson.

Those numbers are the lobster boat prices from Connecticut to downeast Maine, made available weekly by the North Atlantic Lobster Coalition. The "boat price" is the price that dealers pay fishermen for their lobsters.

Polisson and many of his Cape Ann peers have pondered why their Cape Ann/North Shore boat price has lately been one of the lowest, if not the lowest, when it once was one of the highest — and who sets it in town? Furthermore, Polisson asks, "If the dealers can pay 75 cents to $1 a pound over what they pay their own fishermen for Maine and Canadian lobsters delivered to their doors, why can't they pay us the same price for the same quality lobsters — and our stuff hasn't been beaten, stressed and shipped?"

Many Gloucester dealers regularly buy Maine and Canadian lobsters to fill their orders. Many Cape Ann lobstermen feel if other ports can pay the price, so should Cape Ann/North Shore.

That common 25-50 cents-per-pound difference would add up at year's end to hundreds, if not thousands, of needed extra dollars in their pockets. Area lobstermen find themselves today paying more for bait, gear and fuel, while their boat price hasn't kept up with the costs.

"We can't pass our costs on to anyone," said one fisherman.

Most also believe Ipswich Shellfish Company has lately had the most influence on their boat price, and the often skimpy price has not only been helping to pay its commission to a Gloucester dealership that acts as its buying station, but also has been giving Ipswich and most of the other eight to 10 major dealers in town an added profit margin and selling advantage in today's very competitive domestic and overseas live lobster marketing. Unless obligated by dealer dockage, area lobstermen have the option to sell to whomever they want.

But they realize selling out of town is time and gas or diesel expensive, and lobster mortality occurs while holding and transporting the catch.

The Big Lobster Price

By textbook definition, the lobster boat price is supposed to be dictated by supply and demand. It usually peaks during the cold water months and bottoms out during the warm water ones.

"The lobster boat price is pretty much the same up and down the coast," explained Eddy Hook, a co-owner of James Hook & Company in Boston. But, that price can differ from state to state and port to port up to 75 cents a pound. Some ports, like Gloucester, pay a straight crate-run price, while others have a split price for different quality lobsters.

"Our customers tell what we can get for the lobsters," Hook said.

Vince Mortillaro, president of Mortillaro Lobster Company in Gloucester, added, "The price drives the market.

"In the end," he said, "if the consumer doesn't buy, nothing moves. The lobster is a luxury item, and people can go without them."

Dealers have found out that, amid the high energy costs and uncertain economy, more people will go without lobsters if the price is too high.

"The economy is very bad. Every dealer's expenses have gone up, and our margins have either stayed the same or dwindled. The days of dealers making $1 to $2 a pound are gone," Fred Fullerton, the lobster branch manager at Ipswich Shellfish Company, explained.

Dealers like Ipswich Shellfish Company and Mortillaro's sell their lobsters locally, nationally and overseas. Many of those markets are high-volume, low-margin.

"The Internet has killed our business," Mortillaro said.

"The customers are so tuned in today that they know what the boat price is and what the air freight and other expenses are," Fullerton said, "and they will squeeze you on what profit is left. The customers will tell you what they are willing to pay."

"Many customers are now buying directly from fishermen," Mortillaro went on.

"East Coast (Seafood Company in Lynn) used to set the price from Rockport to north of Boston," said Sam Parisi, owner of the Gloucester Seafood Depot. East Coast was then the world's largest lobster wholesaler.

By contrast, most of the Gloucester dealers today feel not any one of them has the power to directly set the boat price for the entire area even though they often call one another and say what they are going to do.

"It's up to the individual," Mortillaro said. If any one dealer raises or lowers the price, the others will usually follow suit shortly afterward.

Mortillaro's words recently spoke true when he suddenly raised his boat price a dollar per pound after a customer of his took one of his boats by paying an extra 25 cents a pound for lobsters. A past dealer price war in town even pushed the boat price to $10 a pound.

Most dealers try to avoid price wars, since these are usually no-win situations for them. But Parisi said he's sometimes gotten nasty calls from other dealers for paying the boats extra money for lobsters. He has been regularly paying his fishermen up to a quarter over the boat price.

"I told them (the other dealers) that's my business," he said. "They aren't going to tell me what to do. I sell mainly locally and have certain accounts that allow me to pay the extra quarter. When you do volume (sell lobsters) out of the country, you are only working for nickels and dimes."

Parisi also feels that some local dealers pay covert bonuses to their volume producers to keep them, as well as the boat price, steady.

"We need to make a living, too," Mortillaro said.

The lower local boat price is simply what most of the area dealers feel they need to stay in business.

Fullerton, speaking for the dealers doing volume sales under the current economy and lobster market, added, "The guy who buys and sells the cheapest nowadays makes the money."