Jeff Sones, owner of Jolin Lobster Co. in Manchester, thinks it's a matter of the global economic crisis "catching up to the lobster industry."
Vince Mortillaro, owner of the Mortillaro Lobster Co. in Gloucester's historic Fort neighborhood, says the financial crisis has simply created a market in which "there's too much inventory, and people don't want them."
"Something has to change," Mortillaro says, "or we will all go out of business."
Those words are coming after local boat prices for lobster last week crashed from around $3.75 per pound to $2.75 a pound or lower — a drop of about 28 percent. And those within the industry note the crash is being seen up and down the coast, with no end in sight.
Industry officials in Maine noted that prices there have fallen as low as $2.25. The last time the boat price for lobster was anywhere near $2 a pound locally came in the days after the terrorist attacks of Sept. 11, 2001 — and that time, the price plunge was short lived, since the drop was largely caused by a shutdown of air-freight shipments.
"As soon as the planes flew again, the market sprung open," recalled Craig Babinski, owner of Rockport Lobster Co.
The current lobster market situation "is worse than 9/11," Mortillaro said.
"We (in the lobster industry) are in trouble," he said.
Prices for lobster on the docks in Gloucester had been as high as $3.85 to $4.20 a pound as recently as early September, and had hit as high as $6 a pound in June, more than twice the current rates.
Mortillaro. who buys lobster from many of the Gloucester lobster boats, said he fears the current problem could worsen in the near future as Canadian lobster fishing areas reopen and add more supply to the market.
Spiros G. Tourkakis — executive vice-president of East Coast Seafood, headquartered in Lynn — said the boat price crashed in part last week because many of the larger Canadian players in the processing side of the industry "cannot sell their frozen products."
"The big restaurant chains aren't buying," he said. "Also, the live lobster market isn't picking up the slack, yet. If the processors do put up more inventory, they would want to buy it at a bargain price."
Most of the approximately 20 processors in Canada put up their current inventories with higher-priced lobsters bought last summer. The processors are especially having a hard time moving their frozen lobster tails, which are getting edged out of the market by cheaper warm-water lobster tails.
"Now, the processors' money is tied up in the freezer," said Mortillaro. "They can sell their inventory at a loss to keep buying, or they can wait it out and don't buy."
Meanwhile, their bargain price has arrived, and as they decide what to do, crates of "non-shippable" lobsters are piling up in many dealers' tanks. Getting rid of these locally is hard to do this time of year, he said.
Not all of the processors are in this bind, and some have put their suppliers on quotas," Mortillaro said.
"This business can't survive without the processors," he added.
Their side of the lobster business helps keep the American and Canadian lobster industries' combined haul of more than 175-million-pound annual landings moving by providing dealers bulk outlets for their poor-quality lobsters — the "non-shippables", which are usually soft-shelled or have just one claw or none.
The processors, which include three in Maine, process many of these lobsters for their meat and whole tails, which are later frozen. The processors' products find their ways onto the menus of cruise ships, casinos and big restaurant chains. The demand for lobsters created by the processors has also helped keep the boat price up during times of catch abundance.
Non-shippable, or processor-grade, lobsters often make up 25 percent or more of lobstermen's catches in the summer and fall, especially in October. Overall catches usually peak in the fall, too.
After buying crate-run catches from either lobstermen or other dealers, many dealers later sort out the non-shippables, re-crate these and have the bulk of them trucked off to a processor, usually earning less than 50 cents-a-pound on them. These same people sell the remainder of the good lobsters to more profitable domestic and overseas markets.
Domestic sales for live lobster normally ebb in the fall after summer's period of high demand.
"Business usually picks up again around Dec. 10," said Sones.
Right now, he said, "domestic sales are pretty slow."
"If we didn't have overseas, we wouldn't be selling enough (live lobsters) to pay the bills," said Mortillaro.
"Restaurant business is down about 25 percent," Babinski added. As the economic situation worsens, more people are having to settle for the basics.
"There is always a certain amount of business," he added.
Area lobstermen, despite being frustrated by the plummeting boat price, find themselves fortunate, at least at the moment, on some fronts. Dealers are still regularly buying their catches, and they can go out when desired. Gas and diesel prices have also come down about $1 a gallon since last summer, and there hasn't been a pot-damaging storm yet this year.
Many consumers automatically respond to the news of the low lobster price as something that's good, noting that it can mean lower consumer prices. But in a fishing and lobstering community lie Cape Ann, a drop in lobstermen's income means less money going out into the community, and into the local economy.
"We just have to keep our chins up," said veteran Pigeon Cove Harbor lobsterman Dennis O'Connell.
Peter K. Prybot is a regular Times columnist and writer who is also a longtime local lobsterman.
