Article originally published in the Spring 2018 edition of the Union Forum, by Robert Keenan, FFAW Projects Manager
Lobster is historically the quiet child in the family of species that are fished by harvesters in Newfoundland and Labrador. Many residents of the province not active in the fishery have little to no knowledge that there is a substantial, and thriving, lobster fishery in Newfoundland and Labrador. After all, lobster is the symbol of the Maritimes and New England – a prosperous fishery enjoyed by tourists at restaurants in seaside hamlets.
The reality, however, is that the lobster fishery stands on the cusp of transforming the expectations and economics of the fishery for hundreds of fish harvesters on the south, west, and northwest coasts of the province. The live lobster market is best described as “red hot”, as record landings in 2017 produced record prices, a circumstance at odds with standard economics whereby more supply lowers prices. There are a variety of factors pushing this red-hot market, such as the health of the global economy and individuals with more disposable income to purchase “luxury” goods.
But the biggest factor is China, and to a lesser extent other parts of East Asia. The changes currently underway in China are of a scope that is difficult to describe. Over the past 30 years, tens of millions of Chinese have entered into a middle or upper-class income bracket, with more disposable income. This change is expected to be more rapid over the next decade, with estimates that by 2030 more than 350 million Chinese will be considered middle or upper-class. That’s a population that is bigger than the entire United States.
Fortunately, China is the largest consumer of seafood in the world and is willing to pay top dollar for North American lobster. It is not uncommon for lobster prices in China reaching $50 to $60 per pound. With a huge market demanding more lobster, exports to China have exploded in the last five years. In 2013, Canadian exports to China were 2.7 million kg; in 2017 exports were 16.4 million kg – that’s a 499% increase. China is now the second biggest market for Canadian lobster.
The impact of the Chinese market is definitely felt by lobster harvesters in NL. The price of lobster to harvesters in the province is set by the Lobster Price Formula established by your Union in 2010, which guarantees harvesters a share of the market price, with the share increasing as prices increase. In 2013, the average per pound price to harvesters was $3.61. In 2017 it was $6.89, a 91% increase in 4 years.
Even more encouraging is the growth in lobster landings in the province. Between 2014 and 2017, lobster landings increased by 28% from 2119mt to 2906mt. This growth is seen in all major lobster fishing areas.
The impact on harvesters is noticeable. At meetings, most harvesters state that 2017 was the best fishing year they can remember. They said the same after 2016 and our hope is that they will say the same after 2018. There’s an unprecedented value in the lobster fishery, where landed value increased from $18 million in 2014 to $44 million in 2017. It is now the second most valuable fishery in the province after snow crab.
The future looks very bright for lobster harvesters. China will continue to drive prices for the foreseeable future and environmental conditions are optimal for improvements to the lobster stock.
Negotiations for the 2018 lobster season are taking place right now.