Saving Maine: The Heart of America’s Lobster Industry
By Frank Paine
When faced with the cost-benefit analysis of eating seafood, people are generally willing to pay more to get the best products available (since low-quality seafood is known to make you sick). Thankfully for fishermen in Maine, their community has a reputation for having the world’s best seafood, especially lobster. Maine accounts for 80% of the lobster supply of the United States (US), making the state heavily reliant on the global lobster market. Unfortunately, the past several years have been incredibly tough on Maine’s lobster industry, as both the US-China trade war and the COVID-19 pandemic have significantly decreased the price of lobster.
In May 2018, President Trump increased tariffs on Chinese exports, which immediately led to China raising its tariffs on US exports, specifically seafood. Before the trade war, every third pound of Maine lobster was being sent to mainland China, which has a sky-high demand for seafood. When China slashed its purchases of Maine lobster, the lobstermen turned to Europe to try to sell their excess supply. However, due to Canada's trade deal with the European Union (EU), Maine lobstermens' attempts to enter the European Single Market ended up being difficult and unprofitable. To add insult to injury, in 2018, Maine was projected to export $87 million worth of lobster, which would have been its highest-grossing year on record. In spite of these setbacks, Maine lobstermen persevered. In 2019, they recalibrated their sales strategy by targeting the domestic market more deeply: restaurants, cruise ships, casinos, supermarkets, and even individuals.
The next severe blow to Maine’s lobster industry was the start of the pandemic in early 2020. As you probably know, many restaurants in the US have been shuttered due to the lockdowns and capacity restrictions that have been imposed across much of the country. The cruise ship industry has been hit particularly hard by the pandemic, as cruise ships are known to be virus-breeding grounds due to their close quarters. Maine lobstermen have paid the price for this lack of demand, as the price of lobster has dramatically decreased over the past year. Typically, the highest-quality lobster sells for up to $12 per pound, but, due to the impacts of the pandemic, the price of lobster has decreased by 25 to 30%, with prices dropping as low as $2.60.
Maine’s lobstermen should prepare for another year of diminished demand. Countries worldwide have reimposed lockdowns or are preparing to do so, as COVID-19 lingers in spite of vaccines already being distributed. Cruise ships and casinos will likely be among the last venues to fully reopen, and the US seems poised to continue its tough stance on China. While the present appears bleak, the future looks bright, thanks to the new Biden administration. Although the Trump administration claimed to be a champion of Maine’s lobster industry, they failed to provide the industry with what it needed most: assurance. Not all of Trump’s actions hurt Maine’s lobster industry, though. For instance, he rolled back environmental protections off the coast of New England, which provided more fishing grounds for Maine lobstermen. He also worked out a “Phase One” trade deal with China, which will (in theory) lead to a relaxation of China’s tariffs on Maine lobster. However, these positive steps taken by the former president were not enough to balance the negative effects on the lobster industry stemming from his administration’s failure to stop the spread of COVID-19.
The Biden administration represents a new hope for Maine's lobster industry, as greater stability in terms of decision-making is widely anticipated. Although Biden is expected to more strictly regulate New England’s coastal waters, many Maine lobstermen believe the change in leadership will generally aid their industry. For instance, although they acknowledge that Biden’s stance on China is similar to his predecessor’s, they believe that he will maintain a more consistent policy toward their industry and not be as “unpredictable” as Trump. While the global demand for lobster and the politics surrounding it have shifted, Maine’s supply of the crustacean has not, which leaves Maine’s lobster industry with a difficult decision: Maine’s lobstermen can either decrease their supply by underfishing (in an attempt to inch prices higher), or amplify their efforts to create new demand by selling their excess catches to new people. Even though the US and EU have agreed to a deal that will see $200 million worth of lobster being shipped to the EU annually, that still leaves a substantial surplus of Maine lobster. The lobster industry, like the species itself, will live on. However, the industry must be innovative in order to weather the current storm, and diversifying its consumer base may be its best bet. That is why I recommend that Maine lobstermen seek new trading partners via M74, as introducing lobster to new markets will help increase global demand, thereby ensuring the long-term success of the industry.
Frank Paine is an intern at M74 from Milford, Connecticut. He is a student of Economics and Government at Bowdoin College in Brunswick, Maine, and an active member of its varsity football team. His interests include East Asian politics, global supply chains, and ESG policy.
The views expressed above are those of the author and do not reflect the official position of the M74 Group, which remains neutral on all matters. Publishers assume no liability for content.