Posted on

Hugh’s Take

 

A quick note from Greenhead Lobster owner Hugh Reynolds on the Corona Virus and its Impact on the US Lobster Market

Many customers have had questions recently about the lobster market prices and supply. It’s fair. WE have had a lot of questions about the lobster market ourselves, both prices and supply. It has been a volatile last two weeks, the likes I have not seen since 9/11. There are a variety of factors at play, some I will get into below. In short, prices have been reduced overall due to the quantity and quality coming in from Canada. Here’s why:

China Tariffs

June 2018, US owned lobster companies were effectively banned from exporting lobsters to China due to the trade wars and ensuing retaliatory tariffs. At the time China was the most active lobster export market in the world, and a significant percentage of Greenhead Lobster revenue. Overnight, the supply chain to China shifted to Canada where exports to the Chinese market grew tenfold. In 2019, China surpassed the US as the largest importer of Canadian lobster in the world, allowing the Canadians to shift their focus from the US market. Every week, several cargo planes leave Atlantic Canada destined for China each loaded with one thousand tons of lobster. This has been a windfall for the lobster industry in Atlantic Canada. That has all but stopped in the wake of the coronavirus epidemic.

Canadian Impact

The Canadians have now learned the volatility of the International market, and have been left too reliant on the Chinese market. They were essentially hit with their own version of crippling tariffs when the coronavirus halted all cargo to China. To make matters worse, the impact of shipping due to the virus happened at a time the Canadian dealers have millions of pounds of lobster caught in December and stored for the Chinese New Year Holiday. This abrupt change has left the Canadians with no other choice but to try an unload their catch with former partners in the US as the stored lobsters near their expiration date.

Greenhead Promise

Greenhead Lobster experienced a similar shift in 2019. We learned an important lesson to approach new export markets with caution, and focus on what has helped grow the business into what it is today. Forced to change our business, we made the choice at that time that we would re-focus our energy on Maine lobster, not Canadian, supplying the best of Stonington, Deer Isle lobsters to our partners here in the US. We are not willing to compromise our quality buying distressed Canadian lobsters at cut-rate prices for short-term profits. We stand by our quality, and can make that guarantee because we own the supply, from our relationships with our fishermen through to the shipping of live lobsters and the innovative HPP processing and flash-freezing that happens minutes from our docks.

What’s next?

This will be a challenging few months for the lobster industry. These Canadian imports could threaten the lobster price to a point where Maine fishermen can’t afford to go. Winter fishing for hard-shell Maine lobsters is a dangerous and expensive undertaking, with long distances to set traps at depths offshore where lobsters migrate this time of year, and severe weather and dangerous conditions for the fishermen. That’s where the high prices come from. And we will continue to pay our lobstermen for the work they do because we know we can stand by their catch and guarantee the quality our customers demand.

We also understand you are running a business. And if you can get supply cheaper, we would never ask you to stay away from a good business opportunity. But be very careful with the quality that comes at those prices. Some of our competitors process ‘deads’ that we would not touch, and ‘weaks’ that only make our cut for by-products.

Greenhead Lobster is a family owned and operated American business dedicated to our domestic and international customers. Nearly all product is caught here, processed here, all within 50 miles of our pier until it is shipped from our tank facility in Seabrook, NH. We are all in on quality, we are all in on processing, and we are all in on the US market. With us you know what you will get, the highest quality lobster Maine has to offer at a reasonable price.