Let Them Eat Lobster!

This may seem sorta silly, but I come from a long line of Maine sea cooks and captains (each of whom got an extra share of the catch of the fishing ships they worked on, so one can romanticize it as being entrepreneurial, but if you have ever spent any time on the Maine coast, it is still a hard way to earn a living). Lobster catches in the North Atlantic spiked up and stayed high relative to previous norms post WWII for reason not well understood (but my great uncle, the biggest lobster broker in Maine, and therefore presumably presumably the US for many years, benefitted. My uncle, who at the age of 74 got a PhD in lobsters, ahem, marine biology [he hauled lobsters for many years after losing his job as a teacher, major shaggy dog story], failed to find a good explanation). Longwinded way of saying I take more interest than I ought to in the health of the lobster business.

Bottom line: Lobsters were cheap last summer. But because they are perceived as a luxury good (which strikes me as funny, there are a lot of coastal Maine residents who regard them as the functional equivalent of garbage fish), people are reflexively shunning them. So they are even cheaper now. And the exit of Icelandic banks as financiers had had a big impact. From the Financial Times:

[Lobster} Prices have sunk so far over the past two years that some mass-market restaurant chains have added lobster to their menus. Tennessee-based Ruby Tuesday, with about 850 outlets in the US, offers lobster tails, as well as lobster carbonara and lobster macaroni and cheese.

Hannaford Supermarkets, a New England chain in the heart of the US lobster industry, has the crustacean on special this week at $4.99 a pound, half the price of halibut.

The lobster fishery’s woes are closely tied to the global financial crisis, which has shrunk demand for a delicacy long associated with celebration.

Yves here. Ahem, this account misses two issues. First, most restaurants treat lobster as a high end item, which deters most people from ordering it. But lobster is very ill suited to eating in a formal setting (if a whole lobster), since it’s messy. The diner has to pick out a lot of body parts (which usually involves putting your hands on the carcass and using crackers and picks). Lobsters are best eaten on a picnic table with beer and a bib. And lobsters ex lobster rolls are seldom used in other dishes (lobster cakes? fried lobster? Lobster Rockefeller?)

Lobster is now so cheap that cooking it at home is attractive. But how many people know how to cook lobster? It’s easy but disagreeable (throw them in a pot with a about an inch of boiling water and leave the room while they scrabble around trying to escape). And eating them is a bit of work, particularly if you don’t know the tricks for tackling them (especially the late in season “hard shells” which are tough to get into but have much more meat). Back to the story:

The credit crunch has also deprived North American and European processors of working capital. Icelandic banks, among the most prominent casualties of the meltdown in the markets, were big lenders to the seafood industry.

Bank of Montreal, a big lender to Canada’s east coast fishery, urged Canadians this week to make lobster part of their New Year festivities.

“Canadian lobster fishers need your support,” the bank said. “You’ll be having a treat and helping out your fellow Canadians at the same time.”…

Boat foreclosures have driven some fishermen out of business..

The gap left by the Icelandic banks is being filled by institutions such as GE Capital and the Canadian government’s Farm Credit Corporation and Export Development Corporation.

Low prices have boosted supermarket sales, but restaurant orders are in the doldrums.

“The problem now is that the stock market is picking up, but casual dining is most affected because people are still losing their jobs,” said Michael Tourkistas, chief executive of a large Maine-based distributor. “We’re not out of the woods yet.”

Originally published at Naked Capitalism and reproduced here with the author’s permission.