Lobster industry feels the pinch of recession
June 28, 2009
By Matthew Craze and Ben Sills
Ronaldo Contreras leans over the side of his faded green fishing boat and hauls a wooden lobster crate from the Pacific Ocean off Robinson Crusoe Island, 670km west of Chile's coast.
While sales to customers in Europe have withered, about 150 of the orange crustaceans have been stored in the container for so long that they're eating each other, says Contreras, 33, tossing an empty shell into the sea.
"I've been fishing here for 65 years and I've never seen anything like it," says Fiorentino Contreras, 76, Ronaldo's uncle and shipmate, whose catch now fetches 37 percent less than a year ago.
More than 11 000km away in Madrid, businessmen and bankers are giving up lobster lunches as the worst global recession since World War II reduces their income.
The slump, which is hammering shippers from South America to Nova Scotia, is bringing lean times to the Chilean island, named for 18th-century author Daniel Defoe's fictional castaway.
Most of its livelihood comes from exports of the shellfish to Europe, according to the local mayor, Leopoldo Gonzalez.
The Spanish housing crisis, which left 18 percent of the country's workforce without jobs, led to a 20 percent plunge in lobster sales in Madrid's eateries, says Juan Garcia Munoz, a seafood wholesaler in the city's main food distribution hub.
"The restaurants are suffering," Munoz says, as fish sellers in rubber boots hose maroon guts of bream and halibut from the concrete floor surrounding his office.
Customers buying on credit "who used to pay well, pay so-so, the one who was so-so is bad, and the one who was bad, well, we can forget about him."
"Executives' spending on their company Visas has been really reined in and you can see it," Jose Carlos Diez, the chief economist at bond dealer Intermoney Valores, says as he tucks into a grilled lobster in the half-empty dining room of El Barril de Recoletos, a 10-minute walk from the central bank in downtown Madrid. "Many of my clients are afraid of losing their jobs."
Missing the rent
The drop in prices means Eduardo Retamales, who came to Robinson Crusoe from the mainland 15 years ago, can't afford to pay the rent on his boat. For the first time since his arrival at the three-island Juan Fernandez archipelago, he says he won't take an annual vacation in his home town of Valparaiso, and plans to pay off what he owes on the boat when or if prices pick up. "We really hope this crisis doesn't stretch into next season," says Retamales, 37.
Gonzalez says he is concerned that the younger of the island's 800 inhabitants, who have grown accustomed to higher earnings, aren't prepared for the slump.
"This is the worst crisis in 40 years," says Gonzalez, 54, recalling how, as a boy, he walked barefoot to school and islanders would barter their catch with visiting representatives of foreign fishing companies.
Most residents not involved in fishing guide tourists along trails of the jagged, volcanic-rock island or take scuba divers to view the wreck of the German battleship SMS Dresden, which sank during a World War I gunfight with British cruisers.
English author Defoe's novel that gave Robinson Crusoe Island its name was inspired by Alexander Selkirk, a Scottish sailor and castaway who lived there for more than four years, according to the municipal government's website.
Nowadays, lobstermen sell the 40 000 to 50 000 lobsters they trap each year for 5 000 pesos (R78) each, compared with 8 000 pesos 12 months ago, says Julio Chamorro, a researcher for the University of Concepcion, south of Santiago.
Chamorro says he advises islanders on how to find new buyers for their catch, the bulk of which goes to Europe.
Raul Vera, a lobster exporter based in Valparaiso, says the archipelago's unique species sells in Europe for e27 (R302) apiece in wholesale markets, as much as e5 more than similar varieties from South Africa.
Up in arms
Around the world, lobster trappers are suffering from lower values. In Nicaragua, lobstermen attacked the offices of a seafood processing firm in the Caribbean port of Puerto Cabezas on June 12 after prices fell 50 percent, says protest organiser Oscar Hodgson. They threatened to burn down a church where mayor Guillermo Espinoza sought refuge until he was rescued by police.
Fishermen in Maine and Halifax, Nova Scotia, where most of the world's lobsters are harvested, are selling their catch from the back of pick-up trucks after dockside prices fell to less than $4 (R32) a pound from as much as $16 in 2007, says Bob Bayer, the head of the Lobster Institute at the University of Maine in Orono.
Canada is the largest producer, with an annual catch of about 120 million pounds, followed by the US with about 60 million pounds, Bayer says. At Rockefeller Center in New York, the Sea Grill serves lobsters from Nova Scotia and Maine. Its customers declined 16 percent following the collapse of Bear Stearns and the bankruptcy of Lehman Brothers Holdings last year, according to executive chef Jawn Chasteen. The restaurant charges $38 for a 1.5 pound grilled lobster served with Swiss chard, white beans and linguica sausages, down from $42 to $46 a year ago. It pays $5.75 to $5.95 a pound for 1.5 pound Nova Scotia lobsters, down from $7.95 to $9.95 a year ago.
Edward McFarland, the proprietor of Ed's Lobster Bar in the SoHo district of Manhattan, says the drop in the cost of his main raw material is helping him recoup some of the money he lost when lobster prices soared in 2007.
"It keeps the price low and consistent," says McFarland, who sells what he describes as the classic New England lobster roll of chopped Maine lobster, mixed with mayonnaise and celery, seasoned with salt and served in a toasted hot dog bun for $27.
On Chile's mainland, Juan Fernandez municipal councillor Juan Chamorro is developing a new market for the catch by canvassing consumers in Santiago. "I just e-mailed everyone I could think of," says Chamorro. He says people he has persuaded to buy include employees of state-owned Codelco, the world's biggest copper producer.
The drop in revenue forced Ronaldo Contreras, 33, to abandon plans to improve his home between May and September, when fishing is banned but lobsters kept in underwater cages can still be sold. Instead, he's applying for a job digging footpaths through Robinson Crusoe's 9 571 hectare national park. - Bloomberg
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