Will more processing help lobster prices?

Like their counterparts throughout the region, P.E.I. lobster fishers are dealing with low prices for this season’s landings.

The economic downturn has led to a drop in demand and increased inventory for processors. That means buyers at the wharf are willing to pay less – prices dropped below $3 per pound for canners at one point and many fishers decided to try the direct sale method obtaining a peddler’s licence allowing them to eliminate the middleman and sell to consumers directly.

However, there is one element that is unique to the P.E.I. story. Its roots go back to the collapse of Polar Foods International (at that time the Island’s top seafood processing company) in 2004. One of the prime reasons cited for the collapse was an abundance of processing capacity.

That matter was addressed when the former Conservative government of Pat Binns sold the bulk of Polar’s assets to Newfoundland based Ocean Choice International. The $12.5-million deal stretched over 10 years. If the province decided to issue any additional processing licences until 2014, Ocean Choice’s debt was deemed to be paid in full.

As well, any provincial help to any other processor also had to be extended to Ocean Choice.

Earlier this season, Ocean Choice limited catches to fishermen on the north side to 500 pounds per day. Many in the industry felt Ocean Choice was using its influence as the number one processor in the province to drive down prices. Even Fisheries Minister Neil LeClair called it a bad deal.

Then Ocean Choice came up with a surprise offer. They contacted the government telling them they were willing to sit down and renegotiate the agreement. The first meeting between the two sides was cancelled by LeClair when he chose instead to attend the $65-million assistance package unveiled by his federal counterpart Gail Shea in the western P.E.I. community of Tignish ¬– coincidentally the hometown of both ministers.

The two sides finally met for two days of talks in mid-June at the company’s St John’s headquarters. The two sides were saying little after the meeting except to say they are willing to meet again. As this issue went to press, a second meeting was in the process of being arranged.

The company denies allegations it is has a monopoly in the Island processing business, saying it produces only about 20 per cent of the Island catch. The company has invested over $40 million in its P.E.I. operations, and has paid out nearly $200 million to fishermen and its own labour force since it took over in 2004.

Prior to the talks beginning, company spokesman Blaine Sullivan was blunt. He said government had three options. He said if the Liberals choose to leave the agreement as it is, “We would expect government spokesmen to desist from referring to the contract as ‘a bad deal.’”

Sullivan said the other options are to tear up the deal or re-negotiate it.