The Canadian lobster sector is feeling the impact of recent dramatic increases in the value of the Canadian dollar vs. the U.S. dollar, the most commonly used currency for international lobster trading. Relative to the U.S. dollar, the Canadian dollar has strengthened in three months from $1.35 on May 1 to $1.25 in late July, putting pressure on Canadian lobster processors and live shippers to increase selling prices.
Geoff Irvine, executive director of the Lobster Council of Canada, says, “While a strong dollar helps Canadians buy wine from California or travel to New York City for a holiday, it’s the last thing we want as exporters of Canadian seafood products. Our live and processed lobster products are generally priced in U.S. dollars and, while some exporters are able to hedge and buy forward currency contracts, many remain at the mercy of changes to the value of the Canadian dollar that are out of their control.”
A combination of economic factors has negatively impacted the U.S. dollar, including interest rate hikes and short-term economic growth forecasts. At the same time, the Canadian economy has been picking up steam, adding strength to Canadian currency.
Canadian live and processed lobster exporters maintain inventory through periods of minimal fishing activity and therefore are subject to changes in the value of their inventory based on currency fluctuations, especially when they occur in such a short period of time.
Stewart Lamont, managing director of Tangier Lobster Company, a live lobster exporter, says, “Currency exchange is a key variable for international trade. On this one, the lobster industry lost badly.”
On behalf of the lobster processing sector, Jerry Amirault, president of the Nova Scotia/New Brunswick Lobster Processors Association, says, “This is hurting the lobster industry, the communities in which the plants operate and the whole Atlantic region.”
Lobster harvester Bernie Berry, president of the Coldwater Lobster Association, says, “The whole industry is susceptible to swings in the value of the Canadian dollar, good and bad. In the future, the industry should develop mechanisms and methods to lessen the impact of a volatile currency. We must undertake ways of enhancing a true increase in profit margins, not a false picture that a change in the amount of currency exchange creates.”
