HomeIndustrySupply and Demand Imbalance Could Cause Long-Term Damage to Sector

Supply and Demand Imbalance Could Cause Long-Term Damage to Sector

The Lobster Council of Canada (LCC) is worried that 96-million pounds of lobster could be stranded without a home by the end of 2020.

The LCC is “concerned that the predicted imbalance of supply and demand could cause long-term damage to the lobster sector if there is not close collaboration and adjustments made as landings increase in May,” says its executive director, Geoff Irvine.

He said the LCC has developed a ‘Canadian Lobster Model’ that allows it to input market recovery projections compared to 2019 landings. The model will help “determine what we think will be the amount of ‘stranded’ lobster at the end of each month and the end of 2020.”

“Our last projection showed 96-million pounds could be left stranded at the end of 2020,” said Irvine. “We have shared this broadly with all of our members and governments to help harvester and shore-side associations make decisions on delays, slowing landings, adjusting buying, shipping and processing.”

Since the collapse of the live lobster market in late January, Irvine said there has been some recovery in Asia with China taking some live product and then backing off in recent weeks as new seasons open in Canada.

“Other countries in Asia are showing positive interest in live lobster, but we are challenged with air freight logistics to get live products to those countries such as Vietnam, Taiwan and Singapore,” said Irvine.

“As long as commercial airlines are not operating, we are reliant on charters which limits our ability to service many markets. Restaurants everywhere are trying to determine how they can operate with physical distancing, so they are indicating much lower lobster projections for both processed and live lobster.”

Irvine said the principal challenge in both live and processed markets is uncertainty and the collapse of the food service (restaurants) sector in the three key markets of Asia, Europe and North America.  

“The largest food service distributors in North America predict that 40 to 50 per cent of their customers will not make it through the COVID-19 pandemic,” said Irvine.

“This means that every restaurant operator does not know if and when they can re-open, what the restaurant may look like, what their capacity will be and how quickly their customers will return.”

For the processing sector, the American food service market “is vital for items like tails and lobster meat and with restaurants closed and inventory remaining from 2019 there is much concern,” said Irvine. “There is some demand for whole in-shell frozen products, but at a price and in unknown volumes.”

Irvine said the LCC is working on a project with the Atlantic Canada Opportunities Agency (ACOA) and the provinces to do multi-species retail promotions in Asia and possibly Europe.

“Our own LCC marketing strategy is busy re-developing our website, trade marketing materials and social media strategy focused on China and North America. We are also working on an Export Café promotional mission in late August to Shanghai, Hong Kong and Taiwan.”

Irvine said the provinces are all planning enhanced promotional strategies to ensure that Canadian lobster and all seafood products are top of mind when markets recover.

“We are working with provinces to talk about buy local programs and domestic promotional activities to ensure that Canadians know that lobster in processed and live form is available and is a product of Canada,” he said.

Aside from the very difficult market conditions, public health is the most important issue facing both the harvesting and shore-side sector, said Irvine.

“Harvesters are concerned about their crews and operating at sea in tight quarters. Plants are worried about how to keep their workers safe in plants with hundreds of people and the costs and regulations associated with managing their temporary foreign workers who must be quarantined and/or tested on arrival. Both sectors are working with governments on protocols and hope they can manage through the crisis safely.”