Lobster exporters feel tariff clamp

The Maine lobster was so hungry last summer that Stephanie Nadeau, an Arundel living lobster seller, was selling $ 100,000 worth of lobster to Beijing, Guangzhou and Shanghai by a good day. She lived and breathed the lobster market in China, which, after seven years of one-hour sales and repeated trips to the mainland, had risen to account for one-third of its annual sales.

Maine Lobster Pipeline to China On July 5, however, China hit American lobsters with a 25% import tax in retaliation for US duties on imported Chinese products. Since then, Nadeau's company, The Lobster Co., has not sold lobster to China despite daily phone calls and a trip to the Pearl River Delta to visit its Chinese customers last week.

Nadeau estimates that Lobster Co.'s rates about $ 10 million in sales in 2018. She still sells at other locations in Asia, including Hong Kong, Malaysia and Singapore, but without China Nadeau had to lay off two people, reducing her total number of employees to 20 and reducing the number of times she bought lobster. five times a week to two.

"Who knew I was going to have a summer vacation?" Nadeau said with a morbid laugh. "Let's hope it will not be permanent."

China is the largest overseas market for lobster sales living in the United States. US lobster exports doubled this year, with US exports reaching $ 75.3 million in June, up from $ 34.2 million in 2017. But that was before China lifted its lobster tariff.

Live lobster dealers like Nadeau who have invested in the construction of the Chinese lobster market are now feeling the tariffs, but other live lobster sellers who sell locally or have more export markets Diversified say they are unscathed – at least for the moment. They fear, however, that increased competition for buyers outside China may eventually drive down their prices.

"There is no way that it does not hurt everyone," said Annie Tselikis of the Maine Lobster Dealers' Association.

Seasonal Differences

The $ 1.5 billion lobster industry in Maine relies on live lobster sales to generate heat in the US lobster market, according to resellers, and China has fueled much of this heat. But until here, lobster fishermen say that they do not feel the spur of Chinese fares. Their prices, which range from $ 3.50 to $ 4 a pound in different ports for excretors, are comparable to what they were getting at this time last year, they say.

They may not feel the effects of the Chinese tariff until the autumn, when the domestic tourism market is softening and the majority of catches have a firmer shell deemed worthy of air cargo transport . It is at this point that a large part of Maine's catch could go abroad and that China's role in the Maine export market is important. Coincidentally, the lobster fishery in Canada is closed.

Last year, China imported $ 128.5 million worth of lobster, making it the largest foreign importer of the most valuable fishery in the United States

. turn the excretors, or soft-shell, catch in frozen lobster tails and meat, have a season of banners. A Maine processor who does not do much with China said the season of frozen lobster tails is the strongest since it left the wholesale trade in 1993.

Data export showing the The impact of tariffs on US exports to China, or reveal whether dealers have been able to replace the Chinese market with other foreign buyers, will not be released before the fall. Many lobster traders living in Maine who have made big bets on China, like Ready Seafood and Cape Seafood, say that they are not ready to talk about their post-tariff sales.

As a general rule, Tselikis does not speak of price. Each of Maine's 300 lobster wholesalers is different, she said. The industry itself is built more on anecdotes and gossip than on data that is publicly available for review, she said. But losing Maine's largest live lobster market will hurt, she said. Merchants may be the first, but what hurts them will hurt everyone.

Nadeau says that she does not reveal anything that everyone in the seafood industry does not know: the Chinese tariff has stifled commercial fishing and has pushed Chinese lobster buyers to Canada, whose live lobsters are subject to a 17 percent general tax. Because of this tariff differential, Chinese customers can save about $ 2 a pound when they buy a Canadian lobster rather than a Nadeau lobster. This differential is an insurmountable gap that no amount of sales or service can bridge, Nadeau said. In lobster, an agreement can be lost on a price difference of 10 cents. In the best of cases, Nadeau said that she was lucky to get a 10% gross profit margin, or about 70 cents a pound, before expenses. This is not enough to match a price differential of $ 2 a pound, even if it was willing to give up its profit to keep its Chinese customers while the tariff is in effect. Matching the Canadian price would eventually cost her about $ 2,000 per order, she said.

Market Diversification

Maine Coast, a major live lobster exporter based in York, will likely lower its price to remain competitive with Canadian rivals in Europe, which can now sell lobsters to the commercial block of 28 countries without tariffs customs. while US dealerships face an 8 percent tariff on their lobsters, said owner Tom Adams. But it can not "sharpen its margins" enough to absorb the cost of the Chinese tariff.

Like Nadeau, Maine Coast has not shipped any lobster to China since the tariff came into effect, he said. Last year, the Maine Coast sold an average of 30,000 pounds a week to 50 customers across China, representing about 20% of annual sales, Adams said. It was able to offset some, but not all, of this loss by sales to non-Chinese buyers, but not always at the same price.

Adams had already begun to diversify his export market before the United States and China. commercial war hit. While China was his specialty, the Maine coast sold lobster to 29 countries last year, he said. He has not had jobs, and still hopes to match last year 's earnings of nearly $ 57 million, and grow the number of jobs. company, which is expanding its York plant.

business plan, Adams said. With less market available right now, Maine dealerships will be competing against each other on the only price point, which it calls a "race to the bottom", until that ## 147 ## They can develop new markets. But it takes time, he said. This will involve asking her sales team in China, often hired because she speaks the language, to work new business in Brazil, for example.

"For a salesperson who works on commission, developing a new market means less money" Adams said. "It's not easy, you have to start from scratch and create a demand for a new product in a new place, often in another language." We do not put people out, but we tell our team from China that they have to find a new way to reach their goals.It is hard. "

Take it lightly

For some, the pain of Chinese tariffs may still come, while others say that they, and the balance of industry, will remain unharmed.

start of the summer season and land new excretors at this time, of which most are not yet robust enough to be shipped to China.In the spring and early summer, US merchants buy much of the lobster that they sell to China in Canada, and not to American lobsters, another reason why Maine lobster fishermen do not feel the problem. The price is about the same as it was last July, said Kristan Porter, president of the Maine Lobstermen's Association

"A lobster is never going to say that the price should not be more high, "said Porter. "However, up to here, the prices have been good."

Meanwhile, the frozen lobster industry enjoys one of the best lobster tail markets, according to John Norton, owner of Cozy Harbor Seafood, Maine's largest lobster. processors. But advertising about the impact of Chinese tariffs has prompted Norton customers to call and send e-mails all the time, asking when Chinese tariffs will drive down prices.

"I tell them that they are not," said Norton. "The Maine lobster industry is much more than live exports. Some companies have made big bets in China, and this is going to be tough for them, but the lobster industry goes up and down all the way. time, in waves, and we've had stronger waves than it's already struck us. "

Some industry members believe that the US-China trade war perfectly illustrates why Maine should focus on building the domestic market rather than sending much of the harvest to countries that can handle trade. "John Hathaway, owner of Shucks Maine Lobster in Portland, says the US market is huge and relatively untapped

"There are 400 million people in the United States at one time," Hathaway said. "There are only 20 million pounds of Maine lobster meat each year. It's a Maine lobster roll for five people once a year. Never go to Red's Eats? People line up two hours before opening every day. Do you think these Americans could survive with a single Maine lobster a year?

Nadeau expects some of his Chinese customers to come back in the fall, after Canadian lobster has stopped fishing and Maine fishermen start harvesting firmer shelled lobsters. this ship well in China. With little debt – the 27-year-old has paid for all of its buildings and trucks – The Lobster Co. can afford to exceed the rate, at least for a little while, Nadeau said. ? I do not know, "said Nadeau. "You can not run a business if you are profitable only three months a year."