Thursday, June 25, 2009

You want a lobster with your fries?...

Although you have to travel to Maine to take the most advantage of this, lobsters are dirt-cheap.  And not for really obvious reasons.
But here's the problem--and this is the key to understanding what's happening now. Way before our current recession began, lobstermen were doing such a good job conserving their resource that beginning in the 1990s, they were already catching more lobsters than the market could sustain. There's never been enough demand for all those live lobsters. They've always had to go somewhere else.

Remember how I said stocks of codfish in Canada had collapsed 20 years ago? Those cod used to be packaged and frozen by Canadian processing plants. After the cod collapse, the same Canadian plants started packaging and freezing the extra lobsters being caught in New England. They took up the slack.

By an unfortunate twist of fate, those plants had their financing tied up in the Icelandic banking system, and when it collapsed last fall, the capacity of the processing plants did, too. Ever since then, the market has been flooded with excess live lobster. Lobsters that used to get turned into frozen claws and tails for mid-level chains like Red Lobster are now filling the fresh lobster tanks to overflowing. Thus the crash in price. The fact that luxury dining has declined doesn't help, but it's not the cause. The problem is simply that New England's lobsters have finally come home to roost.

Now lobstermen are trying to hawk their extra lobsters on the street, and retailers are furious, because it's undercutting prices even more. [More]
I almost wish I liked it now.

Anyhoo - another weird chain of events from the global financial turmoil.  If you don't appreciate how bad banking several time zones away can clobber your business plans, ask a lobsterman.

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