2021-02-02 13:31:08 | California lobster fishermen ride high-price wave from China | Business and Economy News

Story by: Al Jazeera

Santa Barbara, California, the United States — On a recent winter’s evening in Santa Barbara Harbor, seafood distributors Gabriel Sosa and Tony Escalante lifted large containers crawling with California spiny lobsters off of the boats of local fishermen and onto a wharf to be weighed before placing them into large, water-filled containers in the back of a white truck.

At the end of the night’s work, Sosa estimated the truck contained around 1,360kg (3,000 pounds) of the crustaceans, which lack the iconic claws of their New England counterparts but are prized for the sweetness of their meat.

Since it became home to California’s first lobster fishery in the early 1870s, the coastal city of Santa Barbara has established a long and proud history of lobster fishing. The industry is now experiencing a surge in demand because of a trade war between nations that are thousands of miles across the Pacific Ocean.

Almost all of the lobsters caught in the waters off of Santa Barbara’s coast this season will end up in China, where an ongoing dispute with Australia has worked to the advantage of California’s lobster fishing community. The surge in demand from Chinese markets has resulted in high prices that fishermen and distributors here say are without precedent, as well as plenty of uncertainty.

“The most I’ve paid for lobster in my 20 years as a distributor is $25 a pound,” Sosa told Al Jazeera. “This year, we’ve seen it go as high as $40.”

Volatile prices

The economic interconnection between California’s lobster fishermen and markets in China, where the spiny crustaceans are popular with the country’s growing middle class as a symbol of status and good fortune, comes as a double-edged sword.

A 2016 study by researchers at the University of California San Diego estimated that over 95 percent of California’s annual lobster production ends up in Chinese markets. That means that varying levels of demand and market access can produce price volatility at home in California.

“Last Thursday, we were buying for $33 a pound. But then I got a call that some markets were closing down in China again because of the [coronavirus] pandemic, and they dropped to $23 the next day,” Sosa said. “The price changes all the time.”

Seafood distributor Gabriel Sosa shows off a recent haul of California spiny lobsters destined for export to China, where they are considered a delicacy [Brian Osgood/Al Jazeera]

Even without variables in China to consider, lobster fishing is a business defined by its unpredictability, with factors like ocean temperatures and atmospheric conditions affecting a fisherman’s daily prospects.

California’s lobster season runs from October through March, and prices typically start low and end high, since the majority of the year’s annual haul is caught in the first half of the season, causing supply to drop and prices to rise as the season continues.

In 2018, not an exceptional year itself, Santa Barbara Harbor saw close to 124,738kg (275,000 pounds) of lobster deposited on its docks, bringing in a total value of over $4.5m. In 2019, despite nearly identical poundage, that value shrunk to just over $3.8m.

During the last two months of the season, when prices would typically be ending high, data from the California Department of Fish and Wildlife show that the average price of lobster unloaded in Santa Barbara and surrounding ports sunk below $10 a pound.

Hit hard by COVID-19

But even for an industry accustomed to volatility, the last two seasons have seen incredible price swings. Owing in large part to varying levels of access to Chinese markets, fishermen and distributors say prices have gone as low as $8 per pound and as high as $40.

In the 2019-2020 season, a trade war between the United States and China early on was followed by market closures both at home and abroad due to the COVID-19 pandemic. Since prices fluctuate on a regular basis, fishermen caution against overreliance on price averages. But many confirm that as the COVID-19 closures started to be felt more acutely first in China and later in the US, prices dropped as low as $8 to $10 a pound, the lowest level in years.

Seafood distributor Tony Sosa (left) stands with a fisherman as he rounds up the day’s haul of California spiny lobsters [Brian Osgood/Al Jazeera]

“The American seafood industry is primarily dependent on two things: international trade and restaurant sales,” Easton White, a researcher who co-authored a study on the effects of the COVID-19 crisis on the American seafood industry, told Al Jazeera. “You couldn’t ask for two areas more seriously impacted by the pandemic and the resulting closures.”

During lockdowns, consumer demand for seafood from US restaurants dropped by as much as 70 percent, the study found.

At the same time, US seafood exports to China also plummeted — falling by 44 percent in February 2020 compared to February 2019, the nonpartisan Congressional Research Center found, and the export of fresh seafood including lobster “nearly stopped.”

Roaring back

If the US-China trade war and COVID-19 pandemic restricted access to Chinese markets and sent prices into a nose dive last season, this year has been just the opposite. Locked in a trade dispute with Australia that has barred Australian lobster from Chinese markets, China has seen demand for California’s lobster supply skyrocket, and prices have jumped to unprecedented levels.

“We’ve seen prices go above $40 a pound for lobster,” Chris Voss, president of the Commercial Fishermen of Santa Barbara, told Al Jazeera. “That isn’t just good, it’s beyond anything I’ve seen in all my years as a fisherman.”

Before the season opened in October, seafood business outlet Undercurrent News reported that many in the lobster fishing community were worried that the 2020-2021 season would be defined by more low prices.

But in the month of December, with Australia and China locked in political disputes and Australian lobster locked out of Chinese markets, the monthly average price of California spiny lobster jumped to over $33 a pound in the Santa Barbara area.

Fishermen and seafood distributors in Santa Barbara Harbor in California have seen a windfall recently thanks to high prices for one of their main catches, California spiny lobster [Brian Osgood/Al Jazeera]

Nevertheless, Voss said that fishermen are realistic about the fact that the prices won’t stay sky-high forever.

“Smart fishermen put away money in the good times so they can weather the bad times,” he explained. “This is an expensive industry, and there are a lot of ups and downs. The one thing we know for sure is that the good times don’t last forever.”

A silver lining to the volatility seems to be that the floor is higher than it was previously, in large part due to the vast Chinese demand supplanting that of domestic consumers as the primary market for  California spiny lobster.

“Chinese consumers are generally willing to pay higher prices for lobster than Californians are,” Theresa Talley, a researcher at California Sea Grant based at the University of California San Diego, told Al Jazeera. “So the incentives are to export.”

Because of the early effects of the pandemic on international trade, White said his research found that American fishermen turned to selling more of their products through local ventures like fishermen’s markets and direct-to-consumer services.

“Some of those developments might remain in place after the pandemic,” White said. “But America is a top importer and exporter of seafood. It’s a very international business.”

Voss echoes that sentiment.

“I’m a big believer in buying and selling locally,” he said. “But it doesn’t make a whole lot of sense economically not to sell to the highest bidder.”

Story continues…

Source References:Al Jazeera

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