Lobster dealers contribute $1 billion to Maine economy, says study



ROCKPORT — It’s no surprise that lobsters play a major role in Maine’s economy, but just how big may come as something of a shock.

Last year, Colby College Professor of Economics Michael Donihue studied the in-state economic impact of the wholesale distribution side of the lobster business. His conclusion: the wholesale distribution network of Maine lobster dealers contributes more than $1 billion to the state’s economy and supports more than 4,000 jobs.

Those numbers do not include what dealers pay harvesters for their lobsters — last year some $451 million, according to figures released by the Department of Marine Resources this month — or the indirect effects of what those Maine harvesters spend their money on. Those include food and clothing, heating oil, pickup trucks and, of course, boats, traps and everything it takes to rig, maintain and insure them, as well as the number of jobs that spending creates.

The DMR paid for Donihue’s study using money from the state Lobster Research, Education and Development Fund. The fund itself is financed primarily by the sale of Maine lobster license plates.

According to Donihue, Maine had some 300 licensed lobster dealers in 2017. Of those, about one-third were supermarkets, other retail establishments or restaurants. The rest were wholesale dealers who buy lobsters, either directly from harvesters or from buying stations and move it into the supply chain so that it ends up in the hands — and the bellies — of consumers.

“We’re the part of the industry that would get a lobster from, say, Stonington, Maine, to Shanghai or San Francisco,” said Annie Tselikis, Maine Lobster Dealers Association executive director, in a video Donihue showed to a packed auditorium at the Maine Fishermen’s Forum in Rockport. “Aggregation and dispersal of the product is what we do, and we add value to it by processing it into product forms that are useful for food service or restaurant sectors.”

Over the course of a year, Donihue interviewed 31 lobster dealers along the coast between Kittery and Jonesport-Beals. Of those, 21 gave Donihue “complete detailed worksheets” reflecting their 2016 income and spending in connection with moving live and processed lobsters into the distribution supply chain.

According to Donihue, the spending data from the worksheets was broken out into distinct items such as wages, insurance, trucking and bait purchases. Computer modeling software was then used to apply the appropriate “multiplier” to each category of expense to determine its overall economic impact in Maine.

As Donihue explained the intricacies of economics, often called the “dismal science,” to the crowd of fishermen, fisheries scientists and fisheries managers, he said that a multiplier is a factor that takes account of the fact that every dollar spent on wages has a widened economic impact as workers spend their income buying gas, groceries and the like. That spending affects the revenue of local grocers, gas stations, restaurants and even Emera Maine or Central Maine Power and is known as “induced effects” of spending by lobster dealers.

Business-to-business expenditures for buying and maintaining holding tanks, refrigeration and aeration equipment, scales and processing machinery, and even lobster crates, as well as expenditures on supplies and purchased services, each have unique, if only estimated, indirect multiplier effects.

Combining all three of these elements allowed Donihue to estimate the total economic impact of the dealers at each stage of the supply chain.

It took a few more steps for Donihue to reach his conclusions. Before doing the math, he separated Maine’s 200 or so licensed nonretail dealers into several categories by size — small, medium or large — and by type of operation — wharves and buying stations, co-ops and processors.

Then Donihue “scaled up” the results of his calculations based on the data he got from the 21 dealers who gave him their numbers — again distinguishing among the size and type of operation.

While the results of Donihue’s study are inexact, they should help both harvesters and the public better understand, he said, the dealers’ contributions to Maine’s economy separately and in addition to the impact of the landed value of the state’s lobster catch.

 

Stephen Rappaport

Stephen Rappaport

Waterfront Editor at The Ellsworth American
Stephen Rappaport has lived in Maine for nearly 30 years. A lifelong sailor, he spends as much time as possible messing about in boats. srappaport@ellsworthamerican.com