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Maine lobster sector determined to rebuild 'lost' Chinese market

Firms are keeping in close contact with Chinese buyers for when the market opens again, but the landscape may have shifted significantly by the time it does.

The Maine lobster industry is aiming to rebuild its market share in China, lost amid a bitter trade war that began a year ago with the Asian economic giant.

Since US President Trump opted to take action to redress what he cited as unfair Chinese dealings in breaching his country's intellectual property rights and a massive imbalance in trade with China, the trade war has escalated, sucking in various non-related industries including seafood.

These industries have been hit by 25 percent retaliatory tariffs on many of their products, making them too expensive for Chinese buyers.

A year on from the start of the trade war, IntraFish decided to get an update on where the Maine lobster industry is on this issue, amid concern from some in the industry that the Chinese market may be lost forever with sales now funneled through Canadian distributors.

"The Chinese market is not coming back," lobster fisher Julie Eaton told IntraFish, adding that from now on she believed Maine lobster will have to take a diversion to Chinese dinner plates via Canadian traders.

Annie Tselikis, executive director of the Maine Lobster Dealers Association, does not comment specifically on market conditions, not least because both domestically and internationally markets tend to fluctuate. But she said the reality for those who speak to Chinese buyers and attend trade shows is somewhat different.

"What I hear from my businesses is that if there is an opportunity to rebuild the Chinese market due to some revolution in our trade situation, they would be working with their customers as soon as possible to try to resolve this," she told IntraFish.

Very frustrating time

Being a casualty in an international intellectual property trade war along with soy and pork producers is frustrating for Maine lobstermen and women, who have invested heavily and as much as a decade and of their time building up business relationships, which Tselikis said are not something to be discarded at a moment's notice.

"It's been just as upsetting for a lot of Chinese buyers as it has US shippers," said Tselikis.

"This industry has built markets before, they can rebuild the market if we are able to access the market on an equal footing with our Canadian counterparts."

Live lobster supplier Maine Coast gets around 60 percent of its business from exports. Of that, 40 percent goes to southeast Asia. From that, 20 percent went to mainland China. The remaining 40 percent of Maine Coast's business comes from the US and Canadian markets combined.

Tariffs mean Chinese customers are forced to go with Canadian suppliers offering a 25 percent discount, leaving them with little room for choice on where to buy their Maine lobster, according to Maine Coast Vice President of Sales and Marketing Sheila Adams.

"If you believe in free market economies that's not a great situation for the Chinese customer," she told IntraFish.

Immediate impact

The impact of retaliatory tariffs on the Maine lobster sector was immediate. While it took to time for the impacts to filter through to other industries, Maine Coast felt it within three days.

Unlike other sectors, which pre-bought six months of inventory before the tariffs went into effect, Maine's lobster sector was left in the lurch: live species can't be stockpiled.

Although currently not selling to China, Adams said she is optimistic a solution to the tariff situation will found. Her team remains in close contact Chinese buyers, even visiting them and updating them on prices they would be able to buy at if the tariff situation were no longer a factor.

"We feel that we have done everything we possibly can that's within our control to maintain those relationships in the interests of when the tariff situation is resolved and it will be," she said.

"The question is when -- then we will be in as good a position as any US dealer to recoup that market."

Shifting landscape

If and when Maine lobster does return to the Chinese market, Adams said the landscape may have changed and that some customers may have stepped out of the market for good. The Chinese customer base could also morph into fewer, but much larger players.

"Will it ever be as big as it was? Maybe not. Whenever you have something as disruptive as this the industry as a whole changes," she said.

"The competition model may be different, you may not have 100 customers in mainland China doing 4 million pounds, you might have 15 customers doing that same volume."

On the upside, this slimmed down customer base may improve cold storage methods, Adams said. On the downside, the longer the situation goes, the greater the danger the US will lose its so-called "airlift" advantage over Canada. While the United States previously had more airports with more cargo aircraft, investment in Canadian infrastructure has seen that advantage narrow as US lobster suppliers sit on the sidelines.

Extraordinarily nimble

Patrice McCarron, executive director at Maine Lobstermen, is reluctant to comment specifically on the supply chain but confirmed her group does move a significant proportion of product into the market alive.

She said the supply chain for the Maine lobster, a highly perishable product, has had to be extraordinarily nimble as certain markets -- such as China -- have constricted, meaning companies have worked extremely hard to open new markets.

"I think we have seen some growth in the US domestic market to help purchase those lobsters and keep them moving through the supply chain, so to date I think the Maine lobster fishery has been successful in coping with the tariffs," McCarron said.

Near-record catches for the last 10 years, no reports of people being unable to sell their products, and very stable average prices have bolstered the industry in the executive's view.

With President Trump due to face the US electorate in November next year, Maine lobster industry executives would give almost anything to know whether trade policy will change this side of that date.

At the same time, speculation has swirled that the Chinese government may try to drag out the trade dispute, given there is a prospect of dealing with a new US administration in the not-too-distant future.

Until then, there may be more waiting for Maine's lobster sector, which is worth an estimated $2.5 billion (€2.2 billion), supplies 90 percent of lobster to the US market and supports the livelihoods of 4,800 licensed lobstermen and women and more than 10,000 additional Mainers who work within the industry.

"The Maine lobster fishery has been very resilient and a lot of the credit goes to our lobster buyers and people in the supply chain who have had to put in a lot of overtime to make the sure the product keeps moving in the face of these barriers," McCarron said.

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