Department of Marine Resources
Lobster Advisory Council Meeting Minutes
Natural Resources Service Center
6 Beech Street, Hallowell
October 27, 2008 6:00 pm
A meeting of the Department of Marine Resources’ Lobster Advisory Council (Council) was held on this date at the Natural Resources Service Center, Hallowell. Council members attending this meeting included: Chair Bob Baines (Non-Zone Lobsterman), John Drouin (Zone A), Gerry Cushman (Zone D), Larry Knapp (Zone E), Jeff Putnam (Zone F), Elliott Thomas (Non-Zone Lobsterman), Jim Henderson (Zone G), Peter McAleney (Western Dealer Member), Dana Rice (Eastern Dealer) and Jon Carter (Zone B). Council members not present included: Dan MacDonald (Zone C), Ted Hoskins (General Public Member) and Cappy Sargent (Non-Zone Lobsterman). Commissioner George Lapointe, Deirdre Gilbert, Sarah Cotnoir, Kathleen Reardon, Carl Wilson, Melissa Smith, Lorraine Morris, Lynda-Ada Doughty and Donna Hall of the Department of Marine Resources were also present. Others present were: John Higgins, Shelia Dassatt, Mike Dassatt, Jim Wilson, David Cousens, Patrice McCarron, Steve Brooks, Annie Tselikis, Wendy Pieh, Allison Hawkes, Jim Merryman, Teresa Johnson, Gina LeDuc, Hugh Cowperthwaite, Victoria Burpee, Jim Nimon, Charles Emmons, Sen. Dennis Damon, Rep. Bruce MacDonald, Rep. Hannah Pingree, Rep. Leila Percy, Rep. Edward Mazurek, Rep. Dave Miramant and Dan Somers of the Maine Lobster Promotion Council.
The meeting convened at 6:10 p.m.
1. Welcome and Review of Agenda
2. Approval of Minutes (October 2, 2008)
MOTION: (G. Cushman and J. Putnam) To accept the minutes of the October 2, 2008 meeting as written. Unanimous.
3. New Business
a. Discussion with Representatives from FAME, Department of Economic & Community Development,
Eastern Maine Development Cooperation and Coastal Enterprises, Inc. on Current Lobster Situation
Commissioner George Lapointe told the Lobster Advisory Council that on October 24th the Governor had signed an executive order to establish a Task Force on the Economic Sustainability of Maine’s Lobster Industry. The Task Force will make a comprehensive review of Maine’s Lobster Industry and make recommendations to the Governor and the Legislature by April 15, 2009.
The Commissioner said the Task Force will consist of 8 members; one of which will be the Commissioner of the Department of Marine Resources or his designee; one shall be the Commissioner of the Department of Economic & Community Development, or his designee; and one member shall be the Executive Director of the Maine Lobster Promotion Council, or his designee. The remaining appointments shall be appointments will include diverse members who represent interests of the lobster industry or have expertise in business operations, finance, community development, international trade, and /or marketing. George said that the Task Force is identifying opportunities for expanding and diversifying both live and processed markets for Maine lobster, increasing product quality and profitability, and expanding marketing initiatives.
Commissioner Lapointe said that last week the Governor directed a number of State departments to work on financial issues impacting lobster businesses and families. The Department of Economic & Community Development, Department of Marine Resources and the Finance Authority of Maine have begun meeting with financial institutions and agencies to expedite measures that may bring relief.
George said he wanted to thank everyone for the meeting at the Augusta Civic Center on October 15th; meetings of that nature bring resources forward and create opportunity.
Bob Baines introduced members of State departments and financial groups present at the Lobster Advisory Council: Charlie Emmons, FAME, Jim Nimon, Department of Economic & Community Development, Victoria Burpee, Eastern Maine Development Cooperation and Hugh Cowperthwaite, Coast Enterprises, Inc.
Jim Nimon said that the Department of Economic & Community Development had an internal meeting and challenged each other to come forward with some solutions for finance, promotion and processing. We had a sense that the Governor would do an Executive Order. We are tasked with what we can do quickly and we will be present at all the upcoming Lobster Zone Council meetings.
Charlie Emmons said that FAME and other groups are trying to get a handle on the short term needs and come up with a short term solution. We did a conference call with regional banks, the Small Business Administration, CEI and others. We asked the banks what the needs are of the industry and what we can do to help the banks. We do not insure pre-existing loans. In our conversation today we learned what they might like is help from you. We are going to figure out a way that is meaningful to lobstermen and their banks. If you have any questions please ask.
Elliott asked if you can you look at working with pre-existing loans? Charlie said what we will look at is how we will do it. Gerry asked with you insuring it, does it drop the rate? Charlie said suppose you skip payments, now you don’t have the dollars per pound you need; the bank could do interest only payments, move payments to the end of loan, 6 month only payments, we will ask the bank for ideas to insure the loan. The bank does not want a whole lot of boats on its books; they don’t want to own boats. Gerry said that gives banks flexibility to adjust their payments, but what happens if next year things are no better. Charlie said we will work with the banks to help modify loans. FAME is not a relationship bank, you need to work with your bank, you know them better. FAME will work as a partner with your bank, not everyone will get what they want with the banks.
John Drouin said I am looking for something more, these things that you have outlined, banks can already do; what I’m hearing from guys is - what are they going to do? What people would like to see is to provide a cash flow-fixed at 2%, which would help them; looking down the road nothing that says this will get better. Charlie said you have to understand, economic money is bridge financing at prime rate; subordinated debt. In the banking world the interest rate would be 9%. There is flexibility; this money is for every industry in Maine. John D. said I can do all that anyways; what I hear through FAME is the banks will be breathing easier. Charlie said one of the things the banks did discuss is, what about next spring; if it’s a new line of credit one of things that FAME can do is insure that loan. John said if the cheap money is available then it would help; is there anything else available? Charlie asked if anyone else had any thoughts.
Hugh Cowperthwaite said he learned on the call today; bankers want to work with the fishermen; don’t wait, talk now. Some folks may need some business counseling; think about what makes sense, what are you spending now. If you’re in trouble with CEI, you can’t just go to X-bank and get another loan that just prolongs debt; your current bank is the best one to work with. Small things that folks can think about; 6 months interest only, 6 months payment, you could go to 7/5, ask for deferred payment, short term notes for spring, refinance within your bank; don’t go somewhere else, or make payment due in 60 days not 30 days.
Vicky Burpee said it is important that you understand where we get our money from; we have Federal/State monies. We actually borrow some of our money; we borrow the same way you guys borrow. I still have to make money to pay staff and overhead, we are non-profit; our margins are not huge; we will keep it as rock bottom as we can, even prime will not work. We are a loan; if it warrants another loan and a person can show us that they can pay it back we will help them; most loans do have risk to them. We have auditors to be sure we are making good loans; our hands are tied to give it to you at cost. We can be flexible, we can give you time to get you through the hard time; you are going through this. Talk to your bank now if your have trouble. With the SBA if your loan hits the 30 day mark, they need to know it; keep it in the current column.
Charlie said the bankers that we talked with today are a very positive group; it’s not if you get help, it’s how. In 2 weeks a lot of people have come a long way to help you folks. Vicky said last week when we had our regular meeting; our bankers were asking what are you going to do to help the fishermen? No one wants to own your boat, we don’t want that. This is not an easy time to borrow money; things are done on a case-by-case basis.
Lila Percy said the piece about the 30 days; is it appropriate for the banks to send the word out to the fishermen? Vicky said I don’t know that the banks are going to get the word out; it’s the responsibility of the borrower to let the bank know. The SBA said today, don’t let it go beyond 29 days; that way you would not be in default. Charlie said most banks will begin notifying late payments. Vicky said someone will be at every one of these zone meetings.
Wendy Pieh said agriculturist/farmer folks can borrow at 2%; this industry is being crippled, why can’t the state do something? Charlie said the money comes through bonds, that is the way they fund us. W. Pieh said I was in town government for the Town of Bremen and banks offered us money at 2%; it seems to me if the town can be offered money; fishermen can. Charlie said I don’t know how they came up with that rate; banks have savings that they may lend, with all of this we are trying to take in and come up with a way to help. Representative Bruce McDonald asked if anyone know what the size of the problem? Larry said last week he heard a third of fleet could go by the spring.
David Cousens said this is huge problem in the industry; it is a long-term problem. You are able to help people that have done things right, but some have been making interest only and they have not been smart; I don’t want to reward ignorance with my money. Hugh said bankers agreed to look at portfolios and see what things look like, all of us are going to be looking at that. Charlie said we did ask them to send us information, but they may not tell us what their portfolios are; we don’t know the answer to the size of the problem.
Jon Carter said at the meeting 2 weeks ago I mentioned some of us don’t have boat loans, but I built a new house. We all took out good loans with the intention of paying them back; I think guys in default for a year, have pretty much had it. Charlie said this discussion is for boats and lines of credit; I want to be candid, we can’t do any residential. Jon said the fishermen is the business, it’s everything. I think what the problem is, we are individuals and everything we have is our business. Vicky said there are loan programs that we have, that may work; your household budget is important to us, as your loan. In the best of times we look at what your personal debt is, owners salary, how much money do you have to take home to make your expenses; there are ways to look at that, we do take that in to consideration; real life tells you are going to take money out of your business to pay your bills, that is why we take every business personally; we look at all of it, if we are deciding to give a loan. Bob said what we are hearing today is people have to work with their banks themselves; David put it pretty well, guys who have done things right will probably be okay; we need the message out.
Leila asked what about other businesses - like Mr. Brooks who has a trap business? Charlie said we are now focusing on the fishermen, but the loan programs we have go to businesses as well. Vicky said we know that’s the next thing that is coming. George said having a specific suggestion is the right way to do it; you may get a no answer, but you may get a yes. Mike Dassat said the guy I sell to has shut all of us down, but 4. What about the dealers, there should be some relief for the dealers as well, they can’t move the lobsters. If they don’t move the product they can’t buy the product; this is classic effort reduction. Annie Tselikis asked what resources are you going to have available for Zone Council meetings? Charlie said the specifics have not been ironed out. Patrice said tell people to go to their bank. George said Deirdre Gilbert had put a list of resources together for help; we will put that on the website. Hugh said the list that the MLA sent around to folks has been very helpful. Bob thanked everyone for coming and letting everyone know what resources are available.
b. What’s next - Overall Structure of the Lobster Fishery – Markets, Season, Landings, Product, etc? Given what we now know about the Global Market Influence & Impact on the Industry
Patrice McCarron said that a lot of the topics of tonight’s meeting are the items that this new Governor’s Task Force will be looking at. Patrice said we need to start generating ideas and feeding them to the Task Force. David Cousens said we need to be pro-active and do it now. I missed the last meeting; you need to stop being dysfunctional, because that is pretty much what you’ve been doing; we know how to do a trap limit the wrong way; we need to look at all the things that are coming down the road and send a message to the Legislature to do something.
John Drouin said some always look at we can do as an industry; this is not our fault. J. Drouin said it really irked him when Dane Somers said that people would be willing to pay $89.00 for a lobster dinner – I don’t know what I’ve done to warrant that kind of money. We need to do something; Grand Manan has been promised $4.50 on opening day. This continually happens with the price in the store and our expenses keep going up; it was just like this 3 years ago, we had the best price and the Canadians figured it out.
Commissioner Lapointe said legally we cannot regulate the price; it’s illegal and I’ve already been warned by the Attorney General’s office. George said he agrees with D. Cousens that we need to do something and get started on it as soon as possible and that is what the Task Force is charged with doing.
Gerry Cushman said it is a real problem when 70% of our product goes to Canada; we need to be at least at 50%. Gerry said he knows a guy who is willing to give $10 million toward processing, but he wants a business plan. Dane Somers said – yes things are tight; we need to look at things. You can build a new facility but I think it would take 75-100 million to do that; you need to remember you are competing with the same market that these people are competing with right now. We need to be careful about attacking the people that 75% of our market goes to. George said if we had three more plants in the State of Maine in the long-term, yes it would help; but the world markets are jammed up right now because of the economy. Representative Leila Percy pointed out that the Task Force should look at Brunswick Naval Air Base as a processing location.
John asked if we were to switch our seasons would that help us; what is that going to do to our price? Pete McAleney said this thing is so complex and the worst time is going to be January – April. He said he had a couple of suggestions because things are going to get better until at least July; no fishing on Sunday and 2 claw fishing only. Guys pull down to your wharfs and pay you cash; this is one of the reasons why you have such a low price. I received a call from a Japanese television station and they want to buy the product that you are catching; this is a global problem. If you have kids tell them to go to school; tell them to find another job. Pounding people used to put away 8 million pounds; not anymore – this is not going to change. Dana Rice said some used to pound 12 million away.
Larry Knapp said with a Sunday law; I am hearing that where I sell. In the winter when it blows you go when you can; I don’t understand what difference it makes. Pete said we don’t sell that many lobsters in the winter. Jon Carter said one thing that happened this year is places in Canada caught lobster this year that never caught it before and some caught so many they didn’t know what to do with them. I think we need to look at the processing in this State, until the global economy comes back I don’t think there is much we can do. Dana said this economy will affect them this year as well. Elliott Thomas asked do you think we’ve hit bottom. Dana said I’m not sure we have hit bottom yet. Pete said you don’t want the government getting involved here either; they will just screw things up more.
Representative Dave Miramant said where you were trying to make adjustment to the number of traps; when you get to something like this, legislation may be able to help with this. Government has to work together, they are never just going to have the solution for you, and there are 6 or 7 State Representatives here to help you, because we care.
Bob Baines asked what can we do as a Lobster Advisory Council; two meetings ago this council voted to work on a tiered license system; until we get a tiered license system in place we’ll make the same mistakes again. I am challenging the LAC to take this to the Legislature this winter. Representative Ed Mazurek said someone asked what we can do; you people can be a tremendous voice, if you spoke as one; your goal could be how to unify yourself.
Commissioner Lapointe said I thought we said we were going to look at all kinds of problems and work on them and at the end you were going to say, does it go in or does it go out? Bob said it is my opinion if we do that we’ll be doing the same thing that we have done for the past 2-3 years, things are bad and it’s hit the fan. If we don’t make those kinds of changes we’re all going down the tubes. Gerry said whatever we do in this industry we can’t do things on a handshake, without the Government’s support. George said you are all part of Government. Pete said then the Government has to worry about the part-timers; what makes more sense is no fishing after 4:00. Allison Hawkes said what about the guys outside? Jeff Putnam said we have new restrictions with tags in tags out; we’ll have no industry left. Dana said the economy will take care of some of these people; this is a volume industry. Jim Henderson said we didn’t vote to have freeze; let the Legislature do it, they are here let’s do it now. Gerry said it can take 2 years. John asked what do you have different this time?
Bob said we worked on it but we did not get the support from the LAC. I am looking for a consensus, to support a tiered license system, so the full-time guys will have support. The entry system we leave alone, but first we have to decide do we support it; we don’t have a lot of time. Mike Dassatt said in some ways I support it and some ways I don’t. I fish 400 traps full time; you’ll put me right out of business. There are many guys who work for the Portland Fire Department but fish as well. Fishing is all I do. You need to get rid of recreational licenses; they take 50,000 pounds of lobsters. George asked whose resource is it? Allison said lobstermen do the conservation on it. George said this isn’t an easy exercise; if you reduce effort someone will hurt.
MOTION: (J. Carter and J. Henderson) For the Lobster Advisory Council to explore a tiered license system. 9 in favor, 1opposed.
A sub-committee was formed to explore a tiered license system and the members are: John Drouin, Jon Carter, Bob Baines, Jim Henderson, Elliott Thomas, Jim Merryman and the Department of Marine Resources.
Discussion began about how fast the lobster industry is changing. Bob Baines said it is my intention to move it forward to the legislature this winter, with some type of effort reduction so 2-3 years from now when the whale people or whoever have us doing something, it will be based on 2010 license holders; we have to choose what we think is the best criteria for the industry. Jeff said what I’m afraid of is; putting the cart before the horse. Sarah Cotnoir said the DMR has a paper that was done a year or 2 ago; maybe we can bring it to the next meeting; it had all kinds of ideas. Bob said if we move forward on this, we would have a sub-committee to work with DMR, to hammer it out and come back with a final approval from the LAC. Jon said we should talk with the zone councils about it. George said you will need support from Marine Resource Committee because there will be people that will come out to testify against.
Rep. Percy asked when the task force going to begin; it may be that it is going to make recommendations to Legislature. George said the Task Force will not reporting until 4/09. Lila asked if they should ask the LAC for suggestions. Pete asked how much power do you have; can we limit the number of days? George said we would look at biological reasons and the stock assessment and take those kinds of things into consideration. Allison asked why you can’t set some criteria before you vote otherwise you will move forward with nothing. Bob said because it will take hours; the DMR did the pro-cons and we need to work from that document and form a bill and see what the MRC wants to do with it. Larry said if you put a tiered license system in you will separate us even more. Bob said we need to define why this is necessary.
Representative Bruce McDonald asked what the Maine Lobster Promotion Council is doing about this very critical issue. Dane Somers said they have been doing promotion with retailers, looking at taking pressure off through the local market and looking long-term at our industry. Along with Patrice and the Maine Lobstermen’s Association we were successful in convincing the Governor to form a Task Force. Dana Rice said I would guess that people in this room should thank the Governor for his quick action.
4. Set next Meeting Date and Agenda
The date for the next Lobster Advisory Council is Thursday, November 17th at 1:00 pm
MOTION: (J. Carter and E. Thomas) To adjourn. Unanimous.
The meeting adjourned at 8:40 pm.
