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Department of Marine Resources
Lobster Advisory Council Meeting Minutes
Natural Resources Service Center
6 Beech Street, Hallowell
May 5, 2010 4:00 pm

A meeting of the Department of Marine Resources’ Lobster Advisory Council was held on this date at the Natural Resources Service Center, 6 Beech Street, Hallowell, Maine. Council members attending this meeting included: Chair Bob Baines (Non-Zone Lobsterman), John Drouin (Zone A), Dan MacDonald (Zone C), Ted Hoskins (General Public Member), Gerry Cushman (Zone D), Larry Knapp (Zone E), Jeff Putnam (Zone F), Jim Henderson (Zone G), Peter McAleney (Western Dealer Member), Dana Rice, (Eastern Dealer) and Elliott Thomas (Non-Zone Lobsterman.) Members not present included: Jon Carter (Zone B) and Nick Lemieux (Non-Zone Lobsterman). Commissioner George Lapointe, Deputy Commissioner David Etnier, Sarah Cotnoir, Deirdre Gilbert, Carl Wilson, Colonel Joe Fessenden, Kathleen Reardon, and Donna Hall of the Department of Marine Resources were also present. Others present were: Lyman Kennedy, Michelle Gryga, Wayne Canning, David Black, Shelia Dassatt, Senator Dennis Damon, Kristen Bailey from the Mosley Group and Dane Somers from the Maine Lobster Promotion Council.

The meeting convened at 4:10 p.m.

1. Welcome and Review of Agenda

2. Approval of Minutes (April 1, 2010)

MOTION: (T. Hoskins and D. Rice) To accept the minutes of the April 1, 2010 meeting as written. Unanimous

3. New Business

a. Follow up on Lobster Task Force Report & Potential Legislation for Next Session – Kristen Bailey and Commissioner Lapointe

Kristen Bailey, Senior Consultant from the Moseley Group selected by the Governor’s Task Force on the Economic Sustainability of Maine’s Lobster Industry to assist in the development of a comprehensive strategic plan for Maine lobster, gave the Lobster Advisory Council Members a follow-up on the Lobster Task Force Report. Kristen said 10-12 potential next steps were identified. In order to increase the value of the harvest, we need to address some of the issues that were identified; but it is not an easy fit. The first step is outreach, to communicate with the industry. Kristen said that the Town of Stonington hired us for 3 days having small one-on-one meetings; they want to pull more profitability out of the market. The Town is very integrated with the fishing community. The key to it is -how complex is the marketplace in order to understand the next step. Commissioner Lapointe asked how the response was. Kristen said it was great and well attended with all day one-on-one meetings; summer people may be interested and may be willing to invest. Gerry Cushman asked were they willing to invest. Kristen said yes, just like you are investing in it with your license fees and you are hoping it’s coming back to you. People don’t know what they would or wouldn’t get from it; there is a group of harvesters that have a co-op and hire people to create value in their organization.

Ted Hoskins asked are you suggesting that different communities invite you. Kristen said it would be a good way for people to gain a level of trust. Kristen said the market sets its level of interest. George said the Task Force Report focused on the concept of Lobster; can you piggyback off Maine Lobster? Kristen said Maine Lobster has such a cliché that it would be silly not to include it. George said there is a sense of urgency with this and I struggle with that. We’ve talked about this and the discussions go well until folks realized someone had to pay for it; how do we get traction? Kristen said a year has gone by without doing something; inviting Cabot to Maine is not a big deal. George said everyone wants meetings; we need to get to a point where we are going to do this or not. Our usual model if DMR is doing it; we hold 3 meetings, how much closer is this going to get us?

Bob Baines said he has talked with a number of different lobstermen; everyone agrees we need to do something about marketing. If the Lobster Advisory Council can make a statement here tonight saying this industry needs to invest in marketing, then how are we going to move it forward; that is what I think we need to do. Larry Knapp said guys in my area would be willing to do about 1%. Dane Somers said the common theme is - good bang for your buck; 1% of return of your wholesale value. Larry said my area is worried about bankruptcy. B. Baines said see if we can agree that we need a marketing entity. Elliott said I’ve been talking with a number of people and everyone says we need marketing and we need to pay for it; I agree.

b. National Seafood Marketing Coalition - Dane Somers

Dane Somers, Executive Director of the Maine Lobster Promotion Council gave the Lobster Advisory Council Members a brief outline of a Strategic Marketing Mindset. Dane said we are the Lobster Promotion Council of Maine.
Our mission - basically our job is to help create and drive demand to build and maintain value for the industry. Our focus has not changed. Overarching goal for industry is to achieve superior profitability. Straightforward goal is to double profitability in 3-5 years. We can do that best if the overall industry is doing well. The ‘situation’ is low profits, declining value, and threats to our economic stability and quality of life.

The MLPC has done a thorough 2 years of analysis in and outside of seafood industry. Through that analysis we have:

• Analyzed industry in-depth
• Interviewed participants and stakeholders
• Reviewed background and history
• Developed goals and strategies
• Tested these in the marketplace
• Developed strategic business model

Destructive competition costs industry $30-50 Million a year - $100M total. Investments in marketing are directly related to profitability. Gross margins 15% - leaves no room for investments in R&D, market development; the downward spiral leads only to declining value; we must improve margins. We’re only focused on the demand side of the business and not focused on marketing, which is the only way to increase demand in dollar terms. Not on the supply side and not on other issues challenging the industry. We are not getting a good (ROI) return on our investment in the resource; all revenues come from the consumer. A strategic approach that effectively deals with the two major obstacles to success and leads us to our goal of superior profitability for all; with potential funding options that are equitable, proven, successful, modest, effective and will have great ROI.

Dane Somers said he believes we need a steering committee to help lead the industry in a positive direction. This is complicated and confusing and a lot of work, but it’s necessary to support this industry and our ‘Maine’ way of life. We need support and help to get this done. A Steering Committee will help drive the process and be a part of the solution.

Commissioner Lapointe said the Lobster Advisory Council needs to move forward with this discussion. Bob Baines said we want to hear from the council how we move this forward. George said that there are a number of different strategies; one type of outreach is getting the Blueberry people up to 3 locations. People that are interested will want to take next steps, going out and talking with the zones is another approach. Dane Somers said wild blueberry is a good example, but I caution; the Lobster Zone Council approach is great but not getting much traction with a few people. Dana Rice said can I make a suggestion to go forward with the outreach; put a number on what you’re going after, put it out there; I like Dane’s suggestion to have a group within marketing group. If you promote this product, you will see the rising tide. George said to Dane - pick who you want, for members. I have a penny a pound, if it is low don’t waste our time, if not enough money, I don’t know what the right answer is; 1% last year was 2.5 million. Dane said I think it is practical to collect at dealer level. Bob said that’s the first point of sale; let’s come back to the how much.

Jeff Putnam said to Kristen Bailey; I thought you would talk more on the Marketing Institute; there is a lot more going on than just Stonington. Jeff said to Dane Somers; a Steering Committee without a business plan, from what we’ve seen without a plan is crazy right now. Kristen Bailey said it is a matter of sharing the information; they don’t have access to the information, they can figure it out; important for industry to understand how you measure profitability; people need to understand what they are going to get out of it. Jeff said based on what we’ve seen so far, to get actual investment; I can’t support another tax on the fishermen. David Etnier said in his opinion the Maine Lobster Promotion Council is broken; you did a presentation, you’ve got a board of directors, why do you need a new steering committee. I think the Maine Lobster Promotion Council is severely broken and it shows here today. Dane said what I’m asking here is to get people to engage; I agree it is time to do something in a positive way.

John Drouin said I agree marketing is a good thing but first we need to figure out how you are going to do this and we need to know how much we are going to spend; dealers are increasing profits. Industry cannot figure out how to come together as one. Bob said harvesters don’t get any more money than they used to, they actually make less money; my dealer can sell it for whatever he wants. Pete McAleney said I normally don’t say too much; everything here is so damn complex. Last year, I said I hate government and I am offended by it when you say a dealer makes a lot of money. The general consensus is lobstermen only work 6 months out of the year. I sell lobsters if they are low; the consumer doesn’t care about your low boat price. This is a worldwide problem, the only way you’re going to make it is to lose some lobstermen and dealers; no sales after Mothers Day this year, dealers made it king a few years ago; bring back the idea that lobsters are for celebrating. Bob said I agree with Pete, its very complex; create a demand, we need a greater demand nationwide. We have to advertise the product but no one wants to put up the money. Gerry said I feel like I’m in the movie Groundhogs Day. We are just trying the approach to promote our product; if you can increase demand they are going to have to pay more to get their product. George said it is very complex; the same as farming. Let’s start giving some examples, if people think the Maine Lobster Promotion Council doesn’t work let’s go to the legislature and ask for more money. I’m happy to have the conversation or go home.

Elliott said the MLPC could blow their whole budget in New York City on one weekend, it’s almost a joke on how much money we are spending; people need to see all the models that can be used for outreach. Ted said we’ve got to move ahead, there is lot’s of creativity that can add to the outreach. John Drouin said I agree that marketing works, back last fall George said he told the Governor that he had 6 people on board, maybe now you have 10. I haven’t seen anyone who says they support it; do your outreach. Sarah Cotnoir said there are more than 10 people that support marketing up and down the coast. Deirdre Gilbert said we need strategy for outreach; bring success examples to the council. Some people say we already know we want it, people won’t talk about it until they know where the money is coming from; outreach is complicated, what do you think we should do.

Gerry said have the council come up with 3 different options and take it out to people; we need to do something, we haven’t done anything in a long time. Sheila Dassart said I have been bombarded with invites to promote marketing. Bob asked why the industry won’t want to invest in their own business; every industry out there markets their product. Jeff said just because you market your product doesn’t mean you’ll have success. Elliott said there are no grants or venture capital without investment from you. Kristen said you can access private money venture capital but it is going to want that check back; it seems like some momentum for investment in marketing. I don’t know what the measurement is, if we invest, what are we going to get; need to incorporate in the outreach another level of assessment and understanding of what returns big companies are getting.

George said when Ocean Spray got started did they know what they would get? There has to be some faith. We aren’t marketing a company it’s a commodity, there has been ¾ of a billion pounds since I’ve been Commissioner; you’ll never see things the way they were in 1998, if we don’t get started we are going to lose. I’m going to get those people here and start talking; what did they know in the beginning, I don’t know what the answer is. Dane said I don’t think we need to take a leap of faith; there are many models out there. We can ask some of those people those questions. Dana said asking people to be their own venture capitals; we need to move ahead not everyone is going to agree with this. Bob said he’d like to have the LAC vote on this.

MOTION: (Dana Rice and Elliott Thomas) To Support Marketing Outreach. 11 in favor 1 opposed

Jeff Putnam asked Commissioner Lapointe if he had a bill in place; the Commissioner asked what would it look like at this point. Pete said if conditions are good this summer what I’m saying is, get the money out of the RED Board to advertise. George said Dane needs to put a proposal together before we go to the RED board.

c. MLPC Nomination

Chairman Bob Baines told the members of the Lobster Advisory Council that in their packets they would see a nomination letter from the Maine Lobster Promotion Council in regards to the appointment of Mike Cote and asked the council to look over the recommendation of the MLPC.

MOTION: (G. Cushman and J. Henderson) To accept the recommendation of the Maine Lobster Promotion Council’s nomination of Mike Cote, Dealer Member Eastern District Representative. 11 in favor, 1 abstained

d. 30 % Lower Limit of Licenses

Commissioner Lapointe asked the Lobster Advisory Council to look at their handout. He pointed out that Zone F is within one year away of reaching their lower limit and explained the proposed rule for 30% lower limit of tags. Larry said it should be controlled not limited. Jeff Putnam said we supported this idea at our last meeting. John Drouin said this won’t work for Zone A. Elliott said the way it’s written we’re not equating licenses with tags; I’m not sure what you’re trying to say. John said we changed the language to say tags. Gerry said Zone D supported this. Larry Knapp said that Zone E supported this change.

MOTION: (G. Cushman and E. Thomas) To support the wording of the 30% Lower Limit of Tags Regulation. 8 in favor, 2 opposed, 1 abstained

 

4. Reports and Updates

a. DMR Updates

o Legislative Update

Deputy Commissioner David Etnier updated the Lobster Advisory Council on DMR rule-making. Chapter 6 Lobster Processing: This proposed rulemaking creates a two tiered approach for a Lobster Processor license that would allow both processing of tails and lobster parts with a fee of $500 (new); and a Lobster Processor Tails only license for processing only lobster tails with a fee of $159 (new fee and similar to the former lobster tail permit). The proposed rules would also update the lobster meat permit rules (similar to the repealed lobster meat permit in statute with no change to license fee) for consistency and enforcement. Labeling and records would be required for each license holder for traceability and enforcement purposes. An effective date of July 1, 2010 is proposed for these regulations. The public hearings have taken place with very little turnout; this was one of the recommendations that came out of the Lobster Task Force.

Commissioner’s office staff at the Department of Marine Resources is working on drafting rules for the island limited entry program and more than likely the rule will go out to public hearing sometime in July. The wet storage issue came up at the last meeting and Cathy Fetterman has confirmed with the court that the waiver fine is now $250.00. We are reviewing the list of repeat violators and folks with 2nd offenses are being reviewed for possible suspension; hopefully this new policy will be more effective.

David said at the last Zone G Lobster Council meeting the issue of Marine Patrol staffing shortage was raised. I met with the Colonel and Lieutenants a while ago and we are doing the best we can with our existing resources. If we go up on the trap tags by .10 we can afford to fill 1 position and one other through watercraft with Section 3 and 4 vacancies being filled.

The Deputy said that the bait research project contract (presented by Dr. Ian Bicknell at the last meeting) has been given to Deb Bouchard to look at different baitfish in areas of concern. Jeff Putnam said he didn’t think the contract should go to Deb Bouchard; she also received a $ 250K grant to research food quality and lobster storage: we are going to get a biased report. Commissioner Lapointe said I don’t agree, we’ve worked with her in the past and she does very good work. There is fish disease in the upper part of the mid-west we don’t want it; it’s a pretty clear cut thing she will help us on the protocol with that.

David Etnier said we are working on an alternate approach to license suspension; we have asked the Maine law school for help and have a proposal from a 3rd year student. We will update you with more information on this once it becomes available.

o Patrol Update

Colonel Joe Fessenden told the Lobster Advisory Council that Marine Patrol has been working on some of the violence issues in Penobscot Bay and a trap pile that was burned the other night in Cushing. Marine Patrol boats have all been surveyed and are all in good shape. A new Protector Boat is going to Division II in Zone B sometime in Mid-June. Colonel Fessenden said the Commissioner and the Deputy Commissioner did a great job with the budget; Marine Patrol is in ok shape.

o DMR Rule-Making Update

The LNG meeting will be taking place in Calais with the Board of Environmental Protection. The hearings will be 3-4 days long. They will be discussing when the vessels that go in to the St. Croix can go up the channel.

4. Set Next Meeting Date and Agenda

Gerry Cushman said he wants the Lobster Advisory Council to look in to the issues with alewives. Bob Baines asked that we invite Pat Keliher, Bureau Director of Sea Run Fisheries to the next meeting.

The next meeting will be held in July after DMR moves forward with Marketing Outreach.

Meeting adjourned 6:30