Tuesday, August 19, 2008
Why Lobster is Cheap (or Not)
I was a bit surprised to see Newsweek run an article on why lobster is cheap. Of course, that is a relative question, and the author's experiece occurred during a recent vacation in Maine. In Portland, prices were apparently $5.49, which, if you know lobster pricing at all, is odd. Generally there will be several different prices: one for chicken (small) lobsters, another for pound and a half, and maybe a third price for two-pounders, and that's at a store. But, overall, pricing have been coming down a bit, and the article mentions several factors. But I found some of them stretching to make an economic point that wasn't necessarily there.
- Largely local consumption means no global market, even with international shipping. Well, at least until tourists pile so heavily onto Cape Cod that it tips into the sea.
- Lobster is a luxury, discretionary food. Historically that is pretty amusing, as at one time it was so plentiful that indentured servants coming to the colonies would have in their contracts that they could not be forced to eat the shellfish every day, because it was so cheap. But more to the point today, if it's a luxury food, by definition it is something that most people cannot afford every day, so the claim of lobster being so cheap is a bit confusing. However, if you take a one pound lobster at the prices the article quotes (I suspect they're for chicken lobsters), you're going to get maybe six ounces of meat and possibly less after the shell is gone. In other words, suddenly it's more expensive than steak. In fact, lobster meat prices, sans shell, are still pushing $30 a pound. It just takes a few lobsters, and shelling labor, to get there
- Lobster takes special equipment to cook at home. Uh, the special equipment are the same pots we use to boil pasta. Maybe he was thinking of some special lobster pot you'd get at a Williams-Sonoma.
- Distributors are pushing to keep prices down. That only works when there is a big enough haul. When lobsters are scarce, prices go to.
- Lobster remains cheap because it's so simple to produce, with few processing or distribution costs. I'm not sure that keeping a bunch of salt water recirculating because lobster must be kept alive is all that simple compared to, say, stacking wrapped steaks in a fridge.
