Why are lobster prices falling?

Daniel Gross tries to explain why Maine lobster is getting less expensive while other foods are doing the opposite: At root, the global forces that are driving up the price of food don’t significantly affect the vacation lobster business in Maine. Commercial and consumer demand doesn’t vary much for off-the-boat lobster. Sure, many lobsters are ...

Daniel Gross tries to explain why Maine lobster is getting less expensive while other foods are doing the opposite:

Daniel Gross tries to explain why Maine lobster is getting less expensive while other foods are doing the opposite:

At root, the global forces that are driving up the price of food don’t significantly affect the vacation lobster business in Maine. Commercial and consumer demand doesn’t vary much for off-the-boat lobster. Sure, many lobsters are sold to processing plants. But unlike other seafood products—think of canned tuna, or clam sauce, or frozen fish fillets—lobster is not produced or marketed on a mass global scale, which also means there are no speculators trying to make a killing on lobster futures. The fact that people are eating more and better in China and India isn’t much boosting the demand for lobsters from Maine. Even in the United States, lobster remains to a large degree a regional product. […]

With demand down, and with distributors facing higher costs, there has been significant pressure on lobster producers to keep costs low.

Isn’t this analysis too complicated? Isn’t Maine lobster simply a luxury good, the price of which falls when times get tough and demand — primarily from the United States and Canada — drops? That’s what one ShopRite owner thinks:

The price has come down, but more important, what I’m hearing is, the supply side to supermarket retailers is better because tourist consumption is down in Maine," he said. "So there’s been more consistent supply."

(Hat tip: Tyler Cowen)

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