SHELLFISH AQUACULTURE FEASIBILITY STUDY
Expanding Shellfish Culture in the NRAC Region – Constraints to existing
industry expansion and an analysis of the economic feasibility of new,
small-scale oyster culture businesses
Part II: The feasibility of new, small-scale oyster culture businesses.
Edwin Rhodes
Aquatecnics LLC, 49 Reed Street, Milford, CT 06460
Rob Garrison
,Nantucket Aquaculture, 11 Union Street, Nantucket, MA 02554
Dana Morse
Maine Sea Grant College Program, UMaine Cooperative Extension, Darling
Marine Center, 193 Clark's Cove Road, Walpole, ME 04573
Tessa Getchis
Connecticut Sea Grant, 1080 Shennecossett Road, Groton, CT 06340-6048
Sandra Macfarlane
Coastal Resource Specialists, Box 1164, Orleans, MA 02653
Expanding Shellfish Culture in the NRAC Region – Constraints to existing
industry expansion and an analysis of the economic feasibility of new,
small-scale oyster culture businesses.
Part II: The feasibility of new, small-scale oyster culture businesses.
Introduction
In 2004 the NRAC funded a number of proposals to develop model business plans for
start-up companies in selected aquaculture businesses. These model plans are part of an
NRAC strategy to reach its goal of doubling northeast aquaculture production within a
decade. We have focused our efforts on evaluating several opportunities for shellfish
aquaculture in the Northeast region, and present here business plans that can be used as
models for start-up oyster aquaculture companies.
Why Aquaculture in the Northeast and Why Oysters?
In the northeast region, shellfish aquaculture annual ex-farm value is currently about 50
million dollars from more than 350 separate culture operations and employs
approximately 500 people. Only salmon farming in Maine contributes more to the value
of aquaculture in the northeast. Although there is a fair amount of shellfish aquaculture
underway in the NRAC region, we believe that there are still opportunities to increase
production and sales.
Shellfish aquaculture is an old industry in the northeast U.S. and techniques to enhance
survival and growth of oysters go back about 200 years. “Modern” shellfish aquaculture
that uses shellfish seed produced in a hatchery and employs very intensive culture
techniques can mark its beginnings with the first successful production of seed from
hatcheries in the 1960’s.
The Northeast U.S., in particular, has been noted for its productive shellfish growing
areas, of which thousands of individuals have taken advantage. The industry is based
principally on hard clams (Mercenaria mercenaria), Eastern oysters (Crassostrea
virginica), and blue mussels (Mytilus edulis), and to a lesser degree, European flat oysters
or “Belon” (Ostrea edulis), soft-shell clams (Mya arenaria), and bay scallops
(Argopecten irradians irradians).
Shellfish propagation methods range from wild seed collection to land-based hatchery
systems, while nursery and grow-out technology includes bottom culture (open bottom,
netted bottom, cages), midwater culture (longlines, pearl and lantern nets), and surface
culture (floating trays, bags, upwellers, rafts, etc.) (Leavitt, 2003).
Compared to most other forms of aquaculture in the U.S., shellfish aquaculture is a more
mature industry with a longer documented history (Barber, 1836; Brooks, 1891; Kellogg,
1910; Kochiss, 1974; MacKenzie et al., 2002a,b; Matthiessen, 2001; Carriker, 2004). As
far back as 1959 Loosanoff was talking about new business formation when he wrote and
widely distributed an article entitled “You, too, can now hatch clams.” (Loosanoff, 1959).
Since Loosanoff’s early aquaculture publications (Loosanoff 1937; 1954; 1963), a
number of other authors have written manuals on how to cultivate oysters, including
Burrell (1989), Creswell et al. (1990), Korringa (1976), Matthiessen (1973, 1989) and
Shaw (1962). These have been considered in our development of the model oyster
production systems described here, but we relied most heavily on the experience in our
team that included individuals with hands-on experience in starting shellfish businesses.
The profitability of our model oyster businesses will depend heavily on obtaining a
premium price for the product. The willingness of consumers to pay more for quality
product has been recently noted in work by Hanson et al (2003). They surveyed U.S.
residents in 2000-2001 and found that consumers were willing to pay 34 cents per oyster
above the usual raw bar price for a guaranteed safe product. In the same study, 38% of
oyster consumers identified price as a constraint to consuming more oysters, but 49%
indicated that they would consume more oysters if they were safer to eat and if more
fresh oysters were available. Bishop (2003) estimates that in the next decade shellfish
sales in the U.S. and Canada could increase by 40%, but notes that this increase will
depend on producing “a safe, quality, branded product”.
Some recent work on the logistics and economics of shellfish business start-ups has been
done. Adams et al (2001) produced cash flows and enterprise budgets for a small
business producing and marketing southern bay scallops and suggest that bay scallop
culture is marginally profitable at a small-scale. On Martha’s Vineyard, Karney and
Blake (1999), described start up businesses for oysters that grew a high quality product,
and received a premium price. Rice and Ganz (1994) have described the basic steps for
starting an aquaculture business.
We chose to focus on the oyster aquaculture business opportunities after considering the
whole suite of native shellfish that are in culture in the northeast region and the market
conditions and state of the technology for each. However, our decision to concentrate on
an oyster business is based on information current in early 2005, and may very well
change. A prudent potential investor in shellfish aquaculture should make an effort to
insure that the oyster business is the right one for them.
In our opinion, the best opportunity for a successful shellfish aquaculture business is with
the native oyster, Crassostrea virginica. Hard clams (Mercenaria mercenaria) are also
widely cultured, but the market price of hard clams is currently very close to the price of
production due to a robust supply from aquaculture companies from Massachusetts to
Florida. Blue mussels (Mytilus edulis) are less widely cultured and in Maine, the center
of the U.S. production, the industry is moving from on-bottom culture to suspension
techniques, making an economic analysis difficult. Additionally, there has been some
recent success with culturing mussels offshore in New Hampshire. (Langan, 2001) and
investors considering business opportunities in the shellfish arena should consider mussel
aquaculture. Bay scallops have been successfully cultured, but in the Northeast growth to
produce a market product of sufficient size takes more than one season, and
overwintering success has been variable. Sea scallops have also been cultured, but
hatchery production of seed is not very reliable, and grow out time is long making this
species currently unattractive as an investment. Work with the soft-shell clam, Mya
arenaria, is underway but we know of no successful commercial operations.
The authors believe that there are realistic opportunities for new aquaculture companies
for oysters, recognizing an unmet demand for superior quality oysters for the whitetablecloth restaurants and other upscale institutions. Oysters for this market are often
referred to as “boutique oysters”. Oysters in this category are grown using methods that
guarantee a large percentage of market-sized oysters with a good shape and good quality
shells that make the oysters easier to open. Additionally, boutique oysters are namebranded to add marketing appeal, and they are grown in specific geographic locations that
impart a distinctive flavor to the oysters and insure that they are safe to eat as a raw
product.
The Business Plans - General
We have developed two principal business plans, one for a small company with a target
production of 100,000 marketable oysters per year, and one for a medium-sized company
that would market 1 million oysters per year. We have presented a highly detailed plan
for the larger company which we call the Acme Oyster Company, and some additional
information for the small company we call My Oyster Farm. The business plan scenarios
for the Acme Oyster Company creates a fictional oyster company in a fictional locations
in language and detail that we believe will facilitate the writing of an actual business
plan.
We forecast that the company with a target production and sales of 100,000 oysters per
year can operate with one or two people, and can be done on a part-time basis, at least
until it reaches its operating capacity. The oyster business with target sales of 1 million
oysters per year will require a company with 5 or 6 full-time employees.
We hypothesize that both of our model companies will buy seed oysters from existing
hatcheries, will operate seed nurseries to produce planting-sized oysters, and will use
grow-out culture methods that have proven track records in the northeast. Persons
entering the oyster businesses with little or no experience in this industry are urged to
start initial production at about 10% of the final target production, and build the company
to its final size over a three or four year period. This will allow the start-up company to
gain the maximum amount of experience with the minimum risk, and also allow for a
gradual increase in the supply of market-sized oysters that makes marketing more
rational.
The oyster company models include descriptions of costs and timing for site selection,
permitting, site leasing, nursery construction and operation, seed purchase, grow-out gear
selection, grow-out operations, oyster cleaning and grading, labor, insurance and
financing. Our team members obtained materials cost information from open market
commercial sources and from personal knowledge of construction and maintenance cost
for gear. Estimates of labor use and costs came from the team’s personal experience and
from conversations with commercial growers. We also obtained some additional
information from our survey of commercial companies that we did as part of another
NRAC-funded study (MacFarlane et al., in press).
For both of our model companies, it is expected that the product will be sold directly to
up-scale restaurants. Our experience with oyster marketing indicates that direct-sales to
white-tablecloth restaurants is the best starting point. Our experience also has shown that
it is nearly impossible to obtain contracts or other “bankable” assurances of future
product sales. The market price information in this report came from personal experience
by team members, and from some additional conversations with restaurant owners and
seafood purchasers.
Finally, the success of an oyster aquaculture start-up company will depend on four major
factors. These are location, methods, capital and marketing. There is more detail on
these critical factors later in this report, but their importance cannot be overemphasized.
The vision we have in these plans is for companies that efficiently grow a high quality,
brand-labeled oyster, grown in a location that will guarantee that it is safe to eat and
marketed directly to white tablecloth restaurants and other high-end retailers.
The Oyster Aquaculture Company Business Plans
Acme Oyster Company
Business Plan
(1 million market oysters/year)
Introduction
The Acme Oyster Company will be formed to produce one million high quality oysters
per year. Located on 10 acres of leased water adjacent to the pristine Hollywood Beach,
Acme will use a floating bag system to provide white tablecloth restaurants with half
shell oysters.
Objectives
Objective 1. Plant 1.5 million oyster seed per year
Objective 2. Begin market sales in year 3
Objective 3. Minimum sales price of 55 cents per oyster, average sale price 65 cents
Keys to Success
Production System that reduces labor, provides optimum growing conditions, and ensures
a high quality product. Sales and marketing service that provides the customer with a
consistent high quality product, professional packaging and on time delivery.
Management that ensures a well organized, efficient operation, motivated employees and
financial responsibility.
Mission
Acme Oyster offers high quality, half-shell oysters to high end restaurants year round.
Frequent testing insures that our product meets the highest standards of health
certification. Acme will provide customers with a consistent quality product harvested
and shipped within 24 hours of ordering. Initial market focus will be high end restaurants
and wholesalers along the East Coast. As production increases major cities throughout
the U.S will be targeted and export opportunities will be investigated. Acme will provide
employees a living wage with benefits and ensure a healthy, safe working environment.
Every effort will be made to produce oysters in an eco-friendly manner using accepted
best management practices.
Facilities/Equipment
Requirements:
Gear Preparation and Storage, Staging Area – Minimum 1000 sq.ft of indoor space
required for gear preparation/assembly, workshop, and tool storage. Minimum 1500 sq.ft.
outdoor space required for storage of gear, construction projects, boat maintenance, etc.
Wholesale Dealer permitted packing/storage facility – Indoor space with walk-in
refrigerator conforming to State Department of Public Health requirements to be used to
pack oysters and store before shipment.
Boats (with location to load/unload) – One boat should be large enough to handle 20,000
oysters (approximately 1.5 tons) as well as transport culture gear equal to 100 oyster
bags. The second boat can be smaller and used mostly for transporting personnel. A
convenient place near the operation’s staging area and packing facility should be secured
for loading and unloading the boat(s). Ideally, this will be a permanent dock where the
boat is routinely tied up.
Truck – Depending upon the shipping arrangement, a refrigerated truck able to carry
20,000 oysters (approximately 1.5 tons) may be needed to deliver the boxed oysters to
customers or a commercial carrier. In addition, a standard pickup truck is also required
for general purposes.
Work Barge/Rafts – Unless the farm site is located adjacent to controlled dock space or
land, a floating work barge or raft is required for operations including; grading, counting,
stocking, harvesting and cleaning. At a minimum a 50 ft X 20 ft platform is necessary
and, depending upon the size of cleaning or grading machinery (if operated on site)
further area may be required.
Nursery Upwellers (tidal/land-based) – Tidal upwellers are the most economical and
efficient nursery systems , but require at least 2 knots of current. FLUPSYs are also very
efficient, but require protected waters with access to electricity. Land based, pump
operated upwellers require the most labor and are the most expensive to operate. One 8 ft.
X 20 ft. tidal upweller or FLUPSY can grow approximately 100,000 oyster seed to one
inch. Land based upweller performance is based on water flow and productivity.
Equipment – Major Equipment includes a mechanical grader, pressure washer, and
hydraulic hauler (for cage culture system). Labor costs and other variables will determine
the sophistication of the oyster grader, which can be purchased to grade through various
sized mesh or using image analysis can sort oysters within 1 mm. A normal range of
carpentry and mechanic tools will be required for construction and maintenance.
Permitting
Permitting will vary depending upon location. Contact your Town government to learn
about local regulations. Local extension agents and State government agencies can
provide information on State regulations. The Army Corp of Engineers will also require a
permit application.
Site Selection
General requirements/considerations for a good oyster growing site
- Temperature
- Reasonable flow
- Medium to harder bottom, not muddy, not rocky
- Predators
- Security: is it so remote that watching over it will be difficult
- Navigation: does it impede navigational use
- Competing use such as fishing, recreation, navigation, etc.
- Ice scour, is it deep enough to withstand the ice cover?
- Access: can I get to it easily, and can I unload product close by?
If possible, several sites should be compared for growth, fouling, weather exposure,
biofouling, etc. before deciding upon the final site. It is also recommended that
several growout systems are compared during the preliminary trial period.
Operations
Nursery – 1.5 million 1 mm oyster seed are purchased from a commercial hatchery to
coincide with the beginning of the growing season, i.e. water temperature of
approximately 11° C. Seed are introduced into nursery system(s) and cleaned and graded
weekly. (Land based upwellers require daily cleaning). Mesh bins are cleaned with a
pressure washer. Oysters are rinsed with freshwater if available. As oysters grow density
is maintained to ensure maximum growth evidenced by a doubling in volume of the
oysters each week. As the oysters reach one inch in size they are transferred to the
growout system.
Growout – One inch oysters are stocked in to ¾” mesh oyster bags at a density of
approximately 250 oysters per bag. Bags are maintained through the growing season.
With the floating bag and rack and bag system, bags are “flipped” every two weeks to
control fouling. Cage culture systems require brine dip or pressure washing, frequency to
be determined by local biofouling conditions. Before the end of the first growing season,
all oysters should be graded and restocked at either 100-125 oysters (final stocking
density) or 250 oysters per bag. In the nursery to bottom system, oysters are distributed
on the bottom at the end of the first growing season. Oysters are maintained through the
next growing season and may be culled for harvest beginning the end of the second
growing season.
Harvest – Except for the first year of harvest (when only about 20% of the oysters are
ready for harvest), culling of the largest class of oysters should yield approximately 40%
marketable oysters per bag. It is important to maintain records indicating which bags
contain the largest oysters and when they were last graded in order to maximize harvest
efficiency. It may be advantageous to maintain four weeks supply of market oysters ready
to pack in order to maintain sales during inclement weather or other operational
difficulties. Bottom grown oysters are harvested either from a boat using a drag or dredge
or with a rake in shallow water.
Packing – Oysters should be brought to the packing facility near the date of shipment.
Standard packaging for the East Coast U.S. is 100 count waxed boxes. HACCP
regulations must be followed during packing and storage of oysters before shipment.
Sales & Marketing – Sales should be arranged to provide the local market first and, as
production increases, expand to regional and national markets. It is extremely important
to match projected harvest with sales volume. Promising more than you can deliver can
permanently damage your reputation and future sales. Customers appreciate good service.
This means delivering the product where and when you promised and being flexible
enough to adapt to the customer’s needs. The Marketing Plan below details marketing
strategy.
Implementation Schedule
First year operations should be limited to less than 100,000 oysters to test different
growout systems and gain specific site knowledge. This will allow the grower to adjust
his plan and system to the site. The table below offers a typical implementation schedule.
Activity
Yr
1
Qtr
1
Yr
1
Qtr
2
Yr
1
Qtr
3
Yr
1
Qtr
4
Site Selection
Permitting
Gear prep
Nursery system
construction/installation
Seed Purchase
Growout system
construction/installation
Wholesale
Dealer/Packing Facility
Permit
Sales
X
X
X
X
X
X
Yr
2
Qtr
1
Yr
2
Qtr
2
X
X
X
X
X
X
Yr
2
Qtr
3
Yr
2
Qtr
4
Yr
3
Qtr
1
X
X
Yr
3
Qtr
2
Yr
3
Qtr
3
Yr
3
Qtr
4
Yr
4
Qtr
1
X
X
X
Yr
4
Qtr
2
Yr
4
Qtr
3
Yr
4
Qtr
4
X
X
X
X
Marketing Plan
Sales Goal: 1,000,000 Oysters at an average price of 65 cents.
X
X
X
X
Target Market
The market is Domestic and International “white tablecloth restaurants” with appetizer
prices of at least $10. This will be accomplished by marketing to wholesalers, and
directly to restaurants. Some retail fish markets and individuals will also be targeted.
Local Market
The local market will be serviced mainly through local wholesalers with some sales
occurring directly to restaurants.
Regional
Regional markets include major cities of the East Coast, Midwest, and West Coast.
International
Depending upon exchange rate for the dollar an opportunity to export oysters to the EU
may exist. As of this writing (2005), initial investigation indicates that export market
demand exists at above target price, sufficient to cover the increased shipping costs, and
yield a net profit in excess of local and regional markets.
Marketing Strategy
We are placing our oyster at the high end of the market. Besides producing and
advertising a high quality oyster “from the clear waters of “Acme Oyster Farm”, we are
also emphasizing our oyster as a product that is produced in a sustainable manner using
environmentally responsible practices.
This strategy offers differentiation in several areas. First, our area is recognized as a
premier tourist location, thus lending credibility to a premium price. Our location is not
subject to coastal industrial pollution and runoff and therefore enjoys better water quality
than other coastal areas. The Hollywood Beach location reassures the customer that this
premium product is healthy, and does not represent a potential source of bacteria related
illness.
Our “Brand Name” separates our oyster from the competition and offers customers a
unique image for the product. Most oysters are recognized by their geographic location.
We are able to capitalize, not only on our location, but also the fact that this is a …….
Finally, consumers have recently begun to pay attention to the origins of, and production
methods used, to produce their food. We will work with emerging companies who market
products that have been produced responsibly and represent a traditional healthy foods.
Collaboration
We are collaborating with organizations that provide opportunities to implement our
strategy. The U.S. State Import Export Association is a non-profit (State) organization
that assists companies in exporting their product. This organization also offers businesses
the opportunity to participate in Food and Trade Shows overseas, and assists Tribes in
marketing their product and making introductions to potential customers. The U.S. State
Department of Food and Agriculture provides a free service to businesses wishing to
export that includes a consultation with an expert that assists with the paperwork and
regulations involved in exporting.
Negotiations are underway with Famous Wholesale Company to offer our oysters
through their distribution network. Acme is also working with Best Mail Order Company,
a direct mail organization to provide oysters through their network. Acme has joined the
Chef’s Collaborative (www.chefscollaborative.org), which offers us an introduction to
top restaurateurs around the country who support sustainable, environmentally
responsible foods. Slow Foods (www.slowfood.com) is another organization with access
to a unique market of quality food enthusiasts.
Marketing Plan Implementation
Target customers are identified through several means. Potential customers are identified
primarily through the above collaborative organizations, and additionally through
restaurant guides, and aquaculture industry contacts.
Our marketing information will be presented mainly through personal contact, supported
by a marketing brochure, designed and printed to capitalize on the uniqueness of our
product. This brochure will introduce the customer to our product, our production
methods, and the distinctiveness of our oyster. This information will be available on our
website, where we can respond to prospective customer inquiries. A Data Base of
contacts will be developed as part of this marketing effort.
Product will be introduced to qualified prospects through an introductory sales call
offering a sample of our oysters. A follow up call after the sample has arrived will initiate
detailed information involving price, shipment, and the frequency and size of orders.
Product will also be introduced to potential customers at Trade Shows, Seafood Festivals
and special events. Marketing material will be available whenever our oysters are
presented to potential customers. In some cases, personal introduction of our oysters to a
prospect will be desirable. This method is by far the most effective and will be used when
possible.
As the majority of our customers are restaurants, most initial sales efforts will target the
Chef or Buyer. Occasionally, the restaurateur may be the preferred first contact. Once a
prospect has decided to purchase our oysters, the sale can be made directly to the
restaurant, or through a wholesaler the restaurant already uses.
Personnel
The volume of targeted prospects, and the processing of customer orders will require a
dedicated employee. This Sales & Shipping Coordinator will be responsible for
implementing our marketing program; expanding sales; coordinating sales orders with
production crew; and, coordinating and participating in shellfish packing and shipping
operations; generating invoices, tracking sales and monitoring receivables.
Transportation
Our oysters are shipped in waxed cardboard boxes printed with our logo and information
via commercial refrigerated truck to the closest major city. There they are delivered to a
refrigerated transportation depot where other commercial carriers pick them up for
delivery to major markets on the East Coast and in the Midwest. These commercial
carriers service wholesalers and a few large seafood restaurants, but offer the lowest
transportation cost. As sales expand to the West Coast and other distant metropolitan
areas, airfreight will be necessary, requiring ice packs and expensive insulated boxes.
Here wholesalers typically pick up the product at the airport, and a few large seafood
restaurants may make regular trips to the airport. Direct sales to restaurants must utilize
expensive overnight shipping. The higher price realized with a direct sale to a restaurant
is often offset by the increased shipping costs usually required with a direct sale, i.e.
overnight express in an insulated box with ice packs. But the net price will generally
exceed the average.
Competition
Over the past five years a large number of East Coast oyster farms have begun producing
high quality oysters. Many of these producers are small (annual production around
100,000 oysters), but provide a good product for at least six months of the year.
Additionally, Prince Edward Island has improved the quality of their oyster. The
Canadians have had a large amount of production at a low price (less than 50 cents U.S.
per oyster) for over ten years. However, they have recently improved their quality and
now have a large share of the second tier market, restaurants that serve appetizers below
$10.
Our strategy to differentiate ourselves from other producers using the premium nature of
our product (our location, uniqueness, and sustainable production methods) is important
to realize our goals.
Market Trends
The market for high-end oysters is closely related to the overall health of the economy.
When the economy is good, more people frequent expensive restaurants and more oysters
are sold. As more people realize the benefits of eating healthy seafood, overall seafood
consumption is increasing. This is encouraging, but increased competition must be
considered. The effect of increased production of high quality oysters will be to narrow
the price range of oysters. Most high quality oysters will be sold at a lower price as
restaurants realize that good oysters are available from more and more producers.
Adjusting to Market Trends
The position of our product in the marketplace will depend on how successfully we are
able to promote the, quality, image, and uniqueness of our oysters. In this respect, there
will always be premium demand in the marketplace, and this will represent a significant
component of our customer base.
While we are not seeking the commodity market for oysters, we recognize the need to
respond to pressures to compete at a commodity level. In this respect we will need to
evaluate ways to produce and grow a commodity product capable of being competitive in
that market.
Pricing
Our target price is an average of 65 cents per oyster. The schedule below demonstrates
how we can achieve this result. Our premium oyster wholesales for around 67 cents each
as compared to the 50-55 cents wholesale price for quality oysters at the Fulton Fish
Market in New York. The marketing strategy outlined above is designed to place our
oyster at a premium level in order to yield the higher price. The pricing structure will
differentiate between wholesalers, restaurants, and direct sales.
Market Segment Analysis
Sample target market segments and volumes are shown in the table below:
Market
Local
Wholesale
Air Freight
Export
# Oysters
100,000
700,000
120,000
80,000
1,000,000
Price per
Oyster
$0.70
$0.62
$0.76
$1.00
Total
$70,000
434,000
91,200
80,000
$675,200
Note: Projected Export Sales may be transferred to Air Freight or Wholesale Sales
depending upon foreign exchange rates.
Risk Assessment
Major risk factors include: weather, disease, pollution, management and market competition.
Storm and ice damage can be significant. To minimize risk from storms, nursery and growout
sites should offer some protection from high winds. If engineered correctly most growout systems
can withstand significant storm effects. It may be difficult to avoid damage from hurricanes. Ice
can destroy an entire farm site. Local knowledge regarding icing is mandatory when planning the
operation and system.
Diseases prevalent in the northeast are Juvenile Oyster Disease, MSX and Dermo. The first
defense against disease is to purchase oyster seed from a reputable hatchery source. Every effort
should be made to ensure that only disease free shellfish are introduced into the growing waters.
If disease does occur, consult local experts to learn how what steps to take to minimize disease
effects.
Pollution can be point or non-point source pollution. Chemicals, petroleum products and illegal
discharges are examples of point source pollution. Constant monitoring of the shoreline reduces
risk from point pollution. Non-point source pollution can elevate coliform levels causing
authorities to designate the farm site as unfit for shellfish harvesting. Elevated coliform levels can
be caused by failed septic systems, sewage discharge or, wildlife. Knowledge of the local
watershed reduces risks from these risks.
Poor management will lead to lower than estimated survival, growth, and production. A detailed
operating plan provides management with a definite schedule for all operating tasks. Following
the plan will ensure maximum production, a high quality oyster, and a profitable business.
Competition can result in lower than forecast selling price. Knowing the competition and keeping
track of the market will allow the business to implement strategies to stay at the top of the market.
Plan Economics
The plan costs, revenue, profits, losses and cash flow are found in the following tables. The full
10-year plan economics can be found in the excel spreadsheets in the file called “Acme Oyster
Company Worksheets May 2005”under tab “Oyster Farm Worksheet” The assumptions used can
also be found in the spreadsheets under tabs for “Assumptions”, “Seed to Market”, “Culture
Gear” and “Labor”.
Some of the major assumptions used in these calculations include:
1. Oyster seed price from hatcheries at $5.00/thousand
2. Annual inflation rate of 3% added to salaries, equipment costs and sales price
3. Payroll taxes at 8% of wages
4. Employee benefits at 25% of salaries
5. Oyster growth produces 20% market-sized oysters at the end of second growing season
6. 10% annual mortality rate
The information in the “Oyster Farm Worksheet” is linked to the other worksheets found under
the other tabs. That is, changing any of the assumptions or costs on the supporting spreadsheets
will automatically be reflected in the main worksheet. This feature can be used to perform
sensitivity analyses of the company. For example, changing the sale price for oysters in the sheet
under the “Assumptions” tab will show its impact on the bottom line in the main worksheet.
Although the Acme Oyster Company plan is based on using a system of floating bags and long
lines, we provide additional cost information for other possible oyster culture methods in the
attached excel spreadsheets. Gear costs for cage culture, rack and bag systems, and for direct
plants on the bottom can be found in the tab called “Culture Gear”.
Acme Oyster Company Financial Tables
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Direct Costs
Manager
50,000
51,500
53,045
54,636
56,275
57,964
Asst Manager
35,000
36,050
37,132
38,245
39,393
40,575
Field Workers
20,594
52,103
Sales/Shipping Coordinator
Payroll Taxes
35,000
8,448
Employee Benefits
60,444
21,250
11,172
14,850
67,200
36,050
15,691
67,200
37,132
16,000
67,200
38,245
16,319
21,888
31,294
32,233
33,200
34,196
Contract Services
3,500
3,605
3,713
3,825
3,939
4,057
Seed Costs
Equipment
7,500
7,725
7,957
8,195
8,441
8,695
Boat
12,000
12,000
Truck
5,000
Generator
2,500
Grader
7,500
Pressure Washer (2)
1,400
Barge
2,500
1,400
1,400
20,000
Upwellers (10)
100,000
Culture Gear
40,824
Walk-in cooler
62,461
16,534
13,392
6,075
44,955
53,812
53,812
20,600
21,218
21,855
22,510
23,185
309,104
288,661
336,277
339,303
346,748
10,000
Freight/Packaging
Supplies
20,000
Total Direct Costs
335,516
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
20,000
20,600
21,218
21,855
22,510
23,185
4,000
4,120
4,244
4,371
Overhead
Administration/Bookkeeping
Advertising & Marketing
Dues and Subscriptions
200
206
212
219
225
232
Internet Fees
600
618
637
656
675
696
Licenses and Permits
400
412
424
437
450
464
Maintenance & Repairs
8,000
8,240
8,487
8,742
9,004
9,274
Rent (land-based facilities)
10,000
10,300
10,609
10,927
11,255
11,593
Rent (packing facility)
-
15,000
15,450
15,914
16,391
16,883
300
2,000
2,060
2,122
2,185
Postage and Delivery
300
Telephone
2,000
2,060
2,122
2,185
2,251
2,319
Travel & Conferences
3,000
3,090
6,000
6,180
6,365
6,556
Utilities
1,200
1,236
1,273
1,311
1,351
1,391
Fuel
3,500
3,605
3,713
3,825
3,939
4,057
Miscellaneous
3,000
3,090
3,183
3,278
3,377
3,478
Depreciation
21,261
21,899
22,556
23,232
23,929
24,647
90,656
101,884
104,940
108,089
111,331
Year 3
Year 4
Year 5
Year 6
$0
121,500
$0.675
$82,037
899,100
$0.695
$625,284
1,076,247
$0.716
$770,937
1,076,247
$0.738
$794,065
1,076,247
$0.760
$817,887
$0
$82,037
$625,284
$770,937
$794,065
$817,887
Total Overhead
73,461
Year 1
Year 2
Sales
Units
Unit Selling Price
Revenue
0
Profit (Loss) and Cash Flow
Revenue (Sales)
Direct costs
335,516
309,104
288,661
336,277
339,303
346,748
73,461
90,656
101,884
104,940
108,089
111,331
Gross Profit (loss)
(408,977)
(317,723)
234,740
329,719
346,674
359,808
Cumulative cash
(408,977)
(726,700)
(491,960)
Indirect costs
(162,241)
184,433
544,240
My Oyster Farm
Business Plan
(100.000 market oysters/year)
The text portion of this business plan can be drawn from the Acme Oyster Farm plan
details. The financials are shown below for the first 6 years, and can be found in the
accompanying excel spreadsheets in a file called “My Oyster Farm Worksheet May
2005”.
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Direct Costs
Seed Cost
Equipment
1,000
Boat
10,000
Truck
5,000
Pressure Washer
700
Upweller
10,000
Culture Gear
4,800
1,030
1,061
1,093
1,126
1,159
1,000
3,500
5,000
5,000
3,090
3,275
3,374
3,404
3,435
7,890
8,363
8,614
8,692
8,770
700
4,800
2,400
Freight/Packaging
Supplies
3,000
33,500
Overhead
Insurance
500
500
500
Advertising & Marketing
Licenses and Permits
400
Maintenance & Repairs
1,000
Postage and Delivery
600
Fuel
1,200
Miscellaneous
300
3,550
Total Expenses
37,050
Sales
Units
Unit Selling Price
Revenue
Net Income
(37,050)
500
500
400
412
424
437
412
437
450
463
477
1,030
1,092
1,125
1,158
1,193
50
100
103
106
109
618
655
675
695
716
1,236
1,310
1,349
1,390
1,432
309
328
337
347
358
3,655
3,874
3,991
4,110
4,234
50
Telephone
500
11,545
12,238
12,605
12,802
13,004
20,000
0.55
70,000
0.55
100,000
0.55
100,000
0.55
100,000
0.55
$15,200
$49,700
$55,000
$55,000
$55,000
3,655
37,462
42,395
42,198
41,996
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Funding was provided through the Northeastern Regional Aquaculture Center
through Grant number xxxxx from the U.S. Department of Agriculture
Cooperative State Research, Education, and Extension Service (USDACSREES).
Any opinions, findings, conclusions or recommendations expressed in the
publication are those of the authors and do not necessarily reflect the views of
the U.S. Department of Agriculture, the Northeastern Regional Aquaculture
Center, or the University of Massachusetts Dartmouth.
NRAC Project No. xxxx
Produced for:
Northeast Regional Aquaculture Center
University of Massachusetts Dartmouth
Violette Building, Room 201
285 Old Westport Road
North Dartmouth, MA 02747-2300