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Financial and Risk Considerations

Budget for a Hard Clam Culture Operation
This EXCEL spreadsheet allows existing or prospective hard clam growers to compute the investment needs, operating cost, and profit associated with a commercial culture operation. The spreadsheet describes the production and financial assumptions used for planting, production, and harvest operations. However, since everybody’s operation is different, the user can adjust key input values so that a customized analysis is possible. The spreadsheet also allows for key production and financial assumptions, such as seed price, harvest size distribution, survival rate, and market price to be varied. An annual budget is created that will allow the user to determine the revenue, costs, and profits of the operation described in the analysis. This information would be useful to those wishing to invest in hard clam culture, as well as existing growers who may wish to change their current operation. Note that since farm sizes vary, number of acres is not designated in this spreadsheet. What drives this is the number of seed planted with the default value of one million, the upper limit for a 1-acre operation. Thus, investment/variable cost values are associated with a given number of planted seed, and not necessarily the acreage involved.

Financial Feasibility Analysis for a Clam Culture Operation
A small-scale commercial culture operation of hard clams was assessed using baseline assumptions applicable to a 2-acre lease in southwest Florida. The analysis suggests that this size operation can produce 600,000 clams each year and realize a net return of about $19,000 per year. Assumptions included planting one million seed per year, seed costs of $8 per thousand, overall survival of 56%, and market price of $0.09 per littleneck clam (based on 2003 dockside prices). Although the study is dated, sensitivity analyses on seed price, market price, and survival rate allow for more current information to be considered and demonstrate how changes to these variables influence the “bottom line,” or net return to the grower.

Economic Impact of the Commercial Hard Clam Culture Industry in Florida
A UF study found that the impact of the cultured hard clam industry on the state’s economy in 2012 was about $39 million. Findings also include information on the distribution of clam sales by growers and processors (shellfish wholesalers), processor sales by type of buyer, and economic impact estimates on output, value-added, labor income, and employment relative to the state of Florida.

This report represents the third assessment of economic impacts associated with the clam culture industry in Florida—the previous studies being conducted in 1999 and 2007. The 2007 output estimates of $53.9 million indicate a 28% decline over the 5-year period. Full recovery of the industry from key events, such as the economic recession that continued into 2012 and the Deepwater Horizon oil spill in 2010 that weakened consumer demand for Gulf of Mexico seafood, has not yet been realized.

Risk Management in Clam Farming
Like terrestrial farming, shellfish aquaculture has risks that are beyond the control of the grower. These include flood events which lower salinities at the farm site, hurricanes, storms, and other perils. The Noninsured Crop Disaster Assistance Programs (NAP), administered by the USDA Farm Service Agency (FSA), provides catastrophic coverage of noninsurable crops, including clams, when low yields or loss of inventory occur due to natural disasters. The crop year runs from October 1 through September 30. You must apply and pay the applicable service fee at your FSA local office by September 1 of each year.

Management of Aquaculture Production Hazards
The aquaculture industry experiences economic losses as a result of pathogens that cause disease, pests that render product unmarketable, operational mishaps, adverse weather events, and closures of harvest areas due to the presence of organisms with the potential to cause human illness. Collectively, these are referred to as aquaculture production hazards, which present considerable risk to operations. Loss of farmed product and human illness caused from ingestion of unknowingly contaminated product both adversely impact profitability, trade, and public perception.

The ability of professionals to respond to problems and assist farmers is often limited by a lack of farm-level monitoring, record keeping, and farmer knowledge of hazards and hazard management strategies. Frequently, the causes of mortality events remain unknown or are identified when it is too late to prevent, control, correct or mitigate. Often, key pieces of information are missing from farmers’ requests to identify and correct the hazard, limiting the response from the extension and aquatic health professional community.

To respond to this problem, extension professionals from universities and industry associations across the northeastern U.S. have developed this comprehensive publication that identifies strategies to address aquaculture production hazards. The manual includes science-based information about major production hazards facing farmers, including: predators, diseases, parasites, organisms that have the potential to cause aquatic animal illness and human illness (e.g. toxic algae), biofouling, spread of invasive species, and other operational and environmental hazards. The manual also includes guidelines for environmental monitoring, evaluation and sampling of stocks, record-keeping procedures, and biosecurity measures. Although this publication focuses on shellfish aquaculture in the Northeastern U.S. (Chapter 3), it provides invaluable guidance for anyone considering entering this business.