Kelp Farm Profitability
-
Hello Greenwave community! I am looking to transition to seaweed farming and have been doing research on this site and those that it links to. Today I saw an article (https://phyconomy.net/wp-content/uploads/2022/09/Maine-Seaweed-Benchmarking-Two-Pager.pdf) concluding that only 1 of 6 kelp farms is profitable. I'm not in this to get rich, nor am I discouraged by a challenging new endeavor, and I realize this question may be location-specific depends on a LOT of factors...but in general I would love any additional insight into the profit margins and overall chances of success in starting up a new operation in New England.
Many thanks, Randall
@randall_loker Line up a market before you start growing. Forward contracting, or pre-selling your crop to buyers and processors and then using those forward contracts to determine how much you are going to out-plant each season, is crucial. But I realize the catch-22 here. If you don't have any experience on the water, and don't have access to infrastructure, it will take you longer to get started and longer build a reputation as a reliable supplier of the kelp that off-takers desire. You may have a hard time pre-selling or contracting with a buyer/processor if you don't have any experience growing the crop. If you have access to a commercial vessel and have experience in other maritime industries, your barriers to entry will be lower. Market access is remarkably different, even across the closely clustered states in the northeast U.S. The value-added kelp product company Atlantic Sea Farms, for example, works predominantly with lobstermen -- who have boats and extensive experience working in Maine's coastal waters. In southern New England, where there are no primary processors, farmers who come from a variety of backgrounds are focused on low-volume farms and accessing high-margin markets (i.e. eaters at restaurants, farmers markets, etc). A group of farmers has banded together to form the Sugar Kelp Cooperative to share resources, risk, and reward, and to help open the door for new market opportunities. Many current and emerging kelp farmers have taken the approach of starting small and scaling over time as they build relationships with buyers and tap into new markets. Bear in mind, kelp farming is highly seasonal (generally Oct-May), so either having a more diverse operation which includes other species of seaweed and shellfish, or having other seasonal enterprises that compliment the seasonality of kelp farming is a plus (e.g. lobstering, salmon fishing, summer maritime tourism etc). The structure of the Maine DMR leasing program allows prospective farmers to test out the waters with a small limited purpose aquaculture license (or LPA) and then apply for/mature into larger leases once they have proved out the viability of their operations. The GreenWave training team will be grappling with these issues in the How to Start a Kelp Farm Course in winter 2024 (details forthcoming).
@kendall_barbery thank you so much for your thoughtful response, I really appreciate it. Yes, as a newcomer, it's unlikely to be able to lock in pricing for future product, but interesting to read about the differences across markets. I was more just looking for anecdotal responses of profitability - either confirming, contradicting, or otherwise commenting on that benchmarking piece that concluded 5 of 6 seaweed farms lose money. I'm looking to recruit some seaworthy friends in Maine and Connecticut but wanted to have a better sense for the probability of success in such a nascent industry. Good ideas though, about having multiple product lines to combat the seasonality of kelp, makes total sense. Thanks again, Randall
@kendall_barbery thank you so much for your thoughtful response, I really appreciate it. Yes, as a newcomer, it's unlikely to be able to lock in pricing for future product, but interesting to read about the differences across markets. I was more just looking for anecdotal responses of profitability - either confirming, contradicting, or otherwise commenting on that benchmarking piece that concluded 5 of 6 seaweed farms lose money. I'm looking to recruit some seaworthy friends in Maine and Connecticut but wanted to have a better sense for the probability of success in such a nascent industry. Good ideas though, about having multiple product lines to combat the seasonality of kelp, makes total sense. Thanks again, Randall
@randall_loker For anyone who comes across this post, the new benchmarking report that came out 2 weeks ago has turned this thing around and shown that seaweed farming has actually become profitable for the most experienced, biggest farmers in New England. It's very much worth a read: https://maineaqua.org/benchmarking/
@steven_hermans this is great, thank you!
@steven_hermans this is great, thank you!