Impact financing and aquaculture: Maryland oyster aquaculture profitability

Abstract

Aquaculture production of oysters has been carried out in the state of Maryland since the 1890s, with limited success because of restrictive regulations and opposition from the commercial wild industry. After revision of the aquaculture leasing regulations in 2009, the Maryland oyster aquaculture industry expanded more than 10-fold. In 2010, Maryland Agricultural & Resource Based Industry Development Corporation (MARBIDCO) started the Maryland Shellfish Aquaculture Loan fund, which features a below-market interest rate, interest-only repayment period, and partial principle forgiveness. This study evaluated differences in farm-accounting metrics when comparing self-financed operations, conventionally funded operations, and operations with MARBIDCO funding on water-column and bottom-culture oyster aquaculture operations in Maryland. Bottom-culture and water-column operations had significantly higher net present value and internal rates of return when they were MARBIDCO-financed compared to other sources of capital. This research suggests that oyster aquaculture operations which make use of MARBIDCO financing or similar options should have the best chance of success and highest financial return. The research also suggests that if significant funds could be identified or obtained (i.e., federal, provincial, or private company disaster payments), establishing programs similar to the MARBIDCO Shellfish Aquaculture Loan Fund could help improve the financial profitability of aquaculture operations in other areas of the world.