Kick-starting the Future
Oyster Farming Moves into Maryland Waters
Workers at the Hooper Island Oyster Aquaculture Company haul a double-stack cage holding two racks of oysters aboard a workboat. Photograph, Jay Fleming
OYSTER AQUACULTURE IN MARYLAND has changed more in the past decade than it has in the past two centuries. Aquaculture, like agriculture, is a form of farming, but farming oysters requires space not on the land but along the bottom of the Chesapeake Bay — and that space, until recently, was hard to come by in Maryland. In 1820, the state legislature passed a law that first allowed a citizen to set up private one-acre farm plots for growing oysters on the Bay's bottom. Good luck building a business on a one-acre farm.
During the 19th and 20th centuries, oyster farming businesses were not welcome in most of Maryland's Bay waters. Any stretch of Bay bottom that held oysters was protected as public oyster grounds and reserved for commercial fishing rather than private farming. Watermen could harvest the bottom with dredges, hand tongs, patent tongs, and scuba outfits. Would-be oyster growers who wanted to stake out a piece of Bay or river bottom for growing oysters faced restrictive state laws that limited the size and number of private leases. Corporations were not allowed to lease at all.
That history reached a turning point in 2009 when the Maryland General Assembly passed legislation that swept away some of those long-standing restrictions limiting the size and number of private leases. The state then reduced the size of the public oyster grounds, put 24 percent of the remaining quality grounds into off-limit oyster sanctuaries, and opened up tens of thousands of acres to private farmers who wanted to grow oysters — either along the bottom of the Bay or in cages or bags or floats in the water column.
Those breakthroughs were followed by others. In the following years state agencies set up a variety of programs designed to fire up oyster farming in Maryland waters. To help new growers with start-up costs, the state set up new low-cost loan programs. The hatchery at the University of Maryland Horn Point Laboratory increased its production of oyster larvae and made more of it available to private farmers. Marine Extension specialists with Maryland Sea Grant worked with the Oyster Recovery Partnership, a nonprofit organization, to organize new training sessions that taught would-be farmers how to apply for a loan, how to prepare a lease site if they were using bottom culture, and how to create their own seed oysters by using hatchery-spawned larvae and remote setting tanks. The state of Maryland — after witnessing decades of declines in oyster fishing — was now making a bet on the future of oyster farming.
The goal laid out by then-Governor Martin O'Malley was to create a shellfish aquaculture industry that could help the ecology of the Bay and the economy of the state's Tidewater regions. Growing more oysters around the Bay would put more filter feeders into an ecosystem oversaturated with nutrients, algae, and plankton. The state's economic target was an industry that would be worth more than $25 million annually. The industry would support more than 150 businesses and create the full-time equivalent of 225 jobs, counting full-time, part-time, and seasonal work.
The results to date bode well for hitting those economic targets. As of October 2015, more than 150 businesses were active, many of them one-person operations. More than 498 workers held licenses to harvest oysters on 350 active leases spread over more than 4,500 acres. Those numbers will keep changing as new lease applications move through the approval process, says Karl Roscher, aquaculture chief for the Maryland Department of Natural Resources.
The industry that's emerged is divided into two distinct camps: those who grow oysters on the bottom and those who grow them off the bottom in cages, bags, or floats. More than 80 percent of the current leases, both new and long-standing, are labeled as bottom leases, and they occupy more than 90 percent of the acres under lease. The largest of these leases is 311 acres and the average size is 14.5 acres — a far cry from those early one-acre leases.
OYSTER SCIENTISTS AND WATERMEN AND FARMERS throw around a lot of terms they find familiar and the rest of us find odd. When we order oysters on the half-shell, we don't spend much time thinking about cultch and larvae, seed oysters and spat set, diploids and triploids. But the people who grow oysters for a living spend a lot of time thinking about these terms. Definitions . . .
© John Norton
Bottom farming falls into two sub-camps: operations that spread loose shell on the bottom and rely on natural spat set, and those that plant seed oysters — shells that come with spat, or baby oysters, already attached. The oysters on both kinds of bottom leases typically take three years to reach market size, and when they are harvested they arrive on the boat clumped together. They are usually shucked and canned, ending up breaded and fried or cooked in a classic oyster stew.
Since 2010, however, nearly half the new leases are labeled as water-column leases, and they have gone to growers who are trying a variety of off-bottom techniques. These farmers start with hatchery-spawned larvae that is set not on shucked shell, but on tiny chips of shell, producing single, unclumped oysters, called cultchless oysters. Most of these farmers use floats or cages (considered water-column devices, even though they sit on the bottom). Some farmers also use bags for part of the growout stage. As a result these farmers use less acreage, averaging 4.2 acres per lease, but they have to put in more hand labor with multiple haul outs of their floats and cages for tumbling and grading and splitting the loads into more cages. The oysters they harvest will usually end up in restaurants or raw bars served as oysters on the half shell, dressed with cocktail sauce or a classic tangy, red-wine mignonette sauce.
Where are most of the farms? In St. Mary's County in Southern Maryland along the creeks and shores of the lower Patuxent and Potomac Rivers. And in Dorchester County on the Eastern Shore, along waterways like the Choptank and the Honga. They are the busiest centers for oyster farming, especially for off-bottom oyster farming. More than 65 percent of water-column leases are located in these two counties.
The waters of Talbot, Wicomico, Somerset, and Anne Arundel Counties, on the other hand, have very few water column leases but dozens of bottom leases.
Where is the money coming from for all the start-up loans for all those farms? From the federal government and from the state of Maryland — and from some creative collaborations among some unusual loan makers. Some of the money now targeted for helping oyster farmers was originally set aside to help blue crab fishermen back when the harvest crash of 2007 qualified that fishery for federal disaster relief funds. Those federal crab disaster funds became the core for a Shellfish Aquaculture Loan Fund created in 2010 and partially funded by capital funds approved by the Maryland legislature. The logic behind this loan fund seems to be this: crabbers who had suffered through drastic harvest declines during the previous decade might benefit by exploring other options for making a living on the water.
Another pot of money came from the state's Port Administration, the agency that is responsible, among other duties, for dredging shipping channels. These funds are targeted for loans to pay for remote setting tanks that farmers can use to create seed oysters. The logic behind this kind of loan: "It is intended to support commercial oystermen to ameliorate the effects of dredging," says Stephen McHenry, executive director of MARBIDCO, short for the Maryland Agricultural and Resource-Based Industry Development Corporation, the group that the state uses to administer its loan programs
Oyster farmers are trying a variety of high-tech and low-tech approaches to growing this bivalve in Maryland waters, but the state Department of Natural Resources classifies them in only two categories: Submerged Land Leases (SL) and Water Column Leases (WC). The first category primarily covers on-bottom techniques that feature loose shell to catch natural spat set or plantings of spat-on-shell. The second category covers cages, bags, floats, and any other device that holds oysters off the bottom. As the map shows, the busiest centers for both styles of aquaculture are Dorchester County on the Eastern Shore and St. Mary's County on the western side of the Bay. Table source, Karl Roscher; map, created by Sandy Rodgers on a base map from vectorstock.com
Why are federal and state agencies putting up loan money for oyster farming? Because no traditional lending sources would make this kind of loan — at least not yet. "These are high-risk loans with no collateral, only the personal guarantee of the borrower," says McHenry. The loans come with strings attached: they can be used to buy farming equipment like setting tanks, tumblers, graders, and cages as long as the gear has a 15-year life expectancy. But nothing for trucks, cars, or boats.
The loans are not grants, says Roscher. "It's not free money. We want people to have an investment in this. They have to pay it back." Borrowers start off paying interest only for the first two years, and if they stay current with their payments, they qualify for some loan forgiveness in the latter years. That forgiveness, set at 40 percent during the early years of the program, was later capped at 25 percent.
As those loan repayments come in they go into a revolving fund, and from there the money goes out again in the form of new loans to other farm start-ups. And if oyster farming proves profitable in Maryland, as it has elsewhere, then future loans should come from traditional private credit channels.
The results to date on the loan program bode well for the future. Most farmers are making their payments on schedule, reports McHenry, though one grower lost his farm to bankruptcy and another lost his oysters to Superstorm Sandy in November 2012.
What bodes less well for the future are threats like superstorms, disease outbreaks, and loan defaults. In the mid-1980s a major outbreak of Dermo disease drove many earlier farmers out of business. Farmers now have access to disease-resistant oysters spawned in hatcheries and triploid oysters that grow so fast they can be harvested before the disease can kill them off.
What if a lot of farmers — for a variety of reasons — were unable to pay back their loans? Then the growth of oyster farming in Maryland, which has been so rapid in recent years, could indeed slow down and stall out. "With principal forgiveness at 25 percent, you are only getting back 75 percent," says McHenry. "Ultimately the money runs out."
Any form of farming is a gamble, a bet that weather patterns will yield a good crop, that disease won't kill off the crop, that market trends will yield a good price. All that holds true for oyster farming, but now the state of Maryland has put its money on the table, placing its bets on the energy and creativity of a lot of new oyster entrepreneurs.