This website has practical guidelines and strategies about entry into and operational considerations of the shellfish farming business in Alaska. The information was collected by extension workers, shellfish farmers and other experts in the field.

We encourage you to contact those professionals for hands on advice when looking to start a shellfish business.

If you have any comments regarding this website, please contact Debbie Maas.

When starting out, permitting is one of the most time consuming and frustrating parts of getting a shellfish farm up and running. As you will see, there are a number of requirements would-be farmers must meet before they are permitted.

As always - if something in the permitting process is becoming difficult to handle, do not hesitate to contact an expert to help you.

Permit application
To start an aquatic farm in Alaska, you must first apply for and receive permits from the State of Alaska and possibly the Federal Government. Permit applications and detailed instructions are available through the Alaska Department of Natural Resources Aquatic Farming web page.

The material on this web site will generally describe the permit application process and provide tips for expediting the process.

Maps and Charts
As part of your permit application, you will need to include a map of your site. Nautical charts are available from the National Oceanic and Atmospheric Administration (NOAA) Chart Sales Office in Anchorage or view an on line list of NOAA Chart Suppliers in Alaska. If you do not know the chart number you need, ask for the chart catalog …..

Additional Management Contacts
After you file your permit application, a number of state and federal agencies will review your plan to determine its environmental, economic, social, and land use impacts. From time to time, various agencies may also be important for you to contact prior to permit application. As an example, …...

Permit Flow Diagram
Permit flow diagram

Putting together a business plan may be one of the most important things you do. Business plans are important for:

• minimizing the painful lessons of not knowing all the risks,
• establishing what your business will be like, and
• drumming up financing

Putting together your own business plan may seem daunting. There are very few people that can claim expertise in all fields of business - and no one can know all the ins and outs of every industry. That is why the best person to write your business plan is YOU. That’s right.

You need to do it. Why? You are the one who:

• is accepting the risk,
• needs to know all the regulatory hurdles,
• needs to know how to operate the business,
• needs to know how to sell the product(s),
• needs to know what things will cost and when covering costs will be difficult.

No consultant can provide you the kind of certainty you need to run your business. You might as well embrace these things before you jump into business.

With that said, there are plenty of helpful guides for putting together a business plan, including this web manual. Click on the links for more information.

Contents of a Business Plan
In the table here, there are many of the common categories you find in any business plan. Take a few moments to read through the list and you will understand what will be expected.

Help Guides
There are a number of guides through that can help you …..

Establishing a Small Business in Alaska - 1998

Alaska InvestNet Business Planning Material

Business Planning Contacts
There are a number of organizations established to assist new business owners. The following links will put you in touch with a number of such organizations.

Department of Commerce, Community & Economic Development: Small Business Development

Alaska Business Development Center

Alaska Small Business Development Center

Unless you have deep pockets, or know a friend or relative looking to make a risky investment, you will need to go out in search of money to start up your business. Since you have gone through the process of developing your business plan (right?), you know how much money will be required.

The two common categories of financing come from:

1.) debt or
2.) equity sources.

Traditional debt financing comes from banks and other loaning institution.

Debt Financing
Debt financing may be defined as:

“The long-term borrowing of money by a business, usually in exchange for debt securities or a note, for the purpose of obtaining working capital or other funds necessary to operational needs or for the purpose of retiring current or other indebtedness.” 
                                                                          Instant Business Dictionary, 1989

If you plan on financing your start-up costs and working capital through debt, or bank loans, you will need to have a well developed business plan.
Loan managers will look at your credit rating, personal equity, management capabilities, soundness of your proposed operation, and industry environment.
Debt financing is typically the least expensive form of financing. However, lending institutions typically have fairly rigorous standards for loaning and quite often you may find your business plan does not “fit into the box.” Regardless, as you look for financing, you may want to explore this form of financing.

Debt Sources
There are a number of government organizations with loan programs. These are particularly helpful when traditional debt sources are difficult to muster. The following organizations are good places to start:

Alaska Department of Community & Economic Development - Division of Investments

Southeast Revolving Loan Fund

Alaska Industrial Development & Export Authority

USDA Farm Service Agency

Equity Financing
Debt financing may be defined as:

“The acquisition of money for capital or operating purposes in exchange for a shore or shares in the business being financed.”
                                                                                 Instant Business Dictionary, 1989

Essentially, if you look for equity financing, you are giving up some ownership of your business. This is not necessarily a bad thing. Depending on the type of investor, you may receive a great ally in making your business successful. The investor may range from a strategic business partner to an “angel” investor or a venture capitalist.

• Strategic partner: A strategic partner may be an existing business that will benefit from your product line or services. In other words, having part ownership in your business somehow enhances an existing businesses operation.
• Angel investors: Angels are wealthy investors looking to make more money. Typically, but not always, angels will like to invest in industries they are most familiar with. They will be great advisors and champions in helping get a business off they ground. At a certain point, they will want to see a return on their investment and/or a liquidity event (they get bought out).
• Venture capitalist: Venture capitalists firms can range from rich investors to investment companies. They target riskier investments in hopes of higher payoffs and may not be as hands on as angel investor. They will want to have a liquidity event in order to capture a return on investment for their investors.

Equity Sources
In Alaska, there are a few contacts you will want to make if equity financing appeals to you.

Contacts include:

• Alaska Growth Capital
• Alaska InvestNET

Choosing an appropriate and viable aquaculture site is an important step in planning your business. A number of factors must be taken into consideration including the biological, social, physical and economic characteristics of the site.

Keep in mind the long term future of your business; will the site be as productive several years down the road? What factors might change?

See the categories below for more information on characteristics to consider when selecting a site.

Biological Factors
Plankton productivity: Phytoplankton abundance is one of the controlling factors in the growth rate of shellfish. In general, the more opaque the water, the richer the plankton layer, (aside from those areas influenced by silt or other inorganic sediment floating in the water). The secchi test, in which a 20 cm white disk is lowered into the water, is a simple way to test productivity. If the disk disappears before reaching five meters from early spring to fall, the site is probably sufficiently productive. Avoid backwater areas where currents are weak as this can lead to decreased nutrient/plankton availability, higher water temperatures in these areas can lead to spawniness.

Water Quality: Because shellfish filter nutrients from the water column, they are highly susceptible to pollutants. Site selection should include testing of sea water as well as nearby watersheds; factors such as the presence of marine mammals and human development may affect water quality. Alaska requires that shellfish farms pass the National Shellfish Sanitation Program requirements before the first product is sold. Contacting the DEC lab in Palmer (907-745-3236) for a water quality test is recommended before taking the time and money to develop a site.

Paralytic Shellfish Poisoning: Though testing for PSP is not required to obtain a permit, it is highly recommended that potential farmers determine the short and long term risk of PSP toxin buildup before committing to a site. Contact the DEC lab in Palmer (907-745-3236) for assistance in taking samples.

Fouling: A mariculture site should be free of excessive fouling. Caused by the growth of marine organisms on shellfish gear, undue fouling requires extensive labor to keep gear clean. Observing the abundance of barnacles, mussels, sponges, tunicates, and seaweed on nearby shores and placing test gear in the water before committing to a site are good ways to determine the risk of fouling.

Social Factors
Land use conflicts: Pay attention to the current and potential development on the land and water around your prospective farm site. Ask yourself if your farm can coexist with current land use patterns.

Who owns adjacent land and what are its designated uses? Might the owners be opposed to a farm? Neighboring land and water users might object to the placement of a farm for aesthetic reasons, including locals or tourists organizations using the water, beaches, or nearby land. Others may not wish to comply with the stringent water quality standards imposed by a mariculture operation, (development projects), or because they desire to build infrastructure on the shore for land operations, (docks and transfer facilities). Could future development projects affect your water quality?

Potential shellfish farmers should contact land owners neighboring their prospective site to determine their concerns. A good dose of diplomacy may be in order.

Physical Factors
Currents: A firm knowledge of the ocean’s characteristics in and around the potential site is essential for site selection. Strong currents can cause the culture gear to tangle and damage the shellfish. The presence of strong currents will also affect your farm’s construction. On the other hand, an area with low circulation limits the nutrient/plankton abundance in the water, potentially diminishing shellfish growth; or allowing the termperature to rise until spawniness occurs.

Wildlife: Spend some time observing wildlife in the area of your prospective site. Are there large populations of seabirds or other animals that could prey upon your shellfish or otherwise disturb your operation? Do you have the necessary equipment to protect your crop from predation? Additionally, mariculture operations are prohibited within a certain distance of seal and sea lion haulouts, anadromous fish spawning streams, seabird colonies, and other wildlife areas.

Economic Factors
Isolation: Though developing a shellfish farm in a secluded, wilderness setting might appeal to you, keep in mind transportation logistics. A site should be close enough to transportation corridors that moving supplies, crew, and product to and from the site is not prohibitively expensive. The site should also be accessible in rough weather.

Proximity to Other Farms: Most shellfish farms in Alaska are small operations that can benefit from cooperation with neighboring farms. Resources such as personnel and expensive equipment can be shared by a number of operations, reducing the costs for each and allowing the coop to hire full-time employees. Joint marketing and product deliveries can also increase the economic success of your farm.

While the potential for mariculture in the Gulf of Alaska is great, success rates for shellfish farms are not high. There are a number of challenges facing the industry, some shared by shellfish farmers nationwide and some unique to Alaska. The following list includes several stumbling blocks you may encounter:

• Supportive infrastructure for shellfish growers is sparse or lacking in many areas of Alaska.
• Specialized equipment suppliers are few.
• Transportation services for product, supplies and individuals are limited in some areas.
• It can be costly and time consuming to gain the necessary permits to operate.
• Each site has its unique qualities, so methods used by one successful farmer may not be appropriate to your operation.
• You may encounter resistance from land and water users in developing certain sites.

See the “Suggestions” section of this guide for a few hints in overcoming these problems.

The prospective shellfish farmer faces many hurdles in starting a business
in Alaska. Here are some suggestions that may assist you.

Preparation
Think ahead!

Many of the hurdles associated with starting a shellfish farm can be ameliorated through solid, thoughtful preparation. One of the most important steps is writing a complete business plan (see the “Business Planning” section of this guide). Furthermore, you will benefit by performing comprehensive feasibility studies and learning about the biology of the organisms you cultivate and the environment in which they grow. Be sure to select a site that meets the needs of you, your shellfish and nearby land and water users (see the “Selecting a Site” section of this guide).

Innovation
Be optimistic and innovative!

The shellfish farming business is best suited for individuals with an optimistic
outlook. The work is hard and the rewards are relatively modest. Small-scale
shellfish farming is best suited for hard-working individuals interested in
developing a valued lifestyle as much as a profit.

Successful farmers tend to be the ones who are innovative and capable of
work-reducing thinking. The success of a small farm is largely cerebral in nature. Hard work is not enough--one of the most important character attributes a shellfish farmer can have is the ability to be persistently innovative.

Experience
Gain practical experience!

No matter how much you read about shellfish farming, nothing is more educational than time spent on an operational farm. Running a mariculture business involves hard work in trying conditions and the mariculture entrepreneur should be aware of the labor demand as well as the rewards.

Find a shellfish farm willing to take on temporary employees and give it a try; at the very least, visit several farms during peak activity and be sure to talk with other shellfish farmers.

You may also wish to join a shellfish growers association and attend its meetings before starting your own business.

Adaptation
Be Adaptive!

Alaska is a newcomer to the shellfish farming industry and many of the problems plaguing the first Alaskan farmers remain today. Alaskans must adapt farming technologies designed to work in radically different environments to our conditions. Additionally, the methods of success for one mariculture operation may cause another to fail. The entrepreneur must be willing to adapt technologies to his or her unique site and keep abreast of new innovations in the industry.

This matrix lists all the experts and professional organizations that can help you with various aspects of shellfish farming.