Aquaculture Sector Analysis

For specific information about aquaculture including the range of activities, existing laws and regulations, and an expansion of issues facing the sector, read the full Sector Analysis Report on Aquaculture.
 

Aquaculture in Washington

Washington State is recognized nationally and worldwide as a premier producer of farmed shellfish, with the Pacific oyster serving as its marquee product. The most recently published U.S. Census of Aquaculture (2005) places Washington first in value of sales of farmed mollusks ($63,710,000), with Washington-grown shellfish accounting for 31 percent of the value of U.S. farmed shellfish production ((USDA 2006). According to the 2012 Census of Agriculture, 171 shellfish farms are based in Washington (USDA 2014a).

For specific information about aquaculture, read the full Sector Analysis Report on Aquaculture.
 
 

General Overview of the Aquaculture Sector

The aquaculture industry on the Pacific coast of Washington is concentrated primarily within Willapa Bay (Pacific County) and, to a lesser extent, Grays Harbor (Grays Harbor County). The communities of South Bend and Nahcotta, both on Willapa Bay, serve as the primary centers of industry activity. All but one of the shellfish farms operating within this region are family-owned businesses. They range in size and complexity from small, “mom and pop” operations that may farm a relatively small parcel of aquatic land to larger, vertically-integrated farms with many thousands of acres.
According to the 2012 Census of Agriculture, there were 25 shellfish farms in Pacific County and 8 in Grays Harbor County, of a total of 171 shellfish farms statewide (USDA 2014a). Data provided by DFW indicate that 20 farms in Pacific County and 6 farms in Grays Harbor County reported sales of shellfish products in 2012.

According to harvest data collected by DFW, Pacific oysters account for the overwhelming majority (82 percent) of shellfish farmed and harvested in the study region, followed by Manila clams (16 percent). In 2013, Pacific oysters comprised 83 percent ($16,235,388) of the total farm-gate value of farmed shellfish harvest in Pacific and Grays Harbor Counties, while Manila clams accounted for 11 percent of the total value ($2,058,998). The majority of oysters harvested in the region are shucked and processed for market, but the amount of oysters sold in-shell (i.e., singles) is growing in response to consumer demand, and may be nearing 20 percent (Personal comm. T. Morris 2014, Personal comm. K. Nisbet 2014).
 
 

History, Trends, and Opportunities

The shellfish community in Willapa Bay and Grays Harbor was initially dominated by the native Olympia oyster, Ostrea lurida. Heavy commercial exploitation by the region’s early white settlers resulted in the commercial extinction of this species by the early 1900s. To support the industry that had grown around harvest of this species, numerous attempts were made to transplant and establish other species of oysters to these waters (University of Washington Biology Department 2013a). This process led to the development of the first oyster farms (De Alessi 1996). Beginning in 1928, Pacific oysters, Crassostrea gigas, were transplanted as spat from Japan. Imports of Japanese spat continued until the mid-1970s, when the local industry finally established a reliable hatchery production of larvae of this species (University of Washington Biology Department 2013a). A thriving oyster industry has existed in the region ever since.

Although Pacific oysters have naturalized in the region, hatchery development began in earnest in the 1970s to help assure a more stable production level was available to meet market needs. Today, shellfish farmers rely on a mix of natural set and hatchery larvae production to meet demand (Personal comm. B. Sheldon 2014). Beginning in the mid-2000s, both Willapa Bay and Grays Harbor began to experience a failure of the natural set. Although the cause of this change is not confirmed, oceanographers suspect it is due to an increase in the acidity of coastal waters stemming from climate change (Welch 2012) and upwelling events that bring acidic water to the surface (Great American Adaptation Road Trip 2014). As a result of this failure, most farms now must rely upon the purchase of larvae from hatcheries to seed their beds. For one operation, this need has increased the cost of the seeding process alone by five to six times, and has required the purchase of additional equipment that was previously unnecessary, along with other impacts described later in this report (Personal comm. B. Sheldon 2014). Another company has opened a hatchery in Hawaii to hedge against the potential complications of producing larvae in acidifying water (Personal comm. K. Nisbet 2014, Welch 2012). There have been some successful natural set events in recent years, but at a much smaller and more localized scale than in the past. Farmers are hopeful that a new climate cycle may restore natural sets to historic levels, but the potential for this to occur is uncertain (Personal comm. B. Sheldon 2014, Personal comm. K. Weigardt 2104, Personal comm. M. Ballo 2014).

Currently, the aquaculture industry is enjoying strong demand for its products.6 If growers are able to innovate and adjust to changing climatic conditions and other challenges, such as invasive, noxious, and nuisance species, and if the regulatory structure permits the industry the flexibility needed to adapt to changing conditions, experts believe the industry can continue to grow with minimal expansion of the area it has historically farmed. Experts interviewed for this report cited ongoing experimentation with culture of geoduck clams, and a substantial opportunity to further develop production and markets for Manila clams, as potential areas of expansion (Personal comm. B. Sheldon 2014, Personal comm. D. Cooper 2014).
 
 

Key Issues

The table below summarizes the key issues confronting the aquaculture industry, as identified by the experts interviewed. These issues generally fall into six categories:

• invasive/noxious/nuisance species;
• regulatory requirements;
• climate change;
• water quality;
• workforce;
• space use conflicts.

Those who were interviewed identified concerns related to the spread and treatment of invasive, noxious, and nuisance species as the most critical issue currently faced by the industry. They also cited what they describe as a complex, cumbersome, and resource-intensive regulatory system as the other primary issue of present concern. Climate change and declines in water quality were cited as issues of less immediate concern to the industry. With respect to marine spatial planning, some industry experts noted concern that placement of marine renewable energy projects could alter the natural characteristics growers rely on to maintain the quality of their growing areas. A potential increase in shipments of crude oil through the Port of Grays Harbor was also noted as a concern, due to the accompanying increase in the risk of oil spills. Lastly, industry representatives expressed serious concerns over the Army Corps of Engineers (ACOE) plan to deepen the Grays Harbor navigational channel, citing past effects of dredging on the industry, including loss of oyster beds and loss of protection from surge due to migration of sand.
 
List of Issues of Concern to the Aquaculture Sector

Range of Activities

Location
Aquaculture production on Washington’s Pacific coast (i.e., within our study area) occurs exclusively within Willapa Bay (Pacific County) and Grays Harbor (Grays Harbor County). Willapa Bay is the definitive center of the shellfish aquaculture industry in this region, with the communities of South Bend and Nahcotta serving as primary centers of activity. Willapa Bay can be characterized as a “Grade A Working Estuary.” Although it has always been a working harbor, the low population base has allowed water quality to remain high. Grays Harbor is substantially more developed, with pulp mills and an active port (Personal comm. D. Nisbet 2014).

Shellfish farms are operated on privately owned tidelands, as well as on tidelands that are owned by the State and are leased through DNR to shellfish growers for farming. According to data collected by Pacific Shellfish Institute for a 2013 report (Northern Economics, Inc. 2013), in 2010 there were a total of 17,288 commercially farmed acres in Pacific County and 2,288 farmed acres in Grays Harbor County (of a total farmed acreage of 29,663 acres statewide).7 DNR reports that in 2010 shellfish farmers held a total of 82 leases on the coast, with 1,714 acres of leased tidelands being actively farmed (Personal comm. B. Pruitt 2014). In addition, DFW owns several tracts of land that are managed as oyster reserves from which licensed individuals may harvest naturally occurring oysters.
 
Statistics
According to the 2012 U.S. Census of Agriculture published by the U.S. Department of Agriculture (USDA), Washington ranked first among all states in sales of aquaculture products, with a total value of $187,222,000 (USDA 2014a). The most recently published U.S. Census of Aquaculture (2005) also places Washington first in value of sales of farmed mollusks ($63,710,000), with Washington-grown shellfish accounting for 31 percent of the value of U.S. farmed shellfish production (USDA 2006). In the context of state-wide agricultural production, aquaculture (all products) ranks ninth in value in Washington, accounting for 2.1 percent of the total sales of agricultural products in the state (USDA 2014b).
The counties within the study area make a substantial contribution to state-wide aquaculture production. Pacific County ranked third among all Washington counties, and 15th among all U.S. counties, in aquaculture production, with sales of $22,360,000 in 2012 (USDA 2014c). Grays Harbor County ranked seventh state-wide, and 43rd nationally, with aquaculture sales of $7,756,000 (USDA 2014d). For mollusk production specifically, Pacific County had the second highest sales in the state (behind Mason County) in 2012 ($21,304,000), accounting for 23 percent of state farmed mollusk sales. Grays Harbor County ranked fourth among Washington counties with sales of $5,559,000 (6 percent of state-wide sales) (USDA 2014a).
 
Participation
According to the 2012 Census of Agriculture, Washington had a state-wide total of 171 shellfish farms, with 25 in Pacific County and 8 in Grays Harbor County (USDA 2014a). Data provided by DFW indicate that in 2012, 20 farms in Pacific County and 6 farms in Grays Harbor County reported sales of shellfish products.

Although production and sales data are likely to provide the most accurate characterization of active harvesting businesses, license data also offer insights on participation in the industry in this region. We reviewed farm registration information provided by DFW as one potential source of additional information, but found these data, which are self-reported by the industry, to be incomplete. Licensing data from DOH, however, provide a sense of the number of businesses that participate in various aspects of the industry. According to its website, the DOH issues the following types of licenses:

• Harvester (HA): operations are limited to harvesting shellstock (live, unshucked product) and selling to other licensed dealers in Washington. Harvesters cannot sell at the retail level.
• Shellstock Shipper (SS): operations can cultivate and harvest shellstock. They can buy, sell, and ship shellstock at retail or wholesale in Washington, to other states, and to other countries.
• Wholesale Only Shellstock Shippers: are limited to wholesale activities, that is, buying, selling, and shipping shellstock. They cannot cultivate or harvest shellfish.
• Shucker-Packer (SP): operations can perform all activities allowed for Harvesters and Shellstock Shippers, and can shuck shellstock for packing in jars or similar containers (Washington Department of Health 2014).
   
  Employment
  Statewide, the only source of employment data identified in our research comes from the 2013 report “The Economic Impact of Shellfish Aquaculture in Washington, Oregon and California” (Northern Economics, Inc. 2013). In that study, survey respondents reported 1,266 direct jobs in the shellfish aquaculture industry, which was used to develop an estimate of a total of 1,900 direct jobs industry-wide. The minimum employment among surveyed firms was 0.1 persons per farmed acre (1 person per 100 farmed acres), and the maximum was 5 people per farmed acre (500 people per 100 farmed acres). Survey results did not indicate any clear relationship between number of farmed acres and number of employees. Note that these data represent the shellfish aquaculture industry state-wide, and are not specific to the study area. This survey also found no direct correlation between the extent of farmed acres within a county and the employment in that county. For example, almost 65 percent of the reported farmed acres are in Pacific County, but only 27 percent of the total reported employees are residents of Pacific County. In contrast, Mason County is home to 32 percent of the reported employees, but only 4 percent of the farmed acres (Northern Economics, Inc. 2013).

  We were not able to identify any comprehensive source of industry employment data specific to the study area. The best available data on employment in the aquaculture sector within the study area come from a series of surveys commissioned by the Willapa Grays Harbor Oyster Growers Association (WGHOGA). The most recently conducted survey (2008) identified a total of 443 employees working for these businesses (Powell, Seiler & Co., 2010). It is important to note, however, that surveys were only administered to WGHOGA members, only a subset of whom responded. Thus, this figure represents employment at only a subset of growers in the study area (i.e., those that responded to the survey).
   
  Production and Value
  The aquatic farm permits issued by DFW require growers to keep complete and accurate records showing the quantity of products sold and to supply that information to the department quarterly. This information is the primary source of data on the production and value of farmed shellfish in Washington; however, these data are generally viewed by both industry and DFW itself as incomplete. It is difficult for DFW to verify the production numbers submitted, and there is little if any incentive for growers to provide accurate information to the agency. For these reasons, DFW believes that the figures reported to it understate actual production (Personal comm. D. Ayers and B. Kauffman, 2014). The information presented below should be considered with this caveat in mind.

  According to the reports submitted to DFW, Pacific oysters account for the overwhelming majority (82 percent) of shellfish farmed and harvested in the study region, followed by Manila clams. In 2013, Pacific oysters comprised 83 percent ($16,235,388) of the total value of the farmed shellfish harvest in Pacific and Grays Harbor Counties, while Manila clams accounted for 11 percent of the total value ($2,058,998).

  Since 2004, the Pacific oyster harvest has ranged from a high of 8,274,431 pounds in 2007 (with a value of $21,429,323) to a low of 5,842,470 pounds in 2013 (with a value of $16,381,505). In 2013, 73 percent of the Pacific oyster harvest in the region came from Pacific County. On average over the last 10 years, 81 percent of the oyster harvest has come from Pacific County.

  Since 2004, the Manila clam harvest has ranged from a high of 1,196,821 pounds in 2012 (with a value of $1,893,053) to a low of 704,529 pounds in 2004 (with a value of $1,647,259). In each of the last 10 years, 99 percent or more of the Manila clam harvest has come from Pacific County.

  A complete summary of the volume and value of aquaculture products in Grays Harbor and Pacific Counties between 2004 and 2013 is provided in the full report.
   
  Impact of the Industry
  The most recent and comprehensive data on the economic impact of shellfish aquaculture in Washington was developed by Northern Economics for the Pacific Shellfish Institute (Northern Economics, Inc. 2013). This analysis sought to derive a specific production function for the industry based upon detailed information on expenditures collected through targeted interviews and surveys. This expenditure information was used to conduct an input-output analysis to assess the economic impact of the shellfish industry in Washington as a whole, and within particular counties.

  Survey results identified the breakdown of expenditures in several cost categories based on 2010 spending. The top three expense categories for surveyed businesses were Payroll (29 percent), Other Spending (21 percent) and Seed and Shellfish (18 percent). The authors report that on average, shellfish farms spend approximately $3,100 for every acre owned or leased, and $4,988 for every acre farmed.

  Based upon the survey data, and extrapolating to those farms that were not included in the survey results, the expenditures were applied in an input-output analysis that generated the following state-wide results for 2010:

  • The shellfish aquaculture industry in Washington spent $101.4 million in the Washington economy in 2010, and generated $184 million in economic activity (1.8 times direct expenditures);
  • The industry was responsible for 1,900 direct jobs, which in turn generated 810 additional jobs, for a total of 2,710 total jobs in the state; and
  • The industry paid $37 million in wages, which generated additional labor income of $39.9 million, for a total of $77.1 million in labor income in the state.

  The economic multipliers calculated through this analysis are as follows:

  • Every $1 spent by the industry generates $1.82 of economic activity in the state;
  • Every $1 spent by the industry generates $0.76 in wages in the state; and
  • Every $1 million spent by the industry generates approximately 27 jobs in the state.

   

  Data Gaps

  This report relies upon existing information to develop a characterization of the non-tribal aquaculture industry in Washington’s Pacific coastal estuaries. Through this process, we identified a number of gaps in the existing information that limited our ability to develop a complete characterization. These gaps may present a similar challenge for the state’s forthcoming economic analysis. The most important data issues are described briefly below.

  • Participant information: The number of businesses actively engaged in shellfish aquaculture is critical to accurately characterizing this industry. Various entities collect information that should allow for identification of the number of businesses licensed to operate in the study region, as well as those that are actively participating in the industry. Farm registration data reported to DFW by the industry, which would allow for identification of all registered businesses, are incomplete. DOH licensing data, however, appear to be an accurate source of information on the number of licensed businesses in the region. More critical is information on the number of businesses that are actively farming and harvesting. DFW harvest information reported by industry to DFW is the primary source for these data (in the form of farms that reported harvest in each year by species), but it is generally believed by both industry and the agency to be incomplete and inaccurate. DFW currently lacks the resources to enforce accurate reporting of these data.
  • Employment: Data on employment in the aquaculture sector has been collected by various entities; however, these data provide only a snapshot in time of a subset of businesses. We did not identify any comprehensive source of employment data that is collected regularly and rigorously, and captures the entire universe of businesses in the industry.
  • Harvest Volume: Based on our research, DFW appears to be the only state entity regularly collecting information on harvest volume by species for shellfish farms in Washington. Due to a variety of factors, including misreporting and a lack of funding to enforce reporting requirements, both industry and DFW acknowledge that these data are incomplete and inaccurate, and underrepresent the true productivity of the industry. Because harvest volume information is critical to DOH in fulfilling its obligations, the agency is working with DFW through a committee focused on improving data collection. Until the recommendations of this committee are implemented, this will continue to be a critical data gap.
  • Harvest (Farm Gate) Value: For the same reasons described above related to harvest volume, available data on the farm gate value of shellfish harvested in the study area are believed to be inaccurate and under-representative of the true harvest value. We were not able to identify a comprehensive alternate source for this information.
  • Harvest (Total) Value: The total value of shellfish harvested in the region is not regularly collected by any entity that we were able to identify. Although the industry itself has attempted to track this information, the data generally represent snapshots in time and only reflect a subset of active farms.
  • Processing: Industry experts provided conflicting information as to the proportion of oysters being sold as an in-shell product, versus those that are shucked. As these products fetch different prices, and are sold into different markets, this information would be valuable for any economic analysis of the industry.
  • Multipliers for Economic Impact Analysis: Development of accurate input-output multipliers for an industry allows one to translate expenditures and employment in that industry into a total regional economic impact. Numerous attempts have been made to identify representative multipliers for this industry, including efforts by Northern Economics (2013) and others (which were summarized in Northern Economics (2013)). Although Northern Economics (2013) provides the most detailed and specific set of multipliers developed to date, that study focused solely on the economic impacts of the production of cultured shellfish, and did not include sales trends and demand factors. Further, it did not include the economic impacts of shellfish consumption, which may be significant.

  Key Economic Questions

  Due to substantial shortcomings in the data that are currently collected, some of the key economic questions requiring attention are as basic as developing an accurate profile of production and harvest value for the aquaculture industry. In addition to filling the key data gaps described above, other key economic questions worthy of consideration include the following:

  • Economic contribution of aquaculture to regional economy: To what extent is the regional (e.g., county, coastal) economy dependent upon the aquaculture industry? How does the economic contribution of this industry compare to that of other industries?
  • Added value: What is the fate/distribution pathway for shellfish harvested in this region, and what price is being paid for various products along each step of the supply chain?
  • Failure of nature: How has the failure of the natural set affected businesses financially? How have they changed their operations to adapt to the new regime?
  • Permitting costs: How much are businesses spending annually in labor costs and fees associated with the permitting process?
  • Ecological costs and services: What are the ecological costs and benefits associated with shellfish aquaculture in the region?

  Aquaculture Sector Analysis

  For specific information about aquaculture, read the full Sector Analysis Report on Aquaculture.

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