hauke l. kite-powell marine policy center woods hole oceanographic
TRANSCRIPT
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Hauke L. Kite-PowellMarine Policy CenterWoods Hole Oceanographic InstitutionShelton, 7 February 2011
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Business Plan Economic Model Start-up Capital Requirements Return and Payback Period Risk
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Purpose Components
Concept
Market
Operations (biology, logistics, marketing)
Staffing
Financial Projections
http://www.lib.noaa.gov/retiredsites/docaqua/reports_miscellaneous/musselbusinessplan.pdf
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Cash flow, year to year Costs
Longlines (purchase, installation, maintenance)
Expendables/supplies/seed
Boat operations
Staff salary
Other
Revenue
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For each year:
New lines installed
Lines in operation
Lines stocked
Lines harvested
Harvest yield (lbs/line)
Boat days (stocking, maintenance, harvesting)
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New longlines (installed cost) Expendables, supplies, seed Vessel fixed costs Vessel variable costs Staff salaries On shore costs (dock use, administrative,
insurance, permits, marketing, etc.)
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Scale: 20 longlines (10 in year 1) Yield (maximum)
14,000 lbs per line (years 2, 3)
16,000 lbs per line (years 4, 5)
18,000 lbs per line (years 6 ->)
Scale: 20 longlines (10 in year 1) Installed cost: $6,000 per longline Expendables: $600 seed, $500 other per
longline per year
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Boat:
second-hand, $25,000 upgrade in year 1
$100/day fixed costs (capital, maintenance, dockage, insurance)
$600/day variable cost (2x $250/day crew, $100/day fuel)
Onshore/adminstrative costs: $25,000/year
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Boat utilization:
Longline deployment: 2 lines/day
Longline stocking: 6 lines/day
Longline maintenance: 12 lines/day, every two weeks
Longline harvesting: 1 line/day
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longlines, 13%
seed & expendables
22%
vessel & crew, 40%
onshore/other, 25%
Major Cost Components
Long-term production cost: about $0.25/lb
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Farmgate price ($/lb)
10-year project NPV @ 5% ($)
Internal rate of return (%)
Payback period (years)
0.30 -70,000 -- --
0.32 -20,000 -- --
0.34 30,000 7 8
0.36 80,000 11 7
0.38 130,000 15 7
0.40 180,000 18 6
0.45 300,000 26 5
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Boat: full utilization => about 80 longlines, 600+ tons/year production
20 longline farm operation requires ~$230,000 in start-up capital
80 longline require close to $1 million
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Risk and Return What is the likelihood that you will not make
a specified return (or positive NPV)? Risk = variability, uncertainty Risk factors are not necessarily the largest
cost components
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Harvest yield
model results on previous slides assume consistent maximum yield production
In fact, yields will sometimes be lower – and there’s a non-zero chance of losing everything
Price
Mussel price in New England over the past ten years (NOAA data) has ranged from below $0.40/lb to above $0.90/lb
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$85,000 expected NPV
25% chance of negative NPV
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Longline mussel farming should be economically viable in New England if good production yields can be achieved
People and boat costs are major cost components
Yield and price are important risk factors Full utilization of boat requires a very large
operation – look for “part-time” boat
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Funding provided by NOAA via MBL, and by the WHOI Marine Policy Center.
Thanks to Scott Lindell, Bill Silkes, and members of the Martha’s Vineyard and Rhode Island longline mussel projects.