Our 2019 U.S. Shellfish Industry Outlook

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Over the last ten years, we have seen the oyster market explode. We saw the rise of farmed oysters, the rapid openings of raw bars, and the expansion of the cocktail-size oyster market. The shellfish industry continues to surprise us with innovation and newcomers. But as it grows, it is also drawing more attention from the public sphere. As we look forward into 2019, here are the industry issues and trends we are thinking about and how they may affect the shellfish market.

Supply Trends

Climate Change

At the most recent 2019 Northeast Aquaculture Conference & Exposition, climate change was the hot topic. The ramifications of climate change for the shellfish industry are far-reaching. Ocean acidification and warming waters are affecting shellfish health and development. Shellfish are becoming more susceptible to disease and less resistant to invasive species. More frequent and extreme weather systems also increase the risk of losses. Stormwater runoff carrying excess nitrogen is causing more algal blooms harmful to shellfish.

Figure 2.31: Shells Dissolve in Acidified Ocean Water (Nina Bednarsek, National Oceanic and Atmospheric Administration Pacific Marine Environmental Laboratory )

Figure 2.31: Shells Dissolve in Acidified Ocean Water (Nina Bednarsek, National Oceanic and Atmospheric Administration Pacific Marine Environmental Laboratory )

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2019 IMPLICATIONS

Climate change is the new reality, and it will likely continue this year and into the near future. The consequences of climate change will definitely affect supply. Winter storms, wind, and other weather systems will limit farm access and production. There could be more frequent shellfish area closures due to heavy rain or algal blooms. Vibrio bacteria also thrives in warmer waters, which increases the risk of illnesses and related closures.

The warmer temperatures will likely induce shellfish to spawn sooner and potentially longer.  This will affect their quality during the warmer months. The soft shell clam fishery continues to struggle with climate change, and its decline will limit supply. Connecticut, a large producer of hard shell clams, is seeing a decline in wild set seed. This will likely put future pressure on hard shell supply as well.

Regulations affecting catch and harvest

“They have no idea about the impact on the habitat and the fishery… And they’ve made a regulation that’s going to affect people dramatically in a negative way.”

- Former New Bedford Mayor Scott Lang

Public agencies and regulators are trying to mitigate the effects of climate change. Unfortunately, these regulations can hurt the industry. This past December, the New England Fisheries Management Council closed an area in Nantucket Shoals to protect aquatic habitat. The area, however, was also vital to the surf clam industry. The closure may cause surf clam harvest and production to drop by 50%. Surf clam is a New England staple — it’s the main ingredient in New England clam chowder.

2019 IMPLICATIONS

Market prices on wild shellfish will likely increase with supply constraints. Product costs on surf clams have already gone up since the closure. These costs inevitably get passed along the supply chain to the consumer. Local, state, and federal regulations affect the industry's ability to produce and sell. If new rules apply in 2019, they may pose unforeseen supply challenges.

Oyster farmers are more prepared

Despite all the doom and gloom around climate change and regulations, oyster producers are readier than ever. Growers have had to deal with the effects of climate change and red tape for more than a few years now. Oyster hatcheries now breed seed to adapt to ocean acidification. Industry changes have forced growers to find smarter approaches, and they’re now more prepared for the unexpected.

Preparing oysters for winter on the Standish Shore Oyster Farm

Preparing oysters for winter on the Standish Shore Oyster Farm

2019 IMPLICATIONS

If Mother Nature is kind, farmed supply will be relatively steady throughout the year. It's hard to predict unforeseen forces like new regulations or industry shifts. So if all stays the same, weather aside, we expect oysters to be fairly available moving through 2019.

Market Trends

Credit: Sara Norris

Credit: Sara Norris

Interests in something new

The raw bar market is starting to mature. Restaurants and diners are now looking to branch out of local varieties. Demand for Pacific oysters is growing on the East Coast. Interest in Northeast oysters is growing in Gulf regions. The Midwest is seeing a lift in shellfish growth from both coasts.

2019 IMPLICATIONS

Demand for local seafood will remain strong, but this increasing interest for different and new will help farms reach markets outside their local regions. Smaller producers will have more opportunities to find their niche market. More restaurants are also adding oysters to their menus, so businesses will need to stay creative to entice their customers with their shellfish offerings.

Interests from abroad

Despite growing domestic demand, the international appetite for American shellfish is even greater. Asia and Europe are heavy seafood consumers. Domestic producers can command a higher price in these export markets. As of late, politics have definitely affected seafood exports going to China. The West Coast shellfish industry is feeling its effects. On the European front, the FDA is working with the EU to lift an import ban on American oysters.

2019 IMPLICATIONS

The global political climate has been difficult to predict. If trade tariffs stay, shellfish exports, especially to China, will continue to struggle. As a result, Pacific shellfish availability could improve in the domestic market. If the FDA and the EU are able to lift the American oyster ban, this will be great news for producers. Peak shellfish consumption in the EU occurs during the winter when consumption is slow in the US.

More aquaculture, more public visibility

The growth of the shellfish industry has definitely not gone unnoticed. The oyster farm boom has drawn attention in many local communities concerned with their water access and waterfront sight lines. These NIMBY (“Not In My Backyard”) issues are miring the industry in lengthy and/or costly legal battles. These issues are leading to delays in permitting and sometimes, forcing farms to close up shop.

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More consumers enjoying shellfish also means increased risk of shellfish-related foodborne illnesses. These illnesses receive more media attention, which can become greater public concern. Media outlets sometimes paint the industry as careless despite the industry’s preventative efforts.

2019 IMPLICATIONS

The good news, however, is that many in the public, especially younger generations, have good faith in the industry. They understand that farmed shellfish and aquaculture are sustainable choices. Misinformation remains, but consumers are getting smarter by engaging with producers and suppliers. They are educating themselves and asking questions about their food sources.

This good faith has helped the industry weather difficult situations. There have been times past when the public has come to the industry’s defense. Our industry will continue to invest in public education and marketing with hope to continue this momentum of public support.

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Overall, we expect 2019 to be a pretty steady year. But then again, that can all change in a second based on the whims of Mother Nature. It’s part of our jobs to deal with the unexpected, so we’ll figure it out as an industry. We have seen lots of change over the years, so this year may be no different. Keeps us on our toes. In to 2019 we go.

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Our 2016 Outlook For Oysters

As more consumers become acquainted with oysters, more restaurants are taking advantage of the trend. Oysters are becoming more ubiquitous than ever, and it shows no signs of stopping. These days, they’re no longer making a comeback. Instead, they’re taking center stage. So what’s next for the oyster in 2016?

MARKET TRENDS

The growing petite oyster market

Over the last three years, the demand for oysters has accelerated noticeably. This trend can be attributed to a number of reasons, but a main one is the popular use of oysters during Happy Hour. More restaurants are employing this tactic to draw customers in or drive alcohol sales. These “Dollar Oyster” deals can now be found at the local pub or even the neighborhood pizza joint.

In the past, Dollar Oyster selections were typically commodity oysters like Blue Points, Chesapeakes, or Malpeques. The cost of these oysters allow the dollar deal to be worthwhile. However, as diners become more oyster-saavy, restaurants are looking to make Happy Hour selections more exciting, thus creating a market for petite oysters.

Petite sizes cost less than their Select counterparts, so with this lower cost option, restaurants can offer premium varieties like a Cape Cod oyster during Dollar Oyster happy hours. Aside from happy hour use, this option has also created an opportunity for restaurants that are more cost-sensitive to have quality oysters on their menu. There seems to be a growing preference for smaller oysters too, which could be driven by newer oyster eaters uncomfortable with larger meats.
 

2016 IMPLICATIONS

Growers have definitely taken advantage of the petite market because it allows them to sell their oysters sooner, sometimes too soon. Depending on the farm, this could mean less Select sized product or running out of oysters before their fall peak when quality is best. It is illegal to serve petite East Coast oysters in certain states like Massachusetts, so please check your local regulations. The petite oyster market is here to stay, and we will probably see more customers shift to this lower cost option with rising freight costs and more pervasive dollar oyster deals.

The spread of oyster aquaculture to the South

PHOTO BY RUSH JAGOE FOR CNN.COM

PHOTO BY RUSH JAGOE FOR CNN.COM

With wild oysters on the decline, southern regions have looked to oyster aquaculture as an option to bring oysters back. In the Chesapeake Bay, oyster aquaculture thrived in Virginia because it was fairly straightforward to obtain a private lease. So, when Virginia’s oysters were depleted, watermen were able and open to adopting aquaculture. In Maryland, however, it was not until the last few years when leasing was finally streamlined. Since then, “[Maryland] has issued 111 oyster farming leases across 2,240 acres of waters.” This rapid growth of oyster farms has caused conflict with Maryland’s watermen, who argue farms limit the areas they can access, and with residents of waterfront homes, who find the oyster cages to be unappealing.

In the Gulf, the first oyster farm was started in 2009. Point aux Pins Oysters of Grand Bay, Alabama is now the largest Gulf off-bottom oyster operation. More watermen are now exploring aquaculture and trying to figure out how to distribute their oysters to the half-shell market, a market opposite of Gulf oyster culture where oysters are seen as commodities. The first major Gulf oyster hatchery also opened this year, which will provide more opportunities to explore aquaculture in the region.

2016 IMPLICATIONS

We will most likely begin to see more half-shell friendly oysters from the southern states. Regions with wild fisheries will transition more to oyster aquaculture despite conflicts that will need to be resolved by state regulators. Demand for southern oysters in the Northeast will remain very limited, but the south may see a shift in the commodity oyster culture in the near future.

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New oysters and brands will continue to come on to the market. Marketing will be key for farms to carve out a niche position in a saturated space, and to attract loyal consumers and chefs.

SUPPLY TRENDS

East Coast supply potentially very limited in winter and spring

In 2015, we saw one of the worst winters in New England. Unfortunately, this caught a number of farms off guard. Some oyster growers had to endure significant losses while others had to deal with winter kill in the spring. These lost oysters would have been sold as markets in the fall that usually create a fall glut. There doesn't seem to be as much around as usual this time of year, which could be a sign that growers have lower inventories.

icebergs on the beaches of cape cod. Photo by Dapixara via the washington post

icebergs on the beaches of cape cod. Photo by Dapixara via the washington post

2016 IMPLICATIONS

With less to sell, growers will run out faster earlier in the year. This scarcity will become noticeable in the spring and summer when demand is outpacing supply and growers are either sold out or waiting on their seed to reach market size. Any seed lost this past winter will also affect the amount of supply in fall 2016. East Coast supply outside of New England will depend on the weather. If bad winter weather immobilizes areas like the Canadian Maritime or the Chesapeake, we will see a significant shortage again this coming winter.

More potential West Coast closures and stricter regulations

Warm water temperatures caused many area closures on the West Coast this past summer, which limited Pacific oyster supply. If areas were not closed, oysters showed signs of spawn and quality was not ideal. In British Columbia, illegal sales of shellfish caused a high reported number of shellfish illnesses. New England had a fairly quiet summer season aside from the closures in Katama and Duxbury.

2016 IMPLICATIONS

If the global warming trend continues, water temperatures will also continue to rise causing more area closures and triggering oysters to spawn earlier. West Coast supply will be limited again during the summer. Proposed protocols and regulations to test oysters might be implemented in regions like British Columbia, but the process could be cumbersome, potentially limiting product coming out of those areas. In Katama and Duxbury, new vibrio regulations are being discussed like a one-hour harvest window. Again, these rules will make it harder for growers to harvest and supply the growing demand during the busy summer months.


And that's a wrap on 2015! We hope Mother Nature is kind to us next year, but we'll just have to wait and see. Aside from all the oyster and shellfish talk, though, there's one important thing we have to acknowledge: our growing and amazing community.

Thank you for an awesome year. We wouldn't be able to do what we do without your support! Enjoy the holidays and we hope you get to ring in the new year with some oysters!