Oysters: Headed to Tulip Territory?

In 17th century Holland Tulips were the first modern market panic.  Overnight tulip values dropped to almost nothing and scores of people went bankrupt.  The question I get regularly is: Are we in a oyster bubble? 

I have no way of predicting the future, but here are some of the relevant data points.  

1) Production is way up:  This is the most obvious sign that we are in a bubble.

1. Production in Massachusetts is up 48% in the last 4 years.  
2. Maine has 74 full shellfish leases and over 540 Limited Purpose or Experimental leases--and all these leases can sell product commercially
3. Maryland went from 3,304 bushels in 2012 to 74,066 bushels of oysters in 2017
4. Virginia has seen a 300% increase in production in 10 years
5. North Carolina has 48 water column leases--up from 2 leases on 2011
6. Florida has 200+ leases and just permitted 90 more
7. Texas just started their aquaculture program
8. Washington State: Always strong continues to add new farms and grow existing
9. The Canadian government is really supporting the growth of the industry in the Maritime providence and British Columbia.
10. Mexico has increasing production on the Baja peninsula. 

2) Wild harvests continue to decline.  Especially most recently in the Gulf of Mexico.

3) Prices vary by region and over time.  Reports by farmers seem to point to the Fall being the worst for the Northeast as many smaller farmers sell off crop they don't want to hold over the winter. Others in Louisiana and elsewhere are reporting that they can't keep up with demand. I regularly hear that prices for high-quality half-shell oyster range from a low of $.30 to a high of $70/pc on the wholesale market.  For folks selling directly to restaurants, the price is often between $.60 and $1/oyster.   

4) Wholesalers/Distributors are doing great:  A major distributor in the Northeast reported that their business has been up 20% y/y for the last 10 years and more than 40% this year.  Real Oyster Cult--a direct to consumer business--has seem their business rise by over 100% in the last year.

5) Restaurants continue to push oysters.  They are a profitable item and tend to be paired with drinks--the most profitable items for a restaurant.

6) Global restaurant trends still support oysters: 

Hyper-local food is a hot trend according to 60% of chefs.  

Sustainable Seafood is a top trend for proteins

7) Folks are not getting sick:  Despite the occasional click-bait article, the number of reported illnesses is down on a per-capita basis.  

8) We are nowhere near our historic consumption:  In the 1890s, ~30% of the protein for the working class came from shellfish--today it is probably well less than 1%

So what should the oyster farmer do?  

1) Be an efficient producer:  If we do hit a drop, being able to produce oyster cost effectively will make all the difference.

2) Build strong relationships with your buyers:  Be the folks that are easy to work with.  Deliver a high-quality product on time as promised.

3) Save for a rainy day: Whether it is a hurricane, ice storm, or dropping demand, something will happen make sure you have savings to tide your over.