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Shelling Out Big Bucks

By   /   Friday, May 30th, 2008  /   Comments Off on Shelling Out Big Bucks

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Although commercial fishing has been banned in California since 1997 and sport fishing is severely regulated statewide, the Central Coast is home to two abalone farms. And for them, business is bubbling – the harvest season began in May.

The Abalone Farm in Cayucos and The Cultured Abalone in Goleta both farm red abalone for domestic and export use. As land-based farms, the Goleta and Cayucos operations draw seawater to raise abalone from eggs, typically a five-year process.
The Abalone Farm began production in 1968 and produces about 100 tons of red abalone each year on its 18-acre coastal property. With annual revenue of between $4 million and $5 million, and a staff of 35, the farm is the oldest and largest raised abalone operation in the country, according to sales manager Brad Buckley.
By contrast, The Cultured Abalone in Goleta produces about one ton per month, according to General Manager Ben Beede, and sees estimated annual revenue of approximately $1 million.
With a demanding export market, primarily to Japan, abalone prices are on the rise. The heightened prices mean abalone farms stand a good chance of actually making money, thus allowing the possibility of more California farms, which in turn would expose a wider population to abalone.
The downside is cost. The Abalone Farm sells a one-pound package of tenderized abalone, shells and recipes, shipped overnight, for $115.
The Cultured Abalone, on the other hand, does not sell direct and opts instead for distributors.
H. Roy Gordon, president of San Rafael-based Fishtec, Inc., an abalone consultant firm, said he believes prices will eventually come down as more farms enter the market.
“Would the average consumer buy lobster tail? Absolutely. It’s in the same category,” he said.
But many restaurants view abalone as a special occasion item and the majority of American consumers have never even tried it.
With local, state and federal regulations governing the aquaculture industry, the oppressive oversight needs to be streamlined, Gordon said. Between 12 to 20 permits are needed to operate a new abalone farm.
“Permitting and land costs prohibit the growth of the industry,” he said.
Gordon does see the new Programmatic Environmental Impact Report, now being considered by state officials, as a positive step to loosen burdensome regulations. He said there is room in California to support new farms.
“On a scale of 1 to 100 in terms of production, we’re at 1 in California,” he said “Coastal land prices, however, are another matter.”
As evidence of abalone reemergence into the marketplace, Beede said many grocery stores, particularly Asian markets in Los Angeles’ Koreatown, not only sell packaged abalone, but also sell live abalone direct from the tank.
On the South Coast, the Bay Cafe in Santa Barbara has begun carrying both live and packaged abalone. Other restaurants, including Square One in Santa Barbara and Hoppe’s in Cayucos, routinely offer abalone.
But raising farmed abalone – a delicate mollusk – even in a controlled setting does have its risks.
“They’re really sensitive animals,” he said. “Changes in water temperature and ocean pollution can adversely affect growth patterns.”
Standard growth for abalone is about 1 inch each year, to a maximum of 5 inches.
“We’re affected by what Mother Nature delivers,” he said.
Last year was a good year for The Cultured Abalone, however, with roughly 33 percent of its product exported to Japan and Canada.
The Abalone Farm exports as well, with 30 percent of its product going to Japan.
“The majority of our product stays on the West Coast, I’d say 70 percent,” Buckley said. “The next-largest market is the East Coast, specifically New York, with 15 percent and the rest, about 15 percent, divided between the Mid-West and the South East.”
In the world of abalone, nothing is wasted. As Buckley said, “After the meat is shucked, the trim and viscera are sold to fishermen as a byproduct for rockfish and lobster bait, and the shells are sold to U.S. Shell, a distributor in Texas.”

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