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Oysternomics

We talk a lot around the farm about the business of oysters. It’s the hat I wear, and just like we are students of farming, we are students of business. What makes our little bi-valves such a fascinating business is how dynamic it is. From the supply side to the demand side, there is a whole lot that goes in to getting that small flake of pepper all the way to your plate somewhere across this great nation of ours.

I’m fresh off a trip to Virginia to speak about the importance of branding to a group of farmers and industry experts in the Chesapeake Bay, which is dealing with a monumental increase in their supply of farm raised oysters. So this idea of how Island Creek fits into the larger market, and the future of the oyster industry, is on the front of my mind.

Back to Virginia, first.  In 2010 – Farmers in Virginia planted approximately 26 million oysters. In 2011 – they planted close to 76 million oysters. Those are some staggering numbers. To put this in the appropriate context – Massachusetts farmers planted a fraction of this number. The conference dealt with how to increase demand to preserve the industry as they currently know it, and not commoditize the oyster. This happened to the hard shell clam industry years ago.

From our most basic economic classes, we all remember what happens when supply outpaces demand. The price comes down to a point where supply matches demand. This holds true for the Oyster business, just like it is most likely in your business. What’s even more interesting is that as supply increases, the decrease in price actually occurs faster than the speed of increasing supply. Its very easy to understand why the folks in the Chesapeake are working hard to figure out the best way to prevent a drastic decrease in the price of their oysters due to a sudden, sharp increase in demand.

For me, the obvious question that follows is how big is the oyster market? How many of you out there are going to eat oysters? Does it reach a saturation point? Are we even close to that point? In order for farmers to make a living in the northeast – oysters need to be worth a certain price. If it declines, it will be hard to make a living and people will start to leave the industry. Where the price eventually bottoms out is when the last remaining farmer is willing to farm at the rock bottom price. Pretty crazy scenario, right? It’s a scenario that isn’t a promising one and would not be good for the farmers. You may have access to really cheap oysters – but its unsustainable.

Back to the question at hand – how big is the oyster market? How many oysters can be grown in the United States and be gobbled up by hungry oyster eaters so farmers can earn a living? We believe whole heartedly that there is latent demand in the minds and stomachs of Americans. For years and years, oysters were consumed in abundance. There were thousands of oysters bars, oyster reefs, shucking houses, oyster middens, etc. The main reason this went away is because oysters were over harvested, pollution increased, and the supply crashed.

For the first time in 100 years, supply is coming back and its coming back strong. Because of this, the sleeping giant of the American Oyster lover is being stirred. To me, that’s exciting. Not because we can sell lots of oysters, but because it signals the return of a great food movement where farmers can earn an honest, unsubsidized living, and consumers can eat delicious protein that evokes not only place but history.

At the end of the day, lots of oysters are being grown, and the industry needs your help.  So, the next time you saddle up at your favorite oyster eatery be it in Boston or beyond, don’t think of a supply curve, think of the people, the place, and the history that you are about to consume. It’s a win / win.

-Shore Gregory is the EVP of Island Creek Oysters and loves spreadsheets.

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