Linda Arnold, Financial Programs Officer

Transcription

1 Shellfish Aquaculture Presentation - 1/14/17 Linda Arnold, Financial Programs Officer

2 Is an Ag Business Development/Financial Intermediary Org. Serving All of Maryland With a focus on: - Farming - Forestry - Seafood - Aquaculture

3 Core Rural (and urban-edge) Business Development several secured lending and small grant investment programs that are funded from the Agricultural Stewardship Act of Rural Land Preservation Facilitation programs that are funded from dedicated special funds, or that are offered with other agencies (conduit finance). Higher Risk or Specialty Lending special revolving loan programs that are funded by partnering organizations for targeted business/environmental purposes (e.g., farm energy efficiency and shellfish aquaculture).

4 Commercial Banks and Farm Credit System State Agencies (MDA, DNR, Commerce, MCE, MEA, TEDCO, etc.) USDA (including FSA, NRCS, Rural Development and other Federal Agencies Regional rural planning/development councils Local economic development offices Farm groups and rural industry associations MD Ag Land Preservation Foundation (MALPF) Private nonprofit foundations

5 Has established more than a dozen programs that have made investments in some 402 agricultural and rural enterprises around the State totaling over $39 million Partnered with 17 banks and 4 local government revolving loan funds on projects, and leveraging over $86 million in commercial bank financing Helped 198 young or beginning farmers, and financed 149 farm diversification (value added processing) projects Established two shellfish aquaculture programs with DNR (using DNR, NOAA and MPA funds)

6 In late 2010, the Maryland Department of Natural Resources (DNR) formed a partnership with MARBIDCO to provide affordable ( subsidized ) financing to watermen and other parties wanting to start or expand commercial shellfish aquaculture operations University of Maryland Extension (UME) also contributes to this effort by providing training and business planning assistance to current and prospective shellfish growers

7 Decline of the native oyster population and the desire to accelerate oyster aquaculture for economic and ecological benefits (MD Oyster Restoration & Aquaculture Development Plan) Challenge of obtaining aquaculture business loans from traditional commercial lenders for aquaculture projects includes: Lack of available borrower equity Lack of collateral security 2-3 year growing period for market size oyster

8 NOAA (Federal) originally in (Habitat) Shell/Substrate Federal NOAA funds (for TFLs only) (Habitat) Hatchery Larvae/Seed Federal NOAA funds (for TFLs only) DNR State Capital funds for Capital Equipment and Substrate (15-year useful life) Funds (principal repayments) that are revolving now i.e., colorless money

9 Shellfish Aquaculture Lease from DNR (or have applied for one) Reasonable production and business plans and loan repayment capacity (debt service/ cash flow coverage is important) 10% equity in cash or workboat/equipment Funds cannot be dispersed until a Shellfish Aquaculture Lease is actually approved

10 Submerged Land Leases (SLL) - On bottom, spat-on-shell plantings (traditional) - Harvested via oyster dredge, tongs, rakes, diving Water Column Leases (WC) - Uses gear within the water column, either resting above the bottom (cages), suspended mid-water, or floating at the surface - Harvested via hydraulic or winch hoists, pulley systems or wading in shallow water - May be sorted, culled and tumbled on site

11 388 total leases in Maryland owned by 170 distinct individuals/companies on 6,083 acres Approx. 38% of leases issued since 2011 are water column leases (16% of all leases in operation are water column) Approx. 47% of pending application are for water column leases About 46% of primary leaseholders have a Tidal Fish License *Statistics from MD DNR as of 11/2016

12 *Statistics from MD DNR 11/2016

13 Contact DNR: culture/getting-started.aspx

14 Loan Amounts: $5,000 - $100,000 Loan Term: Interest Rate: Collateral: 5 years, with the first 3 years interest-only (longer if capital) 3% APR during I.O. period, 5% APR when amortizes Security not required (although the loss of the DNR shellfish aquaculture lease is a possibility) Loan Forgiveness: With good repayment performance, 25% of the principal balance is forgiven when the loan amortizes

15 History of the applicant prior experience, etc. Production and business plans Borrower business & personal balance sheets and income statements (if existing business) Pro Forma income projections Debt repayment schedule & credit history Tax return(s)

16 61 Loans approved totaling over $3.7 million Borrowers: 50 TFL holders and 11 non-tfl holders Project types: 29 on-bottom, 28 water column, and 4 combination USDA-NRCS EQIP habitat improvement grant monies have been used by aquaculture enterprises for on-bottom projects; MARBIDCO has 12 EQIP grant assignments totaling $356,840 to repay loans that the grants funded

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18 In 2012, a need was identified for a Remote Setting Loan Program to support oyster nursery operations being operated by commercial watermen Program funding was secured by DNR through the Oyster Recovery Agreement with MDOT/Maryland Port Administration $200,000 was committed to the program in FY 2012.

19 Aquaculture nursery permit from DNR (or have applied for one) Commercial waterman who holds a Tidal Fisheries License (with preference given to applicants who have paid an oyster surcharge at least once in the past five years) Reasonable production and business plan and loan repayment capacity

20 Loan amounts: $5,000 - $30,000 Interest rate: 5% APR Loan Terms: $5,000-$15,000 5 years $15,001- $30,000 6 years Collateral Security: 15% of the loan amount to be provided at settlement by: (1) cash (and returned to borrower once loan is repaid), or (2) financed by interest-only loan at a rate of 5% APR First year is interest-only, thereafter P&I payments Last year of P&I will be forgiven (22% to 24% grant)

21 MARBIDCO has approved 6 Remote Setting Loans, but only 2 closed totaling $60,000.

22 DNR Aquaculture Program and UM Extension staff have been great to work with on implementing the financing programs Good support as well from the Maryland Aquaculture Coordinating Council DNR State Capital funds of $300,000 have been authorized for FY 2017 so please make an application if interested (to one or both programs!)

23 Any questions? Linda Arnold Financial Programs Officer