# Basic Value Model

If we plant 10 geoduck clam seed per square meter, get a 50% survival rate, and allow the animals to grow to 2 pounds apiece, we will probably produce about 10 pounds of product per square meter of ground with each planting.

Planting 10 geoduck seed/sq m with 50% survival rate produces 5 geoducks/sq m @ 2 lbs apiece = 10 lbs/sq m

Since this low density approach fits into the natural ecology of the general area the production should be ecologically sustainable. The conservative survival rate estimate in this model will probably improve as the industry continues to learn.

There are 10,000 square meters to a hectare. This means we will produce about 100,000 lbs. per hectare from each planting.

10,000 sq meters/hectare x 10 lbs/square meter = 100,000 lbs/hectare

At this point in our industry’s development the costs will probably be significantly less than a dollar a pound to produce the product. The market value may be more or less than \$10.00 per pound at the time of harvest, depending to some degree on if the growers work together to avoid cut throat marketing. All this means it will probably cost less than a \$100,000.00/hectare to produce more than \$1,000,000.00 worth of product/hectare.

100,000 lbs/hectare x \$10/lb = \$1,000,000.00/hectare – \$100,000.00/hectare in costs = \$900,000.00/hectare gross profit before taxes.

We are using a conservative ten year grow out cycle for this generic model. This cycle will probably become shorter as the industry matures. This has been the case in the grow out of other species, both in aquaculture and in agriculture.

A 10 year grow-out cycle means a 100 hectare ranch will produce 10 million dollars a year at a cost of one million dollars/year once the ranch has been fully seeded in 10 years.

• Annual Sales starting in year 11      \$10,000,000.00

• Cost to replant each year                    1,000,000.00

• Gross Profit each year                        9,000,000.00

Please keep in mind that these numbers will be impacted upon, both positively and negatively, by a variety of factors. Cost of seed, for example, is affected by hatchery performance. A hatchery that costs \$500,000.00/year to run could produce as much as 100 million geoduck seed a year at a cost of ½ cent/seed. If it has problems it may only produce 500,000 seed, which would then cost \$1.00/seed. Or, it could fail completely in that year, incurring a loss of \$500,000.00 for the year.

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