Perspectives on Business and Economics, Vol. 40

56 are a thickening ingredient, but Alaskan kelp is too costly to be used in the low-price market, so it is excluded from this economic analysis. The following scenario, which uses conservative estimates based on limited data on production and prices, illustrates the potential market value of Alaskan kelp. The analysis also suggests the information a potential kelp farmer would be evaluating when deciding to enter the kelp farming market. A typical farm might have 100 acres with 5 lines, 10 lines, or 20 lines per acre (McDowell Group, 2017). The number of lines per acre is determined by how each farmer chooses to lay out their farm. Each line might be 200 feet long, with each foot yielding 6 wet pounds of kelp. If sold wet, the farmgate price, which is the market price less the cost of storage and transportation, would be $0.54 per wet pound, assuming 2019 prices. When dried, 10 pounds of wet kelp will turn into 1.5 pounds of dry kelp (a 15% yield), which can sell anywhere between $5 and $10 per pound (McKinley Research Group, 2021). Table 1 provides information on potential gross revenues given the above assumptions. The cost of farming kelp includes the costs of spore spools, labor, and processing. One seed spool of kelp would be sold for approximately $100 per 200-foot spool. Labor rates are difficult to predict, but, using data from Maine seaweed harvester income in the Island Institute Edible Seaweed Market Analysis, one harvester can expect to make around $8000 for the season. This work happens during the off-season and typically is seen as supplemental income. One estimate shows that per 100,000 wet pounds harvested, approximately 4 farmers are needed (Piconi et al., 2020). The Edible Seaweed Market Analysis also estimates that for every dollar of dried kelp on the market, $0.157 is spent on processing. Table 2 presents the projected costs, and Table 3 presents the estimated net income for both wet and dry kelp using these assumptions. This analysis shows that for each acre used for kelp farming, $1769 could be generated for selling dry kelp and $980 for selling wet kelp. Other costs of doing business such as storage have not been included. However, even if the farm were only breaking even, this would be a valuable endeavor, because the inputs are being converted to a more useful by-product, and Alaskans are being paid for their labor. In addition, indirect impacts along the chain of production are also important. For example, paying a hatchery for the spools of kelp seed, which it then uses to fund its entire operations, or paying a processor to convert kelp from wet to dry, which the processor uses to pay its employees, contributes to Alaska’s economy broadly (Piconi et al., 2020). The Alaska Mariculture Task Force has set an aggressive goal of producing 19,200,000 wet pounds of kelp annually by 2038. If Alaska can achieve this goal, kelp farmers would be farming on 600 acres, generating 32,000 wet pounds per acre (McDowell Group, 2017); 19,200,000 wet pounds would convert to Table 1 Kelp Harvesting Gross Revenue Projections 5 Lines/Acre 10 Lines/Acre 20 Lines/Acre Wet pound yield 600,000 1,200,000 2,400,000 Farmgate price (2019) $0.54 $0.54 $0.54 Wet revenue $324,000 $648,000 $1,296,000 Dry pound yield* 90,000 180,000 360,000 Dry price (est.) $7.50 $7.50 $7.50 Dry revenue $675,000 $1,350,000 $2,700,000 *Dry yield is 15% of wet yield. Source: Author’s calculations.