Attendance: W. Burt, L. Byrnes, P. Cufferty, F. Dutra, J. Dutra, R. Edgar, R. Garrison, C. Goudey, H. Halvorson, R. Karney, C. Kling, D. Leavitt, C. Mancuso, J. Marshall, S. McBride, K. Riaf, P. Russell, S. Soares, R. Smolowitz, A. Spinale, R. York

Financial Support for Aquaculture
L. Byrnes began his talking by introducing Paul Russell and Jeannine Marshall to the group. He reminded the group that aquaculturists in southeastern Massachusetts are fortunate to have individuals providing a valuable asset, such as putting together pools with banks, inducement guarantees from farm service agency, loan and loan guarantee programs, etc. This represents an excellent opportunity to acquaint banks with financing aquaculture projects. A big inducement for banks to participate would be the loan guarantees which the groups provide. The Farm Service Agency (FSA) is an offshoot of the old Farmers Home Administration and is providing loans and loan guarantee programs. Paul's contribution has been to make these financial programs available to growers. Byrnes then turned the meeting over to Russell

Developmental Loans & Crop Disaster Relief - Paul Russell
The FSA represents a combination, under the Reorganization Act of 1994, of the Farm Credit Program, Farmers Home Administration and Federal Crop insurance, all working under the guide of the local county committee. In this case Cape Cod and the Islands all work on one committee. There are 5 members of the committee: 3 representing the Cape and 2 representing the Islands. The terms/eligibility is decided by the county committee. Committee members are nominated by farmers through an election process, one regular member and 2 alternates serving on a 3 yr. rotating basis. They were fortunate that in 1995, Joel Fox, a shellfish grower, was elected to the county committee, therefore aquaculture does have representation. Under the Farmers Home program, aquaculture was ineligible for receiving funding. The county committee is the one who initiated activity with the shellfishermen. They see aquaculture as any other crop and that it should be entitled to the services we at the FSA provide. Paul informed the group that he has made a major effort to get the quahog farmers involved since they are the largest aquaculture group on the Cape, resulting in 10 direct loans. FSA loans fall into 2 classifications: guaranteed (up to 90% of the value of the loan) and direct loans. Currently they have 3-4 banks that are approved lenders with which they can guarantee a loan. In order to qualify as a lender for guaranteed loans, the bank needs to have at least have 10 existing loans on file that meet FSA'a standards. There is a 1% fee paid up front. With direct loans, FSA takes a promissory note up front directly from the producer and then issue money to a supervised bank account. These loans require a signature from FSA in order to access funds to ensure that the funds are being used for aquaculture. For security on loans, i.e. to buy seed, FSA will take the quahogs as collateral. Most banks do not want to take shellfish as collateral.

Quahogs are a little different from most commodities in that there is not a 1 year return. During the lag time between taking out the loan and actual crop harvest, the producer must pay interest. Funds have to be returned once crops are harvested. FSA also has emergency loans if President declares a disaster. Here, payback is based on how the funds will be used. They also have Farm Ownership loans to build/purchase real estate.

R. Smolowitz asked if there is a value per acre that they won't loan on? Russell said no, the only limits they have are $200k on a direct operating loan, $400k / guaranteed operating loan, $200K for an direct ownership loan, $300K for a guaranteed ownership loan and $500k for an emergency loan. People need to fill out an application with a business plan with anticipated operating expenses which will be reviewed by the county committee. If they are deemed reasonable, we will loan. There are no restrictions for part time vs. full time. FSA has received 40-50 total applications, of which 10-12 were shellfish, 45 have been funded. K. Riaf asked about crop insurance. Russell told the group that they do have a non-disaster program in the form of a grant. It takes about 4-6 weeks after the application has been completed to receive funds. In about 90% of the occasions FSA helps fill out the application which takes longer. help them fill out the application, we pay for real estate appraisal, If it is a new or beginning farmer, we will limit the money for equipment because we want to see that the producer is serious and committed to the Industry. There is a limited resource program, which will drop interest down to about 5%. Guaranteed loans are made at the banks interest rate. Byrnes asked if there are funds available right now. Russell replied that 1997 funds have been exhausted. However, all of the (nationally) unused funds are pooled together and redistributed in April, available by May. The requirement for borrower training i.e. i.e. financial mgt./grower training can be waved if have they person has experience. Most loans are around $5-10K, they will guarantee loans from a nonprofit organization, totals for the state are about $6.5 million, and there are more funds in guaranteed than in direct loans. Burt asked about the availability of loans for other aquaculture technologies i.e. investing in a recirculation system, etc. Russell replied that if the operation was agriculture, then it would be eligible.

Non-insured crop disaster replaced the old disaster program. There needs to be documentation that there has been a disaster with farmers filing a notice of disaster, (representing a loss of more than 35%) can be reimbursed for up to 50% of his loss. Disaster is decided on a crop by crop basis requiring a minimum region of 320K acres or the entire county affected. It is a cash grant. FSA needs to have producers notify us of a loss so that we can maintain good records and have producers report acreage and production values yearly so that we can track and build a database. Only natural disaster are covered, i.e. if QPX could be demonstrated to be a direct result of a natural weather anomaly, it would be covered. FSA needs to be notified within 15 days so they can verify the extent of the disaster. These are available for activities taking place in the EEZ.

Cape & Islands Community Development, Inc. - J. Marshall
They are a relatively new nonprofit lender with about $2 million to lend, $400K of which is dedicated to low income borrowers. There are specific employment criteria, they lend to businesses that are otherwise considered "un-bankable" either due to poor credit or lack of collateral and to those who need gap financing. CDI will accept lower statements except for cash flow statements, 9 months 125,100K referred 300k, If CDI can't help you, they may be able to send you to someone who can. apply to C&I, then to FSA, interest rates are comparable even thought the loans they make are higher risk loans. CDI is patterned after the SEED corporation based in Taunton, MA.

GIS Project status - Dr. Robert Edgar
During the past 6 months, some aspects of the GIS project have moved forward and others have not. There have always been two main components to the project: 1.) getting the geographical information system operative and 2.) making it accessible to people that want to use it by making it available over the internet. There are several web sites available now that have prototypes such as the UNH prototype applied to South America. UMass Dartmouth Biology Department has recently hired Kim Amaral to work on putting together the program. There are currently 2 bills related to GIS now, one involving the Secretary of Environmental Affairs which offers (for a reasonable fee) to put together an analysis for you. The problem there is that the end product may not be used.

Lessons learned Westport project - C. Goudey
They have put together a list of steps needed to get the site (see attached history). As of Feb. 14, 1997, the site was theirs. This placed them 2 years behind in the project timeline. They immediately placed the lighted corner buoys and passed out to the group a revised schedule and buoy diagram. They are ready to do a side scan of the site, are almost ready to collect seed, and are hoping to find a mix of bottom types. They are going to be seeding directly on bottom, using a cage type approach patterned after lobster operation in order to use lobster boats for collecting. They are also looking at using a suspended rigging system designed to use scallop vessels for harvest, sort of a scaled up version of lantern nets. Goudey told the group that they have no idea of the economics of the different collecting methods yet but that this is part of the reason for the project. R. Smolowitz told the group that the process has been interesting and has undergone major shifts in thinking. He pointed out that having SSWG has been very helpful in applying pressure to get this project rolling. This site is an excellent aquaculture research site so they need to get it recognized as a permanent site to save someone the 30 months it would take to get the lease in place again. There are closed offshore areas where the scallops are doing great while other areas are decimated.

At the Council meetings it is interesting to see that the concept of scallop stock enhancement, the idea of setting aside areas for stocking and seeding, and identify seed beds is finally becoming important. They are so close into switching this industry into utilizing husbandry techniques. Smolowitz pointed out that working documents need to be drawn up and that the Council does not have a team specifically formed to design a plan. D. Leavitt pointed out that the lesson learned here is that unless we do it ourselves, we won't get much help from the Federal Government. If it hadn't been for people like us banging on the door every day, nothing like this would have been initiated. K. Riaf mentioned that down in Washington, D.C. there is a sense that the Fisheries Council is not in a position to handle these type of projects. There is a void that lies ahead of us, we have the technical ability but have no place to go "legally". It is complex. The Councils should only be empowered when aquaculture projects directly impact threatened or managed areas, not if the projects don't. R. Smolowitz remarked that Fish &Wildlife should have no authority except to see if a proposal will impact wild animals. The real fundamental issue is the question why any of these "wild" agencies are having any say in these "farm" operations. There is a role for the F&W that may protect wildlife i.e. if aquacultured species escape into the wild. Smolowitz feels F & W should only be a part of the review process, not the lead agency. The lead agency should be a farm agency because that's what we are dealing with. The question was asked if someone else wanted to go through the process are there lessons learned. R. Smolowitz replied that they would need a lot of money, Leavitt added the need for consultants C. Goudey added that it would have been looked at differently if they were a for - profit organization rather than a research organization. W. Burt voiced his concern that there is no NE state represented on the Fisheries Committee.

Update of State Initiatives - Scott Soares
The Dept. of Food & Agriculture is trying to increase funding for aquaculture initiatives. They are trying to convince the Senate to try to reestablish the $630K request they had made. The Hose budget had approved only $130K of what Food & Agri. had requested. Those funds were directed towards marketing, promotion and industry unification efforts. through the Food & Agriculture's Marketing Department. He has been working on budgets for developing regional aquaculture extension centers. The Seaport bond bill had funds for the development of l or 2 regional aquaculture centers, 1 in Gloucester and 1 in Barnstable county. Since that time, advisory groups have been formed, to decide how these centers should come together. The NE Mass Aquaculture Center is not as far along as the SE Mass Center who already has a contract. In FY97, the SE center were approved to spend $50K. We had awarded a contract to develop commercialization of a sea scallop hatchery in Nantucket, in Oct. 1997. P. Russell asked if it would be possible to get J. Fox as a member of the advisory committee? Soares replies that yes, the group is an open group with quarterly meetings.

SS TV taping
Harlyn Halvorson showed the April taping of Sea Scallop Aquaculture VCR film produced by members of the SSWG and edited by Ms. P. Roslansky. The film is 44 min. long and starts and finished with some clips of sea scallop aquaculture from Nantucket. This film has been shown a number of times on Channel 13 in Falmouth and we are seeking opportunities to have it shown elsewhere. A limited number of tapes are available upon request.

J. Dutra mentioned that they are currently putting together a 15 minute video on their site. This will be completed within the next month.

Next Meeting: June 18, 1997

Crystal Mancuso
May 15, 1997