Entrepreneurs to Build Large Private Oyster Hatchery in Maryland

A group of Maryland entrepreneurs is planning to build the state’s first large private oyster hatchery in decades, a move they say will both boost and diversify the burgeoning aquaculture industry.

They have also agreed to work with Morgan State University, which has a small hatchery at its research facility in Southern Maryland.

Johnny Shockley and Ricky Fitzhugh, co-owners of Hooper’s Island Oyster Aquaculture Company — a Hooper’s Island farming operation that markets Chesapeake Gold oysters — have joined with Baltimore businessman Carnelious Jones and other partners under the name Oysters, Inc. They plan to build a 12,000-square-foot facility that will breed oysters and produce millions of larvae for farmers to raise in their leased tracts of water around the Chesapeake Bay.

The hatchery is projected to cost about $3.5 million and expected to employ 25 workers full time plus nearly 50 part time, according to the proposal the group plans to submit to Dorchester County economic development officials to receive revolving state loan funds. Jones said he has discussed private financing with several banks in case state funding falls short.

Meanwhile, the partners have signed a deal for the property — close to 100 acres of forested land on a rare patch of high ground on a low-lying peninsula that juts between the Honga River and the Chesapeake Bay.

“We are leading the industry and building the infrastructure, and that all starts with hatcheries,” says Fitzhugh, who was running a pair of ice businesses when Shockley approached him six years ago to grow oysters together. “What we want to do is show the leadership in Maryland how we can rebuild this industry.”

Over the years, Maryland saw more than a dozen hatcheries come and go. Most were small and produced oysters to set on shells, which oyster farmers would then plant on leased bottom in portions of the Chesapeake’s tributaries. But the hatcheries were challenging and expensive to operate. Then, in the 1980s, an epidemic of the oyster diseases MSX and Dermo swept through the Chesapeake, putting oyster farmers and the hatcheries that supplied them out of business as well as ravaging wild oyster stocks.

Maryland oyster farmers turned to fishing and harvesting what wild oysters they could find. The public fishery then relied on the Department of Natural Resources to spread young seed oysters and shell around the Bay. The state got its larvae from the University of Maryland Center for Environmental Science’s hatchery at the Horn Point laboratory. In recent years, the technicians at the state-run hatchery became so proficient that they were producing more than a billion juvenile oysters, or spat, in a year.

But Horn Point’s first priority is the restoration of the Bay’s wild oyster population, and it doesn’t always have enough larvae to sell to private growers. Maryland’s oyster farmers currently look to buy what they need in Virginia, which has eight private hatcheries. For the last five years, experts have been saying that the lack of a private hatchery in Maryland has been holding back the state’s aquaculture industry.

“We need more seed. We need more hatchery capacity,” says Don Webster, an oyster specialist with the Maryland Sea Grant program, who has been promoting aquaculture in the state since 1974.

Maryland had limited aquaculture until about six years ago, because farming oysters was not permitted in many places. — the Nanticoke River being a major exception. Watermen blocked legislative attempts to broaden private shellfish cultivation, worried that it would threaten the traditional public fishery. But in 2009, the law finally changed, legalizing oyster aquaculture statewide. The next year, the state began accepting lease applications. Dozens of entrepreneurs — some of them watermen who got their start with state-backed, low-interest loans — have gotten into the business. Maryland has 5,660 acres under lease and an industry valued at about $3 million.

In contrast, Virginia’s leased-bottom fishery is more than a century old. It has 104,000 acres under lease. The 2014 value of Virginia farm-raised oysters topped $17 million. Most of that success has come since 2005, when Virginia oyster geneticist Stan Allen helped the industry find a way around the diseases ravaging the wild populations.

Allen, at the Virginia Institute of Marine Science, shared his brood stock with that state’s private hatcheries. In time, Allen and the hatcheries developed a triploid oyster, a bivalve with an extra set of chromosomes that put all of its energy into growing rather than taking time out to reproduce every year. It reached market size in about a year instead of the three it usually took for wild oysters. With disease hitting late in the second year of life, the Allen triploid proved to be an industry driver. Many Virginia oyster farmers re-activated their dormant leases, or changed their products from clams to oysters.

But hatcheries were slower to return, because running them is expensive, time-consuming and fraught with problems. So much can go wrong at a time when oysters, always vulnerable, are at their most fragile state. Among the problems: temperature fluctuations, slogs of sediment from storms, malfunctioning equipment, too much rain making water too fresh, not enough making water too salty, or pollution from accidental discharges. A major Gwynn’s Island hatchery, Oyster Seed Holdings, lost much of its larvae in 2014 when the Virginia Department of Transportation stripped and repainted a bridge, which deposited zinc and lead into the water, during the oyster spawning season.

Starting a hatchery is “rude awakening,” says Jim Wesson, head of the oyster replenishment program at the Virginia Marine Resources Commission. “There’s no cookbook, no expert to go to. There’s always a problem of the day, and the problem of the day is always a big problem.”

Kevin McClarren experienced that firsthand when he came to Marinetics, now the Choptank Oyster Company, from New England more than a decade ago. The Dorchester County company had a hatchery, largely for research purposes and to supply its own farm. McClarren, the farm’s manager, said he spent far more time inside the small facility at Castle Haven than he did out in the water. When he realized the hatchery’s monthly electric bill could cover the cost of seed oysters bought from the state hatchery at Horn Point, he shut his down.

“It was a drain on the economics of the company, so we did away with it,” he says. “You have to ask yourself, what pays the bills? What pays the bills for us right now is large oysters.”

But Shockley and his investors believe they can succeed where others have failed. Near the hatchery site on Hooper’s Island, the water is salty enough to promote fast growth, but not so salty so that it incubates the parasitic diseases that can kill oysters. It’s buffeted from extreme salinity swings, and has no large sewage plants that could discharge and foul the oysters. Shockley and Fitzhugh’s oysters have grown well in the leases near the hatchery, in Tar Bay and the Honga.
Webster, the aquaculture advocate, said location may be the most important factor in a hatchery’s success.

Shockley, 52, also has a record of ingenuity in solving problems. A former waterman and restaurant owner, he visited the thriving Virginia oyster farms six years ago when he decided to get into the business. He noticed that most farmers took a boat out to their oyster cages, and then brought them in cages to the dock. There, they sorted and tumbled the shellfish to clean off grime and give them a more marketable shape. Finally, the farmers washed the cages off, then replanted the oysters on their leased bottom.

Thinking that a waste of labor and fuel, Shockley designed and built a boat that would process the oysters on the water. It has a flat top where cages can be stored while their oysters are cleaned, sorted and tumbled on board. Several other Bay growers have bought Shockley’s equipment, and he said he has overseas customers as well.

“I have never seen anyone who has promoted this industry like Johnny has and has the footprint that Johnny has,” Jones says. “He is driven to do this. I think I’m in good hands with him.”

Jones, 62, came to the hatchery venture after a long career in the petroleum wholesale and distribution business based in Baltimore. But after growing up picking cotton in Tennessee, he is a strong proponent of more opportunities for African-Americans. In 2013, he donated $500,000 to the University of Maryland Eastern Shore to endow scholarships for golf at the historically black college in Princess Anne. He asked the scholarships be named for four black golf legends considered pioneers in their time.

When he first began talking to Shockley and Fitzhugh about the Hooper’s property, which he owned, it was not lost on any of the partners that today’s aquaculture industry is mostly white and male. But the oyster industry was not always that way. Jones, who is active in Blacks of the Chesapeake, a nonprofit devoted to preserving maritime history, knew that many African-American watermen supported their families by harvesting oysters. A waterman’s life was hard, but it afforded some freedoms not easily available historically on the segregated Eastern Shore; namely, the freedom to set your own rules on your own boat. But many got out when disease hit, and their children didn’t want to continue.

To help restore that lost racial diversity, the Hooper’s team is partnering with Morgan State University, which has a small hatchery at its research facility in Southern Maryland. That partnership will help the team test techniques for growing and setting oyster larvae, as well as develop the needed equipment.

Kelton Clark, the director of the facility just north of Solomon’s Island, began a partnership with local watermen to grow oysters and experiment with leases about eight years ago. Since then, he has been incubating small businesses. Several oyster farmers have set their own larvae in Morgan’s tanks, and students who come through the program can land internships in Southern Maryland’s small but growing oyster farming industry.

One of the stumbling blocks for diversity, Clark says, is that communities of color might not know about state grant programs to help get a farm started, or how to navigate the involved bureaucracy.

Most oyster farmers are “middle-class males who have college degrees,” Clark says, adding that as he and others build the industry, they must ask themselves if they’re doing it in a way that increases diversity or narrows it. “If we are truly interested in increasing diversity, it’s something we have to think about every step of the way.”

When Jones drives from Baltimore across the Dorchester County marshlands toward Hooper’s Island, he passes the birthplace of Harriet Tubman and a spur of the Underground Railroad. A museum commemorating her life is being built on the edge of Blackwater National Wildlife Refuge, in the region where she helped slaves escape to freedom. Jones has watched workers erect the monument, which is now nearly complete. In the place where African-Americans first tasted freedom, he said, he wants to make sure that they are not left out of the new economic prosperity.

“History is what history is, but I’m hoping to make sure the door is open,” Jones says. “This is the perfect opportunity to do that.”

By Rona Kobell, Bay Journal News Service