How much can you expect to earn from a pearl harvest?
The Appendix contains examples of budgets for small and medium size pearl farms that will provide a beginning farmer with a model to use to estimate how much it will cost to start and operate a pearl farm and approximately how much profit he or she can expect to make. These are simplified examples and must be adapted to the specific costs and prices of each individual (see the Appendix).
The amount of money you can expect to earn depends on the number and quality of pearls harvested. In cases where the grafting technician is good, and good farming practices are used, it is generally expected that marketable pearls will be obtained from at least 45% of the pearl oysters that have retained the nucleus 1 month after grafting has taken place. The remaining 55% may be of such poor quality that they cannot be sold. For example, if a good technician grafted 3,000 pearl oysters, about 20% would die or reject the nucleus within 30 days. Between further losses during the cultivation period and the number of poor quality pearls harvested, the resulting 45% sale-able pearls would be 1,350.
It is not possible to calculate exactly how much these 1,350 pearls will be worth, since pearl prices fluctuate, and because each harvest contains a widely varied assortment of pearl types, sizes and qualities. However, as a general rule, the average farm price of a pearl is around $35. At this price, the 1,350 pearls could be sold for about $48,000 (gross revenue). A small amount of this revenue would also be gained from the keshi pearls harvested at this time.
The profit margin on pearls is relatively low.
To estimate how much of the $48,000 will be profit, the estimated costs are subtracted from the expected gross profit. With the exception of the very largest, highest quality pearls, you can expect that from the average pearl, which sells for $35, the profit will be approximately $7 per pearl since the cost to produce a pearl is about $28 ($38,713 costs, 1,350 pearls). Using the earlier example, 1,350 pearls bringing a profit of $7 each would result in a total profit of $9,000. This is relatively low for 2-3 years of hard work, particularly when considering that the startup costs must also be recovered. Note that in the model budget for a medium size pearl farm of 6,000 pearl oysters grafted, while the average price per pearl is the same, the cost to produce each pearl is lower, at about $20 per pearl. This results in each pearl yielding a profit of $14, about double that of the profit from pearls produced on the small farm.
This slender profit margin is the reason that great emphasis is put on producing high quality pearls, since only these pearls sell for a high profit. As can be seen, the “average” pearl brings very little profit. It is the rare, exceptionally high-quality pearls that produce most of the profit for a farmer. This example considers only the pearls produced the first time a pearl oyster is grafted. As will be discussed later, the pearls produced the second time a pearl oyster is grafted are larger and generally of higher quality and contribute significantly to farm revenues over time.
There may be more profitable ways to invest your money and time.
As demonstrated above, pearl farming can be profitable, but the profits realized are usually not as great as expected. Additionally, to reach even this level of profit requires the ability to maintain the right conditions to grow pearl oysters by using good farming practices. To decide whether pearl farming is the best way to spend your time and money, it is helpful to compare the expected return from pearl farming with that of other investments and activities. Consider whether you would earn more money if you invested the same amount of time and labor into other activities as you will have to in order to maintain your pearl farm. This is called the opportunity cost.
It is also important to compare the amount of money you would earn if you invested your money in some other type of investment (return on investment). For example, if instead of investing $10,000 in a pearl farm, you kept this money in the bank for 5 years, with a 5% return provided by a traditional bank, this investment would then be worth approximately $12,760. Will the pearl farm give you a higher return on your money? Will the return justify the increased risk associated with pearl farming as compared to keeping it safely in a bank? If you had to borrow the money to make the original investment, you will have to pay that back with the income generated, decreasing your net income even more.
Comparing the financial advantages and disadvantages of investing your time and money in pearl farming will help you to make an objective decision about whether pearl farming is the right choice for you.
Article source: The Basic Methods of Pearl Farming, Author: A Layman’s ManualMaria Haws, Ph.D. (Director, Pearl Research and Training Program, Pacific Aquaculture and Coastal Resources Center, University of Hawaii at Hilo, Hilo, HI 96720 USA, Center for Tropical and Subtropical Aquaculture, Publication No. 127, March 2002)
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