Value Chain Visualizer
One harvest followed from seed to finished product. The price one stage sells at is the next stage's cost, so you can see which stage loses money and whether the chain as a whole still pays.
On these numbers the farm and the processor sell below cost.
On these numbers the chain as a whole still earns $18,164 a year, so the loss at one stage is matched by profit at another. If real figures show the same, that points to prices, contracts or shared costs between stages.
6 of the 9 numbers behind this are examples, because nothing has been published for them. Treat the result as the shape of the answer until you replace them.
When one stage's price goes up, what do the stages after it do?
Stage 1
Hatchery
Produces seeded line
Sells seeded line to the farm atExample
No price for seeded line has been published.
What each m costs this stage
Total cost per m$0.70
What is left after costs
$0.50 per m
That is 42% of the selling price.
Over a year, on 2,000 m of line: profit of $1,000
Stage 2
Farm
Grows and harvests wet kelp
Sells wet kelp to the processor atPublished
Middle of what farmers in Alaska and Maine were paid, US$0.50 to US$1.00 per lb.
What each kg wet costs this stage
Seeded line bought from the hatchery$0.94
Follows the hatchery's price of $1.20 per m. Each metre gives about 1.3 kg to sell.
Total cost per kg wet$7.67
What is left after costs
-$5.39 per kg wet
It sells below what it costs.
Over a year, on 2,550 kg of wet kelp: loss of $13,748
Stage 3
Processor
Dries it into an ingredient
Sells dried kelp to the product maker atExample
No price paid between businesses for dried farmed kelp has been published.
What each kg dry costs this stage
Wet kelp bought from the farm$24.00
Follows the farm's price of $2.28 per kg. It takes 10.5 kg of wet kelp to make 1 kg dried.
Total cost per kg dry$30.00
What is left after costs
-$5.00 per kg dry
It sells below what it costs.
Over a year, on 242 kg of dried kelp: loss of $1,211
Work out these numbers in the Processor Economics Calculator
Stage 4
Product maker
Packs and sells the finished product
Sells each unit to the customer atPublished
Middle of Canadian shelf prices for dried seaweed, $286 to $329 per kg, for this pack size. A maker selling through a shop receives less.
What each unit costs this stage
Dried kelp bought from the processor$1.25
Follows the processor's price of $25.00 per kg. Each unit holds 50 g.
Total cost per unit$8.75
What is left after costs
$6.63 per unit
That is 43% of the selling price.
Over a year, on 4,845 units: profit of $32,122
Work out these numbers in the Product Developer Economics Calculator
How to read this
Each arrow is a sale. The price one stage sells at is the first line of the next stage's costs, so a change at one stage reaches every stage after it and none before it.
Size changes how much every stage handles and earns in a year. It changes the cost per kg only at the farm, because farm size is the only place where the effect of scale has been published.
The starting numbers for the product maker describe one product: a 50 g bag of plain dried kelp, the only kind with a published shelf price. For a different product, such as a snack or a seasoning, replace the price, the cost and the grams of seaweed in each unit.
Three things to try
Every stage handles five times more. The farm’s cost per kg falls, because larger farms in Maine needed a much lower price.
The farm stops losing money. Its price is the processor’s cost, so the loss moves to the processor.
The processor stops losing money. The product maker now pays more for seaweed, and you see whether it can absorb that.
All amounts are Canadian dollars. Published prices in US dollars are converted at 1.38, an example rate. See the published figures and their sources
The whole chain as one business
Sales of the finished product, against each stage's own costs. Payments between stages are left out, because inside one chain they cancel.
Finished product sales
$74,516
Costs of all four stages
$56,353
Profit or loss a year
$18,164
Share of sales kept as profit
24%
How this is worked out, and what it leaves out
- Farm: 20 lines of 100 m, yielding 1.5 kg wet per metre, with 15 percent lost before sale. These three are examples.
- Drying: dried kelp weighs about one tenth of the harvest (published, Alaska). A further 5 percent is assumed lost in processing, so 10.5 kg wet makes 1 kg dried.
- The farm's own cost starts from the published price Maine farms needed to cover all their costs, seed included, with the starting seed cost of $0.94 per kg taken off. Costs on the BC coast may be higher.
- When each stage passes a rise on, its price is its total cost divided by one minus the share it keeps. Real buyers do not always accept a higher price, which is what the other setting shows.
- The hatchery, processor and product maker each have one cost per unit that does not change with size. In practice their costs also fall as volume grows, but no figures for that have been published.
- The colour shows how much of each sale a stage keeps as profit. Green is 20 percent or more, amber is 0 to 20 percent, red is a loss.
- Everything each stage makes is assumed to be sold to the next stage. One path only is shown: kelp, dried, packed as a food product.
- This is a first look and is not financial advice. Use each calculator for a full cost breakdown.