Split operations at Turtle Farm

Despite government subsidies to the turtle farm reaching $10 million in 2013 after several years of massive financial losses, a consultant’s report recommends against closing the Cayman Turtle Farm.  

Rather, reviewers from the Ernst & Young accounting firm propose “splitting” the West Bay facility’s operations into two: a tourism-related venture to be eventually managed by interested private sector investors, and a meat production operation that the government would continue to maintain.  

Closing the farm entirely, the EY study notes, would result in the loss of Grand Cayman’s largest land-based tourism attraction, which brings in more than 230,000 visitors per year. The farm also employs more than 80 workers, most of them Caymanian.  

“We believe that there exists the potential to sell or engage in a joint venture, most likely with a cruise ship operator, in relation to the tourist park element of the Cayman Turtle Farm operations,” the EY report states.  

The turtle meat production operation was not considered suitable for a private sector takeover or partnership because of financial losses and potential limited market for sale. International regulations prohibit the shipment of turtle meat, shells and other parts while the reptiles remain an endangered species.  

Under the joint venture proposed by EY, the interested private sector company would take over operations at the park, including the restaurant, saltwater and freshwater pools, aviary, Cayman cultural street and other marine attractions. The Cayman Turtle Farm would continue producing turtles for the local sale of meat and for release into the wild.  

EY recommends that government retain a 10 percent royalty from the private sector operator of the tourism attraction on all “tourism related revenues.” The tourism section of the farm – once known as Boatswain’s Beach – has never made a profit since it opened nearly a decade ago. A private sector operator would not completely reduce farm financial losses. EY estimates that the government would still subsidize its portion of the turtle farm operations with about $2.6 million per year, of which $1.6 million would go toward paying off debts.  

There were inherent risks identified with the joint venture option, particularly in locating a private sector partner with enough capital who is willing to make a medium- to long-term commitment. “Targets are likely to be limited only to cruise ship operators,” the EY report notes.  

Also, the financial structure of any such joint venture agreement would have to remain attractive to both parties, a difficult balancing act, especially in the early years, EY reviewers state.  

“Given the ongoing and continuing losses of the Cayman Turtle Farm, it is unlikely that any partner would be prepared to pay any sum upfront for the tourist park,” the report states. “A royalty or equity participation with access to profits would be more likely.”  

The Cayman Turtle Farm anticipates it will lose another $9.5 million over the course of the 2014/15 financial year, with most of that spending going toward paying off accumulated debts.  

According to the farm’s chief financial officer, who spoke in Legislative Assembly’s Finance Committee in June, about $5.9 million of the “equity injection” provided by government will go toward paying off debt principal and interest. Another $3.36 million will go toward operational costs that the farm doesn’t earn enough to cover.  

Turtle Farm Managing Director Tim Adam told the committee that total debt held by the tourism facility is about $22.5 million. He has said he expects all of the farm’s debts to be paid off by 2019.