Economic Evaluation of Commercial-Scale, Saltwater Pond Production of Florida Red Tilapia in Puerto Rico

An economic analysis was performed of a proposed commercial-scale 20-ha saltwater pond culture operation for Florida red tilapia in Dorado, northern Puerto Rico. The analysis was based on actual cost and production data from a commercial-scale hatchery, pilot-scale grow-out trials conducted in six 0.2-ha saltwater (avg. = 22.7 ppt) ponds at the Dorado facility and on wholesale market prices ($4.96–5.18/kg) fetched by dressed-out (gilled, gutted and scaled) product. The proposed 20-ha growout facility is comprised of 25 0.8-ha earthen ponds, each supplied with sea water, brackish well water, drainage and aeration, which account for 60.8% of the capital costs. Ponds are stocked with fingerlings (0.85 g avg. wt.) at a density of 3.0 fish/m² (30,000/ha), and are harvested at 160 and 220 d, at an average weight of 545 g for a total yield of 11,445 kg/ha per crop. Imported feed ($0.55/kg), processing and distribution ($0.50/kg) and sex-reversed fry ($0.11/fry) are the highest variable costs, accounting for 30.7%, 15.4% and 13.9%, respectively, of the total annual costs. Salaries and benefits, and depreciation represent the highest fixed costs, accounting for 8.4% and 5.5%, respectively, of the total annual costs. Under these conditions, a wholesale price of $4.55/kg results in a positive cash flow by year eight, and a breakeven price, internal rate of return (IRR), net present value (NPV) and discounted payback period (DPP) of $4.08/kg, 7.6%, ($235,717) and >10 yr, respectively, suggesting that the proposed 20-ha operation is not economically feasible under these conditions. The proposed enterprise is marginally feasible if stocking density is increased to 3.5 fish/m² while at 4.0 fish/m² economic outlook is favorable. Costs can be lowered considerably by targeting production and market variables most sensitive to profitability indices, using locally-prepared feeds, and vertically integrating hatchery and growout operations.