Economics of milkfish (Chanos chanos) production in Hawaii*

Abstract

Economic evaluations of commercial milkfish (Chanos chanos) growout systems were made based on current Hawaiian fishpond, pond and tank culture techniques in Hawaii. Based on the observed practices of milkfish culture as a secondary or tertiary crop, capital costs and several operating costs were pro‐rated to accurately depict current farm practices. For a target harvest weight of 0.80 lb, the study estimates the total production cost for milkfish production at $3.31/lb for the pond system, $3.81/lb for the tank system and $1.84/lb for the Hawaiian fishpond system. At a sale price of $3.00/lb and seed cost of $0.25/fingerling, only the Hawaiian fishpond system is profitable under a 20‐year project life. When considering variable costs alone, the production cost is $1.78/lb for the pond system, $2.33/lb for the tank system and $1.53 for the Hawaiian fishpond system, yielding returns on variable costs of 67%, 30% and 59% respectively. Analyses of profit sensitivity to sale price, production yield, labor, feed and stocking indicate that sale price, as expected, has the largest impact on profitability, followed by feed. The results of this study are consistent with the Hawaii farmers’ view of milkfish as a secondary specie to core production based upon current market conditions and input requirements.     

Harvest of crayfish as an ecosystem service of wetlands compared to production systems with planted forage

ABSTRACT

Crayfish harvest as an ecosystem service of moist-soil wetlands in the Mississippi Alluvial Valley (MAV) was evaluated using estimates of crayfish yield and operational costs to create enterprise budgets. The average daily yield of crayfish was 2.13 lb/acre (95% CI = 1.19–3.00) and yield did not differ between wetlands dominated with Red Swamp Crayfish or White River Crayfish. Four hypothetical scenarios of harvest operations revealed annual costs associated with harvesting crayfish to be $163.89–370.75/acre. Although these costs were lower than estimated costs currently associated with harvesting crayfish from fields with planted forage in Louisiana ($749.96/acre), a three-fold reduction in crayfish yield (lb/trap/day) from moist-soil wetlands resulted in an increase in the break-even selling price from $1.25/lb in Louisiana to $1.70–$3.86/lb in the MAV. Although this enterprise will likely not compete with the Louisiana rice-crayfish industry, harvesting crayfish from moist-soil wetlands may contribute to ecosystem services provided by wetlands and aid in the reduction of the quantity of crayfish products imported into the U.S. market.     

Economic Evaluation of a Small-Scale Recirculating System for Ongrowing of Captive Wild Black Sea Bass Centropristis striata in North Carolina

An economic analysis of a hypothetical small‐scale marine recirculating aquaculture system (RAS) is conducted for ongrowing small, wild black sea bass Centropristis striata at the University of North Carolina Wilmington, Center for Marine Science (UNCW‐CMS) aquaculture facility in Wrightsville Beach, North Carolina (NC). The analysis is based on production data from field trials and marketing data from the sale of tank‐grown product. The growout facility consists of four 16.7‐m³ (dia. x ht. = 5.58 × 1 m) fiberglass tanks supported by state‐of‐the‐art RAS components, including particle traps and swirl separators, drum screen filter, trickling biological filter, UV sterilizer, heat pump, protein skimmer, and oxygen cone. Wild‐caught, above minimum legal size black sea bass (24.2 cm TL, 350 g, 0.77 lb) were purchased from a commercial fisherman for $3.14/ kg ($1.4011b), stocked at a density of 21.1 kg/m³, and grown to a final weight of 1 kg (2.24 lb) in 200 d at 23 C resulting in 1.8 production cycles per year. Fish were fed a commercial pelleted diet ($0.94/kg; $0.42/Ib) with a feed conversion ratio of 1.5. Final harvest density was 60 kg/m³ (0.50 lb/gal), and total harvestable weight was 3,982 kg (8,919 Ibs) of fish per cycle, or 6,760 kg (15,022 lb) per year. The economic analysis assumes that the facility owner manages and operates the system on coastal property zoned commercial/industrial, where full strength seawater is available on demand from natural sources. Under the base case scenario, initial investment in construction and equipment is $84,506 (10‐yr life), fish are grown to a harvestable weight of lkg/fish (2.24 lb/fish), product price (farm gate basis) is $10.10/kg ($4.50/lb), and breakeven price is $7.02/kg ($3.13/lb). Depreciation, fingerlings, interest paid, electricity, and feed, account for 19.6%,17.4%, 16.9%, 16.6%, and 12.3%, respectively, of total annual costs. Measures of financial performance for the base case, 10‐yr scenario are: annual return to management, $18,819; net present value (5% discount rate), $145,313; internal rate of return on initial investment, 37%; and discounted payback period on initial investment, 3.2 yr. Sensitivity analysis showed that product price changes have the largest impact on annual returns, while changes in daily growth rate, initial weight, and survival have a strong impact on financial performance. Moderate effects are seen with changes in fingerling costs, feed costs, feed conversion ratio (FCR), final weight, and interest rates.     

The Cost of Production of Giant Clam Seed Tridacna gigas

The costs of providing giant clam seed in Australia are examined for alternative annual volumes of production. Considerable economies of scale in production are available, both in relation to labor costs and non-labor costs (mostly capital costs). The fall in per-unit cost of producing giant clam seed is considerable when annual production is expanded from 100,000 to 500,000 seed clams per year. At 10% rate of interest, the unit cost per clam seed falls from $1.43–$2.04 at a production level of 100,000 to $0.41–$0.55 at a production level of 500,000. Per-unit operating costs also fall. They decline from $1.01–$1.22 to $0.29–$0.35. This suggests that there are likely to be cost economies in having large centralized hatcheries.     

Effects of Added Substrate on Production of Red Swamp Crawfish, Procambarus clarkii, in Earthen Ponds without Planted Forage

The effects of addition of substrate consisting of plastic mesh fencing to experimental earthen ponds were evaluated for the culture of the red swamp crawfish, Procambarus clarkii, without planted forage. Mean daily yield (kg/ha/d), number of crawfish harvested (number/ha/d), and mean individual harvest weight were compared for ponds with and without substrate during a 2‐yr period. The surface area of added substrate was equivalent to 50% of the bottom surface area of the pond. Mean daily yield in the ponds containing substrate, based on a comparison with that of the previous year, increased by 80.2% and was principally attributed to a 66.7% increase in the number of crawfish harvested. Comparative values for the ponds without substrate were ?13.1 and ?11.7%. For the second year, the treatment‐dependent response was consistent. Mean daily yield for the substrate ponds increased by 48.8% compared to 15.0% for the ponds lacking substrate. The primary benefit of the substrate appears to be provision of refuge and three‐dimensional distribution of crawfish in the pond, thereby reducing the incidence of cannibalism and increasing the total number of crawfish harvested per hectare per day. The benefit of the substrate in a commercial production setting must be weighed against its cost and longevity as well as the conditions of the particular management scenario into which it may be incorporated.     

Comparative Economics of US Catfish Production Strategies: Evidence from a Cross‐sectional Survey

Understanding the effects of specific management strategies on yields and economic outcomes on commercial catfish farms could provide useful guidance to catfish farmers on the most profitable sets of production practices. Data from the U.S. Department of Agriculture–National Animal Health Monitoring System (USDA–NAHMS) 2009 survey of production practices on catfish farms in Alabama, Arkansas, Louisiana, and Mississippi were used to identify five clusters of catfish farms that use various stocking densities, channel versus hybrid catfish, different aeration levels, and utilize automated oxygen sensors. The lowest production costs ($1.96/kg) were found in cluster 1 and were followed in order of increasing costs per kilogram of clusters 2 and 4 ($2.16/kg) and cluster 5 ($2.73/kg); the highest cost corresponded to cluster 3 ($2.84/kg). The lowest risk levels corresponded to the clusters with the lowest production costs per kilogram of fish and the highest risk levels to the highest production costs. This analysis demonstrated that different types of management models can achieve similar levels of production costs ($/kg), and it appears that there is not one single economically optimum way to raise catfish. The key to least‐cost production is to balance the use of inputs, their associated costs, and the yield produced to achieve economic efficiency within the farm's overall business and management model.     

Regulatory costs on U.S. salmonid farms

The economic effects of the implementation of regulations on aquaculture farms in the United States, while of concern, are not well understood. A national survey was conducted of salmonid (trout and salmon) farms in 17 states of the United States to measure on‐farm regulatory costs and to identify which regulations were the most costly to this industry segment. The response rate was 63%, with a coverage rate of 94.5% of the U.S. production of salmonids. The regulatory system resulted in increased national on‐farm costs of $16.1 million/year, lost markets with a sales value of $7.1 million/year, lost production of $5.3 million/year, and thwarted expansion attempts estimated at $40.1 million/year. Mean farm regulatory costs were $150,506/farm annually, or $2.71/kg; lost markets with annual sales values of $66,274/farm; annual lost production of $49,064/farm; and an annual value of thwarted expansion attempts estimated at $375,459/farm. Smaller‐scale farms were affected to a disproportionately greater negative extent than larger‐scale farms. Per‐farm regulatory costs were, on average, greater for foodfish producers than for producers selling to recreational markets, but per‐kg regulatory costs were greater for those selling to recreational compared to foodfish markets. Regulatory costs constituted 12% of total production and marketing costs on U.S. salmonid farms. The greatest regulatory costs were found to be effluent discharge regulations. The majority of regulatory costs were fixed costs, but regulatory barriers to expansion precluded compensatory adjustments to the business in spite of growing demand for salmonid products. Results of this study show that the on‐farm regulatory cost burden is substantial and has negatively affected the U.S. salmonid industry's ability to respond to strong demand for U.S. farm‐raised salmonid products. Results also suggest that the regulatory system has contributed to the decline in the number of U.S. salmonid farms. While regulations will necessarily have some degree of cost to farms, the magnitude of the on‐farm regulatory cost burden on U.S. salmonid farms calls for concerted efforts to identify and implement innovative regulatory monitoring and compliance frameworks that reduce the on‐farm regulatory cost burden.     

Comparative cost of production of Nile tilapia (Oreochromis niloticus l.) fry in recirculating and flow‐through systems in Kuwait

Abstract

This study tested the Kuwaiti new indoor tilapia hatchery using the recirculating system, and compared its production costs with those in the flow‐through system. Breeders were stocked at 4 fish/m² at 1: 3 male: female sex ratio. Seeds were harvested every two weeks for a period of 1.5 years. Seed production ranged from 45–52 seed/m²/d and 105–130 seed/kg female/d. Water quality parameters in the different components stayed below lethal concentration.

Analysis of the capital and operating expenses revealed that the new recirculating system cost 9.4 cents per fry compared with 11.0 cents in the flow‐through system. Operating expenses accounted for 67.14% of the total annual costs. Salary and wages were the major cost item (74.87%) of the operating expenses.

The cost of producing 0.5‐g fry was 6.2 cents per fry. With the use of more spawning and fry rearing tanks, production can be increased from 630,000 to 735,000 1.0‐g fry or 950,000 0.5‐g with a corresponding decrease in the costs per fry to 7.3 cents and 5.7 cents, respectively.     

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.     

Economies of scale for juvenile production of common snook (Centropomus undecimalis Bloch)

Abstract

Construction and operating costs for three common snook (Centropomus undecimalis) hatcheries in Florida, USA, are illustrated. Hypothetical capacities and targets of the three hatcheries (Scenarios I, II and III respectively) were 615, 000 juveniles (8 ‐ 10 g in weight) for stock enhancement, and 1, 275, 000 and 3, 000, 000 juveniles (1‐g in weight) for commercial grow‐out. Estimated production costs were lower than for many marine finfish species. The 20‐year mean costs per 1, 000 juveniles were estimated to be $324, $215, and $159, for hatcheries I, II, and III respectively, and the initial capital investments were $731, 660, $1, 162, 460, and $1, 896, 030¹, respectively. Major cost items of annual production were labor (22 ‐ 33%), supplies (14 ‐ 20%), fixed costs (15 ‐ 17%), and interest (13 ‐ 15%). The most profitable hatchery was the 3 million 1‐g juvenile hatchery due to the hatchery size effect, with a net present value (NPV) of $1, 760, 000, an internal rate of return (ERR) of 81%, a payback period of 3.6 years, and a profitability index of $2.86 for every dollar invested. Possible cost reductions to increase financial profitability were discussed.     

The Economics Associated with Crawfish Production from Louisiana's Atchafalaya Basin 1

Unpredictable water levels for the Atchafalaya River resulting from man's efforts to prevent flooding in South Louisiana lead to an unstable market for Louisiana's annual crawfish production. Empirical models presented show that yields from the basin can be estimated on a monthly basis using bimonthly changes in water level, unemployment rates, and crawfish harvests from ponds. The monthly demand model for basin crawfish yielded a price flexibility of –0.059 and a corresponding price elasticity of –16.94. These empirical results support hypotheses that substitutes for crawfish are available to consumers. Uncertain yields from the basin due to the sort of water level fluctuations documented in this study suggest that investment in this area of the Louisiana crawfish industry will continue to be hampered.     

An Analysis of Biological, Economic, and Engineering Factors Affecting the Cost of Fish Production in Recirculating Aquaculture Systems

Aquaculture production in recirculating systems has been the focus of research and development efforts for decades. Although considerable resources have been expended on these systems in the private sector, there is a scarcity of data on the economic or engineering performance of commercial scale recirculating production systems. This paper presents the results of a computer simulation of tilapia production in a small recirculating production system. Much of the performance data has been developed at a demonstration facility at North Carolina State University. Given the assumptions of the base case simulation, the cost of producing a kilogram of tilapia in the recirculating system described is estimated to be $2.79 ($1.27/lb). The results of a model sensitivity analysis indicate that while improvements in the performance efficiency of system components did not greatly affect fish production costs, reductions in feed costs and improvements in the feed conversion ratio caused the greatest reduction of production cost of all of the operational variables investigated. The analysis further indicates that the greatest gains to be realized in improving profitability are those associated with increasing the productive capacity or decreasing the investment cost of a recirculating fish production system.     

Potential of New Strains of Marine and Inland Saline-Adapted Microalgae for Aquaculture

Several problems currently limit the reliability of algal cultivation systems for the production of aquaculture feeds. Many of these problems may be eventually solved through research in culture system design and operation. However, research into the isolation and development of new strains of microalgae may also directly lead to improved system performance.
Through a collection and screening program aimed at isolating microalgae tolerant to high light, high salinity, and high temperatures, we have been able to isolate several new strains with enhanced production potential (30-35 g/m²/d). The overall range of environmental tolerance exhibited by these strains may result in enhanced culture stability, leading to the high production rates.
The estimated costs of producing strains with these high production rates range from $1.18 to S1.71 per kg (unharvested), depending on the size of the production system. Total production costs for harvested algae (15% solids algal cell paste) range from $1.63 to $2.45 per kg. The major costs for producing harvested algae include the cost of CO₂, as well as capital and operating costs for the harvesting systems.     

ANALYSIS OF THE COMMERCIAL-SCALE COST OF PRODUCING FRESHWATER PRAWN Macrobrachium rosenbergii IN THE SOUTH CENTRAL UNITED STATES

Freshwater prawn, Macrobrachium rosenbergii, production costs have mainly been estimated from experimental results or from limited numbers of producers. This paper discusses results from a cost of production survey sent to freshwater prawn producers in the south central United States in 2005. Feed and stocking costs were the highest variable costs and were related to the proximity of the input sources. Inorganic fertilizer cost was significantly greater for the south region while electrical costs were greater for the west region of the study area. The average prawn breakeven price covering all costs was $12.74, $14.27, $16.12, $17.18, and $14.55 per kilogram for producers in Kentucky, Mississippi, Tennessee, “Other States,” and for all respondents, respectively. Producers could decrease costs by improving yields, i.e., by increasing survival and/or weight gain, or by decreasing stocking, feed, and electrical costs; or by finding multiple uses of the equipment used to grow-out and harvest freshwater prawns.     

ECONOMIC ANALYSIS OF LAND-BASED PRODUCTION OF CULTURED MARINE PEARLS IN INDIA

Land-based marine pearl culture is a novel technological concept suitable for all three important species of pearl oysters. Advantages include lack of fouling and avoidance of boring and predation. An economic evaluation of onshore marine pearl culture production was conducted to provide basic information about the practice. The average annual cost of production over the estimated 10-year period was $158,127 (U.S.), net operating income was $159,197 (U.S.) and the net income was $49,244 (U.S.). The average annual pearl production of 28 kg was higher than the break-even production of 15 kg. The break-even price was estimated at $6.60 (U.S.) per gram of pearl. Net Present Value (NPV) was estimated at $137,416 (U.S.) and the Benefit Cost Ratio (BCR) at 1.20 (20% discount rate). The Internal Rate of Return (IRR) was estimated at 28%.     

The Cost of Off-Flavor

Off-flavor problems in farm-raised catfish Ictalurus punctatus increase production costs and pose inventory management problems for catfish farmers. Multiperiod mathematical programming techniques were used to test the effect of 16 different off-flavor scenarios on expected net returns above variable cost with and without cash flow restrictions. The patterns of off-flavor incidence had less effect on farm profits than whether or not fish are off-flavor during certain key months of the year. To be feasible, systems designed to purge off-flavor from catfish would need to cost less than $0.05 to $0.06/kg (if cash flow is not a consideration) or $0.04/kg to $0.25/ke (with cash flow considerations).     

TENANCY ARRANGEMENTS USED BY LOUISIANA CRAWFISH PRODUCERS

Land tenancy arrangements vary widely in the U.S. crawfish industry, including full ownership by the crawfish producer, cash leases, share leases, and combination cash-share leases. This study examines the array of tenancy arrangements available and analyzes the types of farmers selecting each using a multinomial logit model. Choice of tenancy arrangement varies according to a number of traditional factors, such as farm size, experience, specialization, and production system. The influence of production system on land tenancy selection is of particular interest. Crawfish-rice double-crop producers tend to own all of their crawfish land, while those farming under rotational systems with crawfish and field crops tend to select combination cash-share leases. Shares, rental rates, and percentages of pumping cost paid by the landlord vary widely.     

Red Drum Sciaenops ocellatus Field Trials: Economic Implications

Abstract.– Although recent changes in coastal fisheries regulations in several Gulf states have renewed interest in the economic potential for culture of red drum S. ocellatus , few decision making tools with up-to-date information on production economics are available. From 1988 to 1995, estimates of investment costs, equipment specifications and typical input utilization in commercial-scale production were developed from field trials involving complete or partial grow-out of S. ocellatus . Operating costs and expected yields were subsequently estimated based on "best-case" data from a 70-wk production trial in which 5–7 cm fingerlings were stocked on 1 July and grown to marketable size by the following November, thus avoiding a second overwintering period and the associated risks of losses from freezing temperatures. To allow an evaluation of potential returns with earlier or staggered stocking dates, however, growth and mortality rates from the 70-wk trial were used in a computer-based simulation to estimate yields and costs associated with a hypothetical growout period beginning 1 April, deemed the earliest suitable date to avoid fingerling mortality resulting from abrupt or extreme cold temperatures. The April stocking simulation projected a preferred market size of 1.4 kg prior to a second overwintering period, with yield increasing from 3,454 kg/ha to 4,203 kg/ha and a reduction in breakeven costs from $5.97/kg to $5.53/kg. Partial budget analysis, based on a current average market price of $5.72/ kg, suggested April 1 stocking could result in a positive net change of $1,679 per ha over July 1 stocking.     

Farm-level costs of settling basins for treatment of effluents from levee-style catfish ponds

Compelled by pending regulatory rule changes, settling basins have been proposed as a treatment alternative for catfish pond effluents, but the associated costs to catfish farmers have not been estimated. Economic engineering techniques were used to design 160 scenarios as a basis for estimating total investment and total annual costs. For static-water, levee-style catfish pond facilities, sizing of settling basins is controlled by factors such as type of effluent to be treated, pond layout, size of the largest foodfish pond, number of drainage directions, scope of regulations governing effluents, and the availability of land. Regulations that require settling basins on catfish farms would increase total investment cost on catfish farms by $126–2990 ha⁻¹ and total annual per-ha costs by $19–367 ha⁻¹. More numerous drainage directions on farms resulted in the greatest increase in costs. While both investment and operating costs increased with larger sizes of foodfish ponds, costs per ha were relatively greater on smaller than on larger farms. For farms on which existing fish ponds would have to be converted to settling basins, over half of the cost was due to the production foregone and annual fixed costs of the pond. Requiring catfish farmers to construct settling basins would impose a disproportionately greater financial burden on smaller farms. The magnitude of the increased costs associated with settling basins was too high relative to market prices of catfish for this technology to be economically feasible.