Progress 09/01/16 to 08/31/19
Outputs
Target Audience:The targeted audiences reached by our efforts in the final year of the project include: 1) catfish farmers raising fish in ponds and split ponds in Arkansas, Alabama, and Mississippi; 2) baitfish farmers raising fish in ponds in Arkansas; 3) trout farmers across the U.S.; 4) tilapia farmers working in recirculating aquaculture systems across the U.S.; and 5) investors and startup RAS businesses across the U.S. Changes/Problems:
Nothing Reported
What opportunities for training and professional development has the project provided?The postdoctoral researcher involved in this project has further expanded expertise, research skills, and networks. The experience gained throughout this project undoubtedly contributed to his successful hire as a tenure-track faculty member at Virginia Tech University. How have the results been disseminated to communities of interest?Results have been presented at meetings and conferences attended by aquaculture scientists, aquaculture producers, students, extension aquaculture specialists, and other practitioners. The journal articles will make research results widely available to aquaculture researchers and extension specialists. Moreover, the 58 enterprise budgets made available online will be available publicly to all. What do you plan to do during the next reporting period to accomplish the goals?
Nothing Reported
Impacts
What was accomplished under these goals?
Methods Objective 1 Spreadsheet enterprise budgets were developed for the most commonly used production systems for the most important finfish species and scales of production using 2018 prices, costs, and economic conditions. Each spreadsheet consisted of a full enterprise budget that includes tables that itemized long-term capital investment costs and annual depreciation (for depreciable assets) in land, buildings, production facilities (i.e., ponds, tanks), and equipment. Additional tables itemized annual costs and returns for each scenario. The relative profitability of species/systems in this analysis was compared by dividing the difference between market price (in $/kg) and the breakeven price above total costs (per-kg cost of production) by the market price and multiplying by 100. Objective 2. To identify the key cost drivers that contributed the most to total costs of production for each species/system/scale, the percentage that each line item contributed to the total cost of production was calculated in each of the 58 annual cost and returns tables. The average total cost of production was calculated as the breakeven price (BEP) above total costs. The optimal scale of production for each scenario was identified as that scale of production that corresponded to the lowest breakeven price above total costs for each respective species/system. Objective 3. A modified IMPLAN model was built to which structural path analysis was applied. Objective 4. 42 different indicators of resource use efficiency, resource cost efficiency, cost, profitability, and cash flow were calculated for each of the 58 species, systems, and scales. Results Objective 1 The scenarios analyzed that were profitable were either pond (mostly catfish) or trout raceway production systems. None of the RAS systems modeled were profitable. While many of the catfish scenarios showed profitability, channel catfish was not profitable on the smallest farm size (32.4 ha) and only profitable on larger farm sizes at stocking densities of 14,800/ha and greater. For hybrid catfish, 10 of the 12 scenarios analyzed (including two 32.4-ha scenario) were profitable with greatest profitability for the split-pond scenarios on the two larger farm sizes. Largemouth bass foodfish production showed losses for the two smaller farm sizes, but profits on the largest farm size. Trout raceway production for foodfish also showed profits on the larger farm size with losses on the smallest farm size. Both farm sizes that produced trout in raceways for recreational markets showed profits; moreover the profitability was greater than that for foodfish trout farms, likely due to the greater price paid for trout sold into recreational markets. Objective 2 Capital, feed, labor, fingerlings, energy, and management were found to be the top six greatest costs across species/production systems, although the order of importance varied. Capital costs contributed the greatest percentage of total costs for RAS, trout, and baitfish/sportfish production (23% to 57% for RAS; 32% to 43% for trout in raceways; and 25% to 53% for baitfish/sportfish in ponds). Capital costs, however, were also important, as the second-greatest cost for both catfish (18% to 22% for channel catfish; 12% to 18% for hybrid catfish) and largemouth bass (6% to 9%) with the exception of the smallest farm size in which fingerling costs were the second-greatest cost. Feed costs composed the greatest costs for both catfish (31% to 43% for channel catfish, Fig. 3a; and 37% to 47% for hybrid catfish, Fig. 3b), and largemouth bass production (38% to 71%, Fig. 3c). For RAS, trout in raceways, feeder goldfish, and sportfish, feed was the second-greatest cost (4% to 27% in RAS; 24% to 34% for trout in raceways; 7% to 10% for goldfish; and 11% to 16% for sportfish) (Figs. 3e, f). Labor composed the second-greatest contributor to total costs of production for golden shiner and fathead minnow production and the third-greatest for the larger RAS farm sizes, trout, goldfish, and sportfish, but the fourth-greatest cost on catfish farms. Management and energy costs varied in terms of subsequent ranking in importance among farm sizes. All species/systems modeled showed economies of scale (Figs. 4a to 4e). RAS showed steep economies of scale from 4,500 kg to 45,400 kg of production, with continued declines at a declining rate thereafter. Economies of scale are driven largely by the relative importance of capital costs. Equipment was the greatest contributor to capital costs for RAS (15% to 33% of total costs), trout production in raceways (9% to 15%), and catfish (6% to 14%). Objective 3 Structural path analysis was used to demonstrate for catfish and processed catfish products the network of economic activities associated with producing and delivering catfish products to final consumers. Objective 4 Cost efficiencies The proportionately greater variable than fixed costs in RAS salmon production, while initially surprising for such a capital-intensive system, is due primarily to labor costs. Intensive systems require a highly skilled workforce that commands greater wages and must be available at all times, day and night, weekday and weekend. To compare labor productivity across the species/systems analyzed, the kg of fish produced were divided by the $ of labor spent. Table 3 shows that labor productivity was lowest for baitfish species and highest for catfish farms. It should be noted that labor productivity on catfish farms was more than 12 times greater than that of the RAS scenarios, while labor productivity on trout-raceway and largemouth bass pond farms was nearly double that of RAS scenarios. Fixed costs still composed a substantial proportion of total costs in the RAS scenarios in spite of variable costs constituting a slightly greater percentage of total costs than fixed costs. Comparing the productivity of capital use across species/systems (by dividing the total kg of production by the annualized total costs of capital) revealed that catfish production demonstrated the greatest productivity of use of capital, followed by largemouth bass in ponds, trout in raceways, feeder goldfish in ponds, RAS, and then other baitfish and sportfish pond production. Of note is that capital productivity of catfish was more than nine times greater than that of RAS and that of trout raceway production was 2.6 times greater than that of RAS production. Given that most of the catfish and trout scenarios analyzed were profitable and the RAS systems were not, and that annual capital costs were the greatest cost in RAS production, it appears to be important to search for ways to increase productivity of the capital invested in RAS. In other words, the volume of production per dollar of investment capital will likely need to increase for RAS to be profitable. Comparative resource use efficiency Results of this analysis highlight the importance of collecting primary data from farm operations that represent the breadth and scope of culture and farming practices over time. RAS are widely credited with reduced and more efficient use of water and other resources, but with the intensification of catfish production practices that have been adopted by a number of farms, intensive pond production of catfish was found to use both water and energy more efficiently.
Publications
- Type:
Journal Articles
Status:
Under Review
Year Published:
2020
Citation:
Kumar, G., C. Engle, S. Hegde, and J. van Senten. In review. Economics of catfish production practices: Economies of size, profitability, and liquidity of catfish production practices.
- Type:
Journal Articles
Status:
Under Review
Year Published:
2020
Citation:
Engle, C.R., G. Kumar, and J. van Senten. In review. Cost drivers and profitability of pond, raceway, and RAS aquaculture.
- Type:
Journal Articles
Status:
Other
Year Published:
2020
Citation:
Engle, C.R., G. Kumar, and J. van Senten. In preparation. Economic and environmental sustainability metrics of aquaculture: do they really lead to different choices?
- Type:
Conference Papers and Presentations
Status:
Published
Year Published:
2017
Citation:
Engle, C.R. 2017. Economics of intensification. Invited presentation. Annual Convention, Catfish Farmers of Arkansas, Hot Springs, Arkansas, January 13, 2017.
- Type:
Conference Papers and Presentations
Status:
Published
Year Published:
2017
Citation:
Engle, C.R. 2017. Small-scale farming: economics and marketing. Virginia Aquaculture Conference, Newport News, Virginia, November 18, 2017.
- Type:
Conference Papers and Presentations
Status:
Published
Year Published:
2018
Citation:
Engle, C.R. 2018. The importance of changing how you do things as new circumstances arise. US Trout Farmers Association, Shepherdstown, West Virginia, September 7, 2018.
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Progress 09/01/17 to 08/31/18
Outputs
Target Audience:The targeted audiences reached by our efforts in this second year of the project include: 1) catfish farmers raising fish in ponds and split ponds in Arkansas and Mississippi; 2) baitfish farmers raising fish in ponds and in split ponds in Arkansas; and3) tilapia and ornamental farmers working in recirculating aquaculture systems in North Carolina and in Virginia. Changes/Problems:We have made one change in terms of species under analysis in this project. Our initial proposal indicated that a cooperator raising black sea bass in RAS would contribute data. That farm is no longer producing black seabass, and hence no data are available. However, the project team has recently been able to acquire data from several farmers raising rainbow trout in RAS and will now add trout in RAS to replace black sea bass in RAS. Overall, this change will not substantially affect the overall magnitude of comparisons, results, and data to be forthcoming from this project. In fact, it likely will expand the overall impact given that trout is a major aquaculture species that was not previously included in the project. What opportunities for training and professional development has the project provided?A post-doctoral associate, Dr. Jonathan van Senten, has been hired and is participating fully in the project. The project has provided Dr. van Senten with the opportunity to interact with a variety of commercial aquaculture entrepreneurs. He is also extending his experience in the process of standardizing the various existing enterprise budgets, cash flow budgets, and other components of the bioeconomic models and calculating the various economic and financial indicators used. How have the results been disseminated to communities of interest?Presentations were made at the annual meeting of the Catfish Farmers of Arkansas in Hot Springs, Arkansas and at the Virginia Aquaculture Conference. Several catfish farmers from states other than Arkansas attended the Arkansas meeting, while the Virginia meeting attracted a number of small-scale producers for whom the project results were particularly important. What do you plan to do during the next reporting period to accomplish the goals?Now that we are close to having all bioeconomic templates populated for the various species, production systems and scales of production, we will begin to develop comparative tables. This will allow us to identify how the determinants of profitability vary by species and production system for various scales of production. The final steps in this project will be to model the various types of economic shocks identified in the project meeting this past year and assess what changes may occur in terms of the relative profitability of the various species/production systems/scales under analysis.
Impacts
What was accomplished under these goals?
1. To develop, compare, and contrast economic and financial performance of commercial RAS-based, pond-based, and hybrid pond-RAS aquaculture businesses for several species under a variety of scales of operation under current (2016) economic conditions. Work in Year 2 focused on populating the templates for the bioeconomic spreadsheets developed in Year 1. For pond-based catfish production, the following bioeconomic models have been completed: 1) channel catfish in single and multiple batch at two stocking densities and in an intensively aerated scenario; 2) hybrid catfish production in single batch at two densities, in intensively aerated production at two densities, and in split-pond production. Similarly, the bioeconomic models for pond production of baitfish and largemouth bass have been populated and are in the process of being validated. There was a delay in gathering commercial data for the RAS templates given the situations of several of the farmer cooperators on the project, including moving away from RAS production of black sea bass. To date, we have completed data collection for tilapia in freshwater, marine ornamental fish, salmon, and rainbow trout (substituted for black sea bass) production and are in the process of standardizing units and formats to complete the work to populate the templates for the RAS systems. Each spreadsheet model encompasses all items of full enterprise budgets and includes tables for long-term capital investment costs in land, buildings, production facilities (ponds, tanks, etc.), equipment, and annual depreciation for depreciable assets in addition to annual cost and returns tables. 2. To identify key determinants of profitability for the systems in Objective 1. The templates for the bioeconomic spreadsheets were developed in such a way as to automatically calculate the percentage contribution of each type of input cost of both fixed and variable resources used in the production of the species and systems being analyzed. Thus, these values are being calculated as the templates are populated with the data collected. Clearly, those inputs (whether fixed or variable) that constitute the greatest costs are those that are currently the most important cost determinants of profitability for the systems. Additional metrics embedded in the spreadsheets include measures of effects of yields and output (market) prices of the products produced. In all, five indicators of resource and production factor use efficiency, six indicators of resource cost efficiency, three indicators of production cost efficiency, six indicators of profitability, and four indicators of cash flow have been defined by the project team and embedded in the bioeconomic spreadsheets. Tables of these indicator values will be prepared once all field data have been entered and all enterprise budgets (across all species, production systems, and scales of production) have been constructed, checked, and validated. 3. To evaluate aquaculture businesses in an economy-wide market context in order to assess their relative comparative advantages and changes in their market structures, and to identify opportunities to grow the U.S. aquaculture industry. The templates developed for the bioeconomic spreadsheets have been used to frame Leontief-type input-output multiplier models with disaggregated aquaculture sectors. Information from aquaculture budgets is currently being incorporated into a set of state-level Social Accounting Matrices (SAMs) covering the 2012 - 2016 time period. These data are being used to build a suite of disaggregated industries, commodities and production functions in the SAMs. These base-level SAMs are currently being built using the blueNote open source data and modeling system. The enhanced SAMs will be used to derive both Leontief-type input-output models as well as Computable General Equilibrium models for economy-wide analyses. SWOT comparative advantage models and counterfactual CGE analyses will be used to identify bottlenecks and opportunities to extend markets by adding value-added processing and suggest marketing and trade strategies to positively impact the priorities identified for growing the aquaculture sector. 4. To identify likely changes in the profitability of RAS, pond, and hybrid pond-RAS aquaculture businesses under a variety of scenarios that reflect changes in economic conditions likely to occur over the next 5-10 years. The project team met on November 3, 2017, at the VA Seafood AREC, in Hampton, Virginia. In addition to updates from work on the various components of the project, this meeting also served to review the key determinants of profitability identified in the previous objectives, and the key characteristics of the supply-chain network for the species included in this analysis. The project team then developed a preliminary list of the types of economic conditions likely to change or those likeliest to be vulnerable to various types of external economic shocks as well as the types of data needed to analyze the various types of shocks identified. While the list developed included more than 20 different types of economic shocks, a shorter list was developed that combined effects of price changes of key inputs and resources used in aquaculture production and effects of policy changes were prioritized for further analysis.
Publications
- Type:
Conference Papers and Presentations
Status:
Other
Year Published:
2017
Citation:
Kumar, G. 2017. How do we grow catfish more economically? Farm size, stocking/feeding rates, hybrids, and channels: 2017 data. Catfish Farmers of Arkansas Annual Convention, Hot Springs, Arkansas.
Engle, C.R. 2017. Small-scale farming: economics and marketing. Virginia Aquaculture Conference, Newport News, Virginia. November 18, 2017.
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Progress 09/01/16 to 08/31/17
Outputs
Target Audience:The targeted audiences reached by our efforts in this first year of the project include: 1) catfish farmers riaising fish in ponds and split ponds in Arkansas and Mississippi; 2) baitfish farmers raising fish in ponds and in split ponds in Arkansas; and 3) tilapia farmers working in recirculating aquaculture systems in North Carolina and in Virginia. Changes/Problems:There have been no major problems or changes in the approaches we are using in this project. The project is on track to complete the objectives as described in the proposal as submitted. What opportunities for training and professional development has the project provided?A post-doctoral associate, Dr. Jonathan van Senten, has been hired and is participating fully in the project. The project has provided Dr. van Senten with the opportunity to interact with a variety of commercial aquaculture entrepreneurs. He is also extending his experience in the process of standardizing the various enterprise budgets, cash flow budgets, and other components of the bioeconomic models and calculating the various economic and financial indicators being developed for this project. How have the results been disseminated to communities of interest?
Nothing Reported
What do you plan to do during the next reporting period to accomplish the goals?Over the coming months, we will complete the field data collection, populate all the various enterprise budget templates for the various species, production systems, and scales of production. From the tables of indicators of resource and production factor use efficiency, resource cost efficiency, production cost efficiency, profitability, and cash flow, we will identify the key determinants of profitability for each of the species/production system/scale of production combinations, and compare and contrast them. Based on the outcome of the project team's meeting in November, 2017, in terms of the list of likely and potential economic changes and external economic shocks over the next 5 and 10 years, we will then begin to model these effects. Based on the results of this portion of the analysis, we will then compare and contrast the various combinations of species/production system/scale of production.
Impacts
What was accomplished under these goals?
1. To develop, compare, and contrast economic and financial performance of commercial RAS-based, pond-based, and hybrid pond-RAS aquaculture businesses for several species under a variety of scales of operation under current (2016) economic conditions. Templates for bioeconomic spreadsheets have been developed for the following systems: 1) RAS production (tilapia freshwater; black sea bass marine; ornamental fish marine; integrated marine foodfish and ornamental fish; Atlantic salmon in both freshwater and marine systems); 2) Pond production of catfish (channel and hybrid catfish in open ponds for two stocking densities in single and multiple batch for channels and single-batch for hybrids; split-pond production with hybrids (3 densities); channels and hybrids in intensively-aerated ponds at two aeration levels); 3) pond production of baitfish (open ponds; split ponds).Each spreadsheet model encompasses all items of full enterprise budgets and includes tables for long-term capital investment costs in land, buildings, production facilities (ponds, tanks, etc.), equipment, and annual depreciation for depreciable assets in addition to annual cost and returns tables. The templates have been structured so as to accommodate all scales of production to be analyzed. Field data collecation has been completed for the baitfish budgets, is well underway for the catfish budgets with expected completion of September 30, 2017. For the RAS budgets, field data collection is expected to be completed by December 31, 2017. Work to populate the templates developed is underway for baitfish for three different scales of production. Similar efforts will be underway for catfish and RAS systems following completion of field data collection. 2. To identify key determinants of profitability for the systems in Objective 1. The templates for the bioeconomic spreadsheets were developed in such a way as to automatically calculate the percentage contribution of each type of input cost of both fixed and variable resources used in the production of the species and systems being analyzed. Thus, these values are being calculated as the templates are populated with the data collected. Clearly, those inputs (whether fixed or variable) that constitute the greatest costs are those that are currently the most important cost determinants of profitability for the systems. Additional metrics embedded in the spreadsheets include measures of effects of yields and output (market) prices of the products produced. In all, 5 indicators of resource and production factor use efficiency, 6 indicators of resource cost efficiency, 3 indicators of production cost efficiency, 6 indicators of profitability, and 4 indicators of cash flow have been defined by the project team and embedded in the bioeconomic spreadsheets. Tables of these indicator values will be prepared once all field data have been entered and all enterprise budgets (across all species, production systems, and scales of production) have been completed, checked, and validated. 3. To evaluate aquaculture businesses in an economy-wide market context in order to assess their relative comparative advantages and changes in their market structures, and to identify opportunities to grow the U.S. aquaculture industry. The templates developed for the bioeconomic spreadsheets have been used to frame Leontief-type input-output multiplier models with disaggregated aquaculture sectors. Once the budgets have been finalized in the coming months, structural path analyses will be applied to identify characteristics of the detailed supply-chain network structures of aquaculture businesses. 4. To identify likely changes in the profitability of RAS, pond, and hybrid pond-RAS aquaculture businesses under a variety of scenarios that reflect changes in economic conditions likely to occur over the next 5-10 years. The project team has scheduled a team meeting for the first week of November, 2017, in Hampton, Virginia. This meeting will serve to review the key determinants of profitability identified in the previous objectives, and the key characteristics of the supply-chain network for the species included in this analysis. The project team will then develop a preliminary list of the types of economic conditions likely to change and which determinants of aquaculture profitability are likeliest to be vulnerable to various types of external economic shocks. The team will discuss the most appropriate types of data to use for the modeling work that will identify likely changes in the comparative profitability of RAS and pond aquaculture businesses, given potential economic changes in the next 5-10 years.
Publications
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