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

Abstract

AbstractAn 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.