The effects of price changes on oyster farmers in Changhua County, Taiwan, who cultivate oysters at low and high densities

Abstract

This study analyzed the effects of price changes on the annual costs and returns of 162 oyster farmers in Changhua County, Taiwan, who cultivate oysters at two levels of density: low and high. Specifically, it used the translog profit function to evaluate the effects of changes in oyster prices on output supply and the demand of various inputs at the two densities of oyster cultivation. The study found that high-density farmers generate more profit than low-density farmers because they experience lower average costs. The results of the output supply elasticity with respect to input prices indicate that wages and other miscellaneous prices are the two main factors that negatively and more significantly affect the production of low- and high-stocking-density farmers. Own price elasticity of other miscellaneous input (−1.814), labor input (−1.805), seed input (−1.682), and input of capital (−1.58) was more responsive to price changes for high-density farmers than for low-density farmers. This indicates that increases in input prices have a significant effect on reducing input demand for high-density farmers. The cross-price elasticities of the variable inputs labor–seed and labor–other miscellaneous are −0.648 and −0.649, respectively. These negative elasticities indicate that labor–seed and labor–other miscellaneous are complementary inputs, which suggests their combined application increases farm production synergistically for low-density farmers.