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Economics of a Pacific Threadfin (Polydactylus sexfilis) Hatchery in Hawaii

Document format: pdf

Publisher: Center for Tropical and Subtropical Aquaculture

Creation date: July 2001

A spreadsheet model has been developed to determine a viable scale for a commercial Pacific threadfin (Polydactylus sexfilis) hatchery in Hawaii. The production scheme is modeled after current practices performed at the Oceanic Institute. For a hatchery enterprise producing 1.2 million fry per year, the cost associated with raising a Day-40 fry (at 1 g) is estimated at 22.01¢. The largest variable costs are in labor and supplies, which comprised 49% and 9% of the total production cost, respectively. The combined annualized fixed cost for development and equipment is approximately 12% of total production cost. At a sale price of 25¢ per fry, the 20-year internal rate of return (IRR) is 30.63%. In comparison to the 22.01¢ unit cost for 1.2 million fry production, analyses of smaller enterprises producing 900,000 and 600,000 fry per year reflected significant size economies with unit costs of 27.41¢ and 38.82¢, respectively.

Since smaller scale commercial hatcheries may not be economically feasible, facilities may seek to outsource live feed production modules or pursue multi-product and multi-phase approaches to production. An analysis of the production length, for example, indicates that the cost for producing a Day-25 fingerling (at 0.05 g) is 17.25¢ before tax and reveals the financial impact of transferring the responsibility of the nursery stage to growout farmers. Moreover, sensitivity analyses indicate the potential cost savings associated with the elimination of rotifer, microalgae, and enriched artemia production. The estimated production costs associated with rotifer, microalgae, and enriched artemia feeds suggest the maximum price a commercial hatchery is willing to spend on outsourcing or investing in commercial substitutes for each type of feed. Sensitivity analyses recommend the development of alternative technologies in live feed production. Managerial decisions, however, must also consider the quality and associated production efficiencies of substitutes. An investigation of the effect of lengthening the nursery period revealed that unit costs increase at a slower rate. This is largely due to the ability to spread out fixed costs over larger production volumes. The incremental change in variable cost per fry increases as a result of escalating feed rates. Evaluation of the benefits gained from changes in nursery length, however, must also consider additional facility requirements, shipping costs, and market demand.

Key Words: Pacific Threadfin • Moi • Polydactylus sexfilis • Hatchery • Hawaii • Economics • Production Economics • CTSA • USDA