ECONOMICS FACTORS CRITICAL to the PROFITABILITY of

SUPER-INTENSIVE BIOFLOC RECIRCULATING SHRIMP PRODUCTION

SYSTEMS for MARINE SHRIMP Litopenaeus vannamei

Terry HansonDepartment of Fisheries and Allied Aquacultures

Auburn University, Auburn, AL

World Aquaculture 2009 Vera Cruz, Mexico September 25-29, 2009

Presentation

USMSFP bio-economic model as a research and development toolInvestment costsEconomic analysis of systemsCritical factors affecting profitabilityConclusions Opportunities for the future

Acknowledgements

Benedict Posadas, MSUTzachi M. Samocha, Texas A&MAlvin D. Stokes, Waddel Mariculture CenterThomas Losordo, UNCCraig L. Browdy, Novus

Investment Costs

Land– Greenhouse area– Waste treatment pond area– Office area– Land preparation cost

Greenhouse structure and componentsRaceway and components

Greenhouse Components5,000 m2 raceway in GH

(2 nursery RW + 8 GO RW )

Greenhouse– Structure

– Covering

– Systems• Heat / cooling

• Electrical

• Shading

– Controls

– Freight and installation

Raceways with:– Heating system, drain

pipes, and catwalks

– Mechanical and lab building

– Air supply

Total Cost: Approx. $1 million per fully equipped GH

Equity to Bank Financing Ratio is crucial to project viability

Economic Analysis of Super-intensive Recirculating Shrimp

Production Systems

Limitations of Analysis

Future conditions are unknown– Assume price conditions– Assume loan conditions

Are back-to-back-to-back crops possible?– Depends on input availability, primarily PLs

• Assume availability is year-round

Economic Analysis - I

Texas A&M Agri-Life Research Center

Dr. SamochaRecent Study

Litopenaeus vannamei performance in a 94 d grow-out trial in greenhouse-enclosed RW’s stocked with juveniles (1.25 g) at a density of 530/m3 & operated with no water exchange

Average Treatment Data Used in the Economic Analysis

Treatment Wtf(g)

Growth(g/wk)

Yield*

(kg/m3)Yield**

(kg/m2)Sur.(%) FCR

Water Use(L/kg

Shrimp)

Settling-Ave 18.45 1.28 8.96 4.76 84.4 1.29 148.5

FF-Ave 17.35 1.26 8.25 4.52 80.3 1.35 149.5

* Based on RW water volume at harvest (37 m3)** Based on RW bottom area of 68.5 m2

Enterprise Budget

Value/Cost, $/lb SettlingFoam

Fractionation

1. Gross Receipts $3.27 $3.27

2. Variable Costs $2.22 $2.49

3. Income Above Variable Cost $1.04 $0.77

4. Fixed Cost $0.35 $0.40 5. Total of All Specified Expenses $2.57 $2.90

6. Net Returns Above All Specified Expenses /1 $0.70 $0.37

Economic Analysis - II

The Oceanic InstituteDr. Shaun Moss and Clete Otoshi

Recent Study

Oceanic Institute - Litopenaeus vannamei performance in greenhouse-enclosed RW’s stocked at 301/m2 (Trial #1) and 401/m2 (Trials #2 and #3) and grown for 98, 88, and 94 days respectively with no water exchange

Treatment Wt(g)

Growth(g/wk)

Yield*

(kg/m3)Yield**

(kg/m2)Sur.(%) FCR Water Use

(L/kg Shrimp)

Trial # 1 21.0a 1.44 7.5 5.7 89.5 1.50 187

Trial # 2 18.5a 1.48 8.4 6.4 80.4 2.01 285

Trial # 3 17.4b 1.49 10.0 7.6 90.6 1.67 172

* Based on RW water volume at harvest (57 m3)** Based on RW bottom area of 75.0 m2

Number of crops per year for Trial #1 - 3.6; Trial #2 - 4.0; and Trial #3 - 3.8

OI #3 - Enterprise Budget and Cash Flow SummaryValue/Cost

per lb1. Gross Receipts $3.27 2. Variable Costs $1.54 3. Income Above Variable Cost $1.73 4. Fixed Cost $0.66 5. Total of All Specified Expenses $2.20 6. Net Returns Above All Costs $1.07

Over a 10-year period and 10 GH: AveragePay back period yr 2.09Discount rate % 10.00Net present value $ million 16.11Internal Rate of Return % 39.43

Economic Analysis - III

Critical Factors

Change in NPV and IRR with 20% Improvement in Critical Production Factors

Grow-out Components Change

Change from BaseNPV $mil. IRR %

1. GO survival +20% 10.48 13.72. Shrimp price +20% 9.57 12.53. GO stocking density +20% 6.16 8.14. Initial investment -20% 2.24 6.85. GO growth rate +20% 2.23 6.46. Nursery & GO feed -20% 2.37 3.17. Source of financing 20/80-0/100 1.79 2.48. Nursery survival +20% 1.12 1.59. PL cost -20% 1.01 1.2

Compared to Base Scenario: $10.8 million and 25.3% IRR

ConclusionsMany factors affect the COP and financial viability

Could be feasible under certain biological and economic conditions

Combination of small changes in many grow-out components can lead to profitability

Opportunities for the FutureImproving technologies are:– Increasing growth and production rates– Reducing variable and fixed costs

Genetic selection– Higher yields over time

Financial analyses are focusing research– Improves competitiveness

Marketing opportunities

Thank You Very Much!

Questions?