CONSUMER ACCEPTANCE OF LOCALLY GROWN FOOD: THE CASE OF INDIANA AQUACULTURE PRODUCTS

Many Indiana small- and medium-sized farm and ranch operators are looking at aquaculture to diversify their operations, but the underlying thought for most of these potential aquaculturists is the feasibility of raising fish, and whether consumers will be interested in Indiana aquaculture products. The study used an ordered probit model to examine Indiana consumers' interests in Indiana farm-raised aquaculture products. The model did not predict any non-interest but predicted 18% probability of consumers that are somewhat interested, 58% for consumers that are interested and 24% for consumers that are strongly interested. Factors that positively affected interest in Indiana aquaculture products were previous purchase of farm-raised aquaculture products, frequent at-home seafood consumption—once per week, and being at least 36 years of age. While consumers in the household income $20,000–$59,999 group showed interest, households with higher incomes were less interested. Prices that consumers are willing to pay for Indiana seafood products are within the range of market seafood prices in Indiana. However, consumers will not be interested in Indiana aquaculture products as premiums for the products increase.     

REMAINING COMPETITIVE AT THE REGIONAL LEVEL: DEVELOPING A LOCAL AQUACULTURE INDUSTRY

Aquaculture industry development has been recognized to be an important step in improving a state's economy. However, local producers are facing significant competition from international, national, and other state producers. In this paper, the focus is on competition among local producers. The objective is to examine how interactions among industry participants determine prices and profitability of individual fish growers. The application involves the trout sector of the West Virginia aquaculture industry. Using a game theoretic framework, the Bertrand oligopoly model, and a combination of data from primary and secondary sources, price competition among producers is modeled under different supply and demand scenarios. Factors such as production volume and cost, location relative to market outlets, supply dependability, and proximity to other competitors and markets influence the profitability and competitive position of individual producers. Results also show that, as expected, the entrance of new growers results in a reduction of the sales price, and creates more favorable conditions for sales outlets. In contrast, the appearance of new sales outlets results in an expected increase in sales prices and producers' profits. Implications are derived for the West Virginia aquaculture industry and for other areas where an abundant natural resource base combined with a rapidly growing aquaculture industry are linked to a growing competition for markets and, hence, producer profitability and survival.     

Osmoregulatory balance in Murray cod, Maccullochella peelii peelii (Mitchell), affected with chronic ulcerative dermatopathy

This study examined the osmoregulatory capability of Murray cod, Maccullochella peelii peelii, affected by chronic ulcerative dermatopathy (CUD) in intensive aquaculture. This condition appears to arise only in facilities utilizing groundwater, with the causative agent suggested to be a water-borne factor. Healthy Murray cod (~ 700 g) were transferred to a CUD-affected farm to monitor the progression of the syndrome and began to show signs of CUD after approximately five months. In order to evaluate possible effects of CUD on osmoregulation; plasma electrolyte concentrations, osmolality, and Na⁺,K⁺-ATPase activities were measured, and gill histology and immunohistochemistry were analyzed. Plasma electrolyte concentrations and osmolality of CUD-affected Murray cod were consistent with reference values determined for non CUD-affected fish. A greater number of gill mucous cells were observed in Murray cod cultured at the CUD-affected farm compared to non CUD-affected fish. We also found an un-identified cell type that was present solely in the gills of CUD-affected Murray cod. Gill Na⁺,K⁺-ATPase activity was significantly higher in severely CUD-affected Murray cod compared to individuals transferred to the CUD-affected farm. While there appeared to be some minor changes in the gills of CUD-affected fish, this study demonstrated that Murray cod were able to effectively osmoregulate, although, perhaps at an energetic cost.     

Establishing a benchmarking for fish farming – Profitability,productivity and energy efficiency of German,Danish and Turkish rainbow trout grow‐out systems

The promotion of Blue Growth in aquaculture requires an understanding of the economic drivers influencing the sector at farm level, but the collection of reliable and comparable data at this level is time‐consuming and expensive. This study suggests an alternative strategy for qualitative sampling of freshwater trout farms in Germany, Denmark and Turkey, using a combination of existing data, group discussions and interviews with trout farmers, consultants and researchers. Nine ‘typical’ trout farming models are described, focusing on profitability, productivity and energy efficiency and allowing in‐depth comparative economic analyses of different production systems at farm level, across regions. Our results show that the majority of the farms investigated have been profitable. Turkish farms benefit from competitive advantages due to low wages, low capital investment and favourable climate conditions. Large German farms profit from local market prices and advanced farm management. Danish farms using recirculating techniques remain competitive thanks to enhanced productivity and economy of scale. However, small traditional farms in Germany and Denmark may struggle to stay competitive in the long term. Organic farms in both countries face challenges of high feed costs and comparatively low productivity with mixed success. Using edible protein energy return on investment (epEROI) as an indicator of ecological sustainability, all surveyed farms compared very favourably with the terrestrial systems of animal meat production were investigated so far.     

Optimizing Tilapia, Oreochromis sp., Marketing Strategies in Nicaragua: A Mixed-integer Transshipment Model Analysis

Tilapia, Oreochromis sp., production has increased in the Central American region in recent years. Yet, commercial tilapia aquaculture has not developed in Nicaragua on the scale that it has in other neighboring countries. Although demand for tilapia products exists, lack of thorough understanding of domestic markets and coordinated production and marketing efforts have hampered the development of a domestic market. The objectives of this study were to quantify domestic marketing costs for tilapia produced in Nicaragua and develop a mixed-integer transshipment mathematical programming model to identify the most profitable marketing alternatives for tilapia farmers. Results suggested targeting primarily outlets with higher sales prices such as restaurants with supplemental production delivered to local supermarkets. The model chooses cities with weekly restaurant demand capable of absorbing the farm's production with excess product sold to alternative outlets. Supply of farm-raised tilapia production in most regions of Nicaragua was insufficient and created problems associated with frequent and dependable deliveries required by higher paying outlets (restaurants and supermarkets). Larger farms will generate greater returns with regular consistent deliveries to higher priced restaurant outlets. Smaller farms with limited production volumes were not able to meet weekly delivery requirements. Biannual deliveries reduced transportation cost and sales price and were not profitable. However, sustaining markets with infrequent deliveries may not be feasible. This analysis provides guidelines for targeting those specific markets that optimize returns to specific farm sizes in specific regions.     

Exophthalmia in wild‐caught cod (Gadus morhua L.): development of a secondary barotrauma effect in captivity

Capture‐based aquaculture (CBA) of Atlantic cod (Gadus morhua) has become increasingly important in recent years, and increased attention is being paid to animal welfare issues linked to these activities. Earlier studies showed that some cod develop secondary exophthalmia in captivity. This study investigated the development of secondary exophthalmia in two groups of wild‐caught cod, one of which was exposed to rapid decompression causing acute barotrauma (treatment group) while the other was not (control group). Photographs and radiographs before and up to 33 days after barotrauma revealed a significant increase in overall eye protrusion caused by an accumulation of gas in the orbita in the treatment group, first observed on day 9 after decompression, while no protrusions were observed in the control group. Barotrauma was thus identified as an important trigger for the development of secondary uni‐ or bilateral exophthalmia of wild‐caught cod. Two underlying mechanisms are suggested, where the more likely is residual swim bladder gas taking the route of least resistance, while the less likely is the exsolution of gas from the blood. Our results have implications for a wide range of contexts in which cod are rapidly brought to the surface from great depth.     

Experimental susceptibility of Atlantic cod, Gadus morhua (L.), and Atlantic halibut, Hippoglossus hippoglossus (L.), to different genotypes of viral haemorrhagic septicaemia virus

Viral haemorrhagic septicaemia (VHS) is a well-characterized disease of rainbow trout, Oncorhynchus mykiss, which has also caused economic losses in marine turbot farms in the British Isles. We have previously demonstrated that turbot, Scophthalmus maximus, are susceptible to isolates of viral haemorrhagic septicaemia virus (VHSV) that are endemic in the marine environment, highlighting a potential risk to marine aquaculture. Given the increasing interest in the intensive rearing of additional aquaculture species such as Atlantic cod, Gadus morhua, and Atlantic halibut, Hippoglossus hippoglossus, this study aimed at investigating the susceptibility of these species to VHSV. Both species were found to be largely resistant to VHS following immersion challenge with a selection of 18 isolates, representing the known marine VHSV genotypes. Only one and two VHSV-associated mortalities occurred out of a total of 1710 and 1254 halibut and cod, respectively. These findings suggest that there is a low direct risk to the development of commercial cod and halibut aquaculture from the existing endemic reservoir of VHSV. This study, coupled to field observations has, however, highlighted the fact that both species can become infected with VHSV. The known adaptability of RNA viruses, together with the selection pressures associated with intensive aquaculture would thus advocate a cautious approach to VHSV surveillance within these emerging industries.     

The profitability of producing channel catfish Ictalurus punctatus (Rafinesque) in cages at a commercial scale on small farms

Past beneficiaries of research and extension projects in aquaculture in the USA have been large farmers using pond culture systems. Additional studies, based on sound knowledge of empirical behaviour, are needed to identify alternative technologies and aid in the management decisions of small-scale farms. A mixed integer, multiperiod linear programming model and survey data were used to analyse the profitability of caged channel catfish, Ictalurus punctatus (Rafinesque), culture. Results suggest that only a limited number of farmers may be able to adopt cage culture as an alternative farm enterprise. Profitability was sensitive to assumed product prices.     

Price integration in the farmed and wild fish markets in Uganda

This paper looks at price integration in the aquaculture and wild-harvested African catfish market channels in Uganda. The issue of integration between the two market channels is important because African catfish has become an important traded species in Uganda with exports to regional markets rising even faster than production, yet limited research has been undertaken to understand price formation in the supply chain. The analysis draws on monthly price data from January 2006 to August 2013, and applies threshold autoregressive approaches to test for the existence of a long-run relationship and price asymmetry and to determine the time path needed for shocks to be transmitted from one market channel to the other. The results show that, over the studied period prices in both market channels are linked in the long-run, implying that farm-raised catfish forms part of the same market as wild-harvested catfish in the country. The findings have strong implications for aquaculture producers and artisanal fishers as they can serve as a basis for more efficient farm management and marketing decisions.     

ARKANSAS CATFISH FARMERS AND MARKETING CONTRACTS: SOME INSIGHTS INTO MOTIVATIONS

Interest in sales contracts in the catfish industry increased in the late 1990s and early 2000s as a result of increased import pressures and lower product prices. The study uses survey data fitted to a probit model to examine the motivations for contracting sales, and whether farm size is an important determinant of sales contracts usage. The article concludes that Arkansas catfish farmers with large acreages and therefore large volumes of production have a high probability of utilizing contracts to handle their sales but not necessarily with privately-owned independent processors. The farmers are not motivated to engage in sales contracts by reduction in income or price risks. They are motivated by production and management issues, which appear consistent with reductions in transactions costs relating to asset specificity and quality measurement as the reason for contracting.     

DEMAND FOR AQUACULTURE PRODUCTS IN TAIWAN: AN APPLICATION OF THE GENERALIZED MODEL

ABSTRACT

Policy decisions on what aquaculture products to develop require information on consumer demand for cultured species. However, information on the structure of demand for aquaculture products is limited and what few studies there are in Taiwan, where aquaculture is a major industry, suffer from methodological problems. To clear up some of these problems, we used modified nonnested testing techniques and performance forecasting to determine which generalized models could best estimate the demand for Taiwanese aquaculture products. The results of modified nonnested testing of the aquaculture demand system showed that prices predetermined and quantities predetermined could be used to estimate demand. The generalized ordinary demand model was able to better forecast performance than the generalized inverse demand model. We used the likelihood ratio test to discriminate among the four competing models for the generalized ordinary model; the AIDS model could be more suitably applied to the data. A more general model that is able to incorporate different dynamic structures (partial adjustment, first autoregressive, and static). This general framework is applied to the AIDS model. The first autoregressive AIDS model we used to calculate the own and cross-price elasticities for milkfish, tilapia, shrimp, shellfish, and carps found that price elasticities varied across fish type, that some products had high long-run own price elasticities, and that the demand for aquaculture products was largely determined by inertia.     

A COMPARISON OF THE ECONOMIC PERFORMANCE OF OFFSHORE AND INSHORE AQUACULTURE PRODUCTION SYSTEMS IN KOREA

The economic performance of the current inshore rock bream aquaculture industry conducted in Yeosu, Korea was compared with a pilot commercial scale offshore aquaculture farm in Jeju, Korea. Data was collected from 12 inshore farms and two production cycles of the offshore farm for use in Monte Carlo simulations run over a ten year time horizon. Net present value was compared for the inshore farms and two survival rate scenarios for the offshore farm. The offshore farm is expected to have a higher survival rate if it can withstand tsunamis and avoid pollution, disease and red tide impacts that are prevalent inshore. When the offshore farm was modeled with its observed higher survival rate, its average net present value ($1,016,483) significantly outperformed the inshore farms average net present value ($182,153). In the second scenario, the offshore farm survival rate was lowered based on performance data from the inshore farms. Not surprisingly, given the higher investment costs, the offshore farm performed poorly in terms of average net present value ($-137,142) compared to the inshore farms when it no longer had the advantage of high survival rates.     

THE VALUE OF INFORMATION IN SALMON FARMING. HARVESTING THE RIGHT FISH AT THE RIGHT TIME

Research on management practices in fish farming has traditionally focused on two topics: production planning and forecasting of prices. This article combines these two areas of research, and illustrates how information on price patterns can change production plans, and hence increase the value of the farm enterprise. It will present a model farm and illustrate, with different levels of price information, how information on future prices alters the original production plan and hence creates extra value for the farmer. Although the specifics and empirical application of the paper are on salmon and salmon farming, the ideas and general results could be applied to all farmed species.     

Justification for genetic improvement in growth rates of black bream (Acanthopagrus butcheri): A partial budgeting analysis

Abstract

Black bream (Acanthopagrus butcheri) appear an ideal candidate for the developing saline aquaculture industry of inland Western Australia. However, current maximum growth rates of 150g/annum are too slow for profitable production. This study investigated whether enhanced growth rates of black bream would improve profitability and justify a genetic improvement program. A partial budget analysis was conducted for two different fish production systems; a commercial operation that incurred more operating expenses due to costs associated with farm initiation (stand‐alone farm model), and an existing farm that diversified into aquaculture using the saline water resources of established farm dams (integrated farm model). Sensitivity analyses indicated that a 33 per cent increase in growth rate to at least 200g/annum would allow either production system to return a profit at a farm‐gate price of AUS$6/kg whole fish, with fish survival rates of 98 per cent for the stand‐alone farm, and 65 per cent for the integrated farm model. These results are discussed in the context of the genetic and economic consequences of selection for improved growth rates, and for developing breeding objectives and a genetic improvement program for black bream.     

Resistance of aquaculture net cage materials to biting by Atlantic Cod (Gadus morhua)

Cod bite on aquaculture net cages has resulted in damages like frayed netting and holes, which in part can explain why cultured cod have escaped more frequently than salmon over the last years. We describe damages found on various netting materials subjected to cod bite through field experiments at commercial cod farms. Further, a method to test local cod bite resistance of traditional netting structures is suggested and initial results from a test jig prototype are given. Results from field experiments indicated that cod may have been attracted by types of netting that made it possible to draw filaments out of the twine, while stiff, coated netting structures and thick filaments showed no sign of bite damage during the test period. We concluded that netting materials for cod aquaculture must be resistant to cod bite or be repellent or uninteresting for cod. Based on the present findings, the better choice among the traditional netting materials seemed to be hard-laid netting materials, preferably with a primer that glues the filaments together.     

ECONOMIC ANALYSIS OF ALTERNATIVE EFFLUENT TREATMENT OPTIONS FOR POND PRODUCTION OF HYBRID STRIPED BASS IN AURORA,NORTH CAROLINA

The focus of this article is the post-harvest treatment of effluent from hybrid striped bass (HSB) pond aquaculture to meet effluent discharge standards for Biochemical Oxygen Demand (BOD; 5 mg/L) and chlorophyll-α (40 μg/L) established by the North Carolina Division of Water Quality (DWQ). The specific application is to HSB pond aquaculture in Aurora, North Carolina. A variety of effluent treatment options were proposed and evaluated based on their efficacy in reaching the new standards on a 28.8-ha (72-acre) HSB farm. The economic feasibility of the proposed options ranged from positive $499 to negative $121,691 using the partial budget methodology. Our results indicate that retaining water on-farm for subsequent production cycles instead of discharging had the highest positive impact ($499) on annual farm budgets and may reduce production costs without compromising fish yields. Application of effluents onto existing or newly planted trees was also an attractive alternative because of the possible generation of additional income and the conversion of a point source discharge into a non-point discharge. By conversion of a point source into a non-point source the pond effluents would also benefit from the additional biological treatment and filtration of the effluents by the trees and the associated soil organisms.     

ANTICIPATING THE GROWTH OF AN OCEAN AQUACULTURE INDUSTRY

In assessing the future expansion of aquaculture in coastal-ocean environments, most studies focus only on the constraint posed by the local environmental assimilative capacity. In open-ocean environments, however, the assimilative capacity is difficult to gauge. We develop an alternative economic approach for projecting the growth of the open-ocean aquaculture industry. We evaluate equilibria in the market for seafood, where the product may be supplied either by a wild-harvest fishery or open-ocean aquaculture or both. In our framework, the net demand for farmed fish determines the size of the aquaculture industry and, in turn, the levels of pollution discharges. We illustrate our approach with a case study of a groundfish fishery and the proposed open-ocean aquaculture of Atlantic cod in New England. We find that, for a range of competitive production costs for aquaculture, the optimal industry structure would comprise both a wild-harvest fishery and aquaculture.     

Assessing the Economic Viability of Offshore Aquaculture in Korea: An Evaluation Based on Rock Bream, Oplegnathus fasciatus, Production

Interest is growing in offshore aquaculture as a means of overcoming environmental concerns that plague nearshore and coastal aquaculture production. The challenge of dealing in the offshore environment adds expenses that are not present in other aquaculture production systems. We collected financial and production performance data from a commercial‐scale offshore aquaculture production system for rock bream off the coast of Korea. Financial performance of the system was evaluated using Aquasim, a stochastic financial simulator. To compare performance, we focused on the 10‐yr internal rate of return (IRR) and net present value based on different assumptions regarding fish survival rates and market prices. The baseline model that used the observed survival and market prices had a high probability of financial success and an IRR of 18%. Financial performance became a lot riskier when we assumed that survival rates followed a triangular distribution with a 25% minimum survival that increased 5% per yr, even when the mean survival rate was as high as 97%. Rock bream aquaculture could be successful under that survival scenario if prices are high for the first 5 yr and then start declining in consequence of the industry expanding. In that case, the IRR is around 14%, but with greater variability than the baseline. If prices fall from the initial baseline level in the early yr of production, then the operation has little chance of surviving.     

The Costs of Regulations on US Baitfish and Sportfish Producers

The US regulatory environment has been characterized as complex due to the greater than 1300 laws promulgated at local, state, and federal levels. Recent declines in the growth rate of US aquaculture have been attributed, in part, to a complex, overlapping, and inefficient regulatory framework. This study is the first to examine this question by quantifying the farm‐level regulatory burden and its economic effects in an aquaculture industry sector. A survey was conducted of baitfish and sportfish producers in the 13 major production states in the USA to identify the direct and indirect costs of regulation on producers. Survey responses captured 74% of the national volume of baitfish and sportfish production. The data revealed that only 1% of total regulatory costs are direct costs of regulation, such as license and permit fees, while 99% of the costs are due to manpower used for compliance, farm changes to remain in compliance, and sales lost without replacement. Costs due to regulations varied across states and farm sizes. Across all respondents, average total regulatory costs were found to be $148,554/farm, or $7383/ha. The farm‐level cost to the US baitfish and sportfish industry was estimated to be in excess of $12 million. On 38% of the farms, the cost of regulations exceeded the value of profits on baitfish and sportfish farms. Our findings confirm previous reports of the complexity of the regulatory environment. Results show that the total regulatory burden has increased farm‐level costs and restricted access to markets, thereby reducing profitability and contributing to reduced growth of the US baitfish and sportfish industry.     

Agglomeration externalities and technical efficiency: An empirical application to the pond aquaculture of Pangas and Tilapia in Bangladesh

This article analyzes the effects of agglomeration externalities on productivity and efficiency by applying a stochastic production frontier model with a technical inefficiency model to the aquaculture industry. Agglomeration externalities refer to the costs and benefits to firms from clustering. Agglomeration studies within aquaculture have focused on the intensive salmon industry, whereas this study focuses on low-technology, extensive pond aquaculture, representing most farmers in the developing world and using Bangladesh as an empirical case. The results show that there is a positive externality effect of regional industry size on the production possibility frontier and a negative effect on technical efficiency. Farm density enhances efficiency and the farm proximity to output markets decreases efficiency. Thus, policies aimed at increasing aquaculture pond production in developing countries should consider farm locations and their access to input and output markets, all of which affect farm productivity and efficiency.