Economic Analysis of a Commercial-Scale Recirculating, Brackish Water Hatchery for Florida Red Tilapia

Abstract

An economic analysis was performed on a commercial- scale, recirculating, brackish water hatchery for Florida red tilapia located on Lee Stocking Island (LSI), a privately-owned island in the Bahamas, using actual design criteria and production data collected from 1987-1992. Results were compared with a hypothetical facility based in the city of Freeport, on Grand Bahama Island, Bahamas. At annual production levels of 1.0-2.5 million sex-reversed fry, breakeven prices ranged from $0.16-0.07/fry at LSI and from $0.14-0.06/fry at Freeport. Salaries and benefits represented the largest fixed costs, accounting for 34.6% and 39.1% of annual production costs at LSI and Freeport, respectively. Air-freight shipping to Miami, Florida represented the largest variable cost at both locations, with private air charter from LSI accounting for 16% of the annual operating cost and commercial air freight from Freeport accounting for 6.1% of the total annual costs. At annual sales of 2 million sex-reversed fry, internal rates of return greater than 15%, positive net present values, and discounted payback periods less than 10 years were projected at prices of $0.11/fry at LSI and $0.l0/fry at Freeport, indicating economic feasibility at competitive prices if fry can be sold year-round. Seasonal market demand, however, can limit revenues. Prospects for economic success can be greatly improved by more economical building construction, modifications in rearing tank design, and vertical integration of hatchery and growout operations, with external sales of excess fry and broodstock providing additional revenues.