shang 1986 aquacultural-engineering

7/28/2019 Shang 1986 Aquacultural-Engineering

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Aquaculm ral Engineering5 (1986) 103-108

R e s e a r c h o n A q u a c u l t u r e E c o n o m i c s : a R e v i e wYung C. Shang

Department of Agricultural and Resource Econ omics, University of Hawaii ,Hono lulu, Hawaii 96822, USA

A B S T R A C TEc on om ic research on aquaculture ca n b e broadly classified into fo urcategories: (1) produ ction econ om ics, consisting of budg et analysis,produ ction fitnction, linear progra mm ing, bio-econ ornic mo deling: (2)ma rket s tudies, containing dem an d f i tnction analysis, marke t survey,ma rke t stnwture, con du ct and performance study; (3) project evalua-tion, comprised of social benefi t-cost ana lysis and internal rate o freturn analysis; and (4) development policy, such as economic impactanalysis.The m ajor constraints fo r an eco no mic study in aquaculture are:insuff icient economic data, lack of cooperation among aquacultureexperts, diversity of aquaculture research, an d th e u se o f inappropriatedata and~or m eth od s fo r analysis.

I M P O R T A N C E O F E C O N O M I C S T U D YT h e p r o d u c t i o n f r o m a q u a c u l t u r e is e s t im a t e d t o h av e b e e n a b o u t 1 0m i l li o n t o n n e s i n 1 9 8 3 , a n i n c r e a s e o f a b o u t 8 "6 % si n c e 1 9 7 9 . A q u a -c u l t u r e i s o n e o f t h e fa s te s t g r o w i n g i n d u s t r i e s i n f o o d p r o d u c t i o n . I nt h e l o n g r u n , t h e c o n t r i b u t i o n o f a q u a c u l t u r e t o n u t r i t i o n , i n c o m e ,e m p l o y m e n t , f o r e i g n e x c h a n g e a n d s o c ia l s ta b il it y c a n b e e x p e c t e d t oi n c r e a s e s u b s t a n t i a ll y i n m a n y c o u n t r i e s . F o r a q u a c u l t u r e :to re a l iz e itsp o t e n ti a l, h o w e v e r , i t s h o u l d b e b i o - te c h n i c a ll y , e c o n o m i c a l l y a n ds oc i a l l y f e a s i b l e .

T h e p o t e n ti a l fo r a q u a c u l t u r e d e v e l o p m e n t i n a n e c o n o m y is d e t e r-m i n e d b y f a c to r s t h a t a r e b o t h i n t e r n a l a n d e x t e r n a l to t h e s e c t o r a n dt o t h e e c o n o m y . T h e r e a r e f i v e m a j o r a r e a s w h i c h i n f l u e n c e a q u a -

103Aquacultural Engineering 014 4-86 09/86 /S03 .5 0- E l sev ie r Appl i ed SciencePublishers Ltd , Eng land, 1986 . Printed in Great Britain


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10 4 Y C S hangc u l t u r e d e v e l o p m e n t i n a s p e c i f i c l o c a t i o n : ( 1 ) t h e b i o - e c o n o m i cf eas i b i l i t y o f r ea r i n g an d m ar k e t i n g aq u acu l t u r e s p ec i e s ; ( 2 ) t h ec o m p a r a t i v e e c o n o m i c s o f r e a r in g a n d m a r k e t i n g a q u a c u l t u re s p ec ie sw h i c h c o m p e t e w i t h t h o s e r a i s e d in o t h e r r e g i o n s in e i t h e r d o m e s t ic o rf o r e i g n m ar k e t s ; ( 3 ) t h e av a i l ab i l i t y o f s u i t ab l e r e s o u r ces f o r aq u a -c u l t u re d e v e l o p m e n t ; ( 4 ) t h e r e la t iv e e c o n o m i c s o f a q u a c u l t u r e v e r s u so t h e r e c o n o m i c a c t i v i t i e s t h a t e i t h e r r e q u i r e t h e s a m e i n p u t s o rc o m p e t e i n t h e s a m e p r o d u c t m a r k e t s ; a n d ( 5 ) t h e e x i s t i n g r e g u l a t i o n san d i n s t i t u t i o n a l s u p p o r t s ( c r ed i t , m a r k e t i n g , ex t en s i o n , r e s ea r ch , e t c . )r e l a t e d t o a q u a c u l t u r e d e v e l o p m e n t . R e s e a r c h o n t h e e c o n o m i c s o fa q u a c u l t u r e , t h e r e f o r e , p l a y s a n i m p o r t a n t r o l e i n t h e d e v e l o p m e n t o fa q u a c u l t u r e . I t p r o v i d e s a b a s i s , n o t o n l y f o r d e c i s i o n m a k i n g f o ri n d i v i d u a l f a r m e r s , b u t a l s o f o r f o r m u l a t i n g i n s t i t u t i o n a l a q u a c u l t u r epo l ic ies .

N A T U R E S A N D M E T H O D S O F E C O N O M I C S T U D YO F A Q U A C U L T U R ET h e e c o n o m i c s t u d ie s o f a q u a c u l t u r e c a n b e b r o a d l y c l a ss if ie d i n tof o u r c a t e g o r i e s: p r o d u c t i o n e c o n o m i c s , m a r k e t i n g e c o n o m i c s , p l a n -n i n g a n d p r o j e c t e v a l u a t io n , a n d d e v e l o p m e n t p o li cy . T h e r e s e a r c hn e e d s a n d m e t h o d s o f a n a l y s is u n d e r e a c h c a t e g o r y w i ll b e b r ie f ly d is -c u s se d . T h e m e t h o d s t o a n a l y z e a n d e v a l u a t e m a n y o f t h e e c o n o m i cp r o b l e m s o f a q u a c u l t u r e a r e w e l l d e v e l o p e d in t h e f ie ld o f a g r ic u l tu r a le c o n o m i c s a n d a w a i t o n l y i m a g i n a t i v e a d a p t a t i o n .Aquaculture product ion economicsC o m m e r c i a l a q u a c u l t u r e p r o d u c t i o n e i th e r f o r d o m e s t i c c o n s u m p t i o no r f o r e x p o r t is g e n e r a l l y m o t i v a t e d b y p r o f i t m a k i n g . P r o fi ta b i li ty o f af a r m is a f u n c t i o n o f c o s t s a n d r e t u r n s . C o s t o f p r o d u c t i o n d e p e n d sm a i n l y o n c u l t u r e t e c h n o l o g i e s u s e d a n d p r i c e s o f t h e p r o d u c t i o ni n p u t s , w h i l e t h e r e t u r n s d e p e n d o n p r o d u c t i o n l e v e l s a n d m a r k e tv a l u es o f t h e s p ec i e s . In aq u ac u l t u r e , s it e s e lec t i o n , f ac il it y d e s i g n an dc o n s t r u c t io n , c u l t u re t e c h n o l o g y a n d m a n a g e m e n t s y s t e m a r e c r u c ia lf ac t o r s a f f ec t i n g t h e o p e r a t i n g e f f ic i en cy o f a f a r m , t h e r eb y i n f l u en c i n gi n it ia l c ap i t a l co s t s an d o p e r a t i n g ex p en s es , a s we ll a s lev e ls o f p r o d u c -t io n . P r o d u c t i o n eco n o m i c an a l y s i s is e s s en t i a l to ev a l u a t e t h e v iab i li ty


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Research on aquacul ture economics: a review 10 5o f i n v e s t m e n t i n a q u a c u l tu r e , t o d e t e r m i n e t h e e f f ic i e n c y o f r e so u r c ea l l o c a ti o n , to i m p r o v e t h e e x i st in g m a n a g e m e n t p r a c ti c e s, a n d t oe v a l u a t e t h e n e w c u l t u r e t e c h n o l o g i e s . T h e m e t h o d s u s e d i n p r o d u c -t i o n e c o n o m i c s t u d i e s i n a q u a c u l t u r e c a n b e g r o u p e d i n t o f o u rca tegor ies .

( 1 ) B u d g e t A n a l y s i s(a ) C o s t - r e t u r n a n a l y si s . T h i s is t h e b a s i c m e t h o d u s u a l ly u s e dt o e v a l u a t e t h e e c o n o m i c f e a s i b i l it y o f a c o m m e r c i a l o p e r a -t io n . I t a n s w e r s q u e s t i o n s s u c h a s: H o w m u c h d o e s i t c o s t tos t a r t th e b u s i n e s s ? H o w m u c h d o e s i t c o s t to o p e r a t e t h eb u s i n e s s a n n u a l l y ? Wh a t a r e t h e m a j o r c o s t i t e m s ? I s i tp r o f i t a b l e t o i n v e s t in th i s v e n t u r e ? W h a t is th e a v e r a g e r a t eo f r e t u r n t o c a p i t a l, la n d a n d l a b o r ? W h a t i s t h e b r e a k - e v e np r o d u c t i o n a n d p r i c e l ev e l? H o w m a n y y e a r s d o e s i t t a k e tor e c o v e r t h e i n it ia l i n v e s t m e n t ? e t c . T h i s m e t h o d h a s a ls ob e e n u s e d t o c o m p a r e t h e e c o n o m i c f e a s i b il it y o f d i f fe r e n tsys tems and p rac t i ces ( such as ex tens ive ve rsus in tens ive ,monocu l tu re ve rsus po lycu l tu re , e tc . ) and to eva lua te thee c o n o m i c s o f d i ff e r e n t si z es o f o p e r a t i o n o r d i f f e r e n t ty p e sof fac i l ity des ign .(b) Pa r t i a l budge t ing . W he n the re i s a m inor ch ange in a p ro -d u c t i o n t e c h n i q u e r e s u l t i n g i n a p a r t i a l c h a n g e i nco s t - re tu r n s t ruc tu re , pa r t i a l budge t ing is usua l ly used tore -eva lua te i t s economic v iab i l i ty . For ins tance , thee c o n o m i c f e a s i b il it y o f a d d i n g n u r s e r y p o n d s t o p r o d u c t i o np o n d s , a d d i n g a e r a to r s o r p u m p s i n p r o d u c t i o n p o n d s ,u s i n g a u t o m a t i c f e e d e r s , m a k i n g m i n o r c h a n g e s i n p o n ddes ign , e tc ., can be eva lu a ted by pa r t i a l budge t ana lys i s .(c ) Cas h- f low ana lys i s . Th is ana lys i s p rov ides cash in f low ando u t f l o w o n a m o n t h l y o r a n n u a l b a s i s . A s a f o r w a r d p l a n -n ing too l , i t s p r imary use i s to e s t ima te fu tu re bor rowingn e e d s a n d t h e l o a n r e p a y m e n t c a p a c i t y f o r t h e b u s in e s s .(2 ) P r o d u c t i o n f i n c t i o n . This i s to e s t ima te the phys ica li n p u t - o u t p u t r e l a t io n s h i p f i rs t, a n d t h e n m a r g i n a l a n a l y s is ise m p l o y e d t o e v a l u a t e t h e p r o d u c e r ' s b e h a v i o r . T h e r e s u l t s o ft h i s a n a l y s i s c a n b e u s e d t o a n s w e r s u c h q u e s t i o n s a s: W h i c h

i n p u t s a r e s i g n if i c an t i n e x p l a i n i n g v a r ia t i o n i n o u t p u t ? A r et h e r e e c o n o m i e s o f s c al e in p r o d u c t i o n ? A r e p r o d u c e r s m a k i n g


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106 Y C S hangop t ima l use o f inpu t s? A re t hey techn i ca l l y and econo mica l l ye f f ic i en t? W ha t cons t r a in t s i nh ib i t i nc r eased p rodu c t i v i t y andprof i t ab i l i ty of ex i s t ing pro du ct io n sys tem s? e tc .(3 ) Linear programming. Th i s m e tho d has bee n used t o : (i) de t e r -mine t he p ro f i t-max im iz ing com bina t i on o f s ca rce r e sources(such as labor , land, f ry, feed, e tc . ) for producing a par t icularspec ies ; ( i i ) de te rmine the bes t use of scarce resources forproduct ion of numerous spec ies ; ( i i i ) spec i fy the l eas t -cos tgeograph i c sources f rom which f ry and r aw ma te r i al s shou ld bepurchased; and ( iv) de te rmine the l eas t -cos t ingredient s of ad i e t o r r a t i on w hich mee t spec i fi ed nu t r i t iona l r equ i remen t s .(4 ) Bio-econo mic modeling. Th i s ana lys i s, t ak ing i n to a ccou n t b io -t e c h n i c a l , e n v i r o n m e n t a l a n d e c o n o m i c e l e m e n t s a n d t h e i ri n t e r r e l a ti onsh ips t h rou gh ou t t he en t i r e p rodu c t i on p rocess , isone o f t he p rom is ing app roach es t o be used i n imp rov ing f a rmm anag em ent e f f ic i ency o f an aqu acu l t u r e en t e rp r is e .

M ark et s t u d i e s

A spec ie s has po t en t i a l fo r com m erc i a l dev e lop m ent on ly if t he r e i s ama rke t dem and fo r it a t p r ice s t ha t p rov ide a r ea sonab l e p ro f it f o r t heproduce r s , and i f t he marke t channe l s and i n f r a s t ruc tu re s a r e ade -qua t e t o han d l e t he i nc reased p r od uc t i o n e f fi ci en t ly . Th e re fo re ,ma rke t s t udy is pa r t o f t he e con om ic f ea sib il it y ana lys is . T hre e m a jo ra p p r o a c h e s a r e k n o w n .(1 Demand funct ion analysis. Thi s i s t o de r i ve t he demand func -t ion by us ing t ime-ser ies or c ross -ser ies da ta . Pr ice , inco m e and

c ros s e l a s t i c i t i e s can be ca l cu l a t ed and fu tu re demand can bep r o j e c te d u n d e r c e r ta i n a s su m p t i o n s. D e m a n d f u n c t io n c a n b eder ived for a spec ies in bo th loca l and fore ign marke t s .(2 ) M arket survey. For a re la t ive ly new spec ies , m ark e t po tent ia ls tudy i s usua l ly based on buyers ' r eac t ions to the spec ies co l -l ec ted throug h a survey.(3 ) M arket structure, conduct and performance study. This is tos tudy the marke t channels , mark-up, inf ras t ruc tures ( se l l ing ,s torage , process ing , t ranspor ta t ion fac i l i t i es ) , marke t in te l l i -gence a nd m arke t i ng e f f ic i ency i n o rde r t o i den t i fy t he bo t t l e -n e c k s fo r m a r k e t d e v e l o p m e n t .


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R e s e a r c h o n a q u a c u h z t r e e c o n o m i c s . a r e v ie ~ l 0 7

Plann ing and project eva luat ionTh is i s to iden t i fy aqu acu l tu re p ro jec t (s ) tha t conform wi th the ob jec -t iv e s o f n a t i o n a l d e v e l o p m e n t , a n d t o e v a l u a te t h e e c o n o m i c f e a s ib i li tyof the p ro jec t ( s ) . Loca l government and in te rna t iona l f inanc ia l ins t i tu -t ions usua l ly conduc t such s tud ies . Soc ia l benef i t - cos t ana lys i s andI n t e r n a l R a t e - o f - R e t u r n c a l c u l a t io n a r e u s u a ll y u s e d f o r p r o j e c teva lua t ion .D eve lop m en t p o licyA n y d e v e l o p m e n t p o l ic y s h o u l d b e e c o n o m i c a ll y s o u n d a n d s h o u l d b es u b j e c t e d t o e c o n o m i c a n a ly s is . A c t u a l ly , th e e c o n o m i c a n a l y s e sm e n t i o n e d a b o v e h a v e d i r e c t i m p a c t s o n p o l i c y d e c i s i o n . I n a d d i t i o n ,t h e fo l lo w i n g e c o n o m i c s t u d i e s a r e s o m e t i m e s n e e d e d f o r d e c is i o nm a k i n g .

(1) Ec on om ic imp ac t an a lys i s ( sec to r s tudy) . Th is i s to eva lua tee c o n o m i c i m p a c t s o f a q u a c u l t u r e o n v a r io u s s e c to r s a n d c o m -m u n i t i e s a n d o n t h e e c o n o m y . T h e i n p u t - o u t p u t m o d e l i su s u a l ly u s ed to e s t im a t e t h e i m p a c t o n i n c o m e , e m p l o y m e n t , t axrevenue , e tc.(2 ) G o v e r n m e n t s u p p o r t f o r c r e d i t, i n f ra s t r u c tu r e s , t r a i n in g a n de x t e n s i o n , a n d r e s e a rc h .(3 ) G o v e r n m e n t p o l i c y o n l a n d , w a t e r a n d o t h e r r e s o u r c es a l l o ca -t ion.(4) Re la t ive eco nom ics o f d i f fe ren t dev e lop m ent s tra teg ies .

C O N S T R A I N T S F O R E C O N O M I C S T U D Y I NA Q U A C U L T U R ET h e m a j o r c o n s t r a i n t s f o r e c o n o m i c s t u d y i n a q u a c u l t u r e i n c lu d e th efo l lowing . ( t ) There can be a l ack o f re l i ab le economic da ta . In manycases , the in fo rmat ion ava i lab le i s f rom labora to ry , no t f i e ld , o r ig in .T h i s u s u a l ly im p l i e s a n ' e x p e r i m e n t a l g a p ' b e t w e e n w h a t is a ch i e v a b leu n d e r c o n t r o l l e d v e r s u s f i e l d c o n d i t i o n s . L a b o r a t o r y r e s u l t s r e q u i r es u p p l e m e n t a l i n f o r m a t i o n f r o m e x i s ti n g c o m m e r c i a l fa r m s . U n f o r t u -n a t e ly , t h e d a t a b a s e f o r c o m m e r c i a l a q u a c u l t u r e is p o o r a n d d i ff ic u ltt o o b t a in d u e t o th e p r o p r i e t a r y n a t u r e o f a n o p e r a t i o n a n d b e c a u s e i t


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10 8 Y. C Shangi s a nascen t indus t r3" in ma ny a reas . (2 ) T he re i s o f ten a l ack o f co-o p e r a t i v e r e s e a r c h a m o n g a q u a c u l t u r e e x p e r t s . I n m a n y c a s e s , a q u a -cu l tu re exper t s , inc lud ing economis t s , conduc t the i r s tud ies wi th l i t t l ei n t e r a c t i o n s w i t h e a c h o t h e r . T h e r e f o r e , t h e n e c e s s a r y d a t a f o reconomic ana lys i s a re no t ava i l ab le . (3 ) The d ive rse fo rms , spec ies ,a n d s y s t e m s o f f i s h c u l t u r e m a k e t h e e c o n o m i c c o m p a r i s o n s d i f f i c u l t .(4 ) T h e r e is a l a c k o f i n t e r e s t f r o m e c o n o m i s t s i n a q u a c u l t u r e r e s e a rc h .(5 ) O n e o f t e n s e es th e u s e o f i n a p p r o p r i a t e d a t a a n d / o r m e t h o d s f o ra n a l y s i s .

C O L L A B O R A T IV E R E S E A R C H N E E D S I N A Q U A C U L T U R EA q u a c u l t u r e h a s a r i c h h i s t o r y in As ia bu t is a re la t ive ly new indu s t ryi n m a n y o t h e r c o u n t r ie s . P r e s e n t d a y t e c h n o l o g y h a s b e e n d e v e lo p e dl a rg e l y b y ' tr i a l a n d e r r o r ' r a t h e r t h a n s c i e n ti f ic r e s e a rc h . P r e s u m a b l y ,p r o d u c t i v i t y o f r e s o u r c e s u s e d i n t r a d i t i o n a l p r a c t i c e s c a n b ei n c r e a s e d t h r o u g h s y s t e m a t i c r e s e a r c h w i t h a c o n s e q u e n t i n c r e a s e inprof i tabi l i ty .

S i n c e a q u a c u l t u r e i s a m u l t i d i s c i p l i n a r y s c i e n c e t h a t i n c l u d e sb i o l o g y , e n ~n e e r i n g , n u t r i t i o n a n d f e e d t e c h n o l o g y , g e n e t i c s a n d e c o -n o m i c s , a w i d e s p e c t r u m o f c o l l a b o r a t i v e r e s e a r c h i s n e e d e d t od e v e l o p n e w a n d m o r e e f f i c i e n t o p e r a t i n g s y s t e m s , a s w e l l a s t oi m p r o v e e x i s ti n g m a n a g e m e n t p r a c ti c e s. A s m e n t i o n e d e a rl ie r , t h el a ck o f s u f fi c ie n t d a t a f o r e c o n o m i c a n a l y s i s i n a q u a c u l t u r e i s a m a j o rp r o b l e m , b u t t h i s p r o b l e m m a y b e o v e r c o m e b y c o o p e r a t i v e e f f o r t s ,l o c a ll y o r i n t e r n a ti o n a l l y , a m o n g r e l e v a n t a q u a c u l t u r e s p e c ia l is t s.

B I B L I O G R A P H YAllen, P. G., Schuu r, A. M . & Johnston, W. E. (1983). Bio eco n o mics o f Aq u a -culture, Elsevier Science Publishers, A msterdam, T he Netherlands.Food and Agriculture Organization of the United Nations (1981). Problemso f f i s h Cul ture Ec ono mic s wi th Spec ia l Re ference to Carp Cul ture in East -ern Europe, FA O, Rome, I taly.International Development Research C enter (ID RC )(19 82 ). Aq u a cu l tu reEco nom ics Research in Asia , IDR C, Ottawa, Canada.Shang, Y. C. (1981a). Aq u a cu l tu re Eco n o mics : Ba s ic Co n cep t s a n d Med to d so f Ana lys is , W estview Press, Boulder, Colorado.Shang, Y. C. (1981 b ). Freshwater Praw n P rodu ction in H awaii: Practices an d

Eco n o mics , Aquaculture Developm ent Program, State of Haw aii.Southeast A sian Regional Center for G raduate Study and Research in Agri-culture (1982). Aq u a cu l tu re E co n o m ics Ab s t rac ts , Laguna, Philippines.

shang 1986 aquacultural-engineering

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