Antonio Garza de Yta
International Center for Strategic Studies in Aquaculture
The Practical Vol.4 Issue 12
The Carrying Capacity and the Cost per Kilo concepts have the same importance. It is not a matter of how many fish you can produce per unit of area or volume, it is about how much money you can make in a given production unit. Producing more fish is not always the most efficient way of making an operation profitable. Not always the most state of the art technology will be the most cost-effective.
I am usually invited to speak to aquaculture farmers about how to optimize their production units. I regularly start the meetings with a couple of questions: “What is your carrying capacity?” and “What is your cost per kilo?”. It is surprising the amount of times I have received an “I do not know” for an answer to one or both question. We have to realize that this comes from people that are trying to make their living from aquaculture. The failure to properly manage any of these two concepts could impact directly in their way of life.
It is not uncommon in Latin America, to see that aquaculture is promoted in the most inefficient ways possible. Sometimes I think that the people promoting the industry are doing it so poorly because they really hate the activity and do not want its success. Projects claiming to be using the most advanced technology in aquaculture involve eight 12-meter diameter, 1-meter deep, plastic tanks… two paddle wheel aerators, and ZERO training. It is not bad enough that the projects are underequipped and the specific conditions of water availability and quality were not taken into consideration; it is assumed that everybody can start in the most complex stage of aquaculture, with no experience in the topic at all, and still make these projects sustainable. People that are involved in aquaculture and are taking vital decisions for its promotion do not know the biological and economical requirements of the activity. When you ask them what the cost per kilo in those production units is they completely have no idea or tell you an estimate that is distant from reality. The worst part is that the aquaculture activity is blamed whenever the owners start losing money and have to stop operation of their production units. Let is face it; aquaculture is not for everybody. If someone does not have the adequate biological and managerial skills to efficiently operate a farm, or accessibility to these skills, then they should invest their time and money in another economic activity.
Doing an analysis of different tilapia production technologies I revised the cost-effectiveness of four different production methods: floating cages, cages inside earthen ponds, earthen ponds with aeration, and round tanks with aeration. The analysis proved that there was a huge number of producers whose cost per kilo was higher than their selling price. There was a second group whose profit margin was marginal. Although, there was a third group of producers who were producing way under the production cost and were experiencing high returns on their investment. There was a very strong relationship between the positive economic returns and the percentage of used production capacity. The closest a farm was to using all its production capacity, the higher the profits, regardless of the production method they were using.
Food Conversion Ratio (FCR) it is not a production parameter, it is an economic parameter. Biologically, it is impossible to have a FCR of 1.1, but what we really want to calculate is how much money we are spending in formulated feed in our farms. FCR is usually a very useful parameter to evaluate the management of a farm. It does not matter how much aquaculture producers all over the world want the price of feed to decrease, it will not, the only thing they can do is optimize its use. Analyzing the FCR of a farm will let you know how well the biological parameters are being managed and will inform you how concerned the owner or manger is about reducing cost and maximizing profit. This is another parameter that goes hand to hand with profitability and sustainability.
Listening to my concepts I got the complaint that they were too elitist. That if only companies or private entrepreneurs that could have the biological and economical background should start an aquaculture venture the idea was secluding the food security factor that aquaculture has. Well, in reality, there are adequate conditions for producing aquaculture with limited resources, but if risk is involved then that technology or production method should not be used for food security. I strongly do not recommend using highly intensive systems requiring heavy aeration to start people in developing areas in aquaculture.
If aquaculture is going to succeed with small farmers or producers in developing areas, both biological and managerial issues have to be attended. First, it has to be using an adequate technology that can start at a simple level of complexity and that through continuous training and technical assistance can be escalated to its maximum potential. On the other hand it is vital that the proper management and economical aspects of an aquaculture venture are overseen. If the financial aspects cannot be attended by the producer, then an external person has to do it. In a small trout cooperative in the North of Mexico we convinced the farmers to hire an accountant that could keep their books and records in order. This accountant now is calculating the cost per kilo of the different production units and in coordination with the technical assistant they are working to maximize profitability.
In aquaculture the biological and the economical factors are of the highest importance. It is clear that maximum profitability can only be achieved when we combine the best management skills. Most production technologies have proven to be profitable; it is just a matter of doing it right. In a global economy where producers all over the planet are getting better prepared everyday it is imperative that any farmer that wants not just survive, but to progress, becomes a better manager of his/her production unit. As more producers become real managers of their production units, the whole aquaculture industry will benefit, and it will take us a step closer to the final goal, which is the professionalization of the whole aquaculture sector.