Aquaculture America 2021

August 11 - 14, 2021

San Antonio, Texas

ECONOMICS OF U.S. CATFISH FARMING PRACTICES: PROFITABILITY, ECONOMIES OF SIZE, AND LIQUIDITY

Ganesh Kumar1, Carole Engle2,3, Shraddha Hegde1, and Jonathan van Senten3
 
1Mississippi State University, Delta Research and Extension Center, Thad Cochran National
Warmwater Aquaculture Center, PO Box 197, Stoneville, Mississippi 38776, USA.
2Engle Stone Aquatic$ LLC, 320 Faith Lane, Strasburg, Virginia 22657, USA.
3VA Seafood AREC, Virginia Polytechnic Institute and State University, 102 S King Street, Hampton, Virginia 23666, USA
 

Evolution of the US catfish industry, forged by dynamic market forces, has resulted in the development of an array of farming practices. This comparative economic study was developed with data from 325 ponds on 38 commercial catfish farms (Alabama, Arkansas, and Mississippi) and provides concurrent estimates of the cost of production, profitability, and indicators of farm liquidity for the most common catfish growout strategies. Detailed enterprise budgets were developed for nine different catfish production strategies and analyzed on three different farm scales (32 ha, 124 ha, and 592 ha). Profitability differed across catfish farming practices. The split-pond system using hybrid catfish was the least-cost production strategy ($1.97/kg), followed by the multiple-batch system employing channel catfish with increased aeration rates, and intensively aerated ponds using hybrid catfish. Long-term profitability of catfish farming practices increased with increases in farm size. While seven of the nine production strategies discussed here were profitable in the long-run on medium (124-ha) and large (592-ha) catfish farms, only split and intensively aerated ponds (hybrid catfish and multiple-batch production with channel catfish with increased aeration rates) were profitable in the long-run on small farms (32-ha). Low-intensity strategies involving channel catfish in single- or multiple-batch systems were not profitable on any scale. High-yielding strategies resulted in an increased cash flow coverage ratio and decreased debt-servicing ratios, indicating lower liquidity risk. Economies of scale were evident throughout the analysis but stemmed from two different effects: 1) intensification of production in individual ponds; and 2) larger farm size. Changes in cost structures and economic conditions have changed the degree of profitability of farming practices. A number of previously profitable practices are no longer profitable. Newer, split pond and intensively aerated farming practices were profitable but require greater attention to cost efficiencies.