This study investigated the viability of utilizing a shared-use commercial kitchen and on-farm kitchen to support small-scale local fish processing to supply seafood to local food systems. A case study of each facility type is assessed for feasibility and economic viability for fish farmers. Assumptions made are processing production scale I = 2,500 lbs, scale II = 5,000 lbs and scale II = 10,000 lbs of tilapia and rainbow trout per year and selling at 10% and 15% markups.
We conducted a sensitivity analysis on raw product pricing, commercial kitchen rental rates, and on-farm setup costs to assess inherent uncertainty and potential outcomes for each scenario. The main outcome measure is a profitability index which measures profitability of an investment using ratio of present value of expected cash inflows to initial investment cost. A profitability index value greater than 1 indicates positive profitability. In Table 1, the financial analysis suggests that farmers interested in processing tilapia can utilize rental commercial kitchens for processing from 2,500 lbs to 10,000 lbs per year and selling at a minimum of 10% markup. If a farmer can set up an on-farm kitchen and process at least 10,000 lbs per year, selling at a minimum of 10% markup makes the best economically viable venture. Processing rainbow trout utilizing shared-use a commercial kitchen to process from 2,500 lbs to 10,000 lbs per year is profitable, and similarly having an own on-farm kitchen facility to process at least 10,000 lbs per year is also the best economical venture.
By incorporating uncertainties in raw product prices, commercial kitchen rental cost, and on-farm kitchen setup costs, we found that these variations do not change the overall positive profitability index of 1.10 for processing tilapia or rainbow trout in commercial kitchens. However, breakeven prices and selling prices do exhibit sensitivity to these fluctuations. Moreover, the profitability index, payback period, and net present values remain stable for Scale II and Scale III production levels, even when accounting for a 20% increase in on-farm setup cost.