In 2022 and 2023, global farmed shrimp prices dropped to near historic lows due to high inventories of frozen shrimp, overproduction, and weak demand in key markets. Shrinking margins forced shrimp hatchery managers to cut costs in an effort to remain profitable. With feed costs representing a significant portion of overall production expenses, many producers switched from high-quality, expensive feeds to cheaper, lower-quality alternatives. However, this raises the question: Is substituting cheap, low-quality feeds for expensive, high-quality feeds a wise strategy for maximizing profits during price slumps? To answer this, an economic model was used to evaluate the sensitivity of hatchery profits to feed price and survival.
Shrimp postlarvae prices ($/1000 PL) are based on numbers rather than weight. In the short term, PL producers are not penalized for selling undersized PLs. This tempts hatchery managers to replace higher-cost feeds that support higher growth rates and improved PL vigor with lower-cost, lower quality feeds. However, lower quality feeds negatively impact PL survival and growth and undersized PLs perform poorly on the farms and are less tolerant of environmental and disease challenges. An economic model was used to study the impact of feed price and survival on shrimp hatchery profitability under two PL price scenarios ($3.00/1000 PL and $2.00/1000 PL). The model compared the profitability of a hatchery using lower-cost feeds ($25/kg) to that of a hatchery using higher-cost feeds ($35/kg) , with improvements in survival associated with the use of the more expensive high-quality feed ranging from 0% to 8%. When PL prices were $3.00/1000 PL, only a 1.04% improvement in survival was needed to cover the difference in feed price, and profits increased by 4.6% for each 1% improvement in survival. When the price received for PLs was reduced to $2.00 /1000, a 1.69 % improvement in survival was required to break even, while profits increased by 23.8% for each 1% improvement in survival. This demonstrates that when margins are low, investing in quality feeds to improve survival is more important than ever.