Economics - Salmons

Economics

Investment costs for the establishment of salmonid farms are comparatively high, and because of the need for artificial feeds rich in animal proteins, a supply of high-quality water and the employment of skilled labour, production costs also tend to be on the high side. In most cases, these are compensated for by the high volume of production and reasonably high prices of the diversified products that can be marketed. Obviously, profitability is dependent on a number of factors and it is therefore difficult to generalize on the levels of return that can be expected. According to Sedgwick (1985), a well-sited and well-run unit for trout with good marketing should return between 35 and 40 per cent profit on turnover before tax, and pay off the invested capital in less than three years.

Compared to the one-year cycle of production for portionsized fish, the rearing of larger fish gives a higher return per ton of fish produced in areas where there is a demand for them and they fetch a premium price. However, to grow the fish to a larger size, more equipment and labour are needed. Edwards (1978) showed that if the farmer decided to use the required additional resources, he would achieve a comparable return.

Experience in growing Atlantic salmon shows that it is more profitable than growing trout. Berge (1978), who compared the economics of salmon and trout farming, concluded that the higher profitability of salmon farming is due to the higher price of the product. He found that the cost of production of salmon is about 19 per cent more than that of trout, but because of their later maturing, salmon can be grown to a larger size and this enhances their market price. From a comparison of different types of farms in Norway, he suggested that farms which undertake the complete process of rearing from egg to market fish are far more profitable than those which undertake only one part of the operation. Similarly, larger enterprises, producing over 20 tons, show higher profits. The returns on investment are negative in the case of some smaller farms.