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The costs and returns of salmon farming in British Columbia

University of British Columbia

Data were collected from participating grow-out salmon farmers, processors, and the B.C. Salmon Farmers' Association, through interviews, and utilized to define a base farm. A microcomputer based spreadsheet model was constructed to capture the important biological and economic variables. The model details the operating costs and returns of a farm for five years, and assumes operating costs are consistent with the fifth year to provide cash flows for a total of 20 years. The financial analysis includes an examination of the net present values, the net farm income, and the internal rate of return. Results indicate that the base farm is a viable investment at a 6.9% discount rate. A sensitivity analysis is utilized to determine the critical variables in the operation of a grow-out salmon farm. The most sensitive variable turned out to be the growth rate of salmon. The base farm was found to be vulnerable to economic variables such as the product price, and the feed price. Other important biological variables are the feed conversion ratio and the mortality rate, both of which have a significant effect on the viability of the base farm.

Text

2010-08-30

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http://hdl.handle.net/2429/27978

Agricultural Economics

University of British Columbia

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