Aquaculture Information Series Enterprise Budgets ...

Aquaculture Information Series Publication #AQO1-l

West Virginia

Trout Enterprise Budgets Nu Nu San, Dan Miller, Gerard D’Souza, Dennis K. Smith, and Ken Semmens

Extension Service

West Virginia University Agricultural and Resource Economics Program Division of Resource Management College of Agriculture, Forestry, and Consumer Sciences West Virginia University Morgantown, WV 26506-6108 Version 2.0 - January 2001

This material is based upon work supported by the Cooperative State Research, Education, and Extension Service, U.S. Department of Agriculture, under Agreement Number 98-34386-6849. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture. Acknowledgments: A very special thanks to Debra Sloan, North Carolina Department of Agriculture and Consumer Services, and Skip Thompson, North Carolina Cooperative Extension Service, for their contribution of expertise in trout production. Appreciation is extended to George Cottle, West Virginia trout producer, and Carl Kittle of High Appalachian, WVDA, Beckley, WV, for sharing their aquaculture experience in West Virginia. Appreciation is also given to Joe Hankins and Steve Summerfelt of the Freshwater Institute and Jeff Hinshaw, Extension Fisheries Specialist, North Carolina State University, for their review and helpful comments on an earlier draft. Final responsibility for the contents remains with the authors. The authors are respectively, a former Post Doctoral Fellow, a Research Assistant, and Professors in Agricultural and Resource Economics, Division of Resource Management, Davis College of Agriculture, Forestry, and Consumer Sciences; Aquaculture Extension Specialist, West Virginia University, Morgantown, WV. WVU Extension Service Communications Design, Pat Kerns; illustrations, Nathan Hamric.

TABLES AND FIGURES Page Table 1

A Summary of Annual Expected Costs and Returns of Food-size Trout Production in West Virginia for Tank and Raceway Systems with Alternative Levels of Production .................. 7

Table 2

Expected Costs and Returns for a Polyethylene Tank System, 2,500 Ibs./year ..................................................................... 9

Table 3

Expected Costs and Returns for a Fiberglass Tank System- 2,500 Ibs./year ................................................. 10

Table 4

Expected Costs and Returns for a Fiberglass Tank System- 20,000 Ibs./year ............................................... 11

Table 5

Expected Costs and Returns for a Fiberglass Tank System- 50,000 Ibs./year ............................................... 12

Table 6

Expected Costs and Returns for a Fiberglass Tank System- 100,000 Ibs./year ............................................. 13

Table 7

Expected Costs and Returns for a Raceway System- 20,000 Ibs./year .......................................................... 14

Table 8

Expected Costs and Returns for a Raceway System- 50,000 Ibs./year .......................................................... 15

Table 9

Expected Costs and Returns for a Raceway System- 100,000 Ibs./year ........................................................ 16

Figure 1

Raceway System: Sensitivity Analysis of Net Returns with Different Feed Costs ................................................. 7

Figure 2 Fiberglass Tank: Trout Production Costs for Alternative Sizes ................................................................................... 8 Figure 3

Raceway System: Trout Production Costs for Alternative Sizes................................................................................... 8

APPENDIX A - Review of Waste Management Costs ............................................... 17 APPENDIX B - Permits and Inspections Required in West Virginia ........................ 18 APPENDIX C - Estimated Tank and Raceway Construction Costs .................... .19-21

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INTRODUCTION Trout is the predominant aquaculture species produced in West Virginia. The attached trout budgets are intended to serve as a planning guide for producers, lenders, and the aquaculture industry in general. Although these budgets pertain mainly to West Virginia conditions, with appropriate modifications, they can be utilized by producers in other parts of Appalachia. The production budgets provide a summary of estimated annual costs and returns under a specific set of assumptions. Thus, these budgets reflect an economic analysis, not an engineering analysis. Details on the technical production and engineering aspects are documented in numerous other sources (see, for example, Klontz, 1995, 1996, 1998, and undated; Summerfelt and Timmons, 2000; Summerfelt, et aI., 2000 and Summerfelt, et aI., undated; and Westers, 1984). The sources of data for these budgets include aquaculture farmers, dealers, extension agents, and published papers. Users will need to adjust the budget estimates to meet their needs. For this purpose, each budget contains a column at the end titled, “your farm.” It is important to recognize that individual budgets are site specific, unlike the averages used to compile the attached set of budgets. In the case of aquaculture establishments, for example, the amount of land preparation needed, water flow, quality, and temperature, climate, and terrain will likely vary from farm to farm. Beginning farmers are likely to get feed conversions of 1.6 pounds of feed per pound of fish, until their experience allows them to improve feed management to a more efficient 1.2:1 rate. TYPES OF BUDGETS Detailed trout budgets are reported for a gravity flow circular tank system and a raceway tank system for four alternative sizes: 2,500,20,000,50,000 and 100,000 pounds of rainbow trout per year. These systems and sizes represent the most likely options for producing trout in West Virginia. Each size has corresponding required water flows necessary for the level of production (see assumption 4, page 5). Polyethylene tank and fiberglass tank systems are considered for the 2,500 pounds of production. The raceway system is not used for 2,500 pounds per year, because concrete raceways are not practical with such low flows (60 g.p.m.). For the production levels of 20,000 pounds and above, fiberglass tank and raceway systems are used in this analysis. Because polyethylene tanks are not available commercially in large sizes, the number of units required to produce 20,000 pounds or more was considered impractical. BUDGET ITEMS Each budget contains: initial investment cost, annual operating costs, fixed costs, and profits. The initial investment includes site preparation, water diversion, tank or raceway construction, and equipment. Annual operating cost items are for fingerlings, feed, electricity, interest on operating capital, and hired labor for the production of 20,000 pounds and above, because hired labor was not necessary for the 2,500 pound level of production. Fixed cost items are interest on average annual investment, property taxes, and repairs and depreciation. Net profits reported represent returns to land and operators’s management. All labor costs are assumed to be hired labor.

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WASTE MANAGEMENT COSTS Since aquaculture waste is an important element in the development of a sustainable aquaculture industry, waste disposal costs are also considered in the budget. Current West Virginia regulations require a National Pollution Discharge Elimination System (NPDES) permit for aquaculture farms producing 20,000 pounds or more annually, of cold water species, plus a fee based on maximum feed used per month. Hence, a permit fee of $250 is included in the initial investment and waste discharge fees are factored into the annual budgets based on the total, feed used for fish production over 20,000 pounds. A review of waste management costs, and the schedule of permits and inspections required for aquaculture farms in West Virginia are included as Appendices A and B. Again, it should be emphasized that individual costs are likely to be site specific. BUDGETED COSTS AND RETURNS Table 1 summarizes the annual expected costs and returns for round tanks and raceways at four levels of production. This is a summary of the information on costs and returns reported in tables 2 through 9 for tank and raceway systems at different production levels. The initial construction and equipment costs for each system are reported in each table. Tank construction costs are reported in Appendix C. Annual sales amounts together with variable and fixed costs are also provided. After a system and appropriate size for your farm is chosen, the information should be adjusted to fit the conditions on your farm. Unit production costs for alternative sizes of round tanks and raceways are compared in Figures 1 and 2. For an annual production of 2,500 pounds, costs are $1.04 per pound for a polyethylene tank system, and $1.12 per pound for a fiberglass tank system. In a fiberglass tank system, total trout production costs are $1.12, $1.22, and $1.21 per pound for 20,000 pounds, 50,000 pounds, and 100,000 pounds, respectively. In a raceway system, total production costs are $0.98, $0.93, and $0.90 per pound for 20,000 pounds, 50,000 pounds, and 100,000 pounds, respectively. Based on costs, it appears that a polyethylene tank production system may be an appropriate production technology for 2,500 pounds of trout production, whereas a raceway system is more profitable for all other sizes of production as shown in Figures 1 and 2. Based on West Virginia production data per unit produced, labor costs in circular tanks are higher than in raceways. VARIATIONS IN FEED COSTS Since feed cost is the largest operating cost item, a sensitivity analysis was conducted on this variable (Figure 1). The purpose of the sensitivity analysis is to help us understand the effect of changes in cost of a specific feed on net profits. When feed costs are allowed to vary from $0.30 to $0.50 per pound, net profits decline significantly regardless of production levels. When the feed cost is raised to $0.50 per pound, trout production is no longer profitable at the assumed $1.20 per pound market price for all the production levels studied. The feed analysis was conducted with standard pelleted feeds. Extruded feeds, which cost more than standard pelleted feeds, have been proven to reduce waste, reduce labor costs associated with feed, and reduce cost per unit of gain. Therefore, the feed sensitivity analysis is not meant to compare extruded feeds with pelleted feeds. Rather, it is intended to illustrate the possible impact of changes in cost of a specific trout feed on net returns.

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Honeyfield (1997) demonstrated that the cost per unit gain for rainbow trout by using an extruded feed (45% protein-25% fat) was less than a standard pellet( -’ trout grower diet (38% protein-lO% fat). The extruded feed produced a higher quality water discharge due to the reduced fecal output (greater feed assimilation). Additional cost savings result from reduced labor in feed distribution and handling. Waste management costs would also be lowered due to the reduced waste. The following example illustrates the potential cost savings for a 100,000 lb. production facility resulting solely from a change in the 1.6: 1 feed conversion ratio (FCR) assumed in our analysis. Beginning farmers are likely to get feed conversions of 1.6: 1 until their experience allows them to improve the feed management to a more efficient 1.2: 1 rate. FCR

Annual Feed Input

Price/lb.

Feed Cost

1.6 1.4 1.2

160,000 lbs. 140,000 lbs. 120,000 lbs.

$0.30 $0.30 $0.30

$48,000 $42,000 $36,000

Total Cost Savings

$6,000 $12,000

Every 10,000 lb. reduction in feed usage due to improved feed conversion reduces feed costs by $3,000. Clearly, results such as these reinforce the fact that feed management (choice of feed type, digestibility, and size; method and timing of delivery; and feed storage) is crucial to the expected profitability of trout farming. ASSUMPTIONS The following assumptions were made in constructing the budgets1. These assumptions should be carefully examined when interpreting and/or modifying the budget estimates. 1) Ownership: The producer owns the land, and there is an adequate supply of high quality flowing water without the need for pumps. 2) Bio-parameters: The growth rates were estimated using North Carolina Cooperative Extension Service’s trout growth model which is based on Haskell’s growth equations (Haskell 1959). The model calculates the length of the production time period and the total feed to produce a specific weight of fish, utilizing monthly water temperature, stocking date, initial number of fingerlings, feed conversion ratio, growth in inches per day, and mortality rate. Bio-parameters used are Mortality rate: ........................ 0.03% per day Feed conversion: .................... 1.6 lb. feed: lIb. fish Stocking weight: .................... 4-5 gram fish Loading: ................................. 2-4 Ibs./g.p.m. Density: .................................. 2-4 lbs./cubic foot Production:Biomass: .............. 3-4 Ibs.: lIb. Exchange rate: ....................... 1-8 exchanges/hr. Temperature: .......................... 50-65°F

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3) Oxygen: Liquid oxygen is commonly used in larger farms or those farms that ,have seasonal drops in flow, and is included in the budget for circular tanks at 50K and lOOK pounds/year. The cost of liquid oxygen use for trout production is dependant on the location of the facility in relation to the oxygen supplier, and is generally economical only for larger operations. Gas/Liquid ratios will affect the efficient transfer of oxygen into the water and tends to be 65-77% (Heinen,et al.,1996; Dwyer and Peterson, 1993). The design of the chamber where oxygen (gas) mixes with water (liquid) will affect the absorption. Before employing oxygen the farmer should determine if oxygen is the primary limiting factor and what impact the use of oxygen will have on ammonia, carbon dioxide and waste management. Oxygen was not used in the raceway systems because re-aeration occurs between each pair of raceways. 4) Water flow: Each sized production system requires a different minimum water flow. Seasonallow flows must not be less than the minimum flow. Minimum flow needed for Production level (g.p.m.) (Pounds/yr.) 60 .....................................2,500 350 ....................................20,000 600 ....................................50,000 1200 ...................................100,000 5) Water conservation: In both the tank and raceway systems, water conservation practices are employed through the reuse of water with 3-4 foot drops between units for re-aeration. The use of oxygen in the 50,000 and 100,000 lb. circular tank systems increases the quality of the effluent water and uses a single pass system without the need to reuse the water. This makes disease control an easier task, versus the serial reuse in raceway systems. 6) Tank design: We are attempting to generalize the cost of production and this means a general approach. While design details are beyond the scope of this report, we provide the following reasons that led to the choice of tanks. Round tanks: This report uses 8 foot polyethylene tanks because of their low costs for the 2,500 pound production units. They are not commercially available in larger sizes and are considered impractical for larger production levels. Twelve foot diameter fiberglass tanks were chosen for the 20,000 Ib./yr. level so that the management of the operation, mortality removal, grading and harvesting, would be easier for a single laborer than in larger diameter tanks. Larger tanks are more economical to purchase per unit volume, however, solids removal and exchange rates are faster in smaller tanks resulting in reduced degradation in water quality within the tank. Twenty foot diameter tanks were chosen for the 50,000 and 100,000 lb. production levels to reduce construction costs and minimize the number of production units for that level of production. As tank diameter increases, greater importance is placed on the design of the water inlets and outlets in order to accommodate efficient fish handling, solids removal, and uniform water quality (see Summerfelt and Timmons, 2000; and Summerfelt et al., 2000, for details on tank design and engineering). In the event of tank failure, risk is lowered in smaller tanks due to the smaller volumes of fish. The raceway system is not easily expanded by adding more pairs, therefore, construction should be completed for a targeted production level before production begins. In contrast, a circular tank system is more easily expanded. Waste management can be more efficient with properly designed circular tank systems (Timmons, et al., 1998).

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Raceways: The raceways are built in pairs to reduce construction costs by using the center wall for both units. Water flow determines the actual dimensions. With each level of production, (20,000 pounds, 50,000 pounds, 100,000 pounds) the 24:3:1 (length: width: depth) ratio is maintained, however, the volume of production space increases (greater length: width: depth) proportionately with annual production levels (higher flows). The 24:3: I ratio allows for the relatively easy collection of waste at the end of each raceway. Water quality is reduced as the water progresses through the raceway system. High summer temperatures can greatly limit the feeding levels due to oxvgen problems. The number of raceway pairs remains the same (10) for each production level and it is assumed oxygen levels increase from 6 ppm to 8 ppm during each elevation drop. The design and management of a trout farm are two factors that are controlled by the manager, and beyond the scope of this report. The manager needs to carefully consider all site specific details concerning flow rates, slope of the land, and risks, etc. before implementing any plan. EXPLANATION OF SELECTED BUDGET ITEMS: Interest on operating capital is assumed to be 10% of total operating capital. Average annual investment = (beginning investment + ending investment) + 2. Beginning investment is the same as the “Total Initial Investment;” ending value of investment is assumed to be zero. Property taxes are estimated at WV rates. Repairs and depreciation are assumed to represent 5% of construction costs. Note that depreciation is a non-cash cost. Returns to Land and Operator’s Management represents net return left over after all costs, except land ownership (or opportunity) costs and salary to the owner/operator, are considered. Note that while interest costs are factored into the budgets, principal repayments are not factored into the budgets. They will have to come out of the amount shown under “Returns to Land and Operator’s Management” Costs for site preparation and related establishment items represent owner, not contractor, construction costs. Equipment costs are adapted from “Aquaculture in North Carolina, Rainbow Trout, Inputs, Outputs and Economics,” North Carolina Department of Agriculture and Consumer Services, Division of Aquaculture and Natural Resources (1998). “Miscellaneous” costs listed in the fiberglass tank system budgets (@ 0.15/lb) refer to the costs of supplemental oxygen, likely to be needed for larger production volumes.

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Table 1. A Summary of Annual Expected Costs and Returns of Food-size Trout Production in West Virginia for Tank and Raceway Systems with Alternative Levels of Production Pounds of Production

Total Revenue @ 1.20/lb

Fiberglass Tank Polyethylene Tank

2,500 2,500

3,000 3,000

4,000 4,000

2,800 2,609

200 391

1,200 1,391

Fiberglass Tank Raceway

20,000 20,000

24,000 24,000

32,000 32,000

22,304 19,506

1,696 4,494

9,696 12,494


50,000 50,000

60,000 60,000

80,000 80,000

61,073 46,256

-1,073 13,744

18,927 33,744


100,000 100,000

120,000 120,000

160,000 160,000

120,592 89,674

-592 30,326

39,408 70,326

Production Systems

Total Revenue @ 1.60/lb

Total Cost

Net Returns* $1.20/lb $1.60/lb

Note: *Returns to land and operators’s management, and evaluated with $1.20/lb and $1.60/1b farm-gate prices, for the processing and recreational markets, respectively. Fingerling cost = $ 0.21 per unit (Certified) Feed cost = $ 0.30 per pound Figure 1 Raceway System: Sensitivity Analysis of Net Returns with Different Feed Costs. (assuming identical feed type with increased price)

Feed Costs

35,000 Trout price=$J.20

30,000 25,000 20,000 15,000 10,000 5,000 0

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20,000 Ibs. $0.30 / lb

7

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50,000 Ibs. $0.40 / lb

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100,000 Ibs. 12345 12345 12345

$0.50 / lb

Figure 2 Fiberglass Tank System: Trout Production Costs for Alternative Sizes 1.40 1.22 123456 123456

1.20 1.12

1.00 0.80

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123456 1.12 123456

0.91

0.77

0.60 0.40 0.35

0.20 0.0

0.21

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20,000 lb.

2,500 lb.

Fixed cost per pound

1.10

0.12

1.21

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1.10

0.11

50,000 lb. Variable cost per pound

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100,000 lb. 1234 1234 1234

Total cost per pound

Figure 3 Raceway System: Trout Production Costs for Alternative Sizes 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.0

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20,000 lb. Fixed cost per pound

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50,000 lb. Variable cost per pound

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100,000 lb. 12345 12345 12345

Total cost per pound

Table 2 Expected Costs and Returns for a Polyethylene Tank System, 2,500 lb./year Construction

Unit Price/unit #of Units Totals Your Farm

Site preparation Water diversion Polyethylene tank Labor Sub-Total Equipment Demand feeder and mounting Tanks for transfer and harvest Loading nets Waders Sub-Total Total Initial Investment

dol. dol. tank hour

440 7

6 60

unit unit unit unit

115 1000 45 100

6 1 2 1

500 500 2,640 420 4,060 690 1,000 90 100 1,880 5,940

Estimated Annual Costs and Returns Price/ Unit ($)

Unit Annual Sales Trout Ib Variable Costs Fingerlings (length=3'J each Feed (FCR=J.6) Ib Electricity month Interest on operating capital dol. Total Variable Costs Fixed Costs Interest on average annual investment percent Property taxes percent Repairs and depreciation percent Total Fixed Costs Total Costs Returns to land and operator's management Fixed costs per pound Variable costs per pound Total costs per pound

9

% of Total

# Units

Total ($)

1.2

2,500

3,000

0.21 0.3 5 0.1

2,300 4,000 12 1,743

483 1,200 60 174 1,917

19% 46% 2% 7% 73%

10 2 5

2,970 5,940 5,520

297 119 276 692 2,609 $391 0.28 0.77 1.04

11% 5% 11% 27% 100%

Your Farm

Table 3 Expected Costs and Returns for a Fiberglass Tank System, 2,500 lbs./year Construction

Unit

Price/unit #of Units

Site preparation Water diversion Fiberglass tank Labor

dol. dol. tank hour

2370 7

2 48

Sub-Total Equipment Demand feeders and mounting Tanks for transfer and harvest Loading net Wader

unit unit unit unit

115 1000 45 100

2 I 2 I

Sub-Total Total Initial Investment

Totals

Your Farm

500 500 4,740 336 6,076 230 1,000 90 100 1,420 7,496

Estimated Annual Costs and Returns Unit Annual Sales Trout

Price/ Unit ($)

# Units

Total ($)

% of Total

Ib

1.2

2,500

3,000

each Ib month dol.

0.21 0.3 5 0.1

2,300 4,000 12 1,743

483 1,200 60 174

17% 43% 2% 6%

1,917

68%

375 150 358 883 2,800

13% 5% 13% 32% 100%

Variable Costs Fingerlings (length=3")

Feed (FCR= 1.6) Electricity Interest on operating capital Miscellaneous Total Variable Costs Fixed Costs Interest on average annual investment Property taxes Repairs and depreciation Total Fixed Costs Total Costs Returns to land and operator's management Fixed costs per pound Variable costs per pound Total costs per pound

10

percent percent percent

10 2 5

3,748 7,496 7,160

$200 0.35 0.77 1.12

Your Farm


Unit

Site preparation Water diversion

dol. dol.

Fiberglass tank Labor

- 12' diam.

Price/unit # of Units

Totals

Your Farm

1,500 1,000

tank

2370

12

28,440

hour

7

288

Sub-Total Equipment Demand feeder and mounting

2,016 32,956

unit

115

12

1,380

Tanks for transfer and harvest Loading net Grader Wader

unit unit unit unit

1000 45 300 100

1 2 1 1

1,000 90 300 100 2,870 35,826


Estimated Annual Costs and Returns

Annual Sales Trout Variable Costs Fingerlings (length=3") Feed (FCR=1.6) Electricity Labor (10 hrs per week) Interest on operating capital Miscellaneous Total Variable Costs Fixed Costs Interest on average annual investment Property taxes Repairs and depreciation Total Fixed Costs Total Costs Returns to land and operator's management Fixed costs per pound Variable costs per pound Total costs per pound

11

Unit

Price/ Unit ($)

# Units

Total ($)

Ib

1.2

20,000

24,000

each lb month hour dol.

0.21 0.3 10 5.5 0.1

19,000 32,000 12 500 16,460

3,990 9,600 120 2,750 1,646

18% 43% 1% 12% 7%

18,106

81%

1,791 717 1,691

8% 3% 8%

4,198 22,304

19% 100%

dol. dol. dol.

10% 2% 5%

17,913 35,826 33,810

$1,696 0.21 0.91 1.12

% of Total

Your Farm

.


Unit

Site preparation Water diversion

dol. dol.

-

Fiberglass tank 20' diam. Labor NPDES permit Delivery costs, etc. Sub-Total Equipment Demand feeders and mounting Tanks for transfer and harvest Loading net Grader Wader


Totals

Your Farm

2500 1,000

tank

7,300

5

36,500

hour dol.

7 250

720 1

5,040 250 2000 47,290

unit unit unit unit unit

115 1,000 45 600 100

20 1 3 1 2

2,300 1,000 135 600 200 4,235 51,525


Estimated Annual Costs and Returns Unit Annual Sales Trout Variable Costs Fingerlings (length =3") Feed (FCR = 1.6) Waste discharge fee Electricity Labor ( 30 hrs. per week) Misc./ Liquid oxygen Interest on operating capital Total Variable Costs Fixed Costs Interest on average annual investment Property taxes Repairs and depreciation Total Fixed Costs Total Costs Returns to land and operator's management Fixed costs per pound Variable costs per pound Total costs per pound

12

Price/ Unit ($)

# Units

Total ($)

% of Total

Ib

1.2

50,000

60,000

each Ib Ib month hour Ib dol

0.21 0.3 0.005 10 5.5 0.15 0.1

47,000 80,000 80,000 12 1,500 50,000 50,140

9,870 24,000 400 120 8,250 7,500 5,014 55,154

16% 39% 1% 0% 14% 12% 8% 90%

dol. dol. dol.

10% 2% 5%

25,763 51,525 46,235

2,576 1,031 2,312 5,919 61,073

4% 2% 4% 10% 100%

(-1,073) 0.12 1.1 1.22

Your Farm

Table 6 Expected Costs and Returns for a Fiberglass Tank System, 100,000 lbs./year Construction Site preparation Water diversion

Unit dol. dol.

-

Fiberglass tank 20' diam. Labor NPDES permit Delivery costs, etc. Sub-Total Equipment Demand feeders and mounting Tanks for transfer and harvest Loading net Grader Wader Sub-Total Total Initial Investment


Totals 3,500 1,000

tank

7,300

9

65,700

hour dol.

7 250

1,440 I

10,080 250 4000 84,530


115 1,000 45 600 100

36 I 3 2 I

4,140 1,000 135 1,200 100 6,575 91,105

Your Farm

Estimated Annual Costs and Returns Unit Annual Sales Ttrout Variable Costs Fingerlings (length =3") Feed (FCR = 1.6) Waste discharge fee Electricity Labor (60 hrs per week) Misc. / Liquid Oxygen Interest on operating capital Total Variable Costs Fixed Costs Interest on average annual investment Property taxes Repairs and depreciation Total Fixed Costs Total Costs Returns to land and operator's management Fixed costs per pound Variable costs per pound Total costs per pound

13

Price/ Unit ($)

# Units

Total ($)

% of Total

Ib

1.2

100,000

120,000

each Ib Ib month hour unit dol.

0.21 0.3 0.005 10 5.5 0.15 0.1

94,000 160,000 160,000 12 3,000 100,000 100,160

19,740 48,000 800 120 16,500 15,000 10,016 110,176

16% 40% 1% 0.10% 14% 12% 8% 91%

dol. dol. dol.

10% 2% 5%

45,553 91,105 80,775

4,555 1,822 4,039 10,416 120,592

4% 2% 3% 9% 100%

(-592) 0.1 1.1 1.21

Your Farm

Table 7 Expected Costs and Returns for a Raceway System, 20,000 lbs./year Construction Site preparation Raceway construction Labor Sub-Total Equipment Demand feeders and mounting Tanks for transfer and harvest Loading net Grader Wader Sub-Total Total Initial Investment

Unit dol. 10 pairs of tanks


Totals 1,500

hour

12,526 7

1 1000

12,526 7,000 21,026


115 1,000 45 150 100

20 1 2 1 1

2,300 1,000 90 150 100 3,640 24,666

Your Farm


Annual Sales Trout Variable Costs Fingerlings (length =3") Feed (FCR= 1. 6)

Electricity Labor (6 hrs. per week) Interest on operating capital Miscellaneous Total Variable Costs Fixed Costs Interest on average annual investment Interest on average Property taxes Repairs and depreciation Total Fixed Costs Total Costs Returns to land and operator's management Fixed costs per pound Variable costs per pound Total costs per pound

14

Unit

Price/ Unit ($)

# Units

Total ($)

% of Total

Ib

1.2

20,000

24,000

each lb month hour dol.

0.21 0.3 10 5.5 0.1

19,000 32,000 12 300 15,360

3,990 9,600 120 1,650 1,536

20% 49% 1% 8% 8%

16,896

87%

dol.

10%

12,333

1233

6%

dol. dol.

2% 5%

24,666 17,666

493 883 2,610 19,506

3% 5% 13% 100%

$4,494 0.13 0.84 0.98

Your Farm

Table 8 Expected Costs and Returns for a Raceway System, 50,000 Ibs./year Construction Site preparation Raceway Construction Labor NPDES permit Sub-Total Equipment Demand feeders and mounting Tanks for transfer and harvest Loading net Grader Wader Sub-Total Total Initial Investment


hour dol.



Totals 2500

19,805 7

1 1,500

19,805 10,500 250 33,055

115 1,000 45 150 100

20 I 3 2 1

2,300 1,000 135 300 100 3,835 36,890

Your Farm


Annual Sales Trout Variable Costs Fingerlings (length =3") Feed ( FCR = 1.6) Waste discharge fee Electricity Labor (15 hrs. per week) Interest on operating capital Miscellaneous Total Variable Costs Fixed costs Interest on average annual investment Property taxes Repairs and depreciation Total Fixed Costs Total Costs Returns to land and operator's management Fixed costs per pound Variable costs per pound Total costs per pound

15

Unit

Price/ Unit ($)

# Units

Total ($)

Ib

1.2

50,000

60,000

each Ib Ib month hour dol.

0.21 0.3 0.005 10 5.5 0.1

47,000 80,000 80,000 12 750 38,515

9,870 24,000 400 120 4,125 3,852

21% 52% 1% 0.30% 9% 8%

42,367

92%

1,845 738 1307 3,889 46,256

4% 2% 3% 8% 100%

dol. dol. dol.

10% 2% 5%

18,445 36,890 26,140

$13,744 0.08 0.85 0.93

% of Total

Your Farm

Table 9 Expected Costs and Returns for a Raceway System, 100,000 lbs./year Construction Site preparation Raceway construction Labor NPDES permit Sub-Total Equipment Demand feeders and mounting Tanks for transfer and harvest Loading net Grader Wader Sub-Total Total Initial Investment


hour dol.



Totals 3,500

26,628 7

1 2,000

26,628 14,000 250 44,378

115 1,000 45 150 100

20 1 3 2 1

2,300 1,000 135 300 100 3,835 48,213

Your Farm


Annual Sales Trout Variable Costs Fingerlings (length =3") Feed (FCR = 1.6) Waste discharge fee Electricity Labor (30 hrs per week) Interest on operating capital Miscellaneous Total Variable Costs Fixed costs Interest on average annual investment Property taxes Repairs and depreciation Total Fixed Costs Total Costs Returns to land and operator's management Fixed costs per pound Variable costs per pound Total costs per pound

16

Unit

Price/ Unit ($)

# Units

Total ($)

1b

1.2

100,000

120,000

each 1b 1b month hour dol.

0.21 0.3 0.005 10 5.5 0.1

94,000 160,000 160,000 12 1,500 76,910

19,740 48,000 800 120 8,250 7,691

22% 54% 1% 0.10% 9% 9%

84,601

94%

2,411 964 1,698 5,073 89,674

3% 1% 2% 6% 100%

dol. dol. dol.

10% 2% 5%

24,107 48,213 33,963

$30,326 0.05 0.85 0.9

% of Total

Your Farm

APPENDIX A REVIEW OF WASTE MANAGEMENT COSTS Management decisions made on the farm can greatly reduce the amount of waste. The type of feed (pelleted vs. extruded), and how and when the feed is administered are very important factors. The importance of quality ingredients and the balance of nutrients are well understood in trout culture. The manufacturing process also has an impact on the digestibility of the ingredients to the trout Recently the high-energy extruded pellet has been shown to reduce feed conversion rates without a reduction in growth, (Bender et aI., 1999), thereby reducing waste. In a study published in 1997 the internalized cost, or pollution prevention cost, of flow through systems using filters, was determined to be $.05/1b. of trout produced. This compared favorably with the pollution damage cost, or the external cost, which was estimated to be $.22/1b. (Smearman et aI., 1997). If the industry approaches the waste problem from a long term sustainable path, the efficient and economical way to deal with the problem is to internalize the cost According to the study, in a flow through system, the cost for a producer of 20,000 Ibs./yr. would be about $1,OOO/ yr. if it were internalized. Peng etal. (1997) showed the waste management cost of trout farms to be $.036/1b. of production. Posadas and LaSalle (1997) calculated the cost of waste treatment for catfish using wetlands to be $.075/1b. Three quarters of the cost was due to the purchase of mature plants for the study. Wetlands for waste treatment require larger areas of land and are affected by temperature and seasonal changes. Additional costs of tank design and filters could be necessary for proper waste management of the fiberglass or raceway system. Recent studies on waste management collection from raceways and circular tanks should be reviewed before construction (Boardman et aI., 1998; Timmons et aI., 1998). These studies show how waste collection costs can be minimized with proper designs for drainage systems at the onset of construction. The collected wastes could be used for field applications if laws permit or they could be channeled to a wetland. Utilizing fish wastes as nutrients for commercial plant production is another option that has been investigated (Bailey and Rakocy, 1999; Adler etaI., 1996). The level at which a producer would need to address waste management is determined, in many states, by the annual pounds of production or the annual feed consumption for the operation. In West Virginia a producer is regulated if the annual production exceeds 20,000 Ibs./year.

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APPENDIX B PERMITS AND INSPECTIONS REQUIRED IN WEST VIRGINIA

18

Activity

Permit

Fee

Contacts

Fish Processing Facility

Processing License Enrollment in Inspection Program

Varies

WV Department of Agriculture; Aquaculture Inspector (304)558-2226

Fish Processing Facility

NPDES Permit

Based on volume of discharge

Division of Environmental Protection; Chief of Water Resources (304)558-2107

Importation of Eggs, Fingerlings, or Fish from Out of State.

Fish Importation Permit

None

Division of Natural Resources; Wildlife Resources Section (304)558-2771

Food Fish Production

Enrollment in Inspection Program

None

WV Department of Agriculture; Aquaculture Inspection (304) 558-2226

Fish Production

Fish Pond License Fish Sellers License

$10 $10

Division of Natural Resources Law Enforcement Section (304)558-2784

Fish Production over 20,000 Ibs per year or 5,000 Ibs of feed per month (only when required by a DEP Inspector)

NPDES Permit

$250 upon application, annual fee based on maximum feed per month

Division of Environmental Protection; Chief of Water Resources (304)558-2107

Fee Fishing Operation

Commercial Fishing Preserve License

$IO/ycar

Division of Natural Resources; Law Enforcement Section (304)558-2784

Bait Fishing Production

DNR Permit(s)

Varies

Division of Natural Resources; Law Enforcement Section (304)558-2784

APPENDIX C ESTIMATED TANK AND RACEWAY CONSTRUCTION COSTS

a) Estimate for an 8' Polyethylene Tank Polyethylene tank Plumbing Labor Total cost excluding labor Total cost including labor

Unit 8' tank dol. hour

Cost/Unit($) 360 7

# Units 1 80 10

Total ($) 360 80 70 440 510

Tank measurement: 8 ft diameter; 3 ft deep Production volume: 125 cubic feet per tank (950 gal.) Production capacity per tank: 420 lbs. per year

b) Estimate for a 12' Fiberglass Tank Fiberglass tank Plumbing Labor Total unit cost excluding labor Total unit cost including labor

Unit 12' tank dol. hour

Cost/Unit($) 2,120 7

# Units 1 250 24

Total ($) 2,120 250 168 2,370 2,538

Dual drain tank: 12 ft diameter; 4 ft deep Production volume: 440 cubic feet per tank (3300 gal.) Production capacity per tank: 1,250 lbs. per year

c) Estimate for a 20' Fiberglass Tank Unit 20' tank dol. hour

Cost/Unit($) 7,300

Fiberglass tank Plumbing Labor 7 Total unit cost excluding labor Total unit cost including labor Dual drain tank: 12 ft diameter; 4 ft deep Production volume: 935 cubic feet per tank (7,000 gal.) Production capacity per tank: 11,000 lbs. per year

19

# Units 1 500 144

Total ($) 7,300 500 1008 7,800 8,808

d) Estimate for 10 Pairs of 29' Raceways: Annual Production of 20,000 lbs. Units cubic yard

Concrete 20 ft - .5 inch Rebar 100 ties Ties square-ft Forms dol Plumbing dol Water Diversion dol Screens Miscellaneous dol Labor hour Total cost excluding labor Total cost including labor

Cost/unit($) 67 4.25 50 0.65

7

# Units Total ($) 84 5,628 350 1,488 10 500 1,400 910 2,000 500 500 1,000 1000 7,000 12,526 19,526

Raceway length (ft) : 29 Raceway width (ft): 3.6 Raceway depth (ft): 1.75 Production volume: 125 cubic feet per raceway (950 gal.)

e) Estimate for 10 Pairs of 39' Raceways: Annual Production of 50,000 lbs. Concrete Rebar Ties Forms Plumbing Water Diversion Screens Miscellaneous Labor Total cost excluding labor Total cost including labor

Units cubic yard 20 ft - .5 inch 100 ties square- ft dol. dol. dol. dol. hour

Cost/unit($) 67 4.25 50 0.65

7

Raceway length (ft) : 39 Raceway width (ft): 4.8 Raceway depth (ft): 2.0 Production volume: 300 cubic feet per raceway (2470 gal.)

20

# Units Total ($) 140 9,380 500 2,125 10 500 2,000 1,300 3,000 1,000 1,000 1,500 1,500 10,500 19,805 30,305

f) Estimate for 10 Pairs of 49' Raceways: Annual Production of 100,000 lbs. Cost/unit($) # Units Total ($) Units cubic yard Concrete 67 220 14,740 .5 inch 20 ft Rebar 4.25 650 2,763 100 ties Ties 50 10 500 square- ft Forms 0.65 2,500 1,625 dol. Plumbing 3,000 dol. Water Diversion 1,000 dol. Screens 1,000 dol. Miscellaneous 2,000 2000 14,000 hour Labor 7 26,628 Total cost excluding labor 40,628 Total cost including labor Raceway length (ft) : 49 Raceway width (ft): 6.1 Raceway depth (ft): 2.5 Production volume: 600 cubic feet per raceway (4940 gal.)

REFERENCES Adler, P.R., Fumiomi, T., Glenn, D.M., Wade, E.M., Summerfelt, S.T., and Harper, J.K. (1996) Ecological Process Sows a Cost-Saving Idea for Enhancing Water Quality. Water Environment and Technology March, 1996 Bailey, D.S. and Rakocy, J.E. (1999) Cost analysis of an Aquaponic System for the Production of Red Talipia and Leaf Lettuce. Aquaculture America ’99, Jan 27-30, Tampa, FL Bender, T.R., Lukens,W.B., and Ricker, D.C. (1999) Pennsylvania Fish and Boat Commission, Benner Spring Fish Research Station, 1225 Shiloh Road, State College, P A. Boardman, G. D., Maillard, V., Nyland, J., Flick, G., and Libey, G. S. (1998) Final Report: The Characterization, Treatment and Improvement of Aquacultural Effluents. Departments of Civil and Environmental Engineering, Food Science and Technology, and Fisheries and Wildlife Sciences. VPI and SU Blacksburg, V A 24061 Dwyer, W.P. and Peterson, J.E. (1993) Evaluation of a low head oxygenator at Giant Springs State Fish Hatchery, Great Falls, Montana Progressive Fish Culturist 55: 121-124 Haskell, D.C. (1959) Trout growth in hatcheries. New York Fish and Game Journal 6: 205237. Heinen, J.M., Hankins, J.A., Weber, A.L., and Watten, B.J. (1996) A Simiclosed Recirculating-Water System for High-Density Culture of Rainbow Trout Progressive Fish Culturist 58: 11-22 Honeyfield, D.C. (1997) “Performance of rainbow trout fed either pelleted or extruded feed and the resulting fecal production and effluent water quality.” u.s. Fish & Wildlife Service National Biological Survey, P.O. Box 63 Wellsboro, PA 16901.

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Klontz, G.W. (1995. “Quantitative Methods for Intensive Aquaculture.” University of Idaho, Dept. ofFish & Wildlife Resources, Moscow, ID. Klontz, G.W. (1996) “Concepts and Methods of Intensive Aquaculture.” Murray, UT: Nelson & Sons, Inc. Klontz, G.W. (1998) “Aquaculture Information Series.” Murray, UT: Nelson & Sons, Inc.Klontz, G.W. (Undated) “A Manual for Rainbow Trout Production on the Family Klontz, G.W. (Undated) “A Manual for Rainbow Trout Production on the Family Owned Farm.” University of Idaho, Dept. offish & Wildlife Resources, Moscow, 10. North Carolina Cooperative Extension Service: AG-484 (1998) Aeration, Oxygenation, and Energy Use in Coldwater Aquaculture. Peng, J.,Vannieuwenhuyze, D., Rollin, X., Bois, C.M., Larondelle, Y. and P. Andre’. (1997) In: III International Symposium on Nutritional Strategies and Management of Aquaculture Waste. Abstracts (C.Y. Cho ed.). Proceedings, Vila Real, Portugal, Oct. 2-4, 1997. 58 p. Posadas, B.C. and LaSalle, M.W. (1997) Use of Constructed Wetlands to Improve Water Quality in Finfish pond culture. Coastal Research and Extension Center, Mississippi Agriculture and Forestry Experiment Station, Mississippi State University 2710 Beach Boulevard, Suite l-E, Biloxi, Mississippi 39531. Smearman, S.C., D’Souza, G.E. and Norton, VJ. (1997) Environmental and Resource Economics 10: pp. 167-175. Summerfelt, S., J. Davidson, T. Waldrop, and S. Tsukuda. (2000). “A Partial-Reuse System for Coldwater Aquaculture.” In: Proceedings of the Third International Conference of Recirculating Aquaculture, Roanoke, V A, July 19-21. Summerfelt, S.T. and M.B. Timmons. (2000). “Hydrodynamics in the ‘Cornell-Type’ DualDrain Tank.” In: Proceedings of the Third International Conference of Recirculating Aquaculture, Roanoke, VA, July 19-21. Summerfelt, S.T., M.B. Timmons, and B.J. Watten. (1999) “Tank and Raceway Culture.” Encyclopedia of Aquaculture. New York: John Wiley & Sons, Inc. Timmons, M.B., S.T. Summerfelt, and B.J. Vinci (1998). Review of Circular Tank Technology and Management. Aquacultural Engineering 18(1): 51-69 Westers, H. (1984). “Principles of Intensive Fish Culture.” Michigan Dept. of Natural Resources, Lansing, MI.

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