Tilapia aquaculture has emerged as a significant food source and a key economic activity in many regions. However, the decision of how many tilapia grow-out tanks a farm should have can be a crucial challenge for producers.
A study published by researchers from the Center for Research and Advanced Studies of the National Polytechnic Institute of Merida evaluated the effect of production scale, investment, and profitability of Oreochromis niloticus tilapia farming using Benefit/Cost (B/C), average and marginal return on investment (ROI), net present value (NPV), and internal rate of return (IRR).
The data to generate the proposed technical-economic model were obtained by the researchers from existing semi-intensive and intensive commercial fish farming operations in Yucatan, Mexico. For the study, the researchers analyzed 12 pond sizes and interviewed 21 fish farmers. Technical details, equipment costs, and operational costs were verified by consulting agencies.
Determining the Optimal Tilapia Farm Size
It is essential to note that this study is the first to evaluate the economic efficiency of tilapia production based on pond size (the number of grow-out tanks) and its production capacity. In this regard, one of the main focuses of the study was to determine the optimal size of a tilapia farm in terms of economic profitability.
To do this, two annual breeding cycles were considered, with a density of 35 fish per cubic meter and a 5% mortality rate. The commercial fish farm chosen for the study operated with varying numbers of tanks, ranging from 4 to 100, or even more production units. The study used HDPE liner tanks with a diameter of 16 meters and a volume of 212 cubic meters as the scale unit in an intensive outdoor system.
The simulation model results revealed that farms with sizes of 32, 48, 64, and 80 tanks had the highest IRR values, ranging from 78% to 111%. This indicates significantly greater economic efficiency compared to farms of other sizes.
Increasing returns to scale were observed in farms with sizes of 1 to 30 tanks, while in larger farms, the trend pointed toward constant returns to scale. A particularly notable scale effect was observed when increasing from 32 to 48 tanks, resulting in a 1.5% decrease in average production cost, a 13.9% reduction in unit investment cost, a 63% increase in NPV, and a 21.1% increase in IRR.
Recommendations for Fish Farmers
The study’s results establish that tilapia aquaculture is favorable at larger operating scales and with the right number of tanks. “The average cost to operate a tilapia production system with 31 tanks is US$1.55 per kilogram, which reduces to US$1.50 per kilogram for a system with 80 to 100 tanks,” they report.
Based on the study’s findings, the researchers recommend that tilapia producers initially invest in a 32-tank grow-out system and then scale up production to 48 tanks. This results in significant improvements in industry profitability and can be an effective strategy for those looking to expand their tilapia aquaculture operations.
Determining the optimal size of a tilapia farm is a critical decision for producers in the aquaculture industry. This study offers valuable insight into how production size can significantly affect profitability and economic efficiency.
“In this study, evaluating the economic return on the production and investment of aquaculture farms in Yucatan indicates that a farm with 48 grow-out tanks would be the most suitable alternative for tilapia investment or production scale,” they conclude.
By combining financial data with production scale information, tilapia producers can make more informed and strategic decisions to optimize their operations and contribute to the sustainable success of tilapia aquaculture.
The study was funded by the National Council for Science and Technology (CONACYT).
Centro de Investigación y de Estudios Avanzados
Instituto Politécnico Nacional Mérida
Reference (open access)
Burad-Méndez A, Domínguez-May R, Olvera-Novoa M, Robledo D, Salas S. Economic analysis of Nile tilapia (Oreochromis niloticus) production based on farm size and number of rearing tanks. Lat. Am. J. Aquat. Res.. 2023;51(5): 747-759. Available from: doi:10.3856/vol51-issue5-fulltext-3071.