Production effects of a greenhouse enclosed nursery system on the projected financial performance of a South Carolina marine shrimp farm

[From the U.S. Government Printing Office, www.gpo.gov]

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PRODUCTION EFFECTS OF A GREENHOUSE ENCLOSED NURSERY
SYSTEM ON THE PROJECTED FINANCIAL PERFORMANCE
OF A SOUTH CAROLINA MARINE SHRIMP FARM

Raymond J. Rhodes'
S. Sureshwaran2
Carol Greene2
Craig L. Browdy3
3
John D. Holloway, Jr.
Tzachi M. Samocha'

Economic Analysis and Seafood Marketing Program
office of Fisheries Management
Division of Marine Resources
S.C. Department of Natural Resources
Post Office Box 12559
Charleston, SC 29422-2559

and

2 Department of Agribusiness and Economics
South Carolina State University
Campus Post Office Box 7282
Orangeburg, SC 29117

and

Waddell Mariculture Research and Development Center
Marine Resources Research Institute
Division of Marine Resources
S.C. Department of Natural Resources
0 Post Office Box 809
.0 Bluffton, SC 29910

and

Texas Agricultural Experiment Station
Shrimp Mariculture Project
4301 Waldron Road
Corpus Christi, TX 78418

This work was partially funded by the U.S. Department of
Agriculture as administered by the Oceanic Institute/Gulf Coast
-3) Research Laboratory Consortium. The views expressed in this report
do not necessarily reflect those of the U.S. Department of
Agriculture, Oceanic Institute, S.C. Department of Natural
Resources, or S.C. State University. Any commercial product or
trade name mentioned herein is not to be construed as an
C" endorsement.

US Department of Commerce
NOAA Coastal Services Center Library
2234 South Hobson Avenue
C-3 Charleston, SC 29405-2413
LAJ
C3

Table of Contents

Page

List of Tables . . . . . . . . . . . . . . . . . . . . . . iii

List of Figures . . . . . . . . . . . . . . . . . . . . . . iii

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . 2

Methods and Data . . . . . . . . . . . . . . . . . . . . . . . 3

Growout Operation . . . . . . . . . . . . . . . . . . . 3

Nursery System . . . . . . . . . . . . . . . . . . . . . 4

Facility Design and Equipment . . . . . . . . . . . 4

Production Assumptions . . . . . . . . . . . . . . 5

Major Financial and Operating Assumptions . . . . . 6

Alternative Scenarios . . . . . . . . . . . . . . . . . 6

Results . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Discussion . . . . . . . . . . . . . . . . . . . . . . . . . 11

Conclusions . . . . . . . . . . . . . . . . . . . . . . . . 14

Literature Cited . . . . . . . . . . . . . . . . . . . . . 17

The South Carolina Department of Natural Resources prohibits discrimination on
the basis of race, color, sex, national origin, handicap or age. Direct all
inquires to the Office of Personnel, PO Box 167, Columbia, SC 29202.

LIST OF TABLES

TABLE Page

1. Summary of Facility and Equipment Costs for a
Hypothetical 24-ha (water area) Penaeus vannamei Shrimp
Farm without,a Nursery System in South Carolina, 1994 8

2. Projected Annual Income Statement for Operating
Years Three Through Ten and Discounted Cash Flow
Analysis for a Hypothetical 24-ha Penaeus vannamei Shrimp
Farm without a Nursery System in South Carolina . . . . . 9

3. Summary of Additional Facility and Equipment Costs
for a Greenhouse Enclosed Nursery System on a
Hypothetical Penaeus vannamei 24-ha Shrimp Farm in
South Carolina, 1994 . . . . . . . . . . . . . 10

4. Projected Annual Income Statement for Operating Years
Three Through Ten and Discounted Cash Flow Analysis
for a Hypothetical 24-ha Penaeus vannamei Shrimp Farm
with a Greenhouse Enclosed Nursery System in South
Carolina . . . . . . . . . . . . . . . . . . . . . . . 12

5. Discounted Cash Flow Analysis for the Alternative
Scenarios for a Hypothetical Penaeus vannamei Shrimp
Farm with and without a nursery system in South
Carolina . . . . . . . . . . . . . . . . . . . . . . . . 13

LIST OF FIGURES

FIGURE,

1. Schematic Diagram of Raceway System . . . . . . . . . . 1S

2. Schematic Diagram of Greenhouse Enclosure . . . . . . . 16

SMOMRY 70*-., shrimp harvested at an
average size of 17g, and an
South Carolina's climate ex-pond price of $4.95/kg. In
restricts marine shrimp another scenario, the effects
growing to one season of five of including a greenhouse
to seven months, which is only enclosed nursery system are
long enough to produce one evaluated. The nursery system
crop per year. This is is assumed to only supply
considerably less than in the about 20% of the farm's PL
Latin American and Southeast stocking requirements, and the
Asian countries where two or remaining 80*1 is directly
more crops are grown each stocked. Survival rates are
year. For South Carolina assumed to be 80% in the
shrimp producers to be nursery phase and 75*1 in the
competitive and recover growout phase for an overall
capital cost, they must aggregate survival rate of
maximize production during 60'1. Larger shrimps (R = 20g)
this limited growing season. are produced when a nursery is
utilized, fetching a price of
The utilization of $5.10/kg. The effects of
greenhouse enclosed nursery alternative prices and
raceways may be a viable survival rates are examined in
method of increasing the four other scenarios.
growing season in South
Carolina. Postlarvae (PL) are The.total initial
kept in nursery raceways until investment in facilities and
they reach the juvenile stage equipment to begin a P.
and are then transferred to vannamei growout shrimp farm
growout ponds. Experimental with a greenhouse enclosed
research in South Carolina and nursery system is $1.1
other states indicates that million. This represents a
nursery systems can improve $103,000 increase in
the production (i.e. total investment from a facility
quantity of shrimp harvested which only contains a growout
and average harvest size) of farm. After the second year,
shrimp farms. Consequently, when the farm produces at full
the objective of this analysis capacity, the projected net
is to simulate the comparative cash flow is $397,000. This
financial performance of a is a $56,000 per annum
growout shrimp farm with and increase compared to the base
without a nursery system in case scenario without a
S-outh Carolina. The nursery system.
hypothetical shrimp farm
described in this report The 10-year projected
includes 24 ponds, each 1 modified internal rate of
hectare (ha) in size, located return (MIRR) before income
on 31 ha of land near a salt taxes for the growout farm
water source. The base with the nursery system,
scenario for growout assumes a 18.9%, is marginally higher
stocking density of 80 than in the base scenario,
postlarvae(PL) /M2 , an 17.9% without the nursery.
aggregate survival rate of The projected net present

value (NPV) with the nursery Carolina, with one-fifth of
system, $384,000, is also the nation's cultured output,
higher than the base scenario, is the second largest farmed
$259,000. The internal rate shrimp producing state.
of return (IRR), NPV and MIRR
were sensitive to changes in Commercial cultivation of
the base case prices and marine shrimp in earthen ponds
survival rates. However, in or impoundments in South
all scenarios discussed in Carolina is climatically
this report, the IRR and MIRR restricted to producing one
are higher than the assumed crop per year, over a five to
15'1 risk-adjusted cost of seven month period. This is
capital. considerably less than in the
Latin American and Southeast
Given the marginal Asian countries where two or
increase in NPV when partially more crops are commonly grown
stocking the growout facility each year. For shrimp
with nursery derived shrimp, producers in temperate regions
it is questionable whether the to be profitable, they
present nursery system is a generally must cost
viable financial alternative effectively maximize
solely based upon increasing production during this limited
aggregate yields and harvest growing season, perhaps by
sizes. However, additional incorporating advanced
financial analyses are needed techniques into farming
focusing on possible nursery operations. In addition, the
operation risks, nursery/farm short window of opportunity
size economies of scale and for stocking coupled with
nursery effects on coping with limited supplies of healthy
PL supply risks. Under postlarvae (PL) have forced
conditions where PL supplies commercial growers to stock
are limited and/or are of late in the season, reduce
questionable health or stocking densities and/or not
fitness, nursery systems may stock any or all ponds in a
be the only practical way for given season. For example, in
temperate growers to reduce 1989, several SC farms had to
risks associated with PL stock reduce planned stocking
availability. densities and/or not stock all
their ponds due to an apparent
INTRODUCTION seasonal shortage of quality
PL (Rhodes et al., 1992).
In recent years, farmed
sh*rimp production in the The utilization of
United States has increased greenhouse enclosed nursery
substantially. In the 1993 raceways may be a viable
season, the United States method of expanding the
produced a record crop of stocking window while
farm-raised shrimp, increasing the growing season
approximately 2,500 metric in South Carolina. PL are
tons, 25% more than the kept in nursery raceways until
estimated 2,000 tons in 1992 they are transferred to
(Rosenberry, 1993). South growout ponds. Advantages of

nursery raceways compared to operating risks (e.g.
direct stocking of PL include equipment failures, etc.).
better control of predators,
more accurate production Research results on the
projections, less feed waste effects of nursery raceway
(feed is generally the largest systems are contradictory.
operating cost of a shrimp Samocha and Lawrence (1992)
farm's budget), and increased concluded that an intensive
profitability (Samocha et al., nursery raceway system
1993A). In essence, a generally results in larger
greenhouse enclosed nursery shrimp and thus, greater
facility may provide the market price and higher
following three advantages: revenue. In contrast, Juan et
(1) The growout season may be al.(1988) concluded that
extended, allowing for the direct stocking of growout
production of larger shrimps ponds with PL and producing
or possibly two crops per one crop per year in southern
year. (2) Proper stocking of Texas is more profitable than
juveniles following a nursery using intensive raceway
phase should increase survival systems and producing two
rates and improve consistency crops per year. The
in estimating pond biomass extrapolation of results to
during the growout phase. South Carolina is questionable
This can result in improved given that Texas producers
pond and feed management. (3) generally have a longer
The nursery could allow growout season. Consequently,
producers more flexibility in given the advantages and
stocking schedules by taking disadvantages of greenhouse
delivery of PL earlier in the nursery systems, the objective
year (e.g. March and/or April) of this research is to compare
and "stockpiling" the PL in the financial viability of a
their nursery facility. growout shrimp farm with and
without a nursery system in
Yet, there are potential South Carolina.
di-sadvantages of implementing
this type of intensive nursery METHODS AND DATA
system. Before water
temperatures reach 20*C to Growout Operation
25'C, sea water temperature
must be increased by some Facility design and
means in the nursery system equipment, production
for operation. An-intensive assumptions and major
greenhouse system is also more financial assumptions for the
expensive to'build than growout operation are
regular outdoor nursery ponds discussed thoroughly in
and a greater level of worker Sureshwaran et al. (1994). A
skill is needed to maintain brief review is provided
and operate the system. In below.
addition, high stocking
densities in raceways can The facility consists of
increase the probability of 24 ponds [See Figure 1 in
massive mortalities due to Sureshwaran et al.(1994)],

each of -1 hectare in size, individuals, restaurant
constructed on a 31 hectare distributors, and wholesalers.
farm that is leased near a Prices for the base scenarios
saltwater source. Specific are similar to those that
pathogen free (SPF) P. prevailed in South Carolina
vannamei are used in this during 1993 for the estimated
study (Wyban et al., 1992, harvest weights. Post-
1993). It has been found that harvesting losses were set at
use of SPF P. vannamei has 2% of total harvest.
increased survival rates, feed
ef*ficiency, production and Nursery System
profitability for the shrimp
industry (Carpenter and Brock, Facility Design And Equipment
1992, Jaenike et al., 1992).
The plan and operation of
The length of the growout the nursery system discussed
cycle is 5.0 months. in Samocha and Lawrence(1992)
Aggregate survival is assumed provide the basis for the
as 7501. The risks associated present design. In general,
with growing shrimp include the hypothetical nursery
nutritional and environmental system consists of 4 concrete
factors, such as poor quality raceway structures each 10
feed, poor water quality, feet wide X 108 feet long in
pollution, and low dissolved size, constructed on land that,
oxygen. The risks of growing is available as part of the
shrimp are not examined in growout operation (Figures 1
this study. In addition, the and 2). A 2-foot walkway
study does not account for separates each raceway.
natural disasters such as Raceways are built to
drought, hurricanes, etc. alleviate complications of
drainage at harvest. The
A feed conversion rate of forms are fabricated from
2..O:l is used. The harvest fiber mesh concrete. Each
weight is estimated using a raceway has a center partition
density dependent growth model and a water depth of 4 feet.
(Sureshwaran et al., 1994). A The bottom slope is 0.5
before-tax discount rate of percent with a 5-foot deep
15*1 and a planning horizon of sump at one end. The sump
10 years is assumed. Initial aids in the removal of waste
investment starts in year 0, from the raceways. A 58 feet
first year output is 50% of wide X 144 feet high gutter
maximum capacity, second year connected greenhouse is
output is 75-'. of maximum constructed to.enclose
capacity and third year raceways.
overall production is at 1000-.
of capacity. An average water exchange
rate of 30'-. per day is
It is assumed that all employed with a maximum of 50%
shrimp are produced for normal per day. To pump the water
market sales, i.e., no live into raceways, 4 pumps with
shrimp sales. These shrimp flow ratings of 240 gallons
are sold head-on (whole) to per minute and 5 horsepower

(hp) motors are used. The capital, i.e., no loans. The
pumps allow for oxygen annual financial projections
injection, water circulation, for this facility are
and filtration. One sand generated using a spreadsheet
filter per raceway is template prepared by Applied
required. Each will be Analysis, Inc. (AAI), (Leung
equipped with top mounted and Rowland, 1989). A
multi-port valves and will modified internal rate of
have the capacity of about 20 return (MIRR) formula was
MI/h for each raceway. The added to the AAI original
sand filter is responsible for template. MIRR is defined as
filtering incoming sea water the interest rate applied to
as well as the raceway water. negative project balances that
It is assumed that three phase equates the final project
electrical wiring is used for balance to zero. When
pumps. The multi-port valve compared to the internal rate
directs water from pump to of return (IRR), MIRR is a
sand filter then back to the better measure of
raceway or to the sump for profitability because the MIRR
drainage. An oxygen injection assumes that net cash flows
system is used for aeration from all investment projects
when needed. The system are reinvested at the cost of
includes a liquid oxygen capital while the IRR assumes
storage tank, pressure that cash flows are reinvested
regulator, distribution system at the project's own IRR
pipes and valves, oxygen (Brigham and Gapenski, 1990).
filters, oxygen flow meters,
and oxygen diffusers.
Production Assumptions
Equipment required for
the nursery system are: (1) a Raceways will be stocked
hauling trailer for at 12,500 PL /M2 in early
transporting juveniles to March. All PL are stocked in
growout ponds'; (2) 20 one day and harvested three
automatic feeders; (3) weeks later. The PL in the
harvesting equipment; (4) nursery raceway system are
alarm system, and (5) an assumed to have a survival
Artemia hatching system. it rate of 80'1 and a feed
is assumed that all personnel conversion rate of 2.0:1. The
from the grow-out operation feeding rates for dry feed
are employed for nursery vary from 10'i in the first
needs. Equipment required for week, 12.5% in the second week
the nursery system already and 15% in the.third week. The
available in the grow-out farm PL are fed dry feed from
are: (1) office trailer; (2) stocking according to
trucks; and (3) harvest and consumption, and feed particle
lab equipment. The straight- size is adjusted according to
line depreciation method is animal size. Artemia nauplii
used for the growout and and frozen adult Artemia are
nursery facility. It is also offered as a supplement to dry
assumed that this hypothetical feeds.
facility is not funded by debt

Shrimp reared from PL density of 80 PL/mI, the
that are transferred from the nursery system supplies
nursery system intp growout 20'1 of the farm's
ponds are assumed to have a stocking requirements,
higher survival rate of 75% nursery survival is 800-.
during the growout phase and' and growout survival rate
reach a larger harvest size of of shrimp from nursery is
20g, when compared with direct 75*1, harvest price of
stocking. The nursery system shrimp from nursery is
will supply about 20% of the $5.10/kg for 20g shrimp,
farm's stocking requirements, growth, survival and
and the remaining 80'1 is harvest price of direct
direct stocked. stocked.PL are the same
as scenario SlA.
Major Financial And Operating
Assumptions Scenario S2A: Growout
Only - Same as SlA except
The major financial and harvest price decreased
operating assumptions for the to $4.70/kg.
nursery system are the
following: (1) price of PL Scenario S2B: Growout
including transportation is with Nursery - Same as
$10.00 per 1,000; and (2) the SlB except harvest price
cost of Artemia, including the of directly stocked PL is
hatchery system, is $2,200 for $4.70/kg and $4.90/kg for
a 3-week period. other shrimp from nursery.
financial assumptions are
similar to the growout farm: Scenario 'S3B: Growout
(1) a before-tax discount rate with Nursery - Same as
set at 15%; (2) planning SlB except survival rate
horizon is 10 years; and (3) during the nursery phase
all values are measured in is decreased to 65-0..
1994 dollars.
Scenario S4B: Growout
Alternative Scenarios with Nursery - Same as
SlB except survival
The following six rate during the nursery
scenarios are developed to phase is increased to
compare the effects of 850-o.
alternative survival rates and
ex-pond prices: Scenarios SlA and SiB are
"base case" scenarios for
Scenario SlA: Growout growout without and with a
Only - Stocking density nursery system.
of 80 PL /M2 , direct
stocking growout survival RESULTS
rate of 70*-., harvest
price of $4.95/kg for 17g A base case scenario for
shrimp. the P. vannamei growout
operation only (Scenario S1A)
Scenario S1B: Growout serves as a reference po 'int
with Nursery - Stocking for evaluating the impacts of

alternat ive scenarios. The ten-year (before
Scenario SlB is the base case income taxes) internal rate of
for a farm with a greenhouse return (IRR) and net present
enclosed nursery system. The value (NPV) were projected.
scenarios with the growout The ten-year IRR is 21.50-.
operation only (S2A) and the (Table 2), which is greater
combined growout and nursery than the discount rate of 15%.
operation (S2B) evaluate the NPV in ten years is $259,000.
impacts of decreases in ex- The modified internal rate of
pond prices. Scenarios S3B return (MIRR) in ten years is
and S4B consider a 100-o projected to be 17.9-. (Table
decrease and increase, 2).
respectively, in the nursery
survival rates. The estimated additional
investment in facilities and
The projected initial equipment necessary to
investment in facilities and construct a greenhouse
equipment is approximately enclosed nursery system on an
$998,000 for the 24-ha P. existing shrimp growout
vannamei growout shrimp farm facility is about $103,000
without a nursery system (Table 3). The total
(Table 1). Equipment estimated initial investment
comprises about 49% of this in facilities and equipment to
cost. Land clearing and construct a growout shrimp
construction costs account for farm with a greenhouse
approximately 480-.. The enclosed nursery system is
operating cost in year 1 is about $1.1 million. The
$0.38 million. Therefore, the operating cost in year 1 is
growout shrimp farm without a $0.39 million. Therefore, the
nu'rsery system requires a growout shrimp farm with a
total initial investment of nursery system requires a
$1.38 million before any total initial investment of
revenue from sales is nearly $1.5 million before any
received. revenue from sales is
received.
A simple, pro forma
annual income statement for A simple, pro forma
operating years three through annual income statement for
ten was generated for the P. operating years three through
vannamei growout shrimp farm ten was generated for this
without'a nursery system shrimp farm with a nursery
(Table 2). Projected annual system (Table 4). Projected
sales are about $1.11 million annual sales are $1.18 million
at full capacity, and total at full capacity, and total
cash operating cost is $0.77 cash operating cost is $0.78
million. Feed and PL million. Again, feed and PL
accounted for the largest accounted for the largest
percentage of operating cost, percentage of operating costs,
33% and 25%, respectively 33-.' and 2601, respectively.
(Table 2). Energy accounts
for 10% of the operating cost.

Table 1. Summary o-f facility and equipment costs for a
hypothetical 24-ha (water area) Penaeus vannamei shrimp
farm without a nursery system in South Carolina, 1994.

Item Cost Percent' Useful
years

DEVELOPMENT COST
Project Report $10,000 20
Project Manager 20,000
Subtotal $30,000 3.006

LAND CLEARING AND FACILITIES2
Land Clearing, 31ha $85,250 20
Pond Construction 180,000 10
Seawater Pumps, 3 26,955 10
Electrical System 20,016 10
Discharge and Intake System 96,000 10
Buildings 54,000 20
Survey, Permits & Design 15,000. 47.896 10
Subtotal $477,221

EQUIPMENT
Harvest Equipment $15,000 10
Feed Storage Bins 36,000 10
Paddlewheels 240,000 5
Trucks/tractors 62,500 20
Feeding System 40,500 5
Power Equipment 11,000 10
Pumps 82,800 5
Other 15,000
Subtotal $490,300 .49.2-06

TOTAL COSTS $997,521 100.001
FTotal Cost Per Water Area: $41,563/ha

'Percent of total cost.

2Jt is assumed that the land would be leased.

Table 2. Projected annual income statement for operating years three
through ten and discounted cash flow analysis for a
hypothetical 24-ha Penaeus vannamei shrimp farm without a
nursery system in South Carolina.

Item Value or Cost Percent'
(in thousands)

Projected Annual Sales $ 1,108
(223,910 kilograms at $4.95/kg)

Projected Annual Ex1penses
Pos-tlarvae $192 250-.
Feed 252 33
Energy 80 10
Land lease 60 8
Labor 59 8
Salaried Personnel 83 11
Contingency 8 1
Other 33 4

TOTAL OPERATING COST: $767 10001

Operating Cost Per Kg: $3.43/kg
Projected Depreciation: $129
Total Operating Costs with Depreciation: $897

Projected Net Income Before Taxes: $211

Net Cash Flow
(Sales Minus Total Operating Cost) _L:L4 1
Net Annual Cash Flow Per Kg: $1.52/kg-

DISCOUNTED CASH FLOW ANALYSIS: 10 years

Net Present Value (dollars 0001s) at 15%: $2S9

Internal Rate of Return: 21.53-0o

Modified Internal Rate of Return: 17.8606

'Percent of total cost.

Table 3. Summary of additional facility and equipment costs for a
greenhouse enclosed nursery system on a hypothetical Penaeus
vannamei 24-ha shrimp farm in South Carolina, 1994.

Item Cost Percent' Useful years

FACILITIES

Greenhouse $41,352 10
Raceway Construction 28,000 is
Pumping 8,300 10
Other 4,916 80.3-0.
Subtotal $82,569

EQUIPMENT

Liners $6,848 10
Feeders, 20 2,000 5
Sand Filters, 4 1,600 10
Transfer Trailer 2,500 10
Pumps 4,140 10
Other Equipment & Materials 3,140 10
Subtotal 20,228 19.7@;

[email protected] COSTS: $102,796 100.01

'Percentage of total operating cost.

Energy accounted for 10'i of the debatable if much of the farm's
operating cost. Total annual staff time is used in the off
cash outflow is $0.780 million; season for repair and
the average operating cost is maintenance tasks related to
$3.33/kg (Table 4). The the growout operation.
weighted, average selling price
is $4.99/kgl. In the base scenario,
growout survival was
The projected ten-year MIRR hypothetically projected to be
is 18. 9*1 (Table 4) which is 75-. for ponds stocked with
greater than the before-tax nursery juveniles as compared
discount rate of 15%. The to 70@; for direct stocked
projected NPV in ten years is ponds. In addition, the
$384,000. The IRR in ten years projected growout harvest size
is projected to be 23.7'-.. Thus, of nursery shrimp was 20g
the inclusion of a greenhouse compared to 17g for directly
enclosed nursery system might stocked PL. These projected
modestly' increase the increases in harvest size and
profitability of a 24-ha shrimp survival rate of the nursery
farm in South Carolina. shrimp from the growout ponds
resulted in an overall increase
The profitability of the in projected harvest biomass
systems was compared under and in total annual revenues
alternative scenarios (Table 5). (sales). Potential management
As expected, when price advantages (e.g. improved feed
decreases, the profitability of management) associated with
shrimp farming decreases. As in stocking of juveniles were not
Scenario S3B, a decrease in the addressed in this study.
nursery survival rate to 6501
w i 1 1 reduce o v e r a 1 1 Expected production
profitability below that of the benefits need to be considered
non-nursery base scenario, SlA. relative to additional
Scenario S4B shows that an operating risks associated w 'ith
increase in the nursery survival nursery systems. For example,
rate2 substantially increases transferring commercial
the overall profitability. quantities of juvenile shrimp
from raceway tanks to outdoor
DISCUSSION earthen ponds during warm
weather may cause significant
Relative to the investment mortality. There are also
in - a growout facility, the significant mortality risks
inclusion of a greenhouse associated with the operation
enclosed nursery system required of an intensive nursery system.
a marginal increase in the None of these Tisks were
initial investment in equipment analyzed in this study.
and facilities. There were also
some increases in PL and energy Economies of scale were
cost components of operating not considered, therefore the
expenses. Labor costs were not results of this study may be
increased in this analysis more beneficial to large scale
because it was assumed that the producers than small producers
same staff would operate both (e.g. less than 10-ha farms).
the raceways and the growout In addition, expanding the
operation. This assumption is

Table 4. Projected annual income statement for operating years
-three through ten and discounted cash flow analysis for a
hypothetical 24-ha Penaeus vannamei shrimp farm with a
greenhouse enclosed nursery system in South Carolina.

Item Value or Cost Percent'
(in thousands)

Projected Annual Sales
177,000 kilograms at $4.9S/kg $876
59,000 kilograms at $5.10/kg 301

Total Sales $1,177

Prolected Annual Exioenses
Post larvae $202 2601
Feed 254 33
Energy 80 10
Land lease 60 8
Labor 59 8
Salaried Personnel 83 11
Contingency 8 1
Other 33 4

TOTAL OPERATING COST: $780 10001.

110perating Cost per Kg.: $3.33/kg.

Projected Depreciation: $139
Total Operating Costs with Depreciation: $919

Projected Net Income before Taxes: $258

Net Cash Flow: $397
(Sales Minus Total Operating Cost):
IFNet-Znual Cash Flow per Kg.: $1.68/kg.

DISCOUNTED CASH FLOW ANALYSIS: 10 years

Net Present value (dollars 000's) at 15'1: $384

Internal Rate of Return: 23.650-.

Modified Internal Rate of Return: 18.900-.

Percentage of total operating cost.

Tal5le 5. Discounted cash flow analysis for the alternative
scenarios for a hypothetical Penaeus vannamei shrimp farm
with and without a nursery system in South Carolina.

Scenarios NPV IRR (0-.) MIRR

Scenario SlA $259,000* 21.53* 17.86*
Scenario SlB $384,000* 23.65* 18.90*

Scenario S2A $ 45,000 16.19 15.39
Scenario S2B $170,000 18.96 16.75

Scenario S3B $258,000 20.91 17.6S

Scenario S4B $511,000 26.30 20.03

Base scenarios.

Scenario SlA: Growout Only Stocking density of 80 PL M2,
direct stocking growout survival rate of 70%, harvest price of
$4.95/kg for 17g shrimp.

Scenario SlB: Growout with Nursery - Stocking density of 80
PL/M2, the nursery system supplies 20-06 of the farm's stocking
requirements, nursery survival is 80% and growout survival rate
of shrimp from nursery is 75-., harvest price of shrimp from
nursery is $5.10/kg for 20g shrimp, growth, survival and
harvest price of direct stocked PL are the same as scenario
SIA.

Scenario S2A: Growout Only - Same as SIA except harvest price
decreased to $4.70/kg.

Scenario S2B: Grow6ut with Nursery - Same as SlB except
harvest price of directly stocked PL is $4.70/kg and $4.90/kg.
for shrimp from nursery.

Scenario S3B: Growout with Nursery - Same as S1B except
survival rate during the nursery phase is decreased to 651.

Scenario S4B: Growout with Nursery - Same as.SlB except
survival rate during the nursery phase is increased to 85%.

NPV = Net present value before taxes.

IRR = Internal rate of return before taxes.

MIRR = Modified internal rate of return before taxes.

Before-tax discount rate is 15%.

scale of-the nurse.syst-em to growout shrimp farm without the
supply.a major portion of nursery system. Given this
juveniles.stocked in the small increase in profitability
growout ponds was not examined. when partially stocking a
Also, various opportunity costs growout facility with nursery
were not evaluated (e.g. derived shrimp, it is
marketable securities, etc.). questionable whether an
enclosed greenhouse nursery
As previously discussed, system is a viable financial
one of the potential advantages alternative sclel based upon
of a nursery system is allowing increasing aggregate yields and
a producer to stockpile PL, harvest size.
before they are needed for
stocking growout ponds. Additional financial
Moreover, if supplies of PL analysis on the costs and
become tighter in the future benefits of shrimp nursery
seasons and/or PL health and techniques for penaeid shrimp
fitness are not assured, farms working in locations with
nursery systems may become the a limited growing season is
only practical way for SC needed. Future analyses should
producers to reduce these PL focus on possible nursery
supply risks. The financial operation risks, nursery/farm
"trade-off" between reducing PL size considerations' and
supply risks vs. operating nursery effects on coping with
risks of stockpiling PL was not PL supply risks.
examined in this analysis.

CONCLUSIONS

The long term viability of
the South Carolina shrimp
farming, among other factors,
depends on the ability of its
producers to incorporate new
techniques, particularly those
wit.h the potential to improve
production during a limited
growing season. Some believe
that greenhouse enclosed
nursery facilities may offer
such an opportunity to the
producers. Consequently, the
comparative financial
performance of a growout
operation with a greenhouse
enclosed nursery system was
evaluated in this study. The
projected, before taxes MIRR
for a hypothetical P. vannamei
growout shrimp farm with a
greenhouse enclosed intensive
nursery system was 18.9-i;, only
slightly greater than the
estimated 17.9-. MIRR for a

Figure I Schematic Diagram of Raceway System

Center partition Top View Manifold

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AirlitL3 Air Diffusers
SWnP Side View

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5 4 Airlifts 31611

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81 1001

Figure 2 Schematic Diagram of Greenhouse Enclosure

10,

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LITERATURE CITED Rhodes, R.J., K. McGovern-
Hopkins, and C.L. Browdy.
Brigham, E.F. and L.C. 1992. Preliminary
Gapenski. 1990. Financial feasibility
Intermediate financial analysis of an independent
management. The Dryden marine shrimp hatchery
Press, Orlando, FL., located in South Carolina.
923pp. South Carolina Marine
Resources Center,
Carpenter, N. and J.A. Brock. Technical Report Number
1992. Growth and survival 80.
of virus infected SPF P.
vannamei on a shrimp farm Rosenberry, B. 1993. (Editor)
in Hawaii. Pages 285-294 World Shrimp Farming:
In: W. Fulks and K.L. Main Special Report, Shrimp
(Editors). Diseases of Farming in the United
cultured penaeid shrimp in States. Aquaculture
Asia and the United Digest, San Diego, CA,
States. Oceanic Institute, USA.
Honolulu, HI, USA.
Samocha, T.M., and A.L.
Jaenike, F., K. Gregg, and L. Lawerence. 1992. Shrimp
Hamper. Shrimp production Nursery Systems and
in Texas using specific Management. Pages 87-105,
pathogen-free stocks. In: J. Wyban, (Editor).
Pages 295-302 In: W. Fulks Proceedings of the Special
and K.L. Main (Editors). Session on Shrimp Farming.
Diseases of cultured World Aquaculture Society,
penaeid shrimp in Asia and Baton Rouge, LA, USA.
the United States.
Oceanic Institute Samocha, T.M., A.L. Lawrence,
Honolulu, HI, USA. and W.A. Bray. 1993A.
Design and operation of an
Juan, Y., W.L. Griffin, and intensive nursery for
A.L. Lawrence. 1988. penaeid shrimp. Pages
Production costs 173-210, In: J.P. McVey
of juvenile penaeid shrimp and J.R. Moore, (Editors).
in an intensive greenhouse CRC Handbook of
raceway nursery system. Mariculture, Vol. I.,
Journal of the World Crustacean Aquaculture.
Aquaculture Society, CRC Press, Boca Raton, FL,
19:149-160. USA.

Leung, P.S., and L.W. Rowland. Samocha, T.M., A.L. Lawrence,
1989. Financial analysis and J.M. Biedenbach.
of shrimp production: An 1993B. The effect of
electronic spreadsheet vertical netting and water
model. Computers and circulation pattern on
Electronics in Agriculture growth and survival of
3:287-304. Penaeus vannamei
postlarvae in an
intensive raceway system.
Journal of Applied
Aquaculture 2(l)-55-64.

Sureshwaran, S., C. Greene,
R.J. Rhodes, C.L. Browdy
and A.D. Stokes. 1994.
Financial viability of
Penaeus setiferus versus
Penaeus vannamei with
continuous live harvesting
and one final harvest
strategies in South
Carolina. SC Marine
Resources Center,
Technical Report Number
84.

Wyban, James A., J.S. Swingle,
J.N. Sweeney, and G.A.D.
Pruder. 1993. Specific
pathogen free Penaeus
vannamei. Journal of the
World Aquaculture Society,
24 (1) :39-45.

Wyban, James A., J.S. Swingle,
J.N. Sweeney, and G.D.
Pruder. 1992. Development
and commercial performance
of high health shrimp
using SPF broodstock
Penaeus vannamei. Pages
254-260, In J. Wyban
(Editor). Proceedings of
the Special Session on
Shrimp Farming. World
Aquaculture Society, Baton
Rouge, LA, USA.

A total of 300 copies of this document was printed at a total cost
of $276.82. The unit cost was $.992 per copy.

1. This is calculated by dividing projected total sales,
$1,177,000, by total harvest, 236,000 kg.

2. Data from earlier experimental studies indicate that survival
rates averaging up to 95-. are possible in the system
(Samocha et al., 1993A).

3. For example, could a nursery system improve the comparative
profitability and reduce businesses risks of a small marine
shrimp farms (e.g. <12 ha) in South Carolina?

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