Assessment of Initial Investment Strategies for Different Farm-Scale Scenarios with Economic Cost Analyses in Offshore Salmon Farming

Abstract

The simulation of investment strategies with different farm-scale scenarios has been evaluated for best management plan in cage farming business for the establishment of a salmon production with either full capacity – or progressive investment. Economical revenues were analyzed with business risk assessment based on operating-and fixed costs for each of the four scenarios. In the theoretical model projected for the stimulation of best management plans, structural elements for the construction of an offshore Turkish salmon farm in the Black Sea were designed and investment costs for an annual production capacity of 4,000 tons were re-scaled by 25, 50 and 75% reduction, corresponding to 3,000, 2,000 and 1,000 tons per year, respectively. Economic variables of operational costs were comparatively evaluated with the revenues and annual profit conditions by sales of harvested fish. The break-even points for all investment strategies with different farm-scale scenarios were remarkably lower (on average 302,574.7 kg/year) than the harvest yields from the farms (on average 3,702,857.1 kg/year). Based on break-even points and margin of safety (MOS over 85%), all farms gained net profits with low risks in the first year, whether the farm received full investment, or initiated business with reduced investment expenditures for a gradual and progressive expansion plan. Findings of this study exhibit useful indications for farm management in understanding conditions of a step-wise establishment of business plans for salmon farming in offshore conditions.