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Operating costs and health management strategies in shrimp hatcheries

Abstract This paper presents a study of operating costs in shrimp hatcheries. Size effects are presented for fixed, variable, unitary, and marginal costs. Cost structures by functional production department and by cost‐category are discussed for a hypothetical 100‐million postlarvae/month hatchery in an industrialized country, and compared to those of a hatchery in a developing country. Health management issues, mainly measures commonly used to manage bacterial diseases, and their economic impact are discussed, focusing on the trade off between survival rates and sanitation down‐time. Salaries and benefits represent the largest cost‐component (37%) for hatcheries in industrialized countries, while feeds and operating supplies constitute the most important costs in developing countries (60%). The need to import hatchery feeds and other operating supplies into developing countries works against savings from lower labor costs typical of developing countries. Total fixed costs depend on the size of a hatchery and are constant for all possible levels of output. Average fixed cost per unit (thousand postlarvae) can be reduced by producing high postlarval outputs. Hatcheries in areas with seasonal shrimp crops face the challenge of covering fixed costs with revenue from a short production season. Hatcheries with large fixed costs can operate in a cost‐efficient manner only by producing high levels of output. Average total cost and average variable cost curves follow a U‐shaped curve, in which costs first decline as output increases, then reach a minimum, and finally increase as output increases above a point of diminishing returns. In hatcheries total costs are independent of larval survival, but lower output resulting from low survival increases unit costs. This effect is more pronounced at lower levels of output. Bacterial diseases decrease survival rates and increase unit costs.