Strategies for improving

shrimp production efficiency

and profitability in an era of
increasing global competition

Craig L. Browdy
Tom Zeigler

1
 Profits
Profits are much like breathing
if we dont breathe we are dead
If we dont achieve enough
profit for the risk we take, we Many receive advice,
only the wise
are also dead profit from it
Publilius Syrus
Profits are a risk premium we
need as we commit todays
definite resources to
tomorrows uncertain return

2
 Improving profitability

El Nino The elephant in the room

Long term pressures increasing on shrimp prices
Maximize efficiencies
Cut costs
Improve bottom line

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 Managing costs per unit production

Feed and postlarvae make up 40-

60 percent of production costs,
getting the most attention when
managers focus on cost reduction

Tacon et al 2006 from Zendejas 2004

4
 The value of seed quality
Determines maximum production potential
Predetermined limitations which directly affect
profit potential for the crop

Planting density
Days to harvest
Expected yield
Temperature tolerance
Insect and pathogen resistance
Fertilizer application rates
matthamelagproducts.com

5
 Broiler breeding vs. nutrition
breeding accounts for 85 to 90% of change
in broiler growth rate 1957-2001

1.62 1.92 2.14 2.34

Havenstein et al. 2003 6

 Choose your PL wisely
Critical factor for farm profitability
High survivability, fitness and size uniformity
Reduce transport and stocking mortality
Improve production potential
More effective pond management
Key vector for disease introduction
Genetic potential
Growth
Disease resistance

7
 Hatchery challenges
Broodstock genetics, fitness
Nutrition
Water quality
Source water
Production systems PL Quality
Survival / Disease
Production numbers
Cost control

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 Improving hatchery technologies
Breeding programs
Water treatment
Maturation systems designs
Broodstock management
Larval systems designs
Larval feeds and feeding
Probiotics
Management and quality control

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 Evaluating PL quality
Level 1
Behavioral
hatchery performance
Level 2 Correlation
Quality
Physical observations Index with farm
Stress test survivability performance?
Level 3
Disease diagnostics

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Juarez and Fegan in GAA global shrimp ops 2002
 Invest in seed quality
Cost of high quality PL are quickly justified by
small increases in crop growth and survivability
Effect of 20% change in variable costs
10 year Net Present Value
120%
97%
NPV (% change)

100% 89%
80%

60%
57%
45%
40%
22%
20% 10% 9%
0%
Growout Shrimp Stocking Growth rate Feed Nursery PL cost
survival price density survival

Hanson et al. 200711

 Managing feed costs
Feed cost per unit gain
FCR * Feed Cost = FC/UG
Profit
Total expenses Total revenues
In aquaculture, a close economic relationship
exists between cost inputs and output
revenues
Feed plays a critical role in determining, growth
potential, water quality, health etc.

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 Value of quality feed
feed drives the system
Larger shrimp = more value per lb
Healthier shrimp = less shrinkage, improved
processing efficiency, better meat quality,
improved shelf life
Better water quality = less cost for treatment,
probiotics etc., faster growth, lower FCR, higher
pond carrying capacity
Faster growth = more cycles, less operating
cost, lower risk

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 Simple economic model
Base Scenario
Pond size/Tamao del estanque 1.0 HA
Density/Densidad 15/m2
Growth rate/Tasa de Crecimiento 1.1g/wk
Harvest wt./Peso de Cosecha 18g
Survival/Sobrevivencia 70.0%
FCR/Tasa de conversin 1.50
PL cost/Costo de PL's $ 4.50
Sales price/Precio de venta $ 2.50
Feed cost/Costo de alimento $ 0.40
Other costs/Otros gastos $ 30.00

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 Economic modeling
Base Scenario
Cycle/Ciclo 115 days
Pl's stocked/Siembra de PL's 150,000
Weight harvested/Peso de cosecha 4163
Market value/Valor de mercado $ 10,407.49
PL cost/Costo del PL $ 675.00
Feed fed/Alimentacin 6,244.5 lbs
Feed cost/Costo de alimento $ 2,497.80
Other costs/Otros gastos $ 3,436.36

Income over seed, feed & other costs

Rendimiento despues de alevines, alimentos y
otros gastos $ 3,798.33

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 Improved higher cost feed
Higher more digestible proteins, health
supplements etc.

10% improvement in growth

1.1 g/wk 1.21 g/wk
10% improvement in survival
70 % 77 %
10% improvement in FCR
1.5:1 1.35:1

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 Sensitivity analysis for feed cost
Base 40% Increase
Feed cost / lb $ 0.40 $ 0.56
Feed cost/lb shrimp sold $ 0.60 $ 0.76
Farm Profit $ 379,833 $ 997,793
$1,200,000
Additional profit for

$1,000,000
$800,000
100HA

$600,000
$400,000
$200,000
$-
0 10 20 30 40 50 60 70
Percent increase in feed cost

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 Samocha 2013 - Example
Standard commercial pond feed (SI-35) vs (HI-
35) specially formulated for intensive closed
system culture
Both feeds with 35% protein and 7% fat
67 days
3x - 40-m3 raceways
500/m3
2.66 g initial weight

Samocha et al 2013 Nashville18

 Feeding and Growth
Rations determined assuming FCR of 1.4, growth
of 1.5 g/wk, and mortality of 0.5%/wk,
Adjusted according to twice a week growth
samples

Samocha et al 2013 Nashville 19

Performance Results

Samocha et al 2013 Nashville20

 Water quality effects

Foam fractionator 812 hr vs 1253 hr Samocha et al 2013 Nashville21

 Economic analysis
Shrimp sales price: averaged $ 7.20/kg ($ 3.27/lb)
Grow-out feed: Zeigler Brothers
Semi-Intensive (SI-35): $ 0.452/lb = $ 904/ton
Hyper-Intensive (HI-35): $ 0.795/lb = $ 1,590/ton
Juveniles production cost: $ 20.00/1,000
Interest rate for loans: 8%
Initial Investment $ 991,997
Greenhouse system with eight 500M3 Raceways

Hanson et al 2013 Nashville22

 Enterprise budgets ($/kg)
HI-35 SI-35
Total Sales per year $ 1,542,816 $ 1,379,664
Gross Receipts $ 7.20 $ 7.20
Variable Costs $ 4.06 $ 4.54
Income Above Variable Cost $ 3.14 $ 2.66
Fixed Cost $ 0.47 $ 0.53
Total of All Specified Expenses $ 4.53 $ 5.07
Net Returns Above All Costs $ 2.67 $ 2.13
Payback period, years $ 1.4 $ 1.9
Net present value ($ mil.) $ 2.9 $ 2.0
Internal Rate of Return (%) $ 66.6 $ 50.1
Hanson et al 2013 Nashville23
Farm data 27 ponds 3.5ha

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Selecting appropriate metrics

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 New metrics
Production Productivity Index (PPI): Calculated as:
Kg/Ha/Day/10Pls per m2 stocked.
This calculation equalizes all ponds for production
days and stocking density.

1,500 Kg/Ha, 103 Days, 15 Pl/m2

1,500 / 103
= 9.71 PPI
1.5

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 Predicting profitability
C-1 2011 y = 6.6377x - 62.873
PPI vs % PROFIT R2 = 0.787

40

30
% PROFIT

20

10

0
8 10 12 14 16
-10

-20

PPI

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Correlation of production metrics to
profitability (R2)
Feed cost/Kg Shrimp .0007
Pond Size/Tamao de estanque .001
Stocking Density/D. de siembra .004
Survival/Sobrevivencia .01
FCR .09
Days in Pond/dias de cultivo .2
Harvest Size/cosecha .39
Value of Shrimp/Unit wt./Valor/peso .46
Yield Kg/HA/Rendimeinto Kg/Ha .59
PPI/IPP .79
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 PPI
Advantages
Best Predictor of profitability
Compare ponds, crops/cycles, years
Eliminates time and stocking densities as
variables
Further Improvements
Adapt for multiple harvests
Include shrimp price into the index

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 Designing effective pond trials
Five or more replicate ponds per treatment
Repeat trials
Random allocation of treatments
Stock high quality PL simultaneously or using
pair pond method
Protocols well designed, vetted and not
changed mid crop
Experienced personnel on trial ponds
Simultaneous or paired harvesting

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Weekly data collection and analysis
Date, DOC Estimated survival
Temperature Feed type, size
Salinity Feeding rate
Days with low O2 Weekly average FCR
Weight, Cumulative average FCR
Gain Water exchange
Density
Biomass

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 Understanding pond limitations
Declining Environmental
1500 Conditions
Not here
Biomass. Kg/Ha

008
Superior Product Harvest here

Normal Product

Survival, %
Growth/Week, g
FCR
Yield, Kg/Ha
Animal Weight, g

Time

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Effect of pond limitations on PPI

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 Harvest analysis
Actual survival
Feed cost
Other variable and fixed costs per pond
Crop value
Shrimp condition and quality at plant
Economic performance index

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 Successful farm feed trials
Interpret weekly data and harvest data to tell
the whole story
Without proper planning, effective oversight,
and careful analysis, outcomes can be
misleading
Farm trials are costly and require significant
commitment of appropriate resources
Successful trials enable better understanding of
effects of feed and seed choices on profitability

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 Shrimp production efficiencies
Maintain high performance standards
developing and applying the correct metrics
against global standards
Do not compromise performance to cut cost,
feed and seed are an investment in overall
profitability
In response to price or environmental
pressures, reduce stocking densities while
investing in improving health, growth, survival,
FCR and size at harvest to maximize returns

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Keep your shrimp happy

Thank you!

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