Cost and Benefit Analysis of Anguilla japonica and Anguilla marmorata Aquaculture in Taiwan
Date Issued
2012
Date
2012
Author(s)
Hsueh, Wan-Chih
Abstract
Key (1940) has mentioned that “On what basis shall it be decided to allocate X dollars to activity A instead of B？” Cost and benefit analysis partially answers the question: it emphasizes efficiency and distributes resource to the most efficient project; Early in 1987, the world eel consumption reached approximately 100-110 thousand tons per year. Japan alone accounted for about 70-80％ of it. This was about the total eel production of Taiwan and Japan (Heinsbroek, 1991). Eel production in Japan has decreased by almost 40% in the last decade from 1990 to 1999. In contrast, the eel consumption in Japan has steadily increased (Satoh et al., 2001). On lifting the ban of protection on Apr. 1, 2009, the giant mottled eel farming in Taiwan has attracted many farmers in these three years. Because its larva price is cheaper than that of Japanese eel and it has huge domestic and international markets, it becomes a rising aquaculture species in Taiwan. This study employs some indicators used in the cost and benefit analysis such as net present value (NPV), benefit cost ratio (B/C ratio) and internal rate of return (IRR) to explore the development of aquaculture industries for Japanese eel and giant mottled eel.
NPV is a total of net revenues, sum of all differences between each year of the total cost and total benefit, utilized to inspect an entire net benefit of a project, so when NPV is larger, the project is more lucrative. The B/C ratio is a value of the benefits per unit versus cost. When the B/C ratio is >1, it means that the project can make money. Therefore, when the project has higher B/C ratio, it has a high priority of being invested. The IRR is the actual profitability of the investment project. The percentage of the cost of Japanese eel aquaculture allocated 50-80% to fry cost, 15-40% to feed cost and10- 20% to other cost. Its larva price rocketed from NT$30 in 2006 to NT$155 in 2012 and feed cost also increased from NT$45 to NT$57 per kilogram. Its wholesale price (4 eels per kilogram, was raised from NT$270 to NT$1580 per kilogram. Comparatively, the percentage of the cost of giant mottled eel aquaculture allocated 30-40% to fry cost, and 40-50% to feed cost. Its larva price increased from NT$1.4 in 2009 to NT$5.1 in 2012 because in recent year, the farming of the giant mottled eel in Taiwan grew quickly. And its wholesale price, tended to hike. Given some financial statistics: the NPV of Japanese eel aquaculture is NT$ 6,064 thousands, its IRR is 56%, and its B/C ratio is 1.1, while the NPV of giant mottled eel is NT$25,264 thousands, its IRR 17%, and its B/C ratio is 1.3. As a result, both aquaculture industries give good return. Besides, the profitability of the giant mottled eel aquaculture is greater than Japanese eel, because the NPV of giant mottle eel is 3 times higher than that of Japanese eel. Its B/C ratio is higher, too. In terms of IRR, the giant mottled eel takes 3 years of farming while Japanese eel can go to the market within one year. The result of the study may give more prospective profits to giant mottle eel than to Japanese eel.
Subjects
Japanese eel aquaculture
giant mottled eel aquaculture
cost and benefit analysis
net present value
benefit cost ratio
internal rate of return
Type
thesis
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