PROFITABILITY ANALYSIS AND TECHNICAL EFFICIENCY ESTIMATION OF TILAPIA PRODUCTION IN CHINA

Tilapia (all Cichilds) production has emerged as the second largest cultured species by over 85% countries in tropical and subtropical countries. A rapid growth rate of 13.4 percent was observed in 2008 (FAO 2010) and this particular species is expected to become a leading global animal protein source. Economic analysis of this particular species is relevant in determining investment decision making among potential investors, and providing a learning experience to developing nations like Uganda about the Best Management Practices (BMP) and new innovations implemented by Chinese tilapia farmers in this particular business venture.

Data collection was carried out in southern coastal areas of China covering 6 provinces of (Guangdong, Guangxi, Fujian, Hainan, Yunnan and Hebei provinces) with major focus on 3 culture models of (monoculture, polyculture and integrated). The study was carried out between June to November 2016 and a total of 50 tilapia farmers purposively selected were interviewed using a structured questionnaire. The study focused on two objectives that included profitability indices using input and output Analysis, technical efficiency estimation was calculated based on Cobb Douglas production model.

All the results were calculated based on 1 Mu (=667m²) as the average production area. Positive Gross margins (GM) and Net farm incomes (NFI) were observed, an indication that tilapia farmers were in position to recover all the production costs. Tilapia production was economically viable with positive Benefit Cost Ratio (BCR) of 1.6 in monoculture and 1.0 among the polyculture farmers. The breakeven yield averaged to 767.9 kg of tilapia for farms to recover total production costs without any profits. Farmers that produced small quantities of tilapia were expected to sell their fish at relatively higher prices to breakeven. Positive returns on investment (ROI) of 1.5 to 1.0 were observed in monoculture and polyculture respectively. Findings on technical efficiency estimation indicated that farmers operated at 82% mean efficiency indicating that there was still room to expand tilapia production using the current level of inputs and technologies. And this efficiency was highly influenced by fish feeds (55%), Electricity (30%) and seed (11%). However land lease negatively influenced technical efficiency by (-0.16%). Farmer specific variables revealed that education 29%, Aquaculture training 10% positively influenced farmer level OF technical efficiency. The gamma value of 0.11was observed and it was less than 1 an indication that technical inefficiency was as a result of random stochastic effects (noise) beyond farmer's control. Which led to the rejection of the null hypothesis at 1% significant difference. And significant difference of 23% in technical efficiency among tilapia farmers was observed.  In conclusion efficient feed utilization is paramount to reducing the current feed conversion ratios (FCR) of 1.4, and also lowering production costs to improve efficiency. Farmers should ensure production of quality fish (organic) will attract more global consumers. There is need to engage/attract the youths and women into aquaculture production to close the labor and gender gaps with in the aquaculture sector.