Investment Appraisal of Genetic Improvement Programs in Nile tilapia (Oreochromis Niloticus)

Abstract

The economic benefit derived from a genetic improvement program with Nile tilapia (Oreochromis niloticus) was examined from a national perspective. An industry structure was assumed whereby the genetic improvement program is conducted in a nucleus which provides brood stock to hatcheries, which in turn produce fry for farmers to grow out to market size. Discounting was used to express all returns and costs in terms of net present value. The economic benefit (discounted returns minus discounted costs, EB) and the benefit/cost ratio (BCR) were studied for a 10 year time horizon. The sensitivity of EB and BCR to a number of factors was examined, namely: (i) Biological (heritability values, accounting for feed intake), (ii) Economic (initial investment, annual cost, discount rate, price of fish), and (iii) Operational (year when first return occurs, reproductive efficiency). The risk involved was assessed by studying the anticipated variability in response to selection (and hence in EB and BCR). Heritability values had a moderate effect, whereas it was shown that the cost of increased feed intake as a correlated response to selection for greater growth rate should be considered to avoid gross over-estimations of EB and BCR. Initial investment, annual costs and choice of discount rate had a relatively small effect on EB and BCR, whereas the effect of the price of fish was substantial. Delays in obtaining the first returns in the program resulted in reduced EB and BCR. However, the greatest contribution to variations in EB and BCR came from improvements in the reproductive efficiency at the level of both the nucleus and the hatcheries. The risk of program's failure due to technical reasons was found to be extremely low. We conclude that even under the most conservative assumptions, genetic improvement programs are highly beneficial from an economic viewpoint, and that for the case studied they could result in EBs ranging from over four million US$ to 32 million US$, and corresponding BCRs of 8.5 to 60.