Economic Profitability of Tilapia Production in Malawi and China

Abstract

This study was conducted to analyse the economic profitability of tilapia farming in Malawi and China, using data from 20 farmers both in Malawi and Guangxi Province, People’s Republic of China. Application of enterprise budget for profitability analysis showed that profits for tilapia were significantly different (p ≤ 0.05) between the two countries with Malawi registering a bigger benefit-cost ratio of 1.61 than 1.20 for China. However, 3 farms in Malawi posted losses during the production cycle. Breakeven price was $2.00 for Malawi against $1.26 for China. Sensitivity analysis was conducted to evaluate the influence of changes in price, feed, labour and fixed cost on net profit. Holding all conditions constant, sensitive coefficient for price was relatively high for Malawian farms at 2.63 followed by feed, labour and fixed cost at -0.70, -0.36 and -0.32 respectively. Similarly for China, price showed the highest elasticity of 5.96 compared to -3.65, -0.67, -0.27 of feed, fixed cost and labour respectively. For the farms that did not make profits, application of the shutdown rule indicated that the farms were making surplus gross margins hence could continue operating (Price ≥ Average Variable Cost; and Revenue ≥ Total Variable Cost). The present study has demonstrated that differences in input intensification result in different gross revenues since yield is a function of stocking density, feed input, labour and other production inputs. Irrespective of the intensity of input use, farmers still make profits, thus tilapia production is a viable enterprise in both countries.