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Economic Modeling of Round Pearl Culture in Fiji and Assessment of Viable Farm Size

Johnston, W. L., Hine, D. and Southgate, P. C. (2018) Economic Modeling of Round Pearl Culture in Fiji and Assessment of Viable Farm Size. Journal of Shellfish Research, 37 (1). pp. 79-91. ISSN 0730-8000

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Article Link(s): https://doi.org/10.2983/035.037.0107

Publisher URL: https://doi.org/10.2983/035.037.0107

Abstract

ABSTRACT Round pearl culture is an increasingly important industry in Fiji. Significant barriers to entry include high capital outlay and technical requirements, and a high turnover of small to medium size farms has limited industry growth. This study developed a viable-scale farm model for round pearl culture in Fiji to assist new or potential entrants understand costs, risks, and production levels required for success. Major production costs were labor (51%), oyster stock (18%), and pearl nuclei (10%). At steady state, median annual profitability was determined to be $156,362, but inclusion of price and production risk factors reduced annual profitability to $29,463. The model farm achieved an internal rate of return of 36% with a benefit-cost ratio of 1.8 and payback period of 5 y. Farms holding 100,000 oysters and producing more than 8,000 pearls are deemed of viable scale. At this scale, farms can attract overseas pearl seeding technicians, apply economies of scale, and invest profits into future development. Given the average rural household income in Fiji is $5,800, round pearl culture offers significant economic opportunity and delivers socioeconomic benefits for rural communities in upstream (oyster stock supply) and downstream (handicrafts, jewelry, and tourism) activities.

Item Type:Article
Business groups:Agriculture
Subjects:Agriculture > Agriculture (General) > Agricultural economics
Agriculture > Agriculture (General) > Farm economics. Farm management. Agricultural mathematics
Aquaculture and Fisheries > Fisheries > Economic aspects. Finance
Aquaculture and Fisheries > Aquaculture > Shellfish culture
Aquaculture and Fisheries > Fisheries > Shellfish fisheries
Deposited On:17 Aug 2018 04:09
Last Modified:17 Aug 2018 04:09

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