Understanding Small and Medium Scale Tilapia Culture in Nicaragua

Abstract

Nicaragua has abundance of natural resources to make aquaculture an important economic activity. But despite the efforts of multiple stakeholders, tilapia culture has not developed as expected. Small and medium scale tilapia culture has been promoted for over two decades as a means to ensure food security and income generation. So far, the results have been uncertain. Although many ponds have been abandoned, a number of producers have managed to stay in business. The understanding of how those producers have manage to avoid the factors limiting tilapia culture would offer significant information for further development interventions. Three related studies herein provide information on the economic and financial analysis of several tilapia operations; export opportunities for Nicaragua in U.S. market for tilapia fillets, and the Nicaraguan Aquaculture Knowledge and Information System (AKIS). The economic and financial analysis was conducted using the enterprise budget analysis, estimation of break-even prices, sensitivity analysis, and estimation of internal rates of return. The analysis of export opportunity analysis was based on the estimation of market growth rate using a double log OLS model and changes in market shares estimated using a linear version of the Almost Ideal Demand System Model (LA/AIDS). The analysis of the AKIS followed the methodology suggested by FAO & the World Bank. The results indicated that small and medium scale tilapia culture in Nicaragua is a highly subsidized minor economic activity. Only producers operating with an 80% subsidy on the main inputs enjoyed significant rates of return. Export opportunities were promising; the market in the U.S. is growing and Nicaragua’s market share, despite being very small, is also growing. Finally, the results of the analysis of the AKIS indicated that the different stakeholders of tilapia culture in Nicaragua worked in isolation and had particular plans. Producers had a basic level of technical knowledge on tilapia culture. In summary, the overall analysis elucidated a complex situation, one that requires particular attention in areas of knowledge, economic use of resources, management, and marketing.