1.3 ECONOMIC CONSIDERATIONS

A bivalve hatchery is a business and like any other business it must be run efficiently and it must be economically viable. Government subsidies or grants may help offset costs particularly during initial stages of operation, but eventually the hatchery must stand on its own and be profitable. The economics of building and operating a bivalve hatchery will vary from business to business, from area to area and country to country but eventually all must turn a profit.

Hatcheries are expensive operations. Considerable capital is required to build a hatchery and finance operations. The owner must have sufficient working capital to carry on operations until income is generated. Before deciding to build a hatchery, one needs to carefully examine all facets of building and operating a hatchery and determine at what level a hatchery will be economically viable. Many costs need to be considered including purchase of the site, construction of the hatchery, installation of the seawater system, equipment needed for all phases of production, maintenance, supplies and utility overheads, loan repayments and the need for a trained staff.
Profitability can vary greatly with other factors including geographic area, the scale of the operation and whether it is part of a fully integrated bivalve culture operation.
In temperate areas a major operating cost is heating (and chilling) seawater, but this cost is generally avoided in tropical areas. This may influence location of a hatchery in temperate areas to sites where warm seawater exists at least for part of the year to help reduce heating costs.
Some hatcheries are small family operated ventures that only produce sufficient seed for their own culture needs. Such hatcheries are generally operated for only a few months a year, production is limited, and costs are much lower than for other larger hatcheries.

Large hatcheries may be part of a fully integrated bivalve culture operation or they may be in business only to supply seed. Where a hatchery is part of an integrated culture operation, the hatchery may be operated to simply break even and show no profit or may even operate at a small loss. Profits for the company are made in other phases of the culture operation. Where the hatchery exists only to produce seed to sell to other growers, a profit must be made solely on the hatchery operation. This emphasizes the fact that before building a hatchery one must make an accurate assessment of the market for whatever seed will be produced and not only the quantity of seed that can be sold but also the price people are willing to pay for seed.
Another consideration in operating a bivalve hatchery is that a critical level of production must be maintained to permit profitability. A hatchery cannot exist by simply producing a few thousand juveniles each year. The cost to do so is too high. In fact the costs associated with producing a few thousand juveniles are almost the same as producing several million – economies of scale apply. A manager must determine the critical level of production that needs to be attained to make the operation profitable and this again points to the necessity of knowing the extent and value of the market for the product.
Accurate records of costs, production and sales must be kept to assess whether the hatchery is being profitably run.