158
J. G. García et al.
a scale economy by the increasing cage capacity in the past years (Merinero et al.
2005; García García and García García 2010).
The option of a unique fattening cycle is more profitable under the current conditions; the profitability threshold shows that this fattening activity would only be
feasible when obtaining commercial prices of 6.61 and 6.41 € kg
−1
for octopus
cycles 1 and 2, respectively. Table 9.2 shows that those figures are quite close, although worthy to emphasize that octopus fattened in the one-cycle option achieves
the commercial T2 size (3.65 kg) with a noticeably higher market price than in the
case of two cycles, which reaches a lower T3 size (2.70 kg).
Global results (Table 9.2) indicate that land-based production cost is generally
higher than fattening in sea cages. Moreover, a scale economy exists at sea systems
due to greater production capacity, resulting in a lower average cost. Additionally,
technological advances may significantly reduce the investment required in sea systems, by improving the cages yield using cheaper materials with greater production
capacities, as in fish farming. On the contrary, the capacity to reduce the investment
in land-based systems is much lower; further, the land-based location and choice of
suitable sites to settle installations is more complex than at sea. Thus, two cycles ongrowing with well water would only be possible in areas where the pumping height
is low, as reported by García García et al. (2004b).
The wide range of production variables shows the convenience of using econometric tools to analyse possible scenarios that will be economically feasible. Hence,
econometric equations can provide a guidance to define the maximum subadults
and food prices; in this way, they could ensure that the activity either will be feasible or will have a specific profit rate, providing also information about the balance
between the possible operating designs (regarding type and size of cage, anchorages, etc.) and the investment involved. As an example, a 15 % reduction in the
variable related to investment, while maintaining the rest of the initial variables,
results consequently in an increase of the internal rate of return (IRR) of 22.14 %
(IRR = 12.69 %) and 21.03 % (IRR = 14.85 %) for two and one annual cycles, respectively. The results state that from an economic point of view, the profitability
(IRR) shows elasticity in relation to the variable of investment.
As shown in the cost analysis, the current situation makes it more profitable to implement one production cycle than two, although the situation may change according
to production costs and sale prices. If production costs decrease—particularly those
of subadults and food—and the difference in sale prices too, then two fattening cycles
a year will become more profitable. Undoubtedly, real development of the octopusgrowing activity requires seeking solutions for the two limiting issues still affecting
profitability, i.e. the availability of subadults and the existence of a commercial diet
providing high efficiency in terms of growth, conversion rate and survival.
In the Mediterranean, this activity would last approximately 6–8 months a year,
underutilizing the investment and making fixed asset costs high, as previously noted. A way to decrease production costs would be to integrate the octopus fattening
as a complement to fish farming. In gilt-head bream and sea bass farms, operation
activities drop off considerably during the winter months as low temperatures cause
a major decrease in feeding, becoming perhaps the most important variable in the
J. G. García et al.
a scale economy by the increasing cage capacity in the past years (Merinero et al.
2005; García García and García García 2010).
The option of a unique fattening cycle is more profitable under the current conditions; the profitability threshold shows that this fattening activity would only be
feasible when obtaining commercial prices of 6.61 and 6.41 € kg
−1
for octopus
cycles 1 and 2, respectively. Table 9.2 shows that those figures are quite close, although worthy to emphasize that octopus fattened in the one-cycle option achieves
the commercial T2 size (3.65 kg) with a noticeably higher market price than in the
case of two cycles, which reaches a lower T3 size (2.70 kg).
Global results (Table 9.2) indicate that land-based production cost is generally
higher than fattening in sea cages. Moreover, a scale economy exists at sea systems
due to greater production capacity, resulting in a lower average cost. Additionally,
technological advances may significantly reduce the investment required in sea systems, by improving the cages yield using cheaper materials with greater production
capacities, as in fish farming. On the contrary, the capacity to reduce the investment
in land-based systems is much lower; further, the land-based location and choice of
suitable sites to settle installations is more complex than at sea. Thus, two cycles ongrowing with well water would only be possible in areas where the pumping height
is low, as reported by García García et al. (2004b).
The wide range of production variables shows the convenience of using econometric tools to analyse possible scenarios that will be economically feasible. Hence,
econometric equations can provide a guidance to define the maximum subadults
and food prices; in this way, they could ensure that the activity either will be feasible or will have a specific profit rate, providing also information about the balance
between the possible operating designs (regarding type and size of cage, anchorages, etc.) and the investment involved. As an example, a 15 % reduction in the
variable related to investment, while maintaining the rest of the initial variables,
results consequently in an increase of the internal rate of return (IRR) of 22.14 %
(IRR = 12.69 %) and 21.03 % (IRR = 14.85 %) for two and one annual cycles, respectively. The results state that from an economic point of view, the profitability
(IRR) shows elasticity in relation to the variable of investment.
As shown in the cost analysis, the current situation makes it more profitable to implement one production cycle than two, although the situation may change according
to production costs and sale prices. If production costs decrease—particularly those
of subadults and food—and the difference in sale prices too, then two fattening cycles
a year will become more profitable. Undoubtedly, real development of the octopusgrowing activity requires seeking solutions for the two limiting issues still affecting
profitability, i.e. the availability of subadults and the existence of a commercial diet
providing high efficiency in terms of growth, conversion rate and survival.
In the Mediterranean, this activity would last approximately 6–8 months a year,
underutilizing the investment and making fixed asset costs high, as previously noted. A way to decrease production costs would be to integrate the octopus fattening
as a complement to fish farming. In gilt-head bream and sea bass farms, operation
activities drop off considerably during the winter months as low temperatures cause
a major decrease in feeding, becoming perhaps the most important variable in the