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March 28, 2008

Tilapia farm facing same input cost concerns as rest of ag

<i>Originally published in the March 21, 2008, print edition.</i>

A market that slowly but steadily keeps growing has boosted “farm gate” prices for the tilapia produced by MinAqua Fisheries, the only farmer-owned aquaculture facility in Minnesota, to current levels of $2 to $2.10 per pound. This is the highest live tilapia price in the seven-year history of this cooperative located at Renville.

But several factors continue to challenge the profitability of MinAqua. At its December annual meeting, President Mel Stocks pointed out:

• Feed, which was costing $375 a ton last year (2006) is considerably higher.

• Electrical costs were $6,000 to $8,000 a month two years ago but now run $18,000 to $20,000 a month.

• Wastewater treatment payments to the city of Renville are now at $15,000 per month compared with costs of $5,000 to $7,000 per month when the fish factory initiated its production of about 125,000 pounds of fish per month. The facility uses 170,000 to 190,000 gallons of fresh water daily.

• Fingerling mortality continues higher than acceptable, currently running about 25 to 30 percent which reduces the total yearly production.

The net result of these factors is a loss of about $50,000 for the current fiscal year, which means another year without “added value” payments to the 300-plus shareholders.

“Obviously we wish we had a more positive report for our shareholders,” said Arvin Brouwer, Clara City-area farmer and board chairman. He indicated the cooperative still has about 25 percent balance due on its original note with CoBank at Omaha, MinAqua’s major lender. It has been the board’s ongoing decision to take care of this debt before initiating dividend payments. The current payment rate would clear this note by 2010.

Stocks shared a few management items, which might aid the profitability of MinAqua, including a change in the feeding regime.

“Rather than feeding fish hourly as had been the recommended practice since we first started, we now feed four times per day. We’re seeing less wasted feed, slightly better conversion, and an improvement in water quality which is beneficial for fish health.”

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