The Effect of Production Variability on Financial Risks of Freshwater Prawn Farming in Hawaii

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Abstract
A conceptual model of a stochastic production process is proposed which illuminates the business perils associated with shortfalls in yields of aquacultured freshwater prawns. Commercial production data are statistically analyzed within the context of the model to measure the extent to which yield variability engenders financial risks for prawn producers. It is shown that at wholesale prawn prices of US $11.00/kg there is a 50% probability that a representative 8-ha prawn farm utilizing ponds greater than 0.8 surface ha will incur a financial loss in any given year. This probability falls to 30% when ponds smaller than 0.4 surface ha are utilized.

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