Trade Adjustment Assistance Training

1. Trade Adjustment Assistance Training Carole Engle UAPB

2. Economics Options to improve profitability Marketing Outline:

4. Catfish Prices & Production Costs

5. Average Price Paid to Catfish Producers ($/lb)

6. Average Fillet Price Received by Processors ($/lb)

7. Average Price Paid to Catfish Producers ($/lb)

9. Sluggish economy/Sept. 11

10. Strength of U.S. $

11. Quarterly Retail Sales, 1999-2003

12. Short & long-term financial decisions: Is it profitable in the short run? Is it profitable in the long run? Can it generate enough cash when needed to pay the bills (liquid)? Can it generate enough value over time to pay off the debts (solvency)?

13. Breakeven Prices (based on enterprise budgets)

14. Breakeven Prices (based on enterprise budgets)

15. Breakeven Prices (based on enterprise budgets)

17. How Are These Calculated? Floppy disk includes spreadsheets with: exercise balance sheet, income statement, cash flow budgets The correct versions, the financial ratios, & Includes a brief interpretation of each ratio and how to improve it.

18. Gross Revenue �Pie�

19. Monthly Cash Flow Budget

20. Cash inflow - Cash outflow (Operating expenses) (Fixed cash expenses) (Debt payments) = Cash available + New borrowing = Cash balance

21. Cash Flow Coverage Ratio (Cash available/interest & principal payments)

22. Debt-Servicing Ratio (interest & principal payments/cash inflow)

23. Cash Flow Scenarios

24. Liquidity Measures for Two Scenarios

25. How much debt is too much?

26. How much debt is too much?

27. How much debt is too much?

28. How much debt is too much?

32. Studies at UAPB Identified Economic Relationship Between Feeding and Stocking Estimated a production function. Profit-maximizing stocking rates ranged from 6,500 - 8,500, depending upon feed and fish prices.

33. What would happen with different feed and catfish prices? To maximize profits: At low fish prices, feed rates and stocking rates would decrease. At low feed prices, feed and stocking rates would increase. At high feed prices, feed and stocking rates would decrease.

34. How low should you go? Model results dropped profit- maximizing stocking rates to 5,000/ac at $0.60/lb. At very low prices, may not be possible to calculate true profit-maximizing stocking rate. Farmers need to stock at rates that ensure financial payments are met.

35. Optimal stocking densities with high feed prices Fish prices have larger effect than varying feed prices. Fish prices of $0.70/lb (from $0.65/lb) nearly offset $45/ton increase in feed price in terms of optimal stocking density.

36. Feed Prices

38. Breakeven prices as feed price increases

39. Current Feeding Strategies Every other day feeding Carryover fish may be small following year Restricted daily feedings May equal thin fish Catfish exhibit compensatory gain Can gain weight extremely fast, at low FCR when full feeding resumed.

41. Processing Cost by Size

42. Factors Impacting Costs Economies of Scale: higher throughput will help to reduce unit costs by spreading fixed costs over more units. Technology/processing practices: Automatic presorting of fish by weight Chilling/cleaning fish between deheader & fillet line Reduction in trim operation Interfacing trim, grading to reduce handling Online monitoring and control of productivity.

43. Factors Affecting Costs Production Impacts Characteristics of fish received have large impact. Off-flavor, disease, weight to yield ratios, weight distributions 2% normal seasonal variation in yield Distribution of fish sizes received from each pond varies widely.

44. Big Fish Studies Big Fish I 4,500/acre, 0.6 lb FCR 1.8-2.0 Survival 83-94% 32% protein Big Fish II 4,500/acre, 0.5 lb FCR 1.7-1.9 Survival 87-91% 32% protein No impact of fingerlings Big Fish I: Single-batch culture Big Fish II: Multiple-batch cultureBig Fish I: Single-batch culture Big Fish II: Multiple-batch culture

45. Stocker Net Yield LINEAR INCREASELINEAR INCREASE

46. Individual Weight MEAN FINAL WEIGHT DECREASED LINEARLY WITH INCREASED STOCKING RATE.MEAN FINAL WEIGHT DECREASED LINEARLY WITH INCREASED STOCKING RATE.

47. Management for Larger Mesh Sizes?

49. Catfish Markets and Marketing

51. U.S. Per Capita Consumption of Catfish

52. U.S. consumption of top 6 seafood products

53. Consumer Food Expenditures at Home and Away from Home

54. Increasing consolidation in food industry Beef, pork, poultry all have consolidated. From mid-1990s to 2000, market share held by nation�s top four food retailers (4-firm ratio) increased from 17% to 34%. In cities, reached 72%. Broadline distributors have concentrated food buying power.

55. Product Life Cycle

56. Which strategy? Compete on price in commodity markets with a product very similar to other products? Create unique identity (differentiate product) to capture higher consumer price?

59. Quality/Price Matrix

60. New Product Development When existing products decline phase, replaced with new products. Failure rate is high for new products. Must maximize idea generation & Effectively screen ideas to ensure that only best concepts go to market launch.

61. Value-Added Product Initiative: Turning Nuggets into Gold Value-Added Products may have potential to re-position the catfish industry into retail sales away from commodity-based sales. New products expensive to develop and market. Much research needed to provide guidance.

62. The U.S. Consumer Wants Good flavor Convenient food Healthy food Safe food To know where their food comes from Food free of chemicals and drugs The catfish industry should be well positioned to supply what U.S. consumers want.