A break-even analysis of trout processing in West Virginia: A case study approach

The objective of this study was to determine the current status of trout processing in West Virginia and to determine break-even quantities of whole pounds of trout required for the two main processors in the state. Simulation models were developed for each firm specific to the characteristics of the plant. Scenarios were developed according to historical demand for products and product profit margins determined by the model. Results show that the smaller of the plants experiences regional prices, which are higher than what the industry acquires. If the prices decrease, the plant will have to make changes in processing techniques since their variable cost of production is higher than industry prices. The larger plant charges prices similar to the industry average and in some case below the industry. The results indicate an opportunity to break-even with less fish if more products were sold as value-added. If factor prices were to decrease slightly in some cases, then the firm would be able to compete in larger markets at break-even. Both plant models produced attainable break-even points for different scenarios. The major limitation of this study was that the history of production at the plants is such that processing only occurs at approximately ten percent of the plants capacities. The results should be useful to the plant managers in determining the strategies to employ for profitability given the current variability of supply. Future processing in the state may occur if trout production increases. The information generated in this study will assist in the development of a sustainable aquaculture industry in West Virginia.;The funding for this study was provided by the USDA-CSREES special aquaculture grant.