PROFIT-MAXIMIZING AND RISK-EFFICIENT
STRATEGIES FOR MANAGING A SOFTSHELL CRAYFISH OPERATION
Siddhartha Dasgupta
Nathan Bussen
Aquaculture Research Center
Kentucky State University
Why produce soft shell crayfish?

Opportunities:
Readily available markets
 Ease of setup and operations
 Short production season


Challenges:
Requires highly-trained labor
 Availability of hard shell crayfish
 High labor requirements

It works with O. rusticus & P. clarkii
Facilities and equipment

Production season: May to August
 Facilities:
Secured building with a cold storage area
 Pond for water circulation
 Multiple molting tanks: 2.79m2 (30 sqft), 15
cm(6”) deep


Equipment

Pumps, air conditioner, UV-system, freezer,
plumbing, truck, etc.
Management
Stocking density for molting:516/m2
(48/sqft)
 Feeding rate = 5%/bw/day (25% CP diet)
 Water quality limits:

D.O. > 3 mg/l; pH = 6-9
 Ca hardness/Alkalinity = 5 mg/l
 Total ammonia < 0.5 mg/l
 Nitrite < 0.3 mg/l; Iron < 0.2 mg/l

Molting data

≤ 10cm (4”) crayfish molt easily, within 14
days
Daily survival rate: 99.28% (MT); 98.65%(CT)
Molting %

5%
4%
3%
2%
1%
0%
0
20
40
60
Day
80
100
120
Molting MP model



Assumption: Equilibrium-unknown life
Decision variables: Number of molting tanks, &
number of hard shells purchased
Objective: Profit maximization under technical
and price risk


Risk data available for daily survival rate
Constraints: Tank stocking is based on molting
schedule, limited labor, limited demand
Results: Enterprise budget 15 tanks
Ave. labor = 9.3 Man hrs/day
Revenue:
Prices
Amount
Soft shells: 3,993 doz
$6/doz
$23,958
$0.83/doz
$5,609
$300/ton
$549
Costs:
Hard shells: 6,745 doz
Feed: 1.83 tons
Total variable cost
Total fixed cost
Returns to labor & mgmt
$18,671
$3,194
$10,133
Results: Non-risk model
Ave labor Opt. tank Hard shells Soft shells Breakeven
supply
number
(doz)
(doz) price ($/doz)
8 M-hr/d
13
5,057
3,343
5.60
16 M-hr/d
27
10,503
6,944
5.04
24 M-hr/d
40
15,948
10,544
4.86
Results: Multi-objective model
Production – d+ -d- = Num of Stores * 16 weeks * 13 doz/week
OBJ: Maximize {Profit – High weight*(d+ + d-)}
# of bait Opt. tank Hard shells Soft shells Breakeven
shops
number
(doz)
(doz) price ($/doz)
1
1
315
208
22.00
15
12
4,719
3,120
5.68
50
40
15,731
10,400
4.87
100
79
31,462
20,800
4.69
Results: MOTAD & Wicks-Guise
Model: 2 workers; 26 tanks; 8,770 doz soft shells
6,405
7000
6,577
8000
6,935
7,028
Effect of risk aversion of E (Profit) & output
6000
3000
792
2000
1000
E(profit)
Output(doz)
195
4000
2,041
5000
2,364

0
0
0.0001 0.0005 0.0007
Results: MOTAD & Wicks-Guise
Model: 2 workers; 26 tanks; 8,770 doz soft shells
Risk-efficient frontier (LP ⇒ linear frontier)
$2,500
$2,000
$1,500
$1,000
$500
Std error of Profit
$35,500
$35,000
$34,500
$34,000
$33,500
$33,000
$32,500
$32,000
$0
$31,500
Expected Profit

Conclusions

Strengths



If sold at $6/doz, a modest operation (15 tanks) can
lead to strong returns to labor & mgmt.
Restaurants will pay more than $6/doz in most
cases
Weaknesses


Soft shell crayfish farming is extremely risky,
requiring a skilled labor force
Production management is a full-time job for labor
force during summer