THE EFFECT OF CASH FLOW AND CREDIT CONSTRAINTS ON FINANCIAL FEASIBILITY AND STOCKING STRATEGIES ON U.S. CATFISH FARMS: A MIXED-INTEGER MULTI-STAGE PROGRAMMING APPROACH

摘要

The availability of credit for aquaculture businesses historically has been problematic in the U.S., but little attention has been paid in the aquaculture economics literature to effects of restricted credit and cash flow deficits on the feasibility and optimal management of fish farms. An existing multi-stage mathematical programming model of catfish production was extended to include cash flow, lending and repayment constraints and activities for various farm sizes and levels of equity. Cash flow constraints affected the optimal management plan for catfish farms, with greater changes occurring in the optimal plans for smaller farms. Smaller farms generally were affected more severely than larger farms by restricted access to capital. Sales restrictions (that reduce cash inflow due to a decrease in sales) of only 5% caused small farms to become infeasible (when debt servicing of long-term debt was considered), while the largest farm sizes considered could withstand only a 20% reduction in sales before becoming infeasible. New startup catfish farms would improve cash flow (but not profits) by purchasing large stockers for Year 1, but would need to transition to other management plans to maximize profits in subsequent years. However, use of stockers in Year 1 requires maximum levels on operating capital lines of credit that are much higher than if fingerlings only are stocked. Under-capitalization of catfish farms increases financial risk because the cash flow constraints force farms to operate at sub-optimal levels, leaving them more vulnerable financially to adverse production and/or market conditions. Results of this study confirm suggestions that tight credit for catfish farms may have contributed to recent contractions in the industry.