Economic effects of disease outbreaks on U.S. salmonid farms

Abstract

The U.S. salmonid industry is the second-largest finfish sector of U.S. aquaculture, contributing $886 million and more than 2000 jobs to the U.S. economy in 2022. The goal of this study was to develop an economic analysis of the impact of losses from disease outbreaks to the U.S. salmonid industry. Specific study objectives were: (1) estimation of short- and long-term farm-level economic effects of reduction of marketed yield as a result of a disease outbreak on various salmonid production systems, scales, and business models; (2) estimation of the percent reduction in marketed yield that would trigger short-term financial distress and long-term business failure on various salmonid production systems, scales, and business models; and (3) estimation of the potential overall economic impact of a major disease outbreak on the U.S. salmonid farmed sector. Nine representative farm business scenarios were modeled based on earlier versions of representative salmonid farm production systems and scales developed from farm-level data and included: net pen production of 2500 K kg/farm/year of Atlantic salmon; recirculating aquaculture systems (RAS production) of 453.6 K kg/farm/year of Atlantic salmon; trout foodfish production in raceways of 27.2 K, 106.6 K, and 1588 K kg/farm/year and in RAS of 453.6 K kg/farm/year; and trout recreational fish production in raceways of 17.7 K, 83.9 K, and 453.6 K kg/farm/year. Production systems and scales were chosen based on a national farm-level survey dataset and adherence to maintaining confidentiality of individual farm business data. Threshold percentage reductions in marketed yield from disease outbreaks at which farms suffered short-term financial distress (measured by income above cash costs) ranged from a low of 7% (small-scale trout foodfish farms) to a high of 63% (large-scale trout recreational fish farms); values for salmon and the other trout scenarios were intermediate. Based on net returns (that measure longer-term profitability by considering all cash and noncash costs), the thresholds at which farms became unprofitable were lower, ranging from 3% to 59% for those scenarios for which this metric could be calculated (i.e., those scenarios that exhibited positive net returns; several scenarios modeled had negative net returns). Negative economic effects were greater on smaller than larger-scale farms. A mortality event or a regulatory response leading to total farm losses or depopulation (equivalent to 100% reduction in marketed yield) resulted in economic losses (measured as a percentage decrease in income above cash costs) on trout farm scenarios that ranged from −158% of the base scenario on the largest trout farm size modeled to −1520% on the smallest farm size. A regulatory response limited only to additional surveillance resulted in minimal losses of −34% on the smaller trout farm size and −0.1% reduction in income above cash costs on the largest trout farm size. With only one farm scale analyzed for salmon (raceway and RAS), no farm size effects could be assessed. The national industry-wide effect from a 1% decrease in national salmonid sales from an outbreak of disease was estimated to be $3.9 million/year in lost economic output and 22 jobs lost/year. A 25% decrease in national sales would result in $98.7 M lost economic output and a loss of 541 jobs nationally. Response planning for disease outbreaks should consider the variable effects on different farming scales of production. Efforts to prevent or minimize the impact of the introduction of infectious and noninfectious diseases to salmonid farms could potentially reduce economic losses and harm to U.S. salmonid producers.