THE MILKFISH INDUSTRY IN TAIWAN

This paper attempts to explain empirically the entire milkfish (Chanos chanos ) industry in Taiwan, convering 1) the gathering and marketing of milkfish fry - the procurement subsystem; 2) the production of milkfish fingerlings for the baitfish industry; 3) the production of market-size milkfish - the transformation subsystem; and 4) the marketing of market-size milkfish - the delivery subsystem. A constant elasticity of substitution production function is used to estimate the input-output relationship for baitfish and market-size production systems, with all inputs classified into labor and capital. An important finding is that the elasticity of substitution between labor and capital exceeds unity, indicating rather easy substitution between the two inputs in the milkfish industry in Taiwan. The area for aquaculture has expanded rapidly during the past two decades, but the milkfish production area has remained at 15,000 ha and yields have increased slowly compared with those of other cultured species.