A production economic analysis of different stocking density and fry size combinations of milkfish, Chanos chanos, farming in Taiwan

Abstract Milkfish, Chanos chanos, is often cultured with white shrimp, Penaeus indicus, to maintain ecological stability and increase profits. This study uses the outputs and cost data of 169 milkfish farmers in Taiwan for the years 2018 and 2019 and applies translog cost function modeling to analyze the production scale economy and input–input demand combinations of two stocking densities (<10,000, ≥10,000 fry/ha) and two fry stocking sizes (2–3 in. and ≥4 in.). The study found that high‐density stocking (≥10,000 fry/ha) of small or large milkfish fry has economies of scale overall. Thus, the average culture cost may be reduced by expanding the scale of milkfish production. High‐density stocking of small fry exhibits a comparatively higher own‐price elasticity of fry. As such, farmers are sensitive to fry price variations. The study also found that labor and capital exhibit the highest substitutability. Capital inputs may thus be increased to mitigate the effects of wage increments. In terms of production, the four observed clusters do not exhibit cost complementarity. Moreover, the survival rate of white shrimp in high‐density stocking milkfish polycultures is relatively low. It is thus recommended to strictly control the stocking density of white shrimp and to minimize the risk of excessively high stocking densities by stocking white shrimp in batches.