Economic Analysis of Eucheumoid Algae Farming in Kenya

Abstract

Two commercial eucheumoids (brown Eucheuma denticulatum and brown Kappaphycus alvarezii) were grown in pilot farms of 0.1 ha for 6 weeks (42 days) at two sites (Gazi and Kibuyuni) in southern Kenya. This was done to determine their net yield and economic viability and included sensitivity analysis to determine the effects of decreased farm gate prices and increased operating costs on the return of investment (ROI) and payment period in eucheumoid farming. The average net yield varied from 880 to 1209 kg dry wt for E. denticulatum and 600 to 1150 kg dry wt for K. alvarezii per crop. No significant difference in net yield was observed between the two morphotypes. However, a higher yield (p<0.05) was obtained for plants grown at Gazi (1071 ± 65 kg dry wt) than those at Kibuyuni (793 ± 93 kg dry wt). The total initial investment required for a 0.1 ha seaweed pilot farm (capital investment and operating costs) for one crop was estimated at Kshs 11 253 (Kshs 75=US$ 1), with labour (both hired and family labour) accounting for about 52% of the total production cost. The average annual income per 0.1 ha farm was Kshs 7549 for E. denticulatum and Kshs 49 126 for K. alvarezii. The rate of return on investment in farming E. denticulatum ranged from 15-63% and 122-380% for K. alvarezii. The pay back period was shorter for the latter (0.3 to 0.7 years) than the former (1.2 to 2.7 years). Economic sensitivity analysis showed that, even if the farm gate price was decreased by 20% and operating cost was increased by 20%, K. alvarezii farming would still be a profitable and attractive venture in Kenya, but not E. denticulatum because of negative economic indicators.

Keywords: Cost and revenue analysis, sensitivity analysis, productivity, Eucheuma, Kappaphycus, eucheumoid culture, aquaculture, Kenya.