Comparative Case Study of Small-Scale Fish Processing for Local Seafood Supply

Abstract

This study examines the cost feasibility of local seafood processing as a market diversification strategy for small-scale aquaculture producers in the US Midwest. It addresses a gap in the literature by moving beyond commercial processing and mass marketing of processed seafood to assess the cost profitability of niche local fish processing under alternative facility choices. Using a case study profitability analysis, we compare the use of two facility types, a commercial kitchen and an on-farm kitchen, for two species, tilapia and rainbow trout, at three production scales: 2500, 5000 and 10,000 lb/year. The analysis incorporates enterprise budgeting, break-even pricing, profitability index, discounted payback period, net present value and sensitivity testing under uncertainty in raw product prices, rental rates and set-up costs. Results show that commercial kitchens are profitable for both species across all production scales, making them a lower risk entry option for niche value-added seafood processing. On-farm kitchens are more scale-dependent: Tilapia is unprofitable at 2500 and 5000 lb/year but becomes profitable at 10,000 lb/year, whereas rainbow trout becomes profitable at 5000 lb/year under a 15% markup and at 10,000 lb/year under both markup scenarios. These findings suggest that producers should match processing infrastructure to scale, species and pricing strategy. For extension practitioners, the results offer practical guidance for business planning, facility selection and risk management in local seafood business enterprises.