Production economics and profitability analysis of horizontal rack culture and horizontal rack culture coupled with raft-string culture methods: a case study of Pacific oyster (Crassostrea gigas) farming in Chiayi and Yunlin Counties, Taiwan

Because of the influence of an intertidal farming environment, the oyster breeding industry of Chiayi and Yunlin has adopted the use of a horizontal rack culture in the intertidal zone, as well as a raft-string culture, to increase oyster production. This study used the translog cost function to analyze and compare the horizontal rack culture and horizontal rack culture coupled with the raft-string culture, referred to as a mixed culture, to explore whether the two breeding methods demonstrated economies of scale and a relationship based on production input factor substitution. This study determined that both farming methods demonstrated increasing returns to scale. In addition, the mixed culture method yielded apparently higher returns to scale compared with the rack culture. The mixed culture was found to be more profitable than the horizontal rack culture because of higher production and lower average cost. Both farming methods exhibited an apparently significant substitution relationship regarding capital investment and juvenile oyster input, and capital investment and fishing gear, suggesting that increasing capital price leads to increased juvenile oyster and fishing gear input in substitution of the capital use.