Commercializing the Milkfish Hatchery-Bred Fry Industry in the Philippines: A Welfare Analysis

Abstract This study aims to estimate the welfare gains of the Philippine milkfish industry in establishing local fry hatcheries to reduce imports from Indonesia and Taiwan. It also seeks to identify the industry stakeholders who gain from this import substitution endeavour. The economic surplus model was used to estimate the welfare gains from the commercialization of the hatchery-bred milkfish fry in the fishery sector. Specifically, the changes in consumer and/or producer surplus per stakeholder were compared to determine who the biggest gainers are. Results of the study showed that the consumer surplus from the milkfish fry industry was larger than its producer surplus. On the other hand, the reverse was true for the grow-out industry. It is interesting to note that the consumers in the fry industry and the producer in the grow-out industry were the same set of stakeholders, i.e., the milkfish grow-out operators, who gained the most from this development. The study also showed that commercializing the local milkfish hatchery technologies can bring about more benefits to the country than importing fry and fingerlings. Hence, the development of local hatcheries for other aquaculture species can be expected to bring similar welfare gains. More importantly, the technical and financial assistance that were extended by the government’s fishery institutions through the GAINEX project as pioneered by DOST-PCAARRD can serve as an effective catalyst to prospective hatchery operators in reducing the risks, especially when setting-up a new enterprise like the hatchery-bred fry for an emerging aquaculture species in the country.