O’Rourke, P. D. 1996. Economic analysis for walleye aquaculture enterprises. Pages 371-384 in 

R. C. Summerfelt, editor. Walleye culture manual. NCRAC Culture Series 101. North Central 

Regional Aquaculture Center Publications Office, Iowa State University, Ames. 

Economic Analysis for 

Walleye Aquaculture 

Enterprises 

Patrick D. O’Rourke, Department of Agriculture, Campus Box 5020, Illinois State Universitx Normal, lL 

6 1 790-5020 

Introduction 

This chapter provides an introduction and/or review of 

some of the basic budgeting tools and analytical 

methods that may be useful in evaluating the potential 

economic viability of a current or planned walleye 

aquaculture enterprise. There are few references to 

actual “costs and revenues,” because there have been 

few reports of actual or simulated economic performance of walleye aquaculture enterprises. However, the 

economic analyses of walleye aquaculture enterprises 

by Edon (1994) and Makowieclu (1995) have been used 

as a frame of reference for the present study. 

Basic budgeting 

Enterprise budgets, sometimes called “production 

budgets” or “partial budgets”, provide a framework 

within which one can explicitly recognize the facts, 

assumptions, and uncertainties involved in a current or 

planned production operation or enterprise. This 

budgeting process is often referred to as an “enterprise 

budget” or “partial budget”, because it represents part 

of a larger agribusiness. For example, many farmers 

construct enterprise or partial budgets for each of their 

crop and livestock operations. These budgets help 

identify enterprise specific problems and opportunities, 

while also contributing to comparisons among enterprises and constructing overall or total budgets for the 

total farm. 

Constructing an enterprise budget (henceforth called 

“budget”) for a current or anticipated walleye aquaculture operation should be done by those who are or will 

be involved in operating and managing the operation. 

This is important, because they know how the system 

operates and, as in the case of planning a new operation, they bear the final responsibility for the assumptions used in constructing the budgets. Assistance from 

the Extension Aquaculture Specialist and other aquaculture producers may be helpful for those with limited 

experience in walleye aquaculture. 

Budgets may be constructed on an annual basis, or on a 

production cycle basis if the production cycle is not a 

year. The following discussion assumes an annual 

budget construction. The primary focus of this process 

is on developing sound estimates of the costs of the 

operation. While marketing, prices, and revenues are 

obviously important, the range of possible or likely 

revenues are not as difficult to document and estimate 

as are the costs of operating a walleye aquaculture 

operation. 

The components for a budget include: (1) size of 

operation, investment required and investment related 

costs and; (2) other costs, sometimes called operating 

costs. These costs must be organized in a manner that 

supports critical analysis of assumptions, uncertainties, 

break-even market prices and potential economic 

viability of the operation. 

Size of operation 

The initial size of an operation depends on a number of 

factors, includmg : 

NCRAC Culture Series 101 - Walleye Culture Manual 371 
1. Owner’s objective: hobby, evaluation, or profit? 

2. Assets available: hard (land, equipment, and 

financial sources) and soft (knowledge and 

experience). 

3. Initial estimate of market potential. 

If the owner’s objective is to evaluate hisher ability to 

operate an aquaculture operation or just to raise some 

walleye as a hobby, it would probably be reasonable to 

size the operation to existing hard assets. On the other 

hand, if the primary objective is to have a profitable 

commercial operation, it would be more reasonable to 

size the operation to fit the estimated market potential, 

as well as the available hard and soft assets. 

In either case, one needs either the upper limit of hard 

assets, or the goal for annual production to estimate the 

initial size of the operation and the initial investment. If 

one begins with a hard asset limit, such as an existing 

pond and/or tank system, the production capacity of the 

pond or tank system can be estimated, based on the 

biological needs of the fish. If one begins with a 

predetermined amount of annual production, the size of 

ponds or tanks can be estimated based on the biological 

needs of the fish. These biological requirements are 

hscussed in other chapters. 

Initial investment and related expenses 

A list of items that must be considered when estimating the initial investment for a fry to fingerling production operation is shown in Table 1. Investment related 

expenses are operating expenses that depend, at least in 

part, on the capital invested in the assets of the operation. These expenses may also be classified as fixed 

expenses. Fixed expenses are those expenses that can be 

estimated before production begins, as they do not vary 

with the volume of production from the given assets. 

Typically, the two most significant such expenses are 

depreciation and interest on invested capital. Also of 

importance are property taxes, fixed maintenance and 

repair expenses and property insurance expense. 

Depreciation and interest 

Depreciation and interest may be estimated using 

actual interest expense and the “allowable depreciation” 

expense accounting rules used by the Internal Revenue 

Service, or, especially in cases where there is little 

experience with the production process, by using 

straight-line depreciation over the estimated economic 

life of assets and estimated opportunity costs for 

interest on invested capital. The second approach 

involves fewer calculations and is usually the preferred 

approach for the novice or for the first estimates of 

production expenses. This approach is dscussed in this 

section, while the first approach is illustrated in an 

example application shown later in the chapter. 

Annual depreciation on all assets (except land which is 

not depreciable) with expected useful lives of more than 

one year is estimated by hvidmg the initial investment 

price by the number of years the asset is expected to be 

useful (expected useful life). Annual interest expense is 

estimated by multiplying one-half the total initial 

investment by the opportunity cost of the funds invested. In simple terms, the opportunity cost is the 

annual interest which could be earned by capital in the 

next best alternative investment. For example, if the 

next best investment opportunity were in a mutual fund 

with an expected annual return of 12% then the annual 

opportunity cost of investing that capital in a walleye 

production operation would be considered to be 12%. 

Table 1. Potential initial investment items for 

tank- or pond-based walleye production 

systems. 

Item System 

Land 

Pond and levee renovation or construction 

Tractor 

Building space renovation or construction 

Pumps 

Plumbing and piping 

H e at i n g/coo I i n g E q u i p m e n t 

Tanks, troughs and reservoirs 

Particle removal filter equipment 

Uti lit ies 

B i of i Iter eq u i pmen t 

Feed i ng equipment 

Feed storage 

Ae rat ion eq u i pm en t 

Oxygen injection equipment 

Testing equipment 

Monitoring and alarm system 

Emergency oxygen equipment 

Harvest i n g equipment 

Both 

Pond 

Pond 

Tank 

Tank 

Tank 

Tank 

Tank 

Tank 

Tank 

Tank 

Both 

Both 

Pond 

Tank 

Both 

Tank 

Tank 

Both 

372 NCRAC Culture Series 101- Walleye Culture Manual 
That annual interest expense rate is multiplied by onehalf the initial investment because, when using straightline depreciation, the average annual investment would 

be one-half the initial investment. 

Property taxes 

Property taxes can be estimated using local property 

tax rates, and an estimate of what local authorities 

would estimate the assessed value to be for taxable 

property. While this is a measurable expense, it typically is not a major expense in rural taxing dstricts. 

Fixed maintenance & 

repair 

Most facilities and equipment 

require annual maintenance and 

repair which is not du-ectly 

related to the amount of 

product moved through the 

system. These expenses are 

best estimated using historical 

records. When such records are 

not available, rules of thumb 

and manufacturer guidelines 

may be used. These annual 

expenses may be estimated as a 

percentage of initial investment 

in each asset. Assets with many 

moving parts and exposure to 

corrosion may have an annual 

rate as high as 5%. Assets 

without moving parts and less 

exposure to corrosion may have 

an annual rate as low 

as 1%. 

likely to be economically viable in the long-run, one 

should include as expenses all inputs used in the 

enterprise that have some value if used in another 

enterprise (opportunity cost). For example, the operator/ 

owner may be tempted to assume that hidher own labor 

and time carries no expense. This is usually based on 

the assumption that hisher time has no value. While 

this may be an acceptable assumption for a hobby 

enterprise it is generally not acceptable for a commercial enterprise, because it assumes the operatodowner 

has no marketable talent or skill. The same logic holds 

for interest expense on operating capital. This represents the cost of funds tied up in supplies and other cash 

expenses during the production period. These funds 

could earn interest if invested in stocks, a savings 

Table 2. Other operating expense 

items for tank- or pond-based 

wal I eye prod uct i o n systems. 

Inputs System 

E m p I oyee sal a r i eslw ages 

Em p I oyee fringe be n ef i ts 

Fry 

Feed 

Water 

Chemicals 

Oxygen 

Elect ricity/gas 

Variable maintenance and repairs 

Fees and licenses 

Miscellaneous expenses 

Operating interest expense 

Both 

Both 

Both 

Both 

Tank 

Both 

Tank 

Both 

Both 

Both 

Both 

Both 

Property insurance 

Estimates of property insurance rates may be obtained 

from insurance agents. This expense is not typically a 

major expense, but should be included because it is a 

real expense and it also provides the opportunity to 

dscuss insurance with providers. 

Other operating expenses 

Operating expenses other than those listed above are 

listed in Table 2. In evaluating whether an enterprise is 

account, or other interest bearing 

opportunity. 

The assumptions used in 

estimating the operating expenses are important. These 

assumptions should be recorded 

in order to facilitate analysis and 

to support evaluation of the cost 

of production if any of the 

assumptions are changed. The 

first assumptions recorded for 

each input should be those 

concerning the quantity of the 

input required for the enterprise, 

in relation to units of product or 

units of time. For example, labor 

requirements may be estimated 

based on number of hours 

needed per day or week. These 

estimates also depend on the 

degree of automation and 

cultural practices, such as number of feedings per day. 

Feed expense, on the other hand, will be related to 

several performance assumptions, including: assumed 

feed conversion ratio, the rate of gain, survival rate, 

starting weight, and target harvest weight. All factors 

impact the quantity of feed required to grow a fish to 

target harvest weight. 

The second series of assumptions that should be 

recorded concern the likely prices to be paid for each 

input. The prices of most, if not all inputs vary over 

time and cannot be forecasted with certainty. The 

NCRAC Culture Series 101 - Walleye Culture Manual 373 
uncertainties regarding future prices paid may be 

recognized by doing budgets which use high, low, and 

most likely estimates of the uncertain prices. A more 

complex method of incorporating uncertain prices and 

production relationships is shown in the example 

dmussed later in this chapter. 

The final series of assumptions that should be recorded 

are those that concern the expected prices and the 

quantity of the product produced by the enterprise that 

can be sold. These arc also uncertain, and may be 

incorporated by completing multiple estimates of 

revenues based on low, hgh, and most likely estimated 

prices and quantities. 

The following sections illustrate the use of two analytical tools that can be used to evaluate walleye aquaculture enterprises: the profitability linkage model and 

volume-cost analysis model. These models are useful 

only after enterprise budgets have been completed. 

They provide two methods to evaluate the potential 

profitability of an enterprise based on the budgets and 

underlying assumptions. 

Analytical tools for walleye aquaculture 

enterprises 

This section describes analytical tools which may 

improve business decisions. It outlines some of the data 

that provide useful management information, and 

dmusses a framework in which management information may be used in decision malung. 

What is management information? Management 

information is information that is useful for making 

management decisions. One of the challenges in 

managing a business is to select the information that 

may be useful in profitably managing a business. To be 

successful you and your employees must keep up to 

date on biological, chemical, and other technical 

information related to the products you produce and 

sell. You and your employees must have some technical 

expertise and must continually update your knowledge 

and information in these areas. If this is not done, the 

business will not succeed. Being prepared to utilize 

management information, means collecting and 

assembling useful information in a decision making 

framework so that it can be used effectively to influence 

management decisions. 

Management information may be classified into two 

broad categories: internal information and external 

information. Internal information includes operating 

and financial records for your business and operating 

and financial records for similar businesses. 

There are many forces impacting businesses over which 

the ownedmanager have little control. However, 

effective manager/operators prepare to act as these 

forces cause or indicate changes affecting the business. 

External information includes inflation and trends in 

prices, interest rates and federal monetary policy, 

government and regulations, market and competitive 

forces, includmg competitors ’ strategies. External 

information also includes current and projected input 

prices; qualified and trained supply of labor; technological changes that have potential impact on you, your 

competitors, or your customers; weather/climate; and 

changes in consumer values and attitudes that may have 

sustained or short term or long term impact on demand 

for fish products. 

The art and science of profitably operating a walleye 

aquaculture enterprise calls for the utilization of the 

types of management information dscussed above in 

malung decisions in the areas of purchasing, investments, marketing/distribution, and production. It 

requires setting goals and objectives. The goals and 

objectives set by management will be more realistic 

when they are based on sound information. One can 

never eliminate the risk and uncertainty inherent in an 

aquacultural production enterprise, but the risk and 

uncertainty can be reduced with a better understanding 

of the business and the internal and external forces that 

impact it. 

Two analytical tools (or models) provide a framework 

to analyze the potential impact of internal or external 

factors on the profitable operation and financial 

performance of a business. Those two models are: the 

profitability linkage model and the break-even analysis 

model. 

Profitability linkage model 

The basic profitability linkage model (Figure 1) is a 

conceptual framework linking the operating statement 

and balance sheet to ascertain the profitability of the 

firm and illustrate how profitability is related to 

revenues, expenses, assets, and equities. The example 

used in Figure 1 to illustrate the profitability linkage 

374 NCRAC Culture Series 101- Walleye Culture Manual 
7 

$ Total revenue 

$ Total exp. I $53,189 

$ NPAT&l 

1 $8,287 

+I 

$ Income tax 

I 

$ Current assets I 

I $7,000 

$ Total assets 

+ [ $71.770 

I $64,770 

$ Fixed assets 

$ Current liabilities 

I $6,400 1 

$Total revenue 

Asset turns I 0.877 RONWYo 

X I 17.35% I 

$ Total assets 

I $71,770 

/ I 1.502 

Leverage 

1 $47,770 

$ Net worth 

ROTA% 

+ I NPAl&T=Total revenues - expenses-income taxes 

Profit margin = NPAI&T +Total revenue 1 $24,000 

$ Total liabilties 

Table 3. Beginning pro forma balance sheet for a hypothetical, intensive walleye 

fingerling tank system. 

Assets Equities 

Cash 

Accounts receivable 

Inventory 

Total current assets 

Equipment 

Facilities 

Land 

Fixed assets 

Total assets 

Less depreciation 

Less depreciation 

Balance sheet ratios 

$1,000 

$0 

$6,000 

$7,000 

$33,440 

$28,200 

$0 $33,440 

$0 $28,200 

$3,130 $3,130 

$64,770 

$71,770 

Net profit 13.1 7% 

Return on total assets 1 1.55% 

Return on net worth 17.35% 

Asset turnover 0.877 

Leverage 1.502 

Accrued expenses 

Accounts payable 

Notes payable 

Total current liabilities 

Long-term I iabi I it ies 

Total I i a b i I it i es 

Net worth 

Total liabilities + Net worth 

$2,000 

$0 

$4,400 

$6,400 

$1 7,600 

$24,000 

$47,770 

$71,770 

NCRAC C u l t u r e S e r i e s 101 - W a l l e y e C u l t u r e Manual 375 
Table 4. Pro forma income statement for break-even analysis for a hypothetical, intensive 

walleye fingerling tank system. 

Item Total dollars YO Total revenue Fixed expense Variable expense 

$ per year % of Total Revenue 

Cycles per year 2 

Price per fingerling 

Total revenue 

Operating expenses: 

Employee wages 

Employee fringe 

Feed 

Water 

Oxygen 

Electricity 

Maintenance and repair 

Depreciation 

Fees and licenses 

Insurance 

Property tax 

Miscellaneous 

Operating interest 

Total operating expenses 

Capital interest expense 

Total expenses 

Net profit before taxes 

Taxes (Corp. rates) 

Net profit after tax and 

interest (NPAT81) 

Eggs 

0.84 

62,939 

14,660 

4 , 398 

1,664 

9 , 463 

470 

1 ,165 

8,221 

2 , 879 

5,l 07 

50 

324 

196 

629 

1,324 

50,549 

2 , 640 

53,189 

9 , 750 

1,462 

8,287 

100.0 

23.3 

7.0 

2.6 

15.0 

0.7 

1.9 

13.1 

4.6 

8.1 

0.1 

0.5 

0.3 

1 .o 

2.1 

80.3 

4.2 

84.5 

15.5 

2.3 

13.2 

14,660 

4 , 398 

2.6 

15.0 

470 

160 

8,221 

2 , 879 

5,107 

50 

324 

196 

1.6 

1 .o 

1,324 

2 , 640 

40,428 20.3 

model is based on the assumptions and data used in the 

example dxussed later in ths chapter. The information 

contained in the model comes from the pro forma 

income statement (Table 4) and the pro forma balance 

sheet (Table 3). These financial statements represent a 

likely scenario for the Mathias and Moodie (1 994) tank 

system analysis simulated by Edon (1 994) and discussed later in this chapter. 

The top third of the profitability linkage model in 

Figure 1 contains the expense and revenue information 

from the pro forma income statement. The arrangement 

illustrates the relationships between expenses, revenue 

and the resulting profit margin for one year. In summary the relationship is as follows: 

Revenue - Expenses - Tax = Net Profit after Tax and 

Interest (NPAT&I) 

NPAT&I + Total Revenue = Percent Profit Margin 

The focus is on profit margin percentage and the factors 

that affect it. The profitability linkage model helps 

illustrate the impact of a change in any item on the pro 

forma income statement (Table 4) on the percentage 

profit margin. For example, an increase in the cost of 

feed (or other input) or a decrease in revenue will 

reduce the profit margin, while a decrease in any cost 

item or an increase in revenue will increase the profit 

margin. 

The middle section of the model in Figure 1 contains 

the asset side of the pro forma balance sheet. Current 

376 NCRAC Culture Series 101- Walleye Culture Manual 
and fixed assets may be listed in as much detail (or 

breakdown) as desired to track their impact on the 

business. The focus of this section of the model is on 

the efficiency of asset usage measured by asset turns, 

which is the ratio of total revenue to total assets. An 

asset turns of 2.5 means there was $2.50 of revenue for 

each dollar invested in assets. A change in any asset 

category and its impact on asset turns can be traced and 

understood in this section of the model. For example, if 

there were a decrease in the investment in a fixed asset, 

the result would be an increase in asset turns. Similarly, 

if there were an increase in any asset category the result 

would be a decrease in asset turns. To see how important these lunds of changes may be, the first two 

sections of the model are linked to produce the return 

on total assets percentage (profit margin percentage X 

asset turns). The income statement analysis and the 

asset analysis become even more useful when they are 

linked in this manner, because it focuses attention on 

the return on investment, where investment is represented by the value of total assets. 

The bottom third of the profitability linkage model in 

Figure 1 provides details on investment in the business 

by the owners (net worth) and by outsiders (liabilities). 

The ratio of total assets (which equals total investment) 

to net worth produces a measure of relative owners’ 

investment known as financial leverage. Leverage 

illustrates how many dollars of total investment there 

are for each dollar invested by the owners (net worth or 

owners equity). For example, the leverage ratio in 

Figure 1 of about 1.5 means for each dollar of owner 

investment there is $1.50 total investment or $0.50 

invested by outsiders. These “outsider” investments are 

listed on the balance sheet in Table 3 as liabilities for 

the business. 

The linkage of leverage to the return on total assets 

percentage produces the final and most important 

measure of profitability: return on net worth. This final 

linkage allows one to trace the impact of changes in 

revenues, expenses, assets, liabilities, or net worth on 

the return on net worth. In the final analysis, most 

businesses must provide the owners with an acceptable 

return on their investment to retain that investment. If 

returns are not acceptable, investment dollars will flow 

to similar investments with higher returns or lower risk. 

The acceptability of returns depends on the risk and 

returns on alternative investment opportunities. 

The profitability linkage model illustrated in Figure 1 

may be changed to include as much detail as is desired, 

and it may be adapted to contain multiple years of data, 

thus allowing the tracking of profitability performance 

over time. The profitability model can be expanded to 

incorporate other internal or external factors or forces 

which may have an impact on the business. 

Volume cost analysis 

The volume of business relative to expenses has an 

important influence on economic and financial viability. 

Understanding the relationship between volume and 

expenses plays a key role in achieving profitability 

objectives. Research has shown, and common sense 

tells us, that much of the difference in expenses as a 

percent of sales, among similar businesses, results from 

differences in volume. 

When volume is less than anticipated, expenses as a 

percent of sales can be much higher than anticipated. 

However, increasing volume can be fairly simple: just 

lowering the price on items you sell may lead to 

increased sales volume. However, this might reduce 

profits. To be more profitable, an enterprise must 

increase sales or decrease expenses or both. The 

relationship between sales and expenses is very 

important. This relationship will be examined after a 

discussion about classifying expenses. 

There are many ways to classify expenses: variable and 

fixed; controllable and non-controllable; selling and 

administrative; etc. Each breakdown is useful for 

different reasons. The variable - fixed breakdown is the 

one most useful for purposes of volume analysis. It 

shows the relationship between sales volume and costs, 

and it lays the basis for the use of an important management tool known as “volume-cost” or “break-even 

analysis’’ . 

A fixed expense or fixed cost is present even if there are 

no sales. It doesn’t automatically increase as sales 

increase. The definition for fixed cost (or expense) is 

those costs that do not fluctuate with the volume of 

business. Fixed costs are considered the cost of being in 

business. A variable expense or variable cost changes in 

direct relationship with sales; in fact, sales cause 

variable expenses. The definition of variable cost (or 

expense) is those costs which vary directly with the 

volume of sales. Variable costs are considered the cost 

NCRAC Culture Series 101 - Walleye Culture Manual 377 
of doing business. For instance, the cost of goods sold 

is a variable expense. Sales cause cost of good sold. 

Employee expenses, however, are not a variableexpense, if they are predetermined by agreement or 

contract rather than directly caused by selling product. 

Some expenses may be a mixture of fixed and variable 

expenses. For instance, an initiavpermanent labor force 

is necessary for doing business, so they represent a 

fixed cost. Additional people may be needed to perform 

selected duties during shorter peak sales or stocking or 

harvesting; this labor is a variable cost since it is 

drectly related to the volume of business. 

Judgments must be made about the breakdown of 

expenses into fixed and variable categories. Volume cost 

analysis, when correctly applied, can help answer a 

number of important questions concerning the impact 

of size of business and changes in costs or prices on the 

profit of the business. 

There are four basic steps in determining the breakeven volume for an aquaculture production business. 

STEP 1. Identify fixed and variable costs. 

STEP 2. Summarize fixed and variable costs. 

STEP 3. Calculate the contribution to overhead 

STEP 4. Calculate the break-even volume. 

These four steps are further defined in the following 

dscussion and illustration. Table 4 contains the pro 

forma income statement for the simulated walleye 

fingerling tank production system. A potential breakdown into fixed and variable costs is shown in the two 

right hand columns labeled “Fixed expense $ per year” 

and “Variable expense % of total revenue”” (Step 1). 

This step is important, because mistakes in categorizing 

costs produces misleadmg results. The income statement also shows total costs expressed in total dollar 

terms and as a percent of total revenues for each 

category. 

When the last two columns in Table 4 are completely 

filled, variable costs can be determined as a percentage 

of total revenue and fixed costs can be determined as 

total dollars for the year (Step 2). Volume cost analysis 

is based on the assumptions that selling price and cost 

relationships are constant. As conditions change, costs 

and the fixedvariable breakdowns should be reestimated to more accurately reflect the operating 

environment. By keeping the analysis current, one can 

satisfy the assumptions and use volume cost analysis as 

a powerful planning tool. 

In Table 4 the variable costs were 20.3% of revenues or 

about $0.203 per dollar of sales revenue. We can now 

calculate the contribution to overhead (CTO) per dollar 

of sales revenue (Step 3). The contribution to overhead 

is defined as the portion of revenue from each unit or 

dollar of sales that remains after variable costs are 

covered. This portion of revenue is applied toward 

covering fixed costs. For each dollar of sales revenue in 

this example: 

CTO = $1.00 -$0.203 = $0.797 

Variable costs are covered before fixed costs when 

revenue comes into the business. What remains after 

variable costs are covered is known as a contribution to 

overhead (CTO) which goes to cover or pay fixed costs. 

When all fixed costs are covered, the business is at 

“break-even,” and it then begins to make a profit as 

volume increases beyond the break-even volume of 

business. The Break-even point (BEP) for a business is 

the total revenue volume at which total fixed costs are 

just covered by the contribution to overhead (Step 4). It 

is calculated as follows: 

BEP = $Fixed cost + $CTO per dollar revenue = 

$40,428 + $0.797 = $50,725 

This is the dollar volume of business at which total 

revenues equal total costs and profits equal zero. Each 

dollar of sales revenue above $50,725 generates profit. 

The amount of profit generated for each dollar of sales 

above the break-even point in this example is $0.797. 

The following exercises illustrate the uses of volume 

cost analysis in :profit planning; analyzing the impact 

of change in a product price; analyzing the impact of a 

change in fixed cost; analyzing the impact of a change 

in variable cost. 

Example: Profit planning 

-7 

Volume cost analysis can be used to estimate the sales 

volume required to achieve the desired profit. For 

example, assume that the profit goal equals the net 

profit before taxes in Table 4 ($9,750). Each dollar of 

sales over and above the break-even point generates 

$0.797 (CTO) in profit. What dollar volume of sales is 

378 NCRAC Culture Series 101- Walleye Culture Manual 
required to cover all fixed costs and achieve the profit 

goal? The equation for profit planning using break-even 

analysis is: 

Volume required (VR) = ($profit goal + $fixed cost) 

+ $CTO per dollar revenue = ($9,750 + $40,428) 

t $0.797 = $62,959 

The calculated sales volume required is about equal to 

the total revenue shown in the pro forma income 

statement in Table 4 (the difference is due to rounding 

errors). 

Example: Analyzing the impact of a change in 

price 

One of the most powerful uses of break-even analysis 

is to determine the impact of changes in price of the 

product sold. Decreasing the price per fingerling 

decreases the CTO. As the CTO gets smaller, the BEP 

gets higher. With break-even analysis, you can determine how many more sales dollars must be generated 

before a decrease in price is a profitable decision. For 

example, if you decrease the price 1 %, how would it 

affect the BEP? Remember CTO = sales dollar - 

variable cost per dollar 

Old CTO = $1.00 - $0.203 = . $0.797 per $1.00 of 

Old BEP = $fixed cost + Old CTO = $40,428 + 

sales 

$0.797 = $50,725 

New CTO = $0.99 - $0.203 = $ .787 

New BEP = $fixed cost t New CTO = $40,428 + 

$0.787 = $51,370 

The new BEP is $645 higher than the old BEP. The 

sales volume required to achieve the previous $9,750 

profit goal would be: 

Volume required (VR) = ( $fixed cost + $profit goal) 

+ New CTO = ( $40,428 + $9,750 ) + $0.787 = 

$63,759 

This is an $800 hgher sales volume than the original 

volume required prior to the reduction in price. 

Example: Analyzing the impact of a change in 

fixed cost 

Volume costs analysis can help determine the additional volume necessary to support the purchase of 

more assets or other fixed cost changes. A way to 

calculate the additional sales volume required is: 

$ Additional fixed costs t CTO = $ Ad&tional sales 

required 

For example, how much additional volume will be 

required to cover the cost of an addtional pick-up 

truck? Assume a new pick-up truck costs $15,000 and 

has an expected life of 5 years. Assume a straight line 

depreciation of the truck with no salvage value; 

insurance, taxes, etc. are $1,000 per year; and any other 

operating costs are the same as for other trucks. The 

annual fixed cost increase caused by the purchase of the 

truck would be: 

depreciation ($1 5,000/5 years) = $3,000, other fixed 

costs = $1,000, total additional FC = $4,000 

Additional FC + $ Original CTO = $5,019 in 

addltional sales needed 

Note: these additional $5,019 in sales are needed every 

year for the next 5 years. If a new employee is needed 

to drive the truck, a new fixed cost for his salary must 

also be included. 

Example: Analyzing the impact of a change in 

variable cost 

vkiable costs can also change. When variable costs 

change, the CTO changes and when the CTO changes, 

the BEP changes. What happens to the BEP if variable 

costs increase by $0.02 per dollar of sales? 

CTO = sales dollar - variable cost per dollar = $ 1-00 

- $0.223 = $0.777 

BEP = $ Fixed Cost t $ CTO = $40,428 + $0.777 = 

$52,03 1 

This is $ 1,306 higher than the original break-even 

volume. Further, if one wished to maintain the original 

profit goal of $9,750, the sales volume required would 

be: 

Volume required (VR) = ( $fixed cost + $profit goal) 

+ New CTO = ( $40,428 + $9,750 ) + $0.777 = 

$64,579 

Therefore, if variable costs increase by $0.02 per dollar 

of sales, the volume required to maintain the original 

profit goal would be $1,620 higher. 

NCRAC Culture Series 101 - Walleye Culture Manual 379 
Table 5. Break-even analysis scenario for a hypothetical, intensive walleye 

fingerling tank system. 

Total dollars Per kilogram Per fingerling Per dollar of 

total revenue 

Total fixed cost 

Total variable cost 

$40,428 $1 7.99 $ 0.54 $0.642 

$1 2,761 $5.68 $ 0.17 $0.203 

Break-even volume: (BEV) $50,710 1,811 kg. 60,369 fing. 

Change in Bev: 

Per $1,000 increase in fixed cost $1,254 45 kg. 1,493 fing. 

Per $0.01 increase in variable $23 1 kg. 27 fing. 

cost per kg 

Per $0.01 increase in variable $644 23 kg. 767 fing. 

cost per dollar total revenue 

Table 5 shows additional statistics for the break-even 

analysis of the example &scussed above. It illustrates 

the three views one could take in calculating breakeven. Break-even is shown in dollars, lulograms, and 

fingerlings. This type of analysis may be applied to 

one’s own business by following the procedures 

outlined and discussed above. 

Example application of economic analysis tools 

The economic model that will be presented for 

intensive production of walleye fingerlings in a tank 

system is based on a study by Mathias and Moodie 

(1994). That study was the most complete and the most 

recent source of information concerning input and yield 

data, as well as prices and cost structure for such a 

system. Operating cost data came from studies of past 

and current production systems. The operating costs 

consisted of: labor, feed, energy, water, egg cost, 

oxygen, interest on operating capital, maintenance and 

repairs, fees and licenses, insurance, property tax, 

depreciation, and miscellaneous expenses. It was 

assumed in the model that the production system 

allowed two production cycles per year. Walleye eggs 

were assumed to be available as early as March in the 

South, until late June or early July in the North. The 

availability of walleye eggs during these periods allows 

two production cycles per year. 

An investment which provides future streams of 

revenues and costs is inherently risky if the outcomes 

are not known with certainty. When analyzing the 

potential profits from a risky investment, such as a 

commercial recirculating aquaculture system, collection 

of the most accurate and up-to-date cost and revenue 

data is absolutely necessary. Past economic analyses 

have utilized measures of central tendency or expected 

values because of limited information and limited 

ability to incorporate risk into the framework of an 

income statement. As more commercially derived cost 

data become available, information about expected 

values and measures of variation can be extracted. Also, 

PC software such as @RISK1, which was used in this 

analysis, allows relatively easy analysis of investments 

with multiple sources of uncertainty. 

Initial investment 

Information on initial investment costs in land, 

buildings, fixed equipment, and system components is 

relatively easy to obtain from the marketplace once the 

components of the system are identified. Contractors 

and vendors of fixed equipment can provide up-to-date 

estimates and price lists. The cost information provided 

here is based upon a $3,130 investment in land, a 1,504 

ft2 building at a cost of $28,200, and a $33,440 invest380 NCRAC Culture Series 101- Walleye Culture Manual 
Table 6. Investment related costs of equipment for walleye fingerling intensive 

tank system. 

Item Description Initial Estimated Annual Repair and 

investment life depreciation maintenance 

$ Vrs) $ $ 

Land 

Building @ $1 8.75/ft2 

Total land and building 

Equipment 

System for egg incubation: 

Incubator jars (4) 

Pumps (2) 

Reservoir plumbing 

Heaters (3) 

Holding tank 

System for rearing larvae 

Troughs (3) 

Particle remover 

B iof i Iter 

Reservoirs (2) 

Heater 

Feeders (IO) 

Feede r con t. 

Piping 

Scree n box( 5) 

Pumps (3, 1/3hp) 

Pumps (2, 1/2hp) 

System for fingerlings 

Tanks (2) 

Swirl separator 

B iof i Iter 

Oxygen tower 

Heater 

Feeders (2) 

Controller 

Oxygen meter 

Alarm system 

Emergency oxygen system 

Pumps (4, 2hp) 

Equipment total 

3,130 

28,200 

31,330 

360 

110 

725 

580 

360 

6,280 

2,540 

580 

290 

2,080 

1,460 

180 

800 

1,090 

650 

560 

4,500 

2,900 

580 

145 

1,900 

290 

220 

1,800 

430 

580 

1,450 

33,440 

25 

10 

5 

15 

5 

15 

15 

5 

15 

15 

5 

5 

10 

15 

5 

5 

5 

15 

15 

15 

15 

5 

5 

5 

5 

5 

15 

5 

~ 

1,128 

1,128 

36 

22 

48 

116 

24 

41 9 

508 

39 

19 

41 6 

292 

18 

53 

21 8 

1 30 

112 

300 

1 93 

39 

10 

380 

58 

44 

360 

86 

39 

290 

3,979 

0 

1,410 

1,410 

7 

2 

15 

120 

7 

126 

51 

12 

6 

420 

29 

4 

16 

22 

13 

11 

90 

58 

12 

3 

380 

6 

4 

36 

9 

12 

29 

1,469 

NCRAC Culture Series 101 - Walleye Culture Manual 381 
ment in fixed equipment and utilities (Table 6). Total 

initial investment is estimated to be $64,770. 

straight-line depreciation costs over the estimated lives 

of the buildmg and equipment. 

Depreciation 

Estimation of annual depreciation costs for buildings, 

fixed equipment, and system components requires 

information about expected economic lives and salvage 

values. Until various production systems have been up 

and running for a number of years, useful economic 

lives and salvage values of various fixed equipment will 

not be known with certainty. Such data are based upon 

engineering estimates for longer-lived equipment and 

actual observations for shorter-lived equipment. Data 

presented in Table 6 are estimates, based upon the best 

available information. The resulting figures represent 

Operating costs 

A key variable in the estimation of operating costs is 

the selected level of technology or the mix of fixed 

equipment. Choice of technology may have a significant effect on profits; therefore, it is important to have 

information on operating costs as they vary with the 

level of technology. Such information may come from 

studes of actual production systems or from simulation 

analysis based upon engineering data. Due to the 

relative infancy of intensive aquaculture, much information from private companies has been restricted for 

proprietary reasons. Publicly available cost data from 

Table 7. Values for uncertain input variables for a hypothetical, intensive walleye fingerling tank system. 

Stage Va r i a b I e 

All stages: 

Stage IA: 

Stage IB: 

Stage II: 

Stage Ill: 

Stage IV: 

Fingerling price 

Oxygen price 

Labor wage 

Electric charge 

Eggs to incubate 

Feed price 

Survival rate 

FCR. 

Rate of gain/d 

Feed price 

Survival rate 

FCR. 

Rate of gain/d 

Feed price 

Survival rate 

FCR. 

Rate of gain/d 

Feed price 

Survival rate 

FCR. 

Rate of gain/d 

Feed price 

Survival rate 

FCR. 

Rate of gain/d 

Low 

$0.600 

$1 -21 9 

$7.00 

$0.0500 

360,000 

$20.00 

20.00% 

0.90 

0.008 

$3.50 

60.00% 

0.90 

0.050 

$1.20 

85.00% 

0.90 

0.1 20 

$1.20 

90.00% 

0.90 

0.200 

$1.20 

85.00% 

0.90 

0.40 

Likely High 

$0.800 

$8.00 

$0.0600 

400,000 

$30.00 

$1.444 

30.00% 

1.50 

0.01 0 

$4.00 

70.00% 

1.50 

0.050 

$1.40 

85.00% 

1.50 

0.1 20 

$1.40 

90.00% 

1.30 

0.200 

$1.40 

88.00% 

1.60 

0.40 

$1 .ooo 

$1.670 

$10.00 

$0.0800 

440,000 

$50.00 

40.00% 

1.70 

0.020 

$5.70 

80.00% 

1.70 

0.065 

$1.50 

93.00% 

1.70 

0.125 

$1.50 

96.00% 

1.40 

0.250 

$1.50 

95.00% 

1.60 

0.51 

382 NCRAC Culture Series 101- Walleye Culture Manual 
Table 8. Simulation results for walleye fingerling hypothetical 

system (2500 observations). 

ntensive tank 

Total Expense Net present value Net profit after tax 

Cent s/F i n g e r I i n g 8 15% and interest 

Minimum 

Maxi mu m 

Mean 

Std Deviation 

Va r i an ce 

$0.4737 

$1.1595 

$0.71 91 

$0.1034 

$1.0695 

-$87,851 -$23,119 

$1 68,681 $54,606 

$8,909 $6,319 

$32,556 $9,834 

$1,059.9 mil $96.7 mil 

actual production systems are therefore limited. 

Currently available data for walleye production systems 

have come mainly from universities, which have 

constructed and operated commercial scale production 

systems and from research experts such as Mathias and 

Moodie (1 994). 

Data used in ths analysis indicate that feed costs 

represent 15.0% of total revenues (Table 4), but prices 

fluctuate. Labor is another major cost factor. Employee 

wages and employee fringe benefits were near 36.3% of 

total revenues. Labor costs may vary significantly from 

region to region. Electricity is the third largest operating 

cost at 13.1 % of total revenues. Depreciation and 

maintenance and repair account for about 12.7% of 

total revenues and it can vary due to the cost of equipment. Interest on operating capital and interest on 

capital investment account for about 6.3% of total 

revenues. 

Interest on operating capital was determined by 

multiplying one quarter of total operating expenses less 

depreciation by an interest rate of 12.0%. Interest on 

capital investment was figured at 12.0% times one-half 

the total initial investment in buildings, fixed equipment, and system components plus 12.0% times the 

initial investment in land. 

Revenue 

Total revenue is dependent upon total annual production and net price received. Expected annual production 

is affected by feed conversion ratio, rate of gain, 

mortality, and the number of days required to reach 

market size. The expected price for walleye fingerlings 

was assumed to be $0.84 per fish or $28.00/kg for this 

simulation. 

Risk analysis 

To assess the risk and uncertainty arising from the 

inability to accurately predict certain price and production variables, the pro forma income statement in Table 

4 was generated 2,500 times using the Latin Hyperbola 

iteration procedure in @RISK. To reflect uncertainty, 

triangular distributions with minimum, likely, and 

maximum values were assigned to five general or 

global variables and four other variables in each of the 

five production stages as shown in Table 7. 

The general goal of this study was to determine if the 

commercial production of advanced, 6 inch walleye 

fingerlings, reared intensively in a tank system in the 

north central region, would be economically viable. The 

simulation produced 2,500 observations for the total 

expense per fingerling produced, the net profit after 

taxes and interest, and the net present value (Table 8). 

The simulation generated: 1) a mean expense of 

$0.7 19Ufingerling with a standard deviation of 

$0.1034, a minimum expense of $0.4737 and a maximum expense of $1.1595/fingerling produced; 2) an 

expected net profit of $6,3 19 with a standard deviation 

of $9,834, a minimum profit of -$23,119, and a 

maximum profit of $54,606; and 3) a mean net present 

value of $8,909 with a standard deviation of $32,556, a 

minimum net present value of -$87,851, and a maximum net present value of $108,861. The positive 

expected net present value generated by the simulation, 

NCRAC Culture Series 101 - Walleye Culture Manual 383 
along with an expected net profit of $6,319 indicate that 

investment in this “hypothetical” enterprise may be 

acceptable at the discount rate of 15 percent. 

Net Present value 

The net present value which was calculated for the 

investment in the simulated walleye fingerling system 

assumed a weighted cost of capital of 15%. All fixed 

equipment and components were assumed to be sold for 

salvage value at the end of a 5-year period. 

Generating pro forma income statements with estimates 

of expected net profit after taxes provides one measure 

of the potential profitability of an investment. However, 

such estimates do not provide enough information to 

make the investment decision. Rational investors will 

invest their money where it is expected to produce the 

highest return for any given level of risk. Because fish 

production and marketing on a commercial scale is still 

a very risky business, one would expect an investment 

in such systems to produce a higher return than investments in less risky opportunities in order to attract the 

necessary investment. The net present value method of 

investment analysis is one of the best methods used to 

evaluate investments in business ventures. 

The results shown in Table 8 are greatly impacted by 

the quality and accuracy of the data used in the analysis. Persons interested in investing in a commercial 

aquaculture investment opportunity should consider this 

type of analysis prior to accepting or rejecting such an 

investment opportunity. 

References 

Edon, A. M. T. 1994. Economic analysis of an intensive 

recirculating system for the production of advanced 

walleye fingerlings in the north central region. 

Master’s thesis, Illinois State University, Normal, IL. 

Makowiecki, E. M. M. 1995 Economic analysis of an 

intensive recirculating system for the production of 

walleye from fingerling to food size. Master’s thesis, 

Illinois State University, Normal, IL. 

Mathias, J. A. and G. E. E. Moodie. 1994. Feasibility of 

an intensive walleye culture system for northern 

communities. Research report to Mitigation Department, Manitoba Hydro, Winnipeg, Canada. 

384 NCRAC Culture Series 101- Walleye Culture Manual 
Hamilton, T.E. 1996. Cooperative walleye culture programs in Michigan. Pages 385-388 in R. C. 

Summerfelt, editor. Walleye culture manual. NCRAC Culture Series 101. North Central Regional 

Aquaculture Center Publications Office, Iowa State University, Ames. 

Cooperative Walleye Culture Programs 

in Michigan 

Thomas E. Hamilton, Hamilton Reef Fisheries Services, 2785 Weesies Road, Montague, MI 49437 

Introduction 

In 1970, the Michigan Department of Natural Resources (MDNR) started a pond-rearing walleye 

program. In the first year, 45,500 fingerlings were 

produced. To expand production, the MDNR has 

established a cooperative walleye culture program, with 

more than 100 cooperators by 1990. The scope of this 

program varies from landowner permission for the 

MDNR to use barrow pit ponds, to well-organized 

sportfishing groups conducting their own walleye 

culture with guidance from MDNR. In 1978, the 

program was expanded substantially with the completion of a 15-acre (6.07-ha) $88,000 walleye culture 

pond on the Muskegon River, Muskegon County, 

Michigan. In the first year production was 133,000 

walleye fingerlings. This was a cooperative venture 

between MDNR and Muskegon Sportfishing Association (MSA). This program re-established the major 

walleye spawning runs in the Muskegon River that had 

not occurred since the late 1950’s. The success sparked 

interest by other communities to duplicate the walleye 

culture program and create a walleye fishery for their 

communities. By 1982, the large spawning runs up the 

Muskegon River provided a source of eggs for MDNR 

to expand culture programs for these communities. 

Currently, MDNR faces limited finances, manpower, 

and natural resources to produce the present statewide 

demand for 6 million walleye fingerlings. Local 

communities have human and natural resources which 

can be tapped by well-organized sportpersons and 

MDNR. The size of the contribution and the duties 

performed by the parties may vary, but cooperative 

walleye culture programs can be successful and walleye 

fisheries can be established. 

MDNR receives requests from many communities for 

fish plantings, especially walleye. Local sportfishmg 

groups also request walleye culture ponds for their 

communities. MDNR must first determine if walleye 

should be a part of the local management plan by 

reviewing lake selection criteria. If walleye cannot be 

provided from existing culture, then MDNR must 

decide if a culture pond is feasible, using pond site 

criteria. 

MDNR criteria used to select a lake for a walleye 

fishery include: 

1. Physicalkhemical characteristics favorable to 

2. Waters that historically contained good popula3. Presence of appropriate forage base; 

4. Waters that have produced a fishery by stocking in 

5. Public access to the lake; 

6. Ripariadangler desire for walleye fishery; support 

w a1 ley e ; 

tions that naturally reproduced; 

the past; 

should come from the lake riparians first and 

local anglers second; 

7. Natural reproduction potential. 

The following criteria are used to determine if a site is 

suitable for a walleye culture pond: 

1. The pond site is accessible to fisheries workers 

and vehicles as large as a fish hauling truck. 

Authorized personnel must have 24-h access. 

Ideally, the site should be on state owned land, 

but a long-term lease agreement may be a option. 

Because walleye fingerlings can be transported by 

truck, the site need not be located near the body 

of water to be planted; 

2. The area adjacent to the pond site must be clear of 

brush and/or trees. Land clearing cost must be 

considered when selecting pond sites; 

3. To hold water, the soil profile should have a layer 

of clay at least 12 in (0.3 m) thck near the soil 

surface; 

walleye fingerling production, the minimum pond 

size is 5 acres (2.02 ha) and a minimum depth is 5 

ft (1.52 m). Larger ponds 8-20 acres (3-8 ha) 

with a maximum depth of 8 ft (2.4 m) are 

acceptable. 

4. To obtain an acceptable costhenefit ratio for 

NCRAC Culture Series 101 - Walleye Culture Manual 385 
Chapter 17 - Economics Analysis for Walleye Aquaculture 

5. Water must be available to fill the pond initially 

and to maintain the pond at full level through 

July. An impoundment with any stream flow 

through it is not acceptable because the flow will 

flush the plankton and nutrients out of the pond. 

The last drainable walleye pond built by the MDNR in 

the mid 1980’s cost about $10,00O/acre ($24,71O/ha). 

The MDNR ponds are amortized for a 20-year life 

($500/acre/year, $1,235O/ha/year), and have an annual 

operating cost of about $250/acre ($61 8/ha). The 

statewide walleye production cost is $0.107/fish. 

Broken down to size range, from fry to fall fingerlings, 

fish production cost are $0.0003 for 4-day old fry, $0.06 

for 3-in (7.62 cm), $0.09 for 5-in (12.7 cm), and $0.15 

for 8-in (20.32 cm)fingerlings. The following are 

MDNR approximations of expectations from a 1 -acre 

(0.4 ha) culture pond, using 1993 data: 

average number of 2-in (5.08-cm) fingerlings ....... 7,000 

survival to catchable 15-in (38.1-cm) size ............... 10% 

rate of angler harvest ............................................... 20% 

number of walleye harvested/yr ................................ 140 

catch/walleye/angler-day ......................................... 0.67 

angler- days provided/yr ............................................ 209 

expend ture/angler-da y ........................................ $5 7.00 

expen&ture/year ........................................... $11,913.00 

The cost-benefit ratio of a walleye culture pond is 

estimated at about 1 : 16 ($750:$11,913). 

This paper will profile two successful cases of cooperative culture programs. The White Lake Area 

Sportfishing Association (WLASA), Muskegon County, 

Michigan, will represent a low-investment, 

nondrainable pond operation, with a walleye hatchery. 

The Mason County Walleye Association (MCWA), 

Mason County, Michigan, will represent a largeinvestment, state-of-the-art drainable pond operation. 

The two associations utilize different organizational 

structures to tap financial, human, and natural resources. They reside in adjoining MDNR districts 

which have hfferent management styles for their 

cooperative programs. 

White Lake Area Sportfishing Association 

(WLASA) 

WLASA was established in 1981 as a chapter of MSA 

with a $1500 gift from MSA to expand the walleye 

fishery. In 1982 WLASA became a independent tax 

exempt organization with a walleye culture program 

and returned the monetary gift. 

Thomas E. Hamilton (fishery biologist) and Dr. 

Kenneth J. Linton (biology professor) guided the 

walleye culture program of WLASA from 1982 to 

1995, The WLASA walleye hatchery consisted of two 

8-acre (3.24 ha) freeway barrow ponds for fingerling 

production from 1982-1993. Only one pond was used 

in 1994- 1995. Duties and responsibilities for walleye 

culture are divided as follows: 

1. MDNR applied rotenone to the pond(s) in the late 

fall after the fall fingerling harvest and just before 

ice formation to eliminate predators. 

2. MDNR supplies 1 .O-1.2 million fertilized walleye 

eggs from the Muskegon River stock. WLASA 

incubates the eggs using Plexiglas jars at 48°F 

(9°C) to obtain hatchng in 24-26 d. 

3. MDNR supplies a 50/50 mixture of soybean meal 

and alfalfa meal which WLASA personnel 

applies weekly at 1001b/acre (45.4 kg/0.4 ha) for 

6 or 7 weeks. 

(98,840ha). During the following week, WLASA 

will monitor fry survival using floating crappie 

lights after dark. 

5. Fry produced by the WLASA hatchery are used to 

replace dead fry in other ponds within the MDNR 

District 9. If those ponds don’t need restocking, 

fry from the WLASA hatchery are stocked by 

WLASA into lower White River Marsh. 

6. WLASA applies #1 fuel oil to control airbreathing predaceous insects at rate of 2.5 gal/ 

acre (9.5 L/0.4 ha), if necessary. 

7. WLASA monitors fingerling growth, zooplankton 

density, and determines harvest date. 

8. WLASA harvests their ponds using six large fyke 

nets. A concentration of 0.15-0.30 PPM copper 

sulfate crystals are mixed in the center of the 

pond to stimulate fingerling movement to the 

nets. 

9. WLASA transports spring fingerlings to White 

Lake. Total number and length/weight data are 

reported to MDNR. 

WLASA in October using the same netting 

procedure. The fall fingerlings are transported by 

WLASA to White Lake or a lake designated by 

MDNR. 

4. MDNR stocks the pond at 40,000 fry/acre 

10. A fall fingerling harvest is conducted by 

386 NCRAC Culture Series 101- Walleye Culture Manual 
Economics Analysis for Walleye Aquaculture - Chapter 17 

The 8 x 10 ft (7.5 rn2) hatchery building, equipment, 

and start up cost was less than $2,000 using local 

donations and materials. Because all equipment is paid 

for, WLASA's annual budget for the walleye program is 

$100, the budget is rarely exceeded, and usually only 

for emergency repair. Excludmg startup, annual cost is 

$0.002/spring fingerling. Fall fingerlings are considered 

to be a bonus. 

Mason County Walleye Association (MCWA) 

MCWA was incorporated in 1987 as a board of 

dn-ectorship with no general members. MCWA is a tax 

exempt organization. A gift to MCWA of 43 acres was 

used as the site for construction of a 7-acre (2.83-ha) 

drainable culture pond. The acreage included a 10-acre 

(4.0-ha) pond which could be used to fill the 7-acre 

culture pond (Figure 1). Later a 0.5-acre (0.2-ha) 

zooplankton production pond, which drains to the 

culture pond, a 0.5-acre (0.2-ha) zooplankton experiment pond, and a 1 -acre (0.4 ha) fathead minnow 

culture pond were constructed. A 24 x 24 ft (53.5 m2) 

building was added to house a wet lab, electrical room, 

and equipment storage. 

The 10-acre (4.05-ha) culture pond is filled to an 

average depth of 5 ft (1.52 mj in 67 h using a 75-hp 

electric pump. Depth at the control structure is 8 ft 

(2.44 m). Liquid fertilizer is applied via slip-stream 

injection system at 26-28 psi. It is hstributed through 

1,500 ft (457.2 m) of polyplastic pipe containing 200 

holes 0.10 in2 (0.65 cm2). A 5 hp electric 

pump used for fertilization also can be 

used to replace water lost to evaporation. 

The control structure includes two 

dewatering chambers to dscharge excess 

water past the harvest structure. A permanent cement harvest structure is accessible 

to large MDNR trucks and includes lights 

for night harvesting. Responsibilities for 

this culture program arc divided between 

the MCWA and MDNR: 

1. The culture pond and zooplankton 

production pond are filled by 

MCWA the last week of April. 

MDNR provides walleye fry from 

Upper Peninsula Michigan stock in 

mid-May. 

2. MCWA fertilizes both ponds once 

with soybean meal at 200 lb/acre 

(494.2 kg/haj. The injection system is used to 

distribute 28-0-0 liquid fertilizer for a total 

nitrogen to phosphate ratio 20: 1. Nitrogen and 

phosphorus levels are monitored daily and 

maintained at 0.6 mg N/L and 0.03 mg P/L by 

adding additional fertilizer as needed on odd 

days. 

3. MDNR stocks fry at 40,000/acre (98,84O/ha). 

4. MCWA drains the culture ponds to time fingerling 

harvest for a date agreed upon with MDNR. 

5. MDNR transports fingerlings to lakes in several 

counties, 

Initial land, pond construction, and utilities cost about 

$250,000. Annual operating budget is $1,500, yieldmg 

a spring fingerling cost of $0.0075/fish. 

Discussion 

MDNR is charged with the responsibility of providing 

the most fishng opportunities within a limited budget. 

They recognize there will be competition between 

communities for fishing opportunities and related 

tourist dollars. 

MDNR may accept support from sportfishing clubs, but 

this can also turn into a public relations problem. Fish 

planted in public waters are the property of the state and 

must be in conformity with the district fishery management plan. Sportfishing clubs must take this into 

consideration when contemplating plantings. The 

Figure 1. Mason County Walley Association culture ponds. 

NCRAC Culture Series 101 - Walleye Culture Manual 387 
Chapter 17 - Economics Analysis for Walleye Aquaculture 

working members of the clubs cannot become too 

attached to “their” fish which may not get planted in 

“their” local lake, In 1991, WLASA fish were not 

planted in the White Lake system to determine if 

natural reproduction had been re-established, but 

WLASA continued raising walleye fry and fingerlings 

for other communities in the fishery &strict. The 

walleye culture programs of WLASA and MCWA 

demonstrate benefits of cooperative state rearing 

programs. 

In some cases, MDNR may not have the personnel to 

serve the outlying communities of their dstricts. The 

WLASA hatchery effectively operates as a small 

backup walleye hatchery for Muskegon River stock and 

the White Lake system. MCWA found that the success 

of their liquid fertilization injection system required 

daily analysis and odd-day fertilization adjustments. In 

both cases MDNR benefited by having volunteer labor 

on site. 

WLASA is an example of a low budget-operation 

utilizing a simple hatchery and a freeway barrow pond. 

MCWA uses an expensive drainable pond operation 

which is more complicated to manage. Neither format 

can guarantee a successful production year. MDNR, 

WLASA, and MCWA have all agreed the long-term 

cooperative benefits out weigh the occasional pond 

failures. MCWA is planning to collaborate with the 

MDNR to test new walleye culture technologies. This 

collaboration will save the MDNR money, and it will 

provide students at the local community college 

research experience by participation with future MCWA 

projects. 

There are two actions sportfishng groups can take to 

enhance their effectiveness: 

1. New sportfishmg organizations should initially 

form with a board-of-directors structure to 

facilitate decision making during the construction 

phase of the walleye program. If possible, people 

with specific talents should be asked to serve on 

the board to cover management, finance, law, 

biology, and engineering. The social membership 

structure can come after the walleye fishery 

develops. 

2. Obtain a tax exempt status. This will expand 

opportunities for financial, material, and land 

contributions from corporations, local businesses, 

and private citizens. It will simplify fund-raising 

activities, and the tax status will allow acceptance 

of excess government equipment from state and 

federal agencies. 

The most important benefit of a cooperative walleye 

production program is the improved walleye fishery. No 

agency or interest group is expected to create a walleye 

fishery by itself, but cooperatively the future for the 

walleye fishery looks promising. 

388 NCRAC Culture Series 101- Walleye Culture Manual 
Buttner, J. K. 1996. Cooperative walleye culture programs: the New York state and province of 

Ontario experiences. Pages 389-393 in R. C. Summerfelt, editor. Walleye culture manual. 

NCRAC Culture Series 101. North Central Regional Aquaculture Center Publications Office, 

Iowa State University, Ames. 

Cooperative Walleye Culture Programs: 

the NewYork State and Province of Ontario 

Experiences 

Joseph K. Buttner, Center for Applied Aquatic Science and Aquaculture, Department of Biological Sciences, 

State University of New York, College at Brockpori, Brockpori, NY 14420 

Introduction 

Throughout much of the United States and Canada the 

walleye is considered a premier recreational fish. 

However, its abundance has been reduced in many areas 

by habitat degradation, over-exploitation, and competition from exotic species. To enhance diminished 

populations and, where needed, to re-establish extirpated populations during a period of fiscal austerity, 

state and provincial agencies charged with the management of natural resources have pursued innovative 

solutions. Facilitated by advances in pond culture of 

walleye fingerlings (Richard and Hynes 1986; Buttner 

1989; Fox 1989; Harding et al. 1992) cooperative 

programs have been employed successfully to produce 

fish for introduction into public waters (Buttner et al. 

199 1 ). The composition and operation of cooperatives 

vary, but they characteristically include trained specialists and motivated lay people worhng together to 

enhance a public fishery. As observed by Festa et al. 

(1 987), “cooperative programs involving sportsman’s 

groups can play a meaningful role in increasing walleye 

fingerling production.” 

Cooperative walleye culture programs have existed and 

functioned effectively since the early/mid- 1980s in New 

York State and the Province of Ontario. The goal of 

both efforts is enhancement of walleye populations in 

specifically designated public waters. However, the 

mechanisms employed to achieve their common 

objective differ. Characterization of the two approaches 

provides insight into the formation, operation, and 

impact of cooperative programs. 

New York experience 

Cooperative walleye culture programs in New York 

State are administered by the Department of Environmental Conservation (NYSDEC), coordinated by 

extension specialists, and operated by members of 

angler associations. NYSDEC approves applications 

submitted by angler associations, usually provides fry, 

and oversees stocking of fingerlings into public waters. 

Extension specialists, often in concert with research 

scientists from universities and NYSDEC, provide 

technical guidance in the development of applications, 

management of ponds, harvest and stocking of fingerlings, and assessment of each year’s effort. Angler 

associations complete and submit applications, provide 

daily maintenance, harvest and stock fish. Additionally, 

angler associations must keep good records, submit an 

annual report, and obtain funds to finance their efforts 

(via grants, donations, raffles, industry/community 

sponsorship, association funds). 

A cooperative effort begins in the late fall/early winter 

when a sportsman’s group submits an application to the 

NY SDEC to cultivate walleye fingerlings for introduction into a public water. A 10-page packet, “Criteria and 

Procedures for the Distribution of Walleye Fry to NonDEC Fingerling Rearing Projects,” is provided that 

identifies guidelines for eligible projects, provides 

general information on pond design and fish maintenance, and includes a 2-page application form (Festa 

and Colesante 1988). First-time participants must 

describe in detail their proposed project. Veteran 

participants only provide information on their organization (name, person in-charge of culture effort, address, 

telephone number), identity of approved target water(s) 

for walleye fingerlings, ownership of the culture ponds, 

and description of any changes in their project. The 

application is reviewed by NYSDEC for consistency 

with their programmatic objectives and technical 

feasibility (e.g., suitability of ponds, access to expertise). Applicants are contacted if adhtional information 

is required or if the proposed approach requires 

NCRAC Culture Series 101 - Walleye Culture Manual 389 
Chapter 17 - Economic Analysis for Walleye Aquaculture 

modification. Once approved, the applying organization 

becomes part of a larger cooperative team that has 

grown to include 9-12 organizations and thousands of 

sportsmen (Table 1). 

Table 1. Number of sportsman’s 

associations prod u ci n g wa I leye 

fingerlings and number of walleye 

fingerlings produced by these 

associations that were released 

into public waters of NewYork. 

Year Number of Number of 

Sportsman ’s Walleye 

Associations Stocked 

1986 

1987 

1988 

1989 

1990 

1991 

1992 

1993 

1994 

TOTAL 

1 

3 

5 

6 

12 

12 

12 

11 

9 

20,000 

12,500 

69,533 

85,074 

156,810 

152,810 

133,365 

126,076 

23,092 

778,775 

In March, representatives from angler 

associations and personnel from NYSDEC 

discuss and coordinate pond preparation and 

fry transfer. Most fry introduced into ponds 

that are managed by cooperative participants 

are spawned from Oneida Lake walleye by 

personnel at the Constantia Hatchery. 

Walleye are spawned in early to mid-April. 

Eggs are incubated, hatched, and distributed 

as 1-2-day old fry by hatchery personnel in 

late April to early May. Modest numbers of 

fry are also obtained by spawning walleye 

from Lake Erie and the St. Lawrence River 

for sportsman’s projects that will release 

fingerlings into these respective waters or 

aquatic habitats within their watersheds. 

Angler associations prepare, stock and 

manage their ponds. Typically, an extension 

specialist andor university scientist provides on-site 

assistance, particularly during the initial attempt(s) to 

culture walleye. Pond management involves fertilization and monitoring of water quality, zooplankton 

populations, and walleye fry. Detailed records of 

observations and activities are maintained. Walleye 

fingerlings (1.25-2 in, 30-50 mm TL) are harvested in 

late June to early July, 40-60 d after stoclung (Figure 

1 ). Fingerlings are immediately transported and 

released into the previously approved public water 

(Figure 2). A NYSDEC specialist is often present to 

observe the harvest and release of fingerlings. Although 

many members of the sportsman’s association eagerly 

assist with stoclung of fry and harvest of fingerlings, 

routine pond management is usually provided by a 

small core of dedicated individuals who can become 

quite knowledgeable and skilled in walleye culture over 

time. To a large degree, the success realized by a 

sportsman’s group is dependent upon the dedication, 

stamina, and skdls of a few members. 

Each sportsman’s group must submit an annual report 

to NYSDEC by late fall that identifies the number of 

fry received, number of fingerlings produced and 

released, and the water stocked. A winter meeting, 

coordinated by an extension specialist, is frequently 

used to bring together representatives of each 

sportsman’s association involved in walleye production. 

The meeting facilitates exchange of information: what 

worked, what ddn’t work, and changes planned for 

Figure 1. Members of the Niagara River Anglers Association seine 

harvest walleye fingerlings from a pond that they managed. 

390 NCRAC Culture Series 101- Walleye Culture Manual 
Economic Analysis for Walleye Aquaculture - Chapter 17 

Figure 2. Walleye fingerlings raised by the Niagara River Anglers Association 

are released into the Niagara River. 

next year. Representatives from NYSDEC and assisting 

academic institutions also participate in the meeting. 

Since 1986, cooperative programs have produced and 

introduced to public waters of New York State over 

750,000 fingerling walleye (Table 1). Between 1986 

and 1993, production gradually increased and peaked at 

120,000-1 50,000 walleye fingerlings (1.25-2 in, 30-50 

mm TL) annually. Concurrently, participation expanded 

from one to 11-12 sportsman’s groups. In 1994, 

production and participation decreased (Table l), as the 

original goals and expectations of several sportsman’s 

groups had been met. Walleye cultured and released as 

part of cooperative programs have contributed to the 

fishery and have helped to re-establish populations and 

spawning runs in several waters (Buttner et al. 1991; 

New York Sea Grant 1994,1995). 

Ontario experience 

Cooperative walleye culture programs in the Province 

of Ontario are coordnated by the Ontario Ministry of 

Natural Resources (OMNR) as part of their larger 

Community Fisheries Involvement Program (CFIP). 

CFIP originated in 1982 as a spin-off of the successful 

British Columbia Salmon Enhancement Program. 

During the first few years it was dominated by salmonid 

projects; cooperative walleye culture efforts did not 

begin until 1984. Walleye projects have gradually 

increased in number and 

importance. Walleye are now the 

most commonly targeted species 

by CFIP. Significantly, CFIP 

projects “must improve 

Ontario’s fisheries resource” and 

priority is given to projects that 

increase natural reproduction 

(Anon. 1989; Community 

Fisheries Involvement Program 

Review Committee 1990). As 

such, CFIP projects have 

focused largely on rehabilitation 

and restoration of natural 

habitats. Cooperative walleye 

culture programs are increasingly coupled with some form of 

habitat improvement. 

A cooperative project to culture 

walleye fingerlings usually 

involves the OMNR and a public organization. OMNR 

reviews and approves applications, provides technical 

support, and has a budget of C$500,000 (Canadian) to 

sponsor approved projects. Public organizations 

propose projects, provide labor and commit time to the 

project, and characteristically generate additional 

revenues to facilitate the project. Initially, public 

participation was limited to fish and game clubs, but 

other groups have become involved (e.g., cottage and 

camp associations, tourist outfitters-lodge owners, 

schools, First Nations people). 

Considerable written information, as well as a Coordinator for CFIP, have been assembled by OMNR. 

Written materials include a detailed information packet, 

“Community Fisheries Involvement Program (CFIP): 

Goals, Project Eligibility, Application Forms,” and 

technical manuals to assist cooperative members with 

their walleye culture effort (e.g., Anon. 1984; Anon. 

undated; Richards and Hynes, 1986). OMNR field 

personnel provide on-site advice and technical assistance to cooperative participants. Perhaps most significantly, OMNR can provide financial support up to 

C$X,OOO for a project; the average financial support 

provided is approximately C$2,500. Typically, public 

organizations supplement these dollars through lotteries, donations, garage sales, and from the club or 

organization itself. 

NCRAC Culture Series 101 - Walleye Culture Manual 391 
Chapter 17 - Economic Analysis for Walleye Aquaculture 

Walleye cooperative programs in Ontario, while widely 

recognized as being successful, are varied in composition and purpose. Perhaps the experiences and efforts of 

Bob and Wade Leonard (Hartington, ON) can provide a 

flavor for the nature and evolution of CFIP-sponsored 

walleye culture programs. 

The Leonards became involved in CFIP in 1985 when 

they hatched eggs and stocked walleye fry into waters 

approved by the OMNR. Fingerling production began 

in 1986 with the construction of a drainable pond. Since 

1986, several ponds have been added and culture efforts 

have been refined. Current efforts employ low-cost, 

low-technology methods to produce August fingerlings. 

Hatchling walleye, obtained by spawning walleye from 

the Napanee River and incubating fertilized eggs, are 

released into fertilized culture ponds. Throughout the 

approximate 45-day culture period, which begins in 

early May and concludes in late June/early July, Secchi 

dsk visibility is maintained at approximately 16 in (40 

cm) via applications of organic fertilizer. Walleye 

fingerlings that average approximately 0.05 oz (1 -5 g) 

each are harvested and transferred to ponds stocked 

with a mixture of local minnows (e.g., unidentified 

stickleback, unidentified dace, and fathead minnows). 

The management goal is to produce and stock a 

minimum of 3,000 walleye fingerlings that are at least 4 

in (100 mm) TL and 1.8 oz (50 9). Fingerlings are 

released into nearby waters 

approved by the OMNR at a 

target rate of one fish per two 

surface acres. OMNR personnel assist with spawning, are 

present at harvest, and 

supervise release of fingerlings. A detailed report is 

prepared and submitted to 

OMNR at the end of each 

culture effort. OMNR analyses 

of otoliths has determined that 

walleye fingerlings produced 

and released by the Leonards 

have contributed substantially 

to the population and fishery 

of several lakes. 

resource for 15 other walleye culture groups. Over 

100,000 walleye fingerlings were produced by the 

cooperative groups in 1994. Recently, Mohawks of the 

Bay of Quinte have sought advice and assistance from 

the Leonards as they pursue enhancement of walleye 

populations in the Salmon River as part of a Remedal 

Action Plan for the Bay of Quinte (T. Northardt, 

Environmental Coordmator, Mohawks of the Bay of 

Quinte, personal communication; Figure 3). Facilitated 

by CFIP, and made possible through the efforts of 

people like the Leonards, walleye fingerling culture 

programs in the Province of Ontario now involve 

thousands of concerned citizens and stocked fingerlings 

have contributed significantly to the walleye fishery in 

several lakes. 

Discussion 

Though cooperative programs may dffer in response 

to specific needs and situations, they recognize and 

utilize the enthusiasm that many sportsman’s groups 

and other organizations, as well as individuals, have for 

the environment. Also acknowledged is the need for 

agency personnel to identify new and innovative 

methods to assist with management of natural resources, as financial and personnel resources become 

increasingly limited and inadequate to address all 

legitimate needs. As illustrated, New York State and the 

The Leonards’ success has 

stimulated interest and 

participation by others. Bob 

and Wade now serve as a 

Figure 3. In summer 1993, the Mohawks of the Bay of Quinte constructed ponds 

to culture fingerling walleye. The three ponds pictured were stocked with walleye 

in 1994. 

392 NCRAC Culture Series 101- Walleye Culture Manual 
Economic Analysis for Walleye Aquaculture - Chapter 17 

Province of Ontario have used cooperative walleye 

culture programs to enhance the walleye fishery in 

targeted public waters. These programs have helped 

improve the relationships between the agencies and 

their clientele. 

While developing a cooperative program, it is crucial 

that agency and lay people identify and agree upon a 

specific and realistic goal (e.g., enhancement of walleye 

populations in an appropriate water body). The project 

must have the sincere support of both agency personnel 

and lay participants. Trust between the coordmating 

agency and the collaborating group is essential; there 

must be a degree of freedom to explore, learn, and 

evolve. Finally, criteria to evaluate the cooperative 

effort must be developed. Cooperative walleye culture 

programs, like cooperative efforts in general, are 

dynamic efforts. They address and resolve a clearly 

identified problem; once the agreed upon goal has been 

achieved, they then cease to exist or can define a new 

goal. 

Acknowledgments 

Invaluable assistance and detailed information was 

provided by Richard Colesante (Fisheries Scientist, 

NYSDEC), Allan Wainlo (Community Fisheries 

Involvement Coordinator, OMNR), and Robert Leonard 

(private aquaculturist and CFIP participant). Support 

from the New York Sea Grant Institute, the Great Lakes 

Research Consortium, and Mohawks of the Bay of 

Quinte facilitated data collection and manuscript 

preparation. 

Ref ere n ces 

Anon. u ndated . Community fisheries involve me nt 

program (CFIP) field manual part 2: lake and river 

fisheries rehabilitation. Ontario Ministry of Natural 

Resources, North York, Ontario. 

Anon. 1984. Community fisheries involvement program 

(CFIP): goals, project eligibility, and application 

forms. Ontario Ministry of Natural Resources, North 

York, Ontario. 

Anon. 1989. CFIP community fisheries involvement 

program. Queen’s Printer for Ontario. Ontario 

Ministry of Natural Resources, North York, Ontario. 

Buttner, J.K. 1989. Culture of fingerling walleye in 

earthen ponds-state of the art 1989. Aquaculture 

Magazine 15(2):37-46. 

Buttner, J.K., D.B. MacNeill, D.M. Green, and R.T. 

Colesante. 1991. Angler associations as partners in 

walleye management. Fisheries 16(4): 12-1 7. 

Community Fisheries Involvement Program Review 

Committee. 1990. Community fisheries involvement 

program (CFIP) review. Final Report. Ontario Ministry 

of Natural Resources. North York, Ontario 

Festa, P.J., J.L. Forney, and R.T. Colesante. 1987. 

Walleye management in New York State. A plan for 

restoration and enhancement. New York State 

Department of Environmental Conservation, Albany, 

New York. 

Festa, I? and R.T. Colesante. 1988. Criteria and 

procedures for the distribution of walleye fry to nonDEC fingerling rearing programs. New York State 

Department of Environmental Conservation, Albany, 

New York. 

Fox, M.G. 1989. Effect of prey density and prey size on 

growth and survival of juvenile walleye (Stizosfedion 

vitreum vitreum). Canadian Journal of Fisheries and 

Aquatic Science. 46:1323-1328. 

Harding, L.M., C.P. Clouse, R.C. Summerfelt, and J.E. 

Morris. 1992. Pond culture of walleye fingerlings. 

North Central Regional Aquaculture Center Fact 

Sheet Number 102, Iowa State University, Ames, 

Iowa. 

New York Sea Grant. 1994. Walleye runs reported in the 

Sodus Bay area. Charterlines 41 :I 1. 

New York Sea Grant. 1995. Results from 1994 Port Bay 

walleye assessment. Charterlines 44:lO-11. 

Richards, P.D. and J. Hynes. 1986. Walleye culture 

manual. Ontario Ministry of Natural Resources, 

Toronto, Ontario. 

NCRAC Culture Series 101 - Walleye Culture Manual 393 
Chapter 17 - Economic Analysis for Walleye Aquaculture 

394 NCRAC Culture Series 101- Walleye Culture Manual