The effect of subsidies and reform options on profit efficiency of trout farms: Focus on energy subsidies

• Published in: Aquaculture 2025-02, Vol.596, p.741842, Article 741842
• Main Authors: Asadikia, Hiva, Mosavi, Seyed Habibollah, Ashrafi, Tannaz Alizadeh, Reed, Michael R., Hegde, Shraddha, Alamdarlo, Hamed Najafi
• Format: Article
• Language: English
• Subjects: Egg importation subsidies; Energy subsidies; Iran; Rainbow trout farms; Standard profit efficiency; Subsidy reform
• ISSN: 0044-8486
• DOI: 10.1016/j.aquaculture.2024.741842

Energy and imported trout egg subsidies hold a pivotal role for Iranian trout farms. They aim to decrease production costs, yet their impact on the profit efficiency of farms remains dubious. The first objective of this paper is to assess how the current subsidy scheme affects the profit efficiency of hatchery and propagation trout farms in Mazandaran, Iran. We examine several subsidy reform scenarios to enhance profit efficiency as a second objective. Standard profit efficiency (SPE) is used to acquire the efficiency of the trout farms using data envelopment analysis. Results show that the majority of farms are inefficient and highly dependent on subsidies. Comparing farms with high efficiency against those with low efficiency as a third aim of research highlights the importance of farms holding a propagation license, engaging in vertical integration, achieving adult trout production surpassing 81 t, and maintaining a fish total feed consumption to trout production ratio below 0.74. Findings from reformation scenarios reveal 1) redirecting the current subsidy towards purchasing the extruder machines for fish feed production, 2) transferring funds to subsidize electricity based on the farm's electricity consumption, and 3) opting for the production of genetically modified eggs gives higher SPE. Reformation can also reduce the burden on public funds and dependency on importation. •Hatchery and propagation of Iranian trout farms are heavily dependent on subsidies.•The allocation of subsidies leads to enhanced standard profit efficiency (SPE).•Removing electricity and trout egg import subsidies notably reduces SPE compared to diesel fuel subsidy elimination.•Introducing reform options to modify the current subsidy regime could improve SPE.•Funding extruder machines, paying trout farms for electricity, and using genetically modified eggs all boost SPE.