Monday, January 4, 2010

Happy New Year! Catch Up Time

Aquaculture Grant Program Keeps Catfish Producers Afloat, Bolsters Industry
Catfish farmers in the Mississippi Delta Region hit hard by soaring feed costs have been provided some relief to stop their businesses from drying up.

Nearly 350 Mississippi fish farmers received funding through the U.S. Department of Agriculture Aquaculture Grant Program this year. Supported with funds from the American Recovery and Reinvestment Act, the program provided financial assistance during the most demanding part of the growing season for catfish.

“The grant money couldn’t have come at a better time for us,” said Turner Arant, one of the first fish farmers in Mississippi. “With 19 ponds we use a lot of feed and it’s getting harder and harder [to maintain].”

Arant’s family-run farm opened its first pond in 1962. This year he closed a few of them because production and maintenance costs became too great. “We are concentrating on fewer ponds, trying to be as efficient as we can,” he said.

The American Recovery and Reinvestment Act of 2009 authorized up to $50 million to USDA to implement the Aquaculture Grant Program administered by the Farm Service Agency. The statewide program was coordinated by the Mississippi Department of Agriculture and Commerce, or MDAC, with cooperation from the state Farm Service Agency.

Through the grant program, a feed credit system was instituted that allowed farmers to receive up to $100,000 in credit on feed purchased in 2008. MDAC set up an account at a mill chosen by the farmer and the farmer would call to place an order when feed was needed. The mill would send an invoice to MDAC for payment, which was dispersed after statements were cross-checked and confirmed.

“The program is doing exactly what it was designed to do — help stimulate the aquaculture industry,” said Andy Prosser, director of market development and public relations at MDAC. “This is being done by keeping existing farmers in business, keeping aquaculture related jobs secure and helping an industry remain viable.”

The Mississippi Delta is home to the largest catfish production in the United States. With 87,300 acres of production and 5,000 catfish produced per acre, the grants allowed many farmers to stay in business.

“I was worried I would have to lay off folks and this is a rural area; if they don’t work for me I don’t know where they would go,” said second generation fish farmer Kent Toler, who raises fingerlings to stock fish farms around the country.

Toler said the grant money kept him from having to layoff 22 employees, some who have been with him from the beginning of his operation more than 20 years ago.

“People don’t realize that we can lose our whole operation overnight. If the oxygen level drops too fast and we can’t get the aerators going fast enough a whole pond of fish can be lost in just a few hours,” said Toler. “We don’t have insurance for that, it’s just the way the business is, so this grant money really helped ease our minds for a bit.”

Joe Olgesby agreed, but added that the cost of feed isn’t the only thing going up. “When the cost of feed doubles in a year all the other costs go up too, including diesel to run the equipment and hauling costs,” said Olgesby, whose Mississippi farm includes row crops as well as fish. “The grant allowed us to level out our cash flow for a couple of months. With the USDA payment limit, I went through my feed allowance in about two weeks but it was two weeks I was able to take care of other things.”

According to the USDA Agricultural Statistics Board more than 343,666 tons of feed were delivered in Mississippi in 2008, with an estimated cost of about $330 per ton. Three years ago, feed cost about $240 per ton. But feed buying in Mississippi is a cash-only operation forcing producers to secure a line of credit with the bank.

“The farmer orders his feed, we get it to him and run a charge against his line of credit,” said Lester Myers, owner and operator of Delta Western Feed Mill. “The jump in feed costs, fuel costs and transportation costs all hit at the same time, but the price of catfish didn’t double so the banker didn’t see how to increase the line of credit. In reality it got tighter because the margin of profit was cut substantially,” he said.

Myers said the increase in price for feed has caused his company to implement cost-cutting measures. Each day Myers shuts down some of his larger equipment between 3-7 p.m., which are peak hours for electricity use. This has helped save customers $2 on each ton of feed.

Overall, Myers said the grants have benefitted the aquaculture business. “This program was a real blessing to the industry,” he said. “Allowing a farmer to feed for a month on the grant money allowed his line of credit to rebuild. These farmers sell fish all the time, but if you are spending more than what is coming in, well it doesn’t take long until you are out of business.”

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