Real Option Approach to Economic Analysis of European Sea Bass (Dicetrarchus labrax) Farming in Croatia

The paper emphasizes the economic performance of the fresh European sea bass production and profitability of related processing to value-added fillets. Croatian annual farmed European sea bass and gilthead sea bream production in amount of 4,000 tones plays only about 1.7% of the World production with mediocre economic benefits for producers. However, product diversification, including processing measures as filleting, vacuuming and smoked processing can ensure additional product value providing long-term strategic orientation for fish-farmers. Seabass filleting, although at the initial phase, can be a modus of value-added production, which protects the producers of the price risk volatility targeting the population averse to the long lasting traditional fish mill preparation. Applied Real Option method can be helpful tool in the situation when the strategic project value includes not just the current economic features but also opportunities related to the basic model. Option approach indicates that seabass filleting triplicate the economic performance with respect to fresh seabass production.