Feasibility Study on Organic Aquaculture

Transcription

1 Feasibility Study on Organic Aquaculture CFC/FAO/INFOFISH Project on Organic Aquaculture in Myanmar, Thailand and Malaysia

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3 Feasibility Study on Organic Aquaculture: Shrimp, Freshwater Prawn and Freshwater Finfish CFC/FAO/INFOFISH Project on Organic Aquaculture in Myanmar, Thailand and Malaysia

4 INFOFISH is an Intergovernmental Organisation providing marketing information and technical advisory services to the fishery industry in the Asia-Pacific region from its Headquarters in Kuala Lumpur, Malaysia. INFOFISH Level 2, Menara Olympia, 8 Jalan Raja Chulan, Kuala Lumpur, Malaysia. info@infofish.org or infish@tm.net.my. Web: Phone: (603) , , Fax: (603) Copyright The copyright of this publication is vested with the Common Fund for Commodities (CFC). This publication may not be re-produced, in whole or in part, by any method or process, without written permission from the copyright holder. Applications for such permission with a statement of the purpose and the extent of the production desired should be made through and addressed to the Director, INFOFISH (address as above). Cover page photos credit: Fatima Ferdouse PREPARATION OF THIS DOCUMENT The economic feasibility study of organic aquaculture of shrimp, freshwater prawn and freshwater finfish is prepared by INFOFISH under the Common Fund for Commodities (CFC) Project on Organic Aquaculture carried out in Myanmar, Thailand and Malaysia during The feasibility study was based on culture trials conducted by project partners in Malaysia, Myanmar and Thailand under the project. The study is based on input provided by the project partner farms as well as project technical consultants including Dr Lila Ruangpan, Tarlochan Singh and Anil Kumar P. Inputs from stakeholder workshops conducted in Bangladesh, Cambodia, India, Malaysia, Myanmar, Pakistan, Sri Lanka and Thailand were also incorporated. The economic feasibility study was conducted with the assistance of V. K. Dey, Consultant. The document was edited by Anil Kumar P and Tarlochan Singh. Additional technical inputs and comments were provided by Dr. S. Subasinghe, Dr. Mohammed Ayub and Fatima Ferdouse. Editorial assistance was provided by Rosman Mustaffa. Published by INFOFISH (2011) ii

5 TABLE OF CONTENTS 1. Introduction Culture Systems Economic Analysis: Basic Assumptions Project Cost Means of Finance Product Costing Working Capital Exchange Rate Feasibility of a Modified Traditional Organic Shrimp Farm Feasibility of a Semi Intensive Organic Shrimp Farm Feasibility of a Extensive Organic Freshwater Prawn Farm Feasibility of a Extensive Organic Freshwater Fish Farm...43 iii

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7 1. INTRODUCTION Organic aquaculture uses holistic production management systems which promote and enhance ecosystem health, including biodiversity, biological cycles and soil biological activity. Organic production systems are based on specific and precise standards of production which aim at achieving optimal production systems which are socially, ecologically and economically sustainable. Requirements for organically produced foods differ from conventional products in that production procedures are an intrinsic part of the identification and labelling of, and claim for, such products. Organic farm management relies on natural or traditional production methods. As part of the Common Fund for Commodity (CFC) Organic Aquaculture Project carried out in Myanmar, Thailand and Malaysia during , an economic feasibility study was made of organic farming and processing practices. The study focused on the organic farming and processing of black tiger shrimp (Penaeus monodon), freshwater prawn (Macrobrachium rosenbergii) and freshwater finfish such as tilapia (Oreochromis niloticus), silver barb (Puntius gonionotus), common carp (Cyprinus carpio) etc. 2. CULTURE SYSTEMS Two types of culture systems are considered for black tiger shrimp, the modified traditional farming system and the semi-intensive culture system while for freshwater prawn and finfish, the extensive culture system was analysed. Modified traditional organic farming of black tiger shrimp is dependent on tidal water exchange for the operation of the farm. Ponds are stocked by natural stocking as fish fry and shrimp larvae are carried in by the incoming tides during the spring tides when the sluice gates are opened to allow water exchange. However, hatchery produced black tiger shrimp postlarvae are also stocked in the pond at a stocking density of 5 per square metre. Harvesting and filling of the pond is also dependent on the tides. Harvesting is carried out twice a month, during the full moon or new moon. Supplementary feeding with trash fish is carried out in modified traditional farming. The pond size is also larger (about 10ha per pond). Semi-intensive organic farming of black tiger shrimp uses relatively smaller ponds, e.g ha. Half of the farm area is used as a reservoir for water storage and treatment for recycling. The stocking density is 15 shrimp per square metre. However, since half of the farm area is taken up by the water treatment reservoir, the effective stocking density in the ponds would be 30 shrimp per square metre. Since the stocking density is higher, formulated pelleted feed is used. Feasibility Study on Organic Aquaculture 1

8 Extensive organic farming of freshwater prawn and fish is carried out in ponds of sizes varying from 1 to 4 ha. In extensive farming of freshwater prawn, 3 juvenile prawns are stocked per square metre. Supplementary stocking of three species of freshwater fish (tilapia, silver barb and common carp) at a rate of 0.05 fish per square metre is also done. In the extensive organic farming of freshwater finfish, fish such as tilapia, silver barb and common carp are the principal species cultured. The stocking density of fish is about 0.6 per square metre. Supplemental stocking of freshwater prawn is done at a rate of 0.1 individuals per square metre. 3. ECONOMIC ANALYSIS: BASIC ASSUMPTIONS The economic analysis on the aquaculture production, processing and marketing of organic black tiger shrimp, freshwater prawn, and fin fish products was undertaken. Separate worksheets for modified traditional farming and semi-intensive farming of organic black tiger shrimp and extensive farming of freshwater prawn and freshwater finfish have been computed. An organic shrimp farmer in Thailand checks his shrimp. Fatima Ferdouse 2 Feasibility Study on Organic Aquaculture

9 A uniform farm area of 20 ha was taken for undertaking all the farming operations and for computation purposes. The farm rent has been taken as US$ 925 per ha for modified traditional organic shrimp farm and US$625 per ha for extensive organic fresh water fish and fresh water prawn farm and the farm development cost worked out to be US$ 610 per ha for modified traditional farming. In the case of semi-intensive farming operations, the land cost and farm development cost works out to be US$ 15,400 and US$ 1,540 per ha respectively. There was not much earthwork involved for farm development in the traditional farming method except for site clearance; bund/ sluice maintenance etc, while the land development cost for the modified extensive farming method, which includes cost of equipment, electrical connection, construction of sluice, and building for housing security guards etc, works out to be 10% of the land cost. In the case of semi-intensive farming of black tiger shrimp, a 10-ha area has been earmarked as a reservoir for water treatment. Since the farm is tidal-fed in traditional farming, there is natural stocking of shrimp and fish fry, in addition to the stocking of hatchery produced shrimp postlarvae. The finfish varieties farmed organically along with freshwater prawn were tilapia, silver barb and common carp. The income generated by sale of finfish has also been taken into account for computation as additional income. Since the size of fish cultured varies from 300 gm to 1 kg and above, it has been considered for processing into whole round (WR) fish in live and chilled form for marketing domestically. The sale price is assumed to be at the rate of US$ 2.50 for chilled fish and US$ 3.50 for live fish. For black tiger shrimp and freshwater prawn, the following product mix was considered for undertaking the analysis. A) Black tiger shrimp products i) Head-on shell-on black tiger shrimp (HOSO) ii) Headless shell-on black tiger shrimp (HLSO) iii) Peeled pulled vein tail-on black tiger shrimp (PPVTO) B) Freshwater prawn products i) Head-on shell on freshwater prawn in live form (Live FWP) ii) Head-on shell on freshwater prawn in chilled form (Chilled FWP) iii) Head-on shell on freshwater prawn in frozen form (Fr HOSO FWP) C) Finfish products i) Live finfish (WR fish live) ii) Chilled finfish in WR form (WR fish chilled) Feasibility Study on Organic Aquaculture 3

10 The analysis has two components: i) Organic aquaculture of black tiger shrimp, freshwater prawn and finfish varieties: This section of the analysis has been prepared based on data available from selected countries in the region, mainly focusing on the organic aquaculture practices prevailing in Thailand and Myanmar. Separate analyses were made for modified traditional and semi-intensive organic farming of black tiger shrimp similarly separate analyses were made for extensive fresh water prawn farming with supplementary stocking of fin fish and extensive fresh water fish with supplementary stocking of freshwater prawn. ii) Economic analysis on processing and packing of three organic black tiger shrimp products viz head-on shell-on (HOSO), headless shell-on (HLSO) and peeled pulled vein tail-on (PPVTO) for export with the target market being the member countries of the European Union. Analysis has also been undertaken for three freshwater prawn products (head-on shell-on freshwater prawn in live, chilled and frozen form) and whole round fin fish marketed domestically in live and fresh chilled form. Certain material factors such as, exchange rate fluctuations, export benefits and income tax on profit from export business need to be considered separately as per prevailing rules and regulations in the countries where the project has been undertaken. In this analysis, no export benefits have been taken into account for computing the analysis as they may vary from country to country. 4. PROJECT COST 4.1 Capital cost The capital cost involved for modified traditional farming of organic black tiger shrimp was US$ 30,700 which includes annual farm rent and farm development cost for the preparation of a 20 ha farm while in the case of the semiintensive culture method, it was US$ 308, 000 being the cost of land and US$ 30,800 for the farm development. In the case of the freshwater prawn and fresh water fish, the total capital cost involved is US$ 14,500, being farm rent (US$625/ha) and pond preparation (US$100/ha). The water spread area for culture was 16 ha, leaving 20% for bunding, construction of sluice etc. The variable costs involved are classified as farm maintenance, feed, seed, fuel/energy, farm management (salary and wages), certification charges, pond preparation charges, inputs (lime, organic fertilisers) and harvesting expenses Farm maintenance cost The farm maintenance cost of modified traditional organic shrimp farm consists of repairing expenses for sluice gate, nets and lighting equipments and is assumed as US$ 770. The farm maintenance cost of semi intensive organic shrimp farm includes maintenance cost of equipments such as pumps, aerators, feeding and 4 Feasibility Study on Organic Aquaculture

11 harvesting equipments, administrative expenses etc and based on actual figures is estimated as US$ The farm maintenance cost of extensive organic fresh water prawn and fresh water fish include maintenance cost of equipments such as pumps, feeding and harvesting equipments, administrative expenses etc and based on actual figures is estimated as US$ Feed and seed cost All the feed and seed costs are calculated based on actual costs involved Fuel/Energy cost The fuel/energy costs for modified traditional organic shrimp farm include cost of electricity for lighting up the spot lights used for harvesting and the fuel cost of transporting harvested material to the buyer located about 5 km from the farm. The fuel/energy cost for modified traditional organic shrimp farm is estimated as US$ 250. The fuel/energy costs for semi intensive organic shrimp farm involves the cost of electricity for the operation of aerators, pumps, fuel expenses for vehicle for transporting inputs like feed, organic fertiliser, equipments and lime around the farm and based on actual figures is estimated as US$ Cost of electricity/fuel for pumping estimated as US$ are included as fuel/energy costs for extensive organic fresh water fish and fresh water prawn farm Farm management charges Expenses toward labour during the crop period and manager/technician are included under this item. For modified traditional organic shrimp farm, the owner is considered as the manager/technician and harvesting is conducted by 2 persons for about 4-5 hours on an average for 12 days a month during the crop period (11 months). Thus, the farm management charges which include the salary for the manager/ technician for one year and the labour charges for harvesting for modified traditional shrimp farm are estimated as US $ The semi-intensive organic shrimp farm uses automated feeding and have 6 workers and one manager/technician at a cost of about US $ 250 (THB 8 000)/month/ worker and a salary of about US $ 950 (THB ) for the manager/ technician. Hence, the total cost of salaries for semi-intensive organic shrimp farm is US$ The extensive organic fresh water fish and fresh water prawn farm uses 10 workers at a cost of about US $ 200 ( THB 6 500) monthly salary and one manager/technician for about US $ 800 (THB ) monthly salary. Hence the total farm management cost for extensive organic fresh water fish and fresh water prawn farm is calculated as US $ each Certification charges, cost of inputs (lime, organic fertiliser, probiotics etc), pond preparation and harvesting expenses The harvesting expenses for modified traditional organic shrimp farm are included under the farm management charges. The organic certification charges are calculated based on actual travel expenses and allowances of two auditors and certification fee incurred for a farm in Thailand. The cost of inputs like lime (calcium carbonate), probiotics and organic fertiliser are based on actual figures. The Feasibility Study on Organic Aquaculture 5

12 cost of pond preparation calculated based on actual costs, include the cost of machinery and labour for dyke repair, fixing of nets, feeding equipments etc conducted once an year during the pond drying Processing and packing The processing and packing of the products from all the farming methods is assumed to be done as piecework on contract basis since maintaining a processing facility exclusively for the processing of organic produce would not be feasible. Accordingly, the processing cost of the various products has been calculated as below, taking into account prevailing overheads. D) Black tiger shrimp products i) Head-on shell-on (HOSO)... US$ 1.26 ii) Headless shell-on (HLSO)... US$ 1.45 iii) Peeled tail-on (PTO)... US$ 1.67 E) Fresh water prawn products iv) Head-on shell-on, in live form (Live FWP)... US$ 0.67 i) Head-on shell-on, in chilled form (Chilled FWP)... US$ 0.49 ii) Head-on shell-on, in frozen form (Fr HOSO FWP)... US$ 1.15 F) Finfish products i) Live (WR, live)... US$ 0.79 ii) Chilled, WR (WR F Chilled)... US$ MEANS OF FINANCE Means of finance is calculated on a debt equity ratio of 3:1 as followed in the business. Interest on long term loan has been 12% per annum and the working capital 10%. The loan was repayable over a period of 5 years after a moratorium of 1 year. 6. PRODUCT COSTING 6.1 The selling prices computed were based on available price data for the most common variety and size of the products sold during the project period to European markets and in the domestic market. 6.2 Freight rates for standard frozen products are based on 40 ft containers (40 FCL). 6.3 Raw material cost for black tiger shrimp, freshwater prawn and finfish varieties at the farm were US$ 8.50, US$ 6 and US $ 1.20 respectively and yield has been calculated accordingly. US$ 0.10 per kg has been added to the raw material cost for meeting the 6 Feasibility Study on Organic Aquaculture

13 expenditure towards transportation charges from farm to processing plant, cost of ice and loading and unloading charges. Hence the raw material received at the processing facility would cost US$ 8.60, US$ 6.10 and US$ 1.30 respectively for black tiger, freshwater prawn and fish varieties. 6.4 The following yields of end product from a unit weight of raw material have been assumed for the products processed: A) Black tiger shrimp i) Head-on shell-on to head on shell-on (HOSO) % ii) Head-on shell on to headless shell-on (HLSO) % iii) Head-on shell-on to peeled tail-on (PTO) % B) Freshwater prawn i) Head-on shell-on, in live form... 98% ii) Head-on shell-on, in chilled form... 98% iii) Head-on shell-on, in frozen form... 98% C) Finfish products i) Live... 98% ii) Chilled, WR... 98% 6.5 The variable labour charges involved are for casual labourers engaged for farm management and also for pond preparation, 6.6 Since there are various grades of black tiger shrimp, freshwater prawn and finfish varieties available from the farm, an assessment has been made for determining product grade. It is assumed that the average production of black tiger shrimp from the farm would consist of four grades, viz gm size (25%), gm size (40%), gm size (25%) and gm size (10%). Two grades of freshwater prawn, viz gm (50%) and above 80 gm (50%), are recognized while finfish varieties range from 300-1,000 gm. Hence, average selling prices of US$ 23.04, and were taken for HOSO, HLSO and PPVTO black tiger shrimp, and for fresh water prawn, US$ 12.00, 9.00 and 7.50 for live, chilled and frozen forms, respectively. The average selling price for finfish varieties was taken as US$ 3.5 for live and US$ 2.5 for chilled whole round fish. Although exporting black tiger shrimp in HOSO would be much more remunerative than in HLSO and PPVTO form, a viable product mix ratio for processing and marketing has been considered as 65:35 (HOSO:HLSO) for final computation. 6.7 The variable cost of US$ 35,522 per annum has been allocated based on the production of 413 kg /ha of black tiger shrimp and 400 kg/ha of finfish through organic Feasibility Study on Organic Aquaculture 7

14 culture practices using modified traditional culture methods, while it is US$ 412,831 per annum for the production of 7,920 kg/ha of shrimp through the semi intensive organic culture method. In the case of freshwater prawn with supplementary stocking of finfish, the variable cost varies from US$ 123,013 for the production of 1,200 kg/ha of freshwater prawn and 450 kg/ha of finfish and for fresh water finfish with supplementary stocking of fresh water prawn, US$ 136,911 for producing 80 kg/ha of freshwater prawn and 5,700 kg/ha of finfish. A provision of 5% increase has been allocated to variable cost for the third, fourth and fifth year of operation to meet escalating expenses, as also with respect to production. The selling expenses, variable cost and fixed expenses for processing and export of 1 kg of organic black tiger shrimp have been worked out respectively at US$ 0.479, and for HOSO, US$ 0.502, and for HLSO and 0.554, and for PPVTO. In the case of freshwater prawn, the same was US$ 0.308, and for live freshwater prawn, US$ 0.283, and for chilled head-on shell-on freshwater prawn and US$ 0.458, and for frozen head-on freshwater prawn. The average selling expenses, variable cost and fixed expenses for processing finfish varieties were US$ 0.298, and for live finfish and US$ 0.366, and for chilled finfish products. 7. WORKING CAPITAL The margin for working capital is estimated at 50% which would be availed from the bank as a loan. It has been assumed that no income tax is applicable, as is the case with 100% export oriented business in many developing countries in the region. 8. EXCHANGE RATE Exchange rate used is Thailand Baht per US$. Figures given in the tables are in US Dollars unless otherwise specified. 8 Feasibility Study on Organic Aquaculture

15 9. FEASIBILITY OF A MODIFIED TRADITIONAL ORGANIC SHRIMP FARM Tarlochan Singh Feasibility Study on Organic Aquaculture 9

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17 Table 1: Production Plan - Modified Traditional Organic Shrimp Culture Culture Details Item Quantity Water Spread Area 20 Hectare Pond Size 10 Hectare No. of Ponds 2 Culture Period 11 Months & 1 Month Drying Crop per Year 1 Main Species Cultured Peneaus monodon Other Species P. merguensis, Fish Mud Crab & Cockle Stocking Density 5 per sq.m PL Requirement (Pcs) Total Feed Requirements (Kgs) Organic Fertilizer 50 L/ha/month Harvest Details Survival at Harvest 25% Average Size at Harvest - Gms 33, Percentage of Large Sizes, 8-25 Count More - 30% Shrimp per Produced per Hectare (Kg) 413 Total Shrimp Production (Kg) Fish Produced per Hectare (Kg) 400 Total Fish Production (Kg) Feasibility Study on Organic Aquaculture 11

18 Table 2: Costing Details - Modified Traditional Organic Shrimp Farm Fixed Cost US$ Farm US$ 925/ha Farm US$ 610/ha TOTAL Variable Cost US$ Farm Maintenance 770 Feed (8 000 US$ 1.73/Kg) Seed (1 Million US$ 2.3/1 000 PL) Fuel/Energy 250 Farm Management Charges (Salaries and Wages) Certification Charges Pond Preparation Charges Inputs (Certified Probiotics) 380 TOTAL Table 3: Production Kgs Value In US$ 413 kg/ha and price US$ 8.5/Kg Fin 400 kg/ha and price US$ 1.2/Kg TOTAL Table 4: Profitability Item Year 1 Year 2 Year 3 Year 4 Year 5 Fixed Cost Variable Cost Total Cost Annual Production 1) Shrimp ) Fin Fish Total Production in kgs Income by Sales NET INCOME Feasibility Study on Organic Aquaculture

19 Bank Loan (75% of Fixed Cost) Working Capital (50% of Variable Cost) Table 5: Repayment Schedule Item Year 1 Year 2 Year 3 Year 4 Year Total Principal Fixed Cost O/S Principal Working Capital O/S Interest on Loan Towards Fixed 12% Interest on Loan Towards Working 10% Total Interest REPAYMENT Table 6: Bankability Bankability Year 1 Year2 Year 3 Year 4 Year 5 Gross Income Less Variable Cost Gross Surplus Repayment NET SURPLUS Feasibility Study on Organic Aquaculture 13

20 Table 7: Cash Flow Statement Year Year 1 Year 2 Year 3 Year 4 Year 5 Operating Activities Cash Flow from Operations Total from Operations Financing Activities Share Capital Long Term Loan Working Capital Repayment Principal Interest Total Financing Activities Investing Activities Total Investment Reserve for OPEX any Total from Investing Activities Net Cash Flow CUMULATIVE CASH FLOW Table 8: Project IRR Year Year 1 Year2 Year 3 Year 4 Year 5 Total Investment Free Cash Flow Net Cash Flow Project IRR in % 206 % Discount Rate for NPV 12 % NPV AT 12% DISCOUNT RATE $109, Table 9: Equity IRR Year Year 1 Year2 Year 3 Year 4 Year 5 Equity Investment Free Cash Flow Debt Service (Principal + Interest) Net Cash Flow NPV AT 12% DISCOUNT RATE $104, Discount Rate for NPV 12 % 14 Feasibility Study on Organic Aquaculture

21 Table 10: Product Costing Selling Price in US$ per kg HOSO HLSO PPVTO Chilled Fish Average Selling Price in US$ per kg Price in Thai per US$ Less Selling Expenses a) Freight b) Cess & Taxes c) Clearing and Forwarding d) Post Shipment Finance Total Selling Expenses Net Sales Realisation Variable Cost a) Raw Material Price b) Yield in % c) Adjusted Raw Material Cost d) Freezing Charges e) Packing Material f) Consumable Stores g) Labour Charges h) Storage Charges i) Others Total Variable Cost Contribution Fixed Expenses a) Sallary & Allowances b) Administrative Expenses c) Electricity Charges Fixed Portion d) Repairs & Maintenance e) Interest on Term Loan f) Interest on Working Capital g) Depreciation Total Fixed Overhead NET PROFIT Feasibility Study on Organic Aquaculture 15

22 Table 11: Conversion Details for Average Export Price Processed as HOSO HOSO Size Processed RM Price/kg Av. 30 gram size 25% 20/ Av. 35 gram size 40% 30/ Av. 45 gram size 25% 40/ Av. 65 gram size 10% 60/ Av. Price/kg Total Selling Price for HOSO Processed as HLSO HL Size Processed RM Price/kg Av. 30 gram size HO to HL - 8/12-10% 8/ Av. 35 gram size HO to HL - 13/15-25% 13/ Av. 45 gram size HO to HL - 16/20-40% 16/ Av. 65 gram size HO to HL - 21/25-25% 21/ Av. Price/kg Total Selling Price for HLSO Processed as PTO PPVTO Size Processed RM Price/kg Av. 30 gram size HO to PTO - 8/12-10% 13/ Av. 35 gram size HO to PTO - 13/15-25% 16/ Av. 45 gram size HO to PTO - 16/20-40% 21/ Av. 65 gram size HO to PTO - 21/25-25% 26/ Av. Price/kg Total Selling Price for PPVTO Feasibility Study on Organic Aquaculture

23 Table 12: Profit and Loss Account Item HOSO HLSO PPVTO Chilled Fish (in US$) Raw Material in kg Yield % Total Production & Sales Quantity in kg Income Sales Less Selling Expenses Net Income Expenditures Variable Expenses Contribution Fixed Expenses a) Sallary, Admin, Electricity, Repairs b) Interest on Term Loan c) Interest on Working Capital d) Depreciation Total Fixed Expenses Profit Before Tax Tax* NET PROFIT * Tax exempted for export Feasibility Study on Organic Aquaculture 17

24 Export Sales Item Table 13: Costing at 65:35 Ratio of Product Mix Grade Processed Weight (kg) Price/kg Value Chilled Fish HOSO 65% 20/ / HLSO 35% 8/ / Total Less Selling Expenses Net Income Variable Expenses Contribution Fixed Expenses Profit Before Tax Tax* 0 0 Net Profit TOTAL PROFIT AFTER TAX * Tax exempted for export 18 Feasibility Study on Organic Aquaculture

25 Marketing of Organic Products Fatima Ferdouse Fatima Ferdouse Feasibility Study on Organic Aquaculture 19

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27 10. FEASIBILITY OF A SEMI INTENSIVE ORGANIC SHRIMP FARM Tarlochan Singh Feasibility Study on Organic Aquaculture 21

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29 Water Spread Area Pond Size Table 1: Production Plan - Semi Intensive Organic Shrimp Farm Item Culture Details Quantity 20 Hectare Hectare No. of Ponds 22 Culture Period 8 Months during dry season & 7 months during wet season Crop per Year 1.2 Main Species Cultured Stocking Density Penaeus Monodon 30 pcs per sq.m (i.e. 15 per sq. m. for total area including reservoir, treatment pond, canals etc) PL Requirement 3,000,000 Feed Used Farm made organic feed, costs $1.2 per kg Feed Conversion Ratio 1.2 Feed Requirement per ha (Kg) Total Feed Requirements (Kg) Calcium Carbonate Total Requirement (Kg) Harvest Details Survival at Harvest 80% Average Size at Harvest (Gm) 33 Production per Hectare (Kg) Total Production per Crop (Kg) Feasibility Study on Organic Aquaculture 23

30 Table 2: Costing Details of Semi Intensive Organic Shrimp Farm Fixed Cost US$ Land US$ /ha Farm US$ 1 540/ha TOTAL Variable Cost US$ Farm Maintenance Feed Cost ( US$ 1.2/kg) Seed Cost (6 Million US$ 3.12/1 000PL) Fuel/Energy Farm Management Charges (Salary and Wages) Certification Charges Pond Preparation Charges Inputs (Lime) 360 Harvesting Expenses TOTAL Table 3: Production In Kgs Value In US$ kg/ha Crop per Year, US$ 8.5/Kg TOTAL Table 4: Profitability Item Year 1 Year 2 Year 3 Year 4 Year 5 Fixed Cost Variable Cost Total Cost Annual Production 1) Shrimp Total Production (Kg) Income by Sales NET INCOME Feasibility Study on Organic Aquaculture

31 Bank Loan (75% of Fixed Cost) Working Capital (50% of Variable Cost) Table 5: Repayment Schedule Item Year 1 Year 2 Year 3 Year 4 Year Total Principal Fixed Cost O/S Principal Working Capital O/S Interest on Loan Towards Fixed 12% Interest on Loan Towards Working 10% Total Interest REPAYMENT Table 6: Bankability Item Year 1 Year2 Year 3 Year 4 Year 5 Gross Income Less Variable Cost Gross Surplus Repayment NET SURPLUS Feasibility Study on Organic Aquaculture 25

32 Table 7: Cash Flow Statement Year Year 1 Year 2 Year 3 Year 4 Year 5 Operating Activities Cash Flow from Operations Total from Operations Financing Activities Share Capital Long Term Loan Working Capital Repayment Principal Interest Total Financing Activities Investing Activities Total Investment Reserve for OPEX any Total from Investing Activities Net Cash Flow CUMULATIVE CASH FLOW Table 8: Project IRR Year Year 1 Year2 Year 3 Year 4 Year 5 Total Investment Free Cash Flow Net Cash Flow Project IRR in % 133 % Discount Rate for NPV 12 % NPV AT 12% DISCOUNT RATE $881,663 Table 9: Equity IRR Year Year 1 Year2 Year 3 Year 4 Year 5 Equity Investment Free Cash Flow Debt Service (Principal + Interest) Net Cash Flow NPV AT 12% DISCOUNT RATE $825,160 Discount Rate for NPV 12 % 26 Feasibility Study on Organic Aquaculture

33 Table 10: Product Costing Selling Price in US$ per kg HOSO HLSO PPVTO Average Selling Price in US$ per kg Price in Thai per US$ Less Selling Expenses a) Freight b) Cess & Taxes c) Clearing and Forwarding d) Post Shipment Finance Total Selling Expenses Net Sales Realisation Variable Cost a) Raw Material Price b) Yield in % c) Adjusted Raw Material Cost d) Freezing Charges e) Packing Material f) Consumable Stores g) Labour Charges h) Storage Charges i) Others Total Variable Cost Contribution Fixed Expenses a) Sallary & Allowances b) Administrative Expenses c) Electricity Charges Fixed Portion d) Repairs & Maintenance e) Interest on Term Loan f) Interest on Working Capital g) Depreciation Total Fixed Overhead NET PROFIT Feasibility Study on Organic Aquaculture 27

34 Table 11: Conversion Details for Average Export Price Processed as HOSO HOSO Size Processed RM Price/kg Av. 30 gram size 25% 20/ Av. 35 gram size 40% 30/ Av. 45 gram size 25% 40/ Av. 65 gram size 10% 60/ Av. Price/kg Total Selling Price for HOSO Processed as HLSO HL Size Processed RM Price/kg Av. 30 gram size HO to HL - 8/12-10% 8/ Av. 35 gram size HO to HL - 13/15-25% 13/ Av. 45 gram size HO to HL - 16/20-40% 16/ Av. 65 gram size HO to HL - 21/25-25% 21/ Av. Price/kg Total Selling Price for HLSO Processed as PTO PPVTO Size Processed RM Price/kg Av. 30 gram size HO to PTO - 8/12-10% 13/ Av. 35 gram size HO to PTO - 13/15-25% 16/ Av. 45 gram size HO to PTO - 16/20-40% 21/ Av. 65 gram size HO to PTO - 21/25-25% 26/ Av. Price/kg Total Selling Price for PPVTO Feasibility Study on Organic Aquaculture

35 Table 12: Profit and Loss Account Item HOSO HLSO PPVTO (in US$) Raw Material in kg Yield % Total Production & Sales Quantity in kg Income Sales Less Selling Expenses Net Income Expenditures Variable Expenses Contribution Fixed Expenses a) Salary, Admin, Electricity, Repairs b) Interest on Term Loan c) Interest on Working Capital d) Depreciation Total Fixed Expenses Profit Before Tax Tax* NET PROFIT * Tax exempted for export Feasibility Study on Organic Aquaculture 29

36 Export Sales Table 13: Costing at 70:30 Ratio of Product Mix Grade Processed Weight (kg) Price/kg Value HOSO 65% 20/ / HLSO 35% 8/ / Total Less Selling Expenses Net Income Variable Expenses Contribution Fixed Expenses Profit Before Tax Tax* 0 TOTAL PROFIT AFTER TAX * Tax exempted for export 30 Feasibility Study on Organic Aquaculture

37 11. FEASIBILITY OF AN EXTENSIVE ORGANIC FRESHWATER PRAWN FARM Tarlochan Singh Feasibility Study on Organic Aquaculture 31

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39 Water Spread Area Pond Size Table 1: Production Plan - Extensive Organic Fresh Water Prawn Farm Item Culture Details Quantity 20 Hectare 1-4 Ha Number of Ponds 10 Culture Period 10 Months - 2 Months Nursery Rearing and 8 Months Culture Crop per Year 1.2 Main Species Cultured Other Species Cultured Fresh Water Prawn Stocking Density-grow Out Fresh Water Prawn Juvenile Requirement Fish Stocking Density - Grow Out Fish Fingerling Requirement Feed Used Fresh Water Prawn (Macrobrachium rosenbergii) 3 Species of Fish - Silver Barb, Common Carp and Tilapia 3 per sq.m pcs 0.05 pcs per sq.m pcs Farm Made Organic Feed, Costs $0.65 per kg Feed Conversion Ratio 2.5 Feed Requirement (Kg) Organic Fertilizer (Kg) Calcium Carbonate (Kg) Harvest Details 82, per Hectare 15, kg per Month per Hectare 15, kg per Month per Hectare Grow Out Survival at Harvest - Fresh Water Prawn 80% Grow Out Survival at Harvest - Fish 90% Average Size at Harvest - Fresh Water Prawn Average Size at Harvest - Fish Production - Fresh Water Prawn (Kg) Production - Fish (Kg) Total Production (Kg) 50 gm 1 kg 24,000 1,200 kg per ha 9, kg per ha 33,000 kg Feasibility Study on Organic Aquaculture 33

40 Table 2: Costing Details - Extensive Organic Fresh Water Prawn Farm Fixed Cost Land US$ 625/ha Pond US$ 100/ha US$ TOTAL Variable Cost Farm Maintenance Seed Cost (Fresh Water US$ 0.03/Juvenile and Fish US $ 0.06/fingerling) US$ Feed Cost (Farm Made US$ 0.65/Kg) Fuel/Energy Farm Management Charges (Salary and Wages) Certification Charges Inputs (Lime and Fertilizer) Pond Preparation Charges Harvesting Expenses TOTAL Table 3: Production Details In Kgs Value In US$ Freshwater kg/ha Crop per Year, Price US$ 6/Kg kg/ha, Price US$ 1.2/Kg TOTAL Table 4: Profitability Item Year 1 Year 2 Year 3 Year 4 Year 5 Fixed Cost Variable Cost Total Cost Annual Production in Kg 1) Fish (in kg) ) Freshwater Prawn (in kg) Total Production (in kg) Income by Sales NET INCOME Feasibility Study on Organic Aquaculture

41 Bank Loan (75% of Fixed Cost) Working Capital (50% of Variable Cost) Table 5: Repayment Schedule Item Year 1 Year 2 Year 3 Year 4 Year Total Principal Fixed Cost O/S Principal Working Capital O/S Interest on Loan Towards Fixed 12% p.a Interest on Loan Towards Working 10% p.a Total Interest REPAYMENT Table 6: Bankability Item Year 1 Year2 Year 3 Year 4 Year 5 Gross Income Less Variable Cost Gross Surplus Repayment NET SURPLUS Inspecting harvested live fresh water prawn held in a net on enclosure. Fatima Ferdouse Feasibility Study on Organic Aquaculture 35

42 Table 7: Cash Flow Statement Year Year 1 Year 2 Year 3 Year 4 Year 5 Operating Activities Cash Flow from Operations Total from Operations Financing Activities Share Capital Long Term Loan Working Capital Repayment Principal Interest Total Financing Activities Investing Activities Total Investment Reserve for OPEX any Total from Investing Activities Net Cash Flow CUMULATIVE CASH FLOW Table 8: Project IRR Year Year 1 Year2 Year 3 Year 4 Year 5 Total Investment Free Cash Flow Net Cash Flow Project IRR in % 101 % Discount Rate for NPV 12 % NPV AT 12% DISCOUNT RATE $103,337 Table 9: Equity IRR Year Year 1 Year2 Year 3 Year 4 Year 5 Equity Investment Free Cash Flow Debt Service (Principal + Interest) Net Cash Flow NPV AT 12% DISCOUNT RATE $236,695 Discount Rate for NPV 12 % 36 Feasibility Study on Organic Aquaculture

43 Table 10: Product Costing Selling Price in US$ per kg Live FWP Chilled FWP Fr. HOSO FWP WR Fish Live WR F Chilled Average Selling Price in US$ per kg Price in Thai per US$ Less Selling Expenses a) Freight b) Cess & Taxes c) Clearing and Forwarding d) Post Shipment Finance Total Selling Expenses Net Sales Realisation Variable Cost a) Raw Material Price b) Yield in % c) Adjusted Raw Material Cost d) Freezing Charges e) Packing Material f) Consumable Stores g) Labour Charges h) Storage Charges i) Others Total Variable Cost Contribution Fixed Expenses a) Salary & Allowances b) Administrative Expenses c) Electricity Charges Fixed Portion d) Repairs & Maintenance e) Interest on Term Loan f) Interest on Working Capital g) Depreciation Total Fixed Overhead NET PROFIT Feasibility Study on Organic Aquaculture 37

44 Table 11: Conversion Details for Average Export Price Processed as HOSO Live Live FWP Processed RM* Price/kg 80 g above - 50% g - 50% Total Av. Price/kg Total Selling Price Processed as HOSO Chilled HOSO Size Processed RM Price/kg 80 g above - 50% g - 50% Total Av. Price/kg 8.00 Total Selling Price Processed as HOSO Frozen HOSO Size Processed RM Price/kg 80 g above - 50% g - 50% Total Av. Price/kg 7.00 Total Selling Price * Raw Material 38 Feasibility Study on Organic Aquaculture

45 (in US$) Table 12: Profit and Loss Account Item Live FWP Chilled FWP Fr. HOSO FWP WR Fish Live WR F Chilled Raw Material in kg Yield % Total Production & Sales Quantity in kg Income Sales Less Selling Expenses Net Income Expenditures Variable Expenses Contribution Fixed Expenses a) Sallary, Admin, Electricity, Repairs b) Interest on Term Loan c) Interest on Working Capital d) Depreciation Total Fixed Expenses Profit Before Tax Tax* NET PROFIT * Tax exempted for export Feasibility Study on Organic Aquaculture 39

46 Table 13: Costing at 80:20 Ratio of Product Mix Grade Processed WT Price/kg Value GG Fish Export Sales HOSO Live 20% 80 g above HOSO Chilled 80% gram Total Less Selling Expenses Net Income Variable Expenses Contribution Fixed Expenses Profit Tax* 0 0 Net Profit TOTAL PROFIT AFTER TAX * Tax exempted for export 40 Feasibility Study on Organic Aquaculture

47 Harvesting and Marketing of Live Organic Freshwater Prawns in Myanmar Tarlochan Singh Feasibility Study on Organic Aquaculture 41

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49 12. FEASIBILITY OF AN EXTENSIVE ORGANIC FRESHWATER FISH FARM Feasibility Study on Organic Aquaculture 43

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51 Water Spread Area Pond Size Table 1: Production Plan - Extensive Organic Fresh Water Fish Farm Item Culture Details Quantity 20 Hectare 1-4 Ha No. of Ponds 10 Culture Period 10 Months - 2 Months Nursery Rearing and 8 Months Culture Crop per Year 1.2 Main Species Cultured Other Species Cultured Average Stocking Density of Fish - Grow Out Fish Seed Requirement Fresh Water Prawn Stocking Density-grow Out Fresh Water Prawn Juvenile Requirement Feed Used 3 Species of Fish - Tilapia, Silver Barb and Common Carp Fresh Water Prawn (Macrobrachium rosenbergii) 0.6 pcs per sq.m 126,000 pcs 0.13 pcs per sq.m 25,000 pcs Farm Made Organic Feed, Costs $0.25 per kg Feed Conversion Ratio 2.5 Feed Requirement (Kg) Organic Fertilizer (Kg) Calcium Carbonate (Kg) Harvest Details 289,000 14,450 kg per Hectare 15, kg per Hectare per Month 15, kg per Hectare per Month Grow Out Survival at Harvest - Fish 90% Average Size at Harvest - Fish (Kg) 1 Grow Out Survival at Harvest - Fresh Water Prawn 80% Average Size at Harvest - Fresh Water Prawn (gm) 80 Production - Fresh Water Prawn (Kg) Production - Fish (Kg) Total Production (Kg) 1, Kg per ha 114, Kg per ha 115,600 kg Feasibility Study on Organic Aquaculture 45

52 Table 2: Costing Details - Extensive Organic Fresh Water Fish Farm Fixed Cost US$ Land US$ 625/ha Farm US$ 100/ha TOTAL Variable Cost US$ Farm Maintenance Seed ( Fresh Water US$ 0.04/Juvenile and Fish /seed) Feed Fuel/Energy Farm Management Charges (Salary and Wages) Certification Charges Inputs (Lime and Fertilizer) Pond Preparation Charges Harvesting Expenses TOTAL Table 3: Production Item In Kgs Value In US$ kg/ha Crop per Year, US$ 1.2/kg Freshwater 80 kg/ha crop per Year, US$ 6/kg TOTAL Table 4: Profitability Item Year 1 Year 2 Year 3 Year 4 Year 5 Fixed Cost Variable Cost Total Cost Annual Production in Kg 1) Fish (in kg) ) Freshwater Prawn (in Kg) Total Production (in Kg) Income by Sales NET INCOME Feasibility Study on Organic Aquaculture

53 Bank Loan (75% of Fixed Cost) Working Capital (50% of Variable Cost) Table 5: Repayment Schedule Item Year 1 Year 2 Year 3 Year 4 Year Total Principal Fixed Cost O/S Principal Working Capital O/S Interest on Loan Towards Fixed 12% p.a Interest on Loan Towards Working 10% p.a Total Interest REPAYMENT Table 6: Bankability Item Year 1 Year2 Year 3 Year 4 Year 5 Gross Income Less Variable Cost Gross Surplus Repayment NET SURPLUS Feasibility Study on Organic Aquaculture 47