Southeast Asian Fisheries Development Center Aquaculture Department
SEAFDEC/AQD Institutional Repository http://repository.seafdec.org.ph
Journals/Magazines Aqua Farm News
1993
Economic analysis of an integrated
milkfish broodstock and hatchery operation
Aquaculture Department, Southeast Asian Fisheries Development Center
Southeast Asian Fisheries Development Center, Aquaculture Department (1993). Economic
analysis of an integrated milkfish broodstock and hatchery operation. Aqua Farm News, 11(2), 9-12.
http://hdl.handle.net/10862/2555
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The Agbayani Report
Economic analysis of an integrated milkfish broodstock and hatchery operation
S E A F D E C /A Q D A s s o c ia te S c ie n tis t R e- n a to A g b a y a n i a n d c o lle a g u e s d e te rm in e d th e e c o n o m ic v ia b ility o f a n in te g ra te d m ilk fis h b ro o d - s to c k a n d h a tc h e ry . T h e y a ls o n o te d th e c ritic a l te c h n ic a l a re a s in its o p e ra tio n a n d re c o m m e n d e d m e a s u re s th a t w o u ld im p ro v e th e p ro fita b ility to le v e ls a ttra c tiv e to p riv a te h a tc h e ry o p e ra to rs .
T h e e c o n o m ic a n a ly s is w a s p re p a re d b a s e d o n te c h n ic a l d a ta o b ta in e d fro m e x p e ri
m e n ta l re s u lts o f S E A F D E C /A Q D :
• N u m b e r o f m a tu re fe m a le m ilk fis h , 5 0 fis h /c a g e
• F e c u n d ity /k g p e r s p a w n in g o f fish , 3 0 0 0 0 0 e g g s
• N u m b e r o f s p a w n in g /fis h p e r y e a r, th re e
• F e rtiliz a tio n ra te , 8 5 %
• E g g c o lle c tio n ra te , 9 5 %
• H a tc h in g ra te , 5 9 %
• S u rv iv a l ra te in th e h a tc h e ry , 3 0 %
• S to c k in g d e n s ity in th e h a tc h e ry , 3 0 e g g s /lite r.
A 1 5 -y e a r d e v e lo p m e n t p la n w a s p re p a re d . T h e p la n h a d th e firs t 4 y e a rs o f o p e ra tio n d e v o te d to b ro o d s to c k d e v e lo p m e n t, a n d o n e 1 0 -m d ia . flo a tin g c a g e w a s to b e c o n s tru c te d e a c h y e a r. E v e ry c a g e w a s to b e s to c k e d w ith 100 m ilk fis h , e a c h fis h w e ig h in g a b o u t 2 5 0 g. In a n tic ip a tio n o f th e m a tu ra tio n a n d s p a w n in g o f m ilk fis h in th e fifth y e a r, th e firs t h a tc h e ry fa c ility w a s to b e c o n s tru c te d d u rin g th e fo u rth y e a r a n d e v e ry y e a r th e re a fte r u p to th e fifte e n th y e a r to a c c o m m o d a te a ll th e e g g s p ro d u c e d in th e flo a t
ing c a g e s . T a b le 1 s h o w s th e p ro je c te d m ilk fis h e g g p ro d u c tio n fo r 15 y e a rs b a s e d o n te c h n ic a l d a ta . S p a w n in g s e a s o n is fro m M a y to O c to b e r, w ith S e p te m b e r a s th e p e a k p e rio d .
P ro je c te d c a s h flo w s fo r fo u r c a g e s o f m ilk fis h b ro o d s to c k w e re c o m p u te d fo r th e e n tire 15 y e a rs . T a b le 2 s h o w s th e p ro je c te d c a s h flo w s fo r th e firs t 4 y e a rs fo r C a g e 1. T h e in itia l in fra s tru c tu re , e .g ., g u a rd h o u s e , c a re ta k e r’s h o u s e a n d p u m p b o a t, a re c o m m o n c o s ts fo r th e fo u r c a g e s b u t a re re fle c te d in th e c a s h flo w of C a g e 1.
T h e p ro je c te d c a s h flo w o f th e h a tc h e ry o p e ra tio n w a s c o m p u te d fro m Y e a r 4 to Y e a r 15.
T h e c a p ita l o u tla y fo r th e in itia l h a tc h e ry fa c ilitie s in Y e a r 4 to ta lle d P 8 ,6 7 0 ,2 5 4 a n d th e o p e ra tin g e x p e n s e s in Y e a r 5 re a c h e d P1 5 8 3 6 5 2 . (O p e ra tin g a m ilk fis h h a tc h e ry is d is c u s s e d in A q u a F a rm N e w s , V o l . V III, N o. 3, M a y -J u n e 1 9 9 0 .)
T h e 15 -y e a r c a s h flo w fo r a n in te g ra te d m ilk fis h b ro o d s to c k a n d h a tc h e ry o p e ra tio n is s h o w n in T a b le 3. P o s itiv e c a s h flo w s ta rte d in Y e a r 8, a fte r a n in v e s tm e n t o f a b o u t P 4 5 m illio n .
T h e e c o n o m ic a n a ly s is u s in g d is c o u n te d c a s h flo w a t a d is c o u n t ra te o f 8 % , s h o w e d th a t n et p re s e n t v a lu e (N P V ) w a s n e g a tiv e fro m Y e a r 5 to Y e a r 15 a n d in te rn a l ra te o f re tu rn ( IR R ) w a s lik e w is e n e g a tiv e fro m Y e a r 5 to Y e a r 14. In Y e a r 15, IR R re g is te re d a p o s itiv e 4 % . D e s p ite th e n e g a tiv e e c o n o m ic in d ic a to rs , th e IR R a n d N P V s h o w e d u p w a rd tre n d s s ta rtin g in th e s ix th a n d s e v e n th y e a rs , re s p e c tiv e ly .
T h e s e e m in g ly p o o r e c o n o m ic in d ic a to rs w e re d u e to :
• H ig h in v e s tm e n t in th e h a tc h e ry fa c ilitie s , e s p e c ia lly in c o n c re te ta n k s a n d life -s u p p o rt e q u ip m e n t; th e h ig h ra tio o f a lg a l a n d ro tife r ta n k s to la rv a l re a rin g ta n k s (6 :1 ) re s u lte d in h ig h e x p e n d itu re s o n ta n k s ; a n d
• L o w u tiliz a tio n o f h a tc h e ry fa c ilitie s b e c a u s e o f th e s h o rt s e a s o n a l s p a w n in g w h ic h is o n ly 6 m o n th s (M a y to O c to b e r); th e e s ti
m a te d c a p a c ity u tiliz a tio n is o n ly a b o u t 3 0 % o v e r a p e rio d o f 1 y e a r.
G o vern m en t su b sid y
T h e P 4 5 m illio n in itia l in v e s tm e n t fo r a n in te g ra te d b ro o d s to c k -h a tc h e ry s y s te m w h ic h s ta rts p a y in g o ff a fte r six y e a rs is n o d o u b t u n a ttra c tiv e to th e p riv a te s e c to r. T h e N B B P (s e e p re c e d in g s e c tio n s ) is a p u b lic in v e s tm e n t in th e m ilk fis h in d u s try w ith s u c h a c a p ita liz a tio n .
W h e n th e g o v e rn m e n t in v e s ts in a p ro je c t w h ic h b e n e fits a p a rtic u la r s e c to r o f s o c ie ty - in th is c a s e m ilk fis h g ro w e rs - th e u n re c o v e re d
c o s t is s u b s id iz e d b y o th e r s e c to rs o f s o c ie ty . T h e g o v e rn m e n t, h o w e v e r, c a n re c o v e r th e c o s t o f a p ro je c t b y im p ro v in g th e p ro je c t’s e c o n o m ic e ffic ie n c y th ro u g h s u s ta in e d re s e a rc h a n d d e v e lo p m e n t e ffo rts . A n a lte rn a tiv e a c tio n o f th e g o v e rn m e n t in th e c a s e o f th e N B B P is to c o n c e n tra te o n e g g p ro d u c tio n w h ile m a in ta in in g p i
to t-s c a le h a tc h e rie s in s e le c te d s ite s fo r re s e a rc h , tra in in g a n d e x te n s io n p u rp o s e s , a s is p re s e n tly d o n e . T h e fe rtiliz e d e g g s c a n be s o ld to p riv a te h a tc h e ry o p e ra to rs w h o a re p re s e n tly in s h rim p (P e n a e u s m o n o d o n) fry p ro d u c tio n bu t c a n s w itc h to m ilk fis h a s a n a lte rn a tiv e c ro p .
T h e c o s t e ffic ie n c y a s p e c t o f th e m ilk fis h b ro o d s to c k o p e ra tio n m e rits fu rth e r d is c u s s io n . D u rin g th e firs t y e a r, th e c o s t o f e g g s ra n g e d fro m P 4 ,8 0 0 to P 13 ,1 0 0 /m illio n , a v e ry h ig h fig u re c o m p a re d to th e m a rk e t p ric e o f s h rim p n a u p lii w h ic h c o s t b e tw e e n P 2 ,5 0 0 to P 3 ,5 0 0 / m illio n . T h e c o s t o f m ilk fis h e g g s d e c re a s e d d u rin g th e fo u rth y e a r o f h a tc h e ry o p e ra tio n w h e n in c re m e n ta l re v e n u e s b e c a m e g re a te r th a n th e in c re m e n ta l c o s ts . C o s ts le ve l o ff fro m P 1 ,900 to P 2 ,4 0 0 /m illio n e g g s . T h e c o s t o f fe e d s w a s e s tim a te d to be a b o u t 4 6 % o f to ta l c o s t o v e r a 15- y e a r p e rio d . T h e c o s t o f re a rin g a 5 -y e a r o ld Table 1. Projected milkfish egg production
Y e a r 5 Y ear 6 Y ear 7 Y e a r 8
Q u a n tity o f s p a w n ers 50 100 150 200
F e c u n d ity/kg o f fish 3 00 000 30 0 000 3 0 0 000 3 00 000
A v e ra g e w e ig h t of fish (kg) 3.0 0 3 .13 3.2 5 3.38
F e rtiliza tio n rate 0.85 0.85 0.85 0.85
N u m b e r o f s p a w n in g /fish p e r ye a r 3 3 3 3
Q u a n tity o f fe rtiliz e d eggs 114 7 50 000 2 3 9 062 000 37 2 9 3 7 50 0 516 3 75 000
C o lle c tio n rate 0.95 0.95 0.95 0.95
Q u a n tity o f c o lle cte d eggs 109 012 000 2 2 7 109 375 3 5 4 29 0 625 49 0 55 6 250
H a tch in g rate 0.59 0.59 0.59 0.59
Q u a n tity o f hatch e d eggs 6 4 3 1 7 375 133 9 9 4 531 2 0 9 031 469 28 9 42 8 188
Y e a r 9 Y e a r 10 Y e a r 11 Y e a r 12
Q u a n tity o f s p a w n e rs 200 20 0 2 00 200
F e cu n d ity/kg o f fish 30 0 000 30 0 000 3 0 0 000 300 000
A v e ra g e w e ig h t o f fish (kg) 3.63 3.8 8 4.13 4.38
F e rtiliza tio n rate 0.85 0.85 0.85 3
Q u a n tity o f fe rtiliz e d eggs 5 5 4 62 5 000 59 2 875 000 631 125 000 669 37 5 000
C o lle ctio n rate 0.95 0.95 0.95 0.95
Q u a n tity o f co lle cte d eggs 5 2 6 893 750 56 3 231 250 5 9 9 56 8 750 6 35 906 250
H a tch in g rate 0.59 0.59 0.59 0.59
Q u a n tity of hatch e d eggs 3 1 0 86 7 31 3 33 2 3 0 6 43 8 3 5 3 74 5 56 3 3 75 184 688
Y e a r 13 Y e a r 14 Y e a r 15
Q u a n tity o f sp a w n e rs 200 20 0 200
F e c u n d ity/kg o f fish 30 0 000 3 00 000 30 0 000
A ve ra g e w e ig h t o f fish (kg) 4.63 4.8 8 5.13
F e rtiliza tio n rate 0.85 0.85 085
N u m b e r o f s p a w n in g /fis h p e r ye a r 3 3 3
Q u a n tity o f fe rtiliz e d eggs 7 0 7 625 000 74 5 875 000 78 4 125 000
C o lle c tio n rate 0.95 0.95 0.95
Q u a n tity o f c o lle c te d e ggs 6 72 2 4 3 750 70 8 581 250 74 4 9 18 750
H a tch in g rate 0.59 0.59 0.59
Q u a n tity o f h a tch in g eggs 3 96 62 3 813 41 8 06 2 938 4 3 9 5 0 2 063
10 Aqua Farm News XI (2) March-April 1993
m ilk fis h b ro o d s to c k w e ig h in g a b o u t 3 kg is a b o u t P 8 ,0 0 0 , u s in g 1 9 8 8 p ric e s a s th e b a s e .
T h e s h rim p h a tc h e ry o p e ra to rs in th e P h il
ip p in e s a re e n c o u ra g e d to g o in to m ilk fis h fry p ro d u c tio n a s an a lte rn a tiv e to s h rim p fry in v ie w of th e la tte r’s d e c re a s in g p ric e . T h e g o v e rn m e n t-o p e ra te d m ilk fis h b ro o d s to c k s ta tio n s c a n in itia lly s e ll th e m ilk fis h e g g s at a s u b s id iz e d p ric e to p riv a te h a tc h e rie s to e n c o u ra g e th e p riv a te o p e ra to rs .
T h e in v e s tm e n t re q u ire m e n t n e e d e d to p ut u p a s m a ll-s c a le m ilk fis h h a tc h e ry is e s ti
m a te d at P 3 1 6 ,7 2 4 . T h e w o rk in g c a p ita l re q u ire d is P 3 6 ,6 2 4 w h ic h is g o o d fo r tw o run s.
T h e re st is s p e n t o n c a p ita l s tru c tu re s a n d e q u ip m e n t. T h e a n n u a l d e p re c ia tio n is P 3 0 3 6 0 , c o m p u te d b y a s tra ig h t-lin e m e th o d b a s e d o n th e
e s tim a te d e c o n o m ic liv e s o f th e v a rio u s ite m s o f e q u ip m e n t a nd s tru c tu re s .
T h e c o s t-a n d -re tu rn a n a ly s is o f a p riv a te m ilk fis h h a tc h e ry c a n be b a s e d o n th e fo llo w in g p ro d u c tio n e ffic ie n c ie s :
• H a tc h in g rate , 5 9 %
• S u rv iv a l rate , 3 0 %
• S to c k in g d e n s ity , 3 0 e g g /l
T h e c o s t o f e g g s w a s p la c e d at P 2 , 1 0 0 / m illio n w h ic h w a s th e le v e lin g -o ff c o s t. T h e c o s t o f in p u ts a n d m ilk fis h fry w a s b a s e d o n th e p re v a ilin g m a rk e t p ric e s in 1 9 8 9 in th e p ro v in c e of Ilo ilo . T h e R O I is 6 3 % a n d th e p a y b a c k p e rio d is 1 .4 7 y e a rs . F e e d s (A rte m ia) c o s t 9 % a n d fe rtil
ize d m ilk fis h e g g s c o s t 2 3 % o f to ta l o p e ra tin g c o s ts . T h e re w a s a d ra m a tic in c re a s e in th e p ric e o f m ilk fis h fry fro m P 0 .1 4 in 1 9 8 8 to a s h ig h Table 2. Cash flow projection of one unit floating cage milkfish broodstock for 4 years
Items Year 1 Year 2 Year 3 Year 4
Capital outlay Infrastructure
Floating cage 12 000
Guard house1 5 000
Caretaker’s house and bodega2 50 000
Egg collector 7 000
Equipment
Pump boat 30 000
W eighing scales 3 000 3 300
Thermometers 300 330
Refractom eter 5 000
Dissecting set 1 000
Skin diving gear 2 000 2 000
S u b to ta l 108 300 5 830 7 000
Operating expenses
Fish stock 1 000 1 050 1 103 1 158
Feeds 2 549 5 578 10 545 76 687
Chemicals 5 000 5 500
Nets 15 000 16 500
Twines, ropes, etc 15 000 16 500
Gas, oil and grease 15 000 15 750 16 538 17 364
Salaries
Technician 24 000 24 000 26 400 26 400
Aide 12 000 25 200 39 690 13 200
Repairs and maintenance 5 4 1 5 5 4 1 5 5 707 6 057
Miscellaneous 5 000 5 0 0 0 5 0 0 0 5 00 0
S u b to ta l 99 964 80 943 142 379 144 707
T o ta l c o s t p er ye ar/cag e 208 264 80 943 148 209 151 707
1Off-shore; 2on-shore.
a s P 0 .7 0 in 1 9 8 9 . A c o n s e rv a tiv e p ric e o f P 0 .4 5 / fry w a s u s e d in th e c o s t-a n d -re tu rn a n a ly s is . T h e re w a s n o t e n o u g h fr y to s u p p ly th e n e e d s o f b ra c k is h w a te r p o n d s e s tim a te d to b e a b o u t 8 0 % o f a to ta l o f 2 0 7 ,0 0 0 h e c ta re s . S im ila rly , th e e x p o n d p ric e s o f ta b le -s iz e m ilk fis h a ls o ro s e d ra m a tic a lly b y a m in im u m o f 5 0 % in 1 9 8 9 as c o m p a re d to th e 1 9 8 7 p ric e s .
C o m p a ra tiv e ly , th e e s tim a te d R O I o f a s m a ll-s c a le s h rim p h a tc h e ry in 1 9 8 6 w a s 9 0 % b u t h a d d e te rio ra te d to a lo w 1 5 -2 0 % in 1 98 9.
A b o u t 5 0 % o f th e s m a ll-s c a le h a tc h e rie s lo c a te d in s o u th e rn Iloilo e x p e rie n c e d lo s s e s a n d s to p p e d o p e ra tio n d u e to c u tth ro a t c o m p e titio n .
If th e s u rv iv a l ra te im p ro v e s fro m 3 0 % to 4 0 % , th e R O I in c re a s e s fro m 6 4 % to 9 4 % . A t th is le v e l o f p ro fita b ility , th e p re s e n t s h rim p h a tc h e ry o p e ra to rs w ill b e e n c o u ra g e d to c o n s id e r m ilk fis h a s a n a lte rn a tiv e c ro p . T h e b re a k e v e n s u rv iv a l ra te is 9 % . T h e b re a k -e v e n p ric e is P 0 .1 3 /fry .
R eco m m en d atio n s
N B B P s h o u ld c o n c e n tra te o n e g g p ro d u c tio n a n d s e ll th e m ilk fis h e g g s at a s u b s id iz e d p ric e to a ttra c t h a tc h e ry o p e ra to rs , a n d ta p p o te n tia l e x p o rt m a rk e ts fo r fry . (T h e g o v e rn m e n t d e c id e d to p riv a tiz e th e N B B P s ta tio n s . - Ed.)
S E A F D E C /A Q D , o n th e o th e r h an d, sh o u ld p u rs u e re s e a rc h o n : in d u c e d s p a w n in g d u rin g o ff-s e a s o n to ta k e a d v a n ta g e o f h ig h e r p ric e s a n d o p tim iz e h a tc h e ry u tiliz a tio n ; im p ro v e m e n t o f p ro d u c tio n e ffic ie n c y ra te s (e g g a n d fry s u r
v iv a l a n d e g g h a tc h in g ra te , h ig h e r s to c k in g d e n s itie s ); a n d re d u c tio n o f th e n u m b e r o f ta n k s to re d u c e in v e s tm e n t in life -s u p p o rt fa c ilitie s .
S o u rce : R A g b a ya n i, N Lopez, R Tum aliuan, and G B erjam in. 1991. E co n o m ic a n a lysis o f an in te g ra te d m ilkfish b ro o d s to c k a n d h a tch e ry o p e ra tio n as a p u b lic e n terprise. A q u a c u ltu re 9 9 :2 3 5 -2 4 8 . Table 3. Cash flow projection for an integrated milkfish broodstock and hatchery project
Y e a r 1 Y e a r 2 Y ear 3 Y e a r 4 Y e a r 5 Y e a r 6
C a sh o u tflo w 1
B ro o d sto ck 2 0 8 2 6 4 172 389 2 8 2 011 3 7 8 3 7 7 4 5 7 80 4 718 661
H a tch e ry 0 0 0 8 67 0 2 5 4 1 0 1 1 6 1 8 6 12 853 459
T o ta l 2 0 8 2 6 4 172 38 9 28 2 011 9 04 8 631 10 5 7 3 989 13 572 120
R e ve n u e 0 0 0 0 2 199 6 54 4 811 744
N e t ca sh flo w (208 264) (172 389) (282 011) (9 048 631) (8 3 74 335) (8 760 376)
Y e a r 7 Y e a r 8 Y ear 9 Y ear 10 Y e a r 11 Y ear 12
C a sh o u tflo w 1
B ro o d sto ck 80 8 246 83 2 31 3 9 7 7 823 9 90 823 1 2 3 3 038 1 2 07 765
H a tch e ry 15 8 7 2 259 9 4 9 4 49 4 9 788 120 10 3 1 6 31 9 11 7 9 4 723 11 5 26 545 T otal 16 6 8 0 5 06 10 32 6 807 10 765 943 11 3 0 6 593 13 0 2 7 761 12 73 4 310
R e ve n u e 7 881 636 11 4 5 8 686 12 92 2 8 52 14 5 0 4 78 7 16 2 1 2 609 18 0 5 4 951 N e t ca sh flo w (8 798 870) (1 131 897) (2 156 909) (3 198 194) (3 1 84 848) (5 320 640)
Y e a r 13 Y e a r 14 Y e a r 15
C a sh o u tflo w 1
B ro o d s to c k 1 3 3 3 964 1 4 2 9 41 3 1 571 518
H a tch e ry 12 66 9 615 13 881 656 1 98 2 63 3
T o ta l 14 0 03 579 15 311 169 3 5 5 4 151
R e ve n u e 2 0 0 40 995 2 2 180 5 0 7 2 4 4 8 3 867 N e t ca sh flo w 6 0 3 7 41 6 6 86 9 3 38 2 0 9 29 716
1C a p ita l o u tla y and o p e ra tin g e xp enses.
12 Aqua Farm News XI (2) March-April 1993
