1. INTRODUCTION

This report is based on the findings of an Aquaculture Mission¹, organized by the FAO/UNDP Aquaculture Development and Coordination Programme (ADCP). It visited India from 14 November to 6 December 1977. The Mission worked closely with the Fisheries Division, Department of Agriculture, Ministry of Agriculture and Irrigation, Government of India (GOI), and the State Fisheries Departments of Punjab, West Bengal, Tamil Nadu, Maharashtra and Gujarat. Liaison was maintained with the offices of the FAO Country Representative and the UNDP Resident Representative in New Delhi.

The Mission reviewed the fish farming development plans of the states visited, observed a number of selected fish seed and fish production farms in each state and held discussions on various problems in respect of fish farm development and management with fish farmers, aquaculturists and government officials concerned at various levels. The principal findings of the Mission were conveyed to the Government and are elaborated in this report.

At an FAO-sponsored workshop on aquaculture development planning, held in Bangkok in October 1975, the staff of ADCP had the opportunity to fully discuss the various problems concerning aquaculture development with the Indian participants consisting of a senior planning officer and an aquaculturist. On the basis of a review of the aquaculture situation in India, ADCP prepared a project idea² on the investment possibilities for fish seed production and discussed it with senior officials of the Fisheries Division in New Delhi. They expressed keen interest in the project and requested assistance from ADCP to make the necessary field studies and formulate a project proposal for financing.

Fish seed is one of the essential inputs for fish farm production; the viability of an investment project of this nature would be determined largely by the demand for fish seed for the expansion of fish farming in the country. Therefore a brief review of the technical and economic feasibility of the country's on-going expanded fish farm production programme is essential. Furthermore, the Mission felt that for a balanced growth of the fish farming industry, fish seed production must keep pace with the expansion of fish farming.

Owing to time limitations, the Mission was able to visit only five states as mentioned above. Many states in which freshwater fish farming has long been well established and/or fish seed production has recently been rapidly improved were not included in the Mission's itinerary. The views and opinions expressed in this report are drawn from the basic information obtained from the states visited by the Mission, and it is recognized that these may not apply equally well to all states in the country.

2. BACKGROUND

2.1 General

In 1976, fish production in India amounted to 2.4 million tons; this contributed about 1 percent to the agricultural Gross Domestic Product (GDP). The gross value of fisheries output was U.S.$ 462 million in 1974/75. Inland fisheries and fish farming produced about 0.75 million tons, constituting approximately 30 percent of the total fish production.

¹ The Mission members were: Messrs. Y.A. Tang (Aquaculturist), E. Ruckes (economist) and J. Kövári (Fish Farm Engineer). Mr. Tang also joined the World Bank Inland Fisheries Subsector Mission from 16 January to 9 February 1978

² The Government of India circulated the FAO/ADCP draft project idea on fish seed production and distribution to the State Governments concerned and their responses are summarized in Table 6 (see page 12)

Of the total production of inland fisheries, about 28 percent, or 220 thousand tons, is Indian major carp (see Table 1), which consists of three major species: catla, rohu and mrigal. The fish species used for freshwater farming are Indian major carps and their total production is estimated to be about 120 thousand tons, which is approximately 16 percent of the inland fisheries production.

Table 1

Inland Waters Catch by Types and Groups of Fish, 1976

('000 tons)

¹ Regions are divided according to major river drainages and general geographic conditions

Source: GOI and State Fisheries Departments

It should be noted that the distinction between inland water fishing and fish farming in India is by no means clear-cut. The raising of fish in small village ponds is considered as a type of inland fisheries activity and, in addition, the catches by fishermen from lakes and large reservoirs are often regarded in part as a result of fish culture, because those water bodies were stocked with major carp seeds, even if in a nominal number. In order to avoid confusion between inland water fishing and fish farming in this report, fish stocking in large natural water bodies is considered as a means of lake and reservoir fisheries management with the aim of increasing the fishermen's catch by stock recruitment and this activity is a type of public service for the benefit of fishermen. It is, therefore, clear that the involvement of fish culture in lake and reservoir fisheries management is limited to fish seed production.

2.2 Freshwater Fish Farming

Farming of major Indian carps in the Lower Ganges Basin has been carried out for generations. This stems from a number of reasons, such as: (i) the availability of fish seeds; (ii) the inhabitants' specific preference for carps; (iii) suitability of soils, water and climate for fish farm development and (iv) the peoples' willingness to invest in, and their ability to manage, fish farms.

During the past decade the production from inland fisheries has increased at an average annual rate of about 6.4 percent, which is slightly over the growth rate for the marine sector in the same period. Conceivably, fish farming contributed substantially to this high rate of increase.

Indian scientists have recently demonstrated the potential of intensified fish farm production by the adoption of the principles of polyculture, and this achievement has focussed great attention on fish farming development. This is particularly true for those states where areas of village ponds and small irrigation ponds/reservoirs are extensive, such as West Bengal, Bihar, Uttar Pradesh, Madhya Pradesh, Karnataka, etc.

2.2.1 Demand of Quality Fish Seed

Fish seed collected from rivers and other natural water bodies is mixed with wild fish seed and is unsuitable for stocking the ponds under the polyculture system, because of difficulties in manipulating the fish populations required in this intensive farming method.

Through application of hypophysation techniques, modern fish seed farms could produce better quality fish seed of selected species and varieties, desired size-groups in specific supply period, as required by specific fish population management practices adopted by fish farmers. The techniques of carp hypophysation have been developed for almost two decades in India, and an appreciable number of technicians, specialized in this field, has been trained adequately. Therefore, a technological basis for a carp seed industry has already been founded.

At present there are a total of about 120 state-owned fish seed farms with an aggregate of 500 ha. Carp seed production from these farms amounts to 250 million annually (see Annex 2, Table 1). The great majority of the seeds produced by these state-owned farms, however, is used for stock recruitement in lakes and reservoirs fisheries management programmes. There has been a serious lack in supply of quality fish seeds demanded by private fish farms.

2.2.2 Demand and Consumption of Fish

Surveys have shown that 88 percent of the households in Calcutta, 59 percent in Bangalore and 45 percent in New Delhi consume fish. The fish consumption per caput per year in these cities is respectively 12.1, 9.1 and 6.5 kg, which is much higher than the national average of 3.4 kg. The proportion of the population that chooses a vegetarian diet is at present about 30 percent, but surveys indicate that this percentage is rapidly declining due, mainly, to the changing food habits of the younger generations.

Fish requirements for India have been estimated on the basis of a nutritional standard of 11 kg per caput per year, which will require an increase of 160 percent of the present level of consumption. Average demand for all fish has increased by about 6.1 percent annually in recent years. It is estimated that if carp production increases at a rate doubling that of the present annual inland fisheries growth (6.4 percent), demand will keep pace, with little if any change in relative price. This estimate is based on the following two observations: (i) the large carps are highly valued species and larger quantities can certainly be sold - if necessary - at slightly lower prices, and (ii) carps are produced at many inland locations, closer to consumption centres, and marketing costs will be lower than average.

2.2.3 Pond Ownership and Tenure System

The Inland Fisheries Technical Committee, which was set up by the Central Board of Fisheries in 1972, has intensively reviewed the inland fisheries and aquaculture sector and concluded that the predominant public ownership of the ponds is one the major problems causing set-back in fish farming development. A solution for this, as suggested by the Committee, would be to set up a field mechanism to coordinate the various existing agencies, and at the same time, among other things, to facilitate the leasing of these ponds on a long-term basis from the government departments to the private sector for optimum fish production. On the basis of this suggestion, a central scheme of development, the “Fish Farmers Development Agency” (FFDA) was created in 1974. This scheme was carried out successfully in a limited number of districts and is now spreading rapidly, particularly in the regions where large areas of cultivated water bodies are available. It is expected that the FFDAs will play an important role in solving the problems of land tenure, financing, and, to some extent, training and extension required for fish farming development.

3. THE GOVERNMENTS' FISH FARMING DEVELOPMENT PROGRAMMES

The Government of India has adopted a policy of integrated approach with regard to fish farming development. This approach emphasizes fish production, creation of employment and rural development. A central scheme for FFDA's development (see page 4) is the principal activity of the Government of India in its fish farming development programme.

A review of the state governments' fish farming development programmes under the Fifth National Development Plan (1978/79 – 1983/84) indicates that the establishment of large numbers of FFDA in districts with concentrations of small ponds, is one of the major development activities.

The establishment of farms on a wider scale to increase fish seed production, either to support the increased FFDA operation and/or maintain the lake and reservoir fisheries, is a major aspect of the states' programmes with regard to fish farming development. The latter is especially true for those states whose Fisheries Departments are responsible for the management of a large number of lakes and large reservoirs, such as Tamil Nadu, Madhya Pradesh, Rajasthan, etc.

4. THE PROPOSED PROJECT

4.1 General

The main objective of the project is to assist the Government of India in its effort to develop freshwater fish farming to increase table-fish production, creating employment and developing rural economy. The project would provide assistance to 54 districts in six states to improve the production and distribution of quality fish seed and rehabilitate and improve the village ponds and small irrigation ponds/reservoirs for optimum fish production. The project includes the following states: Uttar Pradesh, Bihar, West Bengal, Orissa, Madhya Pradesh and Karnataka.

The selection of the districts and states was mainly based on: (i) physiographical distribution of small pond areas, (ii) coverage of FFDA sanction, and (iii) market outlets for major carps. It appeared that West Bengal is a centre of freshwater fish farming industry, and, at the same time, a consumption centre of carps. Karnataka is a typical peninsular state abundant in small irrigation ponds/reservoirs, and it possesses great potential for fish farming expansion.

The project would:

• establish 43 fish seed farms of three model sizes: 25 ha, 10 ha and 3 ha, having capacities for producing annually 30 million, 12 million and 2,5 million carp seed respectively, of high quality;

• rehabilitate and improve 130 000 ha of small village ponds in 45 selected districts in Uttar Pradesh, Bihar, Orissa and Madhya Pradesh for optimum fish production;

• improve 48 000 ha of small irrigation reservoirs in Karnataka for fish farming;

• provide equipment and facilities to the State Fisheries Departments and FFDA for strengthening of their field extension service activities;

• provide technical assistance for the development of fish seed production.

4.2 Detailed Features

The project would finance the construction of 43 fish seed farms in six states to produce annually 484 million Asiatic carp seeds of high quality. Table 2 (see page 6) summarizes information on the proposed fish seed farms and production targets.

Table 2

Summary of Proposed Fish Seed Farms and Their Annual Production

The size of the fish seed farms would vary greatly, depending upon the availability of land and water and on the requirements of fish seed in the area. There is a considerable difference in investment cost for 25-ha models and 3-ha ones. The larger the farm size, the lower the investment cost per unit of farm area. The construction costs for a 25-ha model fish seed farm would be about I.Rs. 1.5 million; for a 10-ha model approximately I.Rs. 0.8 million, and for a 3-ha model I.Rs. 0.45 million, with an average of about I.Rs. 70 500 per ha (U.S.$ 8 800). Figures 1–15 show the recommended designs and Annex 5 the estimated costs.

4.2.1 Rehabilitated Fish Ponds

Of the 429 000 ha of small fish ponds in the project states, 130 000 ha (less than 30 percent of the total) would be selected as project ponds. It is estimated that with adequate supply of quality fish seed, about 67 000 ha, or approximately 50 percent of the project ponds area would be rehabilitated to yield about 600 kg/ha/year (type A), which is an average of the nation's fish pond production. In addition, with appropriate investment in farm improvement at about I.Rs. 3 600 per ha, 37 000 ha, or approximately one third of the project ponds area, would be rehabilitated to give a yield of about 1 000 kg/ha/year (type B). Annex 5 describes the details of fish pond improvement.

Table 3

Rehabilitated and Improved Fish Ponds - Proposed Project Area

(in '000 ha)

Improved Small Irrigation Reservoirs in Karnataka

(in '000 ha)

4.2.2 Improved Fish Ponds

Of about 40 000 ha of operational ponds in the project area (excluding West Bengal), 26 000 ha are expected to raise the annual yield from the present level of 600 kg/ha to 1 500 kg/ha by improving the physical facilities of the farm and thereby making the intensification of pond production easier (type C). Unlike those of rehabilitated ponds, the operators of the existing fish ponds have usually demonstrated pond-operating experience and skill. The investment cost per ha for improvement of fish farms is estimated to be about I.Rs. 5 000. Annex 5 describes the details of fish pond improvement.

4.2.3 Improved Small Irrigation Reservoirs

The project would initiate financing the expansion of fish farming in improved small irrigation reservoirs. There are an estimated 228 000 small irrigation reservoirs with a total area of 272 000 ha in Karnataka. The size of the reservoirs ranges from 5 ha to 100 ha, the great majority being 10 ha. The proposed project area for improved small irrigation reservoirs covers two districts with a total of 48 000 ha. The investment cost for farm improvement for 75-ha, 25-ha and 10-ha models would be respectively I.Rs. 500, I.Rs. 1 000 and I.Rs. 1 800 per ha. See Annex 5 for the details of this type of improvement.

4.2.4 Strengthening of Extension

Fish farming extension services for the public sector require strengthening of their organization and operation, particularly in the areas covered by FFDA. Fisheries Departments, in cooperation with the Central Institute of Fisheries Education, and possibly FAO, should accelerate the development of an efficient field extension network. Details of proposals, including major activities of extension and cost estimates, are given in Annex 4.

4.2.5 Technical Assistance in the Development of Fish Seed Production

Technical assistance would be limited. The services of consultants would be provided to help the managers of the newly-established fish seed farms in designing farm management programmes on a commercial basis (see Annex 4).

4.3 Cost Estimate

The estimated costs for the different project components are summarized in Table 4.

Table 4

Summary of Project Costs

¹ Approximately 40 percent of the establishment cost will be used for the construction of infrastructural facilities which will include access roads, electricity supply, and employees' residences

4.4 Proposed Financing

The proposed financing from different sources is summarized in Table 5.

Table 5

Proposed Financing

(in thousands of U.S.$)

¹ Incremental working capital cost

² Of the project investment cost under sub-project components 2, 3 and 4, the project participants' (private sector) contribution will be 25 percent, and the sub-loan, 75 percent, of which the international or regional financial institutions cover 50 percent

³ Land cost

5. ORGANIZATION AND MANAGEMENT

The newly-created modern fish seed farms would be run and managed by a State Fisheries Seed Corporation (SFSC). This organization would be established under the Companies Act, 1956. The SFSC capital would be subscribed by the State Governments, and FFDA.

Each SFSC would be managed by a Board. The members of the Board would include: (i) the State Government; (ii) the participating bank; and (iii) FFDA. The Board would be chaired by the State Agriculture Production Commissioner/Secretary. The Managing Director, fully responsible for the day-to-day operation, would be appointed by the State Government, on the recommendation of the Board.

The SFSC would be run on a commercial basis in accordance with policies set up by the Board and organized in the following three divisions under the Managing Director:

Production - care of broodstock, induced spawning, egg hatching, seed nursing, seed grading and quality control

Marketing - demand assessment, liaison with field extension workers from the State Fisheries Departments and FFDAs, and over-all responsibility for fish seed distribution and shipment

Accounting - financing, accounting and audit.

The credit for fish pond rehabilitation and improvement would be channelled through the Agriculture Refinancing and Development Cooperation (ARDC). The participating commercial banks would be selected by the ARDC, in consultation with the borrowers. The lending terms and conditions would be negotiated and arranged. The margins should be reasonable in relation to the risks involved and the need of appraisal and supervision of individual loans.

The ARDC would organize a team of experts to deal with the lending arrangements for fish farm rehabilitation and improvement, and this team of experts should work closely with the field extension workers from the Fishery Department and maintain liaison with FFDA and SFSC.

6. BENEFITS AND JUSTIFICATION

6.1 Financial Viability

Cash flow projections and financial return of each sub-project components are given in Annex 5.

6.1.1 Fish Seed Farm

The financial return on investment in large fish seed farm development is estimated to be above 50 percent, and even on investment in small farm development of about 3 ha, it is estimated to be 10 percent. These estimates are based on the average technology level in West Bengal and Gujarat (see Annex 2, Table 2 and 3).

6.1.2 Rehabilitated and Improved Fish Ponds and Small Irrigation Reservoirs

The estimated financial return on investment in rehabilitated and improved fish ponds and small irrigation reservoirs, either with or without a fixed cost on farm improvement, is above 50 percent. The projected prices for carp are about 20 percent lower than those now prevailing and this projection indicates the scope for lowering prices to increase carp consumption.

The viability of the project will depend largely on the supply of quality fish seed at reasonable cost, fish seed being a key factor for the improvement of farm production.

6.2 Economic Benefits

6.2.1 Quality Fish Seed Production

A total of 480 million Asiatic carp seeds of high quality will be produced annually when the proposed fish seed farms are in full operation. These seeds will be exclusively used for the rehabilitated and improved fish ponds and small irrigation reservoirs under FFDA operation.

6.2.2 Incremental Fish Production

An incremental fish production of about 140 000 tons annually would be rehabilitated and improved fish ponds and small irrigation reservoirs when their rehabilitation and improvement are completed under the project.

6.2.3 Employment Effect

The project would create about 15 500 new jobs directly required for the sub-projects. Practically all these jobs would be filled by those in the rural, landless group. In addition, the marketing of the project production is expected to create about 700 000 man-days of employment per year and the construction of the fish seed farms and the rehabilitation and improvement of fish ponds and small irrigation reservoirs would require about 30 million man-days of rural labour.

Table 6

Preliminary Responses of State Governments to the Government of India on the Draft Project Idea of Fish Seed Production and Distribution proposed by ADCP