CHAPTER III
ANALYSIS OF PROBLEMS AND CONSTRAINTS

3.1 Introduction

From the outset, it should be stressed that this study was intended not so much as an evaluation of the Sungai Merbok Cage Culture Project, but rather as a review on the progress and performance of the project since implementation. In this context, it was decided to examine some of the major constraints and problems affecting the Project's progress and performance. Such study was thought useful not only in terms of analyzing the constraints affecting the Project but also because the implications derived from the study could provide early signals on problems areas that require immediate remedial solutions by the LKIM management.

3.2 Problems and Constraints

The more important constraints/problems which deserve elaborate discussions could be, at the risk of oversimplification, classified into socio-economics, physical, technological and management, institutional and financial aspects. It should be recognized, however, that such classification in the actual situation may not be as clearcut as it appears to be since there are bound to be some overlappings and interrelations of problems and constraints.

3.2.1 Socio-Economic Problems and Constraints

Participants' Characteristics

Since the participants originate form different social and economic backgrounds, it is inevitable that there will be differences in their behaviourial characteristics, attitudes and values. It is interesting to study these characteristics as they have important bearings on the participants' performance and progress.

From informal discussions with the Project Staff and Group Leaders, it was revealed that, from amongst the participants, there were a few “bad hats” characterised by negative attributes such as non-cooperative, antiestablishment and general lack of interest. This group of participants tends to stay away from the Project Staff, hence denying them of advice, assistance and inputs from the management. the Project Staff, on the other hand, because of minimal contact and interaction with this group, tend to devote more time and attention to participants who are relatively more productive, responsive and cooperative. Such unfortunate circumstances only breed discontentment, resentment and distrust amongst the “anti-establishment” group, hence further aggravating their strained relationship with the management.

Human Relationships

Another setback of the Project which is closely related to the above problem concerns participant-management relationships. From fieldwork observations as well as from informal discussions with participants and staff, it is apparent that there is a lack of rapport, goodwill and understanding between the two parties. Inability to communicate and relate with the participants has created misunderstanding among the participants. It is essential on the part of the Project Staff to appreciate the values, characteristics and customs of the participants' community. On the other hand, the participants were also not entirely faultless since they did not give their maximum cooperation to the Manager. Instructions and technical advice given by the Manager were often misconstrued as orders and commands, resulting in the participants' unwillingness to conform and obey instructions and advice pertaining to efficient cage culture husbandry and practices. In this connection, there must be a deliberate effort aimed at fostering closed management-participant relationship which has been easily taken for granted all this while.

Besides adverse management-participants relationship, another issue of grave concern is the inter-participant relationship. It is very obvious from the field surveys that there seems to be minimal interaction and communication between individual participants in matters that could enhance their performance in the cage culture operations. For example, the survey results indicate that only 18% of the participants admitted that they have had some interaction with their colleagues and team leaders in terms of seeking advice, consultation and assistance for their cage culture operations. This only goes on to show that team or communal spirit and effort, which has been distinctly associated with rural communities, is seriously lacking amongst the Project's participants. Seriously lacking too is initiativeness and self-reliance among the participants, thus making them increasingly dependent on the Project Management whether for supply of production inputs, marketing of the fish or financing. Such “dependency syndrome” would only serve to negate any effort aimed at making the Project self-supporting and sustaining, thereby deviating from the ultimate goal of autonomous and self-reliant development envisaged for the Project.

Finally, the relationship between the Project's participants and the fishing communities in Sungai Merbok is also noteworthy in this section. Relationship between the participants and the fishing communities at large seems far from cordial. This is not surprising because those who had not been selected resent the fact that only a privileged few, representing only about 5% of total fishermen in the Sungai Merbok and Tanjung Dawai areas, are benefiting from the Project in terms of being accessible to government's assistance such as free cages, subsidies and, credit facilities, while the remaining 95% had been left out. This is further aggravated by the fact that while the quality of life of the participants has somewhat improved owing to the new housing and basic amenities available in the resettlement area, the living conditions of the non-participant fishermen still remain deplorable and unsatisfactory, thereby resulting in a wide disparity in the standard of living between participants and non-participant fishermen in the area.

At the surface, it appears that a cordial relationship exists between the participants and non-participants. However, on further investigation, it was revealed that certain quarters among the non-participant fishermen are very hostile and antagonistic towards the participants. Some, it was alleged, even resort to actions that could jeopardise the cage culture operations. Such hostility could have been easily avoided had there been a more cordial and understanding relationship between participant and non-participant fishermen.

Selection of Participants

The above discussion on relationship between participants and the fishing communities at large brings into focus one pertinent issue i.e. concerning the selection of participants. Even though there were specific selection procedures, criteria and merit system, it is clear from the field survey that this could not be strictly adhered to due to political intrusion. It is without doubt that heavy weightage and consideration were given to applicants with strong political connection and who are closely aligned with certain political factions. As a result, unqualified (in terms of LKIM's selection criteria) and non-deserving applicants were selected at the expense of more deserving genuine fishermen. This is evident from the fact that out of the existing 100 participants, about 20% were non-fishermen. Such political intrusion in the selection process should not be allowed so that the intended beneficiaries would have equal opportunities to participate in the Project regardless of their political belief and affiliation.

That the selection procedure based on merit system was not strictly adhered to can also be seen from the age profile of existing participatns. Although a maximum age limit of 50 years was stipulated, it is evident from the survey results that about 30% of the participants are older than 50 years. Perhaps, one cannot deny the fact that in a heavily-subsidized project such as the Sungai Merbok Project, social and welfare factors are also given due considerations, thereby resulting in old participants, who had exceeded the maximum age limit, being selected for the project. In most instances, unfortunately, these old participants could not carry out the cage culture activities themselves and have to depend on their children and relatives. In some cases, the cage culture operations were not adequately maintained by these participants, while some had even completely abandoned the activities.

Another area of concern, in so far as the participants' discipline is concerned is that some of the participants did not stay in the houses alloted to them in the resettlement scheme even though it is stipulated as a pre-condition for all successful applications. There were also complains that some even rented their houses to outsiders. All this and the lack of discipline in the cage culture husbandry and practices among the participants would only have an adverse effect on the overall progress and performance of the Project.

Indeed, disciplinary actions and penalities should and could be taken against the ill-disciplined and problematic participants because on being selected, they were informed of the rules and regulations that they have to adhere to with regards to good culture practices and the disciplinary actions that could be taken against them if these rules and regulations were violated. However, again because of political intrusion, the rules and regulations could not be properly enforced.

Project Planning and Implementation

A number of pertinent observations can be made of the planning and implementation of the Sungai Merbok Project that might have a significant influence on participants' attitudes and perceptions. The first relates to the economic status of the Project. During the initial implementation phase, the cage culture operations was perceived as a supplementary part-time employment for the fishermen with a monthly income target of about $150 per participant. Based on this target, each participant was given 12 cages to operate. This was the policy of the Project when the first batch of participants were selected. Subsequently, however, there was a change in policy whereby it was directed that the Project should provide full-time employment to the participants. the number of cages to be operated by each participant was accordingly increased from 12 to 16 units while the targetted income from $150 to $450 per month, i.e. above the poverty income.

With the benefit of hindsight, it was realized that this policy change was made without studying its implications. An ad hoc policy change made without proper and systematic planning such as this would only result in implementation difficulties. It is clear that the shift in policy and the higher income target set for the participants impose tremendous pressure and strain on the Project Staff as they themselves had admitted. In their opinions, it is extremely difficult if not impossible to persuade the participants to leave their old jobs in order to concentrate full-time on the cage culture. this is not surprising since the participants are not convinced, and rightly so, that the Project, under the present conditions, can sustain a decent livelihood. Moreover, the Project Staff opinioned that the new income target of $450 per month for each participant was somewhat unrealistic, particularly at the initial stage when the Project is still plagued with numerous implementation problems.

The policy decision to change the status of the cage culture operations from part-time to full-time activity has also created some problems with the participants. A large majority of the participants would not give up their old jobs. As a result, more than three-quarter of the participants treated the cage culture operation as their part-time activity (See Table 8). Similarly, when the participants were asked on the contribution of cage culture to their total household income, nearly 90% responded that income from cage culture accounted for less than a quarter of their household income. In terms of working hours, more than 75% reported that they devoted only between 2 to 3 hours daily on the cage culture activities although it was expected by the management that they should spent a minimum of 5 hours a day.

What is apparent here is a lack of understanding and planning at the decision-making level. In this context, one must appreciate that, in the final analysis, it is the participants who have to bear the risk of change in employment. Given the fact that the Project is relatively new and beset with numerous implementation problems, it is only understandable that the participants are extremely cautious and not very receptive to the change. More importantly, the participants are not very confident that the cage culture operations can sustain a decent livelihood as an alternative employment. In this connection, a preliminary study by the Planning Division of LKIM revealed that the average monthly income of participants for 1983 was dissapointingly low, ranging between $80 to $200. This certainly supports the case for participants' unwillingness to leave their old jobs as this would mean risking their livelihood.

Leadership

Another area of concern is the question of leadership. In the Sungai Merbok context, an informal organizational system was introduced whereby for each group a leader was elected from amongst the participants. The key role of these Group Leaders is to provide the communication link between Management and participants. At the same time, these leader are supposed to provide counselling and advisory assistance in matters relating to the cage culture operations to participants in their respective groups. Unfortunately, such informal leadership system was provened ineffective since the leaders could not command the respect and confidence of the participants in their respective groups. This was admitted by the Group Leaders themselves in informal discussions with the consultants.

On the other hand, the participants claimed that the existing leadership system is ineffective since the Group Leaders are only concerned with their own vested interests and welfare while neglecting that of the participants under their care. Because of their close association and interaction with the Project Staff, the Group Leaders were perceived as having better access to inputs, assistance, etc. and are generally favoured by the Staff vis-a-vis other

participants. Such ill-feelings and rivalry between the Group Leaders and participants are detrimental to the progress and performance of the Project.

3.2.2 Physical Problems and Constraints

Site Problems

Although the present site is generally suitable for cage culture, it tends to be overcongested particularly once the Project becomes fully operationalized. The fact that the cages are located in waterways only serves to aggravate the overcongestion problem. Waves made by passing fishing vessels caused instability to the cages, thus resulting in stress to the fish under cultivation. There are plans to move the Project site to another location near Pulau Sayak where there is a larger span of water bodies for the cages. To put such plan into operation, it is imperative that the approval from State Government has to be obtained. It is well-knwon that this usually involves long bureaucratic process and procedures, resulting in delays in executing the plan. A detailed feasibility study should also be conducted in order to ascertain the general suitability of the areas such as accessibility, size of areas, tidal range, water depth, temperature, current velocity, oxygen content, meteorological factors and pollution outlook.

Another issue related to site problem concerns flooding of the river mouth where the cages are located. During the monsoon season, for example, there is a large influx of fresh water, resulting in flooding. Hence, although the Project site is free from the effects of tropical cyclone or severe winds, the area is nevertheless susceptible to flooding and strong currents. It was reported that on several occasions few cages belonging to the participants were damaged or washed away by strong currents after heavy thunderstorms, resulting in wastage and losses. Strong currents often resulted in violent movement of the cages and makes it difficult to keep the cages in place. This in turn has the effect of causing stress to the fish, thus adversely affecting their stability and growth. Moreover, the large influx and continuous flow of fresh water, particularly during the monsoon season, caused a sudden change in the water salinity which might proved harmful to the fish.

Biological Problems

The biological problems faced by the Sungai Merbok Project include feeding, breeding, predators, pests and diseases. It should be noted, however, that these biological problems are not unique to Sungai Merbok project but common to many cage culture projects throughout the country. Amongst the many biological problems, the most serious problem encountered by the Project is the red boil disease infection caused by a bacterium, Vibro anguillarum. According to a study by Chua and Teng (1977), the red boil disease is common for fishes, grouper in particular, which are reared in cages as their movement is restricted due to space limitation and confinement. Common causes of the red boil disease include physical injury incurred during handling and transportation, feeding, over-crowding and parasite infestation. Unless quick precautions are taken, the disease spreads rather rapidly and the fishes may die within a short period of 3–5 days.

Another common biological problem is predatorship, particularly by the hairy-nosed otters (Lutra sumatrana) which are commonly found near river mouths. The otters not only inflict losses on the fish, particularly the young fingerlings, but also caused damage to the nets, thereby allowing the fish to escape from the cages. Fortunately, however, this problem of predatorship is not very rampant in the Project, while the extent of losses of fish due to predatorship has not been too alarming.

Poaching Problem

While loss of fish due to biological predatorship is not a major area of concern, heavy losses caused by poaching and theft are indeed alarming. Usually operating in the middle of the nights, the poachers' activities were facilitated by three factors; first, the cage site is quite isolated from the participants' houses; secondly, the absence of surveillance and other deterrences (such as fencing and lighting) around the cage areas; and, finally, the fact that the fishes are already in captivity makes the poachers' task easy. When asked about the theft problem, some 23% of the participants reported that they had experienced losses of fish due to theft at one time or the other in 1984. Not easily verified, however is the extent of losses. One participant however, confided to the consultants that in 1984 he lost about 300 fishes valued at $4,000 during one incident.

Although several precautionary measures have been taken to overcome the problems of theft and poaching, none seems to have any lasting effects. For instance, according to the Project's rule participants themselves are required to provide nightly patrols and surveillance around the cage areas on a rotational basis so that there will be two persons on duty for each night. Obviously, such selforganized surveillance was not effective judging from the rampant poaching and theft incidents that are still occuring. There were plans to employ two salaried workers to guard the cage areas at nights. But this idea was totally rejected by LKIM top management since this would only deviate from the goal of self-reliance and self-development stipulated for the Project.

Design and Operation of Floating Cages

An inherent weakness of the existing design of the floating raft and cages, according to some participants, is that it is too low. As a result, part of the wooden structure which is supposed to be afloat is submerged in the water, thereby subjecting it to fast deteriorating and decays. In order to ensure durability of the wooden structures, the Management had requested that it should be painted. However, a casual inspection on the cages by the consultants revealed that only a handful of participants had painted their wooden structures.

Besides the wooden structures, another item which is subjected to rapid deterioration is the floats. At present, styrofoam blocks are used to float the raft; but had been provened undurable and not highly resistant to sea waters. It has been suggested that more durable floats like fibre glass floats should be used instead although it is slightly more costly. The participants are generally not very receptive to this idea because of their financial constraints.

Apart from non-durability of wooden structures and floats, fouling of the net cages is another common problem. Completely submerged under water all the time the net cages which are made of polythene are usually clogged with numerous fouling organisms within a relatively short period of between 2 to 4 weeks. Fouling of the nets has the effect of limiting water circulation and thereby decreasing oxygen content in the cages. Moreover, the barnacles deposited on the nets only tend to accelerate the growth of other marine invertebrates and seaweeds, thus aggravating fouling and deterioration of the nets. To a certain extent, this rapid fouling of the nets can be curbed by frequently cleaning and drying them, preferably once in every 2 to 4 weeks. However, our survey results revealed that nearly 63% of the participants cleaned their nets once in every 1 to 2 months, while 30% reported cleaning their nets once in every 2 to 3 months.

Supply and Handling of Fingerlings

One of the most significant determinants of a successful aquaculture project is the continuous supply of fish seeds of fingerlings either from natural sources or from hatcheries. For the Sungai Merbok Project, the fingerlings are mainly imported from Thailand whose sources of supply are from both natural spawning and nursery grounds as well as from hatcheries. The fingerlings are usually imported through private individuals or companies acting as agents to the suppliers from Thailand. At present, the Project obtains its fingerlings supply from about eight agents. Of these, however, only three are regular and active suppliers who are based in Sungai Petani and Alor Star. A pertinent point to note here is that supply of fingerlings from local sources whether from hatcheries or natural spawning grounds was very negligible if not virtually non-existent.

Because of its overdependence on foreign sources and on relatively few suppliers, the Project is often confronted with not only inadequate but also irregular supplies of fish seed. This is evident from dialogues and informal discussions with both the Project Staff as well as the participants. As a result, some participants were unable to proceed with subsequent production cycle due to inavailability of fish fries. In 1984, for instance, it was reported that about four participants discontinued their cage culture operations altogether because of lack of fries. In these particular cases, however, there were undeniably other contributory factors such as neglected state of the cages, poor maintenance and general lack of interest on the part of the participants.

Another serious problem which merits attention here concerns hanling and transportation of the fingerlings. It is generally observed, however, that the existing method of handling and transporting the fingerling is somewhat crude and inefficient. Usually transported by land, the fingerlings are placed in plastic tanks containing sufficient aerated water. The temperature of the water is carefully controlled because too high a temperature will cause death due to asphyxiation. In terms of mode of transportation, what is currently being practiced is that the plastic tanks containing the fingerlings are usually transported in trucks or vans together with the other loads carried by the vans. Given such crude handling and transportation methods and because of the long journey between the points of origin and destination, it is hardly surprising if some fingerlings died, while others badly injured or bruised. The high mortality rate of the fingerlings during transportation is also caused by lack of oxygen supply in the plastic bags and overexposure to the sun during the journey. This situation is further aggravate by the fact that stocking of these fries takes place immediately on arrival. Ideally, the fingerlings should first be kept in a transitional tank treated with potassium permanganate solution in order to stabilize its condition. Mechanical injury sustained by the fries during handling and transportation has often resulted in high post-stocking mortality rate, understandably much to the annoyance of the participants. The high mortality rates of fingerlings immediately after stocking has caused substantial financial losses to the participants since they still would be charged for the dead fingerlings. As reported by the Project Staff, the mortality rate of fingerlings sometimes was as high as 80%, which is about four times higher than the anticipated rate of 20%.

There were also considerable indignation amongst participants that the fingerlings supplied to them were of inferior quality and does not commensurate with the prices that they had to pay. At present, the price ranges from $1.60/piece for 5 inches fingerlings to $2.20/piece for 7 inches fingerlings in the case of grouper, while for seabass the price ranges are between $1.80/piece for 5 inches fingerlings to $2.50/piece for 7 inches fingerlings. It should be noted however, that these prices are not fixed but may vary from time to time. Given such stiff prices of fingerlings, it is easily understandable why participants demand for higher grades of fingerlings supplied. Furthermore, high post-stocking mortality rate of the fingerlings means that participants would incur substantial losses, thereby undermining their profitability from cage culture operations.

Another sore point with the participants was that the fingerlings usually arrived at the Project after dusk, thus making sorting and inspection extremely difficult in the dark. As alleged by some participants, this was done intentionally by the suppliers so that inferior grade and diseased fingerlings could not be easily detected lest the participants might demand for lower prices or have them substituted. However, according to the Project Staff, such timing of the arrival of the fingerlings could not be avoided because of entry regulation at the Thai border which allows traffic movement of the trucks into Malaysia only at specific mid-morning hours. Hence, this explains why the trucks transporting the fingerlings from Thailand usually arrive at the project by nightfalls.

In summary, it would seem that shortage of fingerlings, mishandling and transportation and high mortality rates are amongst the severe physical constraints that could threaten the success of the Project. Hence, what augurs well for the future of the Project may not be too rosy if these constraints are allowed to prevail and persist. Swift remedial actions therefore have to be taken if the Project is to succeed in achieving its desired goals.

3.2.3 Technological and Management Constraints

Quality of Management or Husbandry Practices

Apart from the daily routines of feeding the fish and the occasional cleaning of the nets, it was generally observed that participants do not undertake more innovative and adequate management practices such as optimum stocking, supplementary artificial feeding, stock manipulation and grading, disease control and prevention, net maintenance and records keeping on stocking, sales, income and expenditure. This general lack of innovative and quality management practices amongst participants can be gleaned from Table 14. Generally, with the exception of regular net maintainance, less than 50% of the participants reported undertaking more innovative activities like conditioning and disinfection of fingerlings, optimum stocking density, stock manipulation and grading, disease control and prevention and keeping records on inputs and outputs of the cage culture operations. Feeding the fish with formulated or prepared feed is almost non-existent.

a) Disinfection and Conditioning of Fingerlings

Disinfection of fingerlings prior to release into cages is essential to remove fungus and parasite, thereby preventing fungal and bacterial infections. Equally essential is the conditioning of fingerlings before releasing them into the cages, particularly after a long journey from its point of origin. Care should also be taken to remove and treat the injured or wounded fish with chemical. Injured fish should be put in separate cages so as to prevent infection to the others. For the Sungai Merbok Project, such prestocking activities, are particularly relevant since the fingerlings are more susceptible to bacterial infections, injuries and stress due to mishandling and long distance transportation.

TABLE 14

CULTURE MANAGEMENT PRACTICES OF PARTICIPANTS

Sadly, however, the above activities were not commonly undertaken by participants either out of sheer ignorance or because they expected the Project Staff to do it for them. In fact, the latter reason was expressed by some participants who generally felt that they had been “overcharged” and therefore expect higher quality fingerlings on delivery. The Project Staff, on the other hand, feels that participants themselves are responsible for such pre-stocking activities to encourage healthy management practices and self-reliance. Meanwhile the net result of all these was that post-stocking mortality rates of the fingerlings were incredibly high, sometimes reaching 80% of total stock. High mortality rates are counterproductive to high productivity and profitability since fingerlings are very costly and accounts for between 60 to 70 percent of total operating expenditures.

b) Stocking Density

To ensure high productivity, optimum stocking will have to be strictly followed. In general, the stocking density varies with site conditions, types of species and size of the fish. The optimum stocking density for estuarine grouper measuring between 6 to 7 inches was estimated at 60 fish per cubic meter (Teng and Chua, 1978). It is important that this optimum rate should be strictly adhered to since overstocking may result in slower growth, lower average fish weight, high conversion ratio and higher mortality due to overcrowdings. At the optimum stocking density, it has been calculated that about 90% of the fish culture would reach marketable size after eight months.

Based on the optimum stocking density of 60 fish per cubic meter, it has been calculated that the optimum stocking density for a 4.0 cubic meter cage currently used by participants would be in the region of 250 – 255 fish per cage. It is very apparent from the survey that such optimum stocking principle was not strictly followed by the participants judging from their inability to response to such question. One would have thought that such matter pertaining to stocking, marketing etc. would be best handled by the Project Staff, particularly during the early phase of project implementation. An informal discussion with the Project Staff, however, revealed that there were some practical constraints which prevent them from practising optimum stocking. One such constraint is the irregularity of fingerling supplies. In other words, the stocking rates are, to a large extent, dictated by the availability of fingerling supplies at the time of stocking. This has often resulted in either overstocking or understocking. To say the least, therefore, stocking as currently practised by participants, is carried out haphazardly and not based upon any strict principles and guidelines.

To illustrate the irregularity of stocking of fingerlings for the Project, Table 15 is presented. What can be implied from Table 15 is that there is a clear shortage of fingerlings in 1984, whereas the reverse was true for 1981 and 1983. Under such unpredictable circumstances, it would be rather difficult if not impossible to plan for any systematic operations of the cage culture like maintaining optimum stocking density of the fish.

c) Stock Manipulation and Grading

This is yet another essential management practice which should be carried out periodically. Fingerlings which are less than 10 cm. long need to be graded every 1 to 2 weeks so that fish of the same size are together, and the fast growth fish separated from the slow growth ones. This is to reduce overcrowdings and cannibalism while allowing the slow growth fish to grow to its normal size. Subsequently, the fingerlings are transferred from the nursery to the grow out cages where they are left to grow normally until they reach maturity.

TABLE 15

STOCKING OF FINGERLINGS, 1981–84

* June to November only.

Source: Sungai Merbok Floating Net Cage Culture Project.

Compared with other activities, stock manipulation and grading appears to be one activity quite commonly practised by participants (See Table 14). However, even though majority of participants undertake this activity, the quality of work leaves much to be desired. With the exception of a few, most of the participants did not carry out grading of the fingerlings fairly frequently, at the most twice for the entire production cycle. This has often resulted in cannibalism which occurs quite frequently amongst estuarine groupers of less than 15 cm. length. The mortality rate due to cannibalism, however, cannot be determined by both participants and Project Staff. Nevertheless, it has been estimated that the mortality rate as a result of cannibalism was between 5 to 6 percent for groupers (Chua and Teng, 1980).

d) Feeding

Since it is in captivity, the fish has to be fed regularly either with natural or prepared feeds. The former is normally in the form of trash fish because it is relatively cheap and readily available. At the present moment, almost all fish farmers use trash fish to feed the fish. For feeding fingerlings, the trash fish is usually chopped first so that it can be easily consumed. Small shrimps such as acetes or mysids are also suitable alternative feeds for the fingerlings. As the fish gets bigger, the feed particles have to increase accordingly.

For the Sungai Merbok Project, only trash fish is used to feed the fish. Feeding is normally carried out once a day, usually between 7 to 8 in the morning. Such feeding pattern, while suitable for seabass, may not be suitable for grouper since studies by Chua and Teng had indicated that the latter requires two feedings daily. For fingerlings, feed is usually given more frequently. there is no fixed or standard feeding rate as the amount varies with the size of fish and stocking rate. A visual inspection of the trash fish feed revealed that the quality used by some participants was not very fresh. Ice was not used to preserve the freshness of the trash fish and to prevent spoilage. Poor quality trash fish used to feed the fish may adversely affect their rate of growth, render them susceptible to disease, and eventually cause mortalities. therefore, quality control is very pertinent when trash fish is used to feed the fish.

With regards to supply of trash fish, there seems to be a general consensus amongst participants that it is not a problem at present. Trash fish can be readily obtained and bought at about $1.00 to $1.20 per kilogram. Sometimes, it is supplied free by friends and relatives operating trawler boats. Be that as it may, the participants should not be too overdependent on trash fish as there is evidence to suggest that, of late, landings of trash fish by trawlers has been on decline. This, perhaps, could be attributed to the banning of trawlers within the 0–5 miles waters and the general reduction in the number of trawlers operating owing to licence limitation. Furthermore, there is a keen competition for the use of trash fish from feedmill industries. All this will have a reducing effect on the supply of trash fish in the country.

e) Disease prevention and treatment

Unlike capture fisheries, fish under cultivation is highly vulnerable to disease because of overcrowded living habitat. the main causes of disease include both biological and non-biological factors; the biological factors are bacteria, viruses and parasites; while the non-biological factors are overcrowding, overstocking, underfeeding, overfeeding and fouling of water. In view of this, any cage culturist should be acquainted with fish disease prevention and treatment.

The survey results indicate that, generally participants do not normally engage in disease prevention activities such as disinfecting the fingerlings; ensuring that water circulating in the cages are clean and free flowing; regular cleaning of th nets to prevent fouling and ensuring only fresh trash fish is used to feed the fish. Fortunately, fish disease is not a serious problem, and so far, there has not been a single major disease outbreak in the Project.

f) Net maintenance

Regular and proper net maintenance includes periodically examining for wear and tear, cleaning of the net walls and replacing the nets when necessary. In a tropical climate like Malaysia, fouling of the net occurs very rapidly and within a short time the cage walls are encrustated with a thick growth of tunicates, algae, barnacles, mussels, etc. This reduces the flow of water through the net which is essential to maintain high oxygen content and to remove metabolic wastes inside the cages. Such an environment will cause respiratory problems and duress to the fish, and may result in slow growth or mortality. Moreover, a heavy accumulation of these particles on the netting walls can cause the net to tear or sink.

Under the above circumstances, the nets must be cleaned regularly to keep them in good condition. The frequency of cleaning depends on the water conditions, fouling rates and mesh size of the nets. The optimum cleaning frequency for nets of different mesh size ranges from weekly for a 0.64 cm. mesh size to monthly for a 3.8 cm. and over mesh size. However, our survey results revealed that participants do not clean their nets as regularly as they should. As indicated earlier, majority of participants admitted cleaning their nets only once in every 1 to 3 months. According to them, one of the reasons for not cleaning the nets regularly was that because of financial constraints, they do not own spare nets which could be used while the existing ones are being hauled up for cleaning. Usually, 3 to 4 days are needed to clean and dry a net before it could be used again. Of course, there are other reasons, though not admitted by the participants, to account for poor net maintenance. These reasons include sheer ignorance and neglect on the part of participants themselves to uphold adequate and proper net maintenance.

Lack of skill, Experience and Training

To majority of the participants, i.e. about 78%, the cage culture operation, is perceived as a mere part-time activity to supplement their household income. As a result, participants do not spend so much time and attention on the cage activities. For instance the survey indicates that about 75% of the participants spent only between 25 to 30 percent of their working hours on cage activities. On average, majority of the participants spent only between 2 to 3 hours daily. One eye-opening revelation of the study was that it is not uncommon for 2 to 3 participants, especially if their cages are neighbouring each other, to pool their efforts and takes turns to attend to the cages. This means that each person has to go to the cages, usually to feed the fish, only once in every 2 or 3 days instead of daily if there were no such pooling of efforts. Sometimes, daily feedings of the fish is left to the wives or adult children of the participants, while other activities pertinent to and efficient management of the cages are completely neglected.

Another factor leading to mediocre and inadequate management practices amongst participants was their lack of technical expertise and experience on what constitutes a sound and efficient culture management. From the survey, it was indicated that about 83% of the participants had no previous experience whatsoever in cage culture. Given this negative attribute, it is not unlikely that out of sheer ignorance participants failed to undertake certain basic but essential activities such as disinfection of fingerlings before releasing into the cages to avoid bacterial infection, stock manipulation and grading to prevent cannibalism and to allow the slow growth fish to grow normally, and optimum stocking to prevent overcrowding. In a fully government-sponsored project such as the Sungai Merbok Project, one would expect that the Management should provide the guidance and assistance to the participants on management aspects. Unfortunately such guidance and assistance could not be provided by the existing management team as they themselves are inadequate in terms of their experience and expertise in cage culture. Moreover, the participant-staff ratio was high, implying that each participant received minimal guidance and attention from the Project Staff.

Finally, lack of orientation and training of participants constitutes yet another factor contributing to the weak and inadequate management practices. For example, the survey revealed that 73 percent of the participants indicated that they had never received any formal training or short-term courses prior to joining the Project. It was reported that, the Project was implemented in such a great haste that there was hardly any time for participants' orientation to familiarize them with the new endeavour that they were about to undertake. Whatever minimal exposures they had with cage culture were obtained through brief glimpses of the newspapers or hearing about it from friends and relatives. In the absence of appropriate orientation and training programmes prior to project implementation, it is not surprising if participants subsequently employ sub-standard or mediocre management practices. Until today, no deliberate programme has been formulated by the project Management to provide “in-service” training for the participants, particularly amongst those who had provened successful.

3.2.4 Institutional Constraints

Marketing

Perhaps, it is not unreasonable to suggest that one of the most serious constraints faced by the Project is marketing. From the field investigations, it is abundantly clear that there are inherent weaknesses in the existing system whereby marketing of fish is solely undertaken by the Project Management.

Because of its limited contact, the Project is dependent upon a relatively few private dealers operating mainly from neighbouring areas and towns. These dealers in turn, either do their own retailing or sell the fish to restaurants or other retailers in nearby towns. Occasionally, one or two dealers from Ipoh, Penang and Kuala Lumpur would also buy fish from the Project. However, such marketing intermediary, i.e. through the large towns dealers, is not very dependable and has become increasingly insignificant of late. What is therefor apparent here is the lack of marketing outlets for the fish produced from the Project, thus reflecting the inefficiency of the existing marketing system in terms of market competition.

As a consequence of limited market outlets and hence limited competition, the prices of fish obtained by participants were adversely affected. This was most evident during festival season such as the recent Chinese New Year. Owing to oversupply but limited buyers, the price of grouper which would normally fetch about $12.00 per kilogram fell to $10.00, while the price of seabass fell from the normal $9.50 per kilogram to $8.00. Such drastic fall in the price

of fish would not have occured had there been sufficient fish dealers or intermediaries. The extent of these problems can be casually gleaned from the participants' response and perception. For example, nearly one-third of the participants interviewed cited low and unstable prices offered for their fish as their main marketing problem, while limited market outlets for their fish was perceived as a major marketing problem by nearly half of the participants.

Another area of concern in as far as pricing is concerned is that once the fish exceeded its marketable size (usually not more than 900 gm.), the price it can fetch falls quite sharply, sometimes by as much as 30 to 35 percent. This indeed is another serious problem confronting the Project since the volume of sales that each dealer can handle is generally small, usually not exceeding 50 fishes per month per dealer. In late 1983, a contractual agreement was made to supply fish regularly to a dealer from Penang at predetermined prices. However, there was no guarantee that this single dealer could absorb the bulk if not all of the fish produced. In fact, it was reported that the quantity required by the dealer, on average, is only in the region of 1,000 fishes monthly whereas the quantity reaching marketable size every month is estimated to be about 5,000 fishes. Even after allowing for the smaller volumes transacted with the other private dealers, it has been estimated that every month about 500 fishes get “oversized”, thereby lowering its market price.

In view of the above problems, repeated attempts had been made by the Project Management to secure additional marketing intermediaries, but to no avail. In this connection, the Project Management had directed that participants should seek their own marketing outlets, but transactions would still have to be done through the Project. Unfortunately, apart from a handfuls who had succeeded in securing their own marketing outlets, the majority of the participants are still dependent upon the Project to market their fish. Some explanatory factor for the limited market outlets include remoteness of the Project site, the distance involved from bigger cities like Ipoh and Kuala Lumpur, and the irregularity and unpredictability of supplies from the Project. Ironically, despite its nearness to Penang with its numerous seafood restaurants and establishments, the Project has not been able to attract fish dealers from this market. Apparently, the fish dealers prefer to buy from private cage operators around Bukit Tambun and Jelutong because of more regular and consistent supplies, competitive prices and familiarity and longstanding relationship with the farm owners.

Credit

Two major areas of concern with regard to credit are the manner in which the credit is disbursed and the repayment performance. In so far as the disbursement of credit is concerned, it is most disturbing to learn that the procedures followed were haphazard and not substantially patterned after any systematic guidelines and principles. A cursory examination of the books and records being used indicated that the accounting and book keeping systems were loosely structured. Moreover, the records were not up-to-date while some were even missing, particularly during the tenureship of the previous Project Manager. Equally disturbing too is the fact that there was a serious lack of supervision and post-approval monitorings from the headquarters office in Kuala Lumpur in the manner the disbursement of the credit was handled.

Another noteworthy finding of the study was that credit repayment performance by the participants was very unsatisfactory. For example, of the total loans of $945,195 extended by the Project to 70 participants for operating funds as of September 31, 1984, the balance outstanding was $765,939, representing 81.0% of the original amount or only 19.0% repayment. In 1983, it was revealed that the balance of loan outstanding was $369,844 representing 77.6% of total loan or only 22.4% repayment (see Table 16). It should be noted that the amount stated here does not include loans for housing and initial capital costs. Although there is already an in-built collection mechanism whereby 25% of gross revenues from sales of fish is automatically deducted from participants as loan repayment, the fact remains that loan repayment rate is alarmingly low. Furthermore, considering that the Project has been in operations since 1981, the low collection rate about three years later is certainly a cause for great concern.

Several factors, real and perceived, can be advanced to account for low repayment performance amongst the participants. From interviews and informal discussions with participants and Project Staff, there emerged four major causes of loan defaults as follows:

1. low and fluctuating incomes from cage culture operations;

2. high operating and maintenance expenditures which tend to undermine profitability;

TABLE 16

CREDIT POSITIONS OF PARTICIPANTS 1983–84 ($)

Source Aquaculture Division, LITM Headquarters, Kuala Lumpur

3. inability to market all the fish harvested due to limited outlets, and

4. discontinuation of the cage culture activities as a result of broken cages and nets, insufficient fingerlings, and other social factors such as old age, ill health, etc.

All the above discussions give rise to some pertinent issues that require serious attention by the planners, particularly with regards to credit repayment performance of participants. It is recognized that such loan default position in the magnitude experienced by the Project is not only counter-productive but could jeopardise the continuity and viability of the Project in the future.

Profit Sharing System

Another major shortcoming of the Project concerns the profit sharing system. Under the present system, a 50% deduction is automatically made from the gross proceeds (sales of fish), and the remaining 50% is equally divided between LKIM (25%) and participants (25%) as loan repayment and income to participants respectively (see Fig. 4). This is a variation over the old profit sharing system whereby the gross proceeds are equally divided into two, with 50% accruing to LKIM as loan repayment and 50% to participants as income. One major weakness of the former system, however, was that there were no compulsory “savings”, so to speak, which could be used as operating funds for the forthcoming production cycles. Therefore, the compulsory deduction was necessary because participants on their own accord would not save for this purpose. It was this main shortcoming of the old profit sharing system that has precipated a change to the present system which was implemented since September 1982.

FIGURE 4

THE SUNGAI MERBOK FLOATING CAGE CULTURE PROJECT PROFIT-SHARING SYSTEM

A. Old System

Gross Stock of Production Income (Process from Sales of Fish)
50% to LKIM Loan repayment or cages		50% to Participants  om cagIncome fre culture operations

B. Existing System

	Gross Stock of production Income (Proceeds from Sales of Fish) less 50% for Operating Capitals (seeds, feeds, maintenance, etc.) = Net Stock of Production Income (50% of Gross Stock)
25% to LKIM Loan repayment for cages		25% to Participants Income from cage culture operations

With the change in the profit sharing system, however, comes unhappiness and dissatisfaction amongst majority of the participants. From their viewpoints, they had been “short-changed” on their income capacity since instead of earning 50% of gross revenues as under the old profit sharing system, participants are now getting only 25%. In some sense, this is true as indicated by the Project's records which shows that the income of participants under the old system was between $350 to $400 per months, but fell drastically to between $80 to $200 when the new profit sharing system was implemented. This difference in income earned by participants can be hypothetically illustrated as follows:

From the above illustration, it is easily understandable why participants are unhappy with the present profit sharing system. In their own perceptions, their income from cage culture had been reduced by half. But what they failed to realize is that, under the existing system, their income had, in actual fact, increased to 75% of gross proceeds; of these, however, 50% had been kept aside as compulsory savings for their operating funds. Another factor which participants failed to see was that under the existing system, the loan repayment to LKIM is only 25% of gross proceeds instead of 50% as under the old system. Be that as it may, participants are still unconvinced since what matters most to them is the amount of cash that they can earn at the end of each crop cycle. this is especially true amongst participants who have no other supplementary source of incomes besides the cage culture operations. Under the present circumstances it was alleged that some participants had resort to selling their fish illegally so as to avoid the substantial deductions made if the fish were sold through the Project. This allegation however, could not be validated due to insufficient evidence. Its validity notwithstanding, such allegations should not be taken lightly by the authority because of its serious implications on the vaibility of the Project.

Extension

From the survey, it was faily evident that extension services rendered to the Project is seriously lacking. In this connection, participants were asked about the frequency of visits by extension officers during the last one year prior to the survey. About 72% indicated that the visits by extension officers ranged between none to rarely. Unlike capture fishing culture fisheries, floating net cage culture in particular, is relatively new. It is pertinent, therefore that intensive extension services should be made available to participants in order to “educate” them on the new culture technology. For example, specific guidance and lessons should be given to them on good husbandry practices such as stocking density, feeding method, control and treatment of disease, net maintenance, conditioning of fingerlings, stock manipulation and grading, ensuring good water circulation to ensure suitable conditions for fish growth.

It is possible that the lack of extension services and facilities for the Project's participants could be attributed to shortage of extension officers. While there is no shortage of trained and experienced extension officers in the capture fisheries, the same is not true for the aquaculture sector. Lack of training funds and facilities for the extension officers and minimal attention given to aquaculture in the past are some possible explanations for the shortage of trained extension officers in aquaculture technology in general and cage culture technology in particular. Moreover, at the time of the survey, it could not be clearly established as to whether LKIM or the Department of Fisheries which is specifically responsible for providing the extension services and facilities to the Project. But what is clear was that both agencies denied responsiblities over the extensions services, thus further aggrevating the problem. Meanwhile, whatever little extension and advisory assistance that participants could avail themselves to were provided by the Project Staff who, unfortunately, lacked the skill and training specific to cage culture technology.

The problem of extension service inadequacy is compounded by the fact that participants themselves are not sufficiently aware of and exposed to good culture husbandry and practices. It was evident from the survey that nearly 68% of the participants neither read aquaculture-related articles in newspapers and magazines nor listen to aquaculture programmes on the radios and televisions. The one effective method of news dissemination appears to be through informal talks and discussion in the coffee shops, mosques and other social meeting places. Be that as it may, the low media exposure among participants, coupled with their low educational level, is indeed a great liability in so far as participants awareness and knowledge in cage culture technology is concerned.

Fishermen's Associations and Cooperatives

The main institution serving as an interest group on behalf of fishermen are the Fishermen's Cooperatives (Syarikat Kerjasama Nelayan). In the Sungai Merbok Project, about 50 percent and 40 percent of the participants are members of the PN and SKN respectively. This high institutional membership amongst participants however, does not necessarily mean that the PN is actively involved in the cage culture activities nor other economic activities that culd serve the interest of its members. From the survey, it appears that the large majority of participants became members in order to gain access to government's assistance, whereas, they claimed, non-membership is often used as a reason for exclusion from these assistance. In other words, institutional membership is perceived merely as a “passport” to gain access to government's programmes such as licences, subsidies and credit, etc.

From informal discussions and dialogues conducted during the survey, there seems to be a general consensus that, apart from the subsidy/credit benefits, institutional membership means very little to the great majority of participants, particularly with regards to their cage culture activities. Many opined that PN's and SKN's have become organizations that are used by a few to advance their own narrow political and economic interests. Furthermore, these organizations, the SKN's in particular, are dominated by the larger and well-to-do fishermen operating large trawlers and purseiners, and it is this group that stand to benefit the most. In short, the impact of the PN's and SKN's as an institution serving the interest of the small and least advantaged fishermen still leave much to be desired.

3.2.5 Financial Constraints

3.2.5.1 Production trends in 1984

Table 17 shows monthly harvest data of grouper and seabass achieved by 60 participants in 1984. The peak of the season for grouper lasted from May to July with the production ranging from 5,200 to 6,300 fish per month. Monthly catches of seabass averaged 184 fishes during January to April as compared to 1,460 from June to December.

Average catch per farmer was 58 fishes per month, comprising 43 groupers and 15 seabass. With regard to the price of fish, grouper fetched the highest price in the third quarter of the year at the average of $8.00/fish (ex-farm price). During the rest of the season, the price ranged from $7.11 to $7.90 per fish. The ex-farm price of seabass reached the peak in April, being $7.6/fish. During the rest of the year, the price fluctuated between M$5.5 and $7.59 per fish. It is clear from Figure 5 that the price trend was correlated with the output of the fish. For example when the production was high from May to July, the price of grouper was $7.3/fish, whereas it went up to $8.00/fish when the production was low (October -December). Similarly, the price of seabass was highest when the production was low (September). In general terms, the monthly catch value for both grouper and seabass varied less than the monthly catch itself.

Table 17 : Production By 60 Participants In 1984

Source : LKIM

FIGURE 5 PRODUCTION TRENDS OF GROUPER AND SEABASS IN 1984

KEY
	AVERAGE MONTHLY VOLUME OF CATCH OF SEABASS (NO. OF FISH)
	AVERAGE MONTHLY VOLUME OF CATCH OF GROUPER (NO. OF FISH)
	AVERAGE MONTHLY VALUE OF CATCH (SEABASS)-$/FISH
	AVERAGE MONTHLY VALUE OF CATCH (GROUPER) $/FISH

3.2.5.2. Costs and returns of the project in 1984

(a) Investment costs

Entry into a cage culture operation does not require a high capital involvement as compared with other types of aquaculture (e.g. pond culture) as well as fishing operations (e.g. trawling). Table 18 indicates that the total investment costs spent for the establishment of a fishermen resettlement project accomodating 100 families at Tanjung Dawai were $1,176,439¹. The major cost item for non-culture component was housing ($725,006 or 62%), acquisition of land ($140,550 or 12%) and project equipment ($23,806 or 2%). On the other hand, the major cost directly related to the acquisition of culture installations were nettings/equipment ($236,599 or 20%), bamboo/sheds ($37,351 or 3%), totalling $273,959 or 23% of the total costs. Average acquisition costs of culture installations were therefore about $4,600 per fish farmer during 1981 – 83. Due to the rapid depreciation of the net and bamboo/sheds, annual depreciation of cage culture facilities is quite high ($68,488).

Current replacement cost for a complete set of cage net (16 cages) is estimated to be in the neighbourhood of $6,000 – 7,000.². The increase in price of bamboo and nettings has resulted in a higher total replacement cost.

¹ Culture installation components cover only 60 families.

² Refer to “A Case Study of Private Cage Culture of Fin Fish in Penang (TCP/MAL/4403 Tchnical Report 4)

Table 18 : Investment Cost and Annual Aquisition For Project Ficilities and Culture Installations

Source : LKIM

(b) Fixed Costs

Table 19 shows the costs and earnings of the project in 1984. Fixed costs include all expenses which are incurred independently of the daily operation of the cage net. These costs include salary/allowance, hired labour, business trip, freight charges, land assessment tax, etc. which amounted to $80,467.98 in 1984. Depereciation is also to be included. Fixed costs thus totalled $155,025.4, representing 20% of the total costs.

(c) Variable Costs

The loss of fish caused by either disease or other reasons amounted to $472,495.05, representing over 60% of the total costs. It should be noted that this alone exceeded the total sales of fish by over $177,000. The major cost was the purchase of fry; i.e. $85,876.00 for grouper and $18,367.80 for sea bass, totalling $104,243.80 which accounted for 13.4% of the total variable costs. Prices of fry of grouper (4–5 inches) ranged from $1.5/fry to $3.0/fry with an average price of $2.8/fry, which depended upon the origin (local fry is cheaper than the imported one) and the season. In the case of sea bass, the price of fry ranged from $1.3/fry to $2.2/fry with an average of $1.65/fry Feed was also significant, amounting to $37,177.60, representing 4.8% of the total costs. Own labour opportunity cost was excluded.

Total revenue of the project in 1984 was $315,294.71, of which $295,151.05 was derived from the sales of fish; $20,034.78 from interest; $108.88 from miscellaneous sources. The Project, thus, made a loss of $463,985.94.

Table 19 : Costs and Earnings of Sungai Merbok Cage Culture Project 1984

Source : Compiled based on various sources on information

Note:
¹ Cost of fry is based on the average price of $2.80/fry for grouperand $1.65/fry for seabass
² Death/loss = opening stock + purchases - sales - closing stock

3.2.5.3 Financial Analysis of Selected Participants

The incomes earned by the participants varied considerably in 1984. Sixty participants were classified into four groups according to the level of income that they earned i.e. excellent (above $400/m), good ($250–400/m), not very good ($100–250/m), worse (less than $100/m). Those who joined the project in 1984 (i.e. 40 families) were excluded.

Table 20 indicates that there was only one fish farmer who belonged to Group I (excellent); 4 fish farmers to Group II (good); 20 to Group III (not very good) and 35 to Group IV (worse).

Attempts have been made to analyze the financial status of representative farmers selected from Group I to Group IV (Table 21). As indicated earlier (refer to Chapter 3, Section 3.2.4), out of the total sales of fish, a 50% is automatically deducted for operating costs of the project. The remaining 50% is equally divided between LKIM (25%) and participants (25%) as loan repayment and income to participants respectively. It is clear from the table that none of those fish farmers in three cases were able to keep the cost below 50% of the total sales. For example, Mr. A of Group I had operating expenses amounting to M$19,322.23 which accounted for over 90% of the total sales. Likewise, operating costs spent by Mr. B of Group II reached $11,265.82 which represented 80% of the total sales. This means that LKIM's deduction (i.e. 50%) was far less than the amount that should have been taken away. In other words, LKIM supplemented the balance between actual operating costs and 50% of total sales. For example, LKIM paid the excessive part of costs amounting to $8,751.86 for Mr. A, $5,878.31 for Mr. B and $4,824.83 for Mr. C.

Table 20 : Performance Of Participants Classified According To The Net Income Reseived In 1984

Source : Compiled based on various sources of information

Table 21 : Comparison of Financial Status Of Three Cases

Source : Compiled based on data collected from the Sungai Merbok project

Table 21 also indicates the fact that the participant with the best performance in terms of net income was not the best in terms of net profit. Net profit ratio (net profit divided by the total sales) of Mr. A was 8.6%, whereas that of Mr. B was 19.5%. As far as economic performance is concerned, Mr. B was superior to Mr. A.

Irrespective of the amounts of costs which they expended, Mr. A received $5,285 per annum as his net income based on the sharing system. Likewise, Mr. B earned $3,502 and Mr. C received $1,533. Since all participants are entitled to receive automatically 25% of total sales, they are careless as to how much they spend for costs. In fact, none of the participants were aware of the financial status of their own business. The present system adopted neither foster entreneurship of the participants nor improve the financial standing of the project. It would only offer opportunities to the participants to exploit LKIM's financial resources.

The average number of man-days which the participant spent at the culture farms is also indicated in Table 21. Mr. A spent 336 days which yielded an income of $15.73 per day, while Mr. B spent 120 days with a daily income of $29.18 and Mr. C 192 days with a daily income of $7.89. From this it appears that Mr. B was more efficient than Mr. A. As far as the 1984 performance is concerned, economic profitability as well as the average return per man-day achieved by Mr. A were not so good as those of Mr. B. However, if his performance is examined for the consecutive three years, he was best in every respect. He achieved the third highest accumulated sales among all participants though he joined the project in 1983 which was two years after the Project was set up.

Table 22 : Frequency Of Altendence To Cage Culture Farms (February - September 1985)