1. Purpose of analysis
Small-holder shrimp culture can be carried out in a number of different manners: size of holding, type of feed, source of post-larvae, use of fertilizer, frequency and densities of stocking, species of shrimp cultured, can all vary. The choice of any particular enterprise, or form of culture, in preference to any other, will be determined by the physical environment and by the economic situation of the entrepreneur. These differ from place to place. Therefore, no one type of small-holder shrimp culture will be optimal in all parts of Sri Lanka. This annex analyses the implications of a few of these alternative ways of organizing small-holder shrimp culture.
The analysis will attempt a number of things. First, it will aim to establish whether or not, under existing market conditions (for shrimp and inputs needed for the culture) and economic policies pursued by the Government, culture of shrimp can become economically viable for the typical small-holder. Second, it should identify the factors that are the most important in determining the result. Third the analysis is should provide information which will be useful in assessing the extent to which shrimp culture could help the Government to reach its goals: employment generation, production of fish for local consumption, improvement of the foreign exchange balance, etc.
2. Shrimp farms for small-holders
In this annex one and the same farm layout is assumed for the types of culture that will be analysed. Only the size will change. The farm consists of two grow-out ponds, each shaped like a rectangle. The ponds have one dike (the interior) in common. At one end, the interior dike divides and forms a nursery pond with outlets into both grow-out ponds.
In the following, we will appraise three types of shrimp culture in this standard farm:
In each type of culture, we estimate the costs and returns for three farm sizes: 0.5 ha, 1 ha, and 3 ha. The intention in so doing is to get an idea of what might be the suitable size for a family operation.
3. Investments
Table 19.1 shows a detailed statement of the expenditures expected for the construction of shrimp farms of 0.5, 1 and 3 ha, respectively. It is readily apparent that because of the preponderance of dike construction costs in the total, the cost per ha of pond declines rapidly as the size of the pond, and the farm increases. Per unit of pond area, the investments in the 3 ha farm are only about 45 percent of those required for the 0.5 ha farm.
4. Monoculture of P. monodon
Labour requirements are low on the farm, even considering that the shrimp should be fed. A large part of the time the farmer spends working at the farm, he will be maintaining bunds. It is assumed that he will not himself procure the fish needed to feed the shrimp, but will buy them.
Major recurring inputs are post larvae, feed and pumping. For the farmer who has a very small unit (0.5 ha or less), it will probably make sense to spend time on collection of both post larvae and tilapia. For the larger units, it seems likely that the owner/manager will not be able to undertake these activities himself. Farmers will have to pay, in one way or another, for pumping water. The need for working capital depends on the form of culture. The longer the growing period, the more is needed. It would seem prudent for a small farmer to start with no less than 70 percent of his yearly expenditure - plus an imputed value for his own time - if he intends to undertake monoculture.
Table 19.2 shows that for the small farm, depreciation and interest on capital account for close to 50 percent of yearly costs, while for the 3 ha farm these fixed costs account for only about 30 percent. Costs of production are markedly lower for the larger farm, about Cey.Rs. 40 per kg, than for the 0.5 ha farm, where they amount to Cey.Rs. 54 per kg.
Under the management scheme described in “notes to the table”, at the end of the annex, a farm should be able to yield about 800 kg of shrimp per ha per 6 months growing season. If the crop is exclusively P. monodon and consisting of shrimp which fall into the category 22 to 31 per kg, the average price to the farmer at the end of 1980 would have been about Cey.Rs. 88 per kg.
A calculation of the profit, before payment of family labour, shows that it is high: in fact, very high for the 3 ha farm. A calculation of the “implied” salary for family labour (assuming 365 man-days of work in a year) shows that even with the very small farm, the income is high. It is several times that now enjoyed by the majority of fishermen families. The number of man-days of family labour spent in this calculation is assumed to be the same for the small as for the large farm. The return per man day for the larger farm is almost 8 times that for the small farm. The man days spent on the farm will be dictated by the fact that a watchman is needed around the clock, even on small farms, especially towards the end of the growing season. On the larger farm, one person acting as watchman and also maintaining bunds and feeding the shrimp will be fully occupied. In fact the work would have to be done by two persons. On the small farm one man will have relatively little to do, but will need to be on the farm.
5. Mixed culture
In mixed culture, shrimp will not be given any supplemental feed. Instead ponds will be fertilized. This means that the production of shrimps per ha goes down. As fixed costs account for a large share of the costs, net returns are smaller in mixed culture than in monoculture of P. monodon. The value of shrimps is dependent both on species and on size. P. monodon is more valuable in Sri Lanka than P. indicus.
The average size of shrimps at harvest is extremely important in the appraisal. A price, ex pond, of Cey.Rs. 50 per kg, on the average, could be obtained if 75 percent of the harvest is P. indicus (of 40 to 90 per kg) and the remainder of P. monodon (of 22 to 31 per kg). If such a production were achieved, and it seems unlikely, the farms would be viable. However, if 50 percent of the production is smaller than 100 to the kg, and the remainder mostly between 60–100 to the kg, the average revenue may be about Cey.Rs. 10/kg, or even less. In this situation the production is loss-making on all three farms (see Table 19.3).
6. Polyculture (P. monodon and Chanos chanos)
When cultured in combination with milkfish, P. monodon will grow slower than when cultured in isolation. Given that the price of milkfish per kg is low, when compared with the price of shrimps, the net return from this type of culture is lower than from monoculture of P. monodon. This is shown in Table 19.4. Also in polyculture the economics of scale are evident: the larger the farm the lower the production cost per kg of shrimp produced. The viability of units of 1 ha and smaller, as a result, can not be taken for granted.
7. Conclusions
It seems clear that if large numbers of post larvae of P. monodon can be made available, the culture of them could become a major money-earner for small-holders (fishermen or farmers). The economics of culture are such that polyculture with milkfish is only likely to be a marginal activity, or something that is done when not enough shrimp feed or post larvae are available.
Considerable field trials would be needed to investigate the possibilities of mixed cultures. Its viability is very much dependent upon the growth rate of the shrimps and on the species mix. As long as farmers depend on collection of post larvae from the wild, the possibilities for this type of culture will, of course, depend on the species naturally available, or on development of trade in post larvae.
The economics of size are such that there will be a natural tendency to establish farms several hundred hectares in size. The Government will want to carefully consider this issue in view of its policy to distribute work opportunities and income.
Table 19.1
Pond construction and associated investments
| Item | Cey.Rs. per unit | Unit | 0.5 ha | 1 ha | 3 ha | |||
| No.of units | Cey.Rs. | No.of units | Cey.Rs. | No.of units | Cey.Rs. | |||
| Exterior bund | 300 | m | 300 | 90 000 | 450 | 135 000 | 700 | 210 000 |
| Interior bund | 150 | m | 50 | 7 500 | 150 | 22 500 | 310 | 46 500 |
| Land clearing | 3 500 | ha | 0.8 | 2 800 | 1.5 | 5 200 | 4.0 | 14 000 |
| Secondary gates | 10 000 | each | 2 | 20 000 | 2 | 20 000 | 2 | 20 000 |
| Canal (earth) | 25 | m | 100 | 2 500 | 100 | 2 500 | 100 | 2 500 |
| Pump and sump | 1 | 12 000 | 2 | 24 000 | 2 | 24 000 | ||
| Shed | 1 500 | m2 | 10 | 15 000 | 15 | 22 500 | 20 | 30 000 |
| Miscellaneous | % | 10 | 14 000 | 10 | 23 600 | 10 | 37 700 | |
| 164 300 | 260 300 | 397 700 | ||||||
Working capital (monoculture) | 1 | 0.7 | 21 600 | 0.7 | 42 200 | 0.6 | 90 700 | |
| Total investment2 | 185 900 | 302 500 | 485 400 | |||||
1 Total cost of operation (excluding depreciation), and assuming no other sources of revenue
2 Land is assumed to be owned by the small-holder, therefore no cost for purchase of land
Table 19.2
Monoculture of P. monodon: Yearly costs of operation and income
| Item | Unit | Cey.Rs. per unit | 0.5 ha | 1 ha | 3 ha | |||
| No. of units | Cey.Rs. | No. of units | Cey.Rs. | No. of units | Cey.Rs. | |||
| Labour (full time) | man-years | 1 | 1 | 1 | ||||
| Hired labour | man-days | 20 | 100 | 2 000 | ||||
| Feed | kg | 2.50 | 3 600 | 9 000 | 7 200 | 18 000 | 21 600 | 54 000 |
| Seed | unit | 0.10 | 32 000 | 3 200 | 64 000 | 6 400 | 192 000 | 19 200 |
| Pumping - electricity | thousand m3 | 60 | 90 | 5 400 | 180 | 10 800 | 540 | 32 400 |
Pumping - maintenance of pump | 2 000 | 5 000 | 5 000 | |||||
| Miscellaneous | % | 10 | 2 000 | 10 | 4 000 | 10 | 11 100 | |
Total before depreciation and interest | 21 600 | 44 200 | 123 700 | |||||
| Depreciation | 12 200 | 21 300 | 31 200 | |||||
| Interest | % | 10 | 9 200 | 10 | 16 100 | 10 | 29 300 | |
| Total cost | 43 000 | 81 600 | 184 200 | |||||
| Revenue | kg | 75 | 800 | 60 000 | 1 600 | 120 000 | 4 800 | 360 000 |
| Revenue less total cost | 17 600 | 38 400 | 175 800 | |||||
Revenue (less total cost) per man-day (365 days/year) | 47 | 105 | 482 | |||||
Table 19.3
Mixed culture - Yearly costs of operation and income
| Item | Unit | Cey.Rs. per unit | 0.5 ha | 1 ha | 3 ha | |||
| No. of units | Cey.Rs. | No. of units | Cey.Rs. | No. of units | Cey.Rs. | |||
| Full time labour | man-years | 1 | 1 | 1 | ||||
| Hired labour | man-days | 20 | 100 | 2 000 | ||||
| Feed | ||||||||
| Fertilizer | see note | 200 | 400 | 1 100 | ||||
| Seed | each | 0.10 | 16 000 | 1 600 | 32 000 | 3 200 | 96 000 | 9 600 |
| Pumping - electricity | thousand m3 | 60 | 30 | 1 800 | 60 | 3 600 | 180 | 10 800 |
Pumping - maintenance of pumps | 2 000 | 5 000 | 5 000 | |||||
| Miscellaneous | % | 10 | 600 | 10 | 1 200 | 10 | 2 600 | |
Total before depreciation and interest | 6 200 | 13 400 | 31 100 | |||||
| - depreciation | 12 200 | 21 300 | 31 200 | |||||
| - interest | % | 10 | 8 400 | 10 | 14 500 | 10 | 24 100 | |
| Total cost | 26 800 | 49 200 | 86 400 | |||||
| Revenue I | kg | 50 | 720 | 36 000 | 1 440 | 72 000 | 4 320 | 216 000 |
| Revenue I less total cost | 9 200 | 22 800 | 129 600 | |||||
Revenue I (less total cost) per man-day of full-time labour | 25 | 62 | 355 | |||||
| Revenue II | kg | 10 | 720 | 7 200 | 1 440 | 14 400 | 4 320 | 43 200 |
Revenue II less total cost | (19 600) | (34 800) | (43 200) | |||||
Table 19.4
Polyculture (P. monodon and Chanos chanos) yearly costs of operation and income
| Item | Unit | Cey.Rs. per unit | 0.5 ha | 1 ha | 3 ha | ||||
| No. of units | Cey.Rs. | No. of units | Cey.Rs. | No. of units | Cey.Rs. | ||||
| Full time | man-years | 1 | 1 | 1 | |||||
| Hired labour | man-days | 20 | 100 | 2 000 | |||||
| Feed | |||||||||
| Fertilizer | see note | 200 | 400 | 1 100 | |||||
| Seed | - shrimps | each | 0.10 | 34 000 | 3 400 | 68 000 | 6 800 | 204 000 | 20 400 |
| - milkfish | each | 0.60 | 750 | 400 | 1 500 | 900 | 4 500 | 2 700 | |
| Pumping - electricity | thousand m3 | 60 | 30 | 1 800 | 60 | 3 600 | 180 | 10 800 | |
Pumping - maintenance of pumps | 2 000 | 5 000 | 5 000 | ||||||
| Miscellaneous | % | 10 | 800 | 10 | 1 700 | 10 | 4 000 | ||
| Total cost | 29 500 | 54 700 | 103 200 | ||||||
| Revenue - shrimps | kg | 35 | 1 000 | 35 000 | 2 000 | 70 000 | 6 000 | 210 000 | |
| - milkfish | kg | 7 | 400 | 2 800 | 800 | 5 600 | 2 400 | 16 800 | |
| Revenue less total cost | 8 300 | 20 900 | 123 600 | ||||||
Revenue (less total cost) per man-day of full-time labour | 23 | 57 | 337 | ||||||
Data used in Tables 19.1, 19.2, 19.3 and 19.4
1. The exterior dike has a volume of 12 m3/m running. Its length is calculated assuming it forms a rectangle with the sides 200 and 150 m.
2. The interior bund has a volume of 6 m3/m running. The dike divides the rectangle in two halves. At one end of the interior dike a nursery area is created with outlets into both ponds.
3. The volume of material needed for the dikes and the bund is about 10 000 m3 for the 3 ha unit.
4. The 1 and 3 ha units will be provided with a pump capable of delivering 450 gallons per minute, and 1 500 gallons/minute respectively, through a 4 inch pipe. The smaller pump should be driven by a 10 kw electric engine.
5. Labour. The calculations are based on the assumption that most of the activities to be carried out on the farm will be taken care of by family labour. In the case where two men are not enough for a particular job, the work will be done through exchange of jobs between neighbouring shrimp farmers.
6. Pond operations
(a) Monoculture of Penaeus monodon
Stocking of P. monodon post larvae is made at the rate of about 32 000/ha. Initially, the post-larvae will be collected in the wild. As the culture develops, it would be reasonable to assume that these post-larvae will also be available from hatcheries. Present cost of post-larvae (probably including larger individuals) is about Cey.Rs. 1 per 100 in the Batticaloa area. The quantities sold have been small.
(b) Mixed culture
Stocking has been assumed to be at a much lower density that in monoculture. There are two reasons for this: no supplemental feed will be given, and less exchange of water. These two “negative” changes are slightly off-set by the fact that shrimps will not be grown so large. The average shrimp will only be kept in the pond for 3 months. The stocking rate has, thus, been placed at 16 000/ha.
(c) Polyculture
In this culture stocking of shrimps has been projected at 34 000/ha. Milkfish will be stocked at a ratio of 750 fish/ha.
7. Feed
Feed is given only in the case of monoculture. The shrimp will be fed tilapia. Assuming a feeding ratio of 5 percent of body weight, total quantity needed will be of the order of 21.6 t (0.05 × 4 800: 4 × 360 = 21 600). At a price of Cey.Rs. 2.50/kg (if bought), the farmer with a 3 ha farm, will spend about Cey.Rs. 54 000 on feed.
8. Fertilizer
In the “mixed culture” and “polyculture” schemes, fish feed is provided by growing natural food through the application of fertilizer. Water will be changed every two weeks by drawing one half the pond volume and refilling it on two successive days. Fertilizer will be applied immediately after this, at a rate of 12.2 kg of urea/ha and 1.8 kg of triple superphosphate/ha.
9. Pumping
(a) Monoculture of P. monodon. Water depth is 0.5 m in ponds (which gives 15 000 m3 of water in a 3 ha unit) and a need to replace 10 percent of the water per day. This means a daily replacement of 1 500 m3. This will take care also of the water lost through evaporation (some 50 m3/ha/day). If pumping is to be carried out during daylight hours, the capacity of pumps should be about 2 500 1/min for 10 hours (1 500 000:600). If an electrically driven motor (15 KWA) were used, the cost would come to about Cey.Rs. 90/day or Cey.Rs. 32 400/year (15 KWA × 10 hours × Cey.Rs. 0.60/kWH). It is possible that a diesel powered pump would cost less to run. However, experiences with diesel engines in the minor irrigation programmes argue against their use.
(b) Mixed culture and polyculture. Every 15 days, half the quantity of water will be let out of each pond, which will then be refilled during two successive days. The volume let out per year is (7 500 × 24 = 180 000 m3), for a 3 ha farm.
10. Depreciation
It has been argued that ponds should not be depreciated. The Mission does not agree with this approach. The person who has spent his money on pond construction would like to see that money come back, especially as it is not easy to sell a pond; either the land would have to be sold or it would have to be leased. Thus, from the point of view of the man who constructs a pond, it would seem reasonable to include an amount for depreciation amongst the costs. The ponds are written off over a 50 year period in equal amounts. The pump is depreciated over a 4 year period, also in equal amounts. Miscellaneous investments are depreciated over 6 years.
11. Interest
The interest rate used, 10 percent per year, may appear low by comparison with the interest rates now in force in Sri Lanka. However, it is high considering that the analysis treats inflation by ignoring it, or rather by assuming that inflation will affect all prices uniformly. The analysis given in Tables 19.2, 19.3 and 19.4 should represent an “average” year. Therefore, the interest charge is applied to only half the depreciable assets, plus working capital.
