smeda shrimp farming

Pre-Feasibility Study

SHRIMP FARMING

Small and Medium Enterprise Development AuthorityGovernment of Pakistan

www.smeda.org.pk

HEAD OFFICE

6th floor, LDA Plaza, Egerton Road Lahore

Tel: (042) 111-111-456, Fax: (042) 6304926, [email protected]

REGIONAL OFFICE PUNJAB

REGIONAL OFFICE SINDH

REGIONAL OFFICE NWFP

REGIONAL OFFICE BALOCHISTAN

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Tel: (042) 111-111-456Fax: (042) 6304926, 6304927

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Fax: (021) [email protected]

Ground FloorState Life Building

The Mall, Peshawar.Tel: (091) 9213046-47


Bungalow No. 15-AChaman Housing Scheme

Airport Road, Quetta.Tel: (081) 831623, 831702


January, 2007

Pre-Feasibility Study Shrimp Farming

PREF-22/July, 2001/Rev1

2

DISCLAIMER

The purpose and scope of this information memorandum is to introduce the subject

matter and provide a general idea and information on the said area. All the material

included in this document is based on data/information gathered from various

sources and is based on certain assumptions. Although, due care and diligence has

been taken to compile this document, the contained information may vary due to any

change in any of the concerned factors, and the actual results may differ substantially

from the presented information. SMEDA does not assume any liability for any

financial or other loss resulting from this memorandum in consequence of

undertaking this activity. Therefore, the content of this memorandum should not be

relied upon for making any decision, investment or otherwise. The prospective user

of this memorandum is encouraged to carry out his/her own due diligence and gather

any information he/she considers necessary for making an informed decision.

The content of the information memorandum does not bind SMEDA in any legal or

other form.

DOCUMENT CONTROL

Document No. PREF-1

Revision 2

Prepared by SMEDA-Sindh

Approved by Provincial Chief Sindh

Issue Date January, 2007

Issued by Library Officer



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11 IINNTTRROODDUUCCTTIIOONN

11..11 PPrroojjeecctt BBrriieeff

Shrimp farming, the production of marine shrimp in impoundments, ponds and tanks, got rolling in the early 1970s, and, today, over fifty countries export farmed shrimp. In Ecuador, the leading producer in the Western Hemisphere, export revenue range from $500 to $800 million a year; in Thailand, the leader in the Eastern Hemisphere, they have passed the billion-dollar mark. In addition, India, Indonesia, China, Malaysia, Taiwan, Bangladesh and Sri Lanka all produce huge amounts of farmed shrimp. The Philippines, Vietnam and Myanmar (Burma) have shrimp farms, and there are shrimp farms throughout Central and South America. Honduras, Panama and Mexico have big industries, while smaller industries exist in Colombia, Venezuela, Nicaragua, Peru, Belize and Brazil. The shrimp importing nations, the United States, Western Europe and Japan-specialize in high-tech "intensive" shrimp farming, but, thus far, their production has been insignificant.

Shrimp export has a major share of the total seafood export of Pakistan. It is almost 60% of the total fisheries export of the country. The annual catch of the captured shrimp has been constant and we have reached the sustainable limit of shrimping. In order to increase the shrimp exports we have to go into shrimp farming. Farmed/cultured shrimp in Pakistan is non-existent in Pakistan. Our neighbours, India, Bangladesh, Thailand and Iran are active in this area. Farmed shrimp has a major constitution in the seafood exports of these countries. Farmed shrimp contributes more then US $ 1,100 million in the exports of Thailand. Composition data showing shrimp production and its percentage share of the total exports of selected countries is shown below.

11..22 OOppppoorrttuunniittyy RRaattiioonnaallee

The shrimp consumption has increased throughout the world in the recent times and our marine resources are depleting or have remained stagnant due to various environmental factors, which mean that we are losing a greater portion of the market. The local processors have to meet the international orders, which currently they lack due to non-availability of the required species and also due to the unexpected landings.

Thus if there is a consistent supply of the shrimp species then all of the local processors can commit to their buyers and in result the cultured shrimp will have a definite market for it. The controlling factor in shrimp export is the shrimp production and not the markets. Exporters of shrimps are confident that the exports can be enhanced if the production can be increased. Thus, for the shrimp farming we can say that there is a ready market.



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11..33 PPrroojjeecctt CCoosstt

TTaabbllee 11--11:: PPrroojjeecctt CCoosstt

Item Cost (Rs.)Land 970,000Construction 5,725,000Pumps & Piping 6,702,500Aeration fans 1,865,000Furniture and Fixtures 424,000Laboratory Equipment 500,000Office Equipment 52,500Vehicles 2,013,940Fishing Nets 150,000Gen. Sets 1,550,000Electricity Connection 100,000Water Gates 700,000Working Capital 6,028,653Pre-Operating Cost 165,000Total Project Cost 26,946,593

PPrroocceessss FFllooww CChhaarrtt

11..44 BBaassiicc SSyysstteemmss ooff SShhrriimmpp FFaarrmmiinngg

There are two basic systems of shrimp farming:

Open cycle system Closed cycle system

The difference between the two is that, in open system the broodstock is in the form of wild caught shrimp while a closed cycle system operates entirely on captive stock and not on broodstock captured from the wild.



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FFiigguurree 22--11:: PPrroocceessss FFllooww ooff SShhrriimmpp FFaarrmmiinngg

HATCHERY NURSERY

GROW OUT PONDS

ACCLIMATIONTANKS

MARKET

22 IINNDDUUSSTTRRYY SSTTRRUUCCTTUURREE

The inputs required for the farming include the shrimp seed, feed and various chemicals. Since the shrimp farming in Pakistan has not started yet therefore we should emphasize initially on import of all these inputs. However once this industry takes a start then the local production of these inputs might be possible.

33 MMAARRKKEETTIINNGG

TTaabbllee 44--11:: TToottaall MMaarrkkeett SSiizzee aanndd PPrroodduuccttiioonn

Yearly shrimp production by major producing countries 1991-2000 (in 1,000 metric tons)

Country 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

China 564.1 574.1 488.7 603.4 665.6 751.8 829.6 970.9 1,222.7 1,241.9

India 300.5 290.4 363.0 446.6 406.1 415.6 366.6 413.1 423.3 405.7

Thailand 289.9 300.6 343.1 385.0 389.3 370.8 350.8 345.4 370.9 398.5

Indonesia 296.8 312.1 300.7 317.1 334.7 343.3 382.2 345.5 384.5 398.4

USA 148.5 156.5 137.9 130.2 140.2 145.0 132.9 128.0 140.1 153.0

Vietnam 81.3 86.2 94.6 111.7 138.1 135.9 147.7 148.4 148.9 151.1

Canada 44.7 43.1 47.4 53.2 63.1 65.7 82.1 113.1 120.0 130.6

Malaysia 104.7 129.4 109.8 106.4 99.6 108.0 101.0 57.1 102.7 111.9Mexico 70.6 66.2 79.8 77.3 85.9 78.9 88.5 90.3 95.6 95.1

Greenland 73.1 81.9 76.5 79.8 81.9 72.0 63.9 69.6 79.2 81.5

Philippines 84.9 118.8 130.1 126.6 127.5 113.2 74.5 72.3 73.1 79.4

Norway 49.0 49.1 49.0 38.2 39.3 41.5 42.0 57.1 64.2 66.2

Bangladesh 19.6 21.0 28.5 28.8 34.0 49.3 56.5 66.1 81.1 58.2

Brazil 42.3 44.0 38.4 38.5 43.0 38.9 44.1 42.8 47.7 56.6

Ecuador 118.8 127.0 97.5 98.7 112.1 112.9 137.2 147.4 121.0 51.4

Korea Rep. 55.8 67.1 68.0 58.1 42.5 40.9 41.1 47.6 44.7 37.2

Others 532.7 529.3 542.0 551.7 594.5 622.9 633.7 647.4 599.2 651.7

Total 2,877.3 2,996.8 2,995.0 3,251.3 3,397.4 3,506.6 3,574.4 3,762.1 4,118.9 4,168.4Remark: data include all types of shrimp, namely farm-raised shrimp and wild shrimp Source: Globefish



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FFiigguurree 44--11:: WWoorrlldd SShhrriimmpp PPrroodduuccttiioonn

Table 4-2: Shrimp Farms Worldwide

Worldwide there are approximately 1,251,450 hectares (3 million acres) devoted to shrimp farming with 1.114,050 hectares in the Eastern hemisphere. From 1998 to 1999, Asian countries showed a 75% increase in the number of shrimp farms while North, Central and South America, registered a 39% decrease.

Figure 4-2: Shrimp Farms Worldwide

Eastern Hemisphere

HectaresCountry

1998 1999

Thai 70,000 80,000

China - 180,000

Indonesia 200,000 350,000

India 140,000 130,000

Vietnam - 200,000

Philippines 20,000 60,000

Malaysia 4,000 4,000

Srilanka 3,000 -

Others 200,550 110,050

Total 637,550 1,114,050

Western Hemisphere

HectaresCountry

1998 1999

Ecuador 160,000 100,000

Mexico 24,000 -

Belize 1,200 -

Nicaragua 5,500 6,000

Venezuela 1,200 2,000

Panama 8,500 3,000

Peru 3,200 -

USA 1,000 400

Others 22,000 26,000

Source: CP Group (Thailand) Shrimp Culture Newsletter March, 2000



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44 MMAANNPPOOWWEERR RREEQQUUIIRREEMMEENNTTSS

TTaabbllee 44--11:: HHuummaann rreessoouurrccee rreeqquuiirreemmeennttss

Human Resource Requirements

For an 8-hectare shrimp culture farm following manpower is required.Description No. of Positions Monthly Salary/Person Yearly Salary

Consultant 1 100,000 1200,000 Pond Supervisor 3 20,000 720000 Laboratory In charge 1 10,000 120,000 Accounts Officer 1 10,000 120,000 Purchase Officer 1 10,000 120,000 Driver 2 5,000 120,000 Labor 12 4,000 576,000 Total 19 2,976,000

55 SSPPEECCIIEESS TTOO BBEE CCUULLTTUURREEDD

The various types of captured shrimp species in Pakistan are as follows:

1. Penaeusspp (Jhaira)2. Metapenaeus spp. (Kalri)3. Parapenalopsis styliferia (Kiddi)4. Tiger Shrimp

The above figure shows that the major specie target is Giant Tiger Shrimp as it fetches good price and the growing period is less as compared to other species. Named for its huge size and banded tail, this species dominates production everywhere in Asia except Japan and China. Native to the Indian Ocean and the southwestern Pacific Ocean from Japan to Australia, "tigers" are the largest (maximum length 363 millimeters) and fastest growing of the farmed shrimp. They tolerate a wide range of salinities, but shortages of wild broodstock often exist, captive breeding is difficult and hatchery survivals are low (20 to 30%). Tigers are very susceptible to two of the most lethal shrimp viruses: yellow head and white spot. Consumers in Japan and the United States purchase huge quantities of tigers from Thailand and other countries in Southeast Asia.

66 SSHHRRIIMMPP FFAARRMMIINNGG OOPPEERRAATTIIOONNSS

66..11 HHaattcchheerryy OOppeerraattiioonnss

The purpose of a hatchery is to provide the feedstock or the postlarvae (PL) to growout ponds for farming. The farmers catch the wild broodstocks from the sea and use water at normal temperature to produce post larvae with proper usage of drugs for preventive purpose. Currently all broodstock used for hatchery seed production



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comes from wild spawners or gravid females and the countries that extensively or predominantly depend on hatchery seed supply are Thailand, Indonesia, Philippines, Taiwan and China.

66..22 NNuurrsseerryy OOppeerraattiioonnss

The nursery phase of shrimp farming, when postlarvae are cultured at high densities in small earthen ponds (and occasionally in intensive raceways or tanks, or in net enclosures within the shrimp ponds), occurs between the hatchery and growout phases. It has some characteristics of the hatchery phase, but more closely resembles growout. Since hatchery-produced and wild-caught postlarvae can be stocked directly into grow-out ponds, the nursery phase is not always necessary.

66..33 AAcccclliimmaattiioonn TTaannkkss

The 55 farms that don't have their own hatcheries, acclimation tanks and raceways frequently replace nursery ponds. Acclimation facilities give the juvenile shrimp a chance to adjust to pond conditions, particularly salinity and temperature, before being stocked. The holding period lasts from a half day to four days, and the animals may be fed special diets to prepare them for the rigors of pond life. The most important consideration during acclimation is that the water quality parameters be changed slowly. Acclimation densities should not exceed 300-500 postlarvae per liter, depending on animal size and duration of acclimation.

66..44 GGrroowwoouutt PPoonndd OOppeerraattiioonnss

Once a growout operation is stocked with postlarval shrimp, it takes from three to six months to produce a crop of market-sized shrimp. Northern China, the United States and Northern Mexico produce one crop per year; semi-tropical countries produce two crops per year, while farms closer to the equator have produced three crops a year, but rarely. Temperature has a lot to do with it. Shrimp like it hot, and most species prefer, but are not restricted to, brackish water.



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Growout operations come in all shapes and sizes. They are classified by stocking densities (the number of seed stock per hector) and called "extensive" (low stocking density), "semi-intensive" (medium stocking density) and "intensive" (high stocking density). As densities increase, the farms get smaller, the technology gets more sophisticated, capital costs go up and production per unit of space increases dramatically.

TTaabbllee 77--11:: SSttoocckkiinngg DDeennssiittyy ooff GGrroowwoouutt PPoonnddss

Type Outputkg/hector/yr.

Extensive 50-500 Semi-Intensive 500-5,000 Intensive 5,000-20,000 Super-Intensive 20,000-100,000

66..55 TTyyppeess ooff GGrroowwoouutt FFaarrmmiinngg

Shrimp growout farming operations can be classified into four types. This classification is based on the stocking density of shrimps in the ponds. The four types are as follows:

77..55..11 EExxtteennssiivvee

Extensive shrimp farming (low-density) is conducted in the tropics, in low-lying impoundments along bays and tidal rivers, often in conjunction with herbivorous fish. Impoundments range in size from a few hectares to over a hundred hectares. When local waters are known to have high densities of young shrimp, the farmer opens the gates, impounds the wild shrimp and then grows them to market size. Fishermen also capture wild postlarvae and sell them to extensive farmers for stocking. Overall, however, stocking densities are quite low, not over 25,000 postlarvae per hectare. The tides provide a water exchange rate of from 0% to 5% per day. Shrimp feed on naturally occurring organisms, which may be encouraged with organic or chemical fertilizer. Construction and operating costs are low and so are yields. Cast-nets and bamboo traps produce harvests of 50 to 500 kilograms (head-on) per hectare per year. Production costs range from $1.00 to $3.00 (RS. 64 to RS. 192) per kilogram of live shrimp. Extensive farms have little effect on the environment. Since it is illegal in most countries to use tidal or mangrove areas for the construction of shrimp farms, almost no new extensive shrimp farms are being constructed today.



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FFiigguurree 77--11:: EExxtteennssiivvee FFaarrmmiinngg

77..55..22 SSeemmii--IInntteennssiivvee

Conducted above the high tide line, semi-intensive farming introduces carefully laid out ponds (2 to 30 hectares), feeding and pumping. Pumps exchange from 0% to 25% of the water each day. With stocking rates ranging from 100,000 to 300,000, postlarvae per hector, there is more competition for the natural food in the pond, so farmers augment production with shrimp feeds. Construction costs range from $10,000 to $35,000 (RS. 610,000 to RS. 2,135,000) per hector. Wild or hatchery-produced postlarvae are stocked in growout ponds, which are fertilized (nitrogen, phosphorus and silicate) to encourage a natural food chain. The farmer harvests by draining the pond through a net, or by using a harvest pump. Yields range from 500 to 5,000 kilograms (head-on) per hector per year, with 2,000 kilograms per hector per year, much sought after goal. Production costs range from $2.00 to $6.00 (RS. 122 to RS. 366) per kilogram of live shrimp. Farmers usually renovate their ponds once a year. If too many semi-intensive farms concentrate in a small area, they can have a negative effect on the environment.

FFiigguurree 77--22:: SSeemmii--IInntteennssiivvee FFaarrmmiinngg



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77..55..33 IInntteennssiivvee

Intensive shrimp farming introduces small enclosures (0.1 to 1.5 hectares), high stocking densities (more than 300,000 postlarvae per hectare), around-the-clock management, heavy feeding, waste removal and aeration. Aeration-the addition of air, or oxygen, to the water-permits much higher stocking and feeding level. The water exchange rate can be high, 30% per day and up. Frequently conducted in small ponds, intensive farming is also practiced in raceways and tanks, which may be covered or indoor. Construction costs range from $25,000 to $250,000 per hectare. Sophisticated harvesting techniques and easy pond clean up after harvest permit year-round production in tropical climates. Yields of 5,000 to 20,000 kilograms (head-on) per hectare per year are common. Production costs range from $4.00 to $8.00 per kilogram of live shrimp. It's relatively easy to convert intensive farms to other species. Intensive farms frequently cause environmental problems.

FFiigguurree 77--33:: IInntteennssiivvee FFaarrmmiinngg

77..55..44 SSuuppeerr--iinntteennssiivvee

"Super-intensive" shrimp farming takes even greater control of the environment and can produce yields of 20,000 to 100,000 kilograms per hectare per year. Thailand has some super-intensive shrimp farms. A super-intensive farm in the United States once produced at the rate of 100,000 kilograms (whole shrimp) per hectare per year, but a viral disease wiped it out. Thus far, super-intensive shrimp farms have achieved only marginal success. Generally, they have problems with management, diseases, crop failures, water quality, finances and the environment. Production levels above 10,000 kilograms per hectare per year are risky.



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77 LLAANNDD AANNDD BBUUIILLDDIINNGG

77..11 MMiinniimmuumm AArreeaa rreeqquuiirreedd ttoo ssttaarrtt aa ffaarrmm;;

The area required for a farm should be 20 acres/ 8 hectares.

77..22 SSiizzee ((AArreeaa)) ooff PPoonndd

Size of the pond depends upon the intensiveness of the culture system.For intensive system, size of a pond 1-acreFor semi-intensive farm, size of the pond 2-acre

77..33 NNuummbbeerr ooff PPoonnddss iinn tthhee ffaarrmm

Number of ponds in a 20-acre farm in case of intensive system is 15 ponds.

77..44 IInnffrraassttrruuccttuurree rreeqquuiirreedd ppeerr ffaarrmm

Salt water is delivered from sea or through a 10-inch-diameter, 75-foot-deep well dug on the premises. The salt water will be delivered by a pump/motor system using power from an outside source. An engine-driven pump backup system is provided in case of power outages. Fuel for the backup engine is stored adjacent to the pump and motor shed. The facility has 15 earthen ponds each measuring an acre. An acclimation tank field contains six large tanks, each 6 meters in diameter, holding up to 7,900 gallons. An office block contains a multi-purpose building, an office, men and women's showers, changing facilities, toilets, and a room that could be subdivided for use as storage and as a small laboratory.

Land required is 8 hectares. Pumps & Piping Aeration fans Power Generators Electricity & lights Farm preparation Office & rest room Fresh water tanks Water Gates Mechanism Acclimation tanks



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88 PPRROOJJEECCTT EECCOONNOOMMIICCSS

TTaabbllee 99--11:: PPrroojjeecctt CCoosstt

Item Cost (Rs.)Land 970,000Construction 5,725,000Pumps & Piping 6,702,500Aeration fans 1,865,000Furniture and Fixtures 424,000Laboratory Equipment 500,000Office Equipment 52,500Vehicles 2,013,940Fishing Nets 150,000Gen. Sets 1,550,000Electricity Connection 100,000Water Gates 700,000Working Capital 6,028,653Pre-Operating Cost 165,000Total Project Cost 26,946,593

TTaabbllee 99--22:: PPrroojjeecctt RReettuurrnnss

ProjectIRR 36%NPV (Rs) 8,476,666Payback Period (Years) 2.77

TTaabbllee 99--33:: FFiinnaanncciinngg PPllaann

Financing Ratio RsEquity 100% 26,946,593



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99 RREEGGUULLAATTIIOONNSS

TTaabbllee 1100--11:: IInntteerrnnaattiioonnaall SSttaannddaarrddss oonn IInntteennssiivvee SShhrriimmpp CCuullttuurree SSyysstteemm

Item Intensive Culture Method Monoculture

Stocking Rate / ha 269,000 Stocking Density 25 Age of Fry PL20 Fry Cost (per fry) US $ 0.01 Survival Rate 0.95 Harvest Size (g) 30 Water Management Pumps & Paddle Wheels Food Types Pellets Food Conversion Ratio 2 Crops / Year 3

The above table shows culturing assumptions for advanced economies, which have been doing shrimp culture since last 10 to 15 Years. To be conservative these assumptions have been revised downwards to suit local conditions. This does not mean that International standards cannot be achieved here in Pakistan. International standards can be achieved with hard work and the use of modern technology.The shrimp fry and shrimp feed are based on imports. The costs will reduce substantially upon the local production of these products.

TTaabbllee 1100--22:: IInntteerrnnaattiioonnaall SSttaannddaarrddss aaddaapptteedd ttoo LLooccaall CCoonnddiittiioonnss

Item Intensive Culture Method Monoculture Stocking Rate/hector 250,000 Stocking Density 25 Age of Fry PL20 Fry Cost (per fry) US $ 0.02 Survival Rate 0.70 Harvest Size (g) 25 Water Management Pumps & Paddle Wheels Food Types Pellets Food Conversion Ratio 1.5 Cost of Fed $ 1.4 Price Kg (40-45 pieces/Kg) 360 Rs/$ Conversion Rate 61 Crops/Year 2



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1100 KKEEYY SSUUCCCCEESSSS FFAACCTTOORRSS

Acquaintance with the fisheries Ponds made as per part standards Good quality shrimp hatched. Cost cutting methods employed Entrepreneur stays on top of the problems Quality at sub stages checked Shrimp is saved from diseases Marketing emphasized Adherence to international standards

1111 TTHHRREEAATTSS FFOORR TTHHEE BBUUSSIINNEESSSS

Entrepreneur with non fisheries background More then 6 months elapsed before premises made Disrupted water supply to the premises Outbreak of shrimp disease Orders not received, once production has started Own funds finish Government organizations start bothering too soon, before profits even start


PREF-47/July, 2002/ Rev 1

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1122 FFAACCIILLIITTYY LLAAYYOOUUTT



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1133 FFIINNAANNCCIIAALL AANNAALLYYSSIISS



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19


PREF-47/July, 2001/Rev 1

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1144 KKEEYY AASSSSUUMMPPTTIIOONNSS

TTaabbllee 1144--11:: --CCoosstt ooff GGooooddss SSoolldd ppeerr UUnniitt ooff PPrroodduuccttiioonn

Stocking rate/ hector 250,000Fry Cost/fry (US$) 0.02Crops per year 2Rs/$ Conversion rate 61Net Farming Area 6Total Cost of Fry 3,660,000Cost of Fry per Kg 44Food Conversion Ratio 1.5Cost of Feed ($) 1.4Rs/$ Conversion rate 61Shrimp Production 84,000Total Cost of Feed 10,760,400Cost of Fry per Kg 92

TTaabbllee 1144--22:: --RReevveennuuee AAssssuummppttiioonnss

Stocking rate/ hector 250,000Survival rate 0.70Harvest Size(g) 25Net Farming Area(Hector) 6Crops per Year 2Annual Production Capacity 84,000Sales Price 360Sales Revenue(Yr1) 30,240,000

TTaabbllee 1155--33:: --CCaasshh FFllooww AAssssuummppttiioonnss

Days in Accounts Payable 30Days in Accounts Receivable 30

TTaabbllee 1155--44:: --CCaappaacciittyy UUttiilliizzaattiioonn

|1| Stocking Rate / Ha 250,000|2| Survival Rate 0.70|3| Harvest Size (g) 25|4| Net Farming Area (Hectare) 6|5| Crops / Year 2

Production Capacity* 84,000 Kg

Production Capacity = [(|1| x |2|) ÷ |3|] x |4| x |5|


PREF-47/July, 2001/Rev 1

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Capacity Utilization largely depends upon the survival rate, which has been taken as 70% for this study. If the entrepreneur manages to maintain a healthy environment, this rate could be improved to as much as 95%.

smeda shrimp farming

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