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Profitability Analysis of Argyrosomus Reguis Farming in the Earthen Ponds at the Western Region of Port Said, Egypt

25 August 2014

In this era, the world is facing increasing demands for food supply, and has a need for higher quality food resources, in which aquatic products form an important component. After significant population growth in the last decades, the world's capture fisheries are becoming increasingly limited. This situation creates a need for increasing aquaculture production to fill the growing gap between supply and demand for fisheries products, writes Abdelhamid, A.M, Mansoura University, Egypt, Vedicar F. Madkour, M.A. Abou Elregal and Amal M. Radwan, Port-Said University, Egypt.

In Egypt, aquaculture has been practiced for thousands of years. Egyptian aquaculture started with the use of traditional extensive and semi-intensive techniques. Rapid development has occurred in recent years, after aquaculture had been identified as the best answer to reduce the increasing gap between supply and demand for fish in Egypt.

Egypt’s aquaculture production (705,490 ton in 2009) is by far the largest of any African country where it occupies the 11th ranking in terms of global production. Consider the attempts by other African and Middle-Eastern countries to develop aquaculture and the small production volumes that have resulted, the success achieved in Egypt is all the more impressive. The sector generates very considerable levels of value added, results in profitable businesses, and provides direct and indirect employment for many thousands of people (who in turn have many others in their households dependent on their earnings)

The main sources of fish production in Egypt include: a) marine fisheries, b) inland fisheries in lakes, lagoons, the Nile River, irrigation and drainage canals, and c) aquaculture. Total fish production from both fisheries and aquaculture has increased more than 3 folds between years 1988 to 2006.

The contribution of aquaculture to total fisheries supply increased from 18 per cent in 1988 to reach 61 per cent in year 2006 (the General Authority for Fish Resources Development GAFRD; 1988:2006). Total production levels increased by more than 50 per cent over the period 2000 to 2009 from 724,300 ton in 2000 to 1.1 million ton in 2009. These increases were primarily obtained from significant increases in aquaculture production, while wild capture fisheries production remained almost constant (389,398 ton in 2009), and by 2009 the share of total production provided by aquaculture had risen to 65 per cent (up from 47 per cent in 2000). Of the total aquaculture production in 2009, 84.75 per cent was from farm pond culture (from an area of 361,326 feddans / 151,757 ha), 9.64 per cent from cage culture, 5.34 per cent from rice field culture, and 0.26 per cent from intensive culture (10-12 kg/m3).

Statistics of FAO in 2010 revealed that Egypt was the largest aquaculture producing country in Africa, with a production of around 700,000 ton in 2009 (FAO, 2010). The other important countries in Africa were Nigeria (153,000 ton), Zambia (8,505 ton), Ghana (7,154 ton), and Zimbabwe (2,652 ton).

In addition, Egypt is strategically well placed geographically to consider exports to both the EU and Middle East markets. Indeed, some farmed fish from Egypt has already been sold into regional markets in Gulf countries and southern Europe countries. The growth in aquaculture production may be attributed to the fact that much of the current investment and expansion involves more intensive forms of production, usually of high value species, whose returns stimulate the capital development and support the input costs.

The aquaculture sector makes a significant contribution to income, employment creation and food security in the country, all of which are national priority areas given low per capita income levels, rising population, worsening food security indicators, and official unemployment levels, which have remained at around 10 per cent for the last ten years.

Port Said Fish Farms

Along the Egyptian Mediterranean coast, Port Said is considered as one of the most productive fishing ground. About 25 per cent of the total fish production in the Egyptian Mediterranean sector comes from Port Said. Port Said derives its fish production from four main resources; Mediterranean Sea, Lake Manzala, Port Fouad Lake and aquaculture with main annual fish production of about 8000, 1500, 170 and 15000 ton, respectively (GAFRD; 1990:2006). It is obvious that fish production of aquaculture sector (represented by licensed fish farms) exceeds that of fisheries by about one and half times.

The licensed fish farms in the western region of Port Said are about 2579 feddans (127 fish farms, one feddan is an Egyptian area unit equal 4200 m2). They licensed as marine water fish farms and lie between the old way of Damietta and the new highway. The inhabitants of three villages rent these farms from GAFRD namely from the east to the west: El-Garabaa, El-Manasra and El-Dieba. The total area of these villages is about 10 km with population of about 40-50 thousands, all of them live on the fish and about 10000 fish farmers work in these fish farms. Many illegal or non-licensed fish farms exceed this area were established to the south of Lake Manzala and around Bahr El-Baqar drain (about 11 thousands feddans). In addition, the agricultural land which lie south of Port Said are used as fish farms.

Almost all farms of this area are extensive polyculture ponds, using fry exclusively from wild sources. The main farmed species are meagre (Argyrosomus regius), two species of mullet, bouri (Mugil cephalus) and tobar (Mugil capito), sea bass (Dicentrarchus labrax) and gilthead sea bream (Sparus aurata). This area provides the greater part of marine aquaculture production in Egypt. The two species of mullet account for the majority of output followed by meagre.

Sadek et al. (2009) estimated that around 420 hectares of earthen ponds in the Dibah Triangle Zone (Damietta and Port Said Governorates) are cultured with meagre each year, as capture based aquaculture, with a potential production of around 3000 ton/year, and an average production of 5–7 ton/ha/year. The culture is based on the collection of wild finfish fry and juveniles along the Nile delta, which represents the reproduction and nursery area in the eastern Mediterranean (El-Hehyawi, 1974). Between 2 to 5 million fry and fingerlings catch per year were estimated by Sadek et al. (2009).

The Main Objectives of This Survey

This survey will describe the socioeconomic status of fish farmers in western region of Port Said, examine the determinants of fish output in the surveyed area and determine the profitability of fish farming. The purpose of the present survey is to help improve the exploitation and investment of this area by enhancing its production. This study will assess the overall potential of marine water fish farms, define what is needed to achieve development of their productivity, and identify any barriers toward this goal by:

  1. Identify the main challenges and obstacles facing fish farmers and suggest practical solution for them.
  2. Address the major benefits and opportunities that can be realized as marine fish farms grow in this region.
  3. Clarify the importance of these fish farms as an important source of valuable marine species fishes.
  4. Address the need for a scientific approach to handle the development and improvement of fish farms along with fish farmers.
  5. Address needs for public education and technical assistance/information needs of aquaculture.

Methodology

This survey was carried out in farms located at the western region of Port Said during the period from March to October 2011, using primary and secondary data. The main way for collecting the primary data was structured questionnaire. The questionnaire was prepared to evaluate the level knowledge of fish farmers in fish production and determine its relationship to some independent variables related to them at the study area and the most problem that face them. Information was collected on fish farming and socio-economic characteristics of fish farmers through personal interview. A total sample of 10 fish farmers was randomly selected. The primary data were complemented with secondary data from publications, past literature and Central Bank of Egypt.

The Construction of Questionnaire

The questionnaire constructed for this survey covered the following elements:

Socio-economic characteristics

  • Age, marital state and household size
  • Education
  • Farming experience
  • Training

Farm information

  • Possession of the farm
  • Farm size
  • Number of constructed ponds and number of used one

Fish production information

  • Fry source, costs and quantities
  • Feeding source , costs and quantities
  • Pond aeration
  • Labor
  • Fish production

Analysis of Results

Descriptive statistics

Descriptive statistics done by using mean, frequency and percentages to identify Socio-economic characteristics of the respondents in the study area via; age, educational level, farm size etc., and the problems affecting the fish farming in the area.

Budgetary technique

The budgetary technique which involves the cost and return analysis was used to determine the profitability of fish farming in the study area. The model specification is given as:

Π = TR- TC………………………..Equation 1
TR= PQ………………………...…. Equation 2

Where:

Π = Total Profit
TR =Total Revenue
TC = Total Cost
P = Unit price of output
Q = Total quantity of output

The statistical analysis

Pearson Product Multiple correlation analysis (R2), were conducted on the obtained data from the questionnaire to determine the influence of socioeconomic factors on the fish output level using SPSS programme.

Research hypothesis

H0: There is no significant relationship between level knowledge of fish farmers and the production, educational level, age, pond size, years of experience and amount of available knowledge.

H1: There is a significant relationship between the quantity of fish produced and the production, educational level, age, pond size, years of experience and amount of available knowledge.

Results and Discussion

Descriptive Analysis

Evidence from the descriptive analysis of socio-economic characteristics of respondents in the study area (Table 1) shows that fish farmers whose ages ranged from 30 to 50 years represented the majority (70.0 per cent) with average age of 45 years. Thus, the most farmers fall in the economically active group (20–50 years). The implication of this is that, most farmers are still in their active age and therefore, there is tendency for more productivity in fish farming in the study area. The result of the marital status shows that 100 per cent of the fish farmers were married.

Table 1: Socio-economic characteristics of farmers in the western region of Port Said

The distribution of the household size indicates that the household size ranged from 2 to 5. This figure is expected to enhance the use of more family labor in the fish farming operations, thereby leading to reduction in the use of hired labor among in the study area.

Concerning the education and training, all farmers except one, had no formal training in addition to poor educational status for the majority of them (40.0 per cent had no schooling and 40 per cent had medium schooling). These results indicate the difficulty in the adoption of new technology/innovation by the farmers, which lead to reducing the expected productivity of fish farming in the area.

All farms have been rented from the General Authority for Fish Resources Development (GAFRD). This might have impact on the level of efficiency and the level of dedication to farm profitability, based on the fear of uncertainty by the government policy on the usage of the land visa, revocation, review of land rent fee, tax imposition on the rented land.

While the average farm size was found to be 16.5 feddan, the majority of fish farm sizes fall within 1-10 feddans (40 per cent). The average size therefore suggests good economic returns to the farmers if efficiently used.

All fish farmer obtain their fingerlings from fry dealer, while 90 per cent purchased the feeds and 10 per cent used purchased food and household wastes the descriptive analysis also indicates that most fish farmers (90 per cent) feed their fish once daily to achieve high yield.

The majority finances their fish production through personal savings (70 per cent). while some with (20 per cent) used personal savings and credit facilities. The availability of credit facility to farmers is expected to boost fish productivity if it is utilized judiciously.

Profitability Analysis

The study examines the profitability of fish production in the study area. To determine the profit level, attempts were made to estimate the cost and return from fish farming (Table 2). The input used, cost, yield or output data generated from the farmers were used to undertake the cost and return analysis for assessing the profitability of fish production in the study area.

Table 2: Average cost and return of fish production

The result reveals that the cost of feeds accounted for the largest proportion (68 per cent) of the total cost of fish production. This is followed by cost of fixed input and variable coast (12 per cent). Then fingerlings (7 per cent) and labor (1 per cent). This clearly shows that large fish farmers in the study area for purchase feeds spend amount of money. The fixed cost of production consists of cost of fixed assets such as pump, and pond rented which accounted for 12 per cent of total production cost.

This result is consistent with the finding of Ashaolu et al. (2005) from their studies on profitability on fish farming. The rate of return per capital invested (RORCI) is the ratio of profit to total cost of production. It indicates what is earned by the business by capital outlay (Awotide and Adejobi, 2007). The result revealed that the average RORCI of 117 per cent is greater than the prevailing bank lending rate, 8 per cent implying that fish farming in the study area is profitable (Table 2). If a farmer takes loan from the bank to finance fish farming, he will get profit after paying back the loan at the prevailing interest rate.

Multiple Regression Result

The correlation analysis was carried out to examine the determinants of factors effecting fish output in the study area. The correlation result revealed that fish output is significantly determined by labour used, education status and ratio of used ponds (Table 3). The coefficients are in line with a priori expectation. Hence, the more the amount expended on labour, education and ratio of used ponds, the more the amount that will be realized from fish farms in the survey area. The result is consistent with the finding of Yusuf et al. (2002).

The result equally suggests the need for fish farmers to enhance more of these inputs (labour used, education status and ratio of used ponds) to increase their revenue from fish production. Similarly, policies that will ensure availability of these inputs to fish farmers at affordable price should be put in this place. The positive relationship between labors used in pond indicates that with increase in the labour used in pond, more fish will be produced. Based on the significance of labour used at 0.01 level, the null hypothesis that the fish output is not affected by the quantity of labour used is rejected and the alternative is accepted (Table 3).

Table 3: The correlation analysis of survey parameters in western region of Port Said

Constraints and Challenges

There are a number of constraints and challenges facing fish farms, which may be summarized as follows:

  1. Shortage in fish fry supply especially of marine origin.
  2. The use of poor quality supplementary feed inputs in addition to its high prices.
  3. High percentage of illegal farms, resulting in high uncertainty and under-investment
  4. Expensive energy source supply
  5. The lack of information concerning the dietary nutrients requirements of the locally farmed fish marine species.
  6. Pollution due to great amount of pollutants charges into Lake Manzala from the various drains and factories.
  7. The lack of cooperation between aquaculture research institutes and fish farms.

Conclusion and Recommendations

This recommendations flow directly from the challenges and critical factors that farmers facing in the survey area, which indicate that fish production is economically rewarding and profitable despite problems and challenges. It is available and attractive to who want to invest in this area and improving the standard of living of the people.

All farmers use natural food in feeding Argyrosomus reguis which is not available all the year also its price ranked the most value in farm coast. All fingerlings were from illegal source which dependent on wild resources and may bring many diseases to the farm.

The shortage of labour number is come from using their children as labour in the farm that indicates most people who work in this region have been doing this from their childhood.

Appropriate training programme on fish production and culture techniques should be organized for fish farmers and labour in the study area for improve their skills and uses of new technology that may be possible to expand aquaculture production.

Many farms are not on the electricity grid, and are prevented from installing electricity on rented land. This means that their power costs are increased through the need to use generators for the considerable amounts of power needed to pump water. Furthermore, fuel used to power water pumps is considered expensive by farmers, and is periodically unavailable in some locations, consideration could also be given to the introduction of alternative power sources such as wind and solar power, and as such sources could generate efficiencies over both powers from the electricity grid and from generators.

It is recommended that the General Authority for Fish Resources Development (GAFRD) that own land that they rent to fish farms, consider increasing the duration of their lease periods to provide greater security to fish farmers.

Therefore, government participation in fish farming should be encouraged in the area extension services so that new techniques would be adopted in the area to boost the quantity of fish available for consumption from Argyrosomus reguis. Finally, with respect to benchmarking, this survey data may be helpful in the monitoring, evaluation and development of the surveyed area.

August 2014

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