Thursday, 17 November 2011

Start a Shrimp Farming Business


 

(218). Start a Shrimp Farming Business

Coastal  aquaculture has been identified by the Government of India as high potential area for increasing the fish and shell fish production and also to achieve economic and social benefits .
 
India with  over  8100 Km of  coastline,  vast streches of estuaries/ backwaters , lagoons provide enormous opportunities  for brackish water shrimp farming . Commercial shrimp farming is almost two decades  old in India .During the early nineties due to proven technology in  post larvae  production and farming of two varieties of shrimps viz white shrimp  ( Penaeus indicus ) and  tiger  shrimp (Penaeus monodon )  large scale growth of shrimp farms  and hatcheries was witnessed  during a short span of five years. However, in December 1996 the Supreme Court had to step in to protect the environment and to control the indiscriminate  growth of shrimp farms. To overcome the various problems and also to have sustainable growth guidelines have been issued by the government to ensure that coastal aquaculture is regulated,planned,developed and managed with adequate checks, controls  and within the framework and guidelines provided by Coastal Aquaculture Authority, Chennai .
It is commonly said that after Green and White Revolution in India, it is time for Blue Revolution to exploit the huge potential in fisheries sector. Shrimps are called the "Pinkish Gold" of the sea because of its universal appeal, unique taste, high unit value realisation and increasing demand in the world market.

2. Scope for brackish water shrimp farming 
The over exploitation of shrimp from coastal waters and the ever increasing demand for shrimp and shrimp products in the world market has resulted in the wide gap between the demand and supply in the International market. This has necessitated the need for exploring newer avenues for increasing shrimp production. The estimated brackish water area suitable for undertaking shrimp cultivation in India is around 11.91 lakh ha. spread over 10 states and union territories viz. West Bengal, Orissa, Andhra Pradesh, Tamil Nadu, Pondicherry, Kerala, Karnataka, Goa, Maharashtra and Gujarat. Of this only around 1.356 lakh ha are under shrimp farming now and hence lot of scope exists for entrepreneurs to venture into this field of activity. The following table gives the state-wise potential area available  for shrimp.
 
Sr.
State
Estimated brackish water area
(ha.)
1
West Bengal
405,000
2
Orissa
32,600
3
Andhra Pradesh
150,000
4
Tamil Nadu
56,000
5
Puducherry
800
6
Kerala
65,000
7
Karnataka
8,000
8
Goa
18,500
9
Maharashtra
80,000
10
Gujarat
376,000
Total
1191900
3. Location of the project 
The first and foremost requirement for entering into the venture is the acquisition of suitable land. The details of land surveyed and  identified suitable for shrimp farming in coastal districts are available with the Department of Fisheries of the concerned State Governments and with the Regional offices of the MPEDA functioning in the coastal states of India. A suitable site is one that can support optimum conditions for the growth of shrimps at targetted production level. Most of the lands available along the coastline are owned by the State Governments. In such cases, the entrepreneur has to get it on long term lease from the revenue authorities of the State Government. If it is a private land, one has to preferably purchase on outright basis. While selecting the site for the project, the entrepreneur should ensure the following :

i) Area should be accessible preferably by a road even during the monsoon season.
ii) Mangrove area with large tree stumps should  be avoided.
iii) Site should have good pollution free water supply of both freshwater and brackish water. Water quality parameters required for maximum feed efficiency and maximum growth of Penaeus monodon are given below :

Water Parameters
Optimum level
1
Dissolved Oxygen
3.5-4 ppm
2
Salinity
10-25 ppt
3
Water Temperature
26-32  degree centigrade
4
pH
6.8-8.7
5
Total nitrite nitrogen
1.0 ppm
6
Total ammonia (less than)
1.0 ppm
7
Biological Oxygen Demand (BOD)
10 ppm
8
Chemical Oxygen Demand (COD)
70 ppm
9
Transparency
35 cm
10
Carbon dioxide (less than)
10 ppm
11
Sulphide (less than)
0.003 ppm
iv) The areas should be flood free
v)A location with a natural slope, for proper drainage should be selected.
vi) Social problems due to competing use of water resources and drainage of waste water should be properly taken care of.
vii) Availability of necessary infrastructure namely electricity, ice factory, cold storage, communication facilities etc., are necessary for successful management. 

4. Borrowers' profile
Complete details of the entrepreneurs, partnership firm, registered company should be given. Qualification and experience of the promoters, net worth of the borrowers,  financial ability , other activities undertaken by them etc., have to be furnished.

5. Technical feasibility of the project 
As the project envisaged new technologies, the borrowers may take the help of a competent outside agency to prepare the technical feasibility report on the project. However, to serve as a guidelines to the entrepreneurs in this regard the broad technical parameters are given in Annexure-I. The first and foremost requirement of the project is to get a license from  Coastal Aquaculture Authority,Chennai as per the existing norms and guidelines.

6. Physical and financial outlay 
Details of the physical and financial outlays involved for setting up of 5 ha. brackish water shrimp farm are furnished in Annexure No.II. It can be seen therefrom that the total cost including working capital expenses for raising the first crop for a 5 ha. Shrimp farm works out to Rs. 28.936 lakh. While submitting the project to the banks for sanction of loan entrepreneurs are expected to submit detailed plan and estimates for all the civil works to be undertaken as also invoices of various items to be purchased from the suppliers.

7. Margin money and bank loan 
The entrepreneur has to bring in 15% of the project cost out of his own resources and the balance of 85% will be provided by banks as  loan. 

8. Rate of refinance 
NABARD refinance is available for projects for setting up of shrimp farms provided the same is technically feasible and financially viable. NABARD provides refinance to eligible banks as per  refinance policy.

9. Financial viability 
For undertaking shrimp culture within CRZ and outside CRZ the following assumptions have been made


Improved Traditional (within CRZ)
Extensive 
(outside CRZ)
i.
Farm Size
5 ha
5 ha
ii.
Culture period
5-5 ½ months
5-5 1/2 months
iii.
Stocking density ( PL-20)
Upto 60,000/- ha
Up to 1,00,000/- ha
iv
Survival
70%
70%
v
Expected production
1.0-1.5 tonnes/ha/crop
1.5-2.5tonnes/ha/corp
vii
Price of shrimp has been taken as Rs.230/kg

The financial analysis for extensive system of shrimp farming has been shown inAnnexure No. III. Results of the analysis are as under:
i. NPW at 15% DF - Rs.16.063 lakh.
ii. BCR at 15% DF - 1.25
iii. IRR is more than 50 %

10. Marketing 
Because of huge gap between supply and demand of shrimps in local as well as international market, there may not be any problem in marketing the same. Shrimp can either be sold directly by the farmers in the market or sold to exporters for processing. Shrimp can be exported in frozen form with head on , head less, battered and breaded, or IQF products or any other form with value addition depending on the requirement of the buyer. The shrimp has to be packed as per requirements of importing countries and therefore this should be decided after a detailed market survey.  Hygienic packaging, display and appearance of the packet are key factors to attract consumers of importing countries.

11. Rate of interest 
As per existing RBI guidelines interest rate to be charged to the ultimate borrower for loan exceeding Rs.2 lakh will be as decided by the lending Bank. NABARD's interest rate for refinance would be as per refinance policy prevailing at the
particular time.

12. Repayment period 
As can be seen from Annexure No.IV the borrower will be able to repay the bank loan in 7 years with a moratorium of one year on repayment of principal.

13. Security 
Security from the ultimate beneficiaries has to be obtained as per the lending norms of financing banks which have to be in conformity with the guidelines of RBI.

ANNEXURE I 
Technical Parameters for establishing a extensive shrimp farming 

A -1. Design and Construction of shrimp farm : 
An extensive shrimp farm should be of the size 0.4 - 0.5 ha. and preferably drainable from the pond management point of view. The ponds generally should have concrete dikes, elevated concrete supply canal with separate drain gates and adequate life supporting devices like generators and aerators.
The design, elevation and orientation of the water canals must be related to the elevation of the area with particular reference to the mean range of tidal fluctuation. The layout of the canals and dikes may be fitted as closely as technically possible to existing land slopes and undulation for minimizing the cost of construction.

2.  Earth Work 
It is normally carried out in the following order :
>>Site clearing
>>Top soil stripping
>>Staking of centre lines and templates
>>Preparation of dike foundation
>>Excavation of drainage canals
>>Construction of dikes (peripheral and secondary)
>>Formation and compaction of dikes.
>>Excavation of pits for gates.
>>Levelling of pond bottom.
>>Construction of gates and refilling of pits
>>Construction of dike protection.
The top soil may be set aside and should again be spread later to preserve pond bottom fertility.

3. The essential components of a shrimp farm are :- 
>>Ponds
>>Water intake structure
>>Store room for feed and equipments
>>An area for cleaning of the harvest
>>Pump house
>>Watch and ward room , office and a mini laboratory.

B. Ponds 
From the pond management point of view it is better to go in for  smaller ponds of 0.4 ha-0.5 ha size and should be preferably completely drainable. The ponds are partitioned by secondary dykes. In order to render over all protection to the standing crop and other  related structures a perimeter dyke also can be constructed.
The height of the perimeter dyke will depend upon the following factors, such as :
>>Height of water level in the area.
>>Elevation above mean sea level.
>>Height of free board.
>>The percentage allowance for soil shrinkage.
The partition dykes determine the size and limit of each grow out pond and its height is determined by the following factors namely :
>>The height of water column in the pond
>>Free board
>>Wave action
>>Shrinkage factor
The shrinkage factor is decided by the type of soil like heavy, medium and light soils.

C. Gates 
They regulate the inflow and outflow of water into the pond and also are responsible for maintaining the desired water column in the pond. The main gates are constructed on the perimeter dyke and are usually located on the partition dykes and they regulate the water column in the individual ponds. It can be made out of concrete or PVC or asbestos piping.

D. Drain canals 
They are generally trapezoidal in cross section and its discharge capability is decided by area of cross section and velocity of water flow.

E. Pond preparation 
Proper pond preparation will ensure higher productivity and production levels. The main objectives of pond preparation are :
>>To eradicate weed fishes and other harmful organisms
>>To remove abnoxious gases
>>To improve the natural productivity of the pond eco system
>>To maintain high water quality for proper growth and higher survival percentage.
Eradication of unwanted organisms is usually carried out by draining out the entire water and drying the pond bottom till it cracks. This also helps in removal of obnoxious gases and oxygenation of the pond bottom. It also improves the fertility of the soil.
Liming is done for correcting the pH and to kill pathogenic bacteria and virus. In undrainable ponds mahual oil should be applied @ 200 ppm to eradicate the weed fishes. After around two weeks organic and inorganic fertilisers are applied to enrich the soil and water. Once the thick lab-lab is formed the water level is raised and the pond is made ready for stocking.

F. Selective stocking : 
The most suitable species for culture in India are the Indian white shrimp Penaeus indicus and tiger shrimp P. monodon. The stocking density varies with the type of system adopted and the species selected for the culture. As per the directives of Supreme Court only traditional and improved traditional shrimp farming can be undertaken within the CRZ with a production range of 1.0 to 1.5 tonnes/ha/crop with stocking density upto 60,000/ha/crop. Outside CRZ extensive shrimp farming with a production range of 1.5 to 2.5 tonnes/ha/crop with stocking density upto 1,00,000/ha/crop  viz; 10 nos/sqm may be allowed.
In order to have uniform growth it is always advisable to go in for hatchery reared  and PCR tested seeds.

G. Food and feeding 
Shrimp diets may be supplementary or complete. In a extensive system the shrimps need a complete diet. Although natural food items have good conversion values,it is  difficult to procure in large quantities and maintain a continuous supply.
At present most of the aquaculture farms depend on imported feed with a FCR of 1:1.5 - 1.8. The feeding could be done by using automatic feed dispensers, or by broadcasting all over the pond. If feeding trays are employed in selected pockets in the pond wastage of feed can be reduced.

H. Harvesting : 
Complete harvesting can be carried out by draining the pond water through a bag net and hand picking. The average culture period required is around 150-165 days during which time the shrimps will grow to 25-30 gm size (depending on the species). It is possible to get two crops in a year. Harvested shrimps can be kept between layers of crushed ice before transporting the consignment to market.


ANNEXURE II 

Estimated physical and financial outlay involved for setting up of a shrimp farm (5 ha) Rs. lakh

A.
CAPITAL COST
Unit
Qtty
Rate(Rs)
`Amount
Remarks
a)
Earth work by using machinery
(
hrs
187.50
1500
2.813
37.5 hrs/ha. For 5 ha 187.5hrs
b)
Compaction of side walls, construction of ponds, drainages and feeder canals etc.
Man hrs
500
150
0.750
100 man hrs/ha. For 5 ha
500 man hrs
c)
Water inlet structure for ponds Main inlets (2nos) and indvidual pond inlets (10 nos)

No

12

0.250 & 0.100
1.500

d)
Water outlet structure for ponds
No
10
0.200
2.000

e)
Main outlet sluices
No
2
0.200
0.400

f)
Pump House
Sq ft
250
250
0.625

g)
Office, laboratory and stores
Sq ft
350
250
0.875

h)
Watchman shed
Sq ft
250
250
0.625

i)
Pumps
25 HP
2
0.950
1.900
Two are suffiecient
j)
Aerators
1HP
10
0.225
2.250
Any  make
k)
Electrical installations
LS
LS
2.000
2.000
Including transformer
l)
Lab and farm equipments`
LS
LS
0.750
0.750
Like Ph meter, Salinometer, DO meter, Turbidity meter,chemicals and reagents
m)
Miscellaneous expenditure
LS
LS
0.550
0.550


Sub Total A



17.038

B.
OPERATIONAL COST FOR THE FIRST CROP


a)
Stocking density
No/ha
800000
0.000
0.000
SD 80000 Nos/ha
b)
Cost of PL 20 (‘000)
Rs per thousand
400
300
1.200
Cost /1000 @ Rs 300/-
c)
Feed
kg
12600
48
6.048
FCR 1:1.50
d)
Chemicals and manures for pond preparation
DAP @150kg/ha 2 Rs 12/kg:SSP @75kg/ha @ Rs6/kg and Lime @250/ha @Rs 3/kg
ha
5
3000
0.150

e)
Fuel and electricity
LS
LS
0.750
0.750

f)
Repairs and maintenance
LS
LS
0.150
0.150

g)
Harvesting
Per pond
10
0.040
0.400

h)
Labour for pond preparation
Per pond
10
0.040
0.400

i)
Staff salary






 Farm manager
1
5
0.100
0.500


 Mechanic
1
5
0.050
0.250


Farm hands
2
5
0.050
0.500


Watchman
2
5
0.040
0.400

j)
Insurance
LS
LS
1.000
1.000

j)
Office expenses and Misc. expenses
LS
LS
0.150
0.150


Sub Total B



11.898


Total outlay for 5 Ha ( Rs) lakh



28.936

Note :
1) Detailed plan and estimates are to be furnished alongwith the project.
2) Fuel & electricity charges have comedown because generators are not used regularly
3) Invoices for purchase of various items to be enclosed.
4) Generators( Generators are not purchased and are hired whenever required - hire charges are very meagre viz., 400-500 per day- not taken into account )
5) At the field level it was observed that lining of feeder canals were not done
6) Facility of drinking water storage and supply net work was not provided.
ANNEXURE III
Statement showing Financial Analysis for Shrimp Culture in 5 ha. Farm (Rs. lakhs)


I year
II to VIII years

A
COST



1
Fixed Cost
17.038
0.000

2
Recurring Cost
11.898
11.898


TOTAL COST
28.936
11.898

B.
BENEFIT
19.320
19.320


NET INCOME
-9 .616
7.422


Net Present worth of cost @15%
64.316



Net Present worth of benefits @15%
80.379



NPW at 15% discount factor
16.063
BCR = 1.25



Internal Rate of Return
 More than 50%



ANNEXURE IV 
STATEMENT SHOWING REPAYMENT OF PRINCIPAL AND PAYMENT OF INTEREST (ILLUSTRATIVE) 
Repayment period 7 years with one year grace
Total Outlay = Rs.28.936 lakh
Margin (15%) = Rs.4.340 lakh
Bank Loan = Rs.24.596 lakh  
Rate of interest  12% pa                                                                                 (Rs. lakh)

Year
Bank Loan Outstanding at the beginning of the year
Net Income

Repayment

Bank Loan Outstanding at year end
Net Surplus



Interest
Principal
Total


1
2
3
4
5
6
7
8
1
24.596
7.422
2.952
0.000
2.952
24.596
4.470
2
24.596
7.422
2.952
4.100
7.052
20.496
0.370
3
20.496
7.422
2.460
4.100
6.560
16.396
0.862
4
16.396
7.422
1.968
4.100
6.068
12.296
1.354
5
12.296
7.422
1.476
4.100
5.576
8.196
1.846
6
8.196
7.422
0.984
4.100
5.084
4.096
2.338
7
4.096
7.422
0.492
4.100
4.592
0.000
2.830

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