I.1. Although at present marine shrimp has a greater potential than brackishwater- or freshwater- shrimp, the development of shrimp culture should be undertaken in order to ensure life conservation and increase production of shrimp.
Giant Freshwater Prawn has apparently a better prospect for culture development than other kinds of shrimp and has more convincing export market possibilities. Thus the prospective project will constitute a pilot project for the development of Giant Freshwater Prawn culture undertaking. The project is also undertaken to study problems and prospects of shrimp culture as an alternative engagement for transmigrant-farmers in non-paddy field areas located in Lampung.
The specific locations of this project are in Way Urang for the hatchery and in Way Jepara for the Commercial Ponds, in the province of Lampung.
I.2. The Lampung region is selected as the project location for various reasons.
Firstly, in technical terms the natural conditions of Lampung are suitable.
Furthermore, the number of population working/operating in the inland fisheries
sector in Lampung is 93.4 pct. of the number of population working in the
fisheries sector. However, the number of population working as freshwater
pond farmers is still small, namely around 9.7 pct.
In additions, Lampung is one of the largest transmigration areas in Indonesia.
It is estimated, that in 1975, transmigrants assigned here, have reached 10
pct. the total population in Lampung.
I.3. On the basis of part performance, shrimp production of Indonesia is estimated to increase from 45,510 tons (head-less) in year 1977 to 52,150 tons in 1979 and 58,790 tons in 1981.
Whereas the demand for shrimps in Indonesia is estimated to increase from 52,578 tons (head less) in 1977, 63,067 tons in 1979 and 73,574 tons in 1981.
From these supply & demand estimates, it can be observed, that market space for shrimp will increase from 7,068 tons (head less) in the year 1977 to 10,917 tons in the year 1979 and 14,784 tons in the year 1981. Using these market space figures, we can observe that given the limited production of shrimp, there is sufficient market space for Giant Freshwater Prawns in the near future.
I.4. To develop Giant Freshwater Prawn culture various facilities are required, for hatchery, commercial ponds and marketing activities.
In the hatchery, various ponds and equipments are required, in order to ensure the growth and preservation of larve and juveniles.
In the commercial ponds, maintenance activities of the ponds are required. Furthermore, feed supply in the form of broiler starter, is required in sufficient quantities, in order that the shrimps will not become cannibalistic.
To facilitate marketing activities various processing facilities are required for washing, head cutting and sortation of shrimps. Insulated rooms and insulated trucks are required to store and transport processed shrimp and ice.
I.5. Studies in prawn culture indicate two alternatives of estimating, prospects of production. These alternatives are :
Alternative I : 1,350 kilograms per hectare per year;
Alternative II : 2,000 kilograms per hectare per year.
In view of the fact, that this is a new project and the farmers still have a lot to learn, the production is estimated to develop by stages.
In the 1st year 50 pct, the 2nd year 60 pct, the 3rd year 70 pct, the 4th year 80 pct., the 5th year 90 pct. and in the 6th year and onwards 100 pct. Depending on our assumption it is estimated, that in the full-scale operation stage later-on the Giant Freshwater Prawn production will reach 121,500 kilograms (with alternative I) and 180,000 kilograms (with alternative II) respectively.
I.6. Giant Freshwater Prawn gravied shrimp can be obtained from the waters around the hatchery area. In view of the complexity of operations in the hatchery, consulting experts in the field of Giant Freshwater Prawn culture are required.
A farmer managing commercial ponds of 3 hectares will require 300,000 juveniles yearly. If this should be purchased from the hatchery (at a price estimated at Rp.4.50/piece), the farmers will be unable to cover their costs. It is suggested therefore, that during the first year, the farmers will obtain juveniles from the hatchery free of charge.
I.7. By observing the process and functions of Giant Freshwater Prawn culture, it is necessary to determine separate executing agencies for the undertaking which will conduct the hatchery activities and the undertaking which will conduct the commercial pond- and marketing activities.
The executing agency for the hatchery can be in the form of a “project management unit”, which is responsible to the Directorate General of Fisheries.
The consideration, that the hatchery should be organized as a Government project is based on the assumption that the Government can pave the way towards the development of Giant Freshwater Prawn culture by bearing the development costs and risks, including the expertise, which are too expensive to be handled by the farmers.
The commercial ponds and marketing activities will be organized by a Primary Fisheries Cooperative (PFC), constituting an association of Giant Freshwater Prawn pond farmers.
The PFC will be the owner of the commercial ponds and will be responsible for the repayment of credits to the Bank Rakyat Indonesia (B.R.I.).
The pond farmers as Cooperative members will only be rentors according to conditions as determined by the Cooperative.
I.8. The success of this project will depend on the qualifications of its personnel.
Therefore, it is necessary to observe the capabilities/qualifications requirements, particulary expertise and experience in the field, in which the relative personnel will hold certain functions.
Furthermore, it is also necessary to develop management and personnel qualifications through training.
I.9. The marketing channels of the project, should be designed as an integral part of the project. This will enable management to have control on the integrated overall operations and facilitate coordination between production and marketing.
The selling-price at the ponds is estimated to be Rp.1,200.-- per kilogram (head on). The price at the exporter's warehouse in Jakarta for quality A will be Rp. 3,000.-- per kilogram (head less) and for quality B Rp. 2,500.-- per kilogram (head less). Taking transport and handling costs into consideration, the Cooperative will be better off selling directly to Jakarta.
I.10. The investment required for this project is estimated at Rp. 533,940,000.--, to be allocated for the establishment of the Hatchery, Rp.190,620,000.-- and for the Commercial ponds, Rp.343,320,000.--.
The working capital required for the activities of the Hatchery is estimated to as Rp. 35,500,000.-- and for the commercial ponds to be managed by the Cooperative Rp. 21,600,000.--
The working capital for the Cooperative will be needed to finance the activities for 6 months, as the cooperative will start earning revenues after 6–7 months of operations.
I.11. As a project management unit of the DGF the financial sources for the establishment of the Hatchery as well as for its working capital is expected to come from the Government. Whereas for the Cooperative, financing expected to come from two sources, namely Government aid and credits from the Bank Rakyat Indonesia.
From farmers, members of the cooperative, no funds can be expected yet, as they are new transmigrants, and assumed to be unable, in the first few years, to reserve funds.
I.12. To finance the operation of the Cooperative, four alternative financial mixes between Government Aid and Credits from the Bank Rakyat Indonesia (B.R.I.) will be considered, as follows :
| Government Aid | Credit from Bank Rakyat Indonesia | |
| Alternative I | 40 pct. | 60 pct. |
| Alternative II | 50 pct. | 50 pct. |
| Alternative III | 60 pct. | 40 pct. |
| Alternative IV | 87 pct. | 13 pct. |
With alternative IV, it is assumed that the ponds and water-channels will be contributed by the Government to the Cooperative, so that the Government Aid will amount to Rp. 318,000,000.--
I.13. In calculating the Profit-Loss Projection for the Cooperative, two alternative production levels will be considered, along with the four alternative financial sources.
The matrix below indicate when the cooperative will be able to gain a net profit, given the alternative financial arrangements and production possibilities :
| Financial Alternative (Equity: Debt) | 1st Production Alternative 1,350 kgs.) | 2nd Production Alternative (2,000 kgs.) |
| 40 : 60 | 20th year | 8th year |
| 50 : 50 | 15th year | 6th year |
| 60 : 60 | 10th year | 5th year |
| 87 : 13 | 2nd year | 2nd year |
If the 4th financing alternative is used, namely where equity : debts 87 : 13 then the Cooperative will be able to gain a net profit in the 2nd of Rp.4,011,000.-- with a production of 1,350 kilograms/hectare/year, and Rp. 7,048,000.-- with a production of 2,000 kilograms/hectare/year.
I.14. In terms of the individual farmer, the operation of commercial ponds enable them to gain a reasonable perspective yearly profit.
If production is assumed to be 2,000 kilograms/hectare/year, then in the first year alone a profit of Rp. 619,000.-- will be gained, which will continuous to increase in the next years. If production is assumed to be 1,350 kilograms/hectare/year, then in the first year a profit will be gained of Rp. 221,000.--; in the 2nd year a loss of Rp. 147,000.-- will be sustained, because the juveniles have then to be purchased, and in the 3rd year a profit will be gained of Rp. 208,000.--, which will increase in the next years.
I.15. The financial rate of return of the Cooperative, if calculated in overall terms, including earnings of the farmers, will result in an Internal Rate of Return of 10 pct., with a production of 1,350 kilograms/hectare/year, and 19.83 pct. with a production of 2,000 kilograms/hectare/year.
Taken separately, with financial arrangement of 60 pct. from Government Aid and 40 pct loan, then the cooperative financial rate of return will be low, specifically 3.7 pct. with a production of 1,350 kilograms/hectare/year, and 3.76 pct. with a production of 2,000 kilograms/hectare/year. With financial arrangements of 87 pct. Equity and 13 pct. loan, the financial rates of return will become 56 pct. and 74 pct. respectively for the above production levels.
I.16. The economic rate of return for this project is calculated as a whole, including the Hatchery, the operation of ponds by farmers and shrimp processing as well as provision of production facilities by the Cooperative.
The calculation shows, that the cash inflow is expected to be sufficiently large, but this is obtained only after the 6th year and onwards.
With a production of 1,350 kilograms/hectare/year, the Economic Rate of Return will be 5.27 pct. and with a production 2,000 kilograms/hectare/ year, the Economic Rate of Return will be 13.44 pct. This low Economic Rate of Return is caused by the small size of the commercial ponds, resulting in an over-capacity at the Hatchery.
I.17. The choice of the financing alternative depends on the policy decision by the Government. However, if the policy is directed towards the development of undertakings by transmigrants, then alternative four, in which the building of ponds and water-channels will be the responsibility of the Government, would be the most suitable alternative. With such a policy farmers will be able to become self-supporting within a short time. If a conservative figure is taken and with the estimate, that the production per hectare/year is 1,350 kgs, then the financial rate of return will be 56 pct; furthermore, the loan of the Cooperative can be repaid in the fifth year.
This is definitely a good prospect, provided that the Government is prepared to invest in the interest of the development of these transmigrant farmers.
