4. ECONOMIC CONSIDERATIONS

The economic parameters for small scale, rural Tilapia fingerling production by individual farmers in Western Kenya have not been studied. The fingerlings produced and sold by the project are heavily subsidized, particularly in the transport of the fish from the fry centres to the farmers. The following is a preliminary examination of some of the principal factors involved in determining the economic viability of private Tilapia fingerling production in the rural sector.

4.1 Demand for Tilapia fingerlings

It is difficult to judge the actual demand for Tilapia fingerlings. Theoretically, with a recommended stocking density of 2 fingerlings/m² and a rearing cycle of 6 to 8 months, the existing 104,000 m² of pond surface area in Migori District would require between 312,000 and 416,000 fingerlings per year. However, many farmers in Migori, as well as all of Western Kenya, do not empty and restock their ponds on a regular basis. It is not uncommon to find ponds with the same stock of fish left for 2 or more years, the farmers occasionally take out a few large fish for personal consumption or sale. Additionally, in the event that the farmers do empty their pond completely, many of them will have sufficient or even excess numbers of fingerlings already present on their farms to restock and will not need to purchase them from an outside source.

This does not mean that there is not a demand for Tilapia fingerlings. The practice of continually removing the larger fish and leaving the smaller ones to grow will eventually lead to a deterioration of the genetic quality of the fish in a pond, resulting in slow growing, stunted fish. These fish need to be replaced. Farmers loose their entire fish stock through natural disasters such as drought or floods. Many farmers have seasonal ponds that require stocking each year. New farmers require a stock to begin with.

The project has recently introduced as a culture species the African Catfish, Clarias gariepinus. Initially, this fish is used in a polyculture with Tilapia. The predatory habits of this fish greatly reduce the number of Tilapia fingerlings present in the pond. While this leads to larger Tilapia at harvest, there is a need to regularly replace the Tilapia stock.

One of the major goals of the project is to increase the fish production in existing ponds. This requires improved management techniques such as regular and complete harvests with perhaps mono-sex male culture of Tilapia, and/or polyculture with clarias. Any of these techniques for increased production will require a regular supply of Tilapia fingerlings.

At this point, while it is obvious that there it is some demand for Tilapia fingerlings, it is extremely difficult to quantity the present and future requirements. The current management practices of the majority of the farmers is to keep the same stock of fish for several years. This is due to several factors; there are socio-economic considerations such as the perception of some farmers that his fish are a strategic reserve of either food or money. Many farmers hesitate to introduce better management practices and regularly, completely empty their ponds because they are unsure of obtaining replacement fingerlings. This leads to a vicious circle; the farmers don't empty their ponds due to a lack of regular supply of fingerlings, yet the regular supply will not develop if there is no regular demand.

In summary, the current demand for Tilapia fingerlings is sporadic at best and very difficult to determine. The demand for fingerlings in the future will largely be based on the improvement of fish farming husbandry practices by the rural farmers. The introduction of polyculture with clarias and the introduction of all male Tilapia culture will be the engine creating the demand for replacement Tilapia fingerlings.

4.2 Cost of production

The calculation of the unit cost of producing a Tilapia fingerling in the rural environment is subject to interpretation. For example, the above farmers were basically selling surplus, small fish from their production ponds. On one hand, this could be considered a valuable bi-product of the main activity of rearing market size fish. On the other hand, if the small fish remained in the pond, it is unlikely that the entire stock would have grown to market size, and the removal of the small fish was necessary to lower the density to allow the remaining fish to grow faster. With this second interpretation, removal of the fingerlings could even be considered as a management cost.

For the purposes of this paper, analysis will be made on an assumption that a dedicated fingerling production system is used and where a number of ponds are managed with the sole purpose of producing fingerlings for either sale or restocking into grow out ponds on the same farm.

4.2.1 Pond surface area

The basic method for Tilapia fingerling production as taught to the farmers can be resumed as follows. Two ponds are needed, the first called a breeding pond. Sexually mature Tilapia of 150 – 250 g are stocked at a sex ratio of 3 females to 1 male, 4 fish in 5 m² of pond surface. After 6 weeks, fingerlings are seined out at an interval of every 2 weeks. The temperature regime in Migori district is such to allow year-around spawning of Tilapia. This technique will result in a minimum of 50 fingerlings per female per year, although much higher results have been obtained with improved management (commercial farms under experienced management easily achieve over 500 fingerlings / female / year using the same techniques). For simplicity, a 100 m² pond will be used for calculations. A pond will yield between 2.5 and 10 fingerlings / m² / month, or an annual rate of 30 to 120 fingerlings per m², 100 m² thus producing annually 3,000 to 12,000 per year. We will retain the lower value for all further calculations, although again, through better management, the higher values can be achieved.

If seining is done regularly, the fingerlings removed from the breeding pond will be between 3 and 5 g. The best size for transportation and stocking of fingerlings is 10 – 15g. A second pond, termed the fingerling pond, of approximately the same surface area is needed to grow these smaller fish to 10–15 g in one month. The surface area needed is then doubled: 200 m² is needed to annually produce 3,000 15 g fingerlings.

This rate of fingerling production is theoretically sufficient to fully stock, twice in one year, 750 m² of grow-out production ponds. This represents a surface area ratio between grow out and fingerling production of 3.75 to 1, which is comparatively low. In actual practice, commercial Tilapia pond rearing farms where fingerlings are produced in the same manner have a surface area ratio of between 5 to 1 and 10 to 1. The major factor is the temperature regime; the higher ratio is possible when year-around spawning occurs. On a commercial farm, some specialized breeding ponds may be kept fallow for some months, some may be used solely for broodstock maintenance, and some may double as both spawning and grow-out ponds.

The goal of any fish farmer, be it a commercial producer or a small scale rural farmer, is to use the minimum pond surface area to supply the necessary number of fingerlings, either for sale or for restocking his own ponds. Better management would improve the ratio using the same surface area.

Extrapolation to a higher level is questionable. In Migori District, there is a theoretical, maximum current demand of 416,000 fingerlings per year for a total of 104,000 m² of pond surface area. With the above ratio, some 22,000 m² would be necessary for fingerling production, or about 21 % of the total surface area. It is extremely unlikely that anywhere near this proportion of pond area would be dedicated to fingerling production. The only logical approach is to use a smaller area and intensify the fingerling production through improved management.

4.2.2 Feeding

When the Tilapia fry have consumed their yolksac, the initial external feed is zooplankton. This requires a well fertilized pond. For increased fingerling production, it is crucial that both the breeding and fingerling pond are heavily manured.

After the fish obtain 500 mg, they will readily accept and digest added feeds given by the farmer, while still utilizing natural feed available in the pond. Tilapia of this size are growing at a very rapid rate, doubling in size every few days, and can utilize very efficiently all food stuffs. In a well manured pond, added feed with a high energy content and a protein content of about 24 % will result in a dry weight to wet weight food conversion ratio of less than one.

4.2.3 Other materials

On the farm, the Tilapia fingerling producer requires a small mesh seine net and plastic buckets or similar containers.

4.2.4 Transport

If the farmer is to deliver the fish elsewhere for sale, some means of transport and specialized containers are needed. Transport of fingerlings by motor vehicle is prohibitively expensive when one considers the fuel, maintenance, and replacement cost of the vehicle. If the full cost of owning and operating a vehicle is added to the production cost of a fingerling, it is no longer profitable.

The small scale fingerling producer must market his fish within a radius that is accessible on foot, bicycle, public transport, or some similar means. In this case, the transport cost can be added to the “farm gate” price.

4.2.5 Estimate of unit cost of production

The following is an estimated calculation of the unit cost of producing a Tilapia fingerling on a small scale, rural farm in Migori District. We make the following assumptions:

• 2 ponds of 100 m² each are needed.

• Cost of the pond including inlet and drain pipes: Ksh ⁽¹⁾ 5,000 / 100m², 20 year life span. Cost per year for 2 ponds: Ksh 500.

• Brood stock valued at Ksh 40/kg, 80 breeders @ 200 g, 16 kg = Ksh 640.

• Animal manure, 1 wheel barrow per week, Ksh 10 × 52 = Ksh 520.

• No supplementary feed is necessary except at the higher levels of management and production, at which a 24 % protein, high energy feed costing Ksh 14.00/kg is given with a food conversion of 1.5 to 1, dry weight to live fingerling fish weight.

⁽¹⁾ 1 US $ = 50 Kenya Shillings, 1995

TABLE 2
ESTIMATION OF UNIT COST OF PRODUCTION FOR TILAPIA FINGERLINGS AT DIFFERENT YIELDS, 200 M² POND SURFACE AREA

The above table is only an estimate and has not been verified with actual field results. However, it is clear that increased production levels through better management should lower the unit cost of a Tilapia fingerling. The table also raises the point that feeding a quality feed to fingerlings may not necessarily be economically advisable. Should all male, sexed fingerlings be produced, the unit cost would be roughly twice the above as the females would have little if any value for sale.

4.3 Tilapia fingerling prices

The unit cost of a Tilapia fingerling must be low enough to make the on-rearing economically viable, and still allow a reasonable profit by the producer. One must also consider the mortality and loses that occur during the grow out period; less numbers of fish are present at harvest, which effectively increases the unit cost of his fingerlings. For example, if there is a 20 % mortality over the grow out period, the farmer's cost per fingerling has increased by 20%. If a farmer raises 5 fish to 200 g and sells them for about Ksh 40/kg, his fingerling cost is actually for 6 fish.

In Migori District, the fingerling price in farmer to farmer sales is around Ksh 1.00 a piece for mixed sex, 15 g fingerlings. At this time, no farmers are selling all male fingerlings. At this price, and using the table of estimated production costs, there is a theoretical profit for the fingerling producer. The farmer who purchases the fingerlings for grow out to market size, however, is paying at least 15 % of the potential sale price of his fish.

This should be reduced. The unit cost of a fingerling should not represent more than 10% of the potential sale price. This can be accomplished through better management practices at the fingerling production level leading to a lower unit cost and a lower sale price. Lower prices should also stimulate more demand, leading to more production, more sales, and consequently more profit to the producer.

4.4 Fingerling production versus grow out

In actual practice, the challenge to the project is to convince a small scale, rural farmer that it is perhaps more to his economic benefit to produce and sell Tilapia fingerlings than to use the same pond for production of marketable fish. For the purposes of comparison, as in Table 2, two ponds of 100 m² each are used for the following calculations. Table 3 presents the annual potential profit from producing and selling fingerlings at a unit price of Ksh 0.80 and 1.00 a piece.

TABLE 3
ESTIMATED POTENTIAL PROFITS FROM TILAPIA FINGERLING PRODUCTION

In Migori District, recorded fish production values for ponds used in the production of table size fish range from 15 to 50 kg/are/year. Production costs are similar to those of the fingerling producer; fixed costs for the pond, manure, and equipment are the same with feed costs increasing with higher production. The cost of fingerlings must be added. Using 200 m² of ponds with a similar rate of manuring, the farmer should expect a harvest of about 50 kg/are/year, or 100 kg of table size, salable fish. At Ksh 40/kg this represents Ksh 4 000, however when the fixed costs of fingerlings (Ksh 800), pond (Ksh 500), and manure (Ksh 520) are reduced, this leaves a profit of Ksh 2 180. At all but the lowest level of fingerling production, it is more profitable to raise fingerlings than raise table size fish.