CHAPTER 9
DEVELOPMENT COSTS OF COASTAL FISH FARMS

9. COST ITEMS IN THE DEVELOPMENT OF A FISH FARM

One of the major constraints that impede the development of coastal aquaculture not only in the region but also throughout the world is the high initial cost involved in site selection, planning/design activities, and actual construction of fishpond facilities. The initial cost of fishpond development comes from two sources, namely: cost of land and the cost of feasibility planning and designing activities. Subsequently, the major engineering cost consists of the actual construction.

9.1 Cost of land

The cost or value of land depends primarily on its earning capacity or in this case specifically on its suitability as a fishpond site. Normally, land value is a function of the amortized net returns of the products that can be produced from the land.

Land for fishpond development can be acquired by purchase from a private owner or through lease of public land. The acquisition of land by purchase is an important decision to make and an unwise judgement can lead to disastrous results. Prospective land buyers should determine, regardless of the market value, whether the production potential of the land justifies the purchase.

In most countries in the region, potential areas for coastal aquaculture are public or government property. Their acquisition by leasehold contracts are governed by the country's respective leasehold policies and regulations. In the Philippines, for example, the Bureau of Forest Development and Bureau of Lands in cooperation with the Bureau of Fisheries and Aquatic Resources (BFAR), all under the Ministry of Natural Resources (MNR) are in charge of the disposition of public lands for fishpond development. Applicants must comply with certain requirements and must adhere to established terms and conditions before the lease contract is issued. The annual lease rental is P30/ha/year. Maximum area that can be leased is 50 ha for individuals and 500 ha for associations or corporations. Fishpond sites can be leased for 25 years and renewable.

There are no general recommendations as to whether it is better to buy or lease land. The decision depends on the assets of the developer, the availability of land for sale and for lease, rates and preferences.

9.2 Feasibility planning and designing cost

The lack or absence of a proper plan and workable design for a coastal fishpond has often resulted in waste of money, time and effort. Despite recent advances made in coastal aquaculture development, especially in the field of culture management practices, there have been increasing problems in the planning and implementation of construction of projects. In order to come up with an integrated approach in the design and engineering of fish farm, the ideas of biologists, engineers, and economists should be considered.

9.2.1 Pre-construction evaluation work

Suitability of a particular area for fish culture is site specific and depends upon numerous factors. Sites are to be pro-rated in terms of their technical suitability and likelihood of economic viability and freedom from possible social constraints. The pre-construction evaluation is made up of the above analyses.

9.2.2 Costs

Feasibility planning and design of a small-scale fish farm is usually done by the proponent himself. However, large fish farms require the services of skilled and trained personnel. There are groups of specialists which specialize in this kind of work for which a fee is paid for their services.

There are no standard rates of charge for this kind of work. The cost generally depends on the extent of work that is required but in most cases, a fee of about 10 percent of the overall development cost is charged.

9.3 Construction cost

The major cost in coastal fishpond development is the cost of construction which is made up of three components, namely: cost of land clearing and grubbing, expenses for earthwork, and cost of construction and installation of water control gates and other structures. These works comprise about 50–70 percent of the total development cost.

In carrying out the construction work, a detailed plan and budget is required. It is also important that a construction schedule is prepared. Punctual execution of work activities according to the specified timetable will be necessary.

9.3.1 Land clearing and grubbing

Cost estimates for this operation depend largely on the type and density of vegetation in the area. Factors that affect work efficiency such as number, size, wood density and rooting system of trees and other vegetation are taken into consideration. One estimate of the total manual labour requirement for clearing a typical tidal forest according to specifications for fish farm development is 140 man-days/ha (Tang, 1977). The rate per day can vary for different areas, and if heavy equipment is used the costing will be different.

Generally, cost estimates are made on a per unit area basis (per ha or per acre). Sometimes, costs are computed in a per individual tree basis (e.g., 7 Philippine Pesos per tree of 20 cm or more trunk diameter in Aklan province, Philippines). Approximately, 10–12 percent of total construction cost is spent for this aspect of the construction work.

9.3.2 Earthwork

Earthwork for coastal fishpond development includes the construction of dikes, water supply and drainage canals and pond excavation and levelling. These operations constitute the major actual construction cost and the bulk of the construction work (estimated at about 50 percent or more).

Dikes are measured by volume. The volume for each kind of dike (main, secondary and tertiary) are estimated separately following the example given in Chapter 5. When the canals of the pond system have their own separate dikes or are not parts of the pond dikes, their volumes are also added to the total estimate. In outline form, the estimate for total volume is done as follows:

Pond excavation and levelling is done after the dikes have been constructed. The job includes a cut-and-fill method where certain areas are cut excavated and filled and dumped into the low areas.

Determination of the volume of soil to be moved can be determined from a prepared topographic map. However, an alternative method is being used which is done by manipulating the water level with the help of an ordinary wooden depth gauge (Fig. 6.24). The procedure is as follows:

The water level at the staff gauge or benchmark (Figs. 6.21 and 6.22) is lowered to the desired level of pond bottom. At this point, the waterline of all portions of the proposed pond that are exposes are staked out. The area of the exposed ground must be determined: this represents the excess elevation of the pond bottom and hence, must be removed by excavation. After staking out the exposed area, the water level is again raised up to the highest portion of the ground. Random measurement of water depths by the depth gauge within the limits of the exposed area follows in order to determine the average depth. The data obtained can be used in determining the average thickness of soil to be excavated and the volume of excavation.

The earthwork cost is estimated based on the needed time to finish the job or on the volume of soil or earth needed for the construction of dikes, supply and drainage canals and excavation/levelling according to the required engineering specifications. In manual construction, the total cost is usually calculated based on the actual earthmoving expenses for labour including construction tools. If machinery is used, the cost is estimated based on volume of earth moved, per unit area or per unit of time including equipment rent, operating costs and a profit margin for the owner.

9.3.3 Cost of water control gates and other structures/ facilities

The cost of construction and installation of water gates and other structures rank next to earthwork as the major expense items in the actual construction of coastal fishponds. The cost estimates for these items depend on the design and specifications proposed for the area. Approximately, 20 percent of the total development cost is spent for these items.

There are three types of gates commonly constructed in tidal fishponds. These are the main, secondary, and tertiary gates. Construction materials to be used can either be concrete, wood, or combination of both.

The cost of water control gates can be calculated based on the design (size, volume and type of construction materials) and the labour for construction and installation. Estimating the cost for water control gates can be done following the suggested method by the BFAR-UNDP/FAO, 1981.

(a) For concrete gate

(i) Use the following formula to calculate the area and volume of the walls, wings, floor, bridges, toes, aprons and cut-off-walls.

(ii) Use the following to determine the number of bags of cement, and volume of gravel and sand plus 10 percent allowance for wastage. This is based on class A mixture which has a proportion of one part cement, two parts sand, and four parts gravel.

(iii) Use the following to estimate the number of reinforcement bars using a standard length of 20 ft (6 m) per bar. Bars of 0.25 inch (0.6 cm) or 0.5-inch (1.3 cm) diameters are usually used, based on engineer's choice.

For the floor and toes:

For the walls, wings, etc.:

Where:	Aw = area of walls
	Ax = area of wings
	An = other areas on gate not previously included

(iv) Use the following to calculate the weight (kg) of tie wire (No. 16) required, multiply the total area of gate from (i) by the factor 0.3.

Weight of tie wire (kg) = A_T × 0.3
Where: A_T = total area of gate

(v) The volume of boulders needed is calculated by multiplying the floor area with the thickness of fill.

(vi) Form lumber is calculated by multiplying the area of walls, wings and bridges by 2. Plywood can be used as form while 2" × 3" (5 × 8 cm) lumber can be used as form support or braces.

(vii) Bamboo trunks (base) as pilings are calculated based on the floor area. In general, about 20 pieces of bamboo per m² are staked at about 0.25 m intervals.

(viii) Screens and wooden slabs are calculated based on the design of the gate.

(ix) Assorted nails needed for the construction is calculated based on the thickness of the form lumber used.

(x) Labour cost is estimated based on 35 to 40 percent of total cost of materials.

(xi) A contingency cost of 10 percent of the total cost of material is also included in the total cost estimate for the construction of a concrete gate.

(b) Wooden gate

(i) Determine size and number of lumber for the sidings and flooring based on the plan of the wooden gate. Compute for the total board feet (applicable in the Philippines where lumber dealers still use this unit) using the following formula:

Where:	L = length of lumber in feet
	W = width of lumber in inches
	T = thickness of lumber in inches

(ii) Compute for the total board feet required for the pillars and braces based on the design and specification of the gate.

(iii) Determine size and number of lumber needed for slabs and screen frames and compute the total board feet.

(iv) Calculate the assorted nails (bronze) needed based on the lumber used.

(v) Calculate the coal tar requirement in liters or number of containers based on their capacity.

(vi) Estimate the cost of nylon and bamboo screens needed.

(vii) Estimate labour cost at 30 to 40 percent of total material cost.

Examples of cost estimates for the construction of a concrete main gate, secondary wooden gate, and tertiary wooden gate are presented in Table 9.1.

(c) Other structures and facilities. A fish farm includes not only the pond system but also other support facilities. These include a caretaker's house, working shed, storage space, chilling tanks and others. To be able to make an accurate estimate, there must be a plan for these various facilities. Cost estimates depend on the floor area and type of construction material to be used. Cost of other structures and facilities comprise about 3 to 4 percent of the total development cost.

9.3.4 Other costs

In addition to the major expense items in coastal fishpond construction, there are other costs that are incurred in the development stage. Among these are the following:

Table 9.1
Example of estimate of material and labour requirement for water control gates
(after BFAR-UNDP/FAO, 1981)

(a) Purchase of equipment. Equipment are necessary in the proper operation and management of a fishpond. Cost for these items are normally included in the initial development cost. Among the important equipment required are fish nets, digging blades, shovels, scoop nets, cutting equipment, carpentry tools, and others. The required equipment should be listed down and their corresponding costs are estimated. Additional details on these equipment are given in Chapter 7.

(b) Contractor's tax, labour and profit. In some cases, fishpond investors hire the services of a private contractor to do the overall development of their fishpond projects. Under these circumstances, a fee is agreed beforehand between the owner or investor and the contracting party. The fee is composed of three major components. These are the commensurate payment of labour of the contractor plus a reasonable amount of profit. Since the fee represents the contractor's earning, it is a taxable income. It is common practice that the equivalent tax is borne by the investor and included in the total payment for the contractor's services.

(c) Contingencies. A contingency fund is normally set aside specifically intended for unexpected additional expenses.

For example, a certain amount must be allocated to cover inceases in prices of materials, cost of labour and for other expense items not included in the original cost estimate. At least 10 percent of the total development cost is assumed for contingencies.

9.4 Estimating development cost (Examples 9.1 and 9.2)

Presented in the following outlines are examples in estimating construction and development costs of coastal fishponds. The outline includes the sources of expenditures under each major cost item, bases for computing costs and estimated percentage cost composition.

Cost estimates for the improvement/renovation of an existing fishpond depend on existing physical conditions/ development and the extent of additional work/improvement to be done. Pre-development feasibility analysis may or may not be undertaken. Thus, the major expense items are expenses for construction and other costs.

The following are the possible sources of expenditures for a typical improvement/renovation work for an existing fishpond. Additional details on pond renovation are also given in Chapter 7.