NATIONAL PLAN FOR DEVELOPMENT OF AQUACULTURE IN THE PHILIPPINES^1/

1. BACKGROUND AND JUSTIFICATION

1.1 Status of Fish Production, Supply and Demand

1.1.1 Total production

Total fish production from commercial and municipal fisheries and aquaculture during the past six years increased from 937 684 tons in 1968 to 1 243 268 tons in 1974, with a growth rate of 4.9 percent (as against 4.6 percent for 1968-72). Production in 1974 from the different sectors of fisheries was as follows:

Capture fisheries	tons
Marine - commercial	445 675
Marine - municipal	581 840
Inland (rivers, Lakes, dams, etc.)	102 658
Aquaculture (coastal or brackishwater)	113 195
Total	1 243 368

1.1.2 Fish supply situation

The actual available supply of fish for food in the Philippines in 1974 was 1 304 000 tons. This represents domestic production (1 243 400 tons) supplemented by net imports (61 000 tons). Fish supply situation in the Philippines in 1974 was therefore as follows:

		thousand tons
Domestic production		1 243.4
	Imports (excludes fish meal)	78.5
	Exports (converted to round weights)	17.5
Net import		61.0
Available supply (after imports and exports were converted to their equivalent live or round weights, the resulting net import (import minus export) is added to domestic production to give the total supply available for human consumption).		1 304.4

1.1.3 Exports and imports

Significant developments in external trade occurred in 1969-74. Although consistent trade deficits have occurred during this period, the quantity of exports of fish and fishery products has exhibited an annual growth rate of 55 percent. On the other hand, fish and fishery product import declined at an average rate of 4.5 percent.

Tuna, shrimps and lobsters, which make up about 60 percent of the total Philippine fishery exports, showed a dramatic increase of 170 percent from 1971 to 1973. This trend was, however, reversed for shrimps and lobsters in 1974.

The quantity of imports declined from 68 900 tons in 1971 to 41 200 tons in 1973. It will be noted that during this period importation of mackerel, which accounts for about 75 percent of the total imports, was reduced to 58 percent. Importation of fish meal was likewise reduced from 10 100 tons to 1 300 tons, but this was a result of the failure of the Peruvian fish meal supply in 1973. Heavy importation of fish meal was again recorded in 1974.

^1/ Prepared by Miss N.C. Macalincag, Chief, Planning and Management Staff, Bureau of Fisheries and Aquatic Resources, and Mr. P.A. Acosta, Chief, Fish Propagation Division, Bureau of Fisheries and Aquatic Resources, Manila

In 1971 external trade in fisheries exhibited about P.ps. 100 million^1/ deficit, but this was almost balanced in 1973. However, the value of imports in 1974 again exceeded exports by P.ps. 100 million. Details of the quantity and value of exports and imports are given in Table 1.

^1/ U.S.$ 1.00 = approx. P.ps. 7.50

1.1.4 Demand for fish

The total effective demand for fish in 1974 was 1 304 400 tons (available supply). This represents a per caput consumption of 31.2 kg. The effective demand for fish (human consumption) for the period between 1974 and 1985 is given in Table 2, with the projections being calculated by using the following equation:

where:

D_t = demand at year t
D₀ = demand at the base year
p = annual growth rate of population
g = annual growth rate of income per caput
e = income elasticity of demand
t = number of years after the base year

The Bureau of Fisheries and Aquatic Resources (BFAR) used 1974 as the base year with the corresponding value of effective demand (D₀) of 1 304 400 tons. This is equal to domestic production plus net imports in 1974, all converted to round weights. For the period 1974 to 1980, value taken for annual growth rate of population is 3.01 percent; annual growth rate of income is 3.6 percent; and income elasticity of demand is 0.55.

1.1.5 Effective demand and production targets

One of the primary objectives of the fish production programme of the. Government is to attain self-sufficiency. Viewed in another way, the goal is to achieve zero net import, and ultimately expand net exports. Effective demand and future production figures based on historical data (4.9 percent growth rate) and the planned production programme of the Government (6.6 percent growth rate) are given in Table 2.

1.2 Status of Aquaculture Development

The Philippines is endowed with vast potential for aquaculture in fresh, brackish and marine waters. At present development is mostly in brackishwater areas, while development of both the freshwater and marine areas has just started.

The total production of the 176 000 ha of brackishwater fishponds in operation in 1973 amounted to 99 600 tons and was valued at P.ps. 434 million. This represented 9 percent of 1 204 837 tons total fish production for the same year. The average production/ha/year is only 500-700 kg. The intensification of production by the application of improved management practices is urgently required.

In freshwater fish culture, about 6 000 ha of fishponds have been developed so far. Since freshwater fish culture has only recently been initiated, average production/ha/year is only about 400 kg.

Other production systems practised in the Philippines include the culture of seaweeds in coastal marine waters, the culture of fish in pens in freshwater areas, as well as the culture of rice and fish in rotation in rice fields. The Government is also undertaking a fish "dispersal" programme which consists of stocking inland communal water bodies with fingerlings produced in its freshwater and brackishwater farms or stations. It is assumed that the recovery from the Government fish dispersal programme ranges from 20 to 30 percent of stocked fish, i.e., the incremental fish production from the bodies of natural waters by stocking is 0.015 ton/ha/year. Estimated quantity and value of production in the various types of fish farms are given in Table 3.

These fish farms produce a variety of products: fish, crustaceans, shellfish, seaweeds and fingerlings for stocking and "dispersal" purposes. Available data at the time of writing are presented in Table 4. Except for seaweeds, which are exported in the dry state, and aqua farm seed production (fingerlings) which are utilized for dispersal purposes, all aquaculture output is for direct human consumption.

Aquaculture provides direct employment to about 179 000 farmers (fishponds, fish pens, and seaweed farming). Indirectly it also gives employment opportunities to fry gatherers and people engaged in fry-fingerling trade operations. The contribution of milkfish exports has slowly but steadily increased. In terms of meeting the protein requirements of the Filipinos, milkfish leads the list of fish species consumed locally.

The present Four Year Expanded Fisheries Programme for fiscal years 1975-78 under the National Economic Development Plan gives top priority to aquaculture development as a means to meet the effective demand for fish. Reasons for giving it top priority are:

(a) Culture of milkfish in the Philippines is traditional and although at present the average production is quite low, it is just a matter of transfer of technology from those who know to those who do not know. With available technology present production can be increased two or threefold.

(b) There are still large areas of swamplands available for conversion into fishponds (approx. 400 000 ha for brackishwater and 126 000 ha for freshwater ponds, not to mention coves or inlets of marine waters which offer potential sites for fish culture).

(c) Presently the effect of pollution is minimal.

(d) It is labour-intensive and therefore complements the Government economic development policies. Especially in small-scale operations, manual labour is preferred to mechanization.

(e) Except for fertilizer, almost all inputs can be obtained locally.

(f) Aquaculture development will support the rural economic activities and dispersal programme of the Government.

2. DEVELOPMENT POLICIES AND OBJECTIVES

2.1 Policies

Government policies for aquaculture development are as follows:

(a) To increase and conserve the fishery resources by intensifying fish stocking in inland Waters and protecting the spawning grounds of fishes.

(b) To classify available swamplands according to their suitability or fitness for fishpond purposes.

(c) To provide loans to the fishery industry making it mandatory for the Central Bank, Development Bank of the Philippines, Philippine National Bank, Veterans Bank and Rural Banks to grant loans for the development of fishponds and to leaseholders of public lands for developing fishponds (refer to Annex A for some financing schemes for aquaculture).

(d) To make available public lands for fishponds. Public lands available for fishpond development and not yet leased, including those earmarked for development of family-size fishponds, shall be leased only to qualified persons, associations, cooperatives and cooperations.

(e) To provide for the construction and development of family-size fishponds. For the purpose of accelerating the development of fishponds, the Bureau shall identify public lands which shall be subdivided into economic family-size fishponds, and distribute them to qualified lease applicants.

In addition to these national policies, the following fishery administrative orders to support the development of the milkfish industry have been issued.

(a) Regulations for the conservation of "sabalo" (full-grown bangus or milkfish) and for the prohibition of the exportation to foreign countries of "Kawag-kawag" (bangus or milkfish fry) and "hatirin" (bangus fingerling).

(b) Special rules and regulations governing the issuance of fishpond permits and/or leases within the areas affected by the fishpond project of Manila Bay.

(c) Regulations governing the issuance of fishpond permits and/or leases on public forest lands.

(d) Regulations covering the establishment of fishponds and fish enclosures in inland waters.

2.2 Objectives

The objectives of the aquaculture development programme are threefold:

(a) To ensure a steady and sufficient supply of fish and other fishery products for the increasing population.

(b) To reduce to a minimum level fishery importation.

(c) To increase fish and fishery product exportation.

2.3 Strategy

For production the major strategy is to increase production through either one or a combination of the following:

(a) increasing the yield per hectare of inland waters;
(b) increasing the area of fishponds.

Inasmuch as the first approach will give more harvest per unit cost and immediate results, it will be given more emphasis.

On the utilization of aquafarm products, efforts shall be concentrated on elimination of wastage in processing, marketing and distribution, and on earning and saving foreign exchange through the development of export products and import substitutes.

The BFAR will intensify efforts in pursuing extension work and research and encourage private initiative to be supported by public financing. Special attention will be given to processing and marketing instead of the almost exclusive concentration on production. Full use will be made of the coordinating efforts of the Bureau of Fisheries and Aquatic Resources as the implementing agency for fish production, together with other agencies such as the Bureau of Lands, Bureau of Forest Development, Bureau of Agricultural Extension, Bureau of Agricultural Economics and financial institutions.

The BFAR will concentrate its resources on targeted areas of fishfarm improvement and development. This calls for optimum use of BFAR personnel and budget through redeployment of these resources into high priority projects.

2.4 Production Targets

The Expanded Fish Production Programme envisions that over a certain period of time the aquaculture sector will contribute 48 percent of total production. This is achievable at an average growth rate of 19 percent, and hopefully by 1985 the total production from aquaculture will be in the order of 1 227 400 tons (see Table 5). However, there are two more likely possibilities, that is by 1985 production from the sector could be 176 000 tons (column 1 based on historical growth rate) or 701 700 tons (column 4 based on medium projections). Assuming that the medium projection is most likely to occur, and assuming further that the present yields from existing fishponds could be doubled (column 6), there is still the imperative need to tap new areas as possible sources of aquaculture output (column 6).

In the Government's current expanded fish production programme, the targeted incremental production in 1976 from aquaculture is 43 000 tons of fish (increase in production from 21.2. 800 tons in 1975 to 255 800 tons in 1976). This is designed to come from:

(a) Freshwater	tons
Yield of new area - 3 900 ha at 1.5 tons/ha	2 900
Incremental yield of improved existing fishponds - 5 700 ha at 1.5 tons/ha	8 600
Incremental yield of inland waters, lakes - 427 000 ha stocked with fingerling at .015 ton/ha Rate of recovery	6 400
Sub-total	17 900
(b) Brackishwater
Yield of new area - 5 000 ha at 1.5 tons/ha	3 700
Yield of new oyster and tahong farms - 520 ha at 3 tons/ha	600
Incremental yield of improved existing fishponds 13 200 ha at 1.5 tons/ha	19 800
Sub-total	25 100
Total	43 000

2.5 Fish Farming Systems and Cultured Species

2.5.1 Milkfish farming

The total area utilized for milkfish culture in 1973 was 176 000 ha, producing 99 600 tons valued at P.ps. 434 million. The species utilized is Chanos chanos. Milkfish is grown on natural food, consisting mainly of microbenthic algae and some filamentous algae. Algae are produced following pond fertilization with both organic and inorganic fertilizers.

2.5.2 Freshwater fish farming

Culture of freshwater fishes is still in its initial stage of development. There are at present 6 000 ha of freshwater ponds in extensive production. Among the species utilized for this type of culture are the common carp (Cyprinio carpio), silver carp (Hypopthalmichthys nobilis), grass carp (Ctenapharyngodon idella), Indian carp (Catla catla and Mrigal), Tilapia (Tilapia mossambica) and catfish (Clarias batrachus and Clarias macrocephalus). Lately eel farming has been undertaken by the private sector. Production from freshwater fishponds is still very low, approximating 400-800 kg/ha. This is due to the fact that pond management is still extensive in nature. In addition to these freshwater ponds, there are 6 000 ha of fish pens producing 30 000 tons of fish. The principal species used in fish pens is the milkfish. Other species are being experimented with due to shortage of milkfish fingerlings which cause high prices.

Freshwater fish farms may be classified into three types as follows:

(a) Lowland fish farm - There are 6 000 ha of this type of fish farm constructed in the interior delta areas along the major river systems.

(b) Upland fish farm - A total area of 22 ha of rainfed ponds or impoundments represent this type. Either one or a combination of the species of fish used in the lowland fish farms are also utilized for this type of fish farm.

(c) Fish pen - There are about 600 ha of fish pens established in the major lakes.

These types of fish farming depend largely on natural food and occasionally on a very little amount of artificial food.

Another type of fish farming system in freshwaters is where a high level of artificial feed is used. Included in this category are catfish and eel culture. These have just started and are still in the pilot project stage. The possibility of expansion will depend largely on the availability of trash fish, which is in short supply at present.

2.5.3 Mariculture

Culture of marine species is still in its initial stage. However, because of the existing, potential resources and the expected economic benefits, the Government is intending to develop this sector rapidly.

In the next ten years, new directions in aquaculture are expected to be initiated. Even at this time there is a growing interest in the culture of other species in fresh water, brackish water, and marine water. Species that are considered to have potential for mariculture are the following:

(a) Crustaceans

(i) Shrimps (Penaeus monodon, P. semisulcatus, P. merguiensis, Metapenaeus monoceros)

(ii) Spiny lobsters (Palunirus sp.)

(iii) Squid (Loligo sp.)

(b) Seaweeds - (Eucheuma sp., Digenea sp., Porphyra sp.)

(c) Shellfish

(i) Oysters (Crassostrea sp.)

(ii) Mussels (Mytilus sp.)

(iii) Window pane shell (Placuna placenta)

(iv) Pearl oysters (Pinctada sp.)

(d) Fish

(i) Stromateus niger, Lates calcarifer, Scatophagus argus, Teuthis sp., Mugil sp., for food supply

(ii) Tropical marine aquarium fishes

3. INFRASTRUCTURE

In order to accelerate the development of aquaculture, physical facilities and other services are provided by the Government. These include the provision of extension services, training of core personnel, organization of research and provision of better marketing and distribution facilities. In due time and in order to cope with the expected expansion in aquaculture production, related expansion is being planned for these facilities.

3.1 Extension Service

The current development programme of the Government depends heavily on its extension programme. To be able to effectively carry out the extension service it is so organized that authority and responsibility are clearly defined for the regional, provincial, municipal and barrio (village) levels. Presently, there are 12 regional coordinators, 18 provincial programme officers and 45 technicians supervising the extension activities of 176 extension workers. At the municipal level, the extension worker involves himself directly in operational activities of the farmers by teaching them cultural and management practices in stock manipulation, feeding, etc. Assistance is also given in the form of guidance on proper construction and layout of fishponds. Operators are also assisted in preparing simple feasibility studies for acquiring loans from banking institutions, and also in the procurement of fertilizers, feeds and fish seedlings.

The Government is operating 11 freshwater demonstration farms, nine brackishwater farms and six oyster farms. Extension workers are required to work in these demonstration farms from time to time, as part of their training activities, to reorient or acquaint themselves with new technology or developments in such farms.

Two external assistance projects, the UNDP Brackishwater Extension and Training and the USAID Aquaculture Production projects, will reinforce the Government extension programme.

To provide more strength to the extension programme of the Government an extension division has been organized. One of the activities of the division is to serve as a liaison between the office of the Director and the Regional Offices.

3.2 Training

In 1971 several short-term courses were conducted by the Bureau of Fisheries and Aquatic Resources on fish production, extension and training methods, brackishwater fishpond fertilization and project feasibility studies for pond development. Participants, although mostly from the Bureau of Fisheries and Aquatic Resources, also included personnel from banking institutions which finance fishery projects, and local officials of the Government.

In the present four-year programme the Government set out an integrated training approach for aquaculture, to complement its targeted production output expectations. The design of such a scheme is as follows:

(a) Training of national staff. A national staff composed of biologists and engineers, etc., will have on-the-job training on site selection, design and construction of farms and installations, farm management, fish health inspection, disease control, handling, harvesting, and proper handling of farm produce.

(b) Training of regional staff. The national staff will train biologists, engineers and demonstration farm staff at the regional level.

(c) Training of extension workers, bank appraisers and local officials of the Government. The regional staff assigned to the region or demonstration farms will in turn train extension workers, bank appraisers and local officials. The training of bank appraisers and local officials of the Government seems to be very necessary in implementing a development-oriented aquaculture programme where they are deeply involved. On-the-job training will be supplemented by lectures or short-term courses on pond fisheries extension and communication methods, fishpond fertilization schemes, nursery and hatchery operations, and economic analysis.

The USAID project which is in progress in the Bicol and Panay Regions and the recently approved UNDP project will be of valuable assistance in implementing the training programme envisaged.

3.3 Organization of Research

In the field of fisheries the Philippine Council for Agricultural Research has identified the priority problems and manpower requirements for research. This is extremely important to establish the direction, and prevent duplication, of research efforts of institutions like the University of the Philippines (presently assisted by USAID) and other universities, the Bureau of Fisheries and Aquatic Resources, the National Science Development Board, as well as the private sector. Likewise the Philippine Council for Agricultural Research is cooperating very closely with the Aquaculture Department of the Southeast Asian Fisheries Development Center.

On 7-10 March 1975, the first Philippine Council for Agricultural Research (PCAR) Congress was held. Among the salient features of this congress were the refinement of a mechanism for formulating and updating direction in aquaculture research and the determination of priorities that should be followed. Priority areas identified by the Philippine Council for Agricultural Research are:

Fish seed supply and fish seed improvement

- Spawning of Chanos chanos from natural stock;
- Development of techniques for massive production of monosex tilapia, carps and hito (Clarias);
- Production of milkfish breeders and their induced spawning under controlled conditions;
- Hatchery studies on saltwater fishes;
- Pilot shellfish hatchery/nursery complex;
- Studies to improve survival of milkfish fry and fingerlings.

Fish farm construction

- Survey of engineering structures and problems in aquaculture;

- Studies on pond construction methodology;

- Fish farm design to suit different aquaculture practices, physical features of the area and climate of the region.

Fish food crop production

- Fertilization to increase fish food production

Fish feeds and feeding

- Feeding trials on the basic nutrient requirements of cultivated pond fishes;
- Identification and screening of potential feedstuffs;
- Studies on locally available supplementary feeds and their food value.

Development of new systems and new products

- Development of shellfish mariculture technology based on biological and breeding studies of species of economic importance:

(a) Crassostrea sp. (oyster)
(b) Mytilus sp. (Tahong)
(c) Placuna placenta (Kapis)
(d) Anadara sp. (cockle)

- Studies on propagation and culture of:

(a) Penaeid shrimps
(b) Macrobrachium sp.
(c) Freshwater molluscs

- Mono- and multi-species fish culture;

- Studies on fish pen and cage culture systems;

- Feasibility of culture of siganids, spade fish, mullets and sea bass in brackishwater ponds;

- Studies on rice-cum-fish culture system;

- Development of new products for domestic and/or export markets;

- Development of better and faster-growing strains of seaweeds with high yield of carrageenan, alginic acid, agar and other phycocolloids.

Diseases and parasites and control measures

- Studies on seaweed diseases;

- Studies on control of plant and animal pests and effects of pesticides on fishponds;

- Compilation of detailed description of known parasites of Philippine fishes and their host species; distribution of parasites and identification of diseases in different types of fish farms.

Social and economic studies of fish fanning business and fish farming communities

- Sociological studies on dissemination and application of new technology in fish farming and feedback of industry problems at fish farm level;

- Socio-economic survey of aquaculture industry.

Marketing, storage and distribution of aqua-products

- Studies on channels of distribution, flow system and trading practices in relation to marketing costs and margins;

- Freezing, cold storage and processing of aqua-products;

- Establishment of quality standards and requirements for aqua-products.

In addition to the identification of research priorities, PCAR implemented a programme to strengthen the research capabilities of the different research institutions. It is sponsoring jointly with the Department of Natural Resources (DNR) a training programme for research staff of the Bureau of Fisheries and Aquatic Resources, Bureau of Vocational Education, University of the Philippines, and other institutions. Post-graduate training is also sponsored by regional and international assistance organizations.

3.4 Marketing and Distribution

Most of the fish farm areas are inaccessible either by road or water. Generally, production from the farms is consumed in the locality. Besides creating a negative incentive to produce more, this kind of marketing deprives the farmer of better dividends for his produce.

While the present system is being improved, initial action is being taken to integrate marketing and distribution of fish and fishery products. A study has already been conducted to determine fish movements from within and outside each province and region, to identify areas of oversupply, sufficiency and deficiency.

The integrated plan consists of establishing collection centres in oversupplied areas of the country. The collection centres will have the following facilities:

(a) refrigeration (complete with ice making, freezing, fish storage and ice storage),
(b) fish landing, and
(c) marketing.

These collection centres will be supported by satellite installations of refrigeration facilities with ice making, ice storage and fish storage, constructed in production areas. Aquaculture produce can be stored for short periods for subsequent transport to the main collection centres. From the fish collection centres fish will be transported either by boat or by air to fish - deficient areas. The Luzon area will be ready for a bigger volume of operations with the completion of the Navotas fishing port.

Eventually the plan will be to provide storage facilities in other fish-deficient areas. The construction of farm-to-market roads will go a long way in supporting the fish distribution system.

4. PRODUCTION PROGRAMMES

4.1 Government's Supporting Activities

Several action-oriented projects designed to support the aquaculture production programme are:

(a) Fingerling production and "dispersal". Carp fingerlings produced and milkfish fry reared to fingerling sizes in BFAR stations are stocked in communal bodies of water to increase the natural fish population of such bodies of water. An annual production target of 40-60 million fingerlings for stocking 400 000 ha of communal bodies of water is projected during the plan period. Estimated Government appropriations for the plan period are P.ps. 5.6 million annually.

(b) Extension and demonstration services. Extension workers will be deployed in targeted provinces where they will render technical assistance and help fishpond operators improve the yield of fishponds. Public funding support will range from P.ps. 3 million in 1976 to P.ps. 5.3 million in 1985. Estimated expenditures for extension and demonstration services over a period of ten years is given in Table 6.

(c) Research. Aside from supplementing the extension service project, research activities are expected to solve critical bottlenecks, particularly in pond fertilization, pest and disease control, and those stated in section 3.3. Estimated expenditures from 1976 to 1985 for research will range from P.ps. 5 million to P.ps. 7.8 million as shown in Table 7.

(d) Leasing fishponds. Issuance of lease agreements is being accelerated in order to hasten development efforts by operators. The annual target during the plan period is to lease 2 000-3 000 ha of public swamplands. P.ps. 200 000 is the annual estimated expenditure for this project.

(e) Fishpond development survey (zoning). This is a project to determine public lands, tidal and mangrove swamps, marshes and ponds in the country suitable for fishponds. A zoning survey committee comprising personnel from the Forest Development and Lands is directing this project to speed up its rate of implementation. To date, 22 769 ha have been surveyed. Fishpond areas identified come under the jurisdiction of the Bureau of Fisheries and Aquatic Resources, and will be made available for development of aquaculture. Expected duration of the project is five years and will entail a yearly expenditure ranging from P.ps. 2.5 million to P.ps. 3.6 million.

(f) Training. To promote and hasten inland fisheries production and development, various training activities will be carried out by the BFAR for both the private sector and its own technical force, as mentioned in section 3.2. Government appropriation for this activity is estimated to range from P.ps. 1.3 million in 1976 to P.ps. 2.5 million in 1985, as indicated in Table 8.

4.2 Government Budgets and Private Financing and Credit

4.2.1 Government budgets

Public investment necessary to support the aquaculture programme within the plan period is estimated to be P.ps. 27-29 million as indicated in Table 9.

4.2.2 Private investment required for aquaculture development

Financing available to the fishing industry used to be so limited that the industry could not expand at the desired rate until the attention of financing institutions and investors was directed to the demand gap in fish and the investment requirements of the different sectors of the industry through the Expanded Fish Production Programme of BFAR. At present, financial institutions supporting the fisheries industry are the Development Bank of the Philippines (DBP), Central Bank, Rural Bank and the Philippine National Bank (PNB).

In 1976 incremental production from aquaculture is targeted to be 43 000 tons. The estimate of capital cost is P.ps. 152 million with a working capital requirements of P.ps. 53 million, or a total investment cost of P.ps. 205 million, as shown in Table 10.

A model investment plan for a new 24-ha fishpond was prepared by the Development Bank of the Philippines (DBP) for World Bank financing, and total estimated cost is P.ps. 383 800. The fixed cost component is P.ps. 329 400 with a working capital requirement of P.ps. 54 400. For a ten-year period, annual operating costs range from P.ps. 83 000 to P.ps. 168 000. Financial rate of return for this project is 33.5 percent. Details of total cost, fixed cost, and operating cost of the model are given in Tables 11, 12 and 13 respectively.

On the other hand, the total project cost for improving an existing 24-ha fishpond is P.ps. 226 000. The fixed cost component is P.ps. 187 800, and working capital requirement is P.ps. 38 200. Annual operating costs for a ten-year period range from P.ps. 47 000 to P.ps. 161 000. Financial rate of return is estimated to be 50 percent. Details of total cost, fixed cost, and operating cost of the model are given in Tables 14, 15 and 16 respectively.

It may be observed that DBP estimates are higher than BFAR's because unit productivity per hectare envisaged by DBP is 2.7 tons, while the BFAR estimate is slightly lower at 1.5 tons.

In the Philippines today, the aquaculture production programme has generated much enthusiasm. We are now initiating the so-called "managed development" scheme. Obtaining a lease for land from the Government as speculation is discouraged. Obstacles to development are constantly reviewed and today a lease agreement is valid for 25 years and renewable for another 25 years, which is almost equivalent to ownership. This could be used as collateral for obtaining financial support from banks; however, this right or privilege is matched by corresponding responsibility which is as follows:

- Fifty percent of the area leased shall be developed and be producing on a commercial scale within three years and the remaining portion shall be developed and be producing on a commercial scale within five years; both periods to begin from the execution of the lease contract.

- All areas not fully developed within five years from the date of the execution of the lease contract shall automatically revert to the public domain for disposition by the Bureau of Fisheries and Aquatic Resources; and a lessee who failed to develop the area or any portion thereof shall not be permitted to reapply for the said area or any public land.

4.4 External Assistance Requirements

4.4.1 Financing assistance

Since 1969 the World Bank has provided substantial financial assistance in the form of loans to aquaculture in the Philippines as shown below. This is channelled to either the Development Bank of the Philippines (DBP) or the Central Bank (CB).

World Bank financing for aquaculture

Year	Outlet	Project	Amount (in millions of U.S.$)
1969	CB	Second Rural Credit	1.9
1973	DBP	First Fisheries Credit	6.0
1974	CB	Third Rural Credit	22.5
		(Amount allocated for aquaculture is flexible)
1975	DBP	Second Fisheries Credit (under negotiation)	8.0
		Total	38.4

The Danish Government also provided assistance totalling U.S.$ 11 million for the acquisition of 14 units of ice plants and cold storage for improvement of the fish distribution and marketing system.

4.4.2 Technical assistance

(a) On-going projects

(i) Brackishwater fish farming demonstration and training. This is a four-year project assisted by UNDP.

Its objectives are: to assist the Government in training national staff, regional staff and extension workers on the different aspects of fishpond management, engineering and economics; to assist the Government in establishing four regional demonstration fishponds in strategic areas of the country - Quezon, Negros, Bohol and Zamboanga.

The contribution of UNDP is U.S.$ 780 000 while the Government contributes U.S.$ 480 000 (estimates).

(ii) Aquaculture production project. This is assisted by USAID for four years. The project covers both brackish- and freshwater culture.

Its objectives are: to assist the Government in the training of extension staff to work in the Bicol and Panay regions; to assist in the conduct of research in pond fertilization, optimum pond water conditions, feed formulations, stocking density, etc.

The contribution of USAID is U.S.$ 4 million, while Government contributes U.S.$ 3.5 million (estimates).

(iii) Aquaculture Department of the Southeast Asian Fisheries Development Center.

The main objective of the project is the development of aquaculture in the member countries through research, training and extension service. Research in shrimp hatching and cultivation is given priority in accordance with the desire of the Council of Directors of SEAFDEC.

Japan contributes several million yen in terms of experts' services, laboratory equipment and supplies. Other member countries contribute a token amount from their annual contribution to SEAFDEC. The Philippine Government in the fiscal year 1975 contributed P.ps. 15 million, while in fiscal year 1976 it appropriated P.ps. 27 million for SEAFDEC.

(b) Future assistance requirements

(i) Mariculture development project. This project is envisioned to set the stage for a long-term programme on marine culture and conservation activities in specified areas for specific projects.

(ii) Studies on soil improvement of brackishwater fish farms. This project is aimed at raising the nation's brackishwater fish-farm production level by improving pond soil properties considered one of the major factors affecting fish - farm production.

(iii) Establishment of a fish disease centre. The centre is designed to undertake research on diseases and parasites of culturable fish in order to develop methods of controlling and preventing recurrence of diseases. It is also envisaged that therapeutic, prophylatic and pesticidal chemicals will be evaluated for use in aquaculture.

TABLE 1

Weight and Value of Imports and Exports of Fish and Fishery Products, 1971-74

Product		1971				1972				1973				1974
		Import		Export		Import		Export		Import		Export		Import		Export
		Wt1/	Value2/	Wt	Value	Wt	Value	Wt	Value	Wt	Value	Wt	Value	Wt	Value	Wt	Value
Fresh and frozen fish
	Tuna	-	-	2.8	8.7	-	-	5.2	17.7	-	-	8.5	30.1	-	-	11.4	51.9
	Shrimp and lobsters	-	-	1.5	20.8	-	-	2.2	37.0	-	-	3.1	60.8	-	-	1.7	36.2
	All others	-	-	0.4	3.3	-	-	1.0	6.4	-	-	2.4	16.8	-	-	1.6	14.8
	Sub-total	-	-	4.7	32.8	-	-	8.4	61.1	-	-	14.0	107.7	-	-	14.7	102.9
Canned fish
	Mackerel	53.8	119.4	-	-	47.4	117.3	-	-	31.0	100.2	-	-	42.0	180.5	-	-
	Sardines	2.8	9.0	-	-	1.9	7.1	-	-	7.1	26.4	-	-	3.6	19.4	-	-
	Cuttlefish & squid	2.1	4.2	-	-	3.3	6.5	-	-	1.8	5.3	-	-	1.5	7.0	-	-
	All others	-	-	-	-	-	-	-	-	-	-	-	-	-	0.1	-	-
	Sub-total	58.7	132.6	-	-	52.6	130.0	-	-	39.9	131.9	-	-	47.1	207.0	-	-
Dried, smoked and salted fish		-		0.5	1.5		-	0.6	2.5	-		0.6	4.2			0.7	2.6
Shells		-	-	1.7	4.4	-	-	1.1	4.6	-	-	1.9	6.9	-	-	2.1	5.4
Miscellaneous		-	-	0.4	1.4	-	-	0.6	2.3	-	-	1.5	6.7	-	-	5.4	19.4
Fish meal		10.1	10.1	-	-	11.6	12.1	-	-	1.3	2.6	-	-	9.3	18.7	-	-
Total		68.8	142.7	7.3	40.1	64.2	143.0	10.7	70.5	41.2	134.5	18.0	125.5	56.4	225.7	22.9	130.3

^1/ Weight in thousand tons
^2/ Value in P.ps. millions

TABLE 2

Alternative Fish Production Targets (Tons), 1974-85

Year	Effective demand projection	Projected production based on historical data (4.9%)	Targeted production based on programme (6.6%)	Deficiency/Sufficiency
				Difference between 1 and 2	Difference between 1 and 3
	1	2	3	4	5
1974	1 304 400	1 243 400	1 275.500	(65 300)	(33 200)
1975	1 374 100	1 304 300	1 359 700	(69 800)	(14 400)
1976	1 442 800	1 368 200	1 449 400	(74 600)	6 600
1977	1 514 900	1 435 200	1 545 100	(79 700)	30 200
1978	1 590 700	1 505 500	1 647 100	(85 200)	56 400
1979	1 670 200	1 579 300	1 755 800	(90 900)	85 600
1980	1 753 700	1 656 700	1 871 700	(97 000)	118 000
1981	1 841 400	1 737 900	1 995 200	(103 500)	153 800
1982	1 933 500	1 823 000	2 126 900	(110 500)	193 400
1983	2 030 100	1 912 400	2 267 200	(117 700)	237 100
1984	2 131 600	2 006 100	2 416 800	(125 500)	285 200
1985	2 238 100	2 104 400	2 576 300	(133 700)	338 200

TABLE 3

Aquafarm Production by Farm Type, 1969-73

Year		Brackishwater farm		Shellfish farm	Freshwater farm5/	Eucheuma farm7/	Fish & rice (other crop) farm8/	Fish pen	Others types9/	Total
		Milkfish	Crustaceans4/5/
1969
	Area1/	164 414			6 000			negligible		170 414
	Weight2/	94 573	940	-	2 400	257		negligible	270	98 440
	Value3/	191 038	4 700	-	4 800	287		negligible	540	201 365
1970
	Area	168 118	-	-	6 000	-		negligible	-	174 118
	Weight	96 461	960	-	2 400	276		negligible	690	100 787
	Value	252 727	5 700	-	6 290	466		negligible	1 725	266 908
1971
	Area	171 446	-	-	6 000	-		negligible	-	177 446
	Weight	97 915	980	-	2 400	271		negligible	2 850	104 416
	Value	328 016	6 800	-	8 040	534		negligible	9 490	352 880
1972
	Area	174 101			6 000			3 000		183 101
	Weight	98 922	990	-	2 400	272		12 000	3 225	117 809
	Value	332 380	7 900	-	8 072	713		40 000	10 739	399 804
1973
	Area	176 184		1 420	6 000			4 000		187 604
	Weight	99 600	1 000	925	2 400	171		16 000	2 250	122 346
	Value	434 295	9 000	6 475	10 464	933		69 000	9 742	539 909

^1/ Area - ha

^2/ Weight is given as live weight in tons

^3/ P.ps. '000

^4/ Crustaceans are secondary products from milkfish production in brackishwater fishponds

^5/ Figures given here are estimates which are not included in official statistics (1 percent of total production)

^6/ Weight of oysters in shucked form

^7/ Data on area of eucheuma farms are not available at the time of writing

^8/ Data not available

^9/ This is imputed production from the dispersal programme of the Government in communal bodies of water

TABLE 4

Aquafarm Products, 1969-73

Year	Fish	Crustaceans3/	Shellfish4/	Seaweeds5/	Aquafarm seed production, (no. of fingerlings)6/	Total
1969
Weight1/	97 243	940		257	1 800 000	98 440
Value2/	196 375	4 700	-	287		201 362
1970
Weight	99 551	960	-	276	4 600 000	100 787
Value	260 742	5 700	-	466		266 908
1971
Weight	103 165	980		271	19 000 000	104 416
Value	345 540	6 800	-	534		352 880
1972
Weight	104 547	990	-	272	21 500 000	105 809
Value	351 191	7 900	-	713		359 804
1973
Weight	104 250	1 000	925	171	15 000 000	106 346
Value	454 501	9 000	6 475	933		470 909

^1/ Weight is given as live weight in tons
^2/ P.ps. '000
^3/ Assumed to be 1 percent of total production from brackishwater fishponds
^4/ Weight of shellfish in shucked form
^5/ Assumption is that export for a given year is equal to total production for same year
^6/ Production of fingerlings in Government farms which are stocked in communal bodies of water. Weight and value of produce are entered in Table 3 as "other types"

TABLE 5

Alternative Plans for Aquaculture Production (Tons)

Year	Historical growth (4.1%)	Targeted production1/	Share of aquaculture			Other sources of production
			High (19.6%)	Medium	Present (10.9%)
	1	2	3	4	5	6
1974	113 200	1 275 500	172 400	113 200	-	-
1975	117 800	1 359 700	212 800	165 300	125 500	39 800
1976	122 700	1 449 400	255 800	189 300	139 200	50 100
1977	127 700	1 545 100	301 700	214 700	154 400	60 300
1978	132 900	1 647 100	350 700	241 800	171 200	70 600
1979	138 400	1 755 800	419 400	278 900	189 900	89 000
1980	144 000	1 871 700	501 600	322 800	210 600	112 200
1981	149 000	1 995 200	599 900	374 500	233 600	149 900
1982	156 000	2 126 900	717 500	431 800	259 000	172 800
1983	162 400	2 267 200	958 100	510 300	287 200	223 100
1984	169 000	2 416 800	1 026 300	597 700	318 300	279 400
1985	176 000	2 576 300	1 227 400	701 700	353 000	348 700

^1/Annual growth rate 6.6 per cent

TABLE 6

Ten-Year Estimated Expenditures (P.ps.) for Extension/Demonstration Services

Year	Personnel services	Travel	Supplies	Sundries	Equipment outlay	Total
1976	1 374 147	465 192	529 058	315,462	384 560	3 068 419
1977	1 470 337	497 755	566 092	337 544	411 479	3 283 207
1978	1 573 261	532 598	605 718	361 172	440 282	3 513 031
1979	1 683 389	369 880	648 118	386 454	471 102	3 558 943
1980	1 801 226	395 772	693 486	413 506	504 079	3 808 069
1981	1 927 312	423 476	742 030	442 451	539 364	4 074 633
1982	2 062 225	453 119	793 972	473 423	577 119	4 359 858
1983	2 206 580	484 837	849 550	506 563	617 517	4 665 047
1984	2 361 041	518 776	909 018	542 022	660 743	4 991 600
1985	2 526 314	555 090	972 649	579 963	706 995	5 341 011
Total	18 985 832	4 696 495	7 309 691	4 358 560	5 313 240	40 663 818

TABLE 7

Estimated Expenditures (P.ps.) for Research, 1976-85

Year	Personnel services	Travel	Supplies	Sundries	Equipment outlay	Capital outlay	Total
1976	1 468 977	818 023	642 703	633 463	625 400	805 400	4 993 966
1977	1 546 777	850 257	662 670	659 197	644 150	836 750	5 199 801
1978	1 661 080	915 804	715 085	711 370	694 270	900 352	5 597 961
1979	1 745 294	947 840	733 081	729 105	711 878	932 385	5 799 583
1980	1 833 144	979 883	750 000	745 821	727 394	963 300	5 999 542
1981	1 857 900	1 045 100	799 200	794 650	774 900	1 027 400	6 299 150
1982	2 053 900	1 077 000	813 930	809 000	787 960	1 058 100	6 599 890
1983	2 187 315	1 142 000	860 500	855 200	832 700	1 121 700	6 999 415
1984	2 325 400	1 206 960	905 700	900 100	876 000	1 185 200	7 399 360
1985	2 468 590	1 271 800	949 500	943 560	917 700	1 248 600	7 799 750
Total	19 148 377	10 254 667	7 832 369	7 781 466	7 592 352	10 079 187	62 688 418

TABLE 8

Estimated Expenditures (P.ps.) for Training, 1976-85

Year	Personnel services	Travel	Supplies	Sundries	Equipment outlay	Capital outlay	Total
1976	97 414	454 943	201 676	16 509	230 736	346 104	1 347 382
1977	104 233	486 789	215 793	65 814	246 888	370 331	1 489 848
1978	111 529	520864	230 898	70 421	264 170	396 254	1 594 136
1979	119 336	557 324	247 060	75 350	282 661	423 992	1 705 723
1980	127 689	596 337	264 354	80 624	302 448	453 671	1 825 123
1981	136 627	638 080	282 859	86 268	323 448	485 428	1 952 710
1982	146 191	682 746	302 659	92 307	346 272	519 408	2 089 583
1983	156 424	730 538	323 845	98 768	370 511	555 767	2 235 853
1984	167 374	781 676	346 514	105 682	396 447	594 670	2 392 363
1985	179 090	836 393	370 770	113 080	424 198	636 297	2 559 828
Total	1 345 907	6 285 690	2 786 428	804 823	3 187 779	4 781 922	19 192 549

TABLE 9

Government Budgets for Aquaculture Development Programme (in P.ps. '000)

	1976	1977	1978	1979	1980	1981	1982	1983	1984	1985
Fingerling production/dispersal	5.6	5.6	5.6	5.6	5.6	5.6	5.6	5.6	5.6	5.6
Extension service/demonstration	3.0	3.2	3.5	3.6	3.8	4.0	4.3	4.6	4.9	5.3
Research1/	5.0	5.2	5.6	5.8	6.0	6.3	6.6	7.0	7.4	7.8
Training	1.3	1.4	1.5	1.7	1.8	1.9	2.0	2.2	2.3	2.5
Leasing of fishponds	0.2	0.2	0.2	0.2	0.2	0.2	0.2	0.2	0.2	0.2
Fishpond development survey	3.6	3.4	3.2	-	-	-	-	-	-	-
Marketing and distribution	9.0	9.5	8.0	8.0	8.0	8.0	8.0	8.0	8.0	8.0
Total	27.7	28.5	27.6	24.9	25.4	26.0	26.7	27.6	28.4	29.4

^1/ Excludes Government contribution to Aquaculture Department of SEAFDEC

TABLE 10

Private Investment Requirement for Aquaculture Development (in P.ps. '000)

		Capital cost		Working capital		Total investment
		Unit cost	Total	Unit cost	Total
Freshwater fishponds
	Development of 3 900 ha	8.0	31 200	2.4	9 360	40 560
	Improvement of 5 700 ha	4.5	25 650	1.6	9 120	34 770
Brackishwater		8.0	40 000	2.4	12 000	52 000
	Development of 5 000 ha
	Improvement of 13 200 ha	4.0	52 800	1.6	21 120	73 920
Mariculture
	Development of 570 ha oyster, mussel farm	4.0	2 080	2.4	1 248	3 328
Total			151 730		52 848	207 578

TABLE 11

Model: New Fishpond Establishment (24 Ha)

Investment Cost

Item	Cost (P.ps.)
Cleaning of 24-ha swampland, including hauling, cutting, piling and burning at P.ps. 500/ha	12 000
Removal of tree stumps at P.ps. 2 000/ha	48 000
Excavation and levelling, including smoothening of pond	34 200
Dike construction	103 650
Gates	54 500
Caretaker's house/bodega	8 000
Fishpond equipment	3 200
Purchase of fingerlings, 36 000 at P.ps. 0.35	12 600
Fertilizers	25 440
Pesticides	1 020
Salaries/wages	4 440
Contingencies (25 percent of total cost)	26 763
Total project cost	333 813
Less 10 percent borrower's equity	33 381
DBP loan	300 432

TABLE 12

Model: New Fishpond Establishment (24 Ha)

Projected Fixed Cost (P.ps.)

Item	Year										Total
	1	2	3	4	5	6	7	8	9	10
Clearing of swampland, cutting hauling, piling and burning	12 000	-	-	-	-	-	-	-			12 000
Removal of tree stumps	48 000	-	-	-	-	-	-	-			48 000
Excavation and levelling	34 200	-	-	-	-	-	-	-			34 200
Dike construction	103 650	-	-	-	-	-	-	-			103 650
Gates construction	54 500	-	-	-	-	-	-	-			54 500
Buildings	8 000	-	-	-	-	-	-	-			8 000
Equipment	3 200	-	-	-	3 200			3 200			9 600
Contingencies	65 888	-	-	-	800			800			67 488
Total	329 438	-	-	-	4 000			4 000			337 438

TABLE 13

Model: New Fishpond Establishment (24 Ha)

Projected Production/Operating Cost (P.ps.)

Item	Year
	1	2	3	4	5	6	7	8	9	10
Stock1/	-	20 376	19 440	29 160	34 992	46 656	46 656	46 656	46 656	46 656
Fertilizers	-	25 440	25 440	25 440	25 440	25 440	25 440	25 440	25 440	25 440
Pesticides	-	1 020	1 020	1 020	1 020	1 020	1 020	1 020	1 020	1 020
Salaries and wages	-	7 392	7 860	9 390	10 272	12 216	12 216	12 216	12 216	12 216
Sales charges (8 percent)	-	11 808	13 680	19 800	23 328	31 104	31 104	31 104	31 104	31 104
Repairs and maintenance	-	-	17 665	17 665	17 665	17 665	17 665	17 665	17 665	17 665
Taxes, permits, rentals and miscellaneous fees	-	1 000	1 000	1 000	1 000	1 000	1 000	1 000	1 000	1 000
Contingencies (25 percent)	-	16 759	21 526	25 869	28 429	33 775	33 775	33 775	33 775	33 775
Total	-	83 795	107 631	129 344	142 146	168 876	168 876	168 876	168 876	168 876

1/ Stocking rates:
	1st year - two stockings at 2 000/ha	(1st stocking fingerling at P.ps. 0.35 each; fry at P.ps. 0.12 each)
	2nd year - 2 000/ha	(2 crops)
	3rd year - 2 500/ha	(2 crops)
	4th year - 2 500/ha	(3 crops)
	5th year - 3 000/ha	(3 crops)
	6th year on - 3 000/ha	(4 crops)
	Mortality of fingerlings	= 10 percent
	Fry survival	= 50 percent

TABLE 14

Model: Improvement of Existing Fishponds (24 Ha)

Investment Costs

Item		Costs (P.ps.)
1. Excavation and levelling, including smoothening of pond
	(a) rearing ponds at P.ps. 1 000/ha	18 000
	(b) formation and transition ponds at P.ps. 2 500/ha	13 800
	(c) nursery pond at P.ps. 5 000/ha	2 400	34 200
2. Dike construction (modernization of dikes)
	(a) secondary dikes 8 500 m3 at P.ps. 3.50/m3	29 750
	(b) partition dikes 1 000 m3 at P.ps. 3.50/m3	3 500	33 250
3. Reinforcement/raising/repair of main dike (equivalent to 30 percent of construction cost)			21 120
4. Gate system (modernization)
	(a) one reinforced concrete main gate (two-door)	15 000
	(b) one main gate (two-door)	8 000
	(c) eight secondary gates at P.ps. 3 500 each	28 000
	(d) seven tertiary wooden gates at P.ps. 500 each	3 500	54 500
5. Repair of caretaker's house/bodega			4 000
6. Purchase of fishpond equipment			3 200
7. Purchase of fingerlings - 2 000 at P.ps. 0.35 each			12 600
8. Fertilizers
	(a) 48 bags 16-20-0 at P.ps. 115/bag	5 520
	(b) 12 tons chicken manure at P.ps. 600/ton	7 200	12 720
9. Pesticides
	(a) 12 1 Aguasin at P.ps. 85/1		1 020
10. Salaries
	(a) one caretaker at P.ps. 250/month	3 000
	(b) two helpers at P.ps. 120/month	1 440	4 440
11. Contingencies (25 percent of total cost)			45 263
Total project cost			226 313
Less 10 percent borrower's equity			22 631
Net investment			203 682

TABLE 15

Model: Improvement of Existing Fishponds (24 Ha)

Projected Fixed Cost (P.ps.)

Item	Year							Total
	1	2	3	4	5	6	7
Excavation and levelling	34 200			-		-	-	34 200
Dike construction/
modernization	33 250	-			-	-	-	33 250
Repair of dikes	21 120	-	-	-	-	-	-	21 120
Gate modernization	54 500	-	-	-	-	-	-	54 500
Building repair	4 000	-	-	-	-	-	-	4 000
Equipment	3 200	-	-	3 200	-	-	3 200	9 600
Contingencies	36 568	-	-	800	-	-	800	38 168
Total	186 838	-	-	4 000	-	-	4 000	194 838

TABLE 16

Model: Improvement of Existing Fishponds (24 Ha)

Projected Production/Operating Costs (P.ps.)

Item	Year
	1	2	3	4	5	6	7
Stock1/	12 600	19 440	29 160	34 992	46 656	46 656	46 656
Fertilizers	12 720	25 440	25 440	25 440	25 440	25 440	25 440
Pesticides	1 020	1 020	1 020	1 020	1 020	1 020	1 020
Salaries and wages	3 930	7 995	9 593	10 515	12 540	12 540	12 540
Sale charges (8 percent)	6 840	14 220	20 610	24 300	32 400	32 400	32 400
Repair and maintenance	-	10 015	10 015	10 015	10 015	10 015	10 015
Taxes, permits, rentals and miscellaneous	500	1 000	1 000	1 000	1 000	1 000	1 000
Contingencies	9 403	19 783	24 210	26 821	32 268	32 268	32 268
Total	47 013	98 913	121 048	134 103	161 339	161 339	161 339

1/ Stocking rates:
	1st year	- 2 000/ha (1 crop)
	2nd year	- 2 500/ha (2 crops)
	3rd year	- 2 500/ha (3 crops)
	4th year	- 3 000/ha (3 crops)
	5th year	- 3 000/ha (4 crops)

ANNEX A

SOME FINANCING SCHEMES FOR AQUACULTURE IN THE PHILIPPINES (DEVELOPMENT BANK OF THE PHILIPPINES)

A. Marine Farming Projects (Seaweed Farming)

1. Who May Borrow

To qualify for loans under this programme, applicants should:

(a) possess a Lease Agreement or a Seaweed Concession issued by the Bureau of Fisheries and Aquatic Resources for the operation of a marine (seaweed) farming project, which shall run for a period of not less than five years, the expiration of which should not precede the term of the loan; and

(b) possess a contract between himself and a reputable buyer/exporter of the farmer's product to be prequalified by the DBP, stating that the latter commits to purchase the entire produce of the former at a guaranteed price for a period of at least two years, the expiration of which should not precede the term of the loan.

2. Amount of Loan

The loan shall be based on actual needs of the project but not to exceed P.ps. 8 500/ha. No loans shall be granted for the production of Eucheuma on more than 1 ha of marine farm.

3. Equity Contribution

All borrowers shall be required to contribute at least 20 percent of total project costs. Contributions shall be in cash or in kind, including labour.

4. Purpose of the Loan

Loan funds shall be used for the following purposes:

(a) nylon nets
(b) banca with engine and accessories
(c) twine and lines
(d) lamps
(e) construction of a guardhouse
(f) "seed" material
(g) operating expenses.

5. Security

The loan shall be secured by an assignment of leasehold rights on the project area in favour of DBP. All durable assets of the project shall be chatteled in favour of the DBP.

6. Repayment

The term of the loan shall be two years. Amortized loan payments on principal and interest shall commence on the sixth month after initial loan release and every three months thereafter until the loan is fully paid. Payments due the DBP shall be deducted from proceeds of harvests delivered and sold by the producer to the buyer/exporter, and the latter shall remit the same to the DBP.

7. Interest rate

Twelve percent per annum.

B. Inland Fisheries Projects

1. Fish Culture Projects

(a) Qualifications of borrower

A borrower for inland fishery projects may be individual, a partnership, a cooperative, an association, or a private corporation that is presently engaged in the business of inland fishery production and desires to expand current operations; or one who proposes to engage in a new inland fishery project and can demonstrate his capabilities to undertake such a project successfully. If the borrower has an existing account with the DBP, such account shall not be in arrears. The borrower may be a lessee of the area on which the project is to be established, or he may be a private owner thereof.

(b) Purposes of the loan.,

Loans for inland fisheries may be for freshwater of brackishwater fishponds for the production of milkfish, carp, hito, crustaceans and other fishpond products. More specifically, loan funds for the rehabilitation of damaged fishponds and the development and construction of fishponds shall be utilized as follows:

(i) clearing of the project area
(ii) construction of main, secondary and tertiary gates
(iii) construction of main, secondary and tertiary dikes
(iv) construction and excavation of nursery, transition, rearing ponds and catching ponds
(v) purchase of bangus fry
(vi) procurement of fertilizers and other productive inputs
(vii) procurement of equipment and paraphernalia required for fishpond operation.

(c) Amount of loan

The amount of the loan shall be based on actual needs of the investment project. Actual needs shall be based on project scales that have been evaluated and found to be technically feasible and economically viable.

(4) Equity contribution

All borrowers shall be required to make a minimum contribution toward the incremental investment costs of the project to be financed, in the following proportions to the area of ponds to be developed:

Size of ponds	Contributions
Up to 25 ha	10 percent
More than 25 ha and up to 50 ha	15 percent
More than 50 ha	20 percent

(e) Loan securities

The loan shall be secured as follows:

(i) if the project site is privately owned, whether titled or untitled, the property shall be mortgaged in favour of the DBP; or

(ii) if the project site is covered by a leasehold agreement from the Philippine Government, leasehold rights thereon shall be assigned in favour of the DBP.

Also, all durable assets procured or acquired out of loan funds shall be chatteled in favour of the Bank.

(f) Repayment

The term of repayment, including grace periods, shall be based on the payment ability of the borrower and estimated cash flow of the project to be financed. In general, repayment terms and grace periods shall not exceed the following:

Project	Grace period	Term of repayment (excluding grace)
Fishpond rehabilitation	2-3 years	5-7 years
Development of existing fishponds	3-4 years	7-9 years
Construction of new fishponds	3-4 years	10-12 years

(g) Interest rate

The rate of interest shall not be less than 12 percent per annum.