Umuaka Fish Farm Project: Feasibility Study Report, April 2016

This report presents a feasibility study for a catfish farm project in Umuaka, Njaba LGA, Imo State, Nigeria. It addresses the protein deficiency in the local diet and proposes aquaculture as a solution. The study covers various aspects, including project description, background, and concept, market analysis, and the proposed location. Technical feasibility is assessed, detailing the production plan, species selection (catfish), and hatchery operations. The economic and financial plan includes cost analysis, revenue estimations, and loan requirements. The report also examines potential risks, challenges, and the socio-economic viability of the project. The project aims to produce fish for sale, creating employment and addressing market demands. The report highlights the importance of site selection, water quality, and project management for successful implementation and includes financial projections for the first five years. The study concludes that the project is financially and socio-economically viable, with a detailed execution plan and risk assessment.

FEASIBILITY STUDY REPORT
ON
FISH FARM PROJECT
AT
UMUAKA, NJABA L.G.A. IMO STATE
April, 2016
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TABLE OF CONTENTS
1.0 Introduction/ Executive summary......................................................................................4
1.1 Purpose...............................................................................................................................4
1.2 Project description..............................................................................................................4
2.0 Project background and concept.........................................................................................5
2.1 Fish market.........................................................................................................................6
2.2 Project location.................................................................................................................. 6
3.0 Project technical feasibility.................................................................................................6
3.1 Project execution plan ........................................................................................................7
3.2 Risks and challenges ..........................................................................................................7
4.0 Economic /Financial plan....................................................................................................8
4.1 Operational costs.................................................................................................................9
4.2 Salary/ Wages......................................................................................................................10
4. 3 Variable costs.....................................................................................................................10
4.4 Amortization of costs..........................................................................................................10
5.0 Estimated revenue...............................................................................................................10
6.0 Conclusion ..........................................................................................................................11
LIST OF TABLES
Table 4.1 Cost of land and fish farm infrastructure development.........................................8
Table 4.2 Estimated revenue accruing for the first 5 years...................................................10
Table 5.1 Condensed income/expenditure of fish farm project.............,.............................. 11
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1.0 INTRODUCTION / EXECUTIVE SUMMARY
Nigeria like most of the developing countries suffers from protein deficiency
in the diet of the people. This problem is becoming more and more acute with the increase in
population. Increase in fish production through Aquaculture could be an important source of
animal protein. The successful implementation of an aquaculture project depends upon a
number of parameters, such as proper selection of site, soil and water quality, project
management on scientific lines etc. The present report has been prepared keeping all
these parameters in view.
1.1 Purpose
The purpose of the study is to assess the viability of the establishment of a fish farm at Umuaka
in Njaba Local Government Area, Imo State, Nigeria by attempting to provide data for the
following:
 The entire concept of the project
 The most viable dimension of the project including construction and structures
 The production technology
 The cost and revenue estimates for a year period
 Expansion/development and implication schedule
 Cash flow and financial plan of the project
1.2 Project description
 The fish farm project is for the purpose of producing fish (catfish) for sale. The project would
be located at Umuaka and would produce fish and fingerlings.
 The labor required would be available, particularly the unskilled, which are readily available
in the project area. Manual construction would be adopted for the construction of the fishponds
because of the economic advantages. There is abundant unskilled manpower in the project
environment. The market existing in the area, surrounding the project has not been exploited.
The project market is therefore unlimited and all fish produced would be a ready market. The
demand for fish exceeds the supply.
 Required electric power would be supplied by a 5 KVA generator. The electric supply would
be used in pumping water from the borehole.
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 The project is financially viable and at the envisaged scope of operation (5 years). A short term
loan of N 13,500,000 (Thirteen million five hundred thousand Naira), is to be raised. From the
second year, the project would generate sufficient cash to sustain production. The loan would be
defrayed in the third year of the project.
 The project is socio-economically viable. It would create employment and has no discernible
hazardous impact on the environment.
 There would be no difficulty in the introduction of the technology to be adopted for the
project. The manager of the project will be an adequately trained personnel with skills in fish
farming.
 The projections for the project take care of bills payable from the first year and even at that the
profit would be high.
2.0 PROJECT BACKGROUND AND CONCEPT
Umuaka is a village in Njaba local government area of Imo state. Njaba is one of the local
government in the Orlu senatorial zone in the state located between Owerri and Orlu. It has a
population of over 87,000 people. Umuaka is a major town along the Owerri-Orlu Highway and
it has a prominent market that attracts travellers. It is bordered by sveral towns which include
Amazano, Isiozi, Ugbelle, Achara, Ibelle, Okwudor, Nkume, Attah, Amucha, and Egwedu. It is
situated along the bank of the 9.2km long Njaba river, which flows into the Oguta lake.
However, due to various activities which are carried out in the river, its quality has declined over
the years and this has resulted in a drop in fishing activities. The river is a source of water supply
to several car wash services which carry out their business by the river, releasing detergents and
other potentially hazardous substances into the river. Sand excavation is carried out along the
stretch of the river from its source in Isunjaba all the way to Awomama and this affects the
turbidity of the river. The prolonged re-construction of the Okwudor bridge over the river has
taken over 3 years and has also impacted the ecosystem negatively. The physicochemical
characteristics of the river are not conducive for breeding of aquatic organisms. As a result, fish
production in the river has dropped and fishing in the river has declined as catch per unit effort is
reduced. In order to meet up with demand in the community, fish traders purchase fish from
other towns and markets as there is no fish farm in the area.
2.1 Fish market
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The fish farm proposed is expected to supply fish to Umuaka and its neighboring communities at
affordable prices. The town is close to two of the largest cities in the state, Owerri and Orlu. The
demand for fish in both towns is huge and some of the fish from the farms can be transported to
these places for sale to increase the market for the product.
2.2 Project location
Prior to the determination of site suitability, a careful consideration has been
given to the easy accessibility of sufficient quantity of water, easy accessibility to the
site, proper climatic conditions, easy availability of production inputs, socio-economic
aspects, marketing channels etc. The project would be located on a 100 x 200m piece of land at
Umuaka close to the Njaba river. the water table at this location would be higher and make it
easier to drill a borehole. Presently, there is no fish farm in the area and the main decision to
locate the proposed fish farm at Umuaka was based on the fact that the market for the product is
large and can be profitable. The cost of the land is considerably low because it is presently not
used for any major economic venture.
3.0 PROJECT TECHNICAL FEASIBILITY
The project would be in two separate compartments: Fish production unit and a hatching unit.
The fish production section would be concerned with the production of table size fish for
consumption. The layout of production would start with 2 production ponds measuring 25m2
each. In the 1st year of operation, the ponds would be constructed and stocked. The two ponds
would have a stocking density of 6,000 catfish fingerlings each, per culture period. The 2 initial
production ponds would therefore have total fish density of 12,000 catfish fingerlings when fully
stocked. It is expected that total yield would be increased per unit of production. In the second
year, 2 additional production ponds measuring 25m2 each would be constructed.
The bio-technical feasibility of the selected species is given as follows:
The catfish belongs to the family Clarinda. This family is divided into two genera: Claries and
Heterobranchus. Claries have 8 major species while the latter has 3 species in the southern zone
of Nigeria. The former has a single rayed dorsal fin extending almost to the tail; the latter has a
rayed dorsal and adipose fin. The Claries family would be used for the project because they feed
on wide variety of food ranging from weeds and planktons to insect larvae, snails
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crustaceans, worms and shellfish. The Claries species can accept a wide variety of agricultural
by-products, brewery and flourmill wastes which are available locally. When catfish are stocked
at the stocking rates described; with proper feeding, they can grow to an average of 1000 g in a
year.
The hatchery section starts in the second year of production. At this time, all the fingerlings
required for the production ponds would be supplied from the hatchery. In the hatchery, catfish
would be artificially induced to spawn by hormonal treatment using pituitary hormone within the
hatching units. Catfish matures after 7-10 months at a weight of 200- 500 g. However, spawning
would not take place since the final stimulation associated with the rise in water levels and the
inundation of marginal areas would not occur. In the hatchery, four female brood fish each
weighing 500 g can produce 10% body weight of eggs. The rate of hatchability is estimated at
50% and the survival rate of fry to fingerling at 30%. This means that the hatchery can produce
20,000 fingerlings from the 4 brood fishes, sufficient to meet the fingerling requirements of the
production ponds after the initial cropping.
3.1 Project execution plan
When the project is fully implemented, a total of 1 brooder pond and 2 nursery transition ponds
would be constructed. The brooder ponds measure 4×4 m (16 m2) and the nursery/transition
ponds measure 3×4 m (12m2). 4 production ponds would also be constructed and stocked for the
production ponds, measure 5×5 m (25 m2).
3.2 Risks /challenges
Power -Umuaka town is located in a rural area and the supply of power to the area is poor. For
the project to be successful, it would rely largely on power supply from the generator which
could increase the operational cost.
Water - During the dry season, the water table in the area drops to a low level. This would put a
lot of stress on the pumping machine and could result in frequent break downs which would
increase the operational cost of the project.
Security -There are security challenges in the area which may result in loses if not properly
managed. However, this can be managed by using locals who are conversant with the
environment as security personnel.
4.0 ECONOMIC /FINANCIAL PLAN
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Table 4.1: Cost of land and fish farm infrastructure development
Activity Amount (=N=)
A. Cost of land and land development
Land acquisition 2,000,000
Survey of land 100,000
Pond construction 1,000,000
Total 3,100,000
B. Fish farm infrastructure development
Cost of farm house / office 2,000,000
Fencing of the farm 1,500,000
Fish shade building 500,000
Generation of power (5 KVA) 100,000
Water pump 60,000
Bore hole 1,000,000
2 800Litre tanks 500,000
Total 5,660,000
C. Fish production and hatchery materials
Equipment (Nets, water analysis kit etc) 1,000,000
Total 1,000,000
D. Salaries and wages of staff
Project /farm supervisor 600,000
2 Farm assistants 480,000
Security 240,000
Total 1,320,000
E. Variable inputs
12,000 Fingerlings 360,000
Feed 400,000
Organic fertilizer 20,000
Other chemicals 20,000
Transportation 500,000
Total 1,300,000
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F. Other operational costs
Fuel
Maintenance on pond 100,000
Maintenance on equipment 200,000
Stationery 50,000
Total 350,000
Grand total 12,730,000
The land required for the project was acquired from the community for a cost of =N=2,000,000
and the perimeter and topographic survey have been carried out. The design of the farm has also
been completed. The constructions of the ponds were estimated at =N=1,000,000. The
construction would be undertaken manually, because, it would be more expensive to transport
earth moving equipment from the state capital to site. The method of construction would also
provide opportunity for greater participation by the unskilled unemployed labor force in the
project area. With close supervision of the construction work, it is expected that the time
schedule for the implementation of the project would be easily met. A farmhouse would be
required in the site to secure the project. It would provide areas where farm equipment would be
assembled and maintained. A small office and a store would be constructed as part of the
building to enable adequate control of the staff activities on the project site. In view of the high
cost of building materials and transportation of such materials to site, it is estimated that it
would cost =N= 2,000,000. All other equipment such as generator, tanks and other equipment
would be procured from established companies. The total cost of all infrastructure for fish farm,
would cost =N=5,660,000.
4.1 Operational costs
The operational costs for the fish farm include the cost of the day-to-day management of the
hatching, the wages and salaries of staff and procurement of other operational inputs. The
purchases for all the materials making up the hatchery equipment will be made from Owerri and
transported to the project site.
4.2 Salaries and wages
The estimated total annual expenditure on wages and salaries is estimates at =N=1,320,000.
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4.3 Variable costs
The total variable costs of the project amount to =N=1,300,000 for procurement of fish
fingerlings, feed ingredients, inorganic fertilizer, inorganic fertilizer and other chemicals.
4.4 Amortization of cost
All of the capital expenditure would be made in the 1st year of implementation of the project.
Already, land acquisition, land surveying and fish designing have been completed. It shows that
the 1st year of the project, a total expenditure of (=N=12,730,000) would be made to take care of
the operating costs of the project. A total of =N=2,970,000 would be needed for the operational
expenditure of the project. After that, the project would be capable of generating sufficient funds
to take care of all the operational expenditures.
5.0 ESTIMATED REVENUE
For the purpose of this feasibility report, the revenue expected is restricted to the operation of the
production ponds. It is however necessary to mention that the hatchery ponds would produce the
fingerlings required for the production ponds after the 1st year of operation. The production
ponds when fully stocked would have a total fish density of 12,000 fingerlings, making
provision for mortality at 50% mature fishes. The fish harvested would be 6,000 kg. It is
expected that catfish would sell for =N=900 per kg. Sales and total estimated revenue for the 1st
year of production would therefore, is =N=5,400,000. With a modest estimated annual increase
in the prices of fish of 10%, the estimated revenue accruing from the project for the first 5 years
would be as shown in Table 4.2.
Table 4.2: Estimated revenue accruing for the first 5 years.
Year Income (=N=)
1 5,400,000
2 5,940,000
3 6,534,000
4 7,187,400
5 7,906,140
The Farm /project supervisor would be trained in fisheries and have acquired skills to provide
technical and specialized leadership needed for the management of the fishponds. He would be
personally responsible for the day to day running of the fish farm. The positions of the farm
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assistants would be occupied by men/women who have acquired some form of formal or
informal experience in fish farm management. It is also expected that they would be trained
practically on the job.
Table 5.1: Condensed income/expenditure of fish farm project
Activity Year 1 Year 2 Year 3 Year 4 Year 5
Sales 5,400,000 5,940,000 6,534,000 7,187,400 7,906,140
Costs of sales 9,760,000 - - - -
Gross profit (4,360,000) 5,940,000 6,534,000 7,187,400 7,906,140
Operating
cost
2,970,000 2,780,000 2,400,000 2,560,000 2,700,000
N.P.B.T. 2,403,000 3,160,000 4,134,000 4,627,400 5,206,140
Tax 45% - 1,422,000 1,860,300 2,082,330 2,342,763
Proposed loan
repayment
780,000 880,000 1,000,000 1,150,000 90,000
Table 5.1 shows the Principal =N= 13,000,000 + interest 30 % = N 3,900,000.
6.0 CONCLUSION
The fish farm, when in full operation would have tremendous economic and socio economic
well-being of the people in Njaba local government area and the entire Orlu zone. Fish has
become a very scarce commodity because of the ecological changes due to changes in climate.
The scarcity has also made fish very expensive and unaffordable to majority of the population in
the area. This has resulted in serious deficiency in the intake of protein by the people in the area.
The prices of fish produced in the farm would be cheap relative to the present supply. This can
aid the increased intake of protein by majority of the people as it would be affordable and
accessible. The project would provide direct employment for people for this operation. This is a
significant contribution to the economic well being of the people and social improvement of the
project environment. The fish farm would be a highly profitable project which would generate
sufficient cash to sustain production from the second year. The profits from the project would be
able to repay the loan and interest within the first 5 years.
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