FEASIBILITY STUDY ON THE ESTABLISH

OF INLAND CATFISH FARMING PRODUCTION

In Partial Fulfillment

of the Requirements for the Aquaculture

Systems and Design

Submitted by:

LORIN, Jemuel

SALIK, Al-bin Ladin

MAGUID, Hamerhamsa

May 2019
EXECUTIVE SUMMARY

The objective of this feasibility is to establish and educate potential entrepreneur/

investors on the cost benefit analysis of investing into this project. The project is about

establishing an inland cat fish farm in the potential area of Brgy. Apopong, General

Santos City which provides suitable environment.

The project would serve as facility to utilize the everyday resources in the form of

feed for inland catfish farm that usually ends up as cultural waste. On the other hand it

would generate employment for the local inhabitants and more over would possibly

cause cash inflow as well. Ultimately the investors would also smile to the bank at the

end of the project.

A total sum of 1,501,808.97 (One Million and Five Hundred One Thousand and

Eight Hundred Eight Pesos and Ninety-Seven Centavos) is required for this project, the

project would break even at the end of the third production cycle which is about one and

half year into the project; at the end of the 3 rd year the investors would have made a

total sum of 4,924,451.28 (Four Million and Nine Hundred Twenty-Four Thousands and

Four Hundred Fifty-One Pesos and Twenty-Eight Centavos) which is 30% return on

investment.

This project is environmentally friendly and the risk associated with it is low,

however, the project will be managed by seasoned practitioners in the industry with over

10 years’ experience in the field of Fish Farm production and Management, thus the risk

would be mitigated towards ensuring that the investors make above average returns on

their investment.
Table of Contents

1.0 Product and Services...................................................................................................4

1.1 Brief Background......................................................................................................4

1.2 Defining the product.................................................................................................4

1.3 Raw Materials...........................................................................................................5

2.0 The Market Analysis....................................................................................................5

2.1 The Target Customer................................................................................................5

2.2 Marketing..................................................................................................................5

2.3 Market Opportunities................................................................................................6

2.4 Market Threats.........................................................................................................6

3.0 Resources and Capabilities.........................................................................................7

3.1 Site Location.............................................................................................................7

3.2 Human Resources....................................................................................................7

4.0 Legal Requirements.....................................................................................................8

5.0 Financials.....................................................................................................................9

5.1 Total Capital Outlay...................................................................................................9

5.2 Cash Flow...............................................................................................................10

5.3 Projected Profit and Loss for 3 Years.....................................................................11

5.4 Projected Balance Sheet for 3 Years.....................................................................12

6.0 Conclusions and Recommendations.........................................................................13

1.0 Product and Services.

1.1 Brief Background

Fish farming is an ancient practice that had been used for food purposes for

centuries. Australian, African and Asian regions were the historical fish breeding centers

since 6000 BC. The concept of inland aquaculture away from the seacoast and big

rivers was widely practiced in cerntral Europe during the middle ages. Inland fish

farming was started on commercial basis in 18 th century. Seth Green was the first to

practice commercial inland fish farming in 1864 at Caledonia (USA). It laid down the

foundation of commercial fish farming and people has started practicing it in other

countries like UK and Canada. During 19th century improvement in transportation made

fish farming more convenient and profitable business by targeting the adjoining market

of the inland fish farming zone.

1.2 Defining the product.

Fish is an animal which lives and breathes in water. All fish are vertebrates (have

a backbone) and most breathe through gills and have fins and scales. Fish make up

about half of all known vertebrate species.

Fish is a high protein, low fattening food that provides high range of health

benefits. The white fleshed fish is lower in fat than any other source of protein and

enrich in omega 3 fatty acids. Fish meat is medically recommended as a diet for human

body, it produced essential nutrients in significant amount which is required for healthy
body. Moreover, fishes are low in the bad fats commonly found in red meat, called

omega 6 fatty acids that make it even more favorable product as compare to red meat.

1.3 Raw Materials

The primary raw materials used for fish farming are humus or cow dung, in

addition urea is added to enhance the water quality and enhance productivity for better

growth. Globally some artificial feeds such as fish meal are used for feeding purpose

but these are a bit expensive. Thus, the combination of both will be uses to achieve

effectiveness and efficiency of the feeds. Considering the fact that feed is one of the

major components that will determine the profitability or otherwise of the fish farm

produce.

2.0 The Market Analysis

2.1 The Target Customer.

The target customers for fish are:

 Households,

 Hotels,

 Restaurants and

 Pharmaceutical companies.

2.2 Marketing

The marketing of Fish follows the traditional channels of distribution. Generally, fish

are distributed in the market through middlemen and wholesalers. The role of
middlemen and wholesalers is to identify buyers and negotiate the price. Fish are

transported to the urban market and are sold to retailers. The time spent in getting fish

from the farm to the retail shop varies from area to area. Although collection and

handling of fish has improved with the use of loader vehicles, but it is an established

fact that greater the distance between the farm and consumer, more complicated will be

marketing system including their collection, handling and transportation to the

middlemen or consumer as per perishable nature of the product. The trick in marketing

is availability of current market information of fish supply and demand, which will

determine the selling price.

The approach that will be adopted here will be that of forward integration the

company will have her own marketing team that will source for the market and ensure

that the products are delivered to the customers. With this method the bottle neck

associated with middle men will be eliminated and the cost price of the product to the

final consumer will be lower compare to our competitors in the market.

2.3 Market Opportunities

Following are some major opportunities for the proposed project:

 Diversified demand of the product from the food industry and medicine.

 Availability of abundant raw material.

 Lack of specialized producer.

 Established market and demand.

 2.4 Market Threats.

The proposed project will be facing the following threat:

 Substitute’s availability.

 Price fluctuations and macroeconomic instability.

3.0 Resources and Capabilities.

3.1 Site Location

Special consideration was taken in the identification and location of proposed facility. It

located at High-way Apopong in Prk. San Lorenzo Ruiz village a swamp area that is not

prone to flooding. The site has the following unique features that is conducive for fish

farming:

 Located in a swamp.

 The area is not subjected to flooding

 There is enough elevation in the area.

 The soil texture of the area is china clay soil which is the most preferred for fish

farming.

 There is round the year adequate supply of water.

 There is good road network access leading to the farm location.

 The PH of the water was found to be very good and will be favorable for fish

farming.
 3.2 Human Resources.

Human resources capabilities are keys to the successful execution of this project, the

project team consists of people with relevant qualifications and experience in the field of

management and expertise is in fish farm. Detailed below are the list of the resources

and their capabilities.

 Jemuel Lorin – Managing Director

o Over 10 years of management experience in the field of Fish production.

o Master’s in Business Administration (Specialization in Entrepreneurship

Management)

o Masters in Aquaculture

o BS in Fisheries

 Al-bin Ladin Salik– Farm Manager.

o Over 7 years in the field of Fish production and Management.

o BS in Aquaculture

 About 3 Farm attendants with over 5 years’ experience in fish farming production.
4.0 Legal Requirements.

The farm land has been purchased from the local village land owners; however, the

following legal requirements are still outstanding.

 Transfer of the land ownership to the company’s name

 Payment of all government dues towards obtaining the Certificate of Occupancy.

5.0 Financials.

5.1 Total Capital Outlay.

The project will require a total capital outlay of 10,310,000.00 (Ten Million Three

Hundred and Ten Thousand Pesos) as detailed below.

Capital Investment Amount (PHP)

Land 145,665.27
Building/Infrastructure 72,832.64
Equipment/Machinery 54,624.48
Furniture/Fittings 4,369.96
Construction of 10 ponds 72,832.64
Total Capital Cost 350,324.98
Working Capital Amount (PHP)
Purchase of Fingerlings 109,248.96
Purchase of Feeds 873,991.64
Medications 29,133.05
6 months staff salaries 43,699.58
Fuel/Transport/Maintenance 80,844.23
Cost of Sales expenses 14,566.53
Total Working Capital 1,151,483.99

Total Investment 1,501,808.97

 The following assumptions were used to arrive at some of the figures above

 The working capital is for the production of 30,000 Tons of table six of fish with

each pond expected to produce 3,000 Tons.

 The staff salary consist of 8,000 Pesos for 1 farm manager monthly and 3 farm

attendants of 4,000 Pesos monthly each.

 The total cost required for a pond is 101,237.37 Pesos only.

5.2 Cash Flow

With the first seven months of operation this project requires the capital out lay to be

released as detailed in the cash flow analysis below. Thereafter the project will be

buoyant after the sales of the first production and it will be able to fund itself.

Month 1 2 3 4 5 6 7

Inflow

Balance B/f - - - - - - -

357,608.2 276,035.6 243,261.0 243,261.0 243,261.0 94,682.4 21,849.7

Investors Funds 5 9 1 1 1 3 9

357,608. 276,035. 243,261. 243,261. 243,261. 94,682. 21,849.

Total Inflow 25 69 01 01 01 43 79
Out Flow

Startup cost

145,665.

Land 27 -

Building/Infrastru 72,832.6

cture 4 -

Equipment/Machi 54,624.4

nery 8 -

Furniture/Fittings 4369.96 -

Construction of 72,832.6

10 ponds 4 -

350,324.

Sub-Total 98 - - - - - -

Monthly

Operating Cost

Salaries 7,283.26 7,283.26 7,283.26 7,283.26 7,283.26 7,283.2 7,283.2

 6 6

109,248.

Stock - 96

145,665. 218,497. 218,497. 218,497. 72,832.

Feed - 27 91 91 91 64 -

4,369.9

Transportation - 5,826.61 7,283.26 7,283.26 7,283.26 6 -

2,913.3

Fuel - 2,184.98 2,913.31 2,913.31 2,913.31 1 -

Farm 7,283.2

Maintenance - 5,826.61 7,283.26 7,283.26 7,283.26 6 -

14,566.

Sales expenses - - - - - - 53

276,035. 243,261. 243,261. 243,261. 94,682. 21,849.

Sub Total 7,283.26 69 01 01 01 43 79

 357,608. 276,035. 243,261. 243,261. 243,261. 94,682. 21,849.

Total Out Flow 25 69 01 01 01 43 79

Cash Flow

Balance - - - - - - -
 5.3 Projected Profit and Loss for 3 Years.

Detailed below is the projected profit and loss account for 3years with the flowing

assumptions.

 A production cycle is for 6 months.

 The Income is based on the sales of 1 ton @ 60 Pesos for the first and second

production and 63.75 Pesos and 67.5 Pesos for 3 rd, 4th and 5th, 6th respectively.

 A straight-line method is used for the depreciation of the fixed asset. It is

expected that a sum of 400,833.33 is depreciated at the end of each production.

 The sum of 38,062.5 is assumed for the bank charges – COT and VAT inclusive.

1st 2nd 3rd 4th 5th 6th

Producti Producti Producti Producti Productio Productio

on on on on n n

109,248.9 109,248.9 116,532. 116,532.2 123,815.4 123,815.4

Cost of Stock 6 6 22 2 8 8

Cost of 873,991.6 873,991.6 910,407. 910,407.9 946,824.2 946,824.2

Feeding 4 4 96 6 8 8
Medication

29,133.05 29,133.05 30,589.7 30,589.71 32,046.36 32,046.36

 1

50,982.8
Cost of
Labor/overhead 43,699.58 43,699.58 5 50,982.85 58,266.11 58,266.11
Fuel/

Transport 87,399.1

and others 80,844.23 80,844.23 6 87,399.16 94,682.43 94,682.43

14,566.5

cost of sales 14,566.53 14,566.53 3 14,566.53 14,566.53 14,566.53

Pond 14,566.5

rehabilitations - 14,566.53 3 14,566.53 14,566.53 14,566.53

Total Cost of 1,151,483 1,166,050 1,22,504 1,225,044 1,284,767. 1,284,767.

Production .99 .52 4.95 .95 71 71

1,747,983 1,747,983 1,857,23 1,857,232 1,966,481. 1,966,481.

Income .28 .28 2.24 .24 19 19

596,499.3 581,932.7 632,187. 632,187.2 681,713.4 681,713.4

Gross Profit 0 7 29 9 8 8

Less (58,387.4 (58,387.4 (58,387. (58,387.4 (58,387.49 (58,387.49

Depreciation 9) 9) 49) 9) ) )

Less Bank (5,544.38 (5,544.3 (5,544.38

Charges (5,544.38) ) 8) ) (5,544.38) (5,544.38)

 532,567.4 518,000.8 568,255. 568,255.4 617,781.6 617,781.6

Net Profit 1 9 41 1 0 0
 5.4 Projected Balance Sheet for 3 Years.

Detailed below is the projected balance sheet of the project for the next 3 years showing

the status at the end of each production. The following can be deduced:

 At the end of the 3rd production the project will break even, that is, the investors

would have gotten back their investment.

 At the end of the 3rd year (6th Production) the investors would have made a total

sum of 4,924,451.28 Pesos which is 30% return on investment.

1st 2nd 3rd 4th 5th 6th

Producti Production Production Productio Productio Productio

on n n n
Capita

l Base 1,501,808 1,457,988.0 1,458,594.94 1,400,207 1,401,542. 1,343,155.

.97 0 .44 71 21
Net

Profit 532,567.4 532,567.41 568,255.41 568,255.4 617,781.6 617,781.6

from 1 1 0 0

produ

ction

Finan

ced 2,034,376 1,975,988.8 2,026,850.35 1,968,462 2,019,324. 1,960,936.

By .39 9 .85 31 81
Cash 1,851,687.85 1,960,936. 1,960,936.

at 1,742,438 1,742,438.9 1,851,687 81 81

Hand .90 0 .85

Fixed

Asset 291,937.4 233,549.99 175,162.49 116,775.0 400,833.3 -

s 9 0 5

Net 2026850.35

Asset 2,034,376 1,975,988.8 1,968,462 2,019,324. 1,960,936.

.39 9 .85 31 81

Funds

for 1,166,050 1,225,044.9 1,225,044.95 1,284,767 1,284,767.

next .52 5 .71 71

produ

ction

Fund

s paid 576,388.3 517,393.95 626,642.90 566,920.1 676,169.1 1,960,936.

back 8 4 0 81

to

invest

ors

6.0 Conclusions and Recommendations.

From the facts and figures presented above the following can be concluded and

recommended.
 The project is viable and is environmentally friendly.

 The project demonstrates the fact that the local community will be engaged

which shows a sense of corporate social responsibility on the part of the

promoters.

 The Financials are okay, as the breakeven point for the project is very good and

it will give value to the investors.

 The expected return on investment is 30%.

 The investor would start collecting back of their investment at the end of the first

production.

 The management teams that will be in charge of the project are well seasoned

professionals in the industry.