AFRICAN CRARIID CATFISH FARMING IN CONCRETE AND
EARTHEN PONDS: A COMPARATIVE PROFITABILITY ANALYSIS
C. O. A. Ugwumba
Department of Agricultural Economics and Extension, Anambra State University, Igbariam,Nigeria
R. N. Okoh
Department of Agricultural Economics and Extension, Delta State University, Asaba Campus, Nigeria
The study compared the profitability
and returns to scale of African Clariid catfish farming using concrete and
earthen ponds in Anambra State, Nigeria. Primary data were obtained from useful
copies of questionnaire returned by 204 out of the 256 respondents interviewed
for the study. Data were analyzed by means of budgetary method, translog
stochastic frontier models and a 4-point Likert scale. Mean net farm income and
net return on investment values were
and 0.56 for the concrete pond farms and N1,122,586
and 0.75 for the earthen pond farms. This implies that catfish production using
either the concrete or earthen pond type of production unit is profitable.
Returns to scale values were 2.46 and 0.69 for the concrete and earthen ponds
respectively, an indication of increasing and decreasing returns to scale.
Catfish production was seriously constrained by high cost of feeds, lack of
capital and scarcity of seeds. The earthen ponds were more profitable than the
concrete ponds, however, the concrete ponds were in the majority (77%; n = 158).
Policy must be channeled towards measures that would ameliorate production
problems and encourage the setting up of concrete ponds. Such measures include
the establishment of modern feed mill and hatcheries; the broadening of
extension services and the provision of credit facilities.
Keywords: Comparative profitability; Budgetary technique; Econometrics; Concrete and earthen ponds.
Aquaculture is the production of animals such as fish, turtle, shrimps, lobsters, crabs and crops such as rice and seaweeds (Nwuba and Onuoha, 2006). It is therefore the culture of aquatic plants and animals (F.A.O., 2003). Fish farming is part of aquaculture but sometimes the two words are used interchangeably because majority of output from aquacultural production comes from fish farming. Fish farming/culture is the growing of fish in a controlled environment which could be ponds (concrete or earthen), vats (wooden or fibre glass) and plastics (Osawe, 2004; Nwokoye, Afuluenu and Effiong, 2007).
According to Olagunju, Adesiyan and Ezekiel (2007), fish farming started in
Nigeria about 50 years ago with the establishment of a small experimental
station at Onikan, Lagos State and an industrial farm about 20 hectares at
Panyam in Plateau State by the Federal Government of Nigeria. Presently, the
culture of fish has spread to all States of the Federation. Fish culture has
been established as the best alternative to bridging the widening gap between
the demand for and supply of food fish in the country. This will save the
country huge foreign exchange of about
billion expended to import close to 700,000 metric tonnes of food fish annually
to cushon the effect of inadequate local supply. Among
the culturable species of food fish in Nigeria (carp, tilapia and catfish),
catfish is the most sought after specie, very popular with fish farmers and
commands a very good commercial value in Nigerian markets (Samson,1997).
Consequently, the catfish is very important to the sustainability of the
aquaculture industry in the country
having possessed the following good qualities identified by Adediran (2002);
Osawe (2004); as hardy; survives in different culture systems and diverse
environments; grows very fast; has higher fecundity; improved survival of the
fry and adaptation to supplemental feed.
Studies conducted by Olagunju et al (2007); Kudi, Bako and Atala (2008), and a few others have attested to the profitability of catfish production. However, this profitability is still being weighed down by constraints such as the use of poor quality catfish seeds, inadequate information, high cost of feeds, traditional techniques, small size of holdings, poor infrastructural facilities and low capital investment ( Adeogun, 2007; Ugwumba and Nnabuife, 2008). The study specifically examined the profitability of catfish production using concrete and earthen ponds, elasticity and returns to scale and constraints to production in the study area.
Anambra State is one of the 36 States of the Federal Republic of Nigeria. It is composed of 21 Local Government Areas (L.G.A.s) and 4 Agricultural Zones. The population stands at over 4 million as at 2006 national population census (Federal Republic of Nigeria (FGN), 2006). It occupies an area of 4,416 km2, 70% of which is arable land. The State is situated on a fairly flat land with tropical vegetation. The climate is humid with substantial rainfall and mean temperature of 87OF. It has a weak soil that is easily eroded, thus accounting for over 500 erosion sites of varying depth and length. Agriculture is the predominant occupation in the rural areas engaging more than 70% of the rural population. Crop and livestock farming are traditional while fish farming is gaining grounds (Ugwumba, 2005).
A multistage random sampling technique was used to select 256 catfish farmers for the study, however, 204 of them returned useful copies of questionnaire. The multistage random sampling method involved sampling 8 L.G.A.s out of the remaining 15 L.G.A.s, 4 communities from each of the 8 L.G.A.s and then 8 farmers from each of the 4 communities to arrive at the 256 respondents. Data collection was through primary sources using interview instruments, observations and respondent’s memory recall. Data collection was for a production period of 12 months and in this case January to December, 2009.
Data were collected on input and output variables, their prices and constraints to production. Data were analyzed by means of enterprise budgeting technique, translog stochastic frontier production function and a 4-point Likert scale. The enterprise budgeting technique used to assess the profitability of the catfish farming enterprise is given as:
GM = TR – TVC
NFI = GM –TFC OR TR – TC
NROI = NFI / TC
GM = Gross margin. TR = Total revenue. TVC = Total variable cost
NFI = Net farm income. TC = Total cost. TFC = Total fixed cost.
NROI = Net return on investment.
The output elasticities with respect to the inputs, Xi, for the translog production function was calculated by mean differencing all the variables (output and inputs variables) before estimation (Coelli, Prasada and Battese, 1998). With this, the elasticities for the four inputs were the coefficients of the direct Cobb-Douglas terms, X1, X2, X3, and X4 (i.e. farm size, labour, capital, and feeds respectively) in the mean differenced translog equation and the returns to scale coefficient was the sum of the elasticities of the inputs. The respective output elasticity equations for the four inputs are given as:
Where, ξQfs, ξQl, ξQc, and ξQf are the elasticities of output with respect to farm size, labour, capital and feed respectively. Returns to scale (RTS), is the sum of individual elasticity values of the independent variables and it is represented as:
A 4-point Likert scale was deployed in determining the degree of seriousness of production constraints. The scale employs an ordinal level of measurement. The responses from the respondents were ranked in a sort of dimension or disaggregated along a continuum. The response indicating the most serious constrain was given the highest score. Responses on constraints to catfish production were disaggregated as follows:
Very serious = 4
Serious = 3
Moderately serious = 2
Not serious = 1
Determination of cut-off point,
= critical mean score
f = total scale score (i.e. 4,3,2,1)
n = scale points
To make inferential statement, the mean score is compared with the critical mean, 2.50. If the calculated mean of a problem is greater than the standard critical value, then that problem is regarded as very serious. The equation used to determine variable mean score is given as:
variable mean score
i = variables (e.g. problems 1, 2, ……….,11 of catfish production)
total scores of all the respondents on a variable
n = number of respondents
Results and Discussion
Profitability of catfish production in concrete and earthen ponds
The estimated profitability of catfish production in concrete and earthen ponds
in the study area using enterprise budgetary technique and net return on
investment is as presented in Table II. Results of the analysis showed that the
respective mean net farm income (MNFI) and net return on investment (NROI)
N594,314 and 0.56 for the concrete pond farms and
N1,122,586 and 0.75 for the earthen pond
farms. This implies that the earthen ponds returned on the average 19 kobo
higher than the concrete ponds for every 100 kobo investment. By these results,
catfish production in the study area using either the concrete or earthen pond
production unit is a profitable venture. However, it could be observed that the
earthen ponds were more profitable than their concrete pond mates going by
higher values of MNFI and NROI recorded by them. The outcome of this analysis is
surprising because the concrete ponds were preferred by majority of the farmers
(77%; n = 158) contrary to the 23% of the farmers who used the earthen ponds (n
= 46). The reason could be that some of the concrete pond farms performed poorly
to have impacted negatively on profit. On the other hand, better performance of
the earthen ponds could be attributed to the reasons reported by (Nwuba and
Onuoha, 2006; Ugwumba, 2010) that the earthen ponds provide catfish with natural
environment devoid of noise, and endowed with natural water filtering agents and
natural feed items (such as phytoplanktons, zooplanktons, snails, worms, clay
for calcium, e.t.c.) which encourage faster growth of fish. This situation, in
addition to proportionately lower stocking density, bigger water volume and
larger farm size, opined by Ugwumba, 2010 might have contributed to better
performance of the earthen ponds.
According to Zen, Abdullahi and Yew (2002), technical efficiency of production is sometimes better explained by output elasticities of production inputs and returns to scale. The result of analysis of output elasticities of catfish production inputs (i.e. farm size, lab our, capital and feed) is shown in Table III. The result indicated returns to scale
Table II: Estimated profit for catfish production in concrete and earthen ponds (
Variable Concrete pond farms Earthen pond farms
(n = 158) (n = 46)
Total Revenue: 260,997,850 120,815,500
TVC: 183,803,675 68,100,195
GM: 77,194,175 52,715,305
TFC: 3,450,515 1,076,347
TC (TVC+TFC): 167,254,190 69,176,542
NFI(GM-TFC) : 93,743,660 51,638,958
Mean NFI: 593,314 1,122,586
NROI(NFI/TC): 0.56 0.75
Source: Field survey, 2009
Values of 2.46 and 0.69 for the concrete and earthen ponds respectively. This means that the concrete ponds were operating at increasing returns to scale and the earthen ponds at decreasing returns to scale. It also implies that the concrete and earthen pond farms are at Stages I and III of the traditional production function respectively. The concrete pond farms should continue to increase their output by employing more inputs while holding the fixed input level steady. However, caution must be exercised with the use of the labour input which had negative sign and was being over utilized. This result corroborates Zen et al (2002) who reported over utilization of the labour input in their study on technical efficiency of driftnet and payang seine fisheries in West Sumatra, Indonesia.
On the contrary, the earthen pond farms having decreasing returns to scale should scale down their operations in order to maintain their profit status. They should do so by reducing their inputs’ use especially the feed input with negatively signed coefficient, an indication of over utilization. The earthen pond farmers over utilized their feed input probably because of the earlier reported reason of their being richly endowed with natural feed items above the farmers’ expectations and calculations.
Table III: Estimated translog output elasticities and returns to scale for concrete and earthen ponds
Farm groups Variable Coefficient T-statistic
Concrete Blnfarm size 0.28 0.28 ns
Ponds Blnlabour 0.55 0.54 ns
Blincapital -0.03 0.02 ns
Blinfeed 1.66 1.66*
RTS 2.46 increasing
Earthen Blnfarm size 0.55 0.55 ns
Ponds Blnlabour 0.68 0.68 ns
Blncapital 0.26 0.26 ns
Blnfeed -0.81 0.81 ns
RTS 0.69 decreasing
Source: Field survey, 2009. RTS: Returns to Scale. NS: not significant. *: Significant at 10% level of probability.
Constraints to catfish production
The productivity of catfish farmers in the study area was constrained by several factors. The top in rank among these problems as shown in Table IV was high cost of feed (3.85), followed by lack of capital (3.18) and scarcity of seed (2.95). Other constraints not asterisked which were below the critical mean of 2.50, that is – lack of modern technology (2.25), high cost of transportation (2.11), high cost of labour (2.06), lack of land (1.94), poaching (1.90), inadequate water supply (1.764), mortality of fish (1.759), were perceived as moderately serious problems. However, poor storage facilities (1.33) posed no problem to catfish farming.
Table IV: Problems of catfish production.
Problem Calculated Mean Rank
High cost of feed 3.85* 1st
Lack of capital 3.18* 2nd
Scarcity of seeds 2.95* 3rd
Lack of modern technologies 2.25 4th
High cost of transportation 2.11 5th
High cost of labour 2.06 6th
Lack of land 1.94 7th
Poaching 1.190 8th
Inadequate water supply 1.764 9th
Mortality of fish 1.759 10th
Poor storage facilities 1.33 11th
Source: Field survey, 2009.
Conclusion and recommendation
Catfish production in the study area using either the concrete or earthen pond production unit is a profitable enterprise. The use of any of the pond types yielded positive mean net farm income and net return on investment. However, the earthen pond farmers realized higher profit than their concrete pond counterparts and therefore returned 19 kobo higher on every 100 kobo invested in the business. The concrete pond farms were operating at increasing returns to scale and are at Stage I of the traditional production function, while the earthen pond farms were at Stage III having exhibited attributes of decreasing returns to scale. The earthen pond farmers should reduce their inputs usage especially the feeds input in order to earn better profit.
The concrete pond farms were equally profitable and in the majority. This is an evidence that they can be established on any size and type of land. Catfish production was seriously constrained by high cost of feed, lack of capital and scarcity of quality seeds. Policy must be directed toward measures that would ensure amelioration of the production problems and the establishment of concrete ponds to create more employment opportunities. Such measures should include the setting up of modern feed mills, hatcheries and the broadening of extension services and access to credits.
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