Economics and Financing of
Aquaculture
Economic viability
On national planning of aquaculture development, the characteristics of
programmes for social benefits and commercial profit have been outlined. The
distinctions between the two become less clear when the economics of the
operations are considered, as on a long-term basis both types of activities
have to be economically profitable to be sustainable. Socially oriented
aquaculture can expect governmental support in the form of easy loans and
grants, subsidies and free technical advice and assistance. Such support is
generally time-bound and intended to improve the socio-economic and nutritional
conditions of communities. Although under certain circumstances it may be
maintained on a prolonged basis, it is expected that the targeted improvements
will eventually be achieved and the assistance can then be phased out. On a
somewhat similar basis, incentives may be offered to commercial enterprises for
initial periods in the form of tax rebates and exemptions, concessional loans,
etc. In both cases, economic viability will be essential for continued
operation and future expansion. Whether it is a small-scale farmer or an
entrepreneur involved in large-scale production, the attractiveness of
aquaculture depends to a very great extent on the economic benefits. The social
benefits are often closely intermingled with economic benefits.
The decline of the numerous homestead fish ponds established for
improved nutrition of rural people in parts of Africa is adequate proof of
this.
Despite the basic importance of economic viability, very little
attention has been paid to
this aspect, and promotion of aquaculture has suffered considerably for
lack of appropriate data and documentation on relevant evaluations. Costs and
earnings are undoubtedly site-specific, and what is economic in one area may
not be so in another. However, rough evaluations of the feasibility of an
enterprise or project can be made on the basis of similar ones operating under
as comparable a situation as possible. It is also necessary to compare the
costs and earnings of other similar activities for which opportunities exist in
the area before making decisions on investment in aquaculture.
Problems of obtaining reliable data from commercial operations are not
peculiar to aquaculture. But, unlike many other sectors, aquaculture has until
very recently been carried out almost entirely by individual farmers or small
groups that seldom maintained the type of data required for proper economic
analysis.
So, the paucity of adequate and appropriate data has been a major
constraint. Most of the presently available data on commercial operations are
based on special surveys undertaken by investigators. The limitations of
laboratory and experimental data for economic evaluations are well known. Pilot
productions, which could be of value for this purpose, are too few to be of
much help. It has yet to become an accepted practice for aquaculture scientists
to incorporate economics as an important variable in experimental designs. In
the absence of this, many experimental findings remain of only technical
significance and do not find application in production programmes.
The lack of economic data also seriously affects access to suitable financing that is badly needed for the development of the aquaculture industry. Not only does it constrain investment financing, but it also makes the organization of proper risk insurance extremely difficult.
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