Introduction

The regional breakdown of aquaculture production shows that Asia is the top aquaculture producing continent in theworld with China contributing 68.92% of the 53,301,157 metric tons total aquaculture production of Asia in 20 I0(FAO 2012). However, Africa and other developing nations in Asia have lagged behind in terms of productivity. This

notwithstanding, several developing nations have made progress and include: Asia and the Pacific:Myanmar and Papua NewGuinea; sub-Saharan Africa: Nigeria, Uganda, Kenya, Zambia and Ghana; and South America: Ecuador, Peru and Brazil aslistedby FAO (2012).

Aquaculture in Nigeria dates back to the colonial era but current aquaculture efforts were sparked by the rearing ofcommoncarp (Cyprinus carpio) at Panyam Fish Farms in Plateau State (Ajayi, 1971).The major species cultured in Nigeriaincludetilapia (Oreochromis niloticus, 0. mossambicus, 0. aureus),African catfish (Clarias gariepinus, Heterobranchus lon­gifilis and H. bidorsalisy. Aquaculture production inNigeria rose (in tons) from 56,355 in 2005 to 84,523 in 2006 and 85,087in2007 (FOF, 2007), with a further increase to 143,207 in 2010 (USAlD, 2010).

According to the FDF (2008), projected demand for fish in Nigeria as at 2013 is 2.113 x 106 tons with a projectedpopulation of \64 x \06 people and a production level of just 0.71 xl O" tons, a deficit of 1.365 xlO" will need to be filled.Aquaculture as a business venture can enhance development by improving family income, providing employment opportuni­ties and increase food security (Akinrotimi et al., 2009)

Aquaculture can be managed successfully like every other business using various tools and techniques that are cur­rentlyavailable. The principal step in aquaculture business success is the conceptualization and how the concept is physicallydeveloped.This paper will take a critical look at the various management considerations for aquaculture success with a criti­cal look at the issues that plague the success of managerial efficiency and production.

Starting An Aquaculture VentureFish farming is not for everyone even though earnings can be good but one should enter into this business with caution, seri­ousplanning and a strategy based on a good investigation of the industry and fish farm management (USAID, 20 10).Carefulplanning and implementation of plans is vital to the success of an aquaculture venture. A faulty business plan will have twomonumentaleffects which include practical problems that arise as a result of bad paperwork and decline to fund the project iftheplanwas intended to source capital from the bank or other creditors (RFP, 2010). Aquaculture or fish culture to be preciseis carried out in water and as humans, we do not live in water hence we are constantly trying to understand the activities and

AbstractStarting an aquaculture business in Nigeria requires a good understanding oj the industry. Small aquaculture ventures cannot competeeffectively in the present scenario where large/arms are springing up in the urban areas 0/Nigeria. The export marketfor aquacultureproducts has not been fully exploited. The export of smoked fish to the United Kingdom has been ongoing and is expanding but it ismeant to serve theAfrican community in the UK. The bane of the aquaculture industry lies in the small nature a/most of the enterprises.Nigeria has no specific legislation on aquaculture hence the idea 0/ a National Aquaculture Strategic Initiative is a welcome develop­ment.Keywords: Aquaculture, socio-economics, legislation, enterprise.

Ataguba, G.A. / Ogbe, F. G./ Solomon, S. G. / Okomoda, V. T.

Aquaculture business management in Nigeria: Issues andconsiderations-A review

14

88

Issues with economics and social consideration: Small aquaculture ventures cannot access necessary financial servicesfrom commercial banks because they are not considered credit worthy (Odebiyi and Olaoye, 2012). However, Ataguba and

Biological Considerationsa) Species: The aquaculturist must select species that are compatible with the environment or region where the venture is to be

sited. Salinity and temperature are the basic characteristics of water that determine choice of species. Brackish and marinefish species that are cultured or can be cultured in Nigeria include Chrysichthyes nigrodigitatus, mullets, Penaeus notia/is,snappers (Agwumba et al., 1985 and Anyanwu et al., 2007), oysters, periwinkles and blood cockle (Anyanwu et al., 2007).Freshwater species being cultured extensively include tilapia, carp and African catfish. However, other candidate speciessuch as gymnarchus, heterotis and clarotes are being tested. Snakehead (Parachana obscura) is being successfully reared inAsia and this can atso be produced in Nigeria.

b) Aquaculture Production SystemsI. Level of intensity: The terms intensive, semi-intensive and extensive are commonly used to define culture methods. In

practice, the distinction between them is often less than clear.They are, however, generally linked to the level of inputsof feed and/or fertilizer and to the stocking density of the fish that can be supported (Eleftheriou, 1997) intensity ofoperations, in terms of nutrient inputs, areas used and stocking levels (Chuenpagdee et al., 2008; RFP,2010). Hence:Extensive systems, Semi-intensive systems and Intensive systems.

II. Issues with level of intensity: Today a lot of questions have been raised as to what constitutes each ofthcse categories.Although Stevenson et al. (2007) were of the opinion that classifying aquaculture systems based on intensity was noteasy, they maintained that the use of important variables such as stocking density, feeding rate and fertilizer applicationrate was necessary. However, Stevenson et al. (2007) believe that definition and measurement issues are necessary toclassify production based on intensity and opined that an economic view be applied considering the fact that aquacul­ture production uses variable inputs (fry, feeds, fertilizer) in relation to land which is fixed. Shang (1981), Chuenp­agdee et al. (2008) and RFP (20I0) have given classifications based on the use of inputs as adapted above. However,as with economic measures of partial productivity, the inputs can be substituted for one another to some extent, so thatmeasuring one input cannot be totally satisfactory but with a multivariate approach to classification we can look at theparticular sets of combinations of inputs that currently define production practices (Stevenson et al., 2007).

III. Culture units: Aquaculture can be practiced in earthen ponds, tanks, cages and pens.IV. Based on species combination: Monoculture, polyculture, integrated fish culture and the recent integrated multi-troph-

ic aquaculture (IMTA).

Social and Economic ConsiderationsThis aspect of the plan takes into consideration several factors that link your business to the outside world or society as awhole. In planning for an aquaculture venture, it is necessary to consider the market, the production system as well as ex­pected revenues. Strombom and Tweed (1992), proposed the structure of a business plan to comprise four sections:

a. Expectations: This has to do with goals that will guide management activities and they should be tied to production cyclelengths.

b. Marketing: This involves market analysis to determine market area, identify market segments, understand the needs of buy­ers and estimate the market potential with final deductions on production being drawn from the information gathered.

c. Production feasibility: This involves the core production related issues: site and species selection, source of water, source offish fingerlings and broodstock, construction of production system to be used (ponds, tanks, cages, hatchery) etc. It showsthe relationship between costs and expected revenues. Costs can either be fixed (costs are associated with those inputs whichdo not change over the short run such as salaries, overhead, insurance and depreciation) or variable (fry and fingerlings, feed,chemicals, labor, electricity, etc).

d. Financial feasibility: The cash flow statement shows forecasts of profits and ensures that money is available when needed.Cash flow projections should extend beyond two or three years so as to show the point when the business will break even.Cash inflows and outflows must be modeled using various tools that can predict return on investment as provided by Shang(1981). These include the payback period method (the shortest payback period being most desirable (Dereli et al., 2009»,average rate of return method (Investment altematives with higher average rate of return should be considered, CengageLearning, 2010) and the discounting method which comprises: net present value [(NPV), NPV>O implies a profitable invest­ment and NPV=O is a break-even situation, Dereli et al. 2009], internal rate of return [(lRR), ifIRR is higher than cost ofcapital, it implies the venture is feasible, Eakins, 2002] and the benefit - cost methods (if the ratio is> I or the highest ratioamong alternatives is the most feasible, Eakins, 2002).

There is need to forecast the level of expansion you desire in future, and match this with your targeted profit level asdetermined by your investment in the business as well as managerial input so as to avoid uncontrolled growth which can leadto business failure (Marshall et aI., 2008). Therefore, the initial step will involve planning and business proposals to pencildown scale, intensity and available resources as well as resources being sought for. Successful aquaculture business will startwith selection of site, market analysis, reliable water supply, availability of fish fingerlings, broodstock and rearing technol­ogy, feed and labour availability among others.

dynamics of the aquatic environment. This creates a risky situation that demands constant monitoring of the water and waterrequirements of the species to be cultured (Garling, 1993).

fn considering an aquaculture venture, it is necessary to understand the current state of the industry and also the majorplayers in the industry. As you gain experience in aquaculture you will be able to anticipate trends or problems and adapt

; more effectively but in the beginning it is best to recognize the inherent unpredictability of aquaculture and understand how> to modify your plans as needed (Strombom and Tweed, 1992).o~oc:;:;c:~tr1

PROCEEDINGS OF 28TH ANNUAL CONFERENCE, NOV. 25-30, 2013

Olowosegun(2012) advocated use of micro-finance and the development of appropriate finance to serve small scale aqua­culturists.The quantity of fingerlings, labour input and quantity of feed are the significant variables affecting fish farming(Muhammad-Lawal and Omotesho, 2010). Fish feed is a significant input in the production system gulping about 60% ofproductioncosts (Jamu and Ayinla, 2003). Hence feeds which can offer low FCR matched with species that can deliver lowFeR will be beneficial. However, fish feed development in Sub-Saharan Africa has not made a significant progress as ex- ....pected(Gabriel et al., 2007).

Access to markets in Nigeria is hampered by transportation problems (Adediji and Owoigbe, 2005) which can betracedto either poor road network or inadequate or even unsuitable haulage vehicles. Uncoordinated marketing and the pres­enceof middle men can make fish sales unprofitable (Adelakun et al., 2012). The export market for aquaculture products hasnotbeen fully exploited. The export of smoked fish to the United Kingdom has been ongoing and is expanding but it is meantto serve the African community in the UK. According to Ward (2003), Nigeria alone exports about 5 tons of smoked fishpermonth (via airfreight) to the UK and the total volume of imports from Nigeria and other African countries was estimatedqualitativelyas 500 tons per annum with a retail value of about £7.5 million. The larger EU export market for products liketilapiafillets, catfish fillets and farmed shrimps are yet to be exploited. In Asia, Thailand and Vietnam have penetrated theAmericanand EU fish markets with their local species within the last 10 years.

Management MattersManagementinvolves Sole proprietorships, Partnerships or Corporations. According to Kohler and Selock (1992), the struc­tureof sole proprietorship is such that the farmer is the sole owner, has legal title to the property, is self employed and he/shemakes management decisions with resources being limited to that available to the sole proprietor. Partnerships can eitherbelimitedor general in nature. Partners share in all ownership, management, and liability in a general partnership. Limitedpartnersshare in the profits and losses of the business but not in the management hence, the limited partner provides resourcessuchas capital, but management decisions are under the control of the principal owner (Engle, 2010). The best thing aboutformingyour business as a corporation is that it limits your personal liability, which is not true for partnerships and sole pro­prietorshipsbut incorporating can be expensive, yet it is usually well worth the money (Strauss, 2003).

Successful culturists minimize operational costs by carefully observing changes in feeding habits, water quality, dis­easeandpredation (Strombom and Tweed 1992). Feeding rate and frequency management is vital for profits to be attained. Itisimportantthat farm managers monitor fish for signs of satiation in order not to waste feed since it constitutes a large chunkofthevariable cost. Water quality monitoring is vital as this can lead to mortality ifnot monitored.

Issues with management: The bane of the aquaculture industry lies in the small nature of most of the enterprises.Sole-proprietorshipis the dominant organizational structure of the aquaculture ventures. This has brought about the problemoflow capital base and inadequate capital to run the venture. Management should co-ordinate all aspects of farm operationssuchthat there is a smooth flow from one activity to the next to ensure process continuity and product output. Managementmustkeep a close eye on costs and production efficiencies throughout the production process including monitoring the effi­ciencyof labor, feed usage, use of electricity and fuel, and use and care of equipment (Engle, 2010). According to Mosig andFallu(2004), there are two aspects to stock management: operational management (which is done daily) and administrativecontrol(which is an ongoing process).

Atanda (2007) listed the lack of and poor management of broodstock, especially feeding and handling, poor recordkeepingof all activities regarding induced spawning, care of eggs, fry, feeding, and general management of fingerlings asproblemsassociated with the aquaculture industry in Nigeria. Technical manpower to handle the day to day running of farmactivitiesis being hampered by the high cost of hiring trained personnel. This problem can be effectively solved if NigerianAquaculturistslearn from the Asian example where clustering and partnerships as well as corporations have arisen as againstsole-proprietorshipswhich cannot sustain huge labour costs. This is also good for the Nigerian economy and will also cutdownunemployment. However, infrastructural support from government can catalyze the process of cluster formation andincorporation.Channeling irrigation water into farm villages or centres will enable aquaculture business clustering as it willreducecost of having to provide water by the investors themselves and instead make them rely on natural water provided bygovernmentirrigation programmes.

Environmental ConcernsAccordingto Gegner and Rinehart (2009), for an aquaculture enterprise to remain viable and profitable, it must be environ­mentallysound. Concerns about the ethics of using wild fish which is declining in stock to feed cultured fish is linked withthe issueof sustainability of the system. The question arises: Is aquaculture the key to increasing fish production in view ofdecliningwild fish stocks or it is the lock that will permanently shut out aquatic biodiversity? Other ethical concerns aboutdischargeof waste water and its polluting effects on wetlands and water bodies, use of drugs and chemicals in aquacultureanddischargeof water with these chemicals into the environment were highlighted earlier by Ataguba and Okomoda (2011).

Legal ConsiderationsNigeriahas no specific legislation on aquaculture at national level (D' Andrea, 2005). The Federal Department of Fisheries isresponsiblefor the supervision and control of fish production and quality maintenance. However, aquaculture is mentionedonlyonce in the Department's objectives as it pertains to extension services. Although aquaculture inNigeria operates withoutevena minimum legal framework, it is remarkable that aquaculture inNigeria has reached its present state of development in

PROCEEDINGS OF 28TH FISON ANNUAL CONFERENCE, NOV. 25-30, 2013

90

Daramola, J.A., Osofero, S.A., Kester, C.T. and Gbadamosi, O.K. (2007). Overview of the status of Aquaculture in Nigeria withReference to Ekiti State. Agricultural Journal, 2(3): 447 - 452.

Dereli, T., Baykasoglu, A. and Yilankirkan, A. (2009). Using' Decision-Making Tools' for Business Investments: Feasibility Analysis forBaby Diaper Production _ A Case Study. Rio's International Journal on Sciences of Industrial and Systems Engineering andManagement (3) 2009 !. http://www.rij.eng.uerj.br/scientific/2009/sp091-03.pdf

Eakins, S.G. (2002). Finance: investments, institutions, and Management. Pearson Education, Inc. Published by Addison WesleyLongman, 554pp.

Eleftheriou, M. (1997). Aqualex: A Glossary of Aquaculture Terms. [Online) Accessed 8-09-2013. http.z/www.aqualex.org/etearning/fish_feedinglenglishlintroductionlintensive.html

Engle, C.R. (2010). Aquaculture economics and financing: management and analysis. Wiley-Blackwell Iowa USA. 260pp.

REFERENCESAdedeji, O. B. and Owoigbe-Ogunoiki, G. A. M. (2005). Factors affecting catfish production and its public health implication in

southwest Nigeria. Proceedings, 12th International Congress on Animal Hygiene, September 4-8, Warsaw, Poland. 427-429.

Adelakun, K.M., Oguniwin, 0.1.,Ajagbe, S.O. and Ijagbeni, A.B. (2012). Sustainable Aquaculture Practise: A Profitable Venture inNigeria. In: Handzic, M., Subasi, A. and Goksu, A. (eds), Green Information Technologies and Strategies. Proceedings of the3rd International Symposium on Sustainable Development, ISSD 2012, May 31 - June 0 I 2012, Sarajevo. Vol. 3 Part 1, 265-272.

Agwumba, A., Ezenwa, B.B., Alegbeleye, O. and Anyanwu, P. (1985) Culturable fish seeds in Nigerian waters: A research survey(1978-1985). Proceedings, 4th Annual Conference of the Fisheries Society of Nigeria (FISON), 26-29 November, 1985, PortHarcourt, Nigeria.

Ajayi, S.S. (1971). Panyam fish farm and the introduction of the European Carp (Cyprinus carpio). Nigerian Field, 36:23-31.

Akegbejo-Samsons, Y. and Adeoye, D. (2012). Measuring profitability in small scale aquaculture enterprises in southwest Nigeria.Proceedings, 16th International Institute of Fisheries Economics and Trade Conference, July 16-20, 2012, Dar es Salaam,Tanzania, 8pp. [Online) Accessed 09-09-20 13. http://ir.library.oregonstate.edu/xrnluiibitstreamlhandleIl957/34557/Measuring%20Profitability''1020in%20Small%20Scale%20Aquaculture%20Enterprises%20in%20Southwest%20Nigeria.pdf/sequence= I

Akinrotimi, O.A" Abu, O.M.G., Ibemere, I.F. and Opara, C.A. (2009). Economic viability and marketing strategies of periwinkleTympanotonus fuscatus in Rivers State, Nigeria. International Journal of Tropical Agriculture & Food systems, 3/3: 238-244.

Anyanwu, P.E., Gabriel, U.U., Akinrotimi, O.A., Bekibele, D.O. and Onunkwo, D.N. (2007). Brackish water aquaculture: a veritable toolfor the empowerment of Niger Delta communities. Scientific Research and Essay, 2(8): 295-301.

Ataguba, G.A. and Okomoda, V,'T, (20 II). Aquaculture and the Environment. In: Orire, A. (ed.) Proceedings of the 26th AnnualConference &fair of the Fisheries Society of Nigeria, 28th November - 2nd December, 20 II, Niger State, Nigeria.

___ . and Olowosegun, O.M. (2012). Micro-Credit: Financing Fish Production in Nigeria - A Review. Journal of Fisheries andAquatic Science, 8: 190 - 195

Atanda, A.N. (2007). Freshwater fish seed resources in Nigeria, pp. 361-380. In: M.G. Bondad-Reantaso (ed.).Assessment of freshwaterfish seed resources for sustainable aquaculture. FAO Fisheries Technical Paper; No. 501.Rome. FAD. 628pp.

Cengage, L. (2010). The Accounting Rate of Return (ARR). Web Extension 12A. [Online) Accessed 11-10-2013 http://www.cengage.com/resource _uploads/downloadsl0324594690 _163041.pdf.

Chuenpagdee, R., Kooiman, J. and Pullin, R.S.y' (2008). Assessing Governability in Capture Fisheries, Aquaculture and Coastal Zones.The Journal of Trans disc iplinary Environmental Studies 7( I): 1- 20. [Online) Accessed 7-09-2013. http://www.journal-tes.dklvol_7_no_lIno_3_Ratana.pdf.

0'Andrea, A. (2005). National Aquaculture Legislation Overview. Nigeria. National Aquaculture Legislation Overview (NALO) FaclSheets. in: FAO Fisheries and Aquaculture Department Rome. [Online). Updated I November 2005. Accessed 10 September·2013.

The business of aquaculture is highly risky with financial risks associated with production threats (unfavourable environ­mental conditions, equipment or other asset failure, poor-quality seed stock and broodstock, disease and pest infestation) andmarket threats (Industry competition or reduced demand, escalating prices of production inputs, government policies as theyaffect interest rates, tax and trade that may become costly to satisfy over time and are constantly changing) (Kam and Leung,2008) and yet can produce reasonable profit as against the notion of huge profits that is being circulated. A legal framework aswell as infrastructure can spur the Nigerian aquaculture industry and create huge corporations which can produce sustainableaquaculture products that will find a place in the international market.

> Conclusiono~()qt-<>-lq!;dtr.I

an almost complete legal vacuum in which even basic land law offers little security (Percy and Hishamunda, 200 I).In order to provide a background in which commercial aquaculture can expand and flourish and to address the atten­

dant environmental issues, it is important that Nigeria begin the process of developing a comprehensive and detailed aquacul­ture law (Percy and Hishamunda, 2001). The idea ofa National Aquaculture Strategic Initiative is a welcome development.

f-' This should be expedited to give adequate cover for expansion of aquaculture business as corporate entities.

PROCEEDINGS OF 28TH ANNUAL CONFERENCE, NOV. 25-30, 2013

91

FAO (2012). State of the world fisheries and aquaculture 2012. Food and Agriculture Organisation of the United Nations. Rome Italy.

FDF (2007). Fisheries Statistics of Nigeria, Fourth Edition, 1995 - 20p7. Federal Department of Fisheries, 49pp.

Gabriel, U.U., Akinrotimi, O.A., Bekibele, D.O., Onunkwo, D.N. and Anyanwu, P.E. (2007). Locally produced fish feed: potentials foraquaculture development in subsaharan Africa. African Journal of Agricultural Research, 2(7): 287 - 295.

Garling, D.L. (1993). Making Plans for Commercial Aquaculture in the North Central Region. University of Missouri Extension ManualMX39 I. [Online] Accessed 20-08-2013. http://extension.missouri.edu/pIMX391.

Gegner, L. and Rinehart, L. (2009). Aquaculture Enterprises: Considerations and Strategies. A Publication of A7TRA - NationalSustainable Agriculture Information Service. [Online]. Accessed 09-09-2013. 12 pp. https:/lknightowl.ncat.org/-basecamp/120472/attrapdfpubs/aquaculture _03291 O.pdf.

Jamu, D.M. and Ayinla, O.A. (2003). Potential for the development of aquaculture in Africa. NAGA, 26: 9 - 13.

Kam, L.E. and Leung, P. (2008). Financial risk analysis in aquaculture. In Bondad-Reantaso, M.G, Arthur, J.R. and Subasinghe, R.P.(eds). Understanding and applying risk analysis in aquaculture. FAO Fisheries and Aquaculture Technical Paper. No. 519.Rome, FAO. Pp. 153-207.

Koh\er, S.l. and Se\oc\<..,D.I\. (_\991). Choos\n'i?,an Q''i?,an\zat\ona\ Structure fo, Your Aquacu\ture "Bus\ness.North Central Re'i?,lona\Aquacu\tu,e Cente, 1'uo\lcati.on No. \()3 USDA. 'i?,rant# '&'&-3'&5()()-3'&'&5

Marshall, M.l., Quagrainie, K. and Clark, S. (2008). Aquaculture Small Business Startup Kit. Purdue University Cooperative ExtensionService. [Online] Accessed 7-09-2013.

Muhammad-Lawai, A. and Omotesho, O.A. (2010). Economic Analysis ofFish Farming in the North Central Nigeria: A Case Study ofKwaraa and Kogi States. Journal of Agricultural Research and Development, 9(1): 21 - 36.

Odebiyi, O.C. and 0laoye, 0.1. (2012). Small and Medium Scale Aquaculture Enterprises (SME's) Development in Ogun State, Nigeria:The Role of Microfinance Banks. Libyan Agriculture Research Center Journal International, 3( I): I - 6.

Percy, D.R. and Hishamunda, N. (2001). Promotion of sustainable commercial aquaculture in sub-Saharan Africa. Vol. 3: Legal,regulatory and institutional framework. FAO Fisheries Technical Paper No. 408/3. FAO Rome 29pp.

RFP (20 I0). A Manual for Rural Freshwater Aquaculture. Rural Fisheries Programme Department of Ichthyology and Fisheries ScienceRhodes University for the Water Research Commission and Department of Agriculture, Forestry and Fisheries Republic ofSouth Africa. WRC REPORT NO. TT 463IPIIO.

Shang, Y. C. (J 981). Aquaculture Economics: Basic Concepts and Methods of Analysis. Croom Helm, London.

Stevenson, J.R., Irz, X.T., Alcalde, R., Morrisens, P. and Petit, 1. (2007). An Empirical Typology of Brackish-water Pond AquacultureSystems in the Philippines: A Tool to Aid Comparative Study in The Sector. Aquaculture Economics and Management, 11(2):171 -193.

Strauss, S.D. (2003). The business start-up kit. Dearborn Trade Publishing, Chicago. 27Spp.

Strombom, D.B. and Tweed, S.M. (1992). Business Planning for Aquaculture - Is it Feasible? North-Eastern Regional AquacultureCenter Extension Guide NRAC Fact sheet No. 150-1992. University of Massachusettes, Dartmouth.

USAID (20 I0). Best Management Practices for Fish Farmers in Nigeria. USAID markets. [Online] Accessed 10-10-2013 http://www.nigeriamarkets.org/files/ Aquaculture%20POP%20final%2020 1O.pdf.

Ward, A. (2003). A study of the trade in smoked-dried fish from West Africa to the United Kingdom. FAO Fisheries Circular. No. 981.Rome, FAO. 17p.

PROCEEDINGS OF 28TH FISON ANNUAL CONFERENCE, NOV. 25-30,2013