ECONOMICS OF CATFISH (Clarias gariepinus) PRODUCTION IN BAYELSA STATE, NIGERIA

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ECONOMICS OF CATFISH (Clarias gariepinus) PRODUCTION IN BAYELSA STATE, NIGERIA

 

ABSTRACT

The study investigated the economics of catfish (Clarias gariepinus) production in Bayelsa State, Nigeria. The broad objective of the study was to examine the economics of Catfish production in Bayelsa State, Nigeria. The specific objectives were to: (i) describe the socio-economic characteristics of catfish farming; (ii) determine the technical efficiency of catfish farming; (iii) identify factors that influence technical efficiency of catfish farming; (iv) analyze the costs and returns associated with catfish farming; and (v) examine the problems associated with catfish farming. A multi-stage sampling technique was used to select three (3) Local Government Areas (Yenagoa, Ogbia and Kolokuma-Opokuma) purposively based on their predominance in commercial catfish farming and randomly five (5) communities each from the 3 LGAs. Furthermore nine (9) catfish farmers in each community were randomly selected making a total number of one hundred and thirty five (135) catfish farmers. One hundred and twenty (120) copies questionnaires were retrieved out of one hundred and thirty five (135) copies and used for the analysis. Structured questionnaire was used to elicit the required information from the selected respondents. The result indicates that 75.0% of the respondents fall between age ranged of 31-50 with the mean age of 42 years. Majority of the catfish farmers were married (79.2%), males (83.3%) dominated catfish production in the study area, 91.7% had family size of 1-10 people in their households with the mean of 7 people, 92.5% had one form of education or the other. The result further shows that 87.5% had 1-10 years of farming experience, 83.3% were part-time farmers, 43.4% had farm size of 1-1.5 hectares, 66.7% used family labour while 58.3% had one month contact with extension agent. Feeds, capital, labour and pond size have significant relationship with catfish production at various probability levels. The mean technical efficiency was 0.92 with minimum and maximum efficiencies of 0.68 and 0.99. The inefficiency model revealed that farming experience, sex, pond type and number of ponds were the variables that increased the technical efficiency of the respondents. Total Fixed Cost (TFC) was ₦881,500.00 while Total Variable Cost (TVC) was ₦3,956,025.01with Net Farm Income (NFI) of ₦3,113,183.32 during production period of six months. Return on investment was ₦0.64 which implies profitability of catfish production in the study area. The study also identified high cost of feed, inadequate finance, inadequate seed supply, lack of land, lack of organized market, high cost of transportation, lack of modern technologies, and high cost of labour were the major problems faced by catfish farmers. It is therefore recommended that farmers need for government and non –government support in terms of improves feed research that will help to reduce the cost of catfish feeds without reducing the efficacy of the feeds.Furthermore, there is need to be given proper orientation and/or basic training in major farm management techniques most especially participation in programmes that address efficient allocation of production resources. This will help increase their level of profitability, hence, be more efficient.

 

TABLE OF CONTENTS

Pages

Title page                                                                                                                                i

Certification                                                                                                                            ii

Dedication                                                                                                                              iii

Acknowledgement                                                                                                                  iv

Abstract                                                                                                                                  vi

Table of content                                                                                                                      vii

List of table                                                                                                                             x

List of figure                                                                                                                           xi

CHAPTER ONE: INTRODUCTION

  • Background of the study 1

1.2       Problem of the statement                                                                                            4

1.3       Objectives of the study                                                                                               6

1.4       Hypotheses of the study                                                                                             6

  • Justification of the study 6

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1       Concept of fish farming                                                                                              8

2.2       General background of Nigerian fisheries                                                                  9

  • Productive efficiencies and their determinants                                                          12

2.4       Efficiency                                                                                                                   14

2.4.1    Technical efficiency                                                                                                    15

2.4.2    Profit efficiency                                                                                                          15

2.4.3    Cost efficiency                                                                                                            16

2.5       Production system of catfish in Nigeria                                                                     17

2.5.1    Pond construction methods                                                                                        17

2.6       The production cycle of catfish                                                                                  20

2.6.1   Seed supply, hatchery production and nursery                                                           20

2.6.2    Feed supply                                                                                                                 21

2.6.3    Harvesting techniques                                                                                                 22

2.6.4    Handling and processing                                                                                            23

2.6.5    Markets                                                                                                                       23

2.6.6    Production costs                                                                                                         24

2.6.7    Diseases and control measures                                                                                    24

2.6.8    Basic fish disease treatment                                                                                        25

2.7       Role of fisheries in national economy                                                             26

2.8       Economic importance of fish                                                                                      26

2.9       Problems of fish farming                                                                                            29

2.10     Prospect of fish farming                                                                                             30

2.11     Theoretical framework                                                                                                31

2.12     Concept of profitability                                                                                              31

2.13     Theory of production                                                                                                  34

2.13.1  Production function                                                                                                    35

2.14     Analytical framework                                                                                                 36

2.14.1  Translog stochastic frontier production model (SEPM)                                             36

2.14.2  Budgetary model                                                                                                        39

CHAPTER THREE: METHODOLOGY

3.1       The study area                                                                                                             41

3.2       Sampling procedure                                                                                                    41

3.3       Validity and reliability of instrument                                                                         42

3.4       Data collection                                                                                                            42

3.5       Data analysis                                                                                                               42

3.5.1    The stochastic frontier production function                                                               42

3.5.2    Inefficiency model                                                                                                      43

3.5.3    Budgetary model                                                                                                        43

 

CHAPTER FOUR: RESULTS AND DISCUSSION

4.1       Socio-economic characteristics of catfish farmers                                          45

4.2       Technical efficiency of catfish farmers                                               51

4.3       Factors that influence technical efficiency of catfish farmers                                    52

4.4       Costs and returns of catfish farmers                                                               55

4.5       Problems associated with catfish farmers                                          56

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1       Summary                                                                                                                     58

5.2       Conclusion                                                                                                      59

5.3       Recommendations                                                                                                      59

REFERENCES

APPENDICES

CHAPTER ONE/ INTRODUCTION

  • Background of the Study

Fish farming is the sub-set of aquaculture that focuses on rearing of fish under controlled or semi-controlled conditions for economic and social benefits. Aquaculture is the rearing of aquatic organisms under controlled or semi-controlled conditions for economic and social benefits. Aquatic organisms include fishes, molluscs, crustaceans and aquatic plants. Culture implies some forms of intervention in the rearing process to enhance production such as regular stocking, feeding, protection from predators etc Food and Agricultural Organization (FAO, 2006).

In Nigeria, the production of food has not increased at the rate that can meet the increasing population. While food production increases at a rate of 2.5%, food demand increases at a rate of more than 3.5% due to high rate of population growth of 2.83% (Ojo & Fagbenro, 2010). The apparent disparity between the rate of food production and demand for food in Nigeria has led to a food demand supply gap thus leading to a widening gap between domestic food production and total requirement, an increase resort to food importation and high rates of increase in food prices and as a result, wide spread hunger and malnutrition are evident in the country (Ugwumba & Chukwuji, 2010).

1

The growth of a country’s population is usually accompanied by increase in the demand for the basic necessities of life including water, food and shelter. This is the case with the unrestricted increase in the demand for protein rich food items of animal origin especially. FAO(1991), recommended that an individual takes 35 grams per caput of animal protein per day for sustainable growth and development. However, the animal protein consumption in Nigeria is less than 10 grams per person per day, which is a far cry from the FAO minimum recommendation (Onoja & Achike, 2011). The major animal protein sources in the country include cattle, goat, sheep, poultry and fish. Out of these sources fish and fish products provide more than 60% of the total protein intake in adults especially in the rural areas (Adekoya, 2004). Therefore, the importance of the fishing industry to the sustainability of animal protein supply in the country cannot be over-emphasized (Ugwumba & Chukwuji, 2010). Regrettably, the supply of food fish has been on the decline. This is due to consistent declines from the country’s major source of food fish, the artisanal fisheries, from 90% in 1990 (Tobor, 1990) down to 40% in 2006 resulting to about 300,000 metric tonnes Global Agriculture Information Network (GAIN, 2007). Because aquaculture is capital intensive and financing is generally needed to feeds and labour in the production of catfish and other aquatic species, thus available resources needed to be efficiently utilized to maximize profit. According to (Eyoh & Igben, 2002), knowledge of efficiency of resource use is vital to farmers in agricultural productivity. That, the utilization of land resources is closely guided by the concept of highest and best use for maximum agricultural productivity. Furthermore, profitability analysis could guide investors and would attract investors in committing available funds into catfish production due to its high rate of profitability shown in recent studies such as (Kainga & Adeyemo, 2013; Onoja & Achike, 2011; Ugwumba & Chukwuji, 2010; Esu, Asa & Iniedu, 2009). Currently, domestic fish production is put at 551,700 metric tonnes as against the present national demand of about 1.5 million metric tonnes estimated for 2007 (Osawe, 2007; Nwosu, & Onyeneke, 2013). An underlying premise behind most of the work of efficiency is that if farmers are not  making efficient use of existing technologies, then efforts designed to improve efficiency would be more cost effective than introducing new technologies as a means of increasing agricultural output (Effiong, 2005; Ike,  2008).

The shortfall is said to be bridged by the importation of 680,000 metric tonnes annually consuming about N50 billion in foreign exchange (Odukwe, 2007). It has been asserted by (Amaefula, Onyekweaku & Asumugha, 2010; Ugwumba & Chukwuji, 2010) that the only way of boosting fish production and thereby move the country towards self- sufficiency in fish production is by embarking on fish farming (aquaculture) especially catfish farming. Fisheries occupy a unique position in the agricultural sector of the Nigerian economy. In terms of Gross Domestic Product (GDP), the fishery sub-sector has recorded the fastest growth rate in agriculture to the GDP. The contribution of the fishery sub-sector to GDP at 2001 current factor cost rose from N76.76 billion to N162.61 billion in 2005 Central Bank of Nigeria (CBN, 2005). Fish is an important source of protein to large teaming population of Nigeria and fish contributes about 40 – 50% of protein intake of average Nigerian from animal sources (Adeniji, 1987; Ugwumba & Ugwumba, 2003). According to Adekoya (2004), fish and fish products constitute more than 60% of the total protein intake in adults especially in rural areas. Hence, the role of the fishing industries in sustaining animal protein supply in Nigeria cannot be overemphasized (Ugwumba & Chukwuji, 2010). Amiengheme (2005) enumerated the importance of fish in Human Nutrition as follows:

  1. Food fish has a nutrient profile superior to all terrestrial meats (beef, pork and chicken, etc) source of high quality animal protein and highly digestible energy.
  2. Fish is a good source of sulphur and essential amino acids such as lysine, leucine, valine and arginine. It is therefore suitable for supplementing diets of high carbohydrate contents.
  • Fish is also a good source of thiamine as well as an extremely rich source of Omega iii poly-saturated fatty acids, fat soluble vitamins (A, D and E) and water soluble vitamins (B complex) and minerals (Calcium, Phosphorus, Iron, Iodine and Selenium).
  1. It has a high content of Polyunsaturated (Omega iii) fatty acids which are important in lowering blood cholesterol level and high blood pressure. It is able to mitigate to alleviate platelet of (cholesterol) aggregation and various arteriosclerosis conditions in adult populations.
  2. It reduces the risk of sudden death from heart attacks and reduces rheumatoid arthritis.
  3. Omega iii fatty acids also lower the risk of age related muscular degeneration and vision impairment.
  • It decreases the risk of bowel cancer: and reduces insulin resistance in skeletal muscles.

It is known that economics is an important concept which is the main focus of this study, because it relates to the financial feasibility of expansion, or indeed starting up of an enterprise and contains information of the efficiency of the technical and managerial process. Profitability in common usage means the ability to earn profit. The profitability of any enterprise is measured in relation to the size of the business (Kainga & Seiyabo, 2012). Different forms of business produce goods and services for sale in other to earn income. If the income earned does not exceed cost of production in turn, the firm cannot stay in business for a long time therefore the aim of any enterprise is to minimize cost and maximize output in other to maximize net revenue.

The term efficiency can be described as the use of the lowest amount of inputs to produce greatest amount of output. Thus efficiency simply means reducing the amount of wasted inputs. The modern theory of efficiency dates back to the pioneering work of  Farell (1977)  who proposed that the efficiency of a farm consists of technical and allocative component and the combination of these two components provide a measure of total economic efficiency (overall efficiency). The crucial role of efficiency in increasing agricultural output has been widely recognized by researchers and policy makers like (Nwaru, 2005; Onoja & Achike, 2011). Indeed, considerable efforts have been devoted to the analysis of farm level efficiency in developing countries.

Therefore, greater improvement in catfish production can be achieved with a proper analysis that will lead to knowledge of the level of profitability of catfish farming and technical efficiency to production which constitute the basis for this study.

  • Problem of the Statement

Nigerians are large consumers of fish with demand estimated at 1.4 million metric tons. However, a demand supply gap of at least 0.7 million metric tons exist nationally with import making up the short fall at a cost of almost 0.5 billion US dollar per year. While domestic fish production of about 500,000 metric tons is supplied by artisan fisher – folk (85%), despite over fishing in many water bodies across the country (Adekoya, 2004 . Moreover, fish supply from artisanal fisheries has been consistently on the decline (Tobor, 1990; GAIN, 2007). Therefore, the industry needs further investment such as improving aquaculture development in order to meet the demand-supply gap with proper farm management skills demonstrating its profitability and efficient use of resources.

Nigeria has a vast network of inland waters like rivers, flood plains, natural and man-made lakes and reservoirs (Shimang, 2005). The inland water mass was estimated to be about 12.5 million hectares of inland waters capable of producing 512,000 metric tons of fish annually (Ita, 1984; Shimang, 2005). Bayelsa State has a fair share of the vast fishery resources with 180km coastline that holds a lot of potentials for investors in fisheries. These include rivers, lake and ponds where many fishing activities take place. Yet local fish production in Bayelsa State remains around 30,000 tonnes per year,Bayelsa State Investment Promotion Agency(BIPA, 2013). This is insufficient for local consumption with significant unmet demand in Bayelsa and neighboring states. The findings of Kainga and Adeyemo (2013) stated that 77.8% were part-time farmers while 22.2% were full-time which implies that they augment the business with other sources of fund, in the most parts of Bayelsa State. This could not be out of place due to discovery of crude oil which may have in no little way occasioned production drift of fish production as well as to bridge the gap between the daily per caput animal protein intake which is estimated at less than 10 grams compared to the FAO recommended minimum requirement of 35 grams (Onoja & Achike, 2011). Hence, protein obtained from catfish is needed for the growth and development of the entire populace, thus increases the standard of living and income of the fish farmers.

Presently, two major constraints to the establishment of fish culture enterprises in Nigeria are lack of initial capital input and the acquisition and ownership of land (Onoja & Achike, 2011; Afolabi & Fagbenro, 1998), including Bayelsa State.  Most importantly, the value of rental price of land that satisfies the technical requirements of modern and conventional pond fish culture varies with its quality and alternative uses. It becomes prohibitive and unaffordable especially in urban centres where competing and uses with earthen pond fish culture exists.Also lack of proper management and information to efficiently utilize their limited fisheries resources for profit maximization. This has partly hampered aquaculture development in the country, especially, Bayelsa State leading to ‘potential’ farmers avoiding going into fish farming and others becoming ‘inactive’ because aquaculture profitability has not been demonstrated to them in the study area. Likewise financing institutions and banks are not keen to lend money to farmers whose enterprises cannot be feasibly appraised.

Despite these considerably high potentials, local fish production has failed to meet the county’s domestic demand (FAO, 1995). The fish industry remains the most virgin investment in Nigeria compared with the importation of frozen fish in the domestic market (Ndu, 2006). A sure means of substantially solving the demand – supply gap is by embarking on widespread homestead and small scale fish and through proper analysis that will lead to knowledge of efficient utilization of fish farmer’s limited resources for maximum production.

Although available literature shows that many studies have been done on catfish production, but the attention was more on either profitability (e.g. Ugwumba & Chukwuji 2010; Kainga & Adeyemo, 2013; Kudi, Bako & Atala, 2008; Esu, Asa & Iniedu, 2009; Ohen & Abang 2009; Anyanwu, Mkpado & Ohaka, 2009; John, 2012; Kassali & Mariama, 2011) or technical efficiency of catfish production (e.g. Onoja & Achike, 2011; Emokaro & Ekunwe, 2009).  Little or nothing has been done to look at profitability and technical efficiency of catfish production especially in Bayelsa State. This could be due to poor information dissemination on efficiency and profitability of catfish production.

Hence the study seeks to determine the technical efficiency of catfish farmers, identify factors that influence technical efficiency of catfish farmers,analyze the costs and returns associated with catfish and examine the problems associated with catfish farmers in Bayelsa State, Nigeria.

1.3       Objectives of the Study

The broad objective of the study is to examine the economics of Catfish production in Bayelsa State, Nigeria.

The specific objectives are to:

  1. describe the socio-economic characteristics of catfish farmers in Bayelsa State, Nigeria;
  2. determine the technical efficiency of catfish farming;
  • identify factors that influence technical efficiency of catfish farming;
  1. analyze the costs and returns associated with catfish farming;
  2. examine the problems associated with catfish farming; and
  3. make recommendations based on the findings.

1.4       Hypotheses of the Study

The following null hypotheses were tested in the course of the study:

  1. There is no significant influence of socio-economic characteristics on output of Catfish farmers in Bayelsa State.
  2. Catfish farmers are not technically efficient.

1.5       Justification of the Study

The study aimed at examining the economics of catfish farmers in Bayelsa State. The reason is because presently catfish farming activity is not run as a business in comparison with other agriculture or livestock based industries in the state. If catfish farming can be demonstrated to be profitable at the small scale level, entrepreneurs may take it up at the commercial level and produce for large scale markets and export.

The findings of the study will provide necessary and important information to various stakeholders in the fishing industry, these include – potential fish farmers, policy makers, researchers, extension agents etc. Since the study will enable the efficient utilization of limited resources to maximum profitability and pond management practice by the farmers.

It will also help the government on policy formulation as it affects fish farming, and to the researchers it can be a part of reference material and open areas for the extension agents and all these will lead to increase in fish production with its benefits of increasing the protein intake of Nigerians.

 

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