TABLE
OF CONTENTS
Certification i
Dedication
ii
Acknowledgement
iii
TABLE OF CONTENTS
List of Figures
vii
List of Tables
viii
Abstract
ix
Chapter one:
Introduction
1
1.1 Background of the
Study
1
1.2 Problem
Statement 4
1.3 Objectives of the
Study 6
1.4 Research
Hypotheses
7
1.5
Justification
7
1.6 Limitation of the
Study
7
Chapter Two:
Literature Review
9
2.1 Concept of Fish
Farming
9
2.2 Prospect of Fish
Farming 10
2.3 Relevance of Fish
Farming
10
2.4 Value Chain in
Pisciculture Enterprise
11
2.5 The Value Chain
Concept Applied To Aquaculture /Fish Farming Enterprise 14
2.6 Value Chain Map
of Inputs (Factors) 15
2.6.1 Inputs
15
2.6.2 Feed
Manufacturing
16
2.6.3 Hatcheries
17
2.6 Value Chain
versus Supply Chain 18
2.7 Production
(Out-Grower Fish Farmers) 18
2.7.1 Production
Methods 20
2.8 Value Chain Map
for outputs (Products)
22
2.9 Value Chain
versus Supply Chain
23
2.10 Constraints
facing Fish Farming 23
2.11 Theoretical
Framework
24
2.12 Analytical
Framework 27
2.12.1 Stochastic
Frontier Production Model 27
2.12.2 Technical
Efficiency (TE)
29
2.12.3 Budgetary
Technique
32
2.12.4 Value Chain
Analysis
33
Chapter Three:
Research Methodology
3.1 Study Area
34
3.3 Sample
Techniques 35
3.2 Data
collection 36
3.4 Data
Analysis 36
3.4.1 Stochastic
Frontier Model
37
3.4.2 Budgetary
Analysis
39
3.4.3 Value Chain
Analysis 39
Chapter Four: Results
and Discussions 41
4.1 Socio-economic
Characteristics of Respondents 41
4.1.1 Age
Distribution of Respondents 41
4.1.2 Sex
Distribution of Fish Farmers 42
4.1.3 Marital Status
of Respondents
43
4.1.4 Educational
Status of Respondents
44
4.1.5 Farming
Experience of Respondents 45
4.1.6 Farm Size
46
4.1.7 Household Size
of Respondents 47
4.1.8 Distance of
Farm to the Market (km) 48
4.2 Steps in
Pisciculture Enterprise 49
4.2.1 Value Chain in
Pisciculture Enterprise
51
4.2.2 Production Value
Chain in Pisciculture Enterprise
52
4.2.3 Marketing value
chain in Pisciculture Enterprise
54
4.3 Factor-Product
Relationship in Value Chain Pisciculture
56
4.4 Cost and Returns
Associated With Pisciculture Enterprise
60
4.4.1 Return on
Investment (ROI) 62
4.5 Value Chain
Analysis
62
4.6 Constraints
63
4.6.1 Constraints
Facing Pisciculture Enterprise
63
4.6.2 Constraints
facing Value Chain Pisciculture
65
4.7 Recommendations
according to Respondents
66
Chapter Five:
Summary, Conclusion and Recommendation 67
5.1 Summary
67
5.2 Conclusion
68
5.3
Recommendation
69
References
Appendices
List of tables
Table 2.1: Output
Based on Water Area and System Used
19
Table 3.1: Showing
the Administrative Divisions and Local Government Areas of Lagos State 35
Table 4.1:
Distribution of Respondents by Age 42
Table 4.2 Sex
Distribution of Respondents 42
Table 4.3
Distribution of Respondents by Marital Status
43
Table 4.4 Educational
status of respondents 44
Table 4.5: Farming
Experience of Respondents 45
Table 4.6 Farm Size
of Respondents
46
Table 4.7
Distribution of Household Size of Respondents 47
Table 4.8: Frequency
Distribution of Respondents According to Farm Distance 48
Table 4.9: Steps of
respondents in Pisciculture Enterprise 49
Table 4.10:
Distribution of respondents based on value chain 51
Table 4.11: Type of
Production value added by respondents in Pisciculture Enterprise 52
Table 4.12: Type of
market value added by respondents in Pisciculture Enterprise 54
Table 4.13: Summary
statistics of Output and Explanatory variable 56
Table 4.14: Maximum
Likelihood estimation of the Cobb-Stochastic Production function 58
Table 4.15: Frequency
Distribution of Technical Efficiency of fish farmers 60
Table 4.16: Cost and
Returns associated with Pisciculture Enterprise 60
Table 4.17: Value
Chain Analysis of pisciculture enterprise 62
Table 4.18:
Constraints Facing Pisciculture Enterprise 63
Table 4.19:
Constraints facing Value Chain Pisciculture 65
Table 4.20:
Recommendation of Respondents
66
List of figures
Figure 2.1: An
Operational Value Chain chart
12
Figure. 2.2: The
Extended Value Chain 13
Figure 2.3: Fish
Chain in West Africa 14
Figure 4.1: Depicts
Respondent Age Distribution
42
Figure 4.2: Depicts
Sex Distribution of Respondents
43
Figure 4.3: Depicts
Marital Distribution of Respondents 43
Figure 4.4: Depicts
the Educational Status of Respondents
44
Figure4.5: Depicts
Farming Experience of Respondents
45
Figure 4.6: Depicts
farm size of respondents 47
Figure4.7: Depicts
Household Size of Respondents 48
Figure4.8: Depicts
respondents’ farm distance to market (km)
49
Figure4.9: Depicts
Steps in Pisciculture Enterprises
51
Figure 4.10: Depicts
respondents’ status on value chain
52
Figure 4.11: Depicts
type of Production Value Chain Respondents
Adopts in their
Enterprise 54
Figure4.12: Depicts
type of Marketing Value Chain Respondents adopts
in their
Enterprise 56
ABSTRACT
The broad objective
of the study was to analyze factor-product relationship in pisciculture value
chain in Lagos state, Nigeria. The specific objectives were to: (i) determine
the socio-economic characteristics of the pisciculture farmers and examine
influence on their output, (ii) identify the value chain steps in pisciculture
enterprise, (iii) determine the factor-product relationship and estimate the
technical efficiency in the value chain, (iv) estimate the costs and returns of
pisciculture value chain and (v) identify the various constraints facing the
pisciculture value chain. The study adopted the survey design. It utilized
mainly primary data. A structured close-ended questionnaire was used to collect
information from the 120 fish farmers in the area. Data generated were analyzed
using the stochastic frontier analysis (SFA), budgetary analysis, rate of
return; test of difference in mean and value chain analysis. Average output of
fish per production cycle was 14,000kg, while an average farm size (land) was
1.97ha per farmer. Average scores for farming experience, household size and
years of schooling were 11.7years, five persons and 14.4 years respectively.
The farmers were young as indicated by mean age of 43years. The result showed
that all farmers (100%) culture fingerlings, juveniles and market size fishes
while only few carryout hatching of eggs (40%) and culture fries (50%) in pisciculture
enterprise in the state. Mean scores for pond size ( =2.22m2) and feed (
=3.12N/ha) were also recorded. Six factors namely, farm size, labour, feed,
fertilizer, stocking capacity and depreciation value with coefficients of 0.02,
0.28, 0.03, 0.04, 0.40 and 0.20 respectively exerted significant (p<0.05)
effects on the output of fish. All the production variables analyzed were
positive except farm size and feed. The major determinants of efficiency were
identified to be farm size and stocking capacity. The farmers are fairly
efficient technically, with a mean efficiency estimate of 0.88 ( =88%). An
average profit of N5,371,497.753 was recorded per farmer per farming cycle with
a 2.2 return on investment (ROI) for farmers without value chain; while an average
profit of N6,734,290.39 and a 2.0 return on investment was indicated on the
other hand for farmers with value chain; indicating an average difference in
margin of N1,362,792.64 between these farmers per production cycle. Also, the
study revealed that hatching of eggs which only takes place in one week
generates an average profit of N71,457.18 to the farmers while culturing of
fries only generates on the average after two weeks a net profit of N16,928.36,
while on the other hand, culturing of fingerlings which take up to four weeks
generates an average profit of N467,856.72. Post-fingerlings culturing rakes in
an average profit of N187,856.72 after four weeks while juvenile culture gives
an average profit of N2,987,856.72 after four weeks while raising fish to
market size which takes another four weeks produces on the average a profit of
N1,542,223.29. It was therefore deduced that the highest profit in the chain of
pisciculture enterprise remains culturing of juvenile and raising to market
size respectively. Constraints to pisciculture enterprise in the state were
high feed cost ( >3.8), lack of credit ( >3.6), high cost of inputs (
>3.4) and poor technical know-how ( >3.4). Value chain exerted no
significant effect on
CHAPTER
ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
Food and Agricultural
Organization (FAO, 2002) reported that an estimated 840 millionpeople lack
adequate access to food; and about 25% ofthese are in sub-Saharan Africa
(Illoni, 2007). As the population grows and puts morepressure on natural
resources, more people willprobably become food insecure, lacking access
tosufficient amount of safe and nutritious food for normalgrowth, development
and an active/healthy life(Illoni, 2007). A number of countries in
sub-SaharanAfrica are characterized by low agricultural production,widespread
economic stagnation, persistent politicalinstability, increasing environmental
damage, and severe poverty. Given these situations, it is thereforepertinent to
provide the poor and hungry with a low costand readily available strategy to
increase foodproduction using less land per caput, and less waterwithout
further damage to the environment (Pretty et al.,2003).
Aquaculture is the
farming of aquatic organisms,including fish, molluses, crustaceans and aquatic
plants,is often cited as one of the means of efficiently increasing food
production in food-deficit countries (Inoni, 2007). According to Zohar, Dayan,
Galili and Spanier (2001), pisciculture (also called fish farming) is the
principal form of aquaculture, while other methods may fall under mariculture.
Fish farming is an aspect of aquaculture which involves the cultivation of
fishes in ponds, tanks or other chambers from which they cannot escape. A wide
range of fish farming does exist including growing of fish in earthen ponds,
concrete tanks, cages, pens, run-ways, glass tanks, acrylic tanks, plastic
tanks, Race-ways etc. (FAO FishStat Plus 2012).Pisciculture was derived from
two words Pisce(s) which means fish(es) and culture which means rearing, raising
or breeding of living things. Pisciculture is therefore defined as a branched
of animal husbandry that deals with rational deliberate culturing of fish or
fishes to a marketable size in a controlled water body (Encyclopedia, 2009).
Consequently, there are two main types of pisciculture to be distinguished: (1)
the rearing in confinement of young fishes to an edible stage, and (2) the
stocking of natural waters with eggs or fry from captured breeders
(Encyclopedia, 2009).
In Nigeria, total
domestic fish production fluctuated between 562,972 to 524,700 metric tonnes in
1983 toyear 2003; while the output of fish farming during this period was
20,476 to 52,000 metric tonnes. Fish farming accounted for between 3.64 and
9.92% of total domestic fish production in Nigeria within this period,while the
bulk of production came from artisanal fishing. Although the outlook of
aquaculture production is worrisome given the growing demand forfish and the
declining yield of natural fish stocks due toover-exploitation, fish farming
still holds the greatestpotentials to rapidly boost domestic animal protein
supply in Nigeria. Fish production currently contributes 3.5percent of
Nigeria’s Gross Domestic Product (GDP) and accounts for 0.2% of the total
global fish production (Central Bank of Nigeria (CBN), 2011).as well as
provides direct and indirect employment to over 6 million people (Adekoya,
2004); but if optimally explored has the potential as an enterprise to
contribute significantly to the possible creation of 30,000 jobs and generation
of revenue of US$160 million per annum, which would invariably improve the
agricultural sector and boost the Nation’s economy at large (Federal Ministry
of Agriculture and Rural Development, (FMARD), 2013). Fish farming is an
integral component of the overall agricultural production system in Lagos
State, Nigeria.The terrain of most part of the State is swampy and prone to
seasonal flooding. This makes a vast expanse of land in these areas unsuitable
for crop farming. The prevailing hydrographic conditions therefore make fish
farming a very attractive alternative production to which the abundant land and
water resources in Lagos State can be put (Inoni and Chukwuji,2000).
An efficient method
of production is that which utilizes the least quantity of resources in order
to produce a given quantity of output. A production process uses more physical
resources than an alternative method in producing a unit of output is thus said
to be technically inefficient. However, since economic efficiency embodies both
technical and allocative efficiencies, once the issues of technical
inefficiency have been removed the question of choosing between the set of
technically efficient alternative methods of production, allocative efficiency,
comes to fore.According to Oh and Kim (1980), allocative efficiency is the
ratio between total costs of producing a unit of output using actual factor
proportions in a technically efficient manner, and total costs of producing a
unit of output using optimal factor proportions in a technically efficient
manner. However, a farm using a technically efficient input combination may not
be producing optimally depending on the prevailing factor prices.Thus, the
allocatively efficient level of production is where the farm operates at the
least-cost combination of inputs. According to Yotopoulos and Lau (1973), a
firmis allocatively efficient if it was able to equate the value of marginal
product (MVP) of each resource employed to the unit cost of that resource; in
other words, if it maximizes profit. Therefore allocative efficiency measure,
quantifies how near an enterprise is to using the optimal combination of
production inputs when the goal is maximum profit (Richetti and Reis, 2003).
In addition to the
facts above, Nigeria is proudly the most resourceful and vibrant African nation
in the aquaculture industry and currently the leading producer of catfish in
Africa (FMARD), 2013). “It is sad to note that we are still far behind in our efforts
at reaching optimality (i.e. tapping the highest potentials from every resource
use and production pattern) in fish farming thereby often leading to artificial
glut, low value of non–exportable aquaculture products”(FMARD, 2011). Due to
these facts, value chain has gained more recognition and importance as a way of
fighting poverty and achieving food security for fish farmers, this was in-line
with the statement of Gradl, Ströh de, Martinez, Kükenshöner, and Schmidt
(2012), who opined that involving smallholder farmers in commercial value
chains can boost their incomes and improve their food security.
Value Chain according
to Hempel (2010) is defined as every step, a fisheries business goes through
from raw materials to the eventual end user. Value chain is thus a chain of
activities; products pass through all activities of the chain in sequence and
at each activity the product gains some value (Alam, Palash, Ali Mian and Mohan
Dey, 2012). The chain of activities gives the products more added value than
the sum of added values of all activities (FAO, 2011).Value chain therefore
describes a high-level model of how fishery businesses receive raw materials as
input (land, water, labour and capital), add value to the raw materials through
various processes and sell finished products to customers (Alam et al, 2012).
Moreover, fishery value chain can be defined as interlinked value-adding
(Department of Fisheries (DoF), 2002).
The nature of value
chain activities differs greatly in accordance with the types of fish
production the farmer is involved in (Ardjosoediro, and Neven, 2008). Value
chains for pisciculture differ between fish types as well as fish management
and frequently within and outside various regions (De Silva, 2011). The goal is
to deliver maximum value for the least possible total cost (FAO, 2011). The value chain framework shows that the
value chain of a farmer or producer may be useful in identifying and
understanding crucial aspects to achieve competitive strengths and core
competencies in the marketplace (Dubay, Tokuoka, and Gereffi, 2010). Value
chains have various strategies that focus on those activities that would enable
the farmer to attain sustainable competitive advantageand are also tied
together to ultimately create value for the consumer (DoF, 2002; Alam et al,
2012).
Furthermore, value
chain offers the customer a level of value that exceeds the cost of the
activities, thereby resulting profit margin (Da Silva et al, 2006). Cost
advantage can be pursued by reconfiguring the value chains. Reconfiguration or
structural changes of value chain refers to activities such as new production
processes, new distribution channels or a different sales approach (United
Nations Environment Programme (UNEP), 2009). Moreover, differentiation of value
chains stems from uniqueness. Differentiation advantage may be achieved either
by changing individual value chain activities to increase uniqueness in the
final product or reconfiguring the value chain (Wilkinson, 2006). Value chain
enables rural residents to capture more margins from their farm produce,
however, this is only possible if the credit and other constraints are resolved
(Stanton 2000). Value chain analysis can help fish export of developing
countries to be competitive in the international market (United States Agency
for International Development (USAID), 2008).