Fish farming, or aquaculture, has become an increasingly popular method of producing fish for consumption and has the potential to contribute significantly to food security and economic development in East Africa. In Uganda most aquaculture farms produce Tilapia and a growing number of farmers are farming Catfish. To maximize productivity and profitability, fish farms must be well-managed, have the right equipment, resources, and strategies in place.
This blog will help you understand what productivity and profitability means for your farm, why they are important and how you can measure them. Of course, we shall also provide you with some tools, tips and tricks so that you can start to improve profitability and productivity on your farm today!
Table of Contents:
Productivity versus Profitability
Productivity refers to how much product a business produces relative to the inputs used. There are many different ways to define productivity. But for ease and simplicity we defined it as kilograms of fish produced per m3 of water per year (kg/m3/yr) (Onhoro et al (2021)). Of course this is a very high level measurement, and the ability to produce is dependent on many factors including water quality, fish species, feed used and farm management practices. We will go through the most important variables later on.
Profitability on the other hand is all about money and it is defined as net profit per kg of fish produced. This is the end result of deducting all the direct production costs, and the overhead expenses from the sales revenue. In other words, profit is what remains in your pocket after having paid all your bills!
For a sustainable farm, it is important to balance profitability and productivity. A very productive farm might not be profitable when inputs are too expensive and sales prices low. At the same time a very profitable farm might not be very productive, for example if a farmer has a natural pond with a fish population on its property and she does not do supplementary feeding. Technically that would be very cheaply produced fish, however because of the low productivity, it is not a sustainable venture.
Productivity
As we established, productivity is the kilograms of fish produced per m3 of water in a year at a farm. This means that in order to maximize productivity you need to produce as much fish, as fast as possible in that same water. A key indicator of this is the length of your production cycle: how long it takes you to grow a fingerling (1g) to harvest size. The shorter the cycle, the more times you can grow fish in the same pond or cage!
Factors that determine productivity
To make fish grow as fast and healthy as possible you need to consider the following;
- Match the farm environment (site) to the fish species: Different species thrive in different environments and require different care. As such you need to carefully select the right species for your farm. Or if you are specific about wanting to farm Tilapia for example, then you need to select a site and create a farm that is set up specifically for Tilapia cultivation. You may need to put the following factors into consideration:
- Where is the nearest market where people buy fish? What type of fish do they eat? What is the usual sales price? Who do you plan to sell to? What do they ask for?
- What are the natural conditions at this location? Think of the reliability and capacity of the water source, water quality and the temperature.
- How much technical knowledge do I have (access to) about fish farming? Are you an expert or a novice, do you plan to hire staff to help you?
- Select the best genetics: Genetics is the internal blueprint of any organism. It determines everything from how it looks, to how fast it can grow and how susceptible it is to diseases. To help farmers, science has been able to cross-breed individuals within a species to enhance and develop desirable traits. Think of a friesian cow that is able to give much more milk than an Ankole cow. Or a dwarf mango tree that doesn’t grow beyond harvesting height. Fish, and especially Tilapia is no different. There are genetic generations and the higher the generation, the more genetically superior the tilapia strain is. This will usually lead to faster growth rate and improved health. As such, when purchasing fry, always find out which generation and strain of fry you are getting. And above all select strong fingerlings from your supplier. For this look at their size, the cleanliness of the fish and their environment, the integrity of the skin, and behavior of the fish.
- Stocking density: How many fish you put in a pond or cage greatly determines productivity. Overcrowding can lead to over competition, stress and eventually diseases, while understocking can limit growth potential and increase growing time because they have so much space to swim in and use up energy. Finding the optimal stocking density for your system is important for maintaining high productivity. In general the following guidelines apply:
| Life stage of fish (g) | Pond (fish/m3) | Cage (fish/m3) |
| Fry (<1) | 4000 – 1000 | 4000 – 1000 |
| Fingerling (1 – 10) | 700 – 500 | 700 – 500 |
| Juvenile (10 – 50) | 200 – 50 | 400 – 100 |
| Grower (50 – 200) | 40 – 20 | 90 – 80 |
| Finisher (> 200) | 5 – 3 | 90 – 80 |
- Optimize the production environment; As mentioned under site selection, different fish species enjoy different environments like water temperature, PH, dissolved oxygen and others. For example Tilapia thrives in water temperature of 25-30°C (77-86°F), whereas African Catfish prefers warmer water of 26 to 32 ºC. A catfish might survive in colder water, but it will grow slower. Or, in the worst case when the parameters deviate too much and even outside of the survivable range, fish will simply die and you end up with high mortality rates. This goes for all water parameters. Therefore it is important to carefully monitor and manage them. Below, you find a table with optimal water parameters for both Catfish and Tilapia together with how you can monitor it and some suggestions on how you can control the parameter.
| Parameter | Tilapia | Catfish | Measurement tool | Influencing factors |
| Temperature | 26-30 0C | 25-32 0C | MultimeterThermometer | Site selection Pond / Cage construction Aeration Water exchange / flushing of the water |
| pH | 6.5-8.5 | 6.5-7.5 | pH meter | Liming of the pond using agricultural lime (calcium carbonate) or builders lime Ca(OH)2 |
| Ammonia | < 0.05 ppm | Ammonia dip testLaboratory | Control the feeding Water exchange | |
| Dissolved Oxygen | 4.0-8.0 mg/l | Above 3 mg/l | DO probe | Aeration Pond fertilization to allow primary production Water exchange Control feeding |
| Water transparency | 28-30 cm | Secchi disk | Water exchange / flushing |
- Appropriate feed management. When you use good quality feed in the right way, Tilapia can grow fast on relatively little feed. So you don’t need as much feed to grow 1kg of fish. This is shown by a low Feed Conversion Ratio (FCR). However they are picky on what they like to eat and will actually refuse to eat if they do not like the taste. A catfish on the other hand will eat a greater variety of food. However, poor quality feeding will still affect its growth. For more details on feed and feed management, tap the link below to have a look at our blog from January 2023 that gives you 5 simple steps to maximize feed performance.
- Survival rate. Not so much a variable, but more of a consequence of all the previous variables. This metric measures the proportion of fish that survive from hatch or stocking to harvest. It provides valuable information on the health and well-being of the fish. A high survival rate of over 85% indicates that the fish are healthy and that the culture system is functioning well.
- Human resources. All work at a farm is usually done by people, your human resources. When looking at productivity, it is important to optimize your human resources. If 1 person can feed 3 cages in a day, you don’t have to get 2 people who both have nothing to do for half a day. It might not be feasible to have everyone fill in detailed timesheets on how they spend their time. However a simple sign in and out book at the entrance gives you much insight into how much staff you have present and if they are present for the hours you expect them to. Combined with adequate supervision observing the activities going on, this should give you a good idea of how many people you really need to get the work done.
Monitoring productivity
In order to stay on top of your productivity you need to monitor the before mentioned variables so that you know what is going on. This sounds harder than it is. By using simple tools such as the feeding logbook and a water parameter diary, you regularly record information that allows you to see when parameters change, or are very different than expected. Once noted you can then take action to find out what the cause is and correct it. We recommend you use the following tools:
- Water parameter diary
- Feeding logbook (part of our free feeding toolkit!)
In addition to monitoring individual parameters, it is also important to track production data. This helps you to track the growth of your fish (stock) in your production units in your production cycle tracker and report. And once a production cycle is complete, it is worth the time to take an hour and review all the information that you have for that cycle to see what lessons you can learn. Was the feed performance as expected, were there any diseases that plagued the pond, or was the weather particularly hot for example? All those things will help you understand and optimize the productivity of your farm and maximize the yields from your production environment over the course of a year.
In addition it is also important for farm owners and managers to share this information in a timely and accurate manner. Based on our experience we suggest the following reports. To get you started, you can download free formats here, to make sure you include all relevant information.
- Monthly production report
- Production cycle tracker / report
How to calculate productivity
Calculating fish farm productivity is done in 3 easy steps:
Step 1. Determine your farm size in m3.
You can do this by using the following formula. Or if you want to use a simple worksheet to establish the capacity of your whole farm please download the worksheet here.
For square or rectangular ponds: L x W x D = Capacity
For round cylindrical ponds or cages: Radius2 x Pi x Depth = Capacity
Use all the measurements in meters, then you will get the capacity in M3.
Determine the capacity for each production unit, and then add them up to come to the total capacity of your farm.
Step 2. Determine past production numbers. How much fish in kilograms have you produced in a specific period? For example look at a 6 month period and see how many kilograms of fish you have sold, and how much is in the water. Then correct it to a per year number (e.g. if you have for 6 months, multiply it by 2 to make 12 months). Make sure to include the dry-out period, and how long it takes to prepare a pond for a new cycle.
Step 3: Divide the total production of fish by the farm capacity and then correct it to fit a year.
For example,
- Fish farm capacity: 1200m3
- Production in 12 months: 1500kg
- Productivity: 1500 / 1200 = 1.25 kg of fish/m3/yr
Productivity benchmarks
Now that you know your productivity score, you want to know if that is a good score and you are ahead of the pack. Or if it shows you that you are not performing as well as other farms. Based on the current information the benchmarks for Uganda is 1.2 kg/m3, with the lowest established productivity at 0.3kg/m3 (Onhoro et al (2021)).
As you can see, benchmarks differ greatly. In general, the more advanced a farm is, the more intensive the production system and the better productivity it will have. However, that productivity may also come at a cost as we will see in the next section on profitability.
Be that as it may, as much as benchmarks vary, they also show you what is possible. As such we challenge you to take your productivity score, and use the Ugandan and international benchmarks to be inspired to take your productivity to the next level. How far can you increase it in the next year?
Profitability
Business finances can be analyzed in many different ways, one more complicated than the other. A full course in business economics and accounting is out of scope of this blog. Therefore we will focus on a basic grasp of profitability, through understanding income through sales and grants, expenses (production costs versus overhead expenses) and cashflow.
Fish farming is a business and the key to any business is profitability. Afterall if a business is not making money there will not be money to pay for operations. It is important to distinguish between gross and net profit. Gross profit is sales revenue minus direct production cost. If you then deduct all other expenses, known as overhead expenses, you have net profit before taxes. Specific to farming it is interesting to look at net profit per kg of product; net profit per kg of fish sold.
Key concepts in farming as a business
INCOME:
Sales revenue: This is usually the main source of income for the business, generated from selling finished products. The more valuable the product, the higher the sales price will be. It is important for a fish farm to maximize sales revenue. This means producing high quality fish, but also making sure that for that same fish, the best price is received, and being aware of seasonal changes in prices. Furthermore a farmer can look at other products and services they can offer with minimum investment to expand the sources of revenue. For example; selling Aquatic plants, offering Local tourism, participating in Research and educational opportunities.
Grants: At times businesses qualify for grants and special assistance that also provide income to the business. Though often they come with conditions and are to be used for specific purposes, grants can greatly help to cover cost of operations.
EXPENSES:
Direct production cost; Everything that is directly related to producing a product or providing a service. These costs include raw materials, labor, and other expenses directly related to the production process, such as energy and equipment. For fish farms this is everything from the cost of purchasing fry, fish feed, veterinary care, staff feeding the fish and managing the warehouse etc.
Overhead expenses: Overhead expenses are costs that are not directly related to producing goods or services, but are necessary for the day-to-day functioning of a business. Examples of overhead expenses include rent, utilities, insurance, legal and accounting fees, office supplies, furniture, telephone and internet service, and any other general and administrative costs.
Income and expenses combined, make up the cash flow. Cash flow is the amount of money moving in and out of a business over a certain period. When looking at a fish farm with 1 pound and a 7 month production cycle it might be profitable when comparing the sales revenue to the direct and overhead expenses. However, when looking at the cash flow per week or per month it will show you the challenges. Because if you can only sell after month 7, then where is the money going to come from to meet all the expenses before you get to harvest?
Managing and Monitoring farm finances
The backbone of any business are the financial records. Without financial records, or “books” as they are commonly known, it is very difficult to understand the health of a company, both in terms of its history, current position, and the future outlook.
Financial record keeping is often seen as complicated, time consuming and inconvenient. However it does not have to be. Here we have 4 tips to make it easy and straightforward.
- Make a production and operating budget. This forces you to really think through the financial side of your operations, and it allows you to easily see when expenses are more then anticipated.
- Keep your records every day. By keeping track of all your expenses and all your income (with the evidence!) you can easily piece together the financial standings of your business.
- Use software or an app! The most basic method of keeping track of your finances is using a ledger like in this picture and attaching all receipts and invoices. However nowadays there are also many apps and softwares available that can help you track, analyze and report on your finances without breaking a sweat. Some of our favorite ones include: Wave accounting, Zoho books
- Enlist the help of a (parttime) accountant. This expert can really help you get ahead of the curve. Not only will they be able to help you set up the required systems and processes for you to establish checks and balances, but also monitor the transactions, analyze the financial situation, alert you to problems before they explode and help you increase sales revenue whilst minimizing expenses. If you are using software they don’t even have to come to your farm! They can access the data remotely and assist you at any time.
- Establish a good working relationship with suppliers and service providers, fish farmers can ensure they have access to the best products and services at the best possible prices.
The most important thing in managing company finances is honesty and accuracy. This means that every transaction should be recorded. If you cannot trust that your records are accurate and complete then you might as well not have them. Even if it is a loan to the business owner, or if there are losses because feed got spoiled. In the end, correct books will always show transactions are missing because the numbers won’t add up.
To get you started here are a few formats that you can use to streamline your financial administration:
- Sales receipt
- Payment voucher
- Monthly farm budget
- Production cycle cash flow projection
- Weekly / monthly profit and loss statement
Furthermore, the need to avoid theft/fraud cannot be overstated. Stealing can take many shapes. From paying an exaggerated price for a product or service, having off book transactions (taking money without documentation or approval), to reporting sales for a lower price than was actually received so that the difference is pocketed. People are incredibly creative if they feel that it will benefit them. As such all efforts must be made to discourage such behaviors. Measures such as centralizing all payments and receipts through one person, minimizing cash transactions, and segregation of duties are all known to significantly reduce theft in your business.
Calculating profitability
When you have the financial data available you can calculate profitability for a certain period as follows:
SALES INCOME
| 1 | Amount of fish sold (kgs) |
| 2 | Sales value (money received) |
| 3 | Sales value per kg (= row 2 / 1) |
PRODUCTION COST
| 4 | TOTAL PRODUCTION COST (= total row 1 to 6) |
| 5 | Production cost per kg (= row 10 / 1) |
GROSS PROFIT
| 6 | Gross profit (= row 2 – 10) |
| 7 | Gross profit margin ( = row 13 / 2) |
| 8 | Gross profit per kg (= row 12 / 1) |
OVERHEAD EXPENSES
| 9 | TOTAL OVERHEAD EXPENSES |
| 10 | Overhead expenses per kg (= row 9 / 1) |
NET PROFIT
| 11 | Net profit (= row 6 – 9) |
| 12 | Net profit margin ( = row 11 / 2) |
| 13 | Net profit per kg (=11 / 1) |
For more detailed guidance download the free farm budget and profit and loss calculator here!
Profitability benchmarks
As with productivity, profitability benchmarks are only relevant if they are reflective of a business like yours. In Uganda data is scarce. However the following benchmark has been established: Ugshs 1,959.2 of profit per kg of fish (Onhoro et al (2021).
Balancing Productivity and Profitability
As you have seen it is a fine balance between productivity and profitability to ensure that the business is sustainable. There are some costs that are unavoidable like feed and fry. But given the range of suppliers, there are different price categories you can choose. However, there are other expenses that, depending on your cultivation system and species, might be optional. For example aerators, automatic feeders, farm management software etc. In general they are “nice to have” but not essential. In all situations the consideration comes down to the question “will I earn back the (increased) cost of this expense by producing more fish faster, or will it help me do business more efficiently?
A few practical examples (note: all data given is hypothetical and just for illustration purposes):
EXAMPLE 1: Should I use this new high quality feed?
At the moment you have been purchasing feed X. It gives you an FCR of 1.8 and you spend 3,400 ugx per kg of fish, over a whole production cycle that takes 8 months after which you sell at on average 9,000 per kg. A new brand of feed called Fairy dust has become available on the market that sounds amazing. It promises an FCR of 1.2 and a cycle of only 6 months. Using their feeding guide, you calculate your cost for a whole cycle and you find out that it will cost you 4,700 ugx per kg of fish. You find it very expensive! To double check you look at the value of the potential productivity increase;
For Feed X; You divide 12 months / 8 = 1.5, you can only do 1,5 production cycles in a year and earn 1.5 x 9,000 = 13,500, deduct cost of feed of 5,100 = potential gross profit of 8,400.
For fairy dust; it would be 12/6 = 2. So At 4,700 you can do 2 production cycles in a year and earn 2 x 9,000 = 18,000. Deduct cost of feed at 2x 4,700 = 9,400. Potential gross profit is 8,600 ugx.
If the feed is really as good as they say it is and works in your production system it might be worth it. However, given that it is still new in the market with no proven track record, you decide to wait a little bit and see if it works for other farmers.
EXAMPLE 2: Should I invest in automatic feeders?
Currently you need 3 people each day to feed 3 cages. You pay them 250,000 per month each. So you are spending 750,000 a month to feed. A good quality automatic feeder is available at 1,000,000. Once installed it only needs to be filled once a week, and 1 person can operate all of them comfortably. You estimate the maintenance cost (replacing broken parts, servicing etc.) of an automatic feeder to be 25,000 on average per month. To cover all 3 cages you would need 3 automatic feeders. The cost would be 3 x 1,000,000 = 3,000,000. It would reduce the cost of feeders by 500,000 per month, but you would be spending 75,000 on maintenance. Earn back time is 3,000,000 (cost of investment) / 425,000 (savings per month) = 7 months. This might be a good investment to reduce the cost in the long term!
As you can see, both productivity and profitability are helpful and synergetic lenses with which to analyze your fish farm. Something that looks expensive at first glance, might actually be worth the investment, and vice versa. By using concrete metrics and guidance, they both uncover improvements to your operations to help you build the sustainable and successful fish farm that you have been dreaming of. What has been your biggest challenge in increasing productivity? We would love to hear from you!
If you want to learn more about how to use productivity and profitability at your farm, join us for our free training on the 15th of February 2023 to receive more information and hands-on coaching to help you grow your farm!
