Aquaculture Thesis

8/13/2019 Aquaculture Thesis

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CHAPTER ONE

Introduction

Background of Study

Fish plays an important role in the diets of Ghanaians. It represents 60% of average animal

protein intake, making it the single most important source (FA, !00"#. Adut$um, (!000#

said that Ghana has a selfsufficiency ratio of 60% for fish. &herefore, fish consumption is

sustained 'y a gro$ing level of import of froen fish $hich is 'ecoming an important part of

lo$ income ur'an and rural consumer)s diets. In order to address the shortfalls, A*uaculture

is no$ therefore considered to 'e an important and integral part of agriculture+food sector

development activities in Ghana.

&he formal definition of a*uaculture, 'y the - Food and Agriculture rganiation (FA# is

the farming of a*uatic organisms, including fish, molluscs, crustaceans and a*uatic plants

(FA, //0#. Farming implies some sort of intervention in the rearing process to enhance

production, such as regular stocking, feeding, protection from predators, etc. Farming also

implies individual or corporate o$nership of the stock 'eing cultivated.

A*uaculture in Ghana is 'ased almost entirely in the fresh$ater environment $ith over !,66

fish ponds and 11! reservoirs $ith total surface areas of !2!./ha and !,23./ha respectively

(Fisheries 4irectorate, npu'lished data#. Although there are a fe$ commercial farms,

production is largely at the su'sistence level $ith average pond sie 'eing 0.6ha (Asma,

!001#. &he ma5ority of a*uaculture activities in Ghana involve the production of various

species of tilapia (mainly reochromis niloticus# and the African catfish (larias gariepinus#

under semi intensive systems using earthen ponds. &here are, ho$ever, a fe$ investors

producing rain'o$ trout (ncorynchus mykiss# under intensive systems using race$ays and


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tanks. &he tilapine species constitute a'out /0% of a*uaculture production in Ghana.

7olyculture of the tilapines $ith the African catfish is sometimes done to control the prolific

'reeding of the former under mi8ed se8 culture systems (Asma, !001#.

9ecause of the poor regard of a*uaculture as an economic activity, it $as difficult to promote

its commercialisation, as investors $ere not convinced that a*uaculture could 'e a profita'le

enterprise in Africa (Gitonga et al. !003#. :o$ever, Asma, (!001# suggested that there $as

therefore a need to change this perception for any meaningful development in a*uaculture to

'e realised. &his could only 'e done, among other things, 'y promoting a*uaculture as a

commercial enterprise in $hich investors see potential to make profits. In order to attain this

goal, a paradigm shift $as necessary. In the later part of the //0s, the e8tension approach to

fish farming changed, $ith the government promoting a*uaculture as a 'usiness as opposed

to su'sistence farming (Gitonga et al. !003#. For this approach to take effect, it $as necessary

for a*uaculture to 'e treated and operated as a personal enterprise $ith the sole aim of

making economic gains to the investors.

apital investment decisions that involve the purchase of items such as land, machinery,

'uildings, or e*uipment are among the most important decisions undertaken 'y the 'usiness

manager (:amenoo, !0#. &hese decisions typically involve the commitment of large sums

of money that $ill affect the 'usiness over a num'er of years. Furthermore, the funds to

purchase a capital item must 'e paid out immediately, $hereas the income or 'enefits accrue

over time.

&he aim of this research is to understand the reasons that account for lo$ rate of a*uaculture

production in Ghana in recent times, in spite of capital investment in that fisheries su'sector.


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Statement of the Problem

&he Government of Ghana)s *uest to use A*uaculture to fill the gap 'et$een the rising

demands for fish products and the limited increases in capture and production of $ild fishes

has suffered a serious set'ack recently. &here is a persistent yeartoyear decline in recent

years of the fisheries su'sector)s contri'utions to G47. &he fisheries su'sector particularly

in !0fiscal year produced a negative seven ("%# gro$th. &his has made a lot of industry

$atchers $onder $hat has happened to all the investment and effort made 'y Government

and individual investors in the a*uaculture industry over the last decade. &he *uestions that

arise therefore are; has there 'een a sustained capital investment in the a*uaculture industry

in Ghana< :as these investments yielded the desired or pro5ect returnsedemption ouncil (-># promulgated the Fisheries 4ecree, /"! (-.>..4. 1"#.

In /"", the Fisheries (Amendment# >egulations /"" (C.I. 06# $ere passed 'y the same

government to amend the Fisheries >egulations, /63 (C.I. 63#. In /"/ the government of

the Armed Forces >evolutionary ouncil (AF># also promulgated the Fisheries 4ecree,

/"/ (A.F.>..4. 0#. In that same year, the Fisheries >egulations, /"/ (C.I. !2# $ere

promulgated. In //, the government of the 7rovisional -ational 4efence ouncil (7-4#

promulgated the Fisheries Ca$, // (7-4C !26# to repeal the AF>4 0 $hilst saving

the Fishing 9oats (ertificate of ompetency as skipper and =econd lass ngineers#

>egulations, /"! (C.I. ""0# and the Fishing 9oats (ertificate of ompetency First lass


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and =econd lass ngineers# >egulations, /"3 (C.I. /11#. In //, the Fisheries

ommission Act, // (Act 32"# $as passed amending 7-4C !26. In !00!, the Fisheries

Act, !00! (Act 6!2# $as enacted 'y the present government to consolidate $ith amendments

all the foregoing la$s on fisheries; to provide for the regulation and management of fisheries;

to provide for the development of the fishing industry and the sustaina'le e8ploitation of

fishery resources and to provide for connected matters.

&he point 'eing made here is that virtually every government, postindependence, passed a

num'er of la$s to regulate the fisheries industry. It must 'e an important industry indeed.

&he present government, according to the !00" 9udget =tatement, selected a consultant and

inaugurated a ommittee to revie$ the Fisheries 7olicy to serve as a 'asis for the

development of the fisheries sector. &here is also in the offing 4raft Fisheries >egulations

intended to give effect to the Fisheries Act of !00! (Act 6!2# and to streamline activities and

'ring a'out uniformity in the fishing industry. 7erhaps, the various issues and complaints

from the fisherfolk need find e8pression in the conte8t of these current developments.

urrently, developments $ithin the fishing industry are far from normal. A recent study on

modernied the fishing industry 'y a &ema 'ased nongovernmental organiation, the

orporate =ocial >esponsi'ility @ovement (=>@#, $ith support from the Friedrich 'ert

Foundation (F=#, has esta'lished that fishing practices on sea are likely to create pro'lems

for the sustaina'ility of the marine life and environment. According to them 60% of

respondents in their survey indicated that they dump dead fish 'ack into the sea $hilst !%

also indicated that they use light in their fishing activities. =imilarly in Fe'ruary and @arch

!00", participants including chief fishermen, in a series of consultative $orkshops held in

&ema and Accra, reported to the present authors that industrial fishing vessels tend to plough

through their nets. In most cases, they are una'le to identify the vessels 'ecause they cannot


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read the name of the vessel and so cannot make an intelligent complaint to the relevant

authorities. &he tra$lers sometimes s$eep even the small 'reeding stock and this has serious

implications for the sustaina'ility of the industry. Again, the tra$lers unearth mud as they

move in and $hen they (small fishermen# caste their nets the nets are filled up $ith mud. &he

tra$lers also leave metal pieces (i.e. anchors and metal $eights used 'y tra$lers# under the

sea and these destroy their net $hen they caste them. ven though fishes are seasonal,

according to them, the tra$lers use highlights that distur' the movement of fishes. &hese

tra$lers may take the form of either 'ottom tra$lers $hich sink into the sea or paired

tra$lers $hich have t$o tra$lers dragging the same net over a range of space. &he fishermen

said that they have made a lot of complaints to the Fisheries 4epartment and the -avy 'ut all

to no avail. &hey indicated that they no$ run losses $hen they go to sea. &hey also raised

issues of tra$lers coming as close as 2 nautical miles. According to them these concerns

have 'een raised in a num'er of fora in the past fifteen (2# years under the auspices of the

Fisheries >esearch Institute. &hey $ere given the assurance in //! that no more tra$lers

$ill 'e registered 'y the then 4epartment of Fisheries, 'ut soon thereafter that 0 more

tra$lers $ere registered. &hey have had a num'er of meetings $ith the current @inister for

Fisheries on these concerns and she has promised to pass a Cegislative Instrument (C.I# to

'etter regulate the industry and to 'an light fishing.

Analy%i% of the $i%herie% Act* +,,+ -Act .+/0

&he e8isting regime for the regulation of the fisheries industry, as in many areas of Ghanaian

5urisprudence, is a mi8ture of customary rules and statutory enactments in consonance $ith

Article of the //! onstitution $hich mentions 'oth as sources of la$ in Ghana.


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Article of the onstitution provides that the la$s of Ghana shall include Qustomary Ca$Q

$hich is defined to mean the rules of la$ $hich 'y custom are applica'le to particular

communities in Ghana. Dhilst raising the customary la$ to a high pedestal, the onstitution

also preserves the 'ody of la$s e8isting 'efore the coming into force of the onstitution (the

8isting Ca$# and generally su'sumes ustomary Ca$ under the onstitution and the

8isting Ca$. &he 8isting Ca$, according to the onstitution comprise the $ritten and

un$ritten la$s of Ghana as they e8isted immediately 'efore the coming into force of the

onstitution, and any Act, 4ecree, la$ or statutory instrument issued or made 'efore that

date, in as much as they do not conflict $ith the onstitution.

Flo$ing from the a'ove, the fisheries industry in Ghana is regulated 'y the Fisheries Act of

!00!, all other Acts, 4ecrees, la$s, Cegislative Instruments (and other su'sidiary+su'ordinate

legislation# on or relating to the sector that are still in force and not inconsistent $ith the

onstitution (the 8isting Ca$#; and ustomary Ca$s that are not inconsistent $ith the

onstitution or the 8isting Ca$.

&he purpose of the Fisheries Act is to consolidate $ith amendments the la$ on fisheries; to

provide for the regulation and management of fisheries; to provide for the development of the

fishing industry and the sustaina'le e8ploitation of fishery resources and to provide for

connected matters. De propose to discuss the provisions of this la$ in the light of the issues

raised 'y the fisherfolks and noted in section a'ove. &hese issues generally 'order on the

role, functions and po$er of the fisheries institutions, harmful fishing methods such as light

fishing and pair tra$ling on artesanal industry, *uality control of fish products, and e*uity in

access to fishing logistics provided 'y government.

&he Fisheries Act (in its section # esta'lishes a Fisheries ommission as a 'ody corporate to


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regulate and manage the utiliation of the fishery resources of Ghana and coordinate the

policies in relation to them. &he ommission)s functions among other things are to ensure the

proper conservation of the fishery resources through the prevention of over fishing.

n the a'ove point it is an offence, according to section 1/ of the Act, for a person to

kno$ingly take any (a# gravid lo'sters; ('# crustacea; or (c# any 5uvenile fish during fishing.

&herefore, $here any of the aforementioned fishes is caught accidentally, or caught as a 'y

catch, it shall immediately 'e returned to the sea, river or lake. n summary conviction, one

is lia'le to a fine of not less than R20,000 and not more than R million in respect of a local

industrial or semiindustrial fishing vessel or a foreign fishing vessel, and not more than !20

penalty units in any other case. In addition to these, the catch, fishing gear or other apparatus

or any com'ination of them used in the commission of the offence may 'e forfeited to the

=tate. Again another conservation measure provided in the la$ is to make the fishing of

marine mammals an offence in section /0. &hus no person shall fish for marine mammals in

the fishery $aters and any marine mammal caught accidentally shall 'e released immediately

and returned to the $aters from $hich it $as taken $ith the least possi'le in5ury. &he

punishment for this offence is also a fine of not less than R20,000 and not more than R

million in respect of a local industrial or semiindustrial vessel or a foreign fishing vessel;

and 200 penalty units in any other case. &he @inister of Fisheries may on the advice of the

ommission and after consultation $ith the @inister for the nvironment, o$ners of the

ad5oining land and the relevant 4istrict Assem'ly declare any area of the fishery $aters and

the sea'ed underlying the $aters to 'e a marine reserve, according to =ection /. A person

$ho, engages in fishing; dredges or takes any sand or gravel; or other$ise distur's the

natural ha'itat $ithin any marine reserve, e8cept $ith the $ritten permission of the @inister,

commits an offence and is lia'le on summary conviction to a fine of not less than R20,000


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and not more than R! million in respect of a local industrial or semiindustrial fishing vessel

or a foreign fishing vessel and not more than 200 penalty units in any other case.

&he Fisheries Act also provides in section /!, that $here a person directly or indirectly

introduces a deleterious su'stance into the fishery $aters $hich adversely affects the ha'itat

or health of the fish or other living a*uatic resource, he commits an offence and is lia'le on

summary conviction to a fine of not less than (a# R20,000 and not more than R! million $here

a local industrial or semiindustrial vessel or a foreign fishing vessel is used in the

commission of the offence; and to 20 penalty units and not more than 200 penalty units in

any other case and the person may 'e ordered 'y the court to pay such additional amount as

the court may determine in compensation for any loss suffered as a result of the introduction

of the deleterious su'stance and any related cleanup costs.

&he Fisheries Act also proscri'es in =ection 11 proscri'es the used of any e8plosive, poison

or other no8ious su'stance for the purpose of killing, stunning, disa'ling or catching fish, or

in any $ay rendering fish more easily caught; or the carrying on 'oard or having in one)s

possession or control $ithout la$ful authority at any place $ithin a t$o kilometre radius

from any shore or river, any e8plosive, poison or other no8ious su'stance in circumstances

indicating an intention of using such su'stance for any of the purposes referred to. It is

therefore an offence for any person to land, sell, receive or possess fish taken 'y the

prohi'ited methods mentioned a'ove. &he punishment for such an offence is fine of at least

R!20,000 and not more than R! million in respect of a local industrial or semiindustrial

fishing vessel or a foreign fishing vessel, and at least !2 penalty units and not more than 200

penalty units in any other case, and in addition, the catch, fishing gear or other apparatus or

any com'ination of them used in the commission of the offence shall 'e forfeited to the =tate.


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As one of its duties, the ommmissions is to strive to minimise, as far as practica'le, fishery

gear conflict among users. &his is contained in section 0 $hich clothes the ommission $ith

po$ers to appoint from among its mem'ers a Fisheries =ettlement ommittee composed of

not less than three and not more than five mem'ers to hear and settle complaints from

persons aggrieved in respect of matters arising from or related to the fishing industry. &his,

ho$ever, does not limit one)s right to access 5ustice in the regular courts. &he function of the

ommission in ensuring the monitoring, control and surveillance of the fishery $aters is

contained in =ection /3 $hich esta'lishes and provides for the functions of the @onitoring,

ontrol, =urveillance and nforcement nit.

ne lauda'le function of the ommission is to promote cooperation among local fishermen

and advance development of artisanal fishing. =ection 2 mandates the ommission to take

such action as it considers necessary to protect and promote artisanal and semiindustrial

fishing including the follo$ingE

(a# &he provision of e8tension and training services;

('# &he registration of artisanal fishing vessels and any class of related fishing gear;

(c# &he e8emption for such period as it may recommend to the @inister of such fisheries

activities as it may determine from any re*uirement concerning licensing and the payment of

fees under the Act;

(d# &he promotion of the esta'lishment and development of fishing, processing and

marketing cooperative societies;

(e# &he promotion of the development of artisanal fishing landing facilities;

(f# &he esta'lishment of reserved areas for fishing activities of artisanal and semiindustrial

fishing vessels;


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(g# &he giving of priority to artisanal and semiindustrial fishing in the allocation of fishing

licences or *uotas; and

(h# &he promotion of 5oint venture arrangements, technology transfer agreements and transfer

of technology and e8perience.

In any the foregoing actions to 'e taken 'y the ommission, it shall not esta'lish

concessionary areas $ithin the Inshore 8clusive one (I# for activities not permitted

under this Act. &he I according to the =chedule to the Act is the coastal $aters 'et$een

the coastline and the 0metre iso'ath or the 6 nautical miles offshore limit $hichever is

farther. In =ection 1(!# this areas is for e8clusive use 'y small semiindustrial vessel (=IB#,

canoes and recreational fishing vessels.

Indeed, the Act may 'e descri'ed as a progressive piece of legislation in terms of creating a

frame$ork for the gro$th and sustaina'ility of the fisheries sector and of artisanal and small

semiindustrial fishing.

4espite the strengths of the Fisheries Act, there are shortfalls in t$o 'road respects. For

e8ample, the Act does not contain e8plicit provisions on fish health, *uality assurance or

product safety. 9y virtue of the provisions of =ection "" of this Act, ho$ever, it is possi'le to

dra$ on other la$s addressing these issues and these may apply $ith the same force as if they

$ere enacted as part of the Fisheries Act. =ection "" provides that a fishing licence or other

authorisation issued under this Act shall not relieve any licensee, or the master or cre$ of a

fishing vessel of any o'ligation or re*uirement imposed 'y la$ concerning navigation,

health, customs, immigration or another matter. For e8ample, in e8ercise of the po$ers

conferred on the @inister responsi'le for the nvironment under section !1 of the


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nvironmental 7rotection Agency Act //3 (Act 3/0#, and on the advice of the

nvironmental 7rotection Agency 9oard, >egulations $ere made for the conduct and

su'mission of environmental reports and impact statements. =chedule !, regulation of the

nvironmental Assessment >egulations, /// (C.I. 62!#, prescri'es land'ased a*uaculture

as one of the undertakings for $hich an nvironmental Impact Assessment (IA# is

mandatory. In the same legislative instrument, schedule 2, regulation 0(!# contains the

provisions to regulate the activities associated $ith fish cage culture. It characteries $ater

trapped for domestic purposes, $ater $ithin controlled and+or protected areas and $ater

$hich supports $ildlife and fishery activities as environmentally sensitive areas the use of

$hich is governed 'y IAs. Another e8ample is the role of the Food and 4rugs 9oard. &he

Food and 4rugs Ca$, //! (7-4C 029#, prohi'its the sale of un$holesome, poisonous or

adulterated and unnatural su'stances and lays do$n penalties for 'reaching the la$. Pet,

'eyond dra$ing on legislative provisions from other sectors to 'etter regulate the fisheries

sector, it is advisa'le for the @inistry of Fisheries to enact a comprehensive Cegislative

Instrument to regulate the sector.

&he second shortfall relates to the enforcement of the provisions of the Fisheries Act. It is

clear from the analysis of the provisions of the Act that the issues currently 'ordering canoe

fishermen are addressa'le under the Act, that is, if the provisions of the Act are enforced.

The %i1e and nature of market% and trade for a2uaculture (roduct% in 3hana

&he need to increase annual domestic fish production and efforts 'y the government at

attaining this through increased a*uaculture production has 'een esta'lished in preceding

chapters. fforts so far have concentrated on enhancing production $ith little consideration

given to marketing. >ecent developments geared further in the area of production have


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included the signing of a memorandum of understanding 'y the @inistry of Fisheries $ith

t$o hinese fisheries companies to secure a =R 30 million loan from the hinese

government to 'egin a !000ha fish farming pro5ect on >iver 7ra at =hama in the Destern

>egion ($$$.modernghana.com+ne$s accessed !2+0+!#.

A potential strongpoint of a*uaculture is that production can 'e market oriented as opposed to

'asing markets on the varia'ilities of production, as in capture fisheries (7illay and Jutty,

!002#. 7roper understanding of consumer demands, attitudes, and preferences can therefore

'e a ma5or asset in planning a via'le a*uaculture production programme, thus the need for a

market survey.

A market is literally defined as a place $here goods and services are sold, in effect, a

location. It can also 'e defined 'y time such as the seasonal markets or 'y a level or generic

sense as in the retail and $holesale market. In marketing, the term market refers to the group

of customers or organiations that is interested in or has demand for the product, has the

resources to purchase the product, and is permitted 'y la$ and regulations to ac*uire the

product ($$$.netm'a.com M accessed +0!+01#.

&he primary o'5ective of every market is to sell goods that satisfy customer needs at

$hatever level these are e8pressed. &he demand of any product is ho$ever influenced 'y

price of the product, prices of related goods, consumers) tastes and preferences, population

num'ers, income levels of consumers, and future e8pectations.

nderstanding demographic characteristics, consumer characteristics and consumer attitudes

to$ard the product can 'e used 'y the industry to e8pand markets into other geographic areas

or to increase consumption in traditional market areas (ngle, //1#.


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&arketing in a2uaculture

@arketing is thought to play a key role in any successful a*uaculture development. &he

success of a*uaculture depends not only on increased production, 'ut also on the e8istence of

a $ellorganied and efficient marketing system. Gil'ert (/1/# placed the importance of

marketing in a*uaculture on a par $ith production, financing, cash flo$ and other profit

determining factors in a*uaculture enterprises.

@arketing unfortunately is often an area disregarded 'y fish farmers $ith most producers

'eing production oriented rather than market oriented (Gil'ert, /1/#.

Dilliams (!000# noted that $ithout ade*uate attention to marketing strategy, even the most

efficient fish production may not 'e financially profita'le. &hose $ho are successful in this

'usiness are those that are market oriented, have diverse markets, have spent much time

talking to potential customers 'efore 'eginning to design their production operation and are

committed to their customers (ngle and uagrainie, !006#. Good marketing in a*uaculture

is far more than 5ust finding customers for $hat farms have decided to produce. It starts $ith

customers, 'oth final end user and trade customers, and from analysis of their needs $orks

'ack to decisions a'out $hat should 'e produced $hen it should 'e produced and $hat the

customer should 'e offered (=ha$, //0#.

$i%h con%um(tion and con%umer (reference% in 3hana

General fish consumption patterns in Ghana have 'een studied to varying e8tents 'y ssuman

(//!#; :ein'uch (//3# and =eini et al. (!003#. According to the studies, consumption

patterns $ere defined 'y incomes of consumers, location of consumers, ethnicity, availa'ility

and prices of other animal protein sources such as meat and meat product, eggs and milk.

ssuman (//!# from his study found that the higher a consumer)s income the more the


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*uantity of fish demanded, the species preferred and the sie of fish preferred, $hilst the poor

and rural population in Ghana are said to 'uy smaller sies of fish 'ecause they are $hat they

can afford. :e also indicated that certain processed forms of fish $ere preferred 'y some

ethnic groups than others and cited the e8ample of fermented fish as much more preferred in

southern Ghana, particularly among the Akans (the largest ethnic group in Ghana# than in the

north among the indigenous tri'es. =eini et al. (!003# from their study found in relation to

location that coastal d$ellers or people living on the fringes of large $ater 'odies ate

relatively more fish than their inland counter parts.

A'out 10% of total fish supply is cured in various $ays, $ith smoking 'eing the most $idely

practised method, applica'le to virtually all species of fish availa'le in the country. &hus

'et$een "010% of the domestic marine and fresh$ater catches are consumed in smoked

form (FA and -47, !00#. ther forms of presale preservation are drying, frying and

salting.

$i%h trade and marketing in 3hana

&rading in fish is an important industry in Ghana providing full or partial employment for an

estimated 0% of the population in 'oth rural and ur'an communities. &he volume of trade is

dominated 'y the artisanal fishery sector $hich accounts for 10% of domestic fish supply.

Candings from this sector are dominated (/%# 'y small and medium sied pelagic fishes and

demersal fishes (7erry and =umaila, !00"#. A large proportion of the fish traded is sold

smoked. Fresh fish is thought not to attract a large market in many places as a result of poor

cold storage facilities (Aryeetey, !00!#.

Although estimated annual turnover of the sector is not immediately availa'le, there are

indications that this runs into millions of Ghana edis as the local value of smoked fish


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e8ports to the nited =tates, anada and urope in !00 $ere estimated to range from R ".

million to R /.3 million (4ieiuadi and @ensah, !002#.

$i%h %ale outlet%4 %tructure and infra%tructure

&here are si8 main forms of fish sale outlets in Ghana. &hese are the regular markets, fish

landing sites, fish markets, froen foods stores, vendors and farm gate or pond side.

Regular market%

&hese are markets dealing in a $ide range of merchandise 'ut $hich often have sections

allotted to fish sellers, either central markets serving entire districts or regions or local

markets serving communities. r'an markets are opened for 'usiness daily $hilst those in

the rural areas or serving small ur'an communities operate once or t$ice a $eek on particular

days or at regular intervals of days. &raders at these markets form associations as per product

sold. 8amples of such associations are the fish sellers association, or even riverine fish

sellers association. ach group has its leaders 'ut a'ove all these leaders is the market

S*ueenT $ho oversees all operations in the market. Ghana has a decentralised form of

government and these markets are 'uilt and managed at the local level 'y the district

assem'lies or the municipal authorities.

perators in these markets pay daily tolls to the municipal authorities. Infrastructure $ise, the

central markets are fairly $ell e*uipped $ith porta'le $ater supply, electricity, chilled

storage and ice supply (normally 'y private operators#, and $ashing facilities $ith several

stores, stalls, and sheds. =ome local markets in the cities and ur'an areas have similar

facilities 'ut smaller in sie $hilst others and those in the rural areas are poorly e*uipped

$ith some rural markets 'eing 5ust a cluster of sheds. Cevels of trade in fish at the central


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markets are intermediate, $holesale, and retail. &rading at the local markets is primarily

retail.

$i%h landing %ite%

&hese are sites ad5acent to inland $ater 'odies or the 'eaches $here fishermen land their

catch. &he description here ho$ever focuses primarily on fresh $ater landing sites. Cevels of

trading ($holesale, intermediate $holesale or retail# at a site are very much determined 'y

the volume of fish landings. A'out 0 of such sites have 'een identified along the Bolta

lake, prominent among these are Pe5i, 4am'ai 9rum'en, kye Amenfrom, &apa A'otoase,

J$ame krom, Jpando &orkor, 4eemeni, &apa A'otoase, &orurroano and Akateng and

Akokomasisi landing sites $here an estimated "2000t of fish $ere landed in !00!

(4irectorate of Fisheries, !00#. Important landing sites in other parts of the country include

Galilea along the Dei5a reservoir in the Greater Accra region, 'onu ad5acent to Cake

9osomt$i, 9arekese ne8t to the 9arekese dam and $a'i dam all in the Ashanti region. Fish

sold here are either live or fresh e8cept on market days at certain landing sites especially

those along the Bolta Cake $hen processed fish is also availa'le.

@ost landing sites are poorly e*uipped $ith no receptacles for landed fish. &rading is

generally in the open sky or under thatch shelters. Canded fish are sold to $holesalers directly

from 'oats or canoes. &hese are then sold to intermediate $holesalers and retailers from the

floor on polyethylene sheets. &here are no chilled or froen storage facilities. Fresh fish

dealers come along $ith ice 'locks sometimes 'ought from the vicinity. &here are no pota'le

$ater or $ashing facilities. &rading starts very early in the morning; and ends 'y midday.

&here are plans 'y the government to install 'last freeers and ice making machines at eight

landing sites, including 4emeni and Jpando &orkor along the Bolta

$i%h market%


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&hese are markets that deal in 'oth fresh and processed (smoked, salted dried+fermented and

fried# fish. Dith the e8ception of the $holesale and retail outlets located in central and local

markets, and fish landing sites $here the num'er of traders can run into a fe$ hundreds, the

sies and num'er of traders are *uite small often ranging from 0 to a'out 20 traders

ma8imum. Cevel of trading in the smaller units is primarily retail.

$ro1en food %tore%

ommonly referred to as Scold storesT in Ghana, they deal primarily in froen marine fishes,

froen meat and meat products. &hese are a'out the most organised fish sale outlet $ith

ade*uate froen preservation and storage facilities. &he 'ulk of foods sold 'y these outlets are

imported. &he sies of the outlets vary ranging from very small retail units operated from

domestic chest freeers and run from the operator)s home or a small shop to large industrial

esta'lishments operating from large commercial $alk in freeers and employing several

people. It is the only outlet $here the prices of fish are posted and sold per unit $eight.

&he main difference 'et$een $holesalers and intermediate $holesalers in this outlet is that

the $holesalers are the main importers, importing3 fish from @auritania, =enegal and

-ami'ia, and meat and meat products from the =A, anada, Argentina and 9rail. Fish

from the $holesalers are sold in cartoons of !0 and 0kg $eights.

5endor%

&his group of dealers are either roaming or stationary. >oaming vendors go from place to

place selling their fish $hilst stationary vendors are permanently located under a stall or

under the shade of a tree often along a 'usy road. &here $ere t$o types of roaming vendors;

small retailers $ho go round communities carrying fish on their heads to sell or Information

o'tained from operators during data collection larger retailers $ho have prearranged


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ScontractsT $ith food 5oint operators such as hotels, restaurants and tilapia 5oints for regular

supply of fish. 7rices of fish sold 'y the vendors varied $idely, depending on the location and

the 'argaining po$er of the 'uyer.

$arm gate

&he final fish sale outlet fish is the farm gate. &hese are sale outlets for farmed fish often

located on a pond side. &he level of trade at this outlet varies $ith the level of operation. &he

commercial farms gates as o'served on one commercial farm and also reported 'y 9lo$ and

Ceonard (!00"# for another commercial farm largely sell to $holesalers $ho go on to sell to

retailers and intermediate $holesalers. &he su'sistence farms on the other hand sell largely to

retailers as they are often in relatively small *uantities. uantity of fish sold at this outlet is

over a 000 mt, estimate 'ased on total a*uaculture production in !006.

$inancial "iability of fi%h farming in 3hana

A*uaculture in Ghana is 'ased almost entirely in the fresh$ater environment $ith over !,66

fish ponds and 11! reservoirs $ith total surface areas of !2!./ha and !,23./ha respectively

(Fisheries 4irectorate, npu'lished data#. Although there are a fe$ commercial farms,

production is largely at the su'sistence level $ith average pond sie 'eing 0.6ha. 9ased on

the >idler and :ishamunda (!00# classification of fish farms, the previous chapter defined

over /6% as noncommercial, a'out % as small scale commercial less than % as medium

to large scale commercial farms. A*uaculture contri'ution to domestic fish production is

currently less than %.

As noted earlier, there is a ma5or development interest in e8panding a*uaculture to meet

national needs for a*uatic products, and a concern for the potential of the current sector to

gro$ and develop. &hough technical a'ility is a prere*uisite for a*uaculture development of a


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given species, it $ill o'viously fail to survive and e8pand if it is commercially unvia'le.

A*uaculture development re*uires a mi8 of practical scientific kno$ledge, economic and

profita'ility studies, and kno$ledge of potential areas for site selection, development and

e8pansion. ultivation must 'e 'iologically and technically feasi'le and the net returns, at

least enough to compensate for risks (>idler and :ishamunda, !00#.

Analysis of financial and economic aspects of the sector is therefore essential as it helps

evaluate via'ility of investment and efficiency of resource allocation, to improve e8isting

management practices, evaluate ne$ culture technology, assess market potential, and identify

areas in $hich research $ould have high potential payoffs (Dorld 9ank, !003#. It is also an

important tool for 'usiness planning, seeking financial assistance from formal institutions,

and identifying economically sustaina'le enterprises.

:o$ever, very little attention has so far 'een paid these issues in Ghana. A 'rief profita'ility

assessment of fish farming in Ghana 'y @anu (!003# $as 'ased mainly on assumptions and

speculations rather than actual farm data. A more detailed study had 'een undertaken earlier

'y Amevenku (///#, though 'ased only on hatchery operations.


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CHAPTER THREE

Re%earch &ethodology

)efinition% of economic e"aluation indicator%

ne $ay of evaluating $hether an opportunity such as a ne$ a*uaculture investment is

$orth$hile in the longterm, or to choosing 'et$een a*uaculture opportunities $hich vary in

sie, is 'y using capital 'udgeting (urtis and :o$ard //#. 7opular methods of capital

'udgeting include net present value (-7B#, and internal rate of return (I>># (urtis and

:o$ard //#. 7ay'ack period (797# and the 'reakeven point (97# are also used as

indicators of feasi'ility of investments (7illay and Jutty !002#. -7B is used in the analysis

of the profita'ility of an investment or pro5ect to give indication of the present value of future

earnings. It is the difference 'et$een the future cash inflo$s and outflo$s discounted to

present value. If the -7B of a prospective pro5ect is positive, the pro5ect is profita'le 'ut if it

is negative, the pro5ect should 'e a'andoned 'ecause cash flo$s $ill also 'e negative (urtis

and :o$ard //#. &he higher the -7B value, the more profita'le an investment is. I>>

indicates the estimated rate of return that a pro5ect is e8pected to generate to an investment.

&his can 'e vie$ed as the efficiency of an investment to turn profit (urtis and :o$ard


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//#. Dhen evaluating possi'le investments options, it is important to remem'er that the

-7B method is 'etter that the I>>. sing -7B and I>> measurements to evaluate pro5ects

should ideally result in the same findings $here everything else is the same. :o$ever, there

are certain types of pro5ects $here using I>> $ill not 'e effective. &he ma5or limitation of

I>> measurement is that it uses one single discount rate to evaluate every investment.

:o$ever, discount rates do change significantly and therefore $ithout modification, I>>

evaluation $ill not 'e ade*uate for longterm pro5ects for $hich discount rates are e8pected

to vary. 797 is the time re*uired to recover the cost of an investment through the net cash

revenues it generates (urtis and :o$ard //#. It is given as the investment cost of a pro5ect

divided 'y the pro5ect)s pro5ected annual cash inflo$s. :o$ever, 797 analysis does not take

into consideration cash flo$ after the pay'ack period. &herefore, this method should only 'e

used as a first approach at the initial stages of evaluation to give an indication of the pay'ack

period and may not 'e relied upon to rank investments on the 'asis of via'ility. 97

descri'es ho$ much a pro5ect must produce to cover for the total costs (urtis and :o$ard

//#. At the 97, the revenues generated 'y a pro5ect e*ual the total costs incurred. An

investor $ill need to kno$ this to $eigh this against the production possi'ilities availa'le.

:o$ever, this method like the 797 should only 'e used as a first approach 'efore proper

evaluation is conducted 'ecause it does not sho$ the profita'ility of pro5ects.

:igh revenues alone do not necessarily translate into profits for the investor. A pro5ect must

have the a'ility to clear all of its e8penses and costs. Financial ratios are used to give an

indication, not only of ho$ likely a pro5ect is to return a profit, 'ut also ho$ that profit relates

to other important investment characteristics of the pro5ect. &hese ratios are used to assess a

'usiness)s a'ility to generate earnings as compared to costs incurred during a specific

operational period. &hey provide a comparison of profits generated and $hat has 'een

invested in a pro5ect. For most of these ratios, having a higher value is an indication that the


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investment is good (urtis and :o$ard //#. =uch ratios $ill include return on investment,

return on e*uity, return on asset and operating profit margin ratio. >eturn on e*uity (>#

indicates ho$ much profit an investment generates $ith the e*uity (urtis and :o$ard //#.

>eturn on assets (>A# is an indicator of ho$ profita'le an investment is relative to its total

assets (urtis and :o$ard //#. perating profit margin ratio (7@># gives an indication

of ho$ much of the gross income is actually profit (urtis and :o$ard //#. >eturn on

investment (>I# gives an indication of ho$ an investment)s returns relate to the total

invested capital. ntrepreneurs) kno$ledge of the sensitivity of their investment to aspects of

production is very important. Investments are in most cases implemented 'ased on average

costs, prices, *uantities and yields (arole and Ivano !002#. =ome of these aspects can 'e

very volatile and their changes might have enormous effects on the profita'ility of pro5ects.

For investors to 'e a'le to make choices on $here and ho$ to invest, they need to kno$ ho$

likely variations on production output, cost of inputs or even changes in the market prices of

the products $ill affect their future cash flo$s.

Source% and Tool% of )ata Collection

&his research adopted a mi8ed method approach. &he study is aimed at finding out $hether

or not the market is a factor in the development of a*uaculture in Ghana. &o help achieve

this, primary and secondary data $as collected. 7rimary data $as collected through the use of

intervie$s and *uestionnaires from the main stakeholders in the supply chain; farmers,

$holesalers+ retailers and from the demand side; consumers. In all, 33 consumers,

$holesalers and retailers and 3 farmers $ere sampled. &he secondary data $as collected

from the Fisheries ommission of Ghana and the 9ank of Ghana and consist of intervie$s

and documentary revie$s.


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=econdary data $ere collected from revie$ing of reports and research $orks found in

5ournals and on the internet. Dhere there $as the need for further clarification on some

information or data, email correspondence or telephone intervie$s $ere conducted $ith the

various authors $ere possi'le.

Sam(ling &ethod%

onvenience sampling $as used in selecting the location for the research. &hough there are

numerous farms in different parts of the country, the choice of the area $as done first to

facilitate easy communication to avoid the use of interpreters. =econdly, the researcher had a

target of getting information from 'oth cage farmers and pond farmers, so t$o areas selected

$ere not geographically too far from each other. 9ased on these criteria the Bolta and astern

>egions $ere chosen. @ost of the cage system is practiced along the Bolta Cake $hich

passes through these t$o regions. onvenience sampling is a nonpro'a'ility sampling

method $here unit selection is 'ased on accessi'ility or convenience (=tat7ac, !0#. Its

advantage is that it is direct, easy and a relatively less e8pensive method (&rochim, !006#.

&he disadvantage ho$ever is the difficulty in e8trapolating the result as a true representation

of the $hole population (-ational Audit =ervice, !000#.

&he researcher used the sno$'all sampling in selecting the farms to $ork in. the researcher

$as thus introduced to a farmer 'y a friend $ho in turn directed me to some of his colleague

farmers. =no$'all sampling is another nonpro'a'ility method that depends on referrals

(=tat7ac, !0#. Information could not 'e sourced from farms that had only caretakers

$ithout permission from the managers+o$ners $ho $ere most of the time resident in the

capital city. An initial person $ho meets the criteria is identified and that person in turn

recommends others. Lust as the convenient sampling, it is easy to use 'ut at the cost of

introducing some level of 'ias (=tat7ac, !0#. >etailers and $holesalers $ere sampled in


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three cities 'ased on their $illingness to ans$er the *uestions; Accra, &ema and :o, so also

$ere the consumers.

)ata Analy%i%

4ata analysis $as done using Dindo$s =7== ". sing the data, a yearly simulation of

operations over a period of 0 years $as done for each culture practice. A production target

for each $as set at a constant 2,000 kg per month to 'ring the total yearly production to 60

metric tons. From this production target and using the ac*uired and estimated production

characteristic for each type of production, cost values for capital investment, operational

investment, and operational incomes $ere calculated. &his $as done 'y generating the

follo$ing statements for each of the four culture practicesE

a# Investment statement

'# peration statement

c# ash flo$ statement and

d# 9alance sheet

&hese statements $ere used to derive the parameters that $ere used in this evaluation as

indicators of the via'ility and feasi'ility of the culture practices.

5iability of in"e%tment%

&he via'ility of the investments $as estimated 'y analysingE

a# -et present value (-7B#

'# Internal rate of return (I>>#


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c# 7ay'ack period (797#

d# 9reakeven point (97#

&he -7B and the I>> $ere derived from the net cash flo$s 'y the discounting method. &he

797 $as calculated 'y dividing the initial investment costs 'y the accumulated profits 'efore

depreciations. &his gave the time in years that the enterprise $ould take to pay 'ack the

initial investment cost. 97 $as derived for production *uantities and produce prices. 97

analysis for production *uantities $as derived 'y calculating ho$ much each enterprise

should produce per hectare, considering the estimated market prices for the products, to 'e

a'le to cover the total production cost. &he 'reak even analysis for the produce prices $as

calculated 'y deriving the price at $hich the produce must 'e sold to cover the total cost of

production. In this evaluation, the 97 margin $as considered in evaluation of the 97. &he

margin gave an indication of ho$ much of a ?'uffer) one an investor $ould have 'efore

falling to the 97 level. Dide margins, $hich $ould indicate 'igger profit margins, are

prefera'le.

E"aluation of financial ratio%

valuation of financial ratios $as done 'y deriving the follo$ing ratiosE

a# >eturn on e*uity (>#

'# >eturn on asset (>A#

c# perating profit margin ratio (7@>#

d# >eturn on investment (>I#


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For the analysis of the financial ratios of the culture practices, the derived values of these

ratios $ere plotted in a compound 'ar chart for comparison. &hese ratios $ere derived asE

>E -et income from operations divided 'y total e*uity >AE -et income from operations

divided 'y total assets 7@>E perational gains plus interest divided 'y gross income >IE

-et income from operation divided 'y de'ts plus capital

Sen%iti"ity of in"e%tment% to change% in factor% of (roduction

=ensitivity of the investments $as analysed 'y simulating changes inE

a# 7roduce prices

'# ost of feed

c# 7roduction *uantities

d# Food conversion ratios and

e# =urvival rates of fish species under culture

&his analysis $as done to determine the e8tent to $hich slight changes in the values of these

production characteristic varia'les $ould influence particular dependent enterprise via'ility

varia'les. Apart from survival rate, all other varia'les $ere varied 'et$een /0% and 0% of

their estimated values. =urvival rate $as varied from /0% to 00% of the values used in this

evaluation. &he dependent via'ility varia'les considered $ere -7B and I>>. A sensitivity

factor for each effect $as derived from the rate of change of the values of the via'ility factor

relative to simulated changes in the production characteristic varia'le in consideration.

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Aquaculture Thesis