Introduction to Business Management for Fishersacpfish2-eu.org › uploads › projects › id158 › 2a_Introduction to Busin… · fisheries laws. This introductory training course

Business Planning & Management for Fisherfolks: ICTs Applications for Fish Enterprise Management

by Reginald O. Severin

apidly changing global events continually remind us of the desires of people from all corners of the

world for freedom. Economic freedom--- and the opportunity to better one’s life through

creativity, innovation, and hard work---is the core of these changes. The economic situation in

Dominica and the wider Caribbean region has dictated our times the “age of small

business entrepreneurship.”

Many fishers are hoping to reach their personal goals through the creation and

management of their own business. Having one’s own small business is an expression of

the freedom to become what we believe we are capable of becoming.

Our economies are built on risk-taking entrepreneurs, fisherfolks as

yourself. Your fish and fish products support our daily existence. Particularly

because of the changing world economic climate and drivers impacting on small businesses, including

fishing, there is a clear need for owners and managers to take a more holistic and business-driven

approach within their fishing operations.

Fishers must ensure that they maximize all their skills and assets to meet smart business goals

and deliver on the demands of society for wholesome fisheries products and services.

However, the spirit and motivation that drives entrepreneurs will not guarantee success in

today’s competitive environment. Entrepreneurs must be equipped with the knowledge and skills to

operate a small business successfully. This will involve a considerable culture change for a great many

fisherfolks, which will take time to achieve.

Introduction to Fishing Enterprise Management

The Basic Fisherman Training Course (BFTC) is designed to include all critical areas necessary

for the survival of the industry. It takes into consideration the multiple roles the fisher folks play as

Captain, Mechanic, Boat Owners, and Managers. The initial demand for the course was drawn from

the increasing number of banana farmers divesting their interest by investing in the fishing industry.

These new entrants however are ill-equip and come with little prior fishing experience.

In response the BFTC launched in 2005 is coordinated by the Fisheries Division as a

mandatory training programme to guide participants into a mindset of viewing the investment as a

business and fishing as a renewable resource as oppose to a mere extracting industry. The

BFTC therefore seeks to introduce fishers and prospective new entrants to the industry

about the basic requirements for assessing small business loans and managing their small

business enterprises, train fishermen to better understand fish behavior and fishing gear construction,

conduct various aspects of ‘safety at sea’ training and navigation, learn fish handling, processing and

marketing and the development of fishing cooperatives, and become knowledgeable of the basic

fisheries laws.

This introductory training course provides the tools that, with skillful application, will convert

the novice fisher into an effective small business entrepreneur. Furthermore due to technological

advances, smaller operations are getting much more effective at locating and catching fish and they are

R

Introduction to Enterprise Management for Fishers

©2012 ROSSEAGR SERVICES Page 2

increasingly engaged in fisheries that aim for marketing the products based on international market

standards thereby fostering increasing returns on investments.

Due to increased pressures on inshore areas there is now mounting pressure to

“professionalize” the small-scale fisheries sector so as to make fishing effort commensurate with the

productive capacity of the resources. This is particularly important in the light of the economic and

nutritional dependency on these fisheries by millions of coastal people.

The importance of involving the stakeholders in the fisheries decision-making process is

becoming increasingly recognized, as well as devolving fisheries management to the communities

themselves and establishing defined fishing rights plays a significant role in various types of co-

management arrangements. This training programme therefore is a useful tool for trainers, fisheries

officers, fisheries co-operative management, and other agricultural extension personnel to provide

fishers more specifically with:

1. An understanding of the principles of economics as it influences fishing business efficiency;

2. An understanding of the principles and functions of management that is critical for successful

investments and operations in the fishery industry.

3. An appreciation for the need to identify and address technical, market, and economic constraints

and the risk and uncertainties involved in the fishing industry;

4. Exposure to the fishing industry goals and the overall impact of the industry in the local

economy;

5. Skills in basic pricing that assist fishers to respond to market opportunities.

Training Topics The day training consists of a number of important sessions

designed to introduce management to the fishers, as follows:

Importance of the Fishing Industry in Dominica

This session provides a broad overview of the fishing industry in Dominica with the aim of

assisting the participants to have a greater appreciation for their trade.

The overall goal is to allow participants to receive another view of their trade while providing

the rationale for the investments made with introductory discussions on the need for and the

methodology involved in the management of the fisheries resources and products. The trainee will

discuss the overall goals of the fishing industry, the characteristics of the typical (average) fishing

operations and the economic impact and contributions of the fishing industry to the macro

economy.

With the rapid decline in the major cash crop (bananas), many farmers began moving into the

fishing sector. If properly managed, the returns from fishing can be considerable. The fisheries sector

contributes significantly to national income and represents a fast growing employer for displaced

banana farmers in the agricultural sector workforce specifically in the start of the 21st century.

Introduction to Business Management for Fishers

© 2012 ROSSEAGR SERVICES Page 3

GROSS DOMESTIC PRODUCT BY ECONOMIC ACTIVITY

AT BASIC PRICES, IN CURRENT PRICES (EC$ Million)

INDUSTRIES 2000 2001 2002 2003 2004 2005

Agriculture, Livestock and Forestry

Total 100.53 95.05 90.30 96.53 106.95 109.38 Crops 89.76 84.51 80.08 85.87 94.34 97.51

Bananas 27.84 19.26 18.39 13.96 18.28 15.35 Other Crops 61.92 65.25 61.69 71.91 76.06 82.16

Livestock 7.76 7.45 7.15 7.60 9.46 8.62 Forestry 3.01 3.09 3.06 3.05 3.15 3.25

Fishing 7.73 8.70 7.22 5.79 4.07 3.60

INDUSTRIES 2006 2007 2008 2009 2010 2011 2012 2013

Proj Proj Proj

Agriculture, Livestock and Forestry

Total 106.90 113.10 141.34 142.09 131.10 139.33 152.38 161.62

Crops 93.64 95.29 125.88 126.66 115.23 123.15 135.92 144.89

Bananas 18.26 9.65 18.56 16.59 14.27 14.99 16.68 18.38

Other Crops 75.38 85.64 107.32 110.07 100.96 108.16 119.24 126.50

Livestock 9.84 14.40 12.04 11.98 12.40 12.71 12.97 13.23

Forestry 3.42 3.41 3.42 3.44 3.46 3.47 3.49 3.51

Fishing 4.04 5.75 1.73 3.96 0.75 1.20 3.50 2.28

As the non-banana crop sector improved a number of fishers continue to jointly invest in both the

fisheries and crop sub-sector. This couple with the incidence of major storms that damaged the local

vessels and engines a major decline was experienced in 2007 and 2009.

The Fisheries sub-sector accounts for 9% (3,800 persons) of the national workforce

comprising of fisheries administrators, fisher folks, fish vendors, boat and engine repair servicemen,

net menders, fishing equipment sale s persons, clerical, operational and managerial staff at the

fisheries complex in Marigot and Roseau. The Fisheries Division administrates and manages the sub-

sector under the guidance of the Fisheries Act (2001). The division is lead by the Chief Fisheries

Officer with a staff of approximately 18 individuals. Fish vending, boat and engine repair services and

net and fish pots making and mending are found throughout the fish landing (berthing) areas; there are

33 designated fish landing sites in Dominica. Beneficiaries from fishing range from the providers of bait

to the vendors, the boat builders and repairers, the engine repairers and the net menders.

Fish has an important role in our diet and its consumption should be strongly encouraged.

There is a much greater demand for fish at the present time as a major source of protein with low

levels of saturated fats and cholesterol (See comparative table in Figure 4).Fish is a reliable source of



protein, iron, selenium and iodine. The livers of lean white fish are a particularly good source of

vitamins A and D. The flesh of oil-rich fish, such as tuna and dolphin, an important source of the long

chain n-3 polyunsaturated fatty acids (PUFA) including Eicosapentaenoic Acid (EPA) and

Docosahexaenoic Acid (DHA), due to the large amounts of these fatty acids in marine algae upon

which the fish feed.

There is increasing interest in the beneficial role of oil-rich fish in various human diseases

which is likely to be due to them being a more or less unique source of the long chain n-3 PUFA: A

low incidence of coronary heart disease (CHD) in the Inuit (Eskimos) and the Japanese have been associated

with consumption of large amounts of oil-rich fish.

Figure 4 - Comparative Nutritive Values of Major Protein Sources

Nutrient Units Beef Pork Chicken Goat Lamb Tuna

Protein g 25.94 29.27 27.3 27.1 24.52 23.38

Saturated Fats g 8.54 3.41 3.79 0.93 8.83 0.235

Unsaturated Fats g 10.00 5.10 7.91 1.59 10.33 0.438

Cholesterol g 0.88 0.86 0.88 0.75 0.97 0.45

Total Lipids g 21.45 9.66 13.60 3.03 20.94 0.95

Energy Kcal 305 212 239 143 294 108

Source: USDA Nutrient Database for Standard Reference, Release 12, March 1998.

The construction of the fisheries complexes in Roseau, Portsmouth, and Marigot has improved the

quantity, quality, reliability and stability of supplies flows, and presentation of the fish catch, making it

more appealing to the

consumer. If properly managed,

the returns from fishing can be

considerable. The price of fish

ranges from $6.00 - $10.00/lb,

depending on the village where

it is landed and the species

landed. Prices are of course

lower in the more rural

districts.

The use of ice and the cold

storage facilities have

contributed to providing a

better product to consumers. Under-utilized species like ballyhoo and triggerfish (boose) are boned

and filleted, respectively, and then sold to local supermarkets vacuum-packed.

FISH PRODUCTION (TONNES)

0

200

400

600

800

1000

1200

1400

1993 1994 1995 1996 1997 1998 1999 2000 2001

YEAR

Pro

duct

ion

(Ton

nes)



Analysis of the Fishing Industry: Risks and Uncertainties

Making risky decisions requires careful consideration of the various strategies available and

their possible outcome. Decision-making is the principal activity of the fisher. To do so, the fisher

needs to have all the necessary information about input prices, output prices, yields, and other

technical data. Fishers, however, find that their best decisions often turn out to be less than perfect

because of changes that take place between the time the decision is made and the time the outcome

of that decision is finalized.

It is the common assumption that every year is a normal year where the outcomes can be

predicted accurately. In practice, as we have seen, this is far from reality. The risks associated with

fishing need to be included in the management techniques used for better decision making.

This session therefore introduces the management risk analysis approach using a SWOT

analysis and discusses the risks and uncertainties that de-limit the profit potential and business

survival of a fishing operation.

Management as a way to increase profits

Fishers are continually being exposed to changes that compel them to adjust their operations

in order to increase profitability and competitiveness. These changes stem from the market, the

development of new technologies and policy shifts. They impact on the type of enterprises held, the

quantity of inputs and supplies required and the method and destination of fish products sold. Better

management skills are needed by fishers to respond to these changes.

The role of the fisher is twofold. He or she is at the same time fisher and manager. The first

role of the fisher is to spend time at sea to ensure the best possible

catch relative to the resources expended for the fishing trip. For the

fisher, this includes the preparatory work such as procuring fuel,

food, water, and bait, the tuning of the engine, ensuring that all

fishing, navigational, and safety equipment are in order and going out

with intent to fish either through ports raising, long and vertical line,

nets. Time spent at sea can yield high dividends or it may result in zero or low catch.

The fisher will be engaged in not only harvesting activities; he/she must ensure that the catch

is preserved and protected particularly though adequate quantities of ice or refrigeration space. The

care of the catch and safe return on-shore are important fishing activities that influence the overall

success of each fishing trip. Personal safety and care of the fishing equipment and vessel must be given

equal attention as the physical activities involved in extraction or harvesting while at sea.

Another role of the fisher is as manager. Just like any business, fishing requires management.

Where the skills of fishing are mostly physical, the skills of management involve activities of the mind

backed up by the will. They involve primarily the making of decisions, or choices between alternatives.

The kind of decisions taken by fishers as managers can be summarized as:

Making choices of different fishing activities: diving, deep-sea fishing;



How to best use the resources available to the fisher in pre-fishing and post harvesting

operations;

Selecting the most appropriate technology to use; and

Deciding where and whom to sell their produce and at what prices.

These are only some of the wide range of day to day choices that managers have to make.

Common definitions of management include “making decisions to increase profits”, “making the

best of available resources” and “using, managing and allocating resources”. There are many others.

These decisions imply a number of factors:

Firstly, the existence of a goal or goals;

Secondly, that there are resources such as boat, labour, and capital that can be used or

allocated;

Thirdly, that the resources to be used or allocated imply more than one possible use.

Management is about doing something with the limited resources available to the fisher. Fishers

need to know how to combine these resources optimally in order to attain a satisfactory outcome.

Fishers require improved management skills to become more competitive as fishing becomes more

market driven.

Fishers need to develop their managerial ability so that they are better equipped to take

advantage of opportunities open to them, and to make their enterprises as productive as possible, with

increasing profits from operations. The fisher, however, is also a member of a family and local

community. In effect decisions are made by the fisher family, since different operations are carried out

by different members. But the ways in which tasks are shared vary from one culture to another.

There is a division of labor within the family between all of its members. While most of the

decisions with respect to fishing are made by the individual fisher, decisions are made in the light of

membership within the family. The fisher desires what is best for all members of his household and they

have a direct influence on the decisions taken.

Nevertheless, the desire to secure a better living for the family is a compelling factor in many

situations to improve the productivity of the business. Successful management of the fishing enterprise

requires the fisher to have the following qualities:

the ability to organize and achieve specific goals and targets set

by the fisher’s household;

a good understanding of technical issues involved in the

harvesting, processing and marketing of fish products;

the ability to communicate with people to obtain good

information;

the capacity to make informed and relevant decisions.



Individual fishers may already possess some or all of these qualities. However, in order to achieve

their desired objectives, the fisher must develop marketing plans, make estimates on future events and

forecasts, and adapt their decisions in the light of technical, market and policy changes that are regularly

occurring in the broad environment within which fishing takes place. Fishers require the skills and

know how to adapt effectively to external changes and ensure greater competitiveness.

Management takes time and work and is just as critical for success as harvesting and marketing fish

product. Good fishers need to learn from their day to day experience and recognize their mistakes,

become accountable for their actions, and be willing to change their thinking based on new information.

The common functions of management that help fishers deal with changes in the environment

are:

a) Planning: This is considered the most fundamental and important principle. It

entails deciding on a course of action, policy, and procedure and assessing the

future physical and financial performance, for enterprise as a whole. Plans are

prepared based on resources available and on personal objectives.

b) Implementation: Plan implementation includes the purchase of the inputs and materials necessary

to put the plan into effect and overseeing the process. This is a very important function within the

fishing context because in dealing with marine environment its risks and challenges, the fisher is

faced with a large number of day-to-day decisions that need to be taken.

c) Control: The control function includes monitoring and taking corrective action when necessary.

Monitoring often requires the keeping of records of activities that occur such as the use of inputs,

changes in stock, sales and purchases. Such information is analyzed to clarify what is occurring or

has taken place. The results of the plan are monitored to see the extent to which the plan is being

followed and producing the desired results. This process provides the fisher with an early warning

of pending problems so that adjustments can be made accordingly.

The process of planning, implementation and control is iterative and cyclical.

Why Better Management is Important?

As previously mentioned fishers operate within a dynamic and constantly changing environment

caused by:

Changing prices: Prices of inputs and outputs are constantly changing in line with supply and demand and market forces. Changes in the prices of fish products affect the overall business’

profitability.

Changing resource availability: The quantity available of any input has a

direct impact on profitability. Problems of availability of supplies could result in

the reduced use of fuel, bait etc. and fishers would constantly need to reassess

past decisions in relation to the resources available.



Changing technical relationships: The relationship between inputs and outputs changes as

technological advances are made. For example, a new diesel engine may be introduced that has

improved fuel efficiency over the gasoline type outboard engines and, hence, lower operating costs. This would have an effect of enhancing profitability.

Changing institutional/ social relations: Factors concerning access to markets/ financial

institutions, government support and private sector linkages also affect the industry’s performance.

Although fishers are in the position to control the use of their own resources, they cannot

control the factors and conditions surrounding them. They have to constantly

assess the potential benefits of technologies and reassess the relationship

between inputs and outputs. When new technologies are introduced, increases

in output take place.

In this event, market prices may fall, affecting the relationship between

inputs and outputs. Fishers have to respond to these changes effectively. Improving management skills

is the best way to prepare to adapt and cope with the external changes that impact on fisheries

performance.

Φ Φ Φ Φ Φ Φ Φ Φ Φ Φ Φ Φ

Due to technological advances, smaller vessels are getting much more effective at locating and catching fish and they are

increasingly engaged in fisheries that aim for marketing the products on

the international market. Due to increased pressures on inshore areas

there is now mounting pressure to “professionalize” the small-scale

fisheries sector so as to make fishing effort commensurate with the productive capacity of the resources. This is particularly

important in the light of the economic and nutritional dependency on these fisheries by millions of coastal people. The importance of

involving the stakeholders in the fisheries decision-making process is becoming increasingly recognized, as well as devolving

fisheries management to the communities themselves, and establishing defined fishing rights plays a significant role in various

types of co-management arrangements.

Fish-in-the-Global-Food-Chain-Challenges-and-Opportunities

http://www.thefishsite.com/articles/718

Remember that the purpose of planning is to place the fisher in the best possible position

to make decisions about the future. Once the fisher has defined his/her objective(s) the

next step is to develop a plan to achieve them within the opportunities offered by the

marketplace. This unit analyses the planning process!

The real value of creating a fishing enterprise plan is not in having the finished product in

hand; rather, the value lies in the process of researching and thinking about your business

in a systematic way. The act of planning helps you to think things through thoroughly,

study and research if you are not sure of the facts, and look at your ideas critically. It

takes time now, but avoids costly, perhaps disastrous, mistakes later.

http://www.thefishsite.com/articles/718



Understanding Fishing as a Business

This session explains the concept of the fishing operations and its different enterprises and

introduces the fisher to some of the key economic concepts and terms used in management and

which defines a typical business enterprise. These are costs of sales, gross income, gross margin,

enterprise profitability and gross profit (net income). The chart below provides a summary of these

key terms and the factors influencing them.

Factors Affecting Gross Income and Profitability of a Fishing Enterprise

climate

fishing effort

vessel type, size

engine type, hp

fishing site (ground)

Yield species type, population

time of year

fishing gear

fishers' experience

% spoilage

time in which it is sold

sales - direct, wholesale

Price species type

quality

less

Fuel and lubricants

Bait material

Supplies (ice, food, water)

Labour

Telecommunications

Miscellaneous

less

Permanent labour

Vessel Insurance & Depreciation (owned or rented)

Other rents, (mooring, boat shed)

Financing costs (transaction, interest costs)

Miscellaneous

equals

GROSS INCOME

Variable Costs

Fixed Costs

ENTERPRISE PROFIT or NET INCOME



1. Gross Income is the value of the output of an enterprise. The gross income is obtained by

multiplying the physical output by the landed price of fish and valuing home consumption. The

landed price represents the point of first sale. It is incorrect to calculate gross income for the

enterprise by using the price at which the fisher sold the fish in the marketplace or elsewhere

off the landing site. The costs of transportation and other marketing expenses need to be

deducted from the market price in order to arrive at the gross income at the landing site.

2. Extraction costs are usually classified into two categories: variable and fixed costs. The

classification of a particular cost as variable or fixed depends partly on the nature and timing of

the management decisions being considered. Some costs are fixed in relation to certain

decisions but others remain variable.

Variable Costs: Short-term costs (usually made within one year or within a single production

cycle) and include items that:

- occur only if fish is harvested /extracted (and do not occur if no trip is attempted);

- tend to vary according to the size of the fishing enterprise (with type of fishing gear or

the fishing effort); and

- can easily be allocated to individual enterprises.

For example, considerable labour is required in fishing. If a fisher has to hire labour, then as

extraction increases, so too will the need for hired labour. Similarly, fuel costs for boat

engine increase as the use of the motor increases; or the greater distance from land fished,

the higher the fuel costs. Thus, variable costs in fishing are usually costs of fuel and

lubricants, bait, food, landing fees, storage fees, hired labour, etc.

Fixed Costs are generally long-term costs (lasting for more than one year) and are defined

as costs that remain the same regardless of the size of the enterprise and do not alter with

small changes in size. The allocation of fixed costs to a specific enterprise can be difficult, in

some cases. Fixed costs (e.g. fishing equipment) are more difficult to allocate. The vessel, for

example, tends to be used in all fishing operations, port

or gill-net activities. If the operation adds an extra activity

such as long-line fishing, the costs of the vessel will hardly

be increased. If the farmer stops fishing altogether,

some of the vessel costs will still be incurred. Of course, the operating costs of using the

vessel, and in particular the cost of fuel, are variable but the capital cost of the vessel (interest) is

fixed.

Other fixed costs such as depreciation on vessel and engine, maintenance and repairs,

regular labour: (boat captain), insurance, and rental of boat house and mooring fees, may

need to be computed for the whole enterprise since they cannot be directly allocated to a

specific activity.

As a general rule, a reduction of fixed costs where

production is not affected will lead to increased

profit. Higher fixed costs places strain on the

operations and pressure to increase productivity.



3. Gross Margin is a simple, useful and practical tool to assess performance. The gross margin

for an enterprise is defined as the gross income minus its variable

costs.

Gross margin = Gross income - variable costs

A fisher who uses his or her resources to extract fish worth $600 at a

variable cost of $100 generates a gross margin of $500 ($600-$100). The gross margin is a

measure of what the enterprise is adding to profits. Variable costs rise and fall as fishing

output expands and contracts. The fixed costs are not affected. It is only the variable costs

and value of output that increase. If the extra variable cost is less than the value of extra fish,

the fisher increases profits by as increases in fishing effort occur. Profits will be increased by

the value of the gross margin.

4. Gross Profit (Net Income) is the year-by-year profitability of the operations as a whole. It

is the reward for labour, capital, and management contributed by the fisher’s family during

the year. There are two ways of calculating gross profit; either by using gross margins or

conducting enterprise profitability calculations. Gross Profit is calculated by combining the

gross margin of each of the fishing activities and deducting fixed costs. Alternatively it could

be calculated by estimating the profit for each of the enterprises and aggregating to the level

of the operations.

The final income figure reflects the profit of the business and is the reward for the capital and

management contributed by the fisher and his family

during the year. Gross Profit is necessary to cover the

family living expenses and payments of loan principals. The

amount left over after accounting for living expenses and

loan payments can be reinvested into the fishing operations.

5. What is Liquidity? Liquidity is the ability of the fisher to generate enough cash to meet

financial obligations as they come due without disrupting the normal operation of the

enterprise. It is the flow of funds into and out of the fishing enterprise.

Cash flows into the enterprise from various sources such as the sale of crops and livestock,

the sale of capital assets, mobilization of loans and non-enterprise income sources. Boat

owners use this money to cover their enterprise and family expenses. These include such

items as fishing trip costs, capital expenditures, loan repayments and family living

Gross Margin

Gross Profit

(Net Income)

Gross Income

Gross Margin

Variable Costs

Fixed Costs

=

=

-

By measuring farm income, the

economic strength of the fishing

operations can also be measured.

-



expenditures. A reserve of cash or liquidity needs to be kept to prevent cash shortages from

disrupting the normal enterprise operations.

Several factors can affect the liquidity position of the enterprise:

The extraction cycle for all fishing enterprises is based on a typical fishing trip, a few

hours to a day. This means that fisher often have to make daily payments for inputs

(fuel purchases) used to sustain the operations.

Fishers often find that it may be better not to sell fish directly following harvest, but

alternatively to store or add value for some time in the search for higher prices. This,

however, has an effect on the cash reserve by delaying cash inflows from product sales.

Very often other businesses involved in purchasing fish do not pay for it immediately.

For many enterprises the availability of cash over the short term may even be more

important than generating additional profits. For example, fishers may sell some of their

productive assets, such as livestock, in order to pay for fuel and oil. For these reasons fishers

need access to working capital and short-term credit.

Flexible lending facilities are often desired that advance cash as is needed during the production

cycle and can be repaid when fish is sold.

The Meaning of Profit: The starting point in understanding the profit and loss account is to

be clear about the meaning of "profit". Profit is the incentive for business; without profit

people wouldn't’ bother. Profit is the reward for taking risk; generally speaking high risk = high

reward (or loss if it goes wrong) and low risk = low reward. People won’t take risks without

reward. All business is risky (some more than others) so no reward means no business. Fishing

is a very risky business venture and all efforts extended could result in loss; the loss of life or

the entire investment is a constant threat to all fishers.

Profit has an important role in allocating resources (labour, capital and enterprise). Put

simply, falling profits (as in a business coming to an end e.g. Coastal fishing) signal that

resources should be taken out of that business and put into another one; rising profits signal

that resources should be moved into this business. Without these signals we are left to guess

as to what is the best use of society’s scarce resources.

The Task of Accounting - Measuring Profit: The main task of accounts, therefore, is to

monitor and measure profits.

Profit = Revenue less Costs

Therefore, monitoring profit means monitoring and measuring revenue and costs. There are

two parts to this:-



1) Recording financial data. This is the ‘book-keeping’ part of accounting.

2) Measuring the result. This is the ‘financial’ part of accounting. If we say ‘profits are

high’ this begs the question ‘high compared to what?’

Profits are ‘spent’ in three ways.

1) Retained for future investment and growth.

2) Returned to owners e.g. a ‘dividend’.

3) Remitted as tax.

Record Keeping for Fishers

Fishing records provide useful information for fisheries officers to help fishing enterprises

increase their profits, adjust practices, select the best investment options

/strategies, determine the best use of available resources, obtain credit and

formulate harvest/extraction plans. Accounts are drawn up and are used to

measure the financial performance of the enterprises.

More specifically, records and accounts can to assist in:

Evaluating the enterprise’s financial position in relation to its objectives;

Measuring the outcome of decisions and therefore allowing the fishing enterprise to

benchmark financial data to be compared with others in the industry;

Controlling the daily routine operations and enabling the fisher to know what have been

spent and done at any given time during the year;

Evaluating alternative strategies for controlling the available resources and therefore help the

fisher/manager to spot where the enterprise is strong and where it is weak;

Financing the fishing business operations; and

Meeting legal requirements.

Apart from its potential use in management decision-making, fishing records are

sometimes used to formulate national policies, programmes and action plans.

Various types of fishing records are needed to assist the Division in monitoring and evaluating

fisheries performance. Physical and technical records help to diagnose the various aspects of the

enterprises’ operation and prevent emerging problems.

Fishers are continually exposed to new data and information that affect how their businesses are

organized, what, how and when fish products are harvested, and what type and quantity of inputs

should be used, etc.

Understanding the rural communities is necessary because the constraints and development

potentials of fishing activities are largely determined by these factors and resources.



Data refer to the raw numbers and facts such as prices, costs, quantities etc. Information is data

that is processed in a way that is useful for decision-making. The relationship between data,

information and decision making is given below.

The categories of data that facilitates the decision making process can be summarized as follows:

Categories Specific Data

Technical and physical Catch, effort, weather, gear, fish sites, labor …

Economic Input prices, buyers, sources of credit

Social Culture, organizations, facilities

Institutional Support services, private organizations

Political Policies and priorities

Some of the most commonly used records are:

1. Operational records: These serve the daily needs of fishing enterprises in managing their

operations and are designed to control specific activities. A series of tables can be used for

collecting such fishing operations data. Some of the most common non-financial records are:

Labour Records: These record labour inputs as expressed in hours or days of fishing (Table

A, Effort Record) and the corresponding compensation in cash or kind.

TABLE A LABOR RECORDS

Reg. # : Trip 1 Trip 2 Trip 3

Month:

Date: Date: Date:

PURCHASES UNIT Days $ Days $ Days $

Captain $/Day

Mate $/Day

Fisher 1 $/Day

Total 0 0 0 0 0 0 0

Collect

Data

Process Data Generate

Information

Make

Decision



Catch & Effort Records: These provide fishers with valuable information on extraction

output (fish catch) by species and seasons, quality and effectiveness of gear used, the daily

effort, and the overall productivity measured by catch per unit effort (CPUE). These will

assist in formulating production/extraction objectives (annual total catch) and economic

objectives (total and per capita annual incomes), ecological goals (control of exploitation,

reduce by-catch) and biological goals (stock status and level of overfishing). (See Table B)

Table B FISH CATCH RECORD

VESSEL REG. # : Trip 1 Trip 2 Trip 3

Month:

Date: Date: Date:

Species Group ID Species

Name Count

Weight

(lb) Count

Weight

(lb) Count

Weight

(lb)

DORADOES 0 0 0 0 0 0 0

TUNA 0 0 0 0 0 0 0

SWORD FISH 0 0 0 0 0 0 0

RED FISH 0 0 0 0 0 0 0

BLUE MARLIN 0 0 0 0 0 0 0

KINGFISH 0 0 0 0 0 0 0

BY- CATCH 0 0 0 0 0 0 0

TOTAL CATCH 0 0 0 0 0 0 0

START END START END START END

EFFORT Hours

Days

CPUE #DIV/0! #DIV/0! #DIV/0! #DIV/0!



Fuel use Records: These refer to information on quantity of fuel consumed in the fishing

process and the overall influence of fuel prices on the profitability of operations. The following

Table C represents a simple example.

TABLE C FUEL USAGE RECORD

Reg. # : Trip 1 Trip 2 Trip 3

Month:

Date: Date: Date:

PURCHASES UNIT Q $ Q $ Q $

FUEL gallons

Oil (Engine) quarts

Oil (Steering) quarts

Total Fuel (only) 0 0 0 0 0 0 0

2. Marketing Records: These refer to information on market transactions and performance

based on fish species. This includes contracts and their performance, movements in sales,

consumer preferences and demand, and the overall market demand and supply dynamics. The

following record shows the volumes caught and the price for landing which allows the fisher

to calculate his expected revenues before sale.

Species Caught Month 1 Month 2 Month 3

DORADOES 675 580 750

Landed Price 4 4 4

Revenue 2700 2320 3000

TUNA 2,500 2,800 2,460

Landed Price 4 4 4

Revenue 10,000 11,200 9,840

SWORD FISH 650 700 790

Landed Price 5.5 5.5 5.5

Revenue 3,575 3,850 4,345

RED FISH 1,050 1,188 850

Landed Price 4.0 4.0 4.0

Revenue 4,200 4,752 3,400

3. Financial Records: Financial records (Accounts) may be used as data sources for assessing

profitability, for statistical purposes and as a basis for enterprise evaluation. Financial records

are also known as accounts and are represented by financial statements.



INTERPRETATION AND ANALYSIS OF ACCOUNTING INFORMATION

Financial information is always prepared to satisfy in some way the needs of various interested

parties (the "users of accounts"). Stakeholders in the business (whether they are internal or

external) seek information to find out three fundamental questions:

(1) How is the business doing?

(2) How is the operations placed at present?

(3) What are the future prospects of the business?

For outsiders, published financial accounts are an important source of information to enable them

to answer the above questions.

The Key Questions

To some degree or other, all interested parties will want to ask questions about financial

information which is likely to fall into one or other of the following categories, and be about:

Performance Area Key Issues

Profitability Is the business making a profit? Is it enough?

Efficiency

Is the business making best use of its resources?

Is it generating adequate sales from its investment in equipment and

people? Is it managing its working capital properly?

Liquidity Is the business able to meet its short-term obligations as they fall due

from cash resources immediately available to it?

Stability

What about the long-term prospects of the business?

Is the business generating sufficient resources to repay long-term

liabilities and re-invest in required new technology?

What is the overall structure of the businesses' finance - does it place

a burden on the business?

Investment Return

What return can investors or lender expect to get out of the

business?

How does this compare with similar, alternative investments in other

businesses?



Market Price: How do you Price Your Fish?

In this session a simple spreadsheet is used to assist fishers decide on the price for their fish

landed, locally sold, or exported. The fisher will learn how to use data collected

for transactions and prepare an income statement from which a simple analysis

will be conducted to assist in pricing the fish product. There is a relation

between the costs associated with the fish extraction process to prices received

upon sales of the fish product.

The price paid by the eventual consumer is thus made up of the amount of money paid to the

fisher for his catch plus all of the costs involved in getting the catch to the consumer in the

form, place, and time in which he or she purchases it and a reasonable return to those carrying

out the functions of marketing and processing. The percentage share of the final price which is

taken up by the marketing function is known as the marketing margin.

Sometimes the marketing margin can be quite a high percentage and this may be used to argue

that fishers or consumers are being exploited. However, high margins can often be fully justified by

the costs involved. Without an understanding of those costs and how they are made up it is

impossible to know whether margins are reasonable or not.

The following represents simple practical calculations the techniques used in calculating the price of

fish landed and any value added in determining the minimum price per lb of fish sold.



PRICING FISH LANDED – A Practical Exercise!

PRICE STRUCTURE

Ave. Catch No Catch Low Catch Best Catch

Catch Volume (lb) 450 0 125 1,200

COST ITEM

Fishing Effort Cost (Wages)

Fuel & Oil Supplies

Ice, Bait, Food Purchases

Handling, Transportation

Landing Costs, Fees

Cost of Fish Landed

Depreciation

Interest

Rents, Fees

Repairs, Maintenance

Insurance

Cost of Fish to Sell, Local

Assumptions:

Parameter Value Parameter Value

Fishing Cycle Nov. - May Purchase Price of Vessel $80,095.00

No. of Trips per week 3 Purchase Price of Engine $25,000.00

Total Trips per annum 84 Purchase Price of FNS Gear $130,000.00

Engine: Fuel Consumption 6 miles per Gallon Loan Terms 120,095 for 10 yrs @ 10%

Fuel price $15 per Gallon Mooring Fees $2.00 per day

Ave. Distance Fished 30 miles Locker Room Rental $5.00 per day

Ave. Time at sea 8 hrs per trip Landing fees $0.15 per lb

No. of Fishers 3 Cost of Food per Trip $80.00

Bait Type and Cost Artificial/ $1,800 Cost of Ice per Trip $25.00



PRICING FISH FOR EXPORTS – A Practical Exercise!

PRICE STRUCTURE Ave. Per

lb

Ave. Per

Trip

Ave. Per

Month

Target

Year

Catch Volume (lb) 1 790 9,480 65,041

COST ITEM

Fishing Effort Cost (Wages) 0.74 583.02 6,996.20 48,000.00

Fuel & Oil Supplies 2.21 1,749.05 20,988.61 144,000.00

Ice, Bait, Food Purchases 0.44 350.16 4,201.92 28,828.80

Handling, Transportation 0.11 87.45 1,049.43 7,200.00

Landing Costs, Fees 0.23 180.14 2,161.68 14,831.00

Sundries 0.08 64.48 773.80 5,308.94

Overheads 0.49 387.03 4,644.40 31,864.57

Cost of Fish Landed 4.31 3,401.34 40,816.04 280,033.31

Cold Storage 0.24 189.60 2,275.20 15,609.84

Processing (Clean, Cut) 0.25 197.50 2,370.00 16,260.25

Labels & Packaging 0.04 31.60 379.20 2,601.64

Processing Margin 0.27 209.35 2,512.20 17,235.87

VAT 0.12 94.21 1,130.49 7,756.14

Cost of Fish to Sell, Local 5.22 4,123.59 49,483.13 339,497.05

Air/Sea Freight 2.50 1,975.00 23,700.00 162,602.50

Insurance Cost 0.80 632.00 7,584.00 52,032.80

Marketing Margin 0.17 130.35 1,564.20 10,731.77

VAT 0.52 410.60 4,927.23 33,805.06

Cost of Fish to Sell, Exports 9.20 7,271.55 87,258.56 598,669.17



BFTC………….Example of Profit & Loss Statement

Fishing Receipts $ $

Cash Sales 280,627.00

Ending Frozen Fish Inventory 800.00

Beginning Frozen Fish Inventory 1,200.00

Gross Income From Fish 280,227.00

Sales of Bait 500.00

Value of Fish Consumed at Home 200.00

Gains/Loss on Sale of Capital Items -

Other Income -

GROSS INCOME 280,927.00

Variable Expenses

Fuel and Oil 144,000.00

Food Purchases 14,400.00

Purchases [Bait, Ice] 14,428.80

Transportation 7,200.00

Fish Landing Charges 14,831.00

Sundries 5,308.94

Total Cost of Fish Landed 200,168.74

GROSS MARGIN 80,458.26

Fixed Expenses

Payroll 48,000.00 Administrative Expense 3,240.00 Boat Repairs & Maintenance 3,600.00 Locker Room Rent & Mooring Fees 720.00 Interest 11,677.92 Social Security Payments 1,920.00 Depreciation 7,706.65 Vessel Insurance 3,000.00

Total Cost of Fixed Expenses 79,864.57

NET INCOME: Profit/(Loss) 593.69



Commercial Fishing Projected Income Statement

2005 2006 2007

Revenue

Fish Sales 280,627.00 296,931.04 318,177.09

Total Revenue 280,627.00 296,931.04 318,177.09

Less Cost of Fish Sold Fuel and Oil 144,000.00 45,440.00 148,348.80

Food Purchases 14,400.00 14,688.00 14,981.76

Purchases [Bait, Ice] 14,428.80 15,438.82 18,526.58

Transportation 7,200.00 7,344.00 7,490.88

Fish Landing Charges 14,831.00 15,686.24 16,824.94

Sundries 5,308.94 8,060.70 8,353.17

Total Cost of Fish Landed 200,168.74 206,657.76 214,526.12

Gross Margin 80,458.26 90,273.28 103,650.97

Overheads

Payroll 48,000.00 48,960.00 50,428.80

Administrative Expense 3,240.00 3,888.00 4,665.60

Boat Repairs & Maintenance 3,600.00 3,600.00 4,320.00

Locker Room Rent & Mooring Fees 720.00 780.00 780.00

Interest 11,677.92 10,906.52 10,054.34

Social Security Payments 1,920.00 1,958.40 2,017.15

Depreciation 7,706.65 7,167.18 6,665.48

Vessel Insurance 3,000.00 3,252.00 3,414.60

Total Operating Expenses 79,864.57 80,512.10 82,345.97

Net Income (Loss) 593.69 9,761.18 21,305.00



SAMPLE FISHING OPERATIONS STATEMENT OF NET WORTH (Balance Sheet)

LIABILITIES $ ASSETS $

Long-Term Liabilities Fixed Assets

Bank loan 120,095.00 Fishing Vessel 85,095.00

Diesel Engine (150 HP) 25,000.00

Other Non-fishing Assets 130,000.00

Total Long-term Liabilities 120,095.00 Total Fixed Assets 240,095.00

Current Liabilities Current Assets

Overdraft 1,000.79 Cash in Bank 13,000.00

Creditors (Gas Supplies) 12,540.00 Debtors (Sales Collectables) 28,062.70

Short-term loans 7,366.85 Frozen fish stock 800.00

Fuel in storage 12,000.00

Total Current Liabilities 20,907.64 Total Current Assets 53,862.70

Total Liabilities 141,002.64 Total Assets 293,957.70

NET WORTH (Asset-Liabilities) 152,955.06

Balance 293,957.70 Balance 293,957.70



Our vision lies in promoting entrepreneurship and facilitating

improvements in fisheries productivity, efficiency, and profitability so that

the fishing industry may become an economically viable, environmentally

responsible, and socially equitable industry for fisher folks and fishers’

co-operatives in Dominica.

Prepared by REGINALD SEVERIN

(C) 2012 ROSSEAGR SERVICES

For the FISHERIES DIVISION

Roseau Fisheries Complex Bldg.,

M.E. Charles Boulevard, Roseau

Commonwealth of Dominica, W.I.

Tel. 767-448-2401 (Ext. 5263, 5291/2)

Fax: 767-448-0140

Email: [email protected]

... to teach him how to fish ...

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