Formulation of aquaculture development at an ox-bow lake in Malaysia: economic feasibility analysis

Abstract. This paper summarizes the economic aspects of production models and discusses the economic feasibilities and some marketing requirements of a proposed fisheries-aquaculture development at an ox-bow lake, isolated from the Perak River, at Teluk Intan, Perak, Malaysia. Measures of feasibility from a budgetary simulation model are expressed in terms of net present values of return (NPV), internal rate of return (IRR) and return on sale; their changes recalculated in relation to practical ranges of variations in sale prices and yields, and under conditions of normal and 20% increment in operational costs, are also expressed. Using appropriate real production data, the cage culture complex has an NPV of M$4.068 million with an IRR of 68% and return on sales of 31% at a sale price of M$10/kg and yield of 12kg/m³ (US$1.00 = M$2.30); capture fisheries integrated with livestock have an NPV of M$252410, IRR of 42% and return on sales of 18% at a sale price of M$2.50/kg and yield of 33 tonnes; the hatchery facility has an NPV of M$0.963 million, IRR of 38% and return on sales of 20% at a sale price of M$0.39/fry and yield of 2 million; and prawn pond culture has an NPV of M$314000, IRR of 43% and return on sales of 36% at a sale price of M$11/kg and yield of 2.5 tons/ha. Overall, the modular project has an NPV of M$5.596 million with an IRR and return on sales of 53% and 28% respectively. Should the operational costs increase by 20% above normal, project unviabilities are obvious at specific levels: cage culture is unviable at sale prices ≤M$8.00/kg and yields ≤10 kg/m³; capture fisheries at sale prices ≤M$1.5/kg; hatchery facility at sale prices of fry ≤M$0.30/fry; prawn culture at sale prices ≤M$8.00/kg and yields ≤2 tons/ha; and the overall project is unviable when the sale level of fisheries products drops to 80% of the normal and operational costs increase to 120%. With greater efforts at raising sales and securing better prices, and raising yields while reducing operational costs, the projects have a markedly improved economic profit.