Developed by Bill Johnston
This farm models is provided to allow you to evaluate the economics of sandfish farming, using your own input
parameters.
The model covers pond-based systems and is based upon the cost-benefit analysis technique. Cost
conceptual framework for the economic evaluation of projects, in this case, sandfish aquaculture projects. This approa
differs from financial appraisal in that it considers all gains and losses. The basic premise of cost-
assist you to make a decision in regard to the allocation of resources. In particular, this model helps you to make deci
about whether or not to invest in sandfish aquaculture.
Existing farmers can also use the model. Once the data is entered into the model a farmer can use the computer vers
of his farm to determine the impact of different management decisions. For example, the farmer may wish to know ho
change in length of production will effect his bottom line (profit).
The model is easy to operate. It is simply a matter of entering data into the input cells of the model you have selected.
better to be as accurate as possible with data entry in order to get the best possible results. The model farm is split
sections that, amongst others, cover:
1. The physical description of the farm - pond descriptions and requirements.
2. Production scenario, including method of farming, growth rates, stocking density, survival rates and so forth.
3. Marketing of the product, including processing, packaging and freight: The marketing form provides 2 options for th
processing of your product. You can sell the sandfish fish chilled wet or dried.
4. Labour requirements for the farm operation: In the model categories are provided for casual labour, permanent labo
and farm management. A labour component for the owner/manager of the business is provided and should be filled o
include the value of thier input or drawings from the business.
5. Additional operating expenses that includes fuel, oil, repairs, maintenance and insurances: This data entry form cov
the remainder of the operating expenses for the farm and should be entered as an annual cost for the farm.
the remainder of the operating expenses for the farm and should be entered as an annual cost for the farm.
6. Revenues: The price you expect for your sandfish given the grade.
7. The capital expenditure section provides for the summary of the capital required to establish the farm and allows yo
allocate future revenues to the replacement of capital items: This data entry form requires a little time to complete, but
important if you want an accurate reflection of your farm. Enter all data as accurately possible and remember that the
maximum life for any item on the farm can not exceed 20 years as it represents the full life of the project. The salvage
value can exceed 100% in cases such as the appreciation of land.
Once all the data is entered into the model you can view the summary statistics for the farm. All the statistics used are
explained in the model itself. Basically, the farm is run over a 20-year period. The output includes the expected annua
returns, when the farm is paid off and the interest rate at which you can borrow funds to invest in the project. The sum
statistics will also provide a break down of costs on a per kilogram basis. All the sheets contained in the model are lab
for easy reference and there are buttons in the menu for easy movement between sections.
Cell Views
Data Entry Cell - yellow
Formula Cell - red (protected)
dfish farming, using your own input
analysis technique. Cost-benefit analysis is a
sandfish aquaculture projects. This approach
basic premise of cost-benefit analysis is to
ticular, this model helps you to make decisions
model a farmer can use the computer version
example, the farmer may wish to know how a
nput cells of the model you have selected. It is
possible results. The model farm is split
density, survival rates and so forth.
e marketing form provides 2 options for the
provided for casual labour, permanent labour
usiness is provided and should be filled out to
e and insurances: This data entry form covers
d as an annual cost for the farm.
d as an annual cost for the farm.
equired to establish the farm and allows you to
form requires a little time to complete, but is
ccurately possible and remember that the
ents the full life of the project. The salvage
tics for the farm. All the statistics used are
d. The output includes the expected annual
ow funds to invest in the project. The summary
the sheets contained in the model are labelled
Key Parameters
Is a nursery phase to be included in this production system?
Number of ponds
Size of ponds
Size of juveniles purchased from the hatchery
Length of production
Expected survival of sandfish over production cycle
Target density of sandfish at harvest
Are the sandfish sold wet? no
Prices
Grade A
Grade B
Grade C
yes 1 yes
no
0
0.0 hectare(s)
0.0 grams
0 months
0.00%
0.0 per square metre
no yes
no
Wet Dried
$0.00 $0.00
$0.00 $0.00
$0.00 $0.00
Pond Description and Output
Pond Dimensions and Capacity
Total number of ponds (including nursery if applicable) 0
Pond length / width 0.0
Pond surface area 0.00
Productive area per pond 0%
Productive area per pond 0.00
Total ponded area of farm 0
Pond Usage
Number of ponds for nursery use 1
Number of ponds for dedicated production -1
Pond Outputs - Production
Target density of sandfish at harvest 0.00
Number of sandfish per pond 0
Number of sandfish produced each season 0
metres
hectares
hectares
square metres
per square metre
(final harvest numbers)
Juvenile Purchase and Nursery Phase
Juvenile Requirements and Purchase
Size of purchased juveniles
Number of juveniles required - no nursery phase
Number of juveniles required - nursery phase included
Initial stocking density of sandfish
Number of sandfish stocked per pond
Cost per juvenile
Juvenile cost per cycle
Nursery Targets
Expected susrvial rate of sandfish during nursery phase
Number of sandfish required from hatchery
Length of nursery phase
Nursery Capacity
Length of hapas
Width of hapas
Surface area of hapas
Number of hapas required for nursery
Nursery Stocking Densities
Size of nursery pond
Initial stocking density of sandfish
Number of juveniles per hapas
Total hapas surface area
Average weight of juvenile moving from nursery into production ponds
0.00 grams
0
0
0.00 per square metre
0 Dependent of whether you include a nursery phase the
purchase size of juveniles will vary - consider the
$0.00 per pc
appropriate size and associated price of juveniles
$0 purchased from the hatchery.
0.00%
0
0.0 months
0.00 metres
0.00 metres
0.00 square metres
0
0 square metres
0
0
0 square metres
o production ponds 0 grams
nclude a nursery phase the
consider the
ated price of juveniles
Production Parameters
Psuedo Growth Curve (following hatchery or nursery phase - adjust growth rates as req
% of Cycle
Phase 1 15.00%
Phase 2 45.00%
Phase 3 25.00%
Phase 4 10.00%
Phase 5 5.00%
Average weight gain per day
Growth Parameters
Length of production 0
Pond dry-out following harvest 0.0
Mean weight of stocked juvenile sandfish 0.00
Average growth rate over production period 0.00
Expected weight gain over production cycle 0.00
Average weight of sandfish 0.00
Expected survival of sandfish over prodiction cycle 0.00%
Pond Production
Total farm production 0
Production of sandfish per pond 0
se - adjust growth rates as required)
Cumulative
Grams per Day Days Weight Gain (g)
0.00 0 0 0
0
0.00 0 0 0
0
1
0.00 0 0 0
1
0.00 0 0
1
0.00 0 0
0.00 grams 1
Days / Grams
1
1
months 0
month(s) 0
grams 0
grams per day 0
grams 0
grams
kilograms 0 sandfish harvested
kilograms
0
0 Days Related to Weight Gain
0
0
0
Days of Growth Cumulative Weight Gain
Production Summary
Number Kg
Year 1 0 0
Year 2 0 0
Year 3 0 0 1
Year 4 0 0
1
Year 5 0 0
Year 6 0 0 1
Year 7 0 0 1
Year 8 0 0
1
Year 9 0 0
Year 10 0 0 1
Year 11 0 0
0
Year 12 0 0
Year 13 0 0 0
Year 14 0 0 0
Year 15 0 0
0
Year 16 0 0
Year 17 0 0 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 18 0 0
Year 19 0 0
Year 20 0 0
Year 20
Year 19
Year 18
Year 17
Year 16
Year 15
Year 14
Year 13
Number of Sea Cucumber
Year 12
Year 11
Year 10
Year 9
Year 8
Year 7
Processing & Packing yes
no
Are the sandfish sold wet? no
Quantity of sandfish produced on farm per cycle 0
Processing - Wet Sandfish
Average number of wet sandfish per kilogram 0.00
Grading - Wet Wet Sandfish per Kilogram
Lower Range
Grade A 1.00
Grade B 2.10
Grade C 4.10
Packaging
Weight of sandfish per package 0.00
Cost per package $0.00
Number of packages required 0
Total cost of packing $0
Freight
Cost per kilogram to freight to market $0.00
Total freight cost $0
Total Cost for Processing Wet Sandfish $0
Processing - Dried Sandfish (Trepang)
Average number of dried sandfish per kilogram 0.00
Drying Process
Drying weight loss 0.00%
Final weight of sandfish after drying 0.00
Average weight per sandfish after drying 0.00
Drying Labour
Labour hours required per wet tonne dried Gutting
Salting
Boiling
Washing
Drying
Total labour hours required
Drying labour cost
Addition costs per wet tonne dried Salt
Gas
Fuel for cooking
Grading - Dried Sandfish Dried Sandfish per Kilogram
Lower Range
Grade A 10.00
Grade B 16.00
Grade C 21.00
Packaging
Weight of sandfish per package 0.00
Cost per package $0.00
Number of packages required 0
Total cost of packing $0
Freight
Cost per kilogram to freight to market $0.00
Total freight cost $0
Total Cost for Processing Dried Sandfish $0
If the sandfish are sold wet directly to wholesaler or a processor then the drying
2 costs are removed from claculations.
kilograms
Wet Sandfish per Kilogram
Upper Range Crop Grade
2.00 0
4.00 0
- 0
kilograms
per kilogram
kilograms
grams
0.00 hours
0.00 hours Consider the number of hours required to process the wet
sandfish into a dried product. In particular, the level of
0.00 hours sandfish into a dried product. In particular, the level of
processing i.e. gutting, boiling, curing (salt) and drying.
0.00 hours
0.00 hours
0.0 hours
$0.00 per hour
$0.00
$0.00
$0.00
Dried Sandfish per Kilogram
Upper Range Crop Grade
15.00 0 kg
20.00 0 kg
- 0 kg
kilograms
per kilogram
rs required to process the wet
uct. In particular, the level of
uct. In particular, the level of
ing, curing (salt) and drying.
Revenue
Wet Product
per kilogram Quantity (kg)
Grade A $0.00 0
Grade B $0.00 0
Grade C $0.00 0
Total revenue per farm cycle
Dried Product
per kilogram Quantity (kg)
Grade A $0.00 0.00
Grade B $0.00 0.00
Grade C $0.00 0.00
Total revenue per farm cycle
Revenue
VND 1
VND 1
VND 1
VND 1
VND 1
VND 1
VND 0
VND 0
VND 0
VND 0
$0 $0
VND 0
Grade A Grade B
Revenue
$0
$0
$0
$0
Revenue
$0
$0
$0
$0
Revenue
$0
Grade B Grade C
Labour Requirements
Casual farm labour (excludes processing)
Number of employees 0
Average hours worked per staff member 0
Wage rate per hour $0.00
Annual expense $0
Permanent staff (skilled)
Number of employees 0
Weekly salary $0.00
Annual expense $0
Permanent staff (labourer)
Number of employees 0
Weekly salary $0
Annual expense $0
Farm manager
Weekly salary $0
Annual salary $0
Additional Operating Expenses
Fuel and oil $0 Water supply or pumping licen
Repairs and maintenance $0 Aquaculture licences and perm
Electricity $0 Salt (drying or medicinal)
Accounting and legal $0 Chemicals (cleaning)
Administrative expenses $0 Chemicals (medicinal)
Phone (domestic and mobile) $0 Miscellaneous items
Travel (related to business) $0
Vehicle registrations $0
Vehicle insurance $0
Other insurances $0
Water supply or pumping licences $0
Aquaculture licences and permits $0
Salt (drying or medicinal) $0
Chemicals (cleaning) $0
Chemicals (medicinal) $0
Miscellaneous items
$0
$0
$0
$0
Capital Cost of Farm
Project Length (Years) 20
Capital Item No. of items
Land and Buildings
Land -
Sheds 0
Other 0
Electricity connection -
Vehicles and Machinery
Motorbikes 0
Other 0
Other 0
Nursery
Nursery hapas 0
Hapas stakes (2 per hapas with support rope) 0
Other 0
Ponds
Growout pond construction (per pond) 0
Pond piping and infrastructure (per pond) 0
Aerators 0
Other 0
Other 0
Other Infrastructure and Equipment
Generator 0
Pumps 0
Water monitoring equipment (and other testing) 1
Harvesting equipment 1
Scales 0
Processing/drying equipment -
Workshop tools and equipment 1
Other 0
Other 0
Total capital outlay
Year of purchase - When did you buy the item? The majority of capital items are bou
which denoted the start up of the project.
Life - How long will the item last once you buy it? Remember that the maximum life is
Salvage Value - How long will the item last you once you purchase it?
Cost of items ($) Total cost ($) Year of purchase Life (years)
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0 $0 0 0
$0
tem? The majority of capital items are bought in Year 0
uy it? Remember that the maximum life is 20 years.
you once you purchase it?
Salvage value (%)
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Summary Statistics
Output summary
Annual production (kg)
Annual gross revenue
Annual production cost
Production cost per kilogram
Revenue per kilogram
Cost structure summary
Juveniles
Labour
Process/Pack
Electricity
Fuel, Oil, Reapir & Maintenance
Operating
Capital
Scenarios
Current
Annual production (kg) 0
Annual gross revenue $0
Annual production cost $0
Production cost per kilogram $0.00
Revenue per kilogram $0.00
Net present value $0
Annual return $0
Internal rate of return #NUM!
Benefit - cost ratio 0.00
Economic indicators
0
$0
$0
$0.00
$0.00
Annual cost Cost per kilogram
$0 $0.00
$0 $0.00
$0 $0.00
$0 $0.00
$0 $0.00
$0 $0.00
$0 $0.00
Scenario 1 Scenario 2 Scenario 3
omic indicators
Net present value $0
Annual return $0
Internal rate of return #NUM!
Benefit - cost ratio 0.00
The Net Present Value (NPV) is the difference between the present value of cash inflows and
the present value of cash outflows over the life of the project. If the NPV is positive the project is
likely to be profitable. When the NPV is converted to a yearly figure it becomes annualised. In
this report the annualised return is called the Equivalent Annual Return (EAR). It is a measure
of equivalent annual returns generated over the life of the project expressed in today’s dollars.
Internal Rate of Return (IRR)
The discount rate at which the project has a NPV of zero is called the internal rate of return. The
IRR represents the maximum rate of interest that could be paid on all capital invested in the
project. If all funds were borrowed, and interest charged at the IRR, the borrower would break
even, that is, recover the capital invested in the project.
Benefit – Cost Ratio
The benefit – cost ratio is simply a measure of the total flow of benefits over the life of the project
as compared to the flow of costs. If the ratio is greater than one the project is deemed acceptable.
In other words, the ratio describes the return per dollar invested; e.g. if the b-c ratio is 1.6 then we
can say that for every $1.00 invested in the project or enterprise we get a return of $1.60.
Scenario 4
Costs per Kilogram
Capital $0.00
Operating $0.00
F.O.R.M. $0.00
Electricity $0.00
Process/Pack $0.00
Labour $0.00
$0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 $1.00
Cost per kilogram
Discounted Cumulative Cashflow
$1
$1
$1
$1
$1
$1
$0
$0
$0
$0
$0
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Years
Risk Analysis
Production Kilograms Probability
Minimum 0 0.00
Poor 0 0.05
Average 0 0.20
Good 0 0.80
Maximum 0 1.00
Price Price ($/kg) Probability
Minimum $0.00 0.00
Poor $0.00 0.10
Average $0.00 0.40
Good $0.00 0.70
Maximum $0.00 1.00
Results of Risk Analysis
(Press F9 to re-calculate)
Lowest return $0 0
Highest Return $0 VND 0
Average Return $0 VND 0
VND 0
Cumulative Probability Distribution
1.00 VND 0
0.90
0.80
Cumulative Probability
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
$0 $0 $0 $0 $0
Annual Return
5% chance of getting between 0 and 0 kg
15% chance of getting between 0 and 0 kg
60% chance of getting between 0 and 0 kg
20% chance of getting between 0 and 0 kg
10% chance of getting between $0.00 and $0.00 per kg
30% chance of getting between $0.00 and $0.00 per kg
30% chance of getting between $0.00 and $0.00 per kg
30% chance of getting between $0.00 and $0.00 per kg
Cumulative Probability Distribution
$1 $1 $1 $1 $1 $1
Annual Return
Risk Analysis
Risk and uncertainty are features of most business and government activities and needs to be
understood to ensure rational investment decisions. The process involves:
1. Defining your model – modelling business operations;
2. Define our uncertain variables – price and yield;
3. Assign probability distributions for each of our uncertain variables – allocating probabilities to our
categories of minimum, poor, average, good and maximum;
4. Run the simulation and analyse the results – for our risk analysis we have displayed the results using
a cumulative probability distribution.
The best way to demonstrate how we input information for the risk analysis and interpret the results is
with an example. Consider the 'saucy sandfish' farm: we need to first specify the likelihood of various risk
factors affecting production (or yield).
Identified Risks
Zero to Poor Cyclone, severe disease and flood 1 in 10 years 0.1 (or 10%)
Poor to Average Theft, some disease, lack of stock supplies 2 in 10 years 0.2 (or 20%)
Average to Good Good conditions, minimal disease, good feed 4 in 10 years 0.4 (or 40%)
Good to Maximum Excellent growing conditions, no disease 3 in 10 years 0.3 (or 30%)
In the actual table under production these estimates will be entered cumulatively. That is, the first after
the minimum will be 0.1, followed by 0.3 (0.1 + 0.2), followed by 0.7 (0.1 + 0.2 + 0.4) and so on .The user
then enters the expected production (stems). We do not need to enter the minimum or the maximum
probabilities, nor their associated production.
The same process is followed for the price risk, except that the minimum and maximum prices have not
been set for you (they are in yellow). The minimum price may not be zero; it may be a subsidised price
set by the government or an historical market low. Once all the data are entered we can run the
simulation. Once the simulation has run its course we will have produced a set of results that is
graphically shown as a cumulative probability distribution. This graph (left) shows the entire range of
outcomes possible, given our inputs, for the enterprise.
The annual return is represented along the x-axis and the probabilities on the y-axis. Where the
cumulative probability curve crosses the $0 return point can be interpreted as meaning that an X% exists
chance of making an annual return of less than $0 (making a loss for the year). Alternatively, a line
drawn vertically from any point on the horizontal axis can a chance of earning less than relative
probability expressed as a %. For instance we draw a line from say $100,000 up to the curve
to 0.3, that means there is a 30% chance of making less than $100,000 or 3 in 10 years.
vities and needs to be
ocating probabilities to our
ave displayed the results using
sis and interpret the results is
ecify the likelihood of various risk
1 in 10 years 0.1 (or 10%)
2 in 10 years 0.2 (or 20%)
4 in 10 years 0.4 (or 40%)
3 in 10 years 0.3 (or 30%)
ulatively. That is, the first after
+ 0.2 + 0.4) and so on .The user
e minimum or the maximum
and maximum prices have not
o; it may be a subsidised price
entered we can run the
d a set of results that is
t) shows the entire range of
axis. Where the
ed as meaning that an X% exists
year). Alternatively, a line
rning less than relative
0,000 up to the curve - it equates