SMEDA Shrimp Farming

Pre-Feasibility Study
SHRIMP FARMING
Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk
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January, 2007
Pre-Feasibility Study Shrimp Farming
DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject
matter and provide a general idea and information on the said area. All the material
included in this document is based on data/information gathered from various
sources and is based on certain assumptions. Although, due care and diligence has
been taken to compile this document, the contained information may vary due to any
change in any of the concerned factors, and the actual results may differ substantially
from the presented information. SMEDA does not assume any liability for any
financial or other loss resulting from this memorandum in consequence of
undertaking this activity. Therefore, the content of this memorandum should not be
relied upon for making any decision, investment or otherwise. The prospective user
of this memorandum is encouraged to carry out his/her own due diligence and gather
any information he/she considers necessary for making an informed decision.
The content of the information memorandum does not bind SMEDA in any legal or
other form.
DOCUMENT CONTROL
Document No. PREF-1
Revision 2
Prepared by SMEDA-Sindh
Approved by Provincial Chief Sindh
Issue Date January, 2007
Issued by Library Officer
PREF-22/July, 2001/Rev1
1 INTRODUCTION
1.1 Project Brief
Shrimp farming, the production of marine shrimp in impoundments, ponds and

tanks, got rolling in the early 1970s, and, today, over fifty countries export farmed
shrimp. In Ecuador, the leading producer in the Western Hemisphere, export revenue
range from $500 to $800 million a year; in Thailand, the leader in the Eastern
Hemisphere, they have passed the billion-dollar mark. In addition, India, Indonesia,
China, Malaysia, Taiwan, Bangladesh and Sri Lanka all produce huge amounts of
farmed shrimp. The Philippines, Vietnam and Myanmar (Burma) have shrimp farms,
and there are shrimp farms throughout Central and South America. Honduras,
Panama and Mexico have big industries, while smaller industries exist in Colombia,
Venezuela, Nicaragua, Peru, Belize and Brazil. The shrimp importing nations, the
United States, Western Europe and Japan-specialize in high-tech "intensive" shrimp
farming, but, thus far, their production has been insignificant.
Shrimp export has a major share of the total seafood export of Pakistan. It is almost
60% of the total fisheries export of the country. The annual catch of the captured
shrimp has been constant and we have reached the sustainable limit of shrimping. In
order to increase the shrimp exports we have to go into shrimp farming.
Farmed/cultured shrimp in Pakistan is non-existent in Pakistan. Our neighbours,
India, Bangladesh, Thailand and Iran are active in this area. Farmed shrimp has a
major constitution in the seafood exports of these countries. Farmed shrimp
contributes more then US $ 1,100 million in the exports of Thailand. Composition
data showing shrimp production and its percentage share of the total exports of
selected countries is shown below.
1.2 Opportunity Rationale

The shrimp consumption has increased throughout the world in the recent times and
our marine resources are depleting or have remained stagnant due to various
environmental factors, which mean that we are losing a greater portion of the
market. The local processors have to meet the international orders, which currently
they lack due to non-availability of the required species and also due to the
unexpected landings.
Thus if there is a consistent supply of the shrimp species then all of the local
processors can commit to their buyers and in result the cultured shrimp will have a
definite market for it. The controlling factor in shrimp export is the shrimp
production and not the markets. Exporters of shrimps are confident that the exports
can be enhanced if the production can be increased. Thus, for the shrimp farming we
can say that there is a ready market.
1.3 Project Cost
Table 1-1: Project Cost

Item Cost (Rs.)
Land 970,000
Construction 5,725,000
Pumps & Piping 6,702,500
Aeration fans 1,865,000
Furniture and Fixtures 424,000
Laboratory Equipment 500,000
Office Equipment 52,500
Vehicles 2,013,940
Fishing Nets 150,000
Gen. Sets 1,550,000
Electricity Connection 100,000
Water Gates 700,000
Working Capital 6,028,653
Pre-Operating Cost 165,000
Total Project Cost 26,946,593
Process Flow Chart
1.4 Basic Systems of Shrimp Farming

There are two basic systems of shrimp farming:
 Open cycle system
 Closed cycle system
The difference between the two is that, in open system the broodstock is in the form
of wild caught shrimp while a closed cycle system operates entirely on captive stock
and not on broodstock captured from the wild.
Figure 2-1: Process Flow of Shrimp Farming
HATCHERY NURSERY ACCLIMATION

TANKS
GROW OUT PONDS
MARKET
2 INDUSTRY STRUCTURE
The inputs required for the farming include the shrimp seed, feed and various
chemicals. Since the shrimp farming in Pakistan has not started yet therefore we
should emphasize initially on import of all these inputs. However once this industry
takes a start then the local production of these inputs might be possible.
3 MARKETING
Table 4-1: Total Market Size and Production
Yearly shrimp production by major producing countries 1991-2000 (in 1,000 metric
tons)
Country 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
China 564.1 574.1 488.7 603.4 665.6 751.8 829.6 970.9 1,222.7 1,241.9
India 300.5 290.4 363.0 446.6 406.1 415.6 366.6 413.1 423.3 405.7
Thailand 289.9 300.6 343.1 385.0 389.3 370.8 350.8 345.4 370.9 398.5
Indonesia 296.8 312.1 300.7 317.1 334.7 343.3 382.2 345.5 384.5 398.4
USA 148.5 156.5 137.9 130.2 140.2 145.0 132.9 128.0 140.1 153.0
Vietnam 81.3 86.2 94.6 111.7 138.1 135.9 147.7 148.4 148.9 151.1
Canada 44.7 43.1 47.4 53.2 63.1 65.7 82.1 113.1 120.0 130.6
Malaysia 104.7 129.4 109.8 106.4 99.6 108.0 101.0 57.1 102.7 111.9
Mexico 70.6 66.2 79.8 77.3 85.9 78.9 88.5 90.3 95.6 95.1
Greenland 73.1 81.9 76.5 79.8 81.9 72.0 63.9 69.6 79.2 81.5
Philippines 84.9 118.8 130.1 126.6 127.5 113.2 74.5 72.3 73.1 79.4
Norway 49.0 49.1 49.0 38.2 39.3 41.5 42.0 57.1 64.2 66.2
Bangladesh 19.6 21.0 28.5 28.8 34.0 49.3 56.5 66.1 81.1 58.2
Brazil 42.3 44.0 38.4 38.5 43.0 38.9 44.1 42.8 47.7 56.6
Ecuador 118.8 127.0 97.5 98.7 112.1 112.9 137.2 147.4 121.0 51.4
Korea Rep. 55.8 67.1 68.0 58.1 42.5 40.9 41.1 47.6 44.7 37.2
Others 532.7 529.3 542.0 551.7 594.5 622.9 633.7 647.4 599.2 651.7
Total 2,877.3 2,996.8 2,995.0 3,251.3 3,397.4 3,506.6 3,574.4 3,762.1 4,118.9 4,168.4
Remark: data include all types of shrimp, namely farm-raised shrimp and wild shrimp
Source: Globefish
5
Figure 4-1: World Shrimp Production
Table 4-2: Shrimp Farms Worldwide
Worldwide there are approximately 1,251,450 hectares (3 million acres) devoted to

shrimp farming with 1.114,050 hectares in the Eastern hemisphere. From 1998 to
1999, Asian countries showed a 75% increase in the number of shrimp farms while
North, Central and South America, registered a 39% decrease.
Figure 4-2: Shrimp Farms Worldwide
Eastern Hemisphere Western Hemisphere

Hectares Hectares
Country Country
1998 1999 1998 1999
Thai 70,000 80,000 Ecuador 160,000 100,000
China - 180,000 Mexico 24,000 -
Indonesia 200,000 350,000 Belize 1,200 -
India 140,000 130,000 Nicaragua 5,500 6,000
Vietnam - 200,000 Venezuela 1,200 2,000
Philippines 20,000 60,000 Panama 8,500 3,000
Malaysia 4,000 4,000 Peru 3,200 -
Srilanka 3,000 - USA 1,000 400
Others 200,550 110,050 Others 22,000 26,000
Total 637,550 1,114,050
Source: CP Group (Thailand) Shrimp Culture Newsletter March, 2000

6
4 MANPOWER REQUIREMENTS
Table 4-1: Human resource requirements
Human Resource Requirements
For an 8-hectare shrimp culture farm following manpower is required.
Description No. of Positions Monthly Salary/Person Yearly Salary
Consultant 1 100,000 1200,000
Pond Supervisor 3 20,000 720000
Laboratory In charge 1 10,000 120,000
Accounts Officer 1 10,000 120,000
Purchase Officer 1 10,000 120,000
Driver 2 5,000 120,000
Labor 12 4,000 576,000
Total 19 2,976,000
5 SPECIES TO BE CULTURED
The various types of captured shrimp species in Pakistan are as follows:
1. Penaeusspp (Jhaira)
2. Metapenaeus spp. (Kalri)
3. Parapenalopsis styliferia (Kiddi)
4. Tiger Shrimp
The above figure shows that the major specie target is Giant Tiger Shrimp as it
fetches good price and the growing period is less as compared to other species.
Named for its huge size and banded tail, this species dominates production
everywhere in Asia except Japan and China. Native to the Indian Ocean and the
southwestern Pacific Ocean from Japan to Australia, "tigers" are the largest
(maximum length 363 millimeters) and fastest growing of the farmed shrimp. They
tolerate a wide range of salinities, but shortages of wild broodstock often exist,
captive breeding is difficult and hatchery survivals are low (20 to 30%). Tigers are
very susceptible to two of the most lethal shrimp viruses: yellow head and white
spot. Consumers in Japan and the United States purchase huge quantities of tigers
from Thailand and other countries in Southeast Asia.
6 SHRIMP FARMING OPERATIONS
6.1 Hatchery Operations

The purpose of a hatchery is to provide the feedstock or the postlarvae (PL) to
growout ponds for farming. The farmers catch the wild broodstocks from the sea and
use water at normal temperature to produce post larvae with proper usage of drugs
for preventive purpose. Currently all broodstock used for hatchery seed production
7
comes from wild spawners or gravid females and the countries that extensively or
predominantly depend on hatchery seed supply are Thailand, Indonesia, Philippines,
Taiwan and China.
6.2 Nursery Operations

The nursery phase of shrimp farming, when postlarvae are cultured at high densities
in small earthen ponds (and occasionally in intensive raceways or tanks, or in net
enclosures within the shrimp ponds), occurs between the hatchery and growout
phases. It has some characteristics of the hatchery phase, but more closely resembles
growout. Since hatchery-produced and wild-caught postlarvae can be stocked
directly into grow-out ponds, the nursery phase is not always necessary.
6.3 Acclimation Tanks

The 55 farms that don't have their own hatcheries, acclimation tanks and raceways
frequently replace nursery ponds. Acclimation facilities give the juvenile shrimp a
chance to adjust to pond conditions, particularly salinity and temperature, before
being stocked. The holding period lasts from a half day to four days, and the animals
may be fed special diets to prepare them for the rigors of pond life. The most
important consideration during acclimation is that the water quality parameters be
changed slowly. Acclimation densities should not exceed 300-500 postlarvae per
liter, depending on animal size and duration of acclimation.
6.4 Growout Pond Operations
Once a growout operation is stocked with postlarval shrimp, it takes from three to
six months to produce a crop of market-sized shrimp. Northern China, the United
States and Northern Mexico produce one crop per year; semi-tropical countries
produce two crops per year, while farms closer to the equator have produced three
crops a year, but rarely. Temperature has a lot to do with it. Shrimp like it hot, and
most species prefer, but are not restricted to, brackish water.
Growout operations come in all shapes and sizes. They are classified by stocking
densities (the number of seed stock per hector) and called "extensive" (low stocking
density), "semi-intensive" (medium stocking density) and "intensive" (high stocking
density). As densities increase, the farms get smaller, the technology gets more
sophisticated, capital costs go up and production per unit of space increases
dramatically.
Table 7-1: Stocking Density of Growout Ponds
Type Output
kg/hector/yr.
Extensive 50-500
Semi-Intensive 500-5,000
Intensive 5,000-20,000
Super-Intensive 20,000-100,000
6.5 Types of Growout Farming

Shrimp growout farming operations can be classified into four types. This
classification is based on the stocking density of shrimps in the ponds. The four
types are as follows:
7.5.1 Extensive
Extensive shrimp farming (low-density) is conducted in the tropics, in low-lying
impoundments along bays and tidal rivers, often in conjunction with herbivorous
fish. Impoundments range in size from a few hectares to over a hundred hectares.
When local waters are known to have high densities of young shrimp, the farmer
opens the gates, impounds the wild shrimp and then grows them to market size.
Fishermen also capture wild postlarvae and sell them to extensive farmers for
stocking. Overall, however, stocking densities are quite low, not over 25,000
postlarvae per hectare. The tides provide a water exchange rate of from 0% to 5%
per day. Shrimp feed on naturally occurring organisms, which may be encouraged
with organic or chemical fertilizer. Construction and operating costs are low and so
are yields. Cast-nets and bamboo traps produce harvests of 50 to 500 kilograms
(head-on) per hectare per year. Production costs range from $1.00 to $3.00 (RS. 64
to RS. 192) per kilogram of live shrimp. Extensive farms have little effect on the
environment. Since it is illegal in most countries to use tidal or mangrove areas for
the construction of shrimp farms, almost no new extensive shrimp farms are being
constructed today.
Figure 7-1: Extensive Farming
7.5.2 Semi-Intensive
Conducted above the high tide line, semi-intensive farming introduces carefully laid
out ponds (2 to 30 hectares), feeding and pumping. Pumps exchange from 0% to
25% of the water each day. With stocking rates ranging from 100,000 to 300,000,
postlarvae per hector, there is more competition for the natural food in the pond, so
farmers augment production with shrimp feeds. Construction costs range from
$10,000 to $35,000 (RS. 610,000 to RS. 2,135,000) per hector. Wild or hatchery-
produced postlarvae are stocked in growout ponds, which are fertilized (nitrogen,
phosphorus and silicate) to encourage a natural food chain. The farmer harvests by
draining the pond through a net, or by using a harvest pump. Yields range from 500
to 5,000 kilograms (head-on) per hector per year, with 2,000 kilograms per hector
per year, much sought after goal. Production costs range from $2.00 to $6.00 (RS.
122 to RS. 366) per kilogram of live shrimp. Farmers usually renovate their ponds
once a year. If too many semi-intensive farms concentrate in a small area, they can
have a negative effect on the environment.
Figure 7-2: Semi-Intensive Farming
10
7.5.3 Intensive
Intensive shrimp farming introduces small enclosures (0.1 to 1.5 hectares), high
stocking densities (more than 300,000 postlarvae per hectare), around-the-clock
management, heavy feeding, waste removal and aeration. Aeration-the addition of
air, or oxygen, to the water-permits much higher stocking and feeding level. The
water exchange rate can be high, 30% per day and up. Frequently conducted in small
ponds, intensive farming is also practiced in raceways and tanks, which may be
covered or indoor. Construction costs range from $25,000 to $250,000 per hectare.
Sophisticated harvesting techniques and easy pond clean up after harvest permit
year-round production in tropical climates. Yields of 5,000 to 20,000 kilograms
(head-on) per hectare per year are common. Production costs range from $4.00 to
$8.00 per kilogram of live shrimp. It's relatively easy to convert intensive farms to
other species. Intensive farms frequently cause environmental problems.
Figure 7-3: Intensive Farming
7.5.4 Super-intensive
"Super-intensive" shrimp farming takes even greater control of the environment and
can produce yields of 20,000 to 100,000 kilograms per hectare per year. Thailand
has some super-intensive shrimp farms. A super-intensive farm in the United States
once produced at the rate of 100,000 kilograms (whole shrimp) per hectare per year,
but a viral disease wiped it out. Thus far, super-intensive shrimp farms have
achieved only marginal success. Generally, they have problems with management,
diseases, crop failures, water quality, finances and the environment. Production
levels above 10,000 kilograms per hectare per year are risky.
11
7 L AND AND B UI L DI NG
7.1 Minimum Area required to start a farm;

The area required for a farm should be 20 acres/ 8 hectares.
7.2 Size (Area) of Pond

Size of the pond depends upon the intensiveness of the culture system.
For intensive system, size of a pond 1-acre
For semi-intensive farm, size of the pond 2-acre
7.3 Number of Ponds in the farm

Number of ponds in a 20-acre farm in case of intensive system is 15 ponds.
7.4 Infrastructure required per farm
Salt water is delivered from sea or through a 10-inch-diameter, 75-foot-deep well

dug on the premises. The salt water will be delivered by a pump/motor system using
power from an outside source. An engine-driven pump backup system is provided in
case of power outages. Fuel for the backup engine is stored adjacent to the pump and
motor shed. The facility has 15 earthen ponds each measuring an acre. An
acclimation tank field contains six large tanks, each 6 meters in diameter, holding up
to 7,900 gallons. An office block contains a multi-purpose building, an office, men
and women's showers, changing facilities, toilets, and a room that could be
subdivided for use as storage and as a small laboratory.
Land required is 8 hectares.
 Pumps & Piping
 Aeration fans
 Power Generators
 Electricity & lights
 Farm preparation
 Office & rest room
 Fresh water tanks
 Water Gates Mechanism
 Acclimation tanks
12
8 PROJECT ECONOMICS
Table 9-1: Project Cost
Item Cost (Rs.)
Land 970,000
Construction 5,725,000
Pumps & Piping 6,702,500
Aeration fans 1,865,000
Furniture and Fixtures 424,000
Laboratory Equipment 500,000
Office Equipment 52,500
Vehicles 2,013,940
Fishing Nets 150,000
Gen. Sets 1,550,000
Electricity Connection 100,000
Water Gates 700,000
Working Capital 6,028,653
Pre-Operating Cost 165,000
Total Project Cost 26,946,593
Table 9-2: Project Returns

Project
IRR 36%
NPV (Rs) 8,476,666
Payback Period (Years) 2.77
Table 9-3: Financing Plan
Financing Ratio Rs
Equity 100% 26,946,593
13
9 REGULATIONS
Table 10-1: International Standards on Intensive Shrimp Culture System
Item Intensive
Culture Method Monoculture
Stocking Rate / ha 269,000
Stocking Density 25
Age of Fry PL20
Fry Cost (per fry) US $ 0.01
Survival Rate 0.95
Harvest Size (g) 30
Water Management Pumps & Paddle Wheels
Food Types Pellets
Food Conversion Ratio 2
Crops / Year 3
The above table shows culturing assumptions for advanced economies, which have
been doing shrimp culture since last 10 to 15 Years. To be conservative these
assumptions have been revised downwards to suit local conditions. This does not
mean that International standards cannot be achieved here in Pakistan. International
standards can be achieved with hard work and the use of modern technology.
The shrimp fry and shrimp feed are based on imports. The costs will reduce
substantially upon the local production of these products.
Table 10-2: International Standards adapted to Local Conditions
Item Intensive
Culture Method Monoculture
Stocking Rate/hector 250,000
Stocking Density 25
Age of Fry PL20
Fry Cost (per fry) US $ 0.02
Survival Rate 0.70
Harvest Size (g) 25
Water Management Pumps & Paddle Wheels
Food Types Pellets
Food Conversion Ratio 1.5
Cost of Fed $ 1.4
Price Kg (40-45 pieces/Kg) 360
Rs/$ Conversion Rate 61
Crops/Year 2
14
10 KEY SUCCESS FACTORS

 Acquaintance with the fisheries
 Ponds made as per part standards
 Good quality shrimp hatched.
 Cost cutting methods employed
 Entrepreneur stays on top of the problems
 Quality at sub stages checked
 Shrimp is saved from diseases
 Marketing emphasized
 Adherence to international standards
11 THREATS FOR THE BUSINESS

 Entrepreneur with non fisheries background
 More then 6 months elapsed before premises made
 Disrupted water supply to the premises
 Outbreak of shrimp disease
 Orders not received, once production has started
 Own funds finish
 Government organizations start bothering too soon, before profits even start
15
12 FACILITY LAYOUT
16
PREF-47/July, 2002/ Rev 1

13 FINANCIAL ANALYSIS
17

18

19

14 KEY ASSUMPTIONS
Table 14-1: -Cost of Goods Sold per Unit of Production
Stocking rate/ hector 250,000
Fry Cost/fry (US$) 0.02
Crops per year 2
Rs/$ Conversion rate 61
Net Farming Area 6
Total Cost of Fry 3,660,000
Cost of Fry per Kg 44
Food Conversion Ratio 1.5
Cost of Feed ($) 1.4
Rs/$ Conversion rate 61
Shrimp Production 84,000
Total Cost of Feed 10,760,400
Cost of Fry per Kg 92
Table 14-2: -Revenue Assumptions
Stocking rate/ hector 250,000
Survival rate 0.70
Harvest Size(g) 25
Net Farming Area(Hector) 6
Crops per Year 2
Annual Production Capacity 84,000
Sales Price 360
Sales Revenue(Yr1) 30,240,000
Table 15-3: -Cash Flow Assumptions
Days in Accounts Payable 30
Days in Accounts Receivable 30
Table 15-4: -Capacity Utilization

|1| Stocking Rate / Ha 250,000
|2| Survival Rate 0.70
|3| Harvest Size (g) 25
|4| Net Farming Area (Hectare) 6
|5| Crops / Year 2
Production Capacity* 84,000 Kg
 Production Capacity = [(|1| x |2|) ÷ |3|] x |4| x |5|

20
PREF-47/July, 2001/Rev 1
 Capacity Utilization largely depends upon the survival rate, which has been
taken as 70% for this study. If the entrepreneur manages to maintain a healthy
environment, this rate could be improved to as much as 95%.
21
PREF-47/July, 2001/Rev 1

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Pre-Feasibility Study

Small and Medium Enterprise Development Authority

1.1 Project Brief

Shrimp farming, the production of marine shrimp in impoundments, ponds and

1.2 Opportunity Rationale

1.3 Project Cost

Table 1-1: Project Cost

Process Flow Chart

1.4 Basic Systems of Shrimp Farming

Figure 2-1: Process Flow of Shrimp Farming

HATCHERY NURSERY ACCLIMATION

GROW OUT PONDS

Figure 4-1: World Shrimp Production

Table 4-2: Shrimp Farms Worldwide

Worldwide there are approximately 1,251,450 hectares (3 million acres) devoted to

Figure 4-2: Shrimp Farms Worldwide

Eastern Hemisphere Western Hemisphere

Source: CP Group (Thailand) Shrimp Culture Newsletter March, 2000

6 SHRIMP FARMING OPERATIONS

6.1 Hatchery Operations

6.2 Nursery Operations

6.3 Acclimation Tanks

6.4 Growout Pond Operations

6.5 Types of Growout Farming

Figure 7-1: Extensive Farming

7.1 Minimum Area required to start a farm;

7.2 Size (Area) of Pond

7.3 Number of Ponds in the farm

7.4 Infrastructure required per farm

Salt water is delivered from sea or through a 10-inch-diameter, 75-foot-deep well

Table 9-2: Project Returns

10 KEY SUCCESS FACTORS

11 THREATS FOR THE BUSINESS

PREF-47/July, 2002/ Rev 1

PREF-47/July, 2002/ Rev 1

PREF-47/July, 2002/ Rev 1

PREF-47/July, 2002/ Rev 1

Table 15-4: -Capacity Utilization

 Production Capacity = [(|1| x |2|) ÷ |3|] x |4| x |5|

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