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Cost Containment Options for Tilapia Production in Central Luzon, Republic of the Philippines 10PDVR2

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Cost Containment Options for Tilapia Production in Central Luzon, Republic of the Philippines

Product Diversification Research 2 (10PDVR2)/Experiment/Philippines

Collaborating Institution
Central Luzon State University, Philippines
      Remedios B. Bolivar

Florida International University
     Christopher L. Brown

1) To conduct farm trials and production cost analyses, designed to test the hypothesis that the two methods of reducing rations resulting in increased profit (under the Ninth Work Plan) have an additive effect.

2) To conduct farm trials and production cost analyses, designed to determine the efficacy of increasing grow-out efficiency by way of reducing rations by feeding on alternate days.

3) To integrate economic figures generated in the first two objectives in the course of analyses of production costs in order to develop a comprehensive analysis of the costs and benefits of grow-out options. The goal of this objective will be to test whether cost containment occurs.

Regional growth in the tilapia farming industry and increasing stature of the Freshwater Aquaculture Center at CLSU have gone hand in hand. The proposed investigation continues a line of research initiated at the Asian Institute of Technology in the early 1990s and adapted for the benefit of farmers in the Philippines, at Central Luzon State University, more recently.

Regional aquaculture research attention has maintained a focus on increased profitability, as opposed to intensification or maximization of yield without regard for cost (see Diana, 2000). Studies conducted by the PD/A CRSP earlier in Thailand suggested that supplemental feeding of tilapia in fertilized ponds can induce growth advantages over feeding or fertilization alone (Diana et al., 1994), and that the timing of feeding can be manipulated to the advantage of farmers in Thailand (Diana et al., 1996) and in the Philippines (Brown et al., 2000). The advantages of either delayed feeding or feeding a sub-satiation level diet are realized in the cost savings that occurs with the reduction in the amount of processed feed that must be purchased by farmers. Our analysis, based on trials at seven participating commercial farms in the Philippines, showed that delayed feeding led to reductions in feed costs amounting to approximately 37% without a significant loss of crop value at harvest (Brown et al., 2000). Similar reductions were seen by reducing the amount as opposed to the timing of feeding; the first objective above is intended to determine whether these effects are additive.

The determination of feeding strategies based on mathematical and economic models can be rather complex (Cacho, 1993). It is not known whether the reduction of food costs without a net reduction in crop yield is a result of more efficient food consumption (i.e. lack of waste), better food utilization (increased food conversion ratio) or both. It has also been argued that optimal feeding levels should be below the level supporting maximal growth on the basis of water quality concerns; regularly feeding to the point of satiation increases the risk of waste, food decomposition, and compromised fish health (Hatch and Kinnucan, 1993). The modeling of optimal feeding regimes is based on a mix of observations and assumptions. One vitally important component in these calculations—feed consumption efficiency—is quite difficult to quantify in aquatic animals (Lovell, 1989). Most often, decisions about the amount to feed are left to chance or the instincts of the farmer.

The proposed experimentation will evaluate the possible additive effects of two methods of cost reduction—delayed onset of feeding and feeding at sub-satiation levels. Each has been shown independently to reduce the cost of grow-out, and it is possible that a further cost reduction can be gained by combining the two strategies. The delayed onset of feeding probably causes fingerling fish to depend more, or longer, on the plankton blooms or other natural productivity of fertilized ponds. These farm trials will provide a clear indication of whether reduction of food expenditures at two stages (delayed onset and reduced ration) present another cost-effective feeding option for farmers, or whether this approach compromises yield or product quality to an undesirable degree.

A second set of farm trials will test the provision of prepared feeds on alternate days, in order to determine the net effect that this strategy will have on grow-out efficiency and net profit. The combined significance of the proposed farm trials is the comparative evaluation of a range of alternative methods of cost reduction under semi-controlled conditions (commercial aquaculture). Economic analysis will be used to develop an overview of the integrated capacity of these methods to reduce production costs.

Quantified Anticipated Benefits
The proposed field research will take place on at least nine commercial farms and will clarify the relative benefits of practical feeding strategies for tilapia grow-out. We will build on the successful demonstration of two such feeding strategies with evaluations of a third strategy and a combination of the two established methods.

Fish farmers in the Philippines and in Central Luzon in particular readily adopt appropriate new technology. Tilapia is a staple in the Philippines, and tilapia farming is carried out on a huge scale. Tilapia contributes heavily to Philippines fish farming productivity, which currently ranks fifth worldwide (Anon., 2001). A modest reduction in the cost of production when carried out on such a large scale could translate into a significant economic boost.

Research Design
Location of Work: As in recent farm trials, tilapia fingerling will be obtained under agreement with the Genetically Improved Farm Tilapia (GIFT) Foundation. Our past arrangement has been to obtain these fast-growing tilapia at a nominal cost in exchange for the public exposure that is gained in the course of on-farm experimentation. We are currently negotiating a more formal agreement with the GIFT Foundation, expected to result in a signed Memorandum of Understanding defining the terms of our cooperation with them.

Grow-out experiments will be carried out at farms within driving distance of the Central Luzon State University campus in Muñoz, Nueva Ecija province, Central Luzon. Farmers will be selected on the basis of their willingness to follow prescribed protocols, the availability of identical ornearly identical ponds for side-by-side comparisons of treatments, their assumption the risks inherent in the unpredictable outcome of an experimental trial, and proximity to the Freshwater Aquaculture Center. We have a solid working relationship with nine area farmers who have expressed interest in continued cooperation with our project, and we will also consider new locations for the proposed farm trials.

Methods: Sex-reversed, genetically selected tilapia fingerling will be obtained from the GIFT Foundation and stocked into ponds on participating farms at an initial density of 4 fish per m2. The natural productivity of the ponds will be promoted with the addition of chemical fertilizers at the rates of 28 kg N per ha per wk and 5.6 kg P per ha per wk. Feed prepared at the Freshwater Aquaculture Center, consisting of 67% rice bran and 33% fish meal will be used for these studies. Fifty fish will be sampled every two weeks for weight determination. Undergraduate and graduate students will be involved in these studies.

In the first trial, both treatment groups will be fed beginning on day 75, as in our previously reported experimentation (Brown et al., 2000 and ms in preparation). One group will be fed to satiation and the other will be fed to 67% of satiation (rations to be based on experimental determination). At least one pond consisting of each of the two treatment groups will be monitored at each participating farmsite; in each case growth rates, yields, and uniformity of fish will be assessed. Growth data will be subjected to Paired T-tests in order to test the hypothesis that the use of a reduced ration has no effect on growth rate in a delayed feeding paradigm.

Farmers will be asked at the time of harvest for any additional observations they may have on fish health, behavior, or quality. Crop value and production costs will be calculated in order to determine the net production cost for each of the two feeding strategies. These data will be compared with the cost analyses generated in the course of the Ninth Work Plan experimentation.

The second set of farm trials will follow the same general guidelines as the first, in terms oflocation, stocking densities, nutrient inputs, sampling, etc. except that a different set offeeding schedules will be used. In this trial, the same feed (67% rice bran and 33% fish meal) will be given to fish, but the comparison will be between fish fed to satiation daily andfish fed the same amount on alternate days. We will test the null hypothesis that this 50% reduction in ration does not disrupt growth rate, again using the Paired T-test.

Economic data from the pond trials will be pooled to examine the productivity of ponds under the various production regimes, in terms of potential net profit per hectare. Reducing feed costs is a primary goal of these studies, but the efficacy of reduced-feeding paradigms is only demonstrable in terms of crop yields and values. Economic analysis will be carried out using the same approach we have used in the past two years. Specifically, we will calculate the cost of production as a consequence of varying the feeding schedule, based on the use of feed costs as the independent variable and yield in terms of kg per hectare as the dependent variable. Data collected at the time of harvest will also allow us to make a determination about uniformity (variance in body mass) and % survival rate (number harvested/number stocked). Production costs will be presented as both Philippine pesos and US$ per kilogram. This enables us to make a direct comparison of control and experimental treatments, and a reduction in the production cost among the experimental groups would be interpreted as indicative of cost containment. Wholesale crop values will be used to calculate the approximate profit margin for each feeding paradigm, on both a pesos per hectare and US$ per hectare basis. In addition, qualitative indices of crop value, such as uniformity, subjective comments of farmers, observation of deformities if any, etc. will be noted. This method does not figure in labor costs, since the amount of time required to prepare feeds, weigh them, and feed ponds are difficult to measure accurately and the cost of labor on a family farm is a nebulous concept.

Regional Integration
The tilapia is a crop with established and growing importance in Southeast Asia, and the generation of new strategies for tilapia culture could have an economic impact throughout the region. Based on our most recent experience, we anticipate that the proposed studies will provide insight into the suitability of a variety of cost-cutting options available to farmersnot so much in the form of a dogmatic paradigm to be followed, but a series of choices and expected benefits available for their use as they see fit, and depending on the circumstances on their farms. Central Luzon State University is involved in training of students from throughout the region, and as students and trainees return to their home countries, technology generated in the course of this project will go with them.

We also recognize and plan to take advantage of the fact that electronic dissemination of technical information is occurring at an accelerating pace. Within the past few years, Central Luzon State University has been revolutionized by electronic communications. At the outset of our collaboration in 1997, access to telephones on campus was extremely scarce and a typical exchange of messages by fax involved a significant degree of uncertainty. In 2001, it is commonplace for CLSU students to transfer text files to each other by cell phone. Technical information is being posted on websites, and distributed in electronic publications. The frequency of access to this sort of information is easily quantified. We plan to post and regularly update a project website, and anticipate that as we build our knowledge base of information on the various means of providing substantial cost-savings, the interest in and frequency of access to this website will increase, and will include farmers beyond Luzon and the Philippines.

Year 1


Year 2


Literature Cited
Anonymous, 2001. Aquaculture: Still Growing! Industry status update. Aquaculture Magazine Supplement, 30th annual edition.

Brown, C.L., R.B. Bolivar, E.T. Jimenez, and J.P. Szyper, 2000. Timing of the onset of supplemental feeding of Nile tilapia (Oreochromis niloticus) in ponds. In: K. Fitzsimmons and J.C. Filho (Editors), Tilapia Aquaculture in the 21st Century. Proceedings from the Fifth International Symposium on Tilapia Aquaculture. September 3­7. Rio de Janeiro, Brazil, pp. 237­240.

Cacho, O.J., 1993. Development and implementation of a fish-farm bioeconomic model: a three-stage approach. In: U. Hatch and H. Kinnucan (Editors), Aquaculture Economics. Westview Press, Boulder, CO, pp 55-74.

Diana, J.S., 2000. Summary of activities in Southeast Asia by University of Michigan 1996 to present. External Evaluation Panel Report, In: Project reports prepared for the PD/A CRSP External Evaluation Panel.

Diana, J.S., C.K. Lin, and K. Jaiyen, 1994. Supplemental feeding of tilapia in fertilized ponds. J. World Aquaculture Soc., 25:497­506.

Diana, J.S., C.K. Lin, and Y. Yi, 1996. Timing of supplemental feeding for tilapia production. J. World Aquaculture Soc., 27(4):410­419

Hatch, U. and K. Kinnucan, 1993. Introduction. In: U. Hatch and H. Kinnucan (Editors), Aquaculture Economics. Westview Press, Boulder, Colorado, pp. 1­16.

Lovell, T., 1989. Nutrition and Feeding of Fish. Van Nostrand, New York, NY.

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