Small-Scale Processing of Fish (ILO - WEP, 1982, 140 p.) CHAPTER V. ALTERNATIVE TECHNOLOGIES: EVALUATION, EMPLOYMENT GENERATION AND MANPOWER TRAINING (introduction...) I. ASSESSMENT OF COSTS II. SALTING AND DRYING III. SMOKING IV. THERMAL PROCESSING V. EMPLOYMENT IMPACT OF ALTERNATIVE FISH PROCESSING TECHNOLOGIES VI. ASSISTANCE TO THE SMALL-SCALE FISHERIES SECTOR: MANPOWER TRAINING AND SUPPORTING SERVICES (introduction...) VI.1. The socio-economic framework VI.2. Infrastructural requirements VI.3. Organisation of production and marketing of fresh and cured fish VI.4. Extension services and training

Small-Scale Processing of Fish (ILO - WEP, 1982, 140 p.)

CHAPTER V. ALTERNATIVE TECHNOLOGIES: EVALUATION, EMPLOYMENT GENERATION AND MANPOWER TRAINING

The emphasis in this chapter is to present a method of economic evaluation of some of the processes discussed in the preceding chapters. The analysis is predominantly at the level of the small-scale producer using relatively simple and labour-intensive techniques. However, for purpose of comparison, consideration is also given to unit production costs obtained in large-scale plants which use more complex technologies (e.g. canning). Some of the wider issues involved in choosing between small-and large-scale processes are also discussed.

The analysis shows a comparison of costs and the structure of the latter. A pro forma schedule of costs is outlined whereby it should be possible to use local cost data to make calculations on a similar basis to those given. Whilst the main thrust of the discussion is concerned with the assessment of unit costs of production, the implications of any variation in the quality of product and consequently of sales prices are also discussed. The last section of this chapter compares labour requirements for alternative processing technologies and provides a few suggestions regarding the training of labour and the provision of assistance to the small-scale fisheries sector.

I. ASSESSMENT OF COSTS

In general, a simple estimate of production costs may be made by assessing those costs which are fixed each year and those which are variable according to the level of throughput. The tables below indicate how these can be built up and related to annual production. In order to estimate fixed costs on an annual basis, investment costs (i.e. such items as land, buildings, plant and equipment) should first be calculated and the ‘life’ of the major items ascertained.

Annual fixed costs are equal to the sum of the following cost items:

(i) Depreciation costs: Depreciation based on life of buildings, equipment and plant, etc. Thus a piece of equipment with a 10 year life would be depreciated at the rate of 10% a year of cost.

(ii) Interest on capital: Estimated as a percentage of investment costs.

(iii) Maintenance and repair costs: Estimated as a percentage of investment costs. This may vary for different items.

(iv) Insurance costs: Estimated as a percentage of investment costs for items which need to be covered by insurance.

(v) Interest on working capital: Based on working capital needed to cover stocks of raw material and finished product, and other operating costs.

(vi) Permanent labour: Salaried staff, e.g. management, supervisory staff, etc.

(vii) Other overheads: Other expenses non itemised above, e.g. office expenses.

(viii) Contingencies: Estimated figure. Say 10% of fixed costs.

Variables costs may be estimated on a daily basis and aggregated according to the number of days worked a year. Table V.1 shows how the various cost items may be estimated in order to obtain the total daily and annual variable costs.

Using such pro-forma schedules, it is possible to compare alternative scales and techniques. The cost per tonne of finished product need not be worked out on the basis of total annual production costs only. It would, for example, be possible to compare labour costs/tonne, raw material costs/tonne, depreciation costs/tonne, etc. In this manner, it is possible to make a simple first stage comparison between alternative processes and a preliminary assessment of the effect of improvements. Thus, for example, a new method may reduce raw material costs by improving yield but increase depreciation costs because of higher investment costs. The effect of variations in annual throughput can also be assessed. Where a significant difference arises in the quality of finished product, then the assessment must take into account alternative sale prices and the likely demand for a better quality, but possibly more costly, product.

Table V.1.
Estimation of variable costs

Cost item	Per day ($)	(x working days/year)	Per year ($)
1. Raw material (tonne of fish at $ per tonne)
2. Electricity (kWh at $/kWh)
3. Fuel for processing (litres at $/litre)
4. Water (‘000 litres at $/’000 litre)
5. Other ingredients (salt, vegetable oil, etc.) (quantity × cost per unit)
6. Packaging material (plastic bags, cans, cartons, etc.) (quantity × cost per unit)
7. Direct labour (operatives at $/day semi-skilled at $/day unskilled at $/day)
8. Other costs
TOTAL VARIABLE COSTS

The total annual production costs and the total cost per tonne of output can then be estimated as follows:

Total annual fixed costs..........................................................	$
Total annual variable costs.....................................................	$
Total annual production costs.................................................	$
Total annual production (raw material input × % yield of finished product)...................	tonnes
Total cost per tonne of finished product (total costs divided by total annual production).......................	$/tonne

Since this method of analysis takes no account of revenue, it does not indicate whether a process is profitable or not and cannot be used to compare the relative profitability of different processes. An alternative method of evaluation is the discounted cash flow technique. This method takes into account the flow of costs (including replacement costs) and receipts over time. These are discounted to calculate a project’s net present value (NPV) or the internal rate of return (IRR) and thus enable a comparison to be made between alternative projects.

In the following sections, an analysis is made of cost structures for some of the alternative processing techniques described in earlier chapters. These cost structures have been derived from various sources and must be regarded only as approximations. Their main purpose is to provide illustrative rather than definitive statements of the actual costs at present incurred in processing. The costs will differ between locations but, as far as possible, they have been presented on a comparable basis. These illustrative examples will also help a better understanding of the accounting framework described in this section.

II. SALTING AND DRYING

For each process, two levels of input have been assumed and these in turn have been analysed over 200 and 250 working days. Sun drying is carried out on drying racks made of timber and wire-mesh, with slightly over 5 kg of fish spread on each 1 m² of rack, and a drying cycle lasting 5 days. Mechanical drying involving forced air circulation, has a cycle lasting 12 hours. In all cases, a yield of 33% of finished product is assumed.

The following tables (V.2, V.3 and V.4) show the fixed and variable costs associated with these processes.

Table V.2.
Production of salted dried fish: Investment costs (US$)

Input fresh fish per day	Natural drying		Mechanical drying
	320 kg	650 kg	650 kg	1000 kg
Land	450 (900 m2)	900 (1800 m2)	250 (500 m2)	250 (500 m2)
Buildings (store, processing and/or office building)	300 (20 m2)	450 (30 m2)	9000 (120 m2)	11250 (150 m2)
Equipment + racks1	720	1440	12600	18200
Contingencies (10%)	150	280	2190	2970
TOTAL	1620	3070	24040	32670

Note 1:

- For natural drying: at 320 kg throughput, 300 m² of drying racks at $2 per m² plus miscellaneous equipment

- At 650 kg throughput, 600 m² of drying racks at $2 per m² plus miscellaneous equipment.

- For mechanical drying: A tunnel dryer and accessories installed.

Table V.3.
Production of salted dried fish: Annual fixed costs (US$)

	Natural drying		Mechanical drying
Daily input fresh fish	320 kg	650 kg	650 kg	1000 kg
Depreciation1	324	642	1,620	2,270
Interest on fixed capital (8%)	130	246	1,923	2,614
Maintenance and repair costs (5% of investment costs)	81	154	1,202	1,634
Insurance (1.5% of investment costs)	24	46	361	490
Interest on working capital (8%)2	74	148	171	262
Permanent labour3	1,500	1,500	3,500	3,500
Other overheads	250	300	500	500
TOTAL	2,383	3,036	9.277	11.270

Notes:

1. Estimated at: 4% of building costs + 10% equipment costs + 50% of drying racks costs.

2. Working capital is equal to 5% of variable costs (see table V.4) for 200 working days per year and to 4% of variable costs for 250 working days per year.

3. - For natural drying: 1 manager
- For mechanical drying: 1 manager, 1 mechanic/supervisory

Table V.4.
Production of salted dried fish: Annual variable costs (US$)

Fresh fish daily input	Natural				Mechanical
	320 kg		650 kg		650 kg		1000 kg
Days per year	200	250	200	250	200	250	200	250
Fish (at $200 per tonne)	12,800	16,000	26,000	32,500	26,000	32,500	40,000	50,000
Electricity1	-	-	-	-	650	810	900	1,130
Fuel oil2	-	-	-	-	8,000	10,000	12,000	15,000
Labour3	3,360	4,200	6,240	7,800	3,360	4,200	5,280	6,600
Packaging4	760	960	1,560	1,960	1,560	1,960	2,400	3,000
Salt5	1,560	1,920	3,120	3,900	3,120	3,900	4,800	6,000
Total variable costs	18,480	23,080	36,920	46,160	42,690	53,370	65,380	81,730

Notes:

¹ 36 kWh per day for 650 kg; 50 kWh per day for 1000 kg. At $0.09 per kWh.

² 100 litres per day for 650 kg; 150 litres per day for 1000 kg. At $0.4 per litre.

³ Mechanical: 7 workers per day for 650 kg; 11 workers per day for 1000 kg.
Natural: 7 workers per day for 320 kg; 13 workers per day for 650 kg. At $2.4 per man-day.

⁴ Polythene bags - in some cases may be omitted.

⁵ Applied in the ratio of 1 tonne salt per 5 tonnes fresh fish. At $120/tonne of salt.

The cost per tonne of finished product as well as the output per man-day of direct labour are shown in table V.5.

Table V.5.
Cost per tonne and output per man-day

	Natural drying				Mechanical drying
Fresh fish daily input (kg)	320		650		650		1,000
Days per year	200	250	200	250	200	250	200	250
Finished product (tonnes fish per year)	21	26	43	54	43	54	66	83
Fixed costs per tonne ($)	113	92	71	56	216	172	171	136
Variable costs per tonne ($)	880	888	859	855	993	988	991	985
Total costs per tonne ($)	993	980	930	911	1209	1160	1162	1121
Man-days direct labour	1400	750	600	3250	1400	1750	2200	2750
Output (kg/man-day)	15	15	17	17	31	31	30	30

A number of conclusions may be drawn from the above analysis. For these volumes of throughput, economies of scale exist in both the natural and mechanical processes. However, for a similar volume of input (e.g. 650 kg/day), natural drying methods are cheaper both in terms of fixed and variable costs per tonne of output. At this level of throughput, total costs per tonne are nearly 30% higher for mechanical drying that for natural drying.

In the case of fixed costs, despite the fact that the racks for natural drying are replaced every 2 years, these still work out cheaper on an annual basis than the fixed costs associated with mechanical drying. This is not only because of higher initial capital costs for building and mechanical drying equipment, but also because of the higher interest payments required to service this investment as well as higher maintenance charges. It may be noted that in most developing countries, interest rates are usually much higher than the 8% rate used in the above example. Thus, in reality, natural drying should be much more cheaper than mechanical drying if higher interest rates were used in the cost estimations.

When variable costs are considered, the cost of fuel oil is the most important after that of fish in the case of mechanical processing. Despite the fact that the output per man-day of direct labour is approximately double that obtained by natural drying, this is insufficient to offset the higher energy costs.

So far this discussion has been based solely on cost. Other factors, however, need to be borne in mind when evaluating these processes. Natural drying requires optimal climatic conditions. In many tropical countries, natural drying is severely limited for several months of the year and, even if production continues, heavy losses often occur. Mechanical, drying on the other hand, allows better control to be maintained, a steady throughput and, generally, a more uniform product. If such a product can command a higher market price, the extra costs of mechanical drying could be justified. On the basis of the above analysis it would appear that prices would have to be in the region of 30% more than for the naturally dried product (at the adopted interest rate of 8%). As pointed out in Chapter II, however, the better quality products do not always command higher prices since the consumer is not necessarily aware of their advantages. Furthermore, he may not afford the higher retail price.

In terms of foreign exchange utilisation, natural drying methods offer considerable savings over mechanical methods. The former process only requires very limited foreign exchange expenditure on both fixed and variable cost items. However, mechanical drying equipment, which is the largest item of fixed costs, may well require foreign exchange, as probably will fuel oil - the most important item of variable costs apart from fish.

III. SMOKING

In this section, a comparison is made between smoking/drying using a traditional oven and the improved Altona-type oven. This comparison is based on data from FAO (1971). The traditional process is analysed assuming a daily input of 100 kg fresh fish and an average processing time of 3 days. Two scales of Altona-type ovens are assessed, with inputs of 270 kg (a single oven) and 1,080 kg a day (4 ovens), the average processing time being 15 hours. It is assumed that the smoked product yield is 33%, and that production takes place for 200 working days per year.

The levels of fixed and variable costs associated with these processes are presented in Table V.6, V.7 and V.8.

Table V.6.
Production of smoked fish: Investment costs
(US$, valid for 1971)

Daily input fresh fish	Traditional	Altona
	100 kg	270 kg	1,080 kg
Land	200 (400 m2)	200 (400 m2)	250 (500 m2)
Buildings (drying shed, stores, etc.)	600 (40 m2)	3,000 (40 m2)	6,000 (80 m2)
Equipment (ovens and misc. equipment)	130	400	1,400
Contingencies (10% of above)	90	360	770
TOTAL	1,020	3,960	8,420

Table V.7.
Production of smoked fish; Annual fixed costs
(US$ valid for 1971)

Daily input fresh fish	Traditional	Altona
	100 kg	270 kg	1,080 kg
Depreciation1	50	160	380
Interest on fixed capital (8%)	80	320	670
Interest on working capital (8%)2	40	60	230
Permanent labour (1 manager)	1,200	2,000	2,000
Insurance (1½% of investment costs)	10	60	130
Maintenance and repairs (5% of investment costs)	50	200	420
TOTAL	1,430	2,800	3,830

Notes:

¹ 4% of building costs + 20% of equipment costs for traditional kiln or + 10% equipment costs for Altona kiln.

² Working capital is equal to approximately 5% of variable costs.

Table V.8.
Production of smoked fish: Annual variable costs
(US$ valid for 1971)

Daily input fresh fish	Traditional	Altona
	100 kg	270 kg	1,080 kg
Fish (at $200 per tonne)	4,000	10,800	43,200
Firewood	3,900	1,620	6,480
Labour	960	1,440	3,840
Packaging	260	700	2,800
TOTAL	9,120	14,560	56,320

Notes:

¹ Traditional: 13 m³ per tonne of fresh fish. Altona: 2 m³ per tonne of fresh fish. At $15 per m³.

² Traditional: 2 labourers Altona (270 kg): 3 labourers Altona (1,080 kg): 8 labourers.

³ Polythene bags - in some cases may be substituted by other packaging.

Costs per tonne of finished product are presented in Table V.9 below, with output per man-day of direct labour.

The results of this analysis show that, in terms of both fixed and variable costs, the use of an Altona type oven is cheaper than that of traditional ovens. These results hold despite the considerably higher capital cost associated with the Altona type oven. This is not surprising since the Altona-type oven, although more refined than traditional ovens, still uses basically traditional materials. In terms of variable costs, the greater efficiency of throughput enables a higher output per man to be obtained and hence savings in direct labour costs. Of particular importance, however, is the fact that considerable reductions are made in the use of firewood. This not only reduces the cost of smoking but is also important from the environmental point of view as in some locations wood supplies have been severely depleted. At the same time, continued use of a traditional resource means that local employment in fuel gathering is not seriously affected and foreign exchange is not required to purchase alternative petroleum energy sources. The analysis also shows that when four Altona-type ovens are used, further savings in costs are made primarily due to a less than proportionate increase in fixed costs and direct labour requirements. There are a number of other kiln designs available which also offer the potential for similar savings to those outlined above.

Table V.9.
Production of smoked fish: Cost per tonne and output per man-day

Fresh fish daily input (kg)	Traditional	Altona
	100 kg	270 kg	1,080 kg
Finished product (tonnes of fish per year)	7	18	71
Fixed costs per tonne ($)	204	156	54
Variable costs per tonne ($)	1,303	809	793
Total costs per tonne ($)	1,507	965	847
Man-days direct labour	400	600	1,600
Output (kg/man-day)	17	30	44

Some of these have been discussed in Chapter III (e.g. Roger’s smoke house, Ivory Coast kiln, etc.).

IV. THERMAL PROCESSING

As discussed in Chapter IV, thermal processing of fish is a complex operation requiring sophisticated equipment which cannot realistically be scaled down to suit the volumes typical of a small-scale processing operation. In this section, the cost of canning is examined so that comparisons can be drawn with the smaller scale processes already analysed. It is not the intention here to make comparisons between the various methods of thermal processing; however, certain factors relating to the use of flexible pouches, as opposed to cans, are discussed.

Two cost models of a canning factory are analysed (see Edwards et. al, 1981, for a more detailed analysis of the economies of fish canning). In each model, an annual input of 500 tonnes of fresh fish is assumed. Processing is carried out by a single 8-hour shift working 250 days/year and producing a daily output of 10,000 cans. Each can contains 90 g of fish and 35 g of vegetable oil filler (e.g. sunflower oil). The yield of whole fish in can is assumed to be 45%. Model 1 assumes a fully mechanised cannery. Model 2 is identical except that labour is used to replace machinery in certain operations, namely heading, gutting and can labelling.

The different labour requirements of the two models are as follows:

	Model 1	Model 2
Manager	1	1
Engineer	1	1
Supervisor	1	1
Clerical	2	2
Semi-skilled/unskilled labour, of which permanent labour	56 (10)	96 (18)

In other words, an extra 40 semi-skilled and unskilled labourers are employed in Model 2 as follows:

	Model 1	Model 2
Heading and gutting	6	36
Labelling	2	12

The fixed and variable costs (US$) associated with these two models are presented in Tables V.10, V.11 and V.12.

Table V.10.
Production of canned fish; Investment costs (US$, valid for 1981)

Cost items	Model 1	Model 2
Plant and equipment	165,540	140,640
Buildings (400 m2)	60,000	60,000
Land (4,000 m2)	2,000	2,000
Contingencies (10% of above)	22,750	20,260
TOTAL	250,290	222,900
Working capital1	350,000	355,000

Note

¹ Working capital estimated to cover initial supplies of fish, operating costs over first months, and stocks of finished product.

Table V.11.
Production of canned fish: Annual fixed costs
(US$, valid for 1981)

Cost items	Model 1	Model 2
Depreciation1	18,954	16,460
Interest on fixed capital (8%)	20,023	17,830
Interest on working capital (8%)	28,000	28,400
Permanent labour2	19,000	25,800
Insurance (1.5% of investment costs)	3,754	3,340
Maintenance (5% of investment costs)	12,514	11,150
Other overheads	8,000	8,000
TOTAL	110,245	110,980

Notes

¹ Buildings 4%, plant and equipment 10%.

² Manager at $3.500, engineer at $2,800, supervisor at $1,700, clerical at $1,200, semi-skilled/unskilled at $860.

Table V.12.
Production of canned fish Annual variable costs
(US$ valid for 1981)

Cost items	Model 1	Model 2
Fish (at $200/tonne)	100,000	100,000
Filler (87.5 tonnes at $800/tonne)	70,000	70,000
Cans (2.5 million at $0.084 each)1	212,100	212,100
Cartons (25,000 at $0.66 each)	16,500	16,500
Salt (10 tonnes at $120 per tonne)	1,200	1,200
Personnel2	36,800	62,400
Water (8,750 1. at $0.133 per litre)	1,160	1,160
Electricity3	1,670	1,240
Fuel oil (34,000 1. at $0.4/litre)	13,600	13,600
Quality control	10,000	10,000
Sundries	12,000	12,000
TOTAL	475,030	500,200

Notes:

¹ Plus 1% for damaged cans.

² Semi-skilled/unskilled at $3.2 per day.

³ Model 1: 18,500 kWh at $0.09/kWh. Model 2: 13,750 kWh at $0.09/kWh.

With a yield of canned fish at 45% of input, the annual output would be 225 tonnes, which gives the production costs per tonne of finished product shown in Table V.13:

Table V.13.
Production of canned fish; Cost per tonne
(US$)

Cost items	Model 1	Model 2
Fixed costs per tonne	490	493
Variable costs per tonne	2,111	2,223
Total costs per tonne	2,601	2,716

This analysis shows that total production costs per tonne are marginally lower for model 1 than for model 2. In other words, the savings made on machinery were not sufficient to counter-balance the cost of the extra labour (both permanent and direct) required in model 2. Depending on the relationship between labour and capital costs, this situation will generally vary between countries.

Although the canning costs cited above are not directly comparable in all respects with the earlier analyses of salting and smoking, it is very evident that canning is significantly more expensive per tonne of product than the smaller scale processes. In particular, the cost of cans and filler, which in the models discussed, together account for 59% and 56% of annual variable costs, add considerably to processing costs. These items would form an even more significant proportion of costs in any developing country which did not have a can-making plant thereby necessitating the importation of supplies. Furthermore, unlike the small-scale processes, a cannery requires continuous expert maintenance.

The canning plant costed above is a relatively small one. Separate analysis of larger scale plants has not been undertaken. However, economies of scale are known to exist for larger plants. Even at higher levels of throughput, however, canning will still be expensive when compared to small scale processing.

As an alternative to cans, flexible pouches may be used in thermal processing operations. Although claims are made that the use of pouches is generally cheaper than the use of cans, their commercial profitability in the case of processed fish has yet to be proved. The technology is more complex than for cans, and large capital investments are still required when using flexible pouches. For example, a manually operated line - including a retort - to fill, seal, load and unload retorts, dry pouches and cartons at speeds of up to 12 pouches per minute would cost approximately $200,000 if installed in a developing country (Metal Box Limited, personal communication). A line employing more automation and less labour, and running at 25-30 pouches per minute is likely to cost three to four times this amount.

The main advantage which flexible pouches have over cans is their lower weight: 1,000 empty 8 oz cans weigh 109 lb whereas a similar number of pouches weigh only 12.6 lb. This would lead to savings in transport costs, especially in the case of imported supplies. Apart from the pouches, which are likely to be cheaper, variable costs will generally be of similar order to those for canning. Total costs can therefore be expected to be more nearly equated to canning costs than to the small-scale processes discussed earlier.

Besides costs, other considerations need to be borne in mind when comparing thermal processing methods with the smaller-scale processes described earlier. In the first place, the labour requirements of the former are considerably higher: for canning, Model 1 has a total labour requirement of 61 people while Model 2 requires 101 people. This labour input is much lower than the maximum requirement of 14 people - in the case of natural salting/drying, 650 kg throughput - for the smaller scale processes analysed, with only 3 people being required for the traditional smoking process. This variability in labour requirements is likely to affect the location of the respective processing operations. Thermal processing plants are most likely to be based in urban areas where there exists a sufficient pool of skilled and semi-skilled labour. The smaller-scale processes, however, with their much lower labour requirements, are likely to be based at locations as near as possible to the fish supplies. In many cases, this may be in small rural fishing communities. Adoption of such processes can therefore be expected to increase rural employment and arrest the drift of population from rural areas.

The more exacting infrastructural requirements of thermal processing will also tend to favour their location in urban areas. Factories require electricity supplies and the need to ‘buy in’ a high proportion of supplies (i.e. fuel oil, cans, filler, etc.) necessitates reasonable communications. This latter point is also important in that the output of a canning factory may be marketed over a much larger area.

Finally, although no attempt has been made to quantify the foreign exchange requirements, expenditure on the smaller scale processes described is very small (except for mechanical drying where a relatively modest amount of foreign exchange expenditure is required). Canning, on the other hand, has a high foreign exchange component in plant and equipment costs and, where there is a need to import cans, in variable costs.

V. EMPLOYMENT IMPACT OF ALTERNATIVE FISH PROCESSING TECHNOLOGIES

Fish processing contributes in a significant manner to employment generation. For example, the processing of 1000 tonnes of fish will use approximately 50,000 man-days of semi-skilled and unskilled labour in the case of thermal processing (estimate based on thermal processing - Model 2). Thus, the fish processing sector of a country with a population of 5,000,000 and a per capital consumption of processed fish of 5 kg per year should provide permanent employment to 5000 workers. If one were to add backward linkages (e.g. fishing, production of various materials inputs (such as salt), and manufacturing of processing equipment) and forward linkages (e.g. transport and marketing of processed fish), the total number of permanent jobs would be much larger.

The output of processed fish per man-day is function of the adopted technology, the type of output produced, and the scale of production. The following table provides estimates of output per man-day for the various processes/products analysed in this chapter.

Table V.14
Output per man-day for various fish processing projects

Processing method	Scale of production (Kg fresh fish per day)	Kg of fresh fish processed per man-day
Natural drying/salting	320 650	45 50
Mechanical drying/salting	650 1000	93 91
Traditional smoking	100	33
Smoking-Altona kiln	270 1080	67 120
Thermal processing-Model 1	2000	33
Thermal processing-Model 2	2000	20

The above table shows that output per man-day for thermal processing is lower than that for other processes such as salting/drying or smoking. This finding may seem surprising as thermal processing is much more capital-intensive than the other processing methods. It can, however, be explained by the fact that the technologies listed in Table V.14 do not yield similar products. Thus, the low output per man-day for thermal processing may be explained by the larger number of operations associated with the production of canned fish than with that of salted/dryed fish or smoked fish. In particular, the canning of fish requires much more initial processing (e.g. heading, gutting, scaling, filleting, weighing) than for other fish products. Furthermore, the packaging and labelling of smoked, dried or salted fish constitutes minor operations while they constitute major 1 ones (in terms of labour use) in the case of fish canning.¹

¹ These findings contradict those from another study which shows that smoking/drying is more labour-intensive than canning (see ILO, 1980). This may be explained by differences between the technologies described in this memorandum and those analysed in the above study.

From an employment point of view, the production of canned fish may be more attractive than that of other traditional fish products. However, employment in this case, should not be the only criterion for choosing among alternative fish processing technologies. It is also important to consider production costs per unit of output since low-income groups may not generally afford high priced fish products. Thus, if the satisfaction of the basic food requirements of low-income groups were to constitute a major socio-economic objective, the production of canned fish becomes less attractive than that of other cured fish products. For example, the unit production cost of salted/dried fish and that of smoked fish varies between $847/tonne to $1209/tonne (see Tables V.5 and V.9), while the unit production cost of canned fish varies between $2601/tonne to $2716/tonne (See Table V.13). Other factors may also favour the production of traditional fish products, including the relatively low foreign exchange input associated with fish drying/salting/smoking, and the possibility to locate small-scale fish processing units in rural areas. All the above factors should be taken into consideration when choosing among alternative fish processing techniques/products with a view to selecting those which contribute most to the adopted socio-economic objectives.

VI. ASSISTANCE TO THE SMALL-SCALE FISHERIES SECTOR: MANPOWER TRAINING AND SUPPORTING SERVICES

The small-scale fisheries sector in developing countries has not, in general, benefited from adequate governmental support. There are many reasons for this neglect. The main ones include the relative isolation of fishing communities, resistance to the introduction of new technologies, doubts on the economic viability of small-scale fishing, etc. These reasons may not, however, justify such neglect as they also apply to other sectors of the economy (e.g. agriculture) which have, nevertheless, benefited from extensive governmental assistance. Given the importance of fish as a food source, it is important that greater efforts be made in order to develop the small-scale fisheries sector.

This section briefly describes various assistance measures which may be provided to the sector as a whole (i.e. including fishing and fish processing) as measures limited to some activities only (e.g. fish processing) will generally fail to achieve far-reaching results.

VI.1. The socio-economic framework

Any assistance measure in favour of the small-scale fishing sector should take into consideration the socio-economic framework within which the sector operates. This framework may include the following social groups: the fishermen, the small-scale fish producers (e.g. entrepreneurs or the fishermen themselves and their family), the fish traders, the trader-financiers (i.e. middlemen who rent boats and fishing gear to the fishermen and market the catch), the suppliers of various materials inputs and equipment and local consumers. Any assistance provided to the sector should be carefully analysed in terms of its acceptance by the above groups, its impact on productivity and incomes, and its effectiveness in bringing about the desired changes. There are many examples of well-meant assistance which contributed to worsening rather than improving the living conditions of fishing communities. For example, financial inducement to fishermen in an African country. in the form of generous credit - to invest in improved fishing boats and gear failed to achieve the expected results as fuel and repair services were not always available. Another example relates to the use of solar fish dryers (polythene tents): in this case, the dried fish quality was not acceptable to local consumers although it was appreciated by consumers in a neighbouring country.

Assistance to the small-scale fisheries sector should be determined on the basis of a national fish production and processing strategy. Such a strategy should indicate the following: the extent to which fish production and processing should be shared between small-scale and large-scale fisheries; the proportion of fish catches which should be processed into fish meal and that which should be reserved for local consumption; the mix of fish processing technologies which should be promoted, taking into consideration the local and export markets, etc. The strategy may be implemented by a fisheries department in collaboration with local authorities, technology institutions, etc.

VI.2. Infrastructural requirements

In many developing countries, fishing communities lack the infrastructure necessary for chilling or freezing fish (e.g. cold storage, ice-making plants) and for marketing fresh and cured fish at some distance from the fishing areas. The lack of energy and water for fish processing or fuel for motor boats constitute additional constraints to the development of small-scale fisheries.

The provision of an adequate infrastructure could be costly, especially if fishing communities are established in isolated areas of the country. It may, however, be noted that some of the investments to improve the existing infrastructure are not generally required for fish production and processing only; they may also be required for other economic sectors (e.g. agriculture) and for improving the living conditions of the population. This is particularly true for public investments in road construction, water and energy supply, and transport facilities. Thus, investments which are specific to the small-scale fisheries sector are mostly needed for the handling and cold storage of fish. Some estimates of ice and cold storage requirements are provided below:

(i) In case the fish landing area is located in an important commercial centre, the following infrastructure will be required:

- An ice-making plant with a production capacity equal to four times the weight of the daily catch, and a storage capacity equal to six times the weight of the daily catch;

- Cold storage rooms (0-2° C) which can accomodate three times the volume of a maximum daily catch.

(ii) In case the fish landing area is not located in an important commercial area, the following infrastructure will be required:

- An ice-making plant with a production capacity equal to 2/3 of that described under (i) above.

- Fish freezing equipment to accomodate 50% of the maximum daily catch.

- Cold storage rooms (-18° C) which can accomodate four times the volume of a maximum daily catch.

Additional infrastructural requirements may include a roofed area for sorting, cleaning, washing and packaging fish before transport or storage.

If a country cannot afford investments of the type described above, fresh fish must be marketed within a short distance of the landing area. Excess supply of fish may either be wasted, or must be processed locally within a few hours after landing. In either case, the lack of cold storage or ice making plants will constitute a constraint to the expansion of fish supply by small-scale fisheries.

VI.3. Organisation of production and marketing of fresh and cured fish

Fishermen and small-scale fish processors may operate in an independent manner or may organise themselves into various types of trade associations. In general, whenever they operate independently, they must rely on traders and financiers as it is generally difficult for individual fishermen or small-scale fish processors to organise the marketing of their catch, obtain credit, etc. Some have argued that this reliance on traders/financiers decreases the bargaining power of fishermen and small-scale fish processors, and that they should organise themselves in order to minimise such reliance. While such an argument may not apply in all cases, fishermen and small-scale fish processors could benefit from joint organisation of production or marketing as long as it is well conceived. A number of cooperatives and associations have been tried in a number of countries, including Fishermen’s Associations (e.g. in Malaysia and Thailand) and Fish Marketing Associations (e.g. in Hong Kong). A survey of these organisations (e.g. by the FAO) shows that some have been more successful than others, while some have actually failed. It is therefore important to carefully analyse the local situation prior to selecting one form of organisation of production with a view to improving the living conditions of fishing communities. In any case, the latter should be fully involved in the selection process.

The organisation of the marketing of fresh and cured fish should be such as to benefit the small-scale fishing sector and to, therefore, induce fishermen and fish processors to expand supply. Wholesale fish markets or auction markets have been tried in a few countries, but have not always had the full support of fishermen. It is very important that the latter be involved in the pricing and marketing policies, and that the number of middlemen be limited so that fishermen can obtain the right price for their catch. Well organised fish marketing cooperatives, under the full control of their members, could play a major role in ensuring good prices for the fish.

VI.4. Extension services and training

The provision of training and supporting services to fishermen and small-scale fish processors will generally be needed in order to induce the latter expand the supply of fresh and cured fish, and to increase productivity and incomes. Training and supporting services should preferably be under the responsibility of a fisheries department in close collaboration with rural development agencies and technology institutions.

Supporting services should include the provision of credit, assistance in the procurement of various materials and equipment (e.g. salt, fuel, packaging material, fishing gear), marketing assistance, advice on the design and setting-up of fish processing units, etc. In the case of fish processing, training may cover the following aspects; improved processing techniques and handling of fish in order to minimise spoilage before and during processing, packaging of cured fish, maintenance of good hygienic conditions, simple management techniques, etc.

Supporting services and training should be provided by extension officers assisted, whenever necessary, by specialists from the fisheries department. These extension officers should be trained as generalists to the extent that they should be able to identify the very diverse problems faced by the fishing communities, propose solutions and secure the necessary assistance from experts, local authorities, etc. The extension service should preferably be a branch of the fisheries department. Whenever feasible, one extension officer should serve approximately 500 production units (fishermen and small-scale fish processors). In addition, a number of supervisors and specialists from the department should be available for the overall coordination of the extension service, training of extension officers, and provision of specialised assistance (e.g. fish processing techniques such as drying, smoking, etc.)