(1) COST ELASTICITY
Reported that farming shrimp and fish can be expensive, with production costs ranging between 30% to 40% for shrimp and 60 - 70 percent for fish, respectively. Farmers has the same cost structure with no one gains aas a competitive advantage. As a business normally this is an important concept to be aware of. In the real challenge lies in elasticity; understanding how flexible these costs can be and if they can offer an edge over others. If the prices of goods increase too rapidly so that the quantity sold will decrease. As an example a farmers reported in Johor claim that over the past 12 months he noticed that while their profit margin remained stable when the prices of crab or shrimp rose then they encountered a decrease in sales volume. The cost of the feed is largely determined by commodity prices in the market. More specifically where the feed meal prices (which vary by commodity) are an important factor in determining the profitability of farmers. As such, when the price of a commodity increases, a farmer may need to switch to another option in order to remain profitable. This could involve changing their feed meal supplier. The farmers unfortunately are usually unaware of the quality of feed meal that the suppliers produce. Thus, when they purchase feed with certain protein content written on its label, they only realize later that it is not as effective as it should be. This can happen due to the maybe replacement of raw materials which may depend on current commodity prices. The feed meal suppliers suggested a brand of feed they had, but when farmers bought and tried it, they weren’t pleased with the quality. This is the issue we’re faced with. Reported while some brands stay true to their promise of not changing the raw material for their product, this does not guarantee a steady price. It depends on if your business can absorb the volatility that comes with such commodities.
Reported that the brunt of the effects from industrialization are small landowners such as families who have passed down land for generations and are now sitting alongside a factory. The industrial waste has especially severe effects on fish for ‘kelong’ farms situated along the river. For example, grouper or sea bass business is located near a river contaminated by agricultural runoff, you have no choice but to put up with it. There is fact that that agricultural activities and the feeds used by farmers are usually obscured from view in which they still result in substantial amounts of environmental pollution. This largely goes unnoticed due to the lack of visibility. The way farmers in Malaysia act can have an effect on agricultural outcomes. They have a habit of not revealing their knowledge and strategies, perhaps out of pride or some other motive. This includes releasing water into the environment without anyone knowing. Due to their priority being the safety of the fish and they wanted to ensure that the water was clean before doing anything else. Thus, they changed the order of priorities. The importance of collective solidarity among farmers in order to be able to relay important news like a discharge rapidly. The lack of communication can have devastating consequences and as it is one of the main reasons for disease outbreaks. If one person does not communicate effectively with the others and it can lead to discharge of infected water which in turn can cause various problems for other farms. Therefore, it is essential to make sure that everyone remains up to date about any changes that may take place and collaborates when certain decisions are being taken.
(3) ENVIRONMENTAL CHANGE
Climate change has become harder to anticipate due to its unpredictable nature. What worries me more than pollution are the various environmental changes such as floods in which many cannot ultimately overcome. Reported that it is important to manage any risks associated with inclement weather. By taking the necessary precautions such as pumping water from the ground two days before a storm, one can prepare and make sure that any losses are minimized. Depending on the forecast, it may be necessary to have less on-hand stock to mitigate risk.
The aquaculture sector in Malaysia is a small one with only around 10% of jobseekers possessing a Bachelor’s degree related to this field. As the industry has yet to evolve much, recent graduates face an uphill battle when seeking out such roles. The industry part of has rigid expectations and is slow to adapt. Farms remain traditional and outdated while many of the expectations from graduates tend to be very high. There is a need for the industry to evolve and pay attention to what the young generations desire. Instead of bemoaning the lack of quality personnel in aquaculture, it is better to incentivize potential workers to become a part of this industry and some changes must be made in this situation. Issues of for female candidates are rather when applications came in and those who were more qualified happened to be female. From there on out, we began hiring more female based on their strengths and what they could bring to the company. This is very for an encouraging and demonstrates the company’s commitment to providing equal opportunity for all.
Isssues of land cost is the most significant issue facing aquaculture production and it far surpasses feed, labor, and pollution as key challenges.
In Malaysia the high land prices can often make it difficult to maximize returns on investment. To compensate, farmers may opt for practices that allow them to increase their yield with limited resources. This includes intensifying production using more efficient methods and even if the individual items are not worth as much. By intensifying the fish farming operation doesn’t come without its costs. The expenses will likely increase due to needing more oxygenation means higher feed conversion and other additional resources to support the extra fish. It results in a higher per-unit cost which drives up overall expenses. Reported that in some parts of the world, such as South America in which the land costs are much lower than other places. This means production costs can be lowered, and a less intensive approach can be taken, resulting in further cost savings. In Ecuador, a shrimp costs RM12 (US$2.70), whereas in Malaysia it costs RM25 (US5.60) and this is due to the cost of land. Many farmers try to use technology to compensate, but that is only important if all farmers competing. That means if farmers are all vying for Europe’s business and we are in a price competition. When considering domestic markets, cost structures are usually equal for all participants. This is true unless you own inexpensive land that was handed down to you. The opportunity cost must be taken into account as they can easily opt for renting it out instead. Reported that the aquaculture industry in Malaysia has been facing some of the difficulties in recent years and it leading to a sharp drop in its production. Several factors have been correlated with the declining trend and such as soaring land costs and also include environmental issues. To ensure the industry’s future success a stricter regulation and improved management practices also the introduction of sustainable aquaculture practices and the investment in research projects that aim to increase productivity must be implemented. Thanks...
In Malaysia the high land prices can often make it difficult to maximize returns on investment. To compensate, farmers may opt for practices that allow them to increase their yield with limited resources. This includes intensifying production using more efficient methods and even if the individual items are not worth as much. By intensifying the fish farming operation doesn’t come without its costs. The expenses will likely increase due to needing more oxygenation means higher feed conversion and other additional resources to support the extra fish. It results in a higher per-unit cost which drives up overall expenses. Reported that in some parts of the world, such as South America in which the land costs are much lower than other places. This means production costs can be lowered, and a less intensive approach can be taken, resulting in further cost savings. In Ecuador, a shrimp costs RM12 (US$2.70), whereas in Malaysia it costs RM25 (US5.60) and this is due to the cost of land. Many farmers try to use technology to compensate, but that is only important if all farmers competing. That means if farmers are all vying for Europe’s business and we are in a price competition. When considering domestic markets, cost structures are usually equal for all participants. This is true unless you own inexpensive land that was handed down to you. The opportunity cost must be taken into account as they can easily opt for renting it out instead. Reported that the aquaculture industry in Malaysia has been facing some of the difficulties in recent years and it leading to a sharp drop in its production. Several factors have been correlated with the declining trend and such as soaring land costs and also include environmental issues. To ensure the industry’s future success a stricter regulation and improved management practices also the introduction of sustainable aquaculture practices and the investment in research projects that aim to increase productivity must be implemented. Thanks...
By,
M Anem,
Putrajaya,
Malaysia.
(October 2024).
Updated in November 2024.
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