Techno-Economic Feasibility Study for Fish Smoking Enterprise Fisheries Development Project-Hurghada Red Sea Governorate
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TECHNO-ECONOMIC FEASIBILITY STUDY FOR FISH SMOKING ENTERPRISE FISHERIES DEVELOPMENT PROJECT-HURGHADA RED SEA GOVERNORATE UNITED NATIONS DEVELOPMENT PROGR/iry_i - FOOD AND .AGRICULTURE ORCylt. OF THE UNITED NATIOIJS RAB/81/002/l TECHNO-ECONOMIC FEASIBILITY STUDY FOR FISH SMOKING ENTERPRISE FISHERIES DEVELOPMENT PROJECT-BURGHADA RED SEA GOVERNORATE Prepared by I.H.Feidi M.A.Moharram Economist/Investment Analyst Counterpart Econ/Invest.Analyst With participation of Z.E.z El Din Counterpart Fish Processing FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS PROJECT FOR DEVELOPMENT OF FiSHERIES IN AREAS OF THE RED SEA AND GULF OF ADEN Cairo-Egypt December 1982 t l l. i· ·l f t L ;. I . j ~ ~ ~ ·~ ~. ~ t~ ~. ~- ~· 1...- t.. r1 if' l 'f; l fr;: r.== B I ~ ; ~E ~r J ~ t i ~ ~· l 't~ ~· t \;;. Et -- [ &- --> -- I :· II l t - .-\ill ~ ~..- r (;- .-() 01 .r So. v - _._ 0 \.-· r ;- r - .- ~ r·. k L- . fi ~ ·~ [ cz '.::: i t ~ 1: c;_ u;- ~ 1' t:. v· 0 t f." · I 4 " (r \'t'>r;;:' G. 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I JSJI W' r1 L..J I 00 o9 b ;.,JI J_, ~I u9 d L...... ')I J_, I ~ ~ o.hp~I J. .!!"' ~ clJ~ 4>Ulc..l~I ~•• :t.k:.,1S"~I o~ LS~I o-4 j~d->'- 8 ,. ii 9b~c.h~ 1-~~c..ts"~I o~ ~01.Jo'i-;. .. oll ~J • Jl:b.H • ; .!9.nll ·~ ~ .~o.L;lW~ .. ,. ~ o---........<a...... a ll 0'° <:~ 1G9,,...W I ( ~ o I c~ o I ~ ; I.,:. .;. !.9 ~I '.'1 h.ll ~ ok!J.o(:'°U"'·~ . ...l~ JI~~ 0-lli~ L~I" o.s.;-ih:; ,. • ( ;;....... _ .........,.;.jo cl Lo....l) ~WI ~I~ ( i ) ABSTRACT One of the objectives of the Project for Development of Fisheries in Areas of the Red Sea and Gulf of Aden, is to conduct economic and investment research work and studies through the preparation of feasibility studies aiming at developing and modernizing fisheries industries in the participating counctries of the Projec{ of which the Arab Republic of Egypt is a member. With this objective in mind a feasibility study RAB/77/008/21) on the technical and economic aspects was prepared for upgrading and expanding the activities of the Fisheries Development Project' in Hurghada, Red Sea Governorate. The study centred on adding new fishing- units and the establishment of some shore facilities needed for improving and activating productive, servicing and marketing operations. A comprehensive and integrated study was prepared for this purpose complete with financial and economic analysis and evaluation. In response, the Red Sea Governorate has taken some positive steps to implement sections of the study. The purchase of refrigerated transport trucks,construction of 50 ton capacity cold stores in Hurghada and the ongoing construction of an ice plant of 20 ton/day capacity are among these positive steps. Complementary to these developmental steps, and as the 'Fisheries Development Project' in Hurghada constitutes the basis of planned development, this study has been prepared on the feasibility of establishing a fish smoking unit in Hurghada. This unit will have a medium capacity to produce good, locally acceptable smoked fish products, to be sold at reasonable prices ( L.E 2-3 per kilogram). Such products are to be very competitive with similar imported products which are currently sold on the local market for L.E 4.50- 5.50 per kg. In 1979 the total quantities of imported smoked fish is reported to be about 460 tons at a cost of L.E 620 OOO. The fish smoking unit will require about 300 cons fresh weight raw material ( pelagic, and hook and line species) to produce about 150 tons smoked fish as final product. In addition to producing a local quality product a part of important substitution saving foreign currencies could be achieved. The capital investment requirements for the unit is estimated at about L.E 100 OOO, 25% of which is to be self financed by the Fisheries Development Project and the balance could be obtained by procuring a Food Security loan. ii The financial evaluation proved that the fish smoking unit is feasible giving a financial rate of return ( F.R.R.) of 40%. Moreover, the economic reate of return ( E.R.R.) is 31%. The sensitivity analysis proved that when raising costs by 10% the return is 13%. On reduction of benefits the rate is 10%. In addition, the proposed fish smoking unit will provide 24 new job opportunities for a total gross income of L.E 33 ,OOO annually. To schedule operations it is proposed that production of smoked fish can commence in December 1983. ( i i i ) Table of Contents Page 1. Introduction 1 2. Background 2 3. Justification 3 4. Technical background on fish processing and utilization 8 4.1 Background 8 4.2 Smoke curing of shark and other large fish: procedure and results 8 4.2.1 Preparing shark fillets 8 4.2.2 Preparing other large sized fish 9 4.2.3 Treatment of fillets before smoking 9 4.2.4 Smoking procedure 9 4.2.5 Losses during filleting and smoking 10 4.2.6 Fuel supply in Egypt 11 4.2.7 Results 1i 4.2.8 Marketability 12 4.3 Transportation costs 12 4.4 Related experiments 13 5. Financial and Economical Evaluation of proposed enterprise 13 5.1 Investment components 14 5.2 Project Financing 15 5.3 Schedule of project implementation, operation and planned production 18 5.4 Requirements of raw material and evaluation of production 5.4.1 Cost of raw material 18 5.4.2 Yield of final products per year 19 5.5 Cost structure and costs of production during full capacity period 21 5.6 Schedule for expected annual cost of production, profits and marketability 24 5.7 Enterprise Financial Internal Rate of Return 28 5.8 Economical and Sensitivity analysis of the Enterprise 30 References 32 Appendices (iv) List of Tables Table No.