Feasibility Study for a Shark & Fish Utilization Enterprise in Quseir Area, Egypt
Total Page:16
File Type:pdf, Size:1020Kb
PREFEASIBILITY STUDY FOR A SHARK & FISH UTILIZATION ENTERPRISE IN QUSEIR AREA, EGYPT UNITED NATIONS DEVELOPMENT PROGRAMME FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS RAB/81/002/6 PREFEASIBILITY STUDY FOR A ~HARK & FISH UTILIZATION ENTERPRISE IN QUSEIR AREA, EGYPT Prepared by M. A .. Mohar:riam National Expert Economist/Investment Analyst Supervised by I. Feidi Economist/Investment Analyst FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS Project for Development of Fisheries in Areas of the Red Sea and Gulf of Aden September 1983 PROJECT FOR THE DEVELOPMENT OF FJSHERIES IN AREAS OF THE RED SEA AND GULF OF ADEN Suez Postal address: c/o FAO Office P.O. Box 2223 Cairo EGYPT S U M M A R Y ============= Fisheries development mainly lies in the possib.ilities of identifying new investment opportunities in the fisheries sector. Thus, the development of fisheries along the Egyptian Red Sea Coast could only be achieved and maintained through integrated development/investment oriented projects. Preparing pre-feasibility and feasibility studies on such investments opportunities is one of the main objectives for the Project for Development of Fisheries in Areas of the Red Sea and Gulf of Aden, (RAB/81/002). This report is one of these studies. The report includes four main sections : 1. Technical background : shark fishing trials, processing all parts of sharks caught and trials for tanning shark hides. 2. Fishing Enterprise : cost structure and expected annual revenues. This activity of the proposed project is financially evaluated separately giving a financial rate of return of 32.75% 3. Shark and Fish Processing Enterprise : This activity is studied and financially evaluated separately giving a financial internal rate of return of 27.31% 4. Financial and Economic Evaluation : This has been carried out for the proposed project as a whole. The financial internal rate of return and the economic in.ternal rate of return has been estimated at 27. 52% and 29.93% respectively. Both, the financial rate of return and the economic rate of return surpass the current interest rate in Egypt of 15%. The following facts also emerge from the study : - Total investment requirements are estimated to be L. E. 71 0 0 0 0. Annual expected catch is 500 tons of which sharks would contribute 50% and the rest coral fish species. - Annual fish sales (processed or fresh chilled) is estimated at L.E. 945 OOO under full capacity production (starting year three)· - It is expected that 86 new job opportunities will be created with annual gross income of L.E. 210 OOO when the project becomes operational. -i- Table of Contents Page 1. INTRODUCTION . 1 2. BACKGROUND . 1 2.1 The fisheries sector .................. 1 2.2 Fishing grounds and Resource potential. 3 3. JUSTIFICATION . 3 4. TECHNICAL BACKGROUND . 6 4.1 Wadi Gimal Shark Experimental Camp .... 6 4.2 Trials for tanning shark hides ........ 9 THE PROPOSED PROJECT ........................... 9 5 .1 Shark and Fish Catching Operations..... 10 5.1.1 Justification . 10 5.1.2 Costs and Earnings of Fishing Operations 11 5.1.2.1 Cost structure of the Fishing Boats.... 11 5.1.2.2 Expected Annual Cross Income per Boat .. 12 5.1.2.3 Crew Payments and share distribution ... 13 5.1.2.4 Minimum Salaries and Wages for Crew members . 13 5.1.2.5 The Net Enterprise Income .............. 14 5.1.2.6 Cost of Production . .. .... .. ... .... 14 5.1.2.7 Estimated costs and earnings of the fishing boats 14 5 .1. 3 The Fishing Enterprise Financial Rate of Return ........................... 14 5.2 Pilot Plant for Processing Sharks and Other Fish .......................... 16 5. 2. 1 Justification ....................... 16 5.2.2 Processing Plant Specification and Productive Capacity ................. 18 5.2.3 Plant cost structure ................ 18 5. 2. 3 .1 Cost of Buildings ................... 18 5.2.3.2 Cost of Equipment ................... 19 5.2.3.3 Labour Costs ........................ 20 5. 2. 3. 4 Cost of Raw Material ................ 20 5. 2. 3. 5 Estimated Annual Operating Costs ..... 20 5. 2. 3. 6 Estimated Annual Depreciation Costs .. 21 5.2.4 Landing, Handling and Shore Services Costs ............................... 21 5.2.5 Expected yield of end products per year and annual sales ..................... 23 5.2.5.1 The expected catch composition as raw material ............................. 23 5.2.5.2 Treatment of sharks and expected yield 24 5.2.5.3 Treatment of landed fish ............. 25 5.2.5.4 The expected annual sales of end products ............................. 26 -ii- 5.2.5.5 Estimated cost of production for the main processed products . 28 5.2.6 The Processing Ent~rprise Financial Rate of Return . 28 6. INVESTMENT COMPONENTS OF THE PROPOSED PROJECT .... 31 7. PROJECT EVALUATION ......................... · ·· ·· 33 7 .1 Project Financial Rate of Return . 33 7.2 Project Economic Rate of Return ................. 33 Bibliography 37 Table No. 1 Landed catch at Wady Gimal Shark Experimental Camp during the period from February 15 to March 15,1982 .... 6 2 Catch composition of sharks landed at Wady Gimal Camp ................. 7 3 Budget for new boats ................ 15 4 Investment and replacement costs of processing plant ................... 21 5 Landing, handling and shore services investment & replacement costs ..... 23 6 Annual sales of end products during full-capacity production years ..... 27 7 Budget for processing plant and shore services . 30 8 Project's Investment Components ..... 32 9 Project Financial Internal Rate of Return .. : .......................... 34 10 Project Economic Internal Rate of Re turn ............................. 36 - iii - List of Appendixes Page Appendix No. I 1 . Map of the proposed project area and 38 Egyptian Red Sea Coast. 2. Map of fishing grounds for sharks in the Egyptian Red Sea waters. 3. Red Sea ELASMOBRANCHS II. 1 . Meteorological Information. 39 2. Mercury content of water, sediment, some organisms and for blood & plasma Hurghada Fishes. 3. No. of licensed fishing units registered in Hurghada. 4. Information on prices of shark products on the international markets. III. 1 . Pilot Processing Plant, Design and drawing 40 2. Solar Driers, Small and Large capacity . 3. Skinning of large shark. 4. Form and size of shark fins. 5. Preparing a small shark. 6. Addresses of selected buyers and promoters of shark products. 1. INTRODUCTION One of the objectives of the UNDP/FAO Project for Development of Fisheries in Areas of the Red Sea and Gulf of Aden (RAB/81/002) is to identify and prepare economic and investment-oriented studies. This is achieved through the formulation of proposals, pre feasibility and feasibility studies aimed at the development and modernization of fisheries in the participating countries. The Arab Republic of Egypt is one of the participating countries of the Project. During a meeting with the Project Manager (RAB/81/002) in January 1982, the Governor of the Red Sea requested a feasi bility study for a complete shark utilization unit and a fish smoking unit. This study deals with the shark utilization unit, while that dealing with fish smoking was prepared and delivered under Report No.RAB/81/002/l in September 1982. 2. BACKGROUND 2.1 The fisheries sector 2.1.1 In 1978 total fish production from Egyptian waters was estimated at 119000 tons of which about 20,000 tons (17%) were landed from the Gulf of Suez and the Red Sea; 43000 tons ( or 36%) from the Mediterranean Sea; 30000 tons (or 25%) from the Nile delta lakes and from the River Nile; 23000 tons (or 19%) from Lake Nasser and 3000 tons (or 3%) from fish farming. Fish imports were estimated at 89000 tuns in 1980. 2.1.2. The Egyptian Red Sea Coast is about 1630 km in length, which includes 1080 km from Suez to the Sudanese border, 325 km on the eastern coast of the Gulf of Suez and 225 km on the western coast of the Gulf of Aqaba. Both the eastern and western coasts of the Sinai fall within the South Sinai Governorate. The coast between Suez City and Ras Ghareb (230 km) is in the Suez Governorate while the remaining part (850 km) is in the Red Sea Governorate. 2.1.3. The rnaln .flshing centre is Suez wlie1·e there are 3000 fishermen with 84 purse-seiners, 68 trawlers and 60 small sail and motori~ed boats. They operate in the Gulf of Suez with the exception of about 20 trawlers and purse-seiners based in Suez and operating outside the Gulf of Suez, mainly in the Southern part (Foul Bay 1000 km south). About 80% of the total catches from purse-seiners and trawlers in the Red Sea (16000 tons) are -2- landed in Suez. 2000 tons (or 10%) are caught in Foul Bay and landed in Hurghada or in Suez. The remaining 10% are landed by the small scale fisheries sector. In Suez there is a port allocated on a temporary basis by the Suez Canal Authority to the commercial fisheries (trawlers and purse-seiners). 10% of the catches are sold in Suez while the remaining part is sold to traders who transport the fish by trucks to Cairo, (140km). On their way back , the trucks transport ice. 2.1.4 Hurghada is the capital of the Red Sea Governorate and considered the second fishing centre along the Red Sea Coast. There are about 300-350 small-scale fishermen grouped into a service cooperative. They use 80 launches (8-llm in length fitted with inboard engines and having a crew of 3 fishermen each and 30 small motorized boats (fitted with outboard engines). The catches are around 340 tons per year. Hurghada has a commercial port located in a well protected bay which is used by the 3 purse-seiners/trawlers from the Development Project for Fisheries (directly managed by the Governorate) and by the 20 purse-seiners/trawlers from Suez land ing their catches (about 2000 tons per year).