As more and more catfish farms spring up, every catfish farm owner will have to contend with increased availability of the same products(fingerlings and table-size catfish) in the same market. To avoid losing out, the wise catfish farmer needs to start exploring Variable Cost Reduction initiatives that will enable production of larger numbers of catfish(fingerlings and/or table fish) at lesser cost, in lesser time, and using lesser resources. Are you planning to(or already) own a catfish farm? If yes, I urge you to go beyond enjoying the psychological satisfaction that people think you are making money from it. Instead put your hard earned startup capital to good and lasting use, by doing the things I have described in this report to ensure you do make GOOD money in form of tangible PROFITS.

(First published online: 15th November 2005)

Because its purpose is to create a customer, the business enterprise has two – and only these two – basic functions: marketing and innovation. Marketing and Innovation produce results. All the others are costs” – Peter Drucker

Catfish Farming Is Not Like Trading(Buying and Selling)

The first encounter I had with the catfish was when in Secondary school, I and some fellow boarding students discovered a deep hole which had — on the surface at least – been dry all through the dry season partly filled with water, and to our surprise, some adult catfish! We harvested them using mosquito nets and enjoyed a good meal by frying them using butter on stoves. I would later wonder about how the catfish had survived in the dried up pond all through the dry season up till the start of the rainy season. That experience made me develop a keen interest in learning more about rearing catfish.

Catfish farming has really caught on in Nigeria. Many people today are eager to learn about it especially after hearing about how lucrative both the fingerlings production and grow out ventures can be. Typically, the adverts and articles on the subject present impressive data on startup costs and turnover expected. But that’s where they stop – Turnover. Few, if any, venture further to talk about HOW the prospective farmer will ensure s/he can CONTINUALLY achieve REAL profits (i.e. the difference between turnover and expenses incurred) from running the business.

The reality after all is that once you start a livestock production venture like Catfish farming, your plan is not likely to be to simply complete one cycle of production, make money from selling off your fish, and take off to spend your profits. That is often what obtains with trading, supplies of materials and other businesses that deal with intangibles or are time-bound in nature. With Catfish farming, once you start it, the engagement is likely to be long term. Which is why you must look for every possible way to operate that will enable you stay reasonably profitable and competitive regardless of marketplace occurrences.

Your Farm’s Operating Costs MUST Be Constantly Monitored And Controlled

Let’s be honest here. If you do not keep a grip on your cost of production, your turnover may not give you much profits. On a number of occasions when I have met with persons involved in this business, and tried to get specific details of profit margins achievable, the best answers I got was “Ah, the market is embarrsasing.Your expenses will be nothing compared to the turnover you will record.” That’s simply too vague, and will certainly not easily convince any smart investor to buy into your farm venture.

It is actually true that the catfish farming business offers attractive returns on investment. However that benefit does not go to everyone who ventures into it – only those who do it right, consistently. To do it right, anyone going into business (no matter how micro or small it is) MUST take the pains to measure and monitor the profit margins and other performance indicators of her business so that the true health of the business will never be in doubt at any point in time. This requirement is especially true in the case of production based processes like Catfish farming.

Do you have farm records?

Most Nigerian Catfish Farms DO NOT KEEP DETAILED/USEFUL RECORDS. For most people who venture into business in Nigeria, records of revenue/earned income and expenses over time(daily, weekly, monthly or yearly) are never diligently kept, nor does the business owner ever bother to review or analyse those documented records. The result is that when the profit margins for instance begin to drop gradually, it is not noticed until it it’s too late. From my interactions with many catfish farmers in Lagos this problem of lack of detailed, accurate record keeping for business performance evaluation is widespread.

Okay, Maybe They Don’t Keep Records, But They Still Do Well – Don’t They?

You could argue that it does not matter since they still seem to be doing well. But I would say it depends on the farm. The truth is that it cannot cost all the farmers in Lagos the same amount of money to run say their fingerlings production ventures for the 4 to 6 weeks needed to get ready-for-sale fingerlings. Now if the foregoing is correct, the question to ask is how profitable can it be for everyone to sell at N10.00 per fingerling for instance,if some people achieve N9.00 cost of production per fish and others N5.00?

Every process is different from the other. Each farm will have had its own peculiar needs, problems etc. Some people have to pay for water or for fuel to power the gen that pumps water. Some will use Artemia(which is not cheap to buy) while others will get daphnia from stagnant pools around. A farm might experience a disease outbreak and have to purchase drugs to control it. Many things could(and do) happen that would make each farm end up spending more or less than the next farm to get its fish to the age/size where they are ready for sale.

Now, at the point of sale, the total cost of production for the batch of fish to be sold, would be the cost of electricity, water, feed, drugs, labour (and cost of fish losses/mortalities i.e. dead) and every other material used during that production run divided by the total number of fish left for sale. This would give the actual cost of production for EACH fish. Having derived this, the farmer would then be better informed as to what selling price to adopt .

But what happens in real life is that most people simply rear the fish and sell them at whatever they consider the prevailing price. In other words, they never really know for sure: (a) How much profit they make (b) If the profit will be adequate to meet the cash flow etc business needs.

Some Questions A Catfish Farmer MUST Be Able To Answer “YES” To In Order To Make GOOD Profits!

If you are a catfish farmer, and can answer YES to the following questions, then consider yourself as one who does not need to read the rest of this report.

1. Do you know how much it costs you – in Naira – to produce one(1) catfish fingerling or adult?

2. Do you know what the difference – in Naira – is between your cost of producing one(1) fingerling or adult, and the selling price you adopt?

3. Do you know what the trend in your total profit margin for your catfish farm has been since you started it? Has it been rising upwards, going downwards, or remained at the same level?

4. Can you produce detailed and traceable data to back up your claims/answers to question 1, 2 and 3?

5. Do you use (a). weekly pond records forms and (b). pond conversion ratios forms on your farms?

6. Do you know how much of your feed(in bags or kilograms etc) will be used to raise one batch of fingerlings to table size? Can you supply data to back up that claim?

7. Do you know how much you spend on marketing/sales to dispose of each batch of your catfish production? Do you reflect that in estimating your selling price – and eventual profits?

8. Do you have any process management system in place on your farm to ensure your operating costs are kept at an optimal level that will always ensure comfortable REAL profit margins are recorded?

The Challenge for Catfish Farmers

A BIG challenge awaits many who venture into this catfish business which few(if any) of them will be forewarned about. More people learning about this lucrative vocation, which means the overt time a larger number of producers are likely to increase availability of fingerlings and table-sized fish in the market. This in turn will tend to either keep prices fixed or competitive market forces will see price drops by certain producers so that they can quickly turn around their processes.

What is the challenge I speak about? It is whether catfish farmers will be able able to continue selling at prices that are profitable even as catfish producers increase in number in the market.

The Solution: Efficient Process Management via Variable Costs Control/Reduction

You cannot manage something, if you do not measure it, nor can you measure it if you do not record it. For instance, feeding of the fish constitutes a major chunk of costs incurred in turning out a batch of fingerlings or table-sized fish. Often up to 80% of the cost of production is due to feeding expenses. However, most Nigerian fish farmers do not keep reliable or regular records of feeding done, so it is difficult for them to accurately assess whether or not they/their operatives are overfeeding or not.

The farmer who can CONTINUALLY sell at stable(or lower) prices while earning the same(or greater) profit margins by driving costs down, compared to competitors will always do better! To do this s/he will develop best practice process management systems to effectively control and reduce where possible, the Variable (or Operating) Farm Costs. For as long as s/he keeps exploring ways to reduce the cost of producing each catfish, opportunities to recover profit margins that could be lost as a result of market price drops are likely to periodically emerge.

The result would be that s/he stays in business profitably even during what rivals consider “bad” sales seasons. The foregoing philosophy is one closely adhered to by many highly successful multinational manufacturing organisations locally and internationally. It explains why they have been able to continuously weather the adverse business environment in a place like Nigeria for example.

Read my article titled You Can Increase Your Profits Without Raising Your Prices to learn more about Variable Cost Control/Reduction.

Summary

As more and more catfish farms spring up, every catfish farm owner will have to contend with increased availability of the same products in the same market. As has happened with the GSM business, some farmers will have done their process management so efficiently that they will be able to drop their prices significantly below the market price(or refuse to increase them), and still make as much profit as (or even more than!) their rivals.

To avoid losing out, the wise catfish farmer needs to start exploring Variable Cost Reduction initiatives that will enable production of larger numbers of catfish(fingerlings and/or table fish) at lesser cost, in lesser time, and using lesser resources. Specifically, questions like the following would require serious consideration: How can you modify your production process to significantly reduce time taken or materials used to produce your fish? Are there cheaper alternative feeding stuffs offering similar nutritional benefits that you can use ? Do you know where to find them in the quantities that you need? Would it be useful to have stocks of them in your store in case of unexpected outage of the feeding stuffs you currently use?

Other questions remain. I could go on, but I think the point I’ve made here is clear enough already. So much thinking/re-organisation will have to be done initially to develop the needed systems. But the process once started, can only get easier. And the positive benefits from adopting this approach will be immediately obvious.

Are You Planning To(Or Already) Own A Catfish Farm?

If yes, I urge you to go beyond enjoying the psychological satisfaction that people think you are making money from it. Instead I urge you to put your hard earned startup capital to good and lasting use, by doing the things I have described in this report to ensure you do make GOOD money in form of tangible PROFITS that will reflect in your having what Jeffery Meyer calls an MBA (Massive Bank Account)!

If you need help setting up the Variable Costs Monitoring and Control/Reduction systems I’ve described, first fill/submit this form (making sure to mention the title and web address of this THIS article), and then call me on +234-803-302-1263 or +229-66-122-136.

PS: This article is an educational commercial about an aspect of the Best Operating Process Management System (BOPMS™) that SDAc’s CB Solutions can help you setup for your farm business.

In the BOPMS™, major emphasis is placed on the need to streamline operations(via best practice initiatives) in a manner that allows easy integration of PC automation to reduce time, effort and resources needed PLUS increase output and accuracy in the entire farming process,so that the business becomes MORE profitable. Click here to learn more.

As I have said on my Cost-Saving Farm Business Ideas website, and also in many of my previous write ups, I have gained unique insight into the business of catfish farming as it is done here in Nigeria. I have moved around quite a lot within Lagos especially, visiting various farms in places like Iyana Ipaja, Egbeda, Ojo, Gbagada, and outside Lagos, more recently,in Akute – Ogun State. During my interactions with the farm owners, I typically ask the same questions about operational practices being used, farm output achieved, expenses incurred etc. My objective is always to establish how efficient and profitable the individual operations are.

(First published online: 1st June 2007 )

To Succeed, You Must Adopt A BOPMS™

As I have said on my Cost-Saving Ideas Farm Business Support mini site, and also in many of my previous write ups, I have gained unique insight into the business of catfish farming as it is done here in Nigeria. I have moved around quite a lot within Lagos especially, visiting various farms in places like Iyana Ipaja, Egbeda, Ojo, Gbagada, and outside Lagos, more recently,in Akute – Ogun State.

During my interactions with the farm owners, I typically ask the same questions about operational practices being used, farm output achieved, expenses incurred etc. My objective is always to establish how efficient and profitable the individual operations are. Time and time again, I have found that most of these farm owners are simply focussed on doing what they do in the same mechanical manner they have always been doing them. Little or no effort is made to spend some time THINKING about how to operate more efficiently – especially in order to reduce the time, effort, money and labour needed to produce – and sell – the same output within a production cycle.

But times are hard. Business is tough. Costs have risen. To continue to profit, it has become even more imperative today, for EVERY business to explore ways of LOWERING operating costs, even as they maintain or possibly INCREASE output. That is why IDEAS – NEW IDEAS – about how to better run the business MUST be routinely solicited, and explored practically, with a view to improving the way we work, so that the business can perform better.

But there is something even more compelling: SELLING.

This is the ultimate objective of a business enterprise, which if NOT actively pursued could lead to its eventual demise. Until you get PAID CASH for your product or service, you have NOT done business profitably! And that applies to ANY business. I had to say this at the risk of stating the obvious, because it seems so many business owners often forget this important FACT.

In fact many people seem to go about their businesses focussing more on DOING the technical, production related aspects, and sparing minimal thought for the SELLING part. Yet, if you do not have customers READY and WILLING to part with CASH to get your product or service, ALL your technical, production related know how and skills amount to nothing! Your bank account would be empty!!

This is a message that needs to be drummed into the heads of many Catfish Farm (and other business) owners out here. I have been repeatedly contacted by people who seemed more interested in TESTING my knowledge of how to "inject" catfish or "strip" them of eggs, than they were in hearing my practically tested ideas, for instance, about how they can rear daphnia in glass tanks to feed their catfish fries instead of wasting time/labour scouting for dirty pools of water on different streets, to harvest wild daphnia from – or worse, feeding their catfish fries exclusively with expensive Artemia.

Anyone Can Be Taught To Breed And Rear Fish Using Today’s Methods!

I often wonder if it ever occurs to them that today, almost ANYONE – even the unschooled – can be taught to independently carry out virtually all aspects of breeding and rearing of catfish for commercial production. Is it not obvious from the rate at which seminars, manuals and VCDs teaching the subject now abound in various locations (with adverts appearing in mass media like newspapers, etc)?

The truth is we have a lot of people engaged in producing catfish in different ways, at various scales of operation out here today.

But Not Every Farmers Knows How To Attract PROFITABLE Buyers

The PROBLEM however, is that very few, if at all any, are doing it by following any tested or proven standard operating procedure that guarantees consistent output of quality product. Worse however, and which is the POINT of this write up, is the near TOTAL lack of attention to developing reliable strategies for FINDING GOOD buyers for the ready-to-sell catfish, be it fingerlings, juveniles or table sized ones.

This latter point explains why in my discussions with many owners, they typically complained of being frustrated by the very exploitative offers made by market women who come to buy their harvested fish. The tales of woe they have told me, about how these greedy traders take advantage of the farmers’ need to get the "ready" fish out of the ponds, to buy them at very low prices (and later sell at maximum profit) are heart rending.

Each time I have been told about this problem, I have responded by telling the farmers to take personal ACTION to find BETTER buyers, so that such traders would NO LONGER feel farmers have no alternative. This is where farmers need to employ CRITICAL THINKING skills. The farmer needs to think of ways to find other people who will want his fish produce, and who will be prepared to pay what they are worth!

Some Ready-To-Use Ideas For Finding Good Buyers

In case you are wondering how the farmer will achieve this, I offer some ideas based on my personal experiences and observations.

For table size, ready to sell catfish: The farmer will need to look for beer parlours, restaurants and bars, hotels, motels, entertainment venues, event organisers etc who may need regular or periodic supply of catfish in bulk quantities at good prices. Such buyers are more likely to offer rewarding prices, compared to the market women. Actually they WILL offer better prices – I say this because I am aware of the prices some of them buy from the farmers that supply them.

The challenge is for YOU, as the farmer, to invest reasonable time and effort into locating and approaching them with an attractive offer. The resulting relationship would be mutually beneficial: they get bulk purchase of good quality catfish at AFFORDABLE prices. You get reliable, TIMELY and regular sales outlet for your catfish at PROFITABLE prices that enable you STAY in business for the long term.

Similar thinking will allow you find better sales outlets for fingerlings, if you choose to do so.

You would ask yourself questions like this: Who else would need or can use this catfish product, apart from those I am already dealing with? The answer will lead you towards securing more potentially rewarding sales outlets for your business.

You see, if you do not GO OUT and actively recruit potential bulk buying customers for your harvested catfish, to the extent that you are always able to sell off whatever you produce, at a profitable price, your business will suffer. I have seen farms with impressive looking LIVE catfish produce, but with no idea how to get enough buyers for them. And the owners just sat there – complaining lamely!

Quite often, these owners attend the training and learn how to rear the fish successfully. But their trainers (assuming they knew!) would have "forgotten" to advise them on how to get their produce sold!! The enthusiastic startups would thus launch out assuming buyers would come down in large enough numbers to empty out the ponds, at harvest time. When this does not happen, they are forced to continue spending money feeding the mature fish – inevitably increasing their cost of production.

My argument is that these farmers should have started looking for – and notifying – possible buyers some months BEFORE the fish became due for harvest. That way, they could even have gotten some intending buyers to book for the fish in advance.

Without Profitable Sales, Your Farm Biz Will Die – Even If You’re The World’s Expert On Catfish Farming!

A business that is NOT making sales will DIE. Producing (or retailing) good products and services is good, BUT of much GREATER importance, is the effort you put into finding the RIGHT type of buyers for them, who will pay you profitably.

In essence, I am asking you NOT to stop at priding yourself on the fact that you know how to make a good product or deliver a great service. Spend MORE QUALITY TIME THINKING of how to find people who WILL PAY YOU WELL to get YOUR good product or great service. If you fail to do at least that, you risk FAILING financially, in that business of yours!

Note that the approach I have described above is what I have used successfully for years now, to boost sales of my own products and services. It is based on my experience based understanding, that ONE good paying client is better than ten (10) miserly and/or exploitative ones. It can be applied to ANY business, with equally effective impact.

If you wish to learn more about using this approach or strategy to find BETTER paying customers for your business, first fill/submit this form (making sure to mention the title and web address of this THIS article), and then call me on 234-803-302-1263.

PS: This article is an educational commercial about an aspect of the Best Operating Process Management System (BOPMS™) that SDAc’s CB Solutions can help you setup for your farm business.

In the BOPMS™, major emphasis is placed on the need to streamline operations(via best practice initiatives) in a manner that allows easy integration of PC automation to reduce time, effort and resources needed PLUS increase output and accuracy in the entire farming process,so that the business becomes MORE profitable. Click here to learn more.