August 10, 2022

How to Prepare a Business Plan for a Shrimp Farm?

Shrimp Farm

The shrimp industry is one of the biggest industries in aquaculture, with increasing demand worldwide. Shrimp farms are now increasing in numbers in countries with temperate climates.

 If you are considering engaging in shrimp farming, you should perform due diligence and conduct in-depth industry research before diving in. Preparing a financial plan is one of the critical activities you should do.

This article will discuss the key points you need to consider when preparing a business plan for a shrimp farm.

1. Products

There are different types of shrimps, which include white, brown, pink, and tiger shrimps. Sizes will also vary from small to jumbo shrimps, which differ the number of pieces per pound. You can also produce either fresh, frozen shrimps or both. Identify your value proposition to penetrate the market you are planning to cater to.

2. Target Market

You should first identify your target market. It will help you position your product better and cater to the specific demand of your buyers. You may position in the local market such as the foodservice, restaurants, and supermarkets. Or you can export your products. Catering to these markets has different requirements which you need to adhere to.

3. Competitors

Identify who your competitors are. Are there small and big players in the market? How much are their product volumes? How can you compete with them in terms of volumes and prices? Also, what segment of the market are they already catering to? Is there still a gap you can fill-in?

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4. Prices

Large shrimps command a higher price. However, producing large shrimps will expose you to more risks since the shrimps will stay longer in the ponds. If you plan to sell large shrimps, ensure to mitigate the risks.

Fresh shrimps can also be sold at a higher price compared to frozen. But since your product is perishable, it is inevitable also to sell frozen shrimp. In your projections, estimate the percentages sold as fresh and frozen.

5. Location

Where you situate your farm will affect transport costs in purchasing the farm inputs and delivery of harvest. Ensure that your farm location is accessible to any mode of transportation and has a stable water source. Enough water is crucial to maintain the quality level and avoid contamination. Also, are the roads in good condition? It ensures that the shrimps will not get stressed during travel to avoid a high mortality rate during stocking and minimize weight shrinkage during delivery.

6.  Farm Inputs

Farm inputs include feeds, other nutrients, and antibiotics. There are also fertilizers costs to promote the growth of natural foods in the ponds. Feed consumption per breeder is around one pound for their one-year productive life, while the jumbo shrimp can consume about 0.13 pounds until they reach marketable size. Timely sampling is done to ensure that the feeds correspond to the body weight ratio of the shrimps.

7.  Laborers

Direct laborers are hired to perform the day-to-day activities of the farm. Also, hire a technical expert who knows every aspect of the operation to oversee the operation and give instructions to the workers. Daily wages and other benefits are computed in the business plan to reflect the direct labor costs.

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8.  Cropping Cycle

Per cropping approximately takes four to five months depending on the age of the seedstock during pond stocking and marketable shrimp sizes upon harvest. Also, consider the idle period before the start of the next cycle.

9. Initial Investment

The needed investment will depend on the pond area you will develop. The initial investment needed is working capital and capital expenditure (CAPEX) to start the operation. CAPEX needed are the land, land development, vehicle, aerators, monitoring equipment, and other equipment necessary for the operation. Compute the initial investment needed during the period when there are no cash inflows yet. It is crucial to have enough resources during this time to have a smooth flow of operation.

10.  Sources of Funds

After computing the needed initial investment, you can now identify if you have enough resources to finance the operation. However, if you are short in capital, sourcing outside funding is your other option. You can present your financial plan to the banks and investors. Ensure that the profitability of your project is shown to attract banks and investors to put funds in your business.

Run the numbers based on the terms offered by banks if it will fit on the timing of cash inflows from the farm.

After identifying these ten factors, you can now do an in-depth financial analysis of your business by preparing the financial statement, financial ratios, financial metrics, and break-even analysis. You may need a financial model template when making the financial projections of your project. By using a financial model, you can run through different scenarios and decide the level of risks you want to take.

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There is a financial model template for a shrimp farm offered by eFinancialModels. This model is fully editable and easy to use, where you can input your assumptions and run the analysis.