MANAGERIAL ECONOMICS

Assignment 1
Oliva, Jan Drew L.
Bachelor of Science in Accountancy
1st Year – Section A

Fisheries sector hounded by more issues of shortages

Tue, August 30, 2022 at 4:54 PM

Marvin Joseph Ang

Fish farm groups and other fisherfolk organizations are struggling to farm fish like bangus
(milkfish) and tilapia due to a shortage in feeds, and lack of fish fry.

Several groups are calling on the government for help as their feed conversion ratio (FCR) – the
ratio of the number of kilogram of feeds needed to produce a kilo of fish – has skyrocketed in
recent weeks.

What used to be a consumption of 1.2 to 1.6 kg of feeds in farms in the Visayas enough to grow
an average size of bangus, now has increased to 1.8 to 2 kilos of fish feeds, which could also spike
the cost of this once-readily available fish in the market, according to the chair of Philippine
Association of Fish Producers Inc., David Villaluz.

“A higher FCR translates to a P10 per kilo increase in production cost. Add the P4 per kilo increase
in feeds cost [and] the total increase in production cost is P14. Small fish farms may not be able to
bear these additional costs,” Villaluz said.

Meanwhile, fish ponds in Mindanao are experiencing an all-time high of FCR, up to 2.4 to 2.6 kg
of feeds needed, prompting a shortage of fish fry usually exported to other countries such as
Indonesia.

“The fry being shipped from Indonesia is often of low quality,” Joseph Anthony Lanzar, Malalag
Bay Fish Cage Operators and Fisherfolks Association’s president, said.

The fisheries sector had asked the government in April to allow them to import process animal
proteins (PAPs) from countries hit by the African swine fever (ASF), after it imposed a temporary
ban in 2019.
Although the temporary ban was lifted only for aquatic feed use, the National Federation of Hog
Farmers Inc. last week reiterated their appeal for PAP importation ban in order to not hamper the
ongoing fight against ASF.

They said that they’re not against importing PAP for as long as it came from countries that have
been declared free from ASF.

The fish farms groups are also asking for the implementation of the Brood Stock Project to lower
the cost of fish farming in the country.

“We need a central hatchery to provide adequate fry to our growers. This way, we can stop our
dependence on Indonesia. We are not getting consistent fry quality from them. It can range from
Class A to Class C fry, depending on the seller,” Villaluz said.

Right now, the country is also experiencing other shortages such as in oil, onion and sugar. The
ball now lies with the administration of President Ferdinand Marcos Jr., who is also the agriculture
head, to resolve these issues.

Summary of the Article

Alongside the shortage of supply of oil, onion, and sugar in the Philippines, local fish farming
industry has also been facing a challenge in growing local favorite demands such as milkfish and
tilapia due to shortage of feeds and lack of fish fry which contains the nutrients needed in fish
farming. Additionally, the ratio of the number of kilogram of feeds needed to produce a kilo of
fish increased. As an effect, this leads to an additional cost of farming amounting to Php14.00,
which could then lead to an increase in the average price of fish in the market. Moreover, the
National Federation of Hog Farmers Inc. is against to the importing of process animal proteins for
aquatic feed use from countries hit by the African swine fever. The fish farm groups had also asked
for the implementation of the Brood Stock Project to stop our dependence on Indonesia’s fry
imports as these are often of low quality.
Service Organization: Effect and Possible Solutions

Higher average price of specific aquatic goods could become an economic problem for service
organizations such as restaurants. As input increases its acquisition cost, they could either increase
their final selling price to sustain the business, decrease the serving quantity to control the price,
or execute both depending on their target market. Another possible solution is to switch to local
alternative favorite dish. Also, big chain restaurants could resort to a long-term solution, being
able to provide their own supply by putting up facilities for fish farming. Lastly, another option
that small restaurants can execute is to buy reject goods. These reject goods in the fish market are
not rotten or inedible, in fact, these are just the ones that are not likely to be sold in the market
because of its appearance and other aspects.

Manufacturing Firm: Effect and Possible Solutions

Producers that sell frozen fish products and other related frozen goods could also be affected by
the shortage of fry and higher cost of farming. As their input acquisition price increases, one
possible solution to sustain the business is to increase their selling price. Also, they could reduce
the weight of the fish per pack to control the price. If inputs are not possible to be acquired on a
sustainable price or if the consumers are not satisfied with the decrease of weight of products, the
producers could find alternatives that is possible to be acquired on an average price. And if the
consumers are not satisfied with the price, a change of target market, if possible, could be a
solution.

Consumer Behavior: Effect and Possible Solutions

Due to its higher price, the consumers will experience a dilemma in buying fish in the market. As
an individual consumer, resorting to alternative preferences to decrease expenditures is a possible
solution. In addition, proper budgeting and saving could help them allocate their income to the
needs instead of spending on their wants. On a larger perspective, few of the possible solutions
that our government could execute are most likely to update the price cap of the affected goods as
well as its inputs to control the price, making a business sustainable while being affordable for the
consumers, allow the imported fish fry and other nutrient-efficient fish feeds from other countries
but with strict inspection to increase the supply and lower prices of commodities, and to provide
the fish farming industry subsidies to sustain their business as well as build facilities for the
purpose of hatching fish fry to increase the supply and decrease our dependence on Indonesia’s
low quality exports. These government decisions will eventually lower the price of specific aquatic
products, thus increasing consumers’ purchasing power.

References:

Ang, M. J. (2022). Fisheries sector hounded by more issues of shortages. Yahoo! News.
https://ph.news.yahoo.com/fisheries-sector-hounded-more-issues-shortages-
085448331.html