Session T-89: Economic data sheets

Time: 7:30 AM

Goals:

· For trainees to become acquainted with a profit analysis format that they will be able to use when working with small-scale fishermen

Overview:

In this session trainees become conversant with Marine Economic Data Sheets and their purposes.

Materials:

· Marine Economic Data Sheet, flip chart, markers

Procedures:

Time	Activities
30 Minutes	1. Technical trainer introduces Marine Economic Data
	Sheet using following outline:
	What are Marine Economic Data Sheets?
	a. MEDS are single-sheet summaries of costs and returns for different types of marine businesses - commercial fishing, boatyards, charter fishing and marinas.
	MEDS have these purposes:
	a. to illustrate a proper profit-analysis procedure that can be used in a fishing business
	b. to provide costs and returns data for comparison with other fishermen's costs and returns
	c. as an indicator of potential profitability in a marine business
	Presentation of sample chart on newsprint (see appendix 1)
	a. explanation of each section:
	- boat, equipment and fishery
	- gross returns
	- variable costs
	- fixed costs
	- opportunity costs operator labor and management
	- opportunity costs total business involvement
	- return to operators labor, management and total investment
	- return to operators labor and management
	- return to total investment
	- net cash available
15 Minutes	2. Discussion of sample MEDS	a. How could it be modified for use in developing countries.
		b. Would this information be useful to small-scale fishermen
30 Minutes	3. Trainees are now broken into small groups of 3-4 and asked to develop their "own" MEDS, one which they perceive would be beneficial in-country. They will report back to the large group.
20 Minutes	4. Trainee groups present "low-tech" MEDS to entire group. Technical trainer comments about points brought out and possible points missed.
30 Minutes	5. Technical trainer now extracts key elements from each groups MEDS and "builds" a low-tech model which all trainees have an interest in.
10 Minutes	6. Wrap-up by technical trainer. Trainees are asked to write down finished MEDS.

APPENDIX I

ASTORIA SALMON GILLNET FISHING BUSINESS

Boat

30 feet by 10 feet, fiberglass hull, $33,000 market value, 330 hp gasoline engine.

Equipment

Hydraulic net reel, 7 floating nets, 2 diving nets, CB, fathometer.

Fishery a/

54 days fishing coho and chinook salmon, production of 7 tons (14,000 pounds) at an average price of $2,820 per ton ($1.41 per pound).

Gross Returns
Salmon	$19,740
(1) Total gross returns	$19,740
Variable Costs b/Boat and engineer repair	$800
Gear repair	$6,616
Fuel	$1,936
Transportation	$980
Food	$1,170
(2) Total variable costs	$11,502
Fixed Costs c/Insurance	$500
Depreciation	$1,650
Drift rights maintenance	$825
Licenses	$220
Union dues	$110
Miscellaneous	$348
(3) Total fixed costs	$3,653

Understanding and Using Marine Economics Data Sheets

This report explains the purpose and use of Marine Economics Data Sheets. The explanation begins at the right and continues on page 4. Pages 2 and 3 illustrate both sides of a Marine Economics Data Sheet and describe its parts.

by Frederick J. Smith Extension Marine Economist Oregon State University

Oregon State University
Extension Marine Advisory Program
A Land Grant / Sea Grant Cooperative
Special Report 500 November 19

Capt Mark is a Charleston shrimp boat, similar to the one described in Marine Economics Data Sheet SR 500-20, shown and explained on pages 2 and 3.

What are Marine Economics Data Sheets?

Marine Economics Data Sheets (MEDS) are single-sheet summaries o costs and returns for different types o marine businesses - commercial fishing, charter fishing, marinas, and boatyards. MEDS have been a service of Oregon State University's Extensio Marine Advisory Program since April 1969. All MEDS have a similar format and general plan, even though the costs and returns vary considerably.

MEDS have these purposes:

to illustrate a profit-analysis procedure that you can use in your own business;
to provide costs and returns data for comparison with your own costs and returns; and
to indicate the potential profitability of different marine businesses.

Is the information accurate?

The National Marine Fisheries Service and various universities have conducted studies of "sample" marine businesses. Some MEDS use the results of these studies. Most MEDS are based on studies conducted by the Marine Advisory Program staff, especially for the purpose of developing MEDS.

From three to six local marine business managers are selected on the basis of their knowledge, success and similarity among their businesses A MAP staff person then interviews the group, obtaining a consensus on each of the items the planned MEDS will illustrate. These and other marine business managers then review draft. of the MEDS to verify accuracy.

Data developed in this manner represent only the business involved. However, since the marine business managers participating in the studies are usually more successful than the average, MEDS usually represent an above-average marine business in all aspects.

For each MEDS, the data source is indicated in a footnote

1. Boat, equipment, and fishery

Each MEDS gives first the physical description and market value of business equipment and property. Depending on the nature of the marine business, volume of sales, and production, this item also provides effort expended and expected prices.

2. Gross returns

This is the total value of all goods and services sold, before any deductions.

3. Variable costs

These include all costs that vary as the volume of the business varies. The value of unpaid family labor [excluding the operator) is included, as is the net cost of labor (crew). Some costs, such as equipment and repair, may not vary exactly with the volume of business but are included under the "Variable costs" category for simplicity.

4. Fixed costs

These are all costs that remain constant, regardless of the volume of business. Interest on any debt is not included in this category as it is considered under item 7, "Opportunity costs: Total investment."

5. Opportunity costs:

Operator labor and management

This is the estimated value of the operator's time, or the amount the operator could have earned managing and working in another, similar business. The manager gives up this salary because it is the manager's own business. Therefore, it is an opportunity cost.

6. Opportunity costs:

Total business investment

This is the estimated fair return (interest) to the total investment, regardless of actual debt.

Marine Economic Data Sheet SR 500 20 (Front)

7. Return to operator's labor, management, and total investment

This is what the owner/operator earned for the time, skill, risk, decision-making, and money invested in the business. All costs have been covered except costs of the operator's labor, management, and total investment.

8. Return to operator's labor and management

This is what the operator earned for the time, skill, risk, and decision-making he invested in the business. Ail costs (including opportunity costs of total business investment) except the operator's labor and management have been covered.

9. Return to total Investment

This is what the total investment earned in the business. All costs except the opportunity cost of investment have been covered This can be compared with item 6 above "Opportunity costs: Total business investment," in measuring the financial success of this business.

10. Net cash available for personal outlays and debt service

Depreciation and interest are added back to "Return to operator's labor, management, and total investment," as calculated above (item 7). This is not a measure of profitability but a measure of this business' ability to meet cash needs.

11. Footnotes

These explain the technicalities of some of the costs, and they provide other necessary supporting information.

Charleston Shrimp and Crab Fishing Business (Back)

Now do you use your MEDS?

Study the breakdown of the sample MEDS provided on pages 2 and 3 of this report. Note the organization o' costs and returns. Note, too, that this arrangement is not appropriate for tax reporting or crew settlement.

Once familiar with the way MEDS work, you will find it useful to develop similar information and analysis of your own marine business. This new information and the MEDS can be used in the following way:

1. Compare your costs with those shown on the MEDS. Are some of yours too high?

2. Take your costs and returns data, and the MEDS, to your lender. Can you get better credit terms?

3. Use your costs and the MEDS to determine "break-even" prices.

4. Use MEDS to project profit or loss for a new boat, new fishery, etc.

MAP is here to help you

Your Extension marine agent can provide further assistance, and he will usually have other publications that will be useful to you.

There are four Extension marine advisory offices on the Oregon coast (listed here from north to south):

Astoria 97103 Clatsop County Extension Office Post Office (P.O. Box 207) phone: (503) 325-7441, ext. 50

Tillamook 97141 Tillamook County Extension Office Courthouse phone: (503) 842-5511, ext. 372

Newport 97365 Lincoln County Extension Office Courthouse (225 W. Olive) phone: (503) 265-5376

Coquille 97423 Coos County Extension Office 290 N. Central phone: (503) 396-3121, ext. 242

SR 500 is a revision of SG 24, November 1973, by the same author.

Extension Service, Oregon State University, Corvallis, Henry A. Wadsworth, director. This publication was produced and distributed in furtherance of the Acts of Congress of May 8 and June 30, 1914. Extension work is a cooperative program of Oregon State University, the U.S. Department of Agriculture, and Oregon counties. Extension's Marine Advisory Program is supported in part by the Sea Grant Program, National Oceanic and Atmospheric Administration, U.S. Department of Commerce.

Extension invites participation in its activities and offers them equally to all people, without discrimination.