Jump to content


Photo
* * * * * 2 votes

The Business of Aquaponics


  • Please log in to reply
407 replies to this topic

#1

GaryD

    Senior Member

  • 9947 posts
  • Joined: 14-May 07
  • Location:
    Macleay Island, QLD

Posted 18 January 2011 - 07:42 PM

Hi,

Making aquaponics work as a business is a subject that has been canvassed at length on this (and other) forums.

Notwithstanding that, the various forums evidence a steady stream of queries from newcomers about how to do commercial aquaponics.....and I get several emails each week asking similar questions.

I've written about these things on a number of occasions, but given the level of interest, some of the more important considerations bear repeating.


In considering an aquaponics business, the key questions include:
  • Do you have the knowledge and skills to construct an aquaponics system?
  • Do you have the technical skills to operate a commercial aquaponics system?
  • Do you have the knowledge and skills to run a food production business
Knowing how to build and operate a commercial aquaponics system is not the key issue. There are successful models already in operation......and there is a growing number of people who can help you to produce fish and vegetables.

The issue is not whether it can be done......but rather whether it is financially viable.

Business exists to make a profit. Making a profit comes from knowing about business.....not knowing about aquaponics.

You can be the most proficient vegetable grower on the planet but, if you cannot sell what you produce for sufficient money to cover your costs and provide a profit, you are going to be just as bankrupt as the worst vegetable grower on the planet.

Each business comprises three core functions.......marketing, operations and finance. Of these, marketing is the most important (and the least understood) because, in business, nothing happens until someone sells something.

I get a little concerned when I hear people talking about how aquaponics produce will command a premium price......because it's aquaponics produce. No, it won't.

The organic produce market struggles to get a premium (which it needs because of its generally higher production costs) and that's after 30 years of educating the market about what organic means.

One prominent aquaponics producer in the US has reverted to hydroponics because they've found that they get produce of more consistent quality......in marketable quantities.....at more competitive prices.....by growing hydroponically.

Currently, the world is full of commercial aquaculturists and hydroponics producers who are not moving to aquaponics......simply because they remain unconvinced that it is viable to do so.

Until that changes, aquaponics will reside largely in the backyard/smallholder domain. The possible exception will be those places where the climate, labour costs and water shortages favour aquaponics over conventional horticulture.

Gary
"All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident." - Arthur Schopenhauer

www.microponics.net.au - for candid dialogue on integrated backyard food production.
www.urbanaquaponics.com.au - the home of the Online Urban Aquaponics Manual.

Aquaponics Nation is proudly sponsored by:
Click here to visit
AlliedAqua.comClick here to visit
TilapiaSource.comClick here to visit
PremiumFishFood.com

#2

Kellen Weissenbach

    Super Moderator


  • 2335 posts
  • Joined: 20-May 09
  • Location:
    Kansas City, MO USA

Posted 18 January 2011 - 11:27 PM

Hey Gary,

I was asked a nearly identical question a few weeks ago. My response I gave them is below. Eerily similar to your advice in many ways. hehe...

-------

I don't have the benefit of knowing your background or experience in aquaculture, so I apologize in advance if I tell you things you are already aware of or seem a bit negative. It's not intentional, I promise, so please don't be offended.

Operating a profitable Aquaponics business is not an easy thing to do. Don't fall for the hype that claims otherwise. Anyone telling you that you'll get rich from aquaponics is just trying to sell you something. You have to be a cynic to survive in this industry. It's hard work and a lot of financial risk. Some of the most brilliant folks in the industry are struggling to make a go at it. I believe it will become much less risky over the next several years as technology improves and better scientific methods are utilized, but it is definitely a challenge currently. It requires a pretty hefty financial investment. Initial capital expenses can easily exceed $100,000 US in the first year before you see a single penny of revenue for just a small scale commercial endeavor. A real commercial system requires commercial grade equipment. You won't get by on DIY stuff like you would with a home system. Commercial = mission critical... and that costs money.... lots of it. Plus, you'll need redundant systems, industrial grade power backup systems, monitoring and automation systems, etc. Finding an honest and truly knowledgeable consultant in the industry is quite a challenge as well. There are a LOT of snake oil salesmen out there unfortunately.

If you have some experience with owning your own business and in writing business plans, that will certainly help. However, prior to investing the time in the business plan process, I would suggest researching markets for your fish and veggies. If you can't find a market for your products, there is no point in proceeding. You quite literally cannot afford to put the cart before the horse. You also need to decide on what you can reasonably risk financially, and what you expect to earn from such a venture, and how soon. For instance, can you afford not to bring in an income for at least 9 months from the venture? What about 24 months? Can you afford to risk the capital required for startup and initial operating costs? Do you plan on funding it entirely from your own personal net worth? If not, do you have good enough credit to qualify for enough loan money for the startup capital required to begin? Do you have enough money to pay the loan payments while you're not pulling in any revenue initially? You'll likely have to personally guarantee any loans. Can you afford to risk your personal assets on a business venture? Those are just a few of the answers you'll need to come up with prior to working on a business plan.

Additionally, if you are not experienced in the operational side and business side of the aquaculture and food industry, you need to get this experience and education before you even consider starting your own operation. The same goes for learning the ins and outs of running a business. For instance, you must understand sound accounting practices and financial analysis. You must have a reasonable understanding of taxes as they pertain to a business and associated tax consequences for a self-employed individual. You must be able to sell, which typically includes cold calling and in person sales presentations. You must be able to understand liability implications as well as have at least a basic understanding of business law. You must have a solid grasp on how to set prices, analyze cost of goods sold and set reasonable margins. You must understand what "phantom income" is, and know how to prevent this as best you can in order to avoid tax liabilities that could potentially destroy cash flow.

Taking classes from some of the aquaponics training sources might help to give you some basic knowledge, but nothing will replace real classroom experience with credentialed professors in biology, chemistry, horticulture, etc... and nothing will replace prior professional experience in the field. Don't get me wrong, many of these "training organizations" mean well, and do a pretty good job at providing a basic understanding of aquaponics systems, but really, how much experience do THEY have in operating a truly financially sustainable AP business of any kind of respectable scale? Many of them have little to none.

Hiring people with all this knowledge will eat up all of your profits unless you have enough capital to go HUGE, so it's pretty much out of the question in most cases.

There's a little bit for you to think about! hehe... sorry for the headache. Feel free to shoot me an email if you have any questions, and I'll do my best to help out.

Take Care,
Kellen


White Brook Tilapia Farm - Certified Disease Free Tilapia Fingerlings

Kellen Weissenbach | Hatchery Manager | Kansas City, MO USA | www.tilapiasource.com | Twitter | Facebook


#3

MarkEinOz

    Valued Member

  • 208 posts
  • Joined: 10-October 07
  • Location:
    Seaford, Vic AU by week - Quantong, Vic AU by weekend

Posted 18 January 2011 - 11:38 PM

Thanks Gary for that timely editorial.

It certainly does not take much to get all giddy with excitement at the propect of "doing AP" for a living, but as you point out - you need to know how to run a business. I fear for a lot of new start-ups in the game who receive extremely naive "advice" regarding scalability and input/output units. I have not seen a great deal of evidence to disuade me that to make a small fortune from AP, first you start off with a large fortune....

To wit, as someone with a small winery & cidery in it's infancy - I am highly sensitive to the balance of lifestyle/commercialsm and ROI.

Beware (of) people, and be aware.

Keep up the good advice Gary.
Cheers!

Mark Ellis

"Be excellent to each other"

#4

Damon

    Member

  • 504 posts
  • Joined: 03-November 10
  • Location:
    ohio

Posted 18 January 2011 - 11:39 PM

I really really reallll hate to say this, but friendly aquaponics turns a profit as an organic aquaponic farm. Now most people point to their prime growing conditions as the reason for that, but really that has only a small part to do with it.

Granted they do get great sunlight pretty much year round, but they also get too much of it causing a percentage of their crop to bolt rendering it useless. Their trick is what they sell is a "value added" product. Selling just straight heads of lettuce is not a viable business when dealing with aquaponics, ill give gary that, but if you accent the growing power of aquaponics with its ease of harvesting, and add some tlc to the mix, you've now added minimum of $2-$3 to you origional product.

Ive seen, and managed, their raw numbers, and they work. When your running costs are $3k monthly and you income is $10k monthly... it doesnt take an accounting wizard to see that there is a profit margin to manage. Now subtract the labor average labor wage, and youll find your margin is smaller, but theres wiggle room if you do some of the work yourself.

Their farm, from a commercial standpoint, was small, only producing 400 lbs of lettuce a week. Now a mixed lettuce sells for less than lets say ice burge or romain. But the value added aspects that they apply help their cause.

Also the labor wages are on a sort of inverse curve. Its not always for one unit of work applie you get and equil amount back. 1 more helper can produce more help than you'd expect. To harvest 200 lbs and do the value added stuff on their farm only took 4 well trained people 8-9 hours... with 6 people we'd complete the same task in 6 hours... with 8 people we'd do the same amount of work before lunch.

Gary's correct when he mentions needing a market to sell to, but there's more than just the costco or sams club markets, depending on your location. Theres also the restaurant industry that has its own independant produce vendors.

Once set up, and if set up, run, and managed efficiently, AP systems stand to lterally be a license to print your own money. You just have to be able to full recognize and accept what ou're doing, and reccognize and accept a cost of running portion of your AP system from what most would lead you to beleve is supposed to be a profit producing portion of your farm.

Also, one of the biggest problems i saw on the friendly aquaponics in the large amount of time i spent there is you have to know and live by the limits of your farm. Needless expenses and building senseless projects without the proper capital set aside will hurt your business, but this will come to most of you reading this as common sense.

I've seen the numbers work, it's really only a matter of scale, market, and management. I can lend a heaft vote in the direction of AP being a viable way of farming, it just has to be fully realized froma business aspect and things need to find their proper place of importance, I.E. raising mass amounts of fish is not viable, but seeing the fish raising as a running cost and not a profit producer will produce a profit if managed as such.

Efficiency in your fish rearing will ensure success. By not having, and not feeding, more fish than necessary you'll reduce your running cost while maintaining your production of produce. The friendly aquaponics didnt make $110k last year selling their fish, they did it by selling their value added lettuce product... i think they'd be lucky to claim that they made any where close to $5k on their fish sales. And those numbers are public knowledge known to anyone that has attended their farm tour.
creating the path of least resistance is what i do.

#5

Kellen Weissenbach

    Super Moderator


  • 2335 posts
  • Joined: 20-May 09
  • Location:
    Kansas City, MO USA

Posted 19 January 2011 - 12:55 AM

Hi Damon,

I really appreciate your willingness to share information about your experiences at Friendly AP. I really enjoy reading your posts. I do want to point out though, that there are some extremely important benefits that apply to operating an aquaponics business in Hawaii that most other locations simply do not have. This GREATLY skews the numbers in favor of commercial aquaponics when using one from Hawaii as a model system/operation. It would be quite a different story if Friendly AP was operating the same system, using the same model, in, say, Iowa.

- Hawaii offers possibly the most perfect climate available for year round aquaponics operations. Temperatures are mild and extremely consistent all year round. This means no heating or cooling is required, greenhouses are not needed, plants grow at optimal levels, etc. This translates into lower capital expenses and significantly reduced ongoing operating costs.
- Hawaii imports most of their food. This comes at a great cost and drives up food prices compared to other areas. Simply put, food costs more in Hawaii because of this. This means a local grower, aquaponics related or not, has the ability to charge more than most other areas, and yet his operating costs remain significantly lower than they would be in the vast majority of other worldwide locations due to the great climate. He charges more and pays less. Bigger product margins = Better chance for overall profitability and positive operating income. In addition, a local farmer/grower in Hawaii has a bit of a competitive advantage over large corporate food suppliers. He doesn't have to build transportation costs into his pricing structure like the others do. The market in Hawaii offers a nice bit of geographic protection that isn't enjoyed in most markets.
- Hawaii is HUGE on "local foods". The demand is much higher for such food items, and supply simply hasn't caught up yet. In Hawaii, it's possible it never will. A premium can likely be charged for "local" in much of Hawaii, depending on the product. Not so in many other locales.

Just some things to consider.

Edited by kellenw, 19 January 2011 - 01:21 AM.

White Brook Tilapia Farm - Certified Disease Free Tilapia Fingerlings

Kellen Weissenbach | Hatchery Manager | Kansas City, MO USA | www.tilapiasource.com | Twitter | Facebook


#6

Damon

    Member

  • 504 posts
  • Joined: 03-November 10
  • Location:
    ohio

Posted 19 January 2011 - 01:21 AM

The average air temp of friendly ap is aound 78 degrees f. Lettuce thrives around 65 degrees f. The heat is in a way detramental.

The sun light there is great, until the clouds roll in everyday at 4pm. Also, since lettuce is derived from northen latitudes, it doesnt really require all the lumins that are available in hawaii... this alos causes the lettuce to bolt.

The only thing the temp. Really 100% fully benefits is the fish, but as ive stated before since their fish sales are negatable when it comes to their yearly bottom line, you could use a local cold water fish like perch, walleye, or even channel cat fish, all of which can tolerate poor water conditions.

And yes, their market does help their price... but at any local store you'll still find that a regular every day head of lettuce is still dirt cheap. Now when you walk into the costco in kona, you'll see a bag of their lettuce selling for around $7 per pound right next to a pink package of romaine that has 8 heads packed together, and their average size is 3 inches across and about 1ft tall... and those go for $12 a package. So they do have competition against a higher quality product.

And lets not get too short sighted. Other cool temp. Crops such as green onions that can either be sold whole or as chives can br grown... also with the seed at which they replicate bulbs, after a few crop rotations your biggest problem would be finding a solution to getting rid of the excess bulbs.

Like ive mentioned before, copious times, i live in norther ohio, 20 minutes from the now frozen great lake erie. And in my area there are already 3 indoor commercial farms that have no problem turning a profit while keeping their multi acre green houses heated to a mere 65 deggrees and sunlight this time of year is a rarity, but the amount of solar radiation that makes it through the constant cloud cover seem to be more than enough for these farms to keep up production year round. Check out the chefs garden and green circle growers... these are just two of many farms of their kind here.

Now add in the benefits of aquaponics... faster growth rates to speed up production amounts, higher planting density to maximize spacial performance when restricted to a set indoor spacial limit, and the ease of crop harvesting and rotation, and the shear amount of water saved by using a recirculating system... thse benefits far outweigh the cost of running a water pump, and air pump, and the cost of fish food... basically by using an ap farm they could produce 4-6 times the amount of product in the same space that they are currently using nearly twice as fast... which means 8-12 times their origional amount of production, with only a margional increase in running cost.

Really until some one can tell me how the benefits of ap simply wouldnt work in a green house that already exists and is turning a profit using conventional growing methods im going to contine to be a firm advocate of using ap instead of conventional farming methods. The space is already being heated so the ambient air temp inside the green house would be more the adequit for any type of lake erie fish. And like i said in the post beforw that if you manage you fish as a running cost instead of a profit supply, food cost could be held at a minimum as well as electrical usage for aeration of their tanks, and money saved in that area could be then used for artifical lighting if you fell that what already is working in my area still isnt good enough.
creating the path of least resistance is what i do.

#7

Damon

    Member

  • 504 posts
  • Joined: 03-November 10
  • Location:
    ohio

Posted 19 January 2011 - 02:47 AM

One thing i did forget to mention is you're right about the higher food prices, but what you didnt cover is the cost of building materials, which is more expensive on hawaii, the cost of water, which is more expensive on hawaii, the cost of electricity, which is more expensive on hawaii, and the cost of labor, which is more expensive on hawaii, and im pulling that last one based on the fact that hawaii is the only place ive seen where at McDonalds worker starts out at $9 and hour to flip burgers instead of the federal minimum wage which i believe is around $7.50.

So yes, they may be charging more than you would get on the mainland, but that's only to reciprcate the fact that it costs more to produce, and since they aren't shipping off island or to some place where they could charge a larger mark up on price... the profit margin ratio stands to benefit those on the mainland with access to electricity thats about half the cost, and water that is a far cry less expensive... oh and on the mainland you wouldnt have to pay and extra dollar per pound on average to have fish food shipped to your farm.

So in the arena of cost effictivness... hawaii may not be the best place when dealing souly within the scope of ap... yes it may be cheaper than conventional... but thats comparing apples to oranges... now when you compare a commercial system on hawaii with a proposed commercial system on the mainland in lets say arazon, nevada, southern cali, texis, or anyplace in the cotton belt region... well then we'd be talking all about apples... and when it comes to growing power and places in the mid west and north east... those are colder apples, but still apples none the less.
creating the path of least resistance is what i do.

#8

Kellen Weissenbach

    Super Moderator


  • 2335 posts
  • Joined: 20-May 09
  • Location:
    Kansas City, MO USA

Posted 19 January 2011 - 02:56 AM

The average air temp of friendly ap is aound 78 degrees f. Lettuce thrives around 65 degrees f. The heat is in a way detramental.


78 degrees looks to be about the average high throughout the year, but the average low is right around 67 or 68 throughout the year. That is a fantastic range of temps for YEAR ROUND lettuce production, and it's hard to find much better anywhere in the world, except for a few very, very specific places. http://www.weather.c...hly/graph/96727

The sun light there is great, until the clouds roll in everyday at 4pm. Also, since lettuce is derived from northen latitudes, it doesnt really require all the lumins that are available in hawaii... this alos causes the lettuce to bolt.


Shade cloth would go a long way in fixing this problem and costs very little. I'm surprised they wouldn't use it.

The only thing the temp. Really 100% fully benefits is the fish, but as ive stated before since their fish sales are negatable when it comes to their yearly bottom line, you could use a local cold water fish like perch, walleye, or even channel cat fish, all of which can tolerate poor water conditions.


Relative to most of the world, the temp range and consistent nature of it in Hawaii is a HUGE benefit to year round plant growth, not just the fish growth. As far as the fish selections you mentioned, Perch are a pretty reasonable fish for some locations, but growth rates can be a bit on the slow side and canabalism is often quite high at the fry and fingerling stages. Catfish are a pretty good fish for a wide range of climates, but local market demand isn't always that great. Walleyes are not well suited at all for AP systems.

And yes, their market does help their price... but at any local store you'll still find that a regular every day head of lettuce is still dirt cheap. Now when you walk into the costco in kona, you'll see a bag of their lettuce selling for around $7 per pound right next to a pink package of romaine that has 8 heads packed together, and their average size is 3 inches across and about 1ft tall... and those go for $12 a package. So they do have competition against a higher quality product.


So in other words, from that perspective, they have their own niche that they currently fill without competition, which leaves them fairly independant of the imported food supplier's pricing model, allowing them to charge more for basically an inferior product because it's "local". However, if you believe that's the case, and it very well could be, should a few more local commercial AP operations pop up, Friendly AP could be in some trouble. Supply saturation could turn their currently advantaged niche "goods" into a standard commodity, and then it would simply be a matter of price positioning for sales and market share. This inevitably leads to reduced consumer prices (good for the consumer) and lower profit margins for the supplier (bad for the farmer).

Really until some one can tell me how the benefits of ap simply wouldnt work in a green house that already exists and is turning a profit using conventional growing methods im going to contine to be a firm advocate of using ap instead of conventional farming methods. The space is already being heated so the ambient air temp inside the green house would be more the adequit for any type of lake erie fish. And like i said in the post beforw that if you manage you fish as a running cost instead of a profit supply, food cost could be held at a minimum as well as electrical usage for aeration of their tanks, and money saved in that area could be then used for artifical lighting if you fell that what already is working in my area still isnt good enough.


Converting an existing, established, profitable greenhouse from standard soil based growing methods to aquaponics is really quite a bit different than starting up an aquaponics operation from scratch. If a standard/traditional greenhouse is profitable, the hard part has already been done to a large extent. A viable business with a profitable clientele has already been established. The operation is ALREADY successful. The risk is minimal, assuming the grower is qualified to run an aquaponics based growing system and can do so at the same or reduced cost versus traditional methods. What we (Gary and I) are saying is that marketing savvy and business acumen are vital to the success of an aquaponics venture, and even then there is plenty of risk, just like most any business startup. However, there are a lot more people trying to sell the IDEA that commercial aquaponics can rake in massive profits than there are people actually DOING it.

White Brook Tilapia Farm - Certified Disease Free Tilapia Fingerlings

Kellen Weissenbach | Hatchery Manager | Kansas City, MO USA | www.tilapiasource.com | Twitter | Facebook


#9

Damon

    Member

  • 504 posts
  • Joined: 03-November 10
  • Location:
    ohio

Posted 19 January 2011 - 10:02 AM

Ok, ill come out and say it, the amount of sunlight falling on their farm is very close to disasterious. Theres a man in kona with 3 large family sized trough areas. His biggest problem is keeping his lettuce, and really all of his produce safe from the sun. All of his plants have surpassed their their heat limitations and wilt, which damages the lettuce and reduces the shelf life and also robs the lettuce of a crsip crunch while eating. Yes the average low temp may be around 65, but. Thats only for a few short hours.

Keeping shade cloth anywhere commercially. Is a pot dream and quite frankly a giant waste of money. One good gust of wind over 20mph and all of your hard work wll end up in a neighbors feild.

the "world tribe lettuce" grown by friendly aquaponics is accompanied on the shelf by 3 and most weeks 4 similar products, all in their own unique packaging and styles but all of them are sold as a lettuce mixe and all of them are sold for around the same price. Again i point to commercial restaurant vendors like sysco and gordon foods as potential buyers... ive found 2 buyers of this fashion since ive been home looking for a farm such as an ap farm to supply them. Yes, in certain areas in the west. There may be a market saturation of produce because eating healthy is the new bigthing, but most of the produce grown in ohio is shipped out for consumption. Chefs garden supplies high end facilities in new york for example with their microgreens, yet another crop that would do exceedingly well in an indooor system. And when it comes to finding a market, well... thats the whole reason you'd run a market demographic like any bother sensable business person... of course you would build a burger joint right next to a mcdonalds... that why you have to know your market or face the cost of shipping your food.

And yes there is a difference between build a new facility from scratch as opposed to converting. But when you run the demographic before you decide to build in a certain area, that takes out alot of the business gamble.

All i was pointing out is the fact that indoor fcilities already thrive in colder regions without the added advantages of ap. And of course it doest take a person with ap knowledge to manage an ap farm... but just as anyother business that also runs also the lines of common sense... not many burger flippers running law firms... its a silly metaphore but it hits the mark. In any situation you're going to need to know what youre doing before you get started, thats why i spend 3 hours a night answering questions about ap business fesibility. And just as tim and susanne will tell you, each persons business modle will be different from the next, so of course what may work in Mich. Might be overkill in north carolina.

All im saying is if someone is already using the wheel in my area out of stone, how then could it not be beneficial to use a rubber tire?
creating the path of least resistance is what i do.

#10

Damon

    Member

  • 504 posts
  • Joined: 03-November 10
  • Location:
    ohio

Posted 19 January 2011 - 10:56 AM

And really whats eats me up on both of the forums that im apart od is the large amount of backyard bobbiests making claims about things they dont full comprehend based on either lack of expierence of false information. And this goes with both side of the business viability argument.

Ill be the first person to cast a vote for the viability of commercial ap on here, but i also be the first person to shoot down any false claims about the profitability as well... because when others make false claims about the grandiosity of ap to make a quick buck it makes it harder for people like me who are looking for an honest job managing a commercial ap farm.

And really when it comes to making any sort of claims in dealing with ap viability theres only a hand full of people with any sort of athority on the matter based souly on the fact that those people are the only ones with commercial running cost numbers and sales records.

Im strongly opposed to those people selling pipe dream ap kits that make impossible claims, but im also opposed to people a quarter of the world away making claims with only half of the numbers and insight at the disposal.

There are going to be pros and cons when dealing with any business, and ap is no exception to the rule. But just like any other business its not limited to any specific region, and it is subject to all variables that can make or break your lively hood. Im not saying jump right in and start up a commercial ap farm, all im suggesting is that if a lower standard of farming is already working who is anyone to say that with its benefits that ap cant be an option.

And to answer on point thati forgot about, you are right, there are only a few people at the moment that have any sort of knowledge when it comes to a commercial farm, but i am one of those chosen few that can understand the pros and cons on ap and manipulate a system amd its costs to make a system viable. Are systems viable in the tundra? Probably not. But they arent viable in death valley either. Two opposing enviroments with their own set of pros and cons... so to base an idea and make claims against one or the other souly based on what has been done before without any type of system adjustments it not only careless, but detramental to the entire science of ap itself.
creating the path of least resistance is what i do.

#11

keith_r

    Member

  • 523 posts
  • Joined: 01-December 10
  • Location:
    northeast ohio usa

Posted 19 January 2011 - 12:22 PM

great thread

#12

Pseudoreality

    Member

  • 433 posts
  • Joined: 24-December 10
  • Location:
    Yellowknife, NT, Canada

Posted 19 January 2011 - 03:11 PM

Are systems viable in the tundra? Probably not.

Your comment there caught my eye, because I have been doing some serious thinking on whether a system would be viable in the Canadian Arctic. I travel to small remote arctic communities that, with the exception of locally harvested fish and game, pretty much live off of one sealift a year. Some fresh produce is flown in at a huge cost, but by the time it gets there it's typically in poor condition. I know I have a hard time getting water samples out of the communities to a lab within a reasonable amount of time and maintaining temperature conditions. So I have been wondering about the economics of local food production. It would have to be an indoor system with artificial light. Power, fuel oil, and labour costs are high. It wouldn't be easy to make a go. I wouldn't imagine there's much of a market for fish as everyone can catch all they could eat nearby. So without the fish market it might be better to just go for a hydroponic system. Although it would be nice if you could get a local nutrient source; worm composting of unused animal parts for example.

#13

Damon

    Member

  • 504 posts
  • Joined: 03-November 10
  • Location:
    ohio

Posted 19 January 2011 - 05:06 PM

Ive been in various managwment positionsduring my short span of life, so my mind is geared towards efficiency... even in physics broken down to the smallest units, theres always waste... and as such controlling over head is something one needs to have a great understanding and firm grasp on.

The biggest problems that youre going to face is maintaining a suitable envrioment. Here in northern ohio the temp does dip down to well below freezing... during certain parts of our winter you can toss a cup of water into the air and itll freeze before it hits the ground, but our saving grace is the fact that those weather conditions are that extreame for only a short period of time, mostly only a few months. It is possible to maintain a farm in the harshest condition i believe, but your profit margins would be so low that youd be more or less applying for government funding because you would qualify as a nonprofit organization.

Also with that the sun only pops out for direct light once a week, some times less here, but the density of the cloud cover is so low that 2500 - 3000 lumins still make it through the clouds, which is more than adequit. Now take those levels and subtract the amount of light that wont make it through your green house glass or which ever material, and youre now looking at the actual amount of light making it to your plants.

On possible solution to off setting some of you running cost would be to generate a portion of you electricity yourself. Since where im at gets low light in the winter solar pannels would be a bust option for a farm here... but since we're right on the lake, and most of the land is open farm land, theres always a stiff breeze. Actually when the wind stops here people kind of panic, kind of like that whole "eye of the storm" feeling. So we'd use windmills to suppliment electrical cost. Today was an average weather day with freezing rain and winds 10-20 mph from the NE... meaning more than enough wind power to turn the fan blades on a wind mill. The beautiful thing about our area is the harder the wind blows the colder it gets, but its also all the more electricity than can be made to heat your home or farm... so with the bad literally would come the good.

Since your fish market is already flooded you could use low end fish that can survive poor water conditions. Since they arent being sold for profit you wouldnt have to worry so much about high aeration levels that trout would require, and you wouldnt use a food that is super high in protein which would be more costly.

Basically offsetting running costs anyway possible would be the name of the game in your case to salvage what little profit margin would exist. But since as you said that fresh produce is a top commodity in your area, you'd be looking at a higher sales rate, which would be good for your profit margins. And since as you said produce is so scarce, youd literally find yourself in a sellers market and would be able to grow pretty much anything youd want that would be compatible with an ap system, I.E. any leafy greens.

Youd want a fail safe system, just incase you find yourself in a situation where the wind or sun (depending on which supplimental energy source you choose) stops producing. This would be in the for of a gas or propain powered electric generator.

All things are possible, its just the fact that the harder that you have to fight your envrioment the more creative you have to become, or be ready to face a loss... id starts out on a small scale... small wind generator and a small room similar in size comparison to what you expect your greenhouse to be. Let them run both for a while and maintain a temp of 62-68 degrees F in the room letting the energy generator (wind mill or solar pannel) supply the bulk of energy to run the heater and see what the cost is after. Then really you take that info and adjust accordingly... if the running numbers simply wont match up then the will of the surrounding envrioment is too strong, but if the running cost numbers hold then you'll be looking at applying for the gov. Help programs that are directed at building electrical generating sources... they wont cover the whole cost, but theyll take a large chunk out. Then over the posibility of them paying themselves off are present.

You'll want to be completely sure of all of your running cost numbers before you decide to take on the artic circle. And since its cold year round you really wont have any wiggle room for error. So again, make sure all of your numbers work out before anything drastic is done.
creating the path of least resistance is what i do.

#14

Pseudoreality

    Member

  • 433 posts
  • Joined: 24-December 10
  • Location:
    Yellowknife, NT, Canada

Posted 19 January 2011 - 08:04 PM

Thank you for your detailed response Damon. I should clarify that I am not personally considering building any type of commercial system anywhere. I was just wondering what the economics would be and whether a system could help a remote community. Maybe next time I get weathered into one those communities for days on end I'll have the time to attempt a detailed economic analysis.

#15

GaryD

    Senior Member

  • 9947 posts
  • Joined: 14-May 07
  • Location:
    Macleay Island, QLD

Posted 20 January 2011 - 01:14 AM

Hi Damon,

You cover a lot of ground when you get going.....and no-one doubts your passion for what you do.....but there are some points that I think need to be addressed:
 

I really really reallll hate to say this, but friendly aquaponics turns a profit as an organic aquaponic farm. Now most people point to their prime growing conditions as the reason for that, but really that has only a small part to do with it.

No-one is disputing that Friendly Aquaponics was profitable......although (based on your assertion) they didn't have sufficient money to pay you for several months.
 

Once set up, and if set up, run, and managed efficiently, AP systems stand to lterally be a license to print your own money.

Not to the point where people are flocking to do it. You still haven't pointed to existing operators (outside of Hawaii) that are realising reasonable profits much less printing their own money.
 

The friendly aquaponics didnt make $110k last year selling their fish, they did it by selling their value added lettuce product... i think they'd be lucky to claim that they made any where close to $5k on their fish sales. And those numbers are public knowledge known to anyone that has attended their farm tour.

How much of Friendly Aquaponics' income comes from selling farm tours, information kits and training courses?
 

And in my area there are already 3 indoor commercial farms that have no problem turning a profit while keeping their multi acre green houses heated to a mere 65 deggrees....

So, if they're already making a profit from something that they know and understand, why would they bother to get into something which is, in their experience, rather less certain?
 

Really until some one can tell me how the benefits of ap simply wouldnt work in a green house that already exists and is turning a profit using conventional growing methods im going to contine to be a firm advocate of using ap instead of conventional farming methods.

No-one is arguing that aquaponics doesn't work. What you have not been able to do, so far, is evidence your claims about the profitability of aquaponics by pointing to other successful enterprises outside of Hawaii......which (as Kellen has successfully argued) enjoys a raft (excuse the pun) of climatic and market advantages.

I've lived among farmers and market gardeners for much of my life and they are a conservative lot for the most part. Premised on my experience of them, I suggest that, until you have such examples, you will not see any broad swing toward commercial aquaponics.
 

Keeping shade cloth anywhere commercially. Is a pot dream and quite frankly a giant waste of money. One good gust of wind over 20mph and all of your hard work wll end up in a neighbors feild.

Much of Australia's commercial hydroponics and horticulture industry is located in large shadehouses. I imagine that a similar situation would apply in most hot climates.
 

All im saying is if someone is already using the wheel in my area out of stone, how then could it not be beneficial to use a rubber tire?

The point that I'm attempting to make is that, so long as the move to a rubber tyre doesn't survive a cost benefit analysis......or provide tangible examples of successful rubber tyres elsewhere.....people are going to stick with the stone ones.
 

And really whats eats me up on both of the forums that im apart od is the large amount of backyard bobbiests making claims about things they dont full comprehend based on either lack of expierence of false information. And this goes with both side of the business viability argument.


And really when it comes to making any sort of claims in dealing with ap viability theres only a hand full of people with any sort of athority on the matter based souly on the fact that those people are the only ones with commercial running cost numbers and sales records.

And to answer on point thati forgot about, you are right, there are only a few people at the moment that have any sort of knowledge when it comes to a commercial farm, but i am one of those chosen few that can understand the pros and cons on ap and manipulate a system amd its costs to make a system viable.

With respect, your aquaponics business experience is limited to a single farm in a sympathetic location in an easy market......and you haven't yet made a convincing case.

Im strongly opposed to those people selling pipe dream ap kits that make impossible claims, but im also opposed to people a quarter of the world away making claims with only half of the numbers and insight at the disposal.

The fact is that some of us have made conscious decisions not to become involved in commercial aquaponics. My understanding of both aquaponics and business tells me that setting up a commercial aquaponics farm (based on the models in popular contention) would cost several hundred thousand dollars.....and I'm not about to spend that sort of money to buy myself a job......and, as things stand, that's what would be happening.

Business is business......and one of the first things any businessperson is going to say is "Show me where you have examples of the type of profitable operation that you're speaking about."

You're asking people to put their money up based on your conviction (and no-one doubts your sincerity) that the model of aquaponics with which you have experience is translatable in most places and markets. That's simply not how experienced investors behave.
 

Are systems viable in the tundra? Probably not. But they arent viable in death valley either. Two opposing enviroments with their own set of pros and cons... so to base an idea and make claims against one or the other souly based on what has been done before without any type of system adjustments it not only careless, but detramental to the entire science of ap itself.

We're not talking about those sorts of extremes......but rather the sorts of places that people already grow lots of food using conventional means.

As for the science of AP, one of the issues that you confront (in your efforts to secure employment in the AP industry) is the fact that there is not sufficient track record in commercial aquaponics to attract interest from investors and to create the sorts of opportunities that you are seeking.

Gary

 


"All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident." - Arthur Schopenhauer

www.microponics.net.au - for candid dialogue on integrated backyard food production.
www.urbanaquaponics.com.au - the home of the Online Urban Aquaponics Manual.

#16

Damon

    Member

  • 504 posts
  • Joined: 03-November 10
  • Location:
    ohio

Posted 20 January 2011 - 03:51 AM

The reason frienly aquaponics is in a downward spiral is mainly caused by their poor money management, not business viability. The fact that they are spending their money on personal items faster than they are making money through their business has no reference to viability.

The $110k i mentioned was only their lettuce sales. Those are the numbers i was in charge of. Now as for their income streaming from their classes and manuals, those were a set of numbers controlled by susanne and kept in the dark from all eyes. So again the $110k i said they made does not include they money made from the sales of their manuals nor the sales of trainings or spots in their classes. Oh, and their farm tours are free on saturday mornings just as its stated on their website, so no money to be made there.

And you're correct in stating that no other large scale farm exists for commercial business, but as far as commercial viability being the reason... its a posibility, just as its a prsibility that its not. And when it comes to a start up cost, that comes with any business. In the food industry you can expect a large start up cost even if you're only leasing a hole in the wall, and the average over head is near %70 percent after labor and food cost and all of the bills are tabulated. These low margins havent stopped mom and pop sandwich shops from poping up. And yes most of them do fall off the band wagon over time, but thats mainly to not catering to their market demographic, not so much the running costs. I can site my own town as an example when i say we have 9 pizza joints and people still insist on building more...

And also going along with the fact that no other farms exist, the science of making ap efficient enough the form a business has only been around for a few short years in the grand scheem of thingd. If new things wernt brought about by venture capitalist things like microsfot and wal*mart wouldnt exist. Yes, there arent many records proving the growing power of a system on commercial level dealing with the average yeild per square foot in a commercial system that corralates to the weather that was recorded for the same time frame which would prove as viable evidence of profitability... but i have those numbers. I can tell you exactly week by week how much lettuce was produced per square foot and where it came from on their farm, how much space was needed to produce a certain weight quota and the dates these numbers were calculated on... im pretty sure that covers the numbers portion... and as for their climate being perfect... i discussed their climats draw backs earlier as far as excess heat and sunlight goes... but no one likes to bring those up. Similar climates just as hospitable exist in the contiguous states as well, and i mentioned those before also. So with all that being said, by having to simulate their growing conditions and taking out the negetive aspects may cause a difference in profit margins, but atleast those records supply a factual, existing, concrete basis to grow off of. And as ive stated before the use of supplimental electricity can help to off set costs, especially when the gov. Pays for part of the construction.

And when i talk about the present indoor farmers im not saying that they should convert... this isnt the crusades... im simply saying that because of AP's ability to grow more food faster in the same spacial limitations of existing farms running only a marginaly small more costly operation could stand to prodive better profits. If you can say that in your back yard u can grow more vegies faster than if they were in the ground than how can you not give the same credit on a larger scale? Thats like saying a small apple would taste different than a larger apple off the same tree...

When it comes to the shade cloth, it wouldnt and couldnt work on their farm. They live on the hamakua coast, which stands for the breath of god... vinal structures have a hard time surviving their wind conditions due to large sail areas (areas of solid light mass that catch the wind like a sail boat), so hows is a sun permiable fabric held inplace over the growing troughs at a height tall enough to allow proper growth and harvesting going to hold up any better under the same conditions?

When it comes to the easy market comment... ill leave that one behind by saying hawaii has the largest amount of farmers markets and personal farms per capita in the united states. Every 20 miles down the mamalahoa going from their farm to hilo is a farmers market selling local produce. So yes hawaii is sympathetic to the local produce craze, but buying from costco isnt exactly the best example of going local when theres a farmers market withing an equil driving distance. And thats not even mentioning the produce sold in local stores across the island. And as ive mentioned before there are 3-4 other brands of lettuce mixes that share the same shellves as their lettuce in the one solitary costco on their island.

Yes, the start up is going to be a bit high, but when building something from nothing you'll have that. Yes their produce is sold at a higher value, but the value of its production is also higher... their electricity is $0.48 / kwh... twice that of most places on the main land. They have a value added prouct, they arent shelling out heads of cabbage. Those same techniques can be implemented anywhere and show the same value increases. Their key selling point isnt their market demographic, theres a dozen different types of lettuce in their costco, they key point is "washed and ready to eat" which only 5 of those dozen claimed the title of while i was on the big island.

Finding examples of prospurous commercial ap produce farms are hard to come by, in my opinion its because theyre still trying to couple their fish sales to equil their produce sales, but thats a topic for another thread. But ap farms also dont exist because it is a new business, and because of its infancy anyone who builds a commercial farm will be the spear heads of this new technology... bill gates didnt make microsoft what it is today by waiting to see someone else's results.

Any system will be different, but have the posibilities of being just as profitable as the friendly ap system. Its as if youre flat out saying that under no circumstances can a commercial ap system work anyplace else other than hawaii by only looking at the negetive aspects of comming to the main land and ignoring the positives such as cheaper building and running costs. Places like northern texas, nevada and arizona exibit the same climate types as kona or honokaa. Places like the cotton region of the U.S. need only to suppliment their envrioments temp. Only a few short months of the year, and even then they only need to raise the temp maybe 20 degrees F at best. Their are people with farms in places where sunlight isnt as bountiful as the friendly ap system and their produce is growing all the same, and really... theres only a few months during the summer where theres sunlight every day of the week... and now that i look at my notes there were only 4 complete weeks during those months where it was sunny every day. And even being sunny every day those weeks didnt rate a perfect score on my scale because we lost the direct sunlight to clouds for the last 4 hours of day light. So really on the average day their farm only had direct light for 70% of the day. And of that 70% the direct rays of the sun would cause the lettuce to bolt and wilt and the wind would shred shade cloth if we'd have taken the time to set some up. Also, ive never mentioned before, and neither has anyone else for that matter, along with "bountiful plant life" comes the critters that eat them. Yes we encountered things like aphids and white flies, and yes they did come in mass. As a result our yeilds dropped, but ap systems being the growing dynamos that they are we would only suffer a small loss and make it up within 2 months... there towards the end after a few more modifications were made to the system to regulate the aeration in the troughs we were beginning to face the problem of needing a bigger sales account with costco... the production skipped ahead almost 3 full weeks of the forecasted time frame... surprise...

The growth of ap as a business option cannot be limited by only what was done before... if thats the case all systems would be as expensive to set up as the origional UVI system built out of concrete. Gary, by what you are stating im getting the firm hint that you believe that hawaii, with its higher start up cost and higher running cost is the only place that ap can be done at a profit even though prime examples of of similare climates and health food and buy local trends also exist in the contiguous states... youce said nothing at all about viability in sun rich states. And nothing about viability in food concious states. And the coiencidence is... most of the sun lit states are also food concious states... ive not seen any actual numbers when it comes to comparing food, water, and electrical costs comming from your end either... i just dont feel that it needs to be mentioned that everything is sold at a higher cost on hawii, not just its food... its kind of an inherant thought. All the numbers, cost and sales, would be lower on the mainland, so the profit margins would really be equil. We couldnt demand the same price on the main land, and it doesnt cost nearly as much as far as running costs. Those numbers i do have converted for mainland ap commercial farming... when you take a system that works and place in similar circumstances (suitable climate and consumer demograhpic regions) with quotable benefits in occardence to running cost and building cost and then place it in a larger market that is cheaper to reach... that pretty much makes it a home run.
creating the path of least resistance is what i do.

#17

Damon

    Member

  • 504 posts
  • Joined: 03-November 10
  • Location:
    ohio

Posted 20 January 2011 - 03:53 AM

I hit the character limit and had to omit some points, so if anything was left out that anyone would have liked to see let me know and ill post my thoughts... at great length as youve all seen. Haha.
creating the path of least resistance is what i do.

#18

GaryD

    Senior Member

  • 9947 posts
  • Joined: 14-May 07
  • Location:
    Macleay Island, QLD

Posted 20 January 2011 - 01:57 PM

Hi Damon,

Gary, by what you are stating im getting the firm hint that you believe that hawaii, with its higher start up cost and higher running cost is the only place that ap can be done at a profit even though prime examples of of similare climates and health food and buy local trends also exist in the contiguous states... youce said nothing at all about viability in sun rich states. And nothing about viability in food concious states. And the coiencidence is... most of the sun lit states are also food concious states... ive not seen any actual numbers when it comes to comparing food, water, and electrical costs comming from your end either...

My position has nothing to do with numbers but rather the fundamental premise that, if commercial aquaponics was as profitable as you suggest, there would be lots of people doing it.......and that's simply not the case.

Further.....until there are more examples of profitable AP operations, the industry will remain retarded.

People are largely influenced by social proof.....they most frequently do things because others are doing them.

The other thing that will mitigate against people rushing to embrace commercial aquaponics is the history of agricultural "get rich" schemes that have proliferated over the years. In Australia, we've had ostrich/emu farming, angora goats, jojoba, aloe vera......and many other things that "entrepreneurs" have presented as ways to make lots of money. At one stage, about 30 years ago, Angora does were selling for upwards of $4,000 each.....and overnight the price dropped to $25.

That's the backdrop that you have to overcome.

I do know of people who are getting into commercial aquaponics but they are few in number, they've spent large sums of money, they are working very hard.....and it will be a long time before they reap the rewards of their efforts....if ever.

I believe that, as things stand, the best scope for commercial aquaponics is as part of an integrated approach which includes more than just fish and plants.

We've only just begun to scratch the surface with integration and I think that it's the future for small farmers.

In my view, the most likely way to make money from aquaponics is as part of a much broader approach to farming that includes the production of fish, vegetables and herbs, rabbits, quail, chickens, worms, fodder shrubs and trees, animal protein (BSF and other fly larvae), etc.

The key to commercial small-scale farming is to avoid being seen by the market as a commodity producer. Commodity trading is a game where the lowest price wins.

Adding value and developing relationships with the end user (eliminating the middle man) through farmer's markets and community-supported agriculture (CSA) systems is the means by which small farmers retain a fair share of the price the consumer pays for their produce.

Gary
"All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident." - Arthur Schopenhauer

www.microponics.net.au - for candid dialogue on integrated backyard food production.
www.urbanaquaponics.com.au - the home of the Online Urban Aquaponics Manual.

#19

Kellen Weissenbach

    Super Moderator


  • 2335 posts
  • Joined: 20-May 09
  • Location:
    Kansas City, MO USA

Posted 20 January 2011 - 03:18 PM

Damon,

You have mentioned this $110k figure many times, but is that a sales revenue number, a gross profit number, an EBITDA number, etc.? You stated that this was "only their lettuce sales", so I'm assuming you are saying that this figure was the sales revenue for lettuce sales.

White Brook Tilapia Farm - Certified Disease Free Tilapia Fingerlings

Kellen Weissenbach | Hatchery Manager | Kansas City, MO USA | www.tilapiasource.com | Twitter | Facebook


#20

Damon

    Member

  • 504 posts
  • Joined: 03-November 10
  • Location:
    ohio

Posted 20 January 2011 - 04:56 PM

When it comes to the number of commercial farms, they are in fact few and far between. This could be attrubuted to the fact that only a small portion of the human population actually knows anything about Aquaponics at all. Do this for me, walk down the street and ask 50 people if they've heard about aquaponics. Ill be willing to bet that less than 5% of the people asked would even know a small inkling as to what you were talking about. The knowledge of aquaponics as a whole is largely unknown, and with that how can you expect some sort of super explosion of the industry when the science itself is largely unknown.

Ive seen the effects of market saturation. Things like tickle me elmo and snuggies plague the nation with their flash in the pan populatity. What sets a popular product from a lasting product is necessity and consumption. Furby didnt last long, but food being a consumable needs to be replenished. And if it can be done cheeper and at greater quantities, then whos to say the through the eyes of efficiency that as a commercial business that it wont work. Just the fact that things like industrial planting combines, its fuel, and constant maintainence are cut from the equation and only replaced with a pump, fish food and electricity makes the running cost lower. Not to mention just one of those bad boy machines costs are in the hundreds of thousands of dollars to own just in itself... actually just one combine is equilivant to the cost of a small commercial ap farm.

One thing we were exploring is a cross breed between ap systems and dirt farming. You cant verywell grow trees on a raft, but through farm expansion you can run you rain water over flow onto the ground thus giving your soil many of the same nutrient benefits as in the troughs themselves. I can point out a patch of bananna trees growing on their farm that periodically got some of the systems overflow and produced banannas in half of the time a normal bananna plant would have. So there are many implications stretching as far as the imagination will allow.

If you can provide the same product as your competitors at a better quality at a lower price, group mentality shows that people will go great lengths to save a few cents. So if undercutting the competition is what needs to happen well then... i guess thats just capitalism.

And as for the figure kellen is asking about. Thats the number of generated sales from their farm which had a slow start, only producing 80lbs a week for the first few months. Had they've been producing their current average from the beginning that number would be larger. The trick to maintaining your flow of production is knowing how much is available to harvest without haresting so much that your dropping your yeild per square foot.

And the reasons i dont mention specific harvesting numbers is because the shear amount of emails i recieve asking for them... the harvesting ratios are key when it comes to having a business plan. Even though they do come from what i personally believe is a farm too small to be adequitly commercial, food produced per square foot in a small commercial system is the same as in a large system... for after all the demensions of a square foot dont change based on their surroundings.

To say that something isnt taking off because its largly unknown really is a redundant statement... yes the aquaponics community may have a few thousand members, but as a ratio to the living population... its still a very very small number of people. I wouldnt open up a discgolf product manufactureing company and expect millions because i know theres only a few hundred thousand people on the planet that take that sport seriously. But when it comes to ap, theres only a reletivly small group of people with the technology that will produce a product that is consumed in mass world wide.
creating the path of least resistance is what i do.




0 user(s) are reading this topic

0 members, 0 guests, 0 anonymous users