I feel the need to talk about commercial aquaponics because recently there have been three important news stories about its potential. Two of them (‘Industrial Organic Aquaponics: Like Industrial Organic Agriculture but Better’ and ‘Fish Farms, With a Side of Greens’) were quite positive, describing the potential of commercial aquaponic facilities in urban areas, mainly by focusing their lens on Sweetwater Organics in Milwaukee. The third (‘Aquaponics Businesses Grow, but Profits Prove Hard to Reap’) however, focused on a commercial basil grower in Hawaii who is having difficulty finding a market for his produce because so many aquaponic farms are now operating there and serving a relatively small resident population.
These three articles really struck me because when I discovered this amazing growing technique called aquaponics, the first thought I had was to start a commercial aquaponics operation. This led me to months of researching, analyzing, and interviewing before I finally concluded that commercial aquaponics just wasn’t the right direction for me. However, I learned a lot along the way and I’d like to pass some of my lessons learned on to you just in case you are considering the same idea.
- Know your consumer! – Your market will be local, and your competition will be large growers that can cheaply produce and probably bring in product from all over the world. With commercial aquaponics you probably won’t be able to compete on price but you will be able to offer organic, sustainable and “local” produce. So, the key question you must answer is will your local consumers pay a premium for the distinct value you will be offering? If the simple answer is ‘yes’, then you will have identified a market. But the next question is ‘what is the size of that market and is it big enough to sustain your business model?’ If your analysis tells you the market is big enough then ask yourself what else might impede the market accepting your product? Here is an example of what I mean. Organic, local produce is highly sought after in my home town of Boulder, but along with that enthusiasm comes a romantic attachment to traditional dirt farming. People here often automatically think “oh, aquaponics is associated with hydroponics, which is very unnatural and is connected to pot-growing. Yuck. Overcoming this perspective would require some serious marketing. Bottom line do your home work, be honest with yourself about what you discover, and plan your business to best meet the needs of your market.
- The further away from the end consumer you get, the more convenient it is for you, but the more people will be taking a slice of your profits. We discovered you can market local organic produce directly to the end consumer through farm stands, farmers markets and CSA’s. But selling direct limits the amount you can sell and therefore the sales volume you can generate. However, if you want to use various distribution channels, you need to sell large volumes at much lower margins in order to become profitable. This suggests that you need to decide early what kind of business you wish to build – small and local with higher margins but lower sales, or bigger with a wider reach but with lower margins.
- Talk to lots of people in the industry, especially potential buyers – This was incredibly useful. I talked to several restaurant owners and chefs, and learned that they could be a very viable market for picked and delivered-that-day produce, especially salad greens. Chefs were also very interested in being able to specify what was grown for them. This suggests there might be an interesting market for custom salad blends and unusual herbs. I also talked with grocery store managers in town and found that one family owned store would buy everything I grew (price would probably be an issue, though) and another, Whole Foods, loved working with local producers (it is a big push for them), loved the idea of promoting aquaponics (we even discussed having a web-cam link to the greenhouse so customers could see the activity there, again MARKETING is critical) and they did not have a local supplier of watercress so were very interested in that. All great learning.
- Consider focusing on off season produce – We have a very active farmers market (biggest in Colorado and considered one of the top 10 in the country) but given our climate, everything is very seasonal, and fresh produce goes away for about half the year. There is a big market for off season produce. Lettuce in the middle of the summer. Tomatoes in April. Everything from October to April. If you can figure out how to keep heating costs down, this could be the entire focus of a business plan right here.
- Consider a CSA model – This is basically an extension of everything discussed above. After all was said and done, we decided that the best way to approach our market was through a year-round CSA (community supported agriculture) model where we would sell shares of our production to “members”. The members would be invited to participate in the decision making about what we would grow, and would get a percent allocation of what came out of the commercial aquaponics greenhouse each week (including fish) – and if there was a catastrophe they would share in that as well. The shares would be in 3 month blocks, and the members could pick their own produce from a list we would provide, if they wanted to (we thought families with kids would love this), or we would pre-pick for them and a box would be ready for pickup on certain days. Any “excess” produce could be sold at the greenhouse, sold to restaurants, donated to the food bank, or fed to the fish.
- Consider the flexibility of your system – Given the CSA model we were leaning towards, being able to grow a wide variety of crops was extremely important to us. I was designing our commercial aquaponics greenhouse with a combination of media beds and stacking towers for fast growing plants (now I would use ZipGrow vertical towers). I moved away from using raft systems because of the limited set of plants you can grow, plus raft systems are more expensive to install and take more time to maintain. I believe it is important to be nimble and be able to react to your market no matter which model you start with.
- Fish probably won’t be a profit center - Here in Colorado we have a federal prison that produces most of the “local” tilapia sold in grocery stores. It’s pretty tough to compete with prison labor. The price that tilapia fillets earn barely covers the cost of feed. We found that some grocery stores were interested in perch and barramundi, but these fish are more difficult to raise (maybe not the perch) and grow relatively slowly. The bottom line with fish is that we were hoping to break even on the cost of feeding them and heating their water. In exchange, they would provide all of our plant food at no additional charge! Plus, they would add a very potent point of differentiation to our organic produce operation. Look into your local market prices for the fish you want to grow as part of your analysis.
- You may not be able to “process” your fish - In order to fillet a fish in Colorado, and I believe most of the rest of the country, you need to pass through some serious regulatory hoops and have a specially designed and inspected facility. You can, however sell them live, or “mostly live”, meaning whole and on ice. When we looked into this, it meant that we could only sell to Asian markets and/or directly to consumers and restaurants. Again, restaurants were the most excited but only if they could have the fish they wanted – tilapia wasn’t all that enticing to them. Again, figure out what works in your market and what regulations you are going to have to face.
- Start with a small setup and learn first I can’t say this strongly enough. The riskiest thing you can do is go to a weekend workshop and think that you are ready to manage a large commercial aquaponics operation. While aquaponics is not complex once you understand how it all works, you need to grow for a while before you become experienced at recognizing signs of trouble. I can now walk into my greenhouse and instantly know that something is wrong because the sounds and the smells aren’t normal. I can look at the fish and observe their eating habits and tell how healthy they are. I can look at the plants and tell if I have a pH, nutrient, or insect problem. A year and half ago, I had none of these skills. I shudder to think what would have happened had I started a large growing operation before honing these skills.
- Know thyself – I ultimately decided not to pursue a commercial aquaponics operation because I finally came to the personal realization that, although I have tremendous respect for farmers, I am not a farmer by nature. I don’t do well with routine and solitude. I was intimidated by the notion that I had to be on call 24 hours a day until our business got big enough to hire employees, and even then would still be on call 24 hours a day, really. I’m a bit of a wimp when it comes to physical labor in a hot environment. Given my background, I’m vastly more comfortable with backyard systems and helping people successfully start aquaponics in their homes. I love to teach, write, and promote – I’m a big picture person, not a detail person. But that is just me. Do you have what it takes to be an aquaponic farmer? We should all hope that there are lots of people out there who have the fortitude to do this commercially!