aquaponics economic aspects

7/31/2019 AQUAPONICS Economic Aspects

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AQUAPONIC SOLUTIONSAQUAPONIC SOLUTIONS

AQUAPONICSAQUAPONICS

Economic AspectsEconomic Aspects

Dr Wilson LennardDr Wilson Lennard


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INTRODUCTIONINTRODUCTION

This talk is built around my personal experiencesThis talk is built around my personal experiences

I have several years experience with a small scaleI have several years experience with a small scale

aquaponics businessaquaponics business Because aquaponics is in its infancy, examplesBecause aquaponics is in its infancy, examples

are few and far betweenare few and far between

Hopefully my experiences can translate to yourHopefully my experiences can translate to yourwisheswishes


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AQUAPONIC ECONOMICSAQUAPONIC ECONOMICS

Everyone knows the basics of running aEveryone knows the basics of running a

business economicallybusiness economically

In simple terms:In simple terms:You need to make moneyYou need to make money

You need an acceptable capital outlayYou need an acceptable capital outlay

You need to be able to pay off the outlayYou need to be able to pay off the outlayYou need acceptable work hoursYou need acceptable work hours


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NICHE AQUAPONIC MODELNICHE AQUAPONIC MODEL

Currently, one of the most promising economicCurrently, one of the most promising economic

areas for aquaponics is niche scale farmingareas for aquaponics is niche scale farming

(urban?)(urban?) Single owner/operator model, products sold atSingle owner/operator model, products sold at

retail price (no wholesaler), service localretail price (no wholesaler), service local

interests, directed local marketing, sales from theinterests, directed local marketing, sales from thefarm gate and to local businessfarm gate and to local business


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ECONOMIC MODELLINGECONOMIC MODELLING

Economic modelling allows us to study theEconomic modelling allows us to study the

financials of our proposed business withoutfinancials of our proposed business without

having to actually do ithaving to actually do it Modelling may be simple or complexModelling may be simple or complex

Modelling involves several factors, including, butModelling involves several factors, including, but

not limited to spread sheet analysisnot limited to spread sheet analysis

Spread sheets allow us to study the numbersSpread sheets allow us to study the numbers


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ECONOMIC MODELLINGECONOMIC MODELLING

Several factors need to be consideredSeveral factors need to be considered

Personal preferences (single owner/operator,Personal preferences (single owner/operator,

work hours, work situation, partnerships etcwork hours, work situation, partnerships etc)) Financial factors (capital required, incomeFinancial factors (capital required, income

required)required)

Market factors (market availability, nicheMarket factors (market availability, nichemarkets, local clients etcmarkets, local clients etc))


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ECONOMIC DESIGN REALITIESECONOMIC DESIGN REALITIES

The system has to be sized based upon twoThe system has to be sized based upon twomain criteria:main criteria:

The amount of capital available.The amount of capital available.

The amount of income required.The amount of income required.

A third requirement (for the niche approach) isA third requirement (for the niche approach) isthat one person can operate the system. ie: thethat one person can operate the system. ie: the

system is a model of a single person, home-system is a model of a single person, home-based business.based business.


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CAPITAL REQUIREDCAPITAL REQUIRED

Several choices are available, most of whichSeveral choices are available, most of which

involve borrowing moneyinvolve borrowing money

For this reason (being in debt), my approach isFor this reason (being in debt), my approach isto keep my borrowings as low as possibleto keep my borrowings as low as possible

Sources include Banks, Financial Institutions,Sources include Banks, Financial Institutions,

Friends, Business PartnersFriends, Business Partners

Start small if possible (need to borrow less)Start small if possible (need to borrow less)


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INCOME REQUIREDINCOME REQUIRED

Begin your modelling with your income in mindBegin your modelling with your income in mind

No use being in business if you cannot makeNo use being in business if you cannot make

money!money!Work out the income you require vs the effortWork out the income you require vs the effort

expendedexpended

Required incomes rise when partners becomeRequired incomes rise when partners become

involvedinvolved


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THE APPROACHTHE APPROACH

I reason that, if the fish production side of theI reason that, if the fish production side of thebusiness AT LEAST PAYS for ALL the runningbusiness AT LEAST PAYS for ALL the runningcosts, then the plants will produce pure profitcosts, then the plants will produce pure profit

This means that aquaponics is at leastThis means that aquaponics is at leastcomparable with, and maybe better than,comparable with, and maybe better than,standard hydroponicsstandard hydroponics

This is because the running costs in hydroponicsThis is because the running costs in hydroponicsmust come from the sale of plants, which eatsmust come from the sale of plants, which eatsinto profitsinto profits


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ECONOMICS OF THE FISHECONOMICS OF THE FISH

Sizing of the fish system is based upon the sizeSizing of the fish system is based upon the sizeof the plant system required to meet potentialof the plant system required to meet potentialplant revenuesplant revenues

Also sized for single person ease of operationAlso sized for single person ease of operation

Fish sales at this scale (< 2 tonne/anum) areFish sales at this scale (< 2 tonne/anum) areNOT economically viable in normal recirc.NOT economically viable in normal recirc.

Fish sales used to cover the running costs of theFish sales used to cover the running costs of thesystem/businesssystem/business


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ECONOMICS OF FISH SALESECONOMICS OF FISH SALES

You must know there is an available market inYou must know there is an available market in

your areayour area

You must have a good idea of what that marketYou must have a good idea of what that marketwants in terms of species and regularity ofwants in terms of species and regularity of

supplysupply

This is a niche situation, wholesale fish sales areThis is a niche situation, wholesale fish sales are

completely differentcompletely different

It does allow a lot of control on your behalf!It does allow a lot of control on your behalf!


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ECONOMICS OF PLANTSECONOMICS OF PLANTS

You must know there is an available market inYou must know there is an available market in

your areayour area

You must have a good idea of what that marketYou must have a good idea of what that marketwants in terms of species and regularity ofwants in terms of species and regularity of

supplysupply

This is a niche situation, wholesale plant salesThis is a niche situation, wholesale plant sales

can be completely differentcan be completely different

It does allow a lot of control on your behalf!It does allow a lot of control on your behalf!


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OVERALLOVERALL

ECONOMICS/APPROACHECONOMICS/APPROACH Fish sales used to cover running costsFish sales used to cover running costs

Plant sales therefore approximately equal netPlant sales therefore approximately equal net

profitprofit Owner/operatorOwner/operatorlabour cost becomes profitlabour cost becomes profit

Employ low energy/sustainable energyEmploy low energy/sustainable energy

principles (eg: solar heating, one pump designprinciples (eg: solar heating, one pump design

etcetc) to lower operating costs) to lower operating costs


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RULES FOR MODELLINGRULES FOR MODELLING

Take a simple approach (ie: money spent vTake a simple approach (ie: money spent v

money made)money made)

ALWAYS over estimate your system buildingALWAYS over estimate your system buildingcosts (I use a 20% rule!)costs (I use a 20% rule!)

ALWAYS under estimate your sale prices forALWAYS under estimate your sale prices for

fish and plants (I use the 20% rule)fish and plants (I use the 20% rule)

ALWAYS model this way first, before makingALWAYS model this way first, before making

any other decisionsany other decisions


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RULES FOR MODELLINGRULES FOR MODELLING

Spend a lot of time doing this modellingSpend a lot of time doing this modellingGETGET

IT RIGHT!!!!!!!!IT RIGHT!!!!!!!!

Spend a lot of time doing market researchSpend a lot of time doing market research

Speak to chefs etcSpeak to chefs etc in the area you want to sellin the area you want to sell

to so you gain knowledge of what they actuallyto so you gain knowledge of what they actually

wantwant

Remember, with chefs, itRemember, with chefs, its QUALITY thats QUALITY that

counts, not quantitycounts, not quantity


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SPREAD SHEET ANALYSISSPREAD SHEET ANALYSIS

Spread sheets allow us to model our businessSpread sheets allow us to model our business

before we actually spend much moneybefore we actually spend much money

We can model capital requirements, on-goingWe can model capital requirements, on-goingcosts, incomes, pay back periods, break evencosts, incomes, pay back periods, break even

points etcpoints etc

Number crunching may be boring, but isNumber crunching may be boring, but is

invaluable!!invaluable!!


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ASSUMPTIONSASSUMPTIONS

The assumptions we make are critical to theThe assumptions we make are critical to the

voracity of the modelvoracity of the model

Be as exacting and comprehensive withBe as exacting and comprehensive withassumptions as possibleassumptions as possible

Get someone else to check your assumptionsGet someone else to check your assumptions

and make sure they reflect reality!and make sure they reflect reality!

Research is requiredResearch is required


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LESSONS LEARNEDLESSONS LEARNED

Technical feasibilityTechnical feasibility economic success.economic success.

Marketing, marketing and more marketing.Marketing, marketing and more marketing.

Keep your customers HAPPY.Keep your customers HAPPY. Be truthful with customers (liars lose!).Be truthful with customers (liars lose!).

Try to grow what you have already sold (again,Try to grow what you have already sold (again,

more MARKETING!!).more MARKETING!!). Be realistic about your time.Be realistic about your time.


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CONTACTCONTACT

Dr Wilson LennardDr Wilson Lennard

Aquaponic SolutionsAquaponic Solutions

[email protected]

www.aquaponic.com.au

Ph: 0409 542 621Ph: 0409 542 621

aquaponics economic aspects

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