PRELIMINARY ECONOMICS OF AQUAPONICS

Harry Ako and PingSun LeungDepts. of Molecular Biosciences and

Bioengineering and Natural Resource and Environmental Management

College of Tropical Agriculture and Human Resources

University of Hawaii at Manoa

• We generated a simple economic model that was fun to play with and I came to some interesting projections.

• We gathered information from farmers which was very interesting to me.• I therefore told Clyde, why don’t we have a workshop? A little out of

hand.

Why?

We thought that aquaponics might be good for island ecosystems because it is 6 times more productive per unit area of land, uses on 2% of the water as traditional agriculture and releases no effluent into the environment . It is non-polluting.

We just got back from Samoa. E-mail hako@hawaii.edu for how to

manual.

Research(introduction, not report)

We worked on a very simple system. Plywood sheet with walls, tub for fish, air pump, bucket. Shown.

Both the Ako approach and the Fox/Tamaru approach are highly technical

What we did: Economics determined by materials cost to build an 8 plywood system and cost of operations

This report is based on real numbers and very modest extrapolation. Recorded the price of the wood, every brick, PVC pipe etc. Labor not accounted for.

Capital Costs (extrapolations from 8 plywood system; start with one plywood backyard system)

Items Life 1 plywood

Lettuce traya 10 $130

Shade structure 10 $60

Fish tank 10 $80

Air pump 5 $80

Laborb $0?

Total $350

aincludes wood, screws, plastic, polystyrene sheetsbbuild yourself; this is not as good an assumption when the system is large.

• Cost of each component of each item.• Lifetime of each item.• Costs 3.5 X higher for pre-made systems or another kind of system

Capital CostItems Lif

e1 plywood

12 plywood= racewaya

5 raceways

Lettuce tray 10 $130 $1,560 $7,800

Shade structure

10 $60 $720 $3,600

Fish tankb 10 $80 $600 $2,600

Air pumpc 5 $80 $220 $1,100

Water pump 5 $310 $1,550

Refrigerators (2)d

10 $1,100

Delivery vane 10 $20,000

Total $350 $3,410 $35,110

Annualized cost

$43 $332 $6,260a4 feet wide, 100 feet long; see figureb use larger tankscuse blower for larger operationdvs $8000, chosen for energy conservation reasons ($90/yr vs $4300/yr)edoes a farm this size need a van?•Build yourself

Annualized costs are costs/lifetime in years

Annual variable costs (extrapolated from one tray)

1 plywood

12 plywood=raceway

5 raceways

Fingerlingsa $15 $180 $900

Feed $27 $324 $1,620

Electricityb $66 $788 $3,942

Water $0.56 $6.69 $34

Suppliesc $20 $239 $1,200

Interest $35 $341 $1,815

Labord owner owner owner

Lease rent $74 $434

Total variable costs

$148 $1,774 $9,045

amost of us grow our own; costs are nursery costsbat $0.30/kwh; cOasis cubes mostly; dfor the 1 plywood or backyard system, approx. 2 hr/wk; for the 1 raceway 5-10 hr/wk; 5 raceway, approx 20 hr/wk

Production (based on our data; lb/yr; pieces/wk)

1 plywood

12 plywood =raceway

5 raceway

Lettucea

211 (7.4 )

2,534 (89)

12,672 (443)

tilapiab 43 (0.83)

515 (10) 2,574 (50)

http://img.alibaba.com/photo/11697156/Tilapia_Fillet_Light_Skinned_CO_Treated.jpg

Farmers can be more or less productiveThese values predict sizes of niche markets that can be serviced.a from mediocre season like Spring; 250 g/headbmarket size= l 1b

The thoughts on planning

Choose the production volume you would like to do.

This in most cases determines the markets you can compete in and the prices you can get.

A common error is to produce without thinking about the market.

Suppose you want to have a One plywood/tray system (backyard)

1 plywood

12 plywood =raceway

5 raceway

Lettucea

211 (7.4 )

2,534 (89) 12,672 (443)

tilapiab 43 (0.83)

515 (10) 2,574 (50)• Our production numbers say 7.4 heads of lettuce or other vegetable per week. Maybe 1 fish/wk. Is this enough for a family?

• You save by not having to go to the supermarket. Prices, retail, $5.60/lb for lettuce and $9/lb for live

fish.Annual capital cost

$ 43

Annual variable cost

$ 148

Value of lettuce $ 1,183

Value of fish $ 386

Net profit $ 1,378

Thus, based on the model a backyarder could save about $1,400 a year at the

grocery store. Pays for this system in a few months (there are more expensive systems). Or just like the idea of being self-sufficient?

Suppose you want to have a Six plywood or ½ raceway system (farmers’ market)

1 plywood

12 plywood =raceway

5 raceway

Lettucea

211 (7.4 )

2,534 (89) 12,672 (443)

tilapiab 43 (0.83)

515 (10) 2,574 (50)• Our production numbers say 44 heads of lettuce a week. Enough for farmers’ market? Five fish a week.

• Prices, retail, $5.60/lb for lettuce and $9/lb for live fish.• Will have to rent stall, go to farmers’ market, deal with food safety

issues etc.

Annual capital cost

$166

Annual variable cost

$887

Value of lettuce $7,096

Value of fish $2,317

Net profit $8,360

Thus, based on the model a farmers’ market person could earn about $8,000 a year. Decide for yourself whether it is worth it.

(In Pacific Business News)

Now Janet and her husband, Ray, have cultivated a small business — with a big customer following — selling lettuce and other greens at Manoa Marketplace’s open-air market…. The bags range from $2 to $6, depending on the size….

Suppose you want to have a

Small farm (5 raceway system)1 plywood

12 plywood =raceway

5 raceway

Lettucea

211 (7.4 )

2,534 (89) 12,672 (443)

tilapiab 43 (0.83)

515 (10) 2,574 (50)• Our production numbers say 443 heads of lettuce per week. Is this enough for small specialty store? And 50 fish/week.

• Prices they say are $3/lb for lettuce and $6/lb for live fish.• Capital costs for pre-made or other systems are 3-4 times higher

than ours.

Annual capital cost

$2,080

Annual variable cost

$9,045

Value of lettuce $38,016

Value of fish $15,444

Net profit $42,335

Thus, based on the model a small farmer could earn $42,000 a year if all goes well.

Premature conclusion. You can make money but won’t become a millionaire.

A five raceway operation

Suppose you want a large farm

Farm (40 raceway system)1 plywood

12 plywood =raceway

5 raceway

Lettucea

211 (7.4 )

2,534 (89) 12,672 (443)

tilapiab 43 (0.83)

515 (10) 2,574 (50)• Our production numbers say 506 heads of lettuce per day. Is this enough for a discount supermarket? The 400 fish a week would probably overwhelm the live fish market.

• Prices might be $2.25/lb for lettuce and $6/lb for live fish (though

this high price may become unlikely).

Annual capital cost

$50,080

Annual variable cost

$72,357

Value of lettuce $228,096

Value of fish $123,552

Net profit $229,211

Cost of labor would have to come out of profit. We estimate 4-6 workers. The farmer would be profitable if he or she did everything right.

Can you compete at mainland prices?

Farm (40 raceway system)1 plywood

12 plywood =raceway

5 raceway

Lettucea

211 (7.4 )

2,534 (89) 12,672 (443)

tilapiab 43 (0.83)

515 (10) 2,574 (50)• Our production numbers say 506 heads of lettuce per day. Is this enough for a discount supermarket? The 400 fish a week would probably overwhelm the live fish market.

• Prices might be $1.25/lb for lettuce and $6/lb for live fish (though

this high price may become unlikely).

Annual capital cost

$50,080

Annual variable cost

$72,357

Value of lettuce $126,720

Value of fish $123,552

Net profit $127,835

Cost of labor would have to come out of profit. We estimate 4-6 workers. Six workers would make the business unprofitable.

Summary

We developed a preliminary economic model Working with the model was fun It predicted profitability if there is technical

excellence and imaginative niche marketing We can comfortably recommend aquaponics

on these bases. A person can make money but will not become a millionaire

I enjoyed learning a little economics I especially enjoyed learning from the

farmers

Acknowledgements CTSA seed money grant Western Sustainable Agriculture Research and

Education CTSA Pacific Island grant