Thursday, November 12, 2009

Can you make money with aquaponics?

University extension faculty are responsible for the development and delivery of research information for their state within their expertise, and I am no different. Over the years, I get many requests for support and advice on various projects often using modern greenhouse technologies for local food production with the intention of providing a sustainable food supply.

A sustainable food supply appears to be the new catch phrase for agriculture in the 21st century. And the concept of locally grown foods is often translated by many as a sustainable practice. Locally grown foods are typically said to require less fuel, thus having lower carbon footprint. The idea of eating only locally grown foods has become so trendy that now we have a word to describe the practice, "locavore."

To be a locovore, the challenge and adventure is finding foods from within a determined radius from home. The practice of eating locally can create a greater connection between consumers and their food sources and support the local economy. This movement is strong and many see an opportunity for new enterprises or a new way of surviving a troubled economy.

In Europe, where people have been stacked on top of each other for generations, land for local production is not easily available nor cheap. To replace the need for large expanses for food production, farmers use modern technologies. These include highly automated greenhouses as well as multi-level greenhouse structures. In our down-turned economy and with the drive for local foods, many are considering many technologies for local food production.


Aquaponics seems to be one of those technologies that is being considered by many. Aquaponics is the cultivation of plants and aquatic animals in a recirculating system. The aquatic animal effluent (typically from fish) accumulates in the water and is rich in plant nutrients, but is correspondingly toxic to the fish. Plants are then grown in hydroponically enabling them to utilize the nutrient-rich water. Thus, the plants take up the nutrients while cleaning the water for the fish. As a closed system, there is little water use, except for what is taken up by the plant for evapotranspiration or evaporation from the tank, and little potential for nutrient waste discharge. All while raising fresh produce and fresh fish.

Sounds great, doesn't it? Well many seem to think so. So many that I am getting several inquiries on how to start a business. Where are they seeing this? Many are curious after reading media releases about those whom are constructing new projects or perhaps they just returned from EPCOT at Disney World in Orlando, Florida. The Land Pavilion has a grand display of intensive agricultural practices. Yet, are they sustainable?

So let's look at some facts. Below is a table that lays out an analysis for the production of lettuce in a greenhouse that is 3,072 square feet in size. These data were generated based on typical production yielding 59,000 heads (5 ounces) of lettuce per year with a market value of $1.10 per head, farm gate.

Analysis


Variable


Costs


($)
Fixed


Costs


($)
Total


Costs


($)
Return over


Variable Costs


($)
Return on


Investment


($)
Per Head
0.70
0.15
0.85
0.40
0.25
Per Square Foot
13.39
2.87
16.26
7.77
4.90
Per House
41,130.78
8,808.90
49,939.67
23,868.22
15,059.33

Here you can see that it is possible to make money on lettuce production in a greenhouse, providing you can maintain a sustainable price structure and consistent clientele.

Now let's add the fish. Based on several web sites that promote aquaponic production using tilapia (Nile tilapia, or Oreochromis niloticus), I am going to estimate that one can expect to yield about 0.75 pounds of fish per square foot of greenhouse space per year. For the greenhouse described above, this equates to about 2,275 pounds of fish per year. In 2004, the USDA valued tilapia at $1.72 per pound, farm gate, which equates to $3,913 per year in gross value. Rembember, this is for fish in the greenhouse, not the headhouse.

The greenhouse described in this scenario if built for lettuce, would cost about $23,000 or $7.55 per square foot to build. A kit ready system based on a similar size greenhouse and fish production facility would cost about $41,000 or $13.40 per square foot. This equates to a 78% increased cost to build, which equates to a $8,200 per year cost of ownership (based on 20% of the initial costs).

The lettuce scenario includes all variable costs, such as labor, labels, tags, boxes, sales, etc. The aquaculture component does not as I don't have any ideas on what they may be. But based on these rough calculations, lettuce and tilapia grown together will cost about $89,000 per year to raise for a gross income of $68,800 per year. Or a net loss of more than $20,000 per year.


So why aquaponics? I don't see that this is a sustainable enterprise. At least not in a part of the country where the greenhouses need to be heated or where the fish tanks are in the greenhouse with the plants. Yet, I will be the first to admit that my calculations include a lot of assumptions. But my interpretations on costs of production are based on university data for lettuce production and yield data from commercial operations that sell aquaponic equipment.

Arguments for aquaponics as published by the National Sustainable Agriculture Information Service is managed by the National Center for Appropriate Technology (NCAT) promote aquaponics serves as a model of sustainable food production by following certain principles:
  • The waste products of one biological system serve as nutrients for a second biological system.
  • The integration of fish and plants results in a polyculture that increases diversity and yields multiple products.
  • Water is re-used through biological filtration and recirculation.
  • Local food product ion provides access to healthy foods and enhances the local economy.
NCAT continues that greenhouse growers and farmers are taking note of aquaponics for several reasons:
  • Hydroponic growers view fish manured irrigation water as a source of organic fertilizer that enables plants to grow well.
  • Fish farmers view hydroponics as a biofiltration method to facilitate intensive recirculating aquaculture.
  • Greenhouse growers view aquaponics as a way to introduce organic hydroponic produce into the marketplace, since the only fertility input is fish feed and all of the nutrients pass through a biological process.
  • Food-producing greenhouses—yielding two products from one production unit—are naturally appealing for niche marketing and green labeling.
  • Aquaponics can enable the production of fresh vegetables and fish protein in arid regions and on water limited farms, since it is a water re-use system.
  • Aquaponics is a working model of sustainable food production wherein plant and animal agriculture are integrated and recycling of nutrients and water filtration are linked.
  • In addition to commercial application, aquaponics has become a popular training aid on integrated bio-systems with vocational agriculture programs and high school biology classes.
Should you try aquaponics in the greenhouse? Sure but you must realize that in a greenhouse, your tanks will be small and that currently fish and vegetable products have a low market value. The technology has been proven time after time, it just not be cost effective. According to a colleague at the University of Georgia, Dr. Paul Thomas, fish production in a greenhouse rarely yields 10% of the cost because of the small size. These systems were always designed for self-sufficiancy and small community ag programs in thrird world countries. They are typically not economically feasible in the United States due to the low cost of lettuce, tomatoes, and fish. Yet aquaponics could be a lot of fun on a small scale as a hobby. In order for aquaponics to be sustainable and profitable, the greenhouse hydroponic system and the aquaculture system must be separate while integrating the water and water treatment systems. This will allow you to intensively cultivate the plants and maintain your fish tank density at a productive level.

7 comments:

Joe Barfield said...

It is hard to accept your analysis without the supporting data for the aquaponics side. Do your numbers include Value Add expenses such as cleaning and packaging and Direct to Consumer sales? These bring expenses up, as well as the price per pound of fish or produce.

I do appreciate your bringing this subject up. In any business there are models that FAIL. Some models may be winners...

Steve Newman said...

I don't disagree with you. Your comments do bring up other issues, most that continue to increase the costs of production. My calculation were based on assumptions that include some processing, but the value was based on farm gate sales from USDA on a national scale. Those that user separate facilities for the fish and the plants will have greater profit.

slywoman said...

Hi Steve. We met a few years back while I was still at AeroGrow. I've left AeroGrow to work on consumer based products for aquaponics, so I couldn't agree more with your assessment. Maybe not quite ready for the economics of commercial growing, but fascinating fun as a home growing system. Thanks for the article and your thoughtful perspective.

Sylvia Bernstein

Anonymous said...

There are ways to reduce costs, such as using compost piles for heating, and ways to increase yield, such as vertical space. It's also somewhat silly to assume a monoculture on the vegetable products side of the operation. It's hard to take your analysis seriously with all of the assumptions that you've made. I'd really suggest you research the matter deeply before pontificating in the future.

Anonymous said...

Thanks for the analysis. With the inflation in food, home production might be profitable soon.

Lucas Hirsch said...

Thanks for writing this article. With the size greenhouse your talking about it would actually cost less than $50,000 to make and fill with plants and fish. You could make around $65,000 a year off lettuce and $35,000 a year off the fish. That would equal to a gross of $1,000,000 a year. There is still the cost of electricity and workers but you would still be making a lot of money. If you to know how I got those numbers please email me at lucasfish@verizon.net. Thanks.

Anonymous said...

I would just like to ask if there is a breakdown for all your numbers available or a link to show them all. (The link at the bottom of the chart doesn't show anything. :( )

It would be nice to see what you consider fixed/variable costs. Also costs that are considered for maintenance and running of an operation of this size.

This would allow me and others to view these and adjust as necessary for our areas.