Economic Analysis of Commercial Aquaponic Production Systems

Economic Analysis of Commercial Aquaponic Production Systems

Summary

The purpose of this project is to provide literature that analyzes the economic viability of small to medium scale commercial aquaponic food production systems. There is limited information available that focuses on alternative production systems, capital budgeting, and effective marketing techniques employed by commercial aquaponic producers. In order for our modern food system to gravitate towards more sustainable food production techniques, it is necessary to inform the general public of ways to profitably produce sustainable food products. This project will provide this information by analyzing 3 different commercial aquaponic systems, collecting data for capital budgeting analyses, and determining how commercial aquaponic producers profitably market their products.

Objectives/Performance Targets

1)    Identify and analyze 3 different commercial aquaponic production systems.

2)    Collect data for capital budgeting analyses of identified commercial aquaponic production systems.

3)    Analyze the supply chain and marketing techniques employed by various commercial aquaponic producers.

Accomplishments/Milestones

1)    Identify and analyze 3 different commercial aquaponic production systems.

I have already made the first producer visit, which took place in San Marcos, Texas. Charles Shultz and James Tidwell of Kentucky State University were vital in connecting me with this producer, which lead to the site visit. They were also very helpful in connecting me with the second producer/partner at the University of the Virgin Islands. I will be making this site visit in April and all arrangements have been made. I have also been in discussion with two more producers who are interested in being part of this project. Those plans have not yet been made, but will likely be made soon. I intend to complete all producer visits, system analyses, and data collection before the end of the year (2014).

2)    Collect data for capital budgeting analyses of identified commercial aquaponic production systems.

All data from the first partner/producer and their business has already been collected, and I have already begun the summary and analysis. All data from the second partner/producer will be collected by the end of April, prior to my visit with the University of the Virgin Islands. I am still in the planning process for the final site visits and data collection.

3)    Analyze the supply chain and marketing techniques employed by various commercial aquaponic producers.

This process will begin upon the completion of all producer site visits and data collection activities. I have been in discussion with researchers from various universities that recently conducted their own marketing survey with aquaponic producers. This could lead to some collaboration that could benefit both of us. This connection could be very helpful in regards to creating a distribution list, designing the survey instrument, and much more.

Impacts and Contributions/Outcomes

This project has enabled a lot of information exchange between me and producers, researchers, and educators in the aquaponic industry. I have already learned a lot about the industry and the individuals involved in it. My first producer visit was especially successful because I was able to educate the producer about various local markets such as Farm to School. This individual is now particularly interested in creating business relationships with local schools, and he has gone so far as to begin developing some value added products that might work well with that market. I have also sent them some of our MarketReady training materials, which they have been studying intensely. This lead them towards pursuing more restaurants, wholesale, retail, and institutional markets; which is likely to help their business become more sustainable in the long run. I also see potential for future collaboration on projects with this producer. Finally, I have been able to organize all the data collected from this visit and begin writing the case study I intend to release about this producer upon the conclusion of this project.

Furthermore, I met a couple here in Lexington that is in the process of constructing their own aquaponics system in a greenhouse. The practical skills and knowledge I gained from my first producer visit, coupled with my knowledge and skills as an Extension Associate, enabled me to give them advice on their product mix, target markets, and marketing techniques. We also discussed the advantages and disadvantages of different potential markets they could sell products through. Finally, they decided to go through a MarketReady training course and to attend our first Meet the Buyer event for MarketReady graduates. This will all make them more likely to succeed in their new business venture.

I have also consulted with another graduate student about some research in aquaponics they are interested in pursuing. I believe I was able to narrow their vision to a more realistic goal that would benefit producers. I have also made many contacts with other individuals involved in aquaponic research. This has fostered some very interesting conversations that could lead to good things in the future. I have also found 3 more producers willing to work with me on this project, and have already made the arrangements for one of them. I will be visiting the University of the Virgin Islands in April to study their system, and I have made an agreement with Donald Bailey to co-author this particular case study with him.