Aquaponics is a form of agriculture that has been around for many years but is resurfacing in today’s modern world and attracting many people because of its benefits and profitability. Recent studies have shown the increasing demand for the aquaponics market globally because of the rising population, lack of farming land, and high demand for organic food worldwide.
Aquaponics is a recirculating method of farming that combines aquaculture and hydroponics, leading to the raising of fish and growing of plants together in a symbiotic environment with the help of beneficial bacteria. It converts wastes produced by the fish into nitrates, which become plants’ food, and in return, the plant roots filter and clean the water for the fish.
Today, aquaponics is becoming more popular and attracting many people as a way of growing food because of its sustainability and benefits such as eco-friendly, less use of water, low-cost maintenance, efficient, and organic way of producing food. Aquaponics has grown and developed not just for the hobbyist or backyard gardening but, most importantly, for commercial purposes to sustain the high demand for organic food by the growing population in urban areas.
Commercial Aquaponics can be profitable when done on a specific scale. Startup cost can be a challenge, but because it is a low maintenance and cost efficient system that provides fresh organic yield much faster than any other farming method, makes it an ideal investment. As with any business, starting a commercial aquaponics system requires careful and extensive planning, commitment, a capable team, and a business plan to build and operate.
Essential Things to Consider Before Starting Your Commercial Aquaponics Business
Before developing and starting your commercial aquaponics business, think of the main reasons why you want this kind of business. These will help you focus on the business plan and identify the issues, resources, and expertise needed to develop your business plan. Consider these questions;
- Do you have a farm or crop growing experience that will help your farm operations, or do you need to seek that expertise elsewhere?
- Do you have a property, or are you in the process of choosing a location?
- Are you developing an aquaponic farm for-profit and source of income?
- Who will be part of your planning team?
- Do you have the knowledge or expertise in developing marketing, operating, and financial strategies necessary for the business plan or to help start the business?
- Do you need expertise in addressing environmental and clean up issues that may be associated with the public property you intend to use?
Because of the growing interest in commercial aquaponics, we developed this Aquaponics Business Plan. To provide an outline and guidance for developing an operating strategy for those who are interested in starting their commercial aquaponics farm.
Aquaponics Business Plan
This aquaponics business plan is divided into five sections:
1. Overview: This section provides the vision statement, mission, and goals of your commercial aquaponics farm.
2. Management and Organization: This section describes the business ownership structure and how it will be managed and organized.
3. Marketing Strategy: This section identifies the products to be produced, how it will be marketed, and the potential competitors. This section will also describe the packaging, distributing, and promoting approaches for the product.
4. Operating Strategy:This section describes the approach for product management, farm size, physical and human resources, and regulatory requirements.
5. Financial Strategy: This section provides income and expense estimates, expected profit and loss, sources of funds, and potential business risks to its success.
Overview
Your business plan overview provides your vision and mission statement. It also summarizes your goals for your commercial aquaponics farm. The overview is divided into Introduction, Vision, Mission Statement, and Goals.
- Introduction: Describe the purpose and key issues to be addressed by the business plan. It provides an understanding of what information is contained in the business plan.
- Vision Statement: Your vision statement describes your vision of your commercial aquaponics farm's future, and how you incorporate your values into your farm. It provides clear decision-making criteria and answers what economic, environmental, or community values are important to the farm. What products or services do you intend to offer, and how the community will benefit from these products or services.
- Mission Statement:This is a set of guiding principles that describe your commercial aquaponics farm's overall goals. A mission statement tells the fundamental purpose and expectations for the farm to its customers. It also provides an understanding of the goals of the farm.
- Goals:The goals describe what is to be achieved by the farm. Goals can be short-term goals or long-term goals. Short-term goals may be focused on the farm's startup and achieving a certain level of production income. Long-term goals can be the plans for farm growth. Goals are reflections of what you want to achieve and when you like to achieve them.
Management and Organization
Management and organization describe the commercial aquaponics farm's ownership status and how it will be managed and organized. How you register your farm will depend on your business structure (corporation, sole proprietorship, non-profit). Check with your local or state requirements before registering your commercial aquaponics farm. In making the management and organization structure of your farm, consider answering these questions:
- What will be the legal structure of your business? Will it be a sole proprietorship, partnership, non-profit, or corporation?
- How will the farm be organized and managed?
- Who will be the key managers who will run the farm?
- What skills do these managers bring to the farm, and what will be their duties and responsibilities?
- Will there be a board of directors?
- How these managers, board members, will be compensated?
Marketing Strategy
Before starting your commercial aquaponics farm, defining the strategy for marketing and sales is very important. These are also the most important part of your business plan. The development of your marketing strategy requires understanding the market, demands of your product, potential customers, and potential competitors. In this section, you need to convince yourself and your reader that there is a viable market for your commercial aquaponics farm. The marketing strategy is divided into these sections:
1. Introduction: The introduction section of the marketing strategy shows the reader the following:
- Market or potential customers of your commercial aquaponics farm.
- Products that the farm will produce and sell.
- Distribution process or how and where the products will be made available to the customers.
2. Market: This section analyzes the market to identify your potential customers or target markets. It would help if you had a general understanding of your farm's environment to identify your potential customers. It is important to describe the economic factors, such as inflation, employment rate, and income, that affect your potential customer’s purchasing power and spending rate.
This section describes the demographic, social, and cultural factors that describe your potential customer that will influence or affect your farm. Social and cultural factors refer to the basic values, perceptions, and behaviors of your potential customers. These include their preference for the type of crops to be grown. In discussing the market section, know the answer to these questions:
- Who are your potential customers, and where are they located?
- How likely are they to buy your product?
- Are you growing a crop that is not easily accessible to the consumers?
3. Product: Using the information you gathered from the market analysis about customer values, needs, and preferences, describe the product you’re planning to offer and how they will compete in the market. Describe why your product is unique and how they differ from its competitors.
4. Distribution: Getting your product to the market will be critical to your marketing strategy, as the quality of crops and customer perception will depend on the freshness and quality of your product. This section discusses the handling of products from harvest to sell, including options for storing the product before selling. Discuss these questions:
- How will you sell your product?
- Will your product be distributed directly from the harvest to the customer?
- How will you maintain your product quality during storage and distribution?
- What will you do with the product that is not sold or delivered?
- What is your method of distribution?
- How will you price your product?
5. Competition: This section describes the competition of your market and how you will position your farm to compete in each market segment. Discuss your farm’s advantages and disadvantages over your competitors and how you will differ from them. Discuss these questions:
- Who are your competitors?
- How does your product differ from your competitor’s product?
- Are your competitors’ established in the market?
- Do they offer a greater variety of products?
- Will your pricing be competitive?
Operating Strategy
Before developing your operating strategy, it is important that you have completed your market analysis and identified the type and volume of plants to grow and fish to raise. It divides the operating strategy into these sections:
1. Crop Management(Your approach in cultivating and harvesting plants and fish)
Crop management involves managing the volume of fish and plant crops needed to meet your marketing strategy's objectives. These involved understanding the approach used that will raise the fish and plant the crops and the schedule of planting and harvesting. Discuss the specific method to be used, such as a raft system, media-based system, nutrient film technique (nft), or a combination of the three main systems of aquaponics. This section discusses the following questions:
- Since the relationship between the fish and the plants is interdependent, will the volume of your plant crops meet the market demand drive of the fish's volume needed to provide the necessary nutrients for the plant?
- Will the volume of the fish from the water be able to support the demand of the plants?
- Will the fish be marketed as a product of the farm or managed only to support crop production?
- Will plant crops start from seeds on the farm or seedlings purchased from suppliers?
- How will you manage water pH, ammonia, temperature, nitrates, nitrites dissolved oxygen?
- How will you cycle the system?
- How will planting be made to meet the required crop harvest of the marketing strategy?
- Are you going to plant and harvest year-round?
2. Size and Capacity(the estimated production capacity to the farm)
Yield, you also need to discuss the estimated amount of plants and fish that can be repeatedly reproduced given from the crop management approach, operating size area, and resources available. Estimates output should be for the first five years of operation and should be consistent with the plans and growth of the business.
- What type of buildings and structures are required within five years?
- Will your commercial aquaponics farm be located within the building?
- How much building area and land area are required? Within five years?
- Will you lease or acquire the land area?
- Has an environmental assessment been conducted on the property and are there any known or potential environmental issues on the property that will require cleanup or specific action?
- What resources will be needed for the farm (water, electricity, and waste disposal)?
- What equipment will be needed (vehicles, monitoring equipment, lighting, tanks, etc.) within five years?
- What tools will be needed initially and within five years?
- What supplies will be needed?
- How will these resources be acquired?
- In determining development needs of an aquaponics farm, keep in mind that commercial aquaponics typically exists in a controlled environment like greenhouses, or buildings.
- In determining the square footage needs, it should include sufficient space to access and work around the fish andtanks, space for offices, packaging, shipping, cold storage, material and equipment storage and growing area for the seedlings.
- Consideration should also be given for monitoring the system, such as water quality and temperature,pH, Ammonia, humidity,water pump,lightand other parameters that are important to the healthy growth of the fish and plants.
- Internet, telephone, and other communication requirements for remote monitoring.
- What is the workforce needed for the first five years?
- What positions will be created for the farm, and how many workers will be needed for each position?
- Will you provide training for each position?
- How many workers will be compensated, and will there be full time, part-time, or volunteer workers?
- What are the ranges of salaries for each position?
- What are the employee benefits (vacation, medical coverage, etc.)?
The key issues needed to be considered in discussing human resources are:
- Using monitoring systems with remote notification capabilities can reduce labor and provide notification of system problems even when the aquaponics farm is unattended.
- There may be a need for an additional workforce during harvest days.
Financial Strategy
This section should describe the approach you are taking in developing a financial strategy. The financial strategy is divided into these sections.
1. Expenses (the expenses estimated for start-up and operation of the commercial aquaponics farm)
Develop a five-year projection on the annual expenses for the commercial aquaponics farm. The expenses should include the marketing expenses, operating expenses, and human resource expenses discussed in the marketing, operating and human resources strategy section. Expenses should also cover administrative expenses like the initial operating expenses, start-up expenses, site preparations, and other expenses.
2. Income (projected income of the commercial aquaponics farm)
Develop your five-year annual income projection for the farm. Income should include receipts from sales of products and less any loss associated with spoilage or products that cannot be sold. Income should also include donations, grants, and other sources that are anticipated to cover the farm's operating expenses.
3. Fixed Assets (anticipated fixed assets)
Fixed assets include land, buildings, vehicles, furniture, office equipment, computers, fixtures and fittings, plant, and machinery. These items are depreciated over time for tax purposes. Develop your five-year projection of fixed assets.
4. Funding (a potential source of funds)
Describe the source and amount of funds needed to purchase, install the fixed assets to start-up the farm, and achieve the business plan's goals.
Discuss the following questions:
- How will you obtain these funds, and what are the sources or potential sources of funding?
- How much funding is needed?
- How will the funds impact the achievement of the business plan?
- Are there expenses needed in obtaining financing or funding, like insurance, filing fees, and others?
Commercial aquaponics is a business. To be successful, you need business experience, or you may need to involve someone who has the experience and knowledge about aquaponics. Getting excited and carried away by the coolness and possible profitability of aquaponics does not guarantee success; knowledge, experience, and right business decisions do. Here are our tips on starting a commercial aquaponics farm.
- Expertise And Training.
- Research.
- Start Small Think Big.
- Love what you are doing.
Commercial Aquaponics Success Stories:
Sources:
- https://www.marketwatch.com/press-release/aquaponics-market-2020-size-statistics-growth-revenue-analysis-trends-industry-forecast-report--2025market-research-engine-2020-01-08
- https://www.leaffin.com/aquaponics-sustainable-profitable/
- https://urbanspaceaquaponics.com/2018/01/17/5-things-to-consider-when-starting-a-commercial-aquaponics-farm/
- https://www.epa.gov/sites/production/files/2016-09/documents/1_aquaponics_business_plan_guide_508_081116.pdf
- https://www.researchgate.net/publication/324489360_The_economic_and_social_benefits_of_an_aquaponic_system_for_the_integrated_production_of_fish_and_water_plants
Mauricio Briceño
August 05, 2020