Learn from the Experts
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The joke is, "How do you make a small fortune in aquaculture? You start with a big fortune!" Aquaculture is one strict farming business. Make an error, and your crop dies right now. Make a different error, and the FDA is in your business. Make yet another error, and the authorities can impound equipment, revoke your license or legally execute your crop. This is not a business for the disorganized, the unprepared or the fainthearted. Aquaculture is not a get-rich-quick proposition; often it's not even a get-rich-slow proposition! All who have succeeded have done so through hard work, long hours, significant investment and great personal sacrifice. Only a few who were not rich already became rich because of aquaculture.
Guaranteed Ways to Fail at Aquaculture:
Start Your Operation Without a Business Plan
Aquaculture is a business first, farming second and aquatic farming third. Failure to plan is foolhardy; it's much like planning to fail. Rigorous adherence to the plan and its revisions is critical to success. Banks and other savvy investors won't loan money without a clear, believable plan. You shouldn't spend a dollar without a plan. If you don't know where you're going, you won't get there!
Start Your Operation Without Enough Money
"Undercapitalization" is the number one cause of business failure. You must be prepared for unplanned expenses and unexpected losses. If your fingerlings die, you must restock. If the price of feed changes, it must still be purchased. If the aerator breaks down, it must be repaired immediately. If a minor catastrophe is going to put you out of this business, don't get in this business in the first place.
Borrow Money from Relatives and Friends
Relatives may want to loan you money, but nonpayment will make them angry with you for decades. Do so at your own risk and only with a written legal agreement. You have been warned. Borrow from friends, only if you no longer want them as friends. Avoid use of your house for collateral, if at all possible; you may still want a place to live if the farming fails.
Decide Which Species to Produce Before Doing a Market Study
Many small farmers decide what they want to produce before they determine whether they can make money at this, and if so, how to do so effectively. The purpose of aquaculture is to make money. Determine the range of species able to tolerate your proposed system and climate, of these which are most profitable, and of these which have willing buyers at your required price. Go ahead! Raise the least profitable species available and lose your shirt; it is your prerogative and right.
Decide Which Species to Produce Before Studying Their Biology
Even the most profitable fish to produce may be impossible or too expensive for you to produce. After your market analysis, you must determine which of the more profitable species are within your capability and your systems constraints. Fish which have not been successfully produced in your area failed to be produced for a reason. Learn their general biology, ecology, diseases, parasites and especially, reproductive biology BEFORE taking the plunge.
Spend Your Money on "Tomorrow's Technology" Today
If a system sounds too good to be true, beware! Many "high intensity production systems” are for sale these days. If these systems truly produce huge profits, the system vendor will also be in huge-profit making production, instead of just selling "systems." Demand to see a system which has been running successfully for five years, and its five-year IRS profit and loss statement, before you buy. Research and development is great as long as you know that research is what you're paying for, not proven technology.
Dig Your Ponds, Then Seek Permitting Approval
Most states have strict rules regarding commercial aquaculture production, dredging and filling, wetlands protection, and water storage and withdrawals, etc. If you dig your ponds before reviewing the rules carefully, you may incur huge fines, retrofit expenses or complex industrial wastewater monitoring expenses. It is to your advantage to know the rules before you design your system; make sure you do so. The regulators are not fools. They don't like it when you try to get around the rules! Don't even try. Learn and obey the rules. Apply the rules during the design process, the species selection and your marketing plan.
Stock Your Ponds to the Maximum During the First Years
Inexperienced aqua-farmers often try to recapture every dime during the early years by stocking ponds as heavily as those done by experienced farmers. Don't do this. Lower stocking ratios mean smaller returns, but less risk, lower operating expenses and fewer catastrophes. Better to get 75 percent of maximum for a few years than to lose entire crops while you learn by trial and error. You will make some serious errors, don't even doubt it! Make your errors as cheaply as possible, please.
Produce Your Crop, Then Try to Market It
Production is only one facet of aquatic farming. Marketing your crop should start before the first critter or plant enters the water. Prices vary widely throughout the year; part of your plan should address how you will time your harvest to sell during the peak price season. Sales to processors or wholesalers will yield the lowest returns and must involve huge volumes to be worthwhile. Your plan should address alternative marketing techniques to maximize returns to you, the farmer.
Don't Join Your State Aquaculture Association
Aquaculture is not a cookie-cutter technology; take every opportunity to meet others in your commodity area. Much new is learned each year, much of the old revised or discarded. Interacting with other aquatic farmers will give you an opportunity to learn from others' mistakes, rather than just your own mistakes. Joining your state’s Aquaculture Association not only provides you with a common voice and timely updates, it also provides personal contacts. These personal contacts can prove valuable when you have a problem and don't care to lose all of your crop while you figure out your course of action. Knowing who to call may be the difference between mild stress, major headache or catastrophic loss.
Don't Contact Your County Extension Agent
Your local County Extension Agent and your State Extension Aquaculture Specialists can provide literature about species, production systems, water quality management and other technologies as well as technical advice, farm visits and ongoing support. While the Specialists can assist your decision making process, only your County Agent can legally recommend a course of action. Seek the assistance of the experts. You can do it all on your own, but why would you want to?
Pentair’s efforts to reduce our manufacturing footprint and expand into new markets with innovative solutions by conserving and improving our use of energy, water and waste is a win-win for our customers, investors and all global citizens with a stake in a healthy environment. We are strongly positioned to positively impact global water and energy conservation efforts. We put our own technology and know-how to work within our own operations as part of our overall commitment to sustainability.
In the north-west province of South Africa, only 27% of households have access to safe drinking water and the ground and surface water quality is poor. One cross-sector project aims to increase the well-being of the local population by building more sports facilities near schools. The synthetic turf on the sports facilities allows for sustainable water buffering, filtration and distribution. Pentair worked with cross-sector partners to install 20 sustainable drinking water systems in South Africa, providing safe water storage that makes possible a continuous clean water supply. Viruses and bacteria are removed by means of membrane technology, and filtration membranes need be replaced once every five years. The filtered water can be stored in clean-water tanks and used for drinking, irrigation of crops or spraying the synthetic turf sports pitch, or for sanitary purposes. When used for 16 hours per day, the system can filter approximately 50,000 liters a day or 17 million liters annually. Rainwater, river water and groundwater can be stored in the non-clean water tanks.
We have identified the theme of water reuse and resource recovery from liquid waste streams as a prime target for engineering innovation and investment. We utilize technology and our deep applications knowledge to develop innovative, highly efficient solutions to accelerate nature’s natural process of water recycling and reuse. Our products and services mirror our expertise in water purification, ranging from producing potable water to treating wastewater.
One of the largest opportunities for recycling water recycling is in the food and beverage industry due to the massive amounts of water used to get food from farm to table. The Food and Agriculture Organization estimates that it takes 2,000-5,000 liters of water per day to produce one person’s food. However, recycling of these waters is challenging due to the high levels of organic matter found in these wastewater streams.
Over the past five years we have created a number of award winning solutions to greatly increase the efficiency and cost-effectiveness of reusing municipal and industrial wastewaters. With the world’s population projected to grow significantly in already water-stressed regions, reusing water within food production and processing becomes imperative.
As we begin this Blog at Pentair Aquatic Eco-Systems, I thought this might be a good time to look back over the past three years and figure out how Pentair became interested in Aquaculture and why I came to join Pentair. As many of you may know, I have been in aquaculture technology research and development a long time. Forty years to be exact having my start as a research assistant at Woods Hole Oceanographic in the summer of 1974. Pentair had its beginning as a company about 10 years earlier with five guys from the Midwest following their dream to begin a successful publically held company with a “Win Right” strategy, endeavoring to build weather balloons; hence the name Pent ---- Air.
Fast forward to 2011 and you will find Pentair had morphed into a global leader in water movement (pumps) and water filtration products with 15,000 employees and sales of just under $4 billion annually. Aquaculture came to the attention of long-time Pentair CEO Randy Hogan who asked several members of his Aquatic Systems Leadership Team to investigate. Mr. Hogan became fascinated with the industry and its potential to become a force for good at the global scale. Providing technical solutions to the world for clean water was a centerpiece of the company’s business and sustainable aquaculture appeared to be a natural fit.
The team investigating aquaculture were based in Sanford, North Carolina in the then “Pool” Division of the company. Bob Miller, Rob Stiles and Dave Pullins began a two year investigation that leads them to my office on the campus of NC State University seeking local advice about aquaculture. Over the years I have talked to thousands of individuals and hundreds of companies about aquaculture and associated business opportunities.
However, as I talked with Bob, Rob and Dave, I began to realize maybe this time might be different. As I learned about Pentair, I found out that while they were local, that is a company with manufacturing in North Carolina and California and main offices in Minnesota, they had a global reach with sales offices and manufacturing spread across the globe. While I had heard of Pentair, Inc. and its Pentair brand pool pumps, I did not realize that I was more familiar with their products such as the pumps we recognize today (Sta-Rite, Aurora, Berkley, and even Fairbanks Morris were Pentair companies). In fact, Pentair owned more than 60 pump brands! A little more investigation found that filters we have seen for years in hatcheries with the Triton name were Pentair companies as well! Ok; this was getting interesting. A company in my “back-yard” with a strong manufacturing history, much of it in components that moved and filtered water that had a global reach and an interest in the Aquaculture Industry!
Over my first 6 months of meetings I learned more about Pentair, but more importantly I got to know the team that was investigating aquaculture for Pentair. This team was composed of finance and technical professionals with a strong history of lean manufacturing. That is, making things locally with little wasted effort, materials or space; and more importantly a continued process of production improvement. I also learned that the Pentair teams were good listeners. One of the fastest ways for a company to move into an industry is through acquisitions. Companies grow through acquisitions, and then further growth comes from production improvements and expansions within those acquired companies. I learned that Pentair acquired then grew companies; a refreshing outlook. So one of the early questions explored with the Pentair team was what acquisition would allow for a fast start and the potential for growth. In my mind, having been an aquaculture consumer for over 20 years at NC State University, only one company came to mind, Aquatic Eco-Systems, based out of Apopka, Florida. AES, founded by the late Bob Hiedeman over 30 years ago was at a point where it needed to grow. The large office-warehouse in Apopka had room for growth and with over 130 employees, was a dominant force in the North American aquaculture supply industry with sales reaching Latin America and Asia. This appeared to be a marriage made in heaven. Seeing the interest Pentair had in Aquatic Eco-Systems told me a lot about Pentair and the leadership team. I had often wondered what kind of company would need to come along to make me think about leaving the tenured professors position I had at NC State University. I was starting to think I had found one.
But what about those nagging worries about going from an academic world to the business world? In reality, I had worked with aquaculture businesses most of my career due to my Extension appointment at NC State and also the consulting I had done for the better part of my career. But there was still the question about the corporate culture. As I dug deeper and met more employees, I met an inordinate amount of happy workers, and few unhappy ones; one company vision stood out. That is, the “Win Right” business strategy. Put simply, Pentair would rather lose a contract if it cannot Win the Contract Right. What a refreshing business ethic. Before and after joining Pentair I saw this vision put into action.
So with good memories of my 24 years at NC State, I retired from NC State on April 30, 2012 and began my new career at Pentair at the end of May. Tune in to my next Blog entry to see how it’s going.
Dr. Thomas M. Losordo