How to Make a Small Fortune in Aquaculture by Dr. Jeffrey Wilcox - Tech Talk 40
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?