Commercial Analyses

  • Commercial Aquaponics Considerations
  • Case Study #1- “Commercial Aquaponics Production and Profitability; Findings from an Interenational Survey”
  • Case Study #2 – “Energy and water use of a small-scale raft aquaponics system in Baltimore, Maryland, United States”
  • Case Study #3 – 2013 Study “Economics of Commercial Aquaponis in Hawaii” (Tokunaga et al, 2013)
  • Case Study #4 – 2015 Study “Economics of Aquaponics” (Engle 2015)
  • Case Study #5 – The “L.E.A.F” (living ecosystem aquaponics facility) greenhouse
  • Case Study #6 – FAO Fisheries and Aquaculture Technical Paper No. 589, Small-scale aquaponic food production.

Commercial Aquaponics Considerations
Aquaponics businesses can earn income in a variety of ways:

  • selling aquaponically grown food
  • selling aquaponic related products
  • performing aquaponic services like designing, constructing, and maintaining aquaponic systems [like Anacostia Aquaponics]
  • agrotourism and agricultural education and research [like Anacostia Aquaponics]

“The commercial viability of aquaponics is likely the hottest contested topic on most aquaponic forums today and is the million dollar question that everyone wants answered.” (Gina Cavaliero, Green Acre Aquaponics)

There is a lack of quantitative research to support the development of economically feasible aquaponics systems. Although many studies have addressed some scientific aspects, there has been limited focus on commercial implementation. (Goddek et al, 2014)

Owing to the high initial start-up cost and limited comprehensive experience with this scale, commercial and/or semi-commercial aquaponic systems are few in number. (Somerville et al, 2014)

While backyard aquaponics has become more common in recent years as a way to supply vegetables and fish for household consumption, several commercial-scale aquaponics farms have started operations in Hawaii. Yet, the economic feasibility of commercial scale operations is unclear. There is some anecdotal evidence regarding the successes and failures of commercial scale aquaponics operations; however, there are only a few formal economic analyses of largescale operations and, to the authors’ knowledge, there are no formal studies on existing commercial aquaponic farms. (Tokunaga, et al 2013)

Case Study #1- “Commercial Aquaponics Production and Profitability; Findings from an International Survey” (Love et al, 2015)
This study of 257 international aquaponic businesses found the following:

  • 95 exclusively sold aquaponics-grown food;
  • 69 exclusively sold aquaponics-related “non-food” (equipment, fees for designing facilities, teaching workshops, etc.); and
  • 93 sold both aquaponicically grown food AND “non-food” (supplies/services)
  • Less than one-third of respondents were profitable in the last 12 months, however many were startups and are not expected to be profitable in the first year.

Also of note: the median quantity of fish harvested was 50 to 99 pounds per year and the median quantity of plants harvested was 100 to 499 pounds per year. Facilities tended to focus on the production of plants over fish, likely due to economical and biological reasons. Although many were newly established operations, future studies should be conducted to determine if aquaponics will develop into a profitable food production method.

Case Study #2 – “Energy and water use of a small-scale raft aquaponics system in Baltimore, Maryland, United States” (Love et al, 2015)
Researchers at Johns Hopkins University conducted a two year study analyzing the operating conditions, inputs (energy, water, and fish feed) and outputs (edible crops and fish) and their relationship over two years for a small-scale raft aquaponics operation. The 10.3 m3 aquaponics system was sited in a 116 m2 hoophouse on the grounds of the Cylburn Arboretum in Baltimore, MD.

The findings:

  • Average energy use was 19,526 kWh for propane and electricity per year at a cost of $2055 US dollars. The largest uses of electricity were in-tank water heaters.
  • It took 104 L of water, 0.5 kg feed, and 56 kWh energy ($6 in energy costs) to produce 1 kg of crops.
  • It took 292 L of water, 1.3 kg feed, and 159 kWh of energy ($12 in energy costs) to produce a 1 kg increase in tilapia.
  • Raising tilapia was a net loss, while raising crops was a net gain when comparing market prices to energy costs.

 

Case Study #3 – 2013 Study “Economics of Commercial Aquaponis in Hawaii” (Tokunaga et al, 2013)
There are only a few economic studies on large-scale aquaponics. Bailey et al. (1997) conducted an economic analysis of three different sizes of aquaponics system with the optimal production design features. The study found a scale effect; the bigger the system, the higher the rate of return. In their study, the largest system, which produced 20,160 heads of lettuce and 1,428 kg weekly, had the highest rate of return with an internal rate of return (IRR) of 21.7%, compared to 9% from the system that produces 5,040 heads of lettuce and 357kg of tilapia weekly.

To study the economic benefits of aquaponics, Rupasinghe and Kennedy (2010) used the technical and production information from a case aquaponic farm that produces lettuce and barramundi. The farm is located in New South Wales, Australia, and is equipped with a vegetable raceway surface area of 550 m2 and a fish tank volume of 13,126 m3 . The researchers compared the economic outcome of when the farm produced vegetables and fish separately, and when the farm produced vegetables and fish jointly using aquaponics. The study found that the integrated aquaponic system had a higher economic return, and the difference in the net present value between separate stand-alone system and integrated aquaponic system was $22,800. The study points out that the economic returns were sensitive to prices of lettuce and barramundi; depending on the prices of barramundi and lettuce, the IRR ranged from 0% to 57%. In Hawaii, Baker (2010) calculated the breakeven price of aquaponic lettuce and tilapia production based on a hypothetical operation. The study estimates that the breakeven price of lettuce is $3.30/kg (= $1.50/lb) and tilapia is $11.01/kg (= $4.99/lb).

The consensus from the above mentioned studies is that aquaponics is profitable. Though the studies provide crucial information to understand economics of aquaponics, we need to keep in mind that these studies analyzed experimental or hypothetical cases. In reality, commercial farms face more challenges, such as supply chain logistics issues and sub-optimal production performance. The assumed parameters in the previous studies may not be realistically attainable, 3 and it is therefore paramount to collect data from existing aquaponics farms for more realistic analysis
Compared to terrestrial agriculture, hydroponics is generally believed to be more profitable. This may have contributed to the increasing trend in profitability of vegetable farms in Hawaii. In 2007, the average per acre net profit of the farms that produced vegetables and melons was $1,863, and 56% of the farms yielded positive net profit (Hemachandra et al., 2013). The vegetable and melon sector has fared much better when comparing to other agricultural enterprises in Hawaii and is the only sector that is found to be competitive with similar enterprises on the U.S. Mainland (Arita et al., 2012). It is hopeful that commercial-scale aquaponics would be an economically viable enterprise and contribute to increased profitability of Hawaii’s agriculture industry. There were 70 aquaculture operations in Hawaii in 2011 producing a total sales value of $39.97 million; that amount has since increased to a record high of $55.74 million in 2012.

Case Study #4 – 2015 Study “Economics of Aquaponics” (Engle 2015)
Total investment costs in aquaponic systems ranged from $58,760 to $1,020,536, depending on the scale of the operation. Annual net returns (a measure of estimated annual profit) ranged from annual losses of more than $11,000 to a profit of $278,038 (for a hypothetical large-scale system). The smaller scale systems had annual net returns that ranged from $4,222 to $30,761. Rates of return on the investment (IRR and MIRR) ranged from 0 percent to 27 percent. Several studies (Bailey et al. 1997; Holliman et al. 2008) show that the fish portion of an aquaponics system was not profitable, but crops like lettuce and basil grown in aquaponics can be very profitable.

Case Study #5 – The “L.E.A.F” (living ecosystem aquaponics facility) greenhouse, designed by SchoolGrown to house an aquaponic system. (as reported on PBS Newshour)

  • 30 foot by 60 foot greenhouse
  • 1,000 pounds of produce a week production capacity
  • $75,000 to get the greenhouse up and running. That includes everything from building materials to fish, seeds and even solar panels on the roof. The $75,000 also includes salaries for two part-time staff who would be in the greenhouse for four hours twice each week.

$75,000 is a sizeable amount for any school district, but SchoolGrown has come up with a funding mechanism they believe will work: $25,000 would come from 80 school families, or other families in the community, willing to buy a box of $25 produce for a school quarter or roughly 13 weeks; $25,000 from local community or business sponsorships (a local lumber company for example would get their name on the greenhouse if they donated lumber) and $25,000 from a crowdfunding website the organization has developed.

Case Study #6 – FAO Fisheries and Aquaculture Technical Paper No. 589, Small-scale aquaponic food production. (Somerville et al, 2014)
Researchers for the United Nation’s Food and Agriculture Organization conducted a cost-benefit analysis for a small aquaponic system. Their system had a 1,000 Liter fish tank [264 gallons] and 3 square meters [32 square feet] of media growing space. The following tables summarize their findings:

Startup Costs

Item

Price ($)

IBC tanks

200

Electrical Equipment, water and air pumps, and connections

120

Media bed support (concrete blocks and wood planks

80

Volcanic gravel (biofilter medium

120

Misc. (fish net, plumbers tape, shading material)

100

Plumbing: pipe, fittings, and connections

80

Total

700

 

Monthly Operating Costs

System Input

Costs ($)

Plants

3.5

Fish

5

Electricity

2.5

Water

1.2

Fish Feed

11.25

Misc.

3

Total Costs per Month

26.45

 

Yearly Output

Output

Production Quantity

Unit

Unit Market Value ($)

Total ($)

Lettuce

360

head

1.2

432

Tomatoes

54

kg

1.6

86

Fish

30

kg

8

240

Total

758

 

Summary

Total Cost Per Year ($)

Initial Construction

700

Yearly Operating Costs

317

Yearly Revenue

758

Yearly Net Profit

441

Months to pay back investment

19 months

Taking the final figures from yearly operating costs and yearly revenues, the total profit is $441. This suggests that in general, once a unit is set up, $1.38 net profit is earned for every $1 invested in growing food using a small-scale aquaponics unit for domestic consumption. The payback period for the initial investment is 19 months. Reducing the capital costs (e.g. using recycled tanks) or running costs (e.g. supplementing fish feed), or increasing the revenue (e.g. specialty markets), will considerably decrease the payback period.