A Crash Course in Commercial AP System Design

[GaryD]

Hi,

Let's talk about.......A Crash Course in Commercial AP System Design.

Gary

[Earthan Group]

One of the issues associated with assessing a commercial aquaponics system is what I'd describe as a "data deficiency"........all of the things we don't know about a particular operation.

Let's try and tackle it from the information we do have EG: UVI

They have published the economics of that system for a variety of situations. They have suggested the break even prices (cost recovery) for their 6 bed system. Tilapia breakeven is $1.47/lb and the sell price is $2.50/lb and the breakeven for a case of lettuce is $6.15/case and the sell price is $20/case.

Looks profitable...

Why not take a look at the sample design questions they published freely (this is not my work and not exactly how I would do it but it will give you the idea):

• Assume you have a market for 1000 lettuce a week locally.
• Sold in individual containers (clamshells).
• The lettuce are cultured in the rafts for 3 weeks at a density of 29.3/m2
• Assume tilapia are the fish of choice (may want to look at the future of that).

Questions are:

1. How big is the plant growing area (excluding walk space)?
2. How much tilapia will that grow a year?
3. How big is the fish system?

Away we go:

1. Lettuce production will be staggered so that 1000 lettuce can be harvested per week. So with a 3 week grow period the plant system needs to hold 3000 plants
   
   
2. If the plant density is 29.3 plants per m2 the plant growing area 102.3m2 (3000 plants divided by the plant density 29.3)
   
   
3. Select the size of the hydro tank (floating raft) width. UVI for example 2.44 meters. Total length of the raft is 41.9 meters (102.3m2 plant area divided by the raft width of 2.44m).
   
   
4. Two raft tanks are needed in the UVI style, so each raft length would be 20.95 meters. The poly sheets come in 2.44 meter lengths (can get them cut to any) so round up the raft lengths to suit the sheets. EG 2 x 21.94 meter long raft tanks.
   
   
5. The total plant area has changed becaue we rounded up to suit poly sheet sizes so the plant area is now 107m2.
   
   
6. Plant density of 29.3/m2 means a total of 3135 plants will be grown in the system. (the desnity 29.3/m2 multiplied by the total area of 107m2)
   
   
7. Use the feeding rate of 60grams/m2/day. You will be feeding 6420 grams of fish feed per day. (feed rate 60grams multiplied by the total area 107m2)
   
   
8. The annual feed input will be 2,340 kg (daily feed per day 6.420kg multiplied by a year 365 days)
   
   
9. Assume a feed conversion of 1.7 giving you an efficiency of 0.59 (1kg of fish weight gain divided by 1.7)
   
   
10. The total annual fish production from the feed input will be 1380kg (total feed per year 2340 multiplied by the feed conversion 0.59)
    
    
11. Assume you will harvest the fish at 500 grams and stock with 50 gram fingerlings (bit big). Each fish will gain 450gram in the system. The stocking rate is 154 fish per 1000 liters (77kg/m3) and grow out in 24 weeks (ideal conditions).
    
    
12. Total production of the fish will be 1533kg of fish per year. (1380kg of weight gain divided by 0.450grams each multiplied by 0.500 grams harvest weight fish).
    
    
13. Assume there are four fish rearing tanks and one is harvested every 6 weeks, you will have 8.7 harvests a year. (52 weeks in a year divided by 6).
    
    
14. Each harvest, every 6 weeks will be 176kg (1533kg of fish per year divided by 8.7 harvests).
    
    
15. Harvest density (standing stock) best not to exceed 60kg per 1000 liters (specific to species). Therefore the volume of each tank will be 2.91m3 plus free board. (176kg per harvest divided by the density 60kg/m3).
    

Production:

Now you have a system that will produce 1000 lettuce a week and 176kg of Tilapia every 6 weeks. With an annual production of 52,000 lettuce and 1.38 tonne of Tilapia.

Turn over:

From memory there is 24 heads of lettuce in a case so sale price on an each basis is $0.83 each ($20 per case divided by 24 lettuce) Gives you a total lettuce turnover of $43,333 for the lettuce. ($0.83 each multiplied by the total yearly production 52,000)

The Tilapia selling at $5.50 per kg (though the prices are dropping rapidly and US only). Total turnover for the fish system is $7,590 for Tilapia (1380kg by the sell price of $5.50/kg ($2.50/lb)

Total turn over:
$50,923 per year. Aside from any failures...

Cost of production from the break even at the top in this post:

Lettuce cost $0.26 each to grow in the UVI system. So producing 52,000 lettuce per year will cost $13,325 (production of 52,000 per year multiplied by the cost $0.26 each)

Tilapia costs $3.23 per kg to grow in the UVI system. To produce 1380kg of Tilapia per year will be $4,457 (1380kg per year multiplied by the per kg cost $3.23)

Total cost of production is $17,782

Earnings before interest, depreciation, tax, fees, permits, labor, packaging etc... = $33,141

There are a few anomalies in those figures but gives you some to play with.

Enjoy
Paul

[Earthan Group]

So let's break it down into small chunks and numbers (I like numbers).

Any comment on those numbers? Is there anything missed?

Can American members provide some current prices for tilapia sold chilled whole and perhaps lettuce costs. At the retail end would be handy.

Then we can start to break it right down into material and equipment costs and other costs.

[tpilk]

Paul,

Excellent post. You've presented a PADE (profit after direct expense) scenario, based on some fixed inputs.

I'd like to explore something outside of prices if we could, as I think it hits a key need.

Though, I don't know you, I get a sense you have a strong working knowledge of what might be required to accomplish this example, or at least you know enough to ask the right questions. I'm thinking the objective of the Commercial AP Training material would be to teach just that. The student needs to understand the inputs and variables. We see on paper a potentially profitable business case. We all know the Devil's in the detail. For a given project objective (what are the limiting factors? What is not in your control?), then, what are the land and water requirements in acres/acre ft, structures, type of hardware, equipment, transportation challenges, refrigeration, assessment of potential market conditions, actual labor (breakdown of experience required, compensation pkg) etc, etc. to support someone's future aspirations to be an AP farmer? I am thinking a cirriculum focused on this type of assessment is what will give folks the training needed. Failures in one or more of the few areas listed could mean certain failure of the business, regardless of the initial business case/ROI formula. An assessment tool, with detailed breakdown and description for critical inputs could be developed. I use something similar in my industry to assess development needs to support very large, expensive operations. Unfortunately, I don't know all of the actual inputs required for Commercial AP Operations. I tried to use common sense and logic to address potential requirements and what-if scenarios in my list above. It will take folks with your background and other, related backgrounds to color in the actual cirriculum requirements. That's what I will pay money and purchase airfare to attend.

[Earthan Group]

An assessment tool, with detailed breakdown and description for critical inputs could be developed. I use something similar in my industry to assess development needs to support very large, expensive operations.

Thank you tpilk.

I have such a tool we use for calculating fish farm designs and cashflows etc... I have modified it for the inclusion of plant production etc however that side is a little more complicated for me.

I posted that particular information because it is publically available and well known and can help walk through the details of an operation. Sort of like an online crash course on the topic.

If we are to debate the BS of "commercial aquaponics courses" then let's have some fun and throw around some numbers that will be enlightening.

[tpilk]

Hi Paul,

I agree playing around with some numbers would be both fun and enlightening.

If I may, I want to briefly touch on this assessment tool concept. I know they are in use in many industries, just hadn't previously looked the option of using one in this context. This may be a touchy area, as a well built assessment tool would literally be the livelihood of a consultant and sharing that would be as unlikely as opening your books to just anyone. We call it "proprietary information."

What I would like to see would be the each critical input to the assessment tool , developed into courses, lecture or training session. In that way, a comprehensive cirriculum could be developed, without giving away the "magic" in the consultant's expertice. The student develops an understanding of the critical inputs and their relationship to the business.

The concept makes sense to me, I'm wondering if it could be the foundation of a successful commercial training structure?

[Earthan Group]

The concept makes sense to me, I'm wondering if it could be the foundation of a successful commercial training structure?

On that note, we have been contracted to assist in the construction of curriculum around commercial integrated aquaculture over the next two years. I stress the assist, because we have a specific skill set and there are others with equally specialised skills in their area. This gives some balance to the negotiations around what is important in learning process.

Moving on....

What do you guys think would be the other costs associated with a farm? We can compile a list and add an estimated cost to each. We can do the same for the equipment as well. It is not very difficult.

I ran a few senarios in last years training;

• The fish guys that wanted to grow X amount of fish
• The plant guys that wanted to grow X amount of plants
• The space guys that had x amount of spac to grow in
• The money guys that had a specific budget to work with

If you guys want to run senarios for the fun of it, then I will contribute where I can and where I have time. From that starting point from UVI you can quickly sort out the meat from the veg...

[bigdaddy]

Hi E.G.

Just off the top off my head in no particular order and I'm sure there will be a lot more to add but to get the ball rolling I think the cost of

Land.
Buildings Aquaculture and plants, greenhouses "fish houses"
Equipment costs.
Pumps.
Plumbing.
Heating.
Cooling.
Electricity.
Gas?
Water.
Labour.
Testing and monitoring equipment.
Pest control.
Additives.
Fish.
Plants.
Tanks.
Rafts.
Growbeds.
Media.
Business running costs
Sales and marketing.
Packing of produce.
Transport.

Are some of the costs involved in my mind what is a commercial aquaponics setup.

I'm sure there are more and hopefully people can add to the list.

Cheers.

[ande]

I think there is some tools and exicting puplic analysises public available, that is important key factors to revue in building a AP commercial training course. No matter wich model (production method) and specie/plant.
Water ? you need a absolute minimum volum for "normal production", and a minimum reserve volum "emergency operaton".
Can you harwest water of the minimum quality and volum + reserve, required to suport the planed operation (commercial AP)

USA/AU/EU/.......... This is a MARKET ANALYSIS on H20: THE WORLD’S MOST PRECIOUS COMMODITY

http://www.palisadesindexes.com/news/BAWaterReport1.pdf

Might look stupid to some ? But to me absolute esential, yes I know some say AP dosen't use water it's a "RAS".......
To me fact of the matter is any type of farming use water.

cheers

example tools needed.: http://www.nosclearing.com/seafood/category635.html

[JohnMc]

EG,

Here is a link for Tilapia pricing for different US markets -- http://ag.arizona.edu/azaqua/ista/tilapia$.txt

Here is pricing for loose leaf lettuce http://www.ams.usda.gov/mnreports/wa_fv468.txt

I cringe a little about using USVI as a model. Not the method, but the market. USVI has a captive market of sorts. If buyers want fresh they are it or similarly situated competitors. The next market competitor would be air freighted in, most likely frozen, to overcome the shipping disparity.