“Aquaponics is still developing, and so it’s not viable as a business yet.”
One of my bigger clients dropped this on me last weekend when we met. I told him simply that he was partly right, but not in the way he thought.
Make no mistake, there are successful aquaponic farms running in several parts of the world. The picture above is one such farm. People have been successful at it and it does work. However for every success, there are dozens of failures.
Why is this? Why do most operations utterly fail, and others actually work?
Two reasons:
The aquaponic technology does not work as designed
The business model does not work as planned.
I have seen a few farms that spend so much time and resources trying to get their technology to work, that they run out of capital and fold. This is actually quite common in this phase of technological development. The internet went through this phase, as have a myriad of other industries. Even the railroads 200 years ago had this type of phase with many start-ups and only a few successes.
The reason that the successful ones work however is not so much to do with the technology.
As an example of this I have seen farms with commercially designed and set up systems from Nelson & Pade Aquaponics both succeed and fail. If two farms with the same technology can both fail, and succeed, then the challenge is in the business model.
I suspect that 95% of failures in the aquaponic sector are due to business reasons. The other 5% of failures are possibly technological.
Let’s look at a case study – AquaVita Farms.
AquaVita made a splash the last couple of months when it failed. It wasn’t the first, and it wont be the last. In looking at their operation, they had significant capital for operations, and were running for almost two years. According to a blog post by the founder, in that two years they figured out how to make the technology work, and they were just now ready to start working on building their market and selling their product.
This is not a technological failure, this is a business failure.
Any business that waits two years to start making sales deserves to die. It is not a business, it is a hobby or a research project, or something else. It’s not a business though. The primary characteristic of a business is that it has sales, and thus revenues. Any business without revenues is just a corpse waiting to fall. It may still have some cash in the bank, but without income it will fail.
An unquestioned success – Earthan Group
In September of 2013, Paul Van der Werf went to the United Arab Emirates to consult on a commercial aquaponics project there. Two weeks later he broke ground, and by January 2014 the farm was working. He proved without a question that the technology that he was using worked, and that it could be profitable as a business.
A year later, he has turned the farm over to a professional manager and headed home to Australia to move on to other projects.
One of the most important things that he did with this project is that he started making sales as soon as he had a product to sell. The margins were thin, but doable. As a result it became profitable even before the technology was fully running and before the fish system was fully operational.
The picture at the head of this article is of the view from Paul’s office at the farm looking out into the greenhouses. I highly recommend his work, and his technology.
I would rather see a aquaponic farm with a tiny greenhouse that makes $300 per month and has a net profit of $3 per month, than a million square foot operation with a negative cash flow. At least I know that the little farm will still be around long enough to make some mistakes and expand. I also know that they actually have some customers.
The first, primary, and really only job of a start-up entrepreneur is to make their company sales. Sales are all that matters to a start-up business. Technology is great, but unless your business model involves you selling your technology, it shouldn’t be in your list of worries. Get it working enough to create a product, and then take that product to market no matter how imperfect it is.
If your system is still not working properly, work nights and weekends on your technology while you are our making sales and generating market share during the day. You can get a long way on half baked technology in an aquaponic farm, but without sales, you can’t get anywhere. If you have sales though, you have money to invest in better technology, consultants, and even automation. Without it though, you will be dead in the water in a short time.
As far as the technology in the aquaponic industry goes, here is the specific breakdown
Hydroponic technology has been around commercially for about 30 years and is well proven. Thousands of successful hydroponic farms dot the globe in every imaginable configuration and climate. There are even hydroponic farms at the south pole and on nuclear submarines.
Closed loop aquaculture has been around for almost 50 years and is well proven. These farms generate millions of tons of fish every year and are fast becoming one of the primary sources of farmed fish globally.
Controlled environment agriculture and greenhouses have been around for centuries and are one of the most common places for us to get fresh vegetables now. The model works and has worked for a very long time.
Aquaponic farms are just a combination of these well proven technologies. There is not any real mystery here, it is just an outgrowth of stuff that already works. To claim that the technology is not working, may just mean that the user does not understand the technology, or that they are basing their ideas on faulty information.
All that said, there is still a lot of development work going on in the industry. I have personally developed and prototyped a half-dozen new systems and technologies in the last year alone. Most of these are in automation and new sensor and control technology. Even though the technology is proven, there is still room for improvement, and there is a lot of room for improvement in automation and control systems. This is a lot because of the advances in computer technology, and the revolution of the internet of things. This trend is hitting almost every sector of the economy now, and it doesn’t make the existing technology any less workable.
Aquaponics works. It works on a small-scale, and it works on a massive scale. The technology is well proven. The business model however is subject to the knowledge and execution of the individual entrepreneur.
If you have, or want to have an aquaponic farm, the best thing that you can do is to go build your market and make sales. Even if you don’t have a greenhouse up, or crops in the ground you can still make sales. You can sell a future crop before it’s even planted. Take a small refundable deposit, agree to the terms, and get cracking. I guarantee that you will work harder to get your operation running if you have a deadline for delivery.
Even if you find out later that you are taking a small loss on that contract, do the deal anyway.
Just make that first sale, because only then are you really in business. Once you have sales, you can work out the rest, because you will have income to support the rest of the operation.
Hang in there, you can do this!