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Friendly Aquaponics
Special Newsletter

Commercial Aquaponics Newsletter Number 3
April 17th,  2011
Images from our farmily aquaponics farm
Aloha Friend,

We have so much critical information to share about commercial aquaponics that we've decided to do an ongoing series of newsletters about it. If you plan to make your living from growing and selling aquaponic produce, then this will be a powerful resource for you.

Today we will show you that commercial aquaponics is profitable if done correctly. Today we're sharing one of our student's income and expense numbers for his first year in operation.

There are a lot of people out there teaching "commercial aquaponics" now: consultants, academics, backyard aquaponics people, equipment and kit sellers, and hobbyists. We suggest you ask for verifiable income, expense, and profit numbers (such as those in today's newsletter) from whoever you're considering taking a course from or purchasing a "commercial" aquaponics system kit from. If they can provide them, that is.

If they can't, we'd love to meet you in person at one of our live Aquaponics Technology Trainings (only $495) For those of you who can't free up the time to come to Hawaii, our Commercial DIY Training has all the information combined in our Aquaponics Technology and Commercial Aquaponics Trainings together, and allows you to duplicate our success anywhere.

(Here's today's column from Susanne, the vegetable and biosciences guru at "The Friendlies"):

We're honored to introduce Zac Hosler, of Living Aquaponics in Hounaunau, Hawaii, who is willing to share his experience in the first year and four months of commercial operation. The numbers we present in this column are verifiable by emailing Zac directly at zhosler@gmail.com. He'll tell you that the four-trough system we built for him and that he has expanded to 12  troughs, really works!
 
Zac had a strong background in business before he even began in Aquaponics. We suggest that all newcomers to Aquaponics develop some business experience (or hire some) before they "quit their day job". There's no paycheck at the end of the week unless you bring it in through your actions and hard work. Aquaponics, while a very powerful vehicle, is not a magic potion to get rich! For goodness sakes, this is farming!

To become successful in commercial aquaponics you need to know what you are doing, start small, and build from your knowledge base. This is what Zac did on our recommendation, but is exactly the opposite of what we did, which was to build a large system using all our cash. Because we'd spent all our money, we could only improve our system out of cash flow as we learned better ways to do things. It would have been better for us to start with something the size of our Micro System Plans ($99.95),  if such simple and affordable instructions and plans had been available back in 2007 when we began.

In mid-2010, Zac hired us to build his fish tank, sump tank, sprouting tables, and first four 75-foot long troughs while he stayed in California, wrapping up his rapidly-dying construction business. In November, 2010, he took over a fully-functional system and began growing food, using everything that we knew worked, and what did not, and his own exquisite business sense.

He has not felt the need to experiment or "recreate the wheel", as he says. He was happy to learn from us what had worked best, on a large commercial scale. (Please understand we are not adverse to experimentation, it's just that when our students do so, we can no longer predict their results, and sometimes can't even help them unravel the resulting mess!)
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New, money-saving grading technology:

Tim designed Zac's farm so that as demand increased, all Zac needed to do was add more troughs (but no more fish tanks), going straight down the hill, without needing to level the ground completely or disturb production in the existing system. This was a new innovation of trough design, which came directly from Tim's brilliant, boat-building mind. Grading Zac's farm in the traditional flat and level pads would have cost Zac an additional $75,000 up front for the entire trough area that he has available to build now.

After one year, Zac has expanded
out of cash flow from four troughs to 12 troughs, all 75 feet long, powered by the same fish tank and the same number of fish (though they are much larger, now, of course). He sells almost exclusively to local wholesalers, and has a business model that projects a very conservative 75 cents per hole, per crop rotation (how long each plant is in the system).

Zac has 33 holes per 2-foot by 4-foot raft, with a 6-inch on center spacing, for a total of 1,155 holes per trough. (We now demonstrate how to double this number of holes per square foot of raft area in our trainings and our DIY manuals, with only slightly more labor, without building any more troughs. Because Zac is working primarily alone, the 6" on center spacing is working well for him.) 

Zac's farm is doing so well because he's such a hard worker: he is not sitting back and trying to "manage" other people doing this while he "studies" aquaponics. He's dug ditches, installed troughs, built sprouting tables and protective hoop houses; he's developed better ways of growing and marketing aquaponic vegetables for his location.

Zac makes projections based on a very conservative rotation of five weeks, though his actual rotation (how long each plant is in the system) is closer to three weeks. This means that for every 75-foot long trough he has, he harvests 231 holes from it per week (1,155 holes divided by 5 weeks = 231 holes harvested per week per trough).


So, using the above numbers, each trough is worth $173.25 per week, at $.75/hole. With 12 troughs in full production, at $.75/hole, his average earnings are around $2,000 per week, gross ($231 x $.75 x 12 = $2,079). Due to fluctuations in weather and his market, he's found that his income moves up and down, going as low some weeks as $1,500. He's expanding to 20 troughs soon, and then his gross income will increase to $3,465 per week ($231 x $.75 x 20 = $3,465). Taking into account these fluctuations, he'll move between $3,000 and $3,500 of produce per week.
 
Now, let's talk about expenses. Although it has been built in phases, he designed his entire 20-trough system at one time, and as a result, Zac's electrical bill is only a fraction of ours (only $250 per month), even though he has 70% of the trough area we do. This will increase when he has 20 troughs, to about $275/month.

Here are Zac's monthly consumables expenses:


Electricity                                        $250.00
Water                                              $100.00
Fish Food                                       $240.00
Boxes                                              $452.40
Misc Packaging                             $ 50.00
Farmer's Market Dues                  $125.00
Planting Mix - Coir/Vermiculite    $151.67
Seeds                                             $75.00
Additives/Sprays                           $150.00
Fuel                                                 $150.00
Misc.                                               $250.00

Total Costs                                     $1993.67

His expenses will increase to about $2750 per month (totaling $33,000 per year), when he expands to 20 troughs.To put this in plain English, with 12 75-foot troughs, Zac's current operation projects a potential gross income of around $108,108 per year. The projected consumables expenses are $23,924.04, which leaves a gross net of around $84,183.96.

When he expands to 20 troughs, his gross will be around $180,180 per year, with $33,000 in consumables expenses, for a gross profit of $147,180 per year.

Now, let's talk about labor costs, and the time Zac spends working each week. In his words:
 
"I added up my hours and I am working about 48 hours a week. I work Monday through Saturday; some days are 8 hours, some are 10 hours, but some are less than 8 (Saturday is a 6 hour day, and Tuesdays are usually less as well). The average is around 48 hours.
 
"In the near future my hours will actually drop because I am getting more help. I will then use the "extra" time to continue to expand.  Within 2 weeks I will have two people living on the farm for 20 hours/week each, who are trading for their rent. They will be able to handle a lot of the day to day including planting, moving plants to the system, spraying, cleaning etc.

I will plan out plantings, help them harvest, will deliver and will oversee to make sure that things are running the way they should. They will also be doing the Saturday farmers market for me so I will be able to take Saturdays off and spend them with my family. Basically the number of hours I spend running the system should be less than 25 to 30 hours/week (with a total of 40 hours help from two live in people and a few hours from others on food trade).

I will use the extra time to expand and still hopefully work no more than a total of 40 hours a week.... So what I am getting at here is that the gross income is scheduled to go up very shortly while at the same time my hours will go down. The two 1/2 time people for live/work trade will basically take the place of one full time person I would have had to hire in their absence.  So using the work/live trade will actually increase my bottom line at the end of the day and will allow me to be tied to the property less as time goes on.  Someone will always be here to watch the system even if I want to go to Maui for the weekend.

A note worth mentioning is that at 16 troughs and as I expand to 20 and beyond that, I would be able to hire the help needed (at market wages for this area) to help me run the farm. I am choosing to use the live/work trade model because I have the space on the farm and it makes sense to do, but if I was unable to I would be able to hire the people needed and pay them market wages and still have the income I need to support the farm, my family and expand the business."

Zac is saying that when his income increases to $147,000 gross profit per year, he will be actually be working fewer hours than he is now; when he finishes his expansion, his hours will drop to 25-30 hours per week!

For those of you who do not have a strong business background, "gross net" simply means the gross, or all the money that comes in, minus the expenses for things that are consumed or used in the course of business; this equals what's called "gross profit", which is not what you get to take home.

This is because there are other expenses involved in running a farm. These are known as "overhead", and would include things like depreciation, new tires for his farm truck, repairs and replacement of system components as they age, insurance, costs for licenses and permits, fees for bookkeeping and tax preparation, and similar items. Based on our experience, these should  average $12,400-25,500 a year for a farm of his size, leaving him with a $121,500-134,500 net profit.

Because Zac has living space available on his farm, he has other options than just paying for labor. Zac is able to reduce cash costs for labor considerably, much like our Internship Program (which includes all expenses paid, exclusive of personal cell phones and flight costs to and from Hawaii). It is not "free" labor, as our detractors like to claim, it is actually
value given for value received. In Zac's case, rental units that could be bringing him income are instead offered as trade for work, which is a big part of our economy on the Big Island, and his workers get an aquaponics education into the bargain.
 
Thank you Zac, for sharing so freely what you have found to be true in your first 15 months of being a Primary Food Producer. We are impressed by you, and honored to know you. Thank you for your hard work.

Aloha, ***Susanne***

We hope this has been useful to you. In the next "Commercial Aquaponics" newsletter we will examine what Zac did (and is doing) right to ensure his success. If you have any additional questions you would like us to answer in this continuing series of Special newsletters, please email them to Tim.

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Pistou basil growing in our Aquaponic Solar Greenhouse

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Large-leaf basil interplanted with tomatoes equals yummy pesto in the future!



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Tim joking around, but really showing off the strength of the 20-foot curved beams used in the Aquaponic Solar Greenhouse.


Special Offer! Sign up for our June 28-29 Aquaponic Solar Greenhouse Training  or our June 24-26th Aquaponics Technology Training, and receive our Micro System package for free so you can begin studying aquaponics! ($99.95 value)

More Information on Hawaii Aquaponic Solar Greenhouse Training

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Tomatoes on the north wall of the Hawaii Aquaponic Solar Greenhouse; the wall reflects light and provides a built-in tomato trellis


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Tim with the PV system charge controller, inverter, breakers, and cabling from the PV panels on the wall to the right. The roll-down white plastic cover (rolled-up in this picture) keeps all this (black) equipment from heating up too much on a sunny day.

"The Fish's View"

If you need to pay the bills with the produce from your aquaponics system as we do, you will want to use equipment and techniques proven to be dependable and productive on a commercial aquaponic farm.

Everything we share is based on our direct experience over the last four and a half years. We built our farm ourselves on a very thin dime, so we've had to be observant and learn our lessons the first time around, with no timeouts or free rides.

You can benefit from all our experiences and learning curve so you don't have to pay the same price as we did, to learn what we know now.

For instance, Susanne got our aquaponics systems USDA organically certified (we are the first organically certified aquaponic farm in the USA) It took her six months to do so, because we were the first, and the certification agency was understandably cautious about certifying a farming method neither they nor anyone else had never certified before.

We've heard since then  that some of our students have gotten certified in as little as a month and a half (after their farms were fully planted out, of course),

We shipped an organically certified product to Costco for nearly two years, something no other aquaponic farm has ever done. Getting our product into Costco was not easy, and Susanne worked for over a year to accomplish this. Now that we've done it, we can teach others how to do so much more easily.

Our success is a major reason we've been attacked in online forums. As an associate of ours in Trinidad says: "No one throws stones at a tree with no fruit!".

What we teach in our trainings, write in our DIY manuals, and share freely in this newsletter is based on our experiences over the past four and a half years with large-scale commercial aquaponics. We also share peer-reviewed science from recognized journals and publications.

Our point is this: commercial aquaponics is different from backyard aquaponics, "kits", and hobby systems sold by aquaponics supply houses, in the same way a PeterBilt semi hauling a 16-yard dump trailer is different from the family car, a motorbike, or a bicycle. They're all vehicles, but they can't all do the same job.

Commercial aquaponics must be profitable, or you are out of business at a loss. There are no such requirements for backyard aquaponics and "kit" aquaponic system designs. They can have all kinds of inefficiencies built in, for there is no requirement that they turn a profit. There is also no requirement for efficiency at turning your labor into vegetables and fish, something that's absolutely necessary for commercial aquaponics.

If you read something in this newsletter about commercial aquaponics, and then an "expert" tells you in an online forum "They're all wrong, those systems don't work, and you can't make money with aquaponics", it may leave you with a valid question. Here's how to resolve it:

First ask for their background and  experience with large-scale commercial aquaponics. A few of the "experts" who say our systems don't work don't even have aquaponics systems, let alone large commercial systems.

If they claim to have students with commercial-scale systems, have them send you the "numbers" for those systems, with contact information for the owner so you can verify their claims. They can't and won't do so, because their systems are not turning a profit.

Ask how many years they operated a commercial scale aquaponics venture themselves that their income derived from. In most cases, the answer from these experts is "none", or less than one.

The aquaponics community is in a fledgling state, and can truly benefit from all the aquaponics teachers, consultants, and farmers with experience. But the waters around the subject of commercial aquaponics are getting muddied by these people who have little or no personal experience earning a living from their aquaponic produce, just because they have a personal grudge.


To be very clear:

Jefferson

"The trouble with information you find on the internet is that it is frequently inaccurate."
Thomas Jefferson
(1743-1826), 3rd President of the United States


(PS: This is a joke!)




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