Hobby Farming with Aquaponics

Following on from our recent post on the hidden cost of aquaponics (Aquaponics for Profit), I want to take that same hypothetical aquaponic system and see how we might improve its chances of success.  We are not taking into account markets and capacity for the farmer to sell their product.  We will look as some of the basics of the system to see where improvements may be made.

Reduce Capital Investment Cost

The first and very prominent issue is the capital investment of such a small farm.  In terms of scale, the economy of small systems makes them very susceptible to high capital cost in comparison to their capacity to produce.  In other words, the square meter cost to production return or cost to benefit are quite high, so scale of economy negatively impacts the small farm business outcome.  This high cost will be reflected in the increase of the break even sale price of the produce.  Often the capital investment in small farms is not recovered over their life span, though it does give you some capacity to reduce your taxation exposure in the first 3 to 5 years

Cash Savings

We all know cash is king, and when it comes to start up boutique hobby farms cash is very important.  The high capital cost often means putting at risk substantial cash savings with the intention of generating a higher return than you might get in a long term investment cash account.  For example you might have some cash squirrelled away for later in life and it is earning you an comfortable 6%pa with next to no risk.  It will take some serious consideration before taking that money out and invest it in a very high risk venture like farming (aquaponics or otherwise).  As with any investment the returns should reflect the level of risk, eg high risk you should expect high returns.

Partnerships

Perhaps, there is opportunity to partner with family or friends in the venture, however that can also be fraught with risk and sometimes does not end well.  You also need to keep in mind that now you have to sustain more than one income and usually an income that is not directly reflected on the farms input (labor), so it can increase your risk substantially through cash flow reduction.  This is not to say it is bad, but choose wisely with whom you might partner with and set the expectations well before any finances are exchange.

Borrowing Capital

If those cash funds are not available to you, borrowing the money is the next option which incurs substantial interest rates which put your operational cash flow at serious risk.  In AU obtaining 50K or 100K to get you going from a bank is going to be near impossible and as I mentioned earlier, the banks will charge a high interest rate appropriate to the risk, if you manage to convince them you are the right person to bet on.

Grow as You Go

Another option often used with success, if capital funds are not readily available  is to build and expand as funds from other sources, such as your day job becoem available.  Effectively it starts as a hobby with a larger plan to possibly replace your day job income with that of the hobby farm.  This can be a stiff lifestyle choice but one that many opt for.  Provided your system design allows you to easily and inexpensively increase your production as your market grows, you stand a fairly high chance of success.

This expansion process is very important because when you start out, chances are you will not have much in the way of market penetration, so it makes perfect sense to grow what you can afford to as you identify what your market wants from you and expand in line with demand.  I can not stress enough that production must be driven by demand not the other way around.  Grow as much as you can sell.

While I got a little side tracked, the point I make is a critical factor in determining your success as a farmer.  Reducing capital cost does not mean butcher your design by using gear that it is not designed for and doing a lot of ad hoc modifications.   Start with proven system designs and culture techniques, keeping in mind the cutting edge is the bleeding edge and as a small grower you can not afford to dally too much with experimental ideas.  Invest in the right gear for the job and it will serve you well.  The last thing you want to be doing is repairing or reconfiguring your set up.

How can we improve on the previous scenario?

We have talked about reducing capital investment is critical without compromising on the gear used.  Another critical consideration is getting the most out of every square meter of the large capital costs plays a vital role in reducing your investment.  That is what farming is about aquaculture or horticulture.

Take for example our 2200 plant holes in a 450m2 double poly tunnel.  Click on the concept drawing at the top of this post to get a better look.  That is a substantial modification to the original design.  You now have 4500 plant holes and 22,000 litres of aquaculture in the same poly tunnel.  This set up will take just as long to run and manage but it is much more productive and much lower capital, which answers two of the critical factors for success, lowering capital cost and increasing production.

Now we product 700 kg of fish and 54,000 plants.  At the rates we used in the previous post, you might see a turnover like $10,500 for the fish and $81,000 for the plants with a potential turnover of $91,500 per year.  You will work close to the same hours but we will add an extra full day because of the volume of plants.  The fish will take the same time to care for.

Let’s take a quick look at how this has helped our bottom line.