Source material

Marketing and Economics

1. 10.1 Economic

   Original publication 2021 · First published on FarmHub Learn 2021-04-22 · Kentucky State University

   There is relatively little information available on the economics of aquaponics, likely due to a lack of successful commercial production before 2014. Based on information summarized in Engle (2015) and Heidemann and Woods (2015), aquaponics profitability is achievable depending on geographic location, climate, initial investment, production cost, market demand, and consumer preference for goods.

   Production in USDA Zones 7-13 are typically most profitable in the U.S. due to reduced risk of losses associated with cold weather, power outages, and utility costs (Love et al. 2015). Another production factor is labor costs, which have been estimated at 46% of total operating cost and 40% of total annual cost (Tokunaga et al. 2015). Reduced delivery travel costs are associated with aquaponic production due to the capability of suburban and urban production.

   An international survey of aquaponic growers found a significant relationship between sales of non-food products from aquaponics farms (i.e. training, workshops, system designs, consulting services) and the farms' profitability (Love et al. 2015). Crops grown in aquaponics can be very profitable; however, several studies have shown that the fish component is far less so. But while the crops may produce a larger profit than the fish (and the amount of space/area devoted to fish in the aquaponics system may be minimized), the "advertising-value" of the fish has a worth that exceeds the actual dollar amount brought in from fish sales. This may be even more true with systems located in the Virgin Islands and Hawaii that experience long, consistent daylight hours with little daily temperature fluctuation and where the price of fresh produce is very high.

   Considering the inherent adaptability of aquaponic production, potential success should be carefully weighed from available information, a well-constructed business plan, and individual needs and inputs. An operating plan should include, but not be limited to, the investment required to construct facilities and purchase equipment, annual costs to operate the system, projections of market prices and competition, and realistic estimates of potential revenue. Based on information from three commercially surveyed aquaponic farms, the estimated payback period can be between two to five years.

   Source: Janelle Hager, Leigh Ann Bright, Josh Dusci, James Tidwell. 2021. Kentucky State University. Aquaponics Production Manual: A Practical Handbook for Growers.

2. 10.2 Marketing

   Original publication 2021 · First published on FarmHub Learn 2021-04-22 · Kentucky State University

   The most difficult aspect of any aquaponics operation is developing a realistic and practical marketing scheme (Engle 2015). Location is key for marketing because location determines what is in demand and the size of the market. Having close access to multiple cities significantly increases the market size as well as market demographics and in turn increases demand for product. If the location is within a remote area such as an island, then the market price for the product will be much higher compared to a location in an easily accessible area (Engle 2015). Since aquaponics production can be done year-round, growing and selling produce that is locally considered "out of season" can help achieve a higher price point. Offering a variety of niche crops such as microgreens, house plants, and herbs holds much potential to increase the market as well as profits.

   In order to enhance the marketability of aquaponic produce, certain certifications will be extremely helpful. These certifications include organic and certified naturally grown (CNG). In order to maintain the organic label, extra funds will need to be used in order to satisfy the regulations, but overall the product will be able to be marketed as a high-quality product, raising the price consumers are willing to pay. The other option is to be certified as naturally grown, which means no synthetic chemicals are used in the operation, which stands true for most aquaponic farms. While organic is still the word most consumers know, being certified as naturally grown can still draw in top-dollar prices that consumers are willing to pay. No preservatives! No pesticides! No herbicides! Local! Homegrown! These are also labeling strategies that can be used to promote the sale of aquaponic produce. Clever and catchy labeling that is easily spotted in stores can help leave an impression in a consumer's mind about the product. Just having aquaponic-grown fish available from a business will make their hydroponically-grown crop more desirable to environmentally-conscience customers, so even though fish may be a small percentage of what the business produces, it serves as a "marketing tool" for all other sales from that business.

   Selling directly to restaurants, farmers markets, and CSA markets has potential to generate more revenue compared to selling it wholesale. These routes allow for a closer personal contact with the consumer and allow the aquaponic producer to tell their story. Although wholesale can be much more reliable and easier to work with, the profits are drastically reduced, since the price of the product is sold at a much lower price. Selling wholesale also requires a much larger capacity than what most aquaponics farms have, which is why selling directly to the consumer is typically the market chosen for business.

   Source: Janelle Hager, Leigh Ann Bright, Josh Dusci, James Tidwell. 2021. Kentucky State University. Aquaponics Production Manual: A Practical Handbook for Growers.