Title: Economic & Management Issues of Recirculating Aquaculture Ventures Dr. Michael B. Timmons Professor Department of Biological & Environmental Engineering Cornell University Ithaca, NY 14850 USA
1Economic Management Issues of Recirculating
Aquaculture VenturesDr. Michael B.
TimmonsProfessorDepartment of Biological
Environmental EngineeringCornell
UniversityIthaca, NY 14850 USA
2Fingerlakes Aquaculture LLC
- Fully integrated tilapia farm, breeding,
fingerling, growout - 1999 production 150,000 lb/yr (Phase I)
- Sold 500,000 lb during 2000 (Phase II, new
facility) - Designed for 1.2 million lb/yr
- Positive cash flow by January 2002
3STRATEGY
- Become the low cost producer of farm or tank
raised white fish for the US mass market
consumers of fresh fish. Use this competitive
advantage to sustain a marketing program to brand
Tilapia as a substitute fresh white fish.
4Strategy (continued)
- Apply proven techniques of fresh poultry
production and marketing to the fish farming
industry to establish substitute protein source
to current declining salt water species - Establish FINGERLAKES FRESH as an ultimate brand
5Lessons Learned
- Dont do it!
- Stop before its too late
- If you start, do NOT run out of money (Ill
mention this again)
6Lessons Learned (continued)
- 2, 2, 2, 2 rule
- twice as long
- twice as much
- twice as hard
- 1/2 as much (revenue)
7Lessons Learned (continued)
- Commodity versus niche
- 200,000 lb/yr (worst position)
- 10,000,000 lb yr (competitive)
- 25,000 lb/yr (niche, family oriented)
- Do NOT NOT NOT run out of money
- speed of ramp up and operating costs prior to
full production targets
8Keys to Fingerlakess Expansion Success
- larger scale of operations
- unit input prices lower overhead per unit goes
down - trained workforce
- improved technology
- adequate water
- greatly reduced electrical costs
- targeted marketing approach
9Mistakes
- Slight changes in prototype (from Cornell
system) - Lack of adequate water supply
- Under-estimating water requirements
- Purging requirements
- Cleanup requirements
- Flushing during tank emergencies
- General usage around farm
- Deterioration in well supply (50 at least)
10False Assumptions
- Applying successful prototype systems to
alternate species - feces differences
- water quality tolerances
- differences in performance and behavior of water
conditioning equipment, e.g. fine solids capture
in coarse or fine sand fluidized beds
11Most Important ResourceManagement Team
- You can overcome just about any challenge if you
have a good management team - Prior experience a necessity
- can build in house via a series of expansions
- dangers of going too big too fast
12Financing Sources of Capital
- Look in the mirror...
- Look in the mirror again!
- Banks View (Bank guaranteed loans are a myth)
- you will fail and therefore they require a
perfected secured loan - salvage values of 10 cents on the Dollar at best
13Financing (continued)
- Venture capital for aquaculture startups does NOT
exist - Venture capital for expansion efforts can be
obtained - Requires close personal contacts and documented
previous success
14Financing (continued)
- Takes a tremendous amount of time to obtain
- Takes an immense amount of patience and ingenuity
- Even successful securements, take several months
to obtain actual in hand
15Investment Choices
- Only invest in operations with proven success
- includes investing your own money
- Probability of success of a startup venture very
small
16Species Choice
- myth of high value species (lets do walleye?)
- successful aquaculture results in dramatic drops
in wholesale price - salmon, striped bass, tilapia
17Reminders
- Catfish farm side _at_ 0.75/lb and 45 fillet yield
gt tilapia farm gate at 0.55/lb - establishes commodity price for other species
18Reminders Broiler production
- 1,000,000 kg/yr per person
- 0.10/kg for labor, capital costs, utilities
(most) - twice feed requirements per unit meat produced
- productivity per unit space only 50 of indoor
fish production
19Some other gentle reminders
20Marketing Efforts What FLA did
- Wegmans fillets and whole fish
- Test marketing with local Wegmans
- Live Fish Market wholesaler (Philadelphia)
- Chinese Market in Rochester
- Restaurants (local)
- Stew Leonards (Norwalk and Danbury CT)
- Whole Foods Inc (Bread Circus)
- Sysco Foods
21Cost Analysis Impact of Scale
22Fillet Cost in Store
23It looks so good, its scary!
Any Questions or Comments ?