Economic & Management Issues of Recirculating Aquaculture Ventures Dr. Michael B. Timmons Professor Department of Biological & Environmental Engineering Cornell University Ithaca, NY 14850 USA - PowerPoint PPT Presentation

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Economic & Management Issues of Recirculating Aquaculture Ventures Dr. Michael B. Timmons Professor Department of Biological & Environmental Engineering Cornell University Ithaca, NY 14850 USA

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Title: Economic & Management Issues of Recirculating Aquaculture Ventures Dr. Michael B. Timmons Professor Department of Biological & Environmental Engineering Cornell University Ithaca, NY 14850 USA


1
Economic Management Issues of Recirculating
Aquaculture VenturesDr. Michael B.
TimmonsProfessorDepartment of Biological
Environmental EngineeringCornell
UniversityIthaca, NY 14850 USA
2
Fingerlakes 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

3
STRATEGY
  • 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.

4
Strategy (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

5
Lessons Learned
  • Dont do it!
  • Stop before its too late
  • If you start, do NOT run out of money (Ill
    mention this again)

6
Lessons Learned (continued)
  • 2, 2, 2, 2 rule
  • twice as long
  • twice as much
  • twice as hard
  • 1/2 as much (revenue)

7
Lessons 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

8
Keys 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

9
Mistakes
  • 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)

10
False 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

11
Most 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

12
Financing 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

13
Financing (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

14
Financing (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

15
Investment Choices
  • Only invest in operations with proven success
  • includes investing your own money
  • Probability of success of a startup venture very
    small

16
Species Choice
  • myth of high value species (lets do walleye?)
  • successful aquaculture results in dramatic drops
    in wholesale price
  • salmon, striped bass, tilapia

17
Reminders
  • 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

18
Reminders 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

19
Some other gentle reminders
20
Marketing 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

21
Cost Analysis Impact of Scale
22
Fillet Cost in Store
23
It looks so good, its scary!
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