How to Start a Fish Farm
If you’ve ever sat down to enjoy a fish dinner at your favorite restaurant, your meal may have been possible because of the hard work of a fish farmer. Many restaurants rely on fish that is bred and raised in these farms. Starting a fish farming business of your own can be an exciting business venture, and soon you might be the person helping to supply local markets and restaurants with premium seafood that’s been carefully raised.
Fish farms breed and raise fish and other aquatic creatures in captive environments. These environments may consist of fish ponds, large tanks, or even cages immersed along the shore of an ocean. Mature fish are harvested and sold to wholesale processors or directly to restaurants and grocery stores.
Many different types of fish are farm-raised, with the most popular being bass, catfish, tilapia, rainbow trout, salmon, shrimp, etc. A commercial fish farm might specialize in one or two types of fish or offer a wide array of species. Farms can range from small operations run out of a garage to large-scale multi-acre farms staffed by multiple employees.
You can consider starting a smaller fish farm before going large-scale. A smaller farm will require less time and a smaller initial investment. Managing a small farm will give you a chance to determine which fish species you want to grow on a larger basis. Any mistakes you make while gaining experience won’t have the same large-scale implications they would with a bigger operation. Gaining some initial experience and proving that you can make a profit can also increase your chances of securing the financing you need to expand your operation.
There is a lot to learn in the fish farming industry, and the more a business owner uses available resources, the better they’ll be able to make smart decisions in their business. Local extension agents can be a source of valuable information, while other fish farmers can also help you to get started. Attending fish farming meetings and seminars can help you get an informative introduction to the industry, learning the ins and outs of what’s involved in deciding if this business is right for you.
According to IBIS World, the fish and seafood aquaculture industry experienced a 1.1% decline from 2015 to 2020. That decline related to reduced demand for products in 2020 because of the COVID-19 pandemic. Much of the industry’s revenue is driven by the sale of products intended for human consumption. While the 2020 decline was notable, seafood consumption has increased from 2015 to 2020. Multiple factors, including an increase in per capita disposable income and more consumers seeking healthy protein sources, drove that change in consumption.
As of 2020, the fish and seafood aquaculture industry was a $1 billion industry consisting of 2,674 businesses. Those businesses employed 8,468 staff. IBIS World predicts that the industry will grow from 2020 to 2025. This growth will be driven by a continued increase in disposable income, leading to consumers choosing to eat more expensive foods and dining out at restaurants that serve seafood. As the economy recovers from the effects of the COVID-19 pandemic, there should be increased demand for exports to Asia.
Many trends are shaping the aquaculture industry. Sea Technology notes that aquaculture is the fastest-growing sector of the food production industry worldwide. Environmental, economic, and social concerns are shaping this rapidly developing industry.
With the effects of global warming, rising ocean water temperatures have become a concern. These fluctuating temperatures can threaten many fish species, so fish farmers are increasingly breeding blue mussels, which are resilient to temperature changes. Blue mussels can change their genes to become resistant to climate change. Sea urchins are also largely resistant to climate change, making them a top choice for farmers. Kelp farming is also largely eco-friendly and is becoming more popular.
Fish need omega-3 fatty acids to survive, and while they get these in the wild from their diets, captive fish need to be supplemented. Traditionally, fish farms fed smaller fish to larger fish to simulate that natural diet, but this is an unsustainable practice long-term. Instead, farmers are feeding fish microalgae oil. This newer solution is environmentally friendly and reduces the amount of fishing that a farm needs to do to support its fish.
We may also see more of a shift toward open-ocean fish farms. While fish farms that are concentrated close to the shore can damage the ecosystem, relocating those farms into deeper waters makes for better management. There are some logistical issues to be addressed, but this relocation could help to protect shore ecosystems.
According to the United Nations Conference on Trade and Development, fish products that bring higher prices, like shrimp, prawns, salmon, and tuna, are traded the most frequently. Some of the most frequently farmed products are shrimp, prawns, salmon, tilapia, and catfish. Different regions also tend to buy different fish products. Southern European countries tend to buy whole fish, but northern European countries often buy more processed fish.
A fish farm may have multiple target markets. Some farms will sell to food distributors who supply restaurants and markets with fresh fish, while other farms may sell directly to a restaurant or market, bringing higher profits. A farm can also wholesale its fish to a processor, though this brings lower profits for the fish. Some farms may also choose to sell live fish to pet stores.
Skills, experience, and education useful in running a fish farm
Starting a fish farm doesn’t require a business degree, but certain skills and experiences will help run this business.
Fish farming experience. Fish farming can be challenging, and there are many elements involved in successfully raising fish, such as tracking feed, watching water quality, monitoring oxygen levels, and maintaining proper water temperatures. Previous experience with fish farming, whether that’s learning from a relative or working for another farming business, will be invaluable and can greatly increase a business’ chance of early success.
Knowledge of current consumption trends. A farmer with an awareness of the local fish consumption trends and prices can design and stock the farm to meet local demand and boost profits.
Familiarity with local ordinances and requirements. The rules governing fish farming vary from state to state. A business owner will need to be aware of the local regulations that apply to the area.
Attention to detail. Attention to detail is essential in this industry. A detail-oriented business owner can potentially spot and control diseases, parasites, and other problems early on and ensure that the fish receive the care they need for optimal growth.
Physical strength. Fish farming can be physically demanding, and a business owner will need to be able to lift and carry heavy loads regularly.
Networking skills. Strong interpersonal and networking skills can help a business owner to foster relationships with customers, including local restaurant owners.
Checklist for Starting a Fish Farm
Starting a fish farm can be an incredibly rewarding experience, but it’s important to make sure you’re prepared for the challenges ahead. Use this checklist to help get your business off on the right foot.
Step 1: Write a Business Plan
Before investing in your business, it’s important to sit down and write out a detailed business plan. This plan should outline everything from your business’ target market, the types of fish you’ll raise, and your marketing strategies and selling your products. This business plan is essential if you need to secure funding from a bank. Multiple sources have also found that taking the time to develop a business plan increases the chance of success.
Related: How to write a business plan
Step 2: Name the Business
Finding the perfect name for a business can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.
Step 3: Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a fish farm, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 4: Select Your Location
Location is essential to a fish farm’s success. If you’re farming out of the ocean or a pond in your backyard, that location will need to support the species you’re raising year-round, or you’ll need to limit your business to certain parts of the year. It’s also possible to farm out of aquarium tanks, but this will require a larger building. A good location will have an adequate water supply, good soil quality with minimal or no rocks.
It’s also important that the farm be located relatively close to the vendors you’ll be selling to minimize transportation costs. A property’s location and amenities can affect its rent or purchase price, so look for a property that has the features you need while still falling within your budget.
Step 5: Apply for Business Licenses and Permits
A fish farm will need to hold any local, state, and federal registrations required for businesses. Most businesses need to have a sales tax permit, Employer Identification Number, and Occupancy Permit, among others. Additionally, many fish farms are required to hold a National Pollutant Discharge Elimination System permit, depending on their setup.
Step 6: Find Financing
Starting a fish farm can require a significant investment, but finding financing can make those initial costs more manageable. To get a business loan, a borrower will need good credit and personally invest 15-25% of the total start-up costs. Having a detailed business plan can help to increase the chances of being approved for funding.
Step 7: Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get Your Marketing Plan in Place
Marking is essential in building your business and in keeping it supplied with a steady base of customers to sell it. Common marketing techniques for a fish farm include social media marketing, online advertising, and even direct mail. Networking is particularly important in this industry since it can help a business owner to develop valuable relationships with businesses in need of fish products. Referral programs can also help to build up a customer base.
Every business is going to need a logo. Make a professional logo in no time with the free Canvaa logo maker!
Step 9: Get Business Insurance
There are several types of insurance to consider when starting a fish farm. A few of these include:
– General liability insurance helps protect the business if a customer or their customers are ever injured or made ill because of the products the business sells.
– Worker’s compensation insurance covers expenses like medical bills and lawyer fees that can occur if an employee were ever hurt while working.
– Commercial auto insurance covers a company-owned vehicle, protecting the business against expenses that could occur if the vehicle is ever in an accident.
The cost to insure a fish farm depends on factors like the fish farm’s location and the value of its buildings and company vehicle. To get the most accurate idea of what to budget for insurance, review quotes from multiple insurance providers. Compare not only the premiums but also the coverage exclusions, coverage, limits, deductibles, and other important elements of each policy.
Step 10: Hire Employees
It may be possible for a business owner to manage a fish farm entirely on their own, but a larger farm will require at least one additional employee. According to Salary.com, fish farmers make an average salary of $47,223, though that salary can range from $41,062 to $58,662.
In addition to budgeting for salary requirements, a fish farm’s budget will also include related expenses like paid time off and worker’s comp insurance.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your fish farm is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost to start a fish farm?
The cost to start a fish farm can vary significantly depending on whether a business owner already owns suitable land or a building or whether they need to buy or establish a rental arrangement for land. Starting a fish farm can run from several thousand dollars into hundreds of thousands of dollars, depending on its size and complexity.
Some common startup costs for a fish farm include:
– Site purchase or rental
– Site work
– Supplies like cages, tanks, aeration devices, and seine reels
– Inventory such as fingerlings and fish feed
– Company vehicle
How much can a fish farm owner make?
Many factors will affect a fish farm’s profits, including the number of ponds, the types of species farmed, and how the farm sells the fish products. Langston University has performed an economic analysis of different fish culture enterprises. According to the University, a fish farm that produces 3,000 pounds of wholesale catfish will need at least $3,000 per acre in both startup and operating expenses. That farm can expect net profits to be $300 per acre per year or about $0.10 per pound of fish. If that farm markets its fish and avoids wholesaling it, retail net profits could be as much as $1.00 per pound of fish. It’s also important to note that changing consumer demands can affect the profit potential. Demand for hybrid striped bass is high and is currently one of the more profitable species.
Some fish farms will generate additional revenue by selling fish food, pumps, aeration, or harvesting devices, which may help bring additional income outside of harvest, which largely happens only once per year.
A couple of other business models supporting fish farms includes a hatchery or fingerling production operation, though it does take more care and attention to run successfully. A fish brokerage business makes a percentage from the sale of fish. They will typically have their own ponds to hold fish until the buyer is ready to purchase.
Are there grants to start a fish farm?
It’s extremely rare to find a grant to start a fish farm. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for a fish farm?
The NAICS code for a fish farm is 112511.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
Related: What is a NAICS code?