Succeeding in Aquaculture:

How to Start and Run a Profitable Open Ocean Fish Farm

Introduction
Aquaculture has been around for thousands of years, but it has grown
significantly since the 1970s in response to declining wild fish stocks.
Today it accounts for more than half of the seafood produced globally
each year.

While land-based aquaculture and near-shore marine aquaculture

are both well-established industries, open ocean fish farming is the
next frontier. With rugged new equipment built to withstand the
forces of the high seas and technological advancements like artificial
intelligence fueling exciting new capabilities, the open ocean is now a
viable and promising option for aquaculture and is helping the industry
expand into new territory.

It’s an exciting time for anyone thinking of getting into fish farming.
As with anything, however, a little knowledge and some realistic
expectations go a long way. While open ocean aquaculture is
a complex endeavor, this e-book outlines the basics that any
entrepreneur or investor needs to know before taking the plunge.

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Why Aquaculture?
In 1999 Peter Drucker, the famed management consultant and
economist, told the New York Times that aquaculture was going to be Aquaculture has been the fastest growing food producing
the biggest growth industry of the next 30 years. Drucker recognized sector in the world over the last decade. With the global
the need to improve global food production systems to provide enough population expected to rise to over 9 billion people over
healthy protein to meet the world’s rapidly growing population. the next 30 years and consumer choices trending towards
healthier options, demand will continue to climb.
He also understood that fish farming has immense potential to grow
protein-packed, high value food in a sustainable manner. And because
of the unique characteristics of fish spelled out below, aquaculture is
much more efficient than agricultural methods:

» Fish live in the ocean, which covers more than 70 percent of the
earth. Although fish farms can utilize a wide range of environments,
being able to utilize open ocean space to produce food reduces
conflict with other industries and allows for large economies of scale.
» Fish are cold blooded, don’t grow heavy bones and don’t have
to fight gravity. These metabolic energy savings make fish more
efficient at converting feed into body mass than cows, pigs or
chickens.
» Fish do not need to be provided with water nor do they graze
on open fields. This means the water requirements to produce a
kilogram of fish are lower than they are with traditional livestock.
» Unlike terrestrial farms, which usually require dramatic land use
transformations and significant reductions in biodiversity, open
ocean fish farms have little impact on the surrounding environment.

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Making an Aquaculture Business Plan The first step in forming a business plan is asking questions such as:
» Which species can be produced in my area of interest?
Many entrepreneurs and investors in aquaculture are attracted by » What is the market price of this species?
the desire to improve the environment, produce their favorite fish
» How many tons of it are sold each year – and where?
or build a successful business in a coastal community. While all
Extensive research will need to be done to properly answer these
admirable goals, they’re difficult to achieve without a rigorous and
questions, but there are great online resources that can help in the
well-developed business plan. Without profits, a farm will not last
early stages. Websites offer news and prices for certain species
and any social or environmental benefits will never materialize.
while many government websites and the United Nations’ Food
Fortunately, growing fish and making money are compatible goals. and Agriculture Organization provide statistics on production
volumes for most species.
The key to a successful business model is flexibility and a
willingness to let market opportunities guide the business plan. As the business plan becomes more refined, it’s imperative to
The number one reason fish farms struggle is because they’re built contact industry experts such as seafood buyers and distributors,
without the market price and demand to support the operating university academics, government regulators and industry
costs and scale of the business. consultants. They can help refine the values and assumptions used in
the plan, point out any red flags and offer new perspectives. Many of
these people will benefit from a new successful farm and will want to
help it succeed.

A successful aquaculture business plan requires

flexibility and the willingness to let market
realities serve as the guiding force.

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Species Selection
Selecting a species to produce is one of the first critical steps in Market parameters, meanwhile, focus on the farm-gate
developing the business because tanks, pens and systems are price and production volumes. It is important to understand
chosen and designed with a particular fish in mind. While it is the details of both these elements to have an accurate
possible to change species or add a second or third species after a financial outlook. Some fish species are globally traded
farm is operational, this often adds inefficiencies and shouldn’t be commodities, so producers
done early in the life of a new business. have little ability to negotiate
prices, which can fluctuate
The species selected will need to meet the oceanographic
wildly in response to supply
conditions that exist in the area of interest and the market
and demand. Others are
parameters required for financial success. Two of the most
produced in seasonal fisheries
important oceanographic parameters to consider are temperature
that experience large but
and levels of dissolved oxygen.
predictable changes in price
» Water Temperature: Many people think that because a species and availability as that species
is present somewhere it means that it is fine to farm it there. enters or exits its wild-capture
But temperature has a significant impact on growth rates - so season. It is essential to understand the farm’s projected
a particular species may be able to feed in an area seasonally profitability as well as how those projections might change
or migrate through but it will not achieve commercially viable in a dynamic market environment.
growth rates if farmed there year-round.
The last element to consider is whether the technology and
» Dissolved Oxygen: This is a critical component of fish survival. techniques exist to produce a particular species. Bluefin
Areas that have low or variable oxygen levels may not be an tuna, for example, has a large market and strong price. But
issue for wild fish who can move around during low oxygen because the hatchery technology to produce juveniles is in
conditions, but that can create high mortality rates for fish living its infancy, it would be a risky choice for a new fish farmer.
inside a pen in a static location.

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Site Selection A phased approach works best, starting with remote collection
and analysis of:
Site selection is another critical component of farm success that
needs to be tackled early on. Many farms have failed because » Zoning information
owners did not thoroughly consider all relevant factors when
» Potential user conflicts (shipping lanes, tourism, etc.)
choosing their location.
» Remotely sensed or modeled oceanographic data
More than two dozen factors can come into play when selecting a This phase can be done relatively quickly (on the order of weeks)
site, so there can be significant delays to the permitting or start- and with minimal costs since travel and data collection are not
up of a project if not done properly. The key is taking a holistic required. Once a suitable site has been identified, then you
approach that reflects all considerations and minimizes the need for can travel to the location for in-person assessment, study and
repetitive iterations. characterization.
An effective site selection process will balance the time it takes to A comprehensive site selection study, on the other hand, can
finalize a location with the cost of acquiring data and the risk of be a challenge for new entrants to the industry to undertake on
making a suboptimal choice. their own – and mistakes can be costly. Consultants in this area
are often a good choice due not only to their expertise, but also
their access to software like GIS (see sidebar) and equipment
like current meters and temperature loggers.

The Power of GIS

Geographic information systems (GIS) are a tool for
integrating, analyzing and visualizing spatial data from
multiple sources. This software allows you to display many
types of spatial data on a single map and analyze the
relationships between the data layers. GIS performs unique
and powerful analysis to create understanding from what
0 2 4 8 can otherwise be a cluttered array of overlapping data.
km

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Permitting Keys to Success
Engaging regulators early in the permitting process
Each country has a unique process for granting permits and many will help both parties. An early connection leads to
even have distinct rules for different regions. Some countries, such stronger relationships and can create goodwill. Often key
as Norway, Chile, the Philippines and Turkey, have an established information is exchanged during these early interactions
permitting process with personnel who are familiar with the that can prove pivotal in the process – such as certain types
process. Many even have designated aquaculture areas where of studies, sets of standards that can guide the process and
applicants can obtain a permit in just a few months. resources that the applicant may not have been aware of.

Other countries have lengthy or poorly defined processes that result It is also wise to engage environmental non-governmental
in the applicant not having a good idea of the timeframe or costs of organizations, watchdog groups and aquaculture or fishing
acquiring a permit – even while in the middle of the process. industry groups early. The interactions may be challenging,
but it’s always better to have some sort of contact than
Discovering that the permitting process in your area of interest
having no communication at all. Early engagement with
is unclear or difficult does not need to be a red flag. Engaging
stakeholders has alleviated conflict entirely in some
stakeholders early, working with other affected parties and being
instances since the interest group was able to guide the
prepared with data and analysis makes it easier to obtain permits
process in a way that suited both parties.
and licenses in a reasonable timeframe.
Have as much data and analysis available as possible – and
as soon as you can. It can be expensive to conduct studies
and generate data sets, but the cost of project delays will
almost always be higher.

For example, a deposition model that predicts the benthic

impacts of a farm is not required by all government
agencies for permitting, but it is required by third-party
market certifiers. Producing this model can often be put off
until fish are being sold, but if an environmental lobbyist
asks for it during a public comment period, it could be
grounds for regulators to postpone a decision on a permit
–ultimately sidetracking a project for months.

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Feed
Feed accounts for much of a farm’s operating costs. So farms must There are several ways to deliver feed to fish. The best one
choose the right feed and the right delivery system – and then find will depend on the farm. Small farm operators often toss
feed operators who are experienced and capable. With annual feed into fish pens by hand. Mid-sized farms often use a
feed budgets in the millions of dollars for a mature farm, every cannon that shoots feed pellets into the pens. This delivers
percentage point of efficiency is extremely valuable. feed faster than hand tossing, but still requires pulling up a
boat to each pen – and both of these methods lead to a lot
of wasted feed.

Recent advances in feeding equipment have brought

efficient single pen feeders or, for large farms, modular
multi-pen systems. These systems have feed tubes running
from a feed barge or central mooring location to each pen.
The feed system delivers feed through pipes either with
air blowers or pumped water. This is the fastest and most
efficient way to deliver feed at large farms with many pens.

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The rate at which fish convert food into body mass is called the Feed Conversion Ratios Explained
feed conversion ratio (FCR). This is one of the most important There are two typical FCR stats reported, the Biological FCR
metrics in aquaculture and is explained in more detail to the right. (bFCR) and the Economic FCR (eFCR). The bFCR is calculated
Another important ratio is the economic conversion ratio (ECR), as the amount of food consumed by a fish divided by the
which is the value of the feed purchased divided by the value of fish weight gain. This shows the biological capability of the fish to
harvested. Unlike FCR, which is a weight-based ratio, this is strictly grow on that particular diet. The bFCR is affected by the fish’s
a value ratio. So if a farmer switches to a more expensive feed, the species, genetics, health and stress levels as well as the quality
economic conversion ratio can still improve if the fish grow faster and makeup of the feed. A farmer can improve the bFCR by
and have a lower mortality rate. instituting genetic selection programs, improving fish health or
changing feed types.

The eFCR is calculated as the amount of feed purchased

by the farm divided by the harvest weight of the fish. This
measure includes the variables used in FCR since most of the
feed purchased is consumed by the fish, but also includes:

» Feed consumed by fish that die.

» Feed lost or spilled during transport or storage.
» Feed damaged during delivery.
» Feed lost to the environment due to overfeeding or poor
feeding practices.

eFCR can be improved by hiring, training and retaining quality

feed operators, improving feed delivery systems and installing
cameras and sensors to enable operators to make better
decisions.

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Farm Operations Mortality Collection: A small amount of mortality is
expected at any farm as is normal with any large population
Although feeding requires the most time, labor and cost of all the of animals. These mortalities need to be removed promptly
tasks on a fish farm, there are several other regular operations to from the pen to avoid transmission of disease and so they
consider as well: don’t attract predators. Some farms collect mortalities with
divers, but it is more common to use automated collection
Stocking: This is the process of transferring fingerlings from a land- and pumping systems or remotely operated vehicles.
based hatchery or nursery to net pens offshore. Fish are counted
and weighed as they are transferred from a tank into transport Maintenance: There will be wear and tear on all system
totes. They are then taken by boat to the farm site and released components from the corrosive action of seawater and
into the net pens. the continuous movement created by waves and currents.
Regular inspection of the pens and mooring system will
Harvesting: This requires fish to be collected into a small area ensure that components are retired and replaced on time
where they can be harvested by net or a fish pump. The fish are and that failures are avoided. Regular upkeep tasks such as
typically landed on a de-watering table where they go through a changing anodes can be done during inspections as well.
stunner/bleeder and then get loaded into an ice tote. The totes are
brought back to shore where they are repacked in ice and delivered
to the processing plant.

Bathing: While not done at all locations, some farms need to rid
their fish of external parasites. This task can be performed several
ways, but bathing fish in an antiparasitic solution is an effective
method. Diluted hydrogen peroxide is commonly used for this as
Did You Know?
the chemical breaks down into water and oxygen within a couple of
minutes and leaves no lasting trace in the fish or the environment. Aquaculture products are often fresher than wild
Bathing is often done in the pens using methods to reduce water caught products since fish can be transferred
flow during the operation. from the ocean to the processing plant in a
matter of hours and are on ice the entire way.

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Six Critical Success Factors
There are six critical factors that impact a farm’s success: 4. Feed – A reliable source of quality feed is vital. When feed is
unavailable, the valuable fish that are in the water will lose
1. Sufficient capital – Aquaculture is a capital-intensive industry. In
weight quickly and start to die if unfed for a few days.
addition to the cost of equipment, a farm needs enough capital
5. Fish health – A proactive approach to fish health will save a
to cover its operating costs for a whole grow-out cycle before any
lot of headaches in the first few years. The right time to hire a
revenue is seen. Projects that are undercapitalized often need
veterinarian and look into vaccines is before fish are sick and
to cut corners, reduce production, take on loans or sell equity
the problem is urgent. Fish health is an essential program
to sustain themselves until they can establish a fully scaled,
at all farms and the value of putting this in place early will
consistent harvest schedule.
significantly outweigh the cost.
2. Site, species and equipment selection – These three elements
6. Data analytics – Every farm has unique characteristics –
must complement each other. The site must have the right
location, genetics, feed type, operators – that will affect fish
temperature range and other parameters for the species to
performance. As a result, the lessons learned at one farm
thrive. The equipment must be robust enough to survive the
may not be applicable to another. Systems designed to
environment. And the species must be compatible with the
capture, store and analyze data allow farmers to understand
location and gear to produce commercially viable growth and
what is happening at their farm and provide valuable
survival rates.
insights into how to optimize the biological and economic
3. Skilled workers – Like any business, a talented and committed
performance.
workforce is essential to the success of the farm. Aquaculture
Each of these critical areas should be addressed to give a new
is a new industry in many areas and even companies in well-
farm the best chance of success.
established industries have difficulty attracting the right
personnel. Getting the right staff to succeed and continually
training them as they develop and grow is paramount.

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Conclusion
Aquaculture is going to play an increasingly important role in feeding the planet
in the years ahead and has immense business potential. Fish farming in the
open ocean has numerous advantages, but comes with challenges as well. For
a newcomer to the industry, it’s going to take knowledge and a lot of careful
planning to succeed.

If only it were that easy. But we’re not here to make it sound simple. We’ve
been around long enough to know that fish farming in the open ocean is a
challenging endeavor. It takes a knowledge, a lot of careful planning and even
a bit of luck to succeed. While we’ve distilled our decades of experience into
these pages to help get you started on thinking seriously about open ocean
aquaculture, it’s going to take a lot more to develop a complete business plan
and begin fully sketching out your dream.

Innovasea offers a full range of consulting services to help you with every
aspect of open ocean aquaculture – from selecting a site for a new farm to
optimizing an existing operation. Contact us today to get started or to learn
more about how we can help.

And don’t forget to subscribe to the Innovasea Insights blog for the latest
happenings in the industry.

About Innovasea
Fueled by leading-edge technology and a passion for research and
development, Innovasea is revolutionizing aquaculture and advancing the
science of fish tracking to make our oceans and freshwater ecosystems
sustainable for future generations. With 250 employees worldwide, we provide
full end-to-end solutions for fish farming and aquatic species research –
including quality equipment that’s efficient and built to last, expert consulting
services, and innovative platforms and products that deliver unrivaled data,
information and insights. Visit us at Innovasea.com to find out more. 11