"Real Life Experiences" with Recirculating Systems

Marty Riche and Paul Brown
Department of Forestry and Natural Resources
Purdue University, West Lafayette, Indiana

Introduction

World per capita seafood consumption is projected to jump from 27.3 pounds/year to 34 pounds/year by the year 2000. With the current projected rate of increase in population this corresponds to an increase of 31 million pounds annually (Lee, 1991). According to Lee Weddig, President of the National Fisheries Institute1 this increase is occurring at a time when catches from the ocean are nearing their peak. The majority of increased consumption is expected to fall to aquaculture production (Egan, 1990).

From the period 1985-1988 aquaculture production grew by 20% compounded annually. According to one aquaculture Analyst's projections, the industry should have topped $30 billion in 1990 and he expects a continued increase of 10-15% compounded annually through out the rest of the century (Davlin, 1990).

Closer to home, the U.S. per capita consumption of seafood products has increased by 25% since 1980. The National Fisheries Institute claims that last year only about 15% of the U.S. seafood consumption came from farm raised products. However, it is expected to climb to 25% by the year 2000 (Egan, 1990).

In 1989 the United States had a net deficit in seafood imports of $3.2 billion. Among commodity products this deficit ranked second, only behind petroleum. Estimates say that unless aquaculture continues to grow at the present rate the U.S. will have to import as much as 80% of it's seafood consumption by 2000 (Egan, 1990).

In view of the good news and predictions for aquaculture, why are the media and industry rife with stories of failing aquaculture ventures? Despite what many industry representatives and enthusiasts claim, there is much that is unknown about aquaculture technology and the fish themselves.

There is a serious need for research to gain a better understanding of current technologies and methods of biofiltration, aeration, genetic enhancement, and water sterilization. There is much to learn about fish nutrition, water quality, and their concomitant interactions with disease. There is also room for improvement in processing, market analysis, management strategies and system design. Although aquaculture as an industry is still in it's infancy and much is still unknown, enough information exists to develop successful operations if one proceeds cautiously.

Many of the intensive, recirculating systems that have succumbed to failure have not done so because of the unknowns still facing the industry, but because of a failure to adhere to what I consider three fundamental concepts.

These three concepts are sufficient capital, simplicity, and manageability of the system. None of the concepts should be viewed as independent or mutually exclusive of each other. The relationship between the three may best be exemplified by the following models.

In a well designed system, simplicity can be viewed as the fulcrum upon which the capital expenditures and the manageability are balanced. For the venture to be successful the system must be maintained below a competitive ceiling. An increase in any member of the system which attempts to rise above this ceiling makes the system uncompetitive in the market and breaks the system.

If the simplicity is increased there is a concomitant increase in the manageability of the system for the same level of capital input.

A level is quickly reached at which attempting to make the system more manageable pushes it past the competitive ceiling and the system breaks. This may occur by making the system overly simple, as might happen if an essential component, such as supplemental oxygen, was left out. Or the system may be broken if additional capital expenditures increased cost of production past the competitive ceiling.

If the simplicity is decreased (complexity increased) there is a concomitant decrease in the manageability for the same level of capital inputs.

The more complex system may run at a lower level of manageability, which will eventually translate into lower profits. Or an increased initial capital expenditure is required to attain the original level of manageability to again balance the system. As is indicated it requires a large input of capital to effect a small change in manageability of a complex system.

A point is quickly reached in a complex system where the system is broken by the shear weight of the capital invested to make the system more manageable. This is an example of an overcapitalized system.

Simplicity

Almost by definition, an intensive recirculating system defies the term simplicity. Although it should be recognized that there is an inherent complexity in such a system, a conscious effort should be made to minimize this complexity. Certain steps can be taken to keep the complexity to a minimum.

The first step is to realistically and critically evaluate your goals and resources. This may sound overly simplistic, almost to the point of condescension, but it is the most critical step in developing a successful aquaculture venture. An amazing number of systems fail because a realistic stock wasn't taken of one's expectations or resources. The most important thing to remember about this step is to be absolutely honest and realistic. Being unrealistic will only serve to harm your investment.

It is fine to have a personal goal of having the most advanced recirculating system in the world or to raise 20 million pounds/year. But this is unrealistic if your resources include 100 gpm and a capital investment of $500,000. Conversely it is fine to raise fish with resources of 100 gpm and a capital investment of $500,000 unless you are dishonest with yourself about your goals and push the system to attain 20 million pounds/year.

Once you have evaluated your goals and resources you can begin to design your system to match these goals and resources. If your goals are high you may opt for a larger more complex system. But it should be kept in mind that the greater the complexity, the more room there is for error. In addition, the problems that develop will also be more complex.

The next step should be to develop a general model to assist you in determining your needs as defined by your goals and resources. The model should assist you in determining those methods and technologies which will provide the simplest design possible. It should include, but not necessarily be limited to, the parameters outlined in the appendix.

As a fish culturist there are two things that you can count on. The first, no matter how prepared or careful you are, you will experience problems with your system. The second, no matter how careful you are, you will lose fish; which is probably the basis for the cliche, "you are not a fish farmer until you have killed a million fish". However, what separates a fish farmer from a successful fish culturist is that the latter minimizes the occurrence of problems and loses.

The best way to minimize losses is through good management practices; the most important of which is to learn to recognize signs of impending trouble. A good manager must learn to recognize these signs and be prepared ahead of time to respond quickly and appropriately. Another proven way to minimize problems in a system is to limit the number of variables that can go wrong (ie. keep the system as simple as possible).

There is a tendency in intensive recirculating systems to rely on an overabundance of technology to defend against problems and losses. Often, managers will feel that they have anticipated every need as a result of investing great sums of capital in state of the art technology. This can lead to a false sense of security. The result usually being that the manager is caught unprepared if he/she suffers a system failure or large losses of fish.

A few rules to keep the system as simple as possible are as follows:

1. Do not use equipment or machinery for something that can be done as quickly or efficiently by hand.

This is the easiest rule to violate. It is tempting to purchase a piece of equipment, or state of the art system that is designed to save time and labor. Even though it may not be apparent at first, that piece of equipment might not be as beneficial or benevolent as it appears. Buying a piece of equipment you can do without will likely confront you with one or more of the following:

a) increased cost of production.

b) mechanical failures are usually beyond the capacity of the laborer or manager to repair.

c) reliance on a piece of equipment experiencing a failure will lead to down time.

d) mechanical equipment can generally perform one function in one way. Working by hand allows you added flexibility.

e) A training period is required before a laborer or manager becomes proficient with the equipment. With experience, a laborer may perform a function nearly as fast without the equipment.

f) in many cases it requires a laborer to operate the equipment. If the laborer is not comfortable with the equipment or feels it is inefficient he/she may not use the equipment even though it is available.

2. When possible monitor your system frequently and manually.

There are three good reasons for opting to monitor your system manually. The first, and most significant of the three, is that in general a computer monitoring system puts distance between the manager and the fish. A computer can only react once a problem exists and can not warn you that a problem is developing. More often than not, a good fish culturist will catch a problem long before a computer can detect one. Utilizing a computer monitoring system creates that false sense of security that allows a manager to lose touch with how his/her system is changing.

The second reason is that computer monitoring systems are expensive. This will increase the cost of your finished product significantly, particularly for small ventures.

The third reason is that computer monitoring systems are not infallible.

They are subject to the following problems:

a) power failures

b) operator errors

c) software deficiencies

d) monitoring probes are subject to fouling giving erroneous readings

3. Approach equipment or technology that has not been proven with caution.

This statement is not meant to imply that new and developing technology is not viable. However, weigh the cost/benefit ratio carefully. Ask yourself if this new technology is something you absolutely require, or if there isn't a proven technology that might work nearly as well. You should never invest in a technology until you have talked to someone who has actually raised fish in such a system.

Manageability

The bottom line in the manageability of a system is the size of that system and how efficiently it can be worked. How big should the system be? Again the size of the system will depend on your goals and resources. However, a good rule of thumb is that the system should be large enough to conserve the economy of scale, but not so large that it can't be worked efficiently. This will depend a great deal on your site selection, species selection, capital, cost and availability of supplies, and proximity to suppliers and your targeted market.

If the evaluation of your goals and resources indicate that your system should remain small, you may not be eligible for the discounted rates on inputs that larger producers receive. In this case you may wish to start or join an existing co-operative.

Co-operatives often enable it's members to receive discounts by buying in bulk and passing the savings on to it's members. Some purchases that might be made by a co-operative include feed, oxygen, electricity, fingerlings, and other supplies. Some co-operatives have been known to share labor pools as well as processing and shipping resources.

Manageability refers not only to the entire system but to individual system components as well. A major misconception in intensive systems is that bigger is better. This may be true to some degree, but like everything else, too much of a good thing is problematic.

For example, increasing the volume of a rearing tank to increase the production in that tank could be beneficial. However, there is a point at which the tank becomes too large or too deep and hinders the efficiency of cleaning, harvesting, and sampling the tank.

Another example is the storage of feed in a bulk bin. You may be able to double your storage area for a few dollars more and save 15% on your feed purchases by buying a larger quantity, but it defeats the purpose if you can't utilize the extra feed before the feed quality deteriorates. Allowing feed quality to deteriorate may decrease growth rate, kill your fish, or at best lead to throwing out the bad feed. Therefore, any savings achieved has been offset by decreasing the manageability of your feed system.

Your system should be designed so that once it is up and running you minimize the perturbations to the system while maximizing the efficiency of your labor force. The easier the system is to work the happier the fish and laborers will be. These features will be reflected in your profit margin.

A final word on large systems. In general, the larger the system is, the greater the buffering capacity of that system. The increased buffering capacity allows the system to absorb greater changes. However, it should be remembered that this ability to absorb changes also makes it more difficult to affect changes when correcting a problem. Lag times are generated. It takes longer for problems to show up and conversely longer to clear up.

Capital

Having a strong capital investment is the cornerstone of any successful venture; however, it will not ensure success. Using it wisely is what makes or breaks the success of the venture. Although economics is beyond the scope of this paper, and will be covered by Dr. O'Rourke, I would like to allude to three recurring themes regarding capital investment that are prevalent in unsuccessful recirculating systems.

1. A general failure to anticipate needs.

This occurs in two ways. The first is a failure to maintain a sufficient cash flow to carry the venture through a system failure. The second is a failure to maintain a sufficient cash flow and provide for periods of extended culture cycles.

More often than not, in intensive systems, culture cycles are extended beyond their predicted harvest date. Rarely do the fish perform up to the idealistic expectations of the managers. Therefore a sufficient cash flow should be maintained to allow for the possibility of such an occurrence.

2. A tendency to overcapitalize the project.

State of the art technology and equipment has a tendency to be expensive and rarely holds it's value. Since the aquaculture industry is still in it's infancy, the associated technology is also still developing. Therefore, caution should be taken that you do not overspend for the benefits you will attain. When investing you should keep the following points in mind.

a) the technology is new, therefore the equipment is susceptible to problems.

b) much of the high technology equipment requires time to learn to operate efficiently.

c) the equipment loses it's value quickly.

d) depreciation can be a heavy burden.

e) newly developed technology in a developing industry becomes

outdated quickly.

3. A tendency to expand too quickly.

It is generally agreed to be of benefit to start small and expand at a later date. It is easier to approach a venture capitalist to expand a small successful operation than to find investors to keep a larger troubled project afloat. Starting small enables you to get a good feel for your site, your system, and potential for success before investing large sums.

It takes time for a system to reach an equilibrium. Therefore, enough time should be allowed to determine if the system is truly in balance before serious consideration is given to expansion. Expanding before a system has reached an equilibrium can mask problems that are already inherent in your design and will only amplify the problem. A manager that expands a system too quickly is often faced with a cash flow problem because of hidden system problems that arise.

A final word on expansion. It is important in scaling up from a small pilot project to a larger scale facility to realize that the parameters do not necessarily behave in a linear fashion. This is particularly true in examining the hydraulics of the system. It is then equally important to realize how the altered hydraulics will effect the other system components.

In summary, the future for aquaculture looks bright. According to projections, world consumption is rising at a time when the oceans are reaching their maximum sustainable yield. The increased consumption is expected to be filled by aquaculture production.

Although some intensive recirculating systems to date have failed, it is generally due to the inability to balance a sufficient working capital with a well designed, simple, and manageable system. If one begins with a realistic evaluation of their goals and available resources the likelihood for success will be enhanced. Any intensive recirculating system has the potential for success if it is designed to be simple and manageable without being overcapitalized.

Literature Cited

Davlin, Andrew Jr. 1990. The aquaculture industry: an analyst's report. The Davlin Corporation. Vol. 11 (3):1-6.

Egan, Jack. 1990. The fish story of the decade: as the ocean's bounty declines, the booming aquaculture business hooks corporate investors. U.S. News & World Report. Nov. 26, 1990. pp.52-56.

Lee, Wayne. 1991. Fish by design. Seafood Leader. 11(1):70-82.

Appendix

Some parameters that should be included in a working model to assist in determining needs for system components. This list is not all inclusive nor definitive and should only be viewed as a general outline.

Total water volume                 Number feedings/day
Tank size                          Amount feed/tank/day (max)
Tank volume                        Amount feed/tank/day (avg)
Nominal flow rate                  Total feed/day
Residence time                     Total feed/week
Percentage recirculated            Total feed/month
Percentage makeup water            Feed protein (%)
Wellhead maximum output            Protein Source
Wellhead avg output                Nitrogen input/day
Wellhead maximum temperature       Nitrogen input/week
Wellhead minimum temperature       Nitrogen input/month
Wellhead average temperature       Nitrogen removal
Recycle water temperature          -fish
                                   -dilution/discharge
Loading density (maximum)          Nitrogen uptake biofilter
Loading density (average)          Estimated BOD (max)
Stocking weight                    Estimated BOD (avg)
Harvest weight                     Estimated BOD/day
Growth rate                        BOD oxygen (g/day)
Increase fish wt/day               Pounds oxygen/pound BOD
Increase fish wt/month
Growout period (maximum)           Electricity Cost
Growout period (average)           Electricity/day
Biomass/tank (initial)             Electricity/month
Biomass/tank (ending)              Oxygen cost/100 cu ft
Feed required

Oxygen metabolism                  Mortalities (%)
Oxygen transfer efficiency         Mortalities/day
Oxygen uptake efficiency           Mortalities/month
Oxygen use/tank                    Mortalities/tank/cycle
Oxygen use/day                     Acceptable mortality level
Oxygen use/month
Oxygen pounds/pound fish           Allowable discharge levels
Oxygen pounds/pound feed           - Ammonia
Oxygen input rate                  - Nitrates
                                   - Nitrites
pH                                 - Total Nitrogen
alkalinity                         - Total Phosphorus
hardness                           - BOD/COD
total dissolved solids             - Total dissolved solids
total suspended solids             - Total suspended solids
well chemistry                     - pH
                                   - Temperature

(CO2 production and removal should not be overlooked)