Where can I find info on large scale coral farming?

[Treeman]

I have watched that site and I like what they are doing. One difference that I think is key there is that they are selling retail which gives them an added mark up. I think most of the growers here are wanting to sell wholesale. I may be wrong there, but that is the jist I am getting. That is what I am doing.

I like the idea of the larger farm buying stock from the smaller ones. I think that would help them both. Or all of the growers trading amongst themselves as they need what the other has to fill orders.

 

[raaden]

Alti, good point about walking first. Part of it was just letting the mind race to see what it can come up with. You bring up a couple of good points. I think your point about a farm choosing a single species, although tongue-in-cheek, is absolutely correct. If enough small parties are brought together each person could specialize in something and produce sustainable numbers of whatever they choose. Sure you could produce far more softies than acros, but you will get more for the acros. I think small farms that specialize could do just as well ,in comparison, as the medium sized farms, plus by specializing there would be fewer hassles and greater levels of husbandry for that single species. Then the coop itself becomes the distributor and can distribute within the local lfs arena.

I am not sure that a non profit could fill the role of the distributor. It would make quite an interesting concept and it is being done with produce but it would be difficult as marketing rules are very tough on NFP's, and it would have to walk a very fine line between the commercial facilities and its own charter. I would not mind seeing this evolve as it would make a nice benefit to the community.

I agree that the hub idea where the coop centralizes the product could never work for retail. I am not sure it could work for anything other than single source fulfillment where the coop ships all of the product it has to a single distributor. It makes much more sense to use dropshipping or direct delivery to a local lfs.

The growout idea seems to be just putting another name on the same middleman markup but instead of the consumer absorbing the price the small farmer would have to. I do agree that it would be up to the medium sized farms to round out the catalog with products that are not being produced elsewhere.

The concept behind Exotic Reefs is very similar, but instead of selling to retail it would focus on wholesale like Treeman was referring to. I am not sure that I am personally opposed to selling direct to retail its just if you are trying to sell the quantities that I am looking for it would be almost unmanageable in terms of overhead for sales and shipping. Anthony Calfo is right in saying that as a small business it is a lot of work to try and fulfill 200 orders a month.

 

[Whaledriver]

It seems that limiting overhead is key. If the hub of a coop is virtual there are much lower costs. It would simply be a marketing and processing tool. I think that by limiting things to wholesale markets you can keep costs down and reduce or eliminate the headaches of retail (trust me, retail bites some days)

This limited hub would also help keep things non profit even to the point where it doesn't touch any money. It would list available frags that the grower has ready. The management of such a business would be something a collage class project could help create and even control.

Another key eliminate is that of consolidation and transportation to a overnight shipping hub. Since my personal idea is to run things as a part time business I would consolidate once a week on a Sunday. The virtual coop creates a packing list of what needs to ship out once a week. Things get packed up at individual growers and taken to a central site and put into boxes to go to the final customer.

I think that domestic farm raised frags will eventually lead the way to a sustainable market like they have for fresh water Cichlids. They should also be able to get a premium price that will help support this business model. Don't forget the power of tree hugging environmentalists. Think Dolphin safe tuna and how that played out in the market.

 

[ALTI]

retail definately bites these hot summer days

farm raised will not be a major part of the market till the prices come down or imports are banned. as long as wild colonies are cheaper and easier to get there will be no change in the market.

raaden,
dont think u will be able to make up for lost time with the acros because u get more money from them. you may get more money, but unless you are ORA you are not going to be able to selol 1"-3" frags. stores and distributors want full sized colonies. For the 30-40 bucks you get for an sps colony you could have raised and sold 500 bucks in xenia. there is no comparison. only way i see people making money with sps frags is by selling retail. otherwise its a waste of growing space IMO.

 

[jake levi]

coops

coops

For a working model(s) of what works you might take a look at the Fla fish farmers,

typically some of the larger ones buy from small growers, but there are also some medium sized ops doing the same, as for criteria, thats fairly simple: what sells.

Some farms specialize in the small fish you see in some larger retail chains while others specialize in larger fish, its what works for each producer, and finding their market. A distributor can tell growers what they want, they may get it most of the time, but not always, just the nature of the business, of the small producers typically each will have up to a dozen species/varieties.

Each grower is known for what they have in quality and quantity. Some of the bread and butter fish are regular weekly orders, others may be once a month. Over decades working relationships grow. People come and go in the business, some of the businesses do also, or change management. This will happen in marine aquaculture, mainly because it works.

growing soft corals or stony is mainly a personal preference. Some dont want halides and some do. Each has its adherents and proponents, ultimately market will do a shakeout as to who has what.

I was in a retail store yesterday, nice looking place but the livestock suffers, too much and not enough attention. The marine section looked good in the fish but the inverts were hurting, a lot of aiptasia in the big tank, mismarked species:anthelia as xenia, species that cant survive like flame scallops, a lack of big colonys, most were AC on minute bases. No live rock, cultured or otherwise. Places like this are a block against building a good area market. Better then half of their dry goods area was devoted to high end large tanks. Nice looking store but they cant compete with Petsmart in product margin, or personal attention and livestock quality, where a small store should be able to compete.

Besides working models of what will work for coops theres a lot of other road humps for small producers in aquaculture.

 

[raaden]

Winning at our game... not theirs.

Winning at our game... not theirs.

Limiting overhead and refining process are the only ways that a frag farmer can hope be competitive pricewise. Granted, price is only one aspect of competing in the market, and far to relied upon to by most businesses, but it will always be important.

I definitely think that in time farm raised frags will lead the way not only for existing business but to level the field with freshwater and fish only salt tanks. This can be done several ways:
1. The most important is entry level customer education, I can't get this point out there enough. Those that try corals for the first time lose a couple, because they were never educated about the proper care, and then always think that corals are too hard. If this can change imagine the increase in business, and then when you get the average consumer (those that just go to the store and pick something) interested and educated as to the care, you can begin to educate about farm raised benefits and helping the environment, but it takes mass appeal to create that kind of change
2. Producing better quality products. This goes along with bringing in the average customer. If we can create generations of farm raised corals ,(think 2-3 years down the road) like what Than is doing at Tidal Gardens, we will have corals that are adapted to the captive climate and care and these will be easier for the average customer to care for. With this the farmer now have a better product and this will help with the change in views. For example, if a customer buys three corals 2 of them wild, and one aquacultured and both of the wild ones die (from stress or adaptation or whatever) and the AC lives what do you think his next purchase is going to be. There are many articles out there about how quickly Corals adapt and evolve. Biologically I think it could be done in 3 years especially if we can get corals to spawn in captive situations and not just frag them. The adaptations will be quicker with spawned progeny than having the frags adapt.

I am not sure initially that fighting a price war is going to be successful, especially if we have to do any shipping. Currently it doesn't seem profitable to do this. As regs get tougher, the costs to do this will go up. I don't think it will take banning imports but I do think that it will get significantly more expensive to do it, especially if international shipping hikes get implemented. And when this happens, the AC facilities can begin to either compete on price or to grow the margins that will be necessary to survive long term.

Alti,
why do you say that only ORA can sell small to medium colonies?? I have been to my fair share of stores and between the scabbers and the stores themselves there are not many full sized colonies avaiable anymore, and when you do see them they are priced outrageously. Do you not think there would be a wholesale market for 2+" acros, for example, priced at $8-$12.

Jake,
I think that the same sorts of things would happen in Reef farming, you can already see it to a small extent. Some people have become known for producing a sort of signature coral, and I really think this is good for us all. It draws attention to what can be done and lifts the farmers up in the eyes of the consumer. I also think it keeps the creative juices flowing and incites Reseatch into better methods and techniques (look at all the interesting stuff being done with Chimeric corals and other ways to morph them, not saying I agree but it is interesting)

My last point for this post is something that I have been fighting with retailers about for many years. It is nothing new that I have come up with and I don't take credit for it at all I just wish everyone realized it. What I see all the time as a product manager when I look at how different stores choose their business practices is:
Fighting a battle you can't win, and normally it is the price war. Everyone wants to compete with WalMart, (or PetsMart as it were) but they want to do it on price. I can guarantee you that you cannot win that battle. You may be able to fight it for quite a while, but you cannot win it that is for sure. Before I get to some better ideas let me explain why I think this. Most people chose this battle because as consumers not so long ago there were only two things that mattered. Price and Brand. Until about the mid 80's those were the only two things that would make a consumers mind. If they had the money they would buy based on Brand, and if they didn't they would buy on price. So this has been drilled into our heads, and subconsciously we still think this way. It worked because there were limited brands and just about everyone had the same brands so it was easy to differentiate. You went to whatever store you liked and paid about the same price for the same brand. But then the brands started to evaporate. The quality of off-brand started to become the same as the name-brand and it was just not worth it for most products (food still being a limited exception) to go with the name brand. This was the start of the all out price wars. People started fighting on unequal footing (name brand vs off brand) because it no longer mattered about brand because consumers no longer valued the difference between brands. And those that realized the extreme economies of scale in the retail sector soon grew into giants. And volume has now allowed them to offer name brand at off brand prices.

Since the larger stores now have the same or atleast well known off brands (the consumer is indifferent to the two) and have the benefit of volume contracts the only thing left is price. The smaller stores invalidly still believe that there are only those two battlefronts left. This is simply not true and the stores that realize this will succeed and grow despite WalMart or PetsMart or whatever. It is up to the stores to innovate despite the hurdles, and play to their own strengths. What is it that you can offer that WalMart can't normally it is customer service. Usually something as simple as knowing a customers name or a smiling face at the checkout register. I know this seems old fashioned and very Leave It To Beaver'ish but I promise it works and it works well. The issue is to come up with what we as frag farmers can do better, not cheaper, than the imports. I have a few ideas but I would like to hear what everyone has to say.

 

[shadofax69]

tagging along

 

[Steven Pro]

Actually, the prices I have seen at the area chain stores (Petco, PetSmart, and Pet Supply Plus) is not that cheap and easily matched by several of the successful independent stores in the area.

 

[rcklbs]

Great thread there are a lot of valid points from both sides. Since we are in the process of starting our own farm we could not have found a better post thank you all.

Jake: If you were to do this what pumps,skimmers and lights would you use?

Raaden IMHO if you design your system to produce top quality from the beginning the market will pay your price if on the other hand you set out to produce what everybody else deems neccesary for survival you will be subject to the common marketplace. I personnaly plan to go with acan's,acro's and zoo's.
If succesfull will expand at later date.

Rick

 

[RedSonja]

<a href=showthread.php?s=&postid=7802116#post7802116 target=_blank>Originally posted</a> by raaden
Treeman,

I am in Raleigh/Durham which seems to be turning into the next hotbed of coral farming with redox and hamburglar not but 1.5hrs away and Red Sonja I think was working on a plan as well. Hopefully they will want to jump onboard and see how this thing works.

Awww, he remembered me. I'm flattered.

Have been reading everyone's input with interest, and now I have an excuse to post something and hopefully get updates to the thread now.

Am still in the formulating a business plan stage, yes. And looking around for land to build greenhouses on.

-Sonja

 

[hamburglar]

If we try hard enough, we might be able to get rid of that tobacco row saying that is always used for North Carolina.

 

[ALTI]

raaden,
If you sold the sps frags directly to the stores for that price im sure you would be able to sell some, but softies and xenia fetch the same prices and grow much faster. If u are selling to a whoesaler after he marks it up and the store marks it up, the customer is going to have to pay around 40 bucks for a small piece of sps. When small wild colonies are priced at 60-80 your frag will probably die in their tanks before it is sold. ORA get
s the money because of the name. People will not pay name brand prices for names they dont recognize. I own a Blue Jean factory and have made merchandise for hundreds of different companies. Just because a jean says Levi's on it, peoploe will pay much more for it than a much better quality garment that has a name they have never heard of.

I think the choice of species grown has do do with the type of business you are doing. If you have a small home setup and are selling frags to your friends or trading to the LFS for credit, you can basically grow anything u want. most people doing this are just trying to offset some of the costs of their steup. If u do this full time and rely on your farm to pay your bills u have to think long and hard on how to use your growing space to its maximum potential. You have to realize that the people looking for small frags of sps, acanthastrea and funny names zoas is a very tiny part of the hobby. If you look at the majority of tanks in this country i gaurantee you will see that there are way more peoploe with green star polyps, leathers and mushrooms than the afore mentioned species. I think many people interested in farming consider growing softies not much of a challenge, but when this is a job and not a hobby, challenge has to take a back seat to profit.

When the science of enduced spawning and larval rearing of carlas becomes more advanced i can see sps and more lps corals being farmed on a highly profitable basis, but until then softies are most likely the best crop to base your farm around. After you have a steady supply of softies growing and the connections to sell them, expanding your farm to include higher priced and slower growing species is much less of a risk.

 

[raaden]

Red, how is the search coming along??
Ham, maybe we could change the state to be North Coralina how is that for a nice ring...

rcklbs, that is exactly the point I am trying to bring home is that in the face the current market (price/questionable quality) I don't think any of us can compete, but change the current market to value hearty specimens, good quality, and consistent supply and the market will accept a small premium in price as it makes sense for them against the bottom line.

Alti great point on the benefits of branding. Completely agree that if a brand can be established, and that brand can be associated with the attributes listed above, the customer will see the value and understand the pricing to be fair. This is exactly where ORA is now. As far as the actual price, I am not sure what you are referring to as a reference price, and I admit I am not firm on my pricing yet but as a point of reference the plan for my pricing is to cover costs by 35%, sell direct to the retailer and allow them a 50% markup, and by the numbers I have I can still put out a standard acro for ~$30 at retail with premiums going for 45-50 and from that i can see a ~50% cover. By cover I am referring to the costs of holding that piece until maturity along with the overhead of maintaining the brood stock. Softies obviously present better numbers, but I am looking to make softies much more affordable than they currently are. I would like to see a rock with 3-4 shrooms on it, for example, in the 15-18 neighborhood at retail, and premium varieties at 22-28. I have no control over how a retailer prices them but I hope to impress on the retailers I will deal with my research and the intentions of bringing corals out of the fringes and aggressive pricing is very important to this. This could only open the market and if they can still maintain a standard margin and move stock faster what could be the reason to resist, other than just greed. And if that is the case those retailers that want to maintain their prices will learn, from others in the market willing to try, that making the hobby more accessible has better benefits and come around eventually.

I can't back this up with numbers, but I think you would be suprised by the numbers that have tried some sort of stonie, not saying they were successful but have tried it. The success part is an issue I am ready to tackle.

I am not at all disputing the fact that softies will make up a large majority of the total products delivered. Unless you are retailing yourself it is very hard to make it work with SPS and LPS only stock (trust me I tried very hard to make the numbers work), but I think being able to offer those is very important to providing a complete catalog to the retailers. Understand that by reducing the number of total purchases and different vendors that a retailer has to deal with you are also helping his bottom line, and endearing the company and its image to him. This in turn is the setup for long term success. Remember anyone can sell a marginal catalog with questionable products for a short time but only those with extensive catalogs, and reliable products will be able to maintain and grow their position within the industry. I agree that it is not successful in the short term to put space to use for slow growing corals but the plan is to work on spawning and sell off the growth as this is going on to break even from the research. Is it risky, maybe but I don't see the point in investing the kind of money I am to have a business that just simply gets by.

 

[ALTI]

i dont know of single retailer in my area who marks up less than 100% . i guess every area is different but with the overhead some of the local stores here have the markup is over 200%. Selling directly to the retailers can be complicated sometimes. its alot easier to sell in bulk to one distributor and leave the extra work to them. Its much easier to deal with one or 2 distributors than to have to deal with each store directly. Not all stores buy sight unseen from a stocklist. There are many stores that will want to hand pick. Dealing with customers and having to pack each item individually takes up alot of time. I think some people tend to imagine that there is alot of free time for coral growers, but it is exactly the opposite. Growout systems tend to not be friendly to the eye. You will most likey end up having to set up some display tanks which will costs more money and take up needed room. its more phone calls, morebags, more stocklists and more bills to collect.

your right about the benefits of having more of a selection, but im really worried about having a facility large enough to produce a self sustaining brood stock large enough to supply demand.

 

[jake levi]

rcklbs
I have only had two skimmers ever, and they came in swaps, raising mostly soft corals double fortys with ice caps or similar are almost overkill on light, about the only ones to really need it are xenia and even then they will do okay in shallow water with double 40s, that includes a actinic and blue. Bubble tips I would also do under the ice cap driven lights, most of the rest no. The only way I would consider halides would be if I was growing out lps and tridachna, which I most likely wouldnt be.

I really like the Jehmco line of inline pumps for airpumps, they always do far more then what they are rated for. Most of the powerheads do their job fine. I go by the K.I.S.S. principle on equipment, KISS is affordable and it works. For soft corals in most cases shop lites are the most economical and get it done. If you have a number of tanks/vats of xenia and some lps then beef up the ballasts.

One of the threads on a propagation setup shows some very nice 8 ' fiberglass vats, shallow, with four shoplights these would make great production vats, if you stair-stepped two of these one could drain into a lower one through a bulkhead, flow through to the other end and out a bulkhead and into a filter of aragonite or coarse coral to buffer and then pump back to the top one for another pass through. Those vats were reasonably priced too.

 

[RedSonja]

<a href=showthread.php?s=&postid=7817669#post7817669 target=_blank>Originally posted</a> by raaden
Red, how is the search coming along??
Ham, maybe we could change the state to be North Coralina how is that for a nice ring...

Went to look at one area a few days ago, 6 acres we could farm coral and live on. Not cheap but in a nice area, that we wouldn't mind living in for the long haul. Utilities but no other development. Still looking, still researching.

I like that, North Coralina.

-Sonja

 

[raaden]

Alti, I agree with you that markups generally exist in the 80-100% range, but in talking with store owners most wished they could move more stock. During my research I worked up some numbers for two different sets of inventory plans. I could show that selling 2 corals in a span of three weeks that were marked up 100% was making less profit than selling 3 corals in that same amount of time that are marked up 50%, not to mention the fact that you would draw in and retain customers with your pricing. The hidden issue is maintenance and stock loss, plus with prices like that you will not have to dicount a coral that loses its color or gets ugly because it won't last long enough. These were huge issues with retailers and most of the ones I talked to said that stock loss and old corals were a big part of the reason why they needed the 100% markup in the first place to make up for the other losses they had. I worked up the scenario for three retailers with their numbers and all said it looked good. One was willing to try and the other two wanted me to come back when I had something tangible for them to sell. This is understandable, and after one tries it successfully it is much easier to get others to try.

Selling to retailers definitely presents more issues, but if done correctly looks to be a better business model. If I can avoid shipping and do direct delivery it is definitely worth it. I completely agree with the lack of time thing. At the break even point for my plan there is over 60 hours needed during the week just for fragging and water changes. Handpicking is a difficult subject and I have not even tried to address this. Do you allow it in your operation?? If a store owner comes I am sure that they will understand the grow out issue, never seen one myself but from what I hear importers facilities are atrocious and people still flock to them. I also agree with your concerns about having the room for stony production and if spawning is not viable or does not speed results it looks to take about 1600sf of tank space to produce a sustainable 500/month of average stonies 2-4".

Jake,
Question about the fibreglass vats you were referring to, do you remember what the reasonable price was. The best I can find for premade is and 8'x4' for $1200 which would put $20k just in vats per greenhouse. Not sure if you have seen something better than that or not. I am hoping to get a custom fibreglass builder to do it for less.

 

[Steven Pro]

One of the threads on a propagation setup shows some very nice 8 ' fiberglass vats, shallow, with four shoplights these would make great production vats, if you stair-stepped two of these one could drain into a lower one through a bulkhead, flow through to the other end and out a bulkhead and into a filter of aragonite or coarse coral to buffer and then pump back to the top one for another pass through. Those vats were reasonably priced too.

Jake, Question about the fibreglass vats you were referring to, do you remember what the reasonable price was. The best I can find for premade is and 8'x4' for $1200 which would put $20k just in vats per greenhouse. Not sure if you have seen something better than that or not. I am hoping to get a custom fibreglass builder to do it for less.

It could be this one Economy Fiberglass Trough from Aquatic Ecosystems.

I am getting some from Poly-Tank out of Wisconsin. I will post here how they work out.

 

[jake levi]

Yes, thats the aquatic ecosystems vat, there is a thread here in this section somewhere of some in a new set-up, I went to the website and they had just the one size shown, none in stock at the moment, but well worth looking into, if you want wider you might better take a hard look at Tropicoriums and make something yourself similar. 1" ply fiberglassed after reinforcing is probably cheaper then buying industrial fiberglass tanks. Anything of 4' width needs to stand alone with access from both sides else it will be a pita to work in. I think 3' wide vats actually would have less bowing, and be a lot better to work in, 3' wide, 8-10' long and 12" high. If 3' the 1' ripped off the length of an 8 or 10' ply board can be used for reinforcing. Wouldnt be wasted. 1" heavy ply isnt cheap but neither are fiberglass vats. A 10' vat could be lit with two 6' fixtures side by side and two 4' ones.

I'd suggest everyone reread Erics last post, especially the last para,

the model I can see coming along for domestic ac marines is in addition to local sales of growers is the emerging of several large distributors who will actually function as a domestic 'transhipper' bringing in, acliamting and sending out within the US.

 

[raaden]

Steven, somehow I missed those, or might have dismissed them as being too shallow. I did seethese tanks especially the 24" deep ones but the price was a little high for me. 12" seems a bit shallow to try airlifts. You would only get about 8" of effective lift distance and flow might be inadequate with that. Are you referring to www.polytankco.com, I didn't see anything there that looked to work or did I miss the boat again.

Jake,
Do you think with all of the shipping involved that AC stock can compete with wild or are you referring to once legislation starts to take over. I would think that idea becomes huge when there is no wild comparison but between the markup, shipping costs, and losses due to transit, the domestic transhipper makes prices preemptively expensive.