I need input from all the sifus here. I have an offer to take over an existing 8 Acres of fish farm. Farm has been running for 2 yrs and has another 8 years on the lease for the land (still renewable after that). Farm has been rearing mainly Tilapias and a bit of Soon Hock. There are a total of 8 ponds there. Owner is selling the whole business for about RM 300 k and he will give everything lock, stock and barrel including the pumps, generators, and everything that he has built for the farm.

Can anyone tell me if Tilapia still have big demands out there? According to him, the demand is more than supply currently. Also let me know if 300k is fair value to take over his business.

My partner and I are looking into venturing into the aquaculture industry. We have identified an 8 acre land that is currently farming red tilapia. We are planning to acquire the farm and take over the existing business. There are currently 8 ponds. 6 big pond which the owner says can rear anything from 20000 - 40000 tilapia and another 2 ponds that we can use to rear fingerlings.

I need to know how profitable this business is and whether its a good venture to get into. Both me and my partner will be managing the farm full time. The running cost of the farm currently is about RM 60k/ mth and 90% of that cost comes from feed (about 1000 bags/ mth). We are hoping to harvest at least 15 tons of fish each month.

My questions are:
1. Is tilapia prices stable? We have an agreement from the feed supplier that if we take the feed from them, they will buy our fish but I'm not too sure if the price is stable.
2. What are the risk when venturing into this business?
3. Is demand for tilapia now more than supply?

I would greatly appreciate any feedbacks from forummers here. Would also be interested to visit existing Tilapia farms out there.

Thanks in advance

Thanks for your comments Michael. Basically the middle men takes back the fish live. They will come to collect it with their 3 tonne lorry that is equipped with aerators. Most likely they are supplying to restaurants where they can get a good price for them.

We are trying to understand the risk involved in the business as neither me or my partner has experience in it. This is why I posted in this forum. Infact today I just brought over an experience farmer to the fish farm to gauge to see if the business is viable.

I understand that in any business there will be many risk involved, otherwise everyone would be doing business. There will also be plenty of ways to reduce risk with the right knowledge. Risk that are out of our control will be tough to mitigate but with experience, perhaps we could bring down the cost of production and increase quality.

I foresee that demand will remain high since population growth is certain but it also depends on the number of players that will take up the venture. If the market becomes oversaturated, then prices goes down and most farmers will suffer. The tilapia will be 100% pellet fed and if pellet feed keeps increasing in price each year and the price of fish keeps dropping, I don't see any sense in its economics, unless we become flooded with cheap tilapias from thailand or china.

well I hope to ROI in 1 - 2 years and perhaps do about 20 - 30% profit

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Added on March 29, 2012, 5:33 pmHi Mr. Farmer,

My partner and I definitely do not have hands-on experience in running a fish farm. I'm from the IT background and he is from manufacturing. We both have keen interest in aquaculture but our experience goes as far as rearing ornamental fish. I do not know how else to get hands-on experience in a fish farm unless I go and work in one which I doubt will happen. We plan to attend a few trainings and basically get our hands dirty immediately.

I have closed friends who have experience in aquaculture so they would be able to help out. Moreover, the farm is already being operated by 3 Indons and they basically do everything from changing water to harvesting the fish. The owner of the farm has also agreed to guide us for a couple of weeks to get ourselves familiar in managing the fund.

We have done cashflow projections for 3 years so basically we will know how long our capital can last.

We definitely won't know the real reason the owner is selling the farm but he claims he is retiring.... so can't really say much about that.

This post has been edited by elmer: Mar 29 2012, 05:33 PM

Hi Michael,

No worries. No hard feelings from me. It was indeed good that you could present your points honestly and objectively so that I know what I am getting into.

My partner and I have been working for the past 8 - 9 years and we left our cushy high paying jobs to work for ourselves. We understand that we won't be able to enjoy high salaries for the first few years but we want to know if this is a business we can build long term and eventually make it big.

That example you provided on the company that is doing Tilapia fillets and are now 100% export oriented is what we want to eventually aim for. I do not want to get into this business if it will just basically put food on the table and nothing more. So really, at the end of the day, there is big potential in the business but its just how big you want to grow it and how well you manage it.

Thanks again for your insights. They really provide me with a great overview of the current trends in the industry.

Michael:

Thanks for your insights again. You definitely are an expert in this field. We have to probably take small baby steps before moving into value added products as producing those products comes with a big cost. Indeed that is where we want to be headed if that is where the money is. I guess farming tilapia would be a good place to start.

The world population is definitely increasing and people are living longer. I see that the demand will only increase for fresh fish especially when harvesting from the wild will soon be no longer a viable option. Thanks again and wish us luck! I will keep you guys updated on our progress.

Michael,

After much deliberation, we are thinking of cutting down our risk and moving into higher value fish with lower operating cost. We have identified a smaller farm that is now rearing tilapia as well as marble goby. Can I get your opinion on the marketability of marble goby and what sort of risk factors to look out for. The farm will be smaller and opex will be significantly lower. The farm has 3 ponds - 2 big one (half an acre) and one small one (quarter acre). We are thinking to breed live feed (small fish or shrimps) for food source in the smaller pond and grow out the marble goby in floating cages in the bigger ponds so that personal attention can be given to each fish. We realize mortality in marble goby is pretty low so special care needs to be taken to check the fish for disease.

Your thoughts on this will be much appreciated.