Contents Introduction ...............................................................3 Selecting a Species ....................................................4 The Four P’s in Marketing .......................................6 Regulations ..............................................................12 Inspection .................................................................12 Summary ..................................................................12 Suggested Readings ...............................................13 Niche Marketing Your Aquaculture Products — 1 2 — Niche Marketing Your Aquaculture Products Introduction Producers who are ready to harvest to sell their product. But even though their first crop of fish, often ask, massive quantities of fish are marketed “Where will I sell them?” It is surpris- in those areas, such markets generally ing how many producers ask this serve high-volume producers. New question so late in the production cycle. farmers producing relatively small To avoid certain failure of an aqua- quantities of fish should start by devel- culture enterprise, producers must oping markets within a 50-mile radius seriously investigate the marketplace as of their farm. an initial step before investing in This bulletin discusses general production. Midwestern farmers in marketing concepts as applied to food traditional farming enterprises, such as fish and presents ideas for selling corn, soybeans, beef, swine, and poul- aquaculture products locally. Food fish try, use well-established markets that production offers the greatest potential have been highly refined over the last for aquaculture expansion in the Mid- few decades. For example, go to any west; therefore, most of this bulletin rural town, regardless of its size, and specifically addresses the process of you’ll likely find a grain elevator or marketing food fish. Many of the same stockyard where buyers or outlets for marketing principles apply to other products are available almost daily. types of aquaculture products such as Aquaculture, unlike other agricul- fingerlings, sport fish, bait fish, and ture enterprises, is in its infancy, ornamental fish. especially in the Midwest. Large-scale Keep in mind that more time will be processing plants solely for aquaculture required to initially establish a new products are nonexistent in this region. market as opposed to servicing or As a result, fish and crayfish farmers maintaining an existing market. A are forced to use niche markets for their budget should be developed where products. costs can be estimated and compared Niche markets have advantages and against anticipated returns.The costs disadvantages. The main advantage in may include personnel costs, delivery niche marketing is that producers costs, promotional costs, overhead, and become wholesalers, and, in some additional materials and equipment cases, retailers. Consequently, produc- costs. ers have more control over the prices The producer of any aquaculture they set for their products, and they product should learn how to answer retain some portion of the profit that the following five questions after would otherwise have gone to middle- reading this bulletin. men. The main disadvantage is that 1. How do I select a marketable considerable time must be spent species? analyzing and developing niche 2. What product form will I provide? markets. In most cases the product is 3. How much should I charge for my sold one fish at a time whether product? processed, whole, or live. 4. How can I promote my product to Many beginning aquaculturists increase sales? assume that the huge markets for fish 5. Where will I sell my product? in Chicago, Indianapolis, Kansas City, Louisville, Minneapolis, and St. Louis offer unlimited opportunities for them Niche Marketing Your Aquaculture Products — 3 Selecting a species Tilapia may be a better choice be- When deciding which species to cause they are extremely hardy. They produce, keep four things in mind. tolerate poor water quality and are easy to spawn. The only production draw- 1) Choose a marketable species. back is their intolerance to low A good example of a species difficult temperatures. These fish are often to market as a fresh product is common raised cheaply in tropical climates. A carp. Common carp is easy to produce second, more serious problem with and is a candidate species if you have a tilapia is in marketing. Tilapia are not strong ethnic market in your area. native to the United States and are Otherwise, it is advisable to consider subject to import/production restric- other more widely accepted species. Of tions in some states. Also, because the 60 or so candidate species for food tilapia are not native, the consumer has fish aquaculture, only channel catfish, been slow to recognize them as a high- crawfish, and rainbow trout have quality food fish. With continued established industries in the United promotion tilapia will offer better States. In addition to those species, potential. others, such as Atlantic salmon, coho salmon, hybrid striped bass, tilapia, 3) Understand your competition yellow perch, walleye, and various before selecting a species. sunfishes, offer considerable potential If you are considering aquaculture as in the Midwest. a business because you think there is limited competition, then you should 2) Attempting to farm species with reconsider. The seafood industry is well incomplete production informa- established and very competitive. It tion or production peculiarities is will become even more competitive in a very risky venture. the near future. Midwestern producers Although species such as walleye, have to compete with wild-caught and shrimp, and lobster have wide public farm-raised products of both domestic appeal and are widely consumed, each and foreign origin. Understanding your have unsolved production problems. competitors allows your production For example, walleye producers recog- and marketing programs to develop nize that fingerling survival may be around specific species and markets low due to poor hatchery practices or which will provide you with the great- cannibalistic behavior. Furthermore, est profit. Remember also that other most walleye are produced by state seafood is not the only competition you fisheries agencies and released as will have to consider. Competition fingerlings. Since few have been grown from all protein sources, such as poul- to marketable food size using commer- try, beef and pork, must be considered. cial diets, there is limited nutritional and economical information at this time Native wild on which to base food-size walleye Competition exists from yellow production. Faced with these produc- perch, walleye, and crayfish harvests tion obstacles, a producer could fail to originating from commercial fisheries reach production goals. In any new in states around the Great Lakes region. business, and especially in aquaculture, Harvests from each of these fisheries cumulative short-term setbacks can are highly variable due to either over- lead to heavy monetary losses. fishing or environmental constraints. This has allowed farm-raised yellow 4 — Niche Marketing Your Aquaculture Products perch to compete with commercially region to rely more heavily on niche caught yellow perch. marketing opportunities until signifi- Ocean-caught fish such as cod, cant infrastructure is established for pollock, ocean perch, and salmon, feed, fingerlings, and processing facili- account for a significant portion of ties. In the meantime, small-scale United States seafood consumption. producers must rely on the premiums They are often a cheaper and more that may be paid for locally grown fish. reliable supply than those from lake fisheries or aquaculture enterprises. Farmed international Once again, over-fishing results in The competition from species farmed more opportunities for farm-raised internationally is greatest for salmon products. from Europe and Chile. Tilapia, an- other product being farmed Foreign wild internationally, is being imported into Competing with seafood imports the United States. Many niche market- poses the greatest challenge to the ing opportunities still exist for the aquaculture industry. In 1993, total producer who sells a fresh product, trade deficit was $3.7 billion. Of the since most tilapia are imported as 15.0 pounds of seafood consumed frozen fillets. annually per person in 1993, less than 20 percent was farm-raised. 4) Provide a variety of species. Competition between farm-raised Variety is extremely important to and foreign-wild species is greatest for small-scale producers. Many market cod, pollock, orange roughy, and outlets prefer buying small quantities whiting. Farmers considering walleye of many species. Production of more production should also realize that than one species may offer a competi- Canada has a well-established commer- tive advantage over single-species cial walleye fishing industry. They have operations. If production of a variety of hundreds of lakes which can be opened species is not feasible, then pooling to fishing in order to maintain the resources with other producers will country’s market share by flooding the allow for a variety of species. market. Due to this situation, prices could fall enough to force marginally profitable farmers out of business. The Four P’s in Marketing Farmed domestic Product, price, promotion, and Midwest farmers raising food species place— classical points in traditional such as channel catfish and rainbow marketing— also apply to marketing trout, must