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Finding that Ideal Location for your Vertical Farm | Aquaculture Economics

In the previous blog post, we have discussed how Recirculating Aquaculture Systems are used to farm mud crabs. One of the most popular questions from our course attendees are ‘where should I set up my mud crab farm?’. Upsides of being near the coast as compared to an urban area include easy access to seawater. While some operators prefer to be located near the urban areas and close to the client their serve. Very often, the optimum location will be based on one of these several factors that we will be discussing today in this blogpost.



Body 1- Rental Cost versus Selling Price

The first point of consideration is to evaluate the cost associated with the rental. The rental cost can be a substantial component of the operating cost for your business. This is exceptionally true for places like Singapore, Jakarta, Surabaya, etc. The closer you position your farm to the end consumer, the higher you will have to compete with other businesses. Nevertheless, being close to consumers has its own benefits. The first advantage includes being able to sell your crabs directly to end consumers. The mud crab trade is traditionally a business-to-business (B2B) trade, it is only with recent advancement in the RAS technology that seafood distributors are tapping into the business-to-consumer (B2C) market. Being in the heart of the city increases the visibility of your farm, and enhances the overall consumer experience. This is evident as many crab themed restaurants have expressed interest in setting up a farm right beside their current business.



Body 2- Distribution Cost, Volume and CAPEX for RAS facility

For operators that plan to cater to an export market to Singapore, Hong Kong, and China, and do not intend to supply to the domestic market it might be better to set-up near the coast. Operators targeting the export market would often require volumes (300-500kg/day) to bring down the associated freight cost. Therefore, they are also commonly located near the coast and rely on the natural seawater on their production site. Positioning your farm away from the coast would translate to a higher need to recirculate the water. Although frequent water changes can be done to maintain water quality, very often it is not economical to do so. Hence, operators would have to invest a RAS facility to bring down future operating cost. However, most operators find it hard to come up with the capital cost needed for the RAS facility. Financial institutions are also reluctant to provide financing for RAS facility due to the high risk of failure. Nevertheless, RAS technology is usually used down the distribution lines (holding and trading centers) for businesses that specialized in the export market.



Body 3- Manpower Cost versus