Economic viability of a small scale low-cost aquaponic system in South Africa

Abstract

ABSTRACT Aquaponics provides a sustainable means of converting aquaculture effluent to nutrients for growing plant. This unconventional, but synergistic system of food production has been documented to be economically feasible and sustainable, particularly in areas with limited land and water resources availability. This study assessed the economic feasibility of a low-cost small-scale aquaponics system using production output and economic data. Price trends, cost, revenue, return on investment (ROI), net present value (NPV) using a 10-year period, internal rate of return (IRR) and profitability analyses were modeled to determine the financial performance of the aquaponic system. The result indicated that this small-scale aquaponic operation is not economically viable (Gross profit: 42%, net profit: – 22%, ROI: – 8%, NPV: R81,466, IRR: 13% and Profitability Index: 0.35) by adopting conventional aquaponics cultural practice (fish: plant revenue model 59% to 41%) due to higher operating cost of producing a kg of fish (R55) vis-à-vis the market price, compared to plant production. A revenue model of 42% to 58% fish-to-plant ratio was marginally feasible (Gross profit: 59%, net profit: 13%, ROI: 7%, NPV: R92,445, IRR: 19% and Profitability Index: 0.50). A minimum revenue model of 30% to 70% fish-to-plant ratio by adopting optimized plant yield cultural techniques to attain economies of scale and viability, is suggested. This study serves as a model for promoting viable and sustainable unconventional food production system to attain food security and local economic development in South Africa.