The Role of Cooperatives for Aquaculture Producers Iowa Aquaculture Conference November 17, 2016 Bill Lynch President Ohio Aquaculture Association

Snapshot of NCR Aquaculture Data from USDA Aquaculture Censuses Slide Courtesy of Chris Weeks - NCRAC

Snapshot of NCR Aquaculture Data from USDA Aquaculture Censuses Slide Courtesy of Chris Weeks - NCRAC

Value ($) per Farm 2005 2013 Source: 2005 & 2013 USDA Aquaculture Census

Top NCR Fish Species (Bait not included) Sport Fish Sunfish Walleye Largemouth bass Sunfish Walleye Smallmouth bass Crappies Sport Fish Source: 2013 USDA Census of Aquaculture

Top NCR Fish Species (Bait not included) Food Fish Carp spp. HSB Channel catfish Carp spp. Rainbow trout Yellow perch HSB Food Fish Source: 2013 USDA Census of Aquaculture

Synopsis of NCR Aquaculture Composed largely of numerous small, family farms Production costs high as economy of scale cannot be take advantage of. Slim profit margins! High annual turnover rates as facilities close and new facilities try their luck. Very diverse Up to 22 fish / crustacean species grown commercially. Rainbow trout & walleye the big two!

Market Segment Priority If NCRAC were to focus on one market with the best potential to substantially increase NCR aquaculture in the next five years, it would be (check only one): I agree 100%!!!!! Slide Courtesy of Chris Weeks - NCRAC All Responses Combined

Do You Sense a Problem? NCR’s small family farms are not positioned to grow the food fish market in a profitable manner because . . Small farms lack the production to meet client needs; Lack access to cost effective, quality fingerlings; Cannot realize economy of scale in terms of costs; Can’t justify the costs of being a HAACP approved processor for fillet market; Many owners are uncomfortable with market development and marketing.

Solution Aggregation of Small Fish Farms (even large ones) into a Well Functioning Cooperative.

Cooperatives Could Address . . . Slide Courtesy of Chris Weeks - NCRAC

What is a Cooperative? A cooperative is a business owned and controlled by members who use its services so as to maximize the profitability of the members. Can you do something better as a group than you can individually?

Economic Reasons for Forming An Aquaculture Cooperative Vertical integration To obtain a fair or efficient price of products To reduce costs through economies of scale To pool risks To provide markets, supplies, and services that are missing or in danger of being lost To capture profits from another level To benefit from increased market power

Benefits Allows culturists to pool financial resources and conduct business activities they could not independently perform as efficiently. Provide culturists with access to goods and services. Share knowledge amongst culturists to benefit both the cooperative and its members.

Possible Co-op Types Purchasing Co-ops Marketing Co-ops Service Co-ops Or some combination of above

Purchasing Co-ops Obtain needed products, attain economies of scale to reduce costs, maintain quality of products. Feed and water quality monitoring supplies. Probably the easiest cooperative to form and maintain.

Service Co-ops Fish processing Harvest Transportation HAACP approved facility. Makes no sense for every culture operation to have processing capability. Harvest Team & equipment to assist in or do harvest. Transportation Truck to move feed and fingerlings. Vet on contract to provide aquatic health services.

Marketing Co-ops Move culture products to markets. Access / develop new markets, add product value. Likely to require a marketing person. Probably the most difficult cooperative to form and maintain.

Keys to an Effective Cooperative I Trust! Trust! Trust!

Keys to an Effective Cooperative II Democratic governance process Member elected Board consisting of members Manager held accountable Board members must have: Vision Good communication skills Sense of fairness

Typical Cooperative Structure Members Members Board of Directors Manager Employees

Keys to an Effective Cooperative III A Comprehensive Business Plan Cooperatives are a business! So have a plan! Failing to Plan is Planning to Fail! Should be a living document, subject to annual review and revision.

Keys to an Effective Cooperative IV Bylaws – a set of rules by an organization for the governance of its members and the management of its affairs. Effective Bylaws Build Trust! Include: Name, Purpose, & Objectives Board of Directors, Officers, Elections Committees Dues, fees etc. Meeting of Members Finance

Keys to an Effective Cooperative V A standardized set of guidelines, rules, & regulations that are approved by the members and apply equally to all. Fish production Feed / feeding Chemical use Antibiotic use Harvest Develop BMP’s – best way to standardize grower practices. Purchasing fish from members Needs to be clear, this is where trust is often lost! Order of purchases Pricing Dockage or bonuses for fillet yield? Verification of yield - methods

Ohio: A case Study for an Aquaculture Cooperative

Ohio Production At A Glance . . . Food Fish Sport Fish Largemouth bass Rainbow trout Bluegill / sunfish Tilapia Yellow perch Freshwater prawns Largemouth bass Bluegill / sunfish Rainbow trout Channel catfish Yellow perch Tilapia (algae control) Redear sunfish Koi / goldfish

Ohio Farms by Category # 2005 2013 Source: 2005 & 2013 USDA Aquaculture Census

State Aquaculture Permit Facility (N=182)

Gross Sales ($) per Ohio Farm 2013 2005 Source: 2005 & 2013 USDA Aquaculture Census

Ohio Food Fish Markets Current Future Potential Largemouth bass live haul to large, eastern US cities. Smattering of small sales on ice at farmers markets. 1-2 producers selling to in-state Asian stores. Fresh fillets to high-end restaurants and specialty stores. Frozen fillets to sports bars, chain restaurants, clubs, churches etc. Largemouth bass live haul to large, eastern US cities.

Drivers of Future Potential Dramatic increase in consumers preference for locally grown products. Restaurants, specialty stores, clubs etc. scrambling to meet consumer preference. 2-5 calls monthly asking about availability. Perception Lake Erie is once again contaminated due to cyanobacteria blooms. A nutrient problem rather than manufacturing chemicals. But still, perception is Lake Erie fish are suspect!

Toledo Cleveland Lorain Akron-Canton Lima Youngstown Mansfield Marion Springfield Zanesville Columbus Dayton Cincinnati Portsmouth If there were ever a state to substantially increase food fish aquaculture, it is Ohio! Numerous in-state markets!

Impediments of Ohio Food Fish Expansion Absence of down-state HAACP approved processing near large urban centers. Insufficient production on individual farms to service food fish markets. Low availability of Ohio grown, high quality fingerlings for grow-out. Answer: An Ohio Aquaculture Cooperative

27% Feed Cost Reduction Part of a Formal Cooperative Jointly purchase feed

What is Needed? An aquaculture cooperative (s) centered around large Ohio urban centers that . . . Buys food fish from small Ohio producers, processes the fish with a HAACP processing facility within the cooperative, and directly markets products to high-end restaurants, specialty stores etc. in the urban center. Takes advantage of the locally-grown, support local farmers movement. No middlemen – literally “farm to fork”!

Geographical Representation Coop Member Farms Coop Owned Processing Facility High-end Restaurants Columbus Population: 1 million +

Top-Down Representation High-End Restaurants Specialty Stores Caterers Cooperative - Owned Processor Grow-out Producers Fry Thru Grow-out Producers Fry /Advanced Fingerling Producers

Aquaculture Cooperatives Can For Small Producers …. Reduce input costs thru collective purchasing power; Provide services difficult to justify each producer having; Increase sales via . . . collective marketing and sales of high quality, locally grown aquatic products; Access / develop new markets; And thereby increase profitability! Thank-you for Having Me. Questions?