5. The tilapia business value chain continued

The second half of your business is the sales side. You will need to sell the fish you have painstakingly produced and it stands to reason that if you wish to continue in your business that you should sell them for more than it cost you to produce them. Remember we are still trying to get a handle on where the costs of producing our fish lie.

As with producing fish there are several steps in the selling process. Of course the argument can be made that these costs are in fact production costs but we have included them here because it has been our experience that many people ignore these entirely, to their own detriment.

Before you can sell them you will need to harvest your fish. Then you need to process them to whatever level of processing is required by your chosen market. You may need to store them for a short while and finally you will need to bring them to your chosen market where they can be exchanged for money.

This is also part of a chain or sequence of events that takes place that is described in the graphic below. Bear in mind that storage is often cold (i.e. expensive)  storage.

 

selling tilapia fish

 

This sales value chain is similar to the production value chain. Each link needs to be in place for the business to work. The major inputs are shown in the schematic diagram above and you can see that people, infrastructure and equipment are all important inputs. Unless your budget is R50M+ it is wise and prudent to master this process when small, and grow it as you grow your production capacities.

As easy as it is to fail with production of fish, so too is it easy to fail because you don’t get this part of the business right. An off-take agreement will make your life easier, even if the price is a bit lower than you might obtain elsewhere.

Your business plan should encompass all of these aspects of the value chain. Large scale developments will follow the same development but with differing emphasis.

Remember too that in our 20 TPA math example, you’re processing 1,050 fish per week… Start to think about the practicality of doing this. Do you have 52 harvests? Do you have 20 staff on hand to process the fish in a single day? What do you do with them the other 4 days? What is this process going to look like? Are you going to sell fish en masse weekly/daily/monthly?

These are all things that you will need to understand, process and formulate into a plan of action that suits you. Our five hundred rand is really starting to look cheap…