Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=206506
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Chicago aquaponic farms ready to harness revenue from the food they grow

by Will Green and Elizabeth Bunn
June 04, 2012


Greens & Gills

Will Green/Medill

Greens & Gills Head Farmer Eric Roth, left, and Founder David Ellis, are in the process of assembling the company's first growing system

312 Aqua

Will Green/Medill

312 Aquaponics Finance Manager Mario Spatafora holds a mixture of live microgreens, the company's flagship product

 

In what could be a watershed moment for Chicago’s urban farming movement, local business owners say the city’s Department of Business Affairs has agreed to award business licenses to aquaponic farming companies within the city limits for the first time.

The city’s licensing decision sparks new hope for small businesses stunted for years by bureaucratic inaction in a state more accustomed to open fields of corn and soybeans than indoor lettuce farms. It also removes a major barrier to entry for entrepreneurs who want to start their own aquaponic business: Instead of grasping for creative revenue streams just to keep afloat, urban farms can now harness revenue from the food they grow.
 
“For local government to say, ‘we should do local food, we should produce things that we eat’ – that’s a landmark event,” said Rich Schell, legal counsel for aquaponics start-up Greens & Gills. Schell said he worked with officials on behalf of his client in order to determine how to regulate the nascent aquaponics industry within the framework of existing food laws.

The agreement, reportedly reached in early May, followed an extensive dialogue between small business owners, lawyers and city officials. It would allow aquaponic farmers operating in the city of Chicago to legally sell their crop yield of leafy greens to businesses and the general public. Officials say the coveted wholesale food establishment licenses, which could arrive to at least two Chicago outfits as early as July, will be awarded pending the passage of various state health requirements.  

Department of Business Affairs spokeswoman Jennifer Lipford declined to comment specifically, but wrote in an email that the city “is working closely with local aquaponics startups and other emerging businesses to help them get properly licensed and open for business.”

Greens & Gills Founder David Ellis emphasized that the discussions with city officials were positive, but added that the sheer novelty of aquaponics also obstructed regulators’ decision-making for many months.  

“This is so new to (the city) that they didn’t realize things, like that we use fish to grow our greens, and that fish are cold-blooded animals, and that cold-blooded animal manure doesn’t transmit food-borne pathogens that warm-blooded animal manure does,” he said.

“This is safer, what we’re doing, than growing vegetables in fields. And I think they’ve acknowledged that.”

While aquaponics might remain a novelty to many, the method itself is anything but new. The Aztecs first embraced the scientific process – where nutrient-rich fish waste augments plant growth – back in the fourteenth century. Scientists and farmers developed the technology behind the first commercial systems in the late 1970s.  

In the systems, fish wastewater, most commonly from tilapia, is pumped from large fish tanks into shallow beds where it fertilizes plants. With the plant roots gobbling up the nutrient-rich waste, the cleansed water is pumped back from the soil in to the fish tank, creating a self-sustaining, closed growth chamber for the both fish and plants.

The benefits of aquaponics include a rapidly accelerated growth process (greens grow, on average, roughly 30 percent faster through aquaponics than they do conventionally), water conservation (the same water is cleansed and re-circulated), and an end product that proponents say is fresher, tastier and better looking than most conventionally grown crops.

The technology also incentivizes the presence of local produce in local restaurants and markets, urban farmers say, since freshness is easier to guarantee and shipping costs are significantly lower if greens are grown only a few minutes away from their end destination.

 

Some farmers even sell the fish to restaurants once they reach market size. Ellis said Greens & Gills plans on selling its tilapia after nine to 12 months of use in its growing system. By that time, the fish have grown to their fullest size -- as large as 1 1/2 or 2 pounds. 

Aquaponics has some drawbacks, including finding affordable square footage for growing operations in an expensive city and educating the public about an unfamiliar crop cultivation method.


Urban aquaponic farmers also face the challenge of how to combat pests, since aquaponics - an all-natural process - doesn’t use herbicides or pesticides. While eliminating conventional soil in favor of nutrients reduces around 70 to 80 percent of potential pests, Ellis said, indoor farms should include features such as double-door entry and intake and exhaust fans.

 

Another method to combat pests is biological pest management, in which harmless bugs that feed on plant-destroying bugs, as well as certain plants that attract and then trap harmful bugs with a sticky residue, are allowed in to the closed-system.

The Chicago start-ups’ main competition comes from large-scale greenhouse growers, and traditional field growers, most of whom enjoy several acres of growing space and a more established infrastructure.

Although Greens & Gills operates in just 15,000 square feet of space, one advantage it and other aquaponic businesses have over larger conventional growers is the ability to grow year round.

While Ellis hopes to leverage this advantage to provide a consistent, a-seasonal supply of leafy greens to area businesses, fellow aquaponic company 312 Aquaponics wants to eventually provide both businesses and individuals with commercial aquaponics technology.

312’s finance manager Mario Spatafora applauded the city’s licensing decision, saying it was several years in the making.

“I put thousands of dollars of my own money in to making this,” he said. “We knew for a fact that this was going to be regulated. I was not willing to turn in my pink slip.”

 

(View a timeline of 312 Aquaponics business development)

Spatafora and three Chicago-area friends formed the company in 2010 with the idea of growing vegetables aquaponically and developing personal aquaponic systems for sale. The group married a passion for science with business acumen (Spatafora’s background is in accounting) and pooled roughly $10,000 of its own capital resources, before attracting a $140,000 seed investment.

 

But after applying for a business license last July, 312 didn’t hear anything for several months. The company continued to grow its specialty – tiny versions of lettuces and herbs called microgreens, often used to garnish dishes.

In February, officials told 312 to stop any food sales to area businesses while local policymakers determined how to regulate an industry it had never had to regulate before.

According to those who participated in a teleconference with city officials in early May, aquaponics businesses will need to install a series of sanitizing sinks, hand-washing stations and a packing table before they can be approved by the Illinois Department of Public Health. Pending its inspection, the businesses can apply for wholesale food business licenses from the city of Chicago.

The arrangement will allow 312 to put less emphasis on the alternative revenue streams it was forced to devise in the past year, such as consulting with restaurants like the West Loop’s Moto, and more emphasis on growing plants and refining aquaponic technologies. The company grossed $11,000 in revenue in 2011, and Spatafora hopes to bring in $50,000 in 2012. Were 312 operating at maximum capacity in its current growing space, he estimates the company could service between 20-40 restaurants and gross over $100,000 annually.

 

With proper technological development and a continued emphasis on buying locally and responsibly grown produce, aquaponics holds the promise of offering everyday Chicagoans a new way to source food.

“We can design these systems, install them in restaurants, in people’s homes, or schools,” Spatafora said in an interview his company’s headquarters in the Plant Building, a vertical farm in the Back Of The Yards that also houses Greens & Gills, as well as several other food start-ups.

“It creates a whole open-source market potential where these things could be run on software, so that a 15-year-old kid in his home could program his own software to run our system that grows strawberries perfectly. It’s consumerizing the technology of the industry.”

Between 800 and 1,200 American homes had backyard aquaponics systems in 2010, according to a New York Times article that same year that cited Aquaponics Journal, a magazine published by aquaculture expert Rebecca Nelson. 

While the company ultimately wants to specialize in commercializing aquaponics technologies, 312 aims to grow initially through sales to restaurants.

“The theory is, we build our own system, start growing these food products, get them to market as kind of these ‘312 brand’ and once we can get people excited about the taste of the food, then we can come in and say, ‘hey, if you want to grow it yourself at home you can buy our kit’.”

It’s unclear what Chicago’s restrictions on commercial vegetable production – an eventuality aquaponics farmers say the city never prepared for given its history with traditional commodity farming – would have on at-home growth. But Spatafora said he fielded several calls from suburban municipalities courting his business with promises of a more deregulated farming environment that was more conducive to growth.

Greens & Gills attorney Schell credits local government for making a decision that not only benefits aquaponics businesses, but could also bring jobs to Chicago.

“One in four jobs is still related to agriculture,” he said. “To move some of those jobs to an urban area is a good thing.”

Integral to the city’s licensing decision, some say, was Mayor Rahm Emanuel’s March visit to the Plant Building, which he toured with its owner John Edel and Alderman Pat Dowell. Urban farmers saw the visit as a gesture of support.

“I don’t know if we’d be in the same position we’re in under Daley as we are under Emanuel. It’s just a younger, more forward-thinking team that he assembled,” Spatafora said.

Chicagoans interested in aquaponics’ potential need only look to its northern neighbors. In addition to Sweet Water Organics, Milwaukee is home to Macarthur Genius Grant awardee Will Allen’s Growing Power, an urban agriculture organization that teaches would-be farmers about aquaponics and is credited with helping revamp the city’s derelict northwest side. Wisconsin is also the birth state of some of field’s earliest pioneers, James Rakocy and Damon Seawright.

Then there’s Nelson’s company, Montello, Wis.,-based Nelson and Pade, one of the country’s leading providers of aquaponic systems.

“There’s a lot of talk about projects in Chicago, but not a lot are actually happening. I think that will change,” said Nelson, the company’s president.

“Start-up agriculture is a completely new concept in this country. In an urban area, it’s just that much more of a novelty,” she said, adding that city officials should be applauded for their acceptance of urban agriculture.

Myles Hartson, a manufacturer of aquaponics systems for businesses and universities for almost 30 years, agrees with Nelson’s assessment.

He emphasized that growing a multitude of plant types all with the same fish waste represented an important shift away from the traditional monoculture of Illinois farming – growing one crop with one set of unique, often synthetic nutrients.

“For farmers downstate, the whole emphasis has been corn and soybeans. You can’t even find a young farmer today that knows how to grow anything other than corn and beans,” Hartson said.

While Hartson admits that aquaponics probably accounts for far less than even one percent of the $20 billion American produce industry, he believes its potential for growth is enormous.

One of the most powerful drivers of growth could be organic certification. If Chicago farmers eventually scale to the point where they’re able to sell to grocery stores, their vegetables could be certified as organic because the closed systems use all-natural nutrients.

FarmedHere, a suburban Chicago aquaponics company, sells organic basil and arugula at Whole Foods Market, among other locations. Representatives from FarmedHere did not return calls seeking comment.

Whether or not other local start-ups eventually sell their harvest to area grocery stores, Aquaponic farming’s social impact has the potential to extend well beyond conserving water and putting lettuces in upscale markets and restaurants.

Hartson, for one, envisions a scenario where more low cost, abandoned buildings, such as the Plant, are gentrified for aquaponics uses. Outfits like Growing Power, he said, have increased the availability of fresh produce in disadvantaged areas.

“Once there’s more of these urban farm entities in Chicago, the idea of us being able to pool produce and economies of scale is definitely something to think about,” Spatafora said.

Farmers acknowledge that the reality of these visions could still be years away. But with the licensing agreement in place, its now largely up to aquaponic growers to court investors and grow their businesses.

Perhaps more importantly, they need to not only get their tilapia, but the general public, to bite.