Even with the right equipment and some hands on training, there’s no guarantee of success from setting up a hydroponics system. There are many challenges standing in the way of financial stability. Some of the risks are the same as those faced by any farmer or market grower, while others are unique to this method. Prepare for the most common obstacles faced by hydroponic business owners with this advice.
Locating an Active Market
As with any other kind of niche grower, hydroponic business owners often struggle finding active markets willing to pay premium prices. Organic certification can help, but some states have pushed back against allowing hydroponic systems to qualify for these labels. Try to locate reliable and active markets, preferably more than one, before starting a hydroponic business in any one area. Most crops that do well in these systems can’t take days of transit, so you’ll want to locate the business near consumers and retail outlets. A combination of interested buyers ensures that changing demands don’t suddenly cut your income to zero. Aim to sell to consumers, restaurants, and retail buyers at the same time unless there’s a large enough market in your area to just focus on one source.
As the interest in alternative farming methods and healthy local food grows, so will the amount of competition. Even if you have total control of the local markets when you first start your business, you’ll eventually face some stiff competition. Make plans to differentiate your business from the beginning in some way. This might be a focus on a specific type of crop or cuisine, special arrangements like CSA sales, or hands on tours for your customers. Don’t be afraid to try new things and expand your marketing efforts before competition appears. Waiting until you’re losing customers to a company who’s undercutting your prices will only make it harder to survive and adapt.
Putting some extra investments in emergency management equipment can make or break your business in the long run. Sensors that detect water loss and generators to run pumps during power outages increase the cost of setting up your business. Yet when you factor out the savings over the course of a decade or more of production, you’ll find that money is well worth the cost. One substantial loss of a valuable crop can make or break a hydroponic business with slim profit margins.
Lowering Controllable Costs
Many of the costs incurred during the installation and use of a commercial hydroponic system are fixed and hard to lower. When you find a cost you can negotiate, work on lowering it to stretch your company’s budget. Don’t compromise on materials for construction since low cost liners or greenhouse frames might ruin the entire business. Look for ways to save on seeds, raft materials, growing mediums, and more by buying in bulk or finding new suppliers.
Meeting Local and Federal Regulations
Just like with any agricultural operation designed to reach the public eventually, the federal government has plenty of regulations on how to safely grow food hydroponically. There’s plenty of opportunities for E.coli contamination and other issues if you make some simple mistakes in the system. On top of any federal level requirements related to your system, you’ll also need to check into state and county level laws. These lower level rules often limit water use or uncontrolled release, although they may also cover food safety rules as well. In addition to laws regulating the systems you use for growing, you’ll find a lot of rules about food handling and storage. Failing a routine health department inspection could result in the destruction of two or more rounds of crops, eating into your profits significantly.