Constantly Fighting the Current
In the aquaculture industry, they say you’re not a fish farmer until you’ve killed a million fish.
That definitely makes Dallas Weaver a fish farmer.
Not that Weaver purposely or routinely slaughters fish, but as president for the last 20 years of one of the few American tropical fish hatcheries outside of Florida, the Huntington Beach entrepreneur has experienced his share of costly mishaps. Four months ago, a technician absent-mindedly shut off a valve delivering oxygen to a fish tank for an hour. The result: $2,000 worth of longfin zebra danios dead. A similar incident four years ago left $5,000 worth of his gilled inventory floating on the surface.
Weaver accepts such losses as part of the risk of making a living from livestock: “This is not like other businesses. You make a mistake, your product goes from great value to no value in minutes,” he says.
Such is life at Scientific Hatcheries, one of the most unlikely businesses in urban Southern California. Operating in a 12,000-square-foot warehouse in a nondescript industrial park, Weaver and his staff of 12 breed and cultivate 25 million fish a year. The tiger barbs, zebra danios, gold barbs, white clouds and feeder guppies develop here in 5-foot circular tanks. The 100 tanks are made of fiberglass.
When these ornamental pets reach marketable size, they’re sold to tropical fish wholesalers, who, in turn, resell them to pet shops in Southern California and beyond.
In 1995, Scientific Hatcheries had sales of $750,000--a 12% increase over the previous year for a company that’s experienced 10% to 20% annual sales growth over the last five years. Weaver would not reveal the profit at the privately held firm, but he says they’ve held steady without any assistance from rising prices. Wholesale fish values have remained static. He says the company has continually boosted sales by maintaining strong customer service. For example, when tropical fish shortages took hold last year because of winter cold in Florida, Weaver made sure all his existing customers received allocations, and he didn’t gouge them on prices.
“I get loyalty this way,” he says.
Weaver predicts Scientific Hatcheries’ sales will rise about 7% to $800,000 in 1996. He attributes the slower growth to a flat market, but he hopes to continually boost profits by increasing fish yields. Weaver’s efficiency is considered among the best in the business.
“He gets better yields per square foot than the Asian producers,” says Walter Scott, owner of Coast Tropical, a Gardena-based tropical fish wholesaler and customer of Scientific Hatcheries.
Weaver’s fish farm started 20 years ago. The then-35-year-old Los Angeles native with a newly minted doctorate in applied sciences from UC Davis was earning his living as an engineer. Weaver surmised that to advance in engineering he’d have to abandon his true love--scientific research--for management. So he became an entrepreneur.
“I thought, if I am going to have to be a manager anyway, I might as well have my own show,” he recalls.
Weaver chose aquaculture because he saw it as a technologically sophisticated business in a niche small enough not to attract big players. A colleague showed him a business proposal for a trout farm. He considered his prospects and decided tropical fish would be more profitable. Exotic fish are generally raised in warmer, more rural, regions, but he wasn’t willing to leave Southern California.
“I am a big city kid,” he says.
California is a relatively minor player in the U.S. aquaculture industry and has little, if any, presence in tropical fish production, making Weaver’s Southern California operation all the more unusual. Craig Watson, director of the University of Florida’s tropical aquaculture laboratory in Ruskin, Fla., estimates that 90% to 95% of U.S. tropical fish farming takes place in Florida, where large farms with outdoor ponds are a natural in the state’s rural landscape and hot, muggy climate.
Weaver gravitated to tropical fish because of Los Angeles’ position as a center for international trade. There are more than a dozen businesses near Los Angeles International Airport that act as middlemen between international tropical fish sources and wholesalers and retailers in North America.
But before his supply business could begin, Weaver had to solve a big problem: Coming up with water treatment technology to produce the high-quality water he would need to produce fish at reasonable costs. That’s when Weaver’s engineering and scientific prowess paid off. Working over the course of five years, he devised a water filtration system that’s earned praise from scientists in the field.
In simple terms, here’s how it works: A series of large tanks use biological filters to purify water flowing in from the tanks holding fish. These filtering tanks contain water jets that propel sand containing microorganisms throughout the water. The bacteria living on the sand grains eat the fish’s waste products and rid the fish tanks of potentially toxic materials, such as ammonia and nitrite. After the water flows through the filter tanks, another device replaces the oxygen and removes the carbon dioxide produced by the bacteria and the fish. The treated water flows back into the fish tanks. The total loop takes 23 minutes.
Weaver has been “a real pioneer in the development of these closed systems,” said Fred Conte, aquaculture specialist at UC Davis’ department of animal sciences. Weaver’s industry stature has grown as other tropical fish farmers have emulated his water filtration system, Conte said. (Scientific Hatcheries has four licensees, three in Florida and one in Pennsylvania, who pay 5% of their sales for the rights to use this filtration technology.)
Until five years ago, Weaver operated Scientific Hatcheries from his Huntington Beach home. He transformed his quarter-acre backyard into a fish factory of greenhouses and tanks, with his two children feeding the stock. During Scientific Hatcheries’ first five years, Weaver continued working full-time as an engineer. His wife, Janet, held the business together during the day. In 1980, when the company achieved $75,000 in annual sales and began showing positive cash flow, Weaver left the security of his engineering job for full-time fish farmdom. Weaver understood the risks. Just two years before, he took a major hit when about $40,000 to $50,000 worth of his fish died inexplicably--about half his stock at the time. He had unknowingly fed them feed that had gone bad.
“At the time it was a big loss,” Weaver recalls. “But this is the kind of business where something will go wrong. Your ability to stay in business means you have to be able to take a hit and recover.”
Weaver thinks any company in this field should have at least six months’ cash reserves at any time. “That’s why we’re still here,” he says.
