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Profiles

South River Aquaponics

By Eric Peterson | Nov 02, 2020

Cannabis & Hemp Food & Beverage Supply Chain Colorado

Company Details

Location

Montrose, Colorado

Founded

2013

Ownership Type

Private

Employees

13

Products

Mushrooms, herbs, and hemp

CEO Peter Ullman is scaling his innovative aquaponics farm to bring a variety of crops to market more efficiently than traditional agriculture.

Ullman co-founded South River Aquaponics after his culinary career was cut short by carpal tunnel syndrome that required surgery in both of his hands.

As the Le Cordon Bleu-trained chef worked at The Phoenician in Scottsdale, "I had this epiphany that I needed to do something different with my life, and do something where I wasn't using my hands all day," he says.

Photos courtesy South River Aquaponics

Friends in Mesa, Arizona, had built an aquaponics system with resident fish that resulted in nutrient-rich waters for plants. "It tends to speed things up," says Ullman. "I can get a head of lettuce out in 28 days -- compared to outdoors, it's about 45 days."

Ullman teamed with them on an aquaponics farm in Montrose and broke ground in 2014 and started with lettuce that South River Aquaponics began selling to 16 local schools in 2016.

At first, the business model called for selling fish as well as produce grown in the system. But seafood proved to be a difficult market to crack in terms of both profitability and sustainability. "It just became a pain in the ass," says Ullman. "The truth is we weren't going to make a lot of money selling fish. They're really the driving engine for the plants."

So the farm's 2,000 tilapia ultimately became a catalyst for the growth of lettuce as well as a second, higher-margin crop: herbs for restaurants and grocery stores.

This pivot was largely due to the hiring of Dr. James Rakocy, who Ullman calls "the modern-day godfather of aquaponics," as a consultant. "He came out and said, 'Your system is about six times smaller than it needs to be to be profitable on lettuce alone.'"

Rakocy's advice led to building in the greenhouse vertically with a nutrient film technique (NFT). "They're basically like a gutter, and they're on a grade, so you pump water to one side and gravity takes it away," says Ullman. "What it does is it keeps the plant plug wet all the time without keeping it soaking in an actual body of water. It's a really good way to grow things, especially herbs, so that helped me add about 9,000 plants to my plant count."

The operation also started cultivating a complementary crop to emit carbon dioxide and catalyze photosynthesis in the plants. "At the same time, we realized our CO2 was low in the greenhouse," says Ullman, noting that good CO2 can double yields. "We decided we should build a room inside the greenhouse and grow mushrooms in said. Mushrooms off-gas CO2 when they're fruiting, so we figured we'd ventilate the air from that room over the top of the plants."

In 2016, David Gann, a longtime trout farmer on the Western Slope and former president of the Colorado Aquaculture Association, joined South River Aquaponics as chief science officer. "He came to work with us the day after my partner had left and resigned," says Ullman.

South River Aquaponics subsequently won a $250,000 grant from the Colorado Office of Economic Development and International Trade's Advanced Industries program in 2018. "With that money, we built a whole other building so we could have three more mushroom rooms," says Ullman. "The mushrooms have taken center stage, even though we're an aquaponics system. . . . We just started talking to Walmart to sell the mushrooms."

The company is also working with fungus expert Tradd Cotter of Mushroom Mountain in South Carolina on mushroom tinctures. "We're now distributing his tinctures," says Ullman.

Ullman connected with Black Canyon Seed in 2019 and moved from herbs and lettuce largely to hemp cultivation. "We have an indoor system, so it's free from pollinators outside," he says. The hemp is grown for seed for a 1,000-acre outdoor grow nearby.

Ullman says he sees the operation as more R&D lab than production facility, but he aims to change that by focusing on mushroom sales to Walmart and other accounts, including four Natural Grocers stores in Colorado. "We're going to be in five to seven [Walmart] stores to start, just what I can deliver to within 100 miles myself. They have trucks that come to Montrose empty and we can backhaul to Denver where their distribution center is. The idea is to do a bit of a test market. If that goes well, maybe we can up the numbers."

The farm -- now including a 14,040-square-foot greenhouse, a refrigeration building, a mushroom incubation structure (repurposed from a pair of containers), and an office building with a lab -- could harvest 4,000 pounds of mushrooms a week at full capacity, which Ullman estimates would translate to roughly $2 million to $3 million in annual sales for mushrooms and hemp combined. "I'll probably hire five more people, and then we'll just do mushroom production seven days a week," says Ullman.

Challenges: "Distribution is a bit of a challenge," says Ullman, citing an upcoming decision between buying a South River Aquaponics truck or developing a backhaul plan with the trucks that regularly leave empty after delivering loads to the Western Slope. "Montrose is kind of the end of the road."

Opportunities: Ullman says he sees room to grow more than the 6,900 hemp plants currently under cultivation for seed in the greenhouse. Hemp seedlings grown in the aquaponics system have proven to be hardier than other seedlings. One local account, Typhoon Farma in Montrose, bought 25,000 seedlings in early 2020 that "outperformed the competitors," says Ullman. Soon after planting, the farm "had 60-mile-an-hour wind and 39-degree weather in the first week we planted those. We planted 10 acres of their 168 [acres], and they were most pleased with how our plants performed. They said they had the least amount of loss and that they were able to plant ours twice as fast, because the plugs were really together."

In the longer term, he wants to expand to more crops, including cannabis. Ullman, a longtime medical cannabis patient, says he's also looking to grow cannabis in Arizona, where he currently lives. COO Giovanni Mendoza heads up the day-to-day operations in Montrose.

Ullman also identifies other opportunities in aquaponics consulting as well as more partnerships.

Needs: "I need some clients," says Ullman. "I need to work on the sales and bulk up the amount of stores that we're selling to."

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