Impact Investing in Small-scale Aquaculture


Presentation Description

Presented by Mr Wayne Rogers, WorldFish HQ, Penang, Malaysia, 23rd July 2014. New WorldFish research suggests investment in small aquaculture enterprises can create significant positive social, environmental and economic impact. The presentation discusses results from recent analyses of several aquaculture investment projects, and draws together principles and experiences for investment into small-scale aquaculture. A new initiative to bridge the gap between small-scale aquaculture projects and commercial investments – the “WorldFish Incubator” is described. The presentation seeks to raise awareness of the social, economic and environmental benefits from investment in small-scale aquaculture enterprises, and share innovations on financing seafood production by this important but largely neglected group among the private investment community.


Presentation Transcript

Impact investing in small-scale aquaculture :

Impact investing in small-scale aquaculture Wayne Rogers

Increasingly, our fish comes from aquaculture:

Increasingly, our fish comes from aquaculture

Benefits of aquaculture:

Benefits of aquaculture Meets our demand for fish Provides livelihoods Environmentally e fficient

Aquaculture has also created more than 10 million jobs in 20 years ….:

Aquaculture has also created more than 10 million jobs in 20 years ….

Aquaculture offers more than food:

Aquaculture offers more than food A driver of rural development A source of employment and livelihood

Aquaculture growth will impact ecosystems:

Aquaculture growth will impact ecosystems These impacts can be managed by: Market, regulatory and technology interventions that promote profitable and sustainable practice Innovations in feeds, genetics, training and markets Farming species that feed lower down the food chain

Aquaculture can increase economic access to fish by the poor:

Aquaculture can increase economic access to fish by the poor By developing new markets By producing new products By decreasing the costs of production and processing It can also provide significant employment and wealth creation opportunities for Investors & Owners if the gains are kept by the producers

Aceh Experience:

Aceh Experience Investment $USD1.9m over four years (2007 –2010) Net profit per farmer increased from USD$73 in 2007 to USD$435 in 2010 Profitable farms increased from 28% to 96% Net profit margin from these farms grew from 34% to 64%

India Experience:

India Experience Financial interventions totaling US$ 272,400 from 2001 - 2006 Production increased from 4 tons in 2002 to 870 tons per annum in 2006 Farmer annual profit increased from US$ 278 in 2001 to US$2648 in 2006 The investment has resulted in US$ 8.9 million of revenue from shrimp sales at farm-gate and US$ 3.52 million of profits to farmers

What we have learnt – key elements:

What we have learnt – key elements Management and technology Patient capital (5-7 years) Technical and organizational services Farmer organizations – societies, cooperatives and producer companies Government policy Markets

Combined approaches required:

Combined approaches required Organizational “ glue” Infrastructure investment Working capital Market links to consumers and inputs Technology and Management for productivity

It is hugely challenging :

It is hugely challenging Some Challenges How to reach large numbers of SME farmers? Weak institutional environment Business models Investment mechanisms Unsophisticated management Easier to work with large business!

Why focus and invest in aquaculture SMEs and collaboratives that aggregate small-scale producers?:

Why focus and invest in aquaculture SMEs and collaboratives that aggregate small-scale producers? Aquaculture dominated by small-scale producers SMEs produce nutritious food, strengthen communities and promote better livelihoods Investment in SMEs utilizing improved practices and sustainable technologies will have significant environmental pay-offs SME ’ s often lack working capital, access to markets and business knowledge that would help them succeed Investment in SMEs needs to be accompanied by links to markets, technology development, training and infrastructure development

Investor Questions:

Investor Questions

Some Issues:

Some Issues Financing difficult for small scale producers Significant levels of assets required (Ponds / Processing / Transport) Production risk if not quality controlled Fragmented production and industry (in the developing world) Market Access Investors will not pay for initial business building Investment risk “Predatory” competition offering short term advantages to farmers

Steps to success:

Steps to success Plenty of time Improved farm productivity / move towards environmental sustainability Analysis / Management Organisation Viable business model Correct scheduling of development and investment

A way forward:

A way forward WorldFish Incubator focused on… Coalition building and creating partnerships Conducting, sharing, investment in business case research Investment in intermediary organizations to build viable businesses Knowledge sharing and wide dissemination of lessons learned Advocacy of the approach Sustainable practices Connects aquaculture in the developing world to Aqua Spark & other investors seeking scalable, high impact, triple bottom line investments in aquaculture and seafood businesses

The WorldFish Incubator: Goals:

The WorldFish Incubator: Goals $20 Million in investment by 2020 200,000 Women and men with improved livelihoods by 2020 100,000 Hectares under sustainable practices by 2020

Steps to success:

Steps to success Improved farm productivity Improved organization (fill the management vacuum) Access to working & development capital Improved market access Improved infrastructure The intermediary organization (management glue) Facilitation and analysis A viable business model with farmers sharing in ownership and success (counters competition) Correct scheduling of development and investment Environmental sustainability Plenty of time

Drivers for an innovative / collaborative funding approach :

Drivers for an innovative / collaborative funding approach To address the gap between industrial scale producers and small farmers To address environmental issues surrounding aquaculture Lift people out of poverty Provide a sustainable supply of seafood to local and global consumers Which means……… Identify, work with and build “investment ready” cooperatives / SMEs Assess, qualify and manage investee / investor opportunities Build financing partnerships

Product and Investment Pathway:

Product and Investment Pathway Best Fish nutritionally Most environmentally efficient Food Production system Inputs (feed) enterprises Production Enterprises Other technical inputs Key nutritional inputs Local sourcing Climate friendly Service companies Certification Key Objectives Pro Poor / Nutrition & Feed programs / Smallholders / Sustainability Investment / Enterprise Needs Beneficiary Needs Analysis Environ- ment Efficiency Affordability

Why a WorldFish incubator?:

Why a WorldFish incubator? Utilize WorldFish’s field presence and technical expertise to identify viable aquaculture opportunities Targets small-scale farming enterprises, cooperatives and producer organizations in rural communities that have the best potential for returning positive economic, social and environmental impact Bring research on sustainable aquaculture technologies to scale through commercial investment Utilize the transformative influence of private sector investment to bridge the gap between agricultural research and scaling innovations for development impact Nurture early-stage small and medium size aquaculture enterprises (SMEs) who adopt sustainable aquaculture technologies and prepare them for commercial investment Create successful businesses that produce affordable, nutritious food for the poor and promote better livelihoods for those who rely on aquaculture Facilitates the start-up of scalable small and medium-sized aquaculture enterprises through the adoption of sustainable technologies

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