A panel session at the Seafood Summit 2012 in Hong Kong, Friday 7 September. Participating in the panel discussion is Wayne Rogers (WorldFish), Malcolm Beveridge (WorldFish), Arun Padiyar (aquaculture entrepreneur), Esther Luiten (IDH) and audience members.

1. Impact investing in small-
scale aquaculture enterprise
A Panel Session

2. Agenda and Speakers
• Wayne Rogers – WorldFish Centre
– History, financials and business models
– Incubating opportunities and investment
• Malcolm Beveridge – WorldFish Centre
– Key science social and environmental outcomes
• Arun Padiyar – aquaculture entrepreneur
– A practitioner's view
• Esther Luiten -IDH
– Investors perspective
• Audience dialogue and key questions

3. A bit of history
• BACKGROUND
– WorldFish Technology Interventions
§ Success but challenges of scalability and
sustainability
– Work with farmer clusters proves advantages of
collaborative “co-operatives”
– Detailed case studies and financing issues
– Financial viability proved
– Aquaculture fund and financing partners

4. Investor Questions
What is our
investment
principles/
criteria
How
How will we involved will
manage we be in the
risk? business?
Business
investment How is
What type of model performance
investment
measured
will we
and
make?
managed?
What
is
our
How
do
we
required
know
that
all
return
and
legal
?
exit
strategy?

5. The underlying business case
• 7-billion people mark recorded in 2011, 9 billion expected
in 2050 (1.2% growth per year)
• Dietary shift towards protein consumption in developing
countries
• Urbanization and disposable income growth
• Arguably one of the few proteins with growing demand in
western economies
• “Seafood is the only protein Western consumers wish they
ate more of”
Martin Glenn, Birds Eye Iglo Group
Source RaboBank

6. World fish production and food use consumption
200
Projec'on
aquaculture,
China
aquaculture,
world
excluding
China
150
capture
fisheries,
China
capture
fisheries,
world
excluding
China
Million
tonnes
food
use,
World
100
50
0
1976
1980
1990
1997
2000
2010
2020
2030
source:
hFp://www.seafoodsource.com/newsarLcledetail.aspx?id=12852

7. Fish demand growth rate 2007-2015
source:
Cai
(2011)

8. Annual growth rate of aquaculture 2007-2015
needed to satisfy fish demand
source:
Cai
(2011)

9. Industry Summary
• Demand for fish increasing quickly
• Limited prospect of increasing wild catch supply
• In the developing world
– Good technology improvements achieved and
continuing
– Improved use of feed and farming techniques (feed
conversion ratio)
– Much better resource utilization achievable
– Aquaculture profitability potentially better than or as
good as other animal production

10. 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)

11. 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

12. 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%.

13. 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

14. Local conditions
• Developing country aquaculture is very site and country
specific – one size does not fit all
• Different value chains and participants
• Low level farming will not move families out of poverty
• Small producers are squeezed by traders and processors
• Farm gate price drives behaviour on a daily basis

15. 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

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

17. Detailed interventions & needs
• Technology and Management
– Significant returns through improved management and access to
technology
– Investment opportunities in efficiencies and more “crop per drop”
• Partnerships
– Access to knowledge / skills & resources
§ Finance / Technical / Markets
§ Right mix at right time
– Networking efficiencies among investments
• Organizational “glue”
– Capacity building for collective actions
– Scale efficiencies
– Embedding costs of technical services
– Connecting to services and markets

18. What we have learnt
In summary
• Patient and targeted intervention required at early stages to
build trust and capacity.
• Early wins achievable using technology.
• These enterprises are profitable.
• The co-operative model is probably the preferred option
(incentives aligned).
• Vertical integration is key to protect the vulnerable and
ensure enterprise goals aligned.
• Financing the enterprises properly is key using a variety of
partners. Most finance misses the need and opportunity at
the bottom end.

19. The way forward
• Coalition building and creating partnerships
• Conducting, sharing, investment in business case research
• Investment in intermediary organisations to build viable
businesses
• Knowledge sharing and wide dissemination of lessons
learned
• Rural communications
• Advocacy of the approach
• WorldFish Incubator
• Aqua Spark & other investment funds