Impact investing in small-scale aquaculture enterprise – WorldFish experiences and perspectives

Malcolm Beveridge, Michael Phillips and Wayne Rogers

Overview

•  Investment case •  Project examples •  Lessons learned •  Ways forward

.. the case for finance

•  Another 50 millions tonnes by 2030?

•  Another US$50 billion in capital and annual operational investment?

–  from where?

Year

Pro

du

ctio

n (m

illio

n to

nn

es)

20

40

60

1950 1960 1970 1980 1990 2000 2010 2020 2030

80

100

120

FAO (2004)Wijkstrom (2003)

IFPRI (2003)Ye (1999)

Fish

•Baseline  scenario

•Technological  advances  in  aquaculture

•Ecological  collapse  of  fisheries

• Global  consumption    remains  at1996   levels  (15.6  kg/y)

• Global  consumption  rises  to  22.5  kg/y

Growing fisheries (0.7% per annum)

Stagnant fisheries

the case for small enterprise…

•  Large numbers of small-scale household farms in developing countries

•  Improvements targeting the majority (not minority)

•  SMEs are drivers of growth in developing countries

•  Investment choices impact people

Small enterprises

Medium and large enterprises

the case for environment …

•  Aquaculture can be environmentally sound source of food

•  Considerable improvements possible with current systems

•  Small vs large approach

•  Inclusive approach for sector sustainability

•  Investment pathways and choices make a difference

source: Hall et al. (2011)

Opportunities and challenges •  Opportunities for impact

•  Challenges

–  How to reach large numbers of farmers?

–  Weak institutional environment

–  Business models

–  Investment mechanisms

•  Easier to work with large business!

Analyzing “project” investments

Approach

•  Diagnosis

•  Participatory improvement

–  Technology & management

–  Organizational

–  Local technical assistance

–  Partnerships

•  Scaling up

•  Social, economic and environmental outcomes

Returns to “project” can be significant, but it takes time •  Patient capital...

0  

200,000  

400,000  

600,000  

800,000  

1,000,000  

1,200,000  

1,400,000  

1,600,000  

1,800,000  

2,000,000  

2007   2008   2009   2010  

revenue  from  all  farmers  (USD$2.39m)  net  profit  from  all  farmers  (USD$1.44m)  project  investments  (USD$1.90m)  

 -­‐          300,000      600,000      900,000    

 1,200,000      1,500,000      1,800,000      2,100,000      2,400,000      2,700,000      3,000,000      3,300,000      3,600,000      3,900,000      4,200,000      4,500,000      4,800,000      5,100,000    

Baseline  (2001  survey)  

2002   2003   2004   2005   2006  

Revenue  generated  -­‐  total  $8,884,444  

Net  profit  generated  -­‐  total  $3,524,444  

India Aceh

Intermediary organizations are important

•  Collaborative arrangements such as cooperatives, farmer groups

•  Reduce transaction costs and economies of scale

•  Capacity building takes time

•  Sustained by business not project

•  Opportunities to network and build scale

Environmental outcomes

Aceh India Bangladesh Solomon Islands

Productivity ↑   ↑   ↑   ↑  Disease risks ↓   ↓   ↓  Chemicals ↓   ↓  Fish in fish out ↓  Water use ↓   ↓  Habitats (mangroves)

↑   ↑  

Combined approaches required

OrganizaNonal  “glue”  

Infrastructure  investment  

Working  capital  

Market  links  to  

consumers  and  inputs  

Technology  and  

management  for  

producNvity  

Conclusions

•  Small-scale sector is signi!cant

•  Outcomes – business, environment, social

•  Business case •  Business model –

intermediaries or cooperative models, collective action

•  Think business, not projects •  Mix of partners and !nance •  Role for “patient capital”

M.Beveridge@cgiar.org M.Phillips@cgiar.org

www.worldfishcenter.org Acknowledgements – Resource Legacy Fund, GIZ and FAO/Allfish