Characteristics of Successful Sustainable Fishery Initiatives

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Over the past six years, Wilderness Markets has assessed sustainable fisheries investment opportunities in more than fifteen different wild capture fisheries worldwide. Our specific objective is defining how to make conservation-based approaches a viable financial alternative to current wild capture fishing practices.

We have enjoyed working with numerous international and national partners on field assessments, desk reviews and systemic fishery improvement project (FIP) assessments. Much of our public work and partners can be reviewed at this link.  Fisheries assessed ranged from the United States, Mexico, Indonesia, the Dominican Republic, Grenada, Guyana, Chile, and four Caribbean-wide fisheries. Along the way, we have also reviewed a number of fisheries in Africa.

Behind these public reports are a series of financial models we created to quantify the viability of alternatives considered in different fisheries. These models move beyond the scientific and policy recommendations associated with fishery reform to account for the financial implications associated with existing or proposed measures. These models weigh the financial costs and benefits of changes in management, data collection and use, infrastructure and capacity development in the context of existing value chains and markets. 

Whereas others have ably demonstrated the potential upside associated with fisheries reform through significant economic modeling,[1]and others have documented key characteristics of FIPs,[2] we have focused on how and where the specific financial benefits may be realized in a value chain. We identify how the “upside” may be used to compensate for the costs of fisheries reform and improvement such as gear change, improved management, etc. Our focus has been on the financial implications for fishery participants, especially fishers.

Through our work and others’, the variables listed below have been identified as having a direct impact the financial viability of fisheries reform. These five variables have been examined across a range of fisheries and found to be consistent. It is important to note that these operate in the context of sustainable fishing interventions, most likely in a “parallel” model.

  • Product value 
  • Stock recovery cycle[3]
  • Infrastructure Access[4],[5]
  • Supply chain length[6], [7]
  • Organizational homogeneity and capacity[8]

These variables are focused specifically on the potential likelihood of securing the financial incentives necessary to address the costs of fisheries reform or improvements, i.e., ability to pay for conservation measures through the improved value of the fishery. These benefits may then be utilized to justify reform or directly support sustainable fishing practices.  

The priority quantitative variables that have a direct impact on the financial equation are:

Product Value 

Value refers to not only the price of the seafood, but also to the margin retained by the participant in the value chain, whether fisher, first receiver or processor. This is a combination of the price, operational capacity, input costs and volumes associated with a participant. 

Products handled by participants capable of securing comparatively high value in seafood markets were found to be more capable of absorbing the incremental costs associated with fisheries reform and conservation focused measures. Lower value products – either due to the inherent value of the stock, low volumes, operational inefficiency or poor capacity leading to low margins are less likely to be viable. The willingness of participants to engage in changes in practices such as gear change and harvest control regulations, is directly proportional to the value generated by the seafood product and realized by the participant. 

Stock Recovery Cycle

Life cycles, fecundity, biomass levels, fishing effort mortality, predation and habitat health are all critical components in defining the costs of conservation related measures. Short recovery cycles reduce the wait time to realize benefits in a fishery, capping social, political and financial costs associated with fisheries reform. 

The primary qualitative factors that influence the financial equation are:

Infrastructure Access

Domestic and global supply chains require sanitary and safe foods, therefore access to appropriate storage and transport is a significant driver of product quality and value. In seafood, this typically means access to HACCP compliant facilities able to reliably provide clean ice, cold storage and timely transportation. The absence of these factors negatively impacts value.

This variable is routinely exploited by supply chain participants (including well meaning development organizations) to attempt to integrate new products into global and domestic supply chains. Unfortunately, negative social and environmental consequences are not always considered by these participants, nor is there typically a simple mechanism for integrating or compensating fishers or others for improvement costs. 

Supply Chain Length

Supply chain length includes both the geographic distance and the number of participants “touching” a product in the supply chain. Extensive travel distances between points of harvest and market drive up costs of transportation, ice and storage, and lead to product deterioration. Each “middleman” in the supply chain adds handling and cost margins to the product. While these costs may be absorbed by the end market, long supply chains decrease the likelihood of compensating those bearing the cost of fishery reform and improvement, usually fishers. 

Organizational Homogeneity and Capacity

When considering artisanal and small scale fisheries, community cultural homogeneity has been identified as a critical component of community based fisheries management and reform efforts. Successful efforts are entirely dependent on alignment around goals[9], which is easier to achieve in geographically remote, culturally homogenous communities. Regardless of the financial upside, heterogenous community efforts close to major cities are challenging. 

At the corporate level, strong leadership and the ability to effectively respond to market signals has been well documented in value chain literature and in pilot projects we have tested.

At its base level, the presence of a functioning investable entity is a significant advantage in successfully addressing the characteristics identified above. 

Based on our review of a range of different fisheries, the above characteristics have a significant impact on the success or failure of sustainable fisheries initiatives, particularly in emerging market contexts where the financial and social implications of fisheries reform are often ignored by the conservation community.

Unless these factors are integrated into projects aimed to curb overfishing, conservation efforts are unlikely to succeed and the unsustainable status quo is likely to continue.

We welcome your comments, thoughts and views on the above.

[1]Costello C, Ovando D, Clavelle, T, Strauss, K, Hilborn, R, Melnychuk, M, Branch, T, Gaines, S, Szuwalski, C, Cabral, R, Rader, D, and Leland, A. (2016). Global fishery prospects under contrasting management regimes. Proceedings of the National Academy of Sciences.113. 201520420. 10.1073/pnas.1520420113. 

[2]https://www.ceaconsulting.com/wp-content/uploads/Global-Landscape-Review-of-FIPs-Summary.pdf

[3]http://investinvibrantoceans.org/wp-content/uploads/documents/Executive_Summary_FINAL_rev_1-15-16.pdf

[4]Anderson J, Anderson C, Chu J, Meredith J, Asche F, Sylvia G, et al. (2015) The Fishery Performance Indicators: A Management Tool for Triple Bottom Line Outcomes. PLoS ONE10(5): e0122809. https://doi.org/10.1371/journal.pone.0122809

[5]Basurto X, Bennett A, Hudson Weaver A, Rodriguez-Van Dyck S, and Aceves-Bueno J-S. 2013.

Cooperative and noncooperative strategies for small-scale fisheries’ self-governance in the globalization

era: implications for conservation. Ecology and Society. 18. 10.5751/ES-05673-180438.

[6]Ibid.

[7]Wilderness Markets. 2016. Connecting the Dots: Linking Sustainable Wild Capture Fisheries Initiatives and Impact Investors.http://www.wildernessmarkets.com/our-work/connecting-the-dots/

[8]McCay BJ, Micheli F, Ponce-Díaz G, Murray G, Shester G, Ramirez-Sanchez S, and Weisman, W. (2014). Cooperatives, concessions, and co-management on the Pacific coast of Mexico. Marine Policy,44,49–59. doi:10.1016/j.marpol.2013.08.001. 

[9]Csaky, Eva (2014) Smallholder Global Value Chain Participation: The Role of Aggregation (PhD Dissertation, Duke University)

Is Losing the Amazon Inevitable?

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As the Amazon burns, and the world responds, this might be a good time to reflect on some of the key drivers of this tragedy.

Three major trends have combined to create the conditions that make it almost inevitable that the forest would be burned.

  • Global population increase & increased global middle class
  • Tragedy of the commons
  • Lack of a viable alternative to developing the Amazon

Plenty of ink has been spilt on the first two trends. Populations continue to increase around the globe, with Brazil’s alone increasing from 72 million in 1960 to over 209 million in 2017 according to the World Bank, an increase of almost threefold. At the same time, GDP per capita has risen from $205 in 1960 to $9,812 in 2017. These increase are mirrored around the world, particularly in emerging markets.

The tragedy of the commons has meant that rainforest areas like the Amazon in Brazil and tropical rainforests in countries like Indonesia have been an easy target for both small scale and industrial scale producers of soy, wheat, beef and palm oil.

Global demand for cheap beef, soy, wheat and palm oil– which we in the west are as guilty of driving – provides the markets for these products and the incentive to destroy these natural ecosystems, despite their value as “the lungs of the world”.

Which brings us to the third trend – there is no value in conservation for the people living in these countries. Now that we’ve deforested the north (as the Brazilian President put it), we are dependent upon the south for these ecosystem services. However, despite the many millions of dollars spent on conservation related activities, conservation of these natural resources is simply not a viable alternative to deforestation. In all our modeling for wild capture fisheries, we often find that the costs of conservation increase production costs over and above what the “market” will pay, and that the majority of these costs fall on producers – who face the choice of complying, and potentially going out of business, or finding other markets for their product.

In deforestation, as in wild capture fisheries, as long as there is no way to recognize the resource as an asset, and to provide a realistic payment for ecosystem services provided by those assets, it is unlikely we will ever save the Amazon – or, for that matter, any wild ecosystem, including wild capture fisheries.

The sooner we recognize the need to develop viable assets that provide realistic payments for ecosystem services to incentivize maintenance of priority ecosystems, the sooner we will secure their future.

Fisheries Improvements & Social Impacts

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Many years ago, when I was a hotel manager at a resort in a national marine park, I was roundly castigated for employing poachers as guards and fishermen as boat operators for our visitors. The prevailing sentiment was one of enforcement to protect the national marine park – and the expulsion of the local people. While we had made significant strides in improving enforcement, the local people were facing a social challenge – they had no alternatives. 

The recent Interim Policy on Forced Labor, Child Labor, or Human Trafficking by Fisheryprogress.org is a reminder of the challenges the seafood conservation community is facing in the 21stCentury. It is an important step forward for Fisheries Improvement Projects which seek to secure seafood sustainability and it is encouraging to note the role of Conservation International (CI) in developing the Social Responsibility Assessment Tool for the Seafood Sector (full disclosure – I am a former employee of CI). However, I would propose that while it is essential to know that we are “doing no harm” we also need to understand the implications of the decisions inherent in effective FIPs and need to ensure that fishery participants either have a stake in the upside or have an alternative source of income.

Fisheries Improvement Projects (FIPs) have historically focused almost entirely on environmental metrics to date. One of the central issues associated with effective FIPs relates to good governance of the fishery. While there are a myriad of issues associated with “good governance”, I would propose that the willingness of local leaders and harvesters to adopt less impactful fishing practices is directly proportional to their financial gain and  / or to their alternative opportunities. 

In most of the FIPs we have reviewed or surveyed, there is no mechanism for harvesters to secure any hypothetical “upside” and they have woefully few alternative opportunities. They simply have no way of adapting to the changes – a factor that remains unaddressed in the current FIP framework. Faced with this, is it any surprise that national and local governments are slow to enforce environmentally appropriate regulations? 

So, while we congratulate Fisheryprogress.org on this step forward, it is important to keep the broader picture in mind – in an era of dwindling fish stocks, growing populations, fragmented global markets and populist leaders, the likelihood of “environment only” or “no negative” approaches succeeding in restoring fisheries is slim to none – and risks being passed as irrelevant. The sooner we can begin to address the social and financial implications of seafood sustainability, the sooner we will see these initiatives succeed. 

Oh – and that marine park? Watamu Marine National Park and its numerous supporters continue to develop innovative solutions to turtle conservation and marine protected areas.

LEVERAGE LEAD FIRMS: ENDURANCE AND EFFICIENCY

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Lead Firm Pilot Projects

When we evaluate value chains, we look for lead firms: small, medium, or large enterprises that are linked to many other players in the value chain and can influence the practices of these commercial partners. Ideally, these firms are thought leaders in their fields and open to innovation. Building on our value chain and market research, we work with these firms to lead by example. We collaboratively design and implement pilot projects that help overcome barriers to triple bottom line business growth.

Through these projects, we test our research findings, learn more about what will work on the ground, and iterate on real-world solutions. These pilot projects not only improve business practices within the lead firm, but throughout the fishery value chain. When successful, they generate financial returns that demonstrate the viability of new approaches in the industry and inspire other businesses to follow suit, thus improving industry competitiveness. They create new norms in the market that are sustained because of their business value rather than relying on ongoing philanthropic support or government subsidies to succeed.

Crab fishermen in Indonesia receiving their “Kartu Nelayan”, guaranteeing their access to benefits such as life insurance

Role of Lead Firms

Sustainable and profitable fisheries are built on secure tenure, sustainable harvests, and monitoring and enforcement, according to research behind the report, “Towards Investment in Sustainable Fisheries”. Rather than waiting indefinitely for these enabling environment conditions to transpire, using a lead firm approach allows project developers to leverage the assets and abilities of industry to progress towards better managed fisheries. In return for their contributions, lead firms in fisheries promote decreased supply volatility; increased long-term availability of the resource; improved supply chain efficiency, and more.

Lead Firm Project Goals and Benefits

Wilderness Markets’ goal with lead firm projects is to attract private, return-seeking impact investment and complement ongoing work by fishery managers and NGOs to improve fisheries. This approach enables local fishermen to adopt sustainable practices faster than waiting for the government to independently create and enforce management changes, and without the economic hardship for fishermen that often accompanies changes in fishery regulations. It will also bolsters business advocacy for more effective fisheries management policies and enforcement through a local cooperative structure.

Lead Firm Experience

From 2016 to 2017 we engaged with a lead firm, Blue Star Foods, in the blue swimming crab fishery in Indonesia. Our primary goals were to engage a lead firm to secure change on the water and development an investment model. We gained some valuable learnings, including the importance of fisher organizations; the need for ongoing, structured and unstructured facilitation between stakeholders; and the importance of pre-agreements for data collection analysis, and management.

Parallel Approach
Sumatran Fisherman with Blue Swimming Crabs

By working with a lead firm, the financial viability of data collection and management was validated, and many of the improvements in the value chain have continued to date, despite the project ending in 2017. [

For the fishermen, participation in the project included signing up for the Indonesian fisher ID card – Kartu Nelayan – which conferred immediate benefits to the fishers, such as life insurance. The government also benefitted from getting better counts of fishermen in the area. Through their participation, harvesters were provided clear and reliable financial benefits for small-scale fishermen to make gear changes; follow harvest control measures; and take on other sustainable fishing practices.

Successful Lead Firm Characteristics

  • Industry leaders: innovation, technology, experience
  • Highly connected in the value chain: linked to large numbers of producers
  • High capacity: can provide technical assistance, credit and inputs
  • Financially stable: can make long-term investments towards sustainability
  • Excellent market access and understanding: connected with multiple markets (to decrease risk) and routinely attend industry events and conduct analysis to stay attuned to market dynamics
  • Respected influencer: others in the industry look to them for thought leadership and hold them high esteem
  • Willingness: firm indicates a willingness to work with project developers, including signed agreements

Adapted from: “Integrating Very Poor Producers into Value Chains: Field Guide” by USAID, fhi360 and World Vision, October 2012.

Blue Star Foods initiative shows 3BL efforts work

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lead firm crab

BSC fisherman with new vessel tracking device

Blue Star Foods, the Miami, Florida based seafood specialist, is proving that it is possible to have a sustainable and profitable business in the seafood industry.

The title of a recent article posted on Under Current News sums it up: Blue Star Foods’ founder sees ‘3BL’ effort resonating more with crab buyers.

In 2015, Blue Star Foods partnered with Wilderness Markets to develop their Triple Bottom Line (3BL) strategy. The company wanted to design and implement appropriate financial and social incentives to enable fishermen in their supply chain to transition faster to sustainable fishing practices. Through its purchasing power and relationships, Blue Star was in a strong position to influence the practices of a range of processors who have commercial relationships with a network of mini-plants, collectors, and fishermen. We designed and tested a pilot initiative in one site in Indonesia, which has since been expanded.

Triple bottom line refers to the idea of pursuing environmental, economic, and financial goals simultaneously. Our work often centers around the research and data collection needed to modify or create a value chain that fosters this model with existing practitioners.

“We chose to work with Wilderness markets to develop our 3BL strategy because of their experience with impact investing AND expertise with wild-caught fisheries. That foundational work has made implementation a success.”— John Keeler, Executive Chairman & CSO, Blue Star Foods

For Blue Star Foods, our work helped the company originate, design and develop the strategy (find the report in more detail here).

They have implemented it with vigor, and it’s paying off.

After only two years, they are seeing progress in the sustainability of blue swimming crab fisheries in Indonesia and have expanded their efforts to include the Philippines. In the process, these sustainability practices are positively impacting the social well being of harvesters and workers, and improving sales to more large-scale foodservice, retail and institutional buyers.

Read the article to learn more about the impact Blue Star Foods has seen and how companies may integrate the benefits of developing and implementing 3BL strategies.

Investing for Sustainable Fisheries Needs Funding for Capacity Building

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Impact investors are ready to invest increasing amounts of impact capital in sustainable fisheries; what’s missing are  profitable businesses and organizations with the capacity to accept investment. These profitable “investible entities” aren’t emerging apace because the entrepreneurial ecosystem to develop their business capacity is lagging.

Read more

Is this what success looks like?

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An ongoing discussion between people in the conservation finance community is how we define success.

Reviewing the data – which we like to do (see below) – does not demonstrate much success in addressing species or biodiversity loss.

Perhaps it is time for a review of what has really worked in the conservation finance. Not only do we need to contend with increasing resource demand and population growth, but now we have to increasingly address the impacts of climate change on these less than resilient ecosystems.

If this is what success looks like, I would hate to see failure.

Image Courtesy of Treehugger & Racing Extinction

Marine Heat Waves More Common and Lasting Longer Globally

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A study done by the Marine Heatwaves International Working Group showed that there has been a 54% increase globally in the number of “marine heat wave days” per year since 1925.[1] Published in the Nature Communications journal and cited in News Deeply recently[2], the study cited the warm zone off the Western Australian coast in 2011 and the Gulf of Maine episode in 2012 as incidences of this trend. Average ocean temperatures have been increasing but these marine heat waves are also increasing in frequency and duration. The combination of the two are linked to factors that damage ecosystems and economies.

Figure 1 Graphic explanation of Marine Heat Waves, from http://www.marineheatwaves.org/all-about-mhws.html

Marine heat waves (MHWs) are “…prolonged periods of anomalously high sea surface temperatures… [that] have had severe impacts on marine ecosystems in recent years.” (Oliver et al., 2018). In Australia alone, Shark Bay in Western Australia lost 36% of its seagrass meadows and carbon storage, and the Great Barrier Reef suffered four mass coral bleaching events because of these extended periods of elevated sea surface temperatures.[3]

There are significant ecological and economic effects arising from these marine heat waves. They include:

“… sustained loss of kelp forests, coral bleaching, reduced surface chlorophyll levels due to increased surface layer stratification, mass mortality of marine invertebrates due to heat stress, rapid long-distance species’ range shifts and associated reshaping of community structure, fishery closures or quota changes and even intensified economic tensions between nations.” (Oliver et al., 2018)[4]

According to Eric Oliver, the study’s lead author, “…in the early 20th century, there was an average of two marine heat waves per year globally, but now there are three or four. While they used to last 10 days on average, they now last for an average of 13 or 14 days.”[5]

The study suggests that marine heat waves will continue to increase with the ongoing global warming.

Why does Wilderness Markets care about anemones and anemonefish? Because our work requires us to look not only at enterprises and fishery management, but at the entire ecosystem to properly account for business risks. Learn more about us.

[1] Oliver, E. C. J et al. (2018). Longer and more frequent marine heatwaves over the past century. Nature Communications, 9. doi: 10.1038/s41467-018-03732-9

[2] News Deeply. (2018). Executive Summary for April 13th. Oceans Deeply (Marine Heatwaves Are Longer, More Frequent). Retrieved from https://www.newsdeeply.com/oceans/executive-summaries/2018/04/13.

[3] McSweeney, R. (2018). Marine heatwaves have become ‘34% more likely’ over past century.  Carbon Brief. Marine heatwaves have become ‘34% more likely’ over past century. Retrieved from https://www.carbonbrief.org/marine-heatwaves-have-become-34-more-likely-over-past-century.

[4] Oliver, E. C. J et al.

[5] Willick, F. (2018). Ocean heat waves becoming more common, longer, new study finds. CBC. Retrieved from http://www.cbc.ca/news/canada/nova-scotia/marine-heat-wave-ocean-hot-spot-study-1.4611794

Improve Data to Improve Sustainability

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Case Study:
Developing and Implementing SIMP Compatible Seafood Data Reporting and Traceability System in the Crab Supply Chain

Problem Statement and Opportunity

The U.S. implementation of the Seafood Import and Monitoring Program (SIMP)[1] on 1 January 2018 establishes reporting and recordkeeping requirements to prevent illegal, unreported and unregulated (IUU) seafood from entering the U.S. The onus of proof is placed on the importer of record to provide and report key data from harvest to U.S. entry. In geographically diffuse supply chains, like blue swimming crab from Southeast Asia, with thousands of “points of entry”, i.e., fishers, tracking landings to the vessel is far less straightforward than short and narrow supply chains, such as skipjack tuna or sardines. This reporting requirement, while worthwhile, will require U.S. seafood importers to incorporate cost-effective traceability initiatives in their often-complex supply chains.

There is a growing appreciation that the needs of fishers and their communities must be addressed in order to improve the underlying causes of fishery exploitation in the developing world, particularly for small-scale fisheries. -California Environmental Associates

The requirement also presents an opportunity to promote resource sustainability through supply chain transparency and catch monitoring. Despite pledges to abide by size limits, U.S. importers of blue swimming crab (BSC) have difficulty ensuring their supply chain partners are buying only crabs larger than the agreed minimum size of 10cm and excluding berried females. The application along with a web-based reporting tool we developed can meet the requirements of the SIMP, as well as the European Catch Documentation (CD) requirements, and elucidate the in-country supply chain. By tracking landings by vessel and by harvester, this tool further provides the opportunity to address key social and environmental outcomes associated with the Sustainable Development Goals[2] (SDGs), which gives seafood importers a mulit-purpose toolkit to both decrease their reporting costs and increase the sustainability of the crab stocks.

The opportunity to spur social and economic impact should not be underestimated. Educating, engaging and rewarding fishers and communities directly for complying with ecological goals like minimum size, berried females, no-take areas, and more offers an opportunity to engage communities directly in resource management and provide key links to SDGs. Aside from nascent work by Fair Trade[3] and SmartFish[4], there are few fishery sustainability efforts that actually benefit the fishers that form the foundation of many supply seafood chains. Indeed, most efforts impose costs on fishing communities—time, foregone income, capital for new equipment—without providing benefits. Our tool allows identification of compliant fishers, so they can be awarded price premiums and other incentives.

Supply chain transparency is beneficial to the U.S. importer not only in terms of identifying good actors and meeting reporting requirements, but also gives them an edge in the marketplace full of otherwise opaque supply chains.

Provision of ice is a key concern

Assessment

When initially considering how to provide BSC supply chain transparency from the ocean to the end buyer, we researched existing options, hoping to find one that could be customized to the supply chain. We conducted a desk review, scouring the internet and our personal network to identify all available options. In total, we reviewed nearly forty systems that provided varying levels of traceability; of these, we interviewed approximately six potential providers that met or came close to our key considerations:

  1. Ease of use – the user interface needed to be easy for data collectors in Indonesia and importers in the U.S. to use
  2. Utility for marketing purposes – a consumer-facing component was a must
  3. Facilitate regulatory compliance – must collect and provide data required by the SIMP and EU CD in a straightforward format
  4. Mapping – needs to provide maps of fishing locations to determine which areas are best for avoiding undersized and berried crabs
  5. Business model – a cost effective and durable business model that did not result in excessive fees or costs to each level of the value chain
  6. Data access, storage and ownership – data must be accessible by multiple parties within the value chain, stored in Indonesia, and owned by the funding company
  7. Reasonable set-up costs – ideally, a system would be compatible with existing software and hardware and would require little in the way of training. A team should be able to begin data collection with a few hours or less of upfront training on the system interface and they should be able to readily convey to the fishers the benefits of the system.
  8. Geographic and cultural relevance – the system needed to function in rural, relatively isolated areas with little to no telecommunications access
  9. Engage Harvesters and Vessel owners in order to build their understanding and the relative importance of adhering to harvest control regulation
  10. Ease of integration – overall, the platform needed to be easy to readily integrate into the supply chain.

Findings from Assessment

None of the reviewed systems met the requirements of the lead firm with the exception of the Pelagic Data Systems units for vessel management, i.e., vessel tracking. Due to the cost of acquisition and the relatively high ongoing costs of use, these were installed on a trial basis. This test was not successful, and cheaper, more effective units were identified.

Development

Not finding a suitable existing program, Blue Star Foods decided to develop their own application to gather data tied to their marketing goals and objectives around supply chain integrity. The SIMP and EU CD data requirements were integrated into the data collection system. Wilderness Markets worked closely with an app-development team to develop an Android and iOS  application and support the field trials. After the initial field trials, the system was deployed to in-house teams from Blue Star Foods Indonesian partners, consisting of procurement and quality control specialists.

Implementation and Deployment

Data was collected at selected mini-plants and landing sites during a six-month period. Both harvesters and data collectors were simply encouraged to log landings during the pilot phase without any indication or reference to IUU or other considerations. They were not penalized or otherwise reprimanded for reporting undersized or berried crabs during this time period. Vessel tracking data was collected for a select number of boats during this period, which could be matched to landings data.

Parallel Approach

Sumatran Fisherman with Blue Swimming Crabs

Initial learning points

  • Data collection required additional training of procurement and quality control teams. This in turn required an additional budget to be implemented effectively.
  • The pilot only covered a small portion of overall U.S. imports from Indonesia (less than 1%) – the current opacity of the supply chain means we did not know how much each mini-plant contributes to the supply chain before the pilot
  • The system efficiency is high enough that recording all landings at a mini-plant or at a landing site is possible, though unless a quality control individual is onsite continually, it cannot guarantee there will be no side selling unless all buyers agree to use the system.
  • The data feedback loop to management has been significantly shortened and is possible in nearly real-time allowing:
    • Faster identification of low productivity landing sites
    • Faster identification of high productivity landing sites
    • Faster identification of undersized and/or berried crab seasons and locations
  • Data integrity and accuracy continues to be an issue and needs to be worked on – Due to their small size, most vessels are unregistered so vessel identification is challenging. Usual data integrity and accuracy issues for data collection operations exist, such as ensuring consistent data entry, checking entries for errors, etc.

Initial Data Findings

  • Initial indications, based on sampling approximately 10% of the harvest per vessel, are that up to 25% of landings can likely be classified as IUU (berried females & sub 10cm).
  • Boats with lowest supply chain loyalty appear to have higher levels of IUU (an assumption to be tested in additional sites)
  • It is now possible to identify the specific boats that are causing the high levels of infractions, and to address with through the supply chain in a focused manner.
  • Less than 20% of the surveyed vessels were responsible for 80% of the IUU landings

Fishery Management Implications

The ability to specifically identify vessels not complying with agreed harvest controls will permit a more targeted, focused and cost-effective approach to monitoring and enforcement of infractions. With less than 20% of the vessels are causing 80% of the issues with regards to IUU landings, efforts can be made to reduce IUU in a focused manner.

The data provides:

  • Ability to provide shore-based landing information
  • Ability to identify both geographic and seasonal potential closure options based on real data
  • Ability to target enforcement based on recorded infractions

lead firm crab

BSC fisherman with new vessel tracking device

Links to SDGs

In addition to the business and fishery management implications, the findings are directly linked to at least three SDGs:

SDG 8 Decent Work and Economic Growth

Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

Biological data indicates a quick (less than 1 year) stock recovery when undersized crabs are left in the water, thereby increasing the economic value of the fishery and decoupling growth from environmental degradation (Target 8.4)

SDG 9 Industry, Innovation and Infrastructure

Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation

Increasing the transparency of the supply chain means that small-scale enterprises, like the mini-plants, can have better access to financial services (Target 9.3).

SDG 14 Life Below Water

Conserve and sustainably use the oceans, seas and marine resources for sustainable development

Using the data generated by the app, progress can be made towards sustainably managing fish stocks, combatting IUU, and providing meaningful market access for small-scale artisanal fishers (Targets 14.4, 14.6 and 14.B).

Recommendations and Next Steps

A key recommendation of the initial pilot is the need to establish unique vessel IDs with the support of local government authorities, which will allow more meaningful monitoring and enforcement of landings.

In addition, the need to engage with, and involve, other firms purchasing from the fishery was identified in order to reduce the opportunities for side selling.

A second phase is being planned to address the constraints of the first. The goal of the second phase is to:

  • Capture a minimum of 25% of the Blue Star Foods Indonesia sourcing;
  • Integrate improved vessel activity geographic data
  • Expand geographically
  • Include more processors, mini-plants and fishers in Indonesia, particularly in co-packer conditions
  • Replicate into the Blue Star Foods Philippine supply chain

Conclusion

The drivers of market access compliance requirements, improved social and financial impact in in artisinal fisheries and greater supply chain integration are powerful drivers for change in any industry. The relatively low cost now associated with data capture tools mean lead firms can utilize almost ubiquitous cell phone availability to cost effectively assess the degree and extent of IUU in their supply chain, while strengthening their impact objectives and improving market recognition.

This approach provides resource managers and NGOs as well as development agencies with a relevant, cost effective tool to engage private sector supply chains in achieving SDGs in a measurable, informed and data driven manner.

 

[1] “U.S. Seafood Import Monitoring Program”. Retrieved on 7 March 2018 from: https://www.iuufishing.noaa.gov/RecommendationsandActions/RECOMMENDATION1415/FinalRuleTraceability.aspx

[2] “Sustainable Development Goals”. Retrieved on 19 March 2018 from https://sustainabledevelopment.un.org/?menu=1300

[3] “Capture Fisheries Standard (CFS)”. Retrieved on 8 March 2018 from: https://www.fairtradecertified.org/business/producer-certification

[4] “Rescate de Valor”. (English: Value Rescue) Retrieved on 8 March 2018 from: http://rescatedevalor.org/

Investing in sustainability – the role of intangibles

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“Early in the twenty-first century, a quiet revolution occurred. For the first time, the major developed economies began to invest more in intangible assets, like design, branding, R&D, and software, than in tangible assets, like machinery, buildings, and computers. For all sorts of businesses, from tech firms and pharma companies to coffee shops and gyms, the ability to deploy assets that one can neither see nor touch is increasingly the main source of long-term success[1]”.

Rated as one of the Financial Times Best Books of 2017, Capitalism without Capital is a useful and timely read as we consider sustainability based investment broadly, and sustainable wild capture fisheries specifically. It goes a long way to explaining and addressing one of the many challenges the sustainability community faces when evaluating and considering how to transition “projects” to enterprises.

Wilderness Markets and others have made considerable progress in identifying, developing and deploying appropriate due diligence questions to address investment risk as well as developing appropriate business plans and models, most recently in wild capture fisheries (with the World Bank). However, these criteria either ignore or assume the presence of effective intangible development capacity which is seldom the case with most natural resource “projects” nurtured by NGO’s and many communities. These “projects” often lack both the human and intellectual capital to effectively develop and grow businesses, leading to an over emphasis on tangible assets.

Yet, as is clearly defined in this book, this is where significant value is to be gained. In the abscense of effective design, branding, R&D and software, the likelihood of enterprise success is marginal, seldom providing the risk adjusted returns investors would like to see.

The social implication of this trend are also discussed in the book. It provides good perspective on how inequality is both a result and a cause of this investment trend, resulting in a negative vicious cycle. Applying equally to groups and individuals, in both developed and developing markets, participants are unable to upgrade skills due to economic challenges (or an overreliance on tangibles), thus depriving them of the resources needed to upgrade their skills. We have seen this in fisheries in the United States, Mexico and Asia.

Intangibles also have significant implications regarding the appropriate types of capital to be deployed. Given the nature of intangibles – identified as the 4 S’s (scaleability; sunkenness; spillovers and synergies), these types of investment are more appropriate to equity than to debt, which has implications on the recently launched debt funds in sustainable fisheries and oceans.

As we and others continue to evaluate and explore how best to attract private capital to a range of sustainability markets, this book provides good perspective on an important topic.

[1] Jonathan Haskel & Stian Westlake, Capitalism without Capital; The Rise of the Intangible Economy, Princeton University Press 2017