We’re pleased to announce that Changing Tastes and Wilderness markets will be collaborating to carry out the market research for groundfish in California announced in our RFP. Having robust data about business and institutional buyers close to the consumer will address one of the key information gaps we identified in our value chain analysis; the ultimate goal of the work is to improve the economic value of products from this fishery.
Three years ago, we set out to to explore a perceived anomaly in the impact investment market. While sectors such as carbon and agriculture were attracting a range of capital investment in sustainable fisheries appeared to be neglected. Given the geographic scope, industry scale and potential impact, we wanted to understand the reasons behind the lack of capital.
Our conclusion, following three years of field based research and due diligence in three countries, five fisheries, and over 220 interviews with financial, corporate, government, community and NGO representatives, identified the following key constraints:
The first two, data and management, are the most pressing constraints to the effective deployment of capital at scale in developing country fisheries (DCFs), as discussed in our recently released report, “Connecting the Dots”. Each need to be addressed simultaneously if equitable participation of the harvester is important to investors.
Concerning specific investments, there’s a fundamental need to distinguish between who and what benefits from value chain investments and investments in the drivers of stock health. While a healthy value chain benefits from a healthy stock, the benefits do not cut both ways, that is, a healthy value chain does not necessarily make stocks healthier; the drivers of stock health must be addressed.
Another general assumption holds that by changing the practices of one or two players in the value chain, we can secure stock health – this was found to be exceedingly unlikely in the open access system of fisheries which suffer from the tragedy of the commons. Addressing artisanal tuna harvester needs is socially and potentially economically positive, but it is difficult to prove environmental benefits if the next village over has unrestricted access – along with the purse seine factory fishing boat from the country next door!
The drivers of stock health are all external to the value chain, and, unfortunately, most financial interventions are reliant on the value chain in order to secure repayment. This disconnect is seldom recognized by practitioners, and it is often assumed that by changing the practices of one or two players in the value chain, we can secure stock health. At the other end of the spectrum are improvements aimed at stock health and improved socio-economics for fishing communities that rely on the “build it and they will come” theory, failing to integrate harvesters and buyers into improvements.
Our findings are that value chain based investments in open access systems are unlikely to improve environmental outcomes, and, in practices, are likely to accelerate resource extraction, in some cases, of already pressured stocks and resources.
Our research also identified significant investments in fisheries are an ongoing reality in many DCFs. Whether from the private sector (DDI and DFI data), and from national governments, fisheries are well capitalized.
The inequality experienced by artisanal harvesters is not, in our view, an issue of capital. It is a systemic failure, requiring multiple components be addressed simultaneously
There is an urgent need to focus efforts on improving the drivers of stock health in DCFs, over and above deploying yet more capital into the value chain without investment in stock health.
As our need for the oceans to provide us with food and livelihoods increases, the sustainability of fisheries becomes increasingly vital. One of the key components of fisheries value chain sustainability is the long-term economic sustainability of the fishermen. Without proper conditions to allow organizations to innovate and scale, economic, ecological and social returns are even more difficult to realize.
Wilderness Markets, with the support of the David and Lucile Packard Foundation and the Gordon and Betty Moore Foundation, undertook a series of fishery value chain assessments to better understand the opportunities and constraints for private impact capital to flow into wild capture fisheries markets
Over the course of 220 interviews, we assessed four developing country fisheries (DCFs) in two countries and one fishery in the U.S. Each fishery we assessed provided a piece of a larger puzzle, allowing us to identify the components of a sustainable seafood value chain and its relationship to stock health, which in turn, drives value chain health. We present this value chain as an “Integrated Framework” below.
A number of lessons may be taken from this framework:
We will explore what this means (including how Fisheries Improvement Plans or FIPs link into this) in a series of upcoming posts. We welcome your comments and inputs to this discussion.
WHAT?
“What do you do?”
The big picture, easily digestible, non-jargon answer: We’re trying to figure out how to make it possible for impact investors to work with fishermen to continue catching fish from our oceans, make money doing so, and still have enough fish for future generations.
The buzzword, jargon answer: We’re using value chain based analysis to determine constraints preventing impact capital from flowing to triple-bottom line SMEs in fisheries.
After that question has been settled with a degree of satisfaction, the natural follow-up question is, “Yes, but WHAT do you do?”
The big picture, simple answer: We use readily available data to give us an idea of how big a fishery is in terms of volume and value and what the important markets are for the fishery. This way we can figure out the most important parts of the fishery and focus our efforts there.
The more in-depth answer: We use readily available data to characterize the value chain flows, and we use interviews, scientific papers, and previously published reports to identify opportunities and constraints within the value chain.
WHY?
Not often asked directly, is the question of “Why?” Why are you doing this? Why is it important?
Millions of people rely on fish as their primary source of protein, and billions more benefit from having fish in their diet. A healthy ocean is a great asset to all of us.
We also think it’s a great challenge. How do you quantify risk for a resource you can’t see and where the capriciousness of weather dictates when you can and can’t fish? The multitude of stakeholders adds another layer of challenge: harvesters, processors, distributors, retailers, restaurants, consumers, multiple levels of government plus the local communities, NGOs, and more. Considering the nature of fisheries and the plethora of stakeholders, it’s no wonder that this sector can be overwhelming for financial institutions to explore.
Finally, and perhaps most importantly, we want to see fisheries investments done well. No one benefits from short-sighted projects that may do more harm than good. If the fishery isn’t properly managed, improving the logistics of the supply chain will just lead to overfishing. We know that ensuring appropriate management safeguards are implemented is one of the keys to sustainable fisheries.
