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Business models for small-scale aquaculture to help the poor

Pro-poor Business Models for Small-scale Aquaculture (BMSA)
Project leader
Michael Phillips
16 Jan 2012
15 Jan 2013
Cage aquaculture, Cambodia. Photo by Eric Baran, 2010In developing countries like Cambodia, riverine and coastal waters are the lifeblood of many communities, and have been for millennia. Small-scale fisheries operations feed the local populace, employ local workers, and are a way of life for millions. With demand for fish products’ soaring worldwide, aquaculture in developing nations is seen as a tantalizing opportunity to tap into a growing global market. But cashing in on this global boom is easier said than done for the predominantly poor fishers working in low-tech aquaculture operations. The Pro-poor Business Models for Small-scale Aquaculture (BMSA) project aims to alleviate poverty by identifying innovative business models and finance options that will help small-scale aquaculture enterprises take their produce from catch to market.
Despite the enormous contribution that small-scale aquaculture producers make to local economies, small and medium-scale aquaculture enterprises face substantial hurdles when it comes to growing their business and accessing services, inputs and markets. Compared with larger commercial competitors, small commercially oriented farmers have less technical and managerial expertise, and are limited in their access to financial services to fund infrastructure and organizational improvements. Due to the smaller scale of production, small-scale producers are also challenged in market access, and in export markets face demanding standards for food safety and quality assurance. Greater knowledge sharing within the sector, and networking for economies of scale and commercial partnerships are key to ensuring sustainable investments in the sector into the future. Gaining a better understanding of the optimal business and financing models to achieve these outcomes is the goal of the BMSA project.  
Funded by the German Agency for International Cooperation (GiZ; Deutsche Gesellschaft für Internationale Zusammenarbeit), the BMSA project draws WorldFish Center expertise together with specialists in tropical agriculture economics from Leibniz University of Hannover, and microfinance investment specialists from Innpact Sàrl in Germany. The project also taps into experiences from partners in Cambodia and Indonesia.
The 12-month project will be conducted in five parts. Work has commenced by first looking at existing models of investment into small-scale aquaculture. Key stakeholders in finance, production management and value chain organizations will be consulted to gain insights into current practices in the field. 
The second component of the project is an in-depth analysis of three established business models for pro-poor investments: the horizontally connected production ‘collaborative’ model, the vertically integrated ‘cooperative’ model, and the external management ‘corporate’ model. Each model will be investigated to determine its capacity to support small-scale entrepreneurship, individual ownership, and access to modern value chains. Economic, social and environmental assessments will be conducted in a robust comparison of the pros and cons of each model.
Field studies of the three models in operation in Cambodia, in combination with case study reports from Indonesia and elsewhere will constitute the third component of the project. The aim of this component is to investigate the legal, institutional, financial, and social landscapes that smallholders operate in. The organizational structures and social connections associated with different business models will also be identified.   
The fourth key goal is to identify which business models and financing approaches best support investment into aquaculture in poor communities. This will be achieved through a range of activities, including a market analysis, modeling of key economic variables, and development of an investment strategy. A workshop that brings together small-scale aquaculture stakeholders from government, industry and the research community will be conducted to reach a consensus on the best business and financing structures for small-scale aquaculture in poor communities.
The final component of the project will be to disseminate the project’s research findings. Key insights and policy recommendations will be communicated to the broader research community and industry stakeholders. An investment proposal that supports the sector’s capacity for future development will also be developed.

By drawing upon financial and business sector expertise and experience in the field, the BMSA project will determine the best models to support investment into aquaculture for poor communities. The knock-on effects of improving small-scale aquaculture enterprises are potentially great. By supporting these producers in developing their businesses, it is envisaged that the small-scale aquaculture sector will continue to grow as a vibrant and intrinsic part of the rural landscape in developing nations.