Key Trends for Sustainable Seafood Supply Chains in 2021 (And Beyond)
The following blog post discusses the challenges that often accompany many market systems in developing economies where the incentives and market forces/factors are misaligned in ways that disadvantage lower incomes communities. While these misalignments have serious consequences in many market systems, when the market system is also intertwined in an increasingly vulnerable ecosystem, like a coastal waterway, such misalignments can substantially speed up environment degradation and increase vulnerability. As the post suggests, and a key theme that will be explored at the Market System Symposium, figuring out and catalyzing a change in market system forces and factors such that they combine to favor conservation practices and reward labor fairly is central to any journey to self reliance.
Around the world, the seafood industry plays a critical role in feeding billions of people. It’s also a major economic driver: According to the United Nations, fishing and aquaculture provide livelihoods to around 820 million people worldwide.
In many countries like the Philippines, Vietnam, Ecuador, and Ghana, it is small-scale fisherfolk and aquaculture farmers who dominate the seafood industry. But artisanal fishing communities and small operations are especially vulnerable to disruptions like what we’ve witnessed in the time of COVID-19. Often, it is the small operators who do not have access to insurance, retirement plans, alternative livelihoods, or health care—and if they do, it is unaffordable. There is very little, if any, clear price signaling from the markets they sell to, and many fisherfolk and aquaculture farmers do not have much flexibility in how or to whom they sell their products.
Transitioning to more sustainable fishing practices is also often difficult for these small-scale fisherfolk and aquaculture farmers. Many do not see direct financial benefit, nor do they have the capital needed—or access to affordable loans—to make the financial investments necessary to transform their operations.
The seafood industry also struggles with other serious issues like human rights violations, the use of unethical and illegal work practices, gender inequality, illegal and unreported and unregulated (IUU) fishing, and collapses in marine ecosystems caused by overfishing.
As we enter 2021, we see five major trends emerging from the global development community, government, and the private sector to help small-scale fisherfolk and aquaculture farmers enhance seafood sustainability and resilience. Many of these trends have evolved or arisen in response to COVID-19, but they stand to be ongoing opportunities for progress in the seafood industry.
KEY TRENDS FOR SUSTAINABLE SEAFOOD SUPPLY CHAINS IN 2021 (AND BEYOND)
1. Greater Domestic Import/Export Market Diversity.
COVID-19 highlighted the serious disruptions that result from overreliance on one import/export market. Fisherfolk and aquaculture farmers who relied on selling fresh or frozen seafood products to one primary market experienced major disruptions because of lockdowns and restaurant and hotel closures in the United States, Europe, and China.
To remain in business, small-scale fisheries and aquaculture operations had to quickly pivot to weather the disruption. For example, in the Philippines, blue swimming crab from the Visayan Sea fishery is usually destined for canning and export. It is not widely available in Manila or other local markets. But as the pandemic shut down the export market, we saw a number of entrepreneurs adapt to market pre-cooked, whole crab on social media to local Filipino consumers.
We also saw governments and companies collaborate to safeguard food security and prevent economic fallout for local fisheries and aquaculture providers. In the Philippines, the Department of Agriculture and the private sector launched “eKadiwa,” an online marketing platform to help producers and agri-preneurs sell fresh and affordable farm and seafood products to local consumers.
While COVID-19 accelerated this expansion of import/export markets, we expect this trend to continue in the seafood industry. Diversifying these markets will give small-scale fisherfolk and aquaculture providers more control over pricing and resiliency—in the event of another market shock.
And we will likely see more cross-sector partnerships to develop regional and domestic markets too. This will improve local food security while protecting the livelihoods of fishing communities.
2. Acceleration of Digital Technology for Seafood Sustainability and Market Development.
When COVID-19 upended the import/export market, it was digital technology that opened new markets for many fisherfolk and aquaculture providers. Those who were nimble enough to move their products to a digital marketplace could connect directly to consumers for purchase and delivery.
In May 2020, USAID Fish Right's Fish Tiangge initiative in the Philippines developed an online platform using Facebook to link fishers with local consumers. This one initiative connected 6,000 fisherfolk with more than 300,000 households—enhancing local food security and preserving incomes for thousands of fisherfolk.
Digital technology is also helping to modernize fishing and aquaculture operations, increase profits, and expand awareness of best practices for sustainable seafood. For example, we are collaborating with AquaConnect in India to provide digital solutions that help shrimp farmers identify quality products and farm-input purchases. Farmers also get notices and materials on growth and disease advisories, advice and information on affordable financing, and resources to connect to different markets in India.
Digital technology will continue to be a major player in 2021 and beyond.
3. Private Sector Engagement to Unlock New Solutions for Sustainable Seafood.
To create reliable and sustainable seafood supply chains, we need private sector engagement. Of course, the public sector can and should play a role. But government and the global development community can only do so much to address logistics, aggregate supply, ensure quality, and verify sustainable practices for small-scale fisheries and aquaculture providers.
A truly sustainable seafood industry demands creative, market-driven solutions that fit the local context. We’ve been inspired by local private sector innovators like eFishery: eFisheryprovides technology solutions, financing options, and input sourcing for small-scale aquaculture farmers in Indonesia, helping them build sustainable and profitable businesses. It alsoprovides an online platform connecting farmers to buyers, to close supply chain gaps and strengthen domestic seafood supply chains. We are seeing more local, regional, and international private sector-led solutions—like Verifik8and Abalobi and Aruna—for small-scale fisheries and aquaculture worldwide; we expect this field to continue to evolve in 2021 and beyond.
4. Innovative Financing to Spur Change in the Seafood Industry.
New, innovative financing approaches can rapidly scale sustainability solutions in the seafood industry. Historically, small-scale fisheries and aquaculture providers have struggled to access capital to improve their practices and operations or to protect against market disruptions, shocks, and income loss. This is a critical gap.
At Resonance, we are designing and piloting blended finance mechanisms that increase farmer and fisher profitability while also improving sustainable fisheries management. These finance mechanisms all build on partnerships on the ground with suppliers, aggregators, local financiers, and buyers—leveraging local connections and social capital. We are exploring a range of finance solutions for fisheries, including:
Engaging rural banks and microfinance institutions to reduce the risk-profile of potential borrowing farmers/fishers, using grant subsidies combined with intensive technical assistance provided by local buyers.
Exploring innovative financing alternatives with input suppliers to allow for delayed payment on their inputs until harvest.
Working with buyers and other technical service providers to develop systems for gathering credit risk information from fishers/farmers as part of training or other support activities.
For example, Resonance is currently exploring a partnership with Minh Phu, Vietnam’s largest shrimp company; Seafood Watch, a global leader in sustainable seafood; and local banks, to provide blended financing to shrimp farmers to improve their shrimp yields while also protecting and restoring mangrove forests in their properties.
5. New Models to Verify and Reward Sustainable and Fair Labor Practices in the Seafood Industry.
Over the last few years, we have worked with several partners, from private sector buyers to NGOs to governments, to analyze the return on investment (ROI) for seafood sustainability certifications and improvement programs. Each project analysis overlapped in one key area: the traditional certification and auditing of individual small-scale fisherfolk and aquaculture providers is not working, despite significant investments.
There is growing support, from all stakeholders, to develop alternative models to verify and reward sustainable seafood production practices. We’re currently collaborating with Seafood Watch, Thai Union, and others to create the Partnership Assurance Model (PAM), an innovative approach to verifying sustainable aquaculture production at a regional level rather than certifying individual farms and operations. We are starting by working with Seafood Watch, buyers, suppliers and government to use PAM to help improve the quality and sustainability of shrimp produced in Andhra Pradesh, India, and Ca Mau, Vietnam.
Further, PAM and other models like it can help verify sustainable and fair labor practices—an area that the seafood industry has struggled with.
New assurance and improvement models such as PAM will gain greater traction as NGOs, governments, and the private sector seek more effective and cost-efficient ways to accelerate and verify sustainability progress.
SUSTAINABLE SEAFOOD IN 2021 AND BEYOND
While COVID-19 challenged many small-scale fisherfolk and aquaculture providers, it also showed us areas of opportunity where the seafood industry can build more resilient and sustainable supply chains. We expect the trends that we have outlined will play critical roles in helping governments, the global development community, and the private sector make progress toward a more stable, more sustainable seafood sector.