Indonesia ranks as the third-largest country globally in terms of total aquaculture production, according to FAO's 2018 data cited in the report "Investment Guideline for Sustainable Aquaculture in Indonesia" by IDH Sustainable Trade. Aquaculture serves as a pivotal force in both global food security and economic progress while also serving as a vehicle for supporting small-scale producers and fostering sustainable livelihoods. A significant portion of this production comes from shrimp cultivation, which thrives in tropical nations like China, Indonesia, India, Vietnam, Ecuador, and Thailand. In Indonesia specifically, smallholder producers own 70% of the farms, with the remaining 30% under the management of large corporations. Nevertheless, accessing financial resources remains a formidable hurdle for numerous participants in the aquaculture industry, particularly small-scale producers. Among the primary obstacles concerning financial services are:
Restricted Access to Capital and Credit: Small-scale producers constitute a considerable segment of aquaculture practitioners globally. Data from the Central Statistics Agency (BPS) in 2019 shows that less than 14.58 million people or around 90 percent of Indonesia's 16.2 million fishermen are economically and politically powerless and live below the poverty line. Therefore, their capacity for expansion and efficiency often needs to be improved due to inadequate access to capital and credit. The lack of sufficient financial resources hampers their ability to procure inputs and services necessary for successful aquaculture ventures.
Perception of High-Risk: A key obstacle to small-scale producers' access to financial services stems from the perception of aquaculture as a high-risk endeavour by conventional banking institutions (IDH Sustainable Trade: 2018). Due to aquaculture's unpredictable nature, exacerbated by environmental variability and disease outbreaks, financial services often view lending to aquaculture enterprises as inherently risky. Consequently, small-scale producers either face outright denial of credit or are burdened with prohibitively high interest rates, further constraining their financial capabilities.
Digitizing Financing Disbursement for Responsible Shrimp Farming
Expanding upon our commitment to fostering financial inclusion in rural aquaculture communities, a noteworthy initiative within the aquaculture sector showcases the transformative potential of technology-driven financial solutions. Commencing in 2022, the province of Lampung, witnessed the collaboration between Koltiva, as the digital solutions provider, to Aquarev, the project owner, an aqua-tech company providing an end-to-end solution to shrimp producers encompassing a comprehensive suite of services such as: farm development assistance that includes farm design and construction aided by Capex injection, farming operation assistance through technical support and access to input financing, and market access. To ensure a smooth process, Aquarev implements a robust mechanism from the initial stages. This includes thorough due diligence on producers before onboarding, the development of comprehensive farming operation metrics and a detailed monitoring system. Aquarev also establishes a meticulous financial management flow. As the number of enlisted producers grows, Aquarev recognizes the need for technological assistance to manage operations more effectively. This is where Koltiva steps in, providing the necessary technological support to enhance operational management.
The project aims to digitize the mechanism developed by Aquarev, to enhance the financing management into a platform catering to shrimp producers, encompassing various facets such as credit scoring & assessments, application, approval, distribution, and repayment recorded through the KoltiPay Web Portal. The financings are disbursed in the form of capital to improve producers’ farming operations. At the end of each farming cycle, repayment to the lender is made through crop procurement. This process is managed by the financing management platform, which automatically records data, generates reports, and provides comprehensive dashboards for oversight and decision-making. By integrating financing repayments with crop procurement, we establish a closed-loop ecosystem that engages all supply chain stakeholders- from producers and traders to microfinance institutions (MFIs). This system promotes accountability and incentivizes responsible resource stewardship ensuring that financial services are closely tied to productivity and sustainability.
Seamless Application Process and User Interface
The application process for financing submissions is designed to be both user-friendly and efficient, facilitated through a web interface that is accessed by Field Technicians supporting producers on the ground with their application. In the case of our project in Lampung, financing applications are submitted at the cluster level, undergoing meticulous review and verification, before they are sent to the Lender for streamlined approval. Upon approval, a comprehensive financing contract is generated, and disbursements are managed through our platform. Moreover, our system enables real-time monitoring of shrimp harvests, ensuring accurate recording of transactions and facilitating timely repayments.
Mutually Beneficial Stakeholder Outcomes
The implementation of this project brings benefits for stakeholders across the aquaculture landscape. For producers, it translates into enhanced operational efficiency and transparency, eliminating the need for physical bank visits and providing access to personalized financial data. Similarly, for lenders, the automation of workflows translates into higher efficiency and reduced administrative burdens, including a customized credit scoring system for risk assessments. Furthermore, our experience highlights the collaborative potential of financing distributions, opening avenues for partnerships with financial institutions to expand access in rural communities and drive inclusive growth.
“Launching this KoltiPay Web Portal and Shrimp Traceability Project has been and insightful and rewarding opportunity for us. Allowing the integration of financing management with crop procurement enables for a seamless and transparent ecosystem. This KoltiPay platform in line with our KoltiTrace MIS fosters accountability, enhances financial inclusion and improves supply chain efficiency. This journey has created strong partnerships, and we are proud to be play our part in driving inclusive growth and development in rural communities.” – Sarah Harding, Head of Aquatic Resources at Koltiva.
KoltiPay includes responsible eWallet solution crafted specifically for tackling the distinct challenges encountered by small-scale producers. In regions with limited banking infrastructure, such as remote or rural areas, KoltiPay enhances accessibility to financing, streamlining the process through online applications and automated eligibility assessments.
Furthermore, KoltiPay implements robust risk mitigation measures, including credit scoring system, transaction tracking and real-time monitoring, to bolster lender confidence and facilitate proactive risk management. By prioritizing financing for sustainable aquaculture practices, KoltiPay supports responsible resource management and environmental stewardship, thereby contributing to the long-term resilience and viability of the aquaculture industry.
By recognizing the challenges faced by small-scale shrimp producers, particularly in securing financing, we are proud to support Aquarev, a venture-backed social enterprise dedicated to revitalizing up to 75,000 poorly performing shrimp farms in Indonesia. Our KoltiPay Web Portal has been built to streamline their financing process, offering Aquarev efficient tools for credit assessment, application processing, and disbursement management.
KoltiPay and KoltiTrace provide a significant support to us in managing our daily business operation. With KoltiPay, along with the FarmRetail feature, it eases us in supporting the operation of the financial related activities, particularly in managing the product and service we provide to producers. The system helps from the ordering process until payment disbursement to our contractor. While KoltiTrace, serves as big data source of our customers, the credit rating feature available allows us to evaluate producers profile that critically plays an important consideration in providing the ‘go’ or ‘no go’ decision to onboard prospective producers." – Retno Nuraini, Head of Partnership at Aquarev.
To further explore how KoltiPay can enhance financing in aquaculture and discuss tailored solutions for your specific needs, connect with our expert today!
References:
FAO: 2019 - Seaweed Aquaculture – Development Potential and Challenges
IDH Sustainable Trade: 2018 - Investment Guideline for Sustainable Aquaculture in Indonesia
earth.com: 2020 - Aquaculture is The World's Fastest Growing Food Sector
Wiley: 2020 - A review of inclusive business models and their application in aquaculture development
About Writer
Writer : Maria Marshella Gaviota, Marketing Communications at Koltiva
Editor : Daniel Agus Prasetyo, Head of PR and Corporate Communication at Koltiva
Content Source : Sarah Harding, Head of Aquatic Resources at Koltiva
Contributor : Retno Nuraini, Head of Partnership at Aquarev
Maria Marshella Gaviota, Marketing Communications at Koltiva, blends her marketing expertise with a profound passion for agricultural technology. Armed with a background in marketing and a keen interest in agritech, she offers insights into the convergence of agriculture and technology. Maria's writing prowess in agritech extends to effectively communicating complex agricultural concepts, technological advancements, and their practical applications in the field.
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