A US$2 MILLION PROJECT WILL IMPROVE AQUACULTURE PRODUCERS' PRODUCTIVITY AND INCOME IN LAKE TITICACA IN PERU WHILE IMPROVING ITS SUSTAINABILITY
IDB Lab, the Inter-American Development Bank (IDB) Group’s innovation laboratory, approved over US$2 million funding to support a project that will allow local small and medium-scale aquaculture producers in Lake Titicaca (Peru) to incorporate the benefits of Internet of Things (IoT) in trout farming. The project will be carried out by Cooperativa de Ahorro y Crédito Abaco, a Peruvian Credit Union, as a part of its focus on value chain financing. The specific activities related to aquaculture will be implemented through Abaco’s subsidiary called Piscifactorias de los Andes (Piscis), a rainbow trout farming and processing company operating in Lake Titicaca, in collaboration with Umitron , a Singapore/Tokyo-based technology company for aquaculture that will be the technology provider.
One of today´s largest global challenges is how to supply enough protein to growing markets without causing further environmental stress and damage. The Food and Agriculture Organization of the United Nations (FAO) estimates that fish production through aquaculture in Latin America and the Caribbean will grow from 2.7 million tons in 2016 to 4.0 million tons in 2030. In the case of Peru, this sector is expected to grow from 100,000 tons in 2016 to 221,000 tons in 2030, a 120.9% increment.
However, aquaculture faces serious problems in Latin America and the Caribbean. While agricultural and livestock productions in the region have started to employ technological solutions to become more data-driven and to optimize inputs to improve productivity, aquaculture is lagging behind and remains mostly experience-driven. This is partially because it is not straightforward to adopt and adapt technological solutions to work on unstable water surfaces or underwater. Accordingly, increasing feeding cost has become the biggest issue aquaculture farmers face as the price of feed ingredients has tripled over the last 15 years and in some cases representing up to 70% of the total production cost. In addition, aquaculture faces its own environmental issues. If the amount and schedule of feedings do not strike the right balance, especially in the case of overfeeding, the water quality can be damaged, resulting in algae blooms whose effects go beyond one specific fish farm.
In order to improve aquaculture producers’ productivity and income, and at the same time maintain the environmental sustainability of aquaculture, this project will test a new technological solution, called “UMITRON CELL”. UMITRON CELL is a service that introduces and expands IoT/data-driven practices in aquaculture mitigating the risk of overfeeding, which in turn decreases the risk of water pollution.
IDB Lab’s grant resources will be used to customize UMITRON CELL for the region and species, along with providing training to local producers so they can become familiar with the technology and eventually allow them to implement data-driven aquaculture management decisions. Also, given the growth potential of the aquaculture industry, grant resources will be used to develop a plan to scale-up the UMITRON CELL solution.
“We are entering a new age for aquaculture, bringing new technologies such as IoT to increase farmers’ incomes as well as sustainability. We hope that initial project results will allow the UMITRON CELL solution to scale to other fish species and even beyond Peru to other Latin American countries” said Irene Arias, General Manager of IDB Lab.
"Through our daily operation, we see challenges in aquaculture from various perspectives such as technology level, stable & safe food supply, and economic & environmental sustainability. Those challenges require borderless collaboration between public and private sector. We're delighted to start this project with IDB and Abaco to create a future successful model. We hope this technology driven collaboration encourages sustainable aquaculture and contributes to local economy and global issues." said Masahiko Yamada, Managing Director of UMITRON.
The subordinated loan will allow Abaco to strengthen its equity base and to grow its value chain financing portfolio and further expand its financial and technical support to those value chains that proactively seek and test innovations to improve their productivity, competitiveness and profitability.
The total financing for the project will consist of a US$550,000 grant and a US$1.5 million subordinated loan.
Founded in 1981 thanks to the initiative of 32 people - many of them descendants of Japanese - who aimed to practice mutual aid between friends and thus attend to the diverse financing needs not covered by the financial system. Abaco since its inception has had a strong orientation to help small and medium entrepreneurs understanding their needs and adapting to them. Today, Abaco is a Credit Union serving Peruvian population since 1981 with more than 20,000 active members. As one of its strategic focuses, Abaco has been strengthening the second-tier lending line of business to reach unserved and underserved smallholder farmers. Abaco is currently regulated by Superintendencia de Banca, Seguros y AFP (SBS), the Peruvian banking authority, and supervised by Federación Nacional de Cooperativas de Ahorro y Crédito del Perú (FENACREP).
Piscifactorias de los Andes (Piscis) is the biggest out of hundreds of rainbow trout producers in Lake Titicaca and has been working on improving its efficiency consistently since Abaco acquired it in 2014. In parallel, Piscis has a trout processing business with one factory in Puno and another in Tacna, focusing on high-grade products for export to North America, Europe and Asia. This processing business allows Piscis to process rainbow trout, not only supplied from its own farms, but also supplied from around 20 other farms/producers in Lake Titicaca. Piscis philosophy fits perfectly with the development of this project, since the expected technical results, will be shared with Piscis`s production partners all over Titikaka lake.
Founded in 2016 and based in Singapore and Japan, Umitron builds user-friendly aquaculture data platforms that leverage the use of state-of-the-art technologies such as IoT, AI and satellite remote sensing. Umitron’s vision is to “install Sustainable Aquaculture on Earth”, with the ultimate goal of improving the safety and economics of aquaculture operations, while also positively impacting their environmental sustainability and final food quality. https://umitron.com/
About IDB Lab
IDB Lab is the innovation laboratory of the Inter-American Development Bank (IDB) Group, a purpose-driven platform open to the world that mobilizes capital, connections, and knowledge to promote innovation for inclusion in Latin America and the Caribbean. IDB Lab works with the private sector and leverages IDB's influence with governments and civil society to maximize the impact of its projects and investments on vulnerable populations. As of October 29, 2018, IDB Lab is the new identity of the Multilateral Investments Fund (MIF). www.idblab.org