Aquaculture is a fast-growing industry that provides nearly 50 percent of the seafood consumed around the world. In line with this global trend, the adoption of aquaculture is fast-growing in India, resulting in the country becoming the second largest exporter of farmed shrimp in the world. In fact, in 2021, India recorded the highest-ever production — close to one million tonnes of farmed shrimp — in a calendar year. Farmers are eager to adopt aquaculture as it helps improve their per acre income more than growing crops such as paddy, but they face several challenges which are limiting the growth of the sector in India. The farmers lack access to technical knowledge, input finance to purchase equipment and supplies, and timely access to the export market to sell their harvest. In addition, aquaculture is labor intensive, the crop cycles are as long as six months, failure rates are as high as 33 percent, and the farmers are required to take on the entire capital risk without access to crop insurance.
At Accion Venture Lab, we believe in the potential of technology-driven solutions that leverage unique platform data to transform the delivery of financial services to underserved people. We are excited to back Pavan Kosaraju and the rest of the founding team at AquaExchange and support their vision to address the day-to-day challenges of aquaculture farmers through their differentiated technology solutions. The team brings together complementary skills and decades of experience in understanding farming practices and building credibility with farmers. AquaExchange’s full stack model helps farmers to:
- Monitor their farms in real-time using wireless sensor equipment that integrates with a mobile app.
- Buy farm inputs and sell the crop post-harvest, all via app.
- Access technical guidance and real-time market intelligence.
- Access credit to finance the purchase of seeds, feed, and medicines.
With its differentiated proprietary technology for farm automation and power management, AquaExchange will not only streamline the aquaculture value chain but also generate solid data-driven insights to open access to formal credit, which has largely remained elusive for the sector.
We are excited to partner with AquaExchange as they:
Provide smart farm management technology to farmers
Two of the key challenges that have held farmers back from adopting aquaculture farming in India are the lack of technical knowledge and efficient technology to monitor the farms. Due to these reasons, the crop failure rate within the first 45 days of cropping is 33 percent — putting farmers at significant risk of losing their investment. AquaExchange’s approach of offering farm management technology on a subscription basis has significantly improved the affordability of the product for smallholder farmers.
In addition, the company provides everyday farm management information such as the amount of feed and types of minerals to provide to the shrimp, common diseases prevalent nearby, and other data to help farmers to manage their crops effectively. The consistent use of the company’s technology can reduce crop failure rates and enable farmers to take up aquaculture farming to improve their farm income.
Assess real-time data to underwrite credit products to farmers
Aquaculture farmers need credit to purchase inputs like feed and minerals for their crops, but the inability to predict crop monetary realization and high failure rates have restricted them from accessing institutional lenders. Instead, most farmers rely on local money lenders who, in partnership with input retailers, finance the working capital required for feed, seed, and minerals for the six months of a cropping cycle. The farmers are charged high-interest costs (32 to 40 percent annualized interest rate) and often must agree to sell the crop through the moneylender. This inhibits the farmer’s ability to earn a profit for their harvest.
Despite aquaculture being identified as a priority sector, banks have been unable to lend to aquaculture farmers as they lack an understanding of the nuances of the sector. AquaExchange’s cloud-based farm management equipment allows the company access to granular farm-level data, which they can use to assess the farmer’s cultivation practices, crop value, and success rate. These data points help AquaExchange provide input financing credit products for the farmers while significantly minimizing associated risks. AquaExchange’s data-driven approach will help bring down credit costs and improve the availability of financial services for farmers.
Improve food security and create a positive environmental impact
Increasingly, climate change and overfishing are driving many species of marine life into extinction. The severe drop in the volume of sea catch is driving up the prices of seafood globally and, in the long term, threatens the food security of populations reliant on marine life for a protein source. Changing weather patterns and excessive use of fertilizers are making the soil saline, negatively impacting farmer yields and incomes. AquaExchange’s products and services are expected to drive the adoption of aquaculture, which will increase shrimp and fish production despite the changing weather patterns. In addition, aquaculture requires saline land which allows farmers to convert their less fertile land into aquaculture ponds.
Regarding carbon emissions, studies have shown that consuming seafood is far more efficient than consuming red meat. AquaExchange’s farm automation tools are powered by solar energy, reducing the consumption of energy required to run the aerators that provide oxygen to growing shrimp.
We are proud to support AquaExchange on their journey to enable smallholder aquaculture farmers in India to build more resilient farms and earn more income while supporting the global food supply and generating a positive environmental impact.