Aquaculture is the fastest-growing food production form on earth. Already a $243.5 billion industry, aquaculture holds great potential to meet growing global demand for more sustainable forms of protein while protecting marine ecosystems. However, aquaculture faces challenges related to its potential adverse impacts to aquatic habitats, wild fish stocks and local communities.  In order for investors to achieve good financial returns from aquaculture while avoiding unwanted consequences, they should view the industry through a sustainability lens.  With this perspective, investors should review opportunities with a risk management approach.  In this way, aquaculture investments can deliver not only healthy financial returns, but also important environmental, social and governance benefits.

Investing in aquaculture is difficult, especially without knowledge of the sector’s unique and diverse risks.  Many examples of failed operations have deterred investors from the aquaculture sector and now lack of finance represents one of the largest barriers to growth and sustainable development of this important yet vulnerable food production industry.

The Investment Guide for Sustainable Aquaculture is designed to help investors understand specific risks related to the industry and design appropriate risk mitigation strategies to address them.  It addresses the needs of a range of stakeholders in the investment community, and provides an aquaculture-specific resource to supplement their existing due diligence processes.  The Guide enables investors to identify and capitalize on opportunities around the world; catalyze capital deployments by setting a more established investment precedent; and integrate environmental, social and governance benefits into a risk management framework in order to support the sustainable development of the industry.


This document was written by the IDH Aquaculture team, including Jason Carter, Flavio Corsin, Lisa van Wageningen, Beth Wagude, Trini Pratiwi, Nguyen Ba Thong, Anne Fadilla Rachmi, and with the support of Steven Nelson (consultant) and Daan de Wit.

The production of this document was made possible with the financial support of the Walton Family Foundation.

Overview of the aquaculture sector

Aquaculture refers to the commercial production of finfish, shellfish and seaweed.  It differs from wild caught, or capture fisheries that harvest species directly from oceans, estuaries and freshwater lakes and rivers.  Currently aquaculture is the fastest-growing form of food production on earth. Already a $243.5 billion industry, aquaculture holds great promise to meet growing global demand for more sustainable forms of protein while protecting marine ecosystems. Moreover, aquaculture demonstrates high resource-use efficiency with a lower environmental footprint than most meat production in terms of freshwater use, CO2 emissions, and land usage. However, aquaculture faces challenges related to its potential adverse impacts to habitats, effects on wild stocks and threats to water quality.  This chapter briefly reviews the global aquaculture industry and describes key benefits for impact investors.

Growth of aquaculture.

The volume of fish caught from capture fisheries increased until the 1980s when overfishing depleted wild stocks.  In 1974, scientists estimated that about 90% of wild fish stocks were maintained at biologically sustainable levels.  By  2015, sustainable levels declined to 66.9%, leaving more than 33% of wild fish stocks overfished. Stock rebuilding can take many years as many commercial wild stocks take two to three lifespans to recover.  Partly in response to declining wild stocks, aquaculture began to grow in the 1970s. Since then it has grown more than 21-fold and now provides 52% of the total fish for human consumption Aquaculture surpassed wild fishery production in 2012 and FAO predicts that it will climb to 54% of total fish production in 2030. (See Figures 2 and 3). (FAO 20120.

The growing demand for fish is being driven partly by increasing per capita fish consumption, In 1961 the fish consumption is 9.0 Kg then increase to 20.5 in 2018 showing 1.5% grew per year (SOFIA, 2018).  FAO predicts that total fish consumption per capita will increase to 21.5 kg in 2030, up from 20.5 kg in 2018. By 2030, aquaculture is predicted to contribute 60% of all human-consumed seafood, up from 52% in 2016). Aquaculture has been steadily assuming a leadership position amongst all animal protein production methods, overtaking global beef production in 2012. Aquaculture produces a diversity of species; almost 600 farmed seafood species have been reported to the FAO.



82.1 million tons


96.4 million tons

Figure 1. World capture fisheries (below) and aquaculture production (above), excluding aquatic mammals, crocodiles, alligators and caimans, seaweed, and other aquatic plants (SOFIA,2020)

Sustainable protein source.

Aquaculture has been recognized as one of the most efficient ways of producing healthy animal protein for growing populations. See Figure 1.  Fish and other aquatic species such as crustaceans and molluscs provide one of the planet’s largest sources of proteins and they contain healthy omega-3 fatty acids and essential nutrients including iodine, vitamin D and calcium.  See Figure 2. As a significant source of daily animal protein for more than 3 billion people, fish has a key role in addressing hunger and malnutrition issues.X  This is especially true for developing countries, which consume double the amount of fish per capita versus developed countries. Fish protein is also important in small island states and rural areas within developing countries.X  While most crucial for developing countries, seafood can also play an important role to support healthier diets for developed countries.X. As a result, aquaculture represents a prominent investment target for responsible investors looking to invest in food production methods of the future.

 Figure 2. Seafood nutrient information (FAO 2018)


As an alternative to wild-caught fisheries, aquaculture provides important environmental, social and commercial benefits; including:

Sustainable seafood supply. 

With a third of wild fish stocks fished beyond sustainable limits, aquaculture represents an alternative method of producing seafood, that potentially avoids ecological risks associated with capture fisheries, such as bycatch and adverse impacts to habitats.

Food security and nutrition. 

Among animal protein sources, seafood is among the healthiest for human consumption. Seafood provides a healthy alternative to beef and pork and is a necessary source of nutrition, long-chain omega-3 fatty acids, and micronutrients.  These benefits may be particularly important in developing countries, for maternal health, and in early childhood development. The nutritional profiles of fish differ among farmed and wild stocks.  Differences result from varying composition and nutrients of artificial aquaculture feed and wild prey.  Production methods, processing and preparation also affect nutritional profiles.  For example, due to the fast decomposition of fish, they are often cooked and/or frozen soon after harvest, thereby eliminating many nutrients in the process.

Table 1. Scientific targets for a planetary health diet, with possible ranges, for an intake of 2500 kcal/day.  (EAT-Lancet Commission, 2019).

Macronutrient intake grams per day (possible range) Caloric intake

kcal per day

Protein Sources
Beef, lamb and pork 14 (0-28) 30
Chicken and other poultry 29 (0-58) 62
Eggs 13 (0-25) 19
Fish 28 (0-100) 40
Legumes 75 (0-100) 284
Nuts 50 (0-75) 291
Whole grains
Rice, wheat, corn and other 232 811
Tubers or starchy vegetables
Potatoes and cassava 50 (0-100) 39
All vegetables 300 (200-600) 78
All fruits 200 (100-300) 126

Resource-use efficiency. 

Marine, freshwater, and land-based aquaculture represent food production models that can use scarce natural resources in more efficiently than most land-based systems. Aquaculture can have a lower carbon footprint compared to other livestock production methods, especially if it is performed in a sustainable manner with renewable energy sources. The carbon emissions for aquaculture are 3-15 kg CO2-eq/kg per kilogram, compared to 1-86 kg CO2-eq/kg for seafood (fisheries) and 9-129 kg CO2-eq/kg for beef (Nidjam et al. 2012). Aquaculture also requires less water, energy and fuel

Moreover, aquaculture operations have lower feed conversion ratios (FCR) relative to land-based livestock operations.  For example, salmon have an FCR close to 1.0 i.e., it takes approximately 1 pound of feed to produce 1 pound of weight gain. By contrast, chicken, pork, and beef have feed FCRs of about 2, 4, and 8, respectively.  Additionally, the commercial cultivation of aquatic plants and bivalve shellfish requires no external feed and can, in some cases, have beneficial effects on marine ecosystems.

Supply chain management. 

The controlled nature of aquaculture production can allow for improved traceability, logistics, inventory management, product uniformity, demand response, and product quality, compared to wild-caught seafood.  Innovative novel farming technologies also offer the potential to grow seafood close to end markets while limiting deleterious impacts to marine ecosystems. For example, salmon aquaculture operations have a feed conversion ratio (FCR) close to 1.0 i.e., it takes approximately 1 pound of feed to produce 1 pound of weight gain. By contrast, chicken, pork, and beef have feed FCRs of about 2, 4, and 8, respectively. See Table 2.  Additionally, the commercial cultivation of aquatic plants and bivalve shellfish requires no external feed and can, in some cases, have beneficial effects on marine ecosystems.

Table 2.  Feed Conversion Ratio, Carbon Footprint, Land use, Energy retention, Protein Retention and Edible Yield of different animal production system.

Aquaculture is well established across the planet, with a few geographies dominating production of certain species. Asia has been the leading producer in terms of volume since data records began, contributing more than 89% of total volume during the last two decades. Within Asia, China leads production by both value and volume (Table 2 and Figure 2).

Table 3. Aquaculture food fish production by region and selected major producers (thou. tons) (FAO 2018)

Region/selected countries 1995 2010 2016
Africa 110 1,286 1,982
Egypt 72 920 1371
Northern Africa, excluding Egypt 4 10 23
Americas 920 2,514 3,348
Chile 157 701 1035
Ecuador 106 273 451
Rest of Latin America and The Caribbean 178 881 1,216
Asia 21,678 52,452 71,546
China 15,856 36,734 49,244
India 1,659 3,786 5,700
Indonesia 641 2,305 4,950
Europe 1,581 2,523 2,945
Norway 278 1,020 1,326
Eu-28 1,183 1,263 1,292
Oceania 94 187 210
World 24,383 58,962 80,031

Price trends.

Over the past 30 years, global fish prices have generally increased, although they experienced significant volatility at times (Figure 3). With a base year of 2002–2004 = 100, the FAO Fish Price Index (*) captures price trends in the most frequently traded species for both farmed and wild fish. Data show upward trends in most species groups, for both farmed and wild caught fish. These trends reflect a combination of improved economic conditions and supply shortages for several key species.

Figure 3: FAO Fish Price Index (FAO 2018).  (*developed with the University of Stavanger, Norway, and Norwegian Seafood Council)

FAO predicts that the price of capture and aquaculture products will increase by 25% from 2016 to 2030 (FAO, 2018).  Price increases will result from income and population growth, declining capture fisheries production, higher production input costs and declining rates of aquaculture growth. Prices of fishmeal and fish oil are also expected to increase by at least 20% and 16%, respectively, due to steadily increasing global demand.

Fish farmers conduct aquaculture in different aquatic environments, including freshwater, estuarine / brackish and marine ecosystems.  In 2017, freshwater inland aquaculture led global output with 48.3 million tonnes of fish produced for human consumption; equal to 60.3% of total global farmed fish production; mostly performed in earthen ponds. Freshwater aquaculture grows finfish (such as carp) that accounted for 68.6% of total production, while crustaceans (shrimps, crayfish and crabs) made up 6.5% of total output. Estuarine or brackish water aquaculture most commonly produces crustaceans such as shrimps / prawns with 55.6% of total brackish production along with finfish at 12.2%.  In marine aquaculture (or ‘mariculture’), finfish cages and crustaceans contribute 23.8% of total marine production, while shelled molluscs account for 74.6%.  (FAO 2018).

Aquaculture uses several types of culture systems including ponds, tanks, nets, bags or cages. The degree of containment of aquaculture and exposure to external events systems greatly influences production risks.  Main systems include:

  • Closed systems. Self-contained systems include Recirculation Aquaculture Systems (RAS) and indoor aquaculture systems that sterilise all intake water before use and reuse.
  • Semi-closed systems. These include ponds (i.e. holes in the ground filled with water), where the animals can be largely isolated from external threats, with the exception of contamination through birds or possible pathogen carriers (such as crabs).
  • Open systems. Cages or open-water molluscs farms for oysters and mussels represent open systems greatly influenced by external events and factors.

Pond aquaculture is the most common system for inland and brackish water environments. Intensification in pond farming has the greatest influence on its success.  It depends on the amount of seed input (ie. stocking density) and feed, along with technologies that can play a critical role in maintaining such inputs within ideal operating parameters. These systems can be categorized under three categories:

  • Extensive systems. Usually operating in earthen pond structure, extensive system do not require the external addition of feed.  They have minimum stocking densities and, utilize basic infrastructure, This system depends on food naturally created in the aquatic envionrment and fish diets include phytoplankton and zooplanton which can be supplemented using fertilisers.
  • Semi-intensive systems.  Also dependent on naturally created food, semi-intensive system require external addition of feed to supplement operations with higher stocking densities.
  • Intensive systems. Dependent almost entirely on artificial formulated feed, intensive systems rely on sophisticated technology and high stocking densities to capture economies of scale. These systems often line ponds with plastic sheets to ease removal of waste that is generated during operations.  Success of intensive systems requires wastewater treatment to control diseases which can more easily occur in smaller areas due to the concentration of nutrients and organic matter.  Most forms of cage farming are considered to be intensive, though newer, more sustainable operations are starting to focus on lower-density production that improves the health of both the fish being produced and the surrounding environment.

The term aquaculture broadly refers to the cultivation of aquatic organisms, including fish, molluscs, crustaceans and seaweed, for any purposes – be it commercial, recreational or others. Cultivation can occur in early life stages of a species to increase the biomass of a wild capture fisheries; or throughout the full lifespan, from hatcheries to full grown, mature fish.  Aquaculture farmers can grow a single species (monoculture), or multiple species (polyculture) in production system.  Table 3 shows major commercial species.

Salmon and shrimp.  These species largely comprise high value commodity markets because they carry high sales prices and trade volumes. Salmon is mainly produced in countries with lower water temperatures such as Norway, Chile, Canada and Scotland, while shrimp are mainly produced in tropical countries such as China, Thailand, Vietnam, India, Indonesia and Ecuador. The price of farmed salmon and shrimp have fluctuated over the last ten years, but they have remained high, with prices projected to increase until 2050 (FAO 2018). The demand for both salmon and shrimp has been growing steadily.

Farmed whitefish.  Species such as pangasius and tilapia supply different, cheaper markets relative to those for salmon and shrimp.   Pangasius products now reach an increasing number of markets, with Vietnam operating as the largest supplier.  Other South and South East Asian countries also produce pangasius, though mostly for domestic or regional consumption. Tilapia remains an affordable product that is traded internationally.  The United States is the largest importer of tilapia, while the largest exporters are located in Asia and Central America. Tilapia is also the main species produced in Africa, though that production is primarily for domestic and regional consumption as well.

Table 3: Major species produced in world aquaculture (thou. tons, live weight) (FAO 2018)

Species Item (5 largest volume) 2010 2012 2014 2016 % of total, 2016
Finfish total 38,494 44,453 49,679 54,091 100
Grass carp 4,362 5,018 5,539 6,068 11
Silver carp 4,100 4,193 4,968 5,301 10
Common carp 3,421 3,753 4,161 4,557 8
Nile tilapia 2,537 3,260 3,677 4,200 8
Bighead carp 2,587 2,901 3,255 3,527 7
Atlantic Salmon 1,437 2,074 2,348 2,248 4
European Seabass 134 146 155 191 0.4
European Sea bream 142 143 160 189 0.3
Other finfishes 21,211 25,039 27,764 30,058 51.3
Crustaceans 5,586 6,277 7,047 7,862 100
Whiteleg shrimp 2,688 3,238 3,697 4,156 53
Red swamp crawfish 616 598 721 920 12
Chinese mitten crab 593 714 797 812 10
Giant tiger prawn 565 672 705 701 9
Oriental river prawn 226 237 258 273 4
Other Crustaceans 898 818 869 1,000 12
Molluscs 14,064 14,874 16,047 17,139 100
Cupped oysters nei 3,678 3,972 4,374 4,864 28
Japanese carpet shell 3,605 3,775 4,014 4,229 25
Scallops nei 1,408 1,420 1,650 1,861 11
Marine molluscs nei 630 1,091 1,135 1,154 7
Sea mussels nei 892 969 1,029 1,100 6
Other Molluscs 3,851 3,647 3,845 3,931 23
Other animals 818 839 894 939 100
Chinese softshell turtle 270 336 345 348 37
Japanese sea cucumber 130 171 202 205 22
Aquatic invertebrates nei 223 128 111 97 10
Frogs 82 86 97 96 10
Other aquatic animals 112 118 139 193 21

This chapter describes prominent aquaculture investment risks and strategies to mitigate them. These risks include those related to operational, financial, legal, environmental, social and reputational issues.   It organizes risks and risk mitigation strategies into nine sections.

Each of nine sections describes important risks and prescribes specific risk mitigation measures to increase investor confidence and support due diligence reviews for aquaculture investments.  In some cases, sections refer to other documents for more detailed guidance; such as IFC Performance Standards; World Bank EHS General Guidelines; EHS Guidelines for Aquaculture and Fish Processing.  Sections also refer investors to relevant parts of the Investment Due Diligence Checklist to help in data gathering and due diligence review.  The Checklist is located as an Appendix at the end of the Guide.


Production risks affect the ability of an investee to generate a profit because of production failures that can result in crop loss. The occurrence of diseases is arguably the biggest risk associated with most forms of aquaculture, especially in shrimp farming, for example.  Other risks result from poor farm performance resulting from on-farm and off-farm practices that promote diseases and affect animal growth.  This section summarizes risks related to disease outbreaks and farm performance and presents risk mitigation strategies to address them.

2.1.1  Disease occurrence

Aquaculture diseases often result from traditional small-holder farming practices that utilize limited technology and infrastructure for disease prevention.  In Indonesia, small farms account for approximately 60% of total aquaculture production and often operate with limited investment and poor aquatic health management.  As a result, disease presents a significant risk to profitable aquaculture.  Table 1 shows a list of aquatic animal diseases from a 2017 Indonesian quarterly report from the Network of Aquaculture Centres in Asia-Pacific (NACA).

Table 1. Aquatic animal diseases and those occurring in Indonesia.


See disease risk mitigation strategies to sections: 2.1.B Infrastructure; 2.1.C Access to diagnostic services; 2.1.D Quality seed; 2.1.F Farm management; 2.1.G Information technologies and 2.1.H Analytical expertise.


2.1.2  Farm performance

Farming system

A well-functioning farming system improves performance and chances for success.  In general, the farming system needs to provide a suitable aquatic environment for animal growth.  Among other tasks, it must supply seed and feed for growing animals and manage water to remove waste and unwanted organisms.  Good systems lower production risk.  For example, a pond that takes water in and discharges water out from opposite, disconnected, channels faces a lower risk of self-pollution than a pond using a single channel for both water entry and exit. Some ponds reduce risk by using a central drainage system that allows the effective removal of waste and weak (potentially infected) animals. Similarly, a well-prepared pond that uses lining (i.e. a plastic sheet at the bottom of the pond) will be easier to clean than a pond that does not. Other infrastructure considerations may influence risk, such as the height of surrounding dikes or the use of nets to prevent pathogen carriers and predators from entering the system.  See risk mitigation strategies to manage farming systems in sections: 2.1.B Infrastructure; 2.1.F Farm management; 2.1.G Information technologies; and 2.1.H Analytical expertise.

Land and pond preparation

The preparation of a farm before stocking is as important as the practices of farming. Poor pond preparation will affect water quality and subsequently fish health and disease resistance.   For example, in shrimp farming, animals mostly reside near the pond bottom which needs to be cleaned to avoid low oxygen and excess organic matter. Proper pond preparation requires effort and time to set up systems that remove waste from the previous crop and provide pathogen-free water for the next crop of stocked seed.  See risk mitigation strategies to manage land and pond preparation in sections: 2.1.A Proper siting; 2.1.B Infrastructure; and 2.1.F Farm management.

Seed quality

The most common way to introduce pathogens into a farm is through transfer of infected seed from a neighboring farm or hatchery (e.g. shrimp Post Larvae, PL). Diseases can enter the farm through the movement of infected live animals, most often seed or broodstock.  The movement of infected seed can also introduce new diseases from different countries. After a pathogen enters the farm, it is virtually impossible to remove it and the risk of crop failure generally becomes high. Even without pathogens, seed quality presents other performance risks, such as those related to low quality broodstock, poor water quality and inadequate nutrition.  These factors can lead to poor performance, slow growth, lower disease resistance and crop failure.  See risk mitigation strategies to manage seed quality in sections: 2.1.D Quality seed; 2.1.F Farm management and 2.1.G Information technologies.

Stocking density

In addition to seed quality, the number of seed stocked per unit area, called stocking density, can also affect productivity and disease risk. While the relationship between density and profitability is complex, key relationships include can be drawn:

  • higher stocking density results in higher yields;
  • lower stocking density results in faster growth;
  • lower stocking density (given equal conditions) results in lower risk of disease outbreaks;
  • lower water quality increases the risk of disease outbreaks.

See risk mitigation strategies to manage stocking density in sections: 2.1.D Quality seed; 2.1.F Farm managementand 2.1.G Information technologies.

Feed quality and management

Most aquaculture production systems use external feed.  Only very low-density systems (e.g. those growing approximately 1-2 shrimp per m2) do not require external feed as the pond generates enough natural organic matter internally to feed the animals. Since feed often represents the largest cost item in aquaculture, it offers opportunities for cost saving that can reduce quality and performance. However, high feed quality is important to mitigate risk.  Proper feed formulation must contain the right amounts and proportions of nutrients essential to animal health; including proteins, fats and micronutrients such as minerals and vitamins. In addition to good feed composition, proper feed structure prevents nutrients from dissolving in water and ensures correct floating or sinking behavior necessary for efficient fish feeding.  For example, Vitamin C in feed has been associated with a reduced disease risk, but without proper feed structure and formulation, vitamin C leaches into the water.

Feeding practices are also important. The objective of feed management is to make feed available at the proper amount, time, location, and frequency that match the needs of the growing animals.  Too little feed limits growth, while too much feed results in water pollution, as uneaten feed decays in the pond. Fish will not eat feed spread to unused feeding locations.  Similarly, feed should be provided at naturally occurring feeding times to avoid wasting feed when fish will not eat it.  Poor feed management results in slower growth and lower profitability.  See risk mitigation strategies to manage feed in sections: 2.1.E Quality feed; 2.1.F Farm management; and 2.1.G Information technologies.

Water quality management

Fish are very efficient at producing animal proteins. This is partially due to the fact that fish float in water and do not stand, hence they require less energy to sustain themselves. In this context, water quality becomes an extremely important element in aquaculture. Fish not only get oxygen from water, they excrete toxic products like ammonia into their aqueous environment. High ammonia concentrations can be lethal to fish. Proper water salinity is also essential for the osmoregulation (salt balance control) of fish. Many aquatic animals like shrimp absorb salts from surrounding water in order to build their shells. Moreover, water temperature affects fish growth.  Since they are cold blooded (poikilotherms) vertebrates, fish grow faster at higher temperatures, provided they stay within a suitable temperature range.  In these ways, changes in concentrations of oxygen, toxic substances, salt and other chemicals and water temperature can dramatically affect fish health and performance.

Most farming systems extract water from the surrounding environment. Extraction can be a routine way to manage water quality within the farm since it dilutes excess nutrients and provides oxygenated water. It can also compensate for the water lost through evaporation. As a result, the quality of the water extracted from the surrounding environment is of utmost importance. Areas around Java, Indonesia, for example, appear to be more polluted than in other farming areas, such as Aceh. When faced with poor water quality, farmers should implement risk mitigations related to proper siting and infrastructure, which is described in detail in the next section.  See risk mitigation strategies for water quality management in sections: 2.1.A Proper siting; 2.1.B Infrastructure; and 2.1.G Information technologies.

Waste management

Waste can directly pollute the connected aquatic environment and otherwise surrounding environment. Global recognized standards and schemes such as the BAP, ASC, and Global GAP stress that farm solid waste, chemical and medical waste cannot be discharged in the surrounding environment, that garbage must avoid environmental contamination and odor problems, and that dead fish shall be properly discharged.

Effluent management

Fish farming may result in high concentrations of nitrogen and phosphorus, that might end up in surrounding environments if not well managed. Global recognized schemes such as BAP, ASC and Global GAP have several criteria on effluent management, and state that receiving bodies cannot contain high amounts of phosphorous, nitrogen and dissolved oxygen. Sludge and sediment resulting from aquaculture ponds cannot be discharged or dumped.


Biosecurity refers to practices used to avoid spreading disease from infected personnel and equipment.  To mitigate biosecurity risks, farmers should adopt hygienic practices that limit pathogen entry. Such practices include disinfection of personnel before they enter the farm, especially if these people work or travel through infected areas, and disinfection of any tools used in other ponds or farms (including water testing equipment). See risk mitigation strategies to manage biosecurity in section 2.1.F Farm management.

Neighboring farms

Diseases can spread among local farms. Farmers can try to mitigate infection risks from neighboring farms by adopting biosecurity practices, but it is almost impossible to completely eliminate the risk of infection from neighboring farms.  To minimize these risks, local farmers should share collaborate and share information to collectively minimize disease risk transference and help secure profitable investments for all collaborating producers.  See Section 2.9 Industry Collaboration to review risk mitigation strategies related to greater collaboration among farmers, suppliers, and government officials.

Power supply

With few exemptions (e.g. very extensive, low density systems) farms require power to operate; especially for equipment used to pump water or move paddlewheels to oxygenate water.  When power failures occur, the oxygen levels can reach dangerously low levels and in extreme cases, lead to complete crop loss.  To mitigate power supply risks see sections: 2.1.B Infrastructure and 2.1.F Farm management.


Farmers often rely on advisory services to guide them throughout the production process.  Such services include the advice and support of extension workers, input suppliers (of feed, chemicals, etc.), and diagnostic laboratory experts who can be consulted when disease and other problems occur. If such services fail to provide good advice and suitable recommendations, farmers may adopt poor management practices that negatively affect the crop.  To mitigate risks associated with services see section: 2.1.C Access to diagnostic services.

Seasonal factors and natural disasters

Most tropical countries go through wet and dry seasons, bringing changes in rainfall that affect water quality and quantity.  Changes in water salinity, nitrogen, pH and temperature can affect growth and survival rates.  While different species have various seasonal preferences, most aquatic animals do not like sudden environmental changes.  Hence producers generally favor a dry, stable growing season with conditions that stay within the biological parameters of the farmed species.  Water quantity changes often result from natural disasters, especially flooding, that can destroy the crop. Due to climate change, such events are likely to increase in frequency, so farmers should implement proper precautions to prepare for flooding and storm events.  See risk mitigation strategies to manage natural disasters in sections: 2.1.A Proper siting; 2.1.B Infrastructure; and 2.1.F Farm management.

Farmers can take several precautions during initial farm construction and operation to mitigate risks and optimize production.  Best risk mitigation practices include proper farm siting, adequate infrastructure, access to diagnostic services, quality feed and seed, professional farm management, effective use of information technologies and proper insurance.


2.1.A  Proper siting

To select a suitable site for an aquaculture operation, companies often rely on government plans or zoning documents.  For example, in Indonesia, plans guide the licensing process and define aquaculture zones based on broader spatial plans to manage natural resources and economic development of the region. Aquaculture zoning often uses estimates of carrying capacity to integrate aquaculture with other fisheries and water uses. Carrying capacity refers to the maximum amount of biomass (e.g. volume of fish or shrimp) that can be farmed sustainably in a particular water body. Managers measure carrying capacity by evaluating important characteristics of the water body (e.g. water circulation, ecosystem structure and function, etc). and then assessing farm impacts to that ecosystem.  Ideally an aquaculture farm operates within the carrying capacity of the aquatic ecosystem and the water body can handle the cumulative effects of the aquaculture operations. In this sustainable environment, the farm avoids self-pollution and decreases risks to neighboring farms.  However, carrying capacity studies are often time consuming and expensive due to the need for professional expertise and technology.  (See section 2.6.1 Carrying capacity).


  • To mitigate siting risks, Investors should prioritize investments to farms that:
  • comply with local aquaculture zones and spatial plans;
  • operate in water bodies with estimates for carrying capacity and comply with related recommendations;
  • have information about any past conversion of land or natural resources; including dates and processes of conversion;
  • avoid conversion of high conservation value areas, such as mangrove swamps;
  • maintain a dialogue with local communities and conduct a Participatory Social Impact Assessment (PSIA).


  • Investors performing due diligence reviews should complete Investment Due Diligence Checklist for sections: 4. Core Production Operations; 8. Environmental and Social Risk Management Practices; 9.  Site Characteristics and 10. Expansion capabilities.

2.1.B  Infrastructure

Farms need suitable transportation and institutional infrastructure to maintain supply chains for seed and feed, provide diagnostic services and access markets. Other infrastructure needs include reliable power supplies to reduce risks associated with low oxygen levels and poor water quality. In operations highly dependent on power supply, investors should ensure the producer has stable access to reliable power whether from a power grid, backup generators, or solar, wind or hydro energy. Proper wastewater treatment infrastructure can significantly reduce risks related to disease and it provides clean water essential for intensive farming operations. The timely elimination of farm waste is also important and best done through a central drainage system designed to collect waste. To assess risk, investors should collect information about the wastewater collection system and how it removes wastes from the farm.


  • To mitigate infrastructure risks, Investors should prioritize investments into operations that have reasonable access to:
  • extension services;
  • quality seed suppliers;
  • quality feed suppliers;
  • buyers, preferably processing plants;
  • reliable power sources;
  • power sources that emit low levels of CO2, such as solar energy;
  • proper wastewater treatment;
  • effective drainage and waste removal;
  • sources of renewable energy.
  • Investors performing due diligence reviews should complete Investment Due Diligence Checklist for sections: 4. Core Production Operations; 9. Site Characteristics; 10. Expansion capabilities; 12. Customers and Collectors and 13. Vendors / Suppliers / Middlemen.


2.1.C  Access to diagnostic services

Access to accurate laboratory testing can improve decision making and allow farmers to properly respond to specific health problems.   However, since not all laboratories provide accurate results, farmers should seek labs with international accreditations, such as ISO 17025.  In more isolated locations, diagnostic and water quality kits may be the most effective form of diagnostic services available.  Diagnostic test kits can be linked to an IOT system to provide further knowledge to detect and manage disease problems.  See section 2.1.G Information technology for more details. In developing countries laboratory facilities and capacity remains a delimiting factor for realtime testing, treatment and data collection of many diseases.


  • To mitigate disease risk, Investors should prioritize investments to farms that have access and use an ISO 17025 accredited laboratory capable of providing diagnostic services for the most prevalent diseases in their region. In isolated locations, investors should prioritize investees who use diagnostic and water quality kits at a minimum.
  • Investors performing due diligence reviews should complete Investment Due Diligence Checklist for section 11. Disease


2.1.D  Quality seed

Profitable operations start with stocking high-quality, pathogen-free seed.  Ideally, producers should source seed from certified hatcheries, when possible.  From a pathogen perspective, seed should be Specific Pathogen Free (SPF); that is, produced from broodstock that was demonstrated as SPF. However, ascertaining the true SPF status of the seed is often difficult, especially in seed from smaller hatcheries.  Analyzing seed strength is a relatively subjective process. It includes tests that mimic seed stresses on during the production process performed on samples. More recently, farmers use an increasing number of digital tools and information technologies to measure seed strength and other characteristics based on morphological indicators. See sub-section 2.1.G Information technology for further details.

Vertically integrated farms can capture market advantages through a controlled and shortened by supply chain that maintains seed quality, assures steady supply and enables increased supply chain transparency and traceability of harvested product. Producers that can source from only a few seed suppliers due to location and/or limited hatchery production, face greater risks due to supply chains they cannot control. Vertical integration can help alleviate limited supply risk by constructing on-site hatcheries or establishing formal partnerships or joint ventures with seed suppliers.


  • To mitigate seed risks, investors should prioritize investments to farms that:
  • source use seed from CPIB or other certified hatcheries, large hatcheries, and hatcheries able to provide epidemiological data showing successful farm outcomes among their clients;
  • provide documentation showing history of SPF seed use; or results of pathogen testing;
  • conduct strength assessments on seed characteristics; especially those using digital imaging tools rather than simpler visual (microscope) observations;
  • operate in a vertically integrated environment.
  • Investors performing due diligence reviews should complete Investment Due Diligence Checklist for section 5. Seed.


2.1.E Quality feed

Successful, profitable aquaculture operations depend on high-quality feed.  However, farmers have limited tools to assess actual feed quality of different brands.


  • To mitigate feed risks, Investors should prioritize investments into farms that use certified feed; such as those certified by CPIB, the Indonesian equivalent of Good Hatchery Practices.
  • Investors should prioritize investments to farms that source feed from credible manufacturers:
  • proven to be statistically and epidemiologically associated with better farm outcomes;
  • provide data on the source of the fish products they use;
  • that do not use IUU products. (See 2.7.B Labor and OHS Risk Mitigation); and
  • participate in precompetitive initiatives aimed at strengthening the oversight of the supply chain, from boats to plant.
  • Investors performing due diligence reviews should complete Investment Due Diligence Checklist for section 6. Feed


2.1.F  Farm management

Farm management covers a wide range of practices meant to optimize production and commercial viability.  Key practices include:

  • maintaining a suitable aquatic farming system;
  • preparing proper ponds and land;
  • securing quality seed and feed;
  • stocking seed within optimal density parameters;
  • managing feed disbursement;
  • treating and managing water; and
  • ensuring biosecurity.
  • Recording/logbook and traceability/transparency

Farm management practices are usually system and location specific and this Guide does not describe them in detail.  However, investors and producers should understand best management practices in order to leverage the potential economic benefits from farm management programs such as Best Management Practices (BMP) or Good Aquaculture Practices (GAP).  In addition, certification schemes such as Global GAP, the Aquaculture Stewardship Council (ASC) and Best Aquaculture Practices (BAP) conduct third-party assessments of sustainable practices and awards certificates to farms that comply with operational standards, enabling those farms to access preferential market and investment opportunities.

Investors may be able to integrate best practices and certification schemes into due diligence processes to support risk management.  To maintain credibility, they should focus on leading international sustainability programs, such as Global GAP, the Aquaculture Stewardship Council (ASC) and Best Aquaculture Practices (BAP).  However, sustainability programs focusing on continuous improvement versus exclusively achieving certification should be strongly considered, since it is not feasible for many smallholder farms to achieve certification due to verification capacity and capital constraints.  By employing a sustainability transition instead of certification process, continuous improvement programs can be better tailored to specific regional characteristics, leading to more meaningful target impact of such programs and a more effective route forward in transitioning the sector towards sustainability.


  • Investors should prioritize investments to farms that:
  • participate in best management practices and sustainability programs, whether they are focussed on a continuous improvement transition or certification;
  • follow a sustainability program that has been localized for the production region, enabling a more effective transition towards sustainability as well as more meaningful target impact for investors and the communities;
  • follow best practices defined by Best Management Practices (BMP), Good Aquaculture Practices (GAP), the Global Sustainable Seafood Initiative (GSSI) and/or the Sustainable Supply Chain Initiative.
  • received third-party certification or are working toward certification by programs such as: Aquaculture Stewardship Council (ASC): Fairtrade Standard for Small Producer Organizations; International Sustainability and Carbon Certification (ISCC EU) and ISCC Plus: Round Table on Responsible Soy Association (RTRS); Round Table on Sustainable Palm Oil (RSPO); and EU/US/Canada Organic.
  • Investors performing due diligence reviews should complete Investment Due Diligence Checklist for section Management Practices.

2.1.G  Information technologies

Accessible and easy-to-use information technologies can provide practical, real-time operational data that offer valuable insights into the variable production process inherent in both developing and developed countries.  These digital technologies collect data and gather information with automated sensors.  They operate on combinations of algorithms and expert rules to provide recommendations related to harvest time, feeding schedules, water quality, stock assessment and other operational decisions. In addition to optimizing performance, good and timely data can help attract investment by providing transparency on farm operations and credible impact measurements for investors, while tailoring guidance to specific environment-based considerations.  Before implementing these kinds of data management technologies, however, producers should consider their cost, accuracy, training needs and ease of use before replacing established manual data collection methods.  Product examples include: XpertSea, iQuatic, JALA, e-Fishery, Eruvaka.


IT-based feeding units

Although traditional farmers usually disburse feed manually, new tools automate and optimize feeding processes.  With automatic feeders, farmers can define optimal feeding schedules and amounts in order to reduce the largest farm operating expenditure.  Automatic feeders have proven to enhance efficiency of shrimp culture, reduce waste resulting from uneaten feed and shorten the overall cultivation period. They deliver smaller portions of feed more frequently than manual feeding events distributing feed only 2-3 times per day. Also, automatic feeders use sensors to analyze animal behavior to help detect and quickly respond to disease outbreaks.  These automatic feeders often operate with a bucket to hold feed and support attached sensors to analyze fish behavior. IT-based feeding units send data to cloud-based databases that run algorithms to calculate ideal feeding volumes and schedules.   Examples of IT-based feeding units include eFishery and AQ1.


Water quality sensors

Traditional farmers often conduct water quality assessments based on manual observations of color, transparency and taste to evaluate characteristics such as chlorophyll and plankton concentrations and salinity. More recently farmers have been using sensor-based equipment or kits to assess water quality variables such as temperature, salinity, and pH.  By collecting real-time water quality information, these IoT-based sensors support early warning systems that notify farmers when water quality parameters approach dangerous levels.

  Product showcase: eFishery

eFishery provides an Internet of Things (IoT) solution and data platform for fish and shrimp farming businesses. The technology enables automatic feeding and links to a smartphone app. By directly increasing the FCR of production through automation and optimization, it provides advantages over traditional manual feeding methods that can make errors in timing and disbursement of feed.  As a result, eFishery can increase profits for the farmer by disbursing feed in a manner more suitable for the pond water and animal environment.  Moreover, eFishery is relatively simple to use and many producers consider it to be a ‘staple’ technology with high reliability and a favorable cost/reward ratio. Product examples include eFishery and JALA,  Picture source:

Imaging-based stock assessment

Traditional farmers often conduct manual observation of animals during the seeding and grow-out stages to assess seed quality and animal health. Although essential for the responsible farm management, manual observations of fish numbers and size can be understandably subjective.  To address variances in subjective measures, farmers can use image-based stock assessment tools to provide more objective assessments.  These technologies capture and analyze digital images and use algorithms to calculate biological parameters, such as total fish biomass or sizes which serve as indicators of hatchery or farm-level management.  Product example includes the XpertSea system.


Product showcase: XpertSea

XpertSea digital technology monitors animal growth and health using cameras, machine learning and computer vision. It counts, sizes, weighs and images animals and sends monitoring information to an AI-driven aquaculture management platform for analysis and informed decision-making.  These insights enable farmers to optimize feed efficiency, reduce environmental waste, take preventive actions against diseases and use data to bring transparency and knowledge to the entire supply cha­in.  Features and benefits include:

­Optimize feeding.  XperCount tracks meals and feeding rates to maintain proper feed conversion ratios and adjust health prescriptions. Using predefined rules, it adjusts feed prescriptions and issues warnings when production is at risk.  This minimizes feed waste and keeps ponds in optimal condition to promote growth.

Predict harvest.  Based on millions of data inputs, the AI-driven aquaculture management platform predicts future organism weight, distribution and survival.  When biological data combine with operational costs and market prices, decision rules analyze the profitability cycle and predict optimal harvest time.

Disease. Through image-analysis, our AI-driven aquaculture management platform identifies deformities, coloring inconsistencies and feed-related issues. It alerts farmers and experts to proactively avert antibiotic use and population collapse.

Water quality.  By measuring water quality for salinity, dissolved oxygen, pH, temperature, and ammonia, the technology assesses the pond environment and investigates potential disease problems.

Industry collaboration.  By standardizing and automating and centralizing production data, XpertSea encourages collaboration among producers, suppliers, and advisors.  This allows experts and producers to make informed production decisions.


Picture sources:

Picture sources:


Product showcase: JALA

JALA uses Internet of Things (IoT) technology for water quality monitoring and digital data-analytics. It collects water quality data from shrimp ponds and displays information with a smartphone application.  It allows farmers to record pond and cultivation data related to water quality, daily feed consumption, and other operating parameters.  Based on these data, JALA provides cultivation analysis and makes farming predictions related to daily growth and harvest volumes and schedules.  It also features a financial reporting system that records cultivation expenses and incomes and provides reports on financial health.

These data can be used not only for more effective farm management, but also to provide investors and other potential stakeholders further information to support risk analysis for financial investments and insurance policies. Reliable and accurate farm management data also addresses investor concerns about reputational and accountability parameters for sustainability programs.  These programs are usually flexible in terms of collected metrics, although generally they focus on improved production rates and greater profits for farms.  Investors and insurers should be aware that if financial incentives are being considered for a region of farms, and those incentives rely on data from JALA or other similar technologies, relevant technology companies should be contacted to amend algorithms in order to measure data important for specific investment or insurance provisions.














Picture sources:


 Product showcase: eFishery

eFishery provides an Internet of Things (IoT) solution and data platform for fish and shrimp farming businesses. The technology enables automatic feeding and links to a smartphone app. By directly increasing the FCR of production through automation and optimization, it provides advantages over traditional manual feeding methods that can make errors in timing and disbursement of feed.  As a result, eFishery can increase profits for the farmer by disbursing feed in a manner more suitable for the pond water and animal environment.  Moreover, eFishery is relatively simple to use and many producers consider it to be a ‘staple’ technology with high reliability and a favorable cost/reward ratio. Product examples include eFishery and JALA,  Picture source:


  • Investors should prioritize investments to farms that:
  • utilize data management tools and maintain a performance track record to allow investors to more accurately assess the risk profile of investee.
  • use of IT-based feeding units. These technologies reduce overfeeding and enable more accurate calculations of biomass break-even points.
  • deploy water quality sensors to better control the aquatic environment;
  • conduct imaging-based stock assessments of biomass, size, and other characteristics of the stock; during stocking and grow-out periods.
  • Investors performing due diligence reviews should complete Investment Due Diligence Checklist for sections: Core Production Operations; 5. Seed; 6. Feed and 7. Management Practices

2.1.H  Analytical expertise

As farmers collect more data, they can gain more insight on their production. When data is analyzed properly, correlations be found between various seed and feed inputs and yield outcomes. Data collection coupled with professional analysis enable a process of continuous improvement for farmers and seed and feed suppliers. With the latest information technologies described in section 2.1.G, suppliers and experts can provide better advice to farmers about feed and supplements.  Expertise and good human judgement combined with robust data analysis generally outperform the capabilities of automated algorithms alone. Aquatic epidemiology aims to understand how diseases spread amongst (fish)populations. Aquatic epidemiology methods can be used to analyze data that farmers or technology companies collect, and thereby provide advise for farmers on what can be done to reduce disease risks. The application of aquatic epidemiological expertise is currently limited, though some institutions, including the University of Prince Edward Island (UPEI), the Norwegian Veterinary Institute (NVI), Liverpool University, and the University of Zaragoza provide such services.


  • Investors should prioritize investments to farms that use epidemiological analysis of their data to guide management and operational decisions.
  • Investors performing due diligence reviews should complete Investment Due Diligence Checklist for sections: Core Production Operations.

  2.1.I  Insurance

With the exception of salmon aquaculture, insurance for the sector is not well developed; especially in developing countries not yet operating to commercial scale. To address this gap, governments have initiated insurance programs through partnerships with insurance companies. The insurance may cover natural disasters, disease outbreaks, or failure to meet yield goals.  Assessing insurance by smallholder farmers within this model has generally incurred high administrative costs.


  • Investors should prioritize investment to farms that have insurance and verify the type of insurance program as well as any potentially subsidized support for those programs.
  • Investors should assess risk data used in the calculation of any existing insurance premiums.
  • Investors performing due diligence reviews should complete Investment Due Diligence Checklist for sections: Core Production Operations and 7. Management Practices.


As indicated in Chapter 1, the declining growth of capture fishery stocks along with increasing demand for seafood creates a positive market outlook for aquaculture production.  This section details more specific market risks that can affect farm profitability and mitigation strategies to decrease those risks.

2.2.1 Price volatility

The supply and demand dynamics of seafood result in volatile market prices.  Steep and rapid price changes can result from disease outbreaks that impact production and supply in certain regions.  Figure 10 provides an example of volatile market pricing for shrimp sourced from Mexico over the 12-year period from 2005-2017.

Figure 10. Monthly shrimp prices from 2005-2017 (shell-on, headless, size 26-30 per pound, Mexican origin) (IMF 2018)

2.2.2 Market position as price-taker

Most producing countries are price takers, accepting price fluctuations caused by global production changes in other countries. The global market helps define the local farmer as a price-taker.  Moreover, international trade restrictions and government policy can deepen market position as price-taker.  For example, countries may enact policies that require domestic sourcing of seed, even if imported seed is less expensive.  The few price-taker exceptions include Vietnam pangasius and India shrimp production.

2.2.3 Anti-dumping

Different countries impose anti-dumping duties on imported seafood products.  Examples include shrimp imports from several south-east Asian countries. The introduction or change to such duties will affect profits. Some countries may not be affected by duties, such as Indonesia, but may instead be affected by transshipment practices from producing countries that want to benefit from better tariffs (e.g. China, Thailand or Vietnam).

2.2.4 Market substitutes

Market war and pandemic

These kinds of risks can bring significant impacts to aquaculture supply chains. The USA, for example, imposed tariffs on China, which influenced the price of Tilapia. Given tilapias sensitivity to price, this led to a decrease of import of Chinese tilapia, and to an increase of tilapia imports for other countries. At the same time, the swine fever in China may lead to an increase of domestic tilapia consumption in China, as consumers look for alternative protein sources.

The COVID-19 pandemic also heavily influenced the aquaculture industry. Although the global salmon industry remained steady, both the supply and demand of shrimp has been impacted heavily. Demand for shrimp have dropped considerably, as in some countries shrimp is mainly eaten in restaurants. Additionally, China suspended shrimp imports from Ecuador after detecting the coronavirus on shipments. Disruptions on the production side were caused by the lockdowns (it was for example difficult to source seed and feed in India); the workforce in packaging plants in Ecuador was considerably reduced.

One way of spreading these risks is by ensuring that a producer is not too reliable on one market alone, but serves different markets.

Pls consider these risks in aquaculture business, Vietnam has negative impact to shrimp farm, market prices dropped)…

In 2020, the covid-19 pandemic happened seriously in key seafood markets of Vietnam including US, EU, Japan, China… that led to considerable impacts to seafood industry, particularly the key aquaculture supply chains such as prawn, pangasius. Accordingly, in the first three quarters of the year 2020, number of orders for Vietnam seafood had been significantly decreased, about 35-50%. Annual export turnover of Vietnam pangasius was reduced by 24% compared to the export value in the previous year. Additionally, application of social distance measure led to abeyance of seafood supply chain production in the country and global seafood trade. Number of seafood processing and exporting enterprises had problems in terms of insufficient raw materials, transportation services or logistics, cash flow stuck and lack of capital for reinvestment. Practically, the Covid 19 pandemic directly impacted to consumption of seafood at the restaurant systems that consequently reduced both volume and prices of seafood commodity at the market places.

However, Vietnam government has relatively well controlled the pandemic and take the advantage of the EVFTA that entered to force on 1st August 2020, Vietnam seafood industry has gained some good recovery from production and trade businesses. For instance, shrimp exported to EU has been increased by 10% compared to the previous year.

To mitigate risks associated with price volatility, market characteristics, and product substitutions, producers can implement an integrated approach that targets niche markets, differentiates products at scale, and finds distribution channels that add value.  Although they differ across different species and regions, market differentiation strategies provide an opportunity for producers to receive premium prices and maintain price stability.

2.2.A Target niche markets

As mentioned in other sections of the Investment Guide, producers can receive premium prices and decrease pricing volatility when they meet certain standards regarding animal welfare, farm management and product quality.  Moreover, by producing niche species that are less commoditized, producers may be able to access boutique markets with less volatile markets. Sustainable boutique fish markets continue to grow as consumers increasingly value high quality, sustainably produced seafood.  As a result, we expect demand from boutique species will continue to develop in fertile markets.


  • Investors should consider the advantages and disadvantages of investments to farms that sell products to boutique and niche markets.

2.2.B Product differentiation at scale

To sell seafood at premium and stable prices, producers can differentiate products in selected markets. As boutique market strategies by nature may not enable market differentiation at scale, producers and off-takers can identify product differentiation opportunities by evaluating price volatility, supply and demand and other end-market characteristics.  Product differentiation may involve product size, cut and any sort of value-add features.  For example, if India maintains a strong market position for large shrimp, Indonesian farmers and off-takers could work together to target markets for small shrimp as long as demand exists.

Other strategies to differentiate products at scale may involve leveraging jurisdictional collaboration approaches such as those used in Verified Sourcing Areas.  These jurisdictional approaches could improve product and production practices which may be preferred by sustainability-conscious buyers. These consumers in turn lower market risk for sustainable jurisdictions by creating advantageous buying terms and securing more stable pricing agreements.  For example, E­­uropean buyers typically place a higher price premium on sustainably produced product than fish from other regions; an important consideration for producers that export their product.


  • Investors should prioritize investments to farms that differentiate products to add value at larger scales.


2.2.C Distribution methods

In addition to targeting niche markets and differentiating products within markets, producers can also select beneficial distribution channels to reach those markets and realize better prices.  For example, producers may be able to avoid middlemen and sell straight to the market through direct sales channels, subscription methods, sustainable seafood distributors supporting certification schemes, or restaurants and local retail operations.  In these ways, innovative distribution methods can boost profitability.


  • Investors should prioritize investments to farms that operate beneficial distribution networks to capture benefits from specialized markets.
  • Investors conducting due diligence reviews should complete Investment Due Diligence Checklist parts: Customers and Collectors, 13. Vendors / Suppliers / Middlemen; 14. Sales & Marketing and 15. Markets.


Buyers and financial institutions expect producers to comply with existing legal frameworks. In addition to regional and national legal requirements, many development financial institutions (DFI) require compliance with international legal frameworks and standards; including IFC PS and World Bank EHS Guidelines for Aquaculture and Fish Processing; (See sections 2.3.2 Food Safety and 2.7 Social Risks).  These international standards can be more stringent than national ones.   Legal frameworks for aquaculture primarily focus on establishing the initial facility and ongoing compliance with social and environmental regulations and ordinances.


2.3.1 Legality of production

Key legal themes related to aquaculture production include:

  • Siting of the farm. Farms should have operating licenses, ideally in zones specifically approved for aquaculture production;
  • Farm construction. Farms should meet construction standards and zoning ordinances set by local authorities. Local standards often require water treatment systems, buffer zones; and no disturbance to protected areas;
  • Compliance with environmental requirements. Countries often set Environmental Impact Assessment (EIA) requirements for farming operations. In addition, governments usually establish standards for effluent water quality, treatment and monitoring;
  • Compliance with social standards. Some local governments suggest that producers support the surrounding community’s livelihood through Corporate Social Responsibility (CSR) programs. EIAs also can frequently include a social assessment component;
  • Feed Ingredients. Ensure that feed ingredients (fishmeal, fish oil) are sourced from materials IUU free;
  • Often, authorities request businesses to report their activities on a regular (semi-annual or annual) basis. These reports can include records on production and distribution activities.

To mitigate legal risks see sections: 2.3.A Licenses and zoning and 2.3.B Environmental regulations.


2.3.2 Food safety

Aquaculture production and processing should conform to international food safety standards, such as those set in the Codex Alimentarius, or Food Code of WTO/FAO; or to national standards set by the importing nation. The Codex texts are voluntary and they need to be integrated into national legislation or regulation to have legal stature.  Also, HACCP is a solid, practical tool and a reliable standard/certification to ensure food safety.

In the aquaculture sector, food safety of the product is closely connected to environment, health and safety (EHS) of the aquaculture and fish processing operations. Since national EHS requirements of the host countries may differ, the World Bank developed a set of technical reference documents with general and industry specific examples of Good International Industry Practice to guide aquaculture investors:

  • World Bank Group General Environmental, Health and Safety (EHS) Guideline;[1]
  • World Bank Group EHS Guideline for Aquaculture;[2]
  • World Bank Group EHS Guideline for Fish Processing.[3]

When host country regulations differ from those presented in the World Bank Group EHS Guidelines, investment projects are expected to meet the more stringent levels and measures.  To mitigate food safety risks see section 2.3.B Environmental regulations.

2.3.3  Import rejections

Since aquaculture products are often traded across country borders; producers should comply with bilateral agreements between exporting and importing countries.  Investors and producers should understand these agreements and monitor any material changes to their contents.  Trade agreements most often set hygienic and public health standards, such as the banning or limiting of antibiotic use, and they can incorporate Maximum Residue Levels (MRL) and animal health standards. MRL levels usually depend on the risk level for various commercial forms (e.g. frozen, fresh, live).  The presence of banned antibiotics is often a concern.

If products are not in compliance, authorities can issue notifications and depending on the seriousness of infraction, they could reject products either forcing their return to the exporting country or eliminating them on site.  Notification and rejections not only impact producer reputations, they can also affect profitability if bilateral agreements include contractual compliance arrangements between producer and importer.  The EU Rapid Alert System for Food and Feed (RASFF) is a good source of information for import rejections for individual countries.

To avoid legal problems, Investors should encourage Investees to abide with the environmental and social risk mitigation strategies outlined in sections 2.6 Environmental Risks and 2.7 Social Risks.  In this way investors can proactively deal with many issues likely to trigger future enforcement actions by legal authorities.  Specific mitigation measures address licenses and zoning and environmental regulations.

2.3.A  Licenses and zoning

Proper licenses.  Investors should ensure that producers have proper operating and land licenses in suitable areas, and that those licenses are issued under credible and stable government authority.

Spatial zoning plans.  By navigating spatial zoning plans and cooperating with other resource users in the area, producers can help minimize conflicts that may arise among stakeholders sharing the same resources.  While some governments may consider diverse interests in establishing zoning plans, they may be outdated and/or insufficient.

Location of operations. Investors and producers should monitor potential adverse impacts resulting from the siting or location of operations. (See section 2.1.A Proper siting).  The aquascape management approach is suggested as a way to manage interests of all resource users in the area. See section 2.9 Industry Collaboration.

2.3.B  Environmental regulations

Investees are expected to comply with the national environmental legal requirements and/or IFC PS Framework, whichever is more stringent. However, due to the rapid growth of the aquaculture sector, many national and local governments lack relevant environmental regulations and ordinances. In. these cases, producers should comply with relevant IFC PS and EHS guidelines to prepare for future implementation of national legislation.  Environmental and Social Impact Assessment (ESIA) for farms may not be obligatory under national regulatory frameworks, but such a structured assessment it is highly recommended to avoid potential risks and breach of local regulations.

Efforts to proactively manage environmental issues could be realized through collaboration among farmers in specific regions. Co-operative governance bodies allow farmers to hold all producers accountable for their actions and to leverage their collective interests and influence over environmental regulations.  (See section 2.9. Industry Collaboration).


  • Investors should prioritize investments to farms that:
  • have all required and current operating licences;
  • meet spatial zoning regulations and/or guidelines;
  • monitor potential adverse effects to the environment;
  • comply with importing and exporting agreements;
  • meet international food safety standards as defined by WTO/FAO, World Bank, HAACP;
  • participate in regional farmer collaboration partnerships
  • Investors performing due diligence reviews should complete Investment Due Diligence Checklist sections: 8. Environmental and Social Risk Management Practices; 9. Site Characteristics; 10 Expansion capabilities; 21 Material Contracts and Other Agreements; and 22 Legal / Regulatory / Government.


Producers operating under unclear or conflicting government policies can face delayed permitting procedures and burdensome regulations.  Policies often lack alignment through national, provincial and municipal legislation.  These risks lead to producer bottlenecks and an industry that is slow to adapt to changing demands.  Poor public policy can also lead to social risks if enforced laws and regulations do not align with public sentiment.

In Indonesia, for example, since the issuance of the autonomy law (Law No.22/1999, amended by Law No.32/2004), the government has given each province the authority and responsibility for governing their respective aquaculture and fishery sectors. Although national and provincial governments often integrate long-term plans, short-term misalignments and conflicting regulations among local governments can be prominent enough to warrant attention; since local groups adapt and align legal standards more slowly.

Due to Indonesia’s autonomy law, the local government has ‘discretion rights’ in which their regulations take priority over national level regulation. As a result, every week in Indonesia, 14 new local regulations are implemented, which could lead to additional taxes and business permit procedures.

Before 2015, starting a business in Indonesia required 12 procedures, an average of 97 days, and the costs could reach up to 86.7% of per capita national income. To illustrate the difference in start-up challenges, Thailand requires eight procedures and an average processing time of 33 days with costs accounting for up to 5.8% of per capita national income; in Malaysia it requires nine procedures, 30 days for processing on average and up to 19.7% of average national income per capita.

To mitigate risks from sudden policy changes and inefficient regulatory bureaucracies, Investors and farmers should promote measures to engage stakeholders and meet international standards as described below.


2.4.A Prepare for sudden policy changes

Changes in government bodies can lead to frequent amendments to policies and regulations at multiple government levels. Such changes can impact farm-level technical regulations, compliance requirements for operating procedures or aquaculture zonation laws.  For example, the Indonesian aquaculture sector suffered when government officials abruptly banned fish cultivation in reservoirs without providing a transition plan to alternative aquaculture options for the affected producers.  In this context, a volatile government system coupled with public pressure creates risks associated with an unstable production environment.  For example, Canada banned open water netpens in British Columbia, essentially as a result of public outcry.


  • To prepare for sudden policy changes, Investors should consider community support, potential impacts to the ecosystem, and political will to maintain the business community.
  • Investors should prioritize investments to farmers who engage and communicate with relevant government agencies regarding regulatory issues. By doing so, farms can better prepare for change and avoid disruptions caused by new regulations.


2.4.B Clarify compliance and enforcement regulations

Aquaculture is usually managed by the ministry of agriculture or a separate group such as the ministry of fisheries and marine affairs. Other ministries dealing with the environment (such as those governing water resources), trade or finance should be considered when evaluating the governance of the sector in focus. As these ministries often operate in silos, their regulations can be conflicting, overlapping and unnecessarily complex.  Examples include various regulations related to water use and land-based operations connected with marine environments.   Other bureaucracy risks relate to government control of compliance requirements, acquisition of operating licenses and various approvals from different levels of government.  In regions where the local government has a high degree of autonomy to manage the people and resources, the business permit procedures may vary widely.


  • Investors should clarify all licenses and operating permits associated with aquaculture farming. Moreover, Investors should verify the current status of licenses and likelihood of renewing licenses in the future.
  • Investors should prioritize investments to farms that comply with international and/or third-party standards. International standards are often more strict than local regulations and they can help farmers plan ahead for new and more strict standards.
  • Investors performing due diligence reviews should complete Investment Due Diligence Checklist part 22. Legal / Regulatory / Government.


Animal welfare refers to the state of an animal throughout the production process. International organizations define goals of animal welfare as Five Fundamental Freedoms: freedom from hunger and thirst; freedom from discomfort; freedom from pain, injury or disease; freedom to express normal behavior; and freedom from fear and distress.  (From Terrestrial Animal Health Code of the World Organization for Animal Health (OIE)[4] and the OECD-FAO Guidance for Responsible Agricultural Supply Chains).  Violations of these freedoms present risks to animal welfare. Moreover, animal welfare has become a growing concern in aquaculture, with some consumer markets and governments paying more attention to it.  In some cases, consumers will pay a price premium for fish meeting certain animal welfare standards.  In this way, the case for animal welfare becomes an economic issue; since producers who meet animal welfare standards can gain access to premium markets and receive preferential treatment from certain retailers and end buyers.

2.5.A. Comply with World Organization for Animal Health standards

Proper animal welfare mitigation covers a range of practices, including disease prevention, rapid and sufficient treatment of diseased animals, provision of nutritional feed, comfortable transportation for the animals (traded between farms at certain growth stages) and slaughter methods that are quick and as stress-free as possible for the animals.  Slaughter methods can also directly impact the quality of the end product, as methods that generate stress in the fish can influence characteristics of the meat such as its tenderness.

The World Organization for Animal Health (OIE)4 has generated the most widely recognized set of standards for animal welfare available,.  Investors should reference these guidelines for more detail on risks and opportunities for improvement of animal welfare for aquaculture operations. Ideally, the client should have or should develop during the investment tenure, the Animal Health and Welfare Plan. The plan will identify a number of relevant animal-based indicators – e.g. indicators related to mortality, morbidity, signs of aggression, damage or injury or signs of species-specific behavior[5].


  • Investors should prioritize investments to farms that meet the Five Freedoms of Animal Welfare and those developing an Animal Health and Welfare Plan.
  • Investors conducting due diligence reviews should complete Investment Due Diligence Checklist sections: 8. Environmental and Social Risk Management Practices; 9. Site Characteristics; and 23. Inventory counts.


Environmental risks associated with aquaculture primarily involve adverse impacts to surrounding aquatic ecosystems.  They include inadequate carrying capacity, threats to biodiversity, water pollution and accidental release of alien species to the ecosystem.  Specific risks include:

  • Insufficient aquatic carrying capacity to support aquaculture;
  • Conversion of natural habitats, particularly high conservation value areas (HCV) such as mangroves, seagrasses, wetlands and shellfish beds:
  • Unregulated and unmonitored discharge of wastewater into water bodies supporting aquatic life;
  • Release of alien or genetically engineered species into the environment; especially when alien species escape and breed and/or compete with native species for ecosystem resources;
  • Loss of genetic resources due to collection of larvae, fry or juveniles for aquaculture production;
  • Sourcing ingredients for fish feed from unsustainable agricultural production (e.g. grains, vegetable oil) or from illegal, unregulated and unreported fisheries (IUU) (e.g. fish oil and fish meal);
  • Accumulation of disease/pathogenies in aquatic environment and bottom sediments/sludge and,
  • Development of anti-biotic resistance in pathogenic bacteria at the aquaculture farm, which can spread to wild stocks.

2.6.1  Carrying capacity

Aquaculture carrying capacity refers to the maximum amount of biomass (e.g. volume of aquatic species) that can be sustainably farmed in a specific operation and ecosystem. Limits to carrying capacity usually involve limits to pollution and sufficient food sources for key species.  Dense aquaculture can pollute water through excess discharge of nitrogen and organic wastes; sometimes resulting in eutrophication and low oxygen levels.  In operations that depend on natural food sources, excess capacity and disrupt predator-prey relationships in the food chain and limit access to adequate nutrition for farmed species.  Species weakened by pollution or poor nutrition are more susceptible to diseases.  Scientists measure carrying capacity by analyzing the environmental characteristics of the ecosystem and compare it to the characteristics of combined aquaculture using that ecosystem.  Carrying capacity studies are often time consuming and expensive due to required technical expertise needed to evaluate water circulation, pollution loading, key habitats, and major species in the water body.  To mitigate risk see section: 2.6.A Assess and comply with carrying capacity.

2.6.2  Loss of biodiversity and HCVAs

Aquaculture operations can threaten biodiversity through destruction of High Conservation Value Areas (HCVAs) and the release of alien species into the environment.  Conversion of HCVAs represents a major environmental concern for Investors. Although laws and regulations normally aim to protect HCVAs, aquaculture expansion in the late 90s and early 2000s converted many acres of mangrove forests and wetland into new farms.  Some development finance institutions, such as FMO – The Dutch Development Bank[6], explicitly do not fund projects and companies associated with destruction of HCVAs.  For establishing a shrimp farm, a cut-off date 1999 was set on allowable conversion of natural habitats into farms by the Ramsar Convention on Wetland Conservation.  This standard has been adopted by certification schemes such as the Aquaculture Stewardship Council (ASC). IFC Performance Standard 6 provides guidance to address risks associated with the conservation of high value ecosystems.  To mitigate risk see section: 2.6.B No conversion of High Conservation Value Area (HCVA)s.


2.6.3  Effluent and sediment pollution

Aquaculture activities, particularly those in pond-based systems, may harm marine and freshwater ecosystems through construction and operational activities that mobilize sediments and release effluents into the water.  High-density fish cage culture can cause marine and freshwater pollution and create low oxygen ‘dead zones’ underneath the cages resulting from an overload of nitrogen and organic effluents farm production.  Typical contamination sources include wastewater discharges and soil erosion.  IFC PS and respective World Bank EHS General Guidelines, EHS Guidelines for Aquaculture and Fish Processing provide specific discharge values and propose solutions for managing wastewater quality and hazardous materials at the farm site.  To mitigate risk see section: 2.6.B No conversion of High Conservation Value Area (HCVA)s

The IFC PS Framework and respective EHS Guidance Notes and Handbooks provide a comprehensive and exhaustive approach to manage relevant risks associated with fish farming and processing in closed, semi-closed and open systems. These reference materials are accessible online. [7]


2.6.A  Assess and comply with carrying capacity

Aquaculture operations should always operate within the carrying capacity of the surrounding area in order to and control water pollution and risks of disease.  This mitigation strategy is especially important for open aquaculture production systems.  Open systems usually deserve a carrying capacity evaluation as a part of the overall Environmental and Social Impact Assessment (ESIA) of the farm project. However, since carrying capacity studies are often time consuming and expensive, producers should leverage any previous carrying capacity analysis where possible.

The landscape management approach is recommended for water bodies used by more than two users. It includes an assessment of cumulative pollution and biodiversity risks from all existing or planned operations in the same water body and collaborative management by all involved stakeholders. Organizations such as IDH, The Sustainable Trade Initiative and WWF have specific expertise in developing the landscape management approach for aquaculture.


2.6.B  No conversion of High Conservation Value Area (HCVA)s

Investors should avoid companies with reputations for destroying mangrove forests and wetlands during farm establishment or ongoing operations.  Although mangrove deforestation has decresed in recent years, investors should understand the history of land conversion in order to ensure best practice by producers and to conserve HCVAs.  As requested by IFC PS 6 (Biodiversity conservation), Investors should aquire available information on the types and dates of any past conversions of natural environments.

Investors should prioritise investments on farms that did not convert High Conservation Value Areas (HCVA), after the cut off date of 1999.  In cases where conversions occurred after 1999, producers may want to comply to a scheme for mangrove restoration.  For example, responsible aquaculture of tilapia should have no record of critical habitat destruction after 1999. In case of conversion before 1999, revitalization measures of severely damaged wetlands may be required under the guidance of a recognized expert. See ASC Tilapia Standard). [8]

Importantly, development financial institutions do not consider investing in aquaculture projects associated with destruction of HCVAs due to related environmental and social risks. Destruction means: (1) elimination or severe diminution of ecosystem integrity of an area caused by a major, long-term change in land use or water qualify; or (2) modification of a habitat that compromises its functional role in the ecosystem.


  • Investors should prioritize investments to farms where:
  • carrying capacity assessment has been conducted;
  • the farm operates within the carrying capacity parameters; and
  • neighboring farms and other water users reasonably comply with carry capacity regulations, either through enforcement or collaborative agreements.
  • Investors should aquire available information on the types and dates of any past conversions of natural environments and prioritise investments on farms that did not convert High Conservation Value Areas (HCVA), after the cut off date of 1999.
  • Investors conducting due dilegence reviews should complete Investement Due Diligence Checklist sections: 8 Environmental and Social Risk Management Practices; 9 Site Characteristics; 10 Expansion capabilities; and 22 Legal / Regulatory / Government.



Social risks cover issues related to human rights, Occupational Health and Safety (OHS) of farm workers and nearby communities.  International development programs stress the importance of social risks and mitigation measures and present them in key guidance documents such as the IFC Performance Standards, World Bank EHS General Guidelines, EHS Guidelines for Aquaculture and Fish Processing.  Moreover, investors should consider social risks across the entire value chain including potential impacts from Illegal, unregulated, and unreported (IUU) fishing.  This section describes risk management strategies for key social risks.


2.7.A  Human rights risk mitigation

Human rights risk mitigation is a backbone of any sustainable and responsible aquaculture operation and it an integral part of environmental and social risk management.  IFC Performance Standards 1 and 2 define important risks and present mitigation measures related to labor rights, protection of vulnerable groups including women and Indigenous Peoples, and community consultation among others.  For better transparency and better communication Investors should encourage clients to engage with local stakeholders in a way that enables people to express their views, without fear of reprisal, on risks that the project might present to them or to others, and to consider and respond to these views.


To identify human rights risks and implement mitigation strategies, investors should consider the following questions:

  • Is there a history of human rights abuses in the country, region and sector relevant to the project? For example, abuse of labor rights, minority rights, indigenous rights, women’s rights, children’s rights, migrants’ right, freedom of speech and association?
  • If the country is one with recent history of cases with critical voices from community activists, natural park rangers and other stakeholders against planned projects, were there any oppression or violence against those who challenged the project?
  • If other comparable aquaculture projects are planned or implemented in the area, did they face allegations of human rights abuse? Are there any human rights violation allegations against the aquaculture projects sponsor?


  • For detailed guidance, investor should refer to IFC Performance Standards 2 for human rights risks for the workforce.  Performance Standard 4 for human rights risks in the community, and Performance Standard 7 for human rights risks associated with indigenous people.[9] (ref)
  • Investors conducting due diligence reviews should complete the Investment Due Diligence Checklist for sections: 3: Non-Management Employees/Staff and 8 Environmental and Social Risk Management Practices


2.7.B  Labor and Occupational Health and Safety (OHS) risk mitigation

Aquaculture sites are often located in remote areas with weak provisions for employee protection. Many aquaculture operations employ manual, labor-facing, industry-specific health and safety risks; including physical hazards, exposure to chemicals; and exposure to water-borne diseases.

IFC Performance Standard 2[10] (Labor and Working Conditions) defines important labor risk mitigation themes:

  • promote fair treatment, non-discrimination, and equal opportunity of workers.
  • maintain good worker-management relationship.
  • comply with national employment and labour laws.
  • protect workers in the supply chain; including vulnerable children and migrant workers,
  • keep safe and healthy working conditions and maintain the health of workers.
  • avoid the use of forced labour

In addition to on-site occupational health and safety risks, labor risks can occur across the value chain in operations bringing feed and other supplies to the farm.  Accountability for producers and seafood buyers does not stop at the farm or processing plant, but includes every step in the supply chain, including practices occurring on boats that harvest fish for use in aquaculture fish feed.  Illegal, unregulated, and unreported (IUU) fishing presents additional risks as fishing boats may use forced labor or harvest IUU fish to make fish meal. In this way, illegal practices can have both a social component (e.g. poor labor conditions) and an environmental one (e.g. the catch of protected or overexploited stocks or the damage to marine ecosystems).  These two components often exist simultaneously.  Experiences from Thailand illustrate how forced labor in fishing boats affects the entire value chain, including the processors and the retailers (Nakamura et al. 2018). Effective risk mitigation requires transparency throughout the entire value chain to identify problems and hold accountable individual actors responsible for IUU practices.  Sustainable companies should avoid trade with producers connected with IUU fishing.

Investors may encounter difficulties addressing occupational health and safety (OHS) risks because individual companies may have complex labor relationships.  However, Investors should ask key questions:

  • Do workers have written contracts for workers?
  • Do workers receive fair renumeration?
  • Does the farm source fish meal or other ingredients from companies using child or bonded labour in production or indirectly support of child labour in the supply chain?
  • Does the farm buy fish meal from companies linked to IUU fishing?


  • For detailed guidance, investors can use World Bank Group General Environmental, Health and Safety (EHS) Guidelines and the World Bank Group EHS Guidelines for Aquaculture[11].
  • Investors conducting due diligence reviews should complete the Investment Due Diligence Checklist parts: 3: Non-Management Employees/Staff; 8. Environmental and Social Risk Management Practices and 13: Vendors / Suppliers / Middlemen.

2.7.C  Social and community health and safety risk mitigation

Social conflicts between aquaculture operators and adjacent communities may occur when relevant legal arrangements do not clarify and enforce relevant operational issues; such as related to ownership or responsibility and/or where they do not recognize or protect customary rights to natural resources.  This community health risks can be easy to overlook and hard to identify.  However, social friction between the farm and surrounding communities can affect business stability and threaten productivity. Resulting social conflicts can also lead to NGO intervention and discourage consumers from purchasing aquaculture products, thereby decreasing revenue. Such conflicts can be prevented by carrying out the human rights risk assessment at the early stage of the project planning. Other social conflicts may occur between:

  • aquaculture farmers;
  • farmers and other resource users;
  • farmer and company;
  • labor and management;
  • farmer and government; especially concerning on mangrove conversion; and
  • farmer and surrounding community.

In one example, brackish water discharge from shrimp farms caused salinization of nearby agricultural land.  The resulting decrease in farm production diminished livelihoods, increased social conflicts, and led to several NGO campaigns to discourage consumption of cultured shrimp.  In another example, land expropriation for shrimp farming in Bangladesh led to similar protests and boycotts of shrimp aquaculture.

Other health and safety risks arise from operational activities that create threats to local communities and vulnerable groups.  Investors conducting due diligence should ask key questions:

  • Does the operation cause salinization of neighbouring agricultural land?
  • Any effects on water resources: Water quality?  Water quantity?  Groundwater?
  • Has the farm experience any physical hazards, equipment accidents, or structural failures?
  • Any previous release of non-native species or hazardous materials?
  • Past exposure to diseases?
  • Any stories of abuse by security personnel?
  • Any problems with food safety impacts and management?


  • To mitigate health and safety risks, investors should review more detailed guidance, in the World Bank Group General Environmental, Health and Safety (EHS) Guidelines and the World Bank Group EHS Guidelines for Aquaculture[12] and Handbook on Good Practices in Stakeholder Engagement[13]. These documents describe key concepts and provide practical solutions for successful stakeholder engagement and conflict resolution.
  • Investors conducting due diligence reviews should complete Investment Due Diligence Checklist parts: 8. Environmental and Social Risk Management Practices and 10: Expansion Capabilities.


Irresponsible farming practices have affected producer reputations in the past and deterred buyers, resulting in lower sales. Several of the reputational risks herein described refer to practices that should be avoided by Investees, even if in they do not directly affect profitability.  Sources of reputational damage mostly relate to environmental and social risks outlined in the previous section.  Other reputational risks may result from:

  • Unhygienic practice People bathing in the farm or pets roaming and defecating around farm property result in a poor reputation.
  • Environmentally harmful practices. Farms discharging polluted water could cause eutrophication (overload of nutrients) that lowers oxygen levels and adversely impacts other water users.
  • Occurrence of diseases. The public responds negatively to images of infected and/or dead fish.
  • Use of antibiotics. Antibiotics in animal production have been associated with an increase in the resistance of human pathogens to antibiotics. While antibiotic use can be an important element in maintaining the health of fish, it may not be popular among consumers.
  • Fish feed production practices. Without a traceable supply chain for fish feed, few data are available to determine the source of raw materials used to produce that feed. Even farms that make efforts to ensure responsible production practices, they could unknowingly source fish feed from companies utilizing slave labor or IUU fishing methods.
  • Targetted media campaigns. Smear campaigns that negatively portray aquaculture products can lead to consumer and citizen backlash for specific products and regions

When producers take steps to ensure the health of animals, surrounding ecosystems and local communities, they signal an effort to maintain standards and address potential concerns with regulatory bodies and public citizens. Specific steps to mitigate reputational risks have been outlined in other sections of this document; they include proper farm management, consideration of community interests when making decisions about siting and construction; including chosen containment levels  Other risk mitigations address operational processes and larger supply chain issues such as the rejection of IUU sourced fish feed.  Proper animal seed health can also be important to ensure smooth international trade and good company reputations.  While seed exports rejected at international borders may only affect the reputation of the exporting hatchery, it could also impact other producers operating hatcheries and relying on the sale of seed as a second source of income. To mitigate resulting reputational risk, all hatcheries should perform more stringent quality checks prior to exporting.


2.8.A  Farm management

A number of programs outline best practices for farm management.  These guidance documents include those from the Aquaculture Stewardship Council (ASC), Best Aquaculture Practices (BAP) and GlobalGAP.  Producers should adopt and follow these best practices.  These programs comprehensively integrate environmental and social mitigation strategies to help producers manage their reputational risk.  They also provide the advantages of outsourcing farm management standards to third-party bodies with credibility to define international standards.  However, producers should keep in mind that some certification programs can be unreliable and politically controversial and therefore they should align themselves with only the most credible standards.

Farmers can effectively respond to accusations of irresponsible production by providing transparent reporting of compliance with both third-party farm management programs and farm-led standards.  This risk mitigation strategy farmers defend themselves from claims of activist groups using misleading and/or inaccurate information.

Programs defining best management practices do not tailor standards to every specific regional production area.  To address more specific situations, farms should consider proactively tailoring broad standards to fit their particular operations and make them more practical and localized. Some regional farm management recommendations have been established and producers may want to use them.


  • Investors should prioritize investment to farms that participate in third-party best practices programs such as those from the Aquaculture Stewardship Council (ASC), Best Aquaculture Practices (BAP) and GlobalGAP.


2.8.B  Upstream integration

As much effort as individual producers may expend to ensure their reputation through direct measures, they can still fall victim to disreputable events occurring in their supply chain that are beyond their reasonable control.  For example, while an ASC-certified processor may make best efforts to source only from ASC-certified farms, noncompliance by one of their many potential source farms can be hard to detect without costly and burdensome surveillance.  Yet these distant violations can trigger penalties on the processor, including the suspension of ASC-certifications.


  • Investors should prioritize investment to farms that operate in a vertically integrated upstream industry that controls feed inputs and maintains reputational reliability over production.

2.8.C  Collaborative industry initiatives

Farmers can mitigate reputation risk from upstream operations through collaborative initiatives that engage different stakeholders along the supply chain.  Such multi-stakeholder collaborations can address issues with supply chain transparency and ecosystem damage. The Seafood Task Force offers a good example.  While these initiatives may require competitors to work together, they promote mutual self-interest to reduce risk from harmful aquaculture production practices.


  • Investors should prioritize investment to farms that collaborate in multi-stakeholder organizations and industry initiatives promoting best practices across the aquaculture value chain.
  • Investors conducting due diligence reviews should complete Investment Due Diligence Checklist parts: 6. Feed; 8. Environmental and Social Risk Management Practices; 9. Site Characteristics; and 11. Disease.


Example: Vietnam Pangasius Campaign

Pangasius production in Vietnam offers a clear example of the impact that adverse publicity can have on consumers and market demand. Since 2006, there have been regular media attacks (from Australia, the United States and European countries) on the aquaculture industry to discourage consumers from buying pangasius.  Many reports were misleading, and in some cases, blatantly inaccurate.  Nevertheless, this media attention adversely affected trading activities of the fish.  For example, Europe reduced pangasius imports from USD 409.1 million to USD 250.8 million over the 2012 – 2016 period.  Attacks such as these frequently target the whole industry as a whole, rather than individual bad actors.  This reputational risk highlights the need for industry collaborative to address broad public perception through accurate, independent and transparent scientific evidence and analysis of production operations.

Left picture:

Right picture:,




As the world’s fastest growing food production industry, aquaculture faces complex social and environmental issues.  To reduce risks in this dynamic environment, farmers and stakeholders can work together to overcome obstacles and promote opportunities common to the industry.  In this way, industry collaboration can raise professional standards and encourage first-time investments.  While collaborations are not necessary for aquaculture investments, they can yield significant long-term benefits by addressing social, legal and environmental issues and improving supply chain efficiency.  However, bankable investments may require amended relationships among supply chain middlemen and regional farmers.

Investors should encourage collaboration among farmers, government agencies, NGOs, and partners in international value chains. Effective collaboration can help implement regional scale aquascape management strategies that add value for all participants.


2.9.A  Collaboration among farmers

While risk mitigation strategies applied at the farm level can be effective, Investors should also review collaborative regional approaches to risk mitigation.  Surrounding farms can influence external risks to small individual farms as in the case of shared intake of water sources.  The ideal regional risk mitigation strategy maintains formal contracts of collaboration among neighboring farms to support the industry.  These contracts often include provisions for information sharing, teamwork in dealing with disease threats, support for farm improvements and development of shared infrastructure to enable economies of scale and joint leverage opportunities.

Limited communication among farms can be particularly harmful in the case of animal diseases, as common water resources and infrastructure (such as roads) can serve as transmission vectors for disease infections.  Even soft arrangements that foster communication between neighboring farms can help identify the source of disease outbreaks and reduce the risk of disease spread.  In such cases all farmers have incentives to work together to alleviate risks. Collaborative arrangements between farmers can also strengthen sector-level collaboration if those arrangements involve supply chain partners and public sector institutions.


  • Investors should prioritize investments to farms with collaborative stakeholder arrangements, such as cooperatives, farmer groups and other structures that share responsibilities for:
  • real-time communication on disease occurrence between collaborators;
  • jointly agreed upon guidelines for response to disease outbreaks;
  • effective water management systems to ensure water treatment before transfer to other farms;
  • shared guarantees on loans; and,
  • joint assets that can be used as collateral, to access finance.


2.9.B  Value-chain collaboration and efficiency

To mitigate market level risks where vertical integration is not possible or feasible, value chain actors should collaborate. Effective collaboration can provide reliable and timely information on market needs and potential risks and enable producers to design and implement connected risk mitigation strategies. Trading partners usually will provide information necessary to establish effective mitigation measures and strategies. Fostering long-term relationships with key trading partners can reduce risk and lower price volatility.

Middlemen can create less efficient value chains with added costs and reduced transparency. However, they can also provide critical capital and expertise to farmers, especially to smaller producers. Innovative technologies can shorten the supply chain and reduce price gaps between farmers and consumers, potentially reducing the need for middlemen. Some tools also allow end-users to buy directly from the farmers using online marketplace platforms. Such technologies and tools have the potential to both increase profit margins and establish reliable data on track records, which can be leveraged for investors and other business relationships.

While different regions embody different value chain relationships, collaborations should aim to maximize both the number of collaborating value chain actors and deeper connections among them.  This enables comprehensive coverage of market level risks and mitigations.


  • Investors should prioritise investments to farms that maintain long term relationships (more than two years) with their trading partners and actively participate in value-chain collaboration initiatives, especially with partners other than those they trade with directly;


2.9.C  Public-private collaboration

The complexity of the risks associated with aquaculture requires collaboration, as a risk mitigation strategy.  Beyond farmer-to-farmer collaboration, it is also important for farmers to collaborate with different government departments that manage rules and regulations related to aquaculture; especially for those responsible for important aspects of farm operations, such as:

  • developing, maintaining and monitoring aquaculture plans and zonings;
  • issuing licenses for new operations to ensure that farms remain within carrying capacity;
  • training farmers and reducing farm management risks;
  • monitoring impacts to water quality and land resources;
  • generating useful farm management information and,
  • reducing risks generated from neighboring farms and businesses.

A stronger and more formal structure for collaboration between public and private sectors can be established through the execution of Public Private Partnerships (PPP).  The transportation sector often establishes PPPs and they can be especially useful for building adequate transportation infrastructure to mitigate logistical and general supply chain risks.


  • Investors should prioritize investments to farms that collaborate with the public sector, preferentially involving multiple relevant national ministries and local agencies. Effective public-private collaboration may be direct or indirect, e.g. through representatives.


2.9.D  Landscape/Aquascape arrangements

Landscape/Aquascape collaboration brings together different stakeholders in a specific geography to cooperate for mutual benefits and shared goals.  In the aquaculture sector, Aquascape stakeholders would include farmers, traders, input and service providers, local governments and relevant national organizations sharing the aquatic resource.  They can organize under a collaborative aquascape governance arrangement to:

  • identify priorities for aquascape management based on a review of threats and opportunities;
  • develop action plans, including green growth plans;
  • improve regulations;
  • adopt getter farming practices; and
  • conserve natural resources.

Governments, NGOs, and industry associations have increasing been implementing various aquascape program to manage shared resources and promote sustainable development.   This growth has been largely due to stakeholder recognition of common needs to manage mutual, large-scale impacts that could affect profitability for all individual actors. Development investors such as IDH and NGOs such as the World Wildlife Fund have successfully implemented Landscape/Aquascape programs.


  • Investors should prioritize investments to farms that support Landscape/Aquascape arrangements; often sponsored by governments, development investors and NGOs.

2.9.E  Sector level collaboration

A national level of collaboration occurs with the establishment of sector level institutions that bring together different players across the value chain; including service providers, public sector managers, civil society advocates and academic researchers.  Although such arrangements are currently rare, the Seafood Taskforce provides an example.  It was established to oversee of supply chain issues in Thailand and has now extends to Vietnam. These national-level, sector collaborations can provide important benefits to improve traceability from boats to plants to consumers, identify high risk vessel behaviors, and strengthen port-in port-out inspections.


  • Investors should prioritise investments to farms that participate in international sector collaboration across the seafood value chain.
  • Investors conducting due diligence reviews should complete Investment Due Diligence Checklist parts Seed; 6. Feed; 11. Customers and Collectors; and 12. Vendors /Suppliers /Middlemen.


[1] IFC PS EHS Guidelines – .



[4] OIE Animal Welfare –

[5] FMO Position Statement on Animal Welfare (2018).

[6] FMO Exclusion List –

[7] IFC PS EHS Guidelines – .


[9] FMO Human Rights Position Statement –

[10] IFC PS2 –

[11] WB EHS Guidelines –

[12] WB EHS Guidelines –

[13] Handbook –

3.1 Tilapia Industry Profile

In 2018 global aquaculture farmers produced over six million tons of tilapia.  Tilapia farming represents the second most productive aquaculture species after carp.  (FAO, 2020). Tilapia refers to a group of freshwater cichlid fish native to Africa. Species and hybrids were introduced into many tropical, and subtropical regions of the world during the second half of the twentieth century and now tilapia grow in 127 countries.  Nile tilapia are native to North Africa and the Levant and they have been cultivated in Egypt for 4000 years.  Worldwide distribution of tilapia species started in the 1940s and 1950s with global introductions of O. mossambicuss, but O. niloticus become more popular and global production soared after it came to China in 1978.  China now leads the world in tilapia production and it produced about half of global volume from 1992 to 2003.  Since then other major producers emerged in Indonesia, Egypt, Bangladesh, Vietnam, Philippines, and Brazil.  The United States is the largest tilapia importer; buying large volumes of frozen filets from China and Asia and fresh whole and filet fish from Honduras, Ecuador, and Costa Rica in Latin America.

Tilapia are hearty fish that can survive a range of water quality conditions; including low dissolved oxygen, high ammonia, and high and low salinities. Tilapia can be grown in ponds, large lake cages, irrigation canals, controlled recirculation systems and polyculture systems with carp, catfish, shrimp and other species.  As primary omnivores and vegetarians, tilapia consume a varied diet that includes bacterial films, algae, plant parts and aquaculture by-products. Tilapia require less protein than carnivorous fish leading to lower feed costs.

Tilapia is an excellent aquaculture species due to its fast growth, high tolerance to a wide range of environmental conditions, resistance to stress and disease, the ability to reproduce in captivity, a short generation time, the ability to feed at a low trophic level, and the easy acceptance of artificial feeds.  Moreover, diverse global consumers purchase tilapia as an affordable whitefish with a mild flavor that is easily processed and prepared into filets.

Main traded products include tilapia fillets: fresh, chilled, frozen; and whole tilapia, fresh, chilled and frozen.  (FAO, 2020, Globefish, 2020).  China has long been the largest producer of farmed tilapia; harvesting roughly 1.7 MT in 2018.  The United State represents the world’s greatest consumer importing about 300,000 MT in 2018    The Chinese growth rate has slowed recently relative to other countries in Asia, Latin America and Africa and it may decline further, as Indonesia, Egypt, Brazil, Viet Nam, Mexico and India expand their production. Large producers such as Egypt and Indonesia focus mainly on domestic and regional markets; while China and some Asian countries produce frozen filets and whole fish for export.  Producers receive low margins for farmed tilapia, relative to shrimp and other species.







Table x.  Top tilapia production species, 2018.   (FAO, 2020)

Species name Quantity  (metric tons, MT)
Nile tilapia (Oreochromis niloticus)

Tilapia nei. (nei = not elsewhere included, Oreochromis spp.)

Blue-Nile hybrid tilapia (Oreochromis aureus x O. niloticus)

Mozambique tilapia (Oreochromis mossambicus)






Table x.  Top 10 tilapia producers  In 2015.

(x 1000 tonnes). (FAO, 2017b)



China                  1,779.5

Indonesia.         1,120.4

Egypt                      875.5

Bangladesh           324.3

Viet Nam               283.0

Philippines             261.2

Brazil                     219.4

Thailand                 177.6

Taiwan PoC            70.5

Colombia                 61.1

Figure x. Historical aquaculture production of tilapia by country in millions of tons (FAO, FishStat Database 1950–2009.





Figure x.  Major tilapia importing countries.




Figure x.  Global tilapia trade flows.


Product differentiation.  Tilapia products can be broadly divided into two categories: cheaper, commoditized tilapia and premium tilapia. The vast majority of cheaper tilapia comes from China and is priced often more than 50 percent below the premium product, mostly fresh, which is sourced from a variety of countries in Asia and Latin America, including Indonesia, Colombia and Mexico. Premium producers and marketers seek to differentiate their product through ecolabelling, low-antibiotic production processes and convenience packaging. This strategy targets the growing middle-class, health-conscious urban demographic and seeks to create a clear distinction between this high-quality tilapia and the more typical perception of tilapia as a cheaper, generic whitefish option.

Market forecast.  Future growth in tilapia aquaculture will be supported primarily by export markets to the USA, Japan and some European countries. These developed nations have stringent quality requirements concerning chemical and veterinary drug residues and more discriminating consumers making seafood choices. Therefore, in order to compete, developing country producers have to meet international import requirements and satisfy consumers with high quality products that are safe to eat and responsibly produced.  (Globefish, 2020; Seafood Source News, 2019),

United States of America (USA).  USA leads the world in tilapia imports with about 300,000 MT in 2018.  But demand has been slowing since the 500,000 MT high in 2012. China remains the number one USA supplier, but its relative share of production has been falling due to new products from Latin American suppliers in Brazil, Colombia, Mexico, Costa Rico and Honduras. Moreover, US demand has been slowing in recent years.  Slowing US demand may result from the escalating trade war between the United States of America and combined with the possibility of tariffs.  (Seafood Source News, 2019).  The US imports frozen fillets and whole fish mostly from China and fresh fillets and whole fish from Latin America, where Honduras, Ecuador, and Costa Rica lead export markets.  The US market is shifting towards more expensive, premium tilapia marketed as a gourmet food item available at retail and high-end food service operations. (Globefish, 2018).


(GLOBEFISH. 2020).

 China.  China remains the largest producer of farmed tilapia by far, harvesting roughly 1.7 MT in 2018, up from 928,151 in 2009. (FAO, 2020). It exports large volumes of frozen filets to the USA, the world’s largest tilapia buyer.  But US demand has dropped since 2012; US – China trade tensions combined with potential 25% seafood tariffs decreased US demand for Chinese seafood.  In response, farmers in China can be expected to shift away from tilapia as one of their most lucrative export markets dries up.  (Seafood source news February 4, 2019.). China has been expanding markets in Africa. Approximately 30% of total frozen Chinese tilapia entered African markets in 2017. In first half of 2015, China shipped 45,352 tons of tilapia to Africa; mostly to markets in Zambia, Cameroon, Cote d’Ivoire, Burkina Faso and Democratic Republic of the Congo. African exports have taken up some lost demand in the US.

(Seafood Source News, 2019; Globefish, 2020)

(Globefish. 2020)

China tilapia exports,  % (2015) USA Mexico Russia EU Sub-Sahara Africa Other
56 10 6 6 2 20

Indonesia.  In Indonesia, tilapia are known as ikan nila. Major tilapia production areas are in West Java and North Sumatra. Nile tilapia were introduced to Indonesia in 1969 from Taiwan.  Nile tilapia production grew rapidly from 31,217 tonnes in 1999; 71,789 tonnes in 2003 and 1,171,698 tonnes in 2018.  Indonesia now leads the world in O. mombassius production with 51,043 MT in 2018.  Other aquaculture species include hybrids from Thailand (Nila Chitralada), Japan (Nila JICA). and Genetically Improved Tilapia (GIFT) from the Philippines.  In 2006 Indonesian government research institutions development and introduced a new species named “Genetically Supermale Indonesian Tilapia” (GESIT). GESIT fish are genetically engineered to hatch eggs that will produce 98% – 100% male tilapia. Currently, researchers have developed around 14 hybrid strains of ikan nila.  Farmers produce fish in ponds, fixed and floating cages and rice paddies.  (FAO, 2006. Indonesia). Indonesia targets a premium tilapia market and differentiates the product from cheaper Chinese fish Premium Indonesia tilapia sells for about USD$ 6–7 per kg with primary export markets to the US and smaller markets in Netherlands, Germany, Canada, and Japan, Exports to the US rose significantly in 2018; but the domestic market absorbs most of Indonesian production. (Globefish, 2018).

Egypt.  Egypt produced 1,051,444 MT of Nile tilapia in 2018, most of it for domestic consumption.  Although aquaculture has been practiced in Egypt since 2500 B.C., modern commercial aquaculture started in the late 1950s and grew steadily to produce 1,017,738 MT in 2012.  At that time Egyptian aquaculture production represented 61.8 percent of total African aquaculture production of 1,646,395 MT and 83.6 percent of total farmed African tilapia.  (FAO, 2017a).  Due to restrictions on freshwater use, production expanded in semi-intensive, earthen ponds operating in brackish waters around the Northern Delta lagoons.  The production from these brackish ponds sharply increased from 191,000 MT in 1999 to 765,909 MT in 2012, representing 75 percent of total aquaculture production. Other production practices include intensive culture in cages, tanks and ponds, as well as fish cultured in rice fields.  Many small-scale fish farmers receive inputs from large enterprises (e.g. feed mills, hatcheries, veterinary services and traders) on a credit basis, such as purchasing feed and seed on credit.  Local domestic markets consume most of the production; but small export markets include Saudi Arabia, Israel, Kuwait, UAE and Qatar. (FAO, 2017a).

 Uganda.  Uganda aquaculture produced 74,912 MT of Nile tilapia in 2018, up from 17,000 MT in 2009. (FAO statistics, 2020). Aquaculture came to Uganda in 1941 with the introduction of carp and expanded in the 1950s with the addition of Nile tilapia.  Farmed tilapia production grew rapidly from 600 MT in 2000 to about 50 000 MT in the early 2010s.  Earlier 2000 production included 400 MT of Nile tilapia and 200 MT of redbelly tilapia (Tilapia zillii); however by the early 2010s, farmers only produced Nile tilapia. Uganda has many lakes and rivers with great potential to support both aquaculture and wild tilapia harvest.  While wild capture fisheries declined, farmed tilapia production increased.  Aquaculture represented 1% of total tilapia production in 2000, but by the early 2010s it produced about 50% of the total 100,000 MT of Nile tilapia.  Much of the increase in aquaculture production resulted from overfishing and depletion of wild capture stocks of Nile tilapia and Nile perch.  (FAO, 2020; FAO, 2017a)

Hatcheries breed monosex all-male fingerings and provide them to aquaculture production systems operating in earthen ponds, cages, and tanks. The use of earthen ponds dominates production; however, there is a growing interest in commercial cage culture in lakes, water reservoirs and dams.  Limited supply of quality feeds presents a challenge to industry development.  Earlier studies identified needs for higher quality, floating feeds to develop commercial aquaculture. In 2017, only a single private company (Ugachick Poultry Breeders) provided floating (effused) feed to local and regional Kenyan markets.  The National Fisheries Resources Research Institute (NaFIRRI) has produced a lower quality sinking feed since 2011.  In either case feed supply does not meet demand and farmers may operate semi-intensive operations with lower qualify feeds supplemented by organic wastes, thereby risking fish growth and health.  The local feed industry is in its infancy and Uganda aquafeed producers face challenges finding limited supplies of a main ingredient; fish protein derived from Rastrineobola argente, a pelagic cyprinid also known as the Lake Victoria sardine or mukene.  This small fish also supplies protein to poultry and human diets.  (FAO, 2017a)

Most of the farmed tilapia or farmed fish in general are sold directly to consumers at farmgate.

Some fish farmers or traders process farmed fish by salting, sun drying or smoking to serve bigger regional markets. Uganda’s formal export of farmed tilapia is limited. A large company (Source of the Nile), sells some of its farmed tilapia to Rwanda and South Sudan.  Lack of refrigeration and cold storage facilities limit large scale processing and cost-effective distribution.  In local fish markets tilapia competes with Nile perch.  Consumers prefer tilapia but fish traders earn higher profit margins from wild capture Nile perch relative to aquaculture produced Nile tilapia. (FAO, 2017a).

Tilapia is a common name for a group of cichlid fish that consist of close to 100 species. In 2013, scientists reclassified the tilapia genus into three distinct genera of CoptodonOreochromis, and Sarotherodon. Of these, Oreochromis dominates aquaculture production with minor contributions from the two other genera. Tilapia generally refers to fish in all three genera.  As closely related species, tilapia interbreed to create hybrids with various characteristics relevant for aquaculture. Nile tilapia dominates production with significant contributions from Blue-Nile hybrid tilapia (Oreochromis aureus x O. niloticus), Tilapei nei, and Mozambique tilapia (Oreochromis mossambicus).  Minor production species may include redbreast tilapia, three spotted tilapia, blue tilapia, tilapia shiranus, longfin tilapia, sabaki tilapia, blackchin tilapia, mango tilapia, redbelly tilapia and others.  Tilapei nei refers to all minor species “not elsewhere included” with in other major groups.

 Infrastructure.  Tilapia grow in ponds, large lake cages, irrigation canals, controlled recirculation systems and polyculture systems with carp, catfish, shrimp and other species. With minimal construction and maintenance costs small pond operations keep costs low and affordable for lower income farmers.  These farmers can raise tilapia in extensive ponds or rice paddies fertilized with organic wastes and manures.  More productive semi-intensive and intensive operations use commercial feeds in ponds and cages.  Cage culture is used in countries with abundant lakes, large reservoirs, rivers and/or estuaries and most often occurs in South East Asia and Latin America in semi-intensive and intensive operations. Due to scarce water resources Africa uses few aquaculture cages, except for Egyptian aquaculture in the Nile Delta.  Cage culture allows rearing of mixed sex populations without overcrowding and stunting problems because eggs fall through the cage mesh.  Cage aquaculture can operate with minimal investment and function in large-scale industrial operations such as those in China, Costa Rica and other coastal nations developing export markets.  Large cage systems can cause environmental problems associated with high stocking densities, excess carrying capacity and poor water quality.

(FAO, 2004, FAO, 2017a).  Developed nations in temperate climates have been growing tilapia in recirculation or closed cycle systems although water must be heated.  Some growers in Canada combined tilapia aquaculture with have greenhouse operations (Fitzsimmons, 2000). This is an evidence of a growing demand for cultured tilapia throughout the world.

Feed.  As primary omnivores and vegetarians, tilapia consume a varied diet that includes bacterial films, algae, plant parts and aquaculture by-products. The flexible, omnivorous diet requires less protein relative to carnivorous species.  This allows farmers to use manures and agricultural by-products to produce tilapia cost effectively for domestic consumption and results in lower feed costs in semi-intensive and intensive system. (FAO, 2004).  To keep feed costs low, semi-intensive operations often use low-cost, locally produced feeds since higher quality, imported feeds and raw materials may be too expensive.  However, the cheapest formulations may not be cost efficient since they usually lack one or more nutrients resulting in reduced growth rates, poor FCR, and increased waste to the environment through uneaten feed and excess faeces.  (FAO, 2017; Fitzminnons, 2000; Towers, 2010).

Seed and sex-reversal.  Commercial tilapia production generally harvests male monosex populations after about five to six months of growth. The presence of female tilapia can lead to uncontrolled reproduction, stunted growth and uneven harvest sizes. To address the over reproduction problem, farmers use various techniques to promote male-only stocks. They include species hybridization, hormone induced sex-reversal and genetic modification to create super males.  The vast majority of hatcheries produce monosex male seed by adding a steroid hormone, 17α-methyltestosterone, into fry feed.  All-male Nile tilapia currently represent the major share of farmed tilapia production.

(FAO, 2004; FAO 2017a; Fitzminnons, 2000; FAO. Cultured Aquatic Species Information Programme.  Oreochromis niloticus)

From an economic point of view, the intensity criterion is used to classify an aquaculture system.  The division falls into three categories intensive, semi-intensive or extensive forms of culture. Measures of intensity include stocking density, production by area, feeding regimes and input costs, while the most important feature is the degree of control within the production process.  In intensive farming the farmer controls factors of production such as farm size, stocking and feeding of fish.  Traditional aquaculture varies between semi-intensive and extensive.   The higher degree of

control over the production process allows technological innovation to a much larger extent than other operation modes. This allows largescale production that can benefit from cost saving economies of scale.  It also allows market-oriented production and logistics, so that the fish can be sold in the markets that provide the producer with most added value.

 Disease and production.  Compared to other aquaculture species, tilapia can tolerate adverse water quality and stress; As a result, tilapias are slow to become sick in the presence of pathogens. However, this disease resistance only extends to a certain degree; parasites will infect fish under conditions of bad water quality and high stress   Two species of bacteria in the genus streptococcus cause most serious tilapia disease.  They are responsible for about US$1 billion annual losses globally. A newly detected pathogen, Tilapia Lake Virus (TiLV), is currently affecting production in an increasing number of countries. In order to mitigate diseases, producers need to identify the source of the pathogen; usually from water input or from the hatchery.  (Towers, 2010).  To review risks and mitigation strategies related to disease, see Chapter Two, section 2.1 Production Risks.


Biodiversity and invasive species.  Native to North Africa and the Near East, tilapia represent an invasive species everywhere else; in Asia, the America and many of the 127 nations that produce tilapia.  IUCN Invasive Species Specialist Group lists tilapia among the “100 of the World’s Worst Alien Invasive Species.”  It describes possible adverse impacts on the ecosystem if Mozambique tilapia (Oreochromis mossambicus) escapes from the production facility and competes with native fish for food and nesting space may be a threat to native species through competition for food and nest space. Tilapia are now generally considered to be pests and subject to eradication in many places.  (IUCN. Species Specialist Group. 2020). Earlier studies describe low risks due to possible escapement and species mixing (FAO, 2004).  However, best aquaculture practices eliminate fish escapements from production facilities to the natural aquatic environment.  To mitigate risks follow guidelines defined in Article 9 of the FAO Code of Conduct for Responsible Fisheries).


Weather uncertainties.  Tilapia are tropical fish that live in warm water and they will die when temperature drop below a lethal threshold.  Ideal water temperature should be around 26 C with species specific ranges between about 11 C to 42 C. (Towers, 2010). Unexpected cold temperatures outside of this range present a lethal risk. Site selection should consider seasonal temperatures, especially at high elevations in tropical countries.  In 2018 the tilapia industry in China experienced mass mortalities as a result of abnormal cold weather.


Market fluctuations.  Changes in global market conditions present risks and opportunities for tilapia investments.  The market has grown dramatically as tilapia consumption expanded in the United States and developing nations.  But US demand dropped after 2012 after bad press influenced the tilapia brand and adverse China relations may. Have affected public perception.  Moreover, the threat of tariffs causes uncertainty and shifts markets to other whitefish products that compete with tilapia.  Regardless there has been a recent decrease in US demand and subsequent drop in Chinese prices of 12-15% over the course of a year.  The trend towards premium product marketed as high quality, sustainable and healthy can be expected to continue.  Exporters may focus more on premium, third-party certified products with higher price margins. Recent certifications of Chinese farms under the Best Aquaculture Practices (BAP) scheme, maintained by the Global Aquaculture Alliance (GAA) shows that Chinese producers intend to participate in the growing premium product segment.  Moreover, premium products offer a more stable market somewhat cushioned from rapid price fluctuations of the enormous Chinese frozen filet market. (GlobeFish, 2020; Globefish 2018; Seafood Source News, 2019).

Abdel-Fattah, M. El-Sayed. 2006. Tilapia culture. Edited by CABI Publishing, Cambridge, USA.

 FAO.  2004.  Aquaculture of tilapias. De Silva, S., Subasinghe, R., Bartley, D., Lowther, A.

Tilapias as alien aquatics in Asia and the Pacific: a review.  FAO Fisheries Technical Paper. No. 453. Rome, FAO. 2004. 65p.

FAO.  2005. China.  National Aquaculture Sector Overview. Fact sheets.

FAO. 2006. The State of the World Fisheries and Aquaculture 2006. Rome.

FAO. 2006. Indonesia.  National Aquaculture Sector Overview. Fact sheets.

FAO. 2009. Article 9; FAO Code of Conduct for Responsible Fisheries.

FAO. 2017(a). Social and economic performance of tilapia farming in Africa, edited by J. Cai,

K.K. Quagrainie and N. Hishamunda. FAO Fisheries and Aquaculture Circular No. 1130.

FAO. 2017(b). Fishery and Aquaculture Statistics. Global aquaculture production 1950-2015 (FishstatJ). In: FAO Fisheries and Aquaculture Department [online]. Rome. Updated 2017.

 FAO.  2017(c). Top 10 species groups in global aquaculture 2017. (presentation).  Junning Cai, Xiaowei Zhou, Xue Yan, Daniela Lucentea and Camilla Laganaa.

 FAO. 2018. Fishery and Aquaculture Statistics. Global Fisheries commodities production and trade 1976-2016 (FishstatJ). In: FAO Fisheries and Aquaculture Department [online]. Rome. Updated 2018.

FAO 2020. Yearbook. Fishery and Aquaculture Statistics for 2018

FAO.  Cultured Aquatic Species Information Programme. Oreochromis niloticus. PDF fact sheet.

Fitzsimmons, Kevin.  2000.  Tilapia: the most important aquaculture species of the 21st century.

January 2000.

 GLOBEFISH Research Programme, 2010.  Norman-López and Bjørndal.  Markets For Tilapia. Vol. 101, FAO.  Rome, FAO.  p. 37.

Globefish — Information and Analysis on World Fish Trade. 10 April 2018

GlobeFish Highlights. 2020.  A Quarterly Update On World Seafood Markets.

JULY 2020 ISSUE, with Jan. – Mar. 2020 Statistics. FAO, Rome.

 IUCN. Species Specialist Group. 2020.

 Seafood source news. February 4, 2019.

Towers, Lucy.  2010. The Fish Site. How to raise Nile Tilapia.



3.2 Shrimp Industry Profile

World production of farmed shrimp reached almost 4 million tons in 2018.  Global trade of shrimp and prawns is estimated at USD 28 billions per year, coming mostly from farms in Asia and Latin America (mainly Ecuador) producing Penaeus vanname. Most of this production involved penaeid shrimp produced in Asia and South America.  Although FAO lists over 20 species of farmed shrimp, two species dominated commercial production are whiteleg shrimp (Penaeus vannamei) and Giant tiger shrimp (Penaeus monodon).

Native to the Pacific coast of Central and South America, P. vannamei grow efficiently in intensive, high-density production ponds and support profitable shrimp operations in Asia and the Americas.  Vannamei breed better in captivity than monodon and have higher hatchery survival rates at 50 – 60%. Although monodon shrimp have a longer production history than vannamei became more profitable due to higher disease resistance and higher stocking densities.  Starting around 2000, farmers throughout Asia switched to vannamei and it is now the dominant aquaculture shrimp around the world. Top vannemi (whiteleg) producers include China, Indonesia, India, Ecuador, Vietnam and Thailand.

Named for its huge size and banded tail, Giant (or black) tiger shrimp (Penaeus monodon) accounts for about a quarter of the farmed shrimp coming out of Asia and 12 % globally.  Native to the Indian Ocean and the southwestern Pacific Ocean, “tigers” are the largest and fastest growing of the farmed shrimp.  They take longer to grow in extensive systems with little or no synthetic feed.  Monodon tolerate a wide range of salinities, but hatchery survivals are low ranging from 20 – 30%.  Tigers are very susceptible to two of the most lethal shrimp viruses: yellowhead and whitespot. Specific pathogen free (SPF) broodstock and postlarvae entered the market around 2009, primarily in Vietnam and India, but disease still plagues the industry.  Monodon shrimp are usually marketed and sold as a premium seafood product.  Leading producers of Giant tiger prawns include Vietnam, Indonesia, Thailand, China, and Bangladesh.

Most shrimp grow in extensive or semi-intensive brackish water ponds although intensive operations have been increasing in Asian countries building export markets.  Most farms produce one to two harvests a year and perhaps three of more in tropical climates, that is depended on farming technology used.  Rapid aquaculture expansion in coastal brackish (salty) ponds led to problems of disease and aquatic pollution.  Diseases directly affect the profitability of the shrimp industry can result in huge income losses amounting to billions of dollars annually. Current diseases include: AHPND, an acute hepatopancreatic necrosis disease caused by bacterium Vibrio parahaemolyticus; EHP (Enterocytozoon hepatopenaei), a microsporidian fungal parasite responsible for hepatopancreatic microsporidiosis; and, WSSV, the white spot syndrome virus. Taura syndrome virus (TSV) started in the Americas and spread worldwide. In 2020 and new decapod iridescent virus 1 infected up to a quarter of the shrimp farms in Guangdong province, the heart of production in the south of China.

Global shrimp production

In 2018 farmers produced 4,966,241 tons of whiteleg shrimp and 750,605 tons of giant tiger prawns.


Whiteleg shrimp production (tons)

Top ten producer nations in 2018.

China 1 760 341
Indonesia 708 680
Vietnam 475 000
India 622 000
Ecuador 510 000
Thailand 347 258
Mexico 157 934
Brazil 62 000
Saudi Arabia 56 100
Iran 47 859
Global total 4 966 241


Giant tiger prawn production (tons)

Top ten producer nations in 2018.

Vietnam 290 000
Indonesia 161 903
China 75 356
Bangladesh 61 709
India 59 000
Philippines 44 780
Myanmar 19 042
Thailand 15 257
Malaysia 9 906
Sri Lanka 8 080
Global total 750 605



Figure x.  In 2016, leading shrimp importing nations included the USA, Japan, Korea, Spain and China.  (FAO, 2017)


Middlemen and markets

Smaller shrimp farmers usually buy feed and seed directly from feed manufacturers or through middlemen.  This is an important distinction and consideration for profitability as it affects feed and seed prices and availability and creates production input risks as described in Chapter Two. In many cases, middlemen provide valuable services for farmers, such as training, financing and logistics help to reach markets.  Without financial resources and direct market access to feed and seed suppliers, retailers and off-takers, farmers rely on middlemen to support their production and supply chains. In some cases, they take role as a facilitator between hatchery, feed mills, and processors. In Indonesia, because the location of the farm mostly in remote area, middleman also take part to connecting the remote farmer especially for those who does not have vehicle with other stakeholder in supply chain (BCG, 2019). In many cases middlemen are family members or friends with the farmer.After middleman or off-takers take shrimp from the production facility, it is processed and sold into market as either fresh or frozen product of different sizes.  In marketing products, middlemen and traders may implement value-added processes and selective product sizing to enable product differentiation and distinct supply and demand dynamics.  In small markets, middlemen may limit options for farmers.  See Chapter Two, section 2.2 to review risk mitigation strategies related markets, pricing volatility and product differentiation.


Market drivers

  • Value added products. Consumers in the USA, EU and Japan increasingly purchase higher-quality, value-added products.  These higher-quality value added products include, but are not limited to, ready-to-cook or ready-to-eat shrimp that can be both peeled and breaded.


  • Growing domestic consumer base. Countries like China and India initially supported aquaculture as an export industry. However rising wealth in these and other countries lead to more domestic consumption.


  • Price fluctuations. Shrimp prices change often sharply in response to disease outbreaks and expanded production.  Chinese production volume and value dropped about 25% in 2019 and in 2020 Covid-19 affected shrimp prices as demand dropped in the US and EU.


  • Government support. The governments of major producing countries have acknowledged the seafood sector as a high priority industry and currently promote it with several fiscal reliefs and incentives. For instance, in India the MPEDA (Marine Products Exports Development Authority), supports shrimp culture through cluster farming approach. Similar initiatives in Vietnam, Thailand and China are expected to attract new investors to the industry.

(Businesswire, 2019)


IndonesiaAccording to the FAO (2018) shrimp production reached 637,555 tons in 2016 making Indonesia the second largest shrimp producer in the world after China.  In earlier years Indonesia cultured mostly monodon (giant tiger) shrimp and produced about 90,000 tons annually from 1997 – 2001.  But after outbreaks of white spot virus caused mass mortalities, the government introduced whiteleg (Penaeus vannamei) broodstock from Hawaii as a disease resistant alternative.  Most semi-intensive farmers have now shifted from monodon to vannemei which accounts for more than 75% of total shrimp production.  Corporate farms raise vannamei in intensive operations in East Java, Lampung and Bali producing about 30 tons/ha/year with an average of 2.5 cycles of production/year. The White feaces , Infectious Myo Necrosis Virus (IMNV), White Spot Syndrome Virus (WSSV), and AHDNP (Acute Hepatopancreatic Necrosis Disease) now threaten the vannemei industry.

Indonesian farmers still use extensive mono- and polyculture ponds to grow monodon. Corporate farmers operate extensive monodon farms in East Kalimantan while small-scale farmers conduct extensive farming operations on several other islands. Small-scale farmers also operate extensive polyculture ponds raising monodon along with milkfish on Java and Sumatra. Most of extensive monodon farms target the Japanese market and exporters provide both value and non value-added products.

Cultured shrimp exports accounted for US$ 1.7 bln and close to 175,000 tons 2017. (in processed weight, including wild shrimp).  Indonesia exports shrimp mostly to the United States followed by Japan and the EU.  The nation has avoided anti-dumping duties imposed by the United Stated on other Asian competitors.


(Seafood Intelligence Portal, FAO,2018)

USA Japan China Rest of Asia EU Other


% of Indonesian

exports, 2018

67 21 5 3 3 1



Vietnam.  Vietnam is one of the largest shrimp producers in the world with a production of 823,850 tons in 2019 in which monodon shrimp production of 290,000 tons and the major part is vannamei shrimp, about more or less 530,000 tons.  In 2018 Vietnam produced 475,000 tons of vannemei (whiteleg) shrimp, up 36,000 tons in 2009; and 290,000 tons, of Penaeus monodon (giant tiger), down from 316,000 tons in 2009.  (FAO, 2020). The aquaculture sector began commercial production for export in the early 1980s with the farming of monodon.  However, after EMS outbreaks farmers adopted best practices and transitioned from monodon to the more productive vannamei operation.  Vannamei production started in 2008 and by 2013 had surpassed monodon in terms of volume because of higher productivity and profits. However, many Vietnamese farmers moved back to monodon farming in 2018, due to price advantages relative to vannamei. Vietnam still leads the world in Penaeus monodon production.

(Seafood Intelligence Portal).

The Vietnam shrimp sector is very diverse, ranging from organic mangrove grown P. monodon to small size P. vannamei produced in intensive farms. The Mekong Delta is the most important farming area, accounting for nearly 80% of overall production and home to the top five contributing provinces of Ca Mau, Bac Lieu, Soc Trang, Ben Tre and Kien Giang. Among these, Ca Mau is the largest brackish water shrimp production area covering approximately 300,000 ha and accounting for approximately 40% of the nation-wide production area, total Vietnam shrimp production area was 705,545 ha in 2019Shrimp farms in this southern part of the country operate as either improved extensive, semi-intensive or intensive systems.  In terms of surface area, improved extensive farming systems are the dominant monodon production system in Vietnam. However due to their very low output, they only contribute about 13% of overall country production. Intensive shrimp culture for vannamei and monodon dominate the farming systems in coastal areas such as Ben Tre, Tra Vinh, Kien Giang, Soc Trang and Bac Lieu in the Mekong Delta and in the central coastal areas of Vietnam. With a total farming area estimated at 61,000 ha in 2014, this farming system contributes about 80% of the overall Vietnam production.

Vietnam expects the shrimp industry to grow based on government and industry investments in high-quality post-larvae, feed and intensive farming, as well as in improved infrastructure such as laboratories and power grids. The government has also increased monitoring and regulation of hatchery operators in particular, which contributes to an improved quality of available post-larvae for farmers.

In 2018, Vietnam exported approximately 52% of shrimp production to other countries. Main exports include vannemei (whiteleg) (>60%) and monodon (black tiger) shrimp (25%) along with a few other marine shrimp species. Whiteleg exports included 44% processed and 56% unprocessed (fresh/frozen/live) shrimp, while around 90% of black tiger shrimp was sold as unprocessed.  Vietnam’s preferred export form is frozen shrimp and prawns. Frozen products make up more than 90% annual sales 2018.  Vietnam imported 270,000 tons of frozen shrimp in 2018 for re-processing and re-export.  It imports large volumes of head-on shell-on (HOSO) products from Ecuador and India that it processes into different value-added products before re-exporting them, mostly to the EU28, Republic of Korea, Canada and Australia (Seafood Trade Intelligence Portal).

In 2018, Vietnam shrimp exports totaled US$ 3.6 billion, down 8% from the 2017 value.  Key export markets for Vietnamese shrimp include the EU (29%), Japan (19%), China (13%) and USA (14%). Vietnam was a major supplier of processed shrimp (22,500 tons).  Vietnam’s official exports to China increased by 119 % in 2018, while unofficial trade continued to decline following stringent border control by China. Vietnam competes with India for shares of US shrimp markets, especially in terms of prices.

EU Japan Other nations USA China Rest of Asia
% of Vietnamese

exports, 2018

29 19 19 14 13 6

Figure x.  Volumes of leading Vietnamese export species. (Seafood Trade Intelligence Portal).

Shrimp aquaculture production usually involves three stages:

  • Hatcheriesbreed shrimp and produce nauplii or postlarvae (PL) which they sell to out-grow farms.
  • Nurseriesgrow post-larvae and prepare them for marine conditions in the grow-out ponds. Some operations skip the nursery phase and move PL directly to grow-out ponds. Normally the nursery period can be in range of 20 – 25 days for 10-12 day shrimp post larvae (PL 10-12), as juvenile shrimp can reach the size of 1,000 – 2,000 pieces per kg.
  • Grow-outponds enable shrimp are grown from juveniles to marketable size, for intensive vannameii shrimp farm systems, the grow-out period may take 65 to 85 days, and the market size of the shrimp harvested can be 40-60 pieces per kg. On average, the Feed Conversion Ratio (FCR) for intensive shrimp farm can be ranged from 1.2 to 1.6: 1, popularly 1:3:1.

In some areas such as Vietnam, shrimp farming production can be divided into three stages including stage1- nursery (18-25 days, post larvae shrimp of 10-12 days (PL10-12) is stocked in nursery pond of 200 m2, density of 2,250 post larvae per m2), stage 2 – grow out (30 days – high density, about 500 – 600 pieces per m2) and, stage 3- (55-60 days, density of 200-300 pieces per m2). In general, intensive shrimp farm system today can have  high survival rate, about 89%, and low value of FCR, just about 1.3:1 whilst the productivity can be in range of 60-80 tons per ha, with shrimp market size of 30-35 pieces per kg. Notebaly, for this farming practices, farmers can carry out 3- 4 crops per year.



Grow-out techniques fall into four main categories: extensive, semi-intensive, intensive and super-intensive.  These techniques operate with different stocking densities, feeding practices and yields. Most coastal shrimp farming occurs in extensive and semi-intensive brackish ponds; often in concrete or plastic structures built on earthen foundations and lined with plastic.  Intensive methods operate in smaller ponds with greater stocking densities and require more feed.


Extensive.  Commonly found in Latin American countries, extensive grow-out ponds of 1-5 ha operate in tidal areas with no water pumping or aeration. Shrimp feed mainly on natural foods enhanced by fertilization with once-daily feeding with low protein formulated diets. With low stocking densities, extensive ponds produce small shrimp of 11–12 g harvested in 4–5 months and yield 150–500 kg/ha/crop, with 1–2 crops per year. Shrimp can be farmed in the mangrove forest and harvest may be implemented year-round, no artificial feeds used, low production cost but low productivity.


Semi-intensive.  Semi-intensive ponds are stocked with hatchery-produced seed and are common in Latin America. Relatively small at 1 – ha and 1.0-1.2 m deep, semi-intensive farming usually requires pumping but operates with no aeration or paddle wheels. The shrimp feed on natural foods enhanced by pond fertilization, supplemented by formulated feed 2–3 times daily. Production yields range from 500–2 000 kg/ha/crop, with 2 crops per year.


Intensive. Intensive farms are commonly located in non-tidal areas where ponds can be completely drained, dried and prepared before each stocking.  They are increasingly located inland in cheaper, low salinity areas. This culture system is common in Asia and supports production for export markets.  Semi-intensive infrastructure includes earthen ponds, often lined with plastic to reduce erosion and enhance water quality. Ponds are generally small (0.1–1.0 ha) with water depths usually >1.5 m. They operate with high stocking densities (60–300 PL/m², even 500 PL/m2) and heavy aeration for water circulation and oxygenation. Farmers distribute artificial feed diets about 4–5 times per day. FCRs range from 1.2–1.8:1. (FAO. vannamei)


Best practices.  Regardless of various out-grow techniques, investors and farmers should implement common best practices, such as:

  • Select healthy and disease-free PLs
  • External nurseries to accommodate post-larval (PL) juveniles to marine conditions and observe them for problems prior to their release to larger out-grow ponds
  • Central drain systems to clear sediment and detritus from the bottom of the pond to keep water clean and improve survivability.
  • Solid foundations require less maintenance and enable more efficient water management and treatment systems. This allows farmers to increase stocking density and resist diseases through better water quality
  • Pond liners to reduce erosion and pond seepage to reduce water use.
  • Crab and bird nets to keep predators away and prevent spread of diseases by birds.
  • Aerators or spinning paddle wheels to increase the dissolved oxygen in pond water.

(Rubicon Resources, 2017.  “5 Best Practices for Shrimp Farming.” Aug 23, 2017)


Feed.  Shrimp are very efficient at utilizing the natural productivity of ponds and they require less commercial feed in extensive ponds.  In semi-intensive and intensive operations farmers distribute feed by hand or automatic feeders before it sinks to the bottom for shrimp consumption. Feed costs are generally less for P. vannamei than the more carnivorous P. monodon, due to whiteleg’s lower protein requirements. Feed can contain medicines such as antibiotics, immune-suppressants, and probiotics to boost disease resistance and additives to preserve fish meal.  Antibiotics should be avoided or minimized since they can lead to bacterial resistance and antibiotic residues that exceed safety standards in importing nations.  Moreover, feed should minimize the use of fish meal as a protein source, especially for overfished stocks.  Ingredients for sustainable feeds should be traceable back to its source.  Moreover, feed should not contain fish meal preservatives such as ethoxyquin.

(Seafood Trade Intelligence Portal, Shrimp News International. 2017).


Seed.  With the outbreak of viral syndromes, successful aquaculture now depends on disease-free broodstock.  In the 1990s, scientists developed specific pathogen free (SPF) and specific pathogen resistant (SPR) lines of broodstock.  Hatcheries around the world now produce certified SPF and SPR for sale to out-grow farms.  Farmers who cannot afford SPF/SPR broodstock often establish broodstock from wild capture stock or disease free stock from their own ponds.  However these methods increase the risk of diseased seed.  Regardless, farmers following best practices should use certified SPF and SPR seed.

(FAO vannamei, FAO mondon).


Financial Model for Shrimp

The intensive shrimp farm following 3 stages/periods can conduct 4 crops or cycles per year. Each crop is typically ranging from 90 – 120 days, depending on the market size desired. However, popularly the intensive shrimp farm may take place about 100 days per crop. The main costs of intensive shrimp aquaculture is feeding cost that frequently accounts for about 60%, energy (6-7%), seed (5%), and others (agrochemicals, labour etc). The requirements for responsible sourcing ingredients for shrimp feed such as fishmeal, fish oil (IFFO RS, MSC, FOS etc) by internationally recognized standards e.g. ASC, BAP etc. may considerably increase the feed prices for shrimp farmed. Improvement of the partnerships in shrimp farmed supply chain may reduce the production cost, especially the feed cost by more equally allocation of the benefits long the chain. For instance, small household farmers are dominant in Vietnam shrimp aquaculture. These groups are normally difficult to access to finance therefore, middlemen play an important role to provide input materials such as feed, agrichemicals, equipment, and credit with high interest rates. That makes shrimp production increased and perhaps significantly higher compared to farmers those have sufficient capital to invest in their farming business.

Accordingly, the proportion profit/cost may be about 40%. High stocking density of shrimp farm requires to use large volume feed, and good water quality control systems, that means the investment in water filter systems, aeration system… to keep aquatic environment quality for shrimp growth is very important. And, bio-security is another matter needs to be ensure to mitigate investment risk in shrimp aquaculture.

Table xxxx: Costs/profits analysis of the intensive shrimp farm (whiteleg shrimp) in Bac Lieu province, Vietnam, the farming practices was developed and introduced by CP Vietnam.




Table xxxx: Costs/profits analysis of the intensive shrimp farm (whiteleg shrimp) in some aquaculture communes in Ca Mau province, Vietnam, data collected in 2020, the farming practices was developed and introduced by Viet Uc group.


Items/parameters Commune 1 Commune 2 Commune 3 Commune 4
Pond area (m2) 2,000 1,200 1,600 1,600
Number of post larvae stocked (pcs) 450,000 290,000 350,000 420,000
Stocking density (pcs/m2) 225 187 218 262
Farming duration (day) 110 78 90 92
Production (kg) 10,700 5,100 9,200 9,590
Market size (#pcs per kg) 43 60 40 44
Market price (VND/kg) 117,000 100,000 115,000 123,000
Survival rate (%) 100 100 100 100
FCR 1.3 1.3 1.3 1.2
Total Revenue per pond per crop (VND) 1,251,900,000 502,500,000 1,025,600,000 1,177,094,000
Profit per pond (VND) 557,900,000 212,500,000 375,600,000 527,094,000
Total profit per ha per crop (VND) 2,789,500,000 1,770,833,333 2,347,500,000 3,294,337,500
Productivity (ton/ha) 53.5 42.5 57.5 59.0
Production cost per unit (kg) 64,860 60,500 70,652 67,779



In some intensive farms in Indonesia, the priode to cultured shrimp is 75 days (most common period is 90-120 days) for one cycle to grow the shrimp until 35-40 pcs/kg or 25-28.6 gram/pcs with FCR 1,1-1,4 using auto feeder technology. For the production cost, 50-60% of total cost contributed from feed, 25-30% for electricity, 10-15% chemical and labour cost, and 10% for PL (CEA, 2018).


Tablexx: Cost Profit analysis for shrimp cultures in Jepara Central Java Province and Subang, west java province, Indonesia (Supito, 2018; Mina Ceria 2018)Items (per cycle) Location: Jepara (US$, Supito 2018) Location: Subang (US$, Mina Ceria 2018)
Intesive SemiIntensive Extensive House hold Scale Intesive
Density  (PL/m2) 100 60 10 100 120
Pond Area (m2) 10,000 10,000 10,000 1,000 5.000
Fixed Cost 32,978 7,006 3,520 4,559 32.123
Operation Cost (FCR 1.4-1.5) 44,741 25,992 2,615 4,859 27.339
Total Revenue 82,017

(One Cycle)

49,210 4,100 8,529 38.273

(Two Times partial and Final Harvest)

Middlemen and inefficient supply chains

Middlemen play a significant role in most smallholder farm production and supply chains.  Farmer, middlemen, and off-takers often manage their relationships informally with little formal record-keeping and accountability.  Middlemen may be the only party that maintains a reliable track record of farm production.  In developing markets middlemen may act as monopolists and limit options for input supplies and market access.  These factors contribute to production inefficiencies and lack of transparency in the supply chain that create risks related to sustainable sourcing, dishonest middlemen and lower profits.

To mitigate middlemen risks, farmers and investors should formalize relationships among trading partners, make trading dynamics more transparent where possible and pursue multiple off-taker agreements.  While these mitigation strategies may be difficult to deploy in traditional smallholder shrimp communities, investors should seek and encourage effective trade organizations and professional practices among parties as a precondition for investment.  To review risks and mitigation strategies related to middlemen and supply chains, see Chapter Two, section 2.1 Production Risks and section 2.2 Market Risks.


Loss to disease

Resulting in high mortality rates, diseases represent a very real danger to shrimp farmers, who may lose their income for the whole year due to infected ponds.  The collective losses due to AHPND, and other shrimp diseases during the AHPND outbreak in China, Malaysia, Mexico, Thailand and Vietnam, are estimated to be US$ 23.6 billion, with a further loss of US $7 billion in feed sales, and US$ 13.4 billion in export losses. EHP is the latest pathogen to emerge and there are few country-specific details relating to industry losses.  For Thailand, it is speculated that the EHP-associated losses could be as high as US$ 180 million. Collective losses due to shrimp disease from 1980-2016 is estimated at US$ 42 billion in direct losses, US$ 24 billion in export losses, and US$ 13 billion in lost feed sales. Based on this troublesome disease history, disease losses in Asia and the Americas present significant risk.  (Reference?)

Since most diseases cannot yet be treated effectively, investors and farmers should focus on preventing disease outbreak in the first place. Best practices to mitigate disease include active water quality management to avoid conditions favorable disease conditions and the use of specific pathogen free (SPF) and specific pathogen resistant (SPR) broodstock.  To improve biosecurity practices farmers should line ponds with plastic lining to avoid soil contact and design good central drainage systems to minimize water exchange with the natural environment.  Cages and nets covering production ponds minimize the spread of the disease by birds and crab predators. To review disease risks and mitigation strategies refer to Chapter Two, section 2.1.1 Disease occurrence.


Environmental risks

Shrimp aquaculture may cause water pollution in some coastal estuaries as high stocking densities and large feed volumes exceed natural carrying capacity.  Moreover, shrimp operations often cut mangrove forests for aquaculture sites thereby reducing biodiversity, destroying valuable habitats, increasing coastal erosion and creating hardships for communities dependent on coastal access and productive ecosystems.  Other environmental risks involve the use of unsustainable fish meal in feeds.  Overfished stocks should not be used for fish meal. Vulnerable stocks usually involve small, pelagic species such as sardines, menhaden that are harvested to provide proteins for fish and poultry feeds.  Farmers should know sources of feed inputs and be able to trace them to their sources.  To mitigate environmental risks farms should operate with good central drainage systems operating on solid foundations. Site planning should avoid mangrove forests and wetlands and large operations should conduct carrying capacity studies for estuaries and other impacted water bodies.  To review environmental risks and mitigation strategies see Chapter Two, section 2.6.


Food safety and sanitary standards

Across the production and supply chain chemical and bacterial contaminants can affect food safety.  Unwanted chemicals include antibiotic residues, fish meal additives and preservatives, and agar injections to increase weight.  All major import countries set sanitary standards and enforce food safety regulations for seafood, particularly shrimp.  Risks occur when farmers use antibiotics to fight disease and product distribution contaminates shrimp with bacteria as it moves through cold supply chains.  The EU market has more strict regulations (zero tolerance) on residues of chemicals and antibiotics, as well as the trade privilege or Generalized System of Preference (GSP) on import tax and HACCP. The US market enforces a sanitary standard such as HACCP or Sensory Assessment. (FAO_monodon). To review food safety and sanitary risks and mitigation strategies see Chapter Two, section 2.3.


Social risks

Inadequate worker safety and weak worker rights in factories represent important social risks.  Other risks involve local neighbourhood conflicts due to resource exploitation and water pollution, especially in coastal mangrove areas.  To review social risks and mitigation strategies refers to Chapter Two, section 2.7 Environmental Risks.


Certified best practices and standards

Industry responded to risks and mitigation strategies by defining best management practices and establishing standards for third-party certification systems.  The Aquaculture Stewardship Council (ASC), the Global Aquaculture Alliance (GAA) and Global Aquaculture Practices (GAP) define sustainability standards and maintain certification and improvement programs.

In the world, only 5% of the shrimp aquaculture production that has been certified, one of major obstacle is price of the certification is expensive especially for the small farmer. In Indonesia, 79% of the farmer has not been certified (Figure xx) due to 80% are extensive farm (small holder farmer) (BCG, 2019).













Figure xx. Distribution of shrimp farm certification in Indonesia (Seafood-tip, 2018)


Standards of the Aquaculture Stewardship Council (ASC)

Biodiversity. ASC certified Shrimp farms minimize impacts on their neighboring ecosystem in a number of ways, such as partial restoration of lost mangrove forest, the development and implementation of a biodiversity­ focused environmental impact assessment (B-EIA) and ensuring farms are not sited in critical habitats. Since shrimp farming often occurs along coastal areas, a permanent coastal barrier must be in place between the farm and the coastline.


Feed. ASC certification requires shrimp farms to adhere to strict limits to minimize use of wild fish as an ingredient for feed. In addition, the standard requires farms to ensure full traceability back to a responsibly managed source, preferably certified, for wild fish, but also for palm oil and soy.

Pollution. ASC certified shrimp farms are required to measure water quality parameters (nitrogen, phosphorus, oxygen levels, etc.) at regular intervals and remain within set limits. Treatment systems for wastewater need to comply with strict requirements. Discharge of sludge is not allowed.

Diseases. ASC certified shrimp farms must adhere to rigorous requirements to minimize disease outbreaks. A health plan for the shrimp must be developed and implemented on the farm. This plan details steps for biosecurity management, including the use of pathogen-free shrimp larvae for pond stocking. In addition, the use of medicines before a disease is diagnosed (prophylactic use), is prohibited. ASC certified shrimp cannot be treated with antibiotics or given feed containing medicine. Producers need to manage farms in such a way that shrimp survival rates are high.

Social. ASC certification imposes strict requirements based on the core principles of the International Labor Organisation (ILO), these include prohibiting the use of child labor or any form of forced labor.  All ASC certified farms are safe and equitable working environments where employees earn a decent wage and have regulated working hours. Certified farms need to consult and engage with local communities to ensure they provide access to vital resources and deal with complaints or conflicts in proper manner.

(Aquaculture Stewardship Council. 2020. Farm standards for shrimp).

Aquaculture Stewardship Council (ASC).  2020.  Farm standards for shrimp.

Businesswire, 2019. “The Global Market for Shrimp (2019-2024): Expected to Reach a Volume of 5.83 Million Tons by 2024” –—

BCG. A Strategic Approach to Sustainable Shrimp Production in Indonesia (Rubel et al.,2019)

FAO. monodon.  Cultured Aquatic Species Information Programme. Penaeus monodon (Fabricius, 1798)

FAO. vannamei.  Cultured Aquatic Species Information Programme. Penaeus vannamei (Boone, 1931).

FAO. 2017. Fishery and Aquaculture Statistics. Global aquaculture production 1950-2015 (FishstatJ). In: FAO Fisheries and Aquaculture Department [online]. Rome. Updated 2017.

FAO. 2018. Fishery and Aquaculture Statistics. Global Fisheries commodities production and trade 1976-2016 (FishstatJ). In: FAO Fisheries and Aquaculture Department [online]. Rome. Updated 2018.

FAO 2020. Yearbook. Fishery and Aquaculture Statistics for 2018

Global Aquaculture Alliance. 2018. “Current production, challenges and the future of

shrimp farming.” By Darryl E. Jory, Ph.D. (diseases, feeds, market trends)

Globefish/FAO — Information and Analysis on World Fish Trade. 10 April 2018

GLOBEFISH/FAO. Information and Analysis on World Fish Trade. Trade Statistics.  Shrimp – April 2020.  Products, Trade and Marketing Branch (FIAM) Fisheries and Aquaculture Policy and Resources Division.

GlobeFish Highlights. 2020.  A Quarterly Update on World Seafood Markets.

JULY 2020 ISSUE, with Jan. – Mar. 2020 Statistics. FAO, Rome.

Mina Ceria 2018. Business Management for Vannamei Shrimp. Shrimp Business Training. Saturday, 4 August 2018. Jakarta. Indonesia

Rubicon Resources.  Aug 23, 2017.  “5 Best Practices for Shrimp Farming.”

Seafood Trade Intelligence Portal

Shrimp News International.  2017. “Antibiotics and Shrimp Farming Residues, Resistance and Regulations.” By Dr. Stephen Newman.

Supito. 2018. Business analysis for Shrimp Cultured, Private Communication. Balai Besar Perikanan Budidaya Air Payau (BBPBAP Jepara)

Seafood-tip. 2018. Shrimp in Indonesia  intelligence/countries/indonesia/shrimp/


Investment Case Study

In 2018 IDH partnered with Mvuvi Holding, the holdings company of Chicoa Fish Farms in a project to develop a sustainable tilapia sector in Mozambique. IDH funding is conditional to a 40-60% funding distribution between IDH (40%) and Mvuvi (60%).  IDH provided a grant amounting to EUR EUR 202,873, Mvuvi holdings invests EUR 368,929 into the project.

The project, that ends in December 2020, aims to contribute to a sustainable tilapia industry in Mozambique. This will be achieved through: 1) further developing the market for fresh water fish; 2) increasing efficiency of Mvuvi’s farm in Mozambique (Chicoa) by implementing feed trials, data and carrying capacity analyses; 3) facilitating the expansion of the aquaculture sector by partnering with the Government of Mozambique; 4) establishing an out-grower program and third-party fish farming; and 5) scaling up Chicoa to become an aquaculture center of excellence.  The project helps Chicoa to further vertically integrate and link the company to small and medium enterprises and to become the hub of an aquaculture sector in Mozambique.  Chicoa and Mvuvi holdings are separate limited companies and Aqua-Spark currently owns 57% of Mvuvi Holdings.

Table 1. Impact investment summary

Grant recipient Mvuvi Holdings Investment Size EUR 0.2 mn
Grantor IDH Foundation Investment type Grant
Aquaculture development Species: Tilapia (Oreochromis niloticus) Transaction Date From November 2018;

every six months.

Production Amount 1200 tonnes (2019) 2019 Revenue USD 995,383
# Employees 130 permanent in 2020 2019 EBITDA USD -975,830
Year Incoporated 2015 Certification No certification

Grant proceeds supported a project to develop a sustainable tilapia industry in Mozambique.  Achievements from the funding include:

  1. Expanded markets in Mozambican cities – Tete, Nampula, Palma, Maputo and Beira – with additional market expansion within informal markets both in Mozambique and Malawi.
  2. Assisted with the sourcing and capacitation for downstream cold chain leasing from production-to-markets storage facilities.
  3. Improved lake fish breeding to lower mortalities and ensure healthy fingerlings.
  4. Increased production of high-quality feed with low FCR compared to competitors.
  5. Attracted investments and other grants for further development and scaling.
  6. Strengthened gender inclusion efforts.
  7. Laid the essential groundwork of the inputs supply chain, that is crucial for developing small-scale and third-party farmers within a nascent sector.
  8. Ensured the firm paid a living wage and housing allowances to all their employees.
  9. Maintained a precautionary approach to disease management and mitigation.
  10. Provide trainings on aquaculture production, control of fish diseases and best practices.
  11. Built partnerships with governments, aquaculture producers and other stakeholders.

Strong management. Established in 2015 as a partner with Mvuvi Holdings, Chicoa is based in Mozambique and operates in four countries; Mozambique, Malawi, Zambia and South Africa. Chicoa maintains a strong management team with abundant African aquaculture expertise and experience.  Gerry McCollum and Damien Legros founded Chicoa and presently serve as CEO and COO respectively.  Mr. McCollum previously worked 15 years in Zimbabwe for Lake Harvest, a vertically integrated tilapia farm. In this role, He designed, built and managed aquaculture feed and processing plants and directed sales and logistics.  Mr. Legros has 30 years aquaculture experience having set up and managed fish farms in Africa and beyond.  Jayson Coomer is shareholder and CFO with strong experience in finance.  Strong management results in well-run operations and low feed conversion ratios (FCRs.)


Industry leadership.   In the under-developed African aquaculture sector, Chicoa’s out-grower project will pioneer a business model which could be scaled and replicated in other African countries.  Activities in four countries provide market advantages for Chicoa. As an industry leader and community partner, Chicoa invests in local aquaculture by supplying fingerlings and husbandry expertise to local fishermen.  By supporting local communities and helping their transition into aquaculture, Chicoa will provide economic opportunities and improve food security.  Currently, Chicoa is the biggest employer in Nova Chicoa Emboque village.  Further vertical integration of the Chicoa value chain will help the company to become an innovator and leader in southern African aquaculture.


Government support.  Aquaculture is under-developed in the four southern African countries where Chicoa operates.  In Mozambique, IFAD has provided $43 million to boost the development of aquaculture. Chicoa has been identified as one of the key farms that IFAD will coordinate with for small-scale aquaculture development, in tandem with the Ministry of Fisheries.


Future plans.  Chicoa plans to develop the vertically integrated tilapia farm in Mozambique, set-up an out-grower program and implement a distribution network for seed, feed, and tilapia. Investors will follow the development of the out-grower project to assess how the pilot project could be replicated in other African countries.


Impact investments.  Chicoa operations and growth in southern Africa will support five Sustainable Development Goals (SDGs).  See Table 2.


Market Development.  Chicoa is developing the local supply chains and local fish markets.  This contributes significantly to country food security.

At the early stage of vertical integration, companies like Chicoa face risks related to production, markets, and finances.


Production risks

  • Processing facility machinery is already in place, and should be operational by September 2021. Investment still needed for feed mill once the farm is fully operational;
  • Farm management dependent on too few individuals. Needs scale.  Low production capacity and efficiency;
  • Upstream feed supply. Dependent on imports from supplier;
  • Upstream seed supply. Not issue for Chicoa but others may have low quality juveniles; and
  • Poor water quality. Not issue for Chicoa because of excellent site selection.  Others can experience low oxygen and high nitrogen/ammonia concentrations.

To mitigate comparable production risks, see Chapter Two, Section 2.1 Production Risk Mitigation.


Market risks

Domestic and international market risks include:

  • Weak product differentiation;
  • Currency fluctuations. Sudden domestic and international exchange rate changes;
  • Inadequate agricultural extension workers and outreach to out-growers.

To mitigate comparable market risks, see Chapter Two, Section 2.2 Market Risk Mitigation and Section 2.9 Industry Collaboration.


Financial risks

  • Inadequate cash flow in a cash flow and capital intensive business;
  • Key-man exposure. Need to keep and expand qualified staff.

To mitigate comparable financial risks, see: Chapter Two, Section 2.2 Market Risk Mitigation;

Section 2.8 Reputational Risk Management; and Section 2.9 Industry Collaboration.

Table 2.  Chicoa’s mission supports five Sustainable Development Goals (SDGs):

Sustainable Development Goals Social, environmental, and economic impacts
1: End poverty
2: Zero Hunger By sustainably producing affordable protein, Chicoa directly contributes to food security in Mozambique. Workers benefit from a workplace nutrition program that is provided free of charge to all and supported by the Global Alliance for Improved Nutrition (GAIN).
3: Health On a macrolevel, Mozambique suffers from acute malnutrition amongst its children and youth populations. This is in large part due to a lack of readily available, affordable, nutritious (enriched with Omega 3) protein. Chicoa provides affordable fish, and fish by-products into local markets for low-income consumers, helping to address Mozambique’s protein deficit, and related diseases. At a microlevel, Chicoa provides staff and families with healthcare and supports the local clinic.
5: Gender equality and women’s empowerment The out-grower project aims to introduce aquaculture to small scale farmers with a minimum of 30% women. One of Chicoa’s priorities is to increase women’s access to the aquaculture value chain, particularly through the distribution of fish and development of local markets for the small-scale farmers.
Within Chicoa, women comprise 23% of the work force. The goal is to achieve a minimum of 30% women within Chicoa as a business, but strive towards gender parity. Women and men receive equal pay for equal jobs, and receive equal benefits. Women are paid directly for their labour, no salaries are given to husbands and/or other male dependents.  In informal markets in Mozambique and Malawi, Chicoa has empowered 253 women and 156 men as informal vendors/ traders selling Chicoa’s product.
8: Economic Growth & Decent Work for all Chicoa employs 104 people on the farm itself, 10 in Tete, 16 in Maputo, a total of 130 in country. Employment will increase thanks to the development of the fish processing facility and out-grower scheme.  Employees receive above minimum wage for the sector, with social security, fair leave, benefits, meals while on the premises, overtime pay during harvests and housing support.
9: Infrastructure, industrialization Chicoa represents the first tilapia aquaculture project of its size and scope in Mozambique.

By using pioneering approaches to tilapia fish farming, such as breeding in the lake and creating off-shoot industries such as nets and cage production on-site, Chicoa engages in innovative approaches that are designed around and responsive to the Mozambican context.

Chicoa has built aquaculture infrastructure in Mozambique that will not only benefit Chicoa, but all small-scale and third party farmers. These infrastructure developments include: water storage facilities and water reticulation, ice production, electrical supply, roads, accommodation, ablutions, storage facilities, a processing factory (both interim and a full-scale larger one, with requisite equipment), potable water.

12: Sustainable consumption and production Chicoa is the leading producer of a locally-produced protein, using sustainable methods and a climate-resilient approach in a country that has a protein deficit. By providing a nutritious, affordable protein, Chicoa provides an alternative to imported sources of protein. Farmed tilapia also has a lower food conversion ratio (FCR) and carbon footprint than chicken, pork or beef production, contributing towards sustainable consumption and production within Mozambique.
13: Climate Change Climate resilient best practices at Chicoa reduce its carbon footprint.  Such practices include low food conversion ratio (FCR) and sourcing feed regionally. Chicoa is also situated in an area that has a perennial water supply; thereby reducing dependency on water from other areas and enabling fish production all year around regardless of rainfall quantities. Tilapia are indigenous to Africa and are widespread within the Zambezi basin.


Investment Due Diligence Checklist

Below is an example checklist with items pertinent to investment due diligence for sustainable aquaculture production facilities.  Please note this is intended to act as a supplemental resource to investors’ existing due diligence processes.

  • Breakdown of share capital, including name of shareholders, class of share and denomination (cap table, if available)
  • Other business interests of owners and shareholders if linked to the ownership of the production business (ie. Through a joint venture, or for leveraging collateral)
  • Owners’ roles & responsibilities; compensation
  • Remuneration (salary, dividends, pension, profit sharing, etc.) an all other benefits
  • Non-compete agreements
  • List of the Board of Directors, if applicable – include rights, term, compensation, etc.
  • Reason for transacting

  • List of Management, description of roles and responsibilities (org chart)
  • Employment contracts
  • Bios (experience with the firm, within the industry)
  • Remuneration (salary, dividends, pension, profit sharing, etc.) an all other benefits
  • Non-compete agreements

  • List of employees and their name, position, full-time time or part-time, salary or wages, years with the company
  • List of key technical staff, areas of expertise, dependency on those staff for production success, and key man risk

  • Describe the business’s products and services, by species
  • Describe the different stages of the production process in detail
  • Describe the production infrastructure in detail, including the number of ponds, type of pond lining, technology, equipment, intake/discharge systems and water treatment methods
  • Detail the technology risk involved with current infrastructure and expansion infrastructure, if applicable
  • Five-year year historical pricing, order size, and cost breakdown for all the product lines / service lines
  • List of all the product lines or service lines that have changed (added or removed) in the last 5 years
  • Describe the methodology behind pricing the products / services
  • What are strengths of the company’s operations that allow for growth and to capture market share?
  • What are the company’s growth opportunities?
  • What is the production capacity and utilization and how can it be improved?

  • Describe the business’s seed procurement process, relationships with and dependence on suppliers and ongoing availability of supply
  • Order history of seed for the past two years including exact species, and reason for any switch between species of seed during that timeframe
  • Stocking density of seed for current production cycle and over the past three years
  • Does the procured seed adhere to any sustainability compliance programs? If so, which ones?  Gather records of compliance for the past two years.
  • Ability to switch between species of seed to adapt to market changes and capture growth opportunities
  • History and explanation behind changes in the price of relevant seed over the past 10 years
  • Current portion of total operating expenditures that is comprised of seed
  • Transportation costs of seed and ongoing management / storage needed
  • International trade restrictions and compliance required (if procured across national borders) and history of the business’s compliance
  • Detailed history of pathogen introduction to the business’s production process via seed.

  • Describe the business’s feed procurement process, relationships with and dependence on suppliers and ongoing availability of supply
  • Order history of feed for the past two years and reason for any switch between feed manufacturers during that timeframe
  • Current Feed Conversion Ratio, historical records of FCR over the past two years and reasoning for any variability in the FCR
  • Ability to improve FCR through more automated feeding methods
  • History and explanation behind changes in the price of feed over the past 10 years
  • Current portion of total operating expenditures that is comprised of feed
  • Transportation and storage costs of feed
  • International trade restrictions and compliance required (if procured across national borders) and history of the business’s compliance
  • Detailed nutrient composition of the feed and identification of better quality feed that is available in the region (if any)

  • Describe the business’s management practices in detail
  • Does the business comply with any sustainability certification and/or verification programs? If so, which ones?  Provide records of compliance for the last three years
  • If the company has changed management practices recently, provide any available analysis detailing any changes in profit and/or productivity
  • Describe the company’s water management process, including sources of water intake, water intake infrastructure, water treatment process, wastewater management and discharge

  • Describe the history of establishment of the production facility, including the conversion of any High Conservation Value areas or other ecosystems, dates, licenses procured, stages of expansion and external stakeholder consultation through the process
  • Describe any campaigns and media attention towards the production process and/or supply chain that may be relevant, both from a regional production point of view and in the consumption or supply chain markets
  • Are there any specific sustainability concerns of local stakeholders? If so, what are they, what is the history of their development, and how could they impact future regulations and/or production?
  • Detailed outline of all precautionary processes undertaken by the producer, as well as any community programs and voluntary efforts to improve and conserve the surrounding environment
  • Animal welfare procedures

  • What is the total land size
  • List all topographical considerations of the property, highlighting prominent features that should be especially taken into account
  • Please describe in detail the water rights of the facility, including source of water, total availability from that source, currently used volume, and potential limitations to increasing that volume
  • Please describe in detail the source of power, total availability from that source, currently used capacity, and potential limitations to increasing such capacity
  • Please list all environmental considerations of the property and the facility’s operations
  • List of all water sampling tests completed over the past three years at the facility
  • Any past issues with water quality, and how they’ve been addressed
  • Distance to end market and critical supply chain infrastructure/players
  • Availability of critical supply chain infrastructure if considering greenfield construction of production facility
  • Any experienced or potential seasonal or climate change factors that could adversely effect production and/or damage of infrastructure
  • List and description of current and potential other resource users and how it could adversely effect operations, licenses, etc.

  • Include any reports conducted by third parties regarding expansion capabilities of the facility
  • How much additional capacity can be added to the current facility through expansion, given the current property size?
  • Are there any intended plans for expansion?
  • Are there any major barriers to expansion due to external stakeholders?

  • Include a detailed history of pathogen introduction and disease outbreaks, including the source, method of entry, reactive procedures taken, end result on production, revenue and profit, and post-event insights/implementations
  • List of regional disease threats
  • Detailed explanation of biosecurity and disease prevention processes

  • Describe the offtake process from production harvest to market sale
  • Provide contact details of the top 10 largest customers
  • Reliability of sustainability certifications, if applicable, on customer engagement and retention
  • Five-year historical breakdown of orders – sizes, prices for the top 10 customers
  • Five-year forecast of sales from the top 10 customers
  • Customer contracts currently in place with the top 10 customers, if any
  • Customer retention rate for the past 5 years
  • Describe the role of middlemen, if involved in collection
  • List of potential new customers in the pipeline along with a description of how they were sourced and how they will be achieved
  • Description of salesforce team and methodology in place (i.e. new Sales team management); how are new customers generated?
  • Payment terms from date of invoice
  • Please provide the last 5 years bad debt allowance and write-offs

  • Please provide the contact details of the top 10 largest suppliers of both feed and seed
  • Provide supplier contracts currently in place with the top 10 suppliers (i.e. exclusivity? Length of contract, pricing)
  • Describe cost increases from vendors / suppliers / middlemen in the past 5 years and when you expect further cost increases
  • Describe the role of middlemen in the supply process, if they are involved
  • Payment policy from date of invoice received

  • Marketing plans in place, budgets of the marketing campaigns
  • Sustainability certifications achieved, and associated premium pricing, if any to what degree

  • Describe the competitive advantage and potential risks in their market position
  • List the competitive factors in the market
  • Industry size, historical growth, forecast
  • Industry trends observed in the last 5 years and new industry trends
  • List and describe the key drivers of growth historically and forecasted
  • Competitive protein commodities, the price elasticity between the produced product and those competitive protein commodities, and future trends of relative market share transfer (eg. based on diet changes)

  • Annual, reviewed five-year historical P&L (break down revenues by product / service lines),
  • Annual, audited (or reviewed) five-year historical B/S
  • Monthly cash flows for last two full calendar years
  • Monthly B/S for last two full calendar years
  • Breakdown of COGS items and annual #’s for the past 5 years
  • Breakdown of SG&A items and annual #’s for the past 5 years
  • List of all financial obligations (including short term, long term, loans from banks, loans from directors or employees, lease obligations) and attach the corresponding credit agreements
  • Covenants corresponding to the financial obligations listed above
  • Describe the significant capital investments made in the last 3 years
  • Provide an org chart of entities, if applicable

  • Annual five year forecast of P&L
  • Annual five year forecast of change in working capital
  • Annual five year forecast balance sheet
  • Describe the planned capital expenditures in the next 3 years and the maintenance capex
  • Monthly cash flow budget for 2019 and 2020
  • Use of Proceeds Schedule (Amount & Timing)
  • Long-term company valuation model (Investor build)
  • Debt coverage model (Investor build)

  • Description of collateral that has been utilized and accepted by lenders, if any
  • Description of any insurance or guarantee mechanisms that are available for production, along with the pricing method

  • List of buildings, significant equipment and other tangible assets (along with appraised value of each, if applicable)
  • Depreciation schedule

  • List of all intellectual property (including patents, trademarks, copyrights, licenses, assignments, etc.) and the corresponding expiration date

  • Confidentiality agreements with third parties
  • Non-compete agreements with third parties
  • Shareholder / Joint Venture / Partnership agreements
  • Guarantees or indemnities of the company
  • Security agreements on the company’s assets
  • Pledge of shares
  • Mortgages
  • Agreements restricting the company to compete in any line of business or person
  • Any agreement that could interrupt the ordinary course of business

  • Description of government alignment with development and ongoing aquaculture production at a regional, provincial and national level, along with any expected regulatory changes or shifts
  • Any past or current litigation matters related to any aspect of the business (including labour arbitration, with suppliers, competitors, etc.)
  • List of all licences, permits, and approval requirements
  • Article or certificate of incorporation

  • List all inventory counts completed over the past three years, and the methods utilized to reach those counts.