A new data-driven marketplace developed by XpertSea is helping the shrimp industry unlock growth and seal better trade deals, reports Bonnie Waycott.
Shrimp farming is a key sector of aquaculture that has grown to become the world’s largest, valued at US$30 billion today. However, around 50% of crops are lost to disease, only 10% of farmers are able to access capital, and the industry is constantly at the mercy of price fluctuations and delayed payments by big buyers.
In an attempt to address issues such as these, Canadian aquaculture technology firm XpertSea has connected shrimp farmers and buyers through a data-driven marketplace that uses artificial intelligence (AI) and financial services to transform the way shrimp is farmed and traded. Founded in 2012, the company provides AI technology to improve farming efficiency and help shrimp farmers understand the quality and commercial value of their shrimp. Its belief is that technology and data are key to unlocking aquaculture’s potential as the most efficient protein production system.
“Shrimp is the highest value seafood species that is being farmed,” said Valerie Robitaille, CEO of XpertSea. “With a serious technology gap in the industry, there is a lot of room for optimisation. Our technology brings transparency and trust between shrimp farmers and buyers, creating a lot more efficiency in the market. It also allows farmers to access cash flow to grow their operations, something that has hardly been available to them.”
Launched in November 2020, the new marketplace pairs shrimp farmers and buyers and provides them with crop data, which enables them to analyse the status and livelihood of shrimp before a deal is reached. Farmers then receive up to 80% of their crop value within 24 hours of harvest. This improves their cash flow, de-risks their business and unlocks growth. All they have to do is take pictures of their shrimp using XpertSea’s smartphone app to accurately capture health and quality data before selling. The marketplace was first launched in Ecuador, where, according to XpertSea’s fieldwork, farmers were being paid on average 38 days after harvest, limiting their ability to start their next production and invest in their operations. Over 3175 tonnes (7 million pounds) of shrimp were traded in the first few months of the marketplace’s launch, and over the next year there was a 50% month-over-month increase in new ponds registered and more than 5400 tonnes (12 million pounds) of shrimp traded. More regions are now due to adopt the marketplace, including southeast Asia.
According to Valerie Robitaille, the key to attracting farmers and buyers is strong incentives, such as making it as easy as possible for them to quickly access money for their next production cycle and opening more market opportunities for buyers. Although huge, the shrimp farming industry is a tight-knit community and word-of-mouth is bringing more people to the marketplace, with farmers wanting to work with particular buyers and vice-versa.
Farmers in Ecuador have also reported positive results. Wilson Gomez of El Oro Farms reached his shrimp target harvest weight 12 to 15 days sooner than he used to (this is a 16% reduction in cycle time). Carlos Santos, owner of Oro Del Mar, sold to a buyer in a different province for the first time and got 10% above what he could get from his regular buyers, while Harry Viafara of Exporcareca was able to generate an additional harvest cycle thanks to faster payments, resulting in 33% more revenue.
“When there is a relationship of trust between farmer and buyer, and more data on the shrimp are available, things become easier and transactions become more efficient,” Valerie Robitaille said.
“Of course, a buyer may want to send someone to look at the shrimp, or a farmer will want to send samples to a particular buyer so she can investigate the product in more detail, but the current trend is that farmers and buyers are confident in the data and this is strengthening the foundation of trust between them and enabling them to work together. We are giving them the tools that help them build and enhance that trust.”
Creating a more efficient shrimp supply chain is not the only goal of the data-driven marketplace. Aquaculture brings with it considerable risks, while a lack of data and understanding of the market makes it hard for the industry to attract big investors or more institutionalised investments. At the same time, consumers are increasingly keen to know more about where their food comes from and how it is farmed. Valerie Robitaille believes that the marketplace could bring greater advantages on the traceability front, thanks to trustworthy data on the quality and value of production. Giving economic stability to farmers through a host of incentives such as same-day payment is also likely to encourage the adoption of sustainable practices, she says.
“The supply chain is opaque and inefficient but there needs to be a strong economic incentive for people to want transparency and understand that it can be profitable to be transparent,” she said.
“This is where we come in – by providing incentives for achieving this transparency through access to cash or better prices. Using technology to bring transparency will make it a lot easier for people to invest and this is how we can help make this industry more sustainable and a more viable solution for food security. This is what I am excited about – the role of technology in de-risking aquaculture and making it a very investable sector for the future.”
Having successfully launched the marketplace, in August 2021 XpertSea secured a $20 million Series B funding round led by QED Investors and Atlantico with Investissement Quebec. The funding will be used for new product development and to continue investing in technology, which Robitaille believes can help de-risk investments and access to cash, make the shrimp market more valuable, help buyers really understand what they are getting and build transparency throughout the shrimp supply chain. The funding will also be put toward XpertSea’s entry into new markets in southeast Asia. The company’s goal is to keep delivering on the data-driven marketplace and solidifying the transparency solution in order to interact with international buyers and eventually with consumers to help them understand where their seafood comes from. With a better understanding of the risks and performance of shrimp farmers’ crops, XpertSea is aiming to provide even better solutions.
“The shrimp industry is continuing to grow and there is so much more that we can do,” Valerie Robitaille added.
“I’m excited to see how much of a difference we can make. We are very fortunate to have support from our existing investors as well as new investors. This will enable us to go deeper and look at more technology that we can develop, data we can harvest and more solutions we can bring in terms of financing and markets in order to expand further on an international level.”
