Ten years ago, United India Insurance developed an insurance product for the aquaculture industry. But it did not take off at that time, as the actuaries were unable to get the right product because they did not know how to determine the risks of aquaculturists and mitigate them.

One of the reasons the product didn’t take off was that it didn’t have a data-driven approach. Therefore, he had to fall back even without taking off. Today, a decade later, things have changed with the world going digital and nothing is being spared by digitization with the Chennai-based start-up Aquaconnect taking the initiative.

Launched four and a half years ago, Aquaconnect has a wealth of data insight that is now helping farmers obtain next-generation aquaculture insurance products in partnership with Alliance Insurance brokers. “We have helped create an insurance product which in turn can help farmers go to banks for finance,” said Rajmanohar Somasundaram, Founder and CEO of Aquaconnect.

End-to-end solutions

Aquaconnect is, in fact, an aquaculture platform providing end-to-end solutions to shrimp and fish farmers powered by artificial intelligence and satellite remote sensing technologies. “We provide four services: agricultural advisory, agricultural input market, agricultural finance and insurance, market linkage,” Rajmanohar said.

In India, aquaculture is a huge business with $ 20 billion in fish and shrimp produced. Of this total, $ 5 billion of fish and shrimp products are exported, with frozen shrimp accounting for seven lakh ton of total exports.

In addition, farmers also cultivate native Indian Major Carp (IMC) such as Rohu, Katla and Mrigal which are consumed locally in large volumes. The native BMI produced could be worth $ 11-12 billion.

“Shrimp is a cash crop, with aquaculturists going to a hatchery to buy post-larvae or baby shrimp and store them in their pond. These ponds are generally one acre in size with a depth of 5 to 6 feet. The shrimp grows in 4 to 5 months and can reach 25g to reach the magic number of 40, ”said Rajmanohar.

Exporters and the world market prefer 1940s shrimp. This means that each shrimp will weigh 25 grams and more and 40 of these healthy shrimp is one kg. “There are four parameters for the maintenance of shrimp – water quality, feed efficiency, health management and growth management,” said the CEO of Aquaconnect.

Growth parameters

These four parameters govern the growth of shrimp and ensure the profitability of a business. “Food management is important. At least 60 percent of the costs are spent on feed management. For example, if a fish farmer spends ₹ 8 lakh on his farm, then ₹ 5 lakh is spent on feed, ”he said.

Again, there are 10 parameters such as alkalinity, salinity, ammonia content, green or yellow color that determine water quality. It must be optimal for the healthy growth and the correct size of the shrimp.

FILE PHOTO: Shrimp harvest in progress in a fish farmer’s pond in the village of Rayavaram, near Tangutur, in the Prakasam district (Representative image) – The Hindu

According to Rajmanohar, aquaculture is better than any protein production system since to obtain a kg of shrimp, you have to give 1.1 kg or 1.2 kg of feed, while it is double in in the case of poultry, four times in the case of lamb and eight times in the case of beef.

“The challenge is how farmers will manage feed efficiency. Aquaconnect has built a management system and an advisory platform to improve farm efficiency. This ultimately ensures a higher yield from the pond and higher income for the farmers, ”Rajmanohar said.

Data-driven decision making

The first part of Aquaconnect’s intervention is to solve the problem of lack of data and data-driven decision making.

“Once these are available, it brings transparency to understand the problem and find a solution. He has developed an application and satellite remote sensing to collect data on ponds. While the application provides data on the efficiency with which the farmer manages his farm, the satellite remote sensing provides data on the length of time the shrimp have been kept in the pond and the number of seasons, ”he said. he said, adding that these details help his business work. find solutions for them.

Aquaconnect’s advisory service covers improving power supply, reducing power costs, risk of disease, and providing preventative maintenance advice. “We know exactly what and when a farmer needs feed or health products, including prebiotics. If a pond has a higher ammonia concentration, we provide suitable products in our stores, ”he said.

Working capital requirements

On the other hand, access to working capital is one of the most difficult aspects of aquaculture. “Banks are not interested in providing finance and this has forced farmers to depend on local feed dealers from whom they get credit,” Rajmanohar said.

Merchants offer loans at a whopping 30 percent interest rate, which is one reason why the investment costs are high in aquaculture. “The interest is high because the risks are high. Everything is under water. If something goes wrong, the whole crop is lost and the farmer might not pay back. It’s an informal way to mitigate risk, ”said the CEO of the start-up.

To overcome this, Aquaconnect has created data on the creditworthiness of farmers. This gives a fair picture of them to banks, financial institutions and insurance agencies. There are two problems, however. One is securing funding and the other problem is portfolio tracking.

“Such things can be done for agriculture, but not for aquaculture. You need a holistic approach. We offer such a risk mitigation platform – with eyes in the sku (satellite) and boots on the ground (staff) – via Aquacred, ”says Rajmanohar.

Software platform

Aquacred is a software platform that obtains data via satellite as well as the Aquaconnect application with farmers. It integrates the two data and provides information to banks, financial services and insurance companies. “We have put these pieces together now. It never existed two years ago, ”he said.

Banks are reluctant to assess the creditworthiness of farmers. Therefore, the Aquacred platform was designed to manage credit risk. “The other side of the coin goes to insurance companies. Farmers who wish to access credit must take out an insurance policy that will cover the crop against natural disasters and disease. Banks should therefore be concerned only with non-performing assets, ”Rajmanohar said.

This has helped Aquaconnect ensure a flow of credit to farmers through the Bank of Baroda, Axis Bank, organizations such as Sammunati, and non-bank financial companies such as BlackSoil Capital.

Link to the market

All this has led Aquaconnect to offer its fourth link service to the market. “We ensure farmers’ access to good inputs through Godrej Agrovet and Tata Rallis. So the last should be the link with the market to ensure that farmers get a fair price for quality products, ”said the CEO of the start-up.

FILE PHOTO: A fisherman fishing in the new port of Thoothukudi (representative image) – The Hindu

Currently, middlemen dictate the shrimp trade, reducing the chances that producers will get a fair price for their quality products. “Sometimes there is no guarantee that the farmers will even receive a payment,” Rajmanohar added.

As a result, Aquaconnect engaged 10-15 buyers to purchase the products and help provide same-day credit to producers. “We also predict the harvest time through our platform and help put growers in touch with the right buyers on pleasant fees and transaction conditions,” he said.

Aquaconnect also helps buyers find the right quality and size of shrimp with its data intelligence. Buyers are willing to pay service charge for it. “Ours is not just a technological platform. There is also human intervention. It has set up call centers to help producers in Andhra Pradesh, Odisha, Gujarat, Bengal, Tamil Nadu and Kerala. These call centers have staff who speak Hindi, Malayalam, Telugu, Oriya and Tamil, ”he added.

“With the Covid pandemic accelerating digitization, Aquaconnect is now working with more than 30,000 farmers from around 10,000 farmers before the pandemic triggers it. “Digitization has also been aided by the rising demographics of farmers who spend 8-9 lakh per acre and own the latest 4G smartphones,” Rajmanohar said.

Hidden potential

Aquaconnect initially encountered difficulties in adapting its product to different markets, as there are different languages ​​in the country. “But we are handling it well. This helped us close our $ 2 million pre-seed funding from organizations such as Omnivore, HATCH of Norway, Flourish of the US, and Rebright Partners of Japan.

Reihem Roy, Omnivore partner, said aquaculture is a sector with hidden potential of $ 20-25 billion in the country with the least attention. “People are aware of its potential but are not focusing on the sector. We understand the potential of the sector and therefore work with it. Aquaculture is an unorganized sector although it is export oriented, ”Roy said.

Rajmanohar, praising Center Prime Minister Matsya Sampada Yojana, said insurance should be made compulsory for the aquaculture sector to ensure access to credit for farmers. It will also help them overcome unexpected losses such as the recent losses suffered by 600 farmers in Odisha due to flooding.

“The Union and the state government must come together to provide affordable insurance to farmers, each paying 50-60% of the cost of insurance,” he added.