The burgeoning foodtech in Indonesia sector has taken a fascinating turn towards the oceans with the emergence of a new wave of seafood startups. Nestled within the world’s largest archipelago, startups in Indonesia are tapping into the vast, untapped potential of the country’s expansive coastlines and marine biodiversity. According to the World Bank, Indonesia is the second largest fish producer in the world. Generating around USD 4.1 billion in annual export earnings, the industry supports more than 7 million jobs in the country.
We take a closer look at the state of Indonesia digital economy in 2022
As the country moves towards a more digital economy, the rise of startups in the seafood technology space is no surprise.
The rise of seafood startups in Indonesia
In the past year, renowned investors have propelled startups like eFishery, Aruna, Delos, and FishLog into the limelight by injecting significant capital. eFishery secured USD 90 million in a Series C round, Aruna raised USD 30 million in a follow-on Series A, Delos amassed USD 8 million in a seed extension, and FishLog obtained USD 3.5 million in pre-Series A funding.
As the world’s second-largest wild catch producer and the third-largest in aquaculture production, trailing only China and India, Indonesia is ripe for technological advancement in its fisheries sector. Despite its significant role in the global market, the industry’s potential remains partially untapped due to the need for better technology and more efficient processes.
eFishery is addressing this demand by empowering farmers with technological tools. Through the use of automatic feeders and mobile applications, the startup is optimising farming practices. The ingenious automatic feeders, which gauge the hunger levels of fish and shrimp based on their movements, alleviate the common issue of over- and under-feeding that arises with manual feeding methods.
Meanwhile, Aruna is revolutionising the industry by providing a crucial link between small-scale producers and buyers. Working with an estimated 40,000 fishers across 170 locations, the startup is addressing the needs of a significant portion of the industry. Small-scale fisheries constitute approximately 90% of the total fisher population, stated in the Marine Policy Journal of ocean policy studies. Aruna’s influence has allowed these fishers to command up to 50% higher prices for their catch.
Challenges facing the seafood industry
Despite their considerable strides, these startups grapple with an array of challenges. A prominent barrier is the vast technological gap, wherein many small-scale fishers and farmers need more digital literacy to fully leverage these cutting-edge solutions.
Financing is another hurdle, with conventional lenders often considering seafood businesses risky due to unpredictable factors such as weather and volatile market prices. This scarcity of funds restricts startups, limiting their ability to scale their operations and reach a broader market.
Indonesia’s seafood industry is predominantly artisanal, with traditional methods accounting for most of the country’s seafood production.
Governmental efforts towards the industry’s growth
To accelerate post-pandemic economic recovery, the country’s government aims to establish several villages with aquaculture farms, thus tapping into the global demand for farmed seafood. The fisheries ministry plans to increase the number of such aquaculture villages focusing on cultivating high-value commodities like shrimp, lobster, crab, and seaweed.
President Joko Widodo urged the fisheries ministry to increase aquaculture productivity in 2019, as global aquaculture production had grown by 527% from 1990-2018. Indonesia, being among the top producers, saw its aquaculture output rise by 6% in the third quarter of 2021, reaching 12.25 million metric tons. This sector contributed around USD 1.94 million in non-tax revenue up to November 2021, surpassing the target of USD 1.39 million.
However, despite being a leading global exporter of frozen seawater shrimps, Indonesia trails its neighbours in freshwater shrimp exports. Key export species include the Asian tiger shrimp and whiteleg shrimp.
Despite the government efforts to increase aquaculture productivity, the establishment of aquaculture farms has traditionally involved the removal of carbon-dense mangrove forests to construct ponds for shrimp and fish cultivation. According to the Center for International Forestry Research (CIFOR), Indonesia has lost nearly half of its mangrove area.
In 2019, the planning ministry reported that 15 lakes were in a “critical” state due to environmental degradation primarily caused by human activities. Due to this, President Widodo aims to replant mangroves across 600,000 hectares of degraded coastline by 2024.
The emergence of seafood startups in the country’s thriving food industry marks a significant step in the digital transformation journey. Through their innovative solutions, these startups in Indonesia are not only contributing to the growth and sustainability of the seafood sector but are also paving the way for the growth of broader foodtech in Indonesia.
Despite the industry’s challenges, continued support from the government and improved innovative solutions from startups in the country will play a pivotal role in the industry’s future, helping it sustain its global position as one of the most important producers.