Shrimp and seaweed: a recipe for success for Vietnam?

When confronted with the facts about shrimp farming in Vietnam, it’s hard not to conclude that the sector remains highly inefficient, at the same time struggling to contain its negative effects on the environment. One tonne of shrimp from intensive farms is responsible for 14 tonnes of carbon emissions, while feeds are imported and antibiotic use is high, resulting in production costs double those of top competitor Ecuador.

On the other hand, the extensive farming done by smallholder farmers has no water treatment and is acutely unproductive: as a result, less than a third of shrimp survive, farmers earn very little, ponds are degraded and waste is directly released into the environment.

On top of that, due to the preponderance of extensive farming, land use for shrimp ponds in Vietnam is considerable as well. At nearly 750,000 hectares, it’s about three times as much as Ecuador, even if production is lower.

“Those were the questions that started Rongbient,” says CK: “how can we improve the productivity of these lands and raise farmer’s incomes, while at the same time reducing costs for intensive farms and the associated environmental impact? Seaweeds, Gracilaria in particular, then emerged as our solution.”

A new way to grow Gracilaria

Indonesia has been the biggest grower of Gracilaria for decades, supplying the world’s agar industry. Traditionally, Gracilaria is grown at the bottom of a pond, often with the addition of fertilisers to speed up the process.

Rongbient instead uses a net structure on top of the shrimp pond. As CK explains: “We decided on the surface net to access direct sunlight and improve the growth rate. It needed to be quite a fine mesh as well, because Gracilaria breaks easily, and you could potentially lose a lot of biomass to the bottom of the pond. Of course, because of the polyculture with shrimp, we don’t need to add the extra nutrients like they do in Indonesia.

“With our first test we got to a growth rate of roughly 2.5 percent per day. We are at 3.2 percent a day now, but we know there is room for improvement - we haven’t even started optimising the strain yet.”

The startup uses a rental system to encourage adoption. “We don't ask farmers to drastically change the way they do things. We throw the cultivation system on top of the pond and let it grow. Every two months, we come and pick up the harvest. There are no upfront costs, the farmer only pays us the rental fee at harvest time,” says CK.

“We have a few hectares under cultivation now as a pilot, and we have been able to double farmers’ income thanks to seaweed sales and improved shrimp survival rate, from 33 percent to 42 percent.” he adds.

Feeding it back

Post-harvest, Rongbient processes the seaweeds into a feed additive for intensive shrimp farms. Seaweed-based feed additives are slowly gaining traction across Asia as they are showing good results in reducing the prevalence of EHP, WFS and EMS, at the same time improving FCR, with the potential to even fight off Vibrio.

In Vietnam, Rongbient has seen similar positive results in its pilot. CK expands: “We have seen survival rate increase. Production grew by anywhere between 5 and 8 percent. Although we have seen a drop in feed conversion ratio, our main focus is on the feed additives: antibiotics, probiotics, et cetera. So far, we have managed to reduce usage by 20 percent.

“We are about to start a pilot with one of the largest shrimp exporters to get more data and improve those numbers. We aim to cut down additives use by 50 percent if we get the resources to engineer the product.

“The cost structure of shrimp farming in Vietnam is 50 to 70 percent for feed, with additives accounting for another 20 to 30 percent. If you can cut 50 percent of those additives, it would mean 10 to 15 percent of the total cost. That is close to a farmer’s yearly profit margin. If we can also increase the survival rate a bit, we can effectively double farmers’ profits. That’s our value proposition.

“It’s worth mentioning that the use of banned antibiotics regularly leads to refused imports of Vietnamese shrimp in the US and EU, so this is about more than just cost savings.”

Scaling it up

With close to half a million dollars in pre-orders, Rongbient is in the enviable position of having the problem of a lack of seaweed supply rather than a lack of demand.

CK says: “We started in Cà Mau in the Mekong Delta where we have several hectares under cultivation now. We are rolling out a few more hectares over the next quarter to build more traction and revenue.

Our government partners have been really positive about our system. They told us: ‘if you can double our shrimp farmers’ income, we want this in our communities. If you can scale it to 20,000-30,000 hectares, that's good enough for us. But if you can do more, that would be even better.’

Shrimp farms in Cà Mau cover 280,000 hectares, so the potential is massive.”

While initial results have so far been very positive, finding the funds to scale up the solution is proving to be challenging.

As CK notes: ”We are currently trying to raise 500,000 dollars in a pre-seed round to scale supply and improve our processing, but Vietnam is seen as too risky or too small a market for international investors, while local investors often prefer a concept that has already been proven abroad and that can be adapted to the local context.

“For someone coming from a software background like myself, trying to find the funding for a real-world solution like this has been a sobering experience so far.”