Marina Gana Vida - Overfishing in Philippines

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Marina Gana Vida

Wednesday, February 12, 14

DO YOU LIKE eating FISH?Wednesday, February 12, 14

INTRODUCTION | CONTEXT | MGV | INVESTOR | SOCIAL ENTERPRISE | RECOMMENDATIONS



90%OF THE WORLD’S BIG FISH STOCKS has been depleted in the past

century


k

“I want there to be hammerhead sharks and

bluefin tuna around when my five-year old son grows up. If present fishing levels persist, these great fish will go the

way of the dinosaurs.”





overarching questions of the caseZ

How should one balance philanthropic and business goals in a social enterprise like MGV?

How is a social enterprise different from a normal business and how is a social enterprise different from a normal charity?



SUB-questions of the caseZZ


What does MGV hold itself responsible for?

What should a social enterprise be responsible for?

Is MGV’s business operations sustainable and scalable in the long run?

Why the social enterprise model as opposed to traditional business/charities?



FROM THE POINT OF VIEW OF

an INVESTOR

donor agency

no

i

qw

the firm

marina gana vida

society

communities

CONTEXT OFOVERFISHING WORLDWIDE

& philippinesA

RECOMMENDATIONSAND CONCLUSIONV


CONTEXT OF

OVERFISHING WORLDWIDE & philippines

AzWednesday, February 12, 14

technological developments

INTRODUCTION | CONTEXT | MGV | INVESTOR | social ENTERPRISE | RECOMMENDATIONS

Rapid growth of the

fishing industry

Rapid advances in

fishing technology

Overfishing+m

AND RAPID GROWTH OF THE FISHING INDUSTRY LED TO

OVERFISHING

A


WORLD FISH CATCH HAS REMAINED STAGNANTA

The ‘fisheries boom’ was short-lived

Since 1989, world fish catch has not increased despite continued investment in fishing technology

despite advances in fishing technology

g

g



The result of overfishingA



overexploitation of fisheries worldwideA

In 1994, UN FAO estimated that about 74% of the world’s major fisheries had been fully exploited, overexploited, or depleted



CASE STUDY 1: depletion of atlantic codAGrand Bank fisheries: Point of no return

1500 Explorers found rich fisheries in Newfoundland, Canada

1981 Brought in 779,000 tons of cod

1992 After decades of overfishing, the fishery was forced to shut down



CASE STUDY 1: depletion of atlantic codAGrand Bank fisheries: Point of no return

2014 The fishery has still not recovered



THE FISHING INDUSTRY IN THE PHILIPPINESA• An archipelagic state with 2.2 million km2

of highly productive seas

• 12th largest producer of fish in 1998

• Fish provide income to some 1.3 million small fishers and their families

• Preferential rights given to small-scale fishermen but lax enforcement allowed commercial fishermen to dominate the industry



overfishing led to a steep declineAin catch per unit effort

Declining catch per unit effort severely effected the livelihood of fishermen



overfishing led to a steep declineAin catch per unit effort

For common hook-and-line fishing, fish catch is in some cases less than 5% of the original levels of 1940



Map of heavily exploited areasAin the philippines



nthe firm

marina gana vidazWednesday, February 12, 14

KEY QUESTION

g

o


What does MGV hold itself responsible for?


mgv BASE OF OPERATIONS


n


mgv’s goalsnWhat does MGV hold itself responsible for?

o


POVERTY ALLEVIATION



y F


7HAPPY PEOPLE

HAPPY earth

healthy food


happy peoplenEmployees

Good working conditions*Flexible working shifts*Taking ownership of their work

Micro-Franchises

*Franchises buy hatchery fry and sell the seafood back to MGV*MGV provides necessary technical training

zero turnover rate

community benefit

outreach of 2,500

households


Women empowerment*Positive effect of lending money to women


happy peoplen

Is MGV’s impact substantial?INTRODUCTION | CONTEXT | MGV | INVESTOR | social ENTERPRISE | RECOMMENDATIONS


happy peoplen

Clearly, MGV has had success on a small scale but is far from its vision of employing “10,000 households as labour force or independent suppliers with net incomes of at least 30% above the poverty threshold”

MIXED SUCCESSbINTRODUCTION | CONTEXT | MGV | INVESTOR | social ENTERPRISE | RECOMMENDATIONS


happy EARTHn

SUCCESSFUL8

Sustainable fish farmingObtained excess fish eggs instead of taking the fry directly from the sea

Adhered to regulations*Annual checks on the seabed, water, and marine life*Adhered to government fishing regulations

No chemicals or hormones

Preserved soil and water quality



healthy food


n

SUCCESSFUL8

No preservatives

Health-Conscious BrandIts gourmet retail shops also sold health drinks and other healthy foods to promote the MGV brand image as a health-conscious brand




y F7HAPPY PEOPLE

HAPPY earth

healthy food

82 8 8


an INVESTOR

donor agency

ozWednesday, February 12, 14

KEY QUESTIONS

g

o

f Are MGV’s business operations sustainable and scalable in the long run?

From the POV of an investor in MGV, what is it responsible for?



what is mgv responsible for?oWho are the potential

investors in MGV?

tDonor agencies who needed to see that MGV could scale up

easily with its current business model before they could provide any kind of financial support

Existing financing model

tRaised capital using its own means together with ‘necessary financial assistance in terms of training and market and value

chain analysis from SDCAsia’



wHAT ARE MGV’S BUSINESS GOALS?o“After MGV ran a sustainable business with respectable growth, and

was able to show that its ideas were working, it approached the same donor agencies for financial support because it was ready to scale up

its business operations.”

Timeframe Objective

Immediate Immediate business goal was to scale up its operations’

Long-Term *Within a period of 10 years (2007 - 2017), MGV will be a leading supplier of all natural marine products in the Philippines

*Progressively integrate in its operation 10,000 households as labour force or independent businesses/suppliers with net

incomes of at least 30% above the poverty threshold



MGV IS RESPONSIBLE FOR CREATINGoA SCALABLE AND SUSTAINABLE BUSINESS

ScalabilitySUSTAINABILITY

A characteristic of a system, model or function that describes its capability

to cope and perform an increased or expanding workload (investopedia)

Moving your business beyond initial investment to

sustenance (harvard business review)

+



MGV IS RESPONSIBLE FOR CREATINGoA SCALABLE AND SUSTAINABLE BUSINESS

MGV was ‘intended from the beginning to be self-sustainable, and that meant being able to generate profits to cover the costs of running

and expanding the business’

fish production

fish processing

small-scale retailers

& brokers

obtained excess fish eggs from commercial

breeders retail & distribution

network

Supporting operations: feed mill technology in collaboration with local farmersINTRODUCTION | CONTEXT | MGV | INVESTOR | SOCIAL ENTERPRISE | RECOMMENDATIONS


HAS MGV generated profits to ocover the costs of running the business?

Their profits have been increasing YOY.



HAS MGV generated profits to ocover the costs of running the business?

29%

30%

42%

FishFingerlingsProcessed Products

Total net income in 2011 amounted to US$13,270

YES8



HAS MGV generated profits to oEXPAND THE BUSINESS?

MGV has attempted to scale up horizontally*Building another plant with the prize money of US$19,343 from MaD*Intention to hire more women workers *Replication of existing business model

MGV has insufficient profits to expand the business through scaling up its processing arm

*High fixed cost from purchasing machinery *Necessary to engage external funding in order to go forward


NO2Wednesday, February 12, 14

ARE THE CURRENT BUSINESS OPERATIONSoSCALABLE?

fish production

fish processing


& brokers



network




fish production

fish processing


& brokers



networkaquaculture




aquaculture

Mariculture Park Fishing Farm in Davao




Total areas for mariculture farm

development343 ha

Average cage size 10 x 10 x 5m

Maximum stock per cage 15,000 fingerlings

Days of culture 120 days

Average production/cage 7,000kg

*Must be managed well *Impact minimized for low-priced species*Involves a capital outlay

*MGV is underutilizing its current resources*71.3% of its net income in 2011 came from the sale of fingerlings and fish




Utilization of resources to

maximize profitsReaching the official limit of 600 cages

Protection to the vulnerable

environmentUsing 300 cages

existing

Usage of hormones or chemicals to

increase fish harvest and in turn MGV’s

revenue

Using government-approved feeds

existing

environmentalECONOMIC vs




fish production

fish processing


& brokers



network




processing plant




processing plant*Operating costs in 2011: US$21,527*Scale of production: 400kg of fish meat per worker, 30 workers = 12 tonnes of fish meat*Main product sold: Bangus Pate500 jars produced a day *Sold at 67.00 pesos




processing plant

vs




vsman machine




machine

*A fish meat extractor costs approximately US$5,000 - 8,000 with a capacity to process 260-300kg of fish meat per hour *24 hours a day = 7.2 tonnes of fish meat per day



COMPARATIVE ANALYSIS: case study 2 oALSONS AQUACULTURE CORPORATION

*Philippines’ largest processor and exporter of premium quality bangus and other processed seafood products

*Largest and only commercial bangus fry hatchery in the Philippines and are capable of producing 1.2billion fry annually



MGV IS RESPONSIBLE FOR CREATINGo


A SCALABLE AND SUSTAINABLE BUSINESS

ScalabilitySUSTAINABILITY

*MGV is only partially sustainable.

+*On its own, MGV is not able to scale up.


qwqwsociety

communities

zWednesday, February 12, 14

KEY QUESTIONSi

iWhich is better?

What is a social enterprise?


qwqw

charitysocial enterprise

vsbusinessvs


vsbusinessvs

i

What is a social enterprise responsible for?



qwqwcharitysocial

enterprise vs

Goal/Agenda*Create social value (Austin et. Al, 2003)

*Seek business solutions to social problems (Michelini, 2012)

*Bring Relief and Advancement (Mak, 2012)*Champion and Advocate

for a cause (Ella Foundation)

Receives Funding from

*Trading Activities (Social Enterprise UK)*Profits reinvested (Rykaszewski et. Al,

2013)*Investors

*Grants and Donations (Social Enterprise UK)

Primarily Accountable to

*Customers *Beneficiaries

*Investors*Funders

Level of stakeholder involvement *High *Low

what is a social enterprise?


KEY QUESTIONSi

iWhich is better?



qwqw


vsbusinessvs


vsbusinessvs

i


8 28



qwqw WHICH IS BETTER?

Social Impact

Durability of impact

Aims to remedy the fundamental

issues themselves

Aims to cure symptoms of the

fundamental problems

Create opportunities

within the social structural change

Working within the social structure

charitysocial enterprise >

Empower vs perpetuate

SE8




Financial sustainability

Reliability of flow of funds

Self-sustainable as it is a business Entirely dependent

on the generosity of philantrophistsUse of profits as

funding

Entirely dependent on the generosity of

philantrophists


vs

SE8




Autonomy

In decision-making

Can make decisions on internal organizational affairs

Constrained by funders’ opinions and

interests


vs

SE8


KEY QUESTIONSi

iWhich is better?



qwqw


vsbusinessvs


vsbusinessvs

i




qwqwbusinesssocial

enterprise vs

Goal/Agenda*Create social value (Austin et. Al, 2003)

*Seek business solutions to social problems (Michelini, 2012)

*Maximize Profits*Maximize Shareholder Value

*Operates in a competitive world*Measures success according to

profits realized

Receives Funding from

*Trading Activities (Social Enterprise UK)*Profits reinvested (Rykaszewski et. Al, 2013)

*Investors

*Trading Activities*Investors

Primarily Accountable

to

*Customers *Beneficiaries

*Investors

*Shareholders*Customers

Level of stakeholder involvement

*High *Low

what is a social enterprise?


KEY QUESTIONSi

iWhich is better?



qwqw


vsbusinessvs


vsbusinessvs

i





Social Impact

Direct interaction with communities in need

Tend to be removed from communities in

need

Views helping these communities as their

core mission

Tends to sideline CSR and do cheque-book

philanthropy

businesssocial enterprise

vs

SE8Engagement with local communities




Financial sustainability

Substantial challenges in earning enough profits to

cover costsSeldom run into cash flow

problems to cover their costs. Able to finance through

multiple ways

Threats of being unable to attract or sustain investment

Seldom run into cash flow problems to cover their costs.

Able to finance through multiple ways

Potential problem of funding gap

Seldom run into cash flow problems to cover their costs.

Able to finance through multiple ways

BUSINESSsocial enterprise

vs

SE2




Autonomy

In decision-making

businesssocial enterprise

vs

BOTH8

Both have fairly high levels of autonomy to make internal organizational decisions


KEY QUESTIONSi

iWhich is better?



qwqw


vsbusinessvs


vsbusinessvs

i




qwqw WHAT SHOULD A SOCIAL ENTERPRISEBE RESPONSIBLE FOR?

CREATE SOCIAL VALUE BE

FINANCIALLY SUSTAINABLE

+


KEY QUESTIONSi

iWhich is better?



qwqw


vsbusinessvs


vsbusinessvs

i




qwqw IDENTITY CRISIS

social impact

FINANCIAL SUSTAINABILITY

8BALANCING BETWEEN

SOCIAL AND FINANCIAL GOALS



qwqw IDENTITY CRISIS

social impact

FINANCIAL SUSTAINABILITY

aBALANCING BETWEEN

SOCIAL AND FINANCIAL GOALS

ALWAYS?

CASE STUDY: UNILEVER ‘S FISH SUSTAINABILITY INITIATIVE (FSI)



qwqw CASE STUDY 3FISH SUSTAINABILITY initiative (FSI)

What it is

*Ensures that Unilever does

everything it takes to progressively

purchase all our fish from sustainable

sources

Motivations

*Decline in the world’s largest

fisheries*Livelihood of

coastal communities

What they do

*Take the lead in: planning, setting priorities, market research, forming external contacts

*To implement sustainable sourcing



qwqw CASE STUDY 3Background

*Created in 1997*Partnership

between WWF and Unilever

Objectives

*Tackle the issue of seafood

sustainability

3-part mission

*Recognize and reward sustainable

fishing practices*Influence choices

people make *Work with partners to transform seafood

market



qwqwAchievements of

MSC*Fish & Kids Project

*Creates Market Incentives

*Every MSC certified fishery demonstrated

sustainable fish stocks*Best Available Science

CASE STUDY 3


RECOMMENDATIONS

AND CONCLUSION

VzWednesday, February 12, 14

LOCAL

V


recommendations

GLOBALShould they fire the factory workers and buy

machinery?

Should they use chemicals instead of

government-approved feeds?

How can we prevent

overfishing and protect the oceans from further harm?


V


recommendationsGLOBAL

“Preventing overfishing is fairly straightforward: first and foremost, scientifically-determined limits on the number of fish caught must be established for individual fisheries, and these limits must be enforced. Second, fishing methods responsible for most bycatch must either be

modified to make them less harmful, or made illegal. And third, key parts of the ecosystem, such as vulnerable spawning grounds and

coral reefs, must be fully protected.” - Save Our Seas


V


BUT WHO IS RESPONSIBLE?Enforce scientifically-determined limits on

number of fish caught

Modify fishing methods to make it less harmful

Protect key parts of ecosystem e.g. coral reefs

Government intervention needed to

create and enforce legislation

Workers on-the-groundBusinesses to uptake and commit to these methods

Government monitoringFisheries themselves


V


spot the problem?

Some governments and businesses are already doing something about the oceans, but:

1. Had limited impact2. Uncoordinated efforts

3. Lacked legitimacy


V


MSC’s LEGITIMACY QUESTIONED

eco-imperalism

violate national

sovereignty


V


SO HOW SHOULD WE SOLVE THIS PROBLEM?

SUPRANATIONAL LEVEL DIRECTIVES NEEDED tO:

• Support large-scale initiatives

• Provide a platform for the world’s leaders to coordinate their efforts

• Lend credibility and legitimacy to environmentally friendly measures


local

V


recommendations

Should they fire the factory workers and buy

machinery?

Should they use chemicals instead of government-

approved feeds?

Fundamental issue is about the difficulty it faces in gaining investments or funding which seems only possible through

scaling up.

Draw on current positive traits to attract investment

RECOMMENDATIONS

1


V


recommendationsDraw on current positive traits to

attract investment1

*Funding Implications of Social Enterprise: The role of Mission Consistency, Entrepreneurial

Competence, and Attitude Toward Social Enterprise on Donor Behaviour

By Brett R. Smith, Maria L. Cronley, Terri F. Barr


V


MAIN FINDINGSMission

ConsistencyEntrepreneurial Competence

*When a social enterprise has high mission consistency,

donors tend to view it positively and donation

likelihood increases

Social mission of the

NPO

Commercial Activity

*When a social enterprise has high entrepreneurial

competence, donation likelihood increases

Ability to identify opportunities

Marshal resources

Execute business opportunities


V


Social mission of MGV

g Macro Goal- Alleviate the poverty problem

in the Davao region and provide a stable and healthy

fish supply

Micro Goals- Happy People- Happy Earth- Healthy Food

Commercial Activity

*Processing plants: provided employment

*Microfranchising: helped them to set up companies and generate income for

themselves

Largely consistent in micro goalsBut in terms of macro goal largely inconsistent

mgv’S MISSION CONSISTENCY


V


mgv’S ENTREPRENEURIAL COMPETENCY

l Jonah Nobleza Good Aquaculture Practices (GAqP) standards

Jessie Lapaz Aquaculture Technology, Fish Hatchery Operation

Ivan IdvoroMarket Research and Private

Sector, Development, Enterprise Management

Relatively high entrepreneurial competencyExecuting business opportunities and marshaling resources


overarching questions of the caseV


How is a social enterprise different from a normal business and how is a social enterprise different from a normal charity?



V


conclusionUnderstanding its role

within the local community

• MGV is currently able to meet their micro level objectives

• However, it is limited in meeting its macro aims (e.g. vision and mission)

MGV’s POV:

• MGV is far too small to compete with larger players in the industry

• Cannot scale up to attract substantial investments

Investors’ POV


SOCIAL ENTERPRISES OFFER A NICHE AREA V


BETWEEN NON-PROFIT AND BUSINESS

charity/ngo

social enterprise BUSINESS


CONCLUSIONV


MGV and COMMERCIAL FISHERIES

Philippines government

supranational bodies


CONCLUSIONV


MGV and COMMERCIAL FISHERIES

Philippines government

supranational bodies

TRI-SECTOR COLLABORATION


what can you do?V


The Singapore Seafood Guide

http://www.wwf.sg/take_action/sustainable_seafood/seafood_guide/


Documents

Marina Gana Vida - Overfishing in Philippines