SGARA: Saving Indonesia's Shrimp Farms Through Data Analytics

SGARA is a finalist of Alibaba Cloud Global Startup Accelerator Indonesia Demo Day in October, 2021.

When SGARA Founder and CEO Christopher Jason Sjarif went to shrimp farmers across Indonesia and pitched how his data analytics solution could help turn their failing farms around, he was greeted with derision.

"What do you know? You are still young, we can't trust a robot to give recommendations," Jason recalls farmers telling him. The frigid reception was somewhat unexpected to him, considering that as many as half of shrimp farms in Indonesia were failing.

"If this keeps on happening, more farms will end up failing and farming wouldn't be sustainable to them. So, I believe people will start adopting new things sooner or later" he says. "And once they realize that using our solution, they can easily double their production, they become our influencers; in this way, word spreads," he adds.

Global Shrimp Farming Industry

According to World Wildlife Fund estimates^[1], farmed shrimp accounts for 55 percent of shrimp produced globally. In view of the world's increasing appetites for shrimp, production is growing at approximately 10 percent annually — one of the highest growth rates in aquaculture.

Disease is a major cost to the industry. Jason estimates that as much as 40 percent of shrimp produce in Indonesia is lost to disease. The introduction of pathogens can lead to major outbreaks of disease in shrimp, with devastating consequences. Shrimp that become diseased tend to swim on the surface rather than on the bottom of the production pond, becoming easy prey to seagulls. When these same seagulls defecate in a shrimp pond, they spread disease.

Since fish stocks are used as formulated feed for shrimp, disease has an environmental impact as well, since to keep up with shrimp demand, more feed will have to be produced, depleting local populations of fish.

The Dark Years

A second generation-farmer, Jason's family went through a period of tribulation, during the years 2015 to 2018, when they lost billions of rupiah worth of shrimp produce due to disease, poor aquaculture techniques and what Jason calls "random farming."

"There were barely any margins, we suffered a lot," Jason recalls. "We were considering whether to sell the farm, but since every other shrimp farmer was in dire straits, who were we going to sell it to?"

When his family approached banks to try and secure a loan, or even to sell their farm, bankers showed a very poor appreciation for the real value of the shrimp farm. Jason explains: "The thing about shrimp farms is that no one will pay a good price if they don't understand the trade. A shrimp farm would be nothing more than a piece of land to them. The infrastructure and all the knowledge about shrimp farming and the potential of it — that's got to be worth something, right?"

A computer science and technology graduate, Jason, along with his now Sgara co-founder and chief technology officer, Arrival Sentosa, contemplated if perhaps a more scientific approach was needed. "We were considering how data could be the answer," he says. "We observed how data was transforming a lot of other industries, and the efficiencies it created. Perhaps it could help to solve the issues in shrimp farming as well, which was still untouched by technology?"

When Jason and Arrival reviewed problems relating to shrimp farms, they observed that the key issue, for the far majority of them was that they were approaching shrimp farming very randomly. For example, farmers would taste the water in the ponds to ascertain the water quality, instead of using scientific methods to assess it.

A 'Feeling-driven' Trade

"It was all very 'feeling-driven,'" Jason says. "In the old days people used to consult fortune tellers to predict the weather, and surprisingly that practice is still being continued. In fact, many do not follow SOPs (standard operating procedures) of any kind when it comes to shrimp farming."

"Even myself when I first started learning the trade, I thought it was not very complicated. I was not aware of the risks," Jason says.

Unlike other forms of animal farming, shrimp farming has unique challenges which are exacerbated through subjective, unmethodical farming processes. For example, with poultry farming, it is possible to visually identify and isolate an infected chicken. However, this is impossible in shrimp farming. That makes it difficult to predict the success rate of a farm in any season.

The initial opportunity that Jason wanted to pursue was to establish a marketplace to deliver the feed and probiotics to shrimp farmers. It was a precursor to the SGARAHub application which they launched at the end of 2018. Jason and his colleagues figured that if they could consolidate the demands of all farms into one group, they could benefit from economies of scale when purchasing feed and probiotics suppliers and deliver it to farms more cost-effectively to them.

However, Jason narrates an issue: "With more than 50 percent of shrimp farms failing, they may end up not paying, and that will not address the fundamental issues. So, we were pivoting here and there before we decided to focus on data to help us solve the real problems, starting in 2020. Once we did that, everything else will fall in place."

The Sgara Value Add

The Sgara platform includes: SgaraBook, an AI-driven farm management system to monitor farms, report data and warn of diseases; SgaraHub, a marketplace for farming needs; SgaraHatchery, an AI solution used to count larvae; and SgaraFinance, a module to help farmers finance their operations.

Jason says: "We usually ask the farmers what their problems are and what they require. If they are failing but still have capital, we would recommend them to use our FaaS (farming as a service) solution, which involves SgaraBook and SgaraHub. If they are failing badly and don't have any more capital, we would suggest to them our FaaS (Book and Hub) and SgaraFinance. SgaraHatchery is an additional value-adding solution to enhance their operations."

SgaraHatchery uses computer vision and artificial intelligence to count larvae. Jason says: "Many farms use very manual methods of counting shrimp larvae — they use a spoon and count manually. This can be very laborious and time-consuming, taking up hours of their time. With SgaraHatchery, you can count millions of larvae in just seconds, using a smartphone."

Data is the central asset that the Sgara platform utilizes to prevent disease. Finding data points on water quality, shrimp growth, their appetite, their physical attributes, and then feeding that data into the Sgara platform, the chances of a pond catching a disease can be empirically predicted. Based on the assessments of any pond, recommendations are then made on what probiotics to use or what types of medicine to apply to the ponds.

Yields Tripled, Increased Margins

According to Jason, many of the farms that are currently onboard the SGARA platform have managed to triple their yields — while previously it was 15 tons per hectare, now it is up to 50 tons. Feed utilization has also been optimized — while previously they used 2.6 kg of feed for 1 kg of shrimp, now they only need half that amount. And finally, some farms are now achieving as much as 36 percent margins, while previously it was zero.

Many of the farms that have gone through a difficult period are also in dire need of financing and have "barely any capital left" to carry on their operations, Jason adds. While these farms often approach him to discuss a sale, Jason believes it is better to "teach them how to fish better". He says: "I tell them that if they farm it correctly, use sound aquaculture processes and be guided by scientific methods, they can indeed become successful on their own."

To help these farmers find their footing again, Sgara launched Sgara Finance in November 2021. Sgara Finance helps farms by financing their feed and probiotics requirements. Farmers can pay back the monies they owe when they harvest.

Jason says: "I think it is too individualistic for us to just focus on expanding our own business (by buying over shrimp farms). We are looking beyond just business. We are looking to make an impact. By helping farmers in this way, we are not only helping Sgara get traction, but we are also giving them a way to continue their livelihood. If we just buy over, then they would have to find some other ways to sustain themselves.

"In shrimp farming, we treat one shrimp farmer and another as a friend. It's a community-based industry, which is why we have been branding ourselves as their shrimp farming companion since day one," he adds.

"Over the years, we have been excited to support the thriving startup community and the digital transformation for traditional industries in Indonesia. 'Go Digital' is the future, and Cloud is definitely the accelerator. We will continue to provide our leading technologies and resources to support companies including startups in the market." - Leon Chan, Country Manager, Alibaba Cloud Indonesia

[1] https://www.worldwildlife.org/industries/farmed-shrimp

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SGARA: Saving Indonesia's Shrimp Farms Through Data Analytics

Global Shrimp Farming Industry

The Dark Years

A 'Feeling-driven' Trade

The Sgara Value Add

Yields Tripled, Increased Margins

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