April 28, 2021

Sustainable Finance of Small-Scale Fisheries in the Face of the COVID-19 Crisis

Greta Swanson and Xiao Recio-Blanco

Small-scale fisheries (SSF) have the potential to achieve true sustainable development for participants in the sector. SSF encompasses fisheries that are generally run by households using relatively small vessels, limited investments, and small amounts of energy. They usually make short fishing trips near to shore for fish that are consumed or sold locally. United Nations, Fisheries and Their Contribution to Sustainable Development: Small-Scale and Artisanal Fisheries 2 (2020). Worldwide, SSFs land half of all fish used as human food. Id. at 4.

SSFs are hugely important in developing countries, where 90% of fishery workers are in the SSF sector, almost half of whom are women. World Bank, Hidden Harvest: The Global Contribution of Capture Fisheries (2012). They provide essential food and high-quality nutrition to their participants and local communities. Fish from this sector are consumed locally, bartered, and enter local, national, regional, and international trade networks. This sector’s importance to livelihoods, nutrition, and poverty alleviation, as well as its ability to serve as a sustainable path to marine resource use, warrant attention. To improve SSF’s sustainability, SSF participants and the U.N. Food and Agriculture Organization (FAO) developed principles for these fisheries’ development known as the Voluntary Guidelines for Securing Sustainable Small-Scale Fisheries in the Context of Food Security and Poverty Eradication. Importantly, the guidelines identify connections among SSF, human rights, and economic security that support sustainable development. By developing a specific regulatory framework for the SSF sector, governments can also strengthen small-scale fishers’ livelihoods and marine resource sustainability. Key governance reforms for the SSF sector include establishing and protecting fishers’ individual and community tenure rights to fishery resources, small-scale fishing areas, and adjacent land and galvanizing community management (co-management) of marine resources. Governments may also support SSFs by developing associations and cooperatives and facilitating equitable participation in markets.

However, the COVID-19 pandemic and response measures to address it have adversely affected SSFs. Many governments closed fisheries for health reasons, closed borders and hence shut down much trade, and closed in-person markets and restaurants. Tourism dropped to very low levels. Many supply chains and distribution networks on which SSFs depend disappeared. With the disturbance in supply chains and drop in demand for fish, fish prices declined, while input and commodity prices in many places rose. COVID-19 also impacted the health of fishers and their communities.

The pandemic also impacted SSF management by lowering monitoring and enforcement, leading to greater levels of illegal, unreported, and unregulated (IUU) fishing and competition for fishery resources, and by creating difficulties in maintaining community involvement in resource management as a result of social distancing requirements and potentially reduced time at sea. Governments and other actors can address these impacts and help restore the SSF sector through increased efforts to establish exclusive fishing zones for small-scale fishers to ensure resource access; providing greater use of technology in reporting, monitoring, and enforcement to reduce costs; increasing local fisher participation in enforcement to reduce costs and enhance participatory management; and introducing innovative coordination mechanisms that ensure participation and consultation of small-scale fishers. FAO, Legal Considerations in Responses to COVID-19 to Mitigate the Risk of Disruption to Fisheries and Aquaculture Food Systems (June 2020).

Sustainable finance can help to improve the effectiveness of these interventions. This article takes a broad view that, beyond financial instruments, such financial support includes measures to promote local markets and improve value chain connections between producers, retailers, and consumers. In short, sustainable finance includes all measures that support the maintenance and profitability of supply chains to ensure the sustainability and economic viability of SSF. A holistic approach to fisheries management that includes streamlining regulatory requirements and providing additional economic incentives for SSF is also important.

The article surveys efforts around the globe to support SSFs financially during the pandemic and provides examples of regulatory and institutional actions that help to empower and support small-scale fishers. In many cases, these responses extend existing efforts. They are consistent with other policy recommendations to provide greater support to fishers to help develop supply chains, organize to increase bargaining power, access consistent and transparent pricing, increase focus on marketing, and potentially increase domestic markets, while ensuring sustainability and food security for local communities.

Dealing with the Drop in Demand for Fish

Prior to COVID-19, SSFs depended on a variety of markets, including restaurants, the tourism industry, international suppliers and marketers, and local and national markets. Many fisher communities obtained increased profits through direct sales to restaurants and the tourism industry.

When COVID-19 closed markets and borders, fishers experienced a dramatic drop in demand for their products from international and hospitality markets. Responses to this drop include developing local markets, creating or improving direct online connections between local fishers and buyers, and increasing the storage and processing capacity of the SSF sector.

One potential solution to the loss of usual markets is to invest in web-based platforms to connect producers and buyers. Many web-based platforms for e-commerce or online sales emphasize selling to local purchasers. The FAO recommends facilitating “permits for informal fish trade while ensuring compliance with the necessary protective equipment and sanitation requirements.” Id. at 3. Online platforms can include government-sponsored fish markets, apps that individual fishers or fishery cooperatives use to sell their products, Facebook buy-and-sell groups, and large e-commerce marketplaces. Even when online platforms are not available, facilitating direct sales to consumers, retailers, or restaurants through policies, regulations, and financial incentives helps SSF communities avoid middlemen and may allow them to obtain a higher price for their products. A shorter supply chain can also facilitate a higher level of traceability.

In Oman, the government created a platform for the online trading of fish after COVID-19 social distancing regulations resulted in the closure of the large Al Falaij fish market in the capital. In the market, fish vendors had sold the products of small-scale fishers and others to wholesalers, restaurants, and retailers. To replace lost face-to-face marketing, the Ministry of Agriculture and Fisheries, in cooperation with the Oman Technology Fund, launched Behar, an online platform on which fishers can sell their products directly to purchasers. The vendors upload the details and pictures of the catch to the platform and buyers pay directly to fishers’ registered personal accounts. FAO News, From Bustling Omani Fish Markets to Online Auctions, June 8, 2020.

Other platforms and apps that fishers utilize for direct sales include OurFish, used in Honduras, Belize, Myanmar, Indonesia, and Mozambique (our.fish); VeriCatch (vericatch.com); Odaku (odaku.in), founded in India; and Abalobi (abalobi.info), started in South Africa. A platform may include apps for recording fishery data, monitoring regulatory compliance, and documenting specifics of the catch to ensure better traceability. Data that fishers collect through the app can provide them with a stronger basis for community management. The tools may also assist fishers with tracking their income and expenses and make prices more transparent, allowing fishers to make better business decisions and providing the financial data necessary to access credit. In addition, connectivity platforms and low-cost vessel positioning technologies improve the safety and security of fishers while at sea and facilitate fisheries co-management.

South Africa developed its Policy for the Small-Scale Fisheries Sector in 2012 (No. 474, Department of Agriculture, Forestry and Fisheries, June 20, 2012) and promulgated regulations in 2016. Marine Living Resources Act (Act No. 18 of 1998), Regulations Relating to Small Scale Fisheries, Mar. 8, 2016. Section 4.2 of the Policy recognizes that small-scale fishers face “adverse marketing conditions” and need to add value to their products and sales. However, the Department of Agriculture, Forestry and Fisheries has not fully implemented this policy. As a result, private actors have pursued other responses.

For example, Abalobi (from the isiXhosa phrase meaning “someone who fishes”) is a nonprofit organization that has worked with small-scale fishers in the Cape region of South Africa to develop and use web-based platforms to improve both economic returns for the fishers and management of the fishery resource. In the absence of a fully implemented small-scale fishing policy, the local fishing community has used the platform to improve its self-governance, empowerment, and value chain connections. Tsele T. Nthane et al., Toward Sustainability of South African Small-Scale Fisheries Leveraging ICT Transformation Pathways, 12 Sustainability 743 (Jan. 20, 2020). Abalobi apps use several approaches. The Fisher app, for example, provides for electronic catch-recording, sharing of data, and accounting, allowing better assessment of profits and recordation of data. Using the Marketplace app, fishers built a direct-sale market to restaurants, which greatly increased the value of their sales. They also developed local fish markets, which previously did not exist.

The new apps have helped fishers in other ways. For example, pandemic-associated closures created numerous challenges for small-scale fishers in Lamberts Bay in the Western Cape. In particular, the community lost the lucrative restaurant market. In order to continue to catch and sell fish, fishers needed to be approved as providers of essential services. They were able to obtain the necessary government authorization through the Abalobi platform. Using the Marketplace app, they then began direct deliveries of their catch to consumers via a community-supported fishery model, while also developing the option of serving restaurants that were transitioning to takeout service. The COVID-19 pandemic thus has demonstrated the benefits of developing legal frameworks that enable enough regulatory flexibility to respond to the SSF sector’s challenges. Abalobi, A Call to Action—Our Response to COVID-19, Mar. 22, 2020.

Another approach is for fishers to sell their products through large unspecialized e-commerce platforms such as Shopee and Lazada in Southeast Asia, Alibaba (a Chinese company), or Facebook buy-and-sell groups. Use of these platforms can facilitate direct sales, shortening the supply chain. While positive, governments need to regulate these marketing tools to avoid sales of IUU fishing products.

In Seychelles, the Seychelles Conservation and Climate Adaptation Trust (SeyCCAT) provides funds for “businesses and organisations involved in protected areas management, sustainable fisheries and the ‘blue economy,’” including small-scale fishers. SeyCCAT, In One Month SeyCCAT Will Launch the Blue Grants Fund 4, Facebook, Mar. 6, 2020. Potentially relevant to COVID-19 responses, SeyCCAT has funded small pilot projects that rely on technology to improve SSFs’ sales and profits. Projects have included creating a database to evaluate developing local markets, improving traceability in SSFs, and using Abalobi project ideas and software to improve small-scale fishers’ incomes. Such ideas could help these fishers develop local markets.

Partnerships can also facilitate the purchase and sale of local seafood. For example, Costa Rica has been a leader in promoting sustainable SSFs. A 2014 decree incorporated key aspects of the FAO Guidelines as national policy (Executive Decree No. 39195 MAG-MINAE-MTS, Aug. 7, 2015: Official Application of the Voluntary Guidelines for Securing Sustainable Small-Scale Fisheries in the Context of Food Security and Poverty Eradication), and a bill currently before the legislature, the General Law for the Sustainability of Small-Scale, Artisanal Fisheries in the Context of Food Security, Poverty Eradication and Shared Governance, would implement the Guidelines through law. File No. 20.750, Legislative Assembly of the Gov’t of Costa Rica. One existing role of the fisheries and aquaculture ministry, INCOPESCA, is to support the economic development of SSFs.

Nevertheless, with the pandemic, Costa Rican fishers saw their international, tourism, and hospitality industry sales dramatically decrease. Fish markets were shut down. In response to the loss of markets, INCOPESCA took a number of actions to develop partnerships to increase local marketing of seafood. It promoted direct marketing to Costa Rican consumers, in part by providing lists of shops that offered home delivery of fish products. It collaborated with two groups to set up a collection center in Playas del Coco for fishers to sell their products. In the Guanacaste region, where 140 hotels closed, INCOPESCA and local organizations implemented a previously planned policy to introduce fish into markets for farm products, which remained open. The Chamber of Fishermen of Guanacaste bought fish from local fishers to sell in the markets.

Another strategy is for governments to purchase SSF catches to supply fish for schools, hospitals, and other institutions during the crisis. In Costa Rica, the Institutional Supply Program purchases food from small producers for hospitals, schools, prisons, and Public Nutrition Centres. INCOPESCA coordinated with the Ministry of Agriculture and Cattle and the National Production Council to include fish caught in Costa Rica in the basic food package of the Institutional Supply Plan, purchasing it from small-scale fishers. Costa Rica News, Costa Rican Government Institutions Apply Measures to Support the Most Vulnerable Productive Sectors.

Finally, improving mechanisms that allow fishers and processers to develop and improve cold storage and preservation facilities is another way to deal with fluctuating demand caused by the pandemic and add value to catches. Investments in the processing sector could help alleviate issues associated with reduced demand for fish by allowing fishers to process or store excess fish over longer periods. Related questions are whether regulators can streamline regulations for handling and storage requirements to favor local producers and what incentives governments can provide to processing and storage companies to help distribute the SSF products.

As one example, the Development Bank of Seychelles administers the Fisheries Development Fund (FDF). In response to COVID-19, the FDF provided loans to improve fish processing capabilities and low-interest loans to buy, cut, pack, and freeze the fish. Quentin Bates, Fisheries Rescue Plan to Guarantee Seychelles Food Security, Fisker Forum, Apr. 11, 2020. These loans allow Seychelles businesses to invest in the fish processing sector despite the pandemic and can help the fishing community by allowing purchase or storage of excess fish.

Dealing with Decreased Prices and Profits and Loss of Employment

A drop in demand for fish is not the only COVID-19 impact affecting small-scale fishers. They have also experienced a drop in fish prices, increased costs of inputs such as fuel and bait, and increased unemployment, all of which depress or eliminate their incomes. For example, members of fishing cooperatives participating in the Environmental Law Institute project “Enabling sustainable small-scale fisheries in Yucatan and Quintana Roo to thrive through innovative ocean governance (2018–2021)” have reported a complete closure of recreational, sports, and fly fishing activities in the region, a sharp reduction of opportunities for stakeholder engagement on fisheries governance, and the uneven distribution of government-sponsored short-term economic relief programs.

The relative value of fish sales depends on a host of factors. Mechanisms to maintain or increase prices could include ensuring price transparency, providing price supports for fish products and inputs, establishing a viable SSF traceability standard and label, and, as discussed above, making improvements in processing capacity and capability. It is important to not only replace lost markets, but to maintain the higher value that fishers received in these markets, or at a minimum to ensure that small-scale fishing remains viable economically. With the loss of markets and drop in fish prices, a basic need for fishers is to maintain income to remain viable economically. In response to fishers’ requests, the Seychelles Ministry of Fisheries and Agriculture developed a rescue fund and plan for small-scale fishers. The Seychelles Trading Company distributed fish to retailers in order to improve marketing within the country. The fund supported prices and inputs to maintain fishers’ profits. It guaranteed the purchase of fish at a set price, which—although lower than pre-pandemic prices—maintained a certain level of income. The government also agreed to pay up to two-thirds the cost of bait and half the price of ice. To avoid long-term market distortions, the Seychelles Ministry of Fisheries limited these measures to three months to address the immediate emergency. It has also reduced the price of tools for artisanal fishers and registered fish processers. Seafood Source, Seychelles Moves to Cushion Artisanal Fishers from COVID-19 Impacts, Apr. 17, 2020.

Fisheries traceability standards, which can be established by governments, industry, or nonprofits, document the chain of custody from the point of catch to the consumer. These standards can help implement environmental sustainability and social responsibility principles while also improving regulatory compliance. In the long term, an SSF traceability standard that integrates social, economic, and environmental elements could serve as a means to obtain a price premium in some markets and help to create new markets. The most familiar traceability standard for large-scale commercial fisheries is the Marine Sustainability Council (MSC) standard. However, the MSC standard is of limited value to SSFs because the certification process is complex and relatively expensive, and it does not place a value on the social and economic status of participants in SSFs. For these reasons, it may not be an effective means to help small-scale fishers obtain either a price premium or a niche market for the certified product.

One alternative model is a national standard focused on national markets, such as those set out in the Costa Rica SSFs bill and the South Africa Policy on Small-Scale Fisheries. One of the purposes of the Costa Rica bill, set out in Article 1(c), is to improve the socioeconomic situation of small-scale fishers. The bill would require the development of a traceability standard linked to labeling. Unlike global standards, it focuses exclusively on SSF and is most applicable within the national market. Article 51, part of a chapter concerned with social issues and employment, requires the state to label products from responsible fisheries, developing standards through legislation:

The State will guarantee that responsible fisheries are recognized as such when marketing their products. In order to do that, INCOPESCA will determine by means of legislation the requirements for a product to be placed on the market under the label “Responsible Fisheries” and will establish the necessary procedure to obtain such a label. This procedure must take into account the reality of the small-scale, artisanal fisheries. When purchasing fishing products for the public sector, products labelled “Responsible Fisheries” will be given preference.

File No. 20.750. An advantage of such a national system is that it focuses on the value of SSFs and local production, creating a nationwide brand. It could apply within the country, would be adapted to the needs of SSFs, and would establish a purchasing preference for such fish for public use.

In another approach, the Abalobi platform allows self-organized SSFs in South African Cape fisher communities to provide a traceable product for consumers. When fishers sell their catch directly to consumers through the Marketplace app, it attaches a code to the transaction that directly links the fish and the fisher and indicates where and how the fish were caught.

Another model for assessing implementation of SSF sustainability principles is the Framework for Social Responsibility in the Seafood Sector. Certification and Ratings Collaboration, 2018. This Framework incorporates both existing standards for seafood sustainability and other standards and guidance related to human rights and social issues, including the Voluntary Guidelines for Securing Small-Scale Fisheries. One of its main goals is to develop “a framework to help the seafood industry define social responsibility in the seafood sector.” Id. at 1. It is not a standard in itself, but the Framework provides an overview of important issues and indicates what tools are available for evaluating performance. As such, the Framework could serve as the basis for a traceability standard particular to SSFs.

Numerous governments have also provided direct payments, food, or other supplies to fishers. A strong social security net provides fishing communities with sufficient food and basic necessities and allows them to resume economic activity when conditions improve. In Costa Rica, INCOPESCA allocated subsidies to more than 1,400 registered small-scale fishers for three months. DELFINO, IMAS Ayudará a 1473 Pescadores Artesanales y Ayudantes con Subsidio, May 2020. Local community-based savings and loan institutions, which can be linked to fishers’ organizations, have also provided backup income and resources. In Mozambique, Village Savings and Loan Associations, which are dominated by women, have provided opportunities for women to invest in fisheries enterprises and marine conservation. CARE, Learning Brief: VSLA and CARE Adaptations to COVID-19 and Past Crises, May 2020. In the face of economic hardship associated with the pandemic, such banks have provided assistance to community members.

Governments can also assist struggling fishers by postponing fees, extending loans and credit, providing additional low-cost loans, and ensuring flexible credit laws in difficult times. FAO, The Role of Finance in Mitigating COVID-19 Impacts in Fisheries (2020). The FAO recommends increasing “access for fishers and others in the fisheries and aquaculture value chain to credit and micro-finance programmes with reduced interest rates, flexible loan repayment, and options for restructuring of loans and related payment schedules.” FAO, How Is COVID-19 Affecting the Fisheries and Aquaculture Food Systems (Apr. 2020). In Costa Rica, the government postponed annual fees for commercial fishing licenses, aquaculture and transport authorizations, and marketing of fishery products. Acuerdo No AJDIP/0048-2020, Apr. 2020. Three other examples of countries providing substantial funding of low-interest loans to small-scale fishers and fishery enterprises are the Philippines, India, and Bangladesh. FAO, The Role of Finance, supra.

Next Steps

Governmental and fishing communities have responded in numerous ways to the closure of markets in the face of the COVID-19 pandemic. The development of local and national markets and shorter supply chains, together with numerous other forms of support for optimal marketing, storage, and processing, provide fishers with opportunities to sell their catch for a reasonable income. The development of e-commerce allows fishers to sell directly to consumers and retailers in local and national markets. Traceability initiatives can add value as well as improve regulatory compliance.

However, the pandemic-induced crisis should also inspire governments to use new partnerships to develop local markets and connect producers to consumers, including investment in processing and storage capability and capacity. Governments also need to make more flexible credit available to small-scale fishers. Finally, social security mechanisms must be in place to enable fishers and their communities, including generally unrecognized members of the fishery supply chain such as women, to survive COVID-19’s economic impacts and resume fishing when conditions improve. Despite their relevance, most of the examples described in this article are still piecemeal, anecdotal policy initiatives. Governments and policymakers must engage in legal development and innovation to put in place the regulatory infrastructure needed to put these and other sustainable development instruments into practice.

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Greta Swanson and Xiao Recio-Blanco

Ms. Swanson is a visiting attorney with the Environmental Law Institute in Washington, D.C. Mr. Recio-Blanco is the director of the Ocean Program at the Environmental Law Institute. They may be reached at swanson@eli.org and recio-blanco@eli.org, respectively.