OMS Culture on Small Islands in the Coral Triangle: Case History of a Kuda Laut Demonstration Project
The first production unit was started in 2009 and commercial international sales of CITES-certified seahorses commenced in September 2011, for a total of 2,800 animals sold through January 2014. This unit currently produces ~300 animals per month (=production capacity). A second unit is producing ~200 seahorses per month and is awaiting final inspection by LIPI (Lembaga Ilmu Pengetahuan Indonesia or the Indonesia Institute of Sciences, responsible for CITES oversight) for sales licensing. The third unit has limited production. Five more units are anticipated for establishment within a year because funding and demand exist (see below).
Profits and losses were calculated and then scaled to the production/unit of 200–400 animals per month (Table 1), based on the results of the three units currently in production. The income generated from a kuda laut production unit is substantial for the island families that own and operate each production unit and sell directly to exporters. At the allowable quota of 200 animals/month, price paid by exporter (Indonesian rupiahs Rp$30,000/animal), and exchange rate (Rp11,000 ~ US$1), the profit is roughly seven times the typical monthly income (~US$350/month profit versus < US$50; unpublished data) for a male head of a Pulau Badi household. The highest current production capacity is 300 animals/month; thus, approval to increase the quota would yield a more robust business model by allowing for temporary production shortfalls, e.g., major equipment failures.
In the demonstration project, the start-up costs were provided by the private business (Mars Symbioscience). Facilities expenditures included concrete in-ground, fiber, and biofilter tanks (Table 1). Water system expenditures included filters, pipes, pumps and fittings, ultraviolet sterilizer, and installation. The energy system expenditures included solar panels, DC inverter, battery and charger, controller, electrical panel, cables, and installation. Consumables included holding tanks, aerations, feed (Artemia; mysid and plankton collection and storage equipment), feed system equipment, water filters, water testing, disease analyses, ice, and maintenance costs. Administrative costs included travel to obtain licenses and certification, office equipment, printing, and telephone. There were also unaccounted administrative costs that were, and must continue to be, subsidized by the private business because at present, islanders cannot navigate the current complicated permitting process.
Below, we detail the critical elements in each phase of culture development, which are generally applicable to OMS culture in the Coral Triangle. The major findings are then summarized in a SWOT analysis (Table 2; see also Supplementary Table S1).
Phase 1: Technological Development and Early Adoption
The first phase involved the establishment of the full cycle production system, engagement of local families, training, system optimization, and demonstration of feasibility. Collaboration among the islanders, private business (Mars Symbioscience), and academic researchers was essential, and private business provided the start-up capital. Repeated discussions between village leaders and representatives of the private business that provided the financing and technical support were important to convince islanders to risk the unknown. The process to assess interest and select culturers was managed by the village head but as production proceeded and relationships were built, senior people in different parts of the island joined the headman in managing discussions. Eight families were initially interested in culturing seahorses, but the protracted licensing period winnowed the interest to one initially. All three current culturers were fishermen who still fish but not on a daily basis. Each small (~8 m × 5 m) culture unit was constructed in the family’s yard area.
An important feature of the project was that the economic success was directly attributable to the early adopters because they owned the production units and supplied kuda laut directly to the exporters, which is a major departure from the patron (middleman)-client system characterizing fishing in the Spermondes (Ferse et al. 2012a). Ownership is an important factor determining adoption and success of supplemental or alternative livelihoods as features of coastal management plans (Ferse et al. 2012a). Another factor influencing willingness to culture was exposure to non-traditional life beyond the islands, which characterized all early adopters.
Another critical factor in this early phase was the dedication of owners and their ability to solve problems. Not surprisingly, differences existed among owners. The first adopter was dedicated, acted independently to solve problems, and ran trials to determine the best culturing methods. In contrast, the owner of another unit currently producing too little to be successful had delegated operation to a family member. This culturer was not capable of addressing the suspected root causes of the low production, which included plumbing not to specification, breeding inhibited by warm water, and disturbance of animals by mosque noise. If production remains low, the unit will be converted to culturing less sensitive OMS. The first two units have already begun limited culture of other OMS, and they also a grow-out species provided by government hatcheries (e.g., clownfishes, Amphiprion spp.; blue devils Chrysiptera cyanea; barramundi cod, Cromileptes altivelis). Adding species has leveraged the basic infrastructure with a few incremental assets to provide additional income at reduced overhead per Rp of income.
In the start-up phase, private business promoted the transfer of academic expertise in fish aquaculture to kuda laut culture and provided the investment capital, logistical experience necessary to complete projects in Indonesia, and technical expertise required to develop a reliable, renewable, low-cost supply system. The latter was important because electrical power is not typically available during daylight hours (or at all on some islands). While wind and wave energy systems were also evaluated, a solar energy system was adopted to lower maintenance needs. Finally, sustainable feed systems had to be established to ensure availability when local wild harvest feeds (mysid shrimp) are in low supply. Collaborations with government research laboratories were established by the private business to develop sustainable feed systems, which will become increasingly important as more families adopt OMS culture as a livelihood opportunity.
The private business was also essential for overcoming the most challenging aspect of the project—linking the culturer directly to the exporter and obtaining the necessary licenses and permits (see results below on exporters). The licensing and CITES permit processing took more than 2 years to complete. The process included the acquisition of licenses to collect broodstock, keep the seahorses in captivity, commercially produce the seahorses under a specified quota allocation, undertake domestic sales, undertake export sales, and then finally obtain the CITES permit required for every individual shipment of seahorses.
Phase 2: Build-Out to Franchise
This phase concerns defining the technologies and business systems to enable others to duplicate the system, i.e., the franchise. Eventually, the experienced culturers can receive payment for providing technical support, which has been provided free to the current culturers and included a franchise manual detailing how to establish and operate a successful production unit. The present technology holders (early adopters) must develop the capacity to support technology transfer to help others efficiently and consistently produce a quality product. Capital must be available for additional start-ups and subsequent expansions into small businesses. The collector, exporter, and wholesale businesses must be able to connect to a growing network of small producers and provide market signals to manage supply and demand in reasonable balance. Infrastructure investments (particularly electricity supply and sanitation) by the government or other capable entities are important to reduce the individual investment and ongoing operating costs.
Phase 3: Large-Scale Adoption of OMS Culture
This phase will depend on the success of the preceding phases. Investment must be made in further development of breeding technologies and feed systems to expand the range of captive-bred species and to reduce the complexity of captive breeding production systems. Streamlining the various licensing and audit processes will be essential to managing small OMS businesses within, rather than outside, the regulatory framework.
There is an additional future challenge of flooding an essentially niche market with technology transfers. The risk of rampant production, a market ruined by oversupply, and lack of adherence to a legal supply must be carefully managed to avoid cheating and a decline in the market. A control system incorporating barriers to entry is essential to help manage supply and demand to limit boom and bust cycles, and to maintain the integrity and credibility of the supply chain and the product. Such a control system could include licensing if legally mandated. Certifications offer another potential control, but add potentially prohibitive costs (Shuman et al. 2004; Cohen et al. 2013; Rhyne et al. 2014).
Another model for a control system would be an entity to serve as an information bank for the market and demand. Such an entity could collect and distribute data on the number of shipments, the number of broodstock, aspects of technology, and verification of the number of culterers trained to operate and that the organisms traded are captive bred and not creatively disguised wild specimens. Culturers will know the number of broodstock and the quantities sold to customers, and thus the demand. The ideal entity to implement the control system would be a cooperative of all the stakeholders—culturers, exporters, government, universities, and non-government organizations. Presently, Mitra Bahari South Sulawesi (Ricci and Crawford 2012), a forum involving university, government, not-for-profit organizations, and business partners, could serve as this entity.
The SWOT analysis highlighted the importance of a land- and community-based enterprise with major continued input from private business (Table 2). Being land- and community-based was also an inherent weakness. Land is limited in the Spermondes, and islanders had little technical and business knowledge, which contributed to the major challenge of licensing and continued subsidization. On the other hand, opportunities to expand into different species and other islands and importantly, reduce the time to licensing, will be enhanced due to the cooperation between the community, producers, exporters, private business, and the government’s aquaculture research laboratories. An opportunity for an ecotourism venue was also identified.
The SWOT analysis also underscored declines in production as typical for captive breeding and culture. A hiatus in production occurred during the rainy season in one year perhaps due to pollution and a fall off in production occurred at the fourth generation possibly due to unconfirmed inbreeding depression. Addressing production declines requires better genetic and other scientific information, and collaboration of all parties for quick action when a decline is evident. All parties also need to address the major future threats of market flooding and quality control.
Indonesia OMS Exporters Interested in Cultured Kuda Laut and Other Cultured Species
The success of OMS culture in the Spermondes also depends on factors constraining exporters of the product (Table 3). Similarly, to the kuda laut culturers, the exporters faced a complicated regulatory permitting process, which differed by the export destination. Europe required more permits than the United States, including health certifications, but the United States was very strict about invoices and inspections and levied heavy fines for typographical errors. The lack of a standardized taxonomy, particularly for corals, caused discrepancies between invoices and inspections of shipment contents resulting in stiff fines. An additional challenge was the slow permitting process in Jakarta, which supposedly takes 24 h but extends to several days, adding significant cost. The exporters also had no easy way of acquiring information on species under consideration for regulation in other countries. One exporter was surprised to learn that the lionfish (Pterois volitans) had invaded the Atlantic and Caribbean seas (Calado and Chapman 2006), and was unaware of the general problem of invasive ornamental species.
Exporters did not have a marketing strategy and were at the mercy of weather, availability, airline cargo cost volatility, a shift in consumer preferences away from aquariums to electronic entertainment, regulations, and particularly hobbyist preferences that vary by country. Exporters reported that Japanese favored frogfishes, while Americans had a distinct preference for rarity. Exporters indicated that distinctiveness always created a better product. Product quality was not an issue for these exporters who carefully maintained their clean facilities. Exporters demanded high-quality specimens from their middlemen and collectors, either through training (for up to 6 months) or by terminating employment upon receiving a sub-standard specimen. Exporters were seeking new, more remote collection sites (West Papua, Maluccas), which will lengthen the path to the destination and put pressure on previously unexploited populations.
Exporters emphasized that more cultured specimens are supplied by Indonesia than the Philippines and the Maldives, which rely more heavily on wild collections. To facilitate OMS culture, the Indonesia government established a broodstock habitat in the waters around Serangan Island, Bali, where a number of exporters grow-out corals and giant clams (Tridacna spp.) for export. However, exporters worried about the lengthy time to develop these products. For example, culturing Tridacna required up to 2 months to acquire permits, up to five years to develop the broodstock, and then up to 3 years to reach marketable size (5–7 cm). The cost of setting up an operation at this site (US$200,000–300,000) was prohibitive for some exporters. The Bali culture habitat is crowded, water quality is perceived to be declining, and disease is becoming a problem. Exporters also felt squeezed because collection sites have been reduced as the beach tourism industry has expanded on Bali.
Prospecting for new species to culture was important to exporters and depends on being able to control the species’ life history. Exporters identified currently popular candidates for culture, including damselfish (Chrysopterus hemicyanea), clownfish (Amphiprion ocellaris), mandarin fish (Synchiropus splendidus), the blue tang ‘Dory’ (Paracanthurus hepatus), and a coral (Euphyllia glabrescens). Angelfishes (Pomacanthidae) have been very lucrative (Supplementary Table S2) and have spawning behaviors similar to groupers (Serranidae), which have been successfully cultured for food. Exporters explained the current fads for ‘nanotanks,’ or very small home aquarium systems will favor culturing small-sized species.
Although one exporter worried whether his children could continue the family business, another neither observed nor anticipated a decline in business (see below). Finally, exporters indicated that the industry needed a focused, full-time commitment to assure the high product quality. When all of the above perspectives of the exporters are taken together, they indicate a scope for growth to develop OMS culture in the Spermondes.
Indonesia’s OMS and Live Seahorse Trade
Indonesia has remained a major exporter of many OMS including seahorses, and California has remained a major destination of these exports. The results below indicate a high demand for Indonesian OMS and an increasing exportation of seahorses cultured in Indonesia, which indicates that market flooding is not an imminent threat. Thirty-seven Indonesian exporters shipped OMS through the Los Angeles and San Francisco International Airports to 36 importers in the USA in 2009, based on USFWS LEMIS records. In this year, over one million individual ‘tropical marine fishes’ were collected in and exported from Indonesia, followed by high numbers of ‘crustaceans,’ ‘molluscs,’ and hard corals (Fig. 2).
Specifically, considering seahorses from 2004 to 2012, Indonesia exported 52,712 individuals representing at least 14 (plus ‘Hippocampus spp.’) of the 26 species of Hippocampus reported in the CITES database and accounting for 9 % of the global importations. The United States was the major world importer (62 %) of seahorses, and the majority of Indonesia’s exports (65 %) were to the United States (Fig. 3). Indonesia exported 5,700 H.
barbouri or 82 % of the global live trade in this species from 2004 to 2012. The United States was the major importer of H. barbouri (65 % of global share), and Indonesia supplied the majority of these importations (85 %). Indonesia also supplied the majority of the global trade in H. histrix (91 %) and H. spinosissimus (60 %), and was the sole exporter of H. denise. Furthermore, all or the majority of the Indonesian seahorse exports to the United States were landed in California, comparing CITES to LEMIS records. In 2009, 634 of 763 individuals or 83 % of all Indonesia seahorse exports landed in California (Fig. 4). In 2012, 100 % of Indonesia’s seahorse exports landed in Los Angeles.
Across all years of data, most (83 %) of the Hippocampus exported from Indonesia were from wild sources (source code W: 66,975) and 14 % from captive sources (source code C: 7,084 individuals; F: 462 individuals), with the remainder labeled by other source codes. All of the captive-sourced exports from Indonesia occurred in 2009, 2011, and 2012 and included H.
barbouri, H. comes, H. kuda, and Hippocampus spp. A shift to captive-sourced exports was evident by 2011, when 2,415 were exported, compared to 120 from wild sources. In 2012, 4,687 were coded either C or F as a source code (4,225 and 462, respectively), and none were from wild sources. Of the 2012 total, 720 were H. barbouri. The current allowable quota for each of the three kuda laut production units (200 animals per month) represents 3 % of the Hippocampus exported per month averaged across all years of available data. This comparison indicates scope for growth in kuda laut culture.
OMS Culture: The Spermondes Food Fish Contrast
The sheer number of food fishes in the Paotere market indicated the importance of fishing in the Spermondes, and that OMS culture will not replace fishing as a livelihood. There were approximately 220 marine fish vendors in March 2013, 110 in September 2014, and 113 vendors in March 2014, of which we censused 8, 22, and 23 %, respectively, for a total of 65 vendors. Extrapolating from the total fishes counted and the number of vendors, we estimated that over 31,470–41,000 marine fishes were marketed daily (not accounting for the turnover) representing at least 140 taxa (Supplementary Table S2). Food fish species also exported as OMS were sold for a few US dollars apiece or even less (or US$1 - $3.60 maximum/kg) (Supplementary Table S2). The fish families with the highest diversity and abundances were the Serranidae (groupers/coral trouts/coral cods), Lutjanidae (snappers), and Lethrinidae (emperors/breams), each of which included species sold in the ornamental trade (Supplementary Table S2). All fishes were associated with coral and seagrass habitats, with the possible exception of flying fish and one dolphinfish each sold by a single vendor. The fishes were caught primarily at ‘the islands,” referring to the Spermondes, or “nearby and far,” “a day and night away,” and “one to six hours by boat,” although three vendors reported that fishes were caught in Kalimantan (Indonesian Borneo). Vendors identified six islands specifically but otherwise could not, because they bought from middlemen (the ‘patron’).