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Blue Ocean Strategy, the Final Frontier in Circular Farming

A multi-species offshore circular farming reusing bio-wastes of food production from fisheries, agriculture and aquaculture industries.

Photo of Chian-wen Chan
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Lead Applicant Organization Name

TripleVs Venture Sdn. Bhd.

Lead Applicant Organization Type

  • Small company (under 50 employees)

If part of a multi-stakeholder entity (i.e. team), provide the names of other organizations and types of stakeholders collaborating with you.

(1) MyQR: Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM). (2) Global Shapers Community, Kuala Lumpur Hub: Precision Medicine and Healthcare Valuation. (3) Climate Reality Leadership Corps: Climate Change. (4) Protenga: Bio-waste to insect protein. (5) iVivelabs Ltd: Blockchain. (6) WWF-Malaysia: Protection and rejuvenation of wild fisheries. (7) Challenge Group Inc: reinsurance broker specialising in agriculture. (8) Agridon Technologies: Industrial and process engineering. (9) UCSI university: Aquaculture and marine biology. (10) Bluestream Marine: Onshore and offshore engineering. (11) National University of Malaysia: Food science and food technology.

How long have you / your team been working on this Vision?

  • 1-3 years

Lead Applicant: In what city or town are you located?

Kuala Lumpur

Lead Applicant: In what country are you located?

Malaysia

Your Selected Place: what’s the name of the Place you’re developing a Vision for?

Malaysia's coastlines that predominantly face South China Sea and Straits of Malacca with a total length of about 4000 km, ~ 80,000 km^2.

What country is your selected Place located in?

Malaysia

Describe your relationship to the place you’ve selected.

Malaysia is the place of my birth. I received the first thirteen years of my education in Malaysia before going overseas to pursue a Masters and a PhD from UK universities. After 13 years away, I was ripe with experience to return to Malaysia, develop her economy, and assist in escaping the middle-income trap. This can be achieved by playing my role in building up Malaysia’s fledgling knowledge based industries especially in the area of food, agriculture, and biotechnology. Unlike the West, in Malaysia, sustainable development is still not as widely practised in commerce and policies. Malaysia is tropical and very biodiverse, both on land and in the seas. I am an avid outdoor person who hikes in rainforests and snorkels amongst the fish and corals. Sadly, in the course of my expeditions I have also witnessed the bleaching of corals, homeless Asian elephants and tigers, and landslides due to over-development of highlands.

Being a passionate advocate for environmental sustainability, I want to apply sustainable development in Malaysia’s economic growth. In the national election of 2018, for the first time since Malaysia’s independence from colonialism, a new government was voted into power. This change was unprecedented for Malaysia to have new leaders with relatively untested governance credentials. They called out to all Malaysians to work together to transform Malaysia for the better. This call-to-action inspired me to be a change-maker. Under the helm of these new leaders, I envision a new direction for Malaysia. Although, these leaders have faced many challenges to upend malpractices, they have persevered and pushed forward to make concrete changes for the betterment of all Malaysians. As such, this has solidified my will to spearhead change in my own unique way, to make a dent in the history books of Malaysia. Whilst I may not be able to change Malaysia like these new leaders have done, I still can change Malaysia in the ways of an academic and a technocrat.

Describe the People and Place: Provide information that would be helpful for an outsider who has never been there and may have no context about this Place to better understand the area.

Malaysians are predominantly urbanites, at 75% of her total population. Malaysia is a multicultural place with three largest ethnicities being firstly, the Malays, followed by the Chinese, and then the Indians. The other aboriginals in Malaysia are mostly located in northern part of Borneo Island such as Kadazan, Dusun, Iban, etc. Malaysian food is a strong symbol of cultural identity as it brings together a blend of multi-culturalism and national unity, and the source of national pride and joy. Malaysian food is diverse, such as Nasi Lemak (coconut rice with fried or hard-boiled egg, fried chicken or curry chicken, fried anchovies, fried peanuts, and seafood-based chilli paste), the multitude of Laksas (various forms of curries, some with sardines, shrimp paste, squid), and Rojaks (a Malaysian salad containing tropical fruits, tamarind, shrimp paste, and squid). Hence, Malaysian cuisine is highly dependent on her relationships with the seas as Malaysians’ per capita consumption of seafood is one of the highest in the world. Malaysia’s biggest agricultural export is palm oil, contributing to roughly 38% of her agricultural output, and 3% of her total Gross Domestic Product (GDP) or about USD$9 billion annually. She is the second largest palm oil producer after Indonesia.

Malay language is our national language, bearing lots of similarities with the Indonesian language as Malay has its roots from the Malay Archipelago, and was lingua franca for centuries past. Differences in the content and formation of the language stems from its varied colonial past. Peninsular-Malay language contains culinary words such as garpu (fork), keju (cheese), meja (table), which can be traced back to Portuguese origins. Malaysian culinary thus has Portuguese influence too.  Virtually all Malaysians are multilingual, with most predominantly bilingual in Malay and English languages, the remainders usually speak an additional language of either Mandarin (including its dialects) or Tamil. In food industries, Malaysia relies a lot of foreign labour for lowly paid jobs such as Burmese for waitressing, and Indonesians for plantations. Malaysia is one of the six countries that is part of the Coral Triangle. The others are Indonesia, Papua New Guinea, Philippines, Solomon Islands and Timor-Leste. The Coral Triangle is described as "Amazon of the seas" and covers 5.7 million square kilometres of ocean waters. This region has the highest diversity of coral reef fish (containing 52% of Indo-Pacific reef fish and 37% of the world's reef fish). Also, 76% of all known coral species in the world are located here.

What is the approximate size of your Place, in square kilometers? (New question, not required)

80000

What is the estimated population (current 2020) in your Place?

32000000

Challenges: Describe the current (2020) and the future (2050) challenges that your food system faces.

Malaysia is the fourth highest fish consuming country in the world, per capita basis of 57kg, whereas the US and Europe only consume around 20 kg per capita. Currently, Malaysia is reliant on seafood import for its food security, and has negative trade balance for seafood of more than RM1 billion (USD$250 million) annually. Ironically, in the face of mostly stagnating and declining outputs of wild fisheries locally and worldwide, Malaysia being highly dependent on seafood, has also failed to reverse the years of declining aquaculture output, in spite of increasing output globally. Local fishermen’s income has been negatively affected by declining output of accessible wild fisheries. More inaccessible wild fisheries require larger capital investment into larger and more technologically complex fishing boats that fishermen are not financially capable of.

As the Malaysian government decides to re-emphasis on aquaculture sector to increase national food security and economic stability, our neglected aquaculture sector is also suffering from dearth of experienced investors and impact investors in the area of sustainable aquaculture and circular farming. This has resulted in slow flow of capital necessary to catalyse rejuvenation of our aquaculture sector. The current investment landscapes are only filled with those experienced in tech start-ups and to a lesser extent, social entrepreneurship, influenced by the Silicon Valley model.

Also, viable aquaculture system requires a mature sustainable supply chain which has yet to be fully developed nationally. 50-60% of aquaculture’s operating expenditure lies in animal/fish feed. Traditional aquaculture relies on unsustainable animal feed, in the form of fisheries-derived fishmeal. Scarcity in fishmeal will only worsen in the future. Already, fishmeal price has triple in the last 15 years. Current and future challenges include turning agricultural and food waste into value-creation activities, e.g., conversion into pathogen-free sustainable fish feed to replace fishmeal, thus easing environmental and price pressures on supply chains.

Future challenges of sustainable aquaculture will be land-used scarcity. Demands for coastal and inland areas will face competition from other industries such as tourism, hospitality, and agriculture. Issues to address include capacity for moving operations offshore and intensification of aquaculture practices, i.e. producing more with less. As aquaculture becomes more widespread, future concerns include unconventional pollution of the benthic ecosystem (organisms that live at the bottom of the ocean floor or sea floor, such as crabs, sea cucumber, sea urchins, and corals), increasing frequency of red tides, and proliferation of antibiotic-resistant diseases. Other future challenges including finding sustainable sources of marine-derived omega-3 fatty acids which is important to marine health and viability of aquaculture.

Address the Challenges: Describe how your Vision will address the challenges described in the previous question.

Currently, agriculture and food waste are not upcycled. This will change as such wastes will be turned into insect protein for fish feed. Value creation creates wealth, with preliminary calculations on palm oil waste for example, have shown that waste-to-feed revenue generation per hectare is at least as much as from crude palm oil itself, at ~USD2500 per hectare. EU has recently legalised seven types of insect protein suitable for animal feed, and black solider fly (BSF) larva is the most promising waste-to-feed species for aquaculture use.

At the feed formulation stage, a “hub-and-spoke” business model can be applied, and defined by two generic type of stakeholders, i.e. (i) highly capitalised breeder and post-harvest processor of insects, (ii) and poorly capitalised artisanal fishermen and farmers managing activities that generate quick-return grow-out of insect larvae. Newly hatched larvae can be sold cheaply (or on credit) by highly capitalised breeders to poorly capitalised small farmers/fishermen who will be responsible for growing larvae to harvest size using their own food and agriculture waste. After two weeks of fattening, the larvae can be resold back to the breeder cum processor at a higher price, thus generating quick positive cash flow for the poor. The enactment of contract farming agreement can stipulate the minimum supplies and prices to be expected on each side of the economic transaction to protect from defaults.

Further down the aquaculture supply chain, in the day-to-day management of aquaculture, fishermen can be employed to manage activities, e.g. feeding fish, monitoring fish health, data collection of morphological changes during fish growth, disease monitoring, etc. These activities are more professional, semi-skilled, and better paid.

The concept behind a literal and figurative ‘blue-ocean-approach’ to multi-species circular farming is whereby waste from one cultured organisms is input for another type of cultured organisms. Solid waste is feed input for bivalve and molluscs, while liquid waste from fish excrement is feed input for seaweed and algae farming. Benthic pollution and nutrient run-off can be prevented. Agricultural and aquaculture wastes are inputs for the production of omega-3 fatty acids in micro-algae. Omega-3 production will debottleneck the development of aquaculture in 2050.

A significant amount of aquaculture operation will migrate offshore. Construction of offshore platform for aquaculture requires knowledge transfer from that of offshore oil extraction for stable structures that can withstand harsh weather conditions. Moving offshore minimises nutrient run-off, benthic pollution, competition for inland and coastal land-use, and exposure to urban pathogens.

Next breed of investors will be trained by operators, entrepreneurs, investors, and insurers, all steeped in prior aquaculture experience. A new breed of better informed investors can catalyse cash flow into next generation aquaculture.

High Level Vision: With these challenges addressed, now provide a high level description of how the Place and the lives of its People will be different than they are now.

A functioning circular economy will interlink the food, agriculture, and aquaculture industries. Circular economy will unlock a lot of hidden economic value in wastages creating new economic growth. This requires knowledge intensive industries for facilitation. Lots of white collar jobs are needed which will help to lift the country out of middle-income trap towards high-income. The lifestyle of the local populace will be aligned to that of US EPA’s “Food Recovery Hierarchy” to concurrently extract maximum value from by-products and left-overs while achieving zero waste. Aquaculture will help ease pressure on resource extraction of Malaysian waters, helping depleted wild fisheries to recover. Better utilisation of agriculture and aquaculture waste result in less occurrence of nutrient run-off, red tides, benthic pollution, and animal diseases.  Circular farming enables economic revitalisation of coastal regions that are highly dependent on healthy wild fisheries. These regions will pivot from income generated via wild fisheries towards activities that support and maintain infrastructure and supply chains of offshore and onshore operations.

This circular economy will enable our seafood trade balance to turn from deficit into surplus. Our tropical waters enable high rate of fish growth and very good feed conversion efficiency, as operating cost lowers and turnover rate increases. Malaysia is protected from very extreme weather conditions such as typhoon and tide swells, as she is geographical protected by neighbours. This reduces insurance premium on aquaculture. Both combination of risk reduction and high productivity will make investment into multi-species aquaculture even more attractive, thus Malaysia will be the centre of best practices and best available technologies for sea-based circular farming. Contiguous and exclusive economic zones will provide Malaysia with food security as the area combined is much larger than Malaysia’s own arable agricultural land.

Full Vision: How do you describe your Vision for a regenerative and nourishing food future for your Place and People for 2050?

‘Blue Ocean Strategy’ is defined by INSEAD (Institut Européen d'Administration des Affaires) as creating and capturing uncontested market space, thereby making the competition irrelevant. Multi-species circular farming is envisioned to be that of a blue ocean approach, literally and figuratively.

Diet: In circular farming, our national diet and cuisine will gradually transit into low carbon footprint. As micro-algae is grown from farm waste, which will be fed back to multi-species circular farming, our seafood will be richer with micro-nutrients such as anti-oxidants and omega-3 fatty acids especially in EPA and DHA. Omega-3 is especially important for cardiovascular health, healthy brains, and nervous systems, whilst also providing protection against old-age induced dementia and Alzheimer. In the long term, circular farming will save Malaysia lots of money from better protection against dementia and Alzheimer of its ageing population. The next generation probiotics for animal health will reduce our antibiotic exposure from food production, decreasing risk of antibiotic resistant diseases. Blockchain will ensure that there is information integrity whereby the nutritional, footprint, and safety content on labels is also as truthful.

Technology: Biotechnology will achieve our omega-3 dietary requirement, fulfilling our human potential in brain development and mental health. Green biotechnology will proliferate, thanks to advent of probiotics in the form of new generation synbiotics. Synbiotics will reduce our reliance on antibiotic use in food production, thus mitigating potential disastrous fallout from antibiotic resistance. Blockchain technology will ascertain that supply chain is sustainably sourced, safe, and nutritious. Tempering with the artificial environmental conditions in farms will take place in the form of metabolic engineering. This will safely maximise quantitative and qualitative production of multi-species cultivation. Offshore engineering feat will require experts and labours with offshore experience. The oil-and-gas industry has rendered loss of employment, and shutting down of SMEs in the oil-and-gas sector. Offshore aquaculture operation can revitalise these SMEs and create employment. Engineering feat required include mooring, corrosion resistance, transportation of large structure across kilometres of seas, etc.

Economics: Sustainable supply chains will create new economic activities especially along the coastal regions. The concept of multi-species circular farming is knowledge intensive as it covers sustainable, terrestrial, and marine supply chains. As a result, new highly paid white collar jobs will be created that will benefit the nation’s rise to high income country. Blockchain technology will give rise to new blockchain experts and blockchain economy. Value addition from waste will double per hectare productivity. Using palm oil industry as a base line, per hectare economic productivity can increase by at least a factor of 2. Artisanal occupations will be revitalised by hub-and-spoke business models in certain sections of the upstream supply chain (e.g. grow-out of insect larvae), allowing eco-tourists (eco-tourism is currently a growing trend) to have a glimpse and participate in artisanal lifestyle and occupation. This combination generates extra cash for these artisans. FAO has identified salmon and cobia to be most feasible for large industrialised sea/ocean farming. In tropical water of Malaysian and the Coral Triangle, native cobia is most feasible as its optimal range of water temperature is between 22-32C, at USD$7 per kg post-harvest, but pre-processed, with an attractive payback period of 4-5 years. Thus, this fish will be the economic backbone that ties together multi-species farming and cultivation, where added economic and aquaculture cultivation are built around it. This is thus akin to that of an artificial habitat or ecosystem engineering. Malaysia will set herself as the best practice for ‘blue-ocean’ circular farming, and take a lead amongst the nations at the Coral Triangle to scale up operations beyond national border to those in the Coral Triangle. Thus, this type of knowledge export (e.g. consultancies, equity stake, licensing/sale of intellectual property and franchise) will be new form of GDP and income growth. This new venue of economic growth can occur alongside recovery of wildlife in the Coral triangle, protecting diversity of the ‘Amazon of the Seas’.

Environment: By 2050, the currently existing arable agricultural land will be at least twice as productive as what it is today due to value addition of waste. If aquaculture is developed in only the most productive areas, the oceans could theoretically produce the same amount of seafood as the world’s wild-caught fisheries, but in less than 1 percent of the total ocean surface. The combination of both can potentially free up large arable land, turning farmlands back to wilderness or wildlife reserves. Aquaculture will restore depleted wild fisheries. Circular economy will prevent nutrient run-off, and benthic pollution. As coastal pressure is reduced, mangrove forest can recover and be better protected. The recycling of nutrients back into food production will reduce our reliance on energy intensive production of synthetic fertiliser needed in modern day agriculture. The carbon and land footprints required per unit food production will be reduced.

Culture: The circular activities will be modelled and inspired by United Nations’ Sustainable Development Goals (UN SDGs). The four priority SDGs addressed are: (i) SDG 8 for ‘Decent Work and Economic Growth’, (ii) SDG 11 for ‘Sustainable Cities and Communities’,  (iii) SDG 12 for Responsible Consumption and Production, and (iv) SDG 14 for Life Below Water. The current national economy does not create demand for environmental related jobs but by 2050, there will be competition amongst businesses to vie for the most esteemed environmental scientists such as ecologists and marine biologists. These professions ensure that circular economy and ecosystem is in equilibrium. People will make an effort to recycle and value-add to organic waste to derive maximum value. This effort will be guided by US EPA’s ‘Food Recovery Hierarchy’. 75% of Malaysians are urbanites. Urban areas are largest producers of food waste where urban consumers would be personally responsible for the bulk of food-waste sorting. Non-urban communities are intermediaries in food supply chain, occupying artisanal niches like processing, and farming. Non-urban communities are key labours to the operation of the sustainable supply chain. Businesses that adopt sustainable business models with aforementioned UN SDGs, will have competitive advantage and become industrial leaders due to their foresight in understanding severe supply-chain bottleneck in unsustainable resources. Business communities will look to these businesses for leadership direction and as competitive benchmark, resulting in widespread cultural change in business communities towards sustainability. There will be sustainability tickle-down effect, as business leaders benefit from first-mover advantage and its subsequent economies of scale, they will set SDG compliance that their suppliers must comply prior to any economic transaction.

Policies: A combination of UN SDGs and Aquaculture Stewardship Council (ASC) will inform policy-making to ensure sustainability of our ‘blue-ocean’ circular farming. Waste recycling and value addition will be mandatory through a combination of figurative ‘carrots-and-sticks’. Fine will be imposed by stakeholders who do not recycle and/or value add, while commercial partakers will be incentivised by a minimum of ‘5-to-10 years’ tax breaks for circular innovations and business strategy. The responsible agencies dealing with enquiries, guidelines, and paperwork related to offshore land leases of contiguous zone and exclusive economic zone (EEZ) will be clear, with a minimum leasing period of 20 years, as non-currently exists. Prior offshore operations were related to oil-and-gas sector where land leases are not required since the government obtain offshore revenue in the form of some variant of profit sharing, and nationalisation of oil-and-gas infrastructure once oil reservoirs have achieved a certain threshold of extraction rate. Some existing policies on the decommissioning of out-of-use oil-and-gas offshore infrastructure would be reviewed. Instead of decommissioning, policy guidance is needed to re-evaluate economic value of such offshore platforms to incentivise aquaculture business to takeover and turn into offshore farms. Also, these structures have been commercially and practically proven to be very sturdy to harsh offshore environment, with paperwork recording their strict compliance to health and safety standards defined by its own industry. Health-and-safety standards of offshore aquaculture will follow the template of offshore oil-and-gas as the latter has gone through many accident, trials, and errors. Policies will also provide guidance for the enactment of contract farming agreement between non-urban artisanal food stakeholders and better-capitalised centralised breeders/processors. The necessary ministries responsible are: (i) Ministry of Primary Industries (for palm oil), (ii) Ministry of Energy, Science, Technology, Environment, and Climate Change (for external validation for environmental footprint, innovation, and blue ocean approach to qualify as centre of best practice and best available technologies), (iii) Malaysian Investment Development Authority (to obtain ‘pioneering-status’ in innovation and blue ocean approach, for 5-10 years of tax break), (iv) Ministry of Agriculture and Agro-based Industry (to make policies on contract farming, define compliance and also set fines for non-compliance of waste reutilisation), and (v) Minister of Water, Land and Natural Resources (for land lease).

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3 comments

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Spam
Photo of Thu Nguyen
Team

Hi Chian-wen Chan 

Welcome to the Food System Vision Prize Community!

Thank you for sharing your Vision about the food system in Malaysia's coastlines. Here are some tips and questions that could help you build your Vision stronger:

As your Vision will be designed specifically for Malaysia's coastlines, we encourage you to learn more about the needs, aspirations, motivations, and challenges of the place and its people and bring the top insights together to your Vision. You can find some inspiration and tools to help you with your research in the Vision Prize Toolkit in Chapter 2 under Tools of Transformation: http://bit.ly/2X4ZxQk

Have you had a chance to share your Vision with your key stakeholders and listen to how they feel about it? It would be great to synthesize their feedback and incorporate into your Vision.

One of the most promising resources that can help you make a disruptive yet feasible Vision is data. We’ve put together a wide range of resources and websites that can help you pull out data relevant to your context and Vision. You can find them here: https://ideo.to/Ccy20v

Please note that the last day to submit your final Vision is on Jan 31, 2020 5 PM Eastern Standard Time. Look forward to seeing your Vision evolving.

Spam
Photo of Chian-wen Chan
Team

Hi Thu Nguyen, the vision stakeholders and I do have the data and references. No mention of referencing was mentioned in the toolkit though. At this stage of the application, does the data need to be backed up by referencing? As the references are quite long, it will take up the character limits, and we do not really have much 'character' limit left for our answers. Would a few image of graphs be adequate representation for data presentation?

Spam
Photo of Thu Nguyen
Team

Hi Chian-wen Chan 

We would say that at this stage the data doesn't need to be backed up by references and you can mention some important data that is most relevant to your Vision. A few images of graphs should be fine :)