Making a difference in Investment Aid
Just recently, the PT&I’s Auckland Office successfully inaugurated the first-ever aquaponics project in the Cook Islands during the Forum Leaders Meeting. The NZAid Programme and PT&I jointly funded the project.<!--more-->
[caption id="attachment_4158" align="aligncenter" width="300" caption="Local visitors at the Rarotonga aquaponics facility soon after opening in August 2012."]<a href="https://pacifictradeinvest.com/PTI/wp-content/uploads/2012/11/Visitors-viewing1.jpg"><img class="size-full wp-image-4158 " title="Visitors viewing1" src="https://pacifictradeinvest.com/PTI/wp-content/uploads/2012/11/Visitors-viewing1.jpg" alt="" width="300" height="200" /></a>[/caption]
This project can classed as Investment Aid, which has a long-term multiplier effect to the community as well as to the country. Aid, per se, is not bad as long as it contributes to the local economy as a whole. If Aid doesn’t have a long-term socio-economic impact on the economy or is considered only a stopgap measure, it should not be considered aid at all.
Although that stopgap measure addresses a particular need, like when a country declares an emergency or calamity zone due to strong cyclone or earthquake, then aid is a major help. But real aid, from an economics point of view, should cater to those projects with a longer, deeper and wider socio-economic impact to the local economy.
It is ‘longer’ when it is sustainable and has a long-term socio-economic impact, ‘deeper’ means the economic benefit reaches out not only to the rich people but also to the poorest of the poor social strata and a wider scope where it benefits other industry sectors – manufacturing, retail business, labour, banking, and other related services in the economy. Thus, investment aid makes a difference.
The Investment Aid given by the New Zealand government to roll out an aquaponics project in the Cook Islands has a significant long-term spillover effect to the local economy. For one, it can create self-employment and employment in the community. A new practitioner of aquaponics can set up a commercial production unit to sell constantly to the local market. In fact, they can even put a café in front of their farm and offer a variety of health food products like sandwiches, fresh green salad, and fresh juices and at the same time supply the chain of hotels and small resort operators.
They can also introduce a value-added product such as mixed veggies packed in a sealed plastic bag. The mixed veggies will definitely command a much higher price and thereby earn better financial return. The end-consumers will most likely buy this product because it is convenient and ready-to-eat aquaponically-grown fresh green salad. The food retail outlets will also love it. This can help government programmes such as “Go Local”, which the Cook Islands Government runs to promote local produce and curb expensive food imports. And eventually, if there is a surplus of leafy vegetables in the local market due to increased productivity, the local farmers can export the product to New Zealand and Australia.
Also, aquaponics farm system registers favourable financial returns as compared with the soil-based traditional farming system. Based on the market research done by the Auckland University post-graduate students, a set of conservative estimates on the financial internal rate of return for aquaponics is recorded at an approximate 61% and a payback period of 2.28 years.
It means that the aquaponics project is sustainable provided that they diligently monitor the farming system. In addition, it only takes a maximum of 2-3 hours a day to monitor the aquaponics farm and leaves more quality time to the family. It is, indeed, sustainable and can earn better financial returns as compared with the traditional soil-based farm system.
Aquaponics has a small footprint of production area as compared to the traditional soil-based system. In a 50-square meter area of aquaponics farming system, it can produce an approximately 300-350 lettuce a week. The owner also gets a bonus on the fish production. They can eat some of them and sell the rest of the fish to their café business and to the weekly public market in the community. Surely, this is a double whammy for the aquaponics farm owner.
Lastly, the gestation period of an aquaponics farm is relatively shorter than a soil-based system. An aquaponically-grown lettuce plant can grow maturely in a 4-5 week period while in a soil-based system it normally grows in 7-9 weeks. It means it can easily increase the volume of production. Which means more production and better income for the farm-owner.
There is no doubt that the first-ever aquaponics project in the Cook Islands is a win-win situation for both the donor agency and the Investment Aid beneficiary. It is, indeed, a platinum milestone. This is the reason why the NZ Aid Programme wants to fund similar innovative projects that have a longer, deeper and wider socio-economic impact to the economy.
<em>Article by: Manuel Valdez, COO and Head of Investments, PT&I NZ</em>