Capital Coordination and Capacity Building in Duao

The role of a system intermediary isn’t about moving fish; it’s about moving information, money, and expertise to fill gaps in the system. And it’s critical for driving sustainable small-scale fisheries.

The artisanal hake fishers in Duao, Chile are organized and motivated. But like so many other small-scale fishers who want to improve their practices, increase their capacities, and make changes to ensure they’re fishing sustainably, fishers in Duao struggle to access the resources to effect change. Laid out along a beautiful stretch of coastline, Duao was hit hard by the 2010 earthquake and tsunami but has since been rebuilt, thanks to the commitment of the community and help from local NGOs. With over 90 boats in the local fleet, the small-scale hake fishery was and remains the heart of the town’s economy and identity, along with the robust tourist industry. Yet, declining fish stocks due to overfishing and climate change, difficulties accessing stable markets, and unstable pricing undermine fishers’ capacity to secure their livelihoods.

That’s where we come in. For the past two years, Future of Fish has been working as a system intermediary to connect fishers with the business capacity, capital, and data systems they need in order to improve their fishery and ensure a sustainable livelihood for their families and community. Our role as an intermediary helps build the critical enabling conditions for unlocking social, economic, and environmental wins for oceans and fishing communities and is part of our systems approach to small-scale fisheries transformation.

In Duao, the specific initiatives we are helping implement are based upon an extensive co-design process where fishers identified strategies for improving supply chains that included more direct-to-market pathways that deliver greater value for legal, high-quality fish. The goal: to continue to provide food and income through sustainable fishing built upon better business practices.

To get there, we have worked to identify and secure different funding opportunities, weaving together four distinct streams of capital that are financing initiatives to formalize, develop, and iterate new ways for fishers to do business. Here’s what that looks like on the ground:

Formalization and Business Training

Our programs and interventions are always guided by the wisdom and knowledge of the fishers we work with. During a series of co-design sessions, fishers in Duao identified strategies for supply chain improvements that align with sustainable practices, but as is the case for so many small-scale fisheries, the fishers needed to formalize in order to implement new business ideas and plans. And so, Coop Duao was born. Established in 2019, Coop Duao has six founding members with the intention to jointly sell fish and make direct sales to open-air market vendors without giving away value to extractive middlemen. This important initial step creates a robust business structure and a set of processes that allow fishers to receive investments and make future improvements. If the co-op model is shown to be sustainable and valuable for participating fishers, there is a likelihood that more of Duao’s fisher community will be encouraged to join, increasing the co-op’s impact and scope.

We secured a small grant from Sercotec, a division of Chile’s Ministry of Economy, Development and Tourism, to fund the first phase of activity, including the formalization of the co-op and capacity building to provide the co-op members with training around best business practices.

Weaving the net of capital coordination

With a business plan in place and Coop Duao established and formalized, we then worked with the co-op members to develop a set of initiatives to improve access to markets and build a network for direct sales. The plan has four key components: formalizing the co-operative (check!), developing distribution capacity to reach markets directly, identifying and connecting with new markets, and developing revenue models to support a self-sustaining co-op.

As a system intermediary, our job is to harness resources to enable the fishers to try new things and iteratively develop their new operating model. Our Chile team dove deep into the funding landscape in the region and internationally to develop a series of grant and funding proposals that could pair appropriate capital and grant funds with different phases of the Duao business plan.

The first step of capital coordination is to map diverse funding types and sources and start to identify how they align with specific business plan components. Although at times funds are pursued opportunistically, having this map helps the co-op strategize and prioritize a sequence of activities to move their business plan forward, increasing the chance for overall success. This capital coordination map also helps identify where there are funding gaps and where alternative strategies may be needed in order to bring in the required funds.

Piloting new supply chains from dock to market

With the co-op formalized and more capital in the works to fund projects, we supported fishers to design a better way to get their fish to market. Previously, Duao’s fishers — like many small fishing communities in Chile — had difficulties accessing reliable buyers for their fish, as they didn’t have the stable volume or resources available to sell to bigger buyers. Our first goal for market access was to develop relationships with open-air market vendors in Santiago and to begin direct sales from the co-op to these vendors. By aggregating and selling their fish as a collective, Coop Duao can offer a more stable volume for the vendors, and by transporting the fish directly, the co-op could shorten the supply chain, retaining more value and ensuring they can provide higher quality, more traceable fish.

In December, we were excited to help facilitate the co-op’s first direct sale to vendors in Santiago. The fishers coordinated their catch, hired a truck and driver to transport the seafood to Santiago, secured a buyer, and ultimately moved 1.5 tons of seafood with robust documentation and demonstrably higher quality. While the pilot sale had its challenges, the fishers were pleased to have a first direct transaction, and are excited to continue with further iterations.

To fund the first small direct pilots and build market capacity, we secured capital from the Global Greengrants Fund, a small specialist philanthropic funding network that invests directly in frontline projects and empowers local actors to design effective solutions.

Iterating towards self-sufficiency and facing roadblocks

The next phase of work has involved continuing the direct-sales trials, meetings with potential buyers, and relationship-building to strengthen the connections between Coop Duao and market vendors in both Santiago and Talca. The direct-to-market pilot in December 2019 was successful in providing evidence that this is a viable business option for the co-op. To move from pilot to scaled solution, the co-op plans to purchase their own truck to transport their collective catch to market.

Despite our momentum and the excitement of having over $75,000 secured for continued direct sales and transportation capacity, we hit an unexpected but inescapable roadblock: Covid-19. The pandemic put a halt to the co-op’s ability to move product safely from Duao to Santiago for a number of months and hindered our ability to work safely together in person.

To enable the fishers to purchase a truck to transport their catch—once it becomes safe to do so—Future of Fish secured funding from Fundación Chile, a national development organization.

To support capacity building and multiple direct sales iterations, funding has been secured from CORFO, the Chilean economic development agency dedicated to improving Chile’s competitiveness and economic diversification. The multi-phased funding is designed to support further direct sales trials, along with capacity building and professional development.

A system intermediary for small-scale fisheries

Despite the delay due to Covid-19, we are well-positioned to continue the work with the co-op. We have capital secured from a number of sources, a business plan in place, and an encouraging first round of trials under our belt. And so, while we’re forced to work remotely and the co-op members are unable to move forward at their previous fast pace, we’re doing what we can to keep the lines of communication open and continue to build a strong and resilient relationship with the co-op members. Still, it’s a challenge. We’ve learned that while money is a must when you have timelines and goals to achieve, it’s not enough on its own: there’s no alternative for working together in person.

For small-scale fishers in Duao, fishing is more than a job—it is a lifestyle, a living, a tradition, and a way to support families and communities. However, redesigning a fishery is expensive and requires multiple types of expertise. Each intervention pilot involves complex logistics and labor-intensive implementation, requiring initial capital investments to make the process viable and sustainable. Our job as an intermediary and partner is to ensure the fishers have the time, capital, resources, and skills they need to make change without undermining their ability to secure a livelihood.

Unlike other industries, where entrepreneurs and companies can easily access capital to build their business, grow their market share, and iterate until they hit on a sustainable model, small-scale fishers struggle to secure the money and gain access to the expertise they need to improve their practices without going broke in the process. The funding secured with Future of Fish’s help is intended as a kick-starter, a way to help strengthen the business operations and financial viability of the co-op so they can become self-sustaining, either by securing access to private capital or by reinvesting profits.

Our capital coordination effort for projects in Duao has been effective, and so far all the funding applications we’ve made on behalf of the co-op have been successful. In summary:

  • SERCOTEC (governmental, national-level) for co-op creation, $3,000 USD

  • Global Greengrants Fund (philanthropy, international) for direct sales iterations, $5,000 USD

  • Fundacion Chile (private foundation, national) for the truck, $30,000 USD

  • CORFO (governmental, national) to scale pilot iterations, $40,000 USD

  • TOTAL TO DATE: $78,000 USD

In turn, our work wouldn’t be possible without the support of the Walton Family Foundation, which allows us to develop, demonstrate, and test our role as an intermediary. To map the funding landscape and effectively apply for grants and other types of capital takes significant resources. Lack of time, expertise, and misaligned requirements are all barriers that prevent small-scale fisheries from accessing available funds. Through our work in Chile, we hope we can start to model how a system intermediary can help alleviate pain points like this, and we look forward to sharing our continued findings.

The role of a system intermediary isn’t just about moving fish; it’s about moving information, money, expertise, and yes, sometimes, a bit of hake. And to do it effectively, we need to have strong relationships with communities, and often, boots on the ground. Done right, we believe this work can greatly catalyze and accelerate successful fisheries transformation that delivers social, economic, and environmental gains.

As a nonprofit, our work is possible with the vital support of partners and our community. To discuss potential collaborations or partnerships, or to stay up to date on our progress in Chile and beyond, connect with us here. To support our work on capital coordination and empowering fisheries transformation, visit our donation page.

Published Oct 07, 2020