Beats | November 5, 2013

SmartFish: Catching Gold in the Fish Market

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The Japanese fisherman caught a goliath grouper and began to cry. That was when Hoyt Peckham knew things had to change.

Peckham had been in the fishing industry for decades, fishing and advising fishing communities in Maine, the Caribbean, Mexico, Polynesia, and Southeast Asia. He had organized exchanges among Japanese, Hawaiian, and Mexican fishermen to share practices by hosting each other in their home waters.

The Japanese fisherman cried in part because he would never be able to catch a fish like that at home. Old, slow-growing groupers the size of a person are long gone in Japan. But even more, he said, he cried for how poorly the fish was handled. In Japan, even the smallest fish is handled and packaged with care on the boat to preserve quality.

In Mexico, even a prize like the goliath grouper was not killed properly, bled, iced, or even kept out of the sun. It had deteriorated considerably by the time it got to port. Destined to have a fishy taste, it would be sold at a low price.

The fisherman’s tears moved Peckham to found SmartFish, a for-profit company that rescues value in the fish market by helping fishermen deliver better-quality fish to the docks and sell those fish in premium markets. By helping fishermen get more for each fish, SmartFish aims to reduce overfishing while improving local livelihoods.

They’ll Pay for Quality

Last year, Peckham partnered closely with the Mexican nonprofit Comunidad y Biodiversidad (COBI), which formed in 1999 to promote marine conservation in the Gulf of California. COBI actually helped to develop the model and co-write the business plan. SmartFish is a semifinalist in the Fish 2.0 business competition at Stanford University November 12 and 13.

Los Cabos in Baja California Sur is home to many high-end restaurants, catering to the world’s elite, where hotel rooms can run up to $5,000 a night. The one thing that hasn’t been elite in Baja is the seafood.

The hotels are situated right next to some of the best fishing seas in the world, or the “world’s aquarium” as Jacques Cousteau called it. Yet, the seafood these hotels serve isn’t sourced fresh locally. The fishing communities are disconnected from the hotels, some of which displaced locals when they were built. Until now, local seafood has been considered low-quality.

This isn’t a reflection on the fish itself. Rather, poor handling delivers the fish to market in bad shape, ash-colored, flaky, and smelly. Such poor handling, Peckham says, turns “golden fish” into lead in a kind of reverse alchemy that reduces fishing income and in turn necessitates higher catch-volumes.

“They’re catching fish that’s worth gold in the market,” says Peckham. “But in the ways that it’s caught, it’s worth less than lead, less than plastic.” Recycling a plastic bottle in Mexico fetches 9-10 pesos, he says; poor-quality fish sells for 5-7 pesos a kilo. “How can you get less for a good-eating fish than a dirty, plastic bottle that’s been cooked in the sun and run over by cars on the side of the road?”

So Smartfish is working with local fishermen to preserve their bounty with higher quality, higher prices and lower volumes. SmartFish has found that the high-end hotels are more than willing to pay a premium for excellent quality fish. While paying for quality, they receive sustainability as a bonus. The value of sustainable seafood is becoming well-understood in the U.S., but has not yet become a significant factor in Mexico.

COBI has been working in artisanal fishing communities across Mexico, with the aim of promoting ecological sustainability and reducing overall catches.  If its work is to succeed longterm, COBI knew it needed to offer communities alternative financial models. While trying to foster new connections between seafood buyers and fishing coops, the organization realized that fishermen really need market orientation. SmartFish helps COBI provide its communities with opportunities to capture a greater profit, says Amanda Lejbowicz, COBI’s Program Coordinator for Baja California and Science.

“If SmartFish is a success, it helps all of us because we have the same goal,” she says.

Scaling Up with Tech

Community-embedded organizations like COBI currently make it easy for SmartFish to teach and ensure best fishing and sustainability practices.  But Peckham knew that, as the business scaled regionally and eventually globally, they’d need to systemize their verification processes. SmartFish has struck a partnership with Shellcatch, a catch-verification technology company.

Shellcatch’s software allows the company to monitor catch method and by-catch in an automated manner. This information is shared with the rest of the supply chain. The verified and traceable seafood caught on Shellcatch-equipped boats can thus be differentiated from the rest of the market.

The company’s devices are the size of a paperback novel and are waterproof and impact resistant. They require no user input from the fishermen, so there is very little maintenance involved. Shellcatch passes along the cost of these devices to retailers concerned about the origin and sustainability of their fish.

Launched in Chile in 2008, Shellcatch spent three years gaining the trust of Chilean fishermen. By 2011, fishermen realized that Shellcatch helped them better compete in the international marketplace and allowed them to translate responsible practices into access to higher premium markets and prices.

Previously, such markets were mainly available to large companies who could pay for certifications or create their own branding and marketing.  The fishermen are now so invested in the idea that they promote Shellcatch’s product on Chilean TV.

“We wanted to empower [the fishermen] with technology so that they could be the main characters in [driving] sustainability and traceability in the industry,” said Alfredo Sfeir, Shellcatch’s founder.

For SmartFish, the Shellcatch partnership allows them to expand to small fishing communities regionally, and eventually globally, and to places where partner organizations like COBI don’t yet exist. By 2015, Peckham says, “Our fish will be fully traceable.”

Editor’s Note: This article is part of a series on Oceans and Sustainable Fisheries, in association with SOCAP, the Social Capital Markets conference in San Francisco.

Photo credit: Annie Waller